Module 002: Introduction to Construction Project · PDF fileManagement . Module code:...

National Council for Construction Introduction to Construction Project Management Training Manual

Module 002: Introduction to

Construction Project Management

Module code: NCC/WB/004 Level: A +B CPD Points: 4.0 Guided learning hours: 40 Developed for NCC by:

Dr. E. Mwanaumo Prof. M. Muya Dr L. Matakala Ms B. Mwiya Mr C. Kaliba Mr S. Sanga

Aim and purpose The aim of this five day course is to introduce candidates to and equipping them with basic Construction Project Management concepts and skills. Learning outcomes On completion of this module a learner should: 1. Demonstrate the basic skills required in a Project Management 2. Demonstrate understanding of what makes a successful project and why do some projects

fail. 3. Understand the contractor’s project life cycle and activities involved 4. understand The Work Breakdown Structure 5. Demonstrate knowledge of evaluating project budget 6. Demonstrate knowledge of identifying typical construction project risks 7. Demonstrate understanding of organizing the Project Team 8. Demonstrate understanding Project Performance reporting skills

Module Overview Project management is the broader concept from project conceptualisation to closeout. Ideally the training areas for project management should include: project scope and gathering requirements; creating a project plan; assessing project risk; managing multiple projects; managing enterprise-wide initiatives; scheduling, controlling and managing contracts and implementing project management offices for repeatable success throughout the organization. Construction management on the other hand is the essential link between the expression of a client's wishes and the acceptance or occupation of a completed project. It is about ensuring a smooth and uninterrupted transfer from the design process to the end of construction. This module helps delegates understand the basics of the project management application within the construction post contract period. Ideally this should be referred to as the construction management. Therefore in this module, delegates will explore the project life cycle and apply the basic management skills throughout the construction cycle. The module is divided into two sections, the technical aspect of the project management and the Business aspect of project management. These are designed to provide basic understanding and application of project management principles within the construction project life cycle including the important aspect of managing activities on site. Designed for: Construction contractors or employees of construction contracting organizations responsible for managing small to medium construction projects, Active participants on a project team, especially those who have not yet been exposed to project management, but can see themselves moving in that direction.

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INTRODUCTION TO CONSTRUCTION PROJECT

MANAGEMENT

Course Contents 1 TECHNICAL ASPECTS TO PROJECT MANAGEMENT ............................................. 1

1.1 What is a project? ........................................................................................................ 1

1.2 Request for Bids .......................................................................................................... 1

1.3 What is project management? ..................................................................................... 1

1.3.1 Project stakeholders ............................................................................................. 1

2 THE CONSTRUCTION PROJECT LIFE CYCLE ........................................................... 2

2.1 STAGE 1: Defining the project ................................................................................... 3

2.1.1 Defining the project scope ................................................................................... 3

2.1.2 Creating the work breakdown structure (WBS) ................................................... 5

2.1.3 Estimating cost and developing budgets .............................................................. 5

2.2 Planning ....................................................................................................................... 7

2.2.1 Developing a Construction Programme ............................................................... 7

2.2.2 Resourcing ........................................................................................................... 7

2.2.3 Material Ordering................................................................................................. 8

2.2.4 Equipment Usage ................................................................................................. 8

2.2.5 Subcontractors...................................................................................................... 8

2.2.6 Contingencies and float........................................................................................ 8

2.3 Critical Path ................................................................................................................. 8

2.3.1 Constructing a project network plan .................................................................... 9

2.3.2 Project schedule ................................................................................................. 10

2.4 Work Breakdown Structure ....................................................................................... 10

2.4.1 Durations ............................................................................................................ 11

2.4.2 Sequence ............................................................................................................ 11

2.4.3 Schedule ............................................................................................................. 11

2.4.4 Top Down Task Identification ........................................................................... 12

3 MANAGERIAL ASPECTS OF PROJECT MANAGEMENT ....................................... 13

3.1 Project manager ......................................................................................................... 14

3.1.1 Project risk management .................................................................................... 14

3.1.2 Definition of Risk .............................................................................................. 14

3.1.3 Benefits of Proper Risk Allocation .................................................................... 15

3.1.4 Identifying Typical construction project risks ................................................... 15

3.1.5 Project communication management ................................................................. 17

3.1.6 Project quality management ............................................................................... 17

3.1.7 The price of non-conformance ........................................................................... 18

3.1.8 Management commitment ................................................................................. 18

3.1.9 The quality control ............................................................................................. 19

3.2 SKILLS REQUIRED IN A PROJECT MANAGEMENT ....................................... 19

3.2.1 Introduction ........................................................................................................ 19

3.2.2 Operational Management Skills ......................................................................... 19

3.2.3 Project Management Skills ................................................................................ 20

4 PROJECT ORGANISATION .......................................................................................... 20

4.1 Organizing the Project Team..................................................................................... 20

4.2 Close-out ................................................................................................................... 22

4.2.1 General ............................................................................................................... 22

4.2.2 Key Closeout Activities ..................................................................................... 22

4.2.3 General ............................................................................................................... 23

4.3 Planning ..................................................................................................................... 23

