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CHAPTER 1 Understanding the Estimates Influence on Project Planning Success 1
1
CHAPTER
................................................................
Understanding an Estimates Influence
on Project Planning Success
................................................................
2 CHAPTER 1 Understanding the Estimates Influence on Project Planning Success
There are other aspects related to the The reality of many projects is that
estimate that require close scrutiny. an estimate becomes a living thing,
Many times the estimate is prepared complete with constant revisions as
before submittals are completed or the actual construction nears. To be
owner selections are made. For project successful, project managers have
managers, this means they arent to look way ahead as they plan and
working with the complete picture anticipate aspects within the estimate
and will have a difficult time matching that are likely to derail the schedule.
resources, materials and processes to Identifying these in advance allows
the tasks. project managers to prepare for any
potential delays.
4 CHAPTER 1 Understanding the Estimates Influence on Project Planning Success
AN ESTIMATES INFLUENCE ON
THE PROJECT STRUCTURE
PERMITS
DEMOLITION
LANDSCAPING
MATERIALS
LABOR
CHAPTER 1 Understanding the Estimates Influence on Project Planning Success 7
Ideally, estimates would remain accurate on all levels from start to finish. Cost
breakdowns per division wouldnt undergo an ounce of change and the amount
witnessed at the beginning of the project would resemble the amount at the end of
the project. This experience, however, does not represent the norm. In most cases,
expenses not only change throughout a project, but on a daily basis.
Inexperienced owners have difficulty viewing office overhead separately from profit
and assume their designers plans will finish without modifications of any kind.
2
CHAPTER
..........................
Assessing Risk
..........................
CHAPTER 2 Assessing Risk 9
Interestingly, tight project schedule was ranked as the top risk in all categories.
Unsuitable construction program planning arising from inadequate scheduling,
innovative design and/or the contractors lack of knowledge in planning was another
high-ranking risk. In order to avoid these risks, involve the contractor during the
design phase.
CHAPTER 2 Assessing Risk 11
Other risks arise from the sheer volume of information and participants involved
in projects. Contractors are challenged by the number of entities involved, which
can lead to gaps in communication if incorrectly managed. The best results come
when contractors focus on employing skilled planners and managers and implement
flexible and comprehensive project management tools.
12 CHAPTER 2 Assessing Risk
RISK LANDSCAPE
The litigious nature of societies today is another area with increasing risks. Disputes
tend to arise when there are discrepancies or variations in the design. Mitigating
these requires close coordination between the design team and contractors.
Contractors should also negotiate with the owner and design teams to not only
minimize their impact, but inform the design change itself.
CHAPTER 2 Assessing Risk 13
Disputes also arise from people who are not direct stakeholders. For example, noise,
dust, traffic, and environmental complaints are constantly increasing. Dont wait to
receive these complaints, but rather address them during the design and planning
phases.
The unfortunate reality is that contractors also have to alleviate risks posed by
subcontractors. One of the top risks for subcontractors is low management
competency. This arises from the nature of subcontract work, which requires
managing people, materials and equipment across multiple sites. When
subcontractors are especially skilled in their trades, they tend to attract more work
than they can manage. Besides ensuring subcontractors have the required job skills,
contractors should also consider their level of management competency.
14 CHAPTER 2 Assessing Risk
Every project is unique with its own exceptional set of risks, but the process of
assessing and addressing them can be generally outlined in these eight stages.
06 Assign responsibility.
08 Identify new risks as they arise, and solve them immediately, or plan
to manage them for as long as they are active risks.
Construction is a risky business and one where risks can arise at any time during the
project lifecycle. But with adequate risk assessment and planning, risks that pose the
greatest threat to projects can simply become items to manage.
CHAPTER 3 Plan for Quality 15
................
100%
................
3
CHAPTER
..........................
Plan for Quality
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16 CHAPTER 3 Plan for Quality
COMMUNICATION
Brian Wessels, LEED AP BD+C, CESSWI, and project manager at Greiner Construction
says effective communication ensures the knowledge of specifications gets
transferred to everyone involved in the project.
You should make sure each person responsible for ensuring quality actually knows it
is their responsibility.
