Dammam - Module 4

7/30/2019 Dammam - Module 4

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Construction Cost Management &Construction Cost Management &

The Impact of the Project Schedule on CostThe Impact of the Project Schedule on Cost

Part 4: How the Schedule Impacts CostsPart 4: How the Schedule Impacts Costs

By Ted Garrison

Garrison Associates

www.TedGarrison.com

www.StrategicPlanningforContractors.com

www.NewConstructionStrategies.com
http://www.tedgarrison.com/http://www.strategicplanningforcontractors.com/http://www.newconstructionstrategies.com/http://www.newconstructionstrategies.com/http://www.strategicplanningforcontractors.com/http://www.tedgarrison.com/


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2(c) 2008 Garrison Associates

Module 1: Fundamentals ofModule 1: Fundamentals of

SchedulingScheduling

Time has a huge impact in determining cost.

Everything takes twice as long as anticipated.

Save 1/3 of schedule time and youll increase

profits by 2 to 3 times.


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What Is the Purpose of a

Schedule? Schedules are for planningnot for execution of

the project. Dont micro manage your schedule

They are not a litigation device despite some advice.

It gives you a plan on where you are suppose tobe so that you can adjust to get where you needto be.

It allows you to plan for the future.

The schedule is not an end in its selfits a toolto get results.


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Why Do We Need Schedules?

Reduces construction time.

Reduces costs of labor, overhead, financing.

Provides a more regular continuous flow of work.

Increases productivity.

When the schedule is measured the performance

is improved. When the schedule is reported the rate of

improvement accelerates.


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Why Do We Need Schedules?

Gives everyone a goal to work toward.

Improves company image.

Better control and management.

Makes Owners more comfortable.

Forces detailed thinking.

Improves communications.


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Critical Time Dimension

Factors

These issues must be resolved before you can

proceed with developing a schedule:

Estimating Time and Risk.

Path Considerations.

Establish Priorities.


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Module 2: Types of Schedules

Gantt Chart or Bar Chart Henry Gantt developed for Aberdeen Proving

Grounds during WWI

Network Diagrams Flow Diagram

q PERTPerformance Evaluation Review

Technique (Navy developed for Polaris

Sub project in 1950s)

q CPMCritical Path Method (DuPont & RemingtonRand developed for the construction industry inthe 1950s)

q Todays versions are a combined software.


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Gantt Chart/Bar Chart

Developed by Henry L. Gantt, an ordnance

engineer at Aberdeen Proving Grounds in

Maryland during WW1. Easy to construct and read.

Great time line overview.

Negative: Dont show interrelationships

between tasks.


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Bar Chart

Advantages:

Simple easy to construct & read.

Visual clarity great time line overview.

Accepted.

Disadvantages:

Doesnt show interdependencies.

Doesnt show critical activities.

Difficulty in forecasting effect of changes.

Doesnt show float.


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PERT Network Diagram

Developed by United States Navy for the

Polaris project in the 1950s.

It is a method, not a chart.

Shows dependencies.

Uses three time estimates for uncertain

or risky tasks.


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CPM Schedule/Network

Diagram Developed by DuPont and Remington

Rand for the construction industry in the

1950s. It is also a method, not a chart.

Shows dependencies.

Uses one time estimate for projects.


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What Is the Critical PathWhat Is the Critical Path

Its the longest path through the project.

How many critical paths can there be on a

project? Whats important about the critical path?

To shorten the project you must shorten thecritical path.

Critical path is not necessarily the mostimportant path.


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Critical Path vs. Critical TasksCritical Path vs. Critical Tasks

Critical path is often arbitrary.

Critical tasks are tasks that are absolutely criticalto the project being performed on time.

Examples: Out of the ground before rainy season begins.

Closed in before cold weather sets in.

Permanent power on when needed.

Therefore, you should focus on the critical tasksmore than the critical path unless the criticalpath is truly critical.


