MANAGING RISK OF DELAY – Subject Series Summary

This post addresses the general topic of time management and the relationship to managing the risk of delay.

Keith Pickavance is a prominent leader, speaker, expert and author in the construction industry. His authoritative reference book, Delay and Disruption in Construction Contracts, is noted in our Resource Center.

Mr. Pickavance is President of CIOB. Speaking in this capacity, he delivered an excellent talk entitled: ” Managing the risk of delayed completion in the 21^st Century.”

The link to this streaming video is http://www.multichanneltv.com/ciob/cio004/ and is excellent. The discussion by Mr. Pickavance provides an excellent basis for development of this topic.

Time-Management Strategy (Part 2)

As a member of Time-Management Working Group, Mr. Pickavance and the group authored and have published Guide to Good Practice in the Management of Time in Complex Projects. This publication is noted in our Resource Center.

This work (hereinafter called “The Guide”) addresses, among other aspects, time-management strategy as viewed by CIOB. The Guide is an important contribution to many time-related topics including managing risk of delay.

There are nine topics addressed under the heading of Strategy. When planning the execution of the project and preparing the Project Execution Plan (PEP), the project team considers the Time-Management Strategy. The factors articulated within The Guide are appropriate.

Time-Management Strategy has several additional components and/or related strategies. This strategy must be closely integrated with the Risk Management Strategy as The Guide discusses. Management tools, such as risk registers must be coordinated with the time-management strategy. Time related risks, such as equipment deliveries, permitting and other, must be carefully integrated into the time management strategy. Contingency plans need to be in place.

Time-Management Strategy must be integrated with claims management strategy. More specifically, the time-related issues must be harmonized and synchronized with the claims strategy. Issues such as Key Performance Indicators (KPI’s) and notice mechanisms need strategy, process and procedural considerations. These KPI’s and notice factors are part of the time-management strategy. The specific strategy, process and procedures are driven by the project specifics.

As-Planned Schedule / Accepted Programme (Part 3)

This discussion contains aspects of time management. More specifically, we focus heavily on the managerial aspects of program / project management. This post addresses some ideas regarding the time management baseline. In some communities it is also called the Performance Measurement Baseline (PMB).

A Critical Path Management (CPM) plan and schedule (programme) is one of the most fundamental managerial tools used in professional project management. It reflects (hopefully) the intention of the lead or prime contractor regarding project execution. Further, it reflects (again, hopefully) the intentions of all key stakeholders, including the owner (owner, developer, employer).

Ideally, this meeting of the managerial minds can be achieved and documented through a schedule approval process. Again ideally, the detailed schedule would be developed in a timely fashion and submitted to the owner. Once revisions and improvements have been achieved, the owner would approve this tool. Once approved, this baseline schedule would form the as-planned schedule (or accepted programme, as termed in United Kingdom).

An issue arises when the contractor fails to submit a suitable schedule and/or the owner refuses to approve a suitable submission.

The message and the conclusions regarding schedule submission and approval are summarized in the full post.

Schedule Preparation and Maintenance (Part 4)

This post addresses some ideas regarding preparation and maintenance of the time management baseline. Some might refer to this baseline and As-Planned Schedule or Approved Programme.

When the subject of time management in larger and more complex projects is discussed, a common observation is that the industry lacks adequate structure and standards. The notion can be expressed as frustration with the lack of some grand rules or laws that somehow reduce managerial challenges to simple procedures for widespread adherence.

Mr. Pickavance (and all) presents structure for planning and managing time in larger and complex projects. This publication is cited in this blog’s Resource Center.

In the Preface [page xxi], Mr. Pickavance frames symptoms of the issue. He states:

It was apparent that standard forms of contract did not encourage time management (typically, there were pages and pages of clauses dealing with cost but, if any at all, there would be just one clause dealing with time and that not linked to the extension-of-time provisions). Not only that, but, in some forms, effective time management was actually inhibited. Accordingly, in 2003, in conjunction with Fenwick Elliott, solicitors, I drafted a series of contract supplements for use with the 1998 series of JCT contracts to facilitate their use in the management of time.

