Construction Project Management

Ar. Blessie John, M.Arch (Building Management)

C.A.R.E School of Architecture

Trichirapalli

bjblessi@gmail.com
“Project management involves the coordination of one time work by a team
of people who often have never previously worked together”

WHY PROJECTS FAIL?

Some examples of why projects fail are:

• The project lacks higher management support and resources

• Tasks and goals are vaguely defined

• Planning and pre-project preparation are inadequate

• Management methods are inappropriate or misused

• Communication is insufficient

• Technical and managerial skills are missing

• The project manager is lacking in skills and experience

WHAT IS A PROJECT?

• Temporary endeavor – definite beginning & end

• Not necessarily Short duration

• It produces a lasting outcome – e.g. Monuments

• It can also have Socio economic and environmental impacts

• Repetition does not change the fundamental uniqueness eg :Same

office but in different scenario

• Brings, uncertainties about the same above.

• It can involve single / unit / organisation

• Examples :

• Developing new product

 • Construction

• New business

• Change in structure, staffing

WHAT IS MANAGEMENT?

Definition given by George R. Terry, defines management as a process

"consisting of planning, organizing, actuating and controlling, performed to
determine and accomplish the objectives by the use of people and
resources."

• Firstly it considers management as a "process" i.e. a systematic way of

doing things.

• Secondly it states four management activities:

PLANNING, ORGANIZING, ACTUATING, AND CONTROLLING.

• Planning is thinking of actions in advance.

• Organizing is coordination of the human and material resources of an

organization.

• Actuating is motivation and direction of subordinates.

• Controlling means the attempt to ensure no deviation from the norm or

plan.

• Thirdly it states that manager uses people and other resources. For
example a manager who wants to increase the sales, might try not only to
increase the sales force, but also to increase advertising budget.

• And fourthly, it states that management involves the act of achieving the
organization's objectives
PROJECT MANAGEMENT:

WHO IS A PROJECT MANAGER?

A project manager is the person possessing the applicable skills, knowledge,

and talent who is assigned by an organization and responsible for overseeing
and actively managing, among other things, the scope, time, and cost of a
project to achieve project objectives. The project manager must manage
the interests and expectations of the people and organizations involved and
ensure that the project is completed at scope, on time and within budget.
Along the way, project managers measure and manage risk, ensure the
quality of deliverables, and manage the personnel and other resources
associated with a project—sometimes in a politically charged, stressful, or
time-sensitive environment.

KEY CONCEPTS OF PROJECT MANAGEMENT:

(in planning, organising, controlling and decision making)

1. Ensure that one person, and only one person, is responsible for the project
scope, budget and schedule
2. Don't begin work without a signed contract, regardless of the pressure to

start

3. Confirm that there is an approved scope, budget, and schedule for the

project

4. Lock in the project scope at the beginning and ensure there is no scope

growth without approval

5. Make certain that scope is understood by all parties, including the owner

6. Determine who developed the budget and schedule, and when they

were prepared

7. Verify that the budget and schedule are linked to the scope

8. Organize the project around the work to be performed, rather than trying

to keep people busy

9. Ensure there is an explicit operational work plan to guide the entire project

10. Establish a work breakdown structure that divides the project into

definable and measurable units of work

11. Establish a project organizational chart that shows authority and

responsibilities for all 12. Build the project staff into an effective team that

works together as a unit

13. Emphasize that quality is a must

14. Budget all tasks; any work worth doing should have compensation

15. Develop a project schedule that provides logical sequencing of the work

required to complete the job

16. Establish a control system

17. Get problems out in the open with all persons involved so they can be

resolved

18. Document all work, because what may seem irrelevant at one point in

time may later be very significant

19. Prepare a formal agreement with appropriate parties whenever there is a

charge in the project

20. Keep the client informed; they pay for everything and will use the project

upon completion

PROJECT PLANNING
• A project plan is a model of the process that the project team intends to
follow to realise the project objectives. It brings together a number of
important aspects of this process including its scope, timing, cost, and
associated risks.
• The project plan can be viewed as a type of ―contract‖ between the
project team members and other stakeholders. It defines‖ the process by
which the objectives will be achieved, and the responsibilities in carrying
out this process.
• Project plans also underpin a number of other key project management
functions including estimating and forecasting, options analysis and
decision making, and performance monitoring and control

WHO IS RESPONSIBLE FOR PLANNING?

