Time-Cost Optimization of Building Projects

Uzair Waheed

• Publisher: Project Management Institute
• Year: 2015
• Print ISBN:
  9781628250862
• eBook ISBN:
  9781628251036
• Topic: Business
• Subtopic: Project Management
• Index: Business

Traditional wisdom suggests that when it comes to construction projects, any effort that might be made to shorten the planned schedule will necessarily lead to increased costs. In Time-Cost Optimization of Building Projects, however, author Uzair Waheed, B.E., PMP shows that it might just be possible, under certain conditions, to actually decrease both time and cost for building projects.

CHAPTER

1

INTRODUCTION

Time and cost are important elements of project scheduling, especially for lengthy and costly construction projects. Alternative schedules can be evaluated based on applied resources and planned constraints and an optimum alternative can be established that considers the project's deadline for completion.

The relationship between time and cost can be explained by looking at an example of a single activity, such as excavation. This kind of project could be carried out through manual labor only, which will cost less but will take a good deal more time to complete. This same activity could also be performed by employing additional manual laborers, thus costing more and finishing relatively quicker. Or, in a third scenario, the same activity could be done with advanced resources such as mechanical excavators. This will cost more than basic manual work, but will allow the project to be completed in a much shorter time—that is, it will cost more because of the machinery involved but will also result in savings in terms of how many man hours are consumed.

Delays encountered in construction have an impact on the cost of construction, and that impact can depend on several different factors. For public-sector projects, delays can be attributed to the decision-making process and the various forms of approval required for the project. The decision making involved might lead to delayed payments or nonpayment of interim payment certificates, work stoppages, and late approvals. Such issues would hinder the planning of the project. Private-sector projects can also face delays—for example, unstable economic conditions leading to inflation in material price. Although material escalation is usually permissible to the construction contractor on certain items in construction contracts, its calculation and the schedule of payment during the project's life cycle would greatly influence the contractor's productivity due to cash flow issues. Furthermore, price inflation occurring on materials for which escalation is not permissible to the construction contractor on its contract would immensely obstruct the rate of progress of the project and would represent one more reason for delays.

Presently, one of the major drawbacks being faced by a section of the construction industry is the lack of an engineering and professional approach in construction planning and execution. Although modern and sophisticated software, such as Primavera Project Management (P6), is available and is being used globally, generally, heuristics and thumb rules are employed rather than state-of-the-art project management tools for estimation of resources, costs, constraints, and scheduling, and their comparative analysis of these factors. This study will lead to a better understanding of the time and cost trade-off problem for building projects by applying state-of-the-art management tools under local conditions to derive the advantages of early completion. It will also indicate the disadvantages of delayed completion and slow progress.

The prime objective of this study is to effectively simulate the management of building construction projects using case studies. The study's results will explain and predict the time and cost optimization of building projects.

To achieve the above, a baseline project would be developed for the purpose of comparison with scope quantities, cost, and schedule on Primavera Project Management (P6) with certain preconditions pertaining to price escalations and constraints.

After the baseline has been developed, two alternative projects will be simulated: One that is properly managed and is completed early and a second that is poorly managed and faces delayed completion. A comparison will be made between the cost and time variables in the two alternatives and conclusions will be drawn.

Following are the various factors that must be considered (with appropriate variations) during the development of each alternative:

1. Primavera Project Management (P6) version v7.2 was used for development of the schedules; this is an international standard.
2. Project S-curves and Earned Value Analysis data have been developed from the outcome of the P6 data and the theoretical relations available.
3. Bonuses are given for early completion of the project as we consider the contract type of this project to be a fixed price with incentive contract.
4. Penalties are given for late completion of the project as liquidated damages.

Project management tools for calculating financial progress based on Earned Value Analysis, Cost Performance Index (CPI), and Schedule Performance Index (SPI) techniques will be carried out for the baseline and for each alternative to assess the productivity and other areas of the project discretely during the life cycle of the project. Comments shall be made on these assessments, projecting the variance of costs at the completion of the project.

The baseline will be compared with the various alternatives and time/cost trade-offs can be compared for different cases (on the same graph). Thus, this process will demonstrate which alternative is preferable for achieving optimization in terms of cost and time.

CHAPTER

2

BASIC CONCEPTS OF PROJECT CONTROLS

2.1 Review of Existing Research Work

Because time-cost optimization is an emerging field of study, not a lot of research work has been conducted on the subject. However, the following research papers related to this subject were studied. Their abstracts, which form the basis of this research, are provided below.

“Project Time–Cost Analysis Under Generalized Precedence Relations” by S. Sakellaropoulos & A. P. Chassiakos, 2004

The aim of this research paper is to develop a method that considers realistic project characteristics such as generalized activity precedence relations for particular activities. Existing methods for dealing with the time-cost trade-off problem have concentrated on the solution to basic problems that do not adequately represent real-life engineering scenarios. The proposed method in this paper is formulated as a linear program and provides the optimal project time-cost curve and the minimum cost schedule.

“Project Management with Time, Cost, and Quality Considerations” by A.J.G. Babu & N. Suresh, 1996

In this research...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Tables
• Acknowledgments
• Preface
• Chapter 1 - Introduction
• Chapter 2 - Basic Concepts of Project Controls
• Chapter 3 - Methodology
• Chapter 4 - Case Studies
• Chapter 5 - Conclusions and Recommendations
• References