6 Schedule Control Use Regularly update Gantt chart FrequencyPerformance reports, change requests, time management plan, corrective action, lessons learnedControl techniques e.g. meetings, 1:1
7 Schedule Control: Steps To Control Schedule:Incorporate any additional tasks and revise duration estimatesAdd activities that were overlooked when the original plan was developedAdd new activities due to unanticipated eventsAnalyse the schedule to determine which areas may need corrective action
8 Approaches to Schedule Control Decide what specific corrective actions should be takenRevisit the plan to incorporate the chosen corrective actionsRecalculate the schedule to evaluate the effects of the planned corrective actionsIf the planned corrective actions do not result in an acceptable schedule, repeat the previous stepsA new baseline plan is established and used as the benchmark for comparisonObtain client approval before proceeding
9 Approaches to Schedule Control Each time a schedule is recalculated:Identify the critical pathIdentify any activities that have a negative slackCompare paths where slippage have occurred (Slack got worse)Apply acceleration to the paths with negative slack:The most negative slack should be given top priorityFocus on activities that are in progress or to be started in the immediate futureFocus on activities that have long duration estimates
10 Acceleration To reduce schedule: Apply more resources to speed up an activityAdd more peopleIncrease hours per day or increase days per weekAssign person(s) with greater expertise or more experienceReduce the scope or eliminate the activity if possibleIncrease productivity through improved methods or technology
11 AccelerationTrade-off in the form of an increase in costs or a reduction in scopeThis could jeopardise elements of the overall project objective: scope, budget, schedule, and/or qualityThere may be a dispute over who should absorb any increased cost to accelerateBonus provision if project is completed earlyLiquidated damagesProject meetings are a good forum for addressing schedule control issues
13 Cost Control System (Earned Value) Any cost control system should enable a project manager to observe current perfomance levels, compare them with budget levels and institute corrective actions to keep performance, and ultimately costs, within acceptable range
14 Elements of Effective Cost Control System ObservationComparison of observation with budgetCorrective action to take if necessaryCan also serve as:A basis for a productivity improvement programA measure of productivity loss caused by adverse factors and changed conditions such as winter work, acceleration, design changes, etc.
15 Cost Control System Compares actual man-hours expended to earned hours Actual man-hours come from contractor’s daily time sheetsEarned hours are calculated by multiplying the completed quantities during a period by estimated man-hours per unit quantitySee figure following as an example
17 Cost overrun Budget Money Time Now Actual Expenditure Earned Value NOTES:_______________________________________________________________________________________________________________________Earned ValueTimeDelay
18 Money Budget Ahead of schedule Earned Value Making Money Actual Time NOTES:_______________________________________________________________________________________________________________________ActualTime
19 ConclusionYou can draw immediate attention to significant deviations from what was plannedIndicate what corrective action is necessary and by whomDependent on accurate reporting and correct allocation of hours expended
21 5-Step Project Management PLANNING IMPLEMENTATION DEFINEPLANORGANIZECONTROLCLOSEIdentifyproject activitiesState the ProblemDeterminePersonnelNeedsDefineManagementStyleObtainClientAcceptanceInstallDeliverables andCommissioningDocument theProjectIssue FinalReportConduct Post-ImplementationAuditIdentifyProjectGoalEstimate time and costRecruitProject MangerEstablishControl ToolsList theObjectivesRecruitProject TeamPrepareStatus ReportsReviewProjectSchedule, cost,team reportIssue ChangeOrdersQuality andCommunication managementDeterminePreliminaryResourcesOrganizeProject TeamBiddingIdentifyRisks andstakeholdersSuccess criteriaWrite Project ProposalAssign WorkPackagesDecisionProject charter WBS Recruit Criteria Variance Reports Final ReportProject network Define Work packages Status Reports Audit ReportsProject proposal Assign Work Packages
22 PurposeTo ensure that the works have been completed as specified, and that all facilities work properlyTo provide a record of the actual execution, together with operating instructionsTo train staff in the use of the works
23 Purpose To formally close out contractual relationships Obtain sign off on final report to show contracted deliverables have been successfully implementedTo formally terminate project team assignmentsTo ensure adequate project documentation and baseline information for changes that may need to occur in the futureTo obtain client’s acceptance of project work and deliverables
24 Deficiency ListsThese are lists of required repairs or completion of deficient/incomplete items.Schedule for completion of deficiencies.Need a sign-off procedure.Need a handover process to turn project over to Owner in organized way.
