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ABSTRACT
CCPM has attempted to account for certain human behaviour patterns during project
planning and execution which other time management techniques neglect. CCPM
gives this human behaviour as a major influence on amount of contingency provided
in activity duration estimates. The human behaviours however are assumptions and
justification of CCPM relies heavily on these assumptions. The problem is that we
do not know if the human behaviours assumed are an important influence on
contingencies provided in activity duration estimates during project planning. The
main objective of this research is therefore to determine, using empirical data how
stakeholders in the construction industry rate the influence of human behaviour on
contingency provided in activity duration estimates. Other factors that influence
contingency provided have been identified and their relative importance investigated.
1.1 Introduction
Raz, Barnes and Dvir (2003:27) have argued that the behavioural aspects of
identifying the precise amount of safety margin and taking it away from the task
owner are dealt with only superficially by CCPM literature and still require empirical
support. The study will be a first step towards this study by identifying factors that
influence the safety margin provided.
The problem is that we do not know if human behaviours assumed in critical chain
methodology are an important influence on contingencies provided in activity
duration estimates during project planning.
The main objective of the research was to determine, using empirical data how
stakeholders in the construction industry rate the influence of human behaviour on
contingency provided in activity duration estimates.
Other objective was to identify other factors that influence contingency provided and
determine their relative importance.
2.0 Current Theory and Models
When multiple projects share resources, the mix of projects must be planned and
scheduled such that they not only satisfy their individual objectives and requirements
but in combination do not exceed resources available in the shared pools, (Nicholas
2000:253). Although the projects might in other ways be entirely independent, the
fact that they share resources means that they cannot be managed and scheduled
independently. The projects are integrated into the management control and
reporting system of some common resource pool owner e.g. a general manager,
(Engwall and Jerbrant 2003:403).
Engwall and Jerbrant (2003:406) give two underlying mechanisms behind resource
allocation problem in multiple concurrent projects, i.e. mechanisms influencing
resource demand and mechanisms influencing resource supply. Mechanisms
influencing resource demand are, (i), effect of failing project scheduling, and (ii)
effect of over commitment, i.e. too many projects in relation to existing level of
resources. Mechanisms influencing resource supply are, (i), effect of management
accounting systems that are dysfunctional for multi-project management and (ii),
effect of opportunistic project management behaviour within the organisations. The
allocation of resources to and between simultaneous and successive projects is a
process of politics, horse trading, interpretation, and sense making that is far more
complex than traditionally discussed and research on multi-project management has
to go beyond resource allocation and start addressing incentive structures,
accounting systems and other deeply embedded features on the organisation,
(Engwall and Jerbrant 2003:408).
Goldratt (1997:230) has in his novel Critical Chain given a methodology to deal with
resource constrained scheduling problem based on the Theory of Constraints.
Theory of Constraints (TOC) is a holistic or system-oriented approach to process
improvement (Kendall et al 2001:2). TOC assumes that a system is like a chain. A
chain is only as strong as its weakest link. The links are interdependent on each
other to satisfy a need. A project operates the same way. To achieve the project’s
goals requires the cooperation of many different people, departments and functions,
in a series of interdependent actions. Finding and strengthening the weakest link
(system constraint) gives the greatest opportunity for measurable improvement, both
within individual projects and across the entire collection of an organisation’s
projects. If an organisation is missing just one important aspect of a system, the
entire system fails, or its performance degrades significantly. Critical Chain brings
together and educates management on all aspects of the system that must exist in
order to get the best results. Critical Chain methodology aims at developing a sound
schedule using buffer management in order to avoid project overruns (Cohen et al
2004:40).
Critical Chain addresses both the single and multi-project factors in the reduction of
duration. With this methodology many projects can be effectively synchronised
around the schedule of one or a few key resources. Project work is consciously
delayed and released only according to the resultant staggered project schedules
(Viljoen 2005:2).
