Professional Documents
Culture Documents
by
C.W. Ibbs
&
Walter E. Allen
A Report to
The Construction Industry Institute
The University of Texas at Austin
from
University of California
Berkeley, California
May 1995
Reviewed by CII 23Jun04
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TABLE OF CONTENTS
List of Figures. . . . . . . . . . . . . . . . . . . . . . . . . .
iii
List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . .
iv
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . .
Chapter 1
Introduction . . . . . . . . . . . . . . . . . . . . .
1.1
1.2
1.3
1.4
1.5
1.6
Introduction . . . . . . . .
Nature of Study. . . . . . .
Purpose and Objective of the
Research Methodology . . . .
Chapter Summaries. . . . . .
Composition of Task Force. .
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Chapter 2
Literature Review. . . . . . . . . . . . . . . . . . .
2.1
2.2
2.3
2.4
2.5
Introduction . . . . . . . . . . . . .
Project Change Analysis. . . . . . . .
Project Change Management and Control.
Claims and Legal Issues. . . . . . . .
Construction Labor Productivity. . . .
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Chapter 3
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3.1
3.2
3.3
3.4
Introduction .
Data Gathering
Data Gathering
Project Data .
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Chapter 4
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4.1
4.2
4.3
4.4
4.5
4.6
4.7
Introduction . . . . .
Hypothesis 1 . . . . .
Hypothesis 2 . . . . .
Hypothesis 3 . . . . .
Questionnaire Analysis
Statistical Analysis .
Research Findings. . .
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Study
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Questionnaire
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4.7.1
4.7.2
4.7.3
4.7.4
Hypothesis 1 Findings.
Hypothesis 2 Findings.
Hypothesis 3 Findings.
Qualitative Findings .
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37
50
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55
Chapter 5
57
5.1
5.2
5.3
5.4
5.5
5.6
Introduction . . . . . . . . . . . . . .
Total Project Contingency Draw-Down. . .
Project Change Ratios. . . . . . . . . .
Relationships Between Project Change and
Family of Curves for Schedule Recovery .
Project Budget Recovery. . . . . . . . .
57
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68
73
Chapter 6
76
6.1
6.2
6.3
6.4
Introduction . . . . . . . . . . . . . . . . . .
Hypotheses Findings and Recommendations. . . . .
Change Measurement Findings and Recommendations.
Summary. . . . . . . . . . . . . . . . . . . . .
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76
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Research Questionnaire . . . . .
Cited and Un-Cited Bibliography.
Summary Tables & Graphs. . . . .
Glossary . . . . . . . . . . . .
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82
98
103
132
APPENDIX
APPENDIX
APPENDIX
APPENDIX
A
B
C
D
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Schedule Overlap
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LIST OF FIGURES
Figure
Title
Page
1.
2.
3.
4.
5.
6.
7.
8.
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10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Questionnaire Respondents . . . . . . . . . . . . . . . . . .
Total Installed Cost (TIC) Distribution For All Projects Submitted
Types Of Project Owners Participating In Research . . . . . .
Type Of Construction For Projects Submitted . . . . . . . . .
Types of Projects Analyzed. . . . . . . . . . . . . . . . . .
Breakdown For Design/Build Projects . . . . . . . . . . . . .
Breakdown For Design/Bid/Build Projects . . . . . . . . . . .
Project Schedule Length . . . . . . . . . . . . . . . . . . .
Analysis I Constr. Change vs. Constr. Productivity. . . . . .
Project "S" Curves & Total Project Contingency Draw-Down. . .
Engineering Change (Final Cost/Initial Cost). . . . . . . . .
Construction Change (Final Cost/Initial Cost) . . . . . . . .
Total Project Change (Final Cost/Initial Cost). . . . . . . .
Engr. Change vs. Schedule Overlap . . . . . . . . . . . . . .
Const. Change vs. Schedule Overlap. . . . . . . . . . . . . .
Probability of Engineering Schedule Recovery. . . . . . . . .
Probability of Construction Schedule Recovery . . . . . . . .
Probability of Total Project Schedule Recovery. . . . . . . .
Probability of Finishing Over-Budget (Total $). . . . . . . .
iii
19
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59
61
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74
LIST OF TABLES
Figure
Title
Page
1.
2.
3.
4.
5.
6.
7.
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9.
10.
11.
