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CHAPTER8:. Application Of Controls. PREPARED BY:. Mohammed Tanbora. SUPERVISED BY:. Dr. Kamalain K. Shaat. Introduction Discussed preparation of the overall plan for the project - as well as its implementation.
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CHAPTER8: Application Of Controls PREPARED BY: Mohammed Tanbora SUPERVISED BY: Dr. Kamalain K. Shaat
Introduction • Discussed preparation of the overall plan for the project - as well as its implementation. • The control system quantitatively measures actual performance against the plan and acts as an early warning system to diagnose major problems while management action can still be effective in achieving solutions. • Development and application of a practical control system to measure progress and costs is one of the most important contributions of the professional construction manager and is critical to the success of general and specialty contractors. • The final portion of the chapter sets forth some of the different methods that a single general contractor might utilize on a fixed price contract with a number of subcontractors.
Management-level Reporting By Construction Manager. • Management-level reporting must provide a straightforward statement of : 1-The work accomplished . 2-Predict future accomplishment in terms of the project-cost and schedule . 3-Measure actual accomplishments against goals set forth in the plan. 4-Review current and potential problems and indicate management action underway to overcome the effects of the problems
A Comprehensive "Monthly Progress Report" Can Convey This Essential Information. 1- Summary of project status 2- Procurement status 3- Construction status 4- Schedule status 5- Cost report summary
1- Summary of project status -This item represents a short, overall status. -information such as the physical percentage complete compared with scheduled completion, and forecast "at-completion" costs against budget. 2- Procurement status -This item reviews contracts awarded during the period, contracts currently out for bid. -A simple bar chart showing actual procurement status and contract awards compared with the original plan.
3- Construction status -provide a description of work accomplished during the period. -work to be accomplished in the next period. -discussion of major problems, with solutions or proposed solutions. 4- Schedule status -This item should contain the summary control schedules by contract and by facility, showing actual progress compared to early- and late-start schedules. -Where contracts or facilities are behind schedule or are slipping, an explanation of the problems and the indicated solution.
5- Cost report summary -Show actual recorded costs, committed costs, and estimated costs-to-complete. -It should compare "at-completion" costs with project budgets and identify and explain changes from the previous report. -An evaluated- contingency should be included so that an overall estimate of actual costs at completion is provided. -A summary of value-engineering savings to date and new items added during the period can be included
Overall Cost Controls By Construction Manager -Overall cost controls, designed to measure project status against budget,include the following: • Preliminary estimates • Fair cost estimates • Definitive estimate • Cost report summary • Value engineering studies • Value engineering status • Other significant data
Project Control Techniques For Managing Construction. 1 Preliminary estimates -Preliminary estimates assist the overall cost-control program by serving as the first check against the budget . -Indicating cost overruns early enough for the project team to review the design for possible alternates. -Preliminary estimates are made prior to the completion of detail drawings, the margin for error is usually greater than for fair-cost estimates. -A larger contingency should be applied; this will vary with the amount of design information available and the extent of cost information obtainable from similar projects. -For a phased construction program, it is especially important to prepare preliminary estimates by contract package .
2- Fair-cost estimates -Fair-cost estimates are best prepared from the actual bid documents provided to the bidders. -Whenever possible, it is helpful to complete the fair-cost estimate well before receiving bids so that any discrepancies in plans and specifications, duplications in scope, and possible value-engineering alternates suggested by the estimator can be communicated to the bidders via addenda before bids are received. -Fair-cost estimates represent the professional construction manager's appraisal of the fair value of the bid package to the owner. -Local conditions, such as materials prices, wage rates, labor productivity, and anticipated competition, are important in achieving a reasonable estimate for the area.
- Fair-cost estimates in an integrated cost-progress control system will also develop significant additional information for upgrading the usefulness and accuracy of the schedule- and progress-control portion of the overall control system. Some of these items include the following: 1- An estimate of total man-hours of field effort required. 2- An estimate of reasonable unit costs for various components of the work. 3- Information for allocation of contract costs for owner capitalization and tax considerations . - In the event actual bids differ significantly from the fair-cost estimate, the manager can often meet with the low bidder and compare quantities and scope. Many times this comparison can pinpoint the reason for the discrepancy. - This estimate can be of great value to the field construction manager in scheduling work, in reviewing change order requests, and in determining manpower requirements.
3-Definitive estimate - Definitive estimates fix the anticipated cost of the project with little margin for error. - As contracts are bid on a phased construction program, the overall estimated cost becomes more certain if more percent of the contracts have been awarded . - When 90 percent of the contracts have been awarded, less contingency is required than at 50 percent level. - When 100 percent of the contracts have been awarded, contingency is generally limited.
- Several numerical and statistical methods have been proposed and applied for forecasting total cost under runs or overruns at various contract award percentages. - Accurate definitive estimates must wait until almost all contracts have been awarded. - The manager's knowledge of the area construction and bidding practices, area workload, design considerations, and estimating practices will indicate the point at which a reliable definitive estimate can be prepared.
