Guideline For Construction Project

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GUIDELINES FOR

THE MANAGEMENT
OF CONSTRUCTION
PROJECTS
VOLUME 2

Guidelines for the Management of Construction Projects Page 1 of 106


September 2020
TABLE OF CONTENTS

PART III: PROJECT CONTROLS.............................................................................................................. 8

6. PROJECT SCOPE MANAGEMENT .................................................................................................. 9

6.1. Overview .................................................................................................................................... 9

6.2. Development of the Scope ......................................................................................................... 9

6.2.1. Initial Scope Authorization ................................................................................................. 9

6.2.2. Determining Product Scope: .............................................................................................. 9

6.2.3. Performance and Quality Requirements For Each Space Type ...................................... 11

6.3. Authority for Scope Decisions .................................................................................................. 12

6.4. Managing the Scope during the Planning and Design Phases................................................ 12

6.5. Procedure for Changes to the Scope during Planning and Design Phases ............................ 13

6.5.1. General: ........................................................................................................................... 13

6.5.2. Fee Proposal from PF ...................................................................................................... 14

6.5.3. Evaluation and Recommendation of the Fee Proposal ................................................... 14

6.6. Managing the Scope during the Construction and Close-out Phases ..................................... 14

6.7. Process for Changes to the Scope during the Construction and Close-out Phases ............... 15

6.7.1. General ............................................................................................................................ 15

6.7.2. Change Order Process .................................................................................................... 15

6.8. Value Engineering (VE) ........................................................................................................... 15

7. PROJECT TIME MANAGEMENT .................................................................................................... 16

7.1. Overview .................................................................................................................................. 16

7.2. Development of the Project Master Schedule ......................................................................... 16

7.2.1. Critical Path Method (CPM) ............................................................................................. 17

7.3. Managing the Schedule during the Construction and Close-out Phases ................................ 17

7.4. Procedure for Changes to the Schedule during the Construction and Close-out Phase ......... 18

7.4.1. Contractor Requests for Additional Time (Extension of Time, EoT) ................................ 18
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7.5. Authority for Changes to Schedule .......................................................................................... 18

7.6. Schedule Reporting ................................................................................................................. 19

7.7. Earned Value Management (EVM) .......................................................................................... 19

8. PROJECT COST MANAGEMENT ................................................................................................... 20

8.1. Cost Planning ........................................................................................................................... 20

8.2. Life Cycle Costing and Sustainability Considerations ............................................................. 24

8.3. Contingency Planning .............................................................................................................. 25

8.4. Cost Control ............................................................................................................................. 26

8.4.1. Developing a Cost Control System .................................................................................. 26

8.4.2. Developing a Cost Control Reporting System ................................................................. 26

8.5. Cost Control during the Planning Phase .................................................................................. 27

8.5.1. Overview of Cost Control Objectives during project planning.......................................... 27

8.5.2. Focusing on Cost Drivers ................................................................................................. 28

8.6. Cost Control during the Design Phase .................................................................................... 28

8.6.1. General ............................................................................................................................ 28

8.6.2. Milestone Estimates ......................................................................................................... 28

8.6.3. Assessment of the Market Conditions, Contingencies and Escalation ............................ 28

8.7. Cost Control during the Construction Phase ........................................................................... 28

8.7.1. Construction - Contract Change Management ................................................................ 28

8.8. Value Engineering (VE) as a Cost Control Tool ...................................................................... 29

8.9. Changes to Project Cost .......................................................................................................... 30

8.9.1. Change Notification .......................................................................................................... 30

8.9.2. Change Order of Value .................................................................................................... 31

8.9.3. Change Order Request .................................................................................................... 31

8.9.4. Task Orders ..................................................................................................................... 31

8.9.5. Cost Reallocation Request .............................................................................................. 31

8.9.6. Allowance Use Request ................................................................................................... 32


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8.9.7. Authorized Contingency Expenditure Request (ACER)................................................... 32

8.9.8. Request for Approval (RFA) ............................................................................................. 32

8.9.9. Due diligence tasks that should be carried out by the Contractor relating to change
orders requests and administration: ................................................................................................. 32

8.10. Authority for Cost Change Decisions ....................................................................................... 34

8.11. Project Cost Administration...................................................................................................... 34

8.11.1. General procedures for managing changes to project costs ........................................... 34

8.11.2. Procedure for Requesting Additional Cost ....................................................................... 35

8.11.3. Requisitions Process ....................................................................................................... 36

8.11.4. Amendment Process ........................................................................................................ 36

8.11.5. Owner's Partial or Total Withholding of Periodic Payments............................................. 36

8.11.6. Processing invoices for change orders ............................................................................ 37

8.11.7. Preventing Cost Overruns ................................................................................................ 37

8.12. Project Cost Reporting ............................................................................................................. 38

9. PROJECT RISK MANAGEMENT ..................................................................................................... 39

9.1. Overview .................................................................................................................................. 39

9.2. Risk Identification ..................................................................................................................... 41

9.2.1. Types of Risk ................................................................................................................... 41

9.3. Risk Assessment ..................................................................................................................... 43

9.3.1. Qualitative risk assessment ............................................................................................. 44

9.3.2. Quantitative risk assessment ........................................................................................... 48

9.4. Risk Response Planning .......................................................................................................... 49

9.4.1. Risk Mitigation .................................................................................................................. 49

9.5. Risk monitoring and control ..................................................................................................... 51

9.6. Development of a Risk Management Plan .............................................................................. 52

9.6.1. Minimum Risk Management Requirements ..................................................................... 52

9.6.2. Risk reporting ................................................................................................................... 53

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9.6.3. Project Contingency Allowance ....................................................................................... 54

9.6.4. Roles and Responsibilities during the preparation of a Project Risk Management Plan . 63

10. PROJECT CHANGE AND ISSUE MANAGEMENT .................................................................... 69

10.1. PROJECT QUALITY MANAGEMENT(Overview) ................................................................... 69

10.2. Project Quality Management Plan (QMP) ................................................................................ 70

10.3. Quality Management during Design ........................................................................................ 71

10.4. Quality Management During Procurement .............................................................................. 72

10.5. Quality Management During Construction ............................................................................... 72

10.5.1. General ............................................................................................................................ 72

10.5.2. Quality Plan for sub-projects ............................................................................................ 73

10.6. Inspections and Tests .............................................................................................................. 74

10.6.1. General ............................................................................................................................ 74

10.6.2. Special Inspections .......................................................................................................... 75

10.6.3. Operational Tests ............................................................................................................. 75

10.6.4. Coordinated Tests ............................................................................................................ 76

10.7. Non-conforming Works, Remedial and Preventive Actions ..................................................... 76

10.7.1. General ............................................................................................................................ 76

10.7.2. Procedure......................................................................................................................... 77

PART IV: OTHER CONSIDERATIONS ................................................................................................... 78

11. Project Communication Management .......................................................................................... 78

11.1. Overview .................................................................................................................................. 78

11.2. Project communication planning .............................................................................................. 78

11.2.1. General ............................................................................................................................ 78

11.2.2. Communication Strategy .................................................................................................. 79

11.2.3. Communication Flow ....................................................................................................... 79

11.2.4. Document Flow ................................................................................................................ 79

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11.2.5. Project Meetings .............................................................................................................. 79

11.2.6. Project Reports Procedures ............................................................................................. 80

11.2.7. Project Reports Review Objectives.................................................................................. 81

11.3. Project information distribution ................................................................................................ 82

11.3.1. General ............................................................................................................................ 82

11.3.2. General Information Security Procedures ........................................................................ 83

i. ST/SGB/2016/11 Organization of the Office of Information and Communications Technology ........... 83

11.3.3. Procedures for Information Security during the Bidding Process .................................... 86

11.3.4. Procedures for Information Security during Bid Award .................................................... 87

11.3.5. Procedures for Information Security during Construction ................................................ 88

11.4. Project performance reporting ................................................................................................. 89

11.4.1. General ............................................................................................................................ 89

11.4.2. Reporting to the General Assembly - Reports of the Secretary-General ......................... 89

11.4.3. Reporting to the Senior-Level Advisory Committee ......................................................... 90

11.5. Project administrative closure .................................................................................................. 91

11.6. Coordination with UNHQ .......................................................................................................... 91

12. PROJECT PROCUREMENT MANAGEMENT ............................................................................ 93

12.1. The UN Procurement Process ................................................................................................. 93

12.1.1. Expression of Interest (EOI) ............................................................................................. 93

12.1.2. Source Selection Plan ...................................................................................................... 94

12.1.3. Solicitation method ........................................................................................................... 95

12.1.4. Evaluation criteria and rating system ............................................................................... 95

12.1.5. Timeline............................................................................................................................ 96

12.2. Scope of Work.......................................................................................................................... 97

12.2.1. Terms of Reference ......................................................................................................... 97

12.2.2. Workplan .......................................................................................................................... 98

12.2.3. Deliverables ..................................................................................................................... 98


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12.3. Request for Proposal (RFP) ..................................................................................................... 98

12.3.1. Coordination with UNPD and OLA ................................................................................... 99

12.3.2. Issuance of RFP to Qualified Vendors ............................................................................. 99

12.4. Proposal evaluation process .................................................................................................... 99

12.5. Approval by Committees on Contractors ............................................................................... 100

12.5.1. Local Committees on Contract (LCC): ........................................................................... 100

12.5.2. Headquarters Committee on Contract (HCC): ............................................................... 100

12.5.3. Presentation to the HCC ................................................................................................ 100

12.5.4. Review of Cases by the HCC......................................................................................... 101

12.5.5. Ex-Post Facto Cases ..................................................................................................... 102

12.6. Contract Award ...................................................................................................................... 102

12.7. Procurement Flowchart .......................................................................................................... 103

12.8. Procurement Timeline – Bid Phase ........................................................................................ 104

13. Project Human Resource Management ..................................................................................... 105

13.1. Project organizational planning, ............................................................................................. 105

13.2. Recruitment of the project team ............................................................................................. 105

13.3. Management and development of the project team .............................................................. 105

13.4. Dissolution of the project team............................................................................................... 106

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PART III: PROJECT CONTROLS

Overview of Project Controls

Project controls are generally understood to be the data gathering, management and analytical processes
used to predict, understand and constructively influence the outcomes of a project; by way of assisting
with effective management and decision making.

The development of a robust Project Control system is a critical part of the project management effort, as
a successful project can only be achieved through the implementation of effective project controls. As
such, project controls have to be applied during all stages of a project, starting from the initial
conceptualization to the final close-out of the project.

This section provides information on project controls, which should be used as a reference point to
develop and implement a dedicated Project Controls system. These controls are discussed in this order:

i. Project Scope Management


ii. Project Time Management
iii. Project Cost Management
iv. Project Risk Management
v. Project Change and Issue Management
vi. Project Quality Management

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6. PROJECT SCOPE MANAGEMENT

6.1. Overview

a. Scope in the context of this section refers to the work that must be performed in order to deliver a final
product that meets the requirements of the programme.

b. A clearly documented scope of works is critical to the development of a viable project implementation
and management plan. The scope would provide a shared vision of the program's implementation
and clearly define the programme objectives and major components. The scope provides the basis
for future project decisions.

c. A basic element of controlling a programme is controlling the scope and the associated criteria that
govern performance and quality of the built environment. The objective is to ensure that the program
delivers all the work required and to the required performance and quality. The steps involved include
the initial authorization of the scope of the project, the definition of how the scope will be measured,
current scope elements, methods of scope verification and managing scope changes.

6.2. Development of the Scope

6.2.1. Initial Scope Authorization

a. The major elements of the project shall be based on the findings of the building conditions
assessment conducted during the Conceptual Phase.
b. Refer to Section 2.9.1 Initial Scope Authorization

6.2.2. Determining Product Scope:

a. Product scope, which is the description of the physical portion of the project to be delivered and is
measured against set requirements, standards, criteria and objectives.

b. The basic measure of physical scope for the project shall be ‘area’. Area can be measured both in
net square metres/feet and in gross square metres/feet; the difference being the efficiency of the

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space delivered. This will cover both new construction and renovation. It is also necessary to
subdivide the space and to define functional space types.

c. The following chart presents a recommended approach to defining usable/occupiable space as


constructed and the built areas associated with efficiency and grossing to yield an overall gross area.

d. The PM team should establish a methodology for allocation of space for the entire project.

Space Type Definitions


Occupiable Program Area
Space Type (SM)
line # A B
1 O-1 Senior Esecutive Office Suites SM
2 O-2 Executive Offices SM
3 O-3 General Office Areas SM
4 SP1 Laboratories SM
5 SP2 Food Service SM
6 SP4 ADP Areas SM
7 SP5 Conference & Classrm/Traning Facilities SM
8 SP7 Concessions/Retail Spaces SM
9 C1 Operations Centers SM
10 C2 Shielded Enclosure SM

11 SUBTOTAL (Net Areas) lines 1-10 above 0

Building Infrasture Area Space Types


15 Public Restrooms And Custodial Spaces SM
16 Circulation SM
17 Mechanical And Electrical Spaces SM
18 Building Entry Points SM
19 Security Closets SM
20 Electrical Substation SM
21 Customer Service Centers SM
22 Exterior Walls SM
23 Combined Telecommunications Closets SM
24 Communications Equipment Rooms SM
25 Special Rooms SM

26 SUBTOTAL lines 15-25 above 0

27 FACILITY TOTAL (Gross Area) 0 SM

Figure x: Space Type Definitions

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6.2.3. Performance and Quality Requirements For Each Space Type

a. The performance and quality criteria defined by the PF and in response to the Owner’s requirements
will be defined for each space type and for major variations within each space type. Appropriate
performance measures should be clearly defined for each of the following categories:

 Accessibility;
 Durability;
 Security;
 Serviceability;
 Flexibility;
 Maintainability;
 Replaceability;
 Other criteria may be defined.

How The Space Elements Combine To Make Up The Building Area

Gross External Area

Gross Internal Area

Net Internal Area


(RBNY Usable Area for Single Tenant Floor)
Core & Plant Area (Plus Space Occupied By Other Tenants)

Occupant Area
(BOMA Usable Area, RBNY
Usable Area for Muti-Tenant Floor)
(Building Necessary Corridors and Hallways)

Net Usable Area


(Partions, Enclosures, Structure)

External Walls
Tenant Area Floor Obstructions
Meeting Rooms

Primary Circulation
Auxilliary

Secondary Circulation
(Staff Entitlement)
Workspace

Support

Non-Assignable

Assignable Loss Area

Figure x: Different Space Elements

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6.3. Authority for Scope Decisions
a. Decisions on scope changes should be made by the Project Owner or their delegated responsible
Official, upon receiving advice from the PM.

b. All scope change requests and/or instructions should be logged in the project database and also
filed electronically and hard copy appropriately.

c. Scope can be changed or updated through the revision to the Scope Confirmation Report,
through Design Bulletins, or through Meeting Minutes. Scope changes should be distributed to
all firms and reviewed at the contract meetings.

6.4. Managing the Scope during the Planning and Design Phases

a. The PF design team should be directed by the PM to prepare an analysis of scope at each major
deliverable and as otherwise directed. The analysis will include a comparison between each item and
or area in the scope from the previous deliverable to the current. All significant variations will be
explained in detail concerning reasons for variance and any impact on budget and schedule.

b. The impact of any changes in criteria should also be addressed. The PF should be responsible for
preparing analyses of the reasons for the change as well as implications of the change in terms of
cost, schedule and quality.

c. Any significant change in scope must be approved in advance by the Project Owner or their delegated
responsible official.

d. The PM should ensure that this process of scope monitoring and impact analysis is implemented and
reported.

Flowchart: Changes in Scope during the Planning and Design Phases

PM PM: Draft Scope of Services; issue Scope of Services


to the PF to respond with a fee proposal

PF PF: Responds to PM with fee proposal

PM: Issue draft recommendation memo to the UN


PM Senior Project Manager

UN Senior Project Manager: Review recommendation/


UN Senior Project proposal and prepares final recommendation memo to
Manager Head of Procurement for issue by the PM
Administrative personnel.
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September 2020 UNProcurement Office: Produce contract amendment
and HCC dollar tracking spreadsheet and issues to
the PM/ UN Senior Project Manager for final review
and before issuing hard copy to Head of Procurement
for signature and then to PF for review and signature.
UN Procurement
Office

PF

UN Procurement
Office

PM Administrative
personnel

6.5. Procedure for Changes to the Scope during Planning and Design
Phases

6.5.1. General:

a. The PM should prepare draft Scope of Services for each contract amendment. This would form one
of the attachments to the amendment and should include:
i. Title, date, contract number, amendment number, revision number if necessary, attached
modifications if necessary
ii. Purpose of the services
iii. Cross-reference to part of existing contract for which this is addition or change and referring to
relevant existing terms and conditions.
iv. Deliverables and interim deliverables
v. Schedule
vi. Reference to any drawings or other background material used as a basis for proposal
b. PM should then issue the draft Scope of Services to PF.
c. PF should submit resource/delivery proposal referencing the Scope of Services. This ensures
alignment between proposal and Scope of Services.
d. PM should review and evaluate the PF’s proposal. PM should follow the procedure to finalize contract
amendment with PF, ensuring that UN Procurement Office is updated on a regular basis and is
included in any key commercial or contractual negotiations.
e. PM should ensure that all appropriate correspondence, meeting notes, telephone, e-mail
records/copies are retained on file. If modifications are required to either Scope or Proposal, these
should be prepared as either dated revisions to the document or as attached modification
document(s).

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6.5.2. Fee Proposal from PF

This should include:

a. Reference to Scope of Services by title, date, revision number or attached


modifications.
b. Basis for arriving at the proposed fee. This will generally be the level of effort
required and the hours and cost breakdown by category of worker for the
services to be rendered, unless if the additional service is a repetition of an
existing unit price or lump-sum in the contract which can be used as a basis.
c. Basis for payment: lump sum, hourly basis not-to-exceed, any reimbursable
costs; payment milestones; that the proposal is based upon.

6.5.3. Evaluation and Recommendation of the Fee Proposal

The PM should carry out an evaluation of the Proposal as follows:

a. Verify that the fees are in accordance with the contract and the level of effort
required to perform the services are in its professional judgment reasonable.
b. Review dated PF final cost proposal, (a.) basis for arriving at the fee typically;
rates per hour, hours per title or (b.) payment milestones, and or schedule cost
proposal with dated modifications or attachments.
c. Review summary of scope and dated final Scope of Services or dated
modifications or attachments.
d. Confirm that the hourly rates, if used, are per the contract. If the rates have not
been predetermined in the contract, then the evaluation will affirm that the rates
are reasonable and equal to or better than any standard rates the firm would
otherwise be required to pass on to the UN.
e. Confirm that the number of hours, if used, is reasonable and the basis for that
statement.

6.6. Managing the Scope during the Construction and Close-out Phases
a. At each project progress meeting the PM, the PF and the Contractor should review any areas where
there may be issues with achieving the objectives and/or requirements of the project.

b. The review should include any items that are above or below tolerance, including impact on
functionality, cost, quality, schedule, or other parts of the project. Sufficient background information
should be prepared.

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6.7. Process for Changes to the Scope during the Construction and
Close-out Phases

6.7.1. General

a. PM, PF and Contractor should regularly meet to discuss anticipated contract amendments.

b. PM should agree with UN Procurement Office the extent to which the UN Procurement Office needs
updating during the development of each contract amendment in order to ensure compliance with
UN procurement procedures.

c. Requests for amendments that would be subject to review by the Local Committee on Contracts or
Headquarters Committee on Contracts should be submitted to UN Procurement Office on the
agreed timeframe in advance of intended execution date.

d. Requests not subject to LCC or HCC should be submitted to the UN Procurement Office on the
agreed timeframe in advance.

6.7.2. Change Order Process

a. The PM and Contractor should adhere to the change order process as stipulated in the terms and
conditions of the Contract.

b. Any request for change orders relating to additional time or costs should be done in accordance with
the terms and conditions of the Contract.

c. For information on requests for Additional Time – please refer to Section 7: Project Schedule
Management

d. For information on requests for Additional Cost – please refer to Section 7: Project Cost Management

6.8. Value Engineering (VE)


a. The responsibility for project cost control lies with the Project Owner, PM, Professional firm and
Contractor, including value engineering and scope reduction where necessary.

b. The PF’s role should be to develop the best possible project within the budget.

c. The PM role should be to provide intensive value engineering of the designs submitted by the PF.
The PM shall review all estimates and identify any scope creep.

d. A value engineering goal must be established based on the budget. The PM, PF and Contractor shall
each assign a leader for the VE effort.
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e. At the end of a phase, or whenever necessary in any project stage, VE suggestions must be solicited
from all project staff, and all suggestions must be recorded in a VE summary.

f. The VE summary is reviewed in a group meeting, and VE suggestions are categorized, typically as
unacceptable, potentially feasible, and feasible only with concurrence of a specific department. VE
suggestions are ranked in priority order, with a suggestion to meet the VE goals.

g. The PM shall review and makes recommendations and communicate to the PF and Contractor.

