APPLICATION OF CONTROLSAPPLICATION OF CONTROLS

CHAPTER 8 CHAPTER 8

Presenting byPresenting by : Mustafa Al tayeb : Mustafa Al tayeb

Date 21/11/2005 Date 21/11/2005

IntroductionIntroduction

-Discussed preparation of the overall plan for the project - as -Discussed preparation of the overall plan for the project - as well as its implementation. well as its implementation.

-The control system quantitatively measures actual -The control system quantitatively measures actual performance against the plan and acts as an early warning performance against the plan and acts as an early warning system to diagnose major problems while management system to diagnose major problems while management action can still be effective in achieving solutions.action can still be effective in achieving solutions.

-Development and application of a practical control system to -Development and application of a practical control system to measure progress and costs is one of the most important measure progress and costs is one of the most important contributions of the professional construction manager and contributions of the professional construction manager and is critical to the success of general and specialty is critical to the success of general and specialty contractors.contractors.

-The final portion of the chapter sets forth some of the -The final portion of the chapter sets forth some of the different methods that a single general contractor might different methods that a single general contractor might utilize on a fixed price contract with a number of utilize on a fixed price contract with a number of subcontractors. subcontractors.

MANAGEMENT-LEVEL REPORTING BY CONSTRUCTION MANAGEMENT-LEVEL REPORTING BY CONSTRUCTION MANAGER.MANAGER.

Management-level reporting must provide a Management-level reporting must provide a straightforward statement of straightforward statement of

1-The work accomplished .1-The work accomplished .

2-Predict future accomplishment in terms of the 2-Predict future accomplishment in terms of the project-cost and schedule .project-cost and schedule .

3-Measure actual accomplishments against goals set 3-Measure actual accomplishments against goals set forth in the plan. forth in the plan.

4-Review current and potential problems and 4-Review current and potential problems and indicate management action underway to overcome indicate management action underway to overcome the effects of the problems the effects of the problems

A comprehensive "Monthly Progress A comprehensive "Monthly Progress Report" Can convey this essential Report" Can convey this essential

information.information.

1- Summary of project status1- Summary of project status

2- Procurement status2- Procurement status

3- Construction status3- Construction status

4- Schedule status4- Schedule status

5- Cost report summary5- Cost report summary

1- Summary of project status1- Summary of project status-This item represents a short, overall summary of project status.-This item represents a short, overall summary of project status.

-information such as the physical percentage complete compared -information such as the physical percentage complete compared with scheduled completion, and forecast "at-completion" costs with scheduled completion, and forecast "at-completion" costs against budget. against budget.

2- Procurement status2- Procurement status-This item reviews contracts awarded during the period, contracts -This item reviews contracts awarded during the period, contracts

currently out for bid.currently out for bid.

-A simple bar chart showing actual procurement status and -A simple bar chart showing actual procurement status and contract awards compared with the original plan.contract awards compared with the original plan.

3- Construction status3- Construction status

-provide a description of work accomplished during the period-provide a description of work accomplished during the period..-work to be accomplished in the next period.-work to be accomplished in the next period.

-discussion of major problems, with solutions or proposed -discussion of major problems, with solutions or proposed solutions. solutions.

4- Schedule status4- Schedule status--This item should contain the summary control schedules by This item should contain the summary control schedules by

contract and by facility, showing actual progress compared contract and by facility, showing actual progress compared to early- and late-start schedules.to early- and late-start schedules.

-Where contracts or facilities are behind schedule or are -Where contracts or facilities are behind schedule or are slipping, an explanation of the problems and the indicated slipping, an explanation of the problems and the indicated solution.solution. !! !!

5- Cost report summary.5- Cost report summary.-Show actual recorded costs, committed costs, and estimated -Show actual recorded costs, committed costs, and estimated

costs-to-complete. costs-to-complete. -It should compare "at-completion" costs with project budgets -It should compare "at-completion" costs with project budgets

and identify and explain changes from the previous report. and identify and explain changes from the previous report. -An evaluated- contingency should be included so that an -An evaluated- contingency should be included so that an

overall estimate of actual costs at completion is provided. overall estimate of actual costs at completion is provided. -A summary of value-engineering savings to date and new -A summary of value-engineering savings to date and new

items added during the period can be included items added during the period can be included

OVERALL COST CONTROLS BY CONSTRUCTION OVERALL COST CONTROLS BY CONSTRUCTION MANAGERMANAGER

-Overall cost controls should be integrated with -Overall cost controls should be integrated with schedule controls .schedule controls .

