028 Fast-tracking Projects & Cost Overrun

FAST TRACKING CONSTRUCTION(COST OVERRUN)

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Fast-tracking Construction Projects & Cost Overrun


Changes at theHead office and

on site

Optionalchanges

(improves thechances of

expansion andsurvivor)

Essential changes(for survivor and high

productivity)

Suddenchanges

Gradualchanges

AnticipatedNot

anticipated


Causes ofchange

EconomicalEnvironmentalTechnological

SocialGovernmental/Political

Etc.

National&

international

External

Organizational changes

Internal

Changes

Direct Indirect

Badweather

Badworkmanship

Designerror

Reworkdue to

Omitting

Additionalwork

MaterialsMachinery/equipments

Skilledworkforce

Shortageof

Dispute

Communication

Cash flow

Materials

Lowe moraleamongstworkforce

Reorganizere schedule

change workmethods


1 2

12

14 17 19

13

15

16

18

3

5

4 9

6

11

7

10

21 22

20

S

8

DU=2

DU=4

DU=2

DU=6DU=8 DU=10

DU=3

DU=5

DU=1

DU=7DU=8DU=6

DU=9DU=7

DU=1

DU=5

DU=

DU=4

DU=6

DU=14

DU=12DU=10

A

B

D

F

G

K

C P Q

DU=6

DU=8

DU=3

DU=7

DU=5

UT

V

W

Y

H

L

CC

HH

EE

AA

FFX

GG

0 0

2 2

8 8

6 21

8 2914 35

DU=4E

19 42

19 43

16 16 26 26

26 48

38 38

DD

BB

22 43

32 5319 52

12 38J

20 46

32 53

R M

65 65

58 5826 49

52 52

Fast-tracking Construction Projects & Cost Overrun Since construction has a physical

manifestation, construction rework is normally perceived to have a bigger impact than change.

As a result, construction managers tend to avoid rework on problematic tasks by changing the scope of work, in particular under time constraints.

Types of Changes for Types of Changes for fast-tracked fast-tracked

Fast-tracked-Impact of Fast-tracked-Impact of changeschanges

Fig. 1 Park, M. (2001)Fig. 1 Park, M. (2001)

Change and ReworkChange and Rework

Table-1 Park, M. (2001)Table-1 Park, M. (2001)

Figure 2: Behaviours of Figure 2: Behaviours of Change and Rework Park, Change and Rework Park, M. (2001) M. (2001)

Fast-tracked-Impact of Fast-tracked-Impact of changeschangesWhere floor tiling has been

finished with less/more than the required height, although both change and rework have the same behaviour pattern (replacement) in solving the problem, the object would be the problem area in rework, while the previous work would be the object in change.

Fast-tracked-Impact of Fast-tracked-Impact of changeschangesSince construction industry is a

labour intensive industry construction, rework is usually accompanied with the demolition of what have been already built.

This has a bigger direct impact on the construction performance than the change option.

Fast-tracked-Impact of Fast-tracked-Impact of changeschangesBy adopting the change option, it is

possible to avoid rework on problematic tasks that may require more resources.

changed activity can also become a change source that can cause other subsequent changes.

This change might have more impact on the construction performance than the rework option in certain conditions.

Fast-tracked-Impact of Fast-tracked-Impact of changeschangesFor example, the increased concrete

height may trigger subsequent changes in succeeding tasks, i.e., reducing the size of ventilation ducts.

Where some of piles were not correctly positioned, it still made it possible to proceed with the superstructure without correcting the position of the piles by changing the position of columns.