Summary
Summary
Summary
Summary
Summary
Summary
Summary
Summary
Summary
Summary
Summary
Of
Of
Of
Of
Of
Of
Of
Of
Of
Of
Of
Statistical
Statistical
Statistical
Statistical
Statistical
Statistical
Statistical
Statistical
Statistical
Statistical
Statistical
Tests
Tests
Tests
Tests
Tests
Tests
Tests
Tests
Tests
Tests
Tests
For
For
For
For
For
For
For
For
For
For
For
I st Hypothesis. . . . . . .
I st Hypothesis (Continued).
I st Hypothesis (Continued).
I st Hypothesis (Continued).
I st Hypothesis (Continued).
2nd Hypothesis . . . . . . .
2nd Hypothesis (Continued) .
3rd Hypothesis . . . . . . .
3rd Hypothesis (Continued) .
3rd Hypothesis (Continued) .
3rd Hypothesis (Continued) .
iv
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vi
CHAPTER 1
INTRODUCTION
1.1
Introduction
Project change during the detailed design and construction phases leads
to major disruptions of planned schedules, work methods, productivity and
overall project performance.
Research that focuses on the quantitative impact that change has on the
detailed design and construction phase of projects is limited. This study
expands the body of knowledge concerned with project change during detailed
design and construction.
In the aspects of labor productivity and schedule
recovery, the study has developed graphs to measure or compare project
change.
1.2
Nature of Study
1.3
The third and final hypothesis was developed late in the study:
The Cumulative Change Effect (&) increases proportionately to the amount
of change on a project.
The research team defines the Cumulative Change Effect, as the amount of
change exhibited on a project arising from multiple changes being implemented
over the course of an entire project. Cumulative change effect (&) is
widely understood to exist in the industry but difficult to quantify.
1.4
Research Methodology
o
o
o
Projects should have a Total Installed Cost (TIC) over $10 million
Project should have been completed within the last five years
Projects could be either domestic or foreign so long as costs and
performance were not greatly influenced by currency exchange
Analysis number
Variables to be tested and data source
Number of observations
Simple statistics (Mean, Standard Deviations)
Correlation analysis (Coefficient and Significance Level)
Regression analysis (Best-fit line)
All the graphs and charts developed from this research are provided at
the end of the report in Appendix C Summary Tables & Graphs.
1.5
Chapter Summaries
1.6
Company/Organization
Anheuser-Busch Companies, Inc.
Bechtel Petroleum, Chemical & Industrial Co.
Bechtel Petroleum, Chemical & Industrial Co.
Bechtel Corporation
BGP Services/Belcan Engineering Group, Inc.
Exxon Chemical Company
Graycor, Inc.
Hoechst Celanese Corporation
John Brown E&C
MK Ferguson Company
Merck & Co., Inc.
Mobil Research & Development Corporation
Ontario Hydro
Tennessee Valley Authority
University of California - Berkeley
University of California - Berkeley
University of California - Berkeley
*Research Subcommittee
CHAPTER 2
LITERATURE REVIEW
2.1
Introduction
65%
30%
5%
three, has a
research
are more
by heavy
The Hester research in fine and gross motor skill productivity impacts
is further supported by an article written in the Canadian Journal of Civil
Engineering Impact of Change Orders On Construction Productivity , [Moselhi
91]. This article also supported some of our findings in stating that few
contractors maintain adequate job-site records to allow evaluation of impact
costs for individual change orders. In addition, some contractors do not
realize that they have incurred impact costs until final profit and loss
statements indicate a sizable loss. Oklahoma State University completed a
research project that examined the Early Warning Signs of Project Change
[Zeitoun 92]. This research focused on identifying factors that are known
prior to the commencement of construction, for the purpose of providing early
warning signs of project cost and schedule growth. The research analyzed
fixed price and cost reimbursable projects separately.
The Oklahoma State University study identified seven early warning signs
which exhibited statistical correlation with end of project cost and schedule
growth:
o
o
o
o
o
o
o
10
One
cost and
specific
were not
The researchers did accredit project cost and schedule growth to project
change.
For 71 of the fixed price projects, the average cumulative cost
growth was 11.5% and the median cumulative cost growth was 8.6% at the end of
the fourth quarter.