7. PROJECT TIME MANAGEMENT

7.1. Overview
a. Another element of project control is the management of time. This entails the development of a
logical and comprehensive project or programme schedule and a system to monitor, track and update
against the established Schedule throughout the project.

7.2. Development of the Project Master Schedule


b. The development of a master schedule for the project should be inclusive of all major activities
during each phase of the programme (e.g. design deliverables, procurement activities, contractor
award and mobilization, major construction activities, interim milestones and completion milestones,
etc.).

c. The master schedule should be developed by the PM and approved by the Project Owner.

d. Upon approval, the master schedule should become a “baseline” to be used as a control point
throughout the entire programme. Thus, it should remain "frozen" and continually be used for
comparative purposes to on-going schedule updates.

e. To be comprehensive, the master schedule must be coordinated and developed in collaboration with
the PM, PF and Contractor to be responsive to operational issues and contractual arrangements.

f. In general, the schedule should serve as a working tool for the project, useful for both the project
manager’s day-to-day use, as well as for presentation to senior management briefing. The schedule
should also be used to monitor ongoing tasks and activities, and logic restraints so that the Project
Owner and PM team can monitor the completion of existing activities as well as their effects on future
planned events, co-dependencies, etc.
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g. This schedule should also be used to forecast future work and to also develop corrective measures
when problem arise. Proper utilization will ensure that the PM is informed and has full view of the
spectrum of activities that are inter-dependent on the program at almost all times.

h. Upon the selection and award of the General Contractor, the existing schedule maintained by the PM
should be reconciled with that of the Contractor and an agreement regarding future coordination and
integration of updating methods should be finalised. It is critical that the Contractor be provided with
the required format for their schedules and the Contractor to also be able to utilize this format to permit
easy integration of their schedule.

7.2.1. Critical Path Method (CPM)

a. Upon the approval of a master schedule, the PM should prepare a critical path method (CPM)
schedule that is consistent with the master schedule but identifies activities in far more detail and sets
logical interdependencies and identified the critical path of the programme.

b. The CPM schedule should be organized in accordance with the established WBS to support
integration between the cost and schedule functions. Collaboration amongst different project team
members and vendors is necessary to establish activity durations, sequencing and points of
coordination. The CPM schedule should be a sub-set of the Master Schedule and should utilize the
same activity coding/WBS. This schedule should be formatted to permit detail, summary and/or
executive summary level reporting.

7.3. Managing the Schedule during the Construction and Close-out


Phases
a. At each weekly meeting the PM, PF and the Contractor must agree on the goals for the next month
in detail. These goals are must be within the overall schedule agreed prior to the commencement of
the project or phase of work.

b. At each meeting there shall be a review of the agreed goals and the success in achieving the goals.

c. Should it be determined that a goal has been missed, the project team shall determine if the item is
on the critical path and when the item of work be completed.

d. After this determination, the project team shall review what is required to complete the item, what is
required to achieve the overall goals of the schedule, and if there are any costs involved.

e. The agreed plan is to put in place to mitigate any effects to the schedule.

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7.4. Procedure for Changes to the Schedule during the Construction and
Close-out Phase

7.4.1. Contractor Requests for Additional Time (Extension of Time, EoT)

a. The PM, PF and Contractor should meet regularly to discuss anticipated delays or risk events that
may impact the schedule.

b. Typically, within the timeframe stipulated in the contract, the Contractor should make a written request
to the PM for projected/experienced delays due to acts or omissions of the extension of time for other
delays under the Project.

c. The PM or PF shall submit a written request for changes to the project schedule, noting the extension
of additional time, and the necessary justification for the delay.

d. If EoT is Approved:

i. The PM should issue a Change Order, including Contractor's allowable costs for the delays;
ii. The Contractor should add the work authorised under the Change Order to the next submission for
fee payment.

e. If EoT is Denied:

i. If it is determined that the Contractor's request for Extension of Time is unwarranted, the
Contractor may be entitled to protest the decision by submitting a written Notice of Protest within
the specified timeframe. During this period, the Contractor should continue to perform the project
works, even if under protest.
ii. The Contractor should submit a detailed statement of extra expenses and any damages incurred
from the performance of work performed under protest following the denied extension of time
request.
iii. If, following Contractor's submission of a detailed statement of extra expenses and any damages
incurred resulting from the performance of such work with no extension of time the decision to
reject the EoT is not rescinded, the Contractor may submit a notice of disagreement in writing.
iv. Thereafter, the PM, PF and Contractor may agree to meet after submission of the notice of
disagreement, in order to negotiate in good faith a resolution of the disagreement.

7.5. Authority for Changes to Schedule

a. Any changes to the project schedule with significant schedule or with any financial implications should
be discussed with the Project Owner instantly.
b. When non-negotiable external factors affect the schedule, the PF and Contractor should advise the
PM, via monthly report, including mitigation measures.
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September 2020
c. When schedules changes are made within a phase that do not affect phase completion, the PF shall
advise the PM.
d. When schedule change is subject to decision or would impact completion of a phase, the PF may
recommend changes to schedule (e.g. extension of due date) to the PM for review and decision. This
information is included in the monthly report

7.6. Schedule Reporting


a. Equal in importance to the utilization of the program schedule as a daily management tool, is the
importance of accurate, timely reporting. The programme schedule should be organized both by WBS
code and by tier or level.

b. Tier l will typically be the highest or executive level and require little to no detail, but depict clear,
easily understood, accurate schedule information. Tier 2 should include enough detail to indicate
what activities are driving the schedule and identify different disciplines within a work activity. Tier 3
will depict the full level of detail necessary to track all technical elements of the work. Tier 1 schedules
should be included in monthly executive status reports.

c. It is important that any other reporting requirements be identified during the initial development of the
schedule to permit accommodation of these requirements in the schedule setup.

d. Issues to be considered:
 Resource analyses should be prepared in order to justify activity durations;
 Schedule control system should be integrated with a cost control system to provide cash flow
projections and earned value analyses;
 The integrity of the WBS should be maintained;
 Baselines should be maintained in order to establish control points against actual progress,
 Coordination between PM resources and Contractor scheduling resources should be ensured,
 Scheduling tiers should be structured and properly coordinated between each level of detail

7.7. Earned Value Management (EVM)1


a. Earned Value Management (EVM) is a methodology that combines scope, schedule, and resource
measurements to assess project performance and progress.

b. EVM uses a common set of units that allows the PM to compare the funds spent, the work planned,
the work done and the passage of time. The principles of EVM can be used within the work
breakdown structure and shall be applied to the total project for more visibility.

1 PMI Project Management Institute www.pmi.org


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c. EVM does this by:
1. Quantifying (in budget terms) the value of all project tasks (work packages)
2. Looking at the dates work or products are supposed to be done
3. Seeing when the work is actually done
4. Recording how much was spent completing the work

d. Earned value analysis shall be conducted to track expenditure against the budget, which would
highlight whether project progress is aligned with cash-flow projections.

e. More information on EVM can be found at the Project Management Institute.

8. PROJECT COST MANAGEMENT

8.1. Cost Planning


a. Effective cost control is dependent on sound cost planning and estimating and on the ability to clearly
communicate costs through the major phases of both design and construction to all the members of
the team.

b. An important feature of cost control is an effective and comprehensive format for cost estimating and
cost control. Project budgets for capital projects should be developed and submitted in a project
budget template, which was created by OCSS in collaboration with OPPBA.

c. The project budget template is organised in a work breakdown structure (WBS) type; which provides
a comprehensive structure for estimating, scheduling and other management activities. The WBS
elements are coordinated with UN IPSAS components for property, plant and equipment assets.

d. The project budget template is divided into nine (9) sections. Detailed guidance on how to fill cost-
related sections are as follows:

i. Section 3: Budget and Planning

 Enter the total project budget estimate in USD. Exchange rates used should be those
provided in the budget instructions. Projected inflation or exchange rate fluctuation should
not be included.

 Select from the drop-down menu the source of the estimate in order to assess its accuracy.

 Select the appropriate Charging Account, whether it is Major Maintenance or Alteration and
Improvement, per standard Section 33 practice.
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o An alteration and improvement project is capital-intensive and substantially alters
or improves facilities or infrastructure.

o A major maintenance project repairs or replaces existing installations and systems,


or generally maintains facilities and services in good working order.

 Enter the estimated project schedule details. This should reflect the total duration.

 For multi-year projects enter an estimate of the budget required per biennium against the
relevant biennium. Provide more details in the Description section if the project is longer
than 3 biennia.

 Select the appropriate Category for the project from the drop-down menu, whether the
project is new, recurring, multi-year or deferred.

ii. Section 4: Project Classification

 Type of Expense: Select whether the project is a capital expense, operating expense or has
elements of both.

 Capitalisation threshold by asset class: Buildings, $100,000; Infrastructure assets,


$100,000; leasehold improvements, $100,000; Machinery & Equipment, $20,000; Furniture
& Fixtures, $20,000; Prefabricated buildings, $5,000; Generators, $5,000.

 Capitalised costs: purchase price, associated costs (freight, import duties, insurance),
directly attributable costs (site preparation, materials, delivery and handling, installation &
assembly, testing & commissioning, professional fees), costs of dismantling/removing item
or restoring the site.

 Non-capitalised costs: cost of conducting business in a new location, cost of relocating or


reorganising UN operations, staff training costs, administrative and general overhead costs,
day-to-day servicing costs, internal mark-ups, and, cost of abnormal amounts of wasted
material, labour or other resources.

 Note: If an asset/improvement does not meet the capitalisation threshold, it must be fully
expensed in the financial period in which it was acquired.

iii. Section 8: Detailed Budget

 Enter a detailed budget estimate in USD for the project by asset class and its components,
including fees and other related costs if applicable. The components listed have been
coordinated with the UN IPSAS policy framework.

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 Note: Contingencies and Escalations should be listed separately; they should not be
embedded in the Construction & Refurbishment Costs.

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SECTION 33 - CONSTRUCTION, ALTERATION, IMPROVEMENT AND MAJOR MAINTENANCE

1. RESPONSIBILITY CENTRE:

2. GENERAL INFORMATION 3. BUDGET & PLANNING


P ro ject budgets are to be submitted in USD
PROJECT BUDGET
Code: Total Amount (US$): $ -
Name: Estimate Methodology: Select Methodology
Charging Account: Select Charging Account
LOCATION PLANNING
OAH: Duration (months):
Building: Fo r multi-year pro jects, list estimated to tal duratio n here:

Id (IPSAS): Budget per biennium: $ - $ - $ -


Biennium: Select biennium Select biennium Select biennium
Area: AFFECTED AREA (sqm):
Floor:
Room: CATEGORY Select Category

4. PROJECT CLASSIFICATION 5. ORGANIZATIONAL OBJECTIVES

TYPE OF EXPENSE: Select Type OPERATIONAL OBJECTIVES: Select Operational Objective


Refer to budget instructio ns and the UN IP SA S po licy framework fo r which pro jects to capitalise o r expense Obj 1:
Obj 2:
WORK DISCIPLINE: Select Prime Discipline Obj 3:

STANDARD DISCIPLINE: Select Standard Discipline MANAGEMENT OBJECTIVES: Select Management Objective
Obj 1:
STANDARD REFERENCE: Obj 2:
Obj 3:

6. DESCRIPTION

7. BACKGROUND & BENEFITS

8. DETAILED BUDGET ( 1) 9. COST BENEFIT ANALYSIS (CBA) & PRIORITY SCORING ( 4)

CONSTRUCTION & REFRUBISHMENT COST $ -


A BUILDING $ -
A10 EXTERIOR $ - TOTAL COSTS $ -
A101 FOUNDATIONS & BASEMENTS $ -
A102 SUPERSTRUCTURE $ -
A103 EXTERIOR CLOSURE $ - ECONOMIC BENEFITS $ -
Rate:
A20 ROOFING $ -
A201 ROOFING $ - DESCRIPTION SAVINGS
- xxx $ -
A30 INTERIOR CONSTRUCTION, STAIRCASES & INTERIOR FINISHES
$ - $ -
A301 INTERIOR CONSTRUCTION, STAIRCASES & INTERIOR FINISHES
$ - $ -
$ -
A40 SERVICES $ -
A401 CONVEYING SYSTEMS $ -
A402 PLUMBING $ - NON ECONOMIC BENEFITS
A403 HVAC $ -
A404 FIRE PROTECTION $ - DESCRIPTION DEGREE SCORE
A405 ELECTRICAL AND LOW VOLTAGE $ - - xxx NONE 0

B INFRASTRUCTURE ASSETS $ -
B10 TELECOMMUNICATION $ -
B20 ENERGY $ -
B30 PROTECTION $ - TOTAL 0
B40 TRANSPORT $ -
B50 WASTE MANAGEMENT $ -
B60 WATER MANAGEMENT $ -
B70 RECREATION $ -
B80 LANDSCAPING $ - PRIORITY CRITERIA SCORE
Select Operational Objective 0
C MACHINERY & EQUIPMENT $ - Select Management Objective 0
C10 MACHINERY & EQUIPMENT $ - Risk analysis:
- Likelihood: Select Likelihood NO RISK
D FURNITURE & FIXTURES $ - - Severity: Select Consequence
D10 FURNITURE & FIXTURES $ - Other Non Economic Benefits 0

E SPECIAL CONSTRUCTION & DEMOLITIONS $ -


E10 SPECIAL CONSTRUCTION & DEMOLITIONS $ - TOTAL 0

FEES & RELATED COSTS $ - PRIORITY: LONG-TERM


Consultancy Fees $ -
Construction Management Fees $ -
General Conditions/Preliminaries & Generals (2) $ -
Dedicated UN Project Management Costs $ -
Insurances $ -
Other Miscellaneous Costs (3) $ - RISK DESCRIPTION

CONTINGENCIES, ALLOWANCES & ESCALATION $ -


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Contingencies Projects
$ - Page 23 of 106
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Escalation $ -
Allowances $ -

TOTAL PROJECT COST $ -

1) P ro ject budgets shall be defined acco rding to the available level o f detail. A t minimum, each o f the three (3) subcatego ries --
Civil Wo rks, A rchitectural and Services -- shall be estimated fo r multi-disciplinary pro jects; for all o ther pro jects, o nly the relevant
catego ry(ies) shall be estimated.
2) If no t included in the co nstructio n/refurbishment trade co sts
3) Co mmunicatio n P lan, Taxes & P ermits, Waste M anagement, etc.
4) CB A if available
8.2. Life Cycle Costing and Sustainability Considerations

a. The consideration of capital costs is of a primary relevance at this stage, but it is also important to
consider the impact of life cycle costs and sustainability in Design Development. An in-depth
analysis should assess any decisions that are being made in the context of their impact on life cycle
costs It is required that significant design choices of systems, materials and elements be assessed
by a formal life cycle analysis.

b. Life cycle costing focuses on comparing competing alternatives and in order to compare
alternatives, both present and future costs for each alternative implementation action.

c. The “worth method” approach converts all present and future expenditures to a baseline of today's
cost. Initial (present) costs are expressed in present worth. Future costs are converted to present
value by applying economic discount factors.

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Life Cycle Costing - General Purpose Worksheet Stucco Veneer Stone Veneer
NOB Overseas Location, Overseas Location Esterior Wall Exterior Wall
Study Title: Comparison Stucco to Stone Cladding (AS-18) (7 Year Cycle)
Discount Rate: 6.00% Date: Mo,Day,Yr Estimated Present Estimated Present
Life Cycle (Yrs.) 30 Costs Worth Costs Worth
Initial / Collateral Costs (USD)
INITIAL / COLLATERAL COSTS

A. North Elevation Stucco $224 1350 m² $302,400 $302,400


B. East Elevation Stucco $224 480 m² $107,520 $107,520
C. West Elevation Stucco $224 540 m² $120,960 $120,960
D. North Elevation Stone $560 1350 m² $756,000 $756,000
E. East Elevation Stone $560 480 m² $268,800 $268,800
F. West Elevation Stone $560 540 m² $302,400 $302,400

Total Wall Area (m²)= 2370 m²


Total Initial Collateral Costs $530,880 $530,880 $1,327,200 $1,327,200
Difference ($796,320)
Replacement/ Salvage Occurance Inflation/ PW
REPLACEMENT/ SALVAGE

(Single Expenditures) Year - or - Cycle Escal. Rate Factor


A. Stucco Replacement 7 2% 2.134 $743,232 $1,586,047
B. Stucco Repaint/Refinish 4 2% 3.964 $51,002 $202,191
COSTS

C. Stone Cleaning 10 2% 1.144 $30,601 $35,008


D.
E.
F.

Total Replacement/Savlage Costs $1,788,238 $35,008


Annual Costs Inflation/ PW
Escal. Rate Factor
ANNUAL COSTS

A. Annual Maintenance 2% 17.458 $6,120 $106,847 $2,040 $35,616


B.
C.
D.
E.
F.

Total Annual Costs $6,120 $106,847 $2,040 $35,616


Sub-Total Replacement/Salvage + Annual Costs (Present Worth) $1,895,085 $70,624
Difference
Total Life Cycle Costs (Present Worth) $2,425,965 $1,397,824
LIFE CYCLE

Life cycle Cost PW Difference $1,028,141


COSTS

Payback - Simple Discounted (Added Cost/ Annual Savings) 6.0 Yrs.


Payback - Fully Discounted (Added Cost + Interest/ Annual Savings) 7.7 Yrs
Total Life Cycle Costs (Annualized) Per Year: $176,244 Per Year: $101,550

8.3. Contingency Planning

Contingency planning is an essential element of overall cost control and should be addressed early in the
process and diligently managed throughout the process. Risk management is an important tool for
understanding how to establish contingencies and also to focus attention on important aspects of the
design. Ultimately as the design progresses, risks and contingencies will minimize but will likely remain
part of the process. Refer to section below on Risk Management

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8.4. Cost Control

8.4.1. Developing a Cost Control System

a. The objective of a cost control system should be to implement risk mitigation measures that
ensure the project is completed within the approved resources and that sufficient cost information
is available to enable sound decision making.

b. The cost control system should address the cost of construction as well as other costs associated
with the delivery of the project. The cost control system also must address and manage costs
from the initial inception of the overall programme through the complete delivery of constructed
projects.

c. The cost control plan should be developed to clearly define how costs should be distributed
throughout the project and how cost variances should be managed. The cost control plan should
be based on an existing and approved project budget and revised periodically over the life of the
project implementation programme.

d. Decisions should be reviewed for cost implications as the decisions are made. This requires that
cost control input be provided on an ongoing basis, particularly in the early planning and design
phase where cost control decisions can have a great impact on the overall project cost.

e. The cost control plan should correspond with the adopted contract mechanism and procurement
strategy. For example, if the contract stipulates a Guaranteed Maximum Price (GMP) for
construction services, then a fixed ceiling price would be established whereby the General
Contractor would be responsible for cost overruns and savings are returned to the UN/Owner.

8.4.2. Developing a Cost Control Reporting System

a. The cost control system should encompass a data warehouse of construction and Program costs
organized within an agreed WBS. A database format is required to provide sufficient depth and
sorting capacity of cost down to contract level. Data entry, processing and retrieval function is
critical to provide real-time reporting to both the PM and the Senior-level Advisory Committee
members and other stakeholders. Cost commitments are assigned upon executed contracts for
all work and tracked throughout the execution of work.

b. Reporting categories with the Cost Control system should include


 Baseline budget authorizations
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 Contract commitments
 Actual disbursements
 Pending contract changes
 Contract changes
 Variance against baselines or commitments
 Forecast to complete

8.5. Cost Control during the Planning Phase

8.5.1. Overview of Cost Control Objectives during project planning

a. An essential principle of effective cost control is the integration of cost control into the overall project
delivery process, and not be managed as an afterthought of design and construction decisions. It is
difficult to achieve good value in decision-making if cost control is strictly reactive. Integrating cost
control into the overall delivery process is the first step of effective cost control. The process is based
on several key principles described in the diagram below:

Initial Cost Plan Revised Cost Plan


by Discipline by Discipline

Architectural Assessment, Contingencies Architectural


Cost Parameter & Risks Cost Parameter
Targets Targets Targets Targets

Structural Constructability, Quality & Structural


Cost Parameter Phasing & Scheduling Performance Cost Parameter
Targets Targets Targets Targets

Mechanical Mechanical
Cost Parameter Milestone Revised Cost Parameter
Targets Targets Cost Cost Plan Targets Targets
Ongoing Advise Estimate
Electrical Electrical
Cost Parameter Cost Parameter
Targets Targets Targets Targets

Equipment/Special Materials & Life Cycle Equipment/Special


Cost Parameter Systems Performance & Cost Parameter
Targets Targets Targets Targets
Sustainability
Site Site
Cost Parameter Cost Parameter
Targets Targets Systems Targets Targets
Value
Engineering
Components

Project History
(at completion)

Schematic Design Through Construction Documents

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8.5.2. Focusing on Cost Drivers

a. It is essential to define and then subsequently focus on the key cost drivers by identifying individual
cost targets for each discipline and by also identifying key parameter targets for each discipline.
The effort involves a constant balancing process and the recognition that to achieve overall cost
targets may require a certain amount of trading and adjustment between disciplines. It is important
and critical that proper priorities be maintained.

