Project Variables and the Normalising of Data for the Historical Database/ Historical
Sample Case: Building Reconstruction following the Katrina and Wilma Hurricanes
It can be on occasion easy to forget to factor in the project-unique variables when
evaluating the costs and duration of a construction project.
For example let’s take as a case scenario the rebuilding efforts in southern U.S.
following the Katrina and Wilma hurricanes that resulted in much distress and property
Now let’s suppose we have a government/ institutional building that has sustained
water damage and is need of significant repairs. The relevant government agency puts
together a request for proposal (RFP) with the scope of work consisting say of replacing
of all water damaged drywall. The project is then awarded to an experienced regional
general contractor. This particular general contractor with great confidence goes
on to perform a detailed material take off and to quantify all the resources needed.
In the process it makes use of their proprietary pricing list and benchmarks against
their historical database for similar work.
So far so good. The contractor is given the notice to proceed by the client and work
starts. Now halfway through the project the project manager becomes extremely alarmed
and frustrated: the actual costs for the performed work is much higher than anticipated
and the project progress is behind schedule. How could this be he asks himself.
The project incurred cost and schedule overruns due to a combination of unique project
conditions that were not carefully considered and taken into account. Some of the
factors are listed below:
- The cost of basic building materials like dramatically increased due to the regional
surge in demand (as a consequence of all the re-construction activities occurring
at the same time).
- Regional shortage of labour due to the increased construction activities.
- Workers out of state brought in – with the corresponding premium cost - to make
up for the shortage of local workforce.
- Systematic use of overtime as a way to deal with the labour shortage with the consequent
increased cost per unit rate and reduced productivity.
- Local weather conditions – high humidity and heat leading to growth of hazardous
molds, and the need to encapsulate building area and use of protective cover alls
and breathing filters.
- Extended unplanned project duration then negatively affected by lower productivity
due to end of year holidays.
When the general contractor used their historical database for similar work they
failed to capture the unique project variables including market, geographical, site
and other conditions affecting cost and schedule.
Hence when evaluating a construction project above referenced conditions must be
considered. Further when building the historical cost model of projects performed
these conditions should be clearly noted, along with other necessary data and metrics
such as construction start date, duration, key dimensional and quantity metrics,
etc. for effective normalisation and comparison of the project data.