CAPITAL PROJECTS COST CONTROL

 

In light of the 2017-2018 Construction Forecasts, Capital Projects Cost Control is paramount and one to take a more acute focus.

In Project Execution, Field Labor Shortages Represent The Highest Risk To Achievement Of Time & Cost Objectives Large And Complex Projects.

Major Shortages in Construction Field Labor Will Influence (Negatively) US Construction Costs.

In Execution (After Stage Gate Three), A Major Risk to Project Cost Management Resides in Labor Cost (overruns),

The Highest Risk to Achieving Project Cost Management Occurs In Execution – After Stage Gate Three/Full Funding.

Driven By A Long History of Cost and Schedule Overruns, Managerial Thinking Now Prioritizes Cost Certainty.

On Complex Capital Projects, Cost Certainty Has Become a Compelling Objective.

 

McLaughlin & McLaughlin has assisted numerous  Major Capital Projects successfully over the years by providing cost effective business solutions and recovery plans.

What makes McLaughlin & McLaughlin unique from the others is that we  not only perform project management services but dispute resolution as practitioners.

 

It is important to note that McLaughlin and McLaughlin Project and Dispute Consulting LLC [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 construction claims, dispute resolution and litigation support.   For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

 

Labor Productivity

Project Professionals a blog by McLaughlin & McLaughlin Project and Dispute Consulting LLC   will be offering a few project tips regarding Project Management and Labor Productivity  over the next few weeks.

Labor Productivity – Productivity Factor (PF) according to #AACEI equals Actual Productivity divided by Baseline or Planned Productivity.

Labor Productivity – Performance Factor (PF), according to Schwartzkoff equals Estimated Unit Rate divided by Actual Rate.

Labor Productivity – A simple KPI is the ratio of Planned Man-Hours divided by Actual man-hours – “Earned over Burned.”

Labor Productivity – There are several KPI’s that can be used for project/construction management.

Labor Productivity – Use of labor productivity KPI facilitates proactive project management.

Labor Productivity – As a leading Indicator, Labor Productivity represents an excellent management tool.

 

It is important to note that McLaughlin and McLaughlin Project and Dispute Consulting LLC [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 construction claims, dispute resolution and litigation support.   For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

https://twitter.com/McLaughProject

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Labor Productivity Problem Recognition

Project Professionals a blog by McLaughlin & McLaughlin Project and Dispute Consulting LLC   will be offering a few project tips over the next few weeks.

Today’s focus lists a few key points to recognizing the problems associated with Labor Productivity issues. Problems from the issues may lead to owners and contractors achieving cost uncertainty and schedule uncertainty.

 

  •  Negative Cash Flow on Project/Contract/Job.
  •  Labor Force (Histogram) Peak Later Than Planned.
  •  Field Labor (Crew Size) Peak Greater than Planned.
  •  Low Quantities Installed Per Man-Hour Actual/Expended.
  •  Abnormally/Unexpectedly High Field Labor Turnover Rate.
  •  Billing less than Planned.
  •  High Number of New Revisions to Scope Documents.

 

It is important to note that McLaughlin and McLaughlin Project and Dispute Consulting LLC [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 construction claims, dispute resolution and litigation support.   For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

https://twitter.com/McLaughProject

https://www.facebook.com/McLaughlin-McLaughlin-Project-and-Dispute-Consulting-LLC-134974839908446/

 

CONSTRUCTION CLAIMS and DISPUTES – Subject Series Summary – Update 11-Nov-2014

Just as the businesses and economies have cycles, capital projects (particularly engineering and construction) have recurring cycles.  The pendulum swings back and forth within the bounds of the capital project cycle.  In capital projects, the cycle can be three to five years, depending on the economy, size and complexity of the projects and other factors.

At this time, the market seems to be transitioning from project planning and early execution into middle to later-stage execution with emergence of disputes.  As the claims and disputes marketplace intensifies over the next several years, Construction Claims and Disputes will become an increasingly commonplace and a relevant topic for capital project management professionals.

Construction Claims and Disputes continues to be the most popular subject on Project Professionals.  Further, it is the most requested line of services provided by McLaughlin & McLaughlinM&M are project management practitioners (in the field) and, yes, we practice what we preach.  Further, our choice of topics for Project Professionals posts is driven by and reflective of practical and current issues.  This is not esoteric, academic or hypothetical “stuff”.

