Integration of the Construction Estimate in

Construction Programe

Construction Project Managment Model

Pedro Alexandre Amaral Lopes

Extended abstract of thesis to obtain the Degree of Master in

Civil Engineering

Jury

President: Prof. Albano Luís Rebelo da Silva Das Neves e Sousa

Supevisor: Prof. Pedro Miguel Dias Vaz Paulo

Vowel: Prof. Nuno Gonçalo Cordeiro Marques de Almeida

October, 2013

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1. Introduction

Bearing in mind the current economic crisis, the hardships that are being felt by the

construction industry are increasing as companies seek to systematically to reduce their

costs whilst maintaining their levels of competitiveness.

Thus, as companies from the construction industry seek substantial improvements in

project results, a plethora of project management and production control software

packages are evolving and are being implemented.

Further gains can be achieved by implementing integration of the construction estimate

with the construction program during the construction phase of the project, with the

objective of managing the cost and duration control of the project more efficiently.

By introducing and linking together the construction estimate and construction schedule

in one software package, at the beginning of the construction phase, forecasts can be

obtained, and if the progress and production data are systematically introduced during

the construction phase, comparisons can be made against the base forecasts and critical

information such as cost and schedule deviations can be obtained efficiently and with

ease, providing decision-enabling facts for implementing timely corrective measures.

The primary objective of this investigation is to demonstrate to any construction

company that is interested in improving its results and competitiveness, that the

implementation of the chosen methodology will provide a more effective and efficient

cost and time control of its projects. The methodology that is analyzed is that the

estimating and planning schedules be linked dynamically using just one software

package.

2. State of Art

This chapter intends to conduct an analysis of the State of Knowledge of Integrated

Project Management, specifically some “good practice” rules of Cost and Time control

in construction projects, and to present the most relevant information within this

subject.

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2.1 Project definition

The Project Management Institute (PMI) defines a Project as a temporary group of

outlined activities to produce a unique product, service or result. It is temporary because

it has a beginning and an end within a specific period of time and therefore resources

and scope is also defined.

A project must meet certain specific objectives and must be completed within schedule

and it also must be completed within a stipulated budget and satisfy all the project

quality requirements (Lester, 2007).

2.2 Project Management

Project Management can be defined as the planning, monitoring and control of all

aspects of a Project in order to achieve all the objectives within the criteria of time,

costs and agreed performance. (Lester, 2007).

It’s also the art of directing and coordinating all human and material resources during

the lifetime of the project using modern management techniques to achieve predefined

objectives such as the scope, cost, time, quality and stakeholder satisfaction (PMI).

2.3 Planning and Time Control

Given the uncertainty and complexity inherent to the construction projects, planning

becomes an activity with a high degree of difficulty for project managers, given their

constant need to provide and coordinate all tasks to be performed and control them

during their execution (Lia et al., 2009).

Planning is a key activity in the construction industry both in its management and

during its execution. Developing a plan to manage a project involves several phases,

from decision making in order to devise a project with the development of different

solution to achieve this objective, to the definition of the tasks to be performed in the

project; the estimated physical and financial resources; the determination of the activity

durations and finally the identification and interconnection between the different

activities. (Hendrickson & Au, 1989 & Angelim, 2009).

The bar charts are by definition the representation of the project activities in function of

time in the form of horizontal lines, usually without any connection between them.

These bar charts emerged based on the work of Henry Gantt, mainly dedicated to the

construction industry – Gantt Bar Charts (Figure 1). In such bar charts, the activities

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durations are estimated and the bars are drawn, respectively, for each activity,

depending on its duration, its beginning and its end in the chart (Mubarak, 2010).

Figure 1 – Gantt Chart with activity links

These bar charts present some advantages to the Project manager (Table 1). A graphic

representation of the information makes the process simpler to analyze the project

without requiring any special training or using any complex calculation methods. It

provides a more accurate view of the estimated activities' durations and consequently of

the entire project, enabling a greater understanding of the all involved parties such as

the client, the subcontractors and to the contractors’ managers.

