Managing Construction Projects

Debopam Roy
NICMAR, Pune
Global Construction Industry
2nd largest industry after Agriculture

Source: “World Construction Report 2012” by Davis Langdon, an AECOM company

Construction Output as % of GDP

3.6%
7.2%

Source: US Census Bureau, www.census.gov, CSO India, http://mospi.nic.in, http://www.stats.gov.cn

 Construction Industry in India
$110 Billion 35 Million people
8% of India’s 16% of working
GDP population in
India

75 large
40% of all
companies
development
28000 organized
investments of last
companies
50 years
>5000 years of
construction history
 Overview of Indian Construction Industry
Table: India Construction and Infrastructure Industry, 2011 - 2020
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Constuction Industry
Value, INRbn 6,682 7,713 8,830 10,002 11,272 12,639 14,111 15,763 17,572 19,493

Construction Industry Real

4.0 7.2 8.2 8.3 7.7 7.1 6.6 6.7 6.5 5.9
Growth, % Change y-o-y

Construction Industry % of
GDP 7.9 7.9 8.0 8.0 8.0 8.0 8.0 7.9 7.9 7.8

Total Capital Investment, 26,784 30,864 35,986 41,376 47,355 53,949 60,951 68,607 77,080 86,194
INRbn

Total Capital Investment, %

of GDP 31.5 31.7 32.4 33.1 33.7 34.2 34.4 34.5 34.6 34.6

Total Workforce, ‘000 803,769 818,273 832,851 847,141 860,948 873,803 886,229 898,389 910,552 922,846

Infrastructure Industry
Value As % of Total 47.4 48.1 49 49.3 49.8 50.2 50.5 50.8 51.1 51.3
Construction
Residential and Non
Residential Building
52.6 51.9 51 50.7 50.2 49.8 49.5 49.2 48.9 48.7
Industry Value As % of
Total Construction

National Institute of Construction Management & Research, Pune 6

 Top Indian Contractors

Larsen&Toubro
ENR – 47, 28

ENR – X,Y (Rank as International contractor, Rank as Global Contractor)

SWOT Analysis On Indian Construction Industr

STRENGTH WEAKNESS

Cheap labor Small companies High cost of finance

Large number of engineers

Complicated tax str Low efficiency

PPP enabling environment Low ratio

 SWOT Analysis On Indian Construction Industr

OPPORTUNITIES THREATS

Massive scope of Sustainability Land acquisition

construction
Foreign direct
Large number of investments, real LOW INVESTMENT
estate investment Little regard for
construction systems
trusts, infrastructure
companies investment trusts
Evolution of Project Management Triangle
Performance of Construction Projects in India

National Institute of Construction Management & Research, Pune 16

Performance of Construction Projects in India
Performance of Construction Projects in India

Around 56% projects have cost overrun (totaling 20% cost)

49% have time overrun
Major reasons of the Project Failure are
 Delays in preconstruction activities, Regularity hurdles
& land acquisition
 Inadequate project formulation & poor planning
 Improper contract administration and poor
performance of contractors
 Lack of project management during execution

National Institute of Construction

Management & Research, Pune
 Objectives & Functions of Construction
Project Management
• Maintaining profitability • Contract Management &
Compliances
• In time project delivery • Human Resource Management
• Customer Satisfaction • Project Planning, Monitoring and
Control
• Accident Prevention • Financial Management
• Sustainable • Resource Management & Site
Execution
Construction • Equipment Management
• Material Management
• Labor productivity
• Coordination, Communication &
Documentation
 Project Contracting
• All major construction projects are one off jobs done
though work contracts
• The contractor goes to another person’s land and does
something which becomes permanently attached to
the other person’s land & hence becomes the other
person’s property
• The contractor becomes unsecured creditor (nothing
is hypothecated/mortgaged)
• Hence the contract becomes a critical instrument for
project implementation
 Project Contracting
• Agreement between competent parties enforceable
at law

• Formation of Contract:
– Object
– Proposal / Offer
– Acceptance
– Consideration
– Reciprocal promise
 Typical Parties for Works Contract
• Owners
– Public Owner (Government bodies)
– Private Owner (also include quasi-public bodies)
• Architect/Engineers (A/E)
• Prime/General Contractor
• Project Management Consultants / Construction Managers
• Sub-contractors
• Suppliers
• Banks & Financial Institutions
• Specialized Service Agencies
• Labor
• Regulatory agencies
• General Public
 Rules for the Participants
• Contracts

