Section 5

Knowledge Exam preparation Course

Real Exam Course Simulations

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 Section 5
Project Management

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 SECTION 5 – Project Management
Chapter 16 – Project Management Fundamentals
Chapter 17 – Project Organization Structure
Chapter 18 – Project Communications
Chapter 19 – Project Labor Cost Control
Chapter 20 – Leadership and Management of Project People
Chapter 21 – Quality Management
Chapter 22 – Value Engineering
Chapter 23 – Contracting for Capital Projects
Chapter 24 – Strategic Asset Management
Chapter 25 – Change Management Practical Guide
Chapter 26 – Overview of Construction Claims and Disputes

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 Chapter 16 – Project Management Fundamentals

Learning Objectives
After completing this chapter, readers should be able to:
• Understand the role of the project manager in project planning.
• Understand the major factors effecting successful project
execution.
• Understand the overall company projects life cycle.
• Understand the major phases of projects.
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A Proactive Role
The best of today’s construction management take a proactive role through the newly
developed programs of construction preplanning and constructability; which results in a
strong construction involvement at the early stage of the project to ensure that
engineering design and early planning fully recognize the requirements of an economic
construction program.

Backwards scheduling, where the overall project schedule is structured around the
- construction schedule, with
- design drawing issues and
- material deliveries
being matched to construction needs

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Key Essentials
With the difficult and challenging business environment today, it is vital that the
management of projects focuses on:
• Identifying risks
• Maximizing cost savings
• Minimizing time delays
• Improving economic return

These results can only be achieved through:

• Effective management of people
• Tough but fair project objectives
• Efficient business techniques
• Outstanding leadership skills
“Projects are designed and built by people, not companies.

DEFINITION OF A PROJECT
It is a temporary endeavor with a definite starting point and ending point undertaken
to create a unique product or service.
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  PROJECT MANAGEMENT FUNCTION

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  OVERALL COMPANY PROJECTS LIFE CYCLE

Major Phases Flowchart

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 PROJECT TEAM CULTURE
Finally, there is the question of company personnel working as a team.

Without question, this matter has become the vital issue to profitability;
especially as companies downsize and reduce the core.
Greater personnel efficiency ----- increased operational quality

The “Bean Counter” Syndrome is a wide spread practice,

where effective cost control is absent or greatly diminished.
The bean counter syndrome is a dangerous and unacceptable practice.

Cost control efforts on a project should be proactive.

The term “bean counter” is utilized for those that take only a reactive stance to cost
control and believe that cost control is merely historical recordkeeping of costs.

This “bean counter” practice has two major contributing factors. First, the project
manager does not want an aggressive, creative, analytical function for the cost engineer.
Second, the cost engineer can be directly responsible for this practice; as the individual
may not possess the essential analytical skills, and/or does not possess the essential people
and communication skills.

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 Chapter 17 – Project Organization Structure

Learning Objectives
After completing this chapter, the reader should be able to:
• Describe a project organization structure.
• Understand how to establish objectives.
• Define matrix structures.
• Use communication and information effectively.
• Identify a variety of contracting arrangements.
• Identify pre-contract activities for contractor evaluation.
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BACKGROUND TO PAST ORGANIZATIONAL STRUCTURE

The Matrix Structure

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 Deming and Total Quality Management (TQM)
• Client Satisfaction—For the services provided or for the product sold.

• Understanding and Reducing Variation—

Every management process, practice, procedure, policy must be evaluated for its
effectiveness in allowing the company’s individuals to work at maximum effectiveness.

• “Top-Down” Management Leadership and Commitment—Improvement cannot

come merely from middle managers and workers “trying harder.”

• Change and Improvement Must Be Continues

• Ongoing Training and Education is Essential for all employees

• A Culture of Personnel Pride and Job Satisfaction—is required at all levels.

This requires leadership, program champions, the development of trust and loyalty,
personnel empowerment, and the elimination of inadequate performance measurement
schemes that can create more losers than winners, resulting in lowering of morale.

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Is the Project Manager (the Person) Qualified?
The answer to whether a project manager is qualified, should address:
 technical expertise,
 project experience,
 business capability,
 leadership ability,
 facilitating skills and people skills, including mentoring.
On larger projects :
 Project, business, and people expertise should have greater consideration.
On smaller projects and feasibility studies,
 technical skills would be more important.
Project Manager Authority
The project manager has full authority to make both design and cost decisions, with
appropriate limits of authority and management reporting requirements.