During the planning stages its a good idea to have a quality control meeting where
roles and responsibilities for quality are decided. This meeting should include
everyone with supervisory oversight, including subcontractors. But theres also a
larger quality picture that relates to all people on the project.
Wessels advises that quality control really comes down to the individual and whether
or not theyre invested in the project. If they are, theyll be motivated to do the right
thing, and if all share that investment, its part of the culture, and will go a long way
toward ensuring quality. He says its also key to make sure people have the right tools
such as the ability to easily see the latest specifications from a computer or smart
device. Wessels claims there are few projects today that have budgets allowing large
numbers of supervisors to be circulating around the site ensuring things are built
properly.
20 CHAPTER 3 Plan for Quality
With this type of specification, it is up to the contractor to decide how to build the
wall to meet the specifications within the cost allowed. Performance specifications
also provide an opportunity to incentivize quality. For example, contractors could be
eligible for bonus payments when the work in place exceeds the minimum standards.
For example, there could be instances where a certain material specified for use is
not available. Knowing this upfront allows you to source an alternative and have it
approved long before its needed.
CHAPTER 3 Plan for Quality 21
Ensuring components are installed and built correctly is just one aspect of
quality control.
Another, and probably more onerous aspect is verifying that materials and fixtures
used for construction are the right quality themselves.
In recent years, a spate of counterfeit electrical components bearing all the official
marks of certification has flooded the marketplace. Not only are these components
often made of substandard or dangerous materials, they havent really been certified
by Underwriters Laboratories. Other examples include drywall made with a material
that promotes mold growth and lumber with such high moisture that it not only
warps and twists in place, but encourages mold growth.
22 CHAPTER 3 Plan for Quality
During the planning stages, and even back in the estimating stages, there should be a
commitment to source from known vendors that have consistently delivered quality.
And even then, random checks on quality are a good idea.
During the planning stages, when products and materials are unknown, or are
available from previously unknown sources, it is prudent to get samples and test
them appropriately.
There are also highly critical components that should always be considered for
testing. Concrete is one of them. Once installed, concrete carries a major cost to
remove and replace, so ensuring the mix meets the specifications and is appropriate
for the weather is an inexpensive form of insurance. The process of ensuring the
quality of materials and products used in a project ends only when the project ends
and controls should be established throughout the timeline to make sure quality
remains high.
CHAPTER 3 Plan for Quality 23
With quality materials and workmanship accounted for in the planning stages and
an aggressive effort built into the duration of the project to monitor quality, projects
can be successfully completed at high quality, even in todays fast-paced building
environment.
4
CHAPTER
....................................................................
How to Successfully Manage Information
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CHAPTER 4 How to Successfully Manage Information 25
Maged Abdelsayed of Tardif, Murray & Assoc., consultants based in Quebec, Canada,
estimate a $10 million project generates 56,000 pages of documentation, or data.
Data includes things like contracts, RFIs and submittals, which are currently accessed
on an array of diverse technologies in 2014. As the ease of creating and sharing
data has increased, so too has the amount of data. While sharing and updating the
most current information for all participants seems daunting, the instant access
and availability to this documentation from anywhere also holds promise for new
capabilities.
26 CHAPTER 4 How to Successfully Manage Information
Construction professionals are discovering the real power buried in all the information
accumulated by projects and its purposes beyond the projects construction lifetime.
For example, new data mining and search technologies make it easier than ever to
compile as-builts after a projects completion.
Thankfully, construction software and cloud services can manage that amount
of documentation and file type diversity. Cloud offerings are indispensible in a
construction project as any of these files can be accessed from anywhere at any time.
CHAPTER 4 How to Successfully Manage Information 27
WHAT TO MANAGE?
Once a project actively begins construction, the following types of information should
be managed within one database:
01 Drawings
02 RFIs
03 Schedules
04 Budgeting
05 Punch Lists
06 Daily Log
08 Directories
09 Photos
28 CHAPTER 4 How to Successfully Manage Information
Once you choose a management system, its not a simple cakewalk from there.
You still need to train your team on the chosen software, accumulate and upload all
necessary documentation, and continually update the project information with any
changes.
Not surprisingly, one of the chief contributors to these issues is the tendency for
management solutions to operate in their own silos with little interoperability with
other software. Therefore, a primary consideration when establishing information
systems for a project is the systems integration capabilities and supported browsers
and devices.
