CHAPTET 10
CONCEPTS OF PROJECT PLANNING & CONTROL
DESIGNING TO REDUCE CONSTRUCTION COSTS:
Level of influence Percent of effective control Possible cost savings Ability to control
Degree of effectiveness
· Typically engineering & design fees < 10% of total construction costs
construction costs are < of operation and maintenance costs
·To build or not to build?
What to build?
......
......
standard sizes
build ability
replacement
operation and maintenance
costs to whom:
Designer Contractor Owner Society
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Costs to Whom?
Many problems associated with the level-of-influence concept result from cost subo~ mization inherent in the contractual Structure for a project. As a hypothetical examp assume that an owner desiring a new ore-processing facility has obtained a fixed- j contract with an engineering firm and plans to let a competitively bid constructi contract once designs are complete. Assume also that the engineer has designed se eral similar plants in the past, and has thus negotiated his fee, say $800,000 incIudil 20 percent ($160,000) profit and general overhead, on the assumption that much
the design can be adapted from earlier drawings.
Two of the required drawings describe the electrical instrumentation and controls f a crushing and grinding circuit. Since it is similar to one done before, the engineeriI budget provided for it as follows:
80 design-hours x $60/design-hour = $4800
However, assume that these drawings represent $640,000 worth of equipment, matt rials, and field construction labor..
When the electrical engineer was about 60 percent complete on. these::tlfawings, h
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got into a discussion with a vendor who described a new systemfort!'i:;;applicatio that, through the use of solid-state technology, could save approximately 20 percer of the costs of purchasing and installing a conventional facility, or $128,000 in thi case. The vendor had the facts to back up his numbers.
After this discussion, the electrical engineer went to his supervisor to suggest tha
this change be incorporated. His supervisor denied the request with the foIlowin)
reasomng:
Costs to date for adapting conventional design:
60 percent of $4800 = $2,880
Estimate for revised design using new technoiogy:
200 design-hours x $60/design-hour $12,000
Subtotal $14,880
Initial estimate for drawings E-247 and 1-186($4,800)
Design cost overrun:$10,080
The fact that this potential 210 percent overrun on these two drawings represented over 6 percent of the profit and overhead for the whole job was but one problem. It might have been negotiated as a change with the owner. However, the design as a whole was already two months behind schedule, and the client was thought to be in no mood to even hear of, let alone approve, such a change at this time,. ono rationalized the supervisor to the electrical engineer. Also, he argued, "This new t~chnology is not well proven yet. Stick with conventional designs that we know will work,""
Contractual structures can be adjusted:
1- injecting construction knowledge
The name alone is not enough
a) right packaging (trade - jurisdiction)
b) accurate knowledge for estimating time and costs
- prof. CM is supposedly better than Design construct However, no one contractual arrangement is best for all situations.
2- Competitive bidding for professional services is not recommended.
PROJECT PLANNING AND COTROL:
Analogy: a trip in a car
- No plan vs. too detailed plan.
Flexibility to respond
Human judgment
Turn to advantage
Provision for forecasting
Project planning and control: A model
Feedback: The goal remains to provide feedback to decision makers in min. time for max. impact in controlling operations.
This is one of the MAJOR Difficulties of the industry.
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objectives
General objectives for an information system designed to aid management in the planning and control of engineering and construction projects may bestated as follows:
1 To provide an organized and efficient means of measuring, collecting, verifying, and quantifying data reflecting the progress and status of operations on the project with respect to schedule, cost, resources, procurement, and quality.
2 To provide standards against which to measure or compare progress and status. Examples of standards include CPM schedules, control budgets, procurement schedules, quality control specifications, and construction working drawings.
3 To provide an organized, accurate, and efficient means of converting the data from the operations into information. The information system should be realistic and should recognize (a) the means of processing the information (e.g., manual versus computer), (b) the skills available, and (c) the value of the information compared with the cost of obtaining it.
4 To report the correct and necessary information in a form which can best be interpreted by management, and at a level of detail most appropriate for the individual managers or supervisors who will be using it.
In keeping with the principles of management by exception, the following two objectives should be added:
5 To identify and isolate the most important and critical information for a given situation, and to get it to the correct managers and supervisors, that is, those in a position to make best use of it. .
6 To deliver the information to them in time for consideration and decision making so that, if necessary, corrective action may be taken on those operations that generated the data in the first place.
Status and progress: Nonlinear relationships: Physical
Learning curve
Source of Data:
Records
Information processin2;:
Collecting Data
Analyze
Converting them into useful information
Tools:
Activity and resources: bar chart & CPM cost engineering budgets and cash flows materials procurement and tracking systems statistical Quality Control.
Reporting:
Content (see...)
Selectivity and subreporting Variances: relative (%) and absolute Management by exception Forecasting and trending
Corrective Action
·to Do nothing except update (valid alternative)
·we do not have a HOLY plan.
PM has more information than the Planner had
originally
·Significant deviation
·Understand the reasons behind the symptoms
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CHAPTER 10: CONCEPTS OF PROJECT PLANNING AND CONTROL 189
engineering budgets and cash flows, materials procurement and tracking-.systems, andstatistical quality control.
In concept, information processing systems take progress and status data, compare them against reference standards such as budgets or schedules, and convert the results to information needed by the managers and supervisors on the project. As stated in the objectives, the level of detail, the variety, and the frequency of reports to be produced should be appropriate to the people who will use them, should be feasible for the means of processing the information (manual or computer), should recognize theskills available, and should realistically assess the value of the information comparedwith the cost of obtaining it. Finally, the system should be fast, efficient, and accurate.