On reimbursable projects, the authority of the contractor project manager must be

adequate to allow efficient day-to-day operations.

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 Chapter 18―Project Communications
Learning Objectives
Reading and studying this chapter will help total cost management personnel communicate
more effectively with project
stakeholders. After completing this chapter, the reader should be able to:
• Describe the key elements of the communication process.
• Identify the filters and barriers that affect communication.
• Interpret the Stakeholder Analysis Matrix.
• Summarize the purpose of the Team Charter.
• Differentiate between positive/negative nonverbal communication clues.
• Differentiate between internal/external barriers to active listening.
• Describe the elements of the acronym LISTEN.
• Understand best practices for written communication.
• Describe the top five communication barriers for virtual teams.

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 Use of Technology for Business Purposes: Past and Future Trends
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 COMMUNICATIONS PROCESS

The Communication Loop

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 KNOW YOUR STAKEHOLDERS

The key first step for effective communications is identifying the

stakeholders you need to communicate with on the project.
Stakeholders are those people who are :
 directly or indirectly affected by the project or who can affect the
project
 Can view the project as positive or negative, and can be
 either internal or external to the organization.
Examples of stakeholders can include:
- project team members,
- end users,
- customers,
- management,
- legal and/or regulatory agencies,
- contractors and suppliers, and
- neighbors living close to the project site.
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 Power / Interest Grid

Stakeholder Analysis Matrix

An example of a stakeholder with high power but low interest is a town inspector doing a
code inspection of the plumbing installed for a new office building.
The inspector undoubtedly has many projects requiring inspection so his/her interest in this
one particular project is probably low, but the inspector has high power and can stop the
project if the plumbing fails inspection.

Finally, stakeholders with low interest and low power really don’t require any attention.
At most you should monitor this group in case any pertinent issues develop.
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 THE TEAM CHARTER
Establish the expectations for communications at the start of your project.

The project manager should do this with the entire project team, but if not you should do
this with your work group on the project.

An effective tool for setting the expectations for communications is the

Team Charter,
which is basically an upfront agreement on operating guidelines for the team.
The Team Charter covers more than communications, and can include:
 roles and responsibilities for team members,
 administrative procedures such as reporting hours worked,
 team performance measures and
 the process for making decisions.
The Team Charter should also contain ‘ground rules’ for team conduct such as:
 openly dealing with issues and conflicts,
 meeting commitments,
 returning phone calls and emails, and
 being on time for meetings

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Most important, the Team Charter should cover the five W’s of communications:

 Who are the recipients for the various project communications

(this is from your list of analyzed stakeholders)

 What information do the stakeholders need

(such as status reports, schedule updates, cost reports)

 Where will the communications be done

(face-to-face, email, project website posting)

 When will communications take place

(frequency of creating, updating and disseminating information)

 Why will each communication be done

(for information only, or for review and approval)

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 BODY LANGUAGE AND PERSONALITY TYPES
Effective communication depends on social skill,
which is the ability to read situations and the feelings of
people you are communicating with.
This is one of the five components of emotional intelligence (EI);

The Five Emotional Intelligence (EI) components are:

Social Skill
Self-Awareness,
Self Regulation,
Motivation and
Empathy.
 Critical to developing your EI is having a good knowledge of personality styles.
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Professor Albert Mehrabian, PhD., is well known for his pioneering studies regarding the
effectiveness of spoken communications.

Communications of Feelings & Attitudes

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Nonverbal signals can be positive or negative.
Positive signals suggest openness, acceptance and comfort.
Listed below are some positive nonverbal clues to watch for in your
communications:
• Uncrossed arms and/or legs:
an indicator the person is becoming more comfortable and being more
open with the
conversation
• Open hands: Allstate Insurance uses this as a corporate symbol
because it sends a powerful message of acceptance so watch for this in
your conversations
• Rubbing the chin: an indicator of being engaged, the person is
thinking and evaluating
• Moving closer: this could be a subtle forward lean towards you or
moving their chair towards you; this is a strong
indicator of interest
• Eye contact: good eye contact is a very positive signal
• Matching: this occurs when the person follows or matches your body
language and indicates he/she is in sync with you

