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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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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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Scheduling SecretsScheduling Secrets
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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Scheduling SecretsScheduling Secrets
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.