CHAPTER 4 How to Successfully Manage Information 29
There is also the difficulty of granting system access to members outside the
company, including vendors and subcontractors.
If a vendor can access the project schedule, they can see when specific materials
are needed and better coordinate delivery to the jobsite. Likewise, a subcontractor
having access to QC (Quality Control) documentation can easily locate quality
specifications related to a particular operation.
For example, if the specification of an item changes, and the change doesnt make it
to the vendor on time and the document record is updated accordingly, the wrong
item will most likely be delivered. A more efficient process involves having only one
file version accessible to everyone. That way, if any changes are made, everyone is
updated immediately.
30 CHAPTER 4 How to Successfully Manage Information
Assuming the cloud vendor exercises sound security practices and an established
backup program, the benefits can extend beyond mere management. For example,
cloud systems dont require IT support and are usually pay-as-you-go, allowing you to
scale the service up or down based on your needs.
Look for these key aspects when choosing your project management solution:
Status tracking
Capacity to assign responsibility for tasks with due dates
Permission levels
RFIs and Submittal management
Simplified reporting that is customizable
Automated reminders and update notifications
Search filters
CHAPTER 4 How to Successfully Manage Information 31
ENSURE ACCOUNTABILITY
Once a system is chosen and implemented, the most difficult challenge is ensuring
your team remains accountable for their responsibilities. The software wont simply
run itself files must be uploaded, contact directories built, and documents
consistently updated.
The best defense for ensuring accountability is a good offense. Be sure to assign
responsibility, monitor progress, send reminders for upcoming due dates, and appoint
second points of contact to receive notifications if primary contacts are unavailable
or nonresponsive.
32 CHAPTER 4 How to Successfully Manage Information
Todays construction projects are more information intensive than ever and the trend
toward greater and greater amounts of data is only growing.
The process starts with thorough project management planning with an eye toward
project data uses that live long beyond the individual project.
DRAWING
MANAGEMENT
ACCOUNTING
SCHEDULING
RFIs
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5
CHAPTER
................................................
Communicating the Schedule
................................................
35 CHAPTER 5 Communicating the Schedule
MEETING UP
Schedule meetings with your teams to keep everyone on the same page. However, try
to avoid scheduling them when other forms of communication will suffice. Meetings
are successful when:
They offer the best way to share information that requires collaboration
DOCUMENT MANAGEMENT
THE
SPOKEN WORD
6
CHAPTER
....................................................
A Resource View of Scheduling
....................................................
CHAPTER 6 A Resource View of Scheduling 42
CPM LIMITATIONS
A resource-based approach is often used in conjunction with the Critical Path Method
(CPM), but there may be some projects where using this as the exclusive scheduling
technique is appropriate. Consider a project where short-supply resources are
needed for more than one task, making it impossible for the CPM to work. As Chris
Hendrickson, Department of Civil and Environmental Engineering, Carnegie Mellon
University states, this happens because CPM scheduling assumes that no resource
availability problems or bottlenecks will arise. There are also additional methods for
dealing with resource limitations. For example, the scheduler could set up resource
constraints first and then add precedence constraints. Another option would be to
set up resource-challenged activities into groups that receive special attention.
CHAPTER 6 A Resource View of Scheduling 44
Regardless of the chosen process, the schedule must ultimately reflect the
resource limitations and effectively deal with them, or the issues have to be dealt
with manually. One such manual approach is a reservation system for handling
resource bottlenecks in which the resource in short supply is identified early in the
planning stages. Therefore, participants that need the resource can reserve it at a
predetermined time. In computer-managed projects, this process has been further
refined by independent software agents and referred to as a Multi-Agent System.
The agents are autonomous, each representing either a process or a resource,
and negotiate the right matches between processes and resources. According
to T. Horenburg, J. Wimmer & W. A. Gnthners paper, Resource Allocation in
Construction Scheduling based on Multi-Agent Negotiation, these systems have
been tested and proven highly reliable and capable of returning high-quality solutions
for resource-constrained project scheduling problems.