• Tort Law

• Laws, Statutes, and Regulations of Government Agencies

 Project Delivery Models
• Design Bid Build (Traditional)
• Design Build (EPC / Turnkey)
• Design Build Operate (Concession)
• Construction Management (Design-Manage /
CM @ risk)
 Types of Contract
• Measurement Contract
– Item Rate
– Percentage Rate
• Fixed Price
– Lump Sum
– Guaranteed Maximum Price
• Cost Reimbursable
– CPPF
– CPFF
– CPIF
• Concession
– BOT, BOOT, BOLT........
 Typical Documents Comprising the Contract

• Bidding documents consisting of the Invitation to Bid, the

Instruction to Bidders, and the Bid Form

• General Conditions of Contract

• Special Conditions of Contract

• Specifications

• Drawings

• Reports of investigations of physical conditions

 Critical Areas of Contract Administration &
Management
• Scope of Work
• Measurement & Payment Terms
• Quality Control & Handing Over
• Guarantees and Warranties
• Time Provisions
• Delays & Extension of Time
• Incentives & Liquidated Damages
• Change Orders
• Differing Site Conditions
• Escalation Payments
• Suspensions & Termination
• Dispute Resolution
 Overview of Indian Construction Industry

Share of construction spending by

sector 2012 (%)

Market size and growth prospects by

major construction sector
National Institute of Construction Management & Research, Pune 28
 Project Organization
•  Major Clients
– Residential Sector : Real Estate Developers (Ranging
from Godrej to neighborhood promoter)
– Infrastructure Sector : Government Agencies like
CPWD, PWD, NHAI, Rail, AAI etc.
– Non Residential Sector : PSU’s like ONGC, IOCL, etc.
&Major Industrial Houses like Tata
• Construction Contractors
– 200 corporations
– 120,000 Class ‘A’ registered contractors
– Numerous small contractors
 Construction Business Organization
• Firms
– Sole Proprietorship
– Partnership
• Limited Liability Company (LLC)
– Private Limited Company
– Public Limited Company
• Government Enterprises
• Joint Ventures
 Functions of Construction Organization
General administration
Estimating
Managing contracts and personnel
Design
Engineering, Planning and Control
Purchasing/procurement
Accounting & Finance
Managing Field Construction maintaining
project parameters
Structure of Construction Organization

• Basic Structure – Line & Staff

• Frequently used forms
– Functional
– Feudal
– Matrix
 Factors For Organizational Forms
• Structure keeps on evolving, depending on
– Project / Contract size, features and requirements
– Organizational Experience
– Resource Availability
– Technological and Financial Complexities
– Risk, Competition, etc.
Owner’s Project Organization (Sample)
Architect’s Project Organization (Sample)
Contractor’s Project Organization (Sample)

National Institute of Construction Management & Research, Pune 36

Contractor’s Project Organization (Sample)
Communication Matrix, Traditional System
Intra-Inter Organizational Relationship
Intra-Inter Organizational Relationship
Planning Levels

Major Milestones -> Quarters

Key resources

Activity Completion -> Monthly/Weekly

Quantity Targets
Overall Resource Requirements

Activity Completion -> Daily/Weekly

Quantity/Location Targets
Detailed Resource Requirements

Execution
Monitoring Levels

Monthly Reports &

EVM Parameters.

Weekly Reports
& Activity Targets
Productivity Trends

Daily Progress Reports

Productivity Measurement
& Improvement. Catch-up
Execution Plan
 Planning Definitions
• Planning is a bridge between the experience of the past
and the proposed action that produces a favorable result
in the future.
• Planning is a precaution by which we can reduce
undesirable effects or unexpected happenings and
thereby eliminate confusion, waste and loss of efficiency
• Planning is the prior determining and specifying of the
factors, forces, effects and relationships necessary to
reach the desired goals.
 Project Planning
• Strategic Planning • Master Plan
• Quality Plan • Tender stage plan
• EHS plan • Pre-construction plan
• Scheduling • Look-ahead plan during
• Resource Plan Construction
• Estimation & Costing
• Budget & Cash Flow
 Strategic Plan
• Phasing of Project
• Setting of Project Objectives
• Source of Fund
• Mode of Project Delivery
• Make or Buy
• Bid – No bid
• Contingencies
 Quality Management System
• Quality Assurance Plan – Quality Control System
• Inspection Testing Plan / Sampling Plan
• Control Charts
• Continuous Improvement – PDCA
• Voice of Customer
• Cost of Quality
• Calendars for audit, training
• Records & Documentations
Sampling Procedure
Control Charts
Continuous Improvement – Deming Cycle
Maintenance vs. Improvement vs. Innovation
Voice of Customer
 Cost of Quality
• Cost of Quality = Quality
Management Cost +
Deviation Cost
• Quality Management
Cost = Cost of
Prevention + Appraisal
• Deviation Cost =
Internal Failure Cost +
External Failure Cost
 Records & Documents
• Responsibility Matrix
• RFI
• Record of Non conformities
• Corrective Action and Preventive Action
 Environment, Health & Safety
• Job Hazard Analysis
• Hazard Identification and Risk Assessment
• PPE, Access Control
• Screening & Induction Procedure
• Periodic Training, Tool Box Meeting
 Scheduling Techniques
• Work Breakdown Structure
• Bar Charts
• CPM Network (AOA)
• Precedence Diagram Method (AON)
• Linear Scheduling Method
Work Breakdown Structure
Bar Chart
CPM Network (Activity on Arrow)
PDM Network (Activity on Node)
 The critical path
0 3 3 9 6 8
A 3 B 6 D 2
0 0 3 3 0 9 7 1 9