Figure 3a: Change Option Figure 3a: Change Option Loop-Park, M. (2001), Loop-Park, M. (2001),

Figure 3b: Quality ManagementFigure 3b: Quality ManagementThoroughness Loop-Park, M. (2001)Thoroughness Loop-Park, M. (2001)

Figure 3c: Downstream Figure 3c: Downstream Reprocess Iteration Loop-Reprocess Iteration Loop-Park, M. (2001),Park, M. (2001),

Figure 3d: Feedback Figure 3d: Feedback Processes in Construction Processes in Construction ActivitiesActivities

Park, M. (2001),

Fast-tracking Construction Projects &Cost Overrun


RiskManagement

Riskassessment

Riskidentification

TIMECOST

QUALITYSAFETY

Procurement option

Risktreatment

HighProductivity

Qualitativerisk analysis

Quantitativerisk analysis

Risk review andmonitoring.

FEEDBACK

Brainstorming,Expert opinion,

Structured interviews,Questionnaires,

Checklists,Historical data,

Previous experienceetc.


Y

ResourcesLabour

MaterialsMachinery

Etc

N

Microin UK-Public

orPrivate

Civil EngineeringBuildingHousingschools

hospitalsother

Level of Risk with:

Projects in EUProjects in UAE

Projects elsewhere

Is itMacro

Identifyrisk

DemandFluctuationFinance

Weather

Use ofnew construction

methods

Designcomplexity


RiskMetrics

Predictivemetrics

Retrospectivemetrics

y Diagnosticmetrics

yes

yes

Forward-looking,based on

expectations.Y

Drawn fromcurrent project

status-throughoutthe work

Y

Backward-lookingderived from

resultsY

RISK METRICS:RELATES TO DISCOVERY ANDMINIMIZATION OF RISK


Changes inConstruction

Projects

OmissionAdditionErrors

DesignchangeBad

weather

site conditionsUncertainty

Lack of propersite investigation

Changesmade by the

client

Resources

Scope

Goals

Remove any Ambiguity

RESOURCESSCOPEGOALS

REMOVE ANY AMBIGUITY

LeadershipCo-ordinationcommunication

Team work MORE LEADERSHIP AND TEAM,WORK LESSCHANGES TO THE ORIGINAL PLANS


To calculate the cost overrun during Fast-tracked projects use Model below and suggested formulas.

To measure Items such as: Time (increase/decrease), Cost (increase/decrease), Labour (increase/decrease), Material (Material waste

increase/decrease)Machinery (efficiency

increase/decrease).

Fast-tracking Construction Projects &Cost Overrun Formula onePR (Loss/Gain) =MD [A-X] + HC(EC- AC)+ HL(EL- AL)

Formula twoAC = a EC (1+Σ xi) and similarly AL = a EL (1+Σ

xi)xi = % of influential factors such as weather, crew size, absenteeism, machinery, accidents on site, etc.

Influential factors (related to early stage of project) Economical Technological Customers Stakeholders Environmental Legislative Procurement route Organizational factors Financial factors Sustainability Etc

Process model of Change Management

Pre-construction Activities Client brief Project objectives Specification Design/build-ability Constructability Contractual arrangement Planning Scheduling Estimating

Labour Characteristics Subcontracting Labour Direct labour

Management System Planning Communication Controlling Co-ordinating

Resource Management & Weather Labour selection Labour control Material selection Material handling Plant Waste on site Delay and Disruption on site

Motivating Factors Hygiene Factors

Construction Productivity

Project Performance Time Cost Quality Safety Customer

satisfaction

Rewards

Effort

Ability and skill of management and workers

Site/Project Manager Characteristics Experience/capability Leadership style Authority/influence Goal commitment Involvement

Job Satisfaction

Product Improvement Tools (PIT) Earned Value Management (Evma) Lean Construction (Lcon) Benchmark (Ben) Front End Management (Fema) Just In Time (Jiti) Benchmarking (Bing) Quality Control (Qcon) Supply Chain Management (Scma) Buildability (Buil) Quality Assurance (Qass) Value Engineering (Veng) Buildability/Deconstruction (Buil/Deco) Quality Management System (Qmsy) Value Management (Vman) Otherp Product Improvement Tools

CostcontrolInput

DataProcessing

Output

ContractDocuments

Stored DataPrice book

etc

DataBase

DisplayCost

Overrun

LabourActivities

1-2,2-3,...