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1 TECHNICAL ASPECTS TO PROJECT MANAGEMENT

1.1 WHAT IS A PROJECT? A project is an assignment/task/job that has to be undertaken and completed within a set time, budget, resources and performance specifications designed to meet the needs of stakeholder and beneficiaries For example The Canadian International Donor Agency (CIDA) has donated K7.5 million to provide 3 bedrooms homes to 50 families living in the Kamanga informal settlement. On 6 February 2004, the agency signed a contract with the Department of Housing to implement the project. The following requirements, amongst others were set in the contract: The 3 bedoroomed houses must meet specifications in line with government policy. In order to ensure sustainability and affordability for the 50 families, the head of each

of the 50 families must be given skills development training in small business development

and small business start-up. This is to ensure that the families will be able to afford rentals, maintenance of the homes and to expand their homes to accommodate the growth of the families in the future.

The project must be completed within three years and the handover of the homes to the 50 families must be a high profile public event.

From the example we see:

a clear task - build 3 bedroomed homes for 50 families; a set time – within 3 years; a budget – K7.5 million; performance specifications to meet the stakeholder needs – houses that meet the

specifications in line with government policy, training for the head of each family; beneficiaries – 50 families; stakeholders – donor agency, Department of Housing

1.2 REQUEST FOR BIDS After the details of the project have been developed, the client must request that bids be made. This can involve sending out invitations to bid on projects and posting the opportunity in the media. In some cases, the client will only request bids from a pre-selected list of contractors. In other situations, the bid opportunity may be open to anyone who qualifies to bid on it.

1.3 WHAT IS PROJECT MANAGEMENT? Project Management is the use of knowledge, skills, tools, and techniques to plan and implement activities to meet or exceed stakeholder needs and expectations from a project.

1.3.1 Project stakeholders Project stakeholders are individuals and organisations who are actively involved in the project, or whose interests may be positively or negatively affected by the project. Key stakeholders in the example above include: Project Manager - the individual responsible for managing the project; Project beneficiaries – 50 families who are going to receive the houses;

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Performing organisation – the Department of Housing whose employees are most directly involved in doing the work of the project;

Sponsor – Canadian International Development Agency. In addition to these there are many different typical stakeholders: Suppliers and contractors – e.g. Construction companies, Skills development and

education and training organisations, legal firms, events management company; Project team members and their families; Government agencies – e.g. local municipality. Community representatives and organisations

2 THE CONSTRUCTION PROJECT LIFE CYCLE The project life cycle Projects are usually divided into project stages (i.e., definition, planning, execution and delivery stages) to provide better management and control. Collectively these project stages are known as the project life cycle.

Figure 1 Project life Cycle The project life cycle typically passes through four stages, i.e. definition, planning, execution, and delivery. The starting point begins the moment the project is given the go- ahead (when a contract agreement is signed). Project effort starts slowly, builds to a peak, and then declines to delivery of the project to the customer.

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Definition stage – specifications of the project are defined, project objectives are established, project teams are formed and major responsibilities are assigned. Planning stage – plans are developed to determine the project steps, beneficiaries, timeframes, quality standards and budget. Execution stage – the major portion of the project work takes place – both physical and mental. Time, cost and specification measures are used for control. The project managers have to ensure that the project is on schedule within the budget and meeting specifications. They have to also check if any changes are required. Delivery stage – delivering the project product to the customer, may involve customer training and transferring documents.

2.1 STAGE 1: DEFINING THE PROJECT The three steps described below provide a planned approach for collecting the project information necessary for planning, scheduling and controlling the project. These are:

• Defining the project scope; • Creating the work breakdown structure; • Estimating costs and developing budgets.

2.1.1 Defining the project scope The project scope sets the stage for developing a project plan. It clearly states the project’s objectives and deliverables. Scope definition provides an administrative plan that is used to develop your operational plan, i.e. the plan for how you are going to run the project. Scope definition should be as brief as possible, but complete. Poorly defined scope leads to project failure. The development of the scope must involve the project manager, sponsors, performing organisations and beneficiaries. In summary, close liaison with your customer is necessary to develop a project definition that meets all requirements of the customer. Clear scope definition ensures you will know when a change in scope occurs. A clear project scope definition is the most important requirement for development of your Work Breakdown Structure (WBS).

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SCOPE STATEMENT Project Objective To construct 3 bedroomed house for 50 families in the Kamange informal settlement within 36 months at a cost not exceeding K 7,5 million. Deliverables • 50 finished 3 bedroomed houses as per

specifications laid down by the Department of Housing

• Skills development and training for the head of each of the 50 families

• Hand over the finished homes to the 50 families at a high profile public event

Milestones

1. Permits approved – 5 March 2004 2. Foundations poured – 28 January 2005 3.

Bricklaying, shearing, plumbing, electrical and mechanical inspections passed – 4 July 2006

3. Final inspection of houses – 15 March 2007

4. 50 trainees receive training certificates -15 December 2006

5. Handover to 50 families - 21 March 2007 Technical Requirements 1. RDP homes must meet government

specifications and local building codes 50 trainees must receive recognised certificates after completion of training.

