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PROJECT MANAGEMENT THE COMMON SENSE
APPROACH
BY
HOWARD CAIRNS JAMISON Ph.D.
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Copyright ©1998 by Howard Cairns Jamison All rights reserved
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TABLE OF CONTENTS
1.0 REQUEST FOR PROPOSAL..............................................................................................................1
1.1 INFORMATION H ANDLING AND DISTRIBUTION ........................................................................................11.2 READING SPECIFICATIONS...................................................................................................................11.3 FORMAL QUESTIONS DURING PROPOSAL PREPARATION.......................................................................2
Letter of Transmittal ........................................................................................................................... 41.4 REQUEST FOR PROPOSAL FROM SUBCONTRACTORS............................................................................5
2.0 ESTIMATING .......................................................................................................................................7
2.1 PREPARING THE ESTIMATE..................................................................................................................7Estimate Form.................................................................................................................................... 8
2.2 IMPORTANCE OF KEEPING CLEAN LEGIBLE ESTIMATES .........................................................................92.3 ESTABLISHING TRACKABILITY DURING THE ESTIMATE .........................................................................102.4 ESTIMATING SYSTEMS ......................................................................................................................11
2.4.1 The Decimal Estimating System ................................................................................................. 122.4.2 The Crew Estimating System...................................................................................................... 132.4.3 Computerized Estimating Form................................................................................................... 14
Electronic Estimating Form .............................................................................................................. 16
2.5 ITEMS TO BE AWARE OF DURING ESTIMATING.....................................................................................232.6 ESTIMATING FORMATS AND THE WORK BREAKDOWN STRUCTURE.......................................................24
2.6.1 Work Breakdown Structure ......................................................................................................... 242.6.2 Company Specific Formats......................................................................................................... 252.6.3 Changing Formats Quickly.......................................................................................................... 26
2.7 RECEIVING ESTIMATES FROM SUBCONTRACTORS ..............................................................................282.8 FINAL PROPOSAL..............................................................................................................................29
3.0 PRE-CONSTRUCTION PREPARATIONS........................................................................................32
3.1 IN-HOUSE PRE-CONSTRUCTION ACTIVITIES .......................................................................................323.2 PRE-CONSTRUCTION MEETINGS WITH THE OWNER ............................................................................33
Operational flow chart ...................................................................................................................... 35
3.3 PROJECT DOCUMENTATION...............................................................................................................363.3.1 Meeting Minutes.......................................................................................................................... 36
Sample Meeting Minutes.................................................................................................................. 373.3.2 Issues and the Issue Log ............................................................................................................ 41
Issue Log ......................................................................................................................................... 453.3.3 Filling in the Issue Detail Form.................................................................................................... 46
Issue Record .................................................................................................................................... 503.3.4 Correspondence ......................................................................................................................... 513.3.5 Filling in the Correspondence Log .............................................................................................. 51
Correspondence Log ....................................................................................................................... 553.3.6 Phone Log................................................................................................................................... 56
Phone Log ........................................................................................................................................ 57
3.3.7 Filling in the Phone Log............................................................................................................... 584.0 SCHEDULING ...................................................................................................................................61
4.1 INTRODUCTION .................................................................................................................................614.2 NETWORK LOGIC AND THEIR RELATIONSHIPS.....................................................................................644.3 DURATIONS AND RESOURCE ALLOCATION..........................................................................................674.4 MILESTONES ....................................................................................................................................694.5 UPDATING SCHEDULES .....................................................................................................................694.6 CRITICAL P ATH METHOD ...................................................................................................................71
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5.0 CONSTRUCTION PHASE.................................................................................................................74
5.1 PROJECT M ANAGEMENT DURING CONSTRUCTION ..............................................................................745.2 FILING SYSTEM.................................................................................................................................785.3 SUBCONTRACTS ...............................................................................................................................845.4 PURCHASE ORDERS .........................................................................................................................865.5 PROJECT DOCUMENTATION...............................................................................................................90
5.5.1 Introduction ................................................................................................................................. 905.5.2 Meeting Minutes.......................................................................................................................... 905.5.3 General Correspondence............................................................................................................ 92
Sample Project Memo...................................................................................................................... 935.5.4 Schedule Updates....................................................................................................................... 945.5.5 Operating and Maintenance Manual Information ........................................................................ 945.5.6 Project Journal............................................................................................................................ 955.5.7 Material Control Sheet ................................................................................................................ 97
Material Control Sheet ..................................................................................................................... 995.5.8 Change Orders ......................................................................................................................... 1005.5.9 Project Safety............................................................................................................................ 105
5.5.9.1 Toolbox Safety Programs................................................................................................... 1065.5.9.2 Safety Documentation Systems......................................................................................... 106
5.6 CONSTRUCTION DELAYS .................................................................................................................1075.6.1 Excusable Delays ..................................................................................................................... 107
5.6.2 Comprehensible Delays............................................................................................................ 1095.6.3 Concurrent Delays .................................................................................................................... 1095.6.4 Critical Delays ........................................................................................................................... 109
5.7 OPERATION AND M AINTENANCE M ANUALS .......................................................................................1105.8 PUNCH LIST....................................................................................................................................1105.9 PROJECT CLOSE OUT .....................................................................................................................1115.10 FINAL BILLINGS.............................................................................................................................1115.11 PROJECT M ANAGER CRITIQUE ......................................................................................................112
6.0 SUMMARY.......................................................................................................................................113
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Introduction
The objective of this dissertation is to provide a didactic paradigm for anyone
controlling projects. For this purpose we are using the word project to mean any
undertaking requiring concentrated effort. These projects can range from putting
together a complex computer program including its implementation to executing a
multi discipline construction project. This document should serve as a guide to assist
any Project Manager in correctly putting together the paperwork on a project.
Through proper documentation and correspondence, it is possible to help avoid
litigation. This by itself will not circumvent legal proceedings however, with extremely
well organized documentation and letter formation it will make litigation matters less
painful to deal with.
This document will deal with construction projects. To utilize this system for other
disciplines of project management it may be necessary to modify the terminology
however, all of the fundamentals remain the same.
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1.0 Request for Proposal
1.1 Information Handling and Distribution
When a proposal is received several things should be done with it to
facilitate its distribution and protection. First, a reproduction should be made of
all the original documents. The original is then filed in an appropriate folder,
one dedicated to that specific project. All original documentation and
information received for the project should be filed in the same folder. Only
copies should be distributed to the team members assisting with the
construction of the proposal.
1.2 Reading Specifications
Reading of specifications requires practice and experience. Review the
contract for legal statements. These statements could include indemnification
clauses or, hold harmless clauses. Often missed during the first reading, is a
requirement for special insurance, penalty clauses or performance guarantees.
An inexperienced estimator often overlooks this item. If the estimator does not
completely understand a term or statement within the request for proposal, a
copy of the section should be made and reviewed with their immediate
supervisor. If the supervisor finds nothing out of the ordinary, he or she should
initial and date the estimator’s copy of the proposal. This affirms that the
supervisor has examined these requirements and is satisfied that the required
obligation is currently being met or can easily be fulfilled. The supervisor is
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expected to perform this task for two reasons. First they have acknowledged
that the estimator has requested guidance and they have given it; secondly,
they are reinforcing the importance of documenting everything. The company
supervisor should not hesitate when being asked to initial something that they
have reviewed or approved. Additionally, the staff is learning the importance of
being sure that their answers and/or guidance are correct. This internal form
of discipline also trains employees in the true limitation of their positions’
authority.
1.3 Formal Questions During Proposal Preparation
In the event that the supervisor is not confident that the company has or
is capable of obtaining the required insurance, the following should occur. This
section or any other section not completely understood should be forwarded to
someone associated with the firm who has the knowledge and the resources to
correctly respond. This request for assistance should be sent under a letter of
transmittal. It is important that any persons assisting the company need to be
aware of time constraints for the proposal. Requesting a response date should
do this.
If insurance requirements or any other stipulations are needed, time will be
necessary to contact the proper authorities and request quotations for the
additional insurance or assistance.
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On one occasion, as a fledgling estimator, I was faced with a
requirement of a five million-dollar umbrella coverage, with the term “per
occurrence”. After going to the owner of the company with a question
concerning this, several meetings were set up between the insurance company
and the principles of my company. This insurance was not available for one
project; it was insurance that covered the company on all of its projects.
Therefore, there was a considerable financial impact that needed to be
assessed and a management decision made. The company subsequently
decided that it would be prudent to carry this additional insurance. After one of
the meetings with the insurance company representative, I was fortunate
enough to have him take the time necessary to explain what the words per
occurrence and aggregate meant. This neophyte estimator thought that
aggregate was just the stones within concrete!
For this dissertation there will not be a lengthy discussion on reading
technical specifications. The most important advice that I can give is this.
Read the specifications!
The following Example shows a Letter of Transmittal.
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LETTER OF TRANSMITTAL
From Date
Project
LOCATIONATTENTION
RE
TO
Gentlemen:
WE ARE SENDING YOU HEREWITH DELIVERED BY HAND UNDER SEPARATE COVER
VIA ______________________________ THE FOLLOWING ITEMS:
PLANS PRINTS SHOP DRAWINGS SAMPLES SPECIFICATIONS
ESTIMATES COPY OF LETTER __________________________________________________
COPIES DATE OR NO. DESCRIPTION
THESE ARE TRANSMITTED AS INDICATED BELOW
FOR YOUR USE APPROVED AS NOTED RETURN ________CORRECTED PRINTS
FOR APPROVAL APPROVED FOR CONSTRUCTION SUBMIT _________ COPIESFOR _______
AS REQUESTED RETURNED FOR CORRECTIONS RESUBMIT _______ COPIESFOR ______
FOR REVIEW AND COMMENT RETURN AFTER LOAN TO US FOR BIDS DUE
REMARKS
SIGNED
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Occasionally additional information is wanted from the owner or the
owner's representative. When clarification is necessary a request for
information should be submitted to the owner or the owners representative.
Timely responses should be requested. If the owner or the owners
representative does not respond quickly, then a letter requesting additional time
for preparing the proposal is fitting. In the event that extensive explanations are
needed pertaining to specifications, then requesting a time extension along with
the request for information is recommended.
1.4 Request for Proposal From Subcontractors
If the project is one of a turnkey nature, proposals from subcontractors
will likely be necessary. When referring to a project as turnkey this means that
one company will be responsible for the complete project from conception
through completion. This means hiring all subcontractors, engineers or any
other subcontractors required to properly complete the project. It is important
that the subcontractor receive all specifications that pertain to their work. It is
also equally important that they receive a copy of the general specifications,
along with any terms and conditions presented within the documentation.
Subcontractors will be held accountable for all the general conditions in a
project as well as the primary contractor. When subcontracts are issued it will
be important that all of the original documentation from the request for proposal
be referenced. If the subcontractors have not been given copies of the terms
and conditions then, the contractor requesting the subcontractors’ proposal has
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been negligent. To avoid negligence there is a common practice in the
industry for contractors to have a bid room. Within this room a subcontractor
can view all documents that were obtained from the customer. This will assist
the contractor in avoiding a possible litigious situation however, it can still
become an issue if the contractor did not formally issue, under a letter of
transmittal, all the information required for the subcontractor to accurately and
informatively prepare their proposal. It is not always incumbent on the
subcontractor to search out these documents. When communicating with
potential subcontractors, all documentation should be sent under a transmittal
letter. Keeping track of the documentation from the onset is the key to avoiding
litigation.
