Geomatics Canada- Case Study
The lecture provides information about various aspects of project planning and the rationale behind the accomplishment of each of the tasks associated with the project planning phase. Cost planning is described as being essential towards understanding and managing the overall project costs. It is important for all the cost needs to be understood for costs to be allocated efficiently. An example of a hotel building is given where the number of rooms has to be known, as well as the design of the various rooms to allocate costs effectively. Feasibility analysis is said to be more intensive than the cost planning in that it is more encompassing, entailing revenue as well as costs while the cost planning involves only costs.
The project group discussed works on various construction assignments and targets various types of clients. The group offers consultancy services in construction services such as building development. The range of customers accessed by the group includes governmental and non-governmental organizations, banks e.t.c. The services have to be offered within a particular time frame depending on the urgency of the need. The range of services offered on consultancy basis include property valuation, cost planning, and feasibility analyses for projects. The group offers consultancy services as a business from which the revenue is received hence each project has to cater for the all the costs inclusive of the consultancy costs. The private sector also forms an essential part of the group’s potential customers.
The stakeholders with whom the group interacts are many. First, the building developers form the key stake holders. In most cases, the consultants are contacted by banks and other development firms for their services. The interaction is such that the developers give clarifications in what they desire in the final project. Another class of stake holders in the projects is the building designers. The consultants have to work under the constraints placed by the design team. Besides the project owners and the design team, other stake holders also include various specialists with whom the company interacts such as the architects, engineers and project personnel. In order to manage the relationships with the stake holders effectively, the company ensures that all information needed is obtained only from relevant sources. For instance, an architect would only be asked questions relating to their line of duty. This is to avoid instances of wrong decision making based on low quality information.
The cost planning process discussed in the lecture is considered to be one side of a project planning expenses analysis. The cost planning process reflects the documentation available through the project and can be either summary or detailed depending on the scope of the project. Part of the documentation offered in cost planning by the group is the building drawings which are often labeled to indicate the dimensions of the various sizes associated with the building. Room has to be left in case there is need for significant expansion in any direction. The cost planning entails a dynamic process that is based on the provision of cost estimates at any point in the project life cycle. The preparation of the estimates takes into consideration various concepts such as the expansion capability, collaboration with the building designers, cosmetic aspects of the building and pricing of various materials used and how each of the costs can be optimized. It is essential that the applications of each of the materials budgeted for be considered i.e. where will each material end up?
The cost plan is considered as a forecast of the entire project costs rather than the construction costs, and the initial estimates generally end up to be approximately half of the final costs. Various indices are used in cost estimations for building, the most common being the CPI index. Health and safety standards are also considered rigorously in calculating the cost estimates since these also lead to additional costs being incurred. Market conditions are also essential since the consideration of cost estimates entails a projection of the potential revenue of the building. Contingencies considered in estimating costs include construction contingencies, documentations and others which comprise of additional costs in the construction process. The contingency costs vary in terms of the percentage of overall cost which they cover. The variation in percentage is in terms of both the contingency types and the type of construction order. This implies that the overall cost estimates have to be representation of the total costs. The assumptions applied in cost planning must also be reviewed and presented in documentation as they influence the key costs incurred in the project.
Some assumptions may include exclusions from the cost plans such as potential termination, escalation of prices, GITs e.t.c. Factors such as budget change also emerge during the project management process. Besides the general construction costs, it is critical for the consultants to consider other costs such as authority costs, energy and air services, and environmental management costs. All these contribute to the overall costs. The authorities’ costs include costs charged by governmental authorities for various reasons. Also, cost escalations are also important for the long term sustainability of the project and are considered by the company. The cost escalations normally come about as a result of tender costs among other costs. Besides the tender cost escalation, the process costs may also experience escalations due to various reasons. The escalations in costs are catered for during cost planning through an inclusion of additional costs that may be up to 4 percent of the overall costs.
The company works on tenders that take approximately 21 months with about 4 months for project designs. The consultants take about 40 percent of the project cost for any of the projects worked on. It takes almost 3 months for preparation prior to the design process. The projects have be within the project management scope since the consultancy services offered are a prerequisite to project management. With a variation in the potential customers, the nature of the projects worked on also varies significantly. However, the company mainly settles for well paying construction projects.