Limits and exclusions

1. The homes will be built to the specifications and design of the original blueprints provided by the Department of Housing;

2. Contractors responsible for work done by subcontractors

3. Site work limited to Monday through Friday, 8:00am to 6:00pm

Customer Review

Representative: Canadian International Development Agency

Signature:

DEFINITIONS Project objectives To define the major objectives of the project Deliverables The expected outcomes over the life of the project – what is it that is going to be delivered Milestones A milestone is a significant event in a project that occurs at a point in time. The milestone schedule shows only major segments of work; it represents first, estimates of time, cost, and resources for the project. Milestones are important control points in the project. They should be easy for all project participants to identify. Technical Requirements A product or a service will have technical requirements to ensure proper performance

Limits and Exclusions

The limits of scope should be defined as they point to what can or cannot be done during the course of the project. Failure to do so can lead to unreasonable expectations and the wastage of resources and money.

Reviews with Customer

Completion of the scope checklist ends with a review with your customer.

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2.1.2 Creating the work breakdown structure (WBS) Once the scope and deliverables have been identified, the work of the project can be subdivided into smaller work elements. The outcome of this process is called the work breakdown structure. All the elements/steps that make up WBS are called work packages. It is very useful as the structure clearly points to what has to be done and in what sequence (order). It divides the work and responsibility into individual work packages which makes it easy for the project manager to manage and monitor the implementation for the project by: making it possible to plan, schedule and budget; providing a framework for tracking and monitoring cost and work performance; defining communication channels; assisting in understanding and coordinating many parts of the project; pointing to problems and ensuring they are quickly addressed

An example

Figure 2. WBS

2.1.3 Estimating cost and developing budgets Project status reports to stakeholders depend on reliable cost estimates and budgets. The accuracy of the cost estimates are good when work packages are clearly defined, as in the WBS example above. At the work package level, estimates should be made by the people

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most familiar with the task. They will give an estimate based on their experience and best judgment. Here are typical kinds of costs found in a project: • Direct costs – These costs are chargeable to individual work package in the WBS.

o Labour o Materials o Equipment o Other

• Project Overhead Costs – represents project costs that cannot be tied to specific

deliverable but serve the entire project. For example, a temporary shed may be set up that will be used to store tools and equipment of various contractors, host the training and the handing over function.

• General and Administrative (G&A) overhead costs – these represent organisational

costs incurred by the firm managing the project. G&A overhead costs are usually allocated as a percentage of total direct cost and may vary from one project manager to another.

The organisation of the budget into these three categories helps control the process and improve decision making. The following is an example of a budget format: Direct Costs Rxxxxxx Obtaining permits R xxxxx Tendering Processes R xxxxx Building Contractors R xxxxx Laying Foundations R xxxxx Bricklaying R xxxxx Shearing R xxxxx Plumbing R xxxxx Electrical R xxxxx Fixtures R xxxxx Skills Development & Training Contractors

R xxxxx

Events Management Contractors R xxxxx Contingencies

R xxxxx

Project Overhead Costs Rxxxxxx Salaries: Project Manager & team R xxxxxx Temporary shed R xxxxxx Travel

R xxxxxx

General & Administrative Costs Rxxxxxx 40% of Total Direct Cost

R xxxxx

GRAND TOTAL

Rxxxxxx

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2.2 PLANNING

2.2.1 Developing a Construction Programme A bar chart or construction programme is a list of activities that are planned to be completed by a particular time. The steps in developing a bar chart are as follows: Step 1: Make an activity list and arrange it into a logical sequence of events at a level of detail that is practical and appropriate. Step 2: Assume a rate of production for each activity taking into account the available resources. This will determine the length of time required for each activity Step 3: Determine the logical sequence in which work is to be carried out. Include any dependencies that might exist, even if these are not at first considered to be critical. Step 4: Draw out the logical sequence on a bar chart. This provides a visual tool to identify what activity is to start, when it is to start, and what needs to be completed before it can start

Figure 3 Project Bar Chart (Gantt Chart)

2.2.2 Resourcing The bar chart can be used to resource the project. The chart presents a logical breakdown and sequence of activities for the project and the timing for and duration of these activities. The resources associated with each activity now need to be identified – labour, materials, equipment, subcontractors, etc. The total resources required for each time period can be worked out by simply adding the resources that are required for each activity that is executed simultaneously. The bar chart can then be adjusted by moving particular activities back and forth in time to reduce the quantity of that resource required to complete all those tasks at the same time or to smooth out the requirements for that resource.

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2.2.3 Material Ordering The contractor can identify from the bar chart when materials are required for a project and order them when needed. The supplier’s lead time and delivery time should be taken into account when the item is ordered so that it can be delivered at the right time. This reduces storage costs and minimises damage to the materials and possible loss due to shrinkage or spoiling.

2.2.4 Equipment Usage The contractor can also identify from the bar chart when equipment must be available on the site and when it can be removed from the site. Allowance must be made for the time it takes to move the equipment from one site to the other site or for the hire company to deliver the equipment. It is important to return hired equipment that is no longer required as soon as an activity has been completed to save costs.