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Negative signals indicate discomfort, distrust and indifference.
Listed below are some negative nonverbal clues to watch for in your
communications:
• Crossed arms and/or legs: an indicator the person is becoming
more uncomfortable and less open with the conversation

• Clenched or hidden hands: this is an indicator of discomfort

• Moving away: this could be a slight lean back or turning away; this
is an indicator of discomfort

• Limited eye contact: this can be an indicator of boredom or

disagreement; but staring could be an indicator of distrust or
even anger

• Excessive body motions: this can include fidgeting or tapping the

fingers or feet and is an indicator of impatience, boredom or even
nervousness
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Active Listening
People typically
 talk at around 120 words per minute (WPM), and the
 fastest speaking debaters can speak 350 WPM or more
 thinking capacity is 600 WPM,
so in conversations it’s easy to multi-task or let your thoughts wander instead of focusing on
the message the sender is communicating to you.
There are many internal and external barriers to active listening.
Remind yourself that your goal with any conversation is to hear and understand
what the other person is saying. Active listening will make you a better communicator,
help improve your work productivity and build better relationships.

Active listening, listener pays full attention to the speaker and his word.

Passive listening, listener acts passively by receiving the message only without
giving further external indications

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 External barriers can include:
• Noise: Equipment, traffic, other people talking, radio, TV

• Visual Distractions: Scenic window views, passersby, cluttered desk or work area

• Physical Setting: Temperature too hot or cold, uncomfortable seating, odors,

distance from speaker

• Interruptions: Unexpected visitors or phone calls

• Fidgeting with Objects: Pocket change, pens, paper clips, jewelry

• Multi-Tasking: Doing email or texting while conducting a phone call

• Speaker’s Personal Appearance: Grooming, hairstyle, clothing

• Speaker’s Mannerisms: Nervous habits, dramatic gesturing, overly expressive

face

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 Internal barriers can include:
• Anxiety: Personal worries and concerns crowding in

• Self-centered: Prefer own thoughts or daydreaming to speaker’s message

• Closed-Minded ⁄ Judging: Don’t personally like speaker or disagree with his ⁄ her ideas

• Laziness: Speaker’s subject matter difficult and takes effort to follow

• Boredom: Speaker’s subject matter dry or uninteresting

• Superiority: Feel as though you have nothing to learn from the speaker

• Preconceptions: Listen only for what

• Ego: Prefer talking to listening

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With all of these potential internal and external barriers, it’s easy to see the difficulty in
practicing active listening.
Practice the following six key elements from the acronym LISTEN (explained below) and it
will help ensure that you hear and understand the other person, plus let the other person
know you are hearing what he/she said.
 Look interested and give the speaker your undivided attention
 Involve yourself by responding to show you are listening.
 Stay on target. This means listening to the message and not changing the topic because
you find the message uncomfortable or uninteresting.
 Test your understanding since your role as a listener is to understand what is being
stated. Reflect on what was said by paraphrasing using words such as “what I’m hearing
is” or “it sounds like you are saying”.
 Evaluate the message and respond appropriately. Think before responding and be
candid and honest in your response. Present your opinions respectfully and treat the
other person in a way you think he/she would want based on their personality style.
 Neutralize your feelings. Defer judgment and avoid interrupting since it will frustrate the
speaker and will limit your understanding of the message. Allow the speaker to finish
each point before asking questions, and don’t interrupt with counter arguments.

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WRITTEN COMMUNICATIONS

VIRTUAL TEAMS
A virtual project team is a group of individuals geographically dispersed who work across
space and organizational boundaries to complete projects.
More than 66% of business professionals engage in virtual work, and that number is
rapidly growing.
The danger for virtual teams is communication barriers that can impede the virtual team
from being a high performance team.
The top five communication barriers are
 Lack of a common language
 Use of slang and terminology
 Loss of nonverbal communication clues
 Lack of team interaction
 Use of information filters
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Virtual teams can be successful provided effective communications is achieved.
Some suggestions for achieving better communications with virtual teams include:

• Connect with all team members: Find reasons to communicate with each team
member, not just the group as an entity.
Ask for information, ask their opinion and just connect to say thanks for getting an
important task done. When working With virtual team members a helpful tool is keeping a
contact log which lists the date of communications and the topic.
This provides a reminder that you haven’t talked to a team member recently.

