project scheduling & control...(a-on-a), or arrow diagram • activities are represented as...

PROJECTSCHEDULING&CONTROL

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ProjectPlanningvsProjectSchedulingProjectControlNetworkModelPrecedenceDiagrams

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Example

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IntroductiontoTechniques• Planningcanbethoughtofasdetermining“what”isgoingtobedone,“how,” “where,”andby“whom”

• Ownerswanttheirprojectscompletedwithinspecifiedtimeandbudgetconstraints

• ManagementoftimeandcostdidnotevolveasascienceuntilaftertheIndustrialRevolution

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•  Thescienceof“scheduling”iscommonlyreferredtoasthecriticalpathmethod(CPM)in1956-57•  Thearrowdiagrammingmethod(ADM)resulted

•  Theprogramevaluationreviewtechnique(PERT)wasdevelopedthesametimebytheU.S.Navy

• ADMwasdeterministicandPERTwasprobabilistic

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TheadventofPCsinthe1980sledtoalargenumberof

PC-basedschedulingsystemsAtthelow-costend(Timeline)

andthehigh-costend(Primavera)

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PlanningandScheduling•  Thereisasignificantdifferencebetween“planning”and“scheduling”• Oftenusedinterchangeably—whichisamisuse

•  Schedulingcanneverbeperformedeffectivelywithoutplanning

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PlanningandScheduling

Theplanningportionofaconstructionprojectrelatestodevelopingthelogic

ofhowaprojectwillbeconstructedSchedulingconsistsofintegratingthat

planwithacalendarorspecifictimeframe

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PlanningandScheduling• Wealldoplanningandschedulingonaregular,informal,basis• Oftenitisnecessarytocreatea“to-dolist”

• Asthenumberofitemsincreasesand/ortimeframeexpands,weputourlistinthecontextoftime

• Planningandschedulingisdoneextensivelyandformallyonconstructionprojects• BeginningwiththeNoticeofAward

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PlanningandScheduling

Schedulingconsistsofdeterminingthetimeneededforeachoftheplannedtasksandtheoveralllength

oftheprojectschedule

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BarChartsHenryGanttdevelopedamethodofrelatingalistofactivitiestoatimescaleinaveryeffectivemanner,bydrawingbarcharts

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BarChartsHenryGanttdevelopedamethodofrelatingalistofactivitiestoatimescaleinaveryeffectivemanner,bydrawingbarcharts

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BarCharts•  Barchartsaresimplepresentationsthatshowwhenmajorworkactivitiesarescheduled

•  Mostcommonlyemployedandreadilyrecognizedschedulingmodelsinusetoday

Asimpleschedulecaneasilybeshowninnetworkform

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BarCharts

Barchartsarethemostpopularmeansbywhichschedulinginformationiscommunicatedin

theconstructionindustryWidespreaduseisbestattributedtotheeasewithwhichtheycanbe

understoodwithacursoryexamination

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ShortcomingsofBarCharts• Barchartsbegintofailtoprovidevaluableinformationwhenprojectsbecomemorecomplex• Ageneralcriticismofbarchartsisthattheydonotshowcleardependenciesbetweenactivities• Whilethestatusofindividualactivitiescanbeascertained,overallprojectstatuscannotbecertain(Whensomeactivitiesarenotonschedule)• Changesinthelogicalsequencingofactivitiesinabarchartcannotbereadilymade•  Especiallywhenmanyactivitiesareinvolved

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ShortcomingsofBarCharts

Barchartshortcomingsvirtuallydisappearwhenschedulingsoftwareisused

Mostpopularcomputergeneratedschedulespermiteasyconversionbetween

precedencediagramsandbarcharts

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ValueofBarCharts• Amajorstrengthofbarchartsistheabilitytoclearlyandquicklypresentthestatusofaproject

• Noextensivetrainingisrequiredtolearnhowtoextractinformationfromthem

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SchedulingNetworks• Barchartshavebeensurpassedbynetworksasschedulingtools—especiallyonlargerprojects• Anetworkrepresentsamodel,orplan,oftheprojectasitisproposedtobeundertaken•  Eachactivityisassignedduration;calculationsthroughthenetworkprovideasingle,specificdurationfortheprojectasawhole•  Itisimportanttorecognizethedistinctionbetweendurationandevent

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SchedulingNetworks

Aneventisthepointintime,oraninstantatwhichthestatusofcompletionofaprojector

activitycanbedefinedThedurationofanactivityisthetimethatwillbe

consumedincompletingatask

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SchedulingNetworks• CPMidentifieschainsofactivitiesintheprojectthatcontrolhowlongtheprojectwilltake• AtraditionalCPMtechniqueistheActivity-on-Arrow(A-on-A),orarrowdiagram• Activitiesarerepresentedasarrowsorlines

•  ThealternativeapproachisActivity-on-Node(A-on-N),referredtoasthePrecedencetechnique• PERTcanbethoughtofasa“generalized”CPM•  Inwhichan“expected”activitydurationiscomputed

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SchedulingNetworks

PERTisusedprimarilyinundertakingswhereinsufficientexperienceorhistoricaldataare

availableforestimatingdurationsofindividualactivitiesinaproject

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OtherSchedulingApproaches• Amatrixscheduleisoneinwhichaspreadsheetisusedtoshowallactivitiesonaparticularproject•  Itassumeseachprojectwillconsistofthesameactivities