Raz et al (2003:27) discuss on task duration and safety margins, two important
issues that Critical Chain Project Management does not address satisfactorily. The
first issue is on how the project manager determines safety factor that the task
owners presumably built into the duration estimate. They opine that the only way for
obtaining the correct answer is to have another method for estimating task durations
that provides an accurate estimate and to subtract that estimate from the one
provided by the task owner. If such a method was available, however, it should have
been used in the first place, and the issue therefore remains. CCPM suggests
reducing the estimate by a certain percentage, typically 33%. They take the position
that such an approach is problematic, not only due to the need to justify the
percentage reduction chosen, but also due to the fact that not all people
overestimate by the same amount. There are bound to be variations based on
personality, job experience, and nature of the task, workload, or other reasons. They
see the behavioural aspects of identifying the precise amount safety margin and
taking it away from the task owner as being dealt with only superficially by CCPM
literature and still require empirical support.
Time estimates are impacted in a major way by the last overrun the programmer had
(Goldratt 1997:116). According to Bushy and Payne (1999:299) people vest high
confidence in anchor project outcomes and often, engineers estimate a new project
by adjusting the recorded cost from a single past project of a similar kind. PMBOK
(2000:72) gives analogous estimating as a tool frequently used to estimate project
duration. PMBOK further states the analogous estimating is most reliable when (a)
the previous activities are similar in fact and not just in appearance, and (b) the
individuals preparing the estimates have the needed expertise. Hill, Thomas and
Allen (2000:14) also give estimating by analogy as one of the models used to
estimate cost durations.
Goldratt (1997:117) shows how the larger the number of management levels
involved, the higher the total estimation because each level adds its own safety
factor. Steyn et al (2003:122) describes it thus: Typically the person responsible for
performing an activity builds in some contingency reserve. In addition, the person
co-ordinating the sub-project then typically builds in some reserve as well, and finally
the project manager does the same. They further show that if for a specific activity
15% reserve has been built in at each of five levels of the work breakdown structure,
the total amount of reserve for that activity would be approximately 100%.
Estimators protect their estimates from a global cut (Goldratt 1997:118). Kerzner
(2003:841) argues that task estimates are not created in a vacuum. Often, there is
extensive discussion about the estimates, with managers pushing back on what they
consider to be unreasonably protected estimates. On the one hand, team members
expecting management to push back often inflate their estimates to take this into
account. The result is that estimates often are distorted based on the individual
experiences and negotiating skills of management and team members. According to
Steyn (2000:364), setting completion dates is often seen as a negotiation process.
In negotiations it is common practice to make an opening bid that allows for cuts
later on in the negotiation process. Should planners foresee an overall schedule cut,
they could be expected to add additional reserve in order to protect their schedules
from such a cut. The practice of cutting estimates is often counter-productive. It
influences people to build in even more reserve in future, (Steyn et al 2003:122).
Often there is little incentive to finish an activity ahead of schedule while not meeting
a deadline normally reflects negatively on the individual. Rational people
responsible for project activities therefore attempt to make commitments that they
could meet with a high level of certainty, (Steyn 2000:365). Kerzner (2003:838)
argues that in most companies, people take pride in reliable estimates. It is not good
for anyone’s career to repeatedly be way off on estimates. Considering that an
engineer can never predict exactly what kinds of problems he or she may run into,
and considering that this project is not the only work that the engineer is doing, the
engineer provides an estimate that takes all of these considerations into account.
People feel good if they complete an activity by the due date, and feel bad if they
overrun the due date thus reinforcing their attempts to estimate high probability
completion times, (Leach 1997:42).
The existence or the amount of the contingency time in task duration estimates is not
usually specified (Leach 1999:42). People estimating activity times for a project
usually believe that the project manager wants low-risk activity times; perhaps a
probability of 80% to 95% completion on, or less than, the activity duration estimates.