In cost planning, the company considers various building elements such as doors, roofs, and floors to determine the overall costs. The cost estimates are then calculated depending on the costs of individual elements which add up to the overall costs. It is imperative that the consultants know the features of each of the building elements prior to cost planning as this enables them to give the right estimates post consideration of factors such as size, and additional features e.g. color and weights. The total number of elements considered is 47, with other 50 being in the global construction market.
The major risk faced in the project management is financial risk. The risk comes about mainly due to the existence of cost margins within which the consultancies have to be done. The company risks incurring additional costs due to escalations and price inflations for various items. This may potentially result in extra costs within the budget. To address this problem, the company includes an additional cost margin in the budget to cater for any additional costs. Moreover, cutting costs in various aspects such as labor may also be necessary in addressing additional costs. Although this is a positive alternative to reducing costs, it may also lead to the failure of the project team to meet the project deadline. The project management risks faced by the company can therefore be described as time overlap and labor overlap. More time taken in construction results in less costs incurred, while higher costs are incurred for shorter project times.
Bench marking is essential in the company’s operation as project managers. Bench marking gives the company a basis for reference in carrying out its business activities. In bench marking, the company looks at the project time and the cost discriminator. The two aspects limit the project scope and provide bases for measurement of the project progression. Based on the scope of the project and the total project time, the company prepares a project timeline which enables the achievement of the project objectives to be within the confines of available finances and time limitations. The cost plan must be within the budget limits to enable the company to confirm positive performance. Consistency is one of the keys of appropriate application and consideration of the bench marks placed.
Part 2: Critical Path Scheduling
For any project to be successful, the management process must include a schedule around which all project activities revolve. Several scheduling techniques have been in use over the past years in project management operations. Each of the schedules in use aim at aligning the project deliverables to the available project time and the project costs. One of the most applicable scheduling techniques in construction works is the Critical Path Method (CPM), which is used by project managers worldwide. For instance, in a construction consultancy firm in which I recently did my internship, this method was widely used among the project management team with high levels of effectiveness. The key success factors for project management planning in any organization and for any project include: contractor and end user benefits and the level at which the project planning goals have been met (Dvir et al 2003). Each of these objectives can only be achieved successfully based on the effectiveness of the schedules used in the planning.
Besides the allocation of dates to various project activities, the project schedule is also used to allocate resources to their needs. Materials, equipment and labor availabilities can be efficiently matched to their needs within the project scope using the project schedule. Strong project schedules can aid in the achievement of project objectives without any qualms while poor schedules result in ineffectiveness in the project performance and can result in immense losses during the project timeline. Although formal scheduling procedures are disliked by many project supervisors and other personnel; it has been proved to be effective in projects management as well as in the accomplishment of project goals. It is because of these reasons that my internship company always insisted on the use of formal procedures in project scheduling. This helped a great deal in dealing with instance of potential loss to the project as well as in ensuring that all individuals responsible for various roles during various stages of the project performed their duties efficiently and on a timely basis. This is based on the awareness that the project schedule displayed the roles assigned to each of the individuals at any given time together with the costs associated with each stage.
In applying the critical path method to scheduling, my project manager always insisted on the consideration of all factors that may contribute to the expenditure of more time in the project. The critical path schedule took the longest time possible for the completion of the series of activities involved in the project. Consequently, this method can be said to be time based rather than resource based. Each of the activities to be carried out depended entirely on the available time frame and their completion was based on the consideration of all potential risks to the activity.
The choice of this scheduling technique as a subject for this reflective essay was informed by its wide application. In the construction industry, most of the consultancy firms use this method due to its flexibility. In scheduling, construction firms prefer the CPM of scheduling since it gives them an opportunity to work within the available resource constraints through the assumption of a predecessor relationship between activities. Based on this foundation, I believe that a discussion of this scheduling technique is warranted. Moreover, by comparing the theoretical information obtained from secondary sources with first hand information obtained through field experience, it is believed that the report will provide detailed information on the applicability of CPM to the construction industry, which will be widely referenced.