2.3
11
The greatest amount of resources and research have been directed towards
identifying the causes of construction claims [Mitchell 82], [Rubin 89],
[Simon 89]. Throughout the literature the terms change orders, disputes and
claims are loosely used interchangeability. Task Force 43 adopted a more
precise terminology.
Project change orders are defined as the mechanism to recognize,
evaluate, implement and (ideally) continuously improve change order
management from the lessons learned during project execution.
Change
orders are the first step in reducing the negative impact of project change.
The American Arbitration Association has developed a wealth of
information and research related to dispute resolution. One publication
which lays out the dispute process for the construction industry is The
Contract Dispute Resolution Continuum, Part V, ADR: A Practical Guide to
Resolving Construction Disputes, [Kellogg 91].
12
13
14
15
CHAPTER 3
DATA COLLECTION AND GENERAL ANALYSIS
3.1
Introduction
16
17
2)
clarify interpretations
3)
18
3.4
Project Data
The Total Installed Cost (TIC) for project submitted range from a low of
$3.2 million to a high of $1.2 billion. Most of the projects were in the 0
to $100 million range (80.8%) with the biggest percentage in the $50-100
million range (25%). The largest percentages of projects over the $100
million threshold had a project range between $150-400 million (13.4%). Only
a few projects broke the $400 million barrier (2%).
TIC was one of the research project criteria for selecting submitted
projects. We requested that submitted projects have a TIC over $10 million.
Ninety-two percent of the project submitted did meet or exceed the TIC
criteria. Eight projects had TIC less than $10 million and of these three
were less than $5 million. A complete distribution of projects submitted can
seen in Figure 2.
There are 12 projects in which companies reported filling more than one
role during the project. For example, an EPC contractor that also had
Construction Management responsibilities or an owner that completed the
engineering and design portion of the project in-house is sometimes reported
in two categories. In these cases each role was recorded separately.
Most of the questionnaires and data submitted for this research project came
from the private sector. All the EPC, Engineering/Design, Construction
Managers and Contractor organizations are in the private sector. Private
industry owners represent 87% of the total sample size. The remaining
questionnaires submitted by owner organizations represent 11% from government
agencies and 2% from organizations that were joint public/private
partnerships or some other joint responsibility for project success. See
Figure 3.
There was about a 60/40 split between projects that were New
Construction and Revamp (Renovation). The specific percentages were 57% for
New Construction and 43% for Revamp projects. Figure 4 further illustrates
the difference in project type.
The projects and data submitted came from a broad cross-section of the
industrial private sector. The four leading types of projects submitted for
this research came from the following industries:
o
o
o
o
Refinery
Manufacturing
Petroleum/Natural Gas
Pharmaceutical/Chemical
Lump Sum and Cost + (Fixed or %) Fee comprised 75% for Design/Build Projects
submitted. Similarly the majority of projects submitted under the Design/
Bid/Build (50%) contracting strategy came from the Lump Sum and Cost + (Fixed
or %) Fee. It seems that the major difference in the two analyses and
charts, is the difference in combinations and unknown projects that could not
be easily classified.
24
CHAPTER 4
RESEARCH HYPOTHESES AND ANALYSES
4.1 Introduction
This research has three hypothesis. Hypotheses 1 and 2 were developed prior
to starting the research, and Hypothesis 3 was developed as a result of
conducting this research. They are:
1.
2.
3.
27
4.2
Hypothesis 1
28
29
engineering labor
construction labor
permanent materials
other expenses
Question 13 (or Q13) was the Final Control Budget (FCB) recorded at the end
of the project and consisted of the same four parts that made up OCB but at
project completion.
4.3
Hypothesis 2
The core concept for Hypothesis 2 is that greater amounts of change have
greater negative impacts on project performance. This hypothesis in effect
refers to the ripple effect of project change. Research published which
postulates the existence of such ripple effects includes [Oglesby 89],
[Thomas 90] [Halligan 94], [Hester 91] and [Zeitoum 92]. None of this
research, though, presents quantitative data from a large and broad number of
actual jobs.
To test this hypothesis, we measured productivity by using labor-hours
and defining productivity as:
Productivity Index = Earned Workhours
Expended Workhours
The Productivity Index (PI) is for those activities having measured
productivity. This is consistent with CII s definition of productivity [CII
2-3]. PI greater than 1.0 is favorable; less than 1.0, unfavorable.