• Prepare e-communications plan: Every project should have a communications plan,

but on virtual projects it is a critical element for success. The e-communications plan
describes who needs to receive information, what information will be shared, when the
information will be shared, and how the information will be delivered.

• Use effective communication tools:

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 Chapter 19―Project Labor Cost Control

LEARNING OBJECTIVES
After completing this chapter, you should be able to:
• calculate installed quantities (progress) for construction activities;
• define how actual labor work hours are collected using time cards;
• analyze labor cost performance using earned value;
• analyze labor cost performance using unit rates;
• define the three components of labor costs—quantities installed, production
rates, and wage rates; and
• Analyze labor cost performance using variance analysis.

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• Construction labor costs are the most variable element of the project construction
budget.
• Owners also need to control labor costs for work performed in-house and
•for work performed by contractors on a reimbursable basis.
• In order to control costs, project management must first develop a realistic budget.

• In order to maintain an accurate budget, project management must continually

compare the actual dollars and work hours to the budget dollars and work hours
to identify deviations.

• The two prevalent construction labor cost control reporting systems are
- Use of the “Rules of Credit” principle to measure outputs on tasks (in general)
- earned value method &
- the unit rates method.
• Study for Data from the concrete accounts of a pre-engineered warehouse
project.
The labor cost estimate for the concrete accounts is shown.

Chapter 21
 Budget
QTY.

Labor Cost Estimate for Concrete Accounts

 LABOR COSTS AND PRODUCTIVITY

• The greatest variable in the final cost of a construction project is the labor cost.

• Labor cost is a function of (main components of Labor Cost Control) :

- worker hourly wage rate and
- worker productivity rate
- Quantities
Some factors affecting construction craft productivity include the following:
• crew sizes and craft composition;
• craft density (area per worker);
• interference with other crews;
• scheduling;
• material availability;
• equipment and tool availability;
• information availability,
• rework due to design, fabrication, and field errors;
• site layout;
• weather; and
• constructability.

Chapter 21
subtasks for records the quantity Each subtask
is weighted
account 03140. completed each day These weights are the “rules of credit”

Chapter 21
Measuring Progress
• Labor input is measured by work hours expended or by labor dollars spent.

• Work hours are measured directly using cost codes and time cards.

• Dollars are calculated by multiplying each work hour expended by the appropriate wage
rate (i.e., dollars per work hour).

• A better way to handle too many cost accounts situation is to use the ” equivalent units
method “ to report the partially completed units as equivalent units completed. In the
equivalent units method, each step is assigned a weight based upon the percentage of the
activity’s budget dollars or work hours required to complete that step.
The breakdown of the effort that is required for each step is called the
“rules of credit.”

Following is an example of piping rules of credit [3].

• pipe placed in the permanent location—60 percent of the work;
• pipe end connections are welded or bolted—20 percent of the work:
• pipe trim installed and pipe is ready for hydro test—20 percent of the work.

• An example of a daily production report that measures work progress by cost account using
the equivalent units (rules of credit) method can be found in Table 21.2.
• The detailed description of each field in the daily production report for cost account 03140
appears below.
 subtasks for Each subtask
records the quantity is weighted
account 03140.
completed each day These weights are the
“rules of credit”

Table 21.2–Daily Production Report.

 • The actual quantity for the subtask X subtask’s weight = subtotal of quantity
• 767 linear feet (LF) X 0.6, = 460 LF.
• The subtotal for each subtask is totaled to obtain the equivalent actual quantity for the
account
The total of 608 = the sum of 460 LF (erect form) + 111 LF (wreck forms) + 37
lf (clean and oil forms).

Earned Value Method

Once the actual inputs and outputs are measured,
the project management team compares the:-
actual inputs and outputs to the project budget inputs and outputs.