4- Cost report summary • Cost report summaries describe the actual and forecast status of the project; they generally commence with the preliminary estimate and end when the project is complete and all claims. • In a normal program, cost reports showing estimated cost-at-completion can be prepared from the committed cost plus estimated costs-to-complete for the various contracts involved.
Some owners prefer that the professional construction manager perform additional accounting for recorded costs when these are paid as progress payments and Others prefer to handle this phase themselves and are interested in the manager's report only to cover total commitments to date and estimated costs-to-complete. • Some owners require continual cash flow projections to accompany the cost reports, while others prefer to handle this themselves.
5- Value-engineering studies -Value-engineering studies help in determining the most economical approach prior to detailed design. -If best results are to be obtained, value engineering must involve a partnership where the professional construction manager, designer, and owner all work together. 6-Value Engineering Status - A report showing value-engineering savings approved to date by the owner can keep the results of the program clearly in focus, and can be of long-term benefit to all parties.
Field Cost Controls. • Overall cost controls can be developed and administered either at the job site or in the home office, depending upon the particular project. • Evaluation of plan changes, claims, and other change-order requirements can often be done better at the job site. • The professional construction management firm's field construction manager is also the representative of the owner. When drawings are changed, an increase or a decrease in the contract price may be indicated. The adjustment should be fair to both the contractor and the owner. • In one helpful technique, the contract terms require an itemized breakdown by labor and materials to be supplied by the contractor for all changes, including applicable quantities.
Whenever possible, the price for a modification should be settled before the work is performed. • An important item of field cost control is scheduling contractors to avoid interference, delays, and other detrimental effects of one contractor's operations upon another's. • In a professional construction management program, the owner through his manager is largely responsible for the coordination involved among site contractors.
Schedule And Progress Controls By Construction Manager 1-Control schedules are developed and refined through preparation and revision of the overall plan. 2-actual accomplishments must be compared with the overall plan if effective control is to be achieved.
CPM Control Schedule . -The Critical Path Method (CPM) is the foundation of the progress control system. -Physical Progress Measurement. Figure 8-9 shows a worksheet for calculating the physical percentage complete for a single contract; it is based upon actual quantities completed during the period. The productivity of the construction forces compared with the managers estimated can be calculated by comparing actual hours with calculated hours. Figure 8-10 shows the summary of all contract data entered and plotted upon Figure 8-8. For a multifeature project, work can be grouped and tabulated by facility as well as by contract in order to determine the status of its various components.
Management-level Reporting By Concrete Contractor. • Individual concrete contractors on construction management projects can range from small to medium sized general or subcontractors who may often bid other portions of the work such as some or all of the interior finish or other qualified specialty. • Smaller companies may minimize formal reporting methods by utilizing the owner or a traveling general superintendent who will oversee several projects using periodic job visits to manage and control the work.
At a minimum the on-site manager will normally fill out a daily report on a preprinted form showing the weather, number of craftsmen and other employees, significant starts and completions, problems or delays, and other information to either document the work or to request assistance. • The home office may prepare a weekly unit cost report from payroll information and quantities supplied by the job superintendent or engineer. • Monthly progress reports covering many of the items described in the previous section may also be issued.
Cost Controls By Concrete Contractor. • Overall cost controls mayor may not be integrated with schedule control. If the contractor utilizes man hours in his estimating, he can easily develop an integrated system tailored to his requirements.
Bid Estimate • The contractor maintains an estimating capability in the home office sized to achieve his planned annual bidding volume. • The estimator first develops a material take-off from the plans and specifications listing all of the required quantities for labor, material, construction equipment and subcontract pricing. • When a bid is successful the estimator often acts as the project manager to oversee the work from the home office. In this event his first task will be to "buy out" the job by awarding subcontracts and purchase orders for materials and other required items.
Cost Reports • The concrete contractor will utilize a weekly unit labor cost report to compare actual unit costs or man-hours with estimated units. • The concrete contractor utilizes a monthly cost report to tabulate recorded and committed costs plus estimated costs to complete in order to forecast estimated costs at completion SCHEDULE AND PROGRESS CONTROLS BY CONCRETE CONTRACTOR. • Figure 8-13.
Summary • This chapter reviewed the application of controls. However, the control system is only a tool which assist the manager in shaping the completed product. • In itself it connot manage; it connot tell what must be done to improve unsatisfactory performance; if it receives as similar reports based upon sound input data.
The control system will never replace the judgment of competent home-office and job-site managers. • Managers must be knowledgeable enough to use the control system as available tool; but they must also have sufficient experience and skill to know when the tool has become dull.
Management-level Reporting By General Contractor • If the contractor planned to perform the concrete and allied work with his on forces, unit cost and progress reports similar to Fig 8-12 would be in the order. • Fig 8-2: Overall summary monthly • Fig 8-8: Construction schedule summary.
COST CONTROLS BY GENERAL CONTRACTOR • Cost controls will be a combination of methods described under construdtion management for subcontractor control supplemented by detailed comparison of costs and man-hours to the bid estimate for own forces work. • Productivity analysis will be enhancd if the contractor uss man-hours as the basis of his cost estimating. • Man-hour units also form a valable reference for bidding similar jobs in future