In practice, several related subsystems are needed fully to plan and control projects. Examples include activity and resource scheduling and control, cost engineering, materials procurement and tracking, and quality control. Each of these systems is important, but if fully integrated into one system, the sheervolume of data would dominate" and obscure the vital information that is needed from anyone of them. An inter-related modularsystem is thus essential. That is, each subsystem should be largely self-sufficient, but it should be logically coordinated and compatible with the others.
Consider the whole process from the point-of view of a network-based subsystem for activity and resource scheduling and control. Costs, materials, and quality functions can also be identified with activities, so it is possible to use the activities as a means
Reporting
Reporting can take many forms, ranging from conversations and telephone calls through tabular presentations of cost information and graphical presentations on bar charts, cumulative progress ("5") curves and CPM diagrams, to up-to-the-minute reports from computers transmitted via microwave or satellite telecommunication links
. to sophisticated microcomputers in the field. Certain basic principles should guide each of these, however, if the reporting is to be effective for control purposes.
Content Regardless of the form, in order to be effective for control purposes, a
complete report should have five main components:
- Estimates either total, to-date, or this period, that provide a reference standardagainst which to compare actual or forecast results.
- Actualwhat has already happened, either this period or to-date.
- Forecasts based on the best knowledge at hand, what is expected to happen tothe project and its elements in the future.
- Variances how far actual and forecast results differ from those which wereplanned or estimated.
- Reasons anticipated or unexpected circumstances that account for the actual and forecast behavior of the project and its operations, and especially that explain significant variances from the plan.
EXCEPTION REPORT BASED ON COST VARIANCES
ACTIVITIES SHOWN HAVE VARIANCES GREATER THAN 10%
ACTIVITIES ARE SORTED AS Follows:
ES PRIMARY SORT / 6/1
DUR SECONDARY SORT
PROJECT NUMBER: / 198301 / START DATE: / 04/21/83
PROJECT TITLE: / EXAMPLE CONCRETE BRIDGE / 2+3 / 2/4 / 1/4 / DATA DATE: / 07/11/83
PROJECT LOCATION: STANFORD, CALIFORNIA / REPORT DATE: 07/14/83
LAB. CODE / ACTIVITY DESCRIPTION / UNIT / ESTI- MATED / ACTUAL TO DATE / EST. TO COMPL. / EST.TTL @ COMPL. / PERCENT COMPL / FORECAST VARIANCE / PERCENT VARIANCE / TREND
CFF.0310 CONCRETE FORMWORK FOR FOUNDATION / SF / 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8
EST START: / 06/02/83 / DURATION: / 34 / 29 / 9 / 38 / 76% / 4 / 11.8% / HIGH
ACT START: / 06/02/83 / COSTS: / $49800 / $47600 / $14900 / $62500 / 76% / $12700 / 25.5% / HIGH
EST FINISH: / 07/18/83 / QUANTITIES: / 15860 / 13600 / 4150 / 17750 / 77% / 1890 / 11.9% / HIGH
ACT FINISH: / / / / UNIT COSTS: / $3.14 / $3.50 / $3.59 / $3.52 / $0.38 / 12.1% / HIGH
CRF. 0320 CONCRETE RE-STEEL FOR FOUNDATION / LB
EST START: / 06/09/83 / DURATION: / 29 / 21 / '9 / 30 / 70% / 1 / .3.5%
ACT START: / 06/12/83 / COSTS: / $39400 / $31700 / $13610 / $45310 / 70% / $5910 / 15.0% / HIGH
EST FINISH: / 07/18/83 / QUANTITIES: / 82400 / 74410 / '31890 / 106300 / 70% / 23900 / 29.0% / HIGH
ACT FINISH: / / / / UNIT COSTS: / $0.48 / $0.43 / $0.43' / $0.43 / -$0.05 / -10.4% / LOW
CPF.0330 CONCRETE PLACING FOR FOUNDATION / CT
EST START: / 06/16/83 / DURATION: / 34 / 16 / 21 / 37 / 43% / 3 / 8.8%
ACT START: / 06/19/83 / COSTS: / $73400 / $35540 / $46660 / $82200 / 43% / $8800 / 12.0% / HIGH
EST FINISH: / 08/01/83 / QUANTITIES / 1200 / 690 / 850 / 1540 / 45% / 340 / 28.0% / HIGH
ACT FINISH: / / / / UNIT COSTS: / $61.17 / $51.51 / $54.89 / $53.38 / -$7.79 / -12.7% / LOW
CRW. 0320 CONCRETE RE-STEEL FOR WALLS / LB
EST START: / ' 06/30/83 / DURATION: / 34 / 9 / 26 / 35 / 26% / 1 / 2.9%
ACT START: / 06/30/83 / COSTS: / $37800 / $8320 / $24940 / $33260 / 25% / -$4540 / -12.0% / LOW
EST FINISH: / 08/15/83 / QUANTITIES: / 78750 / 19730 / 59170 / 78900 / 25% / 150 / 0.2%
ACT FINISH: / / / / UNIT COSTS: / $0.48 / $0.42 / $0.42 / $0.42 / -$0.06 / -12.2% / LOW
- - - END OF REPORT - - -
FIGURE 10-3
Example control report. (Adapted from Boyd C. Paulson, Jr., "Concepts of Project Planning and Control," Journal of the Construction Division, ASCE, vol. 102, no. C01, March 1976, p. 77.)