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2.0 Estimating
2.1 Preparing the Estimate
When a request for proposal is received the next step is to secure
pricing to perform the work described. Estimating a project is the frontline for
all companies. Any mistakes or misunderstandings at this phase can, and
usually does, have serious ramifications. Over the years, it has been my
experience that when a project has a questionable beginning, the ending often
has catastrophic financial results.
The estimates often become an issue, if a project goes to litigation.
Rarely is the estimate the most profound document in the case, but there are
times the estimate is the most displayed document of the case. Mistakes in
judgment can be shown and adequately demonstrated with some estimates.
When it is shown that a mistake was one of judgment, then the contractor will
rarely receive any financial compensation. In some states proving
mathematical error can relieve a contractor from the liability of the bid and of
the bid bond. However, the insurance company that posts the contractors bid
bonds will not remain positive if this type of occurrence is repeatedly presented.
The following example shows a simple estimating form.
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ESTIMATE FORM
QUANTITY SHEET
PROJECT
LOCATION
DESCRIPTION QTY UNITCost
LaborProd
UNITTotal
LaborCost
TotalCost
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2.2 Importance of Keeping Clean Legible Estimates
Occasionally there is a tendency for estimator's to haphazardly write
notes around the estimate forms. It is important that these notes be clearly
written, not only for litigation purposes but, also for a clearer conveyance of
information between the office and the field personnel. Many companies have
an estimating division and a separate division for implementing the project. In
this circumstance clean clear notes are imperative. When an estimate is
completed it should be easily understood by anyone experienced in that
discipline. This is important because if other estimator’s are called upon for
assistance they need to clearly understand the original estimator’s intent.
It is not unusual to work on private estimates for a company and then
have no communications for six months. Without warning, their project
becomes urgent and construction must begin immediately. When the
indecipherable notes are retrieved from the estimate file, the long spiral
downward begins. In the unfortunate event that a project does go to litigation,
all of the team members performing the estimate and project management will
then be forced to produce these indecipherable notes. This often causes a
great deal of personal embarrassment for the staff. Opposing, attorneys often
will point out the sloppy estimate pages and notes trying to further their
argument that the contractor was not in control from the beginning. Although
this is not a true litigation matter, the degradation of character for the employee
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may need to be dealt with for several years after the litigation. Clear and
concise notes are important and essential.
2.3 Establishing Trackability During the Estimate
A significant task while constructing the estimate is keeping in mind that
once a project is underway tracking must be performed. In order for tracking to
be most effective, the smallest incremental unit must be used as the baseline
measurement. This will assure the most accurate tracking system. This type of
tracking is referred to as actual vs. estimated. The estimator needs to keep the
estimate broken down adequately so that the tracking system will be easily put
into place. Additionally, company history can begin to be accumulated. This
history will not only serve as a comparison between the estimated and actual
numbers but it will serve as a model for future estimates with similar work units.
I have seen many estimator’s forced to re-estimate projects so that they could
accurately put together an accounting sheet for tracking. This activity is a
complete waste of company resources. All estimates should be prepared so
that they are essentially ready for the tracking system.
Some proposals require specific unit breakouts. When this is
encountered, the original estimating work breakdown structure should be
formatted so that an easy transference from the estimate units to the proposal
units can be performed.
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2.4 Estimating Systems
There are several styles of estimating. In this paper I will not form a
judgment on any type, but rather comment on how they are constructed and
some of the pitfalls associated with them. The most important statement to be
made when it comes to estimating is to be consistent. Occasionally, a
company may decide that standardization of estimating procedures and
estimating formats should be established.
My company has been contracted in the past to supply computer
software for the estimating departments. The standard approach that we take
is to sit with each of the estimator’s and defined how each performs their
individual estimates. Then a very basic spreadsheet is constructed that visually
looks similar to the forms that the estimator currently uses. Then over time the
introduction of automation for repetitive activities is offered. This is usually a
lengthy process however, each time it has proven successful. After the
estimator’s initially become comfortable with how the system works they quickly
begin requesting additional functionality.
Modifying the way an estimator performs their job needs to be done very
slowly, disruptions in this process can have devastating effects. If the estimator
is comfortable using a decimal estimating system then that is the system that
they should utilize throughout the entire proposal. It has been my experience
that when mixing a crew estimating system and a decimal estimating system,
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without performing the proper conversions, these estimates usually become
confusing and mathematical errors occur. Regardless of which type of system
the estimating is performed with, it is imperative that the base numbers be
clearly defined.
2.4.1 The Decimal Estimating System
The decimal estimating system consists of units assigned hours
to install. The basic formula is as follows:
Units X parts of an hour = hours required.
A decimal estimating system basically assigns labor values to
each item being installed. These labor hours are defined by decimal
parts of an hour hence, the name decimal estimating system. A basic
example of this would be the installation time required to install one 2
inch copper to copper sweat valve is .75. This equates to 45 minutes.
There are several publications displaying decimal estimating
systems, many also include a crew estimating system on the same line.
Estimating by means of the decimal system eliminates any conversion
required for tracking purposes. When the estimate has been performed
by means of a decimal system, there is no additional breaking down of
the numbers required for tracking purposes. By the essence of the
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decimal system the estimate has been performed at the smallest
incremental number.
2.4.2 The Crew Estimating System
The crew estimating system establishes a basic crew
complement in order to perform the work. A crew is a group of people
and equipment required to perform this work. An example of an
excavation crew would be.
•
1 laborer,
• 1 operating engineer,
• 1 plumber.
The equipment required for this work would include.
• Pickup truck
• Backhoe
• Hand tools
All of this labor and equipment would then be calculated for the costs
associated. This cost would then be divided into an hourly or daily cost
for estimating purposes.
The crew estimating system requires that all of the crews be
established. This is accomplished by putting together each of the crafts
or people involved with their associated costs. Once a crew is
established then a rate and productivity factor can be established.
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Depending on personal preference the estimator may work with hours to
complete or days to complete. I have seen estimators use months as a
form of measurement however, I do not recommend this. If a task is to
be tracked during a project, months is not an easy measurement for
deciphering productivity. Arguments on both sides of this issue have
occurred and they have often been long and intense. If the crew
estimating system is utilized at some time it must be broken back into a
decimal system in order to perform tracking. This is a pitfall in the crew
system however, if the estimators and Project Managers are aware of
the conversions needed, it should not become a problem.
2.4.3 Computerized Estimating Form
The previous estimating form displayed was a simple hand written
very rudimentary system. The following estimate form shows a more
advanced system. This system will automatically find items from a
database and bring them forward to the active estimate sheet. Taxes
are automatically calculated and carried to the total line item cost. A
summary page is generated and a graph is displayed which represents
the actual costs associated on the project. There is a column for the
work breakdown structure, which will be discussed in section 2.6.
This estimating form allows the estimator to change the hourly
rate for employees. Also the system will facilitate individual markups on
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labor, materials, subcontractors, other and, equipment. This is done
because there is a different risk assessment on each project. Marking
the cost of a project up based solely upon the total cost is not prudent in
a tight market. The contractor needs to evaluate each item on the risk
that it inherently carries.
The following is a simple electronic estimating form with labels truncated
for ease of printing.
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Electronic Estimating FormBid
BY: Howard C Jamison
JOB 1820 ProjectLOCATION new absorber
QUAN PRODUNIT LABOR LAB MATLABOR MAT MAT WBS Item Description COST RATE HOURS DAYS COST COST TAX TOTAL
Administration
Admin Mobilize 1 200.00 16.00 16 1.00 560 $200.00 $12.00 212
Admin Project management 1 1200.00 120.00 120 7.50 4200 $1,200.00 $72.00 1,272 Admin Training of client personal 1 200.00 16.00 16 1.00 560 $200.00 $12.00 212
Absorber work
Absor Test the absorber with nitrogen 1 140.00 16.00 16 1.00 560 $140.00 $8.40 148
Absor Bottel handeling of nitrogen 10 15.00 0.50 5 0.31 175 $150.00 $9.00 159 Absor Lithium bromidehandling 20 X 1.50 30 1.88 1050 Absor Fill absorber with lithium bromide 1 400.00 16.00 16 1.00 560 $400.00 $24.00 424 Absor Install drain valves on the new
absorber 2"1 300.00 16.00 16 1.00 560 $300.00 $18.00 318
Absor Start up and test new absorber 1 400.00 40.00 40 2.50 1400 $400.00 $24.00 424
Rigging
Rig Recieve the equipment in the riggeryard(25/ton)
1 X X
Rig open wall behind pumps and close 1 500.00 24.00 24 1.50 840 $500.00 $30.00 530
Rig seporat the unit as needed 1 200.00 32.00 32 2.00 1120 $200.00 $12.00 212Rig Reconstruct the unit onsite 1 500.00 80.00 80 2800 $500.00 $30.00 530Rig modification to pumps for access 1 450.00 32.00 32 1120 $450.00 $27.00 477
Rig Crain for unloading 1 X X
Rig Deliver the unit into the mechanicalroom 1 100.00 60.00 60 3.75 2100 $100.00 $6.00 106
Piping
Piping Conderser Supply 1 1200.00 32.00 32 2.00 1120 $1,200.00 $72.00 1,272Piping Condenesr return 1 1200.00 32.00 32 2.00 1120 $1,200.00 $72.00 1,272Piping Chilled water supply 1 1200.00 32.00 32 2.00 1120 $1,200.00 $72.00 1,272
Piping Chilled water return 1 1200.00 32.00 32 2.00 1120 $1,200.00 $72.00 1,272Piping Bottel handeling of nitrogen for
testing piping10 15.00 0.50 5 0.21 175 $150.00 $9.00 159
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Piping Dress out pumps 2 3800.00 75.00 150 6.25 5250 $7,600.00 $456.00 8,056Piping Steam piping 1 5800.00 80.00 80 -5.00 2800 $5,800.00 $348.00 6,148Piping Condinsate piping 1 2400.00 40.00 40 -5.00 1400 $2,400.00 $144.00 2,544
Piping Allowance for connections to newmain with valves
1 1800.00 40.00 40 5.00 1400 $1,800.00 $108.00 1,908
Piping Allowance for repairs to existngsteam system
1 4500.00 120.00 120 5.00 4200 $4,500.00 $270.00 4,770
Electrical
Ele Control pannel work including 110for pannel
1 220.00 40.00 40 2.50 1400 $220.00 $13.20 233
Ele Flow switches and other smallcontrols
1 80.00 8.00 8 0.50 280 $80.00 $4.80 85
Ele Power from existing to the starter 1 4500.00 100.00 100 6.25 3500 $4,500.00 $270.00 4,770Ele Power from the starter to the
motors1 250.00 16.00 16 1.00 560 $250.00 $15.00 265
Ele Power to the pumps 2 3200.00 40.00 80 5.00 2800 $6,400.00 $384.00 6,784
Subcontracts
Sub Demolition 1 XX Sub Electrical 1 XX
Sub Insulation 1 XX Sub Painting 1 XX
Equipment
Equ Starter 1 X2500.00 $150.00Equ absorber 1 65000.00 X $3,900.0
0Equ Pumps 2 X3000.00 $360.00
Equ Cooling Towers 1 15000.00 X $900.00
cooling Tower
CT Pricing for the cooling tower is froma previous bid
1 7169.00 137.00 137 8.56 4795 $7,169.00 $430.14 7,599
proposal called 1820 new tower
Total Hours
Labor Material Costs 1447 50645 53,434
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JOBMARKUPS
Bid # 35.00
JOB 1820 Project Run Date: 05-Aug-98
LOCATION newabsorber
TOTAL GrossEstimator: Howard CJamison
HOURS COST Margin PROFIT SALES
LABOR 1447.00 $50,645 30.00% $21,705 $72,350
MATERIAL $53,434 20.00% $13,358 $66,792
EQUIPMENT $93,810 25.00% $31,270 $125,080
OTHER $0 20.00% $0 $0
SUBCONTRACTS $90,000 16.00% $17,143 $107,143
BOND $0 $0
TOTALS 1447 $287,889 22.48% $83,476 $371,365
Special Notes: See c29 for details on the pump problems
LABOR
MATERIAL
EQUIPMENT
OTHER
SUBCONTRACTS
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The following explains the previous estimate form.