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Network Diagrams

Advantages:

Shows dependencies

Develops and shows critical path Identifies critical activities

Identifies potential resource problems

Allows management to set priorities.

Shows impact of changes.

Great analytical tool for different methods orsequences trouble shooting & bottlenecks


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Network Diagrams

Disadvantages:

More difficult to read.

Can become very complex.

Usually requires training.

Requires significant commitment.

Gets neglected because its too complicated.


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Module 3: Creating a Schedule

Elements of an Effective Schedule

Functional

Understandable

Flexible

Commitment by management to make itwork.


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Steps to Creating a Schedule

Review estimate and plans familiarize yourselfwith the project.

Project magnitude.

Method of construction.

Restrictions special conditions etc.

Subs whats their scope? What do theyfurnish?

Special delivery dates logistics.


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Steps to Creating a Schedule

Interview key participants:

Project managers & superintendents

Subcontractors.

Discuss project approach.

Discuss most important areas.

Problem areas anticipated.

Degree of control tight or general terms.


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Six Fundamentals to

Exceptional Time Estimating:

1. Use actual time estimates from

similar tasks.2. Involve the people most

knowledgeable. (As a subcontractor

fight to get positive input.)3. Research the history of vendors and

subcontractors.


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Six Fundamentals to

Exceptional Time Estimating:

4. Consult standard reference books.

5. Concentrate on tasks that most impactthe projects final outcomefight to

build in extra time on critical tasks.

6. Train yourself to be an exceptionalestimator.


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Schedule Analysis

Create list of tasks. (WBS)

Keep contractual divisions separate.

Keep trades separate.

May even separate crews.

Keep field work separate from shop work.

Determine level of detail required.

Things to consider:

Shop drawings, permits, inspections, curing time, delivery

time of key items


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Determining Activity Durations

Best source is your own company records useactual time estimates from similar tasks.

Can adjust for weather, special problems, or

abnormal work conditions.

Involve the people most knowledgeable.

Research the history of vendors and

subcontractors.

Consult standard reference books.


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Effective Scheduling of Subs

Hold a preliminary scheduling meetingw/all subs and vendors.

Avoid conflicting subcontractors beingscheduled at the same time.

Give ample notice to subs.

Provide reminders.

Base payment on compliance w/schedule.


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Effective Scheduling of Subs

Encourage cooperation and improvement

between subcontractors.

If possible, reward superiorperformance. (If they save you $$ - share

the benefit.)

Treat subcontractors like customers.

Tie schedule to contract.


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Issues Effecting Productivity

(ENR Study) Waiting for people and/or equipment to

move material that is needed.

There are errors in the drawing.

Engineers are slow to address questions or

problems with drawings.

Lift, crane or or forklift isnt available

when needed.


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Issues Effecting Productivity

(ENR Study)

Cant get consumables that are needed.

Quality work is needed on prefabricateditems.

Power tools not available when needed.

Supervisor doesnt provide enoughinformation.


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Two Scheduling Options

Time-limited scheduling: time is limited

resources are unlimited.

Resources limited scheduling: resourceslimited time is available.

If time & resources are incompatible you

must renegotiate by presenting options &feasible schedules.


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Scheduling SecretsScheduling Secrets

Schedules are for planning not forexecution of the project, so dont micromanage your projects

Dont focus on tasks focus onmilestones, key or critical events

Make milestones measurable in essence

a specific deliverable

Lay out time-fixed tasks first


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Create as much flexibility in the critical tasks

as possible.

Critical path tasks

High impact tasks such as roof so interior work can start.

Concentrate on starting every critical task as

early as possible.

Schedule the beginning of the project more

aggressively.


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Get commitments from key personnel, vendors

and subcontractors on time frames dont

dictate if at all possible.

Remain flexible in your approach to the project

just because you have always done something

one way doesnt mean it is the only way.

Prepare a calendar of events that senior

management or owners must perform.