30
during engineering
engineering
during construction
labor-hours
31
4.4
Hypothesis 3
32
These variables listed above lead to the development of the formula to test
Hypothesis 3; which is:
(&) = Final Cost (Q0) - Final Control Budget (Q13) - Known Change Final Value
(Col.7)
The (Q0) represents question zero on the questionnaire which is the
total cost information requested in the overall project description on the
first page of the questionnaire. Similarly (Q13) represents question 13 on
the questionnaire which requested the project s final control budget.
(Col.7) denotes the seventh column on Page 11 of the questionnaire table,
which requested the project s Known Change Final Value.
33
The Berkeley research team postulated that both positive and negative
project change impact overall project productivity. The reasoning behind
this assertion is that project change which may add or subtract from a
project s initial scope or original budget will nevertheless have
repercussions. Examining a number of project changes over the course of
project execution, positive and negative change could cancel each
other out or result in a net change of zero. Both the absolute and net
values of & therefore were examined for Hypothesis 3 to determine the total
effect of project change.
Total Project Change, Construction Change and Engineering Change were
tested to validate Hypothesis 3. The specific analysis and relationship
graphed are:
12-1
12-2
12-3
12-4
12-5
34
during engineering
engineering
during construction
labor-hours
4.5
Questionnaire Analysis
35
Statistical Analysis
36
4.7
Research Findings
Hypothesis 1
Hypothesis 2
Hypothesis 3
Tables 1-5
Tables 6-7
Tables 8-11
Hypothesis 1 Findings
37
These listed variables and criteria used to track and quantify change
for Hypothesis 1 will assist in change management. If additional research
focuses on these variables at the start of projects, sets the analysis
foundation, and carries the analysis through project execution and start-up,
then the benefits to the construction industry would be advantageous.
49
4.7.2
Hypothesis 2 Findings
50
51
Hypothesis 3 Findings
52
Re-testing the same relationships but taking the absolute value of & did
not change the test that failed or passed the statistical significant test.
The absolute value test did change the relationship between & and the amount
of project change. The absolute value relationships resulted in & becoming
larger and project change becoming larger. This shows a direct relationship
between & and project change.
We surmise that the difference between the non-absolute and absolute
values for & is caused by an undercounting or canceling out of change caused
by reductions and additions in project scope. Taking the absolute value of &
handles all change as an impact on total change. The non-absolute value of &
results in positive and negative change canceling each other out or reducing
the total change impact.
An analysis of mean absolute values for &/FCB and project change
provided additional information in identifying the hidden costs of project
change. The ratio of &/FCB for all tests is approximately 13%. The
evaluation of project change for the engineering and construction phase was
16% and 12%, respectively. Project change for all test ranged from a low of
9% to a high of 38%.
Both the low and high percentage of project change were identified when
evaluating total project change. The primary difference between the two
evaluations is how total change was calculated. Total Change ($) or Column 7
was used for one analysis and Change % Growth in Forecast Labor-Hours or
Column 4 from Page 11 was used for the other analysis.
54
We believe that the Total Change ($) value is the more accurate data
source. An analysis of the correlation coefficient for calculations that
PASS , indicates that the Total Change ($) coefficient is almost twice as
close to one (1) when compared to Change % Growth Labor-Hours. Also, another
analysis conducted to test the hypothesis used Column 7 for the calculation
of total change and resulted in identical mean values.
4.7.4
Qualitative Findings
55
56
CHAPTER 5
PROJECT CHANGE MANAGEMENT ANALYSIS
5.1
Introduction
Other analyses were performed after the three hypotheses were tested
because of the wealth of information contained in the database. The first
analysis evaluated schedule completion against contingency draw-down. This
analysis was conducted to determine the mean rate of contingency draw-down
for a number of projects.
The second analysis developed project change ratios by examining initial
and final facility forecast costs. The ratio (final facility
forecast/initial facility forecast) was examined for 1) engineering, 2)
construction and 3) total project change. These ratios provided a mechanism
to evaluate project change during each of the three phases.
A third analysis was conducted that examined project change in relation
to the amount of schedule overlap. Schedule overlap is defined as the
construction percentage complete when engineering design finishes. Also,
other analyses were performed to evaluate the probability of a project having
on-time performance and going over budget.
All the analyses were conducted to identify trends and common
characteristics of CII-submitted projects. These analysis can be used to
make inferences about project performance and characteristics throughout the
construction industry.