25 RecordsDuring implementation, difficulties may arise which result in changes to the original design. Records of these changes will be kept during implementation, mainly for financial and engineering reasons. These must be brought together to make a complete record of the actual execution.
26 As-built Drawings Mandatory on some projects. Should be provided on all projects.Reflect what was actually built.Contract documents must set a date for completion of as-built drawings.Make sure they are worked on as the project is built do not wait for the end of the job.
27 Termination Process Project termination can be complicated A systematic approachStay in close contact with the client and administration to ensure close down meets with the client’s satisfaction.
28 Termination Process Generally the termination phases include: 1. Prepare termination logistics2. Document project3. Conduct post implementation audit and prepare and submit final report4. Obtain client approval5. Close operation
29 Conduct Post- Implementation Audit: Prepare and Submit Final Report TerminationLogisticsPROJECT TERMINATIONPHASESCloseOperationDocumentThe ProjectProjectTerminationPhasesObtain ClientApprovalConduct Post- ImplementationAudit: Prepare and Submit Final Report
30 Final Report Memory or history of the project. File others can refer to, study progress and impediments of the project.Can follow many formats.Should answers the following questions:Was the project goal achieved?Was the project work done on time?Was it done within budget?Was it done by specifications?Was the client satisfied with the project results?
31 Final Report Usually includes the following elements: Overall success and performance of the projectOrganisation and administration of the projectTechniques used to accomplish project resultsAssessment of project strengths and weaknessesRecommendation of project manager and team for continuation or extinction of project
32 Rewarding Successes and Learning From Failures Closing a project is a celebration of effort.Brings resolution to the process.Project manager should bring the team together to review their journey.Way of closing formal and informal relationships.Way to re-enforce learning that occurred.Final get together brings project full circle.
33 Concluding Remarks Projects - an increasingly important way of working Project management is challenging, rewardingKeep it simple, use aspects of project management that make senseDon’t be an Accidental Project ManagerIts OK to make mistakes…learn from them to improve project management practices
37 Claim is “The assertion of a right” “A demand for something due” Filed by Contractor or OwnerA claim need not become a disputeA dispute need not develop into litigation
38 Causes of Claims Claims Pertaining to Quantity Claims Pertaining to QualityClaims Pertaining to Methods or Schedule of the Work
39 Claims Pertaining to Quantity Change In DesignChange In Site/subsoil ConditionsIncreased QuantitiesExtra WorkMeasurement Of Work Performed
40 Claims Pertaining to Quality Ambiguous SpecificationUnreasonably Demanding InspectionDesign Enhancement Via The Shop Drawing Approval ProcessDeficiencies
41 Claims Pertaining to Methods or the Schedule of the Work DelayDisruptionInterferenceAcceleration
42 Change OrderIs a written agreement to modify, add to, or alter the work from that set in the contract documents at the time of opening bids, provided that such alteration can be considered to be within the scope of the original project.It is the only legal means available to change the contract provisions after the award of contract
43 Change Order Could be addition to or deletion from the work changes in the method of execution or manner of work performancechange in owner-furnished materials or facilitieschange in the contract time or order of the workcorrect errors in the plans or specificationsdirect results of contractor suggestions that are approved by the owner and its agentsChanges may involvea price change in the contractor’s favorcash credit to the ownerno price change at all
44 Impact CostsChanges in the work may well exceed the cost of the immediate change itself.Many change order forms contain an exculpatory (disclaimer) clause that precludes a contractor from recovery of impact costs.Parties sometimes agree on the price of a change in both time and money, but the contractor wants to reserve the right to file for impact costs.Contractor would be ill-advised to sign off on a change order without a clear reservation, if it expects to claim any future impact costs.if owner refuses to accept reservation, contractor should perform the changed work under protest without signing the change order or agreeing to a price
45 Reservation by contractor This proposal is based solely on the usual cost elements such as labour, material, and normal markups, and does not include any amount for changes in the sequence of work, delays, disruptions, rescheduling, extended overhead, acceleration, and/or impact cost. The right is expressly reserved to make claim for any and all of these, and related items of cost, prior to any final settlement of this contract.How would you react?By this example, the Project Manager is protecting his/her rights ie. not waiving their rights by signing off on change orders that pay part of the extra costs.This will enable the vendor to claim at a future date when impact and other costs are known.If you are the owner representative, would you accept this qualification? What are the consequences if you accept?