2.2.5 Subcontractors The contractor can use the bar chart to identify when a subcontractor must start their work and when the subcontractor must finish their work. This information can help to schedule the work of the subcontractors and to manage them.

2.2.6 Contingencies and float Whilst it is important to draw up the programme to show the shortest possible time to complete a project not everything on site goes exactly as planned. There are unforeseen events such as rain or people that are absent due to sickness which will delay the work that has been scheduled for a particular day. The contractor should incorporate an appropriate amount of slack time or “float” in order to ensure that there is time allowed to deal with these contingencies. Sometimes the float is shown as a separate activity but more often it is included in the activities themselves, allowing slightly more time than anticipated to complete the work. Many activities automatically have float built in due to the way that they were scheduled. There may be slack time for an activity if there is another activity which takes longer and which starts at the same time. Both activities can be started at the same time but the shorter one will finish earlier or can start later and finish at the same time. The shorter activity can then float between its earliest start date and its latest start date without affecting the critical path of the programme.

2.3 CRITICAL PATH Once the programme has been optimised the contractor will be able to determine the critical path. All the activities that have no float are on the critical path. If any of these activities are delayed, the end date of the programme will be delayed. The contractor must make sure that the programme is updated with current progress because the critical path can change from day to day should a non - critical item take longer to complete than anticipated and thereby changing the critical path of the whole job.

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2.3.1 Constructing a project network plan The project network tool is used for planning, scheduling and monitoring project progress. The network is developed from the information collected for the WBS and is a graphic flowchart of the project job plan. The network shows the project activities that must be completed, the sequences (steps), the interdependencies (how individual steps rely on other steps for completion), and in most cases the times for the activities to start and finish along the longest path through the network – the critical path. The network is the framework that will be used by the project managers to make decisions concerning project time, cost and performance. Once the network is developed, it is very easy to modify or change when unexpected events occur as the project progresses. In summary, the network plan is used to:

schedule labour and equipment; enhance communication that brings together all managers and groups in meeting

the time, cost, and performance objectives of the project; provide an estimate of the time the project will take (duration); give the times when activities can start or finish and when they can be delayed; provide the starting point for budgeting the cash flow (when money needs to be

received and spent on various elements) of the project.

Figure 4 Project Network Plan This project network plan clearly illustrates that:

• Plumbing, electrical and sheathing activities can occur at the same time after bricklaying is completed;

• Start – Foundation – Bricklaying – Electrical – Fixtures - Finish is the longest

path, (critical path) – if one of the activities on this path is delayed then the whole project will be delayed by the same amount of time.

Start Foundation Bricklaying

Plumbing

Electrical

Sheathing

Fixtures Finish

Tendering Skills Training

Event management

Tendering

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2.3.2 Project schedule The project network plan will assist in drawing up a project schedule which clearly defines each task, how long it will take, when it will start and finish. It is an important tool used by the project manager to track and monitor the implementation process. Below is an example of a project schedule. Task Name Duration Start Finish

Start 6 Feb 2004 21 March 2007

Organize Permits 21 days 6 Feb 2004 5 March 2004

Lay Foundations 233 days 24 March 2004 28 January 2005

Bricklaying 207 days 15 Feb 2005 30 Nov 2005

Plumbing 130 days 4 Jan 2006 4 July 2006

Electrical 130 days 4 Jan 2006 4 July 2006

Sheathing 130 days 4 Jan 2006 4 July 2006

Fixtures 89 days 28 July 2006 29 Nov 2006

Final Inspection 54 days 1 Jan 2007 15 March 2007

Tendering for Training 41 days 3 May 2006 28 June 2006

Skills Training 139 days 3 July 2006 9 Jan 2007

Tendering for events management

38 days 8 Jan 2007 28 Feb 2007

Event Management 21 days 1 March 2007 21 March 2007

2.4 WORK BREAKDOWN STRUCTURE The aim of the work breakdown structure is to divide a complex project for which it is difficult to create a schedule into individual tasks that require a clearly defined time to complete. The process starts with the whole project and then breaking it down into major sections, such as site preparation, foundations, structure, electrical, plumbing and finishing. Then divide each of the sections, breaking down site preparation, for example, into tasks such as surveying, grading and excavation. This involves identifying a series of tasks which can assist with determining how long it will take to complete each broken down activity. Breaking the work down into individual tasks without the detail of dates, dependencies, and named resources helps accomplish the following key objectives:

a) Develops an objective, rational view of the amount of work required b) Helps team grasp the skills required and amount of resources required for the project c) Provides a clear framework for assigning to individuals a clear task definition and

delegate the responsibility for completion d) Lays a foundation for analyzing the task dependencies and for isolating and

managing risks

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e) Lays a foundation for developing a bottom-up estimate for the Project Plan

2.4.1 Durations Each task of the WBS often has several components. It is necessary to analyze each project task and determine its total duration. For example, need fixtures and labor for a bathroom installation. You have to add the delivery time for the fixtures to the time it will take to install them, and you can ask your fixture supplier and your plumber for estimates. At the end of this process, you have assigned duration to each task of the WBS.

