Fast-tracked Construction Projects & Cost Overrun

FAST TRACKING
CONSTRUCTION
(COST OVERRUN)
helpdesk@construction-
productivity.co.uk
www.construction-productivity.

Fast-tracking Construction
Projects & Cost Overrun
The impact of changes to the original scope of work
on the labour force and the relationship between
change and various types of disruption are important
to project management team.
Any changes made to the original scope of work are
costly and will have an effect on labour productivity.
Although some changes are inevitable, the impact
on site productivity is nonetheless significant.

If a change occurs in the final stage of a construction
project the crew must stop working until the changes
are carried out first.
The increase in the percentage of work hours spent
on changes will result in a 10-20% loss in
productivity.
Changes in themselves do not decrease
productivity or efficiency, it is the
manpower/machinery involved in the process.

Once changes occur, routine work will
change, processes will slow down and the
total work hours will be several times greater.
Also, the work method may require changes
as well as more co-ordination being required.

It is possible to carry out many
changes without a loss of
efficiency.
On average, there is a 30% loss of
efficiency when changes are being
performed.

Repeat works, disruption and the presence of
change all of which can lower labour performance.
Disputes are common between the client
and contractors when these changes occur.
The variables affecting efficiency are
believed to be the time of the change.

Efficiency is determined by dividing the
performance ratio equation value on a
normal day by the performance ratio
equation when change order had occurred.
Efficiency is defined as an actual productivity
ratio to baseline productivity.

Fast-
tracking
• To effectively manage fast-tracking change,
influential factors involved in fast-tracking
projects changes need to be identified fast.
Fast-
tracking
• Proper action is needed to reduce the
negative effects that any changes might
cause to the progress of the project.
Fast-
tracking
• Managerial decisions on change or rework
should be made based on the proper
assessment of any change to original plans.

Fast-tracked-
Impact of
changes
• Shortening project completion time has
been one of the most critical factors for
productivity improvement in construction
industry and many other industries.
Fast-tracked-
Impact of
changes
• To ensure a faster product development is
possible by reducing product cycle time
through concurrent development.

Fast-
tracking
• The increasing preference of project owners
and managers to fast-track construction proves
the popularity of concurrent development in
construction.
Fast-
tracking
• Concurrent construction also has greater
potential to impact the project development
process than the traditional methods.
Fast-
tracking
• Potential problems is considered to be
increased level of uncertainty

Uncertainties make the construction
unpredictable and unstable, mostly by
creating non value-adding change
activities among construction processes
When a project is fast-tracked
without proper planning, change
can cause the disruption of the
construction process.

 Since construction has a physical
manifestation, construction rework is
normally perceived to have a bigger
impact than change.
 As a result, construction managers
tend to avoid rework on problematic
tasks by changing the scope of work,
in particular under time constraints.

Types of Changes for fast-
tracked
For example, changes in the design work that
have been made by mistake can cause
subsequent changes in construction.
Change to the original plan can cause
changes in other tasks

Fast-tracked-Impact of changes
This might have an effect on
site operatives.
In this case, the design changes
caused by the designer

As illustrated in Figure 1, once changes occur
during construction (A and B), changes result
in either subsequent changes (C) or rework
(D), depending on managerial decisions.
The arrows labelled E, F, and G in Figure 1
illustrate the unintended change process.

Change and Rework
Change and rework have different
characteristics, as summarized in
Table 1.
Both change and rework are done in the form
of either ‘adding’, ‘deleting’ or ‘replacement
(deleting and adding)’.

Table 1. For example, in Case
I on Figure 2, given the
problem (a hump on the
concrete surface), rework
would be done by deleting the
problem, while change would
be done by adding some more
concrete.

Figure 2: Behaviours of Change
and Rework Park, M. (2001)

 Where floor tiling has been finished
with less/more than the required
height, although both change and
rework have the same behaviour
pattern (replacement) in solving the
problem, the object would be the
problem area in rework, while the
previous work would be the object in
change.