-Overall cost controls, designed to measure project -Overall cost controls, designed to measure project status against budget, status against budget, include the following:include the following:

Preliminary estimates Preliminary estimates Fair-cost estimates Fair-cost estimates Definitive estimateDefinitive estimate Cost report summary Cost report summary Value-engineering studies Value-engineering studies Value-engineering status Value-engineering status Other significant dataOther significant data

Project Control Techniques for Project Control Techniques for Managing Construction.Managing Construction.

1-Preliminary estimates1-Preliminary estimates--Preliminary estimates assist the overall cost-control program by serving as Preliminary estimates assist the overall cost-control program by serving as

the first check against the budget .the first check against the budget .

-Indicating cost overruns early enough for the project team to review the -Indicating cost overruns early enough for the project team to review the design for possible alternates. design for possible alternates.

-Preliminary estimates are made prior to the completion of detail drawings, the -Preliminary estimates are made prior to the completion of detail drawings, the margin for error is usually greater than for fair-cost estimates.margin for error is usually greater than for fair-cost estimates.

-A larger contingency should be applied; this will vary with the amount of -A larger contingency should be applied; this will vary with the amount of design information available and the extent of cost information obtainable design information available and the extent of cost information obtainable from similar projects. from similar projects.

-For a phased construction program, it is especially important to prepare -For a phased construction program, it is especially important to prepare preliminary estimates by contract package . preliminary estimates by contract package .

2- Fair-cost estimates2- Fair-cost estimates -Fair-cost estimates are best prepared from the actual bid -Fair-cost estimates are best prepared from the actual bid

documents provided to the bidders. documents provided to the bidders. -Whenever possible, it is helpful to complete the fair-cost -Whenever possible, it is helpful to complete the fair-cost

estimate well before receiving bids so that any discrepancies estimate well before receiving bids so that any discrepancies in plans and specifications, duplications in scope, and possible in plans and specifications, duplications in scope, and possible value-engineering alternates suggested by the estimator can be value-engineering alternates suggested by the estimator can be communicated to the bidders via addenda before bids are communicated to the bidders via addenda before bids are received.received.

-Fair-cost estimates represent the professional construction -Fair-cost estimates represent the professional construction manager's appraisal of the fair value of the bid package to the manager's appraisal of the fair value of the bid package to the owner. owner.

-Local conditions, such as materials prices, wage rates, labor -Local conditions, such as materials prices, wage rates, labor productivity, and anticipated competition, are important in productivity, and anticipated competition, are important in achieving a reasonable estimate for the area.achieving a reasonable estimate for the area.

- Fair-cost estimates in an integrated cost-progress control - Fair-cost estimates in an integrated cost-progress control system will also develop significant additional information system will also develop significant additional information for upgrading the usefulness and accuracy of the schedule- for upgrading the usefulness and accuracy of the schedule- and progress-control portion of the overall control system. and progress-control portion of the overall control system. Some of these items include the following:Some of these items include the following:

1- An estimate of total man-hours of field effort required.1- An estimate of total man-hours of field effort required. 2- An estimate of reasonable unit costs for various 2- An estimate of reasonable unit costs for various

components of the work.components of the work. 3- Information for allocation of contract costs for owner 3- Information for allocation of contract costs for owner

capitalization and tax con siderations .capitalization and tax con siderations .

- In the event actual bids differ significantly from the fair-cost - In the event actual bids differ significantly from the fair-cost estimate, the manager can often meet with the low bidder estimate, the manager can often meet with the low bidder and compare quantities and scope. Many times this and compare quantities and scope. Many times this comparison can pinpoint the reason for the discrepancy.comparison can pinpoint the reason for the discrepancy.

- This estimate can be of great value to the field construction - This estimate can be of great value to the field construction manager in scheduling work, in reviewing change order manager in scheduling work, in reviewing change order requests, and in determining manpower require ments. requests, and in determining manpower require ments.

3-Definitive estimate.3-Definitive estimate.

- Definitive estimates fix the anticipated cost of the project - Definitive estimates fix the anticipated cost of the project with little margin for error.with little margin for error.

- As contracts are bid on a phased construction program, the - As contracts are bid on a phased construction program, the overall estimated cost becomes more certain if more overall estimated cost becomes more certain if more percent of the contracts have been awarded .percent of the contracts have been awarded .

- Several numerical and statistical methods have been - Several numerical and statistical methods have been proposed and applied for forecasting total cost under runs proposed and applied for forecasting total cost under runs or overruns at various contract.or overruns at various contract.