9 9
0 0 3 6 Finish
Start E 3 9 0 9
0 0 0 4 1 7

6 8
0 4
C 2
F 4
7 1 9
3 3 7
 LSM Schedule
• Location

• House• 4Excavation
• Foundation•
• House 3 Framing
•• House 2
House 1
• Day
• Day
• Day
• Day
• Day
• Time
• 2• 4• 6• 8• 10
 Resource Planning
• To allocate resources and schedule activities
such that the daily resource requirement on
any particular day does not exceed the
maximum number of resources available on
that particular day
• Resource Leveling – Shift non‐critical activities
within their available floats to obtain the
levelled resource histogram
 Resource Leveling
Act R Time
1 2 3 4 5 6 7 8 9 10
A 2
D 6
F 2
B 2
C 4
E 1
Total 4 4 2 2 10 10 6 6 3 2
Average = 4.9. Max Resource = 6. Target = 6
Strategy – Day 5 Res. Req > 6. Shift (C, 1R)
Act R Time
1 2 3 4 5 6 7 8 9 10
A 2
D 6
F 2
B 2
C 4
E 1
Total 4 4 2 2 6 10 10 6 3 2
Strategy – Day 5 Res. Req is ok.
Day 6 Res Req>6. Shift (C, 1R)
Act R Time
1 2 3 4 5 6 7 8 9 10
A 2
D 6
F 2
B 2
C 4
E 1
Total 4 4 2 2 6 6 10 10 3 2
Strategy – Day 6 Res. Req is ok.
Day 7 Res Req>6. Shift (C, 1R)
Act R Time
1 2 3 4 5 6 7 8 9 10
A 2
D 6
F 2
B 2
C 4
E 1
Total 4 4 2 2 6 6 6 10 7 2
Strategy – Day 7 Res. Req is ok.
Day 8 Res Req>6. Shift (C, 1R)
Act R Time
1 2 3 4 5 6 7 8 9 10
A 2
D 6
F 2
B 2
C 4
E 1
Total 4 4 2 2 6 6 6 6 7 6
Strategy – Day 8 Res. Req is ok.
Day 9 Res Req>6. Shift (E, 1R)
Act R Time
1 2 3 4 5 6 7 8 9 10
A 2
D 6
F 2
B 2
C 4
E 1
Total 4 4 2 2 6 6 6 6 6 7
Strategy – Day 9 Res. Req is ok.
Day 10 Res Req>6. Cannot do anything
 On Site Layout
Site office location/Size
Stores/ Material yards
Labour camps
Location of equipments/ construction machinery
Water supply/ Temporary storage
Electric supply/ Generator set
Site laboratory
Access roads
Site security
Sanitary facilities
Signs & baricades
 Utilities
 Temporary Power
 Temporary Water
 Temporary Sewage Disposal
 Job Site Security
 Fencing
 Lighting / Bright Yard Lights
 Local Police
 Watch Man
 Access Roads
 Entry Register System
 Sign & Barricades
 Site Layout Planning
 Material handling
 Labour productivity
 Equipment constraints
 Site constraints
 Job site security
Site Layout Planning

GAMMON - ARCHIRODON JV.