57
5.2
58
5.3
Data from 64 projects was used to develop the project change ratios.
Three charts were prepared for the analysis. One for each phase:
engineering, construction and total project performance.
Column 5 -- Facility Cost Forecast on Page 11 was used exclusively for
the analysis. This column represents the overall project facility cost
forecast. The forecast includes all costs related to the EPC process, i.e.,
engineering, construction, contract administration and management expenses.
From column 5, the initial and final values were analyzed. The initial
value indicates beginning facility costs and final column value that
represents end of project. The change ratio (Final Value/Initial Value)
was developed to compare the amount of change on a total project or within a
project phase.
If the final and initial values were identical, it was assumed there was
no recorded change on the project. If the final value was bigger than the
initial value, we postulated that project change was represented by
the percentage that the ratio was greater than one (1). For example, a
project that had an initial facility cost forecast of $61,900,000 and a final
facility cost forecast of $66,000,000 would be represented in the change
ratio as $66,000,000/$61,900,000 = 1.06. Consequently, this project had 6%
change.
An analysis of engineering change revealed that most of the projects had
less than 4% project growth. Over the entire change ratio range, 70% of the
projects reduced engineering scope by 5% or had project growth of 11% (the
second, third and fourth bars in Figure 11). The range or amount of change
recorded for the engineering phase is somewhat significant. However, it is
significant when acknowledging the downstream or compounding impact that
engineering change has on construction and total project performance. The
entire change ratio chart for engineering is presented in Figure 11.
60
The total project change ratios were fairly distributed throughout the
full range of project change. Comparing the total change ratios with
engineering and construction ratios reveals three interesting points
(Figure 13).
The first significant point is the lower percentage of projects that
exhibited no change or less than 4% project growth. This percentage steadily
declined from a high of 39% in engineering to 34% in construction
and a low of 23% for total project change. (The fact that total change is
less than engineering and construction changes is due to a canceling out
effect between the two phases.) Four of the projects in the database showed
no change in engineering, construction or total project and may be suspects
for inaccurate data. On the other hand the projects could have been managed
by exceptional project managers. Whatever the case, it can be shown through
change ratios that the probability of project change is very high.
62
Two other points further amplify the high probability of project change
and the significant impact that change has on project performance:
1)
Thirty-seven percent of the projects exhibited reduction in cost,
and 29% exhibited growth in cost beyond 5%. Twenty percent of change on a
project is a considerable amount of project change. In terms of project
cost, 20% of $40 million (CII mean project cost) is $8 million dollars.
2) The outlying or extreme range of project change areas accounts for
project growth that is greater than 10% and scope reductions greater than 5%.
These two areas account for 50% of the project change ratios.Once again this
change ratio shows a tremendous variability in the amount of project change.
63
5.4
65
5.5
Ahead of Schedule
On Schedule
Behind 0 to -3%
Behind -3 to -6%
Behind Greater Than -6%
68
Most project managers proceed with the understanding that the further
along in a project, the more detail, information and understanding of the
project s outcome are available. If this assumption is true, it is
interesting what the analyses of engineering schedule recovery suggest. If
the project is on-time at the 75% milestone, there is only a 50/50 chance
that the project will be on-time. This observation suggests that the last
quartile of engineering is difficult to control.
Moving on to the analysis of construction schedule recovery, some
similar characteristics are present that were noticed in the engineering
schedule recovery chart. The schedule performance characteristic of being
further behind schedule makes it less likely that a project will recover is
more prominent in the construction phase of a project. The Probability of
Construction Schedule Recovery is presented in Figure 17. After a project is
more than 3% behind schedule, there is a definite downward probability of the
project recovering to be on time.
70
5.6
Two points are readily apparent when reviewing the chart. The most
obvious point is the high probability of projects being over budget. This is
further emphasized by the probabilities being higher than 90% for all three
of the project milestones, i.e., 25%, 50% and 75% complete.
The other significant point to discuss is the upward trend for the
probabilities moving from left to right on the chart. Starting with the 25%
complete project status, there is a 33% chance that the project will be over
budget even if it is currently under budget. This probability increases to
70% if the project is on budget at the 25% and is 100% if over budget at the
25% complete milestone.
74
This point is fairly simple to assume when recognizing the most common
ways to recover from being over budget: reduce project scope or gain
efficiency with labor productivity. A reduction in project scope is normally
considered a change, and we have previously discussed the ramifications of
project change implementation.