• Everyone in the project team should be Involved in developing the
plan.
• It should be a collaborative effort.
 • The project manager should provide leadership in this area but may
delegate some of the administrative aspects and detailed analysis
to a project support role.
• On larger projects there may be one or more dedicated planners.

WHAT ARE THE BENEFITS OF PLANNING?

• It is more likely to lead to success and is more cost-effective than a
―just do it‖ approach.
• It develops greater mutual understanding and more commitment to
achieving the objectives within the project team.
• It provides an ―early warning system‖ so that problems‖ are identified
while there is still time to do something about them.

THE BEGINNINGS OF TRADITIONAL PROJECT MANAGEMENT

Although project management was first introduced as a discipline during the

1950’s, it has been around for thousands of years and has been used in
creating some of the biggest projects, from the Great Pyramids to the
Transcontinental Railroad.

Business leaders realized that they needed a system that will help them
manage large-scale projects. They needed a well-structured methodology
that would help them bridge gaps and ensure a consistent work pattern. As a
result, traditional project management was developed. Its ultimate goal was
to make sure all the tasks are carried out in predetermined orderly sequence.

TRADITIONAL PROJECT MANAGEMENT

Traditional project management is a universal practice which includes a set

of developed techniques used for planning, estimating, and controlling
activities. The aim of those techniques is to reach a desired result on time,
within budget, and in accordance with specifications.
Traditional project management is mainly used on projects where activities
are completed in a sequence and there are rarely any changes. The
concept of traditional project management is based on predictable
experience and predictable tools. Each project follows the same lifecycle,
which includes five stages: initiating, planning, executing, controlling, and
closing.
GANTT CHART

Gantt chart is the most important technique in the traditional project

management. Its creator was Henry Gantt, which is why he’s considered the
father of traditional project management.

Gantt chart gives you a simple overview of a project. It is one of the most
useful ways of presenting tasks and activities of the project on a timeline.

In the beginning, people used to create Gantt charts by hand or by using

magnetic blocks and Legos. As technology progressed, we began making
Gantt charts in Excel in a matter of seconds.

Left part of the Gantt chart shows the project activities and the top shows the
time scale. Each activity is presented with a bar. A bar’s position tells us about
the beginning, duration, and end of the activity.

By looking at a Gantt chart, we can learn:

 What the project tasks are

 Who is working on each task
  How long each task will take
 How tasks overlap and link with each other
 The start and finish date of the project

Today, we mainly use Gantt chart to track project schedules and make
project management less stressful. Gantt chart helps us understand the
relationship between tasks more clearly, keep all the team members on the
same page, and successfully complete project.

Gantt Chart comes with a lot of benefits: it lets you organise your thoughts,
gives you a clear layout of what you’re doing, helps you set a realistic time
frame, and it’s highly visible.

However, if you are working on an ambitious and demanding project with

hundreds of tasks, charts might become too complex and make you feel
overwhelmed. For example, as things change, you need to update the Gantt
chart. Also, the size of the bar does not necessarily indicate the amount of
work needed to successfully complete the project as activity may require
more resources than you initially expected.
WHAT IS PROJECT MANAGEMENT TRIANGLE?

There are many project constraints and the three most frequent ones are
time, cost, and scope. They are a part of every project and together they

make up the Project Management Triangle

Scope

In the initiation phase, it’s important to specify all the steps of the project
development including what WILL be was done and what WILL NOT be done.
If you want to keep the project under control, you need to allocate some
time and carefully plan and define the scope.

Time

Time is an invaluable resource. While we can control the processes and make
necessary changes to improve them, we cannot control time. One of the
biggest challenges each project manager has to face is to use time
efficiently, keep the project on schedule, and reach the desired objectives.

Cost

As a project manager, you should define the budget in the early stage of the
project and then compare it with the figure your customer initially offered. If
the client decides to spend a certain amount of money that doesn’t match
your requirements, you can prepare a business proposal which will include
the estimates of the total cost of the project. This proposal helps the customer
base his decision on more accurate estimates.