2.4.2 Sequence Arrange the project tasks of the WBS in logical sequence. Place tasks you can start immediately without prerequisites in a first column. Place tasks that you can start once the tasks of the first column are finished in a second column. Draw a link between tasks to show that a particular task is a prerequisite for another. Continue this process with additional columns until you have assigned all the tasks of the WBS. For very large projects, you have to use a computer program to arrange the sequence of tasks but, if you don't break the work down into too many units of the WBS, you can draw the schedule with pen and paper or with boxes in a spreadsheet.

2.4.3 Schedule You can use the graphical representation of the WBS tasks as the construction project schedule. To finalize the schedule, you can enter a starting date in the boxes in the first column and add the task durations to get the starting dates for subsequent boxes in the sequences. The starting date of the last box in the longest sequence plus the duration of the task in that box gives you the estimated completion date of the project.

a) Begin identifying major work efforts. A key to successful project scheduling is to break down the project work goals into tasks BEFORE you consider delivery dates, resource constraints, or task dependencies. This helps you to objectively identify all of the work necessary without subconsciously leaving out real work in order to fit date constraints. These tradeoffs must be made consciously and with the proper consensus involved.

b) Break the major work efforts into lists of tasks ordered to match your organizational and internal work methodology. Apply top down and bottom up task lists and work for coherency. Engage the project team to analyze and write up the tasks in a sequence of layered task definitions until the detail defines a manageable project. A simple indented list is a good starting point as it goes quickly and is usually translatable into graphical and project management tool formats.

c) The primary objective is to get all of the team participants to contribute to the definition of the work. In practice this usually is done in evolving layers until the tasks represent very specific work by the responsible individuals and of a duration of 1 to 2 weeks depending on the total time of the project. The task duration may have less detail and longer duration if it is clearly understood and represents well-known work in which the team is experienced and successful. The goal in breaking the work tasks down is to ensure that all of the work that is needed to meet the project’s objectives is recognized and planned for from the beginning. The tasks need to be

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identified, assigned to one owner and given completion criteria that are clear and measurable.

d) The hierarchical and logical structuring of work can have many inputs, all of them reinforcing

e) Top down set of high-level tasks initiating a project f) Bottom up task definition by the whole team g) Intermediate task grouping defined by team leaders and functional mangers h) The hierarchy reflects the organizational approach selected to match the project

complexity and the organization's style and management processes. Normally the task identification is around a skill theme applied at the lowest level because that matches best to staffing assignments.

2.4.4 Top Down Task Identification Identify 5 to 10 major work groups, which primarily set up “How” the work is expected to be organized. Identify the next level of tasks (Level 2) and list them under their top-level groups. This can be done with indented lists or graphically in an “Organization Chart” format.

Level 1

Level 2-1

Level 2-2

Level 3-1

Level 3-2

Level 3-3

Indented List Graphical Chart Guidelines for Work Breakdown of Tasks:

− One owner per task − Clear measurable deliverable with measurement specified. − Task duration at lowest level is less than 5% of total time. (e.g. 2 weeks if 1 year; 2

days if 2 months)

Work Breakdown Development Process

Break each major component down to an appropriate level of detail

− details under one component may break into 3 or 4 levels − other components may only require one additional level of detail

More levels of detail are generally required for projects which are:

− larger − more risky − dissimilar to past projects − difficult to define (susceptible to change)

Level 1

Level 2 Level 2

Level 3 Level 3 Level 3

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− performed by internal work groups − planned for the near future

Continue to break the work down until a task list is developed which meets the following criteria:

− one (and only one) owner can be assigned to each of the lowest level tasks − clearly defined outputs are evident for each task − quality can be monitored through performance criteria associated with each output − the tasks communicate the work to be accomplished to the person who is accountable − the likelihood that a task is omitted or work flow forgotten is minimized − each task is well enough defined and small enough so that estimates of duration are

credible − the project is broken down to the level at which you want to track − as a general rule, the lowest level tasks should have durations between two and

twenty days and effort that equates to not more than 1 person week

Often Forgotten Tasks

Project delays are often caused by forgotten tasks, rather than inaccurate estimates.

Remember to include tasks for:

− planning the project − approval cycles − key project meetings − management/customer interfaces − quality inspections/fixing defects − training − management − test planning, development & execution − project reviews and project closing

Task Completeness Tests

1. Status and completion are measurable 2. Clearly defined start and end events 3. Deliverable is clear and quantifiable 4. Cost/Time easily estimated 5. Acceptable task duration limits 6. Activity independence

3 MANAGERIAL ASPECTS OF PROJECT MANAGEMENT

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This section looks at some important aspects that are central to the management of projects. For any project to be successful there has to be a good project manager who is able to provide leadership and bring together different teams to work towards a common objective. In addition to being able to manage people and budgets the project manager must be able to:

1. Identify potential risks and develop back up plans; 2. Effectively communicate with all stakeholders; 3. Ensure quality that meets the expectations of stakeholders

3.1 PROJECT MANAGER The project manager performs the same functions as other managers. The project manager is unique because s/he manages temporary activities and is usually an outsider brought into a business or government department to implement a specific project. A project manager is generally expected to be the projects’ leader who needs to motivate and inspire people working on the project. Project managers are expected to organise resources to complete a project on time, on budget and within specification. They provide direction, coordination, and integration to the project team and are responsible for performance. When things go wrong the project manager’s job is to get the project back on track by working out ways to solve problems and serving as peacemaker when tensions arise. Depending on the nature of the project, there are a number of different groups outside the organisation that influence the success of the project. To be effective, a project manager must understand how these groups can affect the project and develop methods for managing the relationship.