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OtherSchedulingApproaches

Seepage9

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OtherSchedulingApproaches

Aformofschedulingthatshowslessdetail

isthe“horseblanket”

Itiseasytoseeataglancehowmucheffort

istobeexpendedonaprojectthroughits

evolution—fromplanningtofinaloccupation&use CE

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WorkBreakdownStructure• Mostprojectsforwhichformalschedulesareusedaredefinedwithhundredsorthousandsofactivities•  Itisimportantthatthelogicbecarefullylaidoutandthatallimportanttasksareincludedintheschedule• Whenthetasksbecomenumerous,thescheduledevelopmentcanbecomemorehaphazard,• Omissionsaresuretooccur CE

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WorkBreakdownStructure

Thescheduleconsistsoftasksthatmustbeperformed—tocompletetheproject

Thescheduleisdominatedbyverbs—thingstodo—tasks

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WorkBreakdownStructure• AWorkBreakdownStructure(WBS)isasystematicwaytodescribecomponentsofaprojectschedule• DevelopingtheWBSbeginswiththedefinitionofthemajorsystemsorcomponentsofaproject•  Eachsystemisdefinedingreaterandgreaterdetail• Untilthereexistsadiscreteormeasurablepieceofworkandasingleresponsibility—workpackages

• Workpackagescanbeviewedasminiprojectsthatarecontainedwithintheentireproject

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WorkBreakdownStructure•  Informationshouldbeprovidedbyvariousindividuals• Projectmanager;jobsuperintendent;others

• WBSdivides&subdividesaprojectintodifferentcomponents—area,phase,function,orothermeans• ByusingtheWBSapproach,theprojectwillbecomeeasiertocomprehend• WBSisthebackboneoftheprojectcontrolortrackingsystem

•  TheWBSisanorderlypresentationofthetasksthatmustbeperformedtocompleteaparticularproject

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WorkBreakdownStructure•  OnatypicalconstructionprojecttheWBSconsistsofnumerouscategories—dependingoncomplexity

WorkBreakdownStructureforaStorageFacilityProject

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WorkBreakdownStructure•  Ingeneralterms,theWBScanbeviewedasarepresentationofthephysicalbreakdownoftheworktobeperformed

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ReasonsForPlanning&Scheduling• ManyprojectcontractdocumentsexpresslyrequirecontractorstosubmitaCPManalysispriortocommencingwork•  InsomecasesCPManalysisisrequiredwiththebid• CPMallowstheusertoexaminethetrade-offbetweenthetime&costrequiredforaproject• Byaccuratelymonitoringprojectstatus,decisionscanbemaderegularlyaboutscheduleviability

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ReasonsForPlanning&Scheduling

MostpartiesintheconstructionprocesscanbenefitfrommakinguseofCPM

asaroutineelementofthemanagementofalloftheirprojects

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CHAPTER1END

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NetworkDiagram

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DevelopingaNetworkModel•  Networkmodeldevelopmentisthemostimportantstepinusinganetworkasaschedulingtool

•  Anill-preparedmodelservesnousefulpurposeandmaycompromiseconstructionprogress

StepsInBuildingaNetworkModel•  Defineactivities;Orderactivities•  Establishactivityrelationships;drawanetworkdiagram•  Determinequantities;assigndurationstoactivities•  Assignresourcesandcosts•  Calculateearlyandlatestart/finishtimes•  Computefloatvaluesandidentifythecriticalpath•  Scheduleactivitystart/finishtimes

DefiningActivities•  Production/Construction•  Procurement•  Management•  ObjectiveoftheModel

OrderingActivities•  Foreachidentifiedactivity,thefollowingmustbedetermined:•  Whichactivitiesmustprecedeit?•  Whichactivitiesmustfollowit?•  Whichactivitiescanbeconcurrentwithit?

OrderingActivities

Constraintsexistintherealworld—andmustbeconsideredinorderforanetworktobeuseful

–  PhysicalConstraints–  ResourceConstraints–  ProductivityConstraints–  SafetyConstraints–  FinancialConstraints

–  EnvironmentalConstraints–  ManagementConstraints–  ContractualConstraints–  ProductivityConstraints–  RegulatoryConstraints

OrderingActivities•  Introductionofexcessiveconstraintsinnetworklogiccanhavethefollowingimpactsonaproject:•  Reduceschedulingflexibility•  Lengthenprojectduration•  Generallyincreaseprojectcost•  Confusebasicschedulinglogic

DrawingtheNetworkDiagram•  Theprecedencediagramisacommonlyusedtypeofnetworkdiagram

•  Mostpopularsoftwarecurrentlyusedforcomputerschedulingsupportsonlyprecedencediagrams

DrawingtheNetworkDiagram

SimpleExampleofaPrecedenceDiagramforErectingaConcreteWall

Theprecedencediagramis“read”fromlefttoright

DrawingtheNetworkDiagram

ExampleofaPrecedenceDiagramforConstructingaConcreteFooting

DrawingtheNetworkDiagram•  Activitiesconsumetime,andeventssimplyoccuratapointintime