Table 1 – Advantages and Disadvantages using the Gantt Bar Chart

Gantt Bar Chart

Advantages Disadvantages

Graphical representation of the

information

Simpler analysis of the activity

durations

Earlier forecasts of the resource usages

in the activities

Logical connections in projects with a

large number of activities

Great difficulty to understand the

consequences between activities, if not

properly connected

The Critical Path Method (CPM), one of the most widespread techniques in planning, is

specially oriented to a Project with a large number of individual activities, as is the case

for most construction projects (Baker, 2010).

Through CPM is possible to determine:

the project duration with a complex activity network

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critical activities, i.e. activities that must be performed in time under the risk of

delaying the entire project

CPM defines the predecessors/successors activities sequence that determines the

minimum time to complete the project, i.e. any delay in activities that are part of the

critical path (critical activities) will cause a delay of the completion date of the entire

project.

2.4 Estimating and Cost Control

The cost estimate is one of the most important processes in project management. The

cost estimate or the initial budget allows the establishment of the cost basis for the

different phases of construction, and represents the estimate of the present contractual

scope of works. Engineering experience and the expertise are of great importance in the

application of the principles and techniques of estimating in order to reduce problems

with the cost control and specially to increase profits and maximize revenues

(Hendrickson & Au, 1989).

Estimating or making an initial budget means determining the approximate amount of

resources, time and all the costs required to develop a project, in order to obtain the

necessary information to make critical decisions in all aspects of developing a

construction project (Carr, 1989).

Nowadays, almost every company uses software systems for estimating and cost

control. Whilst price estimates and initial budget determination are performed before the

production phase of the project, cost control has to be realized throughout its entire

execution (Azhar et al, 2002).

3. Analysis and Interpretation of the results of the Enquiry

Through this inquiry it was possible to become aware of the reality in some companies,

particularly in relation to the planning and estimating systems. Since these two

procedures are essential in project management and are unequivocally used in

construction companies, regardless of their size, it was important to know how

companies implement these systems and the importance they have in the organization

(Table 2).

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Currently, one of the main problems that have hindered the optimization of procedures

in cost and time control within construction organizations is the difficulty that they have

in integrating the Planning schedule with the Estimate. In general, the use of various

software packages for project management has exacerbated this situation.

Table 2 – Key aspects of the implemented Planning and Estimating systems in the companies

Planning Estimating

Very important in Project

management

Average satisfaction with its

application

Periodicity: Weekly and Monthly

Most commonly used software

package: MS Project

Presents gaps in planning detail and

time control

Responds satisfactorily to the needs of

companies

Very important in Project

management

Average satisfaction with its

application

Periodicity: Monthly

Most commonly used software

package: Candy, Microsoft Excel,

SAP

Responds satisfactorily to the needs of

companies

4. Presentation of the Planning and Estimating Management Systems

This chapter describes the Independent System Planning and Estimating Management

and the Integrated Planning and Estimating Management System. First a brief

description of the procedures in common use is made and then the Integrated System is

referred to and described. This is the proposed model for integrating planning and time

control with the estimating and cost control, in order to achieve the objectives proposed

for this investigation.

4.1 Planning and Estimating Management Independent System

Currently the most implemented management and time control system in construction

companies is the Independent System. This system is characterized by the separation

between planning and time control from the estimating and cost control. Commonly,

construction companies plan and estimate the entire project and then carry out the

project’s time and cost control using separate software packages. This procedure

reinforces the separation of the two data streams, as often the software package do not

share compatible data.

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4.2 Planning and Estimating Management Integrated System

Given the fierce competition in the construction industry and the companies’ needs to

respond in a faster, effective, efficient and most profitable way to the costumers’

requirements, the interconnection between Planning and Estimating, for an integrated

approach to project management, has becoming more and more important.

Figure 2 and Figure 4 are representations of the proposed model in this investigation.

Figure 2 – Analyzed Model for the Planning and Estimating interconnection

Figure 3 – Proposed Model Diagram

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In Table 3, we can see the main differences between the two Management Systems

previously described.