15-16

Materials

Machinery

FormulasAC = a EC (1+? xi) and similarly AL = a EL

(1+? xi)

FormulaPR (Loss/Gain)=MD [A-X] + {(EC . HC)+ (EL

. HL)}-{(AC . HC)+ (AL . HL)}

Labour Productivity (Pi) for time periodi=WHi / Qi

Total MD =Cost of material

Waste Waste

Quantity (TQ)

Delivered to site

(Estimate)

(Actual)

(Act-) % %

156 31.14 5% 6.50%

264 18.88 5% 6.50%

282 8 5% 7.00%

708 1.71 5% 6.50%

Costoverrun?

c

Yes

No

Highproductivity

Labour(Actual)

with cost overrunactivities

4-6

1-12

3-4

Labour(Estimates)

4-6

1-12

3-4

5-7

Materials(Actual)

with wasteincrease

4-6

1-12

4-6

Machinery(Actual)

Lossof

efficiency(%)

1-2

2-3

Materials(Estimate)

4-6

1-12

4-6

Machinery(Estimate)

1-2

2-3

3-5 Database

5-7

PR (Loss/Gain)=MD [A-X] +HC(EC- AC)+HL(EL- AL)

AC = a EC (1+? xi) and similarlyAL = a EL (1+? xi)

xi = % of influential factorssuch as weather, crew size,

absenteeism, machinery,accidents on site, etc.

c

Cost overrun documentLabour

MaterialsMachinery

send tomanagement team

0

25

50

75

100

125

150

Budget 5 10 15 20 25 30 35 40 45 50 55 60

Actuals 10 20 30 40 50 60

Earned 8 15 25 30 35 45

Forecast 70 80 90 100 110 120

J F M A M J J A S O N D0

25

50

75

100

125

150

5 10 15 20 25 30 35 40 45 50 55 60

10 20 30 40 50 60

8 15 25 30 35 45

70 80 90 100 110 120

J F M A M J J A S O N D

Time Now

Management Reports

Labour costoverrun

Materials costoverrun

Time overrun

ReportTime-cost.. overrun

for individualactivities

ReportTime-cost.. overrun

for the project

Fast-tracking Construction Projects &Cost Overrun PR(Loss/Gain) =MD [A-X] + HC (EC- a EC

(1+Σ xi)) + HL (EL- a EL (1+Σ xi)) + Σ (PIKt) /100 PC(est)

Also, add cost of Risk management team (both in-house and external experts)

(Rmi ) + (Rme ) (Rmi )=Risk management (In-house)(Rme )= Risk management (External))

Fast-tracking Construction Projects &Cost Overrun Planning engineer to decide% PC(est)= Fees for (Rmi ) + (Rme )Let us assume 0.50% of PC(est)= Fees

for (Rmi ) + (Rme )(Rmi ) + (Rme )= (Rtotal ) (Rtotal )= (0.5/100)xPC(est)PR(Loss/Gain) =MD [A-X] + HC (EC- a EC

(1+Σ xi)) + HL (EL- a EL (1+Σ xi)) + Σ (PIKt) /100 PC(est) + (Rtotal )

For risk management For risk management considerconsiderBionomial DistributionNow suppose that we want to

know the probability of getting k good result in n trials. We can call this event A.

P(A) = pk(1-p)n-k n!/(k!(n-k)!)Example: k =2 n=3There are 8 possible outcomes, 3

with the desired event – P(A)=3/8

Fast-tracking Construction Projects &Cost Overrun The number of combinations of r

objects taken from a group of n distinct objects is denoted by nCr and is given by:

nCr =n !

(n – r )! • r !

Fast-tracking Construction Projects &Cost Overrun Risk = penalty * likelihoodPenalty can be in dollars, lives,

injuries, amount deadline missed byLikelihood is probability that a

particular hazard will be “activated” and result

in an undesirable outcomeThe product can be considered as

an expected value of cost to project

028 Fast-tracking Projects & Cost Overrun

Engineering

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