WBS
Work breakdown structure. This column is used for sorting
information. Usually this column is used for type of work being
performed. In the previous example rigging is separated by Rig
therefore, the computer system can easily combined all of the rigging
activities for the project then, summarize the costs associated. By
performing this simple operation it is possible to compare pricing
received from potential subcontractors for work that the company has
planned on performing in-house.
Item Description
This is a brief description of the activity to be performed.
Quan
Quantity is the number of the units that need to be installed.
Unit Cost
This is the unit price, it is directly proportional to the quantity.
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Prod Rate
Production Rate is the decimal part of an hour required to perform
the unit installation. In this example I have used the decimal system. If
a crew production was used it would be entered in the same column.
Labor Hours
This column shows the total labor hours required to install each
unit. This is calculated by multiplying the quantity times the production
rate.
Lab Days
Labor days required to complete the unit installation. In this
particular spreadsheet the total hours divided by 16 equals the labor
days. A default value of two is used for the calculation, in this particular
type of work there are usually two man crews. This calculation is
performed so that when the estimate is turned into a schedule the
duration for each activity has already been calculated during the
estimate. I have left this column visible for this dissertation however,
during the preparation of a normal estimate this column can be hidden
until the project has been awarded to the contractor. This would be
done to keep from confusing the decimal system with the crew system.
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Labor Cost
The system allows for entering a labor rate. The labor cost is
calculated by multiplying the labor hours times the labor rate.
Mat CostMaterial cost is calculated by taking the quantity times the unit
cost.
Mat Tax
Material tax is also a variable that the estimator enters in. In this
particular estimate the tax rate is calculated on six percent.
Mat Total
Material total is the some of the material cost plus the material
tax.
Equipment Cost
When using this spreadsheet by entering the code Equ in the
WBS column the system automatically then takes the unit cost and
places its into the equipment cost column. Additionally, the material tax
column is also utilized. For this particular estimate is a Pennsylvania
customer therefore, equipment is taxed.
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Sub
Subcontractor pricing. This column stands alone and uses no
other columns for calculations.
Other
The other column also stands alone and uses no other columns
for the calculation.
Line Total
The line total is a calculated field, it sums the labor cost, material
total, equipment, sub and, other columns.
The summary sheet shows all of the costs in the appropriate
location. Each of these costs can be marked up individually. At the end
of the summary sheet the total percentage of the job is displayed. Then
the profit column is calculated followed by the sale price for the project.
The graph is a representation of risk. Labor is the most risky of
the headings therefore, by reviewing the graph it is easy to see the
percentage of risk that each job holds. This graph also becomes a guide
for "normal" projects. When a contractor performs a specific type of
work on a regular basis, this graph will show certain percentages on a
regular basis. By reviewing the graph it is possible to tell that a project is
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different then the "normal". It is important to state that this is a guide,
knowledge of each individual bid needs to be obtained by the estimator.
2.5 Items to be Aware of During Estimating
The following items are often overlooked when putting together an
estimate. Some of these items can have serious financial ramifications if they
are not included in the proposal. Local municipalities may require specialty
permits also inspection visits may be required before the next phase of work
may begin. Special permits are often required for crane operations. Streets
sometimes need to be closed for public access, this usually requires the local
police department to direct traffic and quite often to place barricades.
Sometimes however, it becomes the responsibility of the contractor to take care
of barricades and sometimes even traffic patterns. When this type of issue
goes to litigation, the first question asked is whether the local municipality was
contacted and their procedures followed.
When working in a client’s plant they often have specific procedures
required for outages of existing services. (Electrical, chilled water, heating
systems) When this is encountered, it is imperative that the estimator
researches the company’s requirements. If the client can not be without these
services, then allocating funds for temporary services will become the
responsibility of the estimator
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2.6 Estimating Formats and the Work Breakdown Structure
2.6.1 Work Breakdown Structure
The work breakdown structure is a format that is utilized in the
construction industry under various names. Essentially, this is the
development of a hierarchy system for assigning project responsibility.
The estimate should always separate work that your direct manpower
will be responsible for versus activities that subcontractors will perform.
By using separate estimating sheets for each discipline this is easily
accomplished. When using a computerized estimating system this
separation of responsibility is easily sorted by work breakdown structure.
The separation of work is needed so that a risk to reward margin can be
properly assigned. Additional, Company policies need to be reviewed so
that the estimates will carry burdened or unburdened costs depending.
Burdened or unburdened costs are issues such as insurance, union
benefits and, per diem costs. Some companies prefer that these types
of costs be shown separately from the estimate while others, consider
burdened costs as the basis for estimating. Company supervisors
should have a very clear understanding of company estimating
procedures. Where will the costs of project management be placed?
Often companies carry this as a line item, other companies utilize
overhead and profit for this issue. There is no right or wrong way to
allocate these costs, it is only wrong when they are not allocated.
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2.6.2 Company Specific Formats
Every estimator utilizes a specific format for estimating. Each
company has a specific format required for estimate reviews. Many
companies have unsuccessfully tried to force estimators into utilizing
some pre-printed or predetermined format. This action is usually self-
defeating. Estimating is an art form. There is no exact science involved.
The word itself in the American Heritage dictionary states.
es·ti·mate ( µ s"t…-m³t") v. tr. es·ti·mat·ed es·ti·mat·inges·ti·mates 1. To calculate approximately (the amount, extent, magnitude, position, or value of something). 2. To form an opinion about; evaluate: "
While an author is yet living we estimate his powers by his worst performance "
Samuel Johnson n. ( -m ¹t) Abbr. est. 1. The act of evaluating or appraising. 2.
A tentative evaluation or rough calculation, as of worth, quantity, or size. 3. Astatement of the approximate cost of work to be done, such as a building projector car repairs. 4. A judgment based on one's impressions; an opinion. [Latinaestim³ re aestim³t-] es ti·ma tive adj. es ti·ma tor n.
Synonyms: estimate appraise assess assay evaluate rateThese verbs mean to form a judgment of worth or significance. Estimate
usually implies a subjective and somewhat inexact judgment: difficult toestimate the possible results in advance; could only estimate the size of the
crowd. Appraise stresses expert judgment: appraised the furniture and worksof art before distributing them to the heirs. Assess implies authoritative judgment in setting a monetary value on something as a basis for taxation:assessing an apartment on the amount for which it is likely to be rented. Assayrefers to careful examination, especially to chemical analysis of an ore todetermine its quality, fineness, or purity: cut a minute piece off the ingot to
assay it. In extended senses appraise, assess, and assay can refer to anycritical analysis or appraisal: appraised his character and found him wanting;
assessing the impact of higher taxes on lower-income households; has no
method for assaying merit. Evaluate implies considered judgment inascertaining value: evaluating a student's thesis for content and organization;used projective tests to evaluate her aptitudes. Rate involves determining therank or grade of along someone or something in relation to others: Will history
rate Picasso above Renoir?
Therefore, the art of estimating is subjective at best.
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2.6.3 Changing Formats Quickly
When new estimating styles are introduced quickly, the balance
can be upset for the estimator. It is not unusual for the estimator to over
estimate several of the tasks on a project, conversely they will under
estimate other tasks. When the final analysis is performed there is a
leveling or balance formed between these two extremes. With the
introduction of new estimating formats these balances are often tipped.
Introducing new estimating systems can be done successfully however,
it must be done in a very slow systematic way. The most important
ingredient is the willingness for each estimator to assist the company by
slightly modifying their individual styles.
The following example is offered. A Company working in a local
refinery within the Philadelphia Pennsylvania area was requested to
perform an estimate for piping installations. The estimate was not in the
format that the estimating department was familiar with. This particular
work breakdown structure separated requirements for hanging piping,
placing supports, placing the piping itself, performing the welding
required at each joint location and installing valves. The estimating
department utilized a long supported pricing structure, which worked out
to be a cost per foot for their company to install this type of system. The
estimator had grown accustomed to this type of procedure. Now when
faced with a new format he tried to work with numbers that he was
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familiar with. In order to check his numbers he took the total linear
footage of pipe and divided that by the cost. A number near their
normal unit pricing was the net result. When upper management
performed their analysis of the estimate, they also requested total linear
footage of pipe and applied their known format. Everyone was satisfied
that the project was priced properly.
The estimator overlooked several things. The specifications
clearly stated that the contract was not for the complete installation of
this system but, individual component parts would be awarded and the
owner reserved the right to issue separate purchase orders to different
contractors for these individual component parts. Also, it was stated that
these quantities were for estimating purposes only and that the actual
project would not be tied to these quantities. The contractors were
guaranteed a minimum quantity of work. After the owner completed their
analysis, they awarded pipe placement and valve installation to our
example contractor. Their pricing for this activity was approximately half
that of all the other contractors. Their unit pricing for placement of
hangers was extremely high so they were not considered. Also, their
welding pricing was higher than the competition. This contractor
subsequently went out of business. Once the litigation began and the
estimates were brought into play along with the specifications that were
issued, the ruling came out that it was a mistake in judgment and not
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misrepresentation by the owner. In this particular case everything was
well documented by both sides. This was caused by the introduction of a
completely new estimating format in my opinion.
2.7 Receiving Estimates From Subcontractors
All pricing received from subcontractors must be documented. Often
placing these subcontractors on a single electronic worksheet and placing
names and pricing across from each serves several purposes. First, this sheet
should be made as all the requests for proposal are sent out to each of the
subcontractors. Once the pricing is in it will show how they all compare quickly
and easily. Next it will verify that all of the pricing has been secured. One
major thing that needs to be looked at with subcontractors is in their written
statements. It must be verified that they have included the entire scope of work
and, that they have made allowances for any general conditions on the project.
Frequently potential subcontractors will exclude sections of the specification.
This makes the estimator's job arduous. It is necessary to ferret out any
exclusion or the inclusion of specifications that the subcontractor is not required
to carry. It is also recommended that when estimates are received, a checklist
to ask the subcontractor be pre-printed. On this check sheet is a question
asking the subcontractor if they have made allowance for the special
requirements called for in the specifications. An example is that all contractors
and subcontractors must be licensed in the local municipality. Between utilizing
an oral checklist and receiving the subcontractor’s proposal it is possible to
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cover all of the requirements quickly and effectively. Recording this information
onto a computerized spreadsheet allows a quick comparison between all of the
proposed subcontractors.