Notwithstanding the obvious advantages, the industry did not take this message to heart. On the whole, contract-drafting bodies ignored both the SCL Protocol and the ‘Change Management Supplements’, as they were called, and unfortunately ‘the Protocol’, as it became known, was used more often as a stick with which to beat the opposition in disputes, rather than to manage time proactively and avoid disputes in the first place.

In the broader industry and certainly in the US, examples and guidelines for time management structure have been available to decades.

Clearly, one of the most prominent authorities and proponents of Critical Path Method [CPM] scheduling is James J. O’Brien. Mr. O’Brien, or Jim as we know him, has authored (with Fredric L. Plotnick) an excellent book (including CD) on this topic related to large and complex projects. Mr. O’Brien’s publication, CPM in Construction Management is cited in this blog’s Resource Center. In the appendix, the authors provide a sample CPM specification. This sample is intended as a starting point for the user’s specification.

Clearly, one of the most prominent authorities and thinkers regarding CPM scheduling and delay liability (and claims) is Jon M. Wickwire. Mr. Wickwire (and others) has authored an excellent book on this topic. Mr. Wickwire’s publication, Construction Scheduling: Preparation, Liability, and Claims is cited in this blog’s Resource Center. In the appendices, the authors provide sample scheduling specifications. The samples can be adapted to the user’s application.

More sources for quality material on this subject include AACE, CII and PMI. Consequently, those embarking on time management challenges have the benefit of many sources of advice and work products. The challenge seems to be, get some good examples, then adapt and adopt.

Earned Value Management (Part 5)

This post addresses some ideas regarding preparation and maintenance of time management related to overall bulk progress. Some might refer to bulk progress as Earned Value Management.

The challenge associated with managing all (critical and non-critical path) work is common to virtually all Lump Sum Turn Key (LSTK), Engineer Procure Construct (EPC) and other similarly executed projects. In addition to the normal issues associated with bulk progress, actions or inactions by the owner can add considerable complexity to this challenge. Owner/Employer delays can be masked among the myriad of activities that are the responsibility of other (than the Owner/Employer) stakeholders. Even when detected or disclosed, these variances to plan are often dismissed as simply consuming available float. Hence, the Owner/Employer (or other stakeholder) may rationalize these variations as having no impact. Of course, the reality is that these sorts of departures may (or may not) add risk or disruption to the project execution. Further, they may delay forecasted completion. The managerial challenge becomes detection, assessment and quantification (should it be appropriate to compensate the contractor for the impacts).

Selection of earned value parameter resource or parameters is a complex consideration. It can differ for each phase of project execution.

Project Management Institute (PMI) Earned Value Management Community of Practice (EVM CoP) [http://www.pmi-cpm.org/pages/home/index.html] provides the industry with resources in this essential area of project management. Key EVM CoP resources will be cited in this blog’s Resource Center updates and additions. Other key resources (AACE, CII and others) are useful and blog users are encouraged to cite quality resources on this subject.

Critical Path and Earned Value Management (Part 6)

This post addresses some ideas regarding the integrated nature of time management using critical path and earned value management.

As noted above, the challenge associated with managing all (critical and non-critical path) work is common to virtually all Lump Sum Turn Key (LSTK), Engineer Procure Construct (EPC) and other similarly executed projects. In addition to the normal issues associated with bulk progress, actions or inactions by the owner can add considerable complexity to this challenge.

Time and progress management has proven to be a three part managerial challenge, with the three parts closely linked. These three performance indicators are:

Critical Path management
Earned Value (e.g. bulk progress, progress “S” curves) management
Productivity management.