8.6. Cost Control during the Design Phase

8.6.1. General

a. Controlling of cost begins in the conceptual planning phase and continues throughout the design
phase. Critical steps include establishing a realistic budget, defining a Cost Plan for the project
by discipline, preparing accurate milestone estimates and taking necessary corrective actions to
control the cost of the project. It may be necessary to address any implications that scope and
design decisions have on cost throughout this process.

8.6.2. Milestone Estimates

a. The development of a milestone estimate at major deliverable throughout the design (i.e. concept,
schematic design, design development and construction documents) is crucial to monitor, identify
probable cost by system and properly react to variance of cost overruns prior to the procurement
of construction. The purpose of the estimates is to establish a progressively more detailed
construction and project cost estimate for all systems and elements of the Work.

8.6.3. Assessment of the Market Conditions, Contingencies and Escalation

a. An important step in the development of an estimate is the assessment of the market conditions
anticipated at the time of bidding/pricing for the project. Also related, are the consideration of
contingencies, escalation and the impact of any major risks been identified.

8.7. Cost Control during the Construction Phase

8.7.1. Construction - Contract Change Management

a. Structuring and resourcing a system to manage contract proposed changes is a critical function
following the award of the construction contract throughout the construction process. This activity
requires considerable attention, proper analysis of all proposals, setting of clear contractual
requirements and the discipline to utilize these requirements. In managing post award changes,
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the PM’s primary objective is safeguarding of the United Nations investment and ensuring fair
value for entitled changes to the base contract.

b. Areas of analysis should include:


 Evaluation of entitlement and legitimacy as change to contractual scope of work
 Independent estimate/evaluation of proposed scope change
 Evaluation of change proposal' s conformance to contractually required format and support
documentation
 Analysis of potential impact to project schedule or out-of-sequence work
 Potential impact to changes in specifications
 Assessment of adequacy of documentation and justification

8.8. Value Engineering (VE) as a Cost Control Tool

a. VE can be utilized as an optimization tool and as a means to maintain alignment among competing
design issues. Sound, team-based value engineering is indispensable tool to maintain alignment and
effect change and adjustment without compromising critical aspects of the design. VE focus should
narrow as the design develops adjusting from conceptual issues to detailed issues, materials and
systems.

b. A VE study may be conducted at the conclusion or near the conclusion of design development for the
purposes of evaluating the major system alternatives that have been defined. Constructability issues
may also be emphasized as an important aspect of renovation projects.

c. A typical VE work session might consist of the following:


i. PM, PF design team, Contractor participation
ii. Supplemented with outside expertise as may be necessary and beneficial
iii. Review and reassert key issues, objectives and risks for project
iv. Assess necessary quality and performance facility attributes
v. Identify facility system alternatives
vi. Identify major alternate materials and methods
vii. Identify phasing, scheduling and procurement options
viii. Assess costs, benefits, schedule impact and risks
ix. Develop alternate proposals for consideration by the Office
x. Reassess alignment of scope, expectations and budget
xi. Adjust Cost Plan targets as necessary

d. Typical items/issues that a VE work session could discuss includes the following:
i. Excessive spare capacity
ii. Unnecessary redundant systems/components
iii. Designing for unnecessary expansion
iv. Splitting systems/loads
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v. Not designing for a degree of risk in lieu of peak conditions
vi. Unwarranted factors of safety in sizing equipment/systems
vii. Rounding off calculations only m upward direction
viii. Equipment sizes from specific manufacturer's catalogues when not necessary

8.9. Changes to Project Cost

a. During Design:
i. At each project progress meeting, the PM and the PF will discuss all items that can result in a
variation from the agreed cost estimates.
ii. Where there is an identification of variance, the following actions will be taken:
1) A review scope and identification of costs2) A review of any knock-on effect to the contract;

3) A review of any knock-on effect to other contracts;

4) Overall variance be reviewed with all affected parties;

5) Recommendation, decision and implementation

iii. In addition to this, the PF will prepare estimates at major deliverable dates. These estimates will
be reviewed with the PM, with a view to agreeing the estimates and any value engineering
required as a result of the estimates.

b. During Construction:
A Change Order (output from a contract amendment) is the mechanism used to instruct changes to
the project.

c. Below are various instruments that could be used to make changes to project cost:

8.9.1. Change Notification

a. Typically, a Change Order implies a change that was not anticipated in the base contract, at the
initial point when the UN requires a change order, (but prior to having it costed or scoped), the
Contractor must submit a Change Notification to the UN. The notification does not require a
response from the UN, it just serves as a mechanism to fulfil the contractual obligations of the
Contractor.

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8.9.2. Change Order of Value

a. An owner requested change can be issued to the Professional Firm. In this situation, the PF
should raise a Project Change Request (PCR) for approval. Upon approval a PCR would become
a Change Order of Value (COV).

b. The Contractor should prepare a COV and issue it to the PM for review, approval and signature.
Upon approval, PM issues to the Contractor for distribution to the contractor specific work group.

c. If for schedule reasons the unanticipated work has to proceed prior to the full cost having been
determined, a COV may be submitted, which upon approval, signifies that the UN agrees that the
work may proceed. However, this does not constitute any agreements on the cost or agreement
that the work was not already covered in the base scope. This will be determined upon receipt of
the COV. Every effort should be made by the Contractor to submit the Change Order with pricing
as soon as possible after the COV has been approved.

8.9.3. Change Order Request

a. A Change Order Notification can become a Change Order Request once the works involved have
been scoped and costed in order to understand the detail. A Change Order Request can also
become a Contract Amendment.

8.9.4. Task Orders

a. Typically, Task Orders are issued for specific works (usually not to exceed an amount stipulated
in the Contract). The PM would request the Contractor to prepare a Task Order for specific works
which will then be formally submitted as an RFA from the Contractor to the UN. In addition, the
Contractor could raise a Task Order to the UN directly, if such terms are included in the
coordination arrangements in the Contract.

b. The PM would then circulate the Task Order to the UN Procurement Office for review and
comment. Comments are to be forwarded to the Contractor for response. The Contractor would
then respond and subject to final agreement, the PM and UN Procurement Office will approve
the Task Order. Note – if issues need to be resolved from the Contractor’s response, the above
process continues in a loop until final resolution is achieved.

8.9.5. Cost Reallocation Request

a. If some project cost needs to be reallocated, particularly in a GMP made up of budget line items,
the contractor should submit a Cost Reallocation Request to the UN for approval before the
change is made.
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8.9.6. Allowance Use Request

a. This process is used to activate the use of a previously agreed allowance as set out in the base
contract for the Contractor.

b. The allowance is a placeholder in the contract for a dollar value that does not have scope or cost
agreed.

8.9.7. Authorized Contingency Expenditure Request (ACER)

a. Within the total project budget for construction, there will be funds assigned as provision for
contingency. If the Contractor wishes to use money from this budget, prior approval must be
obtained from the UN. The Project Owner or his delegate must approve the contingency
expenditure.

8.9.8. Request for Approval (RFA)

a. There are four types of RFA:


i. A request from the Contractor to use a sum of money requiring a written instruction e.g.
additional personnel;
ii. A request from the Contractor to proceed e.g. to approve a bid;
iii. A request to recommend a trade contractor – on conclusion of the bidding process with a
recommendation but prior to the award;
iv. A request for a trade contract changes e.g. when trade contractors are not allowed to
enter the UNHQ compound during the annual high-level General Assembly debate,
which could affect a previously unidentified programme change.
b. RFAs are also required to approve a bidder’s list.
c. RFAs should be submitted to the UN in the form of a memo with full back-up information attached.

8.9.9. Due diligence tasks that should be carried out by the Contractor relating to
change orders requests and administration:

a. Labour Rates
1) Ensure all Labour Rates are correct and signed off as agreed
2) Ensure there are no discrepancies within the labour rates
3) Overtime pay must be substantiated via certified payroll
4) Check to see if Overtime work is applicable/required

b. Unit Rates
1) Ensure that established unit rates are utilized
2) Unit rates should be all inclusive regardless of length of pipe etc.

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3) Unit rates should include; delivery to site, supervision, engineering and any other costs to
perform the associated work
4) Any extra-over non-unit costs should be shown separately
5) Rental equipment should be priced in accordance with the contract and should be confirmed
by Contractor in the change order
6) There should be no additional costs for small tools

c. General
1) Direct costs shall be used where subcontractors are performing the job
2) For lump sum proposals, please include a scope with quantities of items so that a comparison
can be made to validate the costs
3) Details of any lump sum costs within proposal should be provided
4) Where equipment is purchased please provide details of the equipment so that the cost can be
verified
5) Some items may be a change to the trade contractor but not a change to the Contractor’s GMP,
these costs must be separated into change order and RFA
6) Acceleration costs - where a schedule was purchased from the trade contractor, they should
be held to that where possible and justification should be provided where this is not the case
7) There are high levels of all labour hours being included within proposals, these should be fully
clarified in the proposal - including shop, delivery, drawing, property equipment calculations,
engineering as well as field hours
8) Credits should be examined in as much detail as the additional costs
9) Items should be viewed logically, e.g. if 10 hours are being claimed to install 10 feet of conduit
then this equals 1hour per foot of conduit, then the costs are too high
10) Deliveries - Please ensure that where possible deliveries of change order materials are
coordinated and made with the regular deliveries of the contractors, if this is not possible due
to time constraints then please clarify this on the change order
11) Contractor have a number of allowances in this GMP, please ensure where applicable any
change order items are requested under the specified allowance, similarly where the scope is
included within the GMP this should be submitted as an RFA, or contingency request where
applicable
12) Additional work should be requested from the UN Project Team representatives only
13) Documentation submitted in support of the costs should be legible, logical and understandable
14) Regardless of a $10,000 or a $1Million change order, the same due diligence as outlined above
should be performed at a minimum

d. Overtime Tickets require the following:


1) Employee Names
2) Employee Designations
3) Date of Work
4) Contractor Signature
5) Contractor Signature
6) Description and location of the work
7) Where materials are included these must be itemized and listed showing quantities and unit
cost
8) A clearly understandable summary table of overtime work should be included, including; ticket
number, date, employee designation, number of men per designation, and number of hours

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8.10. Authority for Cost Change Decisions
Decisions on any changes to the cost should be made by are made by the PM, who also determines if
external consultation is required.

All design directions must be logged in the project database and all decision documents must be filed
electronically and hard copy appropriately.

8.11. Project Cost Administration

8.11.1. General procedures for managing changes to project costs

a. The original baseline budget and corresponding uncommitted cost amount should be recorded in the
project management information system, once the project has been reviewed and approved by the
UN.

b. As the contractor purchases and executes trade contracts, contract amounts and data are should be
recorded as committed costs against the original budget in the project management information
system.

c. If a potential cost impact to the project is assessed by the Contractor, the amount of the impact should
be recorded as a ‘Cost Event’.

d. Along with an amount, information about the reason for and status of each cost event shall be
recorded, allowing for cost events to be reported and reviewed via a number of different data
parameters. Each cost event shall appear on the Anticipated Cost Report (ACR) as soon as it is
entered in project management information system; allowing for an up-to-the-minute understanding
of any potential cost impacts or exposures on the project.

e. The initial amount of each cost event should be based on the contractor's estimate of the potential
cost impact to the project. This should be recorded as the Original Estimate for the cost event, which
is reflected on the ACR as an Approximate Budget Revision on the budget side (assuming the cost
impact is assessed as Out-of-Scope), and as an Approximate Change Order on the cost side.

f. The contractor should then solicit pricing information for the cost event from the relevant trade
contractors as well as from internal sources for the contractor’s work. Once trade contractor pricing
has been reviewed, evaluated and agreed to, the revised pricing information should be recorded in
the original cost event as the proposed amount.

g. Thereafter, the contractor should generate a Request for Approval (RFA) to the UN, compiling the
pricing information used to reviewed and update the cost event. Once the RFA has been submitted
for approval, the status of the cost event on the ACR should be changed to Pending Approval on the
budget side, and to a Pending Change Order on the cost side. This indicates the RFA is awaiting
approval from the UN, and that once budget approval is granted, a Change Order will be issued to
the trade contractor(s), authorizing them to perform the work indicated on the cost event.

h. No work should be deemed authorized without a fully executed Change Order, with the exception of
work authorized by the UN Project Team via a COV Unless a Cost Event is determined by mutual

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agreement between Contractor and the UN to be "In-Scope", with no budget revision accompanying
it.

i. In addition, change orders should not be issued unless the accompanying RFA has been approved
by the UN. Prompt issuing, reviewing and processing of RFAs should be required of both the
Contractor and the UN to minimise interruption of workflow results due to delays in processing RFAs.

j. Once an RFA has been approved, the status of the cost event should then be changed to Approved
Budget Revision, and reflected as such on the ACR. Once a contractor Change Order has been
created in an electronic database system, issued to the contractor(s) and executed, its status on the
ACR should be reflected as an Approved Commitment.

k. All cost events (amounts, status, justification etc.) should be reviewable at any time independently of
the ACR via a Cost Event Log. The project cost event log should be published regularly (e.g. weekly
or monthly) on the project Team Site for review by the UN, The Programme Management firm, and
design teams.

8.11.2. Procedure for Requesting Additional Cost

a. Typically, within the timeframe stipulated in the contract, the PF or Contractor should make a
written request to the PM for an unknown delay due to acts or omissions of the extension of time
for other delays under the Project.

b. The PF or Contractor should submit a written request for additional cost, noting the extension of
additional time, justification for the delay, and the corresponding cost implications.

c. If Approved:
i. The PM should issue a Change Order, including PF or Contractor's allowable costs for delays
ii. The PF or Contractor should add Change Order Work to the next Amendment for Payment

d. If Denied:
i. If it is determined that the PF or Contractor's request for Extension of Time or Change Order
is without merit or failed to comply with set procedures, the PM should notify the PF or
Contractor of such.
ii. After receiving the notification, the PF or Contractor' might choose to submit a Notice of
Protest. The PF or Contractor would still be required continue to perform the work with no
extension of time to the project schedule even if it is under protest.
iii. After completion of the work performed under protest, the PF or Contractor should submit a
detailed statement of extra expenses and any damages incurred from the performance of
such work.
iv. The PF or Contractor's failure to meet these requirements might be deemed to constitute a
waiver of any claim for compensation in connection with the work performed under protest.

e. If, following PF or Contractor's submission of a detailed statement of extra expenses and any
damages incurred resulting from the performance of such work with no extension of time to the
project schedule, the UN does not rescind its original decision not to grant an extension of time
with cost, the PF or Contractor might choose to submit an indication of disagreement in writing to
the PM. Afterwards, the PM, PF and/or contractor could meet and negotiate in good faith in order
to find a resolution of the dispute.
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8.11.3. Requisitions Process

a. The contractor should submit a requisition to the PM, typically on or around the last week of each
month. The requisition should include all necessary information for the previous month, in addition
to billing information for general conditions and staffing costs.

b. The requisition should be submitted as a Requisition for Payment, the format of which is specified in
Contractor’s contract with the UN.

c. The UN should review and respond with any comments on contractor’s requisition within the
timeframe stated in the contract documents. Thereafter, the contractor should incorporate the
comments and submit a final requisition for payment if needed.

d. The UN should then approve and transmit payment to contractor within the timeframe stated in the
contract documents, after submission of the final requisition for payment.

8.11.4. Amendment Process

a. The PM, PF and Contractor should meet regularly to discuss anticipated contract amendments.

b. The PM should ensure that the UN Procurement Office is updated as needed, during the development
of each contract amendment, in order to comply with UN procurement procedures.

c. Requests for amendments that would be subject to review by the Local Committee on Contracts or
Headquarters Committee on Contracts should be submitted to UN Procurement Office on the
agreed timeframe in advance of intended execution date.

d. Requests not subject to LCC or HCC should be submitted to the UN Procurement Office on the agreed
timeframe in advance.

8.11.5. Owner's Partial or Total Withholding of Periodic Payments

a. The Project Owner should make a determination on whether to withhold any portion or all of a
progress payment due on account of any dispute or discrepancy, which was not discovered
during the review of the Fee Invoices;

b. The PM and Contractor should consult in good faith to resolve the dispute.

c. If timely resolved, PM should authorize any amounts due.

d. If dispute cannot be informally resolved, Parties agree to resolve dispute pursuant to terms of
contract.
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8.11.6. Processing invoices for change orders

a. The PM will process all invoices in accordance with the terms and conditions of the contract.

b. Below is a typical payment process for change orders. This includes options for processing change
orders:

i. Option A - The option to make a "partial payment" in case a portion of a change order in
dispute (say 75%), while the remaining 25% is negotiated. However, in order to make such
partial payment, that portion of the change order needs to follow the same vetting procedures
and sign-offs as a full change order, and result in a signed document between the PM and
the Contractor for 75% of the original submitted change order. Absent such signed document,
payment cannot be made. This procedure therefore results in the same change order being
processed twice: once for 75%, once for 25%. Also, payments will have to be processed
twice, and both portions can only be processed once the underlying portion of the change
order has been duly approved.
ii. Option B - the option to include a request for payment of the initial amount, once the change
order has passed the stage of being recommended for approval by the PM (upon review of
the PF). This is based on the premise that once a change order has cleared these two stages,
the remaining stages are typically processed much faster than the previous stages (clearance
by the UN Senior Project Manager, designated UN senior official, and issuance of a contract
amendment by the UN Procurement Division). It is anticipated that by the time the final
amount is received, the change order might be signed and therefore payment can be made.
However, if between the timeframe of the initial amount and the final amount the change
order is not signed, payment will not be made and the payment pertaining to that change
order will be put on hold.

8.11.7. Preventing Cost Overruns

a. Cost overruns can be primarily prevented through clearly defining the project scope and monitoring
the approved scope from undergoing scope creep or unintended scope changes. Scope control is
discussed below. Developing a cost overrun control strategy and remaining steadfast on its
implementation is an important starting point for ensuring cost integrity into project execution.

b. Other key areas for controlling cost overruns include the following:
 Extensive technical due diligence regarding existing conditions that identifies required remedial
action to meet current design objectives
 Oversight of design and construction documentation for appropriate level of detail and
coordination amongst design disciplines
 Disciplined and decisive PM review and decision making process. This is management
imperative for UN stakeholders
 Clear understanding and means to assess the impact of scope decisions at early design phases
 Implementation of a thorough and independent cost control methodology from early design
through construction and commissioning
 Implementation of a properly resourced contract change plan
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 Pre-Qualification procedures
 Standards for bid competitiveness
 Contractual provisions
 Establishing clear scope objectives and controlling the integrity of the approved project budget
through project conclusion.

8.12. Project Cost Reporting


a. All budget and cost data for each project should be recorded, tracked and analysed using the agreed
project management information system.

b. At the end of every month, the PM should prepare a comprehensive monthly cost report. The cost
report should include both construction-related and operation-related costs, including:
i. Approved Budget
ii. Transfers
iii. Scope Changes
iv. Current Budget
v. Contract Awards
vi. Contracts to Award
vii. Contract Changes
viii. Cost estimate of Interim and Revised submittals
ix. Estimated Final Cost
x. Change in Period
xi. Invoiced/Requisitioned to date

c. The report should also be used to compare major cost categories to the budget approved by the
General Assembly.

d. The cost report should also show yearly commitment for the cash flow.

e. Depending on the scale of the project, multiple contracts may be issued which would require tracking
and reporting of costs to various professional firms and trade contractors.

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f. During construction, the contractor's Anticipated Cost Report (ACR) should be the primary roll-up
vehicle for reporting the current budget and cost status for the project. The ACR should be used to
present baseline and current approved budget amounts, and any current Change Order requests,
whether projected, under review or approved.

g. The ACR should also be used to highlight current commitments and anticipated cost impacts to the
project, and the status of each cost event, whether a potential change order, a pending approved
commitment or an executed approved commitment.

h. A Cost Event Log should be published weekly on Project Team site for review by the UN, Contractor
and Professional Firms teams as required.