Whenever possible, before the final proposal is presented, meetings
should be held with the subcontractors. These meetings are the estimator’s
last chance to verify that the subcontractor has completely included all of the
requested scope of work. Clear concise meeting minutes should be taken and
distributed to all parties immediately afterward. This can prove invaluable later
during the project execution. It is not unusual to request that everyone receiving
copies of the meeting minutes return a signed form stating that they have read
and agree with the meeting minutes or, that they add their comments.
In the event of any litigation, these are mitigating factors for your
defense. Documentation from the onset of a project will only serve you well.
2.8 Final Proposal
It is imperative that more than one person reviews the final bid
document. Analyzing a document that you wrote is often very difficult. Your
mind sees what you meant rather than what you actually wrote. Some things to
lookout for when finalizing bid forms are:
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• Make sure all the appropriate company information is completely
filled out.
• Verify that all bid bonds and other necessary paper acquired from a
third party is there, and filled out properly, and signed as well.
• Double check numbers to make sure that sale prices have been
forwarded to the final documents and not estimated cost numbers.
• Make sure all estimate numbers are shown both numerically and
written long hand. Example $35,000.00 (thirty five thousand dollars)
• Verify that all signatures have been obtained and are located in the
correct location.
• If any attachments are required such as time and material rates or
special insurance, bonds, they should be attached.
• If duplicates or triplicates are requested make sure each of those are
also correct.
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• Make a copy for the job folder. Asking the owner at a latter meeting
for a copy of your proposal is very embarrassing.
Many bid documents come with pre-printed envelopes. If the company
decides to utilize a different type of envelope other than those sent, it is
important that any information placed on the original be properly and accurately
transcribed. Checking with the owner before utilizing something other than what
is issued would be strongly recommended. When calling the owner for this
information make sure you get the person’s name whom you spoke with and
document this conversation exactly as it happened.
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3.0 Pre-Construction Preparations
3.1 In-House Pre-Construction Activities
After the contractor has received the contract, but prior to actually
beginning work on the site, is when the serious preparations need to be made
and documentation put into place. Depending on the size of the project there
should be several in-house meetings to determine who will handle the project
and what the information and authority chains will look like. Complete
schedules will need to be formulated. It should be noted that these schedules
are not always capable of being finished until several conversations with the
owner or owner's representative has taken place.
Subcontracts need to be finalized. Purchasing of large equipment, as
well as long lead-time items need to be negotiated. Reviewing the company's
ability to staff the project needs to be reviewed along with any labor pools that
are available. Often companies neglect to talk with local labor pools about
upcoming work. Usually the questions that are asked are only about the
current employment situation. Long-range thinking needs to commence as
soon a project has been awarded.
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3.2 Pre-Construction Meetings with the Owner
A meeting with the owner should follow the award of a contract. At this
meeting there should be a written formal agenda. Additionally, any questions
comments or concerns that the contractor has should be delivered prior to the
meeting. This agenda should be submitted to the owner with adequate time for
them to prepare answers. If the owner has their own agenda, this allows them
the time required to merge their agenda with the contractors.
All personnel who will be involved with the owner should attend this
meeting. This should include all superintendents, foreman, and any other
management level people for the project. It is recommended that the
employees who are non-essential to the pre-construction meeting arrive in the
beginning for introductions. Once the introductions have been completed,
these personnel can leave. Persons will relate better during a project if they
know each other.
Any special insurance certificates or bonds should be hand delivered at
the pre-construction meeting if they have not previously been sent. Special
requirements that the owner has requested in the form of written documentation
should also be delivered at this time. It is not uncommon but certainly not
necessary for the contractor to receive the official purchase order and contracts
at this first meeting.
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During this meeting with the owner it is important to understand the
goals that the client is looking for from this project. Sometimes the objective is
to construct a building, however, the goal is the implementation of the system
within the building. Understanding what your clients’ goals are can save a
contractor from possible litigation, not to mention generating additional income
in the future. Fully understanding the clients’ time frame is important at this
meeting. This needs to be taken into account before the finalizing of any
construction schedules can be completed. It is important to note here that
many times you need to listen to the client's words but also hear everything he
is saying. Often what the client says is not exactly what they are looking for.
With careful conversation, an astute individual may be able to understand what
the clients’ goals or needs actually are.
The contractor personnel organizational chart should be presented. The
chart should include all persons engaged in the project. Here is an example of
a simple organizational chart.
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Operational flow chart
Project Manager
Engineer Purchasing
Owner
Job foreman
Company CEO
CAD
These meetings are the beginning of the working relationship and open
frank communication needs to be established with a certain amount of caution.
Remember that even though the two parties are working together, some
of their objectives are contrasting. The contractor is interested in making as
much money as possible but the owner is interested in saving as much as
possible. Both are looking for a first-class installation. There are many
commonalties that they share; however, the fundamental financial issues
maintain a slight wedge between them.
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3.3 Project Documentation
3.3.1 Meeting Minutes
Every meeting related to the project must be documented through
the means of recorded minutes. These meeting minutes need to be in
an organized format that is followed throughout the project. They can
serve as a checklist, if put together properly. There are several formats
that will serve adequately for this function. The numbering scheme on
the left side represents the meeting number and then the item number.
The first meeting begins naturally with the number one. Each different
item discussed is assigned a number. Do not put multiple tasks under
one number. If between meetings one of the items in a multiple task
listing was completed, there is no way to clearly display this separation.
The objective is to have numbers for each task.
The following is a sample of actual meeting minutes from my files.
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Sample Meeting Minutes
HOWARD C. JAMISONPROJECT MANAGER
ABCConversion Project1234 Market Street
Date: June 05, 1998 Construction Meeting No. #2
Attendance: ABC HCJ CompanyMark Smith (Supervisor of Plant Op.) Howard C. Jamison (PM)Gerry Smith ( Project Manager)Tom Smith (Maintenance Group)
____________________________________________________________
The purpose of this meeting was to review the progress of the construction. Thefollowing was discussed:
Old Business:
1.2 Outstanding is a pump proposal for the hot water system of the building, whichBob will stay with until that proposal has been presented.
** ABC has requested that the pump and VFD pricing for the hot water pumpsP13 and P14 be provided to ABC by no later then 6/12/98, so that a
determination can be made on how they want to proceed before the heatingsystem is needed.
1.4 Manufacturer is going to put in a proposal for a 5-year extended warranty in thenear future to assist ABC.
1.7 If the call becomes a warranty issue then there would be no subsequent billingand Manufacturer will absorb all the costs. If on the other hand, the problemturned out to be something that was not a warranty issue then Manufacturerwould submit a bill at their normal billing rates for the repair.
** ABC would like details on the warranty, precisely what is not covered with thenew system that we are putting on. In previous conversations it was stated that
non-warranty items would then be charged. They would like to fully understandwhat would not be a warranty issue, if Manufacturer were called in for service.
1.11 Removal of tubes from site is by ABC. There was a discussion on how andwhen they will need to be removed. ABC is going to have a conversation withtheir internal group to be sure that this will happen.
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1.16 Gerry stated that he would like to have the engineer onboard now for the ASHRAE 15 issues. Bob Tool responded with 'We are working on it and weshould have an engineer selected in a short period of time.
1.18 The following MSDS sheets were requested to be forwarded to ABC: Locktight,Cleaning Solvents and refrigerant 123.
1.31 ABC has expressed an interest in taking the brass parts out of the pump fortheir recover unit.
1.33 There was a discussion about Variable Speed Drives and how the bucketswould be reused or replaced.
1.35 HCJ will submit prices with VSDs for pumps P13 and P14 in the near future.
New Business:
2.1 A detailed review of the schedule was looked at and an understanding of what
the schedule was portraying was given to everyone at the meeting.
2.2 Currently we are having some problems with the condenser gaskets.Manufacturer is in the process of making these new gaskets so that we will beable to stay on schedule. It is our intention to begin charging the unit latertoday, so that by next Wednesday we will be able to begin the retubingprocess.
2.3 ABC has requested that the 500-ton unit be the third machine that is converted.
2.4 In the event that ABC decides to do the hot water pumps, 13 and 14, refer toissue 1.2, they must be completed by October in their entirety.
2.5 HCJ will perform unloading tubes from the truck to the lay down area on theremaining tubes. ABC does not want to do this portion of this work. They do notfeel that it was agreed upon that they would do that work. They agreed to bringthe tubes upstairs and the old tubes out, not to unload.
2.6 HCJ stated that the old tubes need to be out by next Tuesday, so that we willbe able to begin demolition of Chiller #1. We will need the new tubes deliveredupstairs between June 12th and 19th, so that we will have room to work on theTriStar when that comes in on the 19th.
2.7 We need the lay down area cleaned by June 19, 1998 for the new TriStar.Currently the old tubes are being stored in the lay down area. This will need to
be cleaned in its entirety to facilitate the disassembly of the new TriStar.2.8 When the new TriStar is scheduled to be moved to the mechanical room, there
will be a need for coordination of the elevator with ABC's people.
2.9 HCJ requested to schedule a meeting with Honeywell, Manufacturer and ABC,so that all the issues that were not resolved in the previous meeting aboutcontrols could be brought to the table and resolutions begun immediately. ABCwill get back to us on when would be a good time. Currently they feel that a
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Tuesday would be good because there are technicians scheduled on site everyTuesday.
2.10 HCJ is obtaining a price for epoxy coating and that pricing should be availablewithin the next week or so.
2.11 There was a discussion on the epoxy and whether it would actually be needed.It was explained that with the deterioration that is currently present over the last25 years, that within another 20 years of the same deterioration the tubeswould probably begin to fail between 15-20 years. By putting the epoxy coatingon they should be able to increase the longevity of the machines. There needsto be a detailed analysis of the cost of the epoxy coating, whether this will be aviable option.
2.12 Next meeting, there is no scheduled date. This meeting will be determined asnecessary. Everyone will be notified before the meeting if they wish to attend.
______________________________________________________
The above is a transcript of our last meeting. Should you differ with the contents,please notify us immediately, as this becomes the official record and the basis onwhich we will proceed.
HOWARD C. JAMISON
Project Manager
Distribution: Ed Smith **=Information subsequently providedMark SmithGerry SmithTom SmithBob Smith
Sample meeting minutes
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In the previous example, each item is clearly broken out into
individual numbers. First the meeting number is shown followed by the
item number. The previous meeting minutes always serve as the guide
for old business. Any conversations that were documented between
meetings are shown as an asterisk. By utilizing this numbering scheme,
several things become easier. For one, you can always tell when an
item was brought up onto the table. Secondly, if you need to track the
disposition of a particular task it is easy to follow through the meeting
minutes. Additionally if any software is used for tracking purposes,
utilizing these numbers will make it very easy to follow the progress of
each item.
If notes are placed into a computer system, tracking is simplified.
By utilizing keyword searches it is possible to find various related
conversations. Using a standard word processing program with the
ability to find usually suffices but if the company requirement is for very
detailed searches, a database program serves best.
Working as a consultant for attorneys, we have put together many
claims. The primary function in preparing the case is to go back and
reconstruct what transpired during the project. If throughout the project
meticulous notes and records are kept significant financial savings can
be realized. By beginning each project with this type of meeting format,
great headway is made toward protecting the company during litigation.
