Project Management for Construction Projects

The weakest form of an organization and is better suited for smaller and easy projects.

Advantages:

• very flexible
• quite easy to integrate a project manager
• resources (human and technological) are used efficiently
• career continuity as well as the opportunity for advancement for technical staff

Disadvantages:

• Lack of a central project authority
• PM only has weak enforcement capabilities
• each department feels responsible only for their subtasks
• weak interfaces with the customer
• decisions made by the most powerful functional group tend to be favored

The PM alone is responsible for the achievement of the project's objectives.

Advantages:

• uniform, objective-based management
• the short decision runs, clear reasonability, and clear authority
• PM can tightly control the project and respond quickly
• good interface with the customer
• promotes cost awareness, punctuality, and high performance
  --> great motivation from the team, and personal loyalty to a single project

Disadvantages:

• inflexible and expensive
• once the project is complete, difficult reintegration of employees into their parent organization
• employees, who were hired only for the project do not enjoy career continuity
• the danger of lack of cooperation with other units of the parent organization
• balancing the workload at the beginning and the end of the project is difficult

The staff and their skills can be used evenly when workers switch from project to project.

Advantages:

• possible to adapt to a changing environment
• reallocation of resources is possible
• at the end of a project, the information is retained
• the resources can be used well and efficiently
• accumulates knowledge
• ambitious projects can serve as sources of new technologies and skills
  for other projects and activities in the organization

Disadvantages:

• relationship between functional department heads and project managers
  • Department heads are focusing on the long-term
  • project managers are focusing on the short-term objectives
• the staff have two bosses --> double reporting
• horizontal and vertical communication is difficult to develop, manage and maintain
• the project manager is not an expert in all technical aspects

The more complex a project is and the longer a project lasts, the more favored a project organizational structure becomes.

Work Breakdown Structure

The WBS provides a general framework in which the entire project can be described as a sum of
subdivided elements. Based on the WBS, planning can be performed, costs and budgets determined,
and dates, costs, and services can be analyzed.

A work package is the deepest level in a WBS.

Considerations:

• it is the lowest level in the WBS
• it must have a deliverable associated with it
• it should have a responsible party (WP owner)
• it may be considered by the WP owner as a project in itself
• it may include several milestones
• it should fit the organizational procedures and culture

Organizational Breakdown Structure

The OBS describes the project team that will work on the project.

Includes:

• clear definition of communication channels
• responsibilities
• authority of each participating unit or department

Division of Work

The process to assign all work packages to the organization units.

Based on the WBS.

Aims to indicate which person is responsible for the successful implementation of a work package.
--> Responsibility Assignment Matrix (RAM)

Responsibility Assignment Matrix

The merge between the WBS and the OBS leads to the RAM.

A way to indicate the DOW

• Design-Bid-Build (DBB) or traditional
  • Construction Management at Risk (CMR)
  • Multi-Prime (MP)
• Design-Build (DB)
• Public-Private Partnership (P3 or PPP)
• Integrated Project Delivery (PID)

The most common delivery system, also known as the traditional project delivery method.

The design consultant and the contractor are not from the same entity.

- possibility for misunderstandings and for conflicts
+ costs are known before the construction starts
+ price competition between contractors

The Construction Manager at Risk acts as a general contractor.

This delivery method entails a commitment by the CMR for construction performance
to deliver the project within a defined schedule and price.

An important variation of Design-Bid-Builds.

The owner holds separate contracts with contractors of various construction disciplines.

The owner, or its CM, manages the overall schedule and budget.

This leads to:

- more effort for the owner
+ owner has control over the entire process

This project delivery method includes one entity (design-builder) and a single contract with the owner.

+ simplicity of having one party responsible (benefit for the owner)

+ accelerated process
+ innovation
+ quality improvements
(because design and construction come from the same entity)

- the risk of the project has to be carried by one contractor only
--> can lead to higher initial costs

PPP is a delivery method whereby a public entity partners with a private entity to deliver public infrastructure.

"A project delivery approach that integrates people, systems, business structures, and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of design, fabrication, and construction."

Encourages the early contribution of knowledge and experience.
--> requires the proactive involvement of key participants

Contracts settle the terms between the owner and the contractor and ensure the compliance of both parties.

Open bid

Restricted bid:  all may apply for participation

Selective bid:  participants are pre-selected (at least 3)

Direct awarding:  without any announcement or submission

Competitive bidding is the typical process for selecting a contractor. The bidding companies will
compete for a project by putting together their best proposal. Competitive bidding is a transparent
and fair process.

lump sum: fixed price
- leads to higher prices
- poses a high risk for a contractor

unit price: describes the cost for a certain task or unit.
- design changes can be easily considered by changing the estimated quantities

The owner shares the risk with the contractor
by agreeing to cover the actual expenses of the project.

Appropriate, when the complete scope of the project is not known at the tender time
or when there is an overlap between the construction and design phases.

Sub-types:

• the cost plus a percentage of cost
• the cost plus a fixed fee
  --> does not have an incentive for the contractor to save time and money
• the cost plus a sliding fee
• the cost plus a guaranteed maximum price
  --> the contractor is responsible for cost overruns

Finish to start (B can't start until A is finished)

Start to finish (A can't finish until B starts, e.g. shift work)

Start to start (B can start if A has started)

Finish to finish (B can't finish until A has finished)

Stochastic approach:

• commonly, the normal distribution is used
  --> drawbacks:
  • in reality no negative task durations possible
  • real operations are usually asymmetrically distributed
• often better to assume a beta distribution
• Program Evaluation and Review Technique (PERT) is such a method

Deterministic approach:

• simpler to use and understand
• assumptions:
  • duration of similar activities is known
  • variability in performance time is very small
  • --> most likely duration is used as a definite value for the duration

The total float (TF) is the time at which a process can be moved or extended without affecting the project's end date.

The free float (FF) is the time to which a process can be moved or extended, without moving the earliest start time of any other process or the project end date.

The CPM is used to determine the longest duration of the schedule of a project and to calculate the scheduling flexibility, and therefore the float.

Information gained:

• the minimal total project duration
• which activities are critical or non-critical

Neither considers cost nor resources nor the project deadline
--> only takes the duration of the activities into account

Does not consider any realistic productivity factors (e.g. weather impact on productivity)

Steps:

1. Initiating the network plan
2. Forward passing
3. Backward passing
4. Calculating the total and free float
5. Determine the critical path

The aim is to reduce all forms of waste in the construction process.

• Time (looking for things, ordering materials)
• Transport (material handling, deliveries)
• Staff downtime (waiting for instructions, information, and deliveries)
• Rework and corrections (correction of poor or incorrect work and updating plans)
• Overproduction (producing more than ordered)
• Inventory (too much or too little stock on hand)

Lean scheduling does not impose the estimated schedule on the working team.
Instead, it pulls the schedules from the teams.

Excusable delays:

Lead to a time extension for the contractor as well as liquidated damage relief and most will allow the contractor to claim extra costs.

• compensable
  • controlled by the owner
    --> time extension for the contractor should be financially compensated
• non-compensable
  • if the owner has no control over the delay
    --> no contractual obligation to compensate the contractor

Non-excusable delays:

Are within the control of the contractor, there is no time extension, no liquidated damage relief, and no payments for additional costs.

Preliminary Estimate

• at the beginning of the project
• often used to decide whether to implement a project or not

Bid Estimate

• used at the bidding phase of a project
• done by the contractor, when they apply with their bid for the project

Contract Estimate

• the plans given out in the bidding phase are again revised
  --> to generate the final construction plans
• based on these final plans, the cost is estimated
  --> and written in the contract

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