Integration of the Construction Estimate in Construction Programe

Transcription

1 Integration of the Construction Estimate in Construction Programe Construction Project Managment Model Pedro Alexandre Amaral Lopes Extended abstract of thesis to obtain the Degree of Master in Civil Engineering Jury President: Prof. Albano Luís Rebelo da Silva Das Neves e Sousa Supevisor: Prof. Pedro Miguel Dias Vaz Paulo Vowel: Prof. Nuno Gonçalo Cordeiro Marques de Almeida October, 2013

2

3 1. Introduction Bearing in mind the current economic crisis, the hardships that are being felt by the construction industry are increasing as companies seek to systematically to reduce their costs whilst maintaining their levels of competitiveness. Thus, as companies from the construction industry seek substantial improvements in project results, a plethora of project management and production control software packages are evolving and are being implemented. Further gains can be achieved by implementing integration of the construction estimate with the construction program during the construction phase of the project, with the objective of managing the cost and duration control of the project more efficiently. By introducing and linking together the construction estimate and construction schedule in one software package, at the beginning of the construction phase, forecasts can be obtained, and if the progress and production data are systematically introduced during the construction phase, comparisons can be made against the base forecasts and critical information such as cost and schedule deviations can be obtained efficiently and with ease, providing decision-enabling facts for implementing timely corrective measures. The primary objective of this investigation is to demonstrate to any construction company that is interested in improving its results and competitiveness, that the implementation of the chosen methodology will provide a more effective and efficient cost and time control of its projects. The methodology that is analyzed is that the estimating and planning schedules be linked dynamically using just one software package. 2. State of Art This chapter intends to conduct an analysis of the State of Knowledge of Integrated Project Management, specifically some good practice rules of Cost and Time control in construction projects, and to present the most relevant information within this subject. 1

4 2.1 Project definition The Project Management Institute (PMI) defines a Project as a temporary group of outlined activities to produce a unique product, service or result. It is temporary because it has a beginning and an end within a specific period of time and therefore resources and scope is also defined. A project must meet certain specific objectives and must be completed within schedule and it also must be completed within a stipulated budget and satisfy all the project quality requirements (Lester, 2007). 2.2 Project Management Project Management can be defined as the planning, monitoring and control of all aspects of a Project in order to achieve all the objectives within the criteria of time, costs and agreed performance. (Lester, 2007). It s also the art of directing and coordinating all human and material resources during the lifetime of the project using modern management techniques to achieve predefined objectives such as the scope, cost, time, quality and stakeholder satisfaction (PMI). 2.3 Planning and Time Control Given the uncertainty and complexity inherent to the construction projects, planning becomes an activity with a high degree of difficulty for project managers, given their constant need to provide and coordinate all tasks to be performed and control them during their execution (Lia et al., 2009). Planning is a key activity in the construction industry both in its management and during its execution. Developing a plan to manage a project involves several phases, from decision making in order to devise a project with the development of different solution to achieve this objective, to the definition of the tasks to be performed in the project; the estimated physical and financial resources; the determination of the activity durations and finally the identification and interconnection between the different activities. (Hendrickson & Au, 1989 & Angelim, 2009). The bar charts are by definition the representation of the project activities in function of time in the form of horizontal lines, usually without any connection between them. These bar charts emerged based on the work of Henry Gantt, mainly dedicated to the construction industry Gantt Bar Charts (Figure 1). In such bar charts, the activities 2

5 durations are estimated and the bars are drawn, respectively, for each activity, depending on its duration, its beginning and its end in the chart (Mubarak, 2010). Figure 1 Gantt Chart with activity links These bar charts present some advantages to the Project manager (Table 1). A graphic representation of the information makes the process simpler to analyze the project without requiring any special training or using any complex calculation methods. It provides a more accurate view of the estimated activities' durations and consequently of the entire project, enabling a greater understanding of the all involved parties such as the client, the subcontractors and to the contractors managers. Table 1 Advantages and Disadvantages using the Gantt Bar Chart Gantt Bar Chart Advantages Disadvantages Graphical representation of the Logical connections in projects with a information large number of activities Simpler analysis of the activity Great difficulty to understand the durations consequences between activities, if not Earlier forecasts of the resource usages properly connected in the activities The Critical Path Method (CPM), one of the most widespread techniques in planning, is specially oriented to a Project with a large number of individual activities, as is the case for most construction projects (Baker, 2010). Through CPM is possible to determine: the project duration with a complex activity network 3