This summary update provides readers with an overview of prior posts and provides a baseline for future posts that will follow on a timely basis.  Initially, this Subject Series, Construction Claims and Disputes, was posted during January 2011 through July 2014.  During the past several years, greater than 25% of views by visitors have been to this Subject Series.

Ideally this Subject Series  provides a starting point to investigate best practice on many planning and execution features of construction claims and disputes. [Read more…]

CONSTRUCTION CLAIMS and DISPUTES – Subject Series Summary

Construction Claims and Disputes is the most popular subject on Project Professionals and has been for several years.  Further, it is the most requested line of services provided by McLaughlin & McLaughlin.    M&M are project management practitioners (in the field) and, yes, we practice what we preach.  Further, our choice of topics for Project Professionals posts is driven by and reflective of practical and current issues.  This is not esoteric, academic or hypothetical “stuff”.

This summary update provides readers with an overview of prior posts and provides a baseline for future posts that will follow on a timely basis.  Initially, this Subject Series, Construction Claims and Disputes, was posted during January 2011 through August 2013.  During the past several years, greater than 25% of views by visitors have been to this Subject Series.

Ideally this Subject Series  provides a starting point to investigate best practice on many planning and execution features of construction claims and disputes.

Construction Claims and Disputes (Part 0)  – This introduction formats the discussion with definitions, claim categories and key industry references.  This post is consistent with M&M experience in many years of professional services.

The Overview (Part 1)  –Part 1 updates Part 0, the introduction.

Construction Claims Management Planning (Part 2) – This is the most popular post in this (most popular) Subject Series.  Construction claims (or the risk of claims) can and should be professionally managed.  View this process as a piece of project (execution) planning [link].  This post outlines elements of a Construction Claims Management Plan.  Further, it addresses elements of defining a Claim Strategy.  Stakeholders include Owners, Prime Contractors and Subcontractors.  Do not miss this post.

Current Project Professionals Posts (Part 3) – Claims are organized into four general categories.  These categories are consistent with the frequency of occurrence, methods of management and other key managerial considerations.  The categories are

  • Scope of Work, Changed Work or Variations
  • Delay and Acceleration, Time-Related
  • Disruption / Productivity (usually labor/labour)
  • Terms and Conditions.

Pricing Construction Claims (Part 4) – This post addresses the…  Think you know how to price your (or other’s) claims?   Andrew (Andy) Ness, 2012-13 Chair, ABA Forum on the Construction Industry probably disagrees with your answer.  Read this post and consider Andy’s position as well as other considerations regarding claim pricing/damages.  The content of the recent ABA book on the subject is covered.

Pricing Construction Claims (continued) (Part 5) – Are construction claims and disputes “all about the money?”  Some believe this to be the case.  This post (Part 5) expands on Part 4 by addressing pricing and citing additional references.

Scope of Work – Baseline (Part 6) – It is widely believed and accepted that Scope of Work and/or Changed Work is the single largest source of claims and disputes in engineering and construction (as well as many other contracted services).  In order to establish departures from the baseline scope of work, you must be able to define the applicable baseline.  This post cites various sources for baseline definition,

Scope of Work Plans and Specifications (Part 7) – Several industry sources (publications) are used to elaborate on execution and contracting strategies that rely on plans and specifications as a major component of scope or work definition.  This discussion includes typical contract documents and contract provisions wherein scope of work, services, supply and / or facilities is / are defined.  Suggestions for configuration and change management in the field are included.

Other Subject Series that are both relevant and popular include:

Going forward, we will post other features of CONSTRUCTION CLAIMS and DISPUTES.

My we wish you the best of luck and let us all attempt to confront and deal with these and other project management challenges.  It is crucial that recognition and anticipation of these issues occur during initiation and planning.  However, the recognition and management should continue through execution, controlling and closeout.

Please 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.

 

 

PROJECT PROFESSIONALS POSTING RESUMPTION

McLaughlin and McLaughlin [M&M] is pleased to announce that they will resume postings at their blog, Project Professionals.  Since mid-2013, M&M has been heavily involved with several large assignments [Construction claims regarding several power plant projects].  Now that workload permits, new blog postings will be offered.

M&M wishes to remind followers (new and ongoing) that there are many offerings at the Project Professional site.  They are organized by what we call Subject Series.