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3.3.2 Issues and the Issue Log
During projects many items become issues. An issue in a project
is anything that was not anticipated during the estimating stage. There
may or may not be financial concerns associated with issues. Some
issues require an extension of time for the contracts, other issues were
oversights during the estimating stage. Keeping track of issues
becomes very important if litigation occurs. Issues should be listed and
tracked individually. During meetings issues should be brought to the
table so that they are documented within the meeting minutes. Many
times contractor's neglect to bring up these types of issues at the regular
meetings; thereby, they fail having formal documentation that the issues
exist. The following is an issue.
During construction of a small building, the engineer reviews
drawings and decides that the doorway should be adjusted left 2 feet.
The wall has not yet been constructed so, there appears to be no impact
or issue. The mason modifies the door two feet left as requested.
Several days later the sheet metal contractor arrives onsite and now can
not place the prefabricated duct work because there is now a door lentil
where there was scheduled to be only a block wall. The sprinkler
system contractor arrives later and finds that there is ductwork exactly
where his sprinkler head goes. He also prefabricated everything based
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on the original drawings. This example clearly shows how one minor
modification that should have no impact can have substantial
ramifications. This particular instance occurred on a project several
years ago. The final outcome was that the contractors did not receive
additional payment. The engineer entered all of these changes into the
meeting minutes. The contractors had no documentation for the change.
When the judge reviewed the case it was his determination that ample
time was provided for each contractor to state their case before their
fabrication was delivered. When having a conversation with the affected
contractors, they were asked if they had noticed these notes in the
meeting minutes. Their common response was that they do not read the
meeting minutes. They did not take the time.
In this example the engineer did properly document the
modification that he was proposing. Because no one responded to his
modification until after the fact, they were found negligent. This
particular instance did not cause any serious financial damage. It did
however prove that by entering the information into meeting minutes
there was a clear decisive change and everyone had time to respond.
Take a moment to review the last paragraph of the meeting minutes that
I have submitted to this documentation
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“The above is a transcript of our last meeting. Should you differ
with the contents, please notify us immediately, as this becomes the
official record and the basis on which we will proceed.”
Issues should be handled in a specific manner. There should be
an issue log. Contained in this issue log is the date that the issue arose,
a brief description of this issue, and a unique identifier for this issue.
The disposition of the issue should also be listed. The disposition of an
issue will change as the project continues. The following shows how to
utilize the issue log:
• No: This column is for the chronological number of the issue
beginning with number one.
• Issue Code: This is a unique identifier for everything that relates
to this issue. All documentation that follows regardless of whether
it is letters or bills will carry this issue code so that they can easily
be distinguished from the other documents.
• Description: This is a brief summary of what the issue is about.
• Date Open: When an issue is first discovered, the date of this
discovery is placed into the date open box.
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• Date Closed: When in issue is completed. The date that this
issue was finished is entered into this box.
There are issues that are taken out that will not amount to
anything once some preliminary research is completed. This is not
unusual. The issue should follow the same course as an issue that has
serious impact. Entering a date closes the issue. This form also serves
as a reminder of what issues were opened and what issues have not
been closed
The following page shows an issue log form.
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Issue Log
No.ISSUECODE Description
DATEOPEN
DATECLOSED
Sample Issue Log
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The Issue Log also serves as an executive summary. Each has
its own documentation. Contained within this documentation are all of
the related details. It is important that documentation also be put into
place for notification of issues between the contractor and the owner.
The following example shows a detail issue report. In this report it is
meaningful to go into expanded details about the issue. Generally, one
issue will have an effect on many different subcontractors or companies.
When this occurs it is important to fill out detailed sheets on each
instance where there is an effect. If the contractor is forced into litigation
this information is very helpful. When sending correspondence to
anyone about an issue that has a possibility of becoming a change order
or a possible litigation item, it is important to send that issue under a
separate cover. The issues should be addressed individually and no
other job business is included. This increases the paperwork for the
contractor; however, throughout the project it will clearly separate the
issues from other job-related items.
3.3.3 Filling in the Issue Detail Form
• Type: This is for any designator that the company would like to
utilize. An example is financial for an issue that has financial impact
or a scope issue. This area is capable of being searched once the
issue has been placed into software.
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• Description: This is a brief summary of what the issue is about.
• Date Open: When an issue is first discovered, the date of this
discovery is placed into the date open box.
• Issue No: This column is for the chronological number of the issue
beginning with number one. This information is obtained from the
issue log form.
• Date Closed: When in issue is completed.
• Issue Code: This is for a unique identifier for everything that relates
to this issue. All documentation that follows regardless of whether it
is letters or bills will carry this issue code so that they can easily be
distinguished from the other documents.
• BIC: Ball in court. Whose responsibility is it to perform the next task?
Generally in our office we utilize a three initial designator for
everyone's name. Mine is HCJ.
• Issue disposition: This refers to what impact the contractor thinks the
issue will have. Below are some classic examples.
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Proposed change order (PCO)
Change order (CO)
Change in condition (CIC)
Request for proposal (RFP)
Extra work order (EWO)
Within original scope of work (INS)
Out of original scope of work (OTS)
•
Each company will need to word or abbreviate according to their
particular needs.
• Final disposition: The final disposition of the issue should be listed
here. This space serves for good history acquiring information. If an
issue does become a change order, the final disposition information is
beneficial to the contractor. This information over a period of time
allows the contractor to accumulate a history on this particular client’s
actions. If this particular client historically issues between 10 and 15
change orders for each project and they collectively average five
percent of the original contract value as a minimum, then it is
statistically correct to assume that this pattern will continue. Armed
with this information a contractor can hedge a price for new work.
(This is a risky way to proceed knowing your client will give you the
best information.)
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Some issues have no effect and are handled by the
contractor. Most of the time an issue has some effect on the project.
Many contractors neglect to request a time extension along with each
issue. Most projects today are run under very tight time constraints,
along with associated penalties for lack of completion. When issues
arise that require additional time, contractors do not routinely formally
request extensions. Many times an extension is requested orally but
there is no documentation. Speed memos are an excellent way for
field personnel to document such changes. Speed memos come with
three copies. The field personnel keep one, one is delivered to the
office and the third is delivered to the client. When a conversation
occurs between the field superintendent and the Owner or Owners
representative leading to an agreed extension of time, sending a
speed memo will serve as adequate documentation later, if litigation
occurs.
Issues should be clearly shown in all documentation by the
issue code (the unique issue identifier).
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ISSUE RECORD
TYPE: ____________________
DESCRIPTION ___________________________________
DATE OPENED: ____________ ISSUE NO. ________ DATE CLOSED: __________
ISSUE CODE: _____________ BIC: ________ _________ _________ __________
DETAILS OF ISSUE
ISSUE DISPOSITION _____ _____ _____ _____ FINAL DISPOSITION _______
PCO PROPOSED CHANGE ORDER INS WITH IN ORIGINAL SCOPE OF WORK
CO CHANGE ORDER OTS OUT OF ORIGINAL SCOPE OF WORKCIC CHANGE IN CONDITIONRFP REQUEST FOR PROPOSALEWO EXTRA WORK ORDER
Sample Issue Detail Report
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3.3.4 Correspondence
All correspondence for a project needs to be tracked and
identified. This becomes an essential task when the attorneys enter into
the project. Experience has shown that performing this activity on a
daily basis affords several advantages to the contractor. When these
forms are filled out electronically it allows for quick retrieval of specific
documents. If these documents are required for court, retrieval is easy
and inexpensive for the contractor and the attorneys.
The main purpose of this document is to keep a chronological
order to all correspondence whether the document was sent or received.
Each document, when entered into the file will receive a number
on the bottom right hand corner. (The location of this number is not
important what is important is that this number be placed in the same
location all of the time.)
3.3.5 Filling in the Correspondence Log
• Date: The date is representative of the day a letter or package is
received in the office. It also represents the day a letter or package
is sent from the contractor's office.
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• Type: The type refers to the type of document that is being sent or
received. In my company we utilize the letter L for a letter or F for a
fax. The company selects all these. It cannot be stressed enough
that whichever nomenclature is utilized, consistency is the most
important issue. Everyone in the office needs to understand how to
fill in this form.
•FR/TO: From/To column makes searching for a document easier.
Using this column makes it easier to search if it is know that the
document being searched for was sent from the contractors office.
• Num: Each document is assigned a chronological number.
Occasionally a document is placed out of sequence by mistake. In
this event, we insert a duplicate number with the letter "a" after it.
This resolves the problem of keeping things chronological. However,
it is important that this not be a regular practice. If the company goes
to litigation, this would be suspect.
•
Description: The description field is for keywords to assist in finding
documents. After the log has been computerized, keyword searches
are very quick and efficient.
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• S/R: Sent or Received stands for whether the document was sent
from the contractor's office or received from elsewhere. When
searching for a document that was sent from the office this will
eliminate all of the Received Documents immediately making the
search faster.
• BIC: Ball in court. Who is responsibility it is to perform the next task.
Generally in our office we utilize a three initial designator for
everyone's name. Mine is HCJ.
• Action: The Action refers to the next action that is needed based on
the letter or document. An example would be that a response is
needed for the letter just received. In the action box would be rsp,
meaning response.
• Date Req: The Date Required is the date that the action needs to be
completed. This will also serves as a tickler for activities that need to
be completed.
• Compl: The Completed section is for the date the required action was
actual completed.
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The last four columns on the form are only used if there are
actions required. This also makes it easier to see all of the actions that
need to be concluded or that has been accomplished. This serves well
when someone calls and wants to know why their questions have not
been answered. With a quick form review, you can tell them that it has
been completed and mailed on a certain date or, that the response
should be out on a certain date. If a response was necessary, then the
document that was prepared and sent out will have a new entry on the
form as well as an activity Completed Date.
The next form shows a typical correspondence log:
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Correspondence Log
DATE TYPE FR/TO NUM DESCRIPTION S/R
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If this form is used frequently on a project then the
computerization should be updated every few days. On some
small projects this form may never need to be computerized. This
is a judgment call by management. This form as with all of the
forms presented are designed to assist the contractor not to
burden them.
3.3.6 Phone Log
The phone log is used to keep records of all phone
conversations in the proper time sequence. Often persons can
remember details of conversations, but remembering the proper
time sequence is often not possible. Utilizing a phone log helps
prevent confusion about time frames as they relate to phone
conversations. Additionally, they provide some formal
documentation to support the position.
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PHONE LOG
Date of Call _____________________________Time of Call ___________________
Company _______________________________Issue__________________________
Name of Caller___________________________Phone (_____) ______- __________
_______________________________________Fax (_____) ______- ___________
DISCUSSION ______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
CALL BACK ____ FAX DOC. ____ SEND LETTER ____ SEND DRW. ____ OTHER ___
______________________________________
_____________ ACTION COMPLETED
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3.3.7 Filling in the Phone Log
It is important to understand that every line does not
necessarily need to be filled in on this form for every call. Personal
judgment needs to be exercised for the level of detail that should
be shown.
• Date of Call: The date that the call was received or placed.
•Time of Call: If a project appears to have potential problems,
being accurate with the time is a good recommendation. If
litigation occurs this level of detail will show the Managers
expertise in their field. This will also help the legal team
immensely in establishing more precisely when activities
occurred.
• Company: This is the name of the company that the call has
been received from or placed to.