• Percent complete (single account) = (actual quantity)

(forecasted total quantity)

• Earned value (BCWP) = (actual percent complete) x (budget for the account)

• Cost Variance (CV) = (earned value) - (actual cost) = BCWP – ACWP = EV - AC

• Cost Performance Index (CPI) = (earned value) = BCWP

(actual cost) ACWP
• Percent Complete (multiple accounts) = (earned value all accounts)
(budget cost all accounts)

EAC :
• Estimate at Completion (EAC) = (actual cost to-date) + (budget - earned value)
• Estimate at Completion (EAC) =(budget) / (CPI)
The credit value:
• The credit value represents what the cost would have been if the actual quantities
were installed at the budget unit rate

• is the budget unit rate multiplied by the actual quantities of work installed
Credit dollars = (actual quantity) x (budget unit cost)
OR
Credit work hours = (actual quantity) x (budget production rate)

Comparing the credit value to the actual cost measures the performance of the unit rate
alone without the confounding effect of changes in quantities
• Unit Cost Index (UCI) = (credit dollars)
(actual dollars)
• Productivity Index (PI) = (credit work hours)
(actual work hours)
• Scheduled value (BCWS) = (scheduled percent complete) x (budget dollars or
work hours)
OR
• Scheduled value (BCWS) = (quantity scheduled) x (budget unit cost or production
rate)
• Schedule Variance (SV) = (earned value) - (scheduled value)
• Schedule Performance Index (SPI) = (earned value)
(scheduled value)

In Table 3, the scheduled value (BCWS) is calculated at

the end of day 30 of the project.
Day 30 is the cut-off date for the example used in this
chapter.
 (5 days/20)
x1440$

Table 19.3—Schedule Report

 (608/2880) X 1440 From (1440/2880) X 608
Table
21.3
(304$/288$
From ACWP BCWP BCWS
Table AC EV PV
From 21.1
table
21.2

Table 21.4—Labor Cost Report Using Earned Value

 UNIT
RATES
METHOD
 • In the unit rates labor cost control system, actual dollars or work hours to-date are
used to calculate actual unit rates (dollars per unit or work hours per unit).

• The actual unit rates are then analyzed to forecast the unit rates at the completion of the
account.

•The estimated total dollars or work hours at completion (EAC) is calculated by multiplying
the estimate at completion unit rates by the forecasted quantities.
•
• The EAC is then compared to the budget dollars or work hours to determine cost
performance.
Method 1
Estimate at Completion (EAC) = (actual dollars or work hours to-date) + [(to go
quantity) (budget unit rate)]
Method 2
Estimate at Completion (EAC) = (total quantity) x (actual unit rate)

• In Table 21.5, the estimated total dollars or work hours at completion (EAC) is
computed assuming that the actual unit cost to-date will continue until the cost account
is completed (Method 2).
Therefore, the forecasted unit cost is equal to the actual unit cost.
 comparing the budget unit cost to the actual unit
cost, the project management team can determine
the cost performance of the account

$0.47x$2880 288/608
608/2880

Table 21.5—Labor Cost Report Using Unit Rates

• In Table 21.5, the estimated total dollars or work hours at completion (EAC) is computed
assuming that the actual unit cost to-date will continue until the cost account is completed
(Method 2).
Therefore, the forecasted unit cost is equal to the actual unit cost.

• The EAC is calculated by multiplying the forecast quantity by the forecast unit cost. For cost
account 03410, the EAC is equal to 2,880 lf multiplied by $0.4737 per LF, or $1,364.
Chapter 20―Leadership & Management of Project People

Learning Objectives
After completing this chapter, the reader should be able to:
• Identify the key contributors to the field.
• Understand the advantages and challenges to a multicultural team.
• Recognize the various theories of motivation.
• Identify how to avoid motivational mistakes.

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 CONCEPTS

Concept 1―
Douglas McGregor
Theory “X” Theory “Y”
People are: People are :
- lazy and - motivated and
- avoid responsibilities and - self development if they have
- need close attention and been provided by the proper
- solid rigid tough work environment
processes

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 Concept 2―

Frederick Herzberg
studied the relationship between the role of work and working conditions .
During his studies, he found that certain job characteristics led to satisfaction while other
factors led to dissatisfaction.
These findings led to the development of the Motivation-Hygiene Theory.
Herzberg found that real motivation resulted from the worker’s attainment of
motivating factors (satisfaction) such as:
 achievement,
 recognition,
 responsibility, and
 advancement.

Conversely, hygiene factors such as

 company policies,
 work conditions,
 salary, and status,
led to dissatisfaction.