3.1.1 Project risk management Construction is a complex and challenging process. Among other things, it requires interpretation of and compliance with many laws, codes, and regulations; gathering of considerable resources, including labor, equipment, and material; and communications with and coordination among multiple parties, such as the owner, the design professional, other contractors and subcontractors, and suppliers, all of whom may have differing purposes and goals. In addition, many factors are unknown or unknowable at the start of any project. Not surprisingly then, risks are an expected part of this process. Therefore, a prudent contractor (including subcontractors) should be able to understand, evaluate, and manage those risks whenever possible. Besides looking at their own experience, many contractors seek advice from their surety bond producers concerning risk evaluation and management. And contractors should seek the counsel of knowledgeable construction attorneys about risk assessment and management.

3.1.2 Definition of Risk A construction risk can be defined as any exposure to possible loss. Because every construction project is different, each offers a multitude of varying risks. To ensure the success of a project, a contractor starting on a construction project must be able to recognize and assess those risks. And then the contractor must be able to manage those risks.

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Risk identification consists of determining which risks are likely to affect the project and documenting the characteristics of each. For example, the project manager in the house project has to look at each package within the WBS and work out what is likely to go wrong. Once this is done the project manager has to develop a plan of how each problem will be addressed. Risk identification is not a one-time event and should be performed on a regular basis throughout the project. Risk identification should address both internal and external risks. Internal risks are things that the project team can control or influence, such as the performance of contractors, material wastage etc. External risks are things beyond the control or influence of the project team, such as changes in the exchange rate, new government legislation, bad weather etc. A risk management plan should document the procedures that will be used to manage risk throughout the project.

3.1.3 Benefits of Proper Risk Allocation A “reasoned” risk allocation strategy is a “win-win” proposition for all project participants. Such a strategy tries to allocate specific risks based on an analysis of which party is best able to evaluate, control, manage, and assume the risk. Proper risk allocation provides many benefits to the project participants and to the project. It frames positive project relationships, thereby reducing the adversarial outlook characteristic of an “all-or-nothing” or “take-it-or-leave-it” approach and the chance for misunderstanding and claims. With fewer uncertainties caused by unfairly allocated risks, contractors can avoid the addition of cost contingencies in the pricing of project bids and estimates and schedule contingencies.

3.1.4 Identifying Typical construction project risks There are many typical construction risks that might impact a contractor’s success on a project. These lists are not all-inclusive but are intended to help contractors think about the risk management process.

i) Cost related risks: − Tight project schedule − Design variations − Variations by the client − Unsuitable construction program planning − Occurrence of dispute − Price inflation of construction materials − Excessive approval procedures in administrative government departments − Incomplete approval and other documents − Incomplete or inaccurate cost estimate − Inadequate program scheduling

ii) Time related risks:

− Tight project schedule − Design variations − Excessive approval procedures in administrative government departments − Variations by the client − Incomplete approval and other documents

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− Unsuitable construction program planning − Inadequate program scheduling − Bureaucracy of government − High performance or quality expectations − Variations of construction programs

iii) Quality related risks:

− Tight project schedule − Inadequate program scheduling − Unsuitable construction program planning − Incomplete or inaccurate cost estimate − Low management competency of subcontractors − High performance or quality expectations − Variations of construction programs − Unavailability of sufficient amount of skilled labour − Design variations − Lack of coordination between project participants

iv) Environment related risks:

− Tight project schedule − Variations of construction programs − Unavailability of sufficient professionals and managers − Excessive approval procedures in administrative government departments − Variations by the client − Inadequate or insufficient site information (soil test and survey report) − Low management competency of subcontractors − High performance or quality expectations − Inadequate program scheduling − Serious noise pollution caused by construction

v) Safety related risks:

− Tight project schedule − Low management competency of subcontractors − Unsuitable construction program planning − Variations of construction programs − General safety accident occurrence − High performance or quality expectations − Design variations − Lack of coordination between project participants − Excessive approval procedures in administrative government departments − Unavailability of sufficient amount of skilled labour − Unavailability of sufficient professionals and managers

vi) The key risks that influence project objectives:

− Tight project schedule − Design variations − Excessive approval procedures in administrative government departments

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− High performance/quality expectations − Inadequate program scheduling − Unsuitable construction program planning − Variations of construction programs − Low management competency of subcontractors − Variations by the client − Incomplete approval and other documents − Incomplete or inaccurate cost estimate − Lack of coordination between project participants − Unavailability of sufficient professionals and managers − Unavailability of sufficient amount of skilled labour − Bureaucracy of government − General safety accident occurrence − Inadequate or insufficient site information (soil test and survey report) − Occurrence of dispute − Price inflation of construction materials − Serious noise pollution caused by construction