All three constraints are interconnected and depend heavily on one another.
Once you reduce the time allocated for the project, the cost increases. Also,
the scope of the project dictates the pace and a number of resources
necessary to realize and successfully complete the project.

While it’s virtually impossible to keep your eye on everything, it’s an

imperative to maintain the balance and strive towards the equilibrium of the
triangle no matter how challenging it can be.

The area inside the triangle represents the quality and it’s the ultimate
objective of every project delivery. A good project manager will find the way
how to control all three constraints of the triangle and produce the best
quality.

Project manager’s ultimate goal is to meet their customers’ requirements and

live up to the quality standards. In order to do so, you as a project manager
need to control both the quality and the constraints.

The charts may be in the form of any of the following:

(a) Scheduling or progress charts, which show the sequence of job progress

(b) Load charts which show the work assigned to a work group or allocated
to machines

(c) Record charts which track the actual time spent and delays, if any

BAR CHART:

A bar graph is a pictorial rendition of statistical data in which the

independent variable can attain only certain discrete values. The dependent
variable may be discrete or continuous. The most common form of bar graph
is the vertical bar graph, also called a column graph.

In a vertical bar graph, values of the independent variable are plotted along
a horizontal axis from left to right. Function values are shown as shaded or
coloured vertical bars of equal thickness extending upward from the
horizontal axis to various heights. In a horizontal bar graph, the independent
variable is plotted along a vertical axis from the bottom up. Values of the
function are shown as shaded or coloured horizontal bars of equal thickness
extending toward the right, with their left ends vertically aligned.
The following are advantages and disadvantages of bar graph
Advantages
 show each data category in a frequency distribution
 display relative numbers/proportions of multiple categories
 summarize a large amount of data in a visual, easily interpretable form
 make trends easier to highlight than tables do
 estimates can be made quickly and accurately
 permit visual guidance on accuracy and reasonableness of
calculations
 accessible to a wide audience

Disadvantages
 often require additional explanation
 fail to expose key assumptions, causes, impacts and patterns
 can be easily manipulated to give false impressions

PROGRESS CHART:
Refer http://www.conceptdraw.com/examples/construction-progress-chart-
sample
Load Chart:
WORK BREAKDOWN T
 Work breakdown process involves splitting of the project works into its
manageable constituents arranged in a hierarchical order till desired
level.
 Work breakdown levels are categorized into sub-projects, tasks, work
packages, activities and operations.
 These levels depend upon the plan type, the nature and complexity of

the project and the expected degree of control .

Project work breakdown defines:-

 Project work breakdown levels
 Outlines the methodology for determining the activities involved
 Method of assessing the activity duration
 co-relating the activity and work items with budgeted earned value

The work break down levels are broadly categorized into five levels
o Sub-project level
o Task level
o Work-package level
o Activity level
o Operational level
Each level has certain features associated with it. However level
categorization is broad concept and at time their overlapping may become
unavoidable.

Sub-Project level: Sub projects are derived by dividing the project work into
Independent large volume mini projects or task groups. For example, in
housing project each group of major works which can progress in a
systematic manner, without interference from other works can be termed as
a sub-project e.g. Block-1,Block 2 etc.,

Task level: The project or sub-project work can be split up into various tasks.
A task is an identifiable and deliverable major works. A task is supported by its
design package. Each task is assigned with time and cost objectives and
provided with planned resources e.g. Floor 1, Floor 2 etc.,

Work Package level: A project task can be further sub divided into one or
more work packages. Each work package contains sizable, measurable, cost
able and controllable package of work like Civil works, Plumbing works,
Electrical works etc.,
Task level: Work packages further be broken down into various identifiable
jobs, operations and processes, which consume time and resources are
necessary for completion like Sub structure works, Super structure works,
External development works etc.

Operations Level: An activity comprises one or more operations. Each

operation contains a part of the work content of the activity. It generally has
a particular type or fixed group of resources associated with it. It is performed
during the scheduled time duration of the activity like Excavation, Block work,
Plastering etc.

Support this with an example for any building structure.