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 Herzberg also noted that addressing the hygiene factors alone would not necessarily
lead to job satisfaction.
 Herzberg’s emphasis on job enrichment (motivating factors) stated that increasing the
challenging content of the job would cause the employee to grow both in skill and in a
feeling of accomplishment;
however, this growth could not happen unless the hygiene factors (dissatisfaction) had
been eliminated.
Managers must be able to recognize and understand the disparate nature of both hygiene
and motivating factors in order to increase job enrichment.

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 Concept 3―

 Chris Argyris
Advanced some of McGregor’s theories and said that:
the organization may be the source and cause of human
problems.
Argyris felt that the:
- organization must change to conform to human needs, and
- organization should offer meaningful challenges and opportunities for
responsibilities.
A climate of open communication and trust is needed in all interpersonal
relationships.

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 Concept 4―

 Rensis Likert
He said that real authority is not just official or formal authority, but is dependent
on how much authority a manager’s subordinates allow the manager to exert
over them, regardless of formal authority position.
He developed four basic styles of leadership related to a wide range of
organizational variables:
• exploitive-authoritative,
management makes most decisions and passes them down
• benevolent-authoritative, this approach is more participative. For example,
instead of just issuing instructions, you also explain the reasons behind
the instructions. –

• consultative, and

• participative group.

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 Concept 5―

Drs. Robert Blake and Jane Mouton developed the Managerial Grid

manager should be a
nine and nine.

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  Teams Cross-Cultural Concerns
 Leading, Managing, Facilitating, and Mentoring
Working with a team of people, the manager faces many challenges.
These include the following:
• Uncertain organizational resource support for the project.

• Extreme time pressures.

• First-time challenges to solve unique and complicated problems.

• A wide variety of personnel and other resource

interdependencies.

• Challenges of obtaining resources from senior managers who may

not totally support the project.
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As a result, the successful manager must bring special skills and abilities to the
organization.
He or she must be able to:
• Apply both technical and managerial skills in addition to operating as a generalist.

• Motivate the team toward the goals and objectives of the project, while still attempting
to meet each individual’s professional goals.

• Create group cohesion without succumbing to “group think.”

• Think and thrive under pressure, while integrating and resolving conflicting priorities and
goals of other stakeholders.
• Drive the team toward excellence.

• Work with the emotional, intellectual, and physical challenges in the startup and close
out phases of the project.
• Think in terms of three dimensions – timely delivery, cost compliance, and task
performance.

• Create mechanisms within the team that encourage the discussion of conflict and
balance the process through methods that motivate the team toward decisive action.
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The role of the project manager is a multifaceted one, and during a project, the project
manager then must be able to assume the
following four different roles.
 Leadership
Leader
someone who can influence others and who has
managerial authority
 all managers should ideally be leaders
not
 all leaders have the ability to be an effective manager
Leadership
process of influencing a group toward the achievement of
goals
a heavily researched topic
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Being a leader of a project is a more subtle, complicated role than simply being the person
who is in charge of the project and is supposed to deliver it on time and within budget.
True leadership involves the:
- ability to conceptualize the vision and direction of the project, and
- be able to communicate and sell the vision to the team members and other stakeholders.
In this context, vision is not an idealistic, amorphous concept of the project, but involves
identifying the purpose of the project.
- This involves listening to the customer to determine the added value the project will bring
and recognizing what the customer is not saying.

Once the project manager has discussed the purpose of the project, the next step is to create
a personal vision of its purpose.
The key point is to create a personal representation of the:
- true purpose of the project,
- noting subtle goals and
- the customer’s true requirements.
This then enables the project manager to be confident and motivated to begin the project
and to determine how to best sell this process to the team and required stakeholders.
The next step is to begin a dialogue with the team members on the subject of the project’s
purpose.
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 The project manager must create an atmosphere in which all team members are
encouraged to ask questions about the purpose of the project and to offer opinions and
clarification. Additionally, the project manager must gain credibility and must
demonstrate managerial actions and behaviors that are consistent with verbally espoused
values.

 Congruence in actions and stated values is crucial because it creates a state of comfort
and trust for team members that enable the person to take the leader at face value and
become involved in the task without holding any reservations, doubts, or hesitation.
Leadership also involves an active role in being the team’s voice to the outside world.

 The leader needs to communicate actively with outside participants who affect the
success of the project to address stakeholders in terms of supporting and buying into the
project goals, obtaining needed project resources, providing updates and progress
reports, and addressing conflict in a productive and forthright manner.