9. PROJECT RISK MANAGEMENT

9.1. Overview
a. A risk in this manual refers to an uncertain event or condition that, if it occurs, has a positive or
negative effect on at least one project objective such as cost, schedule, or other areas. Risk is
described in terms of the likelihood of the event occurring and its potential impact on the achievement
of the UN’s objectives. A risk is as follows:
i. It is an uncertain event or a condition;
ii. It has a likelihood of occurrence; and
iii. It has a consequence or an impact if it occurs (threat or opportunity).

b. Risk management is a systematic process of identifying, analysing, responding to, and monitoring
project risks. A risk has a cause and, if it occurs, a consequence. 2

2A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 2000 ed., Chapter 11.
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c. Project risk management allows for measures to be undertaken in order to minimise adverse impacts
to project scope, cost, and schedule. This is done through the aggregation of proactive actions
intended to accommodate the possibility of failures in elements of the program, all within acceptable
limits.

d. Project risk management should be performed early in the life of the project and continue throughout
the project.

e. A risk management plan should be implemented to ensure that project objectives are achieved, and
strategies are executed successfully in the event there is a threat or action that may adversely affect
the project. The project risk management plan should be developed early on during the project
conceptual and/or planning phases and should be continuously updated throughout the life of the
project.

f. The table below shows the two main process tasks, the four subtasks and the deliverables associated
with project risk management.

Risk Management Process Tasks Task deliverables

Risk management planning Risk management plan

Risk identification Project risk register

Risk Assessment (Qualitative Prioritised list of risks classified as high, moderate, or low,
and/or Quantitative) and analysis of the project’s likelihood of achieving its
objectives.

Risk response planning Risk response plan, including one or more of the
following: residual risks, secondary risks, change control,
contingency reserve (time or budget), and inputs to a
revised project plan

Risk monitoring and control Workaround plans, corrective actions, project change
requests, and updates to the risk response plan and to
risk identification checklists for future projects

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9.2. Risk Identification

a. The first step in risk management is to identify all potential risk areas and their characteristics. A
risk area is any part of the project where uncertainty regarding future events exists and includes
both opportunities and threats (positive and negative outcomes). This is particularly critical if
these risk events could have a negative effect on meeting project cost, schedule and quality
objectives. Risk may be identified through activities such as workshops, checklists, gap analysis,
assumptions, type of work to be undertaken, and phase of project works.

b. Assumptions: All assumptions made in the project should be listed and reviewed to ensure that
they don’t give rise to any risks that have not yet been identified, and any impacts that could
happen if these assumptions do not materialize. If these assumptions will introduce risk to the
project, then they should be reviewed and added to the risk register.

Gap Analysis: The identified risks should be reviewed for gaps and any new risks identified should
be added to the risk register.

Type of work: All categories of work to be undertaken on the project should be thoroughly
reviewed and potential risks identified within each category, ensuring that the identified risks
cover all aspects of the work to be undertaken and that there are no gaps.

Phase of work: All work to be undertaken on each project phase should be thoroughly reviewed
and potential risks identified within each phase, ensuring that a full set of risks have been
identified and that there are no gaps. Risks may be assigned to a particular project phase or to
all phases as appropriate.

Benchmarking: Lessons learned from other capital projects recently undertaken by the
Organization should be reviewed, with particular emphasis on how the projects met their
performance targets and whether these targets are achievable in the proposed/current project.
For instance, the OAH should review whether the risks identified for their project are rated too
high or too low when compared to other projects in terms of the level of perceived risks, likelihood
of occurrence, the range of impacts etc.

The outcome of risk identification should be a detailed ‘Risk Register’, which is a comprehensive
list of sources of project risk.

9.2.1. Types of Risk

a. The risks that need to be considered as part of risk management methodology include:

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i. Programmatic risk: Associated with the delivery of the required program and necessary
performance. A detailed itemization is provided on below:

1) Programs/Scope/Quality Creep: Incremental, user-driven increases in


programs/scope/quality are difficult to detect but collectively increase cost. Care is
required to review all changes and to assure the changes are necessary.

2) “Ripple Effect”: Minor, user-driven operational issues that appear innocent but may have
significant impacts in other areas, (i.e. "ripple effects" examples include, restrictions on
work access due to “visiting dignitaries” who may only visit for short period of time but
whose effect may disrupt work for several days).

3) Effective Decision-making: Decision-making authority should be placed at the


appropriate level in the program organization management hierarchy sufficient to make
informed decisions. If authority is placed too low in the organization, then the risk is
uninformed decision-making, out-of-context decisions and often, overly conservative
decision-making. When placed too high in the organization decision-making may require
too much time and delay the program and may result in gridlock.

4) Labour Availability: The project may require a substantial and skilled workforce. While
there may be an adequate supply, there may be shortages during later phases of the
project. Accurate forecasting can help avoid problems and set corrective actions in
advance.

ii. Schedule risk: Associated with meeting schedule milestones and schedule commitments,
including:

1) Contractor Quote Critical Path Scheduling: Contractors tend to take ownership "float" in
scheduling work, such that Office driven delays will automatically be allocated to the
"critical path" and thereby potentially lead to delay claims. Aggressive Office oversight is
required to manage Office driven delays, identify reasonable workarounds for the
contractors and verify when delays to the contractor are valid.

iii. Cost risk: Associated with meeting budget expectations and risks of exceeded cost expectations,
including:

1) Budget overruns: Refer to Project Cost Control - Preventing Cost Overruns

2) Inflation: Inflation may increase in the future. The Contractor will be required to provide
fixed-price proposals for long-term work. As a result, they may include a significant
inflationary contingency in their bids. The PM could consider an “inflationary index” as a
means to reduce contractor risk and improve the initial bid review process.

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iv. Technical feasibility: The risks associated with the technical feasibility of technical
design/construction solutions.

1) Utility Service Disruption: Utilities serving the building or within the building/floors will be
upgraded during the renovation and may affect service to areas that are still occupied.
Utility disruptions will require oversight and careful scheduling and coordination with
occupants.

2) Interpreting Security Requirements: Contractors and subcontractors may not understand


or correctly interpret UN security requirements. When security requirements are imposed
on them during conduct of the work, they may claim for added costs and schedule delays
when in fact they should have been aware of them in the first place. Effective up-front
education of contractors and subcontractors is important as well as aggressively
enforcing security during construction.

3) Technological Aging: The UN program will take many years to complete. There is a risk
that current design choices, while appropriate for today's technology will be outdated by
the time the actual construction/installation is undertaken. This is particularly acute in IT,
electrical and building control work areas. Ongoing review and reconsideration is
required to assure technically up-to-date choices are made and funds are spent wisely.

v. Risk of operational conflicts: Associated with the potential that design/construction solutions will
conflict with operational requirements.

vi. Dependencies between projects: The risk that unidentified dependencies between projects will
result in unexpected results.

vii. Physical events beyond direct control: Risks associated with acts of nature and other events
beyond direct control.

9.3. Risk Assessment

a. Once risks are identified, risk score should be calculated for each risk as the likelihood of its
occurrence and the impact on the project objectives (risk score = likelihood x impact).

b. The objectives of the risk assessment should include:


i. Identify and prioritise risks in the context of the agreed strategies and the project’s
objectives.
ii. Create a risk registry for the Organization, including identification and assessment of the
likelihood and impact of risks.
iii. Quantify each risk so that a cost is realized and is included in the risk registry.
iv. Create and implement risk response plan.
v. Update progress on risk response plan in the risk register.
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vi. Escalate as required and report key risks.

c. Risk assessment should assess the potential sources of risk and identify the opportunities and
threats to be addressed, pursued, ignored or accepted. It should include both qualitative and
quantitative analysis.

d. Qualitative risk assessment assesses the importance of the identified risks and prioritises them
for further analysis or direct mitigation.

e. Quantitative risk assessment numerically estimates the likelihood of a project meeting its
objectives, by creating a likelihood distribution based on a simultaneous evaluation of the impact
of all identified and quantified risks. Quantitative assessment should be carried out for projects
with an extremely high risk identified from the qualitative analysis.

9.3.1. Qualitative risk assessment

a. The qualitative assessment is intended to produce an initial score for the risk based on a
compilation of probabilities and impacts of risk occurrence which then allows for the risks to be
ranked in order of severity.

b. Using the risk register developed during the risk identification stage as well as any relevant
information available, the impact risks could cause if they occurred should be analysed in terms
of performance or quality, costs and/ or timely delivery of the project.

c. The qualitative risk assessment should describe the following, in words, for each risk:
i. Description of the risk;
ii. The phase of the project in which the risk event might occur;
iii. Dependencies on other project activities or other events;
iv. Triggers - circumstances that might give rise to the risk;
v. Impacts - what could happen if the risk event occurred, including how project objectives
may be affected in terms of costs, whether delays could occur, what activities could be
extended, details of additional work required and where or how quality or performance
may be affected.

Qualitative Risk Scoring Mechanism:

d. For each risk, a likelihood of occurrence as well as an impact should be determined.

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i. Likelihood Guidelines

Description Likelihood of Occurrence

(91 - 100 in 100) or greater


Expected
likelihood that the event will
occur within the project life-
(91 - 100%)
cycle

(66 – 90 in 100) or greater


Highly Likely
likelihood that the event will
occur within the project life
(66 – 90%)
cycle.

(36 – 65 in 100) or greater Likely


likelihood that the event will
occur within project life cycle. (36 – 65%)

(11 – 35 in 100) or greater Unlikely


likelihood that the event will
occur within project life cycle. (11 – 35%)

(0 - 10 in 100) likelihood that Rare


the event will occur within
project life cycle. (0 – 10%)

ii. Impact Guidelines

The table below provides “example” guidance as to the criteria that should be used to rank impacts for
cost and schedule.

Impact of
Low Moderate High Significant Critical
Occurrence

$100K to $1M to
Budget Variance < $100K $500K to $1M > $2.5M
$500K $2.5M

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Schedule Variance
15 to 30 45 to 60
< 14 days 31 to 44 days > 60 days
days days
(calendar days)

Risk Scores are used to prioritize Threats and Opportunities. A heat map is normally used to depict this
with high priorities showing in red, medium priorities showing in yellow, and low priorities showing in
green.

The purpose of the Risk Assessment function is to determine the magnitude of the individual risks by
ranking it with respect to likelihood and cost and schedule impact. Below is a heat map which illustrates
the risk scoring framework.

iii. Severity of Risk

Severity of Risk = Likelihood x Impact

Unacceptable Unacceptable Unacceptable


5 Of Concern Of Concern
II II I I I

Unacceptable Unacceptable Unacceptable


4 Acceptable Of Concern
III II I I I
Likelihood Scale

Unacceptable Unacceptable
3 Acceptable Of Concern Of Concern
III II II I I

Acceptable Acceptable Of Concern Of Concern Of Concern


2
III III II II II

Acceptable Acceptable Acceptable Acceptable Of Concern


1
III III III III II

1 2 3 4 5

Impact Scale

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Increasing Impact

The red boxes in the upper right-hand corner represent the “high” likelihood and “high” impact risks
while the green boxes in the lower left-hand corner represent the “low” likelihood and “low” impact risks.
In the middle region are the yellow boxes which have a moderate likelihood and/or moderate impact
ratings. Based upon the likelihood and impact rating the risks will fall into three categories:
Unacceptable (Red), Of Concern (Yellow) and Acceptable (Green). These severity classifications help
project management to prioritize and focus on key risks. Below is a description of the severity
classifications.

Severity Classification

Unacceptable I Must be managed through a detailed plan by senior management

Of Concern II Managed by specific monitoring or response procedures

Acceptable III Managed by routine procedures or response procedures as necessary

This prioritization will provide the basis for the development of risk response plans and the allocation of
risk management resources. The Project Manager will be responsible for reviewing the Risk Register
rankings and developing risk prioritization.

Qualitative Risk Report (Level 1 Risk Reporting)

e. The report should detail information on the identified risks and their scores, ordered in descending
order of risk score. Thus, risks that have very high impacts and/or likelihood of occurrence should
be listed upper most on the list of significant risks, followed by risks with a medium impact and/or
likelihood of occurrence and lastly list the risks with low impact and/or likelihood of occurrence.

f. A list of top scoring risks should be provided to Senior Management to highlight risks that should
receive priority attention during risk mitigation activities. The top risks may be further sorted out
by project phase, likely risk trigger date, or date for commencing mitigation actions. This list of
top risks may be considered as what could be major risks to the project.

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9.3.2. Quantitative risk assessment

a. The quantitative risk assessment is intended to undertake an in-depth examination of the risks
already identified during qualitative risk analysis and quantify impact to the project’s cost,
schedule and/or quality if the risk event occurs.

b. The results of this quantitative risk assessment would be useful in determining the contingency
required (in terms of schedule float, cost allowance and/or tolerance in the specifications) to
ensure that the project meets its objectives.

c. Quantitative schedule risk assessment should be undertaken to identify and quantify risks that
could lead to project delays and activities that are likely to be critical to achieving specific
milestones (i.e. critical path activities) or planned project completion. The schedule risk
assessment should also review potential unknown risks that would have an effect on the project
schedule if they occurred such as additional works, abortive work, penalties/fines etc.

d. Quantitative cost risk analysis should be undertaken to identify and quantify risks that could lead
to cost overruns in the project, particularly the risks that could have the greatest effect on total
project costs. The cost risk analysis should also review potential unknown risks that would have
an effect on the project cost if they occur such as additional works, abortive work, penalties/fines
etc.

e. Quality risk modelling should be undertaken to identify and quantify risks that could have an
impact on delivering the project in the intended quality, to the extent that the risks can be modelled
both logically and cumulatively.

f. Quantitative risk assessment may be undertaken by way of quantitative models. Examples of


these quantitative models include open source based probabilistic tools or spreadsheets, as well
as proprietary risk modelling software.

Quantitative Risk Reports (Level 2 Risk Reporting)

g. At the end of quantitative risk assessment, the following reports should be produces:

i. Quantitative Cost Risk Analysis (QCRA) Report,

 A QCRA report should present results of the quantitative analysis simulating potential
impacts to the project and their associated financial implications, as well as the
anticipated total project cost.

 The QSRA report should determine provisions set aside for project cost contingency
if risks occur.

 The QCRA report should provide a more robust validation of initial cost estimates as
well as provide information needed for future strategic decision making where
significant uncertainty is present, and a reliable spend profile for contingency.

 The QCRA report should also summarise and prioritise recommended start dates for
key risk mitigation action in response to the size and proximity of each risk.

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ii. Quantitative Schedule Risk Assessment (QSRA) Report

 A QSRA report should present results of the quantitative analysis simulating potential
impacts to the project and their associated implications to the project schedule, as
well as the anticipated project completion date.

 The QSRA report should determine provisions set aside for project duration
contingency if the risks occur.

Consolidated Risk Report (Level 3 Risk Reporting)

a. A fully integrated schedule and cost risk report, called a Quantitative Cost & Schedule Risk
Assessment (QCSRA) report should also be produced, along with an updated qualitative risk
analysis report.

b. The QCSRA report should also provide information on the combined impact of risk to both
the baseline project cost and schedule by modelling the inter-dependencies between time
delays and cost overruns. This would provide a more accurate overall project risks
assessment.

9.4. Risk Response Planning


After all sources of project risk have been identified and analysed, the next step is to identify
how to mitigate the risk, including via one or more of the following: residual risks, contingency
reserve (time or budget) and inputs to a revised project plan.

9.4.1. Risk Mitigation

1) After sources of project risk have been identified and analysed, the next step is to develop ways
of mitigating the sources of risk. When selecting the risk mitigation strategy, OAH should ensure
that the strategy:

i. is appropriate to the severity of the risk;


ii. is realistic within the project and Organizational context;
iii. is a cost-effective way of mitigating the risk;
iv. it can be implemented in a timely manner;
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v. is agreed upon by all parties involved in the project; and,
vi. is owned by a responsible person or office.

Described below are the categories of Risk Response Strategies which may be utilized in
creating risk response plans to address the project Threats and Opportunities:

a. Risk response strategies – Threats:


1) Transfer:

Some risks can be transferred to a third party such as a contractor, a bonding company, an
insurance company or another entity, who may be in a better position to exercise effective
control and manage the risk within economically reasonable bounds.

2) Avoid:

Some risks can be avoided by eliminating their causes. This can be achieved by making changes
to the project plan (i.e. relaxing the “triple constraint” by changing scope, adding time or adding
resources) to eliminate the risk or to protect the project objectives from its impact.

3) Reduce/ Mitigate:

The impact of certain risks can be reduced to an acceptable threshold by minimising their
likelihood of occurrence, thereby minimising potential negative effects to the project objectives.
For example, mitigation steps can be devised ahead of time to address the risk should it occur as
opposed to going forward with the unmitigated risk.

4) Share:

Some risks can be shared between the Office and contractor. For example, cost sharing
arrangements, predefined unit prices and allowances entered into contracts to cover a likelihood
of an event that limits the contractor's risk or sets some bounds on the magnitude of event.

5) Accept:

Some risks can be accepted if effective control can be exercised over their consequences, such
as when there is a clear method of dealing with the risk or the risk impact may be very minimal to
the project. For example, Office can take responsibility to purchase and install equipment that
may be difficult to purchase or difficult to install by a contractor. The Office may develop provisions
for accepting risks, either through cost, schedule or quality float.

b. Risk Responses Strategies - Opportunities:

6) Share:

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Requires shifting the positive impact of an opportunity, along with ownership of the response,
to a third party. Transferring the opportunity simply gives another party responsibility for its
management; it does not capitalize on the opportunity. Examples include forming risk-sharing
partnerships, special purpose companies, or joint ventures that are established with the
express purpose of managing opportunities.

7) Enhance:

Requires taking action to increase the likelihood and/or the impact of an opportunity. An
example of enhancing an opportunity is to take action to communicate lessons learned.

8) Accept:

Take no action and accept with the uncertainty regarding whether the opportunity will
materialize or not. Acceptance is the course of action when the expected value of the
opportunity is deemed to be very low or the cost to enhance the opportunity is greater than
the expected value of the opportunity.

9) Exploit:

Requires taking action that leaves no uncertainty regarding the outcome of the risk event by
exploiting the opportunity to occur. Examples include, but are not limited to assigning more
experienced staff, or using better technology to reduce the time to completion or to provide
better quality; acquiring key suppliers when they become financially distressed, etc.

After the Risk Response Plans have been developed and agreed upon, the Project Manager
(with input from the Risk Owner) will determine the costs required to implement each response
plan. The Project Manager shall approve each Risk Response Plan’s implementation costs
through the normal project change management procedure. The impact costs should be
included in the Risk Register during Risk Review Sessions.

9.5. Risk monitoring and control

a. It is important to monitor and control risks to keep track of the identified, residual risks, and/or
new risks and to ensure the execution of risk response plans, evaluates the effectiveness of the
risk management plan and any mid-course correction that should be undertaken to mitigate the
risk.

b. Risk monitoring and control should continue for the life of the project as sources of project risk
may change as the project progresses, new risks develop, or anticipated risks disappear.

c. If an unanticipated risk emerges, or a risk’s impact is greater than expected, additional response
planning should be implemented to control the risk.

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d. Periodic project risk reviews repeating the tasks of identification, analysis, and risk response
planning (see previous sub-sections) should be regularly scheduled as risk ratings and
prioritisation usually change during project implementation. Project risk should be an agenda item
in all project progress meetings.

e. After encountering risk events on a project, the conditions that led to the event should be
documented to determine if there were any warning signs that could have been identified before
the risk events occurred, the approach taken to address the risk, the effects on the risk occurrence
on project objectives, and whether the outcome of the risk management was satisfactory.
Effective feedback will help identify recurring problems and also add on to lessons learned.

f. Risk retirement: Risks should be closed and retired after the actual occurrence of the risk or when
the likelihood of the risk is reduced such that it is not worth expending resources to track the risk.
The following is guidance on the procedure for deciding on risk retirement:
i. Planned response plans for such risk(s) should be halted and closed.
ii. Alternatively, such risk(s) could be reduced to ’dormant’ status and evaluated as agreed
upon if it is determined that the risk(s) could possibly arise again.

g. Any project stakeholder may recommend a risk for retirement, but the final decision to retire the
risk(s) should be taken by the Project Manager in consultation with the Project Owner.

9.6. Development of a Risk Management Plan

9.6.1. Minimum Risk Management Requirements

A risk management plan should be implemented to ensure that the OAH is able to achieve the
objectives of the project and execute strategies successfully in the event there is a threat or action
that may adversely affect the project.

b. The minimum requirements to prepare a comprehensive risk management plan should depend
on the scale of the project, as depicted in the table below.

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Scale Estimated Project Costs Risk Management Requirements

1 Projects less than $1 million Risk register encouraged

2 $1 million to $5 million: Risk register

3 $5 million to $20 million Risk register with qualitative analysis

4 Greater than $20 million Risk register with qualitative and


quantitative analysis

c. The project team may elect to work at a higher scalability level than the recommended minimum
requirements above, if approved by the Project Owner. The decision to determine what level of
risk management effort is needed should depend on:
i. The type of the project
ii. Location of the project
iii. Duration of the project
iv. The project owner’s sensitivity to the project’s primary objectives (scope, quality, cost
and schedule).

d. The risk management plan should be quantified, including the costs of risk occurrence events, to
highlight the cost of not meeting the project schedule and estimate the costs to accelerate project
activities.