•  Thepointintimeatwhichanactivitycanstartmaybeconsideredanevent

•  Thepointintimeorinstantatwhichanactivityiscompletedcanalsobeconsideredanevent

AssigningDurationstoActivities•  Thedurationofanactivityistheestimatedtimethatwillberequiredtocompleteit•  Typically,inconstruction,theunitoftimeisdays

•  Itisassumedworkisperformedonacontinuousanduniformbasis•  Withinthestandardworkdayandworkweek

AssigningDurationstoActivities•  Durationscanfrequentlybedirectlyrelatedtolaborcostestimatesforthetasks

Costestimatesmaybedevelopedasfollows:

Durationoftheactivityisassumedtobe:

AnalternativeistousehistoricaldataQuantitativedatafromactualprojectsthefirm

haspreviouslyundertaken

AssigningDurationstoActivities

Themajorrequirementforassignmentofresources&coststoindividualactivities

isacleardescriptionoftherelationshipCPMactivitiesandtheunits/phasesof

workbywhichtheestimateisdeveloped

AssigningResourcesandCosts

CalculatingEarly/LateStart/FinishTimes

•  Thelatestarttimeisthelatestanactivitycanstartwithoutadverselyimpactingthecompletiondate

•  Theearlyfinishtimeistheearliestanactivityisexpectedtobecompleted•  Thelatefinishtimeisthelatestanactivitycanbecompleted

IdentifytheCriticalPath

Iftheactivitystartslaterthantheassigneddate,ortakeslongertocompletethanthe

assignedduration,theprojectcompletiondatewillbeextended

bythesameamountoftime

IdentifytheCriticalPath•  Whenanactivitystartdateisfixedinthisway,theactivityissaidtohavenofloat

•  Suchactivitiesaresaidtobe“critical”•  Meaninganydelayinthestartdateorcompletiondatewillextendtheprojectduration

SchedulingActivityStart/FinishTimes

•  Thenetworkandtheinformationgeneratedforeachoftheactivitieswillbeusefulformanagementtoexecutetheprojectrequirements

•  Managementdecisionsrevolvearoundtheuseofanyflexibilityorfloatthattheactivitiespossess

TheNetworkDiagram-bringingordertoprojectworkflows.

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ANetworkDiagramisagraphicalwaytoviewtasks,dependencies,andthecriticalpathoftheproject.Boxes(ornodes)representtasks,anddependenciesshowupaslinesthatconnectthoseboxes.Inthecontextofprojectplanning,anetworkdiagramisasequenceofsteps(activities),commonlyrepresentedbyblocks,thatarelinkedtogetherinthelogicalsequencetheyneedtobecarriedout.ProducinganetworkdiagramfollowsthecompletionofyourprojectWorkBreakdownStructure.Thepileofpost-itsthatyouhavesavedfromtheWBSexercisegetsputtogooduseindevelopinganetworkdiagram.Oncethelogicdiagramhasbeencompleted,youhaveaclearerpictureoftherequiredsequenceofeventsandactivitiesforyourproject.

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AllthelogiclinksinthissimpleexamplearereferredtoasFinish/Startlogiclinks.Thesucceedingactivitycannotstartuntiltheprecedingactivityhasfinished.Typesoflogiclinks:Start/Start-whenoneactivitystarts,anotherindependentactivitymuststart.Finish/Finish-twoactivitiesmustfinishatthesametime.Finish/Startwithalag-thesucceedingactivitymuststartsomedefinedtimeaftertheprecedingactivityhasfinished.Start/Startwithalag-whenoneactivitystarts,anothermustalsostartafteradefinedtime.

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IMPORTANT:Alwaysfollowtherule-havetheminimumnumberofactivitiesneededtoproperlyunderstandthesequencing.Onlyaddmoredetailifitbenefitsthelevelofunderstandingorfutureprogresscontroloftheprojectactivitylist.

NetworkModel

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OLSampleNetworkDiagram

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OLSampleNetworkDiagram

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SampleNetworkDiagram

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ActivityNetworkDiagram

Overview• DefinitionofanActivityNetworkDiagram• History• BasicTerms• Howcanitbeusedinyourorganization?• Howthediagramworks• Example• ActivityNetworkDiagramExercise• Summary

DefinitionofanActivityNetworkDiagram•  AlsoknownastheProgramEvaluationReviewTechnique(PERT)orCriticalPathDiagram

•  Toolusedtocontrolthelengthofprojects•  Takesintoaccountmanyaspectsofprojects:tasktimes,slacktimes,criticaltasks,etc.

DefinitionofanActivityNetworkDiagram(cont.)