CPM OPTIONS
CPM scheduling alone can accommodate beneficial to deal with the resource
all resource constraints, or can be issues first. Furthermore, it may be
done in concert with resource-based advantageous in some instances to
scheduling. For example, when there is proceed by following both approaches
only an occasional resource limitation, at the same time. There are many
you could start with the CPM and different ways to deal with scheduling
address the resource constraints as problems including those arising from
needed. If there are multiple resource resource constraints and many times it
constraints, then it might be more simply means modifying the CPM.
CHAPTER 6 A Resource View of Scheduling 46
Hendrickson outlines a process beginning with the CPM, in which you lay out tasks,
durations and resources in their proper order. Predictably, youll experience deviations
in the start times of activities and if you schedule each activity to start at its earliest
possible time, resource constraints may appear. The next step is to pick the activity
that is resource-challenged and has the CPM late-start time earlier than any other
resource-challenged activities that have all their predecessor requirements filled.
Then, shift the start times of all those activities to later times. As new conflicts arise,
continue applying the rule all the way through to the end of the project. When
choosing what order to consider the resources, select important ones first, meaning
those with higher costs or most likely to cause bottlenecks. Taking care of these early
makes other decisions much easier.
47 CHAPTER 6 A Resource View of Scheduling
RESOURCE SCHEDULING
AND LEAN CONSTRUCTION
Construction planners and schedulers handle the variables of resources from the
inception of the project until completion, and sometimes beyond that. When resource
and information constraints are light, the CPM works well on its own. However, as the
number and complexity of resource and information constraints increase, it can be
beneficial to incorporate alternative scheduling processes.
7
CHAPTER
...................................................................
The Evolving Construction Environment
...................................................................
51 CHAPTER 7 The Evolving Construction Environment
For more than 60 years, construction charts with dates and durations based
has largely relied on a single type of only on the experience or best estimates
scheduling process, the Critical Path of the planners, according to Patrick
Method (CPM). The seeds of CPM were Weaver FAICD, FCIOB, PMP and Director
started by DuPont in the early 1940s of Mosaic Project Services Pty Ltd.
and then developed into a project Needless to say, the planners werent
modeling technique in the late 1950s by always right, especially on complex
Morgan Walker and James E. Kelley, a construction projects. Planners had only
mathematician who had been working their personal opinions on the potential
on linear progression. length of delays when things went
wrong, causing contractors and owners
Until the advent of CPM, project to flood projects with resources, often at
schedules were governed by Gantt a very high cost.
CHAPTER 7 The Evolving Construction Environment 52
CPM has been used for horizontal construction projects like roads, bridges and
dams, but faulted as not being effective at modeling the spatial activities involved
in these types of projects. An alternative method of scheduling called the Repetitive
Scheduling Method (RSM), as outlined by Robert B. Harris and Photios G. Loannou
in their paper, Repetitive Scheduling Method, helps ensure the continued use of
resources once deployed and overcomes CPMs limitations arising from its focus on
precedents and resource availabilities.
53 CHAPTER 7 The Evolving Construction Environment
No one expects CPM to go away anytime soon, especially with more than 90% of
construction firms using it today, but as new technologies such as BIM continue
making inroads into the sector, changes in the processes that take advantage of
the benefits arising from those new technologies will continue to gain speed. In
the meantime, CPM will hold its dominance not only because of its familiarity, but
because other project scheduling processes are not as well vetted when it comes to
legal aspects such as proving delay claims. CPM is also intertwined with the earlier
project management processes like planning.
55 CHAPTER 7 The Evolving Construction Environment
Ultimately, the values derived from the planning stage are plugged into a CPM
scheduling application such as MS Project or Primavera, which can then be integrated
into software programs like Procore. These schedules are available online for easy
viewing and sharing, along with all the other aspects of the project. The following
items form the basis of the schedule:
01 Tasks
Once these are entered into the application, you can see the duration of tasks, and
of the overall project, along with the earliest and latest a task can start without
affecting the projects schedule. You can use analysis tools to get various views of
tasks, durations and the projects critical path to completion. The real advantage
is that whenever you change resources, tasks, time, or dependencies, the changes
automatically trigger a recalculation of time-to-completion and adjust other affected
parameters. This makes it convenient for carrying out what-if scenarios, and makes
it highly efficient when changes become necessary.