Table 3 - Comparative analysis of the two Planning and Estimating Management Systems

System Features Independent

System

Integrated

System

Cost and time Control Separate Integrated

Number of software packages used Several One

Investment in Planning and Estimating

professional software packages High Optimized

Compatibility between the Project cost

and time control

Depends on the

compatibility of the

software package

Integrated and

synchronized

Time and resources spent for updating

and synchronizing the project costs and

deadlines

Vast Reduced

Monitoring the consequences of the

changes (cost or deadline) during the

project execution

Depends on the chosen

computer systems. Cost

and Time updates are

slow and with high

probability of

synchronization errors

Immediate

Detail for the project cost and time

forecasts Scarce

Abundant and

Diverse

Investment in Human Resources and

Formation

Lengthy training in

multiple software

packages

Higher investment

Rapid training in

one software

package

Lower investment

5. Case Study Presentation

This chapter aims to identify and analyze the project management processes, mainly the

cost and time control, by the Portuguese subsidiary company SPIE BATIGNOLLES

EUROPE, through the analysis of the methodologies that were applied in a specific case

study, a construction project that has been successfully executed.

The analyzed Integrated System model is applied to this case study so that the benefits

and advantages that it could bring to the project management can be represented.

The procedures for Planning and time control as well for Estimating and Cost control

management are well defined within the SPIE BATIGNOLLES organization. The

company mainly uses their own software package and Microsoft Project to perform

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their Projects’ Planning and Time Control requirements. Estimating and Cost Control,

are accomplished using the Construction Computer Software (CCS) – Candy System.

This chapter intends to apply the proposed model to the case study and evaluate the

Integrated System Implementation in the organization and to present the advantages in

cost and time control management.

5.1 Cost Control

By implementing this Integrated System, it is possible to obtain data regarding the

current state of the project as well as its future, reliably, securely and quickly.

Thus, any change in the resource cost or in its consumption to in any bill item, will be

reflected dynamically in all of the reports and the documents that are available in the

software package, and this information, if used correctly, will allow the project

managers to make informed decisions whenever to improve the Project’s final cost and

completion date. This is true both when establishing the base forecast and at any stage

during the execution phase of the Project.

5.2 Time Control

With the implementation of the analyzed model, the activities durations and the project

deadlines are also critical for the Projects’ cost forecasts. Thus, any changes in the

activity program will affect the time element resulting changes in the previous forecasts.

Figure 4 – Activitiy Program with a delay of 10 days in the selected activity

Figure 4 presents the consequences to the entire program of the change of a duration of

one activity.

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Analyzing the results of this change in the case study, there are some advantages that

can be easily presented in the proposed model implementation for project management

(Table 4).

Table 4 – Advantages in the implementation of the Integrated System analyzed model

Planning and Estimating Management Integrated System

Cost and time control integration in a single software package

Reduction in costs related to the investment in cost and time control software

packages

Faster monitoring of the updates of costs and deadlines

Constant updates of the Project status

Synchronized forecasts of costs and deadlines during project execution

Forecasts with greater anticipation of changes and verification of the effect of

changes on the Project’s cost and deadlines

Reducing the number of meetings needed to update and integrate the different

cost and time control software packages

Possibility to spread the items’ quantities over the activities’ durations and

obtain dynamic forecasts

Constant comparisons of current costs and deadlines against the planned costs

and deadlines.

6. Conclusions

6.1 Results and Proposed Objectives Evaluation

The results obtained from the dynamic interconnect of the estimating schedule with the

planning schedule allow one to conclude that the implementation of this method meets

the expectations initially proposed. The data that is available in the software package’s

reports, effectively present the Project’s current status including change of scope,

current progress and real costs to date, and forecast the future cost and date of

completion if no steps are taken by the project managers.

6.2 Contributions and innovative aspects

Note that this is a very simple and effective model to apply in project management and

monitoring, and presents the current project status as well the forecasts of its status

through explanatory reports and other able performance indicators.

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One of the most innovative aspects of this model is the interconnection of the activities

from the planning program with the items from the bill of quantities as well with the

budget in one software package. This process reduces the workload required in making

compatible data produced of the two different cost and time control software package so

that it can be analyzed.

6.3 Future Works

Since the application of this model in a single case study wasn’t ideal, it’s suggested for

further investigation that this model be applied to a larger number of case studies, such

that results can be obtained of its implementation in different kinds of projects and

environments and also to quantify the benefits that are gained with its implementation.

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