46 If a change becomes a dispute Estimate the the impact costsDesign changes can be an addition or deletion to scope. In all cases, Project Management needs to be able to identify changes which fall outside the original scope of work and add to project cost and time.Good record keeping and a clear process for change implementation are important:-obtain written authorization before proceeding with extra work-document delays and impacts. Request appropriate time extensions and be clear who is paying for additional cost-if acceleration (speeding up) is needed to overcome delay caused by changes and its impct, clearly identify who is paying for the additional costs of acceleration.
48 Basic Principles in Handling Change Orders No work should be included beyond the scope of the base contract.The identity of the individuals authorized to request and approve change orders should be established early.During the kick-off meeting, discuss the change order handling procedures.All changes in the work must be authorized in writing prior to the execution of any change.The scope of a change order must be clear, and a request for a change order proposal should contain enough information to enable the contractor to make a realistic estimate.
49 Basic Principles in Handling Change Orders The contractor should submit its proposal to execute a change order as soon as possible after receiving the request and the owner’s approval or rejection should follow as soon as possible.The proposal should be fair. It should recognize the contractor’s right to include:overhead and profit percentagescompensation for legitimate time-delay claimscompensation for legitimate impact costs if any
50 Types of Changes Directed changes Owner directs the contractor to perform work that differs from that specified in the contractEasy to identify, mutually recognizedDisagreements tend to center on questions of financial compensation and the effect of change on the schedule
51 Types of Changes Constructive Changes Is an informal act authorizing or directing a modification to the contract caused by an act or failure to actdefective plans and specificationsengineer’s interpretationhigher standard of performance than specifiedimproper inspection and rejectionchange in method of performancechange in the construction sequenceowner nondisclosureimpossibility/impracticability of performanceMust be claimed in writing within time specifiedMajor source of disputes
52 Sample of a change order PROJECT TITLEPROJECT NO. CONTRACT NO. CONTRACT DATECONTRACTORThe following changes are hereby made to the Contract Documents:Construction of access bridge abutment No. 1 drainage system; andReset two penstock bearing plates. All in accordance with revised DWG S-17209Revision 3, dated 28 August 1991.Justification:Unforeseen soil conditionsCHANGE TO CONTRACT PRICEOriginal Contract Price: $Current contract price, as adjusted by previous change orders: $The Contract Price due to this Change Order will be (increased) (decreased) by: $The new Contract Price due to this Change Order will be: $CHANGE TO CONTRACT TIMEThe Contract Time will be (increased) (decreased)by calendar days.The date for completion of all work under the contract will beRequested by datedRecommended by datedOrdered by datedAccepted by dated
55 Partnering Partnering Tries to instil co-operation amongst project participantsFocuses on teamwork, communication and alignment of goalsA partnering workshop is usually conducted at start of projectUsed extensively on US government projects with good results
56 2. Risk Allocation No Time Extension No Damage For Delay * Changed Soil/Soil Conditions *Engineering Work *Quantity VariationNotice Provisions
57 Disclaimer Clauses No damage for delay Examination of the work Examination of engineering work
58 No Damage for Delay“....., the contractor shall not have any claim for compensation for damages against the owner for any stoppage or delay from any cause whatsoever.”
59 Examination of Work“The bidder is required to investigate and satisfy himself of every thing and every condition affecting the work to be performed and the labour and material to be provided, and it is mutually agreed that submission of tender shall be conclusive evidence that the bidder has made such an investigation.”