 Since construction industry is a labour
intensive industry construction, rework
is usually accompanied with the
demolition of what have been already
built.
 This has a bigger direct impact on the
construction performance than the
change option.

 By adopting the change option, it is
possible to avoid rework on
problematic tasks that may require
more resources.
 changed activity can also become a
change source that can cause other
subsequent changes.
 This change might have more impact
on the construction performance than
the rework option in certain conditions.

 For example, the increased concrete
height may trigger subsequent
changes in succeeding tasks, i.e.,
reducing the size of ventilation ducts.
 Where some of piles were not
correctly positioned, it still made it
possible to proceed with the
superstructure without correcting the
position of the piles by changing the
position of columns.

Figure 3a: Change Option Loop-
Park, M. (2001),

Figure 3b: Quality Management
Thoroughness Loop-Park, M. (2001)

Figure 3c: Downstream
Reprocess Iteration Loop-Park,
M. (2001),

Figure 3d: Feedback Processes
in Construction Activities
Park, M. (2001),

Park, M. (2001), "Dynamic
Planning and Control
Methodology for Large-Scale
Concurrent Construction
Projects", Doctoral Thesis,
Dept. of Civil Engineering,
MIT, Cambridge, MA

Projects &Cost Overrun
The ability to manage risks throughout
the construction process has become
a major factor for preventing risk.
Risks have a significant impact on a Fast-
Tracked construction project’s performance
in terms of:
Cost –Time-Quality-Safety

Risk to a large extent is governed by the
procurement option and the content of the related
contract documents.
Fast-Tracked projects carry significantly more risk
than ordinary projects.
Supply chain must share the risk.

A systematic process of:
Identifying, assessing and responding
to project risk
Selecting an appropriate project
procurement option is a key issue for
risk reduction.

A variety of risk management models with
different numbers of stages can be obtained.
The aims and objectives of the risk
management process is to maximize the
opportunities and minimize the
consequences of a risk event.

IEC suggest a model with four steps: 1-risk
identification 2-risk assessment
3-risk treatment 4-risk review monitoring
The international standard “Project risk
management – Application guidelines” (IEC
2001) is a good source for risk management.

qualitative risk analysis
quantitative risk analysis
PMBOK’s model (PMI 2000) is
similar but divides risk assessment
into two processes. They are:

Resources
Scope
Goals
Removeany Ambiguity
Leadership
Co-ordination
communication
Team work

 To calculate the cost overrun during
Fast-tracked projects use Model below
and suggested formulas.
To measure Items such as:
 Time (increase/decrease),
 Cost (increase/decrease),
 Labour (increase/decrease),
 Material (Material waste
increase/decrease)
 Machinery (efficiency

Formula one
PR (Loss/Gain) =MD [A-X] + HC(EC-
AC)+ HL(EL- AL)
Formula two
AC = a EC (1+Σ xi) and similarly AL = a EL (1+Σ
xi)
xi = % of influential factors such as
weather, crew size, absenteeism,
machinery, accidents on site, etc.

Influential factors
(related to early stage
of project)
Economical
Technological
Customers
Stakeholders
Environmental
Legislative
Procurement route
Organizational factors
Financial factors
Sustainability
Etc
Process model of Change Management
Pre-
construction
Activities
Client brief
Project objectives
Specification
Design/build-
ability
Constructability
Contractual
arrangement
Planning
Scheduling
Estimating
Labour
Characteristics
Subcontracting
Labour
Direct labour
Management
System
Planning
Communication
Controlling
Co-ordinating
Resource
Management &
Weather
Labour selection
Labour control
Material selection
Material handling
Plant
Waste on site
Delay and Disruption on site
Motivating Factors
Hygiene Factors
Construction
Productivity
Project
Performance
 Time
 Cost
 Quality
 Safety
 Customer
satisfaction
Rewards
Effort
Ability and skill of
management and workers
Site/Project
Manager
Characteristics
Experience/capability
Leadership style
Authority/influence
Goal commitment
Involvement
Job
Satisfaction
Product Improvement Tools (PIT) Earned Value Management (Evma) Lean Construction (Lcon)
Benchmark (Ben) Front End Management (Fema) Just In Time (Jiti)
Benchmarking (Bing) Quality Control (Qcon) Supply Chain Management (Scma)
Buildability (Buil) Quality Assurance (Qass) Value Engineering (Veng)
Buildability/Deconstruction (Buil/Deco) Quality Management System (Qmsy) Value Management (Vman)
Otherp Product Improvement Tools