• Designedforresearchanddevelopment-typeprojects• Determinesaprobabilitydistributionforaproject

History• DevelopedbytheU.S.DepartmentofDefense•  Firstusedasamanagementtoolformilitaryprojects•  Adaptedasaneducationaltoolforbusinessmanagers

BasicTermsBasicVocabularyofthePERTDiagram:• Activity–partoftheprojectrepresentedbyanarroworline

• BestEstimate(B)–earliestcompletiontime• Criticalpath(CP)–themosttimeconsumingpaththroughthediagramwithnoslacktime

• EarliestStartTime(EST)–earliestpossibletimeforanactivitytobegin

• Network–theprojectshowngraphically• Mostlikelyestimate(M)–lengthoftimeprobablyneeded

BasicTerms(cont.)• ExpectedTime(ET)–theaveragedurationtime• Event–representsthestartorfinishofoneormoreevents(shownasacircle,square,orothersymbol)

• LatestStartTime(LST)–latesttimeanactivitycanbeginandstillbecompletedbeforethenextactivity

• SlackTime–lateststarttimeminusearlieststarttimeforanactivity

• Worstestimate(W)–pessimistictimeestimate

Howcanitbeusedinyourorganization?Brainstormideasofwhereactivitynetworkdiagramscouldbeutilizedinyourbusinesspractices…

Howcanitbeusedinyourorganization?• Findingminimumcompletiontimes

• Determiningmaximumcompletiontimes

• Valueoftimeforeachstepintheproject

• Assigningspecifiedtimesforpartsoftheproject

• Createsarealisticscheduleforthecompany

HowthediagramworksBasicRules:•  Allprecedingactivitiesmustbecompletedbeforethe

projectcanbegin•  Thearrowsrepresentthelogicalprecedenceoftheproject

HowtheDiagramWorks(Cont.)

Procedurefordevelopment: 1.  Identifyallactivitiesandrelationshipsamong

them2.  Sketchthediagram3.  Estimatethetimesforeachactivity,ornode,

inthediagram4.  Determinethecriticalpath5.  Evaluatethediagramformilestonesandtarget

datesintheoverallproject

BegintheAnalysisØ RememberyourstepsforPERTdiagrams:

Ø Usingthegivendiagram,listallthesteps

Ø Determinetasktimes

Ø Determinerelationshipsbetweenthetasks

Ø Findtheearlieststarttime

Ø Findthelateststarttime

Ø Determineslackandthecriticalpath

AdvantagesofPERTDiagrams•  Projectingplansbeforetheybegin• Helpstoseparateplanningandschedulingfunctionsofaproject

•  Controlsprojects•  Clarifiesmaintenanceoftheplan•  Showsdependencyofdifferentaspectsoftheproject

AdvantagesofPERTDiagrams•  Allowsforconcentrationonthestepsthemselvesandnotthetimerequiredforeach

•  Representsarealisticschedule•  Focusesattentiononcriticalaspectsoftheplan•  Changescanbemadeeasilyintheproject

DisadvantagesofPERTDiagrams

•  Cannothandleallspecificproblemsthatariseineachstepoftheproject

• Differentgraphicalrepresentationscanbemadeeasierinothertypesofcontrolprocesses

OddsandEndsü ActivityNetworkDiagramshavemanymoreadvantagesthandisadvantages

ü Theyareusedinalltypesofbusinessesü Thetopicsthatwerecoveredshouldactasthekeyinhelpingyouleadyourcompanyintheirnextbusinessproject

PrecedenceDiagram

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Precedence(Activity-on-Node)Networks

•  Themostcommontypeofnetworkscheduleinusetodayistheprecedencediagram•  Aseriesofnodeswithlines(links)connectingthemtoillustrateactivities

Activitiesarerepresentedbynodes,drawninanydesiredshape

Linesrepresent“Activitylinks,”usedtorepresentdependenciesbetweenactivities

ActivityRelationships

Useofvarioustypesofrelationshipsbetweenactivitiesmakesitpossibleto

prepareschedulesthataccuratelyportraythetruerelationshipsbetweenactivities

ActivityRelationships•  Finish-to-start(FS)—eachactivitydependsonthecompletionofitsprecedingactivity

TypicalSequenceofFinish-to-StartRelationships

ActivityRelationships•  TheseactivitiesmightalsobeshownasbeingrelatedbyFinish-to-Startwithadelay

Finish-to-StartRelationshipwitha28-DayDelay

ActivityRelationshipsFinish-to-Finish(FF)

Finish-to-StartRelationshipforWindowInstallation

Finish-to-Finish(FF)—withDelay

ActivityRelationshipsActivitieswithFinish-to-Finish

withaDelayRelationships

ActivityRelationshipsActivitieswithStart-to-StartRelationships

ActivityRelationshipsActivitieswithStart-to-StartwithaDelayRelationships

ActivityRelationshipsActivitieswithStart-to-Startand

Finish-to-FinishRelationships

ActivityRelationshipsSequenceofStart-to-FinishwithaDelay

ActivityRelationshipsStart-to-FinishwithaDelay—Relationships

BasicsaboutPrecedenceDiagrams•  Donotconfusethelinklineswithactivities•  Nodesorprecedenceactivitiescanbedenotedsimplybyasinglecharacter•  Generallycustomizedtotheuser’sconvenience

ExampleNodeDesignation

SimplifiedFormatforaPrecedenceActivity

Apreliminaryorroughnetworkcanbegeneratedbypositioningeachactivityrelativetoother

activitiesanddrawinglinesbetweeneachsetofrelatedactivities

BasicsaboutPrecedenceDiagrams•  Amoresystematicapproachusessequencesteps•  Eachactivityisassignedtoaparticularsequencestep