6 critical activities, i.e. activities that must be performed in time under the risk of delaying the entire project CPM defines the predecessors/successors activities sequence that determines the minimum time to complete the project, i.e. any delay in activities that are part of the critical path (critical activities) will cause a delay of the completion date of the entire project. 2.4 Estimating and Cost Control The cost estimate is one of the most important processes in project management. The cost estimate or the initial budget allows the establishment of the cost basis for the different phases of construction, and represents the estimate of the present contractual scope of works. Engineering experience and the expertise are of great importance in the application of the principles and techniques of estimating in order to reduce problems with the cost control and specially to increase profits and maximize revenues (Hendrickson & Au, 1989). Estimating or making an initial budget means determining the approximate amount of resources, time and all the costs required to develop a project, in order to obtain the necessary information to make critical decisions in all aspects of developing a construction project (Carr, 1989). Nowadays, almost every company uses software systems for estimating and cost control. Whilst price estimates and initial budget determination are performed before the production phase of the project, cost control has to be realized throughout its entire execution (Azhar et al, 2002). 3. Analysis and Interpretation of the results of the Enquiry Through this inquiry it was possible to become aware of the reality in some companies, particularly in relation to the planning and estimating systems. Since these two procedures are essential in project management and are unequivocally used in construction companies, regardless of their size, it was important to know how companies implement these systems and the importance they have in the organization (Table 2). 4

7 Currently, one of the main problems that have hindered the optimization of procedures in cost and time control within construction organizations is the difficulty that they have in integrating the Planning schedule with the Estimate. In general, the use of various software packages for project management has exacerbated this situation. Table 2 Key aspects of the implemented Planning and Estimating systems in the companies Planning Very important in Project management Average satisfaction with its application Periodicity: Weekly and Monthly Most commonly used software package: MS Project Presents gaps in planning detail and time control Responds satisfactorily to the needs of companies Estimating Very important in Project management Average satisfaction with its application Periodicity: Monthly Most commonly used software package: Candy, Microsoft Excel, SAP Responds satisfactorily to the needs of companies 4. Presentation of the Planning and Estimating Management Systems This chapter describes the Independent System Planning and Estimating Management and the Integrated Planning and Estimating Management System. First a brief description of the procedures in common use is made and then the Integrated System is referred to and described. This is the proposed model for integrating planning and time control with the estimating and cost control, in order to achieve the objectives proposed for this investigation. 4.1 Planning and Estimating Management Independent System Currently the most implemented management and time control system in construction companies is the Independent System. This system is characterized by the separation between planning and time control from the estimating and cost control. Commonly, construction companies plan and estimate the entire project and then carry out the project s time and cost control using separate software packages. This procedure reinforces the separation of the two data streams, as often the software package do not share compatible data. 5

8 4.2 Planning and Estimating Management Integrated System Given the fierce competition in the construction industry and the companies needs to respond in a faster, effective, efficient and most profitable way to the costumers requirements, the interconnection between Planning and Estimating, for an integrated approach to project management, has becoming more and more important. Figure 2 and Figure 4 are representations of the proposed model in this investigation. Figure 2 Analyzed Model for the Planning and Estimating interconnection Figure 3 Proposed Model Diagram 6

9 In Table 3, we can see the main differences between the two Management Systems previously described. Table 3 - Comparative analysis of the two Planning and Estimating Management Systems System Features Independent Integrated System System Cost and time Control Separate Integrated Number of software packages used Several One Investment in Planning and Estimating professional software packages Compatibility between the Project cost and time control Time and resources spent for updating and synchronizing the project costs and deadlines Monitoring the consequences of the changes (cost or deadline) during the project execution Detail for the project cost and time forecasts Investment in Human Resources and Formation High Depends on the compatibility of the software package Vast Depends on the chosen computer systems. Cost and Time updates are slow and with high probability of synchronization errors Scarce Lengthy training in multiple software packages Higher investment Optimized Integrated and synchronized Reduced Immediate Abundant and Diverse Rapid training in one software package Lower investment 5. Case Study Presentation This chapter aims to identify and analyze the project management processes, mainly the cost and time control, by the Portuguese subsidiary company SPIE BATIGNOLLES EUROPE, through the analysis of the methodologies that were applied in a specific case study, a construction project that has been successfully executed. The analyzed Integrated System model is applied to this case study so that the benefits and advantages that it could bring to the project management can be represented. The procedures for Planning and time control as well for Estimating and Cost control management are well defined within the SPIE BATIGNOLLES organization. The company mainly uses their own software package and Microsoft Project to perform 7