• Issue: This line relates to any issue that may be already
logged. If this phone call is the beginning of a new issue then it
is important that the issue log be filled out and the issue detail
form be completed. This space should hold the issue code,
which is the unique issue identifier.
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• Name of Caller: This is self-explanatory
• Phone: This is used for entering the phone number or fax
number of a new caller.
• Discussion: Details of the discussion need to be placed into this
section. Often if the call is long there may be additional pages
required. When having conversations it is advantageous to
abbreviate your writing. After the call has been completed
these abbreviations can be expanded to clearly show the
contents of the call.
• Continue #: If a conversation exceeds the space available in a
typical Phone log, the continuance of the information should be
labeled then, in the event that the pages become separated
they can easily be reunited in the file.
The next section is action required. This section becomes
very helpful as a reminder; this document should be placed in the
project manager's ‘to do’ bin and acts as a tickler file, reminding
the project manager that before this document can be placed into
the job file it must be completed. Each company should determine
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the actions that are listed on the form. We will not review each of
them separately.
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4.0 Scheduling
4.1 Introduction
Scheduling a project is one of the most important tasks that does
not receive the attention that is deserved. To illustrate the importance of a
schedule, I offer the following question.
If you were planning a trip across the country by car, would you
embark on that trip without a map? A well-constructed schedule will
clearly act as a map for the project. It is also important to clearly
understand the purpose of a schedule. A schedule is considered as a
live document, meaning that it does not remain stagnant but rather
changes constantly. Often clients receive copies of schedules and
anticipate that every activity is started and completed precisely as shown.
I have found over the years that it is important to educate people who
receive copies of the schedule. They need to clearly understand that this
document is a guide or plan of action and, that it will be followed as close
as possible; however, it will be changing constantly throughout the
project.
By preparing a network diagram, and by carefully constructing the
network logic, a project can be developed on paper or on a computer
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system. By having the network logic carefully constructed many ‘what if’
questions can be asked about the project. Reality tells us that the owner
wants the project completed quickly, with as little cost as possible. By
constructing a model on the computer system, it is easy to play ‘what if’
scenarios. Additionally, after the network logic is properly constructed
allocating manpower to each task, it will show the manpower
requirements through histograms. When the 'what if' scenario is placed
into the computer system, the financial impacts, as well as manpower
requirements will clearly be shown. This representation can not be
utilized alone. Experience is required to understand whether the
information in the computer can be executed pragmatically. An example
of this is: there are eight sinks to be installed in one bathroom and by
accelerating the schedule it will show that this activity could be completed
in one day, if five men were to work on it. Practicality clearly shows us
that most bathrooms would not be capable of providing adequate space
for five men and all their equipment along with all of the materials
required. Experience is by far the most important guide when using
schedules to assist the project manager. The keyword is assist. The
computer can only perform mathematical equations. While its ability to
assist is incredible, it also has the ability to create catastrophic results.
In the 1970s there was an introduction of a scheduling system that
professed to be able to schedule all equipment and manpower more
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efficiently than any Project Manager. This system was brought onto a
local project in the Philadelphia area. This project was in the hundreds of
million-dollar range. On the project there was a local joke about the hiring
and firing practices. The Company decided to allow the computer to
make decisions on manpower requirements. It was not unusual for 100
people to be hired on Monday and 150 to be laidoff on Wednesday. Then
on Friday the hiring would begin again. Additionally, equipment was
rented and returned at alarming rates. There was no consistency to
anything on the project. These dramatic movements caused by the
computer were allowed to run the project for a few months. After the
company realized that this was not practical, they returned to more
conventional methods. Unfortunately, they abandoned the entire
program and much of the systems capabilities.
In the 1980s scheduling programs came out that had an ability to
do what was called ‘resource leveling’. Resource leveling allowed the
computer to smoothly predict manpower increases and declines. The
system slowly developed the ability to start and stop activities allowing for
certain over allocation and under allocation of resources. The systems
had become more intelligent along with the owners learning that this was
a tool not the Bible. After resource leveling was introduced it was
possible to look at smooth flowing histograms. Unlike my story about our
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misled contractor whose, histograms looked like the Himalayan
Mountains.
4.2 Network Logic and Their Relationships
Network logic is the backbone of a good schedule. Without
properly preparing this logic, the information that is handed back from the
computer system is useless. When preparing the project schedule it is
imperative that this logic be entered clearly and concisely each time.
Most companies will construct templates for normal installations. These
templates show the logical relationships between activities. An example
of the logic is the classic stop start. This most fundamental logic step
states that one activity must be completed in its entirety before the next
activity can begin. The following diagram demonstrates this.
Set equipment onto newconcrete pad
Form concrete pad and pour.
This relationship shown as a network logic diagram clearly states
that the activity form concrete pad and pour must be completed before
the activity set equipment onto new concrete pad can occur. This is a
very true and logical statement.
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However, this statement is not correct in its purist form. If the
concrete were to be poured at 11 o'clock in the morning it would not be
practical to set the piece of equipment onto the new concrete at 11:15
because; needless to say the equipment would sink into the concrete.
Therefore, this statement is not completely correct even though it is
logical. Under most circumstances it is required to allow concrete to cure
for a minimum of 24 hours. In some circumstances this time frame must
be increased depending on the strength required for the concrete by the
specifications. Therefore, it is necessary to change our logic to show
reality. This can be accomplished by two methods. First method would
be to add an additional activity called concrete curing. Or, we could
utilize logical relationships with a lag. By using the same diagram and
adding a 24-hour lag, the scheduler and the computer will understand the
logical connection and make adjustments to the schedule. The following
diagram displays the 24-hour lag addition.
FS
24h
Set equipment onto newconcrete pad.Form concrete pad and
pour.
The next logical connection states that when one particular activity
finishes the related activity can finish.
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By the computer system allowing us to add this type of logical relationship
it greatly reduces the time required to construct the schedule.
The next logical connection is a finish to finish relationship. This
relationship states that one activity must be completed before the next
activity can be completed. A practical representation of this would be to
allow a painter to finish the walls of a building along with the electrician
placing the final faceplates. This would be a finish to finish relationship.
Again however, the paint should be allowed to dry before the electrician
can place the cover plates. So, we will utilize the logical lag within the
system parameters.
FF 3h
Complete painting
trim
Install finish face plates
The system will just as easily accept negative lagging if it is
necessary. There are additional logical connections, which we will only
described without going into detail.
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• Finish to Start
• Finish to Finish
• Start to Finish
• Start to Start
These are the primary relationships that all schedules are based
upon. Most programs have the ability to add additional constraints when
needed. An example of a constraint would be a delivery date. In the
computer system as on the project, activities occur on these specific
dates. This logical connection will lock the activity in that time frame and
move other activities that do not have constraints.
4.3 Durations and Resource Allocation
After the network logic has been constructed, it is then necessary
to assign durations to each activity, along with resource allocation.
Simply stated we need to tell the computer or the paper schedule how
long each activity will take to complete. Once a duration has been
established then resource allocation can be completed. Then a finial
model of the project can be developed. Resource management becomes
one of the most difficult activities for the Project Manager. When the
contractor is very small with only a few employees, it becomes imperative
to schedule each individual. This is because there are usually several
ongoing projects. For this type of situation a strong recommendation for
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computerizing scheduling is in order. Most software programs today
have the ability to handle multiple projects from one resource table.
These programs allow you to schedule one resource (meaning an
individual or piece of equipment) across several projects. When the
histogram reports are generated, they will clearly show any conflicts.
Unfortunately, this is where project management becomes difficult, all of
the customers want their task completed where it originally appeared on
the schedule. Reality will dictate that something will have to be
rescheduled. This only serves to more clearly demonstrate that a
schedule is a live constantly changing document.
Resources have costs associated with them. The computerized
scheduling system will allow for hourly, daily, or weekly costs to be
entered. Therefore, with a duration assigned to each activity and a
resource supplied with costs, it is now possible to present a financial
model for the accounting side of the organization. The importance of this
should not be understated. Every industry requires money to operate,
when the money is gone, usually, so is the project. By utilizing the
scheduling tools it becomes possible to predict cash flow needs. Also, by
entering in monthly billing expectations both inflow and outflow of cash
can be managed. The company's financial team should be given the
opportunity to review and offer input on these projections. Often, with
minor scheduling adjustments using project float, the cash flow can be
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adjusted. By using float there should not be any impact on the project but
it can make a tremendous difference for the accounting department.
4.4 Milestones
Milestones are activities that represent a significant point in time
and have a known duration. Activities or tasks that indicate a start or end
of a series of activities can be identified as milestones. Milestones can be
adversely affected by task durations. When placing task durations it is
important to insert milestone requirements. By placing these activities
with constraints and watching the float, it becomes possible to more
accurately predict any possible conflicts. Occasionally, conflicts will occur
that make it necessary to work additional hours. By showing this
additional time on the schedule, the associated costs can be clearly
calculated. When a schedule is constructed properly and monitored on a
regular basis, these types of issues can be circumvented.
4.5 Updating Schedules
Utilizing a computerized scheduling system allows quick accurate
updates to the schedule. By performing these updates the schedule will
always be current and capable of assisting in decision making. If
activities are completed ahead of schedule this will usually allow for other
activities to occur sooner then originally scheduled. This may also have
an impact on resource allocation. By updating frequently on a project
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new manpower and equipment requirements can be continually projected
and managed. We have not yet discussed the critical path however, it is
necessary to mention that changing activity completion dates and
durations will have impact on project float. Once float begins changing
the critical path of the project may begin to change.
As tasks are completed they can be taken off of the schedules that
are printed and disbursed among the project teams. This begins to
illuminate clutter in the paperwork. This also allows the team to stay
focused on upcoming events rather than seeing longer lists of completed
activities.
From the onset of a project if updates are performed and properly
distributed, the owner will be shown clearly that the document is live and
that change occurs regularly. This will reinforce to all concerned parties
that the dates originally given will fluctuate. An important note here, when
I speak of fluctuating dates this does not refer to milestone constraints.
These tasks are date driven and should not change unless the owner or
controlling body dictates such an action.
When there are multiple companies or groups involved in a large
project, scheduled project update meetings should be held. Before these
meetings it is recommended to send each contractor a copy of the current
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schedule. Each contractor should then be requested to mark up the
schedule that they have received and return it before the project meeting
so that its contents can be entered into the master schedule. Having this
information entered into the schedule prior to the meeting will allow for
accurate projections. These meetings all need to be well documented
and, everyone needs to be well informed of changes and potential
impacts to scheduling. During large projects I try and have scheduling
meetings just before or after the weekly progress meetings. Most
projects have the same team responsible for schedules and for daily work
issues. (Usually the Project Manager is responsible for both activities.)
4.6 Critical Path Method
The term CPM stands for critical path method. Today in the
project management field the term CPM and the word schedule have
become synonymous. The following definitions pertain to the scheduling
portion of the Project Managers job.
• Critical path is the series of activities in a project that will take
the longest time to complete.
• Critical activity is an activity that has zero total float. It must
start as schedule and finish on or before its scheduled finish.
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• Float is the amount of time that the start or finish of an activity
can be delayed without effecting the project finish date.
• Free float is the amount of time that an activities early start can
be delaying without delaying the early start of a successor
activity.