Let us assume that (Bing)+ (Buil/
Deco)+ (Fema) were all carried out
pre and during construction work.
Also items carried out in the (PIKt)
must be added to productivity loss
formula.

PR (Loss/Gain) =MD [A-X] + HC (EC- AC) + HL (EL-
AL)
AC = a EC (1+Σ xi) and similarly AL = a EL (1+Σ xi)
PR (Loss) =
MD [A-X] + HC (EC- a EC (1+Σ xi)) + HL (EL- a EL
(1+Σ xi)) + (Z)
The project estimated cost=PC(est)
Z = Σ (PIKt) /100 PC(est)
PR(Loss/Gain) =MD [A-X] + HC (EC- a EC (1+Σ xi))
+ HL (EL- a EL (1+Σ xi)) + Σ(PIKt) /100 x PC(est)

Total MD
=Cost
of
material
Waste Waste
Quanti
ty
(TQ)
Deliver
ed to
site
(Estima
te)
(Actual
)
(Act-) % %
156 31.14 5% 6.50%
264 18.88 5% 6.50%
282 8 5% 7.00%
708 1.71 5% 6.50%

0
25
50
75
100
125
150
Budget 5 10 15 20 25 30 35 40 45 50 55 60
Actuals 10 20 30 40 50 60
Earned 8 15 25 30 35 45
Forecast 70 80 90 100 110 120
J F M A M J J A S O N D
0
25
50
75
100
125
150
5 10 15 20 25 30 35 40 45 50 55 60
10 20 30 40 50 60
8 15 25 30 35 45
70 80 90 100 110 120
J F M A M J J A S O N D
Time Now

 PR(Loss/Gain) =MD [A-X] + HC (EC- a
EC (1+Σ xi)) + HL (EL- a EL (1+Σ xi)) +
Σ (PIKt) /100 PC(est)
 Also, add cost of Risk management
team (both in-house and external
experts)
 (Rmi ) + (Rme )
 (Rmi )=Risk management (In-house)
 (Rme )= Risk management (External))

 Planning engineer to decide
 % PC(est)= Fees for (Rmi ) + (Rme )
 Let us assume 0.50% of PC(est)= Fees
for (Rmi ) + (Rme )
 (Rmi ) + (Rme )= (Rtotal )
 (Rtotal )= (0.5/100)xPC(est)
 PR(Loss/Gain) =MD [A-X] + HC (EC- a
EC (1+Σ xi)) + HL (EL- a EL (1+Σ xi)) +
Σ (PIKt) /100 PC(est) + (Rtotal )

For risk management
consider
Bionomial Distribution
 Now suppose that we want to know
the probability of getting k good result
in n trials. We can call this event A.
 P(A) = pk(1-p)n-k n!/(k!(n-k)!)
 Example: k =2 n=3
 There are 8 possible outcomes, 3 with
the desired event – P(A)=3/8

 The number of combinations of r
objects taken from a group of n
distinct objects is denoted by nCr and
is given by:
nCr =
n!
(n – r)! • r!

 Risk = penalty * likelihood
 Penalty can be in dollars, lives,
injuries, amount deadline missed by
 Likelihood is probability that a
particular hazard will be “activated”
and result
 in an undesirable outcome
 The product can be considered as an
expected value of cost to project

Fast-tracked Construction Projects & Cost Overrun

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