60 Examination of Engineering Work “Any representations in the tender documents were furnished merely for the general information of bidders and were not in any way warranted or guaranteed by or on behalf of the Owner or the Owner’s consultants’ and its sub-consultants’ employees, and neither the Owner nor its consultants or its employees shall be liable for any representations, negligent or otherwise contained in the documents”
61 Changed soil/site conditions Most common claimsInnocent misrepresentationDuty of contractor to ascertain if practical to execute workContractor cannot abandon the contractDisclaimer clause bind contractorCompensation within framework of contract
62 Notice Provisions“Any claims which the contractor may have against the Owner shall be presented to the Engineer in writing not later than seven (7) days after the occurrence of the delay.Failure by the contractor to present any claim within the seven (7) day period shall be deemed to be an absolute waiver of such claim.”Strict ComplianceAny reasonable form of written notice is sufficient
63 3. Project Administration 3.1 Planning/Scheduling3.2 Record Keeping3.3 Project Monitoring
66 Planning/Master Schedule DesignSite AvailabilityPurchase/Delivery of Process EquipmentPurchase/Delivery of Owner-supplied MaterialsInterfacing of Various Packages
67 Planning/Master Schedule Tender Call for Various PackagesContract Award of PackagesCompletion of PackagesCommissioningCommercial Operation
68 3.2 Record KeepingDo not proceed with the extra work and changes without written authorizationObject to biased minutesDocument delays and impactsRequest appropriate extension of time and make clear who pays for additional costMake clear who pays for accelerationRespond to complaintsIn general, contractors fail to keep a good record, actively administer the contract and to keep proper record. Experience, shows contractors fail in many areas identified in this slide.See also paper entitled “Contractors Construction Claim Avoidance” by George Jergeas and Francis Hartman published by the ASCE Journal Vol. 120, No. 3, Sept. 94.Contractors typically have problems with poor record keeping, such as proceeding with changes without authorization, poor meeting minutes verifications, etc. Records should be kept daily that document the project status, such as temperature, weather and quantities produced. These records could be written, photographs, video, CPM schedules - See also next slides.
69 Records to Keep Daily job reports Photographs and video films and digital picturesAll correspondenceMinutes of site job meetingSchedules and updatesChange ordersCost/labour reportsDiariesIt is a good practice to have your own personal diary - filled out daily in a concise, clear and factual manners.Attention should be paid to the establishment and maintenance of the above documents.
71 3.3 Project Monitoring Updating Schedules Non-adversarial notification toolIllustrate and quantify cost and schedule impact of changes or other delays to the planWatch for:Early completion scheduleYour commitmentRegularly update CPM schedule and use it as a friendly method of notification of delays occurring on the project. You do not need to write nasty letters if you are experiencing delays. The most important thing is to inform the owner of the delay so that an action can be taken to mitigate the damage of the delay. Schedule update can illustrate the delay and its impact on the project plan.Presenting the CPM Schedule to the owners is a non-adversarial approach highlighting the impact of schedule delays and changes. The contractor should ensure that all notice provisions, such as time limits on filing claims, are satisfied. Contractors should have a thorough understanding of how risk is apportioned on the contract, especially on how claims may arise from the apportioned risk.
72 3.3 Project Monitoring: Usual Pitfalls Defective (Ambiguous) SpecificationsIncomplete/Unclear DrawingsDesign Enhancement Throughout The Shop Drawing Approval ProcessFailure To Provide Proper Instructions
73 3.3 Project Monitoring: Usual Pitfalls Use of Inapplicable Standard DrawingsIneffective ExpeditingIneffective Store Management
74 3.3 Project Monitoring: What to Watch Out For Timely Response to QueriesShop Drawing Turnaround TimeUnduly Harsh (Demanding) InspectionPersonality ConflictPayment for Changes and extrasFront-end loading
75 3.3 Project Monitoring: Active Interference Improper Rejection of an Equally Suitable AlternativeInterference with Method of ConstructionInterference with Sequence of Construction
76 3.3 Project Monitoring: Constructive Acceleration Contractor is Entitled to Extension of TimeContractor Requested Extension in a Timely MannerOwner Refused Request
77 Claims by Owners: Contractor Refuses to Sign The Contract Mistake in BidCannot be BondedLeft Too Much on the Table
78 Claims by Owners: Contractor Late in Completion Liquidated DamagesGeneral Damages
79 Obstacle to Resolution Owner’s biasContractor’s biasTotal cost claims-Owner’s bias-loss is caused by contractor’s action or inaction-loss is caused by contractor’s mismanagement-loss is caused by contractor’s under estimation-loss is caused by contractor’s strikes, weather - nothing to do withthe owner-Contractor’s bias-loss is caused by owner’s mismanagement or interference-loss is caused by owner’s design changes-contractor is not responsible and managed the job properly-contractor did not underestimate the job-Total cost claims-claims are prepared that request the entire difference between actual cost and estimated costs. This means that there is one side responsible for all the cost overrun. This is not true.The above approach is NOT fair and does not lead to a fair and successful resolution of disputes. How do you deal with claims, i.e., how do you prepare or evaluate claims?
80 Owner’s Bias Loss is vastly overstated by contractor Underbidding Inadequate supply of resourcesMismanagementStrike, inclement weather, default of subs...