9.6.2. Risk reporting

a. For each reporting period, a consolidated risk report should be prepared. This report should be
comprised of updated risk register and qualitative and quantitative risk analysis reports. The
report should show the total number of active risks, retired risks, and/or any new risks added, as
well as how risk scores have changed since the last reporting period. The level and frequency of
reporting should be aligned to the project controls requirements.

b. The report should present risks grouped by phases, performance objectives, work categories and
sources of risk. The top risks within each grouping should be highlighted.

c. The report should also show the impact of any risk event that have occurred in terms of cost and
schedule variance from baseline and any drawdown on contingency funds. These are further
detailed below.

Reporting on cost risks:


d. For each reporting period, the amount and percentage drawdown on the project’s contingency
allowance should be reported, inclusive of any anticipated, current and actual cumulative
contingency expenditure. Any risks that could lead to drawdowns on the contingency allowance
should be reported, as well as their proposed mitigation strategies. Results of the quantitative

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cost risk assessment should also be presented in order to highlight critical activities that could
have an adverse effect on the project budget.

Reporting on schedule risks:


e. For each reporting period, the project schedule showing key milestones should be reported . This
report should be with respect to baseline timeline and currently forecasted or revised timeline.
Any risks that could impact these dates should be reported along with their proposed mitigation
strategies. Results of the quantitative schedule risk assessment should also be presented in order
to highlight critical activities that could be affected the most by risks and could adversely affect
key milestones or project completion date.

f. The progress of implementing any risk mitigation actions should also be reported together with
any current and risk mitigation actions planned for the immediate future.

g. Where risk mitigation actions are delayed or unsuccessful, the reasons for such should be
reported with recommendations for improvements.

9.6.3. Project Contingency Allowance

9.6.3.1. Introduction

a. Contingency is defined as “the amount of money or time needed above the estimate to reduce
the risk of overruns of project objectives to a level acceptable to the organization” (PMI, 2000)

b. Contingency is a financial reserve to cater for retained risks, used in conjunction with other risk
treatment strategies as a part of an overall risk management strategy.

c. Contingency caters for two categories of risk - known risks and unknown risks.
 Known risks: are identifiable sources of risks that have been identified, analysed and their
possible impacts quantified such that it may be possible to plan a mitigation strategy for them,
including developing a detailed contingency plan should the risk event occur.
 Unknown risks: are sources of risks that cannot be identified or anticipated, therefore they
are not manageable and the realisation of some of them is usually inevitable. Since their
possible impacts cannot be quantified, detailed mitigation strategies cannot be developed.
However, the risks may be addressed by applying a general contingency based on past
experience with similar projects.

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9.6.3.2. Development of contingency allowances

a. Determining contingency requirements is a vital element that defines the amount of funds that
should be held in reserve if risk events that require financial mitigation occurs. Therefore, it is
essential that contingency be calculated accurately and appropriately. For instance,
overestimating contingency would put significant pressure on the Organization’s budget, while
underestimating contingency would compromise the ability of the project to be delivered
according to set objectives.

b. The approach used to determine the required amount of contingency should be aligned with the
stage of the project development process, particularly the level of detail known about the project
design in addition to the risk profile of the project. Other factors such as the complexity and
benchmarks based on past project cost performance should also be taken into consideration.

c. The two main approaches used to determine the required amount of contingency are as follows:

i. Deterministic approach

1) This is a method usually used for estimating contingency requirements during early
stages of project development when limited information is available on the project or
where the level of scope definition is low.
2) It works by applying a fixed or across-the-board percentage addition of contingency
requirements on the base cost estimate. For instance, standard contingency
percentage ranges for projects during the Strategic, Conceptual and Planning
phases may be used in this method.
3) The method could also work by applying a variable percentage addition of
contingency requirements on the base cost estimate, whereby the contingency
requirement is calculated for each major cost element, if it is anticipated that some
parts of the project would have greater uncertainty than others. In this scenario, the
degree of uncertainty or accuracy for each major cost element would be thoroughly
examined and then a specific contingency applied thereon.
4) The accuracy of the method may be increased if it is based on past experience and
actual cost performance of similar completed projects.

ii. Probabilistic approach

1) This is a method for estimating contingency requirements through quantitative


analysis based on the risk profile of a project.
2) It is usually used to develop detailed estimates of contingency funds where sufficient
information is available, including an accurate and complete risk profile of the project,
as well as for higher risk projects.
3) This method may use likelihood distribution assigned to elements of the base
estimate and risk analysis showing ‘most likely’ outcomes, which then is used to
produce the contingency requirements.

d. OAH should consider using both deterministic and probabilistic approaches to calculate
contingency requirements for projects depending on the stage/phase and complexity of the
project. For example, deterministic methods could be used to determine the initial contingency
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requirements for projects during the Conceptual and Planning phases whereas probabilistic
analysis methods could be used to determine the detailed contingency requirements for projects
during the Design and Construction phases.

e. Once a contingency estimate has been prepared, it should be added to the base project cost
estimates to indicate the likely total cost of the project. The inclusion of contingency estimates
within a total project cost estimate would ensure that the anticipated total financial commitment
for a project is presented to the project sponsor, thereby reducing the need to appropriate
additional funds in the future to absorb cost overruns from risk events.

Illustration: Development of contingency allowances using a combination of deterministic and


probabilistic approaches

1) Determining contingency for known risks

a. The contingency requirements for a project could be established based on a risk analysis of the
project. A qualitative risk analysis would identify and rank the projects based on their likelihood of
occurrence and impact. Following that, a quantitative risk analysis undertakes an in-depth
examination of the identified risks and quantify impacts to the project’s cost, schedule and/or quality
in the event that the risk event occurs.

b. The results of both qualitative and quantitative risk analysis would then be used to determine the
contingency required to ensure that the project continues to meet its objectives in the event that risks
occur.

c. As scope is refined and the level of risk on the project is reassessed, the contingency estimates can
change. Best practice recommends using a range of figures to determine the potential accuracy of
estimates, because using a single rate would imply precision beyond what can be achieved during
the early planning, scoping or design stages. After the initial planning and design phases, the
contingency estimates should narrow as the scope gets more refined, comprehensive project
information becomes available and detailed design is undertaken. Table x and figure x below illustrate
the changing levels of accuracy in cost estimating between the early planning and detailed design
stages of a project.

Table x: Level of accuracy in cost estimating in relation to scope definition

Scope definition Probable error


range

Lower bound (%) Upper bound (%)

Well defined -5 +20

Fairly defined -10 +30

Poorly defined -15 +50

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Undefined -20 +100

Figure x: Level of accuracy in cost estimating in relation to of project development progress

Step 1: RISK Step 3: RISK RESPONSE – ABSORTION through CONTINGENCY


Step 2: RISK ASSESSMENT Remarks
IDENTIFICATION ALLOCATION

Project Phase Risk Likelihood Impact Risk Probable Probable Base Estimate Contingency ($) Contingency Anticipated
Description Score/ error error (as % of base Total Estimate
Category range - range - budget)
lower upper
bound % bound %

Conceptual A B A+B
Phase

Planning
Phase

Design

Phase

Construction
Phase

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Close-out
Phase

Table x: Determining contingency estimates for known risks

d. The contingency requirements would then be developed “bottom-up” from an assessment of potential
risks to individual work elements within the project. The risks could include technical risks, schedule
risks, cost risks, and/or programmatic risks; and the likelihood of occurrence and impacts could vary
by project phase/stage. The total contingency estimate for the project would then be extracted from
the contingencies of individual work elements and summed into a project contingency estimate.

2) Determining contingency for unknown risks

a. Risks arising from unknown risks could be mitigated by establishing Management Reserve.

b. The management reserve would provide financial coverage for the unknown risks that are within
the scope of the project but are not funded in the standard contingency allowance, since unknown
risks can neither be identified nor reliably quantified for potential impact in order to prepare a
contingency estimate for individual work elements within the project.

3) Determining contingency for financial risks

a. Financial risks such as fluctuations in inflation rates, interest rates, and currency exchange rates
etc. could pose a threat to the project and cause cost overruns.

b. Risks arising from fluctuations in inflation rates should be mitigated by establishing cost
escalation allowance. The escalation factor should be determined by taking into consideration
various economic indicators such as the construction cost index, consumer price index (CPI),
gross domestic product (GDP), labour market statistics, commodity prices, etc. which affect
changes of prices in the construction markets.

c. Risks arising from fluctuations in interest rates should be addressed in the project financing
agreements, if the project is anticipated to be financed through borrowing. For instance, a fixed
interest rate may be selected instead of a variable interest rate, and the rate should remain
constant for the duration of the project or repayment period.

d. Risks arising from fluctuations in currency exchange rates should be addressed through
established procedures of the Organization regarding recosting or direction from the General
Assembly if it decides to change the currencies of appropriations/assessment for a particular
project in order to reduce exposure to exchange rate fluctuations.

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4) Determining Final Project Costs

a. Once the various contingency estimates have been developed, they should be added to the base
project cost estimates in order to indicate the likely total cost of the project. Table x below shows
Anticipated total project costs, inclusive of base cost estimates and contingency estimates

Project Costs Amount

Base Project Costs:

Trade Costs

Soft Costs

Sub-total:

Allowances:

Escalation Allowance

Contingency Allowance

Management Reserve

Sub-total:

Anticipated Total Project Costs

Table x: Anticipated total project costs

b. The reason for including contingency estimates within a total project cost estimate is to ensure
that the anticipated total financial commitment for a project is presented to the project sponsors,
thereby reducing the need to appropriate additional funds in the future to absorb cost overruns
from risk events. This would also provide assurance to the project sponsors that the project is
feasible and could be achieved within the approved budget.
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c. In addition, presenting anticipated total project cost estimates in a consolidated manner would be
useful during the procurement for comparison with the various bids from potential vendors and
could also be used as a basis for negotiations during the awarding of a construction contract.

9.6.3.3. Usage and management of contingency allowances

a. The use and management of contingency allowances should be structured, formally documented,
and formally controlled as described in the project control procedures, through a structured
procedure that includes contingency expenditure authorization, ongoing monitoring and
reporting.

b. Since contingency allowances are set aside only for the realisation of risks, the project team
should review potential project risk events and evaluate if their impacts would result in the need
for expenditure of project contingency allowances.

c. After it is determined that the use of contingency would be required, the PM team should submit
a Contingency Expenditure Request (CER) to the office/entity responsible for approving
contingency expenditure requests in accordance with the procedures laid out in the project control
systems.

d. Formal requests for the release of contingency funds should provide detailed information on the
forecasted risk event, the phase of the project when it might occur, the likelihood of occurrence,
the severity if its impact, the potential impact to project objectives and the amount of contingency
allowance required to mitigate the risk.

e. Where possible, the use of contingency could also be offset though value engineering and/or cost
avoidance to initiate budget reductions in some areas affected by the occurrence of the risk event.

f. All requests for contingency allowance should be aligned with the contingency cost and
programming estimates prepared during the risk analysis stages. Contingency allowances should
not be spent generally across the project, as the allowances could easily be used up in the early
stages of a project, leaving very limited funds to address risks that could arise in the later stages
of a project. This could also lead to requests for further funding and eventually overspending on
the project as a whole.

g. In regards the management reserve, it should be held in reserve at the project level to provide
the necessary flexibility to manage unknown risks that are within the approved scope of the
project. This is necessary since the management reserve is not allocated to specific work
packages but is intended to mitigate unknown risk events only, therefore, it cannot be bound to
specific programming constraints.

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h. The project management team should have the responsibility for spending the contingency
allowances to mitigate the identified risks, as well as ensuring that any new or residual risks
resulting from realised/mitigated risks are identified and appropriately captured.

9.6.3.4. Authority for approval of contingency expenditure

a. Approval of contingency expenditure requests should be in line with the delegation of authority of
the project. In addition, the authority for approving the use of contingency funds should be
assigned to the governance level that is best placed to efficiently manage and control the
corresponding risk to maximise project cost performance and promote risk mitigation efficiency.

b. The delegation of authority to approve the release of contingency could depend on the level of
project risk, the level of control required etc., or it could be per mandates from the Organization’s
governing bodies. For instance, the approving authorization may be delegated:
i. internally to the project owner, who would review and approve the release of contingency
expenditure in concurrence with GAMPS per the oversight mechanisms to be put in place
for the management of the Organization’s global real estate holdings,
ii. externally to the project’s Steering Committee, who would review and approve the release
of contingency expenditure per their delegated mandate.

c. The approving authority would assume the ultimate responsibility for ensuring the judicious
release of contingency funds for changes to cost within the limits of the delegated authority. Any
amounts outside the set thresholds should be approved from higher authority levels, or from the
project sponsor, depending on the magnitude of the amount.

9.6.3.5. Restrictions on the use of contingency allowances

a. Contingency allowances should only be used to mitigate financial obstacles arising from the
realisation of potential risk events. The following is some of the factors not intended to be
addressed by contingency allowances:

i. Scope changes – Contingency allowances should not be used to cover for cost variances
created by changes in scope. Changes in scope and their associated financial implications
should be properly approved by the project owner and sponsor.

ii. Variances in other project cost components – Contingency allowances should not be used to
absorb cost variances in other components of the project costs, if such components
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experience cost overruns or have new requirements without corresponding funding. Cost
overruns or new requirements in other project cost components should be properly approved
by the project owner and sponsor.

iii. Force majeure and/or other unforeseeable major events such as extreme weather,
earthquakes, riots, acts of war, new government regulations and economic collapse –
Contingency allowances should not be used to cover for cost variances created by these
major events. Other risk mitigation strategies such as risk sharing or risk transfer (such as to
a third-party insurance company) and/or request for additional funding from the project
sponsor should be pursued.

9.6.3.6. Reporting the use of contingency allowances

a. To provide a comprehensive financial performance of the project, contingency performance


should be regularly monitored and reported across each level of cost control (for example, project
phase, work package etc.), as well as the effectiveness of the governance structures for
managing contingency allocations.

b. Reports on the usage of contingency allowances should be prepared on a regular basis, and
should be coordinated with the monthly progress reporting during the project implementation
phase. The reports should include contingency usage logs, explanations for contingency
drawdowns and projected contingency requirements for the fiscal year/biennium and for the entire
duration of the project.

c. On-going evaluation and assessment on the usage of contingency allowances should also be
performed on actual contingency expenditure versus remaining contingency allowance for the
fiscal year/biennium and for the entire duration of the project. The evaluation should also review
the usage of contingency by work package and by project stage/phase, and document significant
trends for incorporation into lessons learned procedures at project close-out. The reports should
also highlight if contingency allowances are available to mitigate potential risk events in the near
and long-term duration of the project.

d. Each of the contingency cost component should be discretely monitored and tracked against
initial baseline estimates as a mean for early identification of potential and/or realised risks
events, enabling effective risk mitigation actions and optimising contingency performance across
the project cost components.

e. The responsibility for reporting on the performance of contingency allowances against base cost
estimates should be aligned with the established delegations of authority such that reporting
activities are undertaken by the governance level allocated contingency ownership.

f. Ensure coordination with month-end cost settlement and year-end financial statement in
accordance with Umoja and UN IPSAS.

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9.6.4. Roles and Responsibilities during the preparation of a Project Risk
Management Plan

Project Manager

a. Approve the project Risk Management Plan (RMP).


b. Approve and ensure implementation of response actions to identified risks, particularly significant
risks that emerge as prospects for risk response.
c. Confirm who will carry out response actions and when action will be taken; incorporate into work plan.
d. Regularly review and update the project RMP.
e. Develop the Project Specific Risk Tolerances.
f. Promote aggressive risk management for the project.
g. Ensure that the project controls functions are integrated with the Project Risk Management Process
to ensure risk information is appropriately integrated into project cost and schedule planning and
reporting.
h. As necessary, allocating appropriate project controls resources (cost and schedule personnel) to
evaluate risks, including potential cost or schedule impacts.
i. Monitor the effectiveness of the Project Risk Management Process and make suggestions for its
improvement.
j. Analyse the project risk profile in terms of impact, schedule, scope, and quality and recommend
appropriate actions.
k. Review and approve the required resources to proceed with the Risk Response Plans.
l. Review and approve the risk summary report prior to circulation.
m. Organize periodic Risk Review Sessions with key project personnel and all Risk Owners to evaluate
and gather risk information.
n. Receive risk identification forms from project staff and incorporate into Risk Register.
o. Review the list of identified risk items.
p. Review and normalize the risk ratings for all identified risks.
q. Report progress on Risk Response Plans and ensure risks are being reported and escalated as
necessary.
r. Update the Risk Register as necessary.
s. Administer all project Risk Response Plans until final sign off by the Risk Owner and Project Manager.
t. Actively participate in risk workshops.
u. Communicate to senior management the risk and uncertainty the project is exposed to and the action
that will be taken to address it.

Project Team Member

i. Proactively identify risks and their characteristics in terms of likelihood of occurrence and impact.
ii. Proactively respond to risks within specialty areas.
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iii. Document actions and report to Project Manager and Project Risk Manager for inclusion in risk
management updates.
iv. Monitor effectiveness of response actions.
v. Communicate with Project Manager regarding risk management actions and changing project risk
profile (addition of new risks or retirement of old risks, as appropriate).

Project Risk Manager – Independent Risk Management Consultant (IRMC)

a. Prepare and update the project RMP.


b. Develop a schedule for key check-in milestones for review and update of the RMP.
c. Determine when risk workshops will be needed and ensure appropriate preparation is accomplished
prior to the workshop.
d. Upon request, provide input, opinion, expertise, guidance, support and advise for developing risk
response plans ensuring that risks are properly addressed and a range of options are defined in
response to risks that are rated the highest with specified actions and activities that should eliminate
risks.

e. Upon request, provide input, opinion, expertise, guidance, support and advise for developing risk
response actions to be performed by assigned roles with defined resources, especially for those
assessed to be most severe in terms of their exposure, to protect the specified objectives.
f. Assist in determining and evaluating the net effect of all identified project risks both opportunities
and threats by using appropriate analytical techniques such as the Monte Carlo analysis for
simulating “what if” scenarios or by using expected monetary value techniques to sum up the total
value of the expected values of risks identified for certain project stages or the project as a whole in
order to ensure that the existing level or risk is within the specified risk tolerances.
g. Assist in populating and maintaining a Risk Register.
h. Assist in determining the recommended risk contingency budget, the sum of the money set aside
from the primary project budget to fund specific management responses on identified project risks
both opportunities and threats utilizing the Monte Carlo analysis.
i. Provide recommendations for further improving and maximizing the effectiveness of the governance
structure of the projects, including risk management.
j. Support the UN Project Team in their efforts of establishing and maintaining integrated risk
management services by coordinating administrative efforts to identify and assess project risks;
assist with the development of appropriate response strategies and actions, and to ensure that the
independent and integrated risk management activities are fully aligned/coordinated.
k. Participate in regular, quarterly risk management meetings, which will be held remotely via video or
teleconferences during working hours of each UN project location.

Risk Owner (Action Owner)

a. Implement agreed-upon response actions.


b. Report on effectiveness of the risk actions to the Project Manager/Risk Manager and affected project
team members.
c. Identify new risks that may emerge after response actions.
d. Communicate with Project Manager regularly, including the need for other risk response actions if
needed.

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List of Risk Categories
The risks that should be included as part of a risk register include:

Category Sub-category

Programme Risks Logistics and coordination

Planning

Schedule

Procurement

Construction

Commissioning

Senior management support

Host country coordination

Stakeholder awareness/support

Administration

Approvals

Funding

Legal

Financial Control

Organizational Risks Inconsistent cost, time, scope and quality objectives

New priority project inserted into program

Priorities change on existing program

Funding changes for fiscal year

Internal “red tape” causes delay getting approvals, decisions

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Losing critical staff at crucial point of the project

Inexperienced staff assigned

Insufficient time to plan

Unanticipated project manager workload

Functional units not available, overloaded

Lack of understanding of complex internal funding procedures

Stakeholders request late changes

New stakeholders emerge and demand new work

Influential stakeholders request additional needs to serve their


own purposes

Stakeholders choose time and/or cost over quality

Technical (Construction- Design


related) Risks
Technical feasibility

Assumptions on technical issues during planning stage

Change requests because of errors

Structural building safety

Building standards

Fire standards

Health and safety standards

Servitudes/Rights of Way

Hazardous materials

Contamination

Sustainability

Environmental

Geotechnical issues

Surveys late and/or surveys in error

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Demolition

Hazardous waste site analysis

Need for design exceptions

Green Certifications

Materials/geotechnical/foundation in error

Utility relocation may not happen in time

Project Management Risks Project purpose and need

Project scope definition

Project schedule,

Project objectives

Project cost, and

Project deliverables

Project Resources

Project Staffing

Communication

Consultant or contractor delays

New or unplanned works

Contract management

Document Control

External Risks Landowners unwilling to sell

Local communities pose objections

Political factors change

Threat of lawsuits

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Environmental Risks Project in a delicate zone e.g. Coastal Zone, Scenic Highway,
Scenic River, a floodplain or a regulatory floodway,
palaeontology zone etc

Permits or agency actions delayed or take longer than expected

New information required for permits

Environmental regulations change

Water quality regulation changes

Reviewing agency requires higher-level review than assumed

Historic site, endangered species, wetlands present

EIS required

Controversy on environmental grounds expected

Environmental analysis on new alignments is required

Project in an area of high sensitivity for

Negative community impacts expected

Hazardous waste preliminary site investigation required

Pressure to compress the environmental schedule

ECA Risk Management Strategy has been provided in the Annex

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10. PROJECT CHANGE AND ISSUE MANAGEMENT

10.1. PROJECT QUALITY MANAGEMENT(Overview)

a. Project quality management refers to the collection of techniques that ensure compliance with set
standards of performance, material and workmanship, all of which is done to ensure the performance
of the facility. These quality standards are represented in criteria, standards, codes, regulations and
Office compliance documentation in general and specifically detailed in the drawings and
specifications prepared for the project.

b. The process of ensuring quality of all works are meeting the project’s objectives can be divided into
two steps:
i. Quality Assurance - includes all activities performed before or during execution to make sure
work will be done in a correct way.
ii. Quality Control - includes all activities done during or after execution of the works in order to
verify that correct quality was achieved; such activities include tests, inspections, photo
documentation etc.