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Module 4: Avoiding Slippage

When people dont perform the reason

revolves around one of the following

reasons:

Insufficient training

Insufficient knowledge

Poor attitude Lack of resources


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4 Essential Remedies to Avoid

Slippage A schedule with clear, measurable milestones.

Understanding the critical path.

Understand your critical tasks.

Avoiding the low level manager who doesntwant to worry his/her boss about small

slippages. Fear boss will over react.

Must reduce risk & encourage sharing of info.

Cut down on reports


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Slippage Problems

Often extra resources cause more slippage.

Need to question why there is slippage.

Usually slippage occurs from little things not

major disasters. These tend to sneak up on us.

Often easier to deal with major disasters respond with force or radical change or

innovation.


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Questions to Ask When

Slippage Occurs

Are the team objectives clear to everyone

on the team?

Are team members committed to the

project?

Does the team accept their targets as

realistic?


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Questions to Ask When

Slippage Occurs Does the team believe their work is

valued?

Is training required?

Is the scope too great for the available

resources?

Should some work be subcontracted?

Are too many changes being made?


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Module 5: Lack of Slack TimeThe legacy of the nineties has been a

dangerous corporate delusion: the idea

that organizations are effective only to theextent that all their workers are totally and

eternally busy.

Tom DeMarco

Author ofSlack


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The 80-20 Rule

20% of what you do produces 80% of theresults. (36% produces 96%)

What makes an item a 20% item?

It is the key to unlocking higher profits andgreater rewards.

As crazy as it seems: the solution is to do less -

not more. Bottom-line the more you have the less detail

you can get involved in.


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Staff Cutbacks

Staff cutbacks have come out of middlemanagement.

Some of this was due to technology reduction of duplication of effort.

But middle managements other roles areto adjust to change and deal with problem

when you eliminate them: Who does thiswork?.


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Lack of Slack Time

Causes Problems

No time for analysis, invention, training,

strategic thinking, or contemplation.

Living in a world of change this doesntwork.

Net result instead of accomplishingwhat we suggested today just theopposite is achieved.


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3 Benefits of Additional Slack1. Increased ability to handle challenges or

problems.

2. Better retention of key people.

3. An improved ability to invest in the

companys future. (learn from clients

what they need)


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Crisis

Quadrant(Burn-out)

Proactive

Quadrant(Higher and

Higher)

Comfort

Quadrant(Rust-out)

Trivia

Quadrant(Waste-out)

The Need for Greater Balance


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What Was the Last SlideReally About?

Effective versus Efficient!

Urgency versus Importance!

Understand planning helps preventurgency!


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Module 6: Multiple Projects

What is best for an individual projectportfolio is not necessarily best for the

portfolio itself.

Michael Dobson

Author ofPractical Project Management


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Few Important Definitions

A project is a specific work assignment that has a planned end and a

measurable accomplishment to achieve.

Time-fixed projects are projects that have a deadline. (Time is the

driver)

Time-variable projects are projects with flexible deadlines. (Cost or

performance is the driver.

Independent projects consist of projects that are not directly

connected to each other.

Interdependent projects are interconnected and results from one

affect the other.


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Five Step Process to

Prioritizing Tasks Lay out time-fixed projects first.

Determine and schedule resource requirements

for those projects.

Identify available resources for remainingprojects.

Use least-resource scheduling to optimizeproduction.

Fit the final schedule together.


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Final Thoughts on Scheduling

Improved schedules can substantially

improve your profits

Leave enough time in the schedule toactually do something

Focus on the most important (80/20 rule)

Make sure the schedule has the right

priority (Triple constraints)


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Final Thoughts on Scheduling

Schedules are for planning not execution, so

use them accordingly.

Obtain commitment in the beginning from all

the players or you will be fighting battles

throughout the project.

Schedules need to be flexible things happen.

The schedule is a tool to reach the completion

date on time its not an end in its self.


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Action Steps

Please turn to the inside of the front cover

of the resource guide. Write down 1 to 3

action steps that you want to immediately

implement from Part 4 of this program.

Dammam - Module 4

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