He further shows that “low risk’ duration estimates can be two or more times the 50%
probable estimate. Leach (1999:42) defines contingency as the difference between
95% probable estimate and the 50% probable estimate. Goldratt (1997:46) defines
the difference between the median of the probability distribution and the actual
estimate as the safety put in.
Bushy and Payne (1999:293) state that human cognition suffers from critical
limitations when making predictive judgements and the problems seem to actually
arise from the strategies we use to form our beliefs. They have identified two
judgement strategies of engineers involved in estimation of task durations and
staffing levels into (i) judgement strategies of individuals and (ii) organisational
activities that bears on these individual strategies.
In many situations in which people make estimates they have motivations to bias
their estimates. Bushy and Payne (1999:296) found reasons for inflating estimates
included; (1) Expectations, in the bidding process, that people downstream would cut
estimates to win contracts, (2) Knowledge that one would be held to account against
one’s estimate, since the task estimator often become the task performer on
successful bids. Reasons for deflating estimates were; (1) Pressure from others in
the organisation to submit low estimates in order to win contracts, (2) Knowledge
that one’s job was threatened if the contract was not won because the price was too
high.
Raz et al (2003:27) state that there are bound to be variations from one individual to
the other based on personality, job experience, and nature of the task, workload, or
other reasons that will influence task duration estimates.
Bushy and Payne (1999:297) came up with organisational activities that bear on
these individual strategies. People’s preferred strategies for making estimating
judgements differed because they had different goals, and these goals arose from
their organisational roles. People in planning support functions had the goal of
demonstrating that they had learned from past projects, and could identify material
risks: they therefore preferred top-down strategies that drew heavily on past
outcomes. People in senior, operational roles typically had the immediate goal of
winning a contract, and the longer-term goal of increasing productivity. Both goals
were served by their strategy of estimating top-down with target costs as an anchor.
People in more junior, operational roles often preferred bottom-up strategies
because other people wanted them to justify their estimates by breaking them down
into detail.
There are confounding goals and predictions at the organisational level. An estimate
can be interpreted either as a prediction of development effort, given the prevailing
specification and prevailing productivity levels, or as a goal that the engineering
organisation had to try to achieve if it was to be commercially successful. An
estimate tended to start off as a best prediction, but as the bid preparation process
continued it became a demanding goal in an attempt to make the bid price
competitive.
3. Methodology
For this research a case study approach was selected. The advantage of a case
study is that this allows investigators to study real-life events such as individual,
organisational and managerial processes, while retaining the holistic and meaningful
characteristics of the event. A multiple case design was adopted. Three
organisations participated in the study with each case predicted to test research
prepositions, thus providing literal replication of the findings (Yin 2003:47). The three
organisations that participated in the study were identified as Case Study A, Case
Study B and Case Study C.
The three companies identified to take part in the study represented the various
industry players from three segments of the industry i.e. contractors, consultants,
and government agencies. The three segments identified offered good case studies
for investigating identified human behaviour as they included a complete range of
players involved in estimating activity duration in construction project environment.
The methodology applied was based on the logic for theory-based empirical
research. Both qualitative and quantitative research methods were adopted in
carrying out the case studies, (Page and Meyer 2003:125). Qualitative research
methods were used to develop research prepositions, research variables and their
operational definitions. Data analysis was by classification and correlation analysis.
Case study analysis strategy adopted was using rival explanations as patterns.
Predicted patterns espoused in the research propositions were compared with the
empirically derived patterns thus strengthening the case study internal validity (Yin
2003:116).
Two methods were used to collect primary data: personal interviews and direct
observations. Personal interviews were carried out with participants from the three
Case Studies. A structured interview format was adopted. Specific items were
asked of all participants and responses were restricted to a pre-determined range.
This format was adopted as it gave the interviewees the opportunity to qualify their
responses. It also helped in having a predetermined coding system that was uniform
for all participants. Brief on issues to be discussed in the interview were given to the
participants before the appointed interview dates to enable them acquaint
themselves with the issues. To allow for direct observations, all interviews were held
at the participants work environment.