Quality Assurance:

c. Examples of Quality Assurance activities include:


i. Pre-qualification of potential bidders, before being included in a bidder’s shortlist.
ii. Submittals, where the UN Project Team would review, comment and confirm conformance
with the contract requirements. Examples of submittals include: product data and
manufacturer's literature, samples of shop drawings, certificates and certifications, schedules,
and calculations
iii. Kick-off meetings with Contractor before work starts on site.
iv. Contractor's Quality Management Plan, where the Contractor explains its organization for
work execution, Quality Assurance and Quality Control. The Contractor lists the Critical Works
that will be included in the scope and provide Method Statements for how these works shall
be executed. The Contractor shall explain how day to day Quality Control will be organized.
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Contractor's Quality Plan shall be reviewed and approved by the Project Manager before work
starts.
v. Mock-up installations, where a small part of the work will be done in full scale. The Mock-up
will then be reviewed and approved by the PM, and if necessary, the Senior-level Advisory
Committee. Later, the Mock-up will be used as a benchmark to what will be acceptable quality
of work.
vi. Construction Monitoring by Contractor's Superintendents and Supervisors. Daily field
inspections that work will be performed in accordance with current drawings, specifications,
applicable Contractor's Quality Plans, and materials, equipment and work will in line with
previously approved submittals.
vii. Weekly coordination meetings where also quality will be discussed. Internal Quality Audits
where execution of work and implementation of procedures will be reviewed, shall be carefully
scheduled and executed, covering Contractor’s work on-site as well as off-site. Also, important
to note that vendors and manufacturers of material can be subject to Quality Audits.
viii. Non-Conformance procedure where any work, equipment or material, that will be found not to
meet the Contract Requirements, would be reported Remedial Actions, how to repair,
exchange or possibly approve the Non-conformance, would be administered in a controlled
way and with appropriate people and functions involved. Another important element in this
process will be Preventive Action, how to act in the future in order to avoid re-occurrence.

d. An effective quality assurance process should be initiated through the preparation of a Quality
Assurance Plan (QAP), which should:
i. document quality standards and procedures;
ii. define ongoing monitoring and reporting procedures, and;
iii. establish methods to address quality deviations.

Quality Control:

e. Examples of Quality Control activities include:


i. Daily field inspections by Contractor's Superintendents and Supervisors including participation
in Contractor's receiving inspections and other field inspections as outlined in Contractor's
Quality Plan.
ii. Contractor's submittal and Contractor's review of daily Field Reports.
iii. Tests and Inspections: The Contractor shall submit a list covering the tests and inspections
that will be done in order to verify that the works will be in compliance with the Construction
requirements. Special attention shall be paid to that and appropriate parties will be notified of
inspections and tests.
iv. Punch lists for various parts of the works will be kept current by the Contractor in order to keep
track of outstanding works, possible critical items etc. To be done as work will be performed
and before Substantial Completion.

10.2. Project Quality Management Plan (QMP)

a. The QMP should reflect the general approach towards achieving quality in the asset under
construction project. The QMP should define how the project team should interrelate in order to
promote quality in all aspects of the program, from the conceptual phase through close-out phase.

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b. The QMP should emphasise expected quality goals of the project, including the quality and
performance expectations of management process.

c. The Engineering/Quality Control project personnel should be responsible for developing the QMP
and providing ongoing oversight of the process.

d. The QMP should contain and/or reference the following items:


i. Overall project organization
ii. Project Quality Management organization including, the Project Engineering/Quality Control
project personnel, and representatives from the PF design team, and Contractor.
iii. Management decision procedures and appropriate references.
iv. Required formats for various elements of the project services and deliverables (Requests for
Information, meeting minutes, progress payment applications, field observation reports, shop
drawing logs, notice of proposal change order, etc.)
v. Requirements & Check lists for assuring quality in the managing the construction process
(Office approval of changes, check lists for approving contractor's schedules, approving
revisions to schedules, reviewing change order costs, approvals to start elements of the
construction, preliminary and final acceptance, etc.)
vi. Project Quality Audit forms.

10.3. Quality Management during Design

a. During the design phase, it is essential that all issues affecting quality be subjected to an ongoing
review and consultation among the team members. The goal should be to ensure that the products
of the design phase is a complete set of documents defining the project, meeting all requirements
and providing a cost-effective solution that can be procured within the PM’s established budget for
the project.

b. The design should be produced to meet performance and time requirements of the Project Team
while achieving all of the PM’s quality goals.

c. The QA activities to be undertaken include:

1) During Schematic Design:


i. Quality assurance activities should be initiated with a thorough check that Office
requirements, standards and criteria are consistent with each other and comply with
prevailing codes and regulations.
ii. Document reviews and design submittal reviews should be undertaken in order to assess
progress, completeness, consistency and appropriateness of developing documentation.
iii. PF design team performance should be assessed relative to schedule,
comprehensiveness of work products and staff experience levels and qualifications.
iv. The performance of other Office consultants and staff is assessed in a similar manner.
v. Changes and deviations are evaluated and approved only by express action of the PM.

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2) During Design Development and Construction Documentation:
i. The process initiated in schematic design is continued throughout design development and
construction documents with a progressively narrower perspective.
ii. Document and submittal reviews should continue.
iii. Additional emphasis should be added to the review of samples and to preparing mock-ups
that facilitate the understanding of quality and performance issues.
iv. Specifications and design details that refer to critical aspects of the work or are limited by
potentials suppliers/manufacturers should be reviewed in detail.
v. The qualification and/or pre-qualification of contractors and suppliers should be initiated.
vi. Changes and deviations are evaluated and approved only by express action of the PM.

10.4. Quality Management During Procurement

a. During procurement attention should be towards actions for ensuring quality in acquiring services and
contractors that would successfully implement the project. Issues affecting quality should continue to
be subjected to an ongoing review, but the goal should be to assure that the products of the design
phase are accurately reflected during the procurement process.

b. Critical Procurement actions include:

i. The qualification/pre-qualification process initiated during design is continued and finalized.


ii. Issues to be addressed include local marketplace availability, integration and utilization of
global goods and services, the impact of lead times and the assessment of viable
alternatives.
iii. Procurement standards and requirements must be coordinated with quality requirements,
especially relative to activities that may limit competition.
iv. Contract issues such as incentives and liquidated damages should be considered for their
impact on quality.

10.5. Quality Management During Construction

10.5.1. General

a. During construction, quality management should shift from review and assessment of documents and
processes to the quality of the actual built environment. Issues affecting quality continue to be
subjected to an ongoing review, but the goal should be to assure that the products of the design phase
are accurately communicated to construction trades and that the eventual work meets quality
requirements.

b. Construction quality management activities should include the following five major areas:

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i. Contractor/Supplier Quality Control Programs:
1) Assure that contractors and suppliers establish quality programs in accordance with the
documents and codes/regulations.
2) Verify that the programs are staffed and managed properly.

ii. Shop drawings and submittals:


1) Assure that construction activities are adhering to the requirements of the construction
documents as communicated through shop drawings and submittals.
2) Assure that shop drawings and submittals are consistent with original construction
documents.

iii. Inspection and testing


1) Coordinate and oversee testing and inspection functions conducted both independently
for the Office and by contractors/suppliers.
2) Assure inspections are carried out per requirements and corrective action is initiated, if
necessary.

iv. Change Management and Oversight


1) Assure integration of changes into the project without compromising quality
requirements.
2) Verify changes in contractors and suppliers meet original qualification goals.

v. Project Documentation
1) Assure that as built drawings and documentation are prepared as the project progresses.
2) Verify inclusion of changes in as built drawings.
3) Verify preparation and delivery of operations manuals and system documentation.
4) Assure training requirements are carried out per requirements.
5) Assure punch lists are prepared and work activities completed.

10.5.2. Quality Plan for sub-projects

a. For each sub-project including any critical works, as defined by the contractor, the subcontractor
should produce and submit, for the contractor's approval, a subcontractor's Quality Plan.

b. In cases where sub-projects are large and complex, the sub-project may be broken down in several
sub-projects and a Quality Plan should cover only one sub-project. The sub-contractor's Quality Plan
should provide details enabling the sub-contractor's plans for executing critical project works. Critical
works could be any work that, if not performed accurately, would have a significant impact on the
project cost, schedule and quality objectives, as well as on the environment and/or fire and life safety.

c. The Quality Plan should also provide clarity on how the sub-contractor intends to control their
operations with respect to the Quality Assurance and Quality Control plans of the project; and
reassurance that the sub-contractor has correctly understood the design and the technical
requirements.
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d. A Quality Plan should clearly identify works considered critical, difficult and/or dangerous by the sub-
contractor. It should describe these areas, activities and/or situations, as well as the measures to
control and ensure the adherence to project objectives, environmental protection as well as fire and
life safety.

e. The content of a sub-contractor's Quality Plan should cover, when relevant, as a minimum:
i. Content: general
ii. Organization
iii. Requirements
iv. Critical works
v. Method statements
vi. A general description of the work to be performed covered by the Quality Plan;
vii. A description of the work organization, outlining the responsibilities for supervision of various
parts of the work as well as responsibility for Quality Assurance/Quality Control (QA/QC) related
tasks;
viii. A list of all relevant specifications, standards, codes and other requirements developed during
the design;
ix. A list of work items considered critical from either a quality, environmental or safety point of view;
x. Full and detailed descriptions of how various work items shall be executed. Method Statements
shall, as a minimum, include work items considered critical.

f. Production Control
i. A description of tests, inspections and other measures taken as work progresses, besides from
what will be specified in the construction requirements, in order to assure the correct quality of
the works.
ii. After submission to the contractor, the Quality Plan should be reviewed by experienced personnel
within the appropriate disciplines, such as Superintendent responsible for the work, specialists
within environment & safety, and as and when considered needed by PF. The sub-contractor's
Quality Plan should be approved by the PM and by the QA/QC-Manager for adequacy and
fulfilment of all relevant requirements.

10.6. Inspections and Tests

10.6.1. General

a. There are a wide range of tests and inspections that would need to be performed during the
execution of the contract.

b. The tests and inspections should be performed in accordance with prevailing and recognized
building codes, and as detailed in the Technical Specifications. The inspections should be
performed by an independent testing firm, contracted by the Contractor.

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c. The test and inspections are described below:
i. Special Inspections will mainly focus on verifying the correct function of all lifesaving systems.
ii. Controlled Inspections should be performed in accordance with prevailing and recognized
building codes.
iii. Progress Inspections, other than special inspections, should be performed in order to verify
compliance with internationally recognized building codes. These inspections can, according
to code, either be carried on by host country authorities, or through independent testing
companies. They may also be carried out in-house by the Contractor’s personnel who are
certified to inspect their own work, upon approval by the Organization.
iv. Area Closure Inspection: Inspections done by the contractor to verify that all work and
inspections necessary will be satisfactorily completed prior to concealing any work area.
v. Factory Acceptance Test: Tests done as required by construction documents, typically on
mechanical or electrical equipment but sometimes also for materials at the manufacturer site
or factory.
vi. Functional Tests: Tests done as required by construction documents, typically by the Trade
Contractor, in order to verify the correct function on a part of a system. Such tests may include
leakage tests on pipes and drains, x-ray testing of welds etc. Some of these tests could be
classified as Special Inspections and should be done by an approved testing agency.
vii. Operational Tests: Tests performed on a full system or a sub-system in order to verify
operability of all functions. Some of these tests will be classified as Special Inspections and
must be done by an approved testing agency.
viii. Coordinated Tests: Tests performed to verify correct operation and interface between
different systems.

10.6.2. Special Inspections

a. The Host Country Agreement shall state the role of host country authorities or officials involving
tests or certifying inspections of the building works within the UN campus.

b. The Contractor should engage an independent testing agency to perform all tests and
inspections, which would normally have been carried out by or through the host country building
officials, in order to satisfy compliance with recognized building codes.

c. Contractors should submit a list covering tests and inspections listed in the Technical
Specifications and other tests that should be carried out, in order to satisfy the requirement that
the works will be in compliance with the requirements of the contract.

d. The PF should also identify special inspections that may be required.

10.6.3. Operational Tests

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a. Operational Tests should be undertaken in order to guarantee detection of any erroneous cross
connection within a system, and the complete interconnection of all elements comprising the
systems as a whole.

b. Filling and charging of system with the working medium should be included. Temporary bypasses
and other connections required to fill, flush and dram should be provided as required. Cleaning
and flushing and preliminary setting and adjustment to valves etc. should be included. Energizing
of electrical circuits ("Initially via temporary supply for all ELV, LV and HV circuits"), and
operational checks for protection devices should also be done. Sound level measurement and
control testing should also be done, when appropriate.

10.6.4. Coordinated Tests

a. Coordinated Tests should be conducted to confirm inter-operation and interfacing between


systems such that each system or relevant portion thereof will be operating satisfactorily in
conjunction with other portions of the same system as well as the other related systems or
portions thereof. Testing should be affected when the integral system and the other inter-related
systems are completed.

b. Coordinated Tests should include: interconnection, final setting and adjustment of all local and
remote sensing and actuating devices as well as actual respective operation of the relevant
system to pre-design parameters.

10.7. Non-conforming Works, Remedial and Preventive Actions

10.7.1. General

a. Non-Conformance Report (NCR): A report indicating work, material or equipment that does not meet
specifications or set standards, or that will be not satisfactory with regards to quality and established
good work practice. Besides the description of the non-conforming work, the report sheet provides
space to describe proposed Remedial Action and Preventive Action. The NCR should be established
by the Project Manager for the sub-project and sent to the QA/QC-Manager.

b. Remedial Action: Remedial Action defines what should be done in order to bring the Non-
Conformance back to an acceptable level. Remedial Action may involve replacement, repair or, when
appropriate, simply reaching an agreement with the PM and with the PF Design Team to accept the
work.

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c. Preventive Action: On detection of a Non-Conformance, the cause should be identified and analysed
in order to initiate measures to be taken to prevent recurrence. The Preventive Action should be
described and approved in the NCR before the Non-Conformance can be closed. The UN Project
Manager should be responsible for ensuring that Preventive Action is established and implemented.

10.7.2. Procedure

a. Defects and other works not in accordance with approved drawings and specifications should be
referred to as non-conformances.

b. Procedures should be established and maintained to ensure that all materials, equipment or work not
conforming to specified requirements will be barred from use or installation.

c. The non-conformances should be formalized in an NCR, describing the non-conforming works and
proposing appropriate Remedial and Preventive Action. Those non-conformances should be reported
in a Non-Conformance Report (NCR) to the Project Manager and the QA/QC-Manager for further
handling. The QA/QC-Manager should keep a log showing status for all open and closed NCRs.

d. Proposals of Remedial Action should be endorsed by the relevant Architect or Engineer, as and when
relevant, before the Non-Conformance Report is submitted to the Project Manager and the Project
Owner for approval or for information.

e. In order to prevent repetitions of non-conforming situations, the cause for the non-conformance
should be evaluated and possible Preventive Actions be initiated.

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PART IV: OTHER CONSIDERATIONS

11. Project Communication Management

11.1. Overview
a. Project communication management refers to the processes required to ensure the
generation, collection, dissemination, storage and disposal of project information.
b. The processes include communication planning, information distribution, performance
reporting and administrative closure.

11.2. Project communication planning

11.2.1. General

a. Project communication planning involves the determination of information required by project


stakeholders in order to develop communication requirements and technologies that best meet
their requirements.

b. Project communication planning should be established during the early project stages in
coordination with the project’s organizational structure.

c. The output of a communication plan would be a Project Communication Management Plan. The
Plan should clearly identify a communication strategy aimed at gathering, disseminating, storing
and disposing project information.

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11.2.2. Communication Strategy

a. The PM should prepare a communication strategy for the project. The strategy should include
details on communication flow, communication methods (meeting types, reports etc.), and,
document formats, contents and standards (for various project information e.g. status reports,
progress updates to governing bodies, technical documentation).

b. The communication strategy should put emphasis on close coordination with UN Procurement
personnel, particularly during the Planning Phase and adoption of procurement strategy.

c. Generally, the PM should:


i. Identify stakeholders
ii. Provide a detailed listing of all personnel assigned to the project
iii. Organise meetings
iv. Establish meeting formats and standards
v. Submit agendas and minutes for all meetings (both formal and informal),
vi. Circulate a calendar of meetings.

11.2.3. Communication Flow

a. The PM should provide a detailed communication flow strategy to all, which should include distribution
of communication materials, consistency in communication flow among all project stakeholders,
central “ownership” and filing of records, safety nets for incoming material, and, a live, current and
inclusive filing system. The detailed communication flow strategy includes:

b. Communication flow should remain consistent among different contracted personnel (i.e. PF,
Contractor)
c. Email should be used for broader distribution
d. Central file and/or electronic files should be current and inclusive – including drafts, rough drafts, pre-
drafts, notes – not just final versions or formal submittals

11.2.4. Document Flow

a. The PM must prepare a detailed breakdown of incoming and outgoing documents for the project.

11.2.5. Project Meetings

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a. Meeting Location:

i. Project meetings should typically take place at the UN office where the project is located.

b. Agendas:

i. The PM should prepare and circulate agendas for all meetings (both formal and informal).
Agendas should be circulated at least two (2) business days in advance of a meeting.

c. Meeting Minutes:

i. At the beginning of each meeting, the revised minutes of the previous meeting should be briefly
reviewed by all participants. Corrections, objections or acceptance must be recorded as part of
that meeting.
ii. Draft meeting minutes should be produced by the project manager within three (3) days of each
meeting, and distributed for comment. Comments should be provided by the next meeting, at
which time previous meeting minutes should be finalized for the record.
iii. Minutes should identify meeting participants, speakers, or those responsible for actions by name
or office (noted next to the action required).
iv. Minutes should be brief but they must include record conclusions, required actions, responsible
parties and target dates.

d. Meeting Schedules

i. The PM’s Administrative personnel will be responsible for circulating a calendar for the following
week’s appointments involving all activities of the UN Project, to be distributed every Friday.

11.2.6. Project Reports Procedures

a. Project reports should be submitted as follows:

Weekly Reports should include the following:

i. A brief Executive Summary on the status of project activities (i.e. as stated in the contract).
ii. A timeline indicating milestones and whether they have been achieved or not;
iii. Illustrations (drawings) of relevant conceptual or detailed designs;
iv. Status of project submittals and approvals;

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Monthly Reports should be a progress report with more detailed information, such as status of design
submittals shall include any open issues, areas of concern and progress. The reports should be due
monthly, whether an invoice will be submitted or not. The report shall include:

i. Executive Summary
ii. Project Budget Status and Projection
iii. Project Cost Report
iv. Goal Schedule
v. Monthly Report by Contract
vi. Actions for the month
vii. 30 day look back
viii. 6 months look forward

11.2.7. Project Reports Review Objectives

a. The review process for project reports has the following objectives:

i. Ensure program delivery – the document review process is the mechanism that ensure that the
delivery of documents is consistent with program requirements, criteria and standards and
adequately represents the UN's program needs.

ii. Assure proper standards are established and maintained – It is essential that standards of
document preparation be communicated to the design team and be ultimately delivered in the
documents.

iii. Provide a mechanism for communication between the PM and the PF design team – the document
review process provides a vehicle by which the PM and the PF design team can regularly meet
and communicate project issues through the medium of the project documents. The process must
be formalized to the degree necessary to provide predictability and consistency as well as
defining clear lines of authority and responsibility for decision-making.

b. A Quality Control Plan for the project documents should be prepared based on the agreed quality
control protocols for all project documents. Prior to any material being issued to the UN, documents
must be checked in accordance with the approved quality control plan.

c. The formats and standards for all documents should be as agreed to by the PM and the PF or
contractor in advance. This will include the currency, language, units of measurement, document
naming structure and document printing standards.

d. All project correspondence that concern the project task-related activities should be shared with
relevant parties and the PM team for record and for file (archive set).