3.1.5 Project communication management Project communication management is about how communication is carried out during the course of the project. Good communication ensures that all stakeholders are regularly kept informed about progress and problems. Project communication management is made up of the following processes: Communications planning - determining the information and communication needs of

the stakeholders: who needs what information, when will they need it, and how will it be given to them;

Information distribution - making needed information available to project stakeholders in an accessible and timely manner;

Performance reporting - Collecting and disseminating performance information. This includes status reporting, progress measurement and forecasting;

Administrative (Project) Closure

- generating, gathering, and disseminating information to formalise phase or project completion

3.1.6 Project quality management Quality is defined as “conformance with requirements”. In the case of the construction industry the requirements are the specifications and contract drawings. These two documents are used by the contractor during the construction phase to assist with the achievement of quality on a project. It is important not to confuse quality with luxury. A house built with face bricks will have a different outcome to one built with stock bricks. The specifications for laying face bricks differ from that of laying stock bricks that will be plastered afterward. Stock bricks do not need to be laid to the high level of tolerances that face bricks are since they will anyway be covered with plaster. The bedding joints do not have to

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be as regular or as neatly executed as those for face bricks. When the walls have been built the result will be a quality job if they comply with the specifications, however, there is a difference in the look, maintenance and performance of the finished product. It is of no use completing a project within the set time and budget if the final product is of poor quality. The project manager has to ensure that the final product meets the quality expectations of the stakeholders. This is done by good: Quality planning - identifying what quality standards are relevant to the project and

determining how to meet them;

Quality Assurance - evaluating overall project performance on a regular basis to provide confidence that the project will satisfy the relevant quality standards;

Quality control - monitoring specific project results to determine if they comply with relevant quality standards and identifying ways to remove causes of poor performance.

3.1.7 The price of non-conformance The cost of all the corrective actions that had to take place due to the contractor’s failure to comply with the specifications is known as the “Price of Non - conformance” (PONC). The reason why a mistake is made is most often because of not checking a drawing to confirm the requirements or not reading the project specifications properly. It is essential to avoid re-doing work because this is a direct cost to the contractor. The cost of re - work extends to: a) Demolition of the work done that does not conform to specification. b) Re - construction of the work done. c) Wasted materials resulting from the work that had to be demolished. d) Delay to work that was programmed to continue directly after completion of the work that

had to be demolished. e) Overheads on site and at head office that are incurred due to the delay. f) Most importantly, the loss of confidence that the employer has that the contractor is

competent to perform the work. It is far better to take slightly longer to do the job right the first time than to rush the work and have to demolish and re - build. The saying “do it right first time” is accurate, but could be enhanced to “doing the right things right first time”.

3.1.8 Management commitment The contractor’s senior management must be committed to improve the quality of the work that the contractor does, otherwise the employees will not believe that it is important to improve the quality of the work that they perform.

a) The quality improvement team A team should be dedicated to run and monitor the quality improvement process. Without consistent monitoring the improvements in quality cannot be measured and where there is no visible outcome the quality improvement process will fail.

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b) Consistency of work and standardisation A contractor may have several sites with different personnel on each of these sites. It is important that the contractor is consistent in the work it produces. It is of little benefit to have one good foreman who always produces a good end result and two other foremen who always battle to hand over projects. The contractor should set up systems and standard methods of approaching the work that they do in order to produce a consistent quality. To do this the contractor might get the “good foreman” to come in and discuss the systems that he uses to ensure that his work runs smoothly, document these systems and then instruct their other foreman to comply with them. If there is a standardised approach and systems in place, there is no excuse for anybody who works within the contractor’s organisation to say that “I thought it was close (good) enough”. Something is either right (conforms to the specifications), or it is wrong (does not conform). However, this does not mean to say that everything must be perfect. Good construction practice allows various tolerances and the contractor should ensure that the work they perform is always within these tolerances. Conformance with specifications means constructing the works within the specified tolerances. Unless the contractor produces consistent quality work it will not be in business for very long. There may be a quick profit on one job but there will be no repeat business if the quality of work is poor.

3.1.9 The quality control Quality control is an essential part of the construction process. By proper planning and careful work any construction project can be completed correctly without having to re - do any of the work that is required. This control over the work to prevent making mistakes is known as quality control. The old adage that “prevention is better than cure” is most definitely applicable in the construction industry. By ensuring that quality work is being done from the start, the contractor ensures that when the work is complete, it complies with the specifications and there will be no call to re - do any of the sections he has completed.

3.2 SKILLS REQUIRED IN A PROJECT MANAGEMENT

3.2.1 Introduction Every project is unique, and most projects will encounter unexpected technical challenges. Each project management team is a group of individuals who need motivation and coordination. Planning is vital, but the ability to adapt to changes and work with people to overcome challenges is just as necessary. A project manager must master the skills that are necessary to be successful in this environment.