10 their Projects Planning and Time Control requirements. Estimating and Cost Control, are accomplished using the Construction Computer Software (CCS) Candy System. This chapter intends to apply the proposed model to the case study and evaluate the Integrated System Implementation in the organization and to present the advantages in cost and time control management. 5.1 Cost Control By implementing this Integrated System, it is possible to obtain data regarding the current state of the project as well as its future, reliably, securely and quickly. Thus, any change in the resource cost or in its consumption to in any bill item, will be reflected dynamically in all of the reports and the documents that are available in the software package, and this information, if used correctly, will allow the project managers to make informed decisions whenever to improve the Project s final cost and completion date. This is true both when establishing the base forecast and at any stage during the execution phase of the Project. 5.2 Time Control With the implementation of the analyzed model, the activities durations and the project deadlines are also critical for the Projects cost forecasts. Thus, any changes in the activity program will affect the time element resulting changes in the previous forecasts. Figure 4 Activitiy Program with a delay of 10 days in the selected activity Figure 4 presents the consequences to the entire program of the change of a duration of one activity. 8

11 Analyzing the results of this change in the case study, there are some advantages that can be easily presented in the proposed model implementation for project management (Table 4). Table 4 Advantages in the implementation of the Integrated System analyzed model Planning and Estimating Management Integrated System Cost and time control integration in a single software package Reduction in costs related to the investment in cost and time control software packages Faster monitoring of the updates of costs and deadlines Constant updates of the Project status Synchronized forecasts of costs and deadlines during project execution Forecasts with greater anticipation of changes and verification of the effect of changes on the Project s cost and deadlines Reducing the number of meetings needed to update and integrate the different cost and time control software packages Possibility to spread the items quantities over the activities durations and obtain dynamic forecasts Constant comparisons of current costs and deadlines against the planned costs and deadlines. 6. Conclusions 6.1 Results and Proposed Objectives Evaluation The results obtained from the dynamic interconnect of the estimating schedule with the planning schedule allow one to conclude that the implementation of this method meets the expectations initially proposed. The data that is available in the software package s reports, effectively present the Project s current status including change of scope, current progress and real costs to date, and forecast the future cost and date of completion if no steps are taken by the project managers. 6.2 Contributions and innovative aspects Note that this is a very simple and effective model to apply in project management and monitoring, and presents the current project status as well the forecasts of its status through explanatory reports and other able performance indicators. 9