According to Roeser, the kinds of additions thrown into a CPM schedule that can
cause it to divert from its intended purpose include:
In particular, it can be dangerous to have too many people interacting with the
schedule. As new requirements are added, such as tracking change orders and cost
data of resources, the schedule becomes increasingly overloaded with information,
inhibiting its effectiveness and rendering it useless. While prudent to limit the kinds
and amounts of data resources used in CPM, theres evidence that incorporating
information flows can be beneficial.
8
CHAPTER
.....................................................
Addressing Schedule Challenges
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CHAPTER 8 Addressing Schedule Challenges 60
Building a schedule that minimizes costs usually relies on optimizing the lower tasks
to such extremes that they push out project completion. The knee-jerk reaction to
those results often leads planners to go too far in the other direction and schedule all
tasks equally. Using overtime because of a compressed schedule leads to higher labor
costs, but as Chris Hendrickson, author of Project Management for Construction
points out, it can also lead to increased accidents and lower quality work. Both which
lead to higher costs.
61 CHAPTER 8 Addressing Schedule Challenges
When you apply this approach systematically, you will reduce the projects duration
to a point where another path becomes the critical path. Continue this process
until youre satisfied with the cost/duration ratio. From there, you can optimize the
schedule by alternating between both approaches. This process will also show you
when the project deadline is unattainable. These processes are most effective when
there are resource constraints and when the time-cost balance for tasks isnt known
ahead of time.
Tweaking the schedule by adjusting durations and the cost of items directly confronts
issues with the projects total budget and completion time. Other schedule problems
such as resource constraints, excessive lag times and missing requirements are often
the result of incorrect assumptions made either in the estimating or planning stage
that ultimately informed the initial decisions. Solving these challenges comes down to
reviewing and correcting earlier assumptions.
CHAPTER 8 Addressing Schedule Challenges 62
Sometimes, replacing labor with mechanization can radically reduce time and cost
constraints. Machines are tireless and unaffected by mood, attitude and comfort
level, and provided you have the necessary resources for operating and maintaining
equipment, can become your greatest asset in addressing schedule limitations. It is
critical, however, to know the limitations of machines and the resources that surround
them. Machines that are utilized inefficiently, or that compromise their strengths, will
inevitably become problems. If machines arent reliable and well maintained, higher
costs and longer durations will result.
CHAPTER 8 Addressing Schedule Challenges 66
You have to factor productivity into any schedule when you want to extend the
workday calendar. Having a six day week without bringing in fresh crews for the sixth
day increases the risk of higher costs due to overtime pay, heightened accident risks,
and lower productivity. Its better to simply extend the work week to seven days and
arrange the crews to average 30 to 40 hours a week. Crews stay fresh longer, accident
potential decreases, productivity is higher and overall task durations are shortened, all
without increasing costs. Be aware of the importance of buy-in from all parties when
interrupting the traditional work week and remember to factor in all local labor laws.
67 CHAPTER 8 Addressing Schedule Challenges
9
CHAPTER
..........................................................
Managing Unrealistic Expectations
..........................................................
69 CHAPTER 9 Managing Unrealistic Expectations
While each project has an estimated completion date, construction projects are
notorious for requiring many adjustments to scope throughout the process. Owners,
bankers and others involved at the highest levels always consider the project in
terms of completion because, as everyone knows, the longer a project is under
construction, the more it costs. The goal is to get it built as quickly as possible, so the
product can move into its most useful stage where the highest returns on investment
are possible.
CHAPTER 9 Managing Unrealistic Expectations 70
To handle this situation, you must make sure you are working with up-to-date
information and that youve created a plan with input from team members that
reflects the shortest time to completion. If, after youve tried crashing, fast-tracking,
and applying alternative estimates of critical path activities, you end up with a plan
that fails to meet the deadline, the next step is to ask management if the project
length youve arrived at is acceptable. If not, youll need to come up with alternatives,
according to Rita Mulcahy, PMP. There may be options you can present that will
address the problem and bring the project in on time. These include:
03 Increasing resources
There are times when a project deadline could be used in a manipulative way.