Gains in labor productivity are difficult to achieve. It was shown
earlier in the validation of Hypothesis 2 that engineering productivity in
routinely less than planned. Cited research and industry experience strongly
implies that labor productivity is the most difficult and volatile aspect of
project performance to control.
75
CHAPTER 6
SUMMARY OF QUANTITATIVE FINDINGS AND RECOMMENDATIONS
6.1
Introduction
This research confirms that project change has a sizable impact on project
productivity, schedule and costs. The validated hypothesis, quantitative
methods of change measurement and budget analyses provide the specific
size or quantities of project change.
There is a wealth of quantitative data and information associated with
this research. The quantitative details are presented in the previous
chapters. This last chapter is a summary of those quantitative findings and
makes recommendations to reduce the negative impact of project change. The
findings and recommendations are based on the analyses of 104 CII projects.
The findings apply only to the current research and the recommendations
are to advance the industry s management of project change.
6.2
76
Hypothesis 1:
The research team concludes that this hypothesis is valid but can not be
statistically proven at this time. Additional research to further analyze
the impact of late project change on project efficiencies is needed.
Improved methods of change measurement should be developed and
implemented to quantify the scope and full impact of project change.
Hypothesis 2:
77
78
39% of projects had less than 4% cost growth Construction change ratios
revealed:
38% of projects exhibited reduction in scope and 29% of that change was
in the 5% to 20% range
79
the later a project is at the 25% or 75% complete, the less chance it
can be recovered
80
For all projects studied there is over a 90% probability that a project
will run over budget
It seems that current cost control systems are not being employed
effectively or are not achieving the objective of keeping projects within
budget. If budget control is critical to the construction industry,
additional resources will have to be directed towards project control.
6.4
Summary
81
APPENDIX A
RESEARCH QUESTIONNAIRE
COLLEGE OF ENGINEERING
THE UNIVERSITY OF TEXAS AT AUSTIN
FROM:
Richard L. Tucker
DATE:
RE:
83
84
The projects that your organization provides for this research project
should represent a variety of completed projects. We are specifically
looking for project performance data that is accurate and well organized.
This questionnaire is designed to expedite your responses and minimize
the amount of time required to complete the questionnaire. Quantitative
project information is needed to perform the research project change analysis
and develop industry change multipliers.
Projects selected should meet the following criteria:
o
Projects should have a Total Installed Cost (TIC) over $15 million
Make copies of this survey form for each project. If you wish, feel free
to send a copy of this questionnaire to the contractor or client that you
worked with on this project.
Send the completed questionnaires to the researcher listed below. If
you need additional copies or information contact the researcher directly:
Professor Bill Ibbs
Dept. of Civil Engineering
c/o Walter E. Allen
3636 Rhoda Avenue
Oakland, California, 94602
Phone: (510) 530-8661
Fax: (510) 643-8919
Please return all completed pilot questionnaires no later than
September 1, 1993.
85
PROJECT INFORMATION
Project Name __________________________________________________
Project Location - City & State _____________________________________
Project Country _________________________________________________
What was the Total Installed Cost (TIC) for the Project ___________________
1.
2.
3.
4.
86
5.
6.
Rank the project driving factors in the order
project (Scale 1 = Highest and 4 = Lowest):
Cost ______ Schedule ______
Other (specify) _______
7.
8.
9.
10.
______Complex
________Very Complex
________
87
11.
12.
13.
14.
15. Were there any project changes that were escalated or settled outside
the routine change order procedures; e.g., mediation, arbitration or formal
litigation?
Yes
___________No
__________
88
16.
If the answer to question #15 is yes, what percent of TIC did those
change costs represent according to dispute resolution method category?
Total Percentage
Litigation
Mediation
Arbitration
Executive Conference
Some other mechanism (please describe)
17.
Did the original project budget estimate
contingency for project changes?
Yes _________
______________
______________
______________
______________
______________
______________
No __________.
If the answer to question 19A or 19B is no, what caused the delay.
Negotiations _________Completion of Estimate _____________
Slow Approval Process _________Completion of Paper Work __________
Other_________________________________________________________
21. In general what type of pricing method was used to estimate these
project changes?
Unit Pricing ______________Forward Pricing ____________
Retrospective Pricing _________Time & Materials ___________
89
22.
Col 3.