- Accurate definitive estimates must wait until almost all - Accurate definitive estimates must wait until almost all contracts have been awarded. contracts have been awarded.

- The manager's knowledge of the area construction and - The manager's knowledge of the area construction and bidding practices, area workload, design considerations, bidding practices, area workload, design considerations, and estimating practices will indicate the point at which a and estimating practices will indicate the point at which a reliable definitive estimate can be prepared.reliable definitive estimate can be prepared.

4- Cost report summary.4- Cost report summary.- Cost report summaries describe the actual and forecast - Cost report summaries describe the actual and forecast

status of the project; they generally commence with the status of the project; they generally commence with the preliminary estimate and end when the project is complete preliminary estimate and end when the project is complete and all claims.and all claims.

- In a normal program, cost reports showing estimated cost-- In a normal program, cost reports showing estimated cost-at-completion can be prepared from the committed cost at-completion can be prepared from the committed cost plus estimated costs-to-complete Of or the various plus estimated costs-to-complete Of or the various contracts involved.contracts involved.

- Some owners prefer that the professional construction - Some owners prefer that the professional construction manager perform additional accounting for recorded costs manager perform additional accounting for recorded costs when these are paid as progress payments and Others when these are paid as progress payments and Others prefer to handle this phase them selves and are interested prefer to handle this phase them selves and are interested in the manager's report only to cover total commitments to in the manager's report only to cover total commitments to date and estimated costs-to-complete. date and estimated costs-to-complete.

5- Value-engineering studies.5- Value-engineering studies.-Value-engineering studies help in determining the most -Value-engineering studies help in determining the most

economical approach prior to detailed design. economical approach prior to detailed design.

-If best results are to be obtained, value engineering must -If best results are to be obtained, value engineering must involve a partnership where the professional construction involve a partnership where the professional construction manager, designer, and owner all work together. manager, designer, and owner all work together.

6-Value Engineering Status.6-Value Engineering Status.-- A report showing value-engineering savings approved to A report showing value-engineering savings approved to

date by the owner can keep the results of the program date by the owner can keep the results of the program clearly in focus, and can be of long-term benefit to all clearly in focus, and can be of long-term benefit to all parties.parties.

Field Cost Controls.Field Cost Controls. - Overall cost controls can be developed and administered - Overall cost controls can be developed and administered

either at the job site or in the home office, depending upon either at the job site or in the home office, depending upon the particular project. the particular project.

- Evaluation of plan changes, claims, and other change-- Evaluation of plan changes, claims, and other change-order requirements can often be done better at the job site.order requirements can often be done better at the job site.

-The professional construction management firm's field -The professional construction management firm's field construction manager is also the representative of the construction manager is also the representative of the owner. When drawings are changed, an increase or a owner. When drawings are changed, an increase or a decrease in the contract price may be indicated. The decrease in the contract price may be indicated. The adjustment should be fair to both the contractor and the adjustment should be fair to both the contractor and the owner. owner.

- In one helpful technique, the contract terms require an - In one helpful technique, the contract terms require an itemized breakdown by labor and materials to be supplied itemized breakdown by labor and materials to be supplied by the contractor for all changes, including applicable by the contractor for all changes, including applicable quantities.quantities.

- Whenever possible, the price for a modification should be - Whenever possible, the price for a modification should be settled before the work is performed.settled before the work is performed.

- An important item of field cost control is scheduling - An important item of field cost control is scheduling contractors to avoid interference, delays, and other contractors to avoid interference, delays, and other detrimental effects of one contractor's operations upon detrimental effects of one contractor's operations upon another's.another's.

- In a professional construction management program, the - In a professional construction management program, the owner through his manager is largely responsible for the owner through his manager is largely responsible for the coordination involved among site contractors.coordination involved among site contractors.

SCHEDULE AND PROGRESS CONTROLS BY SCHEDULE AND PROGRESS CONTROLS BY CONSTRUCTION MANAGERCONSTRUCTION MANAGER

1-Control schedules are developed and refined 1-Control schedules are developed and refined through preparation and revision of the overall plan.through preparation and revision of the overall plan.

2-actual accomplishments must be compared with 2-actual accomplishments must be compared with the overall plan if effective control is to be achieved.the overall plan if effective control is to be achieved.

CPM Control Schedule .CPM Control Schedule .

-The Critical Path Method (CPM) is the foundation of the -The Critical Path Method (CPM) is the foundation of the progress control system.progress control system.