There are essentially 8 parts of a WBS:
1. The top layer
2. The 100% rule
3. No scope overlap
4. Number of layers
5. Identification
6. Roles and Responsibilities
7. Start and finish dates
8. Budgets
The Top Layer
The top node contains the overall deliverable for the project. It should be
approved by all stakeholders, and defined to the appropriate detail. I don’t
mean to its ultimate detail, just to the level that’s appropriate. It’s amazing
how many times I’ve seen people proceed with planning out work tasks for a
report or design they haven’t completely defined.

The 100% Rule

This rule states that exactly 100% of the project scope should be included in
the work breakdown structure. Not more and not less. If you’re missing a work
item in the WBS, you will underestimate the scope and end up over budget or
behind schedule. Similarly, if you overestimate the work in the WBS, you will
end up with the dreaded ―scope creep,‖ whereby well meaning people
insert tasks into the project scope just because it’s easy and nobody stops
them. Scope creep eats projects alive.
All of the deliverables, whether internal, external, or interim, must be included.
Deliverables make great WBS elements.
The 100% rule also applies at all levels within the hierarchy. The sum of all of
the work in ―child‖ elements must equal 100% of the work in their respective
―parent‖ element.

No Scope Overlap
The work breakdown schedule should not contain items that have duplicate
scope of other items. This may seem obvious, but you’d be surprised how
easy it is sometimes. Let’s say you’re building a house and the
excavation contractor and the foundation contractor both want to bring
earthmoving equipment to the site. In the work breakdown structure, both
items contain excavation. Maybe some efficiencies can be realized through
this planning process.
Number of Layers
The best way to know if you’ve gone to the right amount of detail is to ask
yourself if the element can be reliably estimated. At that point, elaborating
further simply creates difficulty in tracking and managing small work items.
In general, I would suggest the lowest level of a WBS be no smaller than
about 40 hours. Any less, and you’re micromanaging and introducing
inefficiencies.
The limit on the high end would be when you can no longer track and control
the project effectively. Big work items with multiple deliverables will limit
project control and make it difficult to track the project.

Identification
According to the PMI, a proper work breakdown structure element has three
parts:
1. Identification: Preferably an identification number, for reference.
2. Description: The name and/or a brief overview of the element.
3. Person responsible: Someone on whom final responsibility for the work
rests.
This is the minimum amount of information, although a project manager is
certainly free to include other information such as schedule and budget.
Since the WBS is primarily a graphical tool, these three items, and any other
information for each task, are included in a supporting document called the
WBS dictionary.
Roles and Responsibilities
As described above, it is a minimum requirement for the WBS to identify
responsible people for each WBS element.
Start and Finish Dates
An optional, but frequently used, piece of information that can be added to
the WBS is the schedule start and finish dates for each item. Although the WBS
should not be used as a schedule planning tool, start and finish dates can be
added after the schedule planning and used for tracking. So long as the
project manager realizes the the creation of the WBS is focused on proper
sub-division of the work, not time and schedule planning, this can be a useful
piece of information in the WBS.
Budget
Similar to the start and finish dates, the budget for the work item can be
included in the WBS. It is optional, but frequently used. The project manager
should realize that the WBS is not a costing or estimating tool, but once the
estimating has been done the budget can be placed in the work breakdown
structure for easy reference.

http://www.projectengineer.net/8-ideas-for-great-work-breakdown-
structures/

MODELLING AND NETWORK ANALYSIS:

With the advancement of technology and speed of construction, the
traditional bar charts planning approach has become inadequate to tackle
complex projects.
Three commonly used networking techniques are
1. Critical Path Method (CPM)
2. Program Evaluation and Review Techniques (PERT)
3. Precedence Network Analysis Techniques (PNA)

NETWORKING:
“A project network is a graph depicting the sequence in which a project's
terminal elements are to be completed by showing terminal elements and
their dependencies”
• CPM (Critical Path Method) is a mathematical algorithm that helps to
analyse, plan, and schedule complex projects.
• Each project consists of a number of tasks and activities that are
interconnected and essential for project’s success
 • CPM is a powerful tool that allows identifying the longest path of
planned tasks necessary to meet the deadlines and identify the early
start and finish dates.
• By determining the critical path, you will know which activities are
critical in completing the project, and which ones won’t have any
serious impact on the project development and can be delayed.