Col. 4.
Col. 5.
Col. 6.
Col. 7.
Total Change ($): Give the cumulative total estimated cost of the
change orders numbered in column 7.
In Columns 8-11, give the breakdown of the change order cost given
in Column 7. The sum of columns 8-11 should equal the figure in
column 7.
Col. 8.
Col. 9.
Col. 10.
Col. 11.
Other Costs ($): Includes all costs associated with owner costs
(if known); engineering personnel; construction indirect personnel;
subcontractors; and construction equipment and materials.
92
Col. 12.
Col 13.
93
21.
What was the total number of labor-hours expended for authorized changes
originating during the project's engineering phase? __________
22.
23.
24.
What was the total number of labor-hours expended for authorized changes
that originated during this project's construction phase?
__________
25.
What was the final productivity ratio for the construction work on this
project? (Productivity ratio is earned labor-hours divided by expended
labor-hours.)
________
26.
When was the original control budget for engineering developed for this
project?
Pre-engineering
10% engineering complete
30% engineering complete
50% engineering complete
100% engineering complete
Other (Please specify)
27.
_____
_____
_____
_____
_____
_____
When was the original control budget for construction developed for this
project?
Pre-construction
10% construction complete
30% construction complete
Other (Please specify)
_____
_____
_____
_____
95
96
Attachment I
General Glossary of Terms
Change: Any event which results in a modification of the original scope,
execution, time or cost of the work.
Change Order Formal documentation which recognizes the existence of a change
and modifies the agreement between contracting parties accordingly.
Detailed engineering: Engineering and design work perfumed to produce
drawings and specifications for construction. Differs from "conceptual
engineering' which includes studies, estimates and other consulting
activities performed to assist the owner in establishing the scope of
the project
Direct Labor: Labor which is consumed directly in the production of
engineering deliverables or in the fabrication or erection of physical
construction quantities. For the purposes of this research, "direct
labor" includes only labor included in the calculation of progress
(percent complete).
Indirect Labor: Other labor attributed to the project, but which is not
included in the calculation of physical progress.
Owner: The organization that will ultimately occupy the facility, and is
ultimately paying for design and construction of the facility.
97
APPENDIX B
CITED AND UN-CITED BIBLIOGRAPHY
98
Appendix B
Bibliography
Cited
Allen, Walter E. A Methodology for Evaluating the Effective Processing of
Project Change, Dissertation Proposal, December 1993.
Anbari, Frank T., A Systems Approach to Project Evaluation, Project
Management Journal, Vol. 16, No. 3, August, 1985.
Borcherding, John D., Improving Productivity in Industrial Construction,
Journal of the Construction Division, Proceedings of the American Society of
Civil Engineers, Vol.102, No.CO4, December, 1976.
Bitner, L. M., Project Management: Theory Verses Application, Project
Management Journal, Vol. 16, No. 2, June 1985.
Construction Industry Institute, Productivity Measurements:
Austin Texas: Publication 2-3.
An Introduction,
99
Appendix B
Bibliography
Cited
Jacobs, R.C., and Richter, I., How to Cope with Claims and Change Orders,
Construction Contracting, McGraw-Hill, New York, N.Y., 1978
Krone, Stephen J., Modeling Construction Change Order Management, Project
Management Journal, Vol. 22, No. 3, September 1992
Leonard, Charles A., et all., Construction Productivity: Major Causes of
Impact, Transactions of the American Association of Cost Engineers, 1988.
Malloney, W.F., Productivity Improvement: The Influence of Labor, Journal of
Construction Engineering and Management, Vol. 109, No.3, American Society of
Civil Engineers, 1983.
Moselhi, J., Impact of Change Orders on Construction Productivity , Canadian
Journal of Civil Engineering, 1991.
Oglesby, C.H. Parker, H.W., and Howell, G.A., Productivity "Improvement In
Construction." McGraw-Hill Publishing Inc., New York, N.Y. 1989.
Paulson, B. C., Jr., Goals for Basic Research in Construction, Department of
Civil Engineering, Stanford University, Stanford, California., July 1975.
Thomas, H.R., Modeling Construction Labor Productivity, Journal of
Construction Engineering and Management, 116(4), 738-755, 1990.
Thomas, H.R., Effects of Scheduled Overtime on Labor Productivity , Journal
of Construction Engineering and Management, Vol. 118, No.1, American Society
of Civil Engineering, 1992.