Site Layout Planning

G A M M O N - A R C H IR O D O N JV.
 Estimation & Costing
• Quantity Survey
– Approximate methods based on preliminary design
– Detailed estimate based on detailed design
• Cost Estimation
– Quotations from Vendors & Subcontractors
– Labor rates, material rates, equipment hire charges
– Productivity, mix design
– Rate Analysis
• Markup
– Overheads, Taxes, Contingencies, Profits
 Budget & Cash Flow
• Projected rate at which project’s cash resources will be
spent
• Developed from the cost estimate and the project
schedule
• Working capital management to maximize return on
investment / minimize interest payment
• Projected monthly expenditures, represented by series of
vertical bars, with tops joined, result in typical bell curve
• S Curve – Cumulative monthly project expenditure /
income
 Cashflow analysis
• Done by both owner and contractor separately.
• Owner- regular progress payments to the contractor
– Timing of those payments is a matter of contractual agreement
and cannot be delayed
– Payment lag can be used as a negotiation parameter
• Contractor
– Working capital during the construction
– Key management tool – Scorecard against which profitability is
measured
• Cashflow analysis made before the work starts, the amount
of working capital needed each month is determined
 Example

• Project Duration – 6 months

• Cost of borrowing money = 0.75% per month
• Monthly bill submission – 5th of the month for work
completed till last day of the preceding month
• Anticipated payments = 30 days later
• Retention amount = 10%, released after virtual completion
• Estimated Cost – Rs. 50,00,000
• Using a 10% markup, Contractor Bid – Rs. 55,00,000
Month 1 2 3 4 5 6
Est. Cost (Lakhs) 5 10 10 10 10 5
Example
Cash Flow Curve

Which project is performing better?

 Example
• For same project, 2 contractors submit bid of
Rs. 53,00,000 and Rs. 56,00,000 respectively.
The projected invoice for the two contractors
are as given below. Assume the client also gets
working capital @ 0.75% per month. Which
one will be more economic?
Month 1 2 3 4 5 6
Predicted invoice for 15 13 10 5 5 5
Contractor 1 (Lakhs)
Predicted invoice for 5 10 10 15 10 6
Contractor 2 (Lakhs)
 Project Monitoring and Control
• It’s foremost duty of PM / CM to keep a eye on
the project parameters which defines its
success.
• Planning for project success is an important
aspect but its equally important to keep on
monitoring and adhering to the plan and also
a check / control need to be exercised in case
of any deviation.
 Why Monitoring and Control?
• Goal is to detect and correct deviation from
desired
– Budget
– Schedule
– Quality
• Detection  Monitoring
• Correction  Control
– Much harder than monitoring!
– Bring project performance back on track with plans
Growing Expenditures, Declining control
 Measuring Project Progress – Earned Value
Method
• BCWS – Budgeted Cost of Work Scheduled –
Original Schedule and Cost
• BCWP – Budgeted Cost of Work Performed –
Original Cost, Schedule updated as per actual
progress
• ACWP – Actual Cost of Work Performed – Cost
and Schedule both updated as per actual progress
• Schedule Variance = BCWP – BCWS
• Cost Variance = BCWP – ACWP
Earned Value Analysis
Earned Value Analysis
 Project Control
• First project control principle is that watching and
controlling are not the same!
• Watching  Observing events and taking notes
• Controlling  PM team to establish some standards
of quality, minimum acceptable rate of production,
rates of planned expenditures or other required
metrics.
• Preventive & Corrective action in case of
performance not met with metric standards
 Schedule Control
• Time Control -
• Time cannot be controlled! – Inelastic
• Project Schedule can be controlled.
• By speeding up the task, we can make for past
or future lost time.
• Work – Elastic
 Elements of Schedule Control

• Monitoring the schedule

• Measuring physical progress
• Planned v/s actual physical progress
Ways to improve schedule:
Improve Productivity
Increase Staff
Work overtime
Reduce the work
Subcontract part of the work
National Institute of Construction
90
Management & Research, Pune
 Schedule Control Checklist
• Update and check the schedule regularly
• Look ahead to control the future; the past is history
• Check physical progress, not labour-hours expended
• Identify the critical activities – CPM
• Take early actions to correct slippage
• Make corrective decisions logically; don’t overreact
• Use overtime wisely.

National Institute of Construction

91
Management & Research, Pune
 Project Cost Control
• Project Budget – Baseline for the cost control program.
• Once original budget has been approved, Project Cost Report
or Job Cost Report compares the cost of individual items
against budgeted cost
• Utmost importance  CM set their sights on beating or at
worst meeting, each item in the budget.
• To meet project financial goals – Win more items than we lose,
especially the big ones
• Budget is broken down into a code of accounts to highlight the
major cost areas, which requires most of the CM’s attention
• Purpose of the account code is to sort and record costs in
separate accounts
 Critical Elements of Cost Control
• Apportioning of shared resources, capital
expenditures, depreciation
• Delaying cost of setting up
• Booking of high value inventory items
• Handling of Contingency Funds, and Escalation
 Sample Cost Analysis
Recording of Cost As on Date (Cost Statement)
Code Item Description SC Material Plant Overhead Total
F Cum F Cum F Cum F Cum FTM Cum
T T T T
M M M M
Direct Cost Items _ _ _ _ _ _ _ _
Indirect Cost Items _ _