In a recent (M&M) presentation and paper before PMI College of Scheduling, this subject was addressed. A discussion during the presentation indicated that many participants were interested and showed recognition of the managerial value. The M&M paper and PowerPoint will be posted at M&M website. A related presentation was delivered before Project Management Institute (PMI) Earned Value Management Community of Practice (EVM CoP). This PowerPoint will be posted at M&M website.

Critical path management is generally an outgrowth of the typical planning and scheduling (programming) work. Reports and graphics are easily extracted from popular software tools and programs. Since this managerial approach is commonly and widely discussed, further discussion of this discipline and approach will be left to another post or comments on this post by others.

PMI publication Practice Standard for EARNED VALUE MANAGEMENT at the Resource Center provides a useful overview:

Earned Value Management (EVM) has proven itself to be one of the most effective performance measurement and feedback tools for managing projects. It enables managers to close the loop in the plan-do-check-act management cycle.

[Snip]

EVM provides organizations with the methodology needed to integrate the management of project scope, schedule, and cost. EVM can play a crucial role in answering management questions that are critical to the success of every project, such as:

Are we ahead of or behind schedule?

How efficiently are we using time?

When is the project likely to be completed?

[Snip]

If the application of EVM to a project reveals that the project is behind schedule or over budget, the project manager can use the EVM methodology to help identify:

Where problems are occurring

Whether the problems are critical or not

What it will take to get the project back on track [Link}

The discussion above is intended to emphasize that one tool (e.g. critical path analysis and reporting, earned value analysis and reporting, or productivity analysis and reporting) is not the optimum, complete or exclusive answer to professional project time management. Contemporaneous reporting on these and other managerial indicators (Key Performance Indicators, KPI) is evaluated and considered together to create the complete understanding.

Earned Value and Schedule Performance Indicators (Part 7)

This post addresses some managerial tools relative to the integrated nature of time management using critical path and earned value management.

Performance Indicators for critical path scheduling and earned value schedule management tend to be structured differently. This is complementary, not conflicting. These general Performance Indicators [sometimes used with Key Performance Indicators or KPI’s] include:

Schedule (or critical path)

– Total Float or Slack

– Lookahead

– Key Milestone Performance

Earned Value

– Schedule Variance (SV)

– Schedule Performance Indicators (SPI)

– Earned Schedule

– Baseline Execution Index (BEI)

Total Float or Slack
Lookahead

Turning to earned value approaches, at least four managerial tools that can be helpful are:

Schedule Variance (SV)
Schedule Performance Index (SPI)
Earned Schedule
Baseline Execution Index (BEI)

It is essential to understand that each major stakeholder has a critical path and a PMB. Both critical path and earned value management may be helpful when managing the overall program or project. This consideration is an input to the Project Execution Plan managerial controls approach.

The discussion above is intended to emphasize that one tool (e.g. critical path analysis and reporting, earned value analysis and reporting, or productivity analysis and reporting) is not the optimum, complete or exclusive answer to professional project time management. Contemporaneous reporting on these and other managerial indicators (Key Performance Indicators, KPI’s) is evaluated and considered together to create the complete understanding. A key focus is consistency of message.

Time-Management Strategy is the higher level challenge. The Time-Management Strategy must be integrated with progress and claims management strategy. More specifically, the time-related issues must be harmonized and synchronized with the progress and claims strategy. The specific strategy, process and procedures are driven by the project specifics.

Good luck and let us all attempt to approach the issue of managing the Risk of Delay with all the factors in an integrated manner (critical path progress, bulk progress or EVM, and productivity) relative to other related aspects of program and project execution planning.

It is important to note that McLaughlin and McLaughlin [M&M] is not a law firm and is not intending to provide legal advice. M&M is a consulting firm providing (among other services) non-legal expertise in dispute resolution and litigation support. The Resource Center is for the convenience of blog visitors and M&M does not offer this for commercial purposes. For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

MANAGING RISK OF DELAY – Subject Series Summary

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