BasicsaboutPrecedenceDiagrams

Lagistimeassociatedwithalinkline

Itindicatesthedifferencebetweentheearlyfinishoftheactivityprecedingthelinkand

theearlystartoftheactivityfollowingthelink

Lagisnotthesameasleadtimeordelayassignedtoalink

Linklagvaluesareusefulindeterminingfreefloatandtotalfloatofanactivity

However,linklagvaluesshouldnotbeconfusedwithfloat

CalculationsOnaPrecedenceNetwork

•  EarlyActivityStart(ES):Earliesttimeanactivitycanstart—asdeterminedbythelatestoftheearlyfinishtimesofallIPAs

•  EarlyActivityFinish(EF):Earliesttimeanactivitycanfinish—determinedbyaddingthedurationoftheactivitytotheearlystarttime

•  LateActivityStart(LS):Latesttimeanactivitycanstartwithoutdelayingtheprojectcompletion

•  LateActivityFinish(LF):Latesttimeanactivitycanbefinishedwithoutdelayingprojectcompletion

•  EarlyEventOccurrenceTime:Earliestaneventcanoccur—determinedbythelatestearlyfinish

•  LateEventOccurrenceTime:Latestaneventcanoccur•  FreeFloat:Amountoftimeanactivitycanbedelayedbeforeitimpactsthestartofanysucceedingactivity

•  TotalFloat:Amountoftimeanactivitycanbedelayedbeforeimpactingprojectcompletiondate

•  LAG:Theamountoftimethatexistsbetweentheearlyfinishofanactivityandtheearlystartofaspecifiedsucceedingactivity

IllustratingcomputationsonaprecedencediagramAllrelationshipsareassumedtobeFinish-to-Start

EarlyTimes(EarlyStart[ES]andEarlyFinish[EF])

•  1.Assign1astheearlystartdateofthefirstactivity•  2.Calculatetheearlyfinishtimefortheactivity•  3.Theearlystartofactivitieswillbedeterminedbytheearlyfinishtimesofprecedingactivities•  Otherthanthefirstactivityoractivities

•  4.Repeatsteps2and3foreachnetworkactivityuntilES&EFaredeterminedforthelastactivity

CalculationsOnaPrecedenceNetwork•  5.CalculatelagsforeachlinkbydeterminingthedifferencebetweentheESofeachactivityfollowingalinklineandtheEFoftheactivitythatprecedesit

•  6.Determinethefreefloatofanactivityasbeingequaltothesmallestlagvalueofalllinksleavingfromthatactivitynode

•  7.Assignavalueof0totalfloat(TF)tothelastactivityinthenetwork

•  8.Thetotalfloatvaluesfortheactivitiesinthenetworkcannowbedetermined

CalculationsOnaPrecedenceNetwork•  9.Proceedinabackward-passfashionuntilyouhavecomputedtheTFforallactivities

CalculationsOnaPrecedenceNetwork•  10.Determinelatestarttimesforalloftheactivities

CalculationsOnaPrecedenceNetwork•  11.Totalfloatisaddedtotheearlyfinishofeachactivitytodeterminethelatefinishofeachactivity

Oncetheearlyandlatestarttimes,earlyandlatefinishtimes,freefloat,andtotalfloatofall

activitiesaredetermined,thecalculationsarecompleted

Aslightlymoreinvolvedprojectshowstheprecedencediagramforconstructingatenniscourtfacility

IndependentFloatandInterferingFloat

•  Independentfloatisfloat“owned”exclusivelybyoneactivity—alsocalled“safe”float,•  Flexibilityascribedtothespecificusebyoneactivity

SimpleNetworktoDetermineIndependentFloat

•  Interferingfloatisfloatanactivitymayhave,subjecttousebyotheractivities—calledsharedfloat•  Differencebetweenitstotalfloatanditsfreefloat

SimpleNetworktoDetermineInterferingFloat

Different-ActivityRelationshipsCalculationscanalsodeterminetheschedulinginformationforother-

activityrelationships

Asimplefinish-to-startrelationshipofthisnetwork,consistingofActivitiesI,J,andK

Different-ActivityRelationshipsEarlystart/finishtimesarecomputedby

conductingaforwardpassthroughthenetwork

Latestart/finishtimesarecomputedbyconductingabackwardpassthroughthenetwork

Different-ActivityRelationships

Thesimplenetworkismademorecomplicatedwhenthesubjectoflagisintroducedtotheactivityrelationships

ComputationsforaFinish-to-Startrelationshipwiththeincorporationoflagvalues

Start-to-Startrelationshipwithlagvalues

Finish-to-Finishrelationshipwithlagvalues

Start-to-Finishrelationshipwithlagvalues

Withdetailedschedulinginformationabouteachactivity,informeddecisionscanbemadewhenthe

needarisestoacceleratetheschedule,makechangesinthe

network,orredefinetheschedulinglogic

DeterminingActivityDurations

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DETERMININGACTIVITYDURATIONS•  Developmentanduseofschedulesreliesheavilyonactivitydurations

•  Somedegreeofuncertaintyisalwayspresent•  However,areasonableeffortshouldprovideacceptableresult