ELEMENTS OF NETWORK:
Event :
An event represents the accomplishment of some task.
• In a network diagram, beginning and ending of an activity are
represented as events.
• Each event is represented as a node in a network diagram.
• An event does not consume any time or resource. Each network
diagram starts with an initial event and ends at a terminal event.
• Each node is represented by a circle and numbered by using the
Fulkerson's Rule.

Following steps are involved in the numbering of the nodes:

• The initial event, which has all outgoing arrows and no incoming arrow,
is numbered as 1.
• This step will create some more nodes (at least one) into initial events.
Number these events in ascending order (i.e. 2, 3 etc.).
• Continue the process until the final or terminal node which has all
arrows coming in, with no arrow going out, is numbered.
• most of the projects are liable for modifications, and hence there
should be a scope of adding more events and numbering them
without causing any inconsistency in the network. This is achieved by
skipping the numbers (i.e. 10, 20, 30…).

Activity:
 • An activity is a physically identifiable part of a project, which consumes
both time and resources.
• Activity is represented by an arrow in a network diagram.
a) The head of an arrow represents the start of activity and the tail
of arrow represents its end.
• Activity description and its estimated completion time are written along
the arrow.
• An activity in the network can be represented by a number of ways:
a) (i) by numbers of its head and tail events (i.e. 10-20 etc.), and
b) (ii) by a letter code (i.e. A, B etc.).
• All those activities, which must be completed before the start of
activity under consideration, are called its predecessor activities.
• All those activities, which have to follow the activity under
consideration, are called its successor activities.

Dummy Activity
• An activity, which is used to maintain the pre-defined precedence
relationship only during the construction of the project network, is
called a dummy activity.
• Dummy activity is represented by a dotted arrow and does not
consume any time and resource .
• An unbroken chain of activities between any two events is called a
path.
RULES FOR DRAWING NETWORKS:

Rule 1: Each activity is represented by one and only one arrow in the
network.
Rule 2: No two activities can be identified by the same end events.

Rule 3: Precedence relationships among all activities must always be

maintained.
Rule 4: Dummy activities can be used to maintain precedence relationships
only when actually required. Their use should be minimized in the network
diagram .
Rule 5: Looping among the activities must be avoided.
ACTIVITY TIMINGS AND CONNECTED TERMS

• Earliest start time (EST): This is the earliest time an activity can be started,
assuming that all the activities prior to it have taken place as early as
possible. EST = EET

• Latest start time (LST): This is the latest time an activity can start consistent,
with the completion of the project in the stipulated time. LST = LET-d.

• Earliest finish time ( EFT): It is the earliest time by which an activity can be
completed, assuming that all the activities prior to it begin at their ESTs.
EFT =EET+d

• Latest Finish time (LFT): It is the latest time by which an activity must be
completed to ensure the completion of project within the stipulate time.
LFT = LET.

Float:

The difference between the latest start time (LST) and the earliest start time
(EST) of an activity is called as float or activity slack. Float is a measure of the
amount of time by which the start of an activity can be delayed consistently
with the completion of the project on time.

Float = LST-EST = LET-d-EET

Total float:

Amount of time you can delay any given activity without delaying the
project end date Total float = (LF - EF)

It is the maximum period by which the start of an activity can be delayed

from its earliest start time (EST) without affecting the project duration. For an
activity (i-j) having duration ―d‖.
TF = LST j - ESTi

LST = LETj - d

EST = EETi; TF = LETj - d – EETi

Free Float: amount of time you can delay an activity without delaying the
earliest start of succeeding activity

Free Float = Minimum ES - ES - Duration

(Successor) (Activity) (Activity)

It is the maximum period by which the start of an activity can be delayed

from its EST without affecting the EST of the subsequent activities.

FF = ESTj - d – ESTi

EST j = EETj ; ESTi = EETi

FF = EETj - d – EETi

Interference Float : It is the overlap time between LFT of an activity and EST
of the succeeding activity.

