Project Management for Construction Projects

Parametric estimating:

• suitable for a rough estimation (preliminary phase)
• done with little time and effort
• costs are calculated with known parameters (e.g. construction volume, or project type)
• other ways: scalable models, or historical data

Detailed estimating:

• for the bid and contract estimate
• relatively time-consuming
• determines the cost of each task
• based on quantities (also scope) the task requires
• adding up all the tasks leads to the cost for the whole project

Since the contractor wants to make money from the project, they need to add a markup.

Resource management is basically a balance between the costs of alternative schedules, the consideration for resource constraints, and the costs of the use of alternative resources to maintain a schedule.

There might be peaks in resource demands, or there may be downtime for several days.
These fluctuations are not desirable.
--> Two techniques are used to minimize such fluctuations:

Resource Leveling

• rearrange tasks so that resource limitations are met
• done without regarding the project duration --> might lead to an extension

Resource Smoothing

• does not affect the project duration
• only utilizes the given total and free float

Potential for loss but none occurred

Reduce on-site security

Replace checklists

reduce workplace injuries

provide a safe environment

access control of restricted areas

The of longest sequence activities that must be finished on time in order for the project to be complete.

Schedule Perfoming Index

Measure of schedule efficiency on a project.

SPI = BCWP / BCWS = EV / PV

SPI > 1 --> good (ahead of schedule)
SPI < 1 --> bad (behind schedule)

Cost Performance Index

CPI = BCWP / ACWP = EA / AC

A metric from the EVA method.

Cost performance index

Measure of cost efficiency on a project.

CPI = BCWP / ACWP = EV / AC

CPI > 1 --> good (below budget)
CPI < 1 --> bad (over budget)

budgeted cost of work scheduled

a.k.a. planned value (PV)

BCWS = total cost * %planned work

actual cost of work performed

a.k.a. actual cost (AC)

ACWP = what is paid for an activity

budgeted cost of work performed

a.k.a. earned value (EV)

BCWP = total cost * %work done

BSC is a strategic planning and management system

Based on defining what is desired (visions) and figuring out how these visions can be achieved (strategies).

European Foundation for Quality Management (EFQM)

• a holistic view of the organization
• the aim is to develop an excellent organization

Baldrige Criteria for Excellence

• used in the United States
• to improve their overall performance
• an integrated approach to delivering ever-improving products and services to the costumers

Key Performance Indicators

• A measurable value that demonstrates how effectively a company is performing
• To control and evaluate the performance of different projects or departments
• Depending on the perspective, different KPIs are used
  e.g. marketing --> number of new customers, construction team --> piles build

Three known types of KPIs:

• Output factors
  --> what is done
• Input factors
  --> what is needed
• Hardship factors
  --> beyond the control of the project manager (e.g. weather)

The EVA is a method used for project controlling.

• measure progress at any given point in time
• determines the schedule, cost, and performance deviations
  and their dependencies between them

Use in different phases:

• During planning phase
  determine the cash flow requirements
   
• During bidding phase
  used by the contractor to compare different cash flow projections using different progress scenarios
   
• During construction phase
  used as a control tool to monitor the actual progress in comparison with the initial plans

Budgeted cost of work scheduled
a.k.a. planned value (PV)

= total cost * % planned work

Actual cost of work performed
a.k.a. actual cost (AC)

= what is paid for an activity

Budgeted cost of work performed
a.k.a. earned value (EV)

= total cost * % work done

The expected cost needed to complete all the remaining work in the project.

Original estimate                  ECT = BAC - BCWP

Cost deviation accounted   ECT = (BAC - BCWP) / CPI

The expected total cost of the project.

EAC = ACWP + ECT = BAC - CV

Critical path ignorant

SPI is not intuitive (measures SPI in cost and not units of time)

Needs a lot of information

Difficult to implement (need to track costs and progress, %completion hard to track)

It includes all the processes and activities that determine quality policies, objectives, and responsibilities so that the project will satisfy the needs, for which it was undertaken.

Planned systematic actions established to get a level of confidence that project design documents comply with applicable codes and criteria and that the resulting construction complies with the contract documents.

The main difference between internal and external failure costs is the moment in time when the failure is discovered.

Internal: when poor-quality products are discovered before they are delivered

External: after delivering (e.g. customer complaint cost, product return cost, warranty claim cost...)

Aims to:

• increase the probability and impact of positive events
• decrease the probability and impact of negative events
• to create value
  resources expended to mitigate risk should be less than the consequence of inaction

1. Plan risk management

2. Identify risk

3. Qualitative analysis

4. Quantitative analysis

5. Plan risk response

6. Monitor and control risk

The RBS is a hierarchically organized depiction of the identified risks arranged by risk category and subcategory that identifies the various areas and causes of potential risks.

The identified risks are summarized in a risk register (or risk portfolio).

After identifying the risks, the risks need to be described in as much detail as is reasonable.

Qualtitative Risk Analyis

• used for initial assessments (fast and not much data needed)
• based on subjective opinions --> very dependent on the expert's opinions
• a prioritization of risk reduction measures is difficult

Quantitative Risk Analysis

• most important risks (established with quantitative RA) are further examined
• data needed
• developed model should always be validated
• Approaches:
  • expected values
  • decision trees
  • simulations (e.g. Monte-Carlo)
  • etc..

Strategies to reduce the risks to an acceptable level.

Reaction options to negative risk:

• Acceptance
• Avoidance
• Mitigation / Reduction
• Transfer of risks

Reaction options to negative risk (opportunities):

• Exploiting (eliminate uncertainty --> ensure it happens)
• Sharing (involve a third party who is best able to capture the opportunity)
• Enhancing (increase probability or impact)
• Accepting (not actively pursue it)