ESTIMATING•  Anestimateis—atbest—acloseapproximationoftheactualcost

•  Aprojectcostestimateisuniquetothatproject•  Evenwhencomparedtoother,similarprojects

•  Soundnessofthecompletedestimatedependson:•  Accuracyofthequantitytake-offand•  Judiciousselectionofunitcostsandproductionrates

TypesOfEstimates•  Conceptualestimatesareoftenusedbyanownertodeterminetheapproximatecostofaproject•  Beforemakingafinaldecisiontoconstructit

•  Detailedestimatesaregenerallypreparedbycontractors•  Priortosubmittingbidsoncompetitivelybidcontracts•  Whenenteringlump-sumorfixed-pricecontracts

ConductingADetailedEstimate•  Theprocessbeginswithananalysisofphysicalquantitiestobeincorporatedinthefinalproject

•  Costsaregenerallycapturedseparatelyformaterials,equipment,labor&subcontracteditems•  Separatetake-offsaremadeforeachjobitem

•  Take-offs,ingeneral,followthesamesequenceasusedtoperformtheactivities

•  Itisgoodpracticetocheckthetake-offtoensurethatnojobquantitieshavebeenoverlooked•  Andnootherobviouserrorshavebeenmade

ConductingADetailedEstimate•  Foradetailedestimate,well-definedcostsmustbelinkedtoeachoftheitemsinthequantitytake-off

•  Oncequantitieshavebeenpriced,anestimateismadeforjoboverhead,andhome-officeoverhead

•  Formanyoverheaditems,itisessentialthatanaccurateestimatebemadeoftheprojectduration

•  Manyprojectcostsareadirectfunctionoftheamountoftimerequiredtocompletetheproject

Theestimateshouldformthefoundationsonwhichthe

scheduleisactuallybased

ConductingADetailedEstimate

EstimatingDurations•  Themethodusedtoestablishdurationofanactivitydependsonthesizeoftheactivity•  Andtheamountofaccuracyrequired

•  Schedulerswithsignificantrelevantexperiencemaybeabletomakeagoodguess•  Mostopttoanalyzetheoperationindetail

•  Aschedulercanconsiderperformancesonpastprojects,andthusmakethedurationestimates•  Withoutactuallyperforminganydetailedanalysis

EstimatingDurations•  Whenhistoricaldataareused,theinformationofprimaryinterestwillbetheproductivityrates

•  Onshortdurationactivities,asignificantpercentageoftimecanbedevotedtomobilizationallowances

•  Referenceguidesthatgiveproductivityestimatesforvarioustasksareavailable•  Generallyconservativeintheirestimates

•  Durationsaregenerallyrecordedintermsofwholedays

SchedulingIssues•  Inactualscheduling,averybasicapproachistouseeitheran“earlystart”ora“latestart”schedule

•  Majoractivitiesshouldbeexaminedtodeterminethetimeoftheyeartheyarescheduledtooccur

•  Theprojectmanagershouldalsotrytoanticipaterework,andlossofsometimeduetoinspections

SchedulingIssues•  Theseschedulesmaybeusedtopredictcashflowrequirementsontheproject

•  Expendituresdonotnecessarilyimplyprogressisbeingmade,oraspecificprofithasbeenearned•  Itismerelyanindicationoftotalprojectexpenditures

Apoorcashpositionmaybehandledbyschedulingparticularlyexpensivenoncritical

activitiesaslateaspossibletodeferthelargepaymentfortheitem

SchedulingIssues

FactorsInfluencingChoiceofActivitySchedules

•  Schedulingshouldsatisfyconstraintsimposedbythecontractorbyspecificneedsofthefirm

•  Staggeringdeliveriescanreducejobsitecongestionandsimplifycoordinationefforts

•  Thescheduleshouldreflectanysignificantconcernsrelatedtomaterials

•  Theinitialscheduleisimportanttoarrangementsforsubcontractorstartdates,contract-specifiedmilestonedates,etc.

WeatherandtheSchedule•  Weatherconsiderationsorothercontingenciesmaybeincorporatedintoaschedule

•  Durationsofweather-dependentactivitiescanbeincreasedpriortonetworkcalculations

•  Anothermethodofweatherinclusionistoinsertoneormorespecificactivitiesintothenetworklabeledasweatherdelays

•  Amoreseriousconsiderationforthescheduleriswhenthecontractstipulatesthatcontractdurationreflectstheimpactofadverseweather

Afurtherconsiderationiswhetherthecontractisadministeredonthebasisofworkingdays

orcalendardays—andhowweatheraffectsthedefinitionofworkingdays

WeatherandtheSchedule

UncertaintyinDurationEstimates•  Whenmostschedulesaredeveloped,activitiesareassumedtobefixedataparticularduration

•  Anappreciationofthetruemeaningofadurationestimaterequiresarudimentaryunderstandingofprobabilityandstatistics

•  Thedesiredestimateshouldbeararealisticvalue•  Thatdoesnotgenerallyunderstatetheduration

•  Therelevantinformationneededtoestimatewithconfidencearethemean&standarddeviations

UncertaintyinDurationEstimates•  Thestandarddeviationimpliestheamountofvariabilitythatexistsinacollectionofnumbers