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11.3. Project information distribution

11.3.1. General

a. Project information should be made available to relevant stakeholders in the required format,
level of detail, and in a timely manner.

b. The information can be distributed in various ways as identified in the communications strategy.

c. It is recommended that the Office evaluate several of the different web-enabled project
management platforms currently existing in the market to leverage improved real-time
collaboration amongst all members of the program team. A web-enabled system can deliver high
functionality and usability in a number of key areas, including:

i. Document management - managing, tracking, organizing and storing project files in a


centralized, secure location.
ii. Project workflow - collaborating with Project Team (i.e. submittals, logs, etc).
iii. Online meetings - interim meetings on-line to solve problems
iv. Project calendar - schedule events/meetings for program team
v. Security - set different level of security for users
vi. Real time reporting - provide access to key stakeholders on all project key project issues

d. The information should be easily retrievable and could be stored in a secure project information
exchange platform, such as an FTP Site. The FTP site would be used to view and download
project documents as it would provide a single accessible electronic database for drawing files,
versions of submittals, along with building code standards, guidelines, analysis reports drawings
and reference annexes.

e. Operating the FTP site:


i. The PM should identify who shall be granted access to the files that will be uploaded to the
FTP secure system – after verifying the credentials of the individuals and a confidentiality
agreement will in place.
ii. The PM and the PF shall agree on the website’s content guidelines.
iii. The PM or designee shall be responsible for regularly auditing the content of the sites,
maintaining the security system, and regularly updating the information.

f. Reporting and electronic collaboration amongst the project team requires continual network
infrastructure support Database tools required for cost and schedule control (i.e. Prolog,
Primavera) and a fairly robust LAN platform deployment with ongoing maintenance and
administration.

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11.3.2. General Information Security Procedures

a. The following UN guidelines shall be used as reference wherever possible, and should take
precedence over the provisions of this section:
i. ST/SGB/2016/11 Organization of the Office of Information and
Communications Technology
ii. ST/SGB/2007/6 Secretary-General’s bulletin – Information sensitivity, classification and handling

iii. ST/SGB/2004/15 Use of information and communication technology resources and data

b. All parties in possession of applicable information should be responsible for maintaining the security
of the information, whether created or obtained, in a secure environment. Information created and
maintained on a LAN (local area network), should be accessible only to approved project personnel.

c. “Confidential/Sensitive” information should be marked with a stamp or labelled, indicating the


contents are “Confidential / Sensitive”. Any media containing such information in part or in whole
should be subject to these requirements.

d. The reproduction of documents labelled as “Confidential/Sensitive” should be limited to the amounts


necessary to successfully execute the project. Documents should be distributed according to the
project’s pre-established approved distribution lists to those individuals or entities required to have
the information for the execution of their respective responsibilities on the project. All such lists (i.e.
personnel lists) should be updated as changes are made or as may otherwise be required by the
Project Team.

e. A record indicating each individual receiving copies (hard copy media), the number of copies
received and the issue date of the document maintained transmittals are an acceptable record of
distribution.

f. Upon discovery of a breach, loss or theft of any such information, the discoverer should immediately
notify their respective UN Project Manager.

g. Applicable information should not be left unattended or beyond the immediate possession of the
user except as may be required during construction as defined herein.

h. When not in use, all hard copy (paper or electronic media) should be stored in an approved storage
container with a minimum 2-hr Fire Label and Class "B" Burglary resistive features, including a U.L.
group II lock (See example in Attachment 'D') or other secure containment as approved by the UN
Security, which may include but not limited to a "Secure Room" with multi-layer security measures
(i.e. access control, video surveillance, operational measures etc.). Any such deviation from the use
of an approved container should require the approval of a representative from UN Security.

i. Copies of documents issued for the project should be maintained on a project server or in project
files or binders to ensure information contained on those documents can be identified should the
issued copy be misplaced, lost or stolen.

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j. Users should establish a reproduction control system to ensure that reproduction of “Confidential /
Sensitive” information is held to a minimum and is consistent with contractual and operational
requirements. “Confidential / Sensitive” information reproduction should be accomplished by
authorized employees only. All unauthorized reproduction of “Confidential / Sensitive” information
should be prevented. All copies of “Confidential / Sensitive” documents should be marked in the
same way as the original material. After the reproduction process is completed, the material should
be reviewed to ensure the markings are legible. Only the number of copies needed for use or
distribution should be reproduced. Logs or records of distribution should be made available to the
Project Team upon request.

k. Documents reproduced outside of the user's office, should be done by pre-approved vendors, and a
"Confidentiality" agreement should be in place with the vendor. The Confidentiality Agreement for
the pre-approved vendor(s) may be signed by only the principal / owner or duly authorized
representative of the service.

l. The storage of “Confidential / Sensitive” information on portable media (paper or electronic) should
be limited to the extent necessary to successfully execute the project. Information contained on
portable electronic media should be password protected and encrypted if possible. All users should
ensure such information is cleaned/ scrubbed from portable media after initial use for its intended
transport, transfer or presentation.

m. “Confidential/Sensitive” documents should not be transmitted electronically outside' of the LAN in


the user's offices, except through approved project extranet, unless approved and authorized by the
Project Team.

n. Information transmitted by electronic media such as CD, CD-ROM, DVD, Flash Drives, Thumb
Drives or other mass storage media should be encrypted using an Advanced Encryption Standard
(AES) 256-bit encryption (i.e. 7zip). Any such programs using this encryption should be publicly
available and provide for self-extraction of data without special software, and without a requirement
for administrator level rights on a Windows based PC. Passwords for encrypted data should not be
transmitted with the information and common global passwords should not be used.

o. Each piece of media used to transmit “Confidential / Sensitive” information should have a unique ID
written on it, to be used as a reference ID. This unique ID should be generated by the originating
Firm and used as a reference for communication, tracking and password assignment / logging. The
ID should include: Company Name - Date of Issuance - Media Production Number.

p. Computers, servers and networks where such information is stored should require managed
password login.

q. Any data relating to the project, to include but not limited to drawings, specifications, calculations
and other information products as specified in this document security procedure, which are to be
disseminated electronically, must be transmitted through (and only through) the officially sanctioned
extranet system (i.e. QuickPlace). The use of alternative mediums such as web sites, email, and ftp
is strictly forbidden. All authorized users will be granted access to the extranet and its specific file
areas with security privileges appropriate to their project roles and "need to know" status. The
extranet will be hosted in a secure environment using appropriate protection measures as deemed
necessary by the Project Team. In no event should such documents be placed and transmitted
through a public service provider website (i e. FTP). “Confidential / Sensitive” documents should not
be transmitted by e-mail.

r. The transport of “Confidential / Sensitive” information on hard copy media should be limited to the
extent possible. All personnel transporting such information outside of an authorized user location
should take precautions as necessary to limit loss or theft of such information
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s. “Confidential / Sensitive” information distributed to project personnel outside of authorized user
offices should be hand delivered by approved Project personnel, or through Federal Express or
equivalent bonded delivery service. When using such delivery services, a signature of receipt
should be required to ensure delivery to appropriate parties. Documents shipped by means of a
courier service / vendor should require a "Confidentiality" agreement be executed by the vendor(s).
The Confidentiality Agreement for the vendor(s) may be signed by only the principal / owner or duly
authorized representative of the vendor / service.

t. For shipping purposes, “Confidential / Sensitive” Documents should be placed inside an envelope
with the recipient's name and labelled, "to be opened by addressee only," then placed in another
envelope with the addressee's mailing address when possible. Where such means of packaging
may be considered onerous based on the size and packaging types (i.e. rolls of drawings, boxes of
documents in binders etc.) the drawing wrapper and / or document box should be labelled with the
recipient's address and labelled, "to be opened by addressee only" The Confidentiality Agreement
for the pre-approved messenger service vendor(s) may be signed by only the principal / owner of
the service.

u. “Non-Confidential / Sensitive” documents may be locally delivered using pre-approved vendors /


messenger service or the Postal service.

v. All incoming project documents to authorized user offices should be received and opened by
assigned approved personnel. The same procedure should be followed for the distribution, filing
and copying of documents.

w. Copies of all project documents must be collected from individuals when they leave the project or
the authorized firm. These documents should be maintained in project files, redistributed to other
project personnel, or destroyed.

x. Documents marked for destruction, should be kept in a secured area, until arrangements can be
made for pre-approved vendor or project assigned personnel to retrieve and destroy these
documents or turn them over to the Project Team according to predetermined guidelines (ex.
shredding, burning, etc.). At NO TIME should “Confidential / Sensitive” information be discarded in
common trash, recycling or other non-destructive methods.

y. “Confidential / Sensitive” information about the project should only be given (transmitted,
communicated or discussed by any means of communication) to those personnel that are under a
confidentiality agreement (see 4.2) and on a "need to know" basis only.

z. “Confidential / Sensitive” information should only be given (transmitted, communicated or discussed


by any means of communication) to product vendors and contractors approved by the Project Team
and that have signed the Confidentiality Agreement. All project information should be given on a
"need to know" basis only.

aa. The theft, loss or misplacement of any “Confidential / Sensitive” document should be immediately
reported to the principal of the firm and the Project Team.

bb. All “Confidential / Sensitive” documents deemed to be in excess of those necessary for record
retention or distribution must be destroyed by cross cut shredding as defined above (at a minimum)
or any other method that prevents unauthorized retrieval or reconstruction of the information.

cc. The Project Team has the right to visit the office(s) of any authorized party subject to the
requirements herein to examine and audit for compliance with the guidelines in the procedure.
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dd. “Confidential / Sensitive” documents should be furnished to the Project Team or destroyed at the
conclusion of the project, unless otherwise required to be maintained by the contracting firm for the
purposes of ongoing work, service, maintenance or consultation for the UN. All parties should retain
right to obtain project documents from the Project Team for legal and insurance requirements as
necessary. Destruction of “Confidential / Sensitive” documents should be by means of cross-cut
shredding or any other method that prevents unauthorized retrieval as defined above.

ee. All “Confidential / Sensitive” information acquired or prepared for the UN should be prepared m
confidence. If such information is required to be disclosed by subpoena or other course of law, all
subject parties will notify the UN immediately upon receipt of such order and will reasonably
cooperate with UN and in the event the UN seeks any legal protective order with respect to such
information.

ff. Declassification of “Confidential / Sensitive” information and documents should be in accordance


with ST/SGB/2007/6 (Section 4).

11.3.3. Procedures for Information Security during the Bidding Process

a. All "Bidders" are required to obtain “Confidential/Sensitive” information for the purposes of bidding /
pricing should be subject to the requirements herein.

b. As a condition of receipt of such information Bidders agree that such information should not be
copied, scanned or reproduced in any way, and that the issued information should be the only
working documentation used in the bidding process.

c. Entities who are not engaged by the UN, Project Team or the Construction Manager should only
receive hard paper copies / prints of such information. Each page of each issued copy of the
information should be individually coded / enumerated using the following standard:

d. Each code should consist of a ten (10) digit number sequence that reads AA-BB-DD/MM/YY which
is devised as follows:

AA = Copy Number (i.e. 1, 2, 3 through 99)

BB = Total Number of copies made (i e. 1, 2, 3 through 99)

DD = Day of month issued (i.e. 1-31)

MM = Month issued (i e 1-12)

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e. Each number sequence (AA-BB-DD/MM/YY) should be followed by the name of the issuing agency.

f. The issuing entity of Bid Documents should only issue two (2) copies to each qualified Bidder to be
used as follows:

i. One (1) set should be for review by the bidding Contractor

ii. One (1) set should be for use by the Bidder's subcontractor (i e Electrical Contractor)

g. Access and control of the issued Bid Documents in accordance with the requirements herein and
deemed the responsibility of the Bidder / Security Contractor. As such, the Bidder should require
sub-contractors reviewing the prints to:

i. Sign in on a bound log book with name, date, time in/time out, title, company name and to
submit a photocopy of the viewer (s) driver’s license.

ii. Review Bid Documents in a specified room, having no copy machines, scanners or other
reproduction equipment, where they should be displayed only for such review purposes.

h. The issuing entity should maintain a record / log of each hard-copy produced and to whom the
documents have been transmitted, as well as a signed transmittal sheet evidencing receipt by the
Bidder.

i. The restrictions and requirements herein should also be applicable to any subsequent data received
or transmitted, including Request-for-Information (RFI) data and other correspondence.

j. Notwithstanding the above paragraph 6.8, all RFI(s) generated by the Bidders should be faxed to
the entity issuing the Bid Documents, and subsequently scanned for electronic file storage and
internal distribution. Likewise, all responses to RFI(s) should be generated and stored in electronic
format, printed and then faxed to the Bidders.

11.3.4. Procedures for Information Security during Bid Award

a. Upon award of a project contract for the fabrication, manufacture, provision, construction or
implementation related to “Confidential / Sensitive” information, the contracting firm should retain a
copy of their originally issued bid documentation for their use in the execution of the work. All other
contractors should be required to return all information they have received as part of their Bid
Submission to the issuing entity, including any copies with annotations, calculations or other
markings the Contractor has made, or they should be disqualified from future bidding.

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b. The contracting firm should be granted access to the information in an electronic format for the
purposes of preparing "As-Built" documents, 'Graphical Maps" and other information as may be
required by the contract.

c. Upon award of the contract for the work the issuing entity should destroy all other copies of the
documentation in an approved manor and should denote / certify such destruction in the issuance
log.

11.3.5. Procedures for Information Security during Construction

a. All construction related use of “Confidential / Sensitive” information should be subject to the
requirements herein

b. The Construction manager should maintain enumerated / coded paper copies of the documents to
be used in the course of construction for use by the contracting firm.

c. Consistent with the requirements of storage and use herein, documents used for construction
should be maintained in an approved security container when NOT IN USE. Field equipment boxes
should not be considered to be in compliance with this requirement.

d. A manual log should be maintained to identify the documents maintained in the container. The
document log should also provide for the tracking of document removal and return and should
include the name of the person removing / returning the documents mid the date of each
transaction.

e. Documents may be removed from the storage container for daily use but must be returned upon
completion of the users shift.

f. Documents used in the field should not be left unattended but can be outside of the immediate
possession of the user for up to fifty feet (50ft).

g. Upon completion of the work as defined by any documents subject to these requirements, 'such
documents should be returned to the Construction Manager for remittance to the Project Team or
destruction as may be mutually agreed upon.

See Annex X on Contractor Confidentiality and Non-Disclosure Requirements.

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11.4. Project performance reporting

This section should be read in conjunction with Part 1 Introduction: 1.7 Outline of the Reporting Process
for Construction Projects.

11.4.1. General

h. Project performance reporting is used to disseminate performance information to enable project


stakeholders to determine how the project was managed and achieved its objectives.

i. Performance reporting should provide project information relating to the project controls as
identified in this section (scope, schedule, cost, risk management, quality management, and
procurement management).

j. The performance reports can be presented in the form of status reports, progress reports,
backcasting and/or forecasting reports.

k. An analysis of the performance of the project may be determined through the use of methods
such as performance reviews, variance analyses, earned value analyses etc.

l. The frequency of performance reporting should be as identified in the communication


management plan.

11.4.2. Reporting to the General Assembly - Reports of the Secretary-General

a. Throughout the project (from conceptualisation to close-out), the reports of the Secretary-General
should be prepared and submitted to the General Assembly.

b. Typically, the reports should be prepared by project phase as follows:

i. During the Conceptual Phase: Report of the Secretary-General to the General Assembly for
Approval of the Project and its Dedicated Resources
ii. During the Planning Phase: Report of the Secretary-General to the General Assembly to
Obtain Funding for Design
iii. During the Design Phase: Report of the Secretary-General to the General Assembly to Obtain
Funding Approval for Construction
iv. During the Construction Phase: Annual Progress Reports of the Secretary-General to the
General Assembly

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v. After the Close-out Phase: Final Progress Report of the Secretary-General to the General
Assembly

c. See Annex X - Reports of the Secretary-General for the specific contents of the report for each
project phase

11.4.3. Reporting to the Senior-Level Advisory Committee

a. The UN Senior Project Manager should provide clear, executive-level briefs to the Senior-level
Advisory Committee (SLAC), in order to ensure adequate input from the SLAC.

b. The process of reporting should be organized around the Monthly Status Reports as described
below. These reports coalesce critical information of the project regarding both status and
performance issues, as measured against set objectives. Executive-level reporting should also
present the technical data as backup support.

c. One of the primary tasks of the PM will be the coordination of Executive Monthly Status Reports
to the SLAC for all aspects of the project. These reports will permit timely dissemination of project
status issues including real-time budget and schedule performance referenced against
established baselines, the identification of key project issues requiring discussions and/or
notification and anticipated activities for upcoming work and issues requiring resolution.

d. The Executive Status Reports should be structured in such a way that they communicate clearly
and effectively to UN senior management and non-technical UN stakeholders. In addition, more
detailed information should be informative to technical members of the project team.

e. The Executive Status Report should be structured in accordance with the agreed format, and
include the following type of information:

i. Statement of Project Scope


ii. Project Organization
iii. Budget/Cost Performance Summary, including:
- Baseline authorization
- Baseline estimate
- Contract commitments
- Actual cost to date
- Pending change orders
- Approved change orders
- Accruals
- Forecast at completion
- Variance of baseline authorization
iv. Schedule Performance Analysis, including:
- Baseline schedule
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September 2020
- Actual Progress
- Revised Forecast
- Variance against Baseline/Authorization
v. Key Project Issues, including:
- Monthly milestones reached
- 3-month look-ahead
- Key Issues/concerns
- Safety and security conformance
- Quality assurance issues
- Material and equipment handling
- Photographic progress
- Other issues

11.5. Project administrative closure

a. Project administrative closure involves the verification and documentation of project performance
results in order to conclude and formalise the acceptance of the project.

b. Project administrative closure activities include collection, storing and disposal of project records.

c. The administrative closure activities should be coordinated with other activities of “Phase 5 – Project
Close Out”.

11.6. Coordination with UNHQ

a. In order to establish regular communication during the project planning and implementation stages,
ongoing communication between UNHQ and the Office should be established.

b. The communication can be formalised by way of a coordination and administration agreement


created for the project.

c. The coordination between the offices is vital in order to re-affirm roles and responsibilities for
executing the project, particularly to:
-Define the interactions and division of responsibility concerning the management of overseas
properties between Headquarters in New York and other duty stations.

-Ensure accountability of responsibilities between Headquarters in New York and Office throughout
project management phases.

-Re-affirm the role of GAMPS in providing advice, endorsing from a technical point of view, and
serving as an advocate for projects during all phases.

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September 2020
Refer to Annex 1 - Administration and Coordination Agreement

d. Monthly Video/Tele-Conferences:
Progress should also be monitored through regularly scheduled video, involving the Senior Project
Manager, Chief of GAMPS at UNHQ, FMS at the office as well as concerned staff from other offices
(e.g. Buildings and Engineering Sections at the Office, UN Security, Procurement Office).

e. Meeting Minutes:
The PM should prepare and circulate agendas and minutes for all meetings.

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12. PROJECT PROCUREMENT MANAGEMENT

Note: This section is essentially intended to provide general guidance on the


procurement of construction projects in the UN. However, the UN Financial
Rules and Regulations and SGT SGB/2019/2 ‘ Delegation of authority in the
administration of the Staff Regulations and Rules and the Financial Regulations
and Rules’ take precedence over the provisions of this section.

12.1. The UN Procurement Process3

a. The United Nations Procurement Division is mandated to provide responsive, timely and cost-
effective procurement and related services to Headquarters, peacekeeping missions, other offices
and organizations within the United Nations while ensuring a competitive, fair and transparent process
in accordance with established rules, regulations and procedures.

b. A primary objective of the procurement process is to ensure that the UN requirements are fulfilled in
compliance with the Best Value for Money principle within the time frame needed, in compliance with
the Specifications, TOR or SOW and in full accordance with remaining regulations or rules. Therefore,
the procurement process shall be open and transparent, and the evaluation of Submissions shall at all
times be fair, reasonable and objective.

12.1.1. Expression of Interest (EOI)4

a. The Expression of Interest (EOI) is intended to encourage new vendors of relevant products and
services to register with the Procurement Division of the United Nations (UNPD). Interested
firms/organizations already registered with the Procurement Division should immediately forward their
EOI to the attention of the referenced Procurement Officer, giving the EOI reference number and
Subject, their vendor registration number, and the commodities/ services for which they are
registered.

b. Firms/organizations interested in a particular EOI that have not yet been registered with the United
Nations Procurement Division must submit applications for vendor registration, along with detailed
information demonstrating experience and qualifications in provision of the relevant
commodities/services.

c. Please note that each EOI forwarded to UNPD must be sent under a separate facsimile transmission
or letter.

