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Project Variables and the Normalising of Data for the Historical Database/ Historical Cost Model

 

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 damage.

 

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.

Project Variables

Meetings

Love them or hate them. How to conduct successful productive meetings.

Funny, but true. Video on the functions of Project Controls.

Enjoy!

Settings do matter: pick the wrong settings and your schedule’s output will be meaningless.

What the text books didn’t tell you
Primavera P6 Settings
Video - Project Controls

Selected Articles

Tips on Scheduling

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