IF = LFT j - EST i

IF = LETj – EETi
THREE MISTAKES U COULD POSSIBLY DO:
1. LOOPING ERRORS

2. DANGLING ERRORS
(PTO)

3. REDUNDANCY ERRORS
 TASK DEPENDENCIES

Finish to Start 2. Start to start 2. S

Finish to finish 4. Start to finish

PROCEDURE FOR SCHEDULING NETWORK BASED PLAN
 Outline scheduling constraints
 Design scheduling calendar
 List activities in order of sensitivity
 Draw earliest start time schedule
 Determine resource optimization criteria
 Schedule critical activities
3. Finish  Schedule non critical activities
4. Star
 Validate time objectives
  Schedule other resources
 Scheduling within resources constraints
 Scheduling repetitive works projects

Network Analysis Procedure as follows:-

1. Defining scope of network
2. Determining activities
3. Developing network logic diagram
4. Structuring Model
5. Incorporating activity durations
6. Numbering events / activities
7. Computing critical path
8. Validating Network

CPM Benefits
• Provides a graphical view of the project.
• Predicts the time required to complete the project.
• Shows which activities are critical to maintaining the schedule and
which are not.

CPM Limitations
• While CPM is easy to understand and use, it does not consider the time
variations that can have a great impact on the completion time of a
complex project.
• CPM was developed for complex but fairly routine projects with
minimum uncertainty in the project completion times.
• For less routine projects there is more uncertainty in the completion
times, and this uncertainty limits its usefulness.
PROBABILITY
• Probability theory provides a mathematical Foundation to concepts
such as “probability”,“uncertainty”,“randomness”,“vari-
ability”,“chance”and “risk”.
• Probability theory is important to empirical scientists because it gives
them a rational frame work to make inferences and test hypotheses
based on uncertain empirical data.
 • Probability theory is also useful to engineers building systems that have
to operate intelligently in an uncertain world

1. PROBABILIY AS A RELATIVE FREQUENCY - proportion of times an event

is expected in a long run
2. PROBABILIY AS A MATEMATICAL MODEL – to describe the limits of
relative frequencies

3. PROBABILIY AS UNCERTAIN KNOWLEDGE - e.g. “I will probably die rich”

the probability that a building stands.

PERT stands for PROGRAM EVALUATION REVIEW TECHNIQUE.

PERT charts are tools used to plan tasks within a project – making it easier to
schedule and coordinate team members accomplishing the work.

PERT charts were created in the 1950s to help manage the creation of
weapons and defence projects for the US Navy. While PERT was being
introduced in the Navy, the private sector simultaneously gave rise to a similar
method called Critical Path.

PERT is similar to critical path in that they are both used to visualize the
timeline and the work that must be done for a project. However with PERT,
you create three different time estimates for the project: you estimate the
shortest possible amount time each task will take, the most probable amount
of time, and the longest amount of time tasks might take if things don’t go as
planned.

Steps for PERT:

1. Identify the specific activities and milestones
2. Determine the proper sequence of the activities
3. Construct a network diagram
 4. Estimate the time required for each activity
a) Optimistic Time (ta)- Shortest time an activity an activity can be
completed
b) Most Likely Time (tm)- completion time having highest probability
c) Pessimistic Time (tb)– Longest time an activity might require
5. Determine the critical path

THREE IMPORTANT FORMULAS:

1. Expected duration = ta +4tm + tb

2. Variance = tb – ta
6

3. Standard Deviation =

DIFFERENCE BETWEEN CPM & PERT:

BASIC STEPS IN CPM / PERT
1. PLANNING :

• Started by splitting the total project into small units

• Relationship of each activity should be defined properly thus

avoiding the overlooking of other activity

2. SCHEDULING:

• Goal is to prepare a time chart showing start and finish dates

• To pinpoint the CP activities which requires special attention

• Non critical activities – float can be calculated - can be delayed/

less resource can be effectively used.

3. ALLOCATION OF RESOURCES:

• Resource – Men Money Material – which will impose time limitation

• When resources are limited, Systematic allocation can be done.

4. CONTROLLING:

• Final phase

• By CPM, we can identify areas that are critical to the completion.

• By having timely progress report and updated network continuously-

better financial & technical control over the project is exercised.

• Arrow diagrams and time charts are done for periodic progress reports.

CONSTRUCTION COST:
The cost of work unit which may be an activity, a work item or a work
package is composed of one or more cost elements. The cost elements
include labour costs, materials costs, plant and machinery costs,
administration costs and other expenses.