•  Contractorsmustcomputearealisticdurationorhaveaverygoodintuitivesenseoftheappropriateestimatetobeused

TimeinContactProvision

CE448–PRO

EDULING&CONTR

Decisionsaboutprojectsequencesandthecontractor’sapproachinundertaking

aprojectareimpactedbythecontractuallanguage

TimeinContractProvisions

TimeinContractProvisions•  Thecontractincludesprovisionsthatrelatedirectlytotheproject’sduration

•  Otherprovisionsaddresstimingoftheowner’scashdisbursementstothecontractor

•  Someprovisionsmaystipulatetheschedulingtechniquethatmustbeusedonaproject

•  Thedegreeofriskshouldlogicallybereflectedintheamountofthebid

TimeisofTheEssence•  Allpartiestothecontractshouldconsidertimeasanelementalaspectofthecontract

•  Emphasisontimegivesgreatervaliditytotheinclusionofliquidateddamagesprovisions•  Italsoallowsownerstopursueclaimsforbreachofcontract

RequirementsforProjectCoordination•  Theownermaystipulatethatmajorpartiesdiscusstheproject’soverallorganizationpriortothestartofanyconstructionwork

•  Whenitcomestocooperation,theissuecannotbeunilateral—bothpartiesmustberesponsible

•  Subcontractorsmustknowwhentheirservicesareneeded,andmustrespondattheappropriatetime•  Sotheconstructioneffortprogressessmoothly

Cooperation•  Dependingonthenatureoftheproject,thesitemaybeusedbypartiesotherthanthecontractor

•  Ifdualoccupancyorfacilityuseisanticipated,aprovisionthatstipulatesthatthecontractoristocooperatewiththeseotherpartiesisprudent

•  Itisalsoimportantfortheownertotrytoconveythespecificnatureoftheworkbeingperformedbytheotherparties

ProgressSchedule•  Thetimeinwhichaprojectisreadyforoccupancybytheownerisofconsiderableinterest

•  Decisionswillbemadebasedontheanticipateddeliverydateofthecompletedproject

•  Ownersoftenindependentlymonitorprojectstoevaluateadherencewiththeschedule

Someownerspreparethescheduleandhavethecontractorsmakesuggestionsfor

modificationsItismoretypicalforthecontractortopreparethescheduleforthe

owner’sapproval

ProgressSchedule•  Thecontractmaydictatethelevelofdetailtobeembodiedintheschedule

•  Constraintsmayextendtotheamounttobepaidtothecontractorforeachactivity

•  AprovisionmayspecificallyrequireuseofCPM,andacomputerbeusedtoperformcomputations

•  Insomecases,receiptofaprogresspaymentmaybejeopardizedbyfailingtosubmitasatisfactoryscheduleortoproperlyupdatetheschedule

ProgressSchedule•  Somecontractsstipulatethatupdatingofthescheduleshouldoccurmonthly

•  Otherprovisionsaddress•  Short-intervalschedules•  Changesinworkactivitiesthatrequireadditionalstaff•  Changesthatwillimpactinspectionrequirements

•  MostU.S.governmentcontractsrestrictfloat-relatedprovisionstothefloatasdeterminedfromthecontractor’sschedule

NoticetoProceed•  Thenoticetoproceeddocumenttypicallymarksthebeginningoftheactualconstructionduration

•  Thecontractmustbeawarded—andsignedbybothparties—beforenoticetoproceedisissued

TimeofCompletion•  Contractdurationistypicallystatedintermsofthetotalnumberofworkingdays•  Ortotalnumberofcalendardaysallottedforcompletion

•  Sometimes,specifiedcompletiondatesaregiven•  Somecontractsstatethatcountingwillbeginonthedatespecifiedinthenoticetoproceed•  Oragivennumberofdaysafterthenoticeisreceived

UnitsofTime:WorkingDaysorCalendarDays•  Considerationmustbegiventotheunitsoftimeused—typicalconstructionschedulesusedays

•  Ifthescheduleisconceptualinnature,durationsmightbestatedinweeks,months,orevenyears

Inturnaroundwork,whereacontractormakesmodificationstoafacilitywhilenormaloperations

areshutdownforashortperiod,durationsmightbesetintermsofshifts—orevenhours

UnitsofTime:WorkingDaysorCalendarDays•  Thereisabigdifferencebetweenworkingdaysandcalendardays

•  Workingdaysmaybemorebroadlydefinedtoexcludeweekends,holidays—anddaysonwhichnoworkcanbeperformed

•  Whatconstitutesadayonwhichnoworkcanbeperformedshouldbeclearlyaddressedpriortoenteringtheconstructioncontract

UnitsofTime:WorkingDaysorCalendarDays•  Ifaprojectisweather-vulnerableorifweathercandramaticallyimpactworkprogress,schedulingwithworkingdaysismostcommon

•  Projectsnotassusceptibletoadverseweatheraregenerallyscheduledintermsofcalendardays

•  Publicownerstendtouseworkingdays,whileprivateownerstendtousecalendardays

Projectdurationsmaybedefinedbyaspecificcompletiondateinwhichsubstantial

projectcompletionislinkedtoaspecificcalendarormilestonedate

UnitsofTime:WorkingDaysorCalendarDays•  Whencompletiondatesareestablishedinthecontract,ownerstendtobereluctanttogranttimeextensionsfordelays