12 One of the most innovative aspects of this model is the interconnection of the activities from the planning program with the items from the bill of quantities as well with the budget in one software package. This process reduces the workload required in making compatible data produced of the two different cost and time control software package so that it can be analyzed. 6.3 Future Works Since the application of this model in a single case study wasn t ideal, it s suggested for further investigation that this model be applied to a larger number of case studies, such that results can be obtained of its implementation in different kinds of projects and environments and also to quantify the benefits that are gained with its implementation. References Angelim, V. L. (2009) Planning and Production Control in Construction Works based on Lean Construction Principles (Planejamento e Controle da Produção de Obra baseado em Principio da Construção Enxuta) Fortaleza Azhar, S.; Ahmed, S. M. & Caballero, A. A. (2002) Development of an Integrated Cost Estimation and Cost Control System for Construction Projects National Institute of Standards and Technology, Gaithersburg, Maryland Bhaba R. S.; Pius J. E.; Liao, T. W. & Yu, F. (2012) - Planning and design models for construction industry: A critical Survey - Automation in Construction, Vol. 22, pages Bowers, J.A. (2000) - Interpreting float in resource constrained projects International Journal of Project Management, Vol. 18, pages Carr, R. (1989) Cost Estimating Principles - Journal of Construction Engineering and Management, Vol. 115, pages Chagas, A. K. (2007) Cost and schedule Integrated Management The Earned Value Management Master Degree Thesis (Gestão Integrada de Prazos e Custos O Método do Earned Value Dissertação de Mestrado) - Instituto Superior Técnico Chelaka, M.; Abeyasinghe, L.; Greenwood, D. J. & Johansen, D. E. (2001) - An efficient method for scheduling construction projects with resource constraints International Journal of Project Management, Vol. 19,pagess Fernandes, M. N. (2008) Energy Systems Business Management Application of the Earned Value Management Methodology Master Degree Thesis (Gestão de Negócios de Sistemas de Energia Aplicação da Metodologia Earned Value Management (EVM) Dissertação de Mestrado) Instituto Superior Técnico Fleming, Q.W. & Koppelman, J.M. (2002) Earned Value Management: Mitigating the Risks Associated with Construction Projects - Risk Management Fonseca, A. (2006) Schedule Control in Construction The Earned Value Management Methodology Master Degree Thesis (Controlo de Prazos na Construção - A metodologia Earned Value, Dissertação de Mestrado) Instituto Superior Técnico Grant, B. & Kelly, K. (2009) The Evolution of Project Management - University of Phoenix 10

13 Hadju, M. (1997) - Network Scheduling Techniques for Construction Project Management Kluwer Academic Publishers Hendrickson, C. & Au, T. (1989) Project Management for Construction Prentice Hall Henriques, A. (2008) Schedule and Cost Integrated Management Methodology Master Degree Thesis (Metodologia de Gestão Integrada de Prazos e Custos Dissertação de Mestrado) Instituto Superior Técnico Kerzner, H. (2003) Project Management: A System Approach to Planning, Scheduling and Controlling Eight Edition John Wiley & Sons Kozak-Holland, M (2011) The History of Project Management - Multi-Media Publications Inc. Lester, A. (2007) Project Management, Planning and Control (Fifth Edition) Butterworth- Heinemann Lia H.; Chana, N.; Huanga, T.; Guoa, H.L.; Lua, W. & Skitmoreb, M. (2009) - Optimizing construction planning schedules by virtual prototyping enabled resource analysis - Automation in Construction Vol. 18, Págs Madadi, M. & Iranmanesh, H. (2012) A management oriented approach to reduce a project duration and its risk - European Journal of Operational Research, Vol. 219 pages Malcolm D.G.; Roseboom J.H.; Clark, C.E. & Fazar, W. (1959) Application of a Technique for Research and Development Program Evaluation - US Navy Marshall, B. e Raz, T. (1996) Effect of resource constraints on float calculations in project networks International Journal of Project Management, Vol. 14, pages Miranda, T. (2011) Economical Control of Construction Works: Method Proposal Master Degree Thesis (Controlo Económico de Obras: Proposta de Método Dissertação de Mestrado) - Faculdade de Engenharia da Universidade do Porto Mubarak, S. (2010) Construction Project Scheduling and Control Second Edition John Wiley & Sons, Inc. Paulo, J. A. (1995) Time and Cost Integrated Management Master Degree Thesis (Gestão Integrada do tempo e do Custo - Dissertação de Mestrado) Universidade Aberta Project Management Institute (PMI) (2008) - PMBOK" - Project Management Guide Body off Knowledge 4º Edição Roldão, V. S. (2004) Performance Evaluation and Earned Value Management in Project Management (Avaliação de desempenho e Earned Value Management em gestão de projectos INDEG ISCTE), Lisboa Samuel L. Baker Critical Path Method (CPM) Julho, 2010 Sousa, N. (2008) Project Management in Construction Evaluation model of the Project performance Master Degree Thesis (Gestão de Projectos na Construção - Modelo de avaliação do desempenho em projectos Dissertação de Mestrado) Instituto Superior Técnico Stretton, A. (2007) A Short History of modern Project Management - PM World Today, vol. IX Zammori, F. A.; Braglia, M. & Frosolini, M. (2009) A fuzzy multi-criteria approach for critical path definition International Journal of Project Management, Vol. 27, pages