Direct observations of estimators in their natural environment were carried out where
possible. This however was hampered by limited occasions encountered where
actual time duration estimation activities were ongoing. In both Case Study A and
Case Study B, there were no estimation activities ongoing at the time of carrying out
the interviews. Two instances where actual estimation activities were taking place
were observed in Case Study C. Target observations were recorded in a
predetermined coding system adopted for personal interviews.
Three participants took part in Case Study A, five in Case Study C while ten
participants took part in Case Study C. Individual interviews were conducted in both
Case Study A and Case Study B. A group interview consisting of six participants
was conducted in Case Study C while the rest were individual interviews. All
interviews and observations were conducted between January and February 2006.
Table 1 below shows a summary of scores for the three case studies. These data is
presented in a bar chart in Figure 1.
Organisational Factors
Uncertainty
Human Behaviour
Saf ety
1 2 3 4 5
Table 2 below shows the ranking in importance of the four factors that influence
contingency added for the three case studies, while Table 3 shows Spearman rank
correlation coefficients for ranking in Table .2.
The different case studies ranked different factors as the most important factors that
influence safety added to activity duration estimates. Case Study A has uncertainty
as the most important influence; Case Study B has individual factors while Case
Study C identifies human Behaviour. The proposition that human behaviour is the
single most important factor that influence contingencies provided in activity
estimates in the construction industry is thus not supported by the empirical data.
A close look at the ranking in table 2 shows that uncertainty was the most highly
rated factor overall by the study. Case Study A rated uncertainty first while Case
Studies B and C rated it second. The proposition that factors such as uncertainty,
organisational and individual motivations are either singly or in combination the most
important factors that influence contingencies provided in activity estimates in the
construction industry is thus supported by the empirical data.
There is strong positive correlation between Case Study A and C; middle to weak
positive correlation between Case Study A and B and a weak positive correlation
between Case Study B and C. This may be an indication that there is no unanimity
among the three case studies on the most important factors that influence
safety/contingency provided in activity estimates in the construction industry.
4 Conclusion
The main objective of the research – to determine how stakeholders’ rate influence
of human behaviour on contingency provided in activity duration estimates – has
been achieved. The research results show that all the three case studies agreed
that human behaviour is an important influence in determining contingency provided.
The results however do not rate human behaviour as the most important influence.
The other objective – to identify other factors that influence contingency provided
and determine relative importance – has also been achieved. The three construction
industry sectors rated different factors as the most important influence on
contingency provided. Uncertainty was rated the number one factor with the civil
engineering contractor rating it highest. Projects are unique endeavours. There is
therefore some uncertainty regarding the duration of most activities. This is best
exemplified in the environment of the civil engineering contractor which normally
involves carrying out projects in areas that have not been worked on before.
The public body rated all factors more or less the same. The organisation main role
is a coordinating one between the client ministries, consultants and contractors.
The research has confirmed using empirical data a number of factors that influence
contingency provided in activity duration estimates in the construction industry.
Human behaviour has been confirmed as one of the important factors. These results
will to certain extend help in justifying TOC project management which relies heavily
on assumptions on human behaviour.
Raz et al (2003:27) have argued that behavioural aspects of identifying the precise
amount of safety margin and taking away from the task owner are dealt with
superficially by CCPM and still require empirical support. This research has
suggested that players in the construction industry rate different factors differently on
their influence on contingency provided. These factors have been identified and
rated for each industry sector. By identifying the factors, the research has taken the
first step towards carrying out further research to identifying the precise amount of
safety margin provided.
4.3 Self-Assessment
4.4 Recommendations
Raz et al (2003:27) has urged for empirical support to determine precise amount of
safety margin impeded in activity duration estimations. This research results is a
point of departure for such a study. Further empirical study should be carried out to
determine contribution of each of the factors identified to overall safety margin
provided. Project managers will then be in a position to know amount of safety to
take away from task owners during Critical Chain scheduling process.
References