•  Whenworkingdaysareused,contractualdurationgenerallyincludesallowancefordelaysresultingfromnormallyanticipatedweather

•  Manycontractsdonotdefine“normallyanticipatedweather”•  Referencemaybemadetolocalclimatologicaldata

Useofliquidateddamagesprovisionsinconstructioncontractsiscommon:“Damagesforavoidabledelayassetforthinthiscontractshallbeintheamountof___$perday”

DamagesforLateCompletion

DamagesforLateCompletion•  Someprovisionsstatethecontractorwillbeliablefortheactualdamagesincurredbytheowner•  Thistypeofprovisionwilllikelyresultinmorelitigation

•  Aprovisionmayshowthattheownernotonlyacknowledgesthis—butthatthecontractorisnottocompromiseperformanceasaconsequenceofadverseweather

UseofCompletedPortionsoftheWork•  Someprojectsareundertakeninoperatingfacilitiesinwhichtheownerortheowner’semployeeswillhaveacontinuingpresence

•  Inotherprojectstheownermaywishtobeginusingportionsofaprojectthathavebeencompleted

•  Ifsuchuseisanticipated,aspecificcontractualprovisiontothateffectisrequired

•  Thecontractormustanticipatetheimpactsuchuseoroccupancywillhaveonconstructionoperations

SubstantialCompletion•  Projectdurationistypicallymarkedorendedwiththesubstantialcompletionofaproject

•  Aprojectisconsideredsubstantiallycompletewhentheownercanbegintooccupyandutilizethefacilityforitsintendedpurpose

•  Theonlycontractortasksthatremainontheprojectitselfconsistofaddressingthepunchlistitems

Delays•  Itisimportanttodefinethoseconditionsunderwhichthedurationmightbeextended•  Relevantparticularlyintheareaofdelays

•  Timeextensionsaretypicallygrantedforunavoidabledelays•  Acontractormustcarefullydocumentinformationrelatedtodelays—andrequestextensionsinaccordancewiththecontractprovisions

Delays•  Whileanextensionmaybegranted,thecontractormaybeaskedtopayforanyaddedcoststhattheownermayincurasaresultofthetimeextension

•  Unavoidabledelaystypicallyhavealess-adverseimpactonthecontractor•  Timeextensionsareoftenautomatic—whencertainproceduresarefollowed

•  Theseprovisionsmustbecarefullyevaluatedtodeterminetheextentthatriskisplacedonthecontractor

Manycausesarefortimeextensionsonly,andthedelaydoesnotgiveanygrounds

forthecontractortoclaimfordamagesoradditionalcosts,expenses,overhead,profit,or

othercompensation

Delays

Submittals•  Submittalsconstituteamajorcomponentoftheprocurementofmaterialsandequipment•  Mayalsoberequiredonotheritems

•  Withoutproperapprovalofsubmittalsonmaterials,thecontractorshoulddeferdeliveryofsuchitems

•  Contractorsshouldpreparedocumentsforsubmittalearlyintheproject

ProgressPayments•  Itiscommonforpaymentsintheconstructionindustrytobemadeonaperiodicbasis•  Mostcommonlyonamonthlybasis

•  Thisalleviatesfinancialhardshipthecontractorwouldassumeifpaymentwasnotmadeuntilprojectcompletion

•  Paymentconditionsmustbecarefullyestablishedinordertoavoidanymisunderstandings

ProgressPayments•  Mostownerspreferpaymentrequeststhatbearareasonablecomparisontothetruevalueofworkputinplace

•  Whileacontractormaystillwishtofront-loadbillingstosomedegree,contractprovisionsoftensendaclearnoticetoavoidthispractice

•  Theperiodicpaymentprovisionmayaddressthepaymentofmaterialsdeliveredbutnotinstalled•  Somedocumentsaddressthisasaseparateissue

Thefinalpaymentistypicallyconsideredthepaymentconsistingofthereleaseofallofthewithheldretainage

FinalPayment

FinalPayment•  Thelastperiodicpaymentwillprobablyprecedethefinalpaymentbyaconsiderableduration

•  Ifthetimingofthefinalpaymentisclearlyoutlined,thecontractorcanmoreaccuratelypredictprojectcash-flowrequirements

Suspension•  Foravarietyofreasons,anownermayfinditnecessarytohaltworkonaconstructionproject

•  Actualreasonsmaynotbeanticipatedwhenthecontractdocumentsaredrafted

•  Theownerwilltypicallywanttoincludeabroadprovisionthatpreservestherightofauthorizingasuspensioninthework

•  Suspensionprovisionsmayonlygrantequitabletimeextensionstothecontractor—ortheymayalsostipulatecompensationtothecontractor

TerminationbyContractor•  Projectterminationisaharshrealitythatacontractoroccasionallyfaces

•  Whilearemotepossibilitywhenaprojectisbeingbid,thecontractorshouldreviewtheprovisionsrelatedtotermination

•  Inparticular,thecontractormaywishtoevaluatetheconditionsunderwhichhe/shecanterminateacontract

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