-Physical Progress Measurement.-Physical Progress Measurement. Figure 8-9 shows a worksheet for calculating the physical Figure 8-9 shows a worksheet for calculating the physical

percentage complete for a single contract; it is based upon percentage complete for a single contract; it is based upon actual quantities completed during the period. The actual quantities completed during the period. The productivity of the construction forces compared with the productivity of the construction forces compared with the managers estimated can be calculated by comparing actual managers estimated can be calculated by comparing actual hours with calculated hours.hours with calculated hours.!!!!

- Figure 8-10 shows the summary of all contract data entered Figure 8-10 shows the summary of all contract data entered and plotted upon Figure 8-8. For a multifeature project, work and plotted upon Figure 8-8. For a multifeature project, work can be grouped and tabulated by facility as well as by can be grouped and tabulated by facility as well as by contract in order to determine the status of its various contract in order to determine the status of its various components. components. !! !!

MANAGEMENT-LEVEL REPORTING BY CONCRETE MANAGEMENT-LEVEL REPORTING BY CONCRETE CONTRACTOR.CONTRACTOR.

Individual concrete contractors on construction management Individual concrete contractors on construction management projects can range from small to medium sized general or projects can range from small to medium sized general or subcontractors who may often bid other portions of the work subcontractors who may often bid other portions of the work such as some or all of the interior finish or other qualified such as some or all of the interior finish or other qualified specialty.specialty.

Smaller companies may minimize formal reporting methods Smaller companies may minimize formal reporting methods by utilizing the owner or a traveling general superintendent by utilizing the owner or a traveling general superintendent who will oversee several projects using periodic job visits to who will oversee several projects using periodic job visits to manage and control the work.manage and control the work.

At a minimum the on-site manager will normally fill out a At a minimum the on-site manager will normally fill out a daily report on a preprinted form showing the weather, daily report on a preprinted form showing the weather, number of craftsmen and other employees, significant starts number of craftsmen and other employees, significant starts and completions, problems or delays, and other information and completions, problems or delays, and other information to either document the work or to request assistance. to either document the work or to request assistance.

The home office may prepare a weekly unit cost report The home office may prepare a weekly unit cost report from payroll information and quantities supplied by the job from payroll information and quantities supplied by the job superin tendent or engineer.superin tendent or engineer.

Monthly progress reports covering many of the items Monthly progress reports covering many of the items described in the previous section may also be issued. described in the previous section may also be issued.

COST CONTROLS BY CONCRETE CONTRACTOR.COST CONTROLS BY CONCRETE CONTRACTOR.

Overall cost controls mayor may not be integrated with Overall cost controls mayor may not be integrated with schedule control. If the contractor utilizes man hours in his schedule control. If the contractor utilizes man hours in his estimating, he can easily develop an integrated system tailored estimating, he can easily develop an integrated system tailored to his requirements.to his requirements.

Bid EstimateBid Estimate

The contractor maintains an estimating capability in the home The contractor maintains an estimating capability in the home office sized to achieve his planned annual bidding volume.office sized to achieve his planned annual bidding volume.

The estimator first develops a material take-off from the plans The estimator first develops a material take-off from the plans and specifications listing all of the required quantities for labor, and specifications listing all of the required quantities for labor, material, construction equipment and subcontract pricing.material, construction equipment and subcontract pricing.

- When a bid is successful the estimator often acts as the - When a bid is successful the estimator often acts as the project manager to oversee the work from the home office. In project manager to oversee the work from the home office. In this event his first task will be to "buy out" the job by awarding this event his first task will be to "buy out" the job by awarding subcontracts and purchase orders for materials and other subcontracts and purchase orders for materials and other required items.required items.

Cost ReportsCost Reports

The concrete contractor will utilize a weekly unit labor cost The concrete contractor will utilize a weekly unit labor cost report to compare actual unit costs or man-hours with report to compare actual unit costs or man-hours with estimated units.estimated units.

The concrete contractor utilizes a monthly cost report to The concrete contractor utilizes a monthly cost report to tabulate recorded and committed costs plus estimated tabulate recorded and committed costs plus estimated costs to complete in order to forecast estimated costs at costs to complete in order to forecast estimated costs at completioncompletion

SCHEDULE AND PROGRESS CONTROLS BY SCHEDULE AND PROGRESS CONTROLS BY CONCRETE CONTRACTOR.CONCRETE CONTRACTOR.

Figure 8-13. Figure 8-13.