Cost/Schedule Control - Scope Definition and Control (Archived)

RT-006a Topic Summary
RT 006a

Overview

This research is the first effort of CII, published in July 1986, regarding cost and schedule control. Prior research conducted by The Business Roundtable Construction Industry Cost Effectiveness Project indicates that “Poor scope definition at the estimate (budget) stage and scope growth contributes to cost overruns.”

There are three main reasons found for underdeveloped scope:

  1. Market pressure
  2. Owner’s engineering expertise to provide complete conceptual definition
  3. Pressure to start working with the initial order-of-magnitude (feasibility, +/-50%) as it looks favorable, without further spending funds in scope definition

Cost overruns can be both apparent and real. Real overruns occur as a consequence of unjustified scope growth during engineering, other engineering changes, and a variety of engineering, procurement, and construction inefficiencies. 

The only way to reduce the problems associated with poor scope definition is to adopt an organized, efficient philosophy for planning and controlling of projects. 

Key Findings and Implementation Tools

1 : Budget Estmate Accuracy

This research describes the various categories of cost estimates that are normally prepared throughout the life cycle of the project. It is recommended that budget estimates should be of the ‘Control Estimate’ category. (RS6-2, p. 4)

Budgets prepared with higher level estimates are subject to high variability and could have the following difficulties:

  • Variability for lack of site information
  • Pressure exerted on estimators to support rough estimates to produce low cost figures difficult to justify to insure final authorization
  • Inability of estimator to predict the direction of design development
  • Individual components of an estimate have higher variability than its total
Reference: (RS6-2)

2 : Bulk Quantity Control

The installation of bulk quantities represents approximately 75% of field labor cost on an industrial project. Therefore it is important that all drawings associated with bulk quantities be completed to get an accurate representation of material and labor cost associated with bulk quantities. (RS6-2, p. 8)

The following two key difficulties should be addressed to improve the process:

  • Communication: Standarize on quantity measurement methods used for estimating, statusing, and reporting among all groups within the project
  • Design Engineer Involvment: Involve those who generate the quantities in the control process
Reference: (RS6-2)

3 : Change Management

With a well-defined project, a good project organization, and a good control structure, changes are readily classified and controlled. However, a poorly defined scope does not provide a clear baseline against which changes can be evaluated as being either changes within or outside scope. Regardless of the reason for the change, there is a need for a positive change control system within an engineering organization. (RS6-2, p. 12)

Changes originate from multiple sources including:

  • Overlooked items by the engineering team members
  • Multiple disciplines working in parallel
  • Concurrent engineering
  • Safety committee
  • Operating and maintenance staff
  • Constructability reviewers
  • Facility sponsors
Reference: (RS6-2)

4 : Implementation Tool #1

RS6-2, Change Control Program

This reseach outlines nine suggested elements of a change control program:  (RS6-2, p. 13)

  • Owner Commitment to Change Control: Install a formal change review commitee
  • Team effort: Among owner, engineering, and contractor
  • Freesing Design: Time to freeze design is after P&IDs have been completed
  • Formal Change Justification: Every change must be justified and reviewed by supervisors and affected parties. The initiaor of the change must estimate the impact of the change both as to cost and schedule, identify other areas of the project that may be affected by the change.
  • Selected Change Justification
  • Operating Facility Liaison
  • Optional change: Some changes could provide cost savings, however it can have considerable consequential effects that overrun the saving.
  • Filtering Changes form Owner Personnel
  • Contractor Incentives

 

Reference: (RS6-2)

5 : Implementation Tool #2

RS6-2, Inadequate Scope Definition 

This research recommends 24 actions to eliminate/minimize problems associated with inadequate scope definition during the feasibility, conceptual engineering, detailed engineering and construction phases. (RS6-2, p. 17)
Reference: (RS6-2)

Key Performance Indicators

Improved cost, Improved schedule, Reduced project growth

Research Publications

Scope Definition and Control - RS6-2

Publication Date: 07/1986 Type: Research Summary Pages: 24 Status: Archived Tool


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