An owner or project manager will sometimes set unrealistic deadlines hoping to
pressure the team to pull it off. In one way, unrealistic deadlines that are founded on
a real need can spur teamwork and ultimately provide a sense of accomplishment,
says Vincent McGevna, PMP. But when deadlines are superficial, they can become
problems for the following reasons:
Scope changes can be another source of unrealistic expectations and often continue
to be so long after the schedule is complete and the project is in the construction
phase. Those changes have to be dealt with as they occur, but changes that take
place while the schedule is being assembled require accommodation before
construction begins.
Changes in scope requirements during the project planning stage can sometimes
result from new information being revealed. For example, as estimators and planners
receive information about site conditions, they may detect situations that require
remediation or extra work. Poor drainage, unsuitable soil conditions, access problems
and complications with utilities are often exposed in these early planning stages.
These and many other factors will ultimately push the desired completion date if they
cant be mitigated. When these changes continue in frequency and volume to the
point where they affect the time available for planning and scheduling, something
must be done. Just as a plumber requires a minimal amount of time to complete a
task, so too does a planner. In the absence of adding planners to the job, the issue of
not providing enough time to properly plan must be confronted.
CHAPTER 9 Managing Unrealistic Expectations 74
This situation is often more difficult than Regardless of the project, it is the level of
tasks on the timeline because its easier trust management in estimators, planners
to view scheduling as a non-contributing and project managers that influences
factor to project completion. But in the how their take on unrealistic expectations
final analysis, inadequate timing always and unrealistic schedules is regarded.
leads to a poorly planned project that When the trust isnt there, the project will
does not meet expectations. undoubtedly fail on many levels.
75 CHAPTER 10 Analyzing the Schedule
10
CHAPTER
.......................................
Analyzing the Schedule
.......................................
CHAPTER 10 Analyzing the Schedule 76
The best way to make these adjustments your process clearly. Be consistent from
manually is to utilize project one project to the next as it will help
management software. For example, define your review process and work
Microsoft Project includes a number style and allow others to follow along.
of ways to adjust what is displayed There are many different approaches to
and how it is displayed so you can see analyzing the schedule and you should
problem areas, share information and pick one that matches not only your
improve the schedule. By selecting work style, but the types of projects
the appropriate views, you can locate you work on. For example, the Defense
problems within the schedule that you Contract Management Agency 14 Point
wouldnt necessarily see otherwise. Assessment is required for government
However you plan to do your schedule projects and provides a step-by-step
review, put it in writing and describe process for analyzing a schedule.
CHAPTER 10 Analyzing the Schedule 78
DCMA ANALYSIS
Timelines, however, do
possess logical characteristics
as well. Any task on the
timeline that does not fit the
criteria of the project is a
mistake. Likewise, if tasks are
not appropriately linked as
predecessors and successors,
its a red flag that must be
examined closely.
Two other key factors to review on a this standard to evaluate the schedule
schedule include the number of leads in before the project begins, most, if not
predecessor relationships on incomplete all, of the tasks will be incomplete.
tasks and the number of lags on
incomplete tasks. There should not be By counting the number of start-to-
any leads in predecessor relationships, start, finish-to-finish and start-to-
due to the critical path and their finish relationships for incomplete
negative affect on analytics. When it tasks, youll be able to make sure that
comes to lags, those numbers should be at least 90% of your schedule uses
kept to 5% or less. Because the DCMA the finish-to-start relationship. Also,
14 Point Assessment is designed to look at the number of start-to-finish
be completed throughout a projects relationships and see how often they
reporting cycle, total tasks, completed are used. These should be rare and if
tasks and incomplete tasks are all used at all, should be accompanied
included in the metric. If youre using with sound justification.
CHAPTER 10 Analyzing the Schedule 80
You might decide to look for help with the schedule analyzing process. Short, simple
projects as well as those that are long and complex can benefit from outside analyses.
This could be done by consulting planners or by individuals with similar project
experience. There are also software programs available that can perform schedule
analyses and flag troubled areas. Here are a few of these software programs:
Schedule Cracker analyzes the schedule and addresses problems that occur in seven
main areas. It finds these issues and gives insight to the schedule by including cost
metrics analyses, highlighted activities with alarming conditions, and showing the
places where closer inspection is needed, such as abnormal activities. This tool also
tells you how closely the schedule fits the Defense Contract Management Agency
14 Point Assessment requirements and compares a base schedule against a revised
schedule, analyzes the trends, and performs an earned-value analysis.