When a project becomes a legal matter the schedule usually gets
introduced and much weight of the decision forming process is carried by
this single document. Good litigators usually display full color graphic
illustrations of schedules. Often documentation that is presented will be in
the form of support for the schedule. This form of presentation is relatively
easy for a lay person to understand because it will show time and
responsibility all with simple clear lines. These graphic representations
will show float and critical activities. Histograms are often shown as well,
because they are also very visual for the juror.
If a schedule is put together properly and the comparison to the
estimate is on going then, the contractor has the ability to clearly show
the clause and effect of any delays or work disruptions. This information
can assist the legal team enormously by showing precisely when some
change in the project rhythm occurred and the effect of this change.
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As schedules are updated, recalculating is important. Some
computerized schedules do not recalculate automatically and it is
therefore necessary to manually begin this process. When critical
activities are completed ahead of schedule, other activities will become
critical. The experienced scheduler will run reports showing float
available after each recalculation. This will provide information on the
next group of activities that most likely will become critical. This
information in the hands of an experienced Project Manager will facilitate
actions that can prevent unwanted critical lines.
Many programs now allow the scheduler to force activities to be
displayed as critical. When this is done in court, the only way to discredit
the presentation is to show how this has been done. Additionally, the
proper critical path needs to then be shown. Many litigators who
understand how to manipulate schedules will make activities critical that
were not truly critical during the project. If a company is unfortunate
enough to run into someone with this ability, the only defense is having a
very knowledgeable scheduling professional assisting your legal team.
Additionally, by having all the proper documentation presented
chronologically through meticulously maintained logs will serve to
discredit anyone trying to manipulate schedules.
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5.0 Construction Phase
5.1 Project Management During Construction
Project management, what is it? This question has been asked
many times over the years. There are many humorous anecdotes to this
question. However, the best answer I have heard: Project Management
is hard work.
Project management requires logical thinking and extraordinary
communication skills. It requires carefully laying out the chronological
steps essential to build a future that has been preset by others. Often a
project manager is called upon to create someone else's dream. Most
importantly the project manager must continually deal with reality. As
problems and obstacles present themselves, this individual is expected to
rise to the challenge keeping emotions under control and the logical mind
functioning.
Project management requires constant vigilance, always watching
the past so that he can better predict the future. Always asking what
remains to be completed and what resources are available to complete
these tasks. As these questions are answered, new questions arise in the
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Project Manager's mind. What if the equipment does not show? What if
the subcontractor does not show up on time? What if the owner changes
his mind again? While the office continually asks where the costs are
and, where will costs be at the end of the project?
The Project Manager needs a clear definition of purpose. This is
accomplished by having a complete understanding of the work scope,
and of all the tasks required to successfully complete a project. If the
project scope is not clearly defined, it becomes the responsibility of the
Project Manager to clearly define the scope of work and, to reconstruct
the estimate. This activity must be completed so that the baseline of
productivity can be established.
Assuming the project has been properly estimated and the scope
of work clearly defined, the Project Manager is faced with the task of
developing a project plan that will meet all contract time constraints and,
be completed on or under budget. Throughout the project, the manager
should be able to show the project financial status. In the event that a
project may slip with regard to completion time, the Project Manager
should show how to make up that time in the most cost-effective way. It
is important for the Project Manager to identify a schedule slippage prior
to its actual causing project delays.
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During the project, productivity, cost, and scheduling are all
separate entities. The Project Manager can have a mixture of these
items occurring simultaneously. For example, the project could be on
schedule, but over budget. Putting together the recovery plan falls on the
shoulders of the Project Manager. Learning how to read these signals
becomes very important. Usually when a project begins the manager
should expect that the productivity would be below the estimated amount.
This is primarily because of start up issues. When the job is new and the
manpower unfamiliar, the productivity will lag behind. Likewise however,
during the middle portion of a project productivity is usually at its highest
rate. It is not uncommon to vastly exceed productivity factors. Then, at
the end of the project the productivity once again usually will drop
significantly. Summarizing this paragraph into the following statement
should assist in understanding how a project usually comes together
during the actual working stage. First is the start-up, followed by the
middle of the project, followed by the never-ending end of the project.
Anyone who has ever managed a project from beginning to end
understands the last comment. The anecdote that contractors have used
for years says, "I spend 50 percent of my money to get 90 percent of the
job." It often seems that this is a very true statement.
During schedule reviews, it is important to look for trends. These
trends should be the key indicator that potential problems are arising. It
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is important to understand that these trends may be very small and
appear insignificant. If a trend begins to show possible project slippage,
the Project Manager needs to react immediately. If the problem is
identified and addressed early enough, it may never surface as a
problem. Not reacting to these small indicators may possibly create large
indicators that everyone around the project will see. The Project
Manager needs to become accustomed to looking at tracking systems
and scheduling systems. The manager should begin to understand what
the warning signs are versus what a normal job blip looks like.
When it is determined that actions are needed, the manager
should implement these corrections. Immediately following this corrective
action, the reevaluation process begins. This should show a trend
correction beginning. If this adjustment does not have the desired effect,
then the next level of management should be alerted and their expertise
called upon. Upper management in the company needs to understand
that their job is to support their people. Occasionally it is necessary to
remind senior management that their function is to assist and train their
underlings.
Periodic projected cost to complete estimates should be
performed. This process keeps everyone informed of the Project
Managers thinking about future productivity. This tool is very useful to
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everyone in management. Many companies do not perform cost to
complete projections. These should be performed so that a financial
slippage can be seen before it happens. Understanding that profit fade
may occur or is going to take place makes it easier to deal with.
Project Managers can never ask this question enough: What if? A
classic example is when the project is on a very tight time schedule and
the pump is being delivered on Monday. There have been and are
definitely scheduling problems. The Project Manager should begin
asking what if the pump does not show up? The manager needs to have
some contingency plan in mind with all required information and material
to keep the crews productive. Remember that the vendors who supply
equipment and materials have their own problems, your project may not
be that important in their schedule. Murphy does visit projects regularly.
As difficult as this task may seem, keep emotions under control, they will
not resolve problems. The picture of the cigar smoking, pot bellied,
screaming foreman, is humorous in cartoons only.
5.2 Filing System
When any project begins, immediately a filing system should be
constructed. When the request for quotation was received in the office a
file was instantly started to hold all of the original documents. Now when
the Project Manager becomes involved, a new filing system needs to be
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started. All of the previously shown forms should have locations within
the filing system. I am going to show a sample filing system. This
system is meant as a guide and is not intended to be a complete filing
system. Each discipline may require different file headings. The main
point is that there needs to be a hierarchy. Consistency throughout the
company becomes very beneficial. If every project has the same basic
file design, then as people are called in for assistance with other projects,
the system is familiar to them.
1.0 CONTRACTS AND CONTRACT CHANGE ORDERS
1.01 ORIGINAL PROJECT CONTRACTS
1.05 PROPOSED CONTRACT CHANGE ORDERS
1.06 CONTRACT CHANGE ORDERS ACCEPTED
2.0 ESTIMATE
3.0 BUDGETS
4.0 SCHEDULES
4. 01 NETWORK LOGIC DIAGRAM'S
4.02 ORIGINAL SCHEDULE PROPOSED TO CLIENT
4.03 ACCEPTED BASELINE SCHEDULE
4.10 WEEKLY SCHEDULE UPDATE FIRST WEEK
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4.11 WEEKLY SCHEDULE UPDATE SECOND WEEK
5.0 SUB CONTRACTORS AND SUBCONTRACTOR CHANGE
ORDERS
5.01 PROJECT MANAGEMENT
5.02 EXCAVATION CONTRACTOR
5.02.1 EXCAVATION REQUESTED CHANGE
ORDER
5.03 PLUMBING CONTRACTOR
5.03.1 PLUMBING REQUESTED CHANGE ORDER
5.04 MECHANICAL CONTRACTOR
5.05 ELECTRICAL CONTRACTOR
5.06 STRUCTURAL STEEL CONTRACTOR
5.07 SHEET METAL CONTRACTOR
6.0 PURCHASE ORDERS
6.01 PROJECT MANAGEMENT
6.02 PROJECT ENGINEERING
6.03 PROJECT TRAINING
6.04 EQUIPMENT STARTUP
6.05 A SPECIAL EQUIPMENT TRAINING REQUESTED
7.0 COST DETAILS
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JANUARY/98
FEBRUARY/98
MARCH/98
APRIL/98
8.0 PROFIT AND LOSS REPORTS
JANUARY/98
FEBRUARY/98
MARCH/98
APRIL/98
8.10 PROJECTED COSTS TO COMPLETE
JANUARY/98
FEBRUARY/98
MARCH/98
APRIL/98
9.0 CORRESPONDENCE
9.01 CORRESPONDENCE LOG
9.02 TRANSMITTAL LOG
9.10 CORRESPONDENCE RECEIVED
9.20 CORRESPONDENCE SENT
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10.0 ISSUES
10.01 ISSUE LOG
10.20 ISSUE DETAILS
11.0 SUBMITTALS AND MATERIAL CONTROL SHEETS
11.01 PROJECT MANAGEMENT SUBMITTALS AND
MATERIAL CONTROL SHEETS
11.02 EXCAVATION SUBMITTALS AND MATERIAL
CONTROL SHEETS
11.03 PLUMBING SUBMITTALS AND MATERIAL
CONTROL SHEETS
11.04 MECHANICAL SUBMITTALS AND MATERIAL
CONTROL SHEETS
12.0 PROGRESS PAYMENTS
JANUARY/98
FEBRUARY/98
MARCH/98
APRIL/98
13.0 MEETINGS MINUTES
13.01 CLIENTS MEETING MINUTES
JANUARY 4, 98
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JANUARY 10, 98
13.02 COMPANY MEETING MINUTES
JANUARY 4, 98
JANUARY 10, 98
14.0 REQUEST FOR INFORMATION SHEETS
15.0 SAFETY
15.01 TOOLBOX SAFETY MEETING GUIDES
15.02 CERTIFICATION'S FOR ACCESS
16.0 SHOP DRAWINGS
With this hierarchy format, it is very easy to maintain an accurate
system for every project. Where additional items may be needed, simply
skip 5 to 10 numbers or more. The format that each company uses can
vary. One of my clients utilizes 200 series numbers for all
correspondence. This system makes it easy to understand that
whenever you enter a pendaflex folder with the 200 series, you will be
looking for some type of communication. Often it is necessary to
implement some trial and error periods. My one recommendation would
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be not to change a system in the middle of a project even if there are
some problems. Take the information that you are learning and
implement it on the next project.
5.3 Subcontracts
Often the Project Manager is required to write subcontracts. This
task is very important and help should be obtained from the supervisor
when beginning this task if the Project Manager is inexperienced. Often
companies become lazy and issue purchase orders to subcontractors
rather then issuing formal subcontract agreements. When the company
has a long history with a particular subcontractor they sometimes avoid
writing contracts and issue PO's. This can have a down side and as a
Project Manager this should be carefully reviewed. Purchase orders
should be written to vendors. Subcontracts should be written to
companies performing labor on the project. A purchase order is designed
for purchasing materials and or equipment. Subcontract agreements are
for employing other companies to perform work on the job. Occasionally,
a manufacturer or vendor may also supply installation of their equipment.
In this scenario, ideally a purchase order should be written for the
equipment and a subcontract issued for the installation portion of their
work. Unfortunately, this does not always work smoothly in the real world
therefore; the best document for the contractor to issue is a detailed
subcontract. In this subcontract all references to supplying of equipment
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should be carefully written. Equipment warranties and labor warranties
are different therefore, when mixing the two in one document it is
important that there is a clear concise separation.