The process of cost estimation (termed costing) would be simple if it were

possible to directly correlate various cost elements to the activity that
incurs them.
 In order to identify cost associated with an activity, construction costs
generally referred to as production costs are categorized into ― direct
cost‖ and ― indirect cost‖ or ―overhead‖.

Production cost = Direct cost + Indirect cost

Direct costs are costs that can be correlated to a specific activity or a

work item which is being done or produced. All other costs that are
incurred to accomplish the activity or the work item but cannot be
correlated directly fall in the category of indirect cost.

DIRECT COST:

These are costs of materials, labour and other expenses which can be
identified with the execution of an item of work or activity.
Direct cost of permanent work item = Direct material cost + Direct labour cost
+ other direct expenses
Material: For example, materials used in concrete work of specified concrete
mix can be both measured, and its cost allocated to concreting activity in
terms of costs of cement, sand, aggregate, admixture and water, per cubic
meter of ready mix concrete.

Labour: It also cover net expenses for procurement, maintenance, and

wages of foremen and all categories of workers employed at the work site for
the execution of an item of project.
These expenses include
• Basic wages
• Overtime and allowances
• Procurement expenses including recruitment and conveyance at site.
• Benefits and statutory regulation compensation expenses such as earned
leave, provident funds, gratuity, bonus, insurance, medical etc.

Others: These include all other expenses on account of services rendered

which can be directly attributed to and clearly identified with the execution
of an activity or work item. Examples of such Special purpose plant and
machinery cost

INDIRECT COST:

Indirect cost includes all cost which is attributable to a given project but
cannot be identified with the performance of specific activity or work
packages. In other words, all costs other than direct costs are covered under
indirect costs. The range of indirect costs, depending upon the nature of the
project, may vary from 7.5% to 35% of the total costs.
These include all indirect manpower, indirect materials and other indirect
expenses incurred by each production responsibility centre also concerned
with providing technical and logistic support to the production centres.The
expenses related to operations and services rendered by the home office.
These costs include consultant’s fee, legal expenses, licensing charges, visits,
entertainment taxes, insurances and a share of the home office running
expenses

TIME COST OPTIMIZATION CONCEPT

― The cost optimization is a process that should be carried out
throughout the construction period to ensure that the cost of the
building is kept within the estimated cost limits‖. In the construction field,
time saving can also be transformed into some kind of opportunity such
as bonus of early completion or saving in overhead. Therefore, the lowest
tender price may not be the only criterion for project success and thus
concurrent optimization in both time and cost is highly encouraged and
desirable
TIME-COST OPTIMIZATION WITH NETWORK ANALYSIS

There is availability of various techniques for optimization and project

control software, still many construction projects do not achieve their cost
and time objectives.

The basic scheduling techniques commonly used in practice include the

Critical Path Method (CPM) and Program Evaluation Review Technique
(PERT)

CRITICAL PATH METHOD

Critical Path Method (CPM) was developed to optimize the organization

of complex procedures of an activity network and also to identify
critical activities in a network critical path. Because activities in the network
can be carried out in parallel, the critical path is the length of the longest
path from the start of project to its finish. An activity is said to be critical if
there is no delay in determining its start and finish times. Once the duration of
all the activities is estimated, the project duration can be calculated with
CPM, the project duration is the sum of the durations of all activities on the
CRITICAL PATH.
PROGRAM EVALUATION AND REVIEW TECHNIQUE

Since uncertainties such as inclement weather, unforeseen site conditions,

poor labour performance, inadequate resource allocation, low equipment
performance and inferior management style incurred during a construction
process, it could be difficult to estimate activity durations correctly.
Program evaluation and review technique (PERT) was originally designed
to orient time elements of a project and adopted probabilistic time
estimate to determine the probability that a project could be completed by
a given date. This method uses weighted values of three time estimates:
i.e. pessimistic, most-likely and optimistic duration to estimate the mean
and variance. The expected mean values then are used to determine the
mean critical path.

1.Optimistic time (O): the minimum possible time required to complete a

task, assuming condition that everything proceeds better than is normally
expected

2. Pessimistic time (P): the maximum possible time required to complete a

task, assuming condition that everything goes wrong (but
excluding major catastrophes).