Revision of Estimate (JCR)

Code Item As on Date Estimates to Revised Original Variance
Complete Estimate Estimate
Amt Qty Rate Amt Qty Rate Amt Qty Rate Amt Qty Rate Amt Qty Rate
 Sample Cost Analysis
Sl. No. Parameters JCR Budget
A Invoicing A1+A2+A3
1. Original Contract Value
2. Escalation
3. Change Orders
B Cost B1+B2
1. Total Direct Cost From JCR
2. Total Indirect Cost From JCR
C Op. Gross Margin A-B
D Contingencies
E Net Gross Margin C-D
F RO/HQ Overheads
G Profit Before Tax E-F
 Resource Management
Procurement Waste Motive Skill

Materials Labor

Constructability Knowledge Reengineering

Information Equipment

Support Deliverables Utilization Maintenance

 Importance of Material Management
• Controlling the kind, amount, location, movement
and timing of the various commodities used in
and produced by the industrial enterprise
• Rate of return on investment is ratio of profit to
capital
• For a construction project 50-60% of the capital
cost is cost of materials
• Material productivity has direct effect on
company’s profitability
Functions of Material Management
• Materials Planning
• Purchasing
• Inventory control
• Store-keeping
• Stores Accounting
• Transportation ( Internal – Material handling / External –
Traffic)
• Disposal of scraps, surplus, obsolete materials
• Materials economics
• Waste management
Costs involved in Material Management
• Basic cost of materials
• Government levies and taxes
• Ordering costs
• Inventory carrying costs
• Packaging & packing costs
• Material handling costs
• Freight costs
• Insurance costs
• Wastage
 5 R’s of Buying
• Right Quality
• Right Quantity
• Right Price
• Right Time & Place
• Right Source
 Inventory Control System
• Replenishment systems
– Two bin system
– Fixed order quantity system
– Fixed order interval system
• Buying Decision
– Make or Buy
– When to buy
– How much to buy
• Inventory Control Factors
– Economic Order Quantity
– Safety Stock
 Main Functions of Site Store
Receipt of material
Verification for quality and quantity
Record keeping of receipt, unloading and issue
Safe and proper storage of material so that any thing is easily
retrievable
To maintain minimum level of inventory if necessary
Supplier’s bill certification
In case some receipts and issues are debatable then make necessary
notes
To comply with various formalities of excise, sales tax / vat and road
permits etc.
Packing and transporting - if necessary
 Managing Waste
• Waste
– Any substance or object that you discard, intend to discard, or are required to
discard is waste
• Impact of waste on Project Programme and Budget
– The purchase price of the materials that are being wasted
– The cost of storage, transport and disposal of waste
– The cost of the time spent managing and handling the waste
– The loss of income from not salvaging waste materials
• Waste Management
– Reduce the amount of waste produced
– Re-use the material where possible
– Recycle the material where possible
– Recovery of any component parts or materials
 Pareto Principle : ABC analysis
• 80% wealth in hands of 20% population
• This 80-20 relation also holds good for inventories
• 20% of total no. of items responsible for 80% of
the value
• High value items needs more stringent control
• Degree of control  Frequency of reviews
• ABC analysis : A (80% value); B (15% value); C (5%
value)
Pareto Principle : ABC analysis
 Example : ABC for Wastage Control
Item Wastage
%
Cement 2
Steel 5
Paint 11
Glass 5
Tiles 14
Binding 14
Wire
Nails 20
PPE 10
Shutterin 15
g oil
 Example : ABC for Wastage Control
Item Wastage UOM Rate
%
Cement 2 bags 300
Steel 5 MT 40000
Paint 11 litres 100
Glass 5 sqft 70
Tiles 14 sqft 25
Binding 14 kg 25
Wire
Admixtur 1 kg 35
es
Lights 2 nos 100
Shutterin 15 litres 20
g oil
 Example : ABC for Wastage Control
Item Wastage UOM Rate Quantity Wastage Category
% Value
Cement 2 bags 300 10000 60000 B
Steel 5 MT 40000 200 400000 A
Paint 11 litres 100 100 1100 C
Glass 5 sqft 70 50 175 C
Tiles 14 sqft 25 10000 35000 B
Binding 14 kg 25 500 1750
Wire C
Admixtur 1 kg 35 5000 1750
es C
Lights 2 nos 100 30 60 C
Shutterin 15 litres 20 40 120
g oil C
 Importance of Equipment
Management
• Over 18% failures in Construction Companies
are due to uncontrolled cost of operations
• In construction projects, 20 – 30% of the
project cost is cost of equipments
• Asset Turnover Ratio is one of the most critical
parameters of project performance
• Goal of Equipment Management : Provide the
right equipment at the right time and place so
the work can be accomplished at the lowest
cost
 Equipment Management
Activity Design Site Layout
Project size