 Active communication between the project manager and various stakeholders maintains
sponsor support, creates needed ongoing liaisons, and helps reduce the risk of
unexpected obstacles hindering the project.

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 Mentor or Coach
The roles of mentoring and coaching are becoming increasingly important areas in the
workplace. They can be defined as those
processes in which one person (the mentor or coach) assists another person, either formally
or informally, in various tasks related to the general purposes of professional growth and
development.
This assistance takes the form of guidance and encouragement and may or may not be
directly tied to an actual project issue being faced by the individual but may be directed at
assisting the individual in attaining a broader view of future career directions or
advancement.
Mentoring and coaching involves the following:
 Being a role model in which the project leader demonstrates desired skills, behavior, and
attitudes whose adoption may
 benefit team members.
 Demonstrating a genuine, personal interest in the welfare and professional growth of
team members.
 Offering suggestions, possibilities, resources, problem-solving approaches, and
opportunities to think-out-loud with team
 members regarding current or future issues.
 Providing feedback that is supportive and also frank and accurate.
 Offering motivation directed toward assisting team members in identifying and achieving
long-term professional goals.
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 Theories of Motivation

Maslow's Theory Hierarchy of Needs Theory

Level 1 – Physiological needs (food, thirst).
• Level 2 – Security and safety needs (stability, survival).
• Level 3 – Belonging needs (affiliation, love).
• Level 4 – Esteem needs (achievement and the acquisition of recognition).
• Level 5 – Cognitive needs (knowledge).
• Level 6 – Aesthetic needs (beauty, order).
• Level 7 – Self-actualization needs (the realization of one’s personal
potential).

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 Chapter 21―Quality Management

Learning Objectives
After completing this chapter, the reader should be able to:
• Understand a brief history of the quality management, continuous improvement, and
benchmarking movements.
• Appreciate why there is renewed interest in quality management, now emerging as the
convergence of lean management and Six Sigma.
• Understand why traditional managerial accounting has failed the quality management
movement.
• Understand the Cost of Quality (COQ) categories: error-free, conformance related, and
non-conformance related.
• Understand how Activity Based Cost Management (ABC/M) provides a foundation for
repetitively and reliably computing COQ.
• Appreciate the goals and uses of COQ and benchmarking data.
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WHAT IS QUALITY?
Before discussing the various costs of quality and how to measure them, one should
have a definition of quality itself.
This is a “fitness for use” definition that relates to a customer’s needs. In the 1980s, a
predominant supplier-oriented view defined quality as being a high conformance to the
buyer’s requirements or specifications, usually measured at the time of final product
test.
One of the risks of limiting the definition of quality to a supplier “doing things right” is
that it can miss the customers’ real needs and preferences.

 Quality planning: Translating customer needs into characteristics of products

and service lines (e.g., quality function deployment analysis).

 Quality control: Measuring quality levels and comparing them against desired
levels (i.e., removing sporadic deficiencies).

 Quality improvement: Implementing incremental improvements to attain

better levels of control (i.e., removing chronic deficiencies) [Quality Circles]

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 Juran’s Trilogy

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 Chapter 22―Value Engineering
Value engineering techniques have been a proven
technique for achieving optimum value and lowest
life cycle costs

Learning Objectives
After completing this chapter, the reader should be able to:
• Express a more detailed understanding of value management.
• Identify the detailed steps of the value management process.
• Conduct a value management workshop.
• Conduct a value management review process.
• Identify the practical steps for implementation of the value management process.
• Understand value management implementation and its impact on the budget and schedule.

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 VALUE TYPES
In considering value engineering techniques, practitioners must be cognizant of the
four types of value.
These four value types are cost value, exchange value, use value, and esteem value.

• Cost Value―This refers to the totality of labor, material, equipment, and overhead
costs, involved in actually producing and bringing to market the project, product, or
service.

• Exchange Value―This refers to the characteristics of the project, product, or

service which allow it to be traded for something of value, such as currency.

• Use Value―This refers to the characteristics of the project, product, or service

which enable it to accomplish its intended purpose.

• Esteem Value―This refers to the characteristics of the project, product, or service

which make ownership attractive.

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 Level of Influence

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THE VALUE ENGINEERING JOB PLAN

 Information Phase
 Speculation Phase
 Analysis Phase
 Development Phase
 Presentation Phase
 Follow-up and Implementation
Phase.