3.Most likely time (M): the best estimate of the time required to
complete a task, assuming condition that everything precedes as normal.

4.Expected time (TE): the best estimate of the time required to

complete a task, accounting for the fact that things don't always proceed
as normal. TE = (O + 4M + P) ÷ 6

COST SLOPE:
It is the slope of the direct cost curve, approximated as a straight line in order
to have a single cross slope.

Cost Slope = crash cost-normal cost / Normal time-crash time

CS = Cc-Cn / tn – tc = ΔC /Δt

STEPS IN TIME COST OPTIMISATION

1. Establish:- Direct cost time relationship for various activities of the project.

2. Determine:- Cost slope for various activities and arrange them in the
ascending order of cost slope.

3. Compute:- Direct cost for the network with normal duration of activities.

4. Crash:- The activities in the critical path as per ranking i.e starting with the
activity having the lowest slope.

5. Continue:-Crashing the critical activities in the ascending order of the

slope.

6. Crash: - Parallel non-critical activities which have become critical by the

reduction of critical path duration due to crashing in steps 4 and 5.

7. Continue: - Crashing process through steps 4 to 6 , till a stage is reached

beyond which no further crashing is possible.

8. Find: - Find total cost of the project at every stage by adding indirect costs
to the direct costs determined above.

9. Plot: - Total cost–duration curve.

10. Pick Up:-The optimum duration corresponding to which least total project
cost is obtained.
RESOURCE PLANNING:
The resources of an organization consist of people, materials, equipment,
knowledge and time. Organizations typically have limited resources;
therefore, trade-offs on what project resources are expended and when are
made every day within organizations.

Resource planning is forecasting the resources required to perform the scope

of work within the time plan. Resource constraint should be considered after
the network diagram, schedule bar chart and procurement schedule have
been developed. But before crash flow.

Resource histogram:
It is a popular planning tool because it gives a good visual presentation
which is easy to assimilate and understand. The pre requisites for drawing a
histogram are

a. early start bar chart (after considering the procurement

requirements ensure the materials and equipment are available)

b. Resource forecast per activity.

Resource overload is when the resource forecast exceeds the available

resources, while a R.underload is when resource forecast is lower than the
available resources. Overload will lead to some activities being delayed
which could delay the completion of the project. Under-load will utilise the
company’s resource which could have a detrimental effect on the
company’s profitability.

Overloads and under loads can be identified and addressed as follows:

1. Resource smoothing: Assign resources to critical activities first, then try

moving the other activities to ease any overload and underutilisation.
2. Time – limited R. Scheduling: the end date of the project is fixed, so
resources must be increased to address any overloads.
3. Resource – limited R.Scheduling: The maximum number of resources is
fixed, so the end date may need to be extended to address any
overload.
4. Increase Resources: to address an overload
5. Reduce resources: to address an under load (underutilised)
6.

RESOURCE SMOOTHING:

Resource smoothing is the process of moving activities to improve the

resource loading profile.

The first step is to select the resource to be smoothed to decide which

resource to smooth considers:

a) The resource that is over loaded

b) The resource that is most used on the project.
c) The least flexible resource – this could be the resource that comes from
overseas, is difficult to get hold of or is least available.
d) The most expensive resource to hire. (eg crane)
RESOURCE LEVELLING:

In project management, resource levelling is defined by A Guide to the

Project Management Body of Knowledge (PMBOK Guide) as "A technique in
which start and finish dates are adjusted based on resource constraints with
the goal of balancing demand for resources with the available supply."

When performing project planning activities, the manager will attempt to

schedule certain tasks simultaneously. When more resources such as
machines or people are needed than are available, or perhaps a specific
person is needed in both tasks, the tasks will have to be rescheduled
concurrently or even sequentially to manage the constraint. Project planning
resource levelling is the process of resolving these conflicts. It can also be
used to balance the workload of primary resources over the course of the
project[s], usually at the expense of one of the traditional triple constraints
(time, cost, scope).
PROBLEMS WITH SOLUTIONS:

CPM – EST, LST, EFT, LFT

CPM – Draw Network
PERT
RESOURCE ALLOCATION:
CRASH
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Thanks & All the Best..!!