Operating Safety
Environment Requirements

EQUIPMENT
Design
Skilled labor MANAGEMENT
Sophistication

Nature of job Automation

Weather Project Human interaction

Objectives & communication
 Equipment Procurement
• To determine what kind and size of equipment seem to
be most suitable for a given project
• Minimize Ownership & Operating cost
– Working at the lowest cost vs. working with least cost
equipment
• Increase availability & utilization
– Working time duration vs. calendar time duration
• Decision making by analyzing data
– Machine Identification
– Utilization data
– Owning & Operating Cost
 The Procurement Decision
• Which Equipment to mobilize for the project
– Many different methods to execute a job. No best or
standard piece of equipment for particular job
– Choice of equipment critical for bidding and operation
planning
• How to procure equipments for the job
– Purchase
– Lease
– Rent
– Rent with option to purchase
 Mode of procurement

Mode Advantage Disadvantage

Purchase Lowest hourly use charge Substantial investment
Always available Challenge to keep
Better control equipment fleet busy
May influence owner to
use obsolete equipment
Rent / Lease Lower risk Higher use charge
Rent with option to Machine can be tested
purchase prior to purchase decision
 Equipment Costs
Ownership Cost Operating Cost
 Life of an Equipment
• Physically limited working life
– The period over which the equipment can be operated
• Depreciation life (book life)
– The period over which the equipment’s value is
depreciated
• Cost limited economic life
– The period over which net annual worth is a minimum
• Actual useful life
– The period over which the equipment is actually used
Productivity in Construction

Corporate Level

Regional Level

Project Level

Work-Package Level

Operation Level
 LABOUR & TOTAL FACTOR PRODUCTIVITY

CONSTRUCTABILITY

QA/ QC
MANPOWER PROCUREMENT
PROCEDURES
UTILIZATION PROCEDURES

EQUIPMENT
UTILIZATION TOTAL
………….. LABOUR
& FACTOR
MECHANIZATION
PRODUCTIVITY
PRODUCTIVITY

OPERATING
CONSTRUCTION EFFECTIVENESS
MATERIAL
METHODS SMALL TOOLS
UTILIZATION
UTILISATION
 Productivity- Definition

• Ratio: Input / Output | Output / Input

Rs.$ / Quantity | Quantity / Rs.$

• Units: Manhrs / Quantity | Quantity / Manhrs

?
 Sources of Lost Time
Slow
Rework
Work

Excessiv Lost
e Travel Time

Idle
Time
 Idle Time
– Late Starts & Early Quits

– Waiting for Inspection

– Availability of tools, materials & equipment

– Accidents

– Mobilization & Re-mobilisation

 Excessive Travel

– Logistics of tools and materials

– Paperwork

– Layout
 Slow Work

– Low craftsman skills

– Fatigue

– Adverse weather
 Rework

–Engineering Errors

–Inaccurate drawings

–Misleading technical instructions

 Lost-Time .vs. Muda (waste)
• Lean identifies seven forms of waste that can be
summarized by the mnemonic TWO DIME. It stands for:

 Transport
 Waiting
 Overproduction
 Defects
 Inventory
 Motion
 Excess processing
 DO WE MEASURE FACTORS FOR ALL ACTIVITIES ?

Objective of a Productivity Measurement System is to identify

if there is a productivity problem.

Measure the factors for Important (Critical) activities and

conventionally problematic (labor intensive) components.