3.2.2 Operational Management Skills Often the difference between the project that succeeds and the project that fails is the leadership of the project manager. The leadership skills needed by the successful project manager include all the skills needed by operations managers of organizations. These skills include:

• Good communication • Team building

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• Planning • Expediting • Motivating • Political sensitivity

3.2.3 Project Management Skills Because project managers generally operate in a project environment that is more time sensitive and goal driven, the successful project manager requires additional knowledge, skills, and abilities. Five characteristics of an effective project leader based on some assumptions about projects include the project environment, which is often a matrix organization that results in role ambiguity, role conflict, and role erosion. The project environment is often a fluid environment where decisions are made with little information. In this environment, the five characteristics of an effective project leader include the following:

• Credibility • Creativity as a problem solver • Tolerance for ambiguity • Flexibility in management style • Effectiveness in communicating

The training of project managers is categorized into interpersonal, technical, and administrative skills:

1. Interpersonal skills. These skills include providing direction, communicating, assisting with problem solving, and dealing effectively with people without having authority.

2. Technical expertise. Technical knowledge gives the project manager the creditability to provide leadership on a technically based project, the ability to understand important aspects of the project, and the ability to communicate in the language of the technicians.

3. Administrative skills. These skills include planning, organizing, and controlling the work.

Traditionally, the project manager has been trained in skills such as developing and managing the project scope, estimating, scheduling, decision making, and team building. Although the level of skills needed by the project manager depends largely on the project profile, increasingly the people skills of the project manager are becoming more important. The skills to build a high-performing team, manage client expectations, and develop a clear vision of project success are the type of skills needed by project managers on more complex projects. “To say Joe is a good project manager except he lacks good people skills is like saying he’s a good electrical engineer but doesn’t really understand electricity.”

4 PROJECT ORGANISATION

4.1 ORGANIZING THE PROJECT TEAM There is no single organizational approach to projects. Each project is organized to accomplish the work effectively and efficiently. Several factors influence the organizational approach to execute a project. The complexity profile of a project, the culture of the parent organization, the preferences of the project manager, the knowledge and skills of the team,

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and a parent organization with a project management office are examples of factors that influence the project’s organization. In developing the project organizational structure, the project manager considers the span of control for each manager. The span of control represents the number of people reporting to a manager. For example, the project manager does not want all the engineers on a project reporting to the engineering manager and assigns senior engineers to report to the engineering manager with other engineers reporting to the senior engineers. The engineering manager can organize the engineering reporting structure so that the various engineering discipline managers would report to him or her. For example, the structural, electrical, and mechanical engineering team leaders would report to the engineer manager. On a larger, more complex project, the engineer manager may establish area team leaders and have the structural, electrical, and mechanical engineers report to an area team leader. If the project is geographically dispersed, with the engineering office staff in different cities working on the project, then structuring the engineering function by area provides better coordination and control. Most projects have similar functions that are important to successfully managing the project. Included among these are the following:

• Sponsor • Project manager • Controls • Procurement • Technical management • Quality • Administration

Figure 4 Typical Project Organizations

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4.2 CLOSE-OUT The Project Site Manager will be responsible for the implementation of project close-out procedure.

4.2.1 General The Project Site Manager is responsible for the following activities involved with project close-out involving the following:

• Completing activities related to the close-out of construction. • Completing close-out activities assigned by the Client and Project Director.

4.2.2 Key Closeout Activities The following are the key activities of the close-out process:- • Audit for the compliance with the Record of Decisions - RoD. • Audit for compliance with the Health and safety matters. • Facilities and Equipment commissioning and production of asset registers • Closing out the construction site, including the re-deployment of personnel. • Dismantling or disposing of temporary construction facilities. • Restoring all site areas used for construction facilities to conditions required by local

law or regulation. • Disposing of all property such as spare parts, keys and locks, and construction and

office equipment. • Securing agreement from the Client regarding the disposition of surplus materials

and equipment including financial approval to dispose of assets. • Financial closure including final accounts and signoff by financial directorate. • Payment of all outstanding costs. • Returning keys, closing all petty cash funds, and phasing out all project bank

accounts. • Canceling insurance coverage and bonds as applicable. • Providing Client with plant fixed asset cost records. • Settling all change orders, insurance claims, and freight damage claims, and making

final supplier or contractor payments. • Obtaining waiver of lien and release from all suppliers and contractors and ensuring

that all suppliers have been paid. • Finalising the computation, running, and distribution of all reports. • Archiving of all documentation and Records • Providing Client with as-built drawings, operating / maintenance manuals, and

guarantee / warranty standards as required by the contract, including documents and records in electronic format when required.

• Returning Client or licensors all confidential drawings and documents. • Issuing internal project close-out notice to all client departments. • Transferring all project records and documents to be retained to client’s document

control department and disposing of any unwanted documents in accordance with document handling procedure.

• Utilities (phone, gas, electricity, etc.) shall be disconnected or transferred to Client as part of the close-out effort.

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4.2.3 General

Project Closeout shall include a full synergy of the following areas: • Technical closure; • Administrative closure; • Financial closure • Archiving files

4.3 PLANNING After the bids have been thoroughly reviewed and evaluated, the client will award the contract to one bidder. In most cases, the bidder with the lowest bid wins. In some situations, the bidder will be awarded the contract not only on price but other factors as well. For instance, the client may be inclined to go with a more reputable contractor or with those where a prior relationship exists.

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