3 Refer to the United Nations Financial Rules and Regulations, and the Procurement Manual
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d. Vendors are required to register with UNPD directly. Please also note that vendor registration with
another UN Agency does not result in automatic registration with UNPD.

e. These notices do not constitute solicitations. The United Nations reserves the right to change or
cancel these requirements at any time in the EOI and/or solicitation process. UNPD considers a firm's
qualifications and experience in the particular commodity/service area, and previous performance,
when preparing a list of invitees. Therefore, in the case of EOI's concerning equipment or supplies, for
responding vendors who are not manufacturers, full details of the vendor's status as a factory-
appointed wholesaler or distributor must be provided if not already on file with UNPD. Thus,
submitting an EOI does not automatically guarantee a firm will be considered for receipt of the
solicitation when issued.

12.1.2. Source Selection Plan

12.1.2.1. Committee5

a. Members
i. Evaluation is overseen and coordinated by the Procurement Officer who usually conducts the
evaluation together with an evaluation team. The task of the evaluation team is to ensure that the
suppliers and their offers satisfy the requirements of the solicitation documents, and to evaluate the
offers according to the predefined evaluation criteria.
ii. The team usually consists of two to five members, depending on the nature, complexity and value of
the procurement activity. The evaluation team may include other procurement officers and/or
technical experts. Technical experts may be external suppliers hired for this particular purpose. It is
good practice that Requisitioner or end-users should only be allowed in the evaluation team as
observers, and only in exceptional cases. However, there may be cases where the Requisitioners
need to be involved in the evaluation, i.e. to ensure technical compliance of the offer with the
requirement definition for example during an RFP. In such cases it is recommended that
Requisitioners are only involved in the technical and not the commercial evaluation process. Where
Requisitioners participate in an evaluation team, it should be ensured that they do not have the
majority vote in the team.

b. Rules of Conduct
i. It is recommended that everybody involved in the evaluation process signs a declaration of
confidentiality, impartiality, and no conflict of interest regarding each particular evaluation.
ii. It is also good practice that members of the evaluation team are briefed by the procurement
officer about their role during the evaluation process, for example, members of the evaluation
team should:
1) Indicate immediately if in a potential conflict of interest situation with one of the suppliers
and ask to be replaced.
2) Study the requirement definition, the evaluation criteria and method.

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3) Understand that the deliberations of the evaluation committee are strictly confidential and
that they cannot discuss the content of the evaluation with colleagues and/or outsiders.
4) Clarify or direct questions for suppliers in writing to the procurement officer who in turn will
communicate with the concerned supplier(s).
iii. All staff members involved in evaluating offers should be careful to observe confidentiality of the
offers and ascertain that information about the content of the submissions or the evaluation
process is not revealed outside the group involved in the procurement process.
iv. The Procurement Officer ensures the confidentiality of the process. In order to do so, it is good
practice to channel all clarifying questions intended for suppliers through the Procurement Officer.

12.1.3. Solicitation method6

a. There are the following three main solicitation methods used in the United Nations:
i. Request for Quotations (RFQ)
ii. Invitation to Bid (ITB)
iii. Request for Proposals (RFP)

b. The selection of the appropriate method is determined by the expected cost of the procurement
action, the feasibility of preparing complete specifications at the outset of the requirement definition,
and whether or not price alone or price plus other criteria such as quality should determine the
selection among qualified suppliers.

12.1.4. Evaluation criteria and rating system7

The purpose of establishing correct evaluation criteria is to:

a. Compare the merits of offers that can vary widely in form and substance, in other words develop the
ability to compare “apples with apples”.
b. Minimize the UN’s risk that the selected bidder will not be able to perform the contract satisfactorily.
c. Identify the best match to the requirement.

12.1.4.1. Pass/fail criteria:

a. When an evaluation factor requires only an acceptance or rejection, it is termed pass/fail (or
compliant/non-compliant), or a threshold condition. In principle, an offer that “fails” would be
disqualified, while an offer that meets or exceeds the requirement would be ranked as “pass”.

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12.1.4.2. Weighted criteria:

a. Variable factors (weighted scoring) evaluate the quality or extent to which offers meet the
requirement. Weighted criteria are expressed in terms of numerical ratings, such as a scale of 1
through 5, with 5 being the highest.

12.1.4.3. Technical Evaluation Criteria8:

a. Technical evaluation criteria are derived from the specifications, TOR or SOW. Depending on the
nature and complexity of the procurement to be undertaken, technical evaluation criteria may be
summarized in a few lines or consist of a long and precise description.

b. Depending on how clearly the requirements are defined, evaluation criteria are developed for
evaluation according to compliance/non-compliance or a weighted scoring (see evaluation
methodologies below). When using the weighted scoring methodology, technical evaluation criteria
are related to the approach and methodology proposed to reach the expected results or solve the
identified problem as described in the requirement definition (TOR or SOW).

c. Technical criteria can also include requirements to the supplier, such as:
i. Previous experience in similar field and with same type of requirements
ii. Experience from the region
iii. Available capacity and equipment to undertake the assignment
• iv. Qualification and experience of proposed personnel.

12.1.4.4. Commercial Criteria9:

a. Price is an important evaluation criterion as part of the commercial (financial) evaluation, but the
weight of the price depends on the chosen evaluation methodology (i.e. weighted rating scale or
pass/fail).
b. It is important to clearly state in the solicitation documents which price factors will be included in the
price used for evaluation. Various factors such as freight cost, operational cost, incidental or start-up
costs, as well as life cycle costs could be taken into consideration. For services and works a template
for breakdown of cost should be provided, (e.g. in Bill of Quantities for works).
c. In all cases, required breakdown as well as evaluation criteria must be clearly stated in the solicitation
documents.

12.1.5. Timeline10

a. The Requisitioner shall establish the time at which an identified need is to be fulfilled. The
Requisitioner shall take into account all the steps of the procurement process, as set forth in the
United Nations Procurement Manual, in order to initiate the process of fulfilling said need in due time.

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b. The Requisitioner is encouraged to establish contact at the early stage (during the budget approval
process) with the Procurement Office regarding any planned procurement for a forthcoming
Requisition in order to gain an understanding of the amount of time typically required to complete the
procurement process.

c. The Requisitioner shall provide adequate lead-time to the Procurement Office to properly complete
the procurement process. In its planning, the Requisitioner shall take into account the time required
for obtaining EOIs, preparation of Solicitation Documents, receipt of Submissions, evaluation of
Submissions, any required review by the Headquarters Committee on Contract (HCC) and/or the
Local Committee on Contract (LCC), and the need for negotiation and drafting of a Contract. Due to
the complexity of the procurement case, it is critical to secure the participation of all the stakeholders
at the outset of the acquisition process (Controller, legal, Insurance, LCC/HCC, etc.).

d. For an example of typical timelines for various activities in the procurement process see Annex V
below.

e. The Requisitioner shall take appropriate measures to avoid using "exigency" as a justification when
unwarranted. "Exigency" cases shall only be permitted in an absolute emergency when the
Requisitioner could not reasonably have foreseen the need, and requires fulfilment in a time frame
shorter than available for the use of the procurement process described in this Manual. When
“Exigency” cases are unavoidable they shall be handled in accordance with the procedures set forth
in Chapter 9. Section 9.2 of the Procurement Manual.

12.2. Scope of Work

a. The scope of work is drafted by technical experts within the Requisitioner’s office, who will specify the
technical description of the construction project.

b. It is important that the scope of work is generic (i.e. not to mention names of any vendors), while at
the same time is descriptive to meet the specific needs of the project.

12.2.1. Terms of Reference11

a. The terms of reference (TOR) for services should define the scope of work required and respective
supplier and stakeholder responsibilities. Adequate and clear TOR are imperative for an
understanding of the assignment, and to minimize any risk of ambiguities during the preparation of
supplier’s proposals, negotiations and execution of services.

b. The TOR, often the supplier’s first and main introduction to the assignment, form the basis for the
supplier’s preparation of the technical and financial proposals, and also eventually become an integral
part of the contract between the supplier and procuring entity.

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c. TOR will force the supplier to prepare clear and detailed proposals, leading to successfully
implemented projects and limiting the risks of disputes and claims.

12.2.2. Workplan

a. The workplan will identify deliverables and key milestones. It will also delineate the roles and
responsibilities of those involved in the UN Project, including the interaction between the consultants
and the UN Project Team.

12.2.3. Deliverables

a. Key deliverables need to be stated and outlined in the Scope of Work, in order to measure the level of
performance and ensure that the Organization is receiving optimal quality of work.

b. Examples of deliverables include:


 Formal minutes of weekly project meeting
 Monthly and/or quarterly progress reports
 Periodic project schedules
 GANTT charts

12.3. Request for Proposal (RFP)12

a. The essential characteristic of the RFP is that proposals are submitted against requirements that are
not fully definable at the time of solicitation and where innovation and the specific expertise of the
Requisitioner is being sought to better meet the procurement requirement. Proposals are usually
submitted with technical and financial components in separate sealed envelopes, therefore there is
normally no public bid opening.

b. This implies that proposals will be evaluated technically:


i. Prior to opening the financial offer
ii. On several factors, with a final weighted score for the overall technical offer. This score will then
be weighted again with the financial score.

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12.3.1. Coordination with UNPD and OLA

a. Coordination with the Procurement Division (UNPD) and the Office of Legal Affairs (OLA) may be
required to review and verify the terms and conditions as stated in the RFP.

12.3.2. Issuance of RFP to Qualified Vendors

a. The Procurement Officer will then issue the RFP to qualified vendors, which includes vendors who
have undergone the registration process as well as those who responded to the EOI.

b. The deadline to submit proposals, in response to the RFP, will be clearly labelled on the cover sheet
showing the date and time.

12.4. Proposal evaluation process

a. The UN will receive and evaluate the bid proposals, determining whether the Vendor is both
qualified and meets the requirements of Financial Rule 105.15 (a) for Bids or (b) for Proposals.

b. A preliminary examination of offers is performed to exclude offers from further consideration that do
not meet the mandatory criteria specified in the solicitation documents.

c. Some examples of mandatory requirements are offers that:


i. have been properly signed
ii. are accompanied by the required offer securities
iii. are accompanied by the required documentation
iv. are complete
v. validity period conforms with requirements
vi. terms and conditions of the organization are accepted etc.

d. The bid proposals are submitted in two parts: technical and financial proposals.

Technical Evaluation13

e. A Technical Evaluation Team, consisting of the technical experts of the Requisitioning Office will
evaluate the technical proposal.

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Commercial Evaluation

f. Upon completion of the technical evaluation, the financial proposals will be evaluated by the
Procurement Officer/UNPD.

12.5. Approval by Committees on Contractors

12.5.1. Local Committees on Contract (LCC):

a. Pursuant to Financial Rule 105.13 (b), LCCs are established for Field Missions and Offices
Away from Headquarters (Office) that perform procurement activities and is headed by a
Chief Procurement Officer. The functions of LCCs, to the extent appropriate, mirror those of
the HCC described below.

12.5.2. Headquarters Committee on Contract (HCC):

a. The primary duty of the HCC is to ensure that proposed procurement actions are based, inter
alia, on compliance, fairness, integrity and transparency, and, as such, are impartial. The
HCC reviews written or electronic presentations made by or through UNPD and provides
advice to the ASG/Office of Supply Chain Management , or other officials duly authorized
under Financial Rule 105.13, on whether proposed procurement actions, including contracts
that generate income to the Organisation, are in accordance with the Financial Rules and
Regulations, the Procurement Manual and other relevant UN procurement policies.

b. As a secondary activity, the HCC may examine and provide general advice regarding the
financial, commercial, operational implications of any proposed procurement action, comment
where appropriate as to whether, in its view, the proposed action, inter-alia, is in the best
interest of the UN, and advise whether the proposed procurement case is appropriate.

c. Notwithstanding the foregoing, the HCC is not responsible for reviewing or providing advice
on the adequacy or necessity of the requirement being met under the proposed procurement
action. Such responsibility rests with other officials such as Approving/Certifying Officer
and/or the Requisitioner submitting the Requisition to UNPD.

12.5.3. Presentation to the HCC14

a. The Headquarters Committee on Contracts (HCC) is comprised of a Chairman and three


members. The Committee convenes every week and has special meetings when warranted
by circumstances at the Committee’s discretion.

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b. The written presentation should provide a summary of the procurement actions taken, clearly
stating the findings of the technical and commercial evaluations and basis for final
recommendation of the contract award. During deliberations, the Procurement Officer and the
Requisitioner, both of whom are required to be present, may be requested to provide
additional information to the HCC members. At a minimum, case presentations shall include:
i. Basic information
ii. Summary of requirement
iii. Summary of the solicitation process
iv. Summary of the evaluation process
v. Recommendation
vi. Supporting documentation

c. The Chairman of the HCC will then decide whether or not to recommend the case for
approval to the ASG/ Office of Supply Chain Management . Positive recommendation for
approval does not constitute approval of procurement, until such time that formal minutes of
the meeting are approved by the ASG/OCSS.

12.5.4. Review of Cases by the HCC

a. The review and recommendation by the HCC, and the approval of the ASG/ Office of Supply Chain
Management thereafter, shall be obtained prior to any contractual commitment being made,
irrespective of whether the procurement action originated at HQ or a Field Mission/Office, in
accordance with the Financial Rules and Regulations as follows:

i. Any proposed award to a single Contractor in respect of a single or a series of related


Requisitions, the total estimated contractual amount of which exceeds US$ 500,000 or, in the
case of procurement of Core Requirements, the delegated authority of the USG/DOS for such
Core Requirements (“HCC thresholds”) during a fiscal year, or such other amounts as the ASG/
Office of Supply Chain Management may establish. For purposes of determining if the HCC
threshold has been reached, there shall be no aggregation of multiple awards if they were based
on separate competitive Solicitations in a [calendar] year;
ii. Any proposed amendment, modification or renewal of a Contract previously reviewed by the
HCC, where the amendment, modification, or renewal:
iii. Increases the total estimated contractual amount by 20% or more or US$ 500,000 or more,
whichever is lower;
iv. Extends the duration of the original Contract exceeding eight months, (also applies for periods
eight months or less for reasons other than to enable the completion of a solicitation exercise or
immediate operational needs);
v. If in the judgement of the Director of UNPD, such amendment in relation to the criteria on which
the original award was made could have materially affected the procurement process or the
original contractual terms;
vi. Any Letter of Assist with a Member State if its value exceeds US$ 200,000; and
vii. Any other matter relating to a Contract referred to the HCC by the USG/DM, ASG/ Office of
Supply Chain Management or any other official duly authorized under Financial Rule 105.13.
viii. For more information on the LCC/HCC process, refer to the United Nations Procurement
Manual.

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12.5.5. Ex-Post Facto Cases15

a. Although ex-post facto cases clearly contradict the intent of the Financial Regulations & Rules (FRR),
they may be permitted under exceptional circumstances of exigency. The definition of "exigency" as
approved by the General Assembly in its decision 54/468 and its application is contained in the
revised version of the Procurement Manual (See Section 9). Full ex-post facto cases (cases for which
procurement action for goods and services have been fully delivered or performed prior to obtaining
the advice of the LCC, HCC, or the approval of appropriate authorities) and partial ex-post facto cases
(cases for which procurement action for goods and services partially delivered or performed prior to
obtaining the advice of the LCC, HCC, or the approval of appropriate authorities), must be rare
exceptions and fully justified as to why timely submission to the HCC was not feasible.

12.6. Contract Award

a. The UN decides which Vendor to select and notifies it of its intention to award a Contract. The
successful Bidder, following Contract negotiations (if any) and the signature of a Contract, would then
become a UN Contractor whose relationship vis-à-vis the UN is governed by the contract formation
processes outlined in the United Nations Procurement Manual.

b. If an award is for an amount that exceeds the individual authority of the Procurement Officer, the case
shall be forwarded for review and written approval to a Procurement Officer who has the appropriate
level of authority, such as a Team Leader, Chief of Section, the Director of UNPD or the Chief
Procurement Officer.

c. For awards at HQ in excess of the threshold value for submission to the HCC, the written approval of
the ASG/ Office of Supply Chain Management is required subsequent to the recommendation of the
HCC. For awards in excess of the amount of a Field Mission’s or Office’s authority, the written
approval of the Chief Administrative Officer is required subsequent to the recommendation of the
LCC, and the additional written approval of the ASG/ Office of Supply Chain Management is required
subsequent to the recommendation of the HCC.

15 Procurement Division website: http://extranet.unsystem.org/pd/hcc_role.htm

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12.7. Procurement Flowchart16
[“Indicative”, as all details not included]

Flowchart I – Procurement by UN/PD

Requisitioner UN/PD

Identify Requirement Develp Spec/SOW Review Specifications/


and obtain funds Raise Requisition SOW/Requisition

Yes
Clarifications?

No
Establish Technical Establish Commercial Identify potential
Cooperation – Develop
evaluation criteria evaluation criteria and sources (EOI, Vendor
Source Selection Plan
amd relative weight relative weight database)

Technical documentatoin
Receive Submission. Develop and Issue
for Requisitioner’s review
Technical/Operational Open technical part Solicitation
Evaluation (formal opening) Documents

Receive Technical Commercial


Evaluation. Open Evaluation
Commercial Part

Prepare HCC Yes


Exceeds HCC
presentation
threshold?

No
HCC review and
recommendation – ASG/
Contract Administration Contract award. Issue
Office of Supply Chain
Contract/PO
Management approval

Cooperate wth
Problems? Cooperation to
Yes Requisitioner – liaise
resolve problems and communicate with
Vendor as necessary
No

Receive Goods/
Services

16 Refer to the United Nations Financial Rules and Regulations, and the Procurement Manual

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12.8. Procurement Timeline – Bid Phase

Suggested Detailed Procurement Timeline for Programme Managemenet Services


YEAR
No. Activity Duration Mar. Apr. May Jun. Jul. Aug. Sep. Oct.
1 Expression of Interest (EOI) 10 Weeks
1.1 EOI issued to market
1.2 EOI period
1.3 EOI closing date
1.4 Facilities Management submits memo to Procurement,
establishing tech. eval. committee
1.5 Procurement Office submits EOI responses to tech. eval.
committee
1.6 EOI evaluation period
1.7 Tech. eval. Committee submits report to Procurement
2 Request for Proposals (RFP) 16 Weeks
2.1 Procurement drafts RFP, except SOW
2.2 Facilities Management drafts Scope of Work (SOW)
2.3 Procurement issues RFP to market
2.4 RFP period
2.5 Bidders' conference
2.6 RFP closing date
Procurement Office submits RFP responses to tech. eval.
2.7 committee
2.8 Technical evaluation period
Technical Evaluation Committee submits report to
2.9 Procurement
2.10 Commercial evaluation period
2.11 Procurement Office finalizes RFP
3 Contract Negotiations & Award 8 weeks
3.1 Procurement prepares HCC case
3.2 HCC hearing
3.3 HCC approval
3.4 Contract negotiations
3.5 Contract award

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13. Project Human Resource Management

Note: This section is intended to provide general guidance on the management of project human
resources in the UN. However, relevant UN Staff Rules, Administrative Instructions, information
Circulars and Secretary-General’s Bulletins take precedence over the provisions of this section.

13.1. Project organizational planning,


a. Project human resource management is concerned with the effective use of people involved in
implementing the project. This includes process related to project organizational planning,
recruitment of the project team and development and retention of the project team.

b. Project organizational planning involves identifying roles and responsibilities of potential project
team members, as well as their reporting relationships. The planning should be done in the very
early stages of a project.

c. Section 2 the Planning Phase provides guidance on how to plan for the project organization in
detail, including how to develop a staffing management plan, project team roles and
responsibilities; and the procedures for recruiting the dedicated PM team.

13.2. Recruitment of the project team

a. The recruitment of the project team should be based on the staffing management plan and carried
out in accordance with the Organization’s staffing rules and regulations.

b. Typically, dedicated project management team should be funded from established project
resources (which should be included in the overall project cost plan).

13.3. Management and development of the project team

a. Once the project team has been recruited, they should continually be managed and developed in
order to ensure that they become a well-functioning and high performing team.

b. The management and development should be undertaken throughout the project phases.

c. If it is determined that team members lack the necessary technical or managerial competencies,
the development activities may include such technical or managerial competencies. Alternatively,
steps may be taken to re-staff the project appropriately.

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13.4. Dissolution of the project team

a. Once the project has been completed and closed out, the project team should be dissolved.

b. The Office should decide if the project team members should be deployed or terminated, based
on the operational requirements of the newly constructed asset. This decision should be made in
line with the existing human resources rules and regulations.

DOCUMENT TITLE / VERSION [CLASSIFICATION] 106 of 106

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