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Value Engineering Success Steps
Organizations have found that for value engineering efforts to be
successful, value engineering must provide the following:
• An organized creative approach to cost reduction.

• Targets function versus technique.

• Targets areas of unneeded costs.

• Enhance the value of the product or service.

• The same level, or improved performance level, at reduced cost.

• Does not harm quality or reliability.

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 Chapter 23―Contracting for Capital Projects

Learning Objectives
After completing this chapter, the reader should be able to:
• Understand the basic requirements of a contract.
• Understand how contracts may become defective and, possibly, unenforceable.
• Understand the types of contracts typically employed in capital projects, their
requirements and the potential advantages and disadvantages of each.
• Understand typical project delivery methods and how contracts are employed in each
method.
• Understand various key clauses in contracts.
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 Requirements of a Contract
 Offer
 Acceptance
 Legality of Purpose
 Competent Parties
 Consideration
 TYPES OF CONTRACTS
 Fixed Price–Lump Sum Contracts
 Fixed Price With Economic Adjustment
 Fixed Price With Incentives
 Fixed Unit Price Contracts

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  TYPES OF CONTRACTS
 Cost Reimbursable Contracts
 Time and Material (T&M) contract.
 Target Contracts Target contracts are generally intended to provide an
economic inducement to the contractor to entice completion of work at the
lowest possible cost and least amount of time.

Contract Risk Allocation

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  PROJECT DELIVERY METHODS AND RESULTING
CONTRACTING ARRANGEMENTS

 Design-Bid-Build Project Delivery Method

 Design-Build Method (EPC Project Delivery Method)

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 Chapter 24―Strategic Asset Management

 Initiating a Change (Project Variance)

 Change Request
 Change Proposal
 Change Order
 Contractor Internal Change Procedure
 Disputed Change
 Change Register
 Pending Change Order (maintained in Change Log)
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 TCM Process Map for Change
Management

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 Chapter 26―Overview of Construction Claims & Disputes

Claims (requests for additional time and/or money) are common on construction
projects

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Ali Kortam PfMP, CPD, PMP, CCP,PSP
Key Words
 Claim,
 Constructive Acceleration,
 Constructive Change/Variation,
 Constructive Suspension of Work,
 Damages/Quantum,
 Delay, Delay Cost,
 Differing Site Conditions,
 Directed Change/Variation,
 Direct Cost,
 Field Office Overhead,
 Force Majeure,
 Home Office Overhead,
 Impact Cost,
 Indirect Cost,
 Liability/Entitlement,
 Lost Productivity, Notice,
 Suspension of
 Work,
 Termination for Convenience, and Termination for Default.
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Excusable, Non-Compensable Delay
Delay caused by third parties or incidents beyond the control of both the owner/employer and the
contractor.
Such delays were discussed in the section on Force Majeure claims, above.
Examples typically include acts of God, unusual weather, strikes, fires, floods, acts of government in its
sovereign capacity, and so forth. In such situations,
the contractor is normally entitled to a time extension and relief from liquidated damages, but no
compensation for delay costs.
• Excusable, Compensable Delay―Delay caused by the owner/employer or the owner/employer’s
agents.
An example is the issuance of changes/variations that delay the project’s end date. The contractor is
generally entitled to a time extension and time related compensation as a result of the delay.
• Inexcusable Delay―Delay caused solely by the contractor, its subcontractors or suppliers at any tier.
Examples include lack of qualified craft labor, or late delivery of contractor-furnished equipment or
materials.
The contractor is generally not entitled to relief for such a delay and must either make up the lost time or
be contractually liable to the owner/employer for late completion or liquidated damages.
• Concurrent Delay―This is a situation where two or more delays occur within the same time frame,
each of which would have independently impacted the project’s critical path.
This is sometimes referred to as overlapping delays.
The delays may be owner/employer caused, contractor caused, caused by others, or caused
by one another. If the concurrent delays are caused by both the owner/employer and the contractor, and to
the extent that they actually overlap by at least one day or more, neither party is entitled to damages.
That is, the contractor receives a non-compensable time extension but no delay damages. Similarly, the
owner/employer will not recover liquidated damages or late completion damages and does not have to pay
delay damages to the contractor.
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 Dispute Resolution Staircase
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