15
CHAPTER 10 Analyzing the Schedule 82
Steelray Project Analyzer says it can evaluate your project schedule for quality and
performance in minutes. It also has a coach that helps you fix problems using
actionable guidelines. This software calculates the longest paths, detects circular
chains of activities, assesses the schedule against the 14 DCMA points, compares
schedules, provides a scorecard and justification, analyzes by phase/period and
allows you to interact with UN/CEFACT files.
Because project schedules are usually built in a fluid and dynamic environment, they
require constant adjustment. Once the project is ready to implement, a thorough
review of the project schedule will pave the way for success.
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11
CHAPTER
..........................................
Controlling Project Costs
..........................................
85 CHAPTER 11 Controlling Project Costs
Using cost controls during a project provides the necessary assurance that spending
wont exceed the budget. When cost controls are used at the activity or task
level, they also help locate problem areas within the schedule and encourage new
efficiencies. If costs for a particular activity rise too fast relative to the percent
complete, then adjustments may be in order. These adjustments might include:
Changes in scope
Adjusting crew size
Attending to factors interfering with timely completion
Increasing management control over material and equipment aspects
CHAPTER 11 Controlling Project Costs 86
Once construction is underway, its very unrealistic, then its time for a meeting
difficult to address cost problems arising with management, and quickly. If
from mistakes or oversights that should attention was put into planning a realistic
have been dealt with during the planning project, with achievable deadlines and
stages. If theres an inadequate work budget, utilizing the cost controls set in
breakdown structure, budgets that have place will help mitigate budget problems
been highly reduced in order to increase once the project is underway.
competitiveness, or an overall budget is
87 CHAPTER 11 Controlling Project Costs
One of the more difficult aspects of cost control is managing reimbursable costs.
These require tracking work progress and purchases already spent against the
budget. If these arent reviewed or managed well, predicting the final cost of
assembly, task or activity will be challenging. Review the tools youre using and make
sure youre not overlooking features that will provide transparency. If needed, find
new, more effective tools.
Changes in project scope due to the emergence of new information are inevitable
in construction. Its not a question of whether, but rather when the next change will
take place. If you have project management software like Procore, change orders are
quickly and easily tracked from cradle to payout and beyond. Construction software
helps ensure cost changes continue to fit into the project budget and approved
changes are transparent and tracked in real time with all parties involved.
CHAPTER 11 Controlling Project Costs 88
PROCURING EFFECTIVELY
According to Edward Opall, CPA, CCIFP, and director at EisnerAmper, Real Estate
Construction Services Group, the best opportunity for reducing costs and increasing
profitability on a construction project is to have effective procurement. This
extends beyond consumables to subcontractors as well. Developing and using a
strategic purchasing plan and packaging all the components of work products gives
contractors the best opportunities for competitive pricing according to Opall. He also
stresses the importance of incorporating unit prices, labor rates and alternates into
purchasing decisions.
CHAPTER 11 Controlling Project Costs 90
There are multiple reasons why project costs begin to escalate. A few of the common
ones to watch out for include:
SCOPE CREEP
Scope creep is a phenomenon that occurs during project execution and is often so
gradual it goes unnoticed. The likely culprits are new products or features being
added and upgraded, or design changes that escalate time and costs without
increasing the budget. Sometimes called value for free, this cost escalator can only
be adequately handled in the very early stages. If a project has had many changes in
scope before construction began, and there has been a lot of back and forth amongst
participants on the design and critical project aspects, then it could be advantageous
to institute daily or weekly budget monitoring in the early stages of the project so
you can detect creep very early on.
Even when contracts include language to protect contractors from rapidly rising
material costs, this can still become a cost problem. A 9% rise in rebar cost is not
recoverable if the contract specifies the cost must rise 10% or more before its eligible
for reimbursement. That 9% increase is a significant cost for the contractor to bear.
The solution might include a thorough review of the quantities of the material used
and determining if there are options for reducing that amount. Other options include
changing suppliers or submitting alternative materials as a substitute. Beyond making
sure the project stays within budget, cost controls are really the measure of how well
the project is planned, and in the end, how well it is managed.