MPSA Principle
Measured Productivity For Significant Activities
CONCRETE OPERATION

COST CONTROL SYSTEM MEASURES

Formwork
EVERYTHING

Steel Reinf

Concrete
Placement
Support
Activities
Curing Finishing

Repair

Indirect
BASED ON MPSA PRINCIPLE MEASURE ONLY IMPORTANT ACTIVITIES

Formwork

Steel Reinf

Concrete
Placement
Support
Activities
Curing Finfshing

Repair

Indirects
 PRODUCTIVITY ANALYSIS
Selected Activity in Progress

Quantities
Work Hours

Productivity Calculations

Performance Work hour Analysis of Trends

Evaluation Forecast
 MEASUREMENT OF QUANTITIES
Quantities Work-hours
• Establish appropriate
• Units Complete measurement scheme in
the time office
• Percentage Complete

• Level of Effort

• Incremental Milestone
 Units Complete
• Activities with well defined scope
• Output determined quickly by counting
• Relatively few Sub-Tasks
• Short duration for completing each unit of
output
• Single Craft or trade
– Piling
 Percentage Complete

• Activities which involve areas rather than

single units
– Painting
– Flooring
 Level of Effort
• Activities involving overlapping subtasks
• Subtasks must be measurable or their status easily
defined
• Best suited where there is a large number of similar
items and the work will be on going for an extended
period of time.
– Eg.
• Structural steel
• Concrete Formwork
• Cable Tray
 Example
• Pipe Hangers to be erected.
• Subtasks are
– Fabricate - Install - Inspection
• Current status
– 366 Hangers Fabricated
– 185 Hangers installed
– 41 Hangers inspected & accepted

• WHAT IS THE OUTPUT QUANTITY ?

 Example
• FABRICATE EACH 0.40 366 146.4

• INSTALL EACH 0.50 185 92.5

• INSPECT EACH 0.10 41 4.1

• TOTAL TASK EACH 1.00 243

UNITS COMPLETE BY LEVEL OF EFFORT = 243

Performance is the comparison of actual
productivity to what was expected

• Performance Factors
• Forecasting
 PERFORMANCE FACTOR =

PLANNED OR ESTIMATED UNIT RATE

ACTUAL UNIT RATE
VALUE > 1 SHOWS PREFORMANCE BETTER THAN EXPECTED

< 1 SHOWS LESS THAN DESIRED PERFORMANCE

PF COMPARISONS CAN BE :

* NUMERICAL

* GRAPHICAL
 EXAMPLE PERFORMANCE EVALUATION REPORT

(1) (2) (3) (4)

UNITS OF WORK QUAN- BUDGETED PERFORMANCE
ACTIVITY MEASURE HOURS TITY UNIT RATE
TO DATE TO DATE FACTOR TO
LIN FT DATE
LIN FT 1824 917
PIPING-L
PIECE
1.27 0.64
PIPING-S 2350 1958
STRUCT- LIN FT 1.02 0.85
STEEL 782 517
CABLE 1.5 0.99
1060 14327
0.09 1.22

Column 4 = Column 3 / (Column 1 / Column 2)

TYPICAL PIPING PERFORMANCE FACTOR
CURVE
PERFORMANCE
FACTOR Actual
Straight
Runs Valves
& bends

1.0

Start-
Up

25 50 75 100

% COMPLETE
 Productivity Reporting

• DAILY

• WEEKLY – PERIODICAL

• CUMULATIVE
 FORECASTING

WORKHOURS FORECAST AT ACTIVITY COMPLETION =

WORKHOURS TO DATE X TOTAL ESTIMATED QUANTITY

QUANTITY TO DATE

= WORKHOURS TO DATE
% COMPLETE
 UNITS OF WORK QUAN- ESTIMATED TOTAL
ACTIVITY MEASURE HOURS TITY QUANTITY FORECAST
TO DATE TO DATE WORK HOURS
LIN FT
1066
LIN FT 1824 917 2,121
PIPING
PIECE
PIPING 2350 9790
1958 86 11,750
STRUCT- LIN FT
20
STEEL 782 638
517 965
CABLE 81
1060 14327 6819
21 5048
 Productivity Evaluation - Tools
• Productivity Measurement Systems
– Daily Progress Report

• Work-Sampling
– Observation based measurement of activity level to
ascertain where time is lost

• Foreman-Delay Survey
– Measures where time is lost based on foreman’s opinion

• Crew Balance Charts

Worksampling Analysis
CASE #1

Direct work

Travel Empty
Handed
30% Transport
Tools/Material
55% Idle
2% Unexplained
3%
10% Waiting Work
Related
 Implementation of FDS
The FDS is accomplished through five–step process.

