Cost/Schedule Controls

RT-006g Topic Summary
RT 006g

Overview

Research Team 6 is a group of six research topics in the area of Project Controls by CII published in 1985 to 1990. Although technology and experience have improved, the principles and practices are still very relevant and valuable today. This material serves as the primer for all subsequent research on Project Controls. The following is a brief summary of each research topic.

Project Control For Engineering (RS6-1) discusses various organizational methods, contract types, planning and budgeting, breakdown structures, codes of account, progress measurement, procurement activity, and system design/computer selectionControl of engineering activity is generally more difficult than construction activity because engineering tasks are more difficult to quantify and track, tasks are more parallel and overlapping, the responsibility for design is often is shared and sometimes engineering overlaps procurement and construction. Engineering work can be controlled with modern techniques and supporting computer systems, combined with organization and qualified people.

Model Planning & Controlling System for EPC of Industrial Projects (RS6-3) describes a planning and controlling system for the Engineering, Procurement, and Construction of an industrial project. The objective is to meet the challenges of owner deadlines, quality standards, cost and schedule optimization, human resource utilization and productivity, and forecasting of potential cost and schedule deviations. It includes five phases of EPC projects (i.e., conceptual engineering, detailed engineering, procurement, construction, startup), and control structures, which include schedule, budget, and reporting within each phase. The output from this process is collectively called the Project Execution Plan, providing the basis for control.

Project Control for Construction (RS6-5) describes Project Controls applied to fixed-price projects with engineering essentially complete, where control is considered most challenging. Variations for other types of contracts are also provided. Control activities are structured to compare actual with planned performance in a format, which provides timely status while isolating problem areas for attention. Control activities include:

  • Project control organization
  • Baseline budgets and schedules
  • WBS development
  • Codes of accounts
  • Measuring work progress
  • Earned value for fixed and variable budgets
  • C/SCSC vs. methods presented analysis
  • Trending and forecasting
  • Materials management
  • Owner changes
  • Budget and schedule variance management
  • Contingency management

Work Packaging for Project Control (RS6-6) provides solid time-tested definitions for Work Packaging basics. It further describes the concepts applied to Engineering, Procurement, Construction, and Startup phases. Definitions are included for work breakdown structures, work packages, activities, tasks, control accounts, code of accounts, and a variety of supporting documents and databases. There are numerous examples and illustrations for hierarchal structures with discussion around levels of control, and the best structural organizations for estimating, integrating cost and schedule, and data collection. 

Concepts and Methods of Schedule Compression (RS6-7) include more than 90 different techniques for schedule compression. Some force shorter schedule time and others will simply prevent needless loss of time. In some cases there will be a time-cost trade-off. The methods are listed in alphabetical order under each major heading, not in order of potential usefulness. These are categorized as follows: Ideas Applicable to All Phases of a project; Engineering Phase techniques; Contractual Approach techniques; Scheduling methods; Materials Management techniques; Work Management methods; Field Labor Management; and Startup Phase opportunities.   

The Impact of Changes on Construction Cost and Schedule (RS6-10) is based in part on CII-supported research performed by the University of California, Berkeley. It details the results of a literature search and field studies of three projects, to examine changes and identify potential impacts on project costs and schedule. While this generally discusses changes given to a general contractor by an owner, the principles are equally applicable to changes given by a contractor to a subcontractor. Included are types, sources, and timing of changes; methods for costing changes; direct and consequential effects of changes; productivity impact of interruptions; overtime delays, rework, and redirection of work; and evaluation methods and tools. 

Key Findings and Implementation Tools

1 : Project Control for Engineering

For engineering control, a task force organization is the most efficient for the larger projects while a strong matrix management approach is more practical for smaller projects. The project control system must be designed to control both work and cost. The system must encompass planning, scheduling, monitoring, reporting and analysis, forecasting, and historical data collection. Subsystems within the total system must be available to track procurement activity and to generate and maintain equipment lists, instrument lists, and other summaries associated with design engineering work. The design of the system should be based on the principle of integrated project control, and be flexible enough to handle large and small projects while also responding to special client needs. The entire professional staff of the engineering organization must be committed to and support project control and be trained in the operation of the company’s system. An effective project control system will require the establishment of a formal project controls organization. Approximately 8% or more of the costs budgeted for an engineering project should be allocated for project control to be effective. This may seem high, but the potential cost and time savings far outweigh the cost of establishing and maintaining that system.
Reference: (RS6-1)

2 : Model Planning & Controlling System for EPC of Industrial Projects

It’s impossible to engineer and construct an industrial facility without some overlap of phases. Engineering often overlaps with procurement for vendor-engineered equipment, and with construction, for long time-phased projects. To the owner, life cycle costs are more important than design-construction costs, and these costs are balanced against potential revenues. The owner will directly overlap phases, to reduce overhead and time-value of investment costs, but such savings may be eroded by the costs of rework, idle crews, premium pay, team relations, morale, quality, and operational reliability. The approach described in this report is believed to be the one with the optimum overlap. No official claims are made, but users of the process feel comfortable with time savings in the order of 15% compared to the sequential approach, and construction labor savings as high as 30% compared to other fast-track options. Labor savings result from the detailed planning (plans & specs available at start of construction), materials availability when needed (procurement tracking and materials management), and productivity improvement. For the system to work, construction must defer to the needs of start-up, engineering must defer to the needs of procurement and construction, and procurement must defer to the needs of construction. There must be a continuous team approach to planning and execution that involves the owner, operator, engineer, procurement group, and constructor.
Reference: (RS6-3)