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The quality control plan is created early in the project lifecycle and becomes the
guide for assuring quality as the project is built. While quality begins and ends with
those doing the work, conversely, few things are more detrimental to quality than
a lack of time. When rushed, there is a natural tendency to focus on completion.
This focus on the endpoint rather than the process compromises quality because
details are often overlooked and shortcuts are taken. The cost of rushing becomes
painfully clear when activities have to be duplicated to get the quality up to the level
of specification. If you dont have enough bandwidth to do the job correctly the first
time, how will you have enough to do it correctly a second time?
Lack of proper training and subpar skillsets also contribute to poor quality. Whenever
new and unfamiliar materials or processes are introduced, there will inevitably be
a shortage of necessary skills and understanding to perform the task. Often times
when a new process is introduced, training is abbreviated or skipped altogether to
accelerate progress. This drastically decreases quality control as teams are never
properly trained to execute the job to company standards and often work under their
own personal assumptions of quality. When dealing with these factors affecting
quality at the task level, the best answer is to have experienced leaders. Foremen,
project managers, and superintendents who know how to lead, inspire, coach,
counsel, and effectively discipline will be able to address problems most effectively.
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According to the U.S. Army Corps of Engineers, one way to look at the quality process
is to view it in three phases.
3
Ensure contract compliance
Maintain quality
Ensure testing reports are submitted
Ensure necessary rework is completed
In any case, all parties involved are responsible for ensuring quality. Some of these
titles include: Quality Control (QC) Manager, QC Specialists, Superintendent,
Subcontractor, Foreman and [the owners] QC Representative. For continuity, its
important that substitutions of people are kept to a minimum and adequate records
of meetings are kept.
As with most aspects of managing construction projects, its the planning phase
thats most important and helps ensure a quality environment is created. Without the
necessary plans and processes in place before construction begins, quality is simply
an afterthought. Once construction is underway, its a matter of following the plan
and ensuring the right people are in key positions.
Project management
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The key indicator to watch closely is the critical path and the activities it includes.
Ideally, there will be communication and observation systems in place to supply real
time feedback on the activities as they are underway. For example, Procores project
management solution includes a system of notifications that not only remind you of
important milestones, but also generate automatic follow-ups inquiring about the
completion of activities.
Walking around the project provides tactile and visual information about how work is
progressing. Its one thing to get an email from a subcontractor telling you a portion
of the work is 75% complete, but quite another when you visit the location and are
able to see, in person, that the project is actually only 50% complete. There are also
various inspections by third parties that can help validate the complete picture. Its
very important to rely on more than a single type of input when gauging the progress
of the project.
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McCue makes a call for creativity when complexity begins taking hold of a project.
This can include going through trial and error tests to see what solutions present
themselves. Encouraging team members to explore different approaches and test the
most likely resolutions expands the available solutions exponentially.
Construction projects are unique in their dynamic nature with disparate organizations
that have competitive incentives. Even the most meticulously planned projects create
surprises, so watch out for the following culprits that may interrupt your schedule:
Its not possible to plan for these risks so if the owners are still going to continue
with the build, the next step is to carefully and quickly plan a recovery strategy. For
example, a large concrete-intensive project starting up in the vicinity may negatively
affect the local supplies of rebar. Keeping an eye on the long-term view includes
watching for changes occurring outside of the project that can subsequently affect
your own project. For events that foretell a problem, like missed deadlines not on
the critical path and contingencies inadequately planned for, take a step back and
reformulate your short-term schedule and test for its effects on the critical activities.
Otherwise, look for opportunities to make up for lost time and resources, in order to
get the critical path back on schedule.
CONCLUSION
Managing construction projects can be an incredibly challenging undertaking. Every
time a new project starts, it is a wholly new process. Maybe some participants will
stay the same, but the territory, scope, materials, processes and equipment will
constantly change. Each owner has different goals from the next, and in all, most
aspects of one project wont resemble any others.
There is no substitute for planning. How well things are planned will determine the
overall success of the project. While excellent planning wont guarantee a successful
project, it can eliminate one of the major reasons why some construction projects fail,
and why others dont measure up to expectations.
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