Wilson, Roy L., Prevention and Resolution of Construction Claims, Journal of
the Construction Division, Proceedings of the American Society of Civil
Engineers, Vol. 108, No. CO3, pp. 390-395, September 1982.
Zeitoun, Alaa A., Oberlender, Garold D., Early Warning Signs of Project
Changes, Construction Industry Institute, Source Document, December 1992.
100
Appendix B
Bibliography
Un-cited
Construction Industry Institute, Evaluation of Design Effectiveness, Austin
Texas: Publication, 1986
Construction Industry Institute, Organizing for Project Success, Austin
Texas: Publication 12-2, February 1991
Construction Industry Institute, Preview of Construction Implementation,
Austin Texas: Publication 34-2, February 1993.
Construction Industry Institute, Project Control For Construction, Austin
Texas: Publication 6-5, September 1987.
Construction Industry Institute, Project Control For Engineering, Austin
Texas: Publication 6-1, July 1986.
Civitello, Andrew M. Jr., Contractor's Guide to Change Orders, Prentice-Hall,
Inc., Englewood Cliffs, 1987.
Department of the Army Office of the Chief of Engineers, Modification Impact
Evaluation Guide, Washington, D.C., July 1979
Ibbs, C. William., Ashley, David B., Neil, James M., and Feiler, Frank W.,
"An Implementation Strategy For Improving Project Control Systems", Project
Controls: Needs and Solutions, American Society of Civil Engineers, New York,
New York, June 1987
Johnson, Charles F., "Early Warning Signs - Trending Techniques",
Transactions of the American Association of Cost Engineers, San Francisco,
California, pp. 125-128, July 1978, Morgantown, West Virginia: American
Association of Cost Engineers.
Mitchell, Paul James, "Holding Down the Cost of Change", The Role of the
Resident Engineer, ASCE Publications, New York, New York, 1985
Rogge, David F., "Delay Reporting Within Cost Accounting System", Journal of
Construction Engineering and Management, Vol. 110, No.2, June 1984
Scott, Donald F., "Effective Contract Administration in Construction
Management", Journal of the Construction Division, Proceedings of the
American Society of Civil Engineers, Vol. 100, No. CO2, June 1974
101
Appendix B
Bibliography
Un-cited
Suchanic, George, "Change Order Impacts on Construction Cost and Schedule",
1980 Transactions of the American Association of Cost Engineers, Washington,
D.C., F-3, pp. 1-7, 1980
102
APPENDIX C
SUMMARY TABLES & GRAPHS
103
APPENDIX D
GLOSSARY
132
Appendix D Glossary
Approved Changes: Changes which are approved by both parties.
changes are divided into two classifications discretionary and
unavoidable changes.
Approved
133
Appendix D Glossary
Forward Pricing: The process of negotiating and resolving a change order in
advance of doing the work. All impact and consequential cost are estimated
and agreed to without further negotiations or claims.
Hidden Cost:
Impact Costs: The indirect effects that changes have on project budgets and
schedules as a result of delays, lowered productivity and material wastage.
These costs are some time referred to as "ripple costs". Indirect Cost
that must be allocated in order to be assigned to the change under
consideration. Indirect cost are items that do not become a part of, but are
a necessary cost involved in, the detail design and construction of a
facility.
Indirect Labor: Other labor attributed to the project, but which is not
included in the calculation of physical progress.
Original Bid: The initial budgeted amount submitted by the developer,
engineer or contractor to the owner for the established scope of work.
Owner: The organization that will occupy the facility or is paying for
design and construction of the facility.
Owner's Estimate: The owners cost calculation for the scope of work prior to
the owner requesting formal bidding or proposals submittal.
Project Completion Date: The actual date that the project was completed with
change order extension or other time extensions.
Retrospective Pricing: The process of evaluating a change's cost, schedule
and other impacts after the work is complete. Parties involved with
negotiating the change order wait until the change order work has been
completed to evaluate direct, indirect and consequential cost for determining
the total change order cost.
Ripple Effect:
and schedule.
134
Appendix D Glossary
Time & Material Pricing: The cost of time and materials are kept while
completing the change order work, and a profit and overhead figure are added
to the final change order cost.
Unit Pricing: This pricing method utilizes simple multiplication of units
and cost to determine the change order cost.
135