3 : Project Control for Construction

The success of a construction project is largely dependent upon the quality of the project controls system and staff assigned as the eyes and ears of management. There must be integrated project control. Cost control is not cost accounting. The Cost Breakdown Structure is designed to catalog budgeted and actual expenditures to identify cost problems, establishing cost trends, and provide cost data for future projects. Since the major cost variable on a construction project is labor productivity, a main component of the cost control subsystem is the tracking of work-hours with quantity tracking. Schedule control requires a Control Schedule at the outset of construction. If it’s too detailed, it loses its usefulness. Arbitrary or false logic causes field personnel to lose confidence in it. A sure sign of schedule planning failure is when project control engineers are found updating schedules while the field personnel are planning their work as best they know how and reporting the results. Materials control is included in the Materials Management Program. Since materials deliveries directly affect the ability to schedule work, materials tracking should be a subsystem within the project controls system and tied to the scheduling system. The source of materials tracking information will come from procurement and expediting personnel. Positive coordination and cooperation with those personnel must be established and maintained throughout the project’s life.
Reference: (RS6-5)

4 : Work Packaging for Project Control

Work packages, as their name suggests, are packages of tasks in which completion is required for the facility to be built. For a total project, the sum of all work packages will account for all planned expenditures of personnel, materials, and equipment. It will also account for the duration of all the work. Cataloging these establishes the structure for integration of cost, schedule, and resource control. A control account can be either a task or work package depending upon the purpose. A task is an appropriate control account for collecting information for the historical database. A control schedule work package is an appropriate control account for collecting information for status reporting to an owner. The Control Schedule is mid-level with enough detail to establish key relationships. More detailed schedules and work packages are developed by the project participants for short-range planning.
Reference: (RS6-6)

5 : Concepts and Methods of Schedule Compression

Schedule control has economic significance for both owners and contractors. There are both proactive and reactive aspects to time management. Techniques used in planning are proactive; while actions to recover lost time or variances are reactive. Schedule compression is important for both modes, and techniques should be part of the skills and knowledge of professional project managers. There are 90 techniques that can be used during engineering, procurement, and construction phases. Some can be classified as constructability, productivity, materials management, or other management functions. Some overlap or are interdependent. In both proactive and reactive modes, knowledge of schedule compression techniques is considered part of the skills and knowledge of the professional project manager.
Reference: (RS6-7)

6 : The Impact of Changes on Construction Cost and Schedule

Changes can be expected, but those directing the change must understand the cost and schedule consequences. There is always a ripple effect throughout the project, and overhead administrative and engineering effort must be added to evaluate, process, and manage each change. The following recommendations and ideas are a sampling that may improve the change process and/or minimize the adverse effects of changes. The complete list is detailed in Research Summary 6-10.

  • Owners freeze the scope as early as possible in the design process.
  • A strong constructability program will reduce the potential for changes.
  • Proposed engineering changes should be reviewed and authorized through a structured change control program.
  • Owner risks should not be transferred to the contractor.
  • Fixed-price contracts should specify owner and contractor jointly own that float.
  • Owner and contractor should establish the mechanisms and procedures for administering changes at the outset.
  • The contract Changes Clause should include price and schedule adjustments for direct and consequential effects.
  • Owners, engineers, and contractors should establish a team approach to change management and openly communicate.
  • Changes should be resolved in a timely manner as they occur. Do not defer their resolution until the end of a project. Contractors should not leave pricing of changes to estimators alone. It should be a team effort.
  • All project stakeholders should make their personnel more knowledgeable about the consequences of changes.
Reference: (RS6-10)

7 : Implementation Tool #1

RS6-1, Progress Measurement Systems

The determination of percentage completion on a single activity can usually be handled under one of four systems presented in Appendix A.
  • Units Completed
  • Incremental Milestone
  • Start/Finish Percentages
  • Ratio or Judgment
Reference: (RS6-1)
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Key Performance Indicators

Improved cost, Improved schedule

Research Publications

Concepts and Methods of Schedule Compression - SD-55

Publication Date: 07/1990 Type: Source Document Pages: 752 Status: Reference

The Impact of Changes on Construction Cost and Schedule - RS6-10

Publication Date: 04/1990 Type: Research Summary Pages: 22 Status: Supporting Product

Concepts and Methods of Schedule Compression - RS6-7

Publication Date: 11/1988 Type: Research Summary Pages: 28 Status: Archived Supporting Product

Work Packaging for Project Control - RS6-6

Publication Date: 11/1988 Type: Research Summary Pages: 32 Status: Archived Supporting Product

Project Control for Construction - RS6-5

Publication Date: 09/1987 Type: Research Summary Pages: 48 Status: Archived Supporting Product

Work Packaging for Project Control - SD-28

Publication Date: 08/1987 Type: Source Document Pages: 108 Status: Archived Reference

Model Planning and Controlling System for EPC of Industrial Projects - RS6-3

Publication Date: 04/1987 Type: Research Summary Pages: 28 Status: Archived Supporting Product

Cost and Schedule Control in Industrial Construction - SD-24

Publication Date: 12/1986 Type: Source Document Pages: 105 Status: Archived Reference

Project Control for Engineering - RS6-1

Publication Date: 07/1986 Type: Research Summary Pages: 28 Status: Archived Tool

Project Control in Design Engineering - SD-12

Publication Date: 05/1986 Type: Source Document Pages: 234 Status: Reference


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