Foreman Orientation

Collection of Delay Reports

Delay Report Summarization

Review of results with Foremen

Visible Positive Action

 Line Balance : Simple Example Over-processing
Overproduction which Rework
Inventory Waiting
causes the other 6 wastes Transportation Motion

5 mins 25 mins 15 mins 10 mins

1 2 3 4

Constraint This operator This operator

Overburden must WAIT for must WAIT for
operator 2 operator 3
25

20

mins 15
10

1 2 3 4
 Line Balance : Simple Example
Promotes one- Avoids Minimises the 7 Reduces
piece FLOW overburden wastes Variation

15 mins 15 mins 15 mins 10 mins

1 2 3 4

Redistribute the work

25

20

15
10

5
Project Communication & Documentation

• Objectives
• Record Types and Content
• Cost Documentation
• Correspondence
• Contractual Requirement Documentation
• Meeting Minutes
 Documentation – Objectives
• Accurate documentation – Essential function of project
administration
• Contractor operates within tight cost and time
constraints, a number of activities beyond the control
of the contractor  Contractor’s performance
• Activity deviation – may not appear to impact contract
at the time it happens, however it may be felt at a later
date
• Disputes resolutions  clear documentation – quick
and equitable solutions
 Keys to effective jobsite documentation &
communication
• Objectivity and truthfulness
• Timeliness
• Retrievability
• Appropriate distribution
• Standard, uniform information
• Completeness and comprehensiveness
 Different areas to be documented

• Events, occurrences and conversations

• Costs
• Correspondence
• Contractual requirements
• Meetings

Documentation should be honest, accurate, complete and usually

sequential.
Careful documentation helps the contractor solve problems on
the project and facilitate budget & duration goals
National Institute of Construction
157
Management & Research, Pune
Events, occurrences and conversations
• Documented by:
– Daily reports – Photographs
– Weekly reports – Time-lapse photography
– Monthly reports – Video recording
– Diaries – Schedules
– Telephone and other
logs
– Accident reports
 Costs
• Documented by:
– Purchase orders
– Subcontracts
– Material reports
– Labour reports
– Equipment reports
 Correspondence
• Documented by transmittals, Request for Information (RFI) and
letters
• Construction contract and agreement requires that all requests,
directions and changes be in written form
• All correspondence – well-crafted by the author.
• Needs to accurately convey the message completely, while being
brief as possible
• Construction contract and agreement requires that all requests,
directions and changes be in written form
• All correspondence – well-crafted by the author.
• Needs to accurately convey the message completely, while being
brief as possible
 Letter of Transmittal
• Dated record of when a particular document
or item was sent to another party.
• Necessary proof that a particular piece of
information was sent from one party to
another, but it is not conclusive proof that the
item was received.
• Signed receipts – necessary for important
documents
 Letter of Transmittal – Content
• Name and address of sender
• Name and address of intended receiver
• Project Number
• Item sent (Full description)
• Number of copies of the item
• Notes relating to the item
 Request for Information (RFI)
• Contractor – numerous questions throughout
project concerning documents, construction,
materials, and numerous other items.
• Traditionally – phone call or informal
conversation with architect solved the problem
• Now – Document every request and reply
• Extra costs or complications can arise during the
process, requiring use of the RFI to substantiate a
project’s direction
 Letters
• Used to provide and obtain information,
request action, reply to a request for action, or
present an explanation
• They are used to encourage activity by parties
in the construction process as well
• Phone call – quickest but Letter – most
powerful form of communication
• Standard language
 Email
• Popular – Business correspondence as well as
personal correspondence
• Instantly available and convenient for both the
sender and receiver
 Minutes of Meeting
• Meetings are frequent occurrences during the
construction process
• Several stakeholders – opportunity – current matters of
concern about the project – face to face
• Meeting – Formal with an agenda, a leader and some
structure
• Partnering meetings and workshops, pre-construction
meetings, progress meetings, subcontractor meetings,
special installation meetings, schedule coordination
meetings, safety meetings, and post construction
meetings
 Contractual requirements
• Documented by payment requests, schedule
of values, change orders, punch lists and
certificates of substantial completion
 Contractual Requirement Documentation

• Project Start-up:
– Construction Schedule
– Schedule of Values
– List of Subcontractors
– Product submittal, shop drawings and samples
• Construction Progress:
– Progress payment requests
– Construction Schedule Updates
– Certified Payrolls
– Contract Change orders: Proposals, Directives, Change-orders
 Contractual Requirement Documentation
(cont.)
• Project Closeout:
– Certificate of Substantial Completion
– Lien Releases
– Consent of Surety
– Warranties
– Operation and Maintenance Manuals
– Spare Parts
– Punch Lists
 Project Manager – Responsibilities &
Functions
• Responsible to upper • Select, build and retain
management for team. Lead team to achieve
profitability goal
• Achieve project • Planning, Monitoring, and
parameters (time, cost, Control
quality, safety, • Decision-making (Technical,
sustainability) Financial & Administrative)
• Delivery of contractual • Co-ordination and liaison
liabilities with agencies
• Compliance of statutory • Mobilization, Allocation and
and tort liabilities Management of Resources