These Subject Series  are:

M&M will resume with additional posts in the Subject Series Construction Claims and Disputes.  This Subject Series focuses on methodologies, process, reference resources, techniques and other practical advice regarding the preparation, evaluating and managing construction claims and disputes.

We hope that you will find these existing and new posts informative and relevant.

We wish you the best of luck in this New Year.

 

Please 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 – Managing Contractor Schedules (Part 13)

This McLaughlin & McLaughlin post is the thirteenth (13th) in a series  of discussions regarding various aspects of time management as it relates to the risk of delay.  This post addresses managerial considerations for dealing with schedules prepared by contractors and submitted to owners or their agents (construction managers, managing contractors, advisors, etc.).

Recently, Mr. Chris Carson authored an excellent article titledDealing with Contractors Schedules That Cannot be Approved.  This fine article was published in COST Engineering(September/October 2013).

This article contains excellent advice for project teams regarding schedule management.

Mr. Carson’s article is, in reality two articles in one.  While Mr. Carson’s article presents a methodology for problematic situations (which he calls DSAB), the preamble and initial discussion for this article is highly useful and applicable to project management teams as they address the frontend of project planning and execution.  This post summarizes the sage advice provided by Mr. Carson regarding frontend project management challenges as they relate to scheduling and time management. [Read more…]

CONSTRUCTION CLAIMS and DISPUTES – (Part 3)

Current Project Professionals Posts

McLaughlin & McLaughlins Project Professionals post is the third in a Subject Series.  Construction Claims and Disputes which are (will be) discussions regarding managerial challenges in potential and actual construction claims situations.  In this series, we focus on the managerial aspects of construction claims and disputes management.  This summary discussion addresses the many posts that have been presented in the past and are at the Subject Series tab of Project Professionals.

In the engineering and construction industry, claims and disputes take many forms and focus on many topics.  For simplicity of discussion, we will use the follow the following categories:

  • Scope of Work, Changed Work or Variations
  • Delay and Acceleration, Time-Related
  • Disruption / Productivity (usually labor/labour)
  • Terms and Conditions (and other subjects).

McLaughlin & McLaughlins Project Professionals has posted (or published) greater than 60 posts regarding one or more aspects of Construction Claims and Disputes.

The balance of this post identifies the Subject Series and posts that are at Project Professionals and are relevant to construction claims and disputes. [Read more…]

PROJECT PLANNING (Part 4)

Summary of Posts

This summary update provides readers with an overview of prior posts regarding Project Planning and provides a baseline for future posts that will follow on a timely basis.

There are two applicable Subject Series.  One Subject Series, PROJECT MANAGEMENT CHALLENGES  was posted during June through September 2011.  Since that time, blog readership has increased very significantly.

The other Subject Series, PROJECT PLANNING  was started in late 2012.  This Subject Series is ongoing and new posts will occur in the upcoming weeks and months.  Readers are encouraged to subscribe to automatic update notification.

This summary is very brief and simply serves as an index for readers to follow.  Of course, detailed descriptions are contained in the individual posts.

Ideally these Subject Series  provide a starting point to investigate best practice on many planning and execution features of project management. [Read more…]

CONSTRUCTION CLAIMS and DISPUTES – (Part 2)

Construction Claims Management Planning

This post is the second in a Subject Series  Construction Claims and Disputes which are (will be) discussions regarding managerial challenges in potential and actual construction claims situations.  In this series, we focus on the managerial aspects of construction claims and disputes management.  This post addresses the planning, a key managerial requirement in all project work.  First plan it, and then do (execute) the work.  The notion is consistent with the old adage “An ounce of prevention [in this case management] is worth a pound of cure.”  In that regard, litigation on a large and complex project can cost millions USD in expenses to pursue and may have tens of millions USD at issue.

Yes, construction claims and disputes can and should be managed.  This is particularly true of large and complex projects.

Prospective Construction Claims Management refers to the managerial approach and planning for managing the risks (and options, opportunities, etc.) during project execution through project close-out related to claims.

Retrospective Construction Claims Management (development, presentation and defending) will be addressed in another post.

Claims Avoidance There is a myth that construction claims can be avoided.  Experience shows that this is just a myth, since it relies on controlling the activities of others.  These others may be in an adversarial posture or position.  Hence, control cannot be readily achieved. [Read more…]