Early Warning Signs of Project Changes

The research team produced a number of graphics to show impacts on cost and schedule growth for fixed price projects. Below are screenshots of two such graphics that deal with Money Left On the Table (MLOT).

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Based on the Cost Reimbursable “warning sign” categories outlined above in Overview/Conclusions, the research team produced a number of graphics to show impacts on cost and schedule growth for cost reimbursable projects. Below are screenshots of two such graphics that deal with the different execution formats (Construction Management, Design/Bid/Build, and Design/Build).

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Ripple effect is a term used in the construction industry to describe a cascade of changes. High ripple projects are ones with a high number and dollar amount of successive changes because of a previous change, whereas low ripple projects are the ones with a low number and dollar amount of successive changes because of a previous change. For high ripple projects, the ripple effect can have a substantial impact on cost and schedule growth. The ripple effect is subjective. Respondents to the survey were asked to rate the ripple effect on each project as high, medium, low, or none. Below are screenshots of two graphics that show the cost growth impact of the ripple effect on Fixed Price projects and Cost Reimbursable projects.

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To supplement the findings of the research project, the industry Task Force members, consisting of owners and contractors, presented various suggestions for reducing undesired cost and schedule growth. This was done using two brainstorming sessions. The first brainstorming session used a technique known as “Force Field Analysis” to cover the following topics: quality as a driving factor, cost as a driving factor, schedule as a driving factor, private and government owners, and money left on the table. Below is a screenshot of the graphic developed for Money Left On the Table.
(SD-91, p. 74)

The second brainstorming session covered aspects of both fixed price and cost reimbursable projects. Some of the recommendations included:

• Award the Construction Manager at the same time as Design Engineering to get the CM involved in early planning
• Develop a partnering approach between owner, engineer and CM
• Freeze the design input by involving the owner’s operating department in design reviews
• Implement one project control and reporting system for the project
• Divide the construction into specialty bid packages and have the CM coordinate communication and scheduling among the specialty contractors
• Provide incentives to the CM to keep the cost down
• Pre-qualify a larger number of bidders
• Do not always award to the low bidder and re-bid if necessary