81 Contractor Bias Causes of loss Late supply of equipment, drawings Changed conditionsAccelerationDesign changes
82 Total Cost ClaimsContractor submits without notification a claim for additional costsActual minus estimatedThis means:no underbiddingall causes owner’s responsibilitydamages were mitigatedno other practical method
83 Successful Settlement Get the factsKeep good recordsKnow your contractPreserve your rights
84 ENTITLEMENT (CONTRACT) CLAIM COMPONENTSENTITLEMENT (CONTRACT)CAUSEEFFECTLINK OF CAUSE TO EFFECTFACTSDAMAGE / COSTINCURRED
85 UNWILLINGNESS TO RESOLVE IT IS HAVING AN HONEST DISPUTE IS NOT SHAMEFULUNWILLINGNESS TO RESOLVE ITIS
86 Resolution of Disputes During ConstructionPost-Construction
87 During Construction Negotiation Face to face by parties themselves Cheapest & quickest method
88 During Construction Joint Performance Evaluation Specific criteria to evaluate effectivenessProgress meetingsForum for identifying a problemPeriodic surveyCompare of survey responsesidentify areas of improvement and potential problems
89 Example: Joint Evaluation 1. Communications between the owner/contractor personnel are………2. Top management support ofpartnering process is……………………3. Problems, issues or concerns are……4. Cooperation between owner andcontractor personnel is…………………5. Responses to problems, issues,or concerns frequently become………Difficult, guardedEasy, open, up frontNot evident,InconsistentObvious, consistentAttacked promptlyIgnoredCool, removed, detached,Genuine, unreserved, completePersonal issuesTreated as project problems
90 During Construction Problem Resolution Mechanism Lowest level with time limitEscalated to the next level of managementNo action is not an option
92 During Construction Project Neutral Adjudicator: Appoint an impartial professional to offer unbiased advice and decisionsSome contracts/contracting processes based on this principleNew Engineering Contract (NEC) by the UK Institute of Civil Engineers
93 During Construction Dispute Resolution Board (DRB) Three members Established at the beginning of projectNon-bindingThis is another useful, economical option available to apply on projects.
95 Mediation Voluntary Economical Uses impartial mediator to facilitate conciliation processAssist negotiationRelies on communication to achieve resolutionProblem solving approachDecision is not bindingSome contracts include mediation clausesMediation involves hearing positions and helping the participants resolve the dispute themselves. The success of mediation is 85% in self motivated mediation (ie both sides wanted mediation, 60% for court-imposed mediation). This is very economical compared to other alternatives. The only drawback is that decision of a mediator is not binding on the parties.Ideally, disputes should be resolved by either negotiation or mediation, not litigation. Mediation is the most cost effective method of disposing of disputes after negotiation.
96 Mini-trialPresentation of both sides’ arguments before an advisory panel and executives of both sides. May include a judgeUsed to predict the likely outcome and the strength and weakness of the caseVoluntary and non-binding
97 Arbitration Provisions for arbitration are included in most contracts May or may not require mandatory arbitrationMost contracts stipulate that the process will be governed by the “arbitration act”
98 Arbitration Uses impartial arbitrator(s) as “trier of facts” 1or 3 arbitratorsSelection of arbitratorsEach party selects one arbitratorBoth select a chairpersonDecision is mostly bindingCould be expensiveArbitration was introduced to resolve dispute and reduce cost of litigation. Arbitration provides a binding solution to disputes. However, as the time and costs required to resolve arbitration disputes increases, the costs are beginning to approximate those of litigation.
99 Litigation Outcome decided by the courts Not private Dirty linen is hung out!Very adversarialNot recommended!
100 Litigation Too adversarial Outcomes unpredictable Very expensive and lengthyCost of a $100,000 litigation was shown to be $140,000 for each
101 COST OF A $100,000 CONSTRUCTION LITIGATION: Fees & Disbursements * Plus $6,000 for Transcripts** Plus $15,000 for Experts $1,500 per day
102 Voltaire“I have only been ruined twice in my life. The first time was when I lost a lawsuit: the second, when I won one!”
104 Conclusions Pay attention to risk allocation Understand contractual termsEven unpalatable terms are enforceableWork within terms of contractUnderstand causes of claimsNip problem in the budEarly non-adversarial communicationKeep negotiatingWork with peopleProper project managementNew approaches
105 Key PointsTRUST is the key to effective contracting and project deliveryBeware of the practical impact law of contractRead and understand your contractApportion risks on a business basisChanges are inevitable, so accommodate it