Advantages and disadvantages
A critical strength associated with CPM scheduling is that it gives the project managers optimum time for the completion of the project. This means that all possible constraints are taken into consideration hence reducing the risk of failure to complete the project in time. Any activity is planned and scheduled only following the consideration of all the challenges that may be faced in carrying out the activity as well as all the resource constraints that may be experienced. Secondly, CPM is flexible in that following the activity scheduling based on the most critical paths, each of the activities may take more or less time depending on the time spent on other activities. For instance, if not challenge or constraint is faced in one activity, the time saved in its completion can be added to the scheduled time for another activity. Other advantages include the ability of CPM based schedules to be presented diagrammatically, the ease with which the technique is understood and applied and the ability of the critical path based schedules to be programmed and simulated using computer systems. The technique is easily understood due to the critical nature of its underlying principle. Similarly, the ability to be programmed and simulated makes it possible to predict the outcomes of the prepared activity schedules and to make decisions based on these outcomes. This also makes it easy for this method to be used in scheduling as the process can be automated.
Apart from the aforementioned advantages, CPM scheduling has also been said to make dependencies between project activities visible. This is accomplished through the construction of project network diagrams which are easy to read and understand and which visually depict the dependencies (Sharma and Bowen 2013). In addition, resource allocation efficiency is also improved through the use of CPM scheduling as the project management sees the impacts of revising schedules and are thereby encouraged to reduce schedule durations. Critical path scheduling is effective in planning complex projects with high dependency levels since it allows a systematic approach to be taken towards the scheduling process.
On the other hand, the major disadvantage associated with the critical path method of project scheduling is that it limits the ability to extend activity durations since it takes into consideration all constraints and the allocated time is the maximum possible allocation for each activity. This implies that without an alternative source of time such as an early completion of an activity, the project manager has not opportunity to extend deadlines. Also, for complex and large projects, printing the project network diagrams may pose a significant challenge.
Drivers and barriers
The key driver to the application of the critical path method is the flexibility of scheduling using this method. In its application, the critical path method enables the project activities to be accomplished less precisely in accordance with time. What this means is that the activities may be accomplished in less time than expected. Moreover, project durations may be changed where there is need as long as the overall time duration is adhered to. Furthermore the impacts of any schedule variation experienced can be measured as well as the degree of deviation from the original schedule (Devaux 2014).
Another key driver to the application of this scheduling technique is the ability of the project management to engage in the consideration of crash durations for activities. This is whereby activities are completed in the shortest time possible rather than the longest time possible resulting in shorter overall project durations. Another driver is the expansion capacity of this scheduling technique. Resource leveling can lead to the creation of logical dependencies between the newly created nodes and the previously existing ones (Devaux 2014). This expandability makes the CPM scheduling method the process of choice amongst construction project managers. It is because of these factors that the management at my former internship company preferred to use this method in scheduling. The only barrier to its application was the difficulty involved in printing and reading project network diagrams for large and complex projects.
With the continued application of computers in project management and project planning, many construction companies have shifted to the application of computers in project scheduling using the critical path method. An essential example is my former company, which was previously doing their scheduling by hand. The company has continuously adopted computer prepared schedules based on the critical path method. This has made their work more effective as well as dependable since the level of accuracy has improved significantly. Moreover, the number of individuals assigned to the preparation of project schedules has continued to reduce with the application of the computing concept to project scheduling. It is projected that in the coming years, the application of CPM will shift completely from the physical realm to the virtual.
Devaux S A 2014. Managing Projects as Investments: Earned Value to Business Value. CRC Press
Dvir D, Raz T and Shenhar AJ 2003. An empirical analysis of the relationship between project planning and project success. International Journal of Project Management 21, 89-95.
Sharma R and Bowen R 2013. Advantages and Disadvantages of Critical Path Method. Retrieved from http://www.brighthubpm.com/project-planning/60960-advantages-and-disadvantages-of-critical-path-method/