Almost every company has standard subcontract agreements pre-
printed. Some companies have these legal documents on their
computers so that it is easy to fill in the blanks and issue the subcontract.
It is important to put all details in this document. Absolutely no
ambiguous sentences or phrases should appear. This document is a
legal binding contract and, it should be handled as such. When writing
this document there will be a space for details. Fill the space up and, use
an additional sheet if necessary. Every task that the subcontractor will be
expected to perform should be clearly listed. Many Project Managers
quickly write these documents, which is a mistake. When writing a
subcontract, it is recommended to leave the office and go to a local
library. This will eliminate interruptions that generally occur with in the
office environment. I can not emphasize enough the importance of this
single document. Poorly written subcontracts will show up in court and
may have the same effect on the project team as the indecipherable
notes and estimates.
The American Institute of Architects and the National Society of
Professional Engineers offer pre-printed subcontract forms for every
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imaginable need. They publish a document list, which gives a brief
summary of all the contracts and agreements that they have available.
Additionally they publish a four-binder set of books that have copies of all
the AIA agreements. These binders are supplied as detailed copies of
the contracts. When using the AIA forms it is necessary to purchase
originals from the company. All original AIA contracts have a red line
going through them. This is to assure all parties involved in the contract
signing that the forms are original AIA documents. Occasionally
contractors will enter an AIA agreement into their computers, this
becomes the basis for their writing contracts. When this is done the
contractor is infringing on copyright laws as well as presenting a contract
that may be altered from the original AIA format. AIA documents have
been tested in court. They are an excellent guide and resource for
companies who have not professionally had their own contracts prepared
by their attorney.
5.4 Purchase Orders
Throughout most projects the Project Manager will write many
purchase orders. In the previous section we briefly touched on purchase
orders. Basically we covered that a purchase order should not be used
as a subcontract. Purchase orders like contracts are important. They
should have all pertinent details clearly spelled out. I expect vendors to
perform every bit as well as members of my company. We require
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vendors to deliver on time or ahead of schedule. In order to expect this
performance it is necessary to clearly write out on the purchase order
these demands. When my company has liquidated damages and they
are imposed due to late deliveries, all of the vendors that I deal with are
tied to these damages. In order to do this properly it is necessary, under
most circumstances, to modify the paperwork that the vendor sends to
the company. Most purchase orders or purchase agreements state that
the vendor will not be responsible for consequential damages. This
statement would eliminate their financial responsibility for a late delivery.
Vendors today are being forced to do things that were not standard years
ago just as the contractors are. When selecting a vendor, it is important
to sit down and have a conversation with them explaining exactly what
you expect. If their location and the contractors are distant, this
conversation can occur over the telephone. Written minutes of the phone
conversation should be sent summarizing all of the salient topics of
discussion. This will properly document the oral agreement. An oral
agreement, has the same impact as a written agreement, both are legally
binding.
Many equipment vendors have a warranty that covers parts but
makes no allowance for labor. The contractor is required by this type of
agreement to supply all labor to make repairs are needed on the vendors
equipment. Very frequently there is another clause in the vendor
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purchase agreement which clearly states that the vendor will not accept
any consequential damages caused by their equipment failing. Two
examples: a company purchases a large cooling tower for an air
conditioning system, during start-up the motor fails. Common sense
would state that the vendor should place a new motor into the new
cooling tower. This is not so, in the documentation from the vendor, they
stated that all materials are covered. If the contract does not say labor
and materials then, the contractor is left with the financial burden to make
these repairs.
The second example had much more serious ramifications. The
vendor supplied new tubes for an air conditioning system. One of the
tubes was manufactured incorrectly, subsequently when the machine was
placed into service this tube failed. This failure caused the new
refrigerant to escape into the building chilled water system. The motor on
the system was flooded with water, which caused an electrical short.
After the tube was located it was then removed and replaced with a new
tube. The tube manufacturer had stated in their purchase agreement that
they would not accept any consequential damages. When the contractor
presented the problem to the manufacturer, this manufacturer offered to
supply them with a new tube and offered to replace the one that had
failed. The contractor was left with thousands of dollars worth of repairs
with no easy legal recourse. Make sure that all terms and conditions
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presented by manufacturers are fully read and understood. The best
way to prevent this type of occurrence is to have conversations with the
vendor before placing the order. Experience shows that the lowest price
is not always the best deal.
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5.5 Project Documentation
5.5.1 Introduction
This section will cover several forms of documentation.
Most of these items have been briefly covered previously in this
dissertation.
5.5.2 Meeting Minutes
Meeting minutes are very important documents. At the
meetings all issues of a project should be discussed. When the
contractor receives a copy of these minutes, they should carefully
read the document and be sure that they agree with the delivery of
the information. Many times these meeting minutes supplied by
others arrive with the correct words however, there are slight
implications that would make the contractors viewpoint ambiguous.
When meeting minutes are sent to the company and they are not
completely agreed with, take the time to write your version of what
transpired. This response to the meeting minutes needs to then
be placed into the minutes or an addendum to the minutes should
be issued to all of the parties.
How do I take meetings minutes? This is not an easy
process especially when you also are required to run the meeting.
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Practice makes perfect. I will offer the style that I utilize as a
guide. Write key words or phrases that will remind you later what
was being said. This is the one time during a project that
scribbling notes is acceptable because, the individual taking the
notes will be responsible for clearly placing them into a discernible
format. Keep in mind that the first meeting is the most difficult to
formulate minutes for. If at all possible the office should supply
assistance during this meeting. Additionally, if the company has
placed a fledgling Project Manager in the key position, assistance
should be supplied during this first meeting. There is enough
anxiety offered just being responsible to run the meeting. The
person taking notes should be well versed in the subjects
discussed.
I find that I am more interested in learning about my client
and taking notes detracts from the ability to listen carefully.
Remember, in the beginning of the project we are listening to what
our clients say but we are trying to understand exactly what they
actually mean. Sometimes the words do not properly convey the
desires. Taking notes makes this intense listening difficult. Earlier,
we spoke of indecipherable notes, this is what I produce during
meetings. After the meeting has ended, I will proceed to a quiet
location with my trustee Dictaphone. While the meeting is still very
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fresh in my mind, all this scribble is translated into a format that
can be transcribed by my secretary. Written notes are then taken
back to the office and placed into the correct file. These so-called
notes are retained because occasionally they will jog my memory
in the future if it becomes necessary.
5.5.3 General Correspondence
Remember to use letters of transmittal where necessary.
When writing normal job memos to clients or subcontractors a
standard format is recommended. I utilize a custom made form
which is standard on all of my projects. The salient references
should be the date that the memo is a written, reference a topic
and it is important to include the job name. Then anyone who
should be is carbon copied. Memos should be brief. Verbose
notes will become old quickly. State the information with as few
words as necessary. Be sure to reference everything clearly.
People reading these memos are not always intimately involved
with the project, therefore sentences referring to instances or items
should be clearly stated. After writing the sentences read them
and see if they could stand on their own without knowledge of the
project.
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Sample Project Memo
July 23, 1998
To: Richard Saunders
Reference: Vineland Development Center: Proposal
Cc:
Dear Mr. Saunders
We have issued you the Purchase Order #SVC-055092 in theamount of $1682.00(one thousand six hundred eighty two dollars)per your proposal of 6/30/98. You should receive it in the next fewdays.
If you have any questions please do not hesitate to call us.
Regards,
Howard C. Jamison
When correspondence is received, a good practice is to
respond to every letter or note. This will put your comments into
the record. Whenever correspondence is received that imply or
make accusations it is important that they been responded to in
great detail. Remember not to respond emotionally. Step away
from the problems for a period of time and then, using intelligence,
respond to the accusations. If the Project Manager feels there
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could be long-range implications from these accusations, the
immediate supervisor should be called in for assistants.
5.5.4 Schedule Updates
All schedule updates should be forwarded to all
subcontractors. Even if a subcontractor is not currently on the
project, updates should be forwarded so that they will know
approximately when their activities should begin. When utilizing
computerized scheduling systems it is possible, through the work
breakdown structure to send only pertinent information to each
craft. When a project is fairly detailed with several disciplines on
site, send each craft a specific schedule as it relates to them along
with a complete schedule. Most of the time subcontractors won't
spend the time required to read everything. By having the
computer system breakout the information, the subcontractors
receive the necessary information needed without peripheral
clutter. It is not the Project Managers responsibility to see that the
subcontractors read all documents, however this action will make
the whole project go better.
5.5.5 Operating and Maintenance Manual Information
Even though this activity is not really correspondence,
throughout a project the information required for the operating and
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maintenance manual arrives. I have, therefore placed it into this
section because it is an ongoing paper project. When instruction
booklets and manuals arrive with equipment, it is important to
place these into a maintenance manual file. All equipment will not
come with operation manuals, some only have basic instructions.
Usually, placing installation guides and any other information
supplied by the vendor into the owner's operation and
maintenance manuals will suffice. This process is very arduous at
the end of a job, if it has not been on going. After the vendors have
been paid the most important thing to them is future orders.
Taking time to spend with a Project Manager from a previous order
is not productive in their world, unless of course there is another
pending order. Therefore, requesting additional documentation
before vendors are paid usually makes this task easier.
5.5.6 Project Journal
Every Project Manager Supervisor and Foreman should
keep a project journal. When a new project starts the Supervisor
and field foreman should be given a hardbound book with
numbered pages. They should then be instructed to keep a
journal of everything that transpires on the project. Examples are
who visited the site, what conversations they had, conversations
that occurred with other trades and, what the weather was like.
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The more information that is placed into this journal the better.
Superintendent and Foreman journals should be copied and sent
to the Project Manager on a weekly basis so that early warning
signs can be detected and cost impacts avoided. If the project
goes to litigation, these journals become very important. If the
unfortunate litigation occurs, these journals need to be hardbound
books with numbered pages. This keeps unscrupulous contractors
from adding entries just before discovery. Everyone who is in
management should maintain this type of document. If the Project
Manager is working within the company office, this journal can be
kept on the computer system. Some journals will be brief while
others carry inordinate amounts of detail. These journals also can
serve as models for future projects. After completing jobs,
reviewing these journals will remind the Project Manager of
incidents that happened. The Project Manager always lives in the
past to better predict the future. This journal will greatly enhance
that ability. Keeping names and phone numbers of vendors and
other contacts in this journal sometimes proves very helpful as
well. On one occasion, I had made a sketch in the journal for a
special type of piping arrangement needed. Several years later
the exact same arrangement was needed, the Engineering Co.
wanted several hundred dollars to construct a field sketch. It only
took a few minutes to locate the old journal and the drawing.
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5.5.7 Material Control Sheet
A material control sheet is used on almost every project.
This sheet should contain a list of all items that need to be
purchased. The form lists the project name, location for the job,
the current page number and the number of pages.
• Item - a brief description of the purchase equipment or
materials.
• MFR - which manufacturer was used.
• Order Placed - this is the date that the order was placed.
• Submittals received - if the items being purchased needs to
have submittals approved, this column is filled in
• Submittals to architect - after a submittal is received from the
vendor, it is then forwarded to the architect or the owner for
approval. When this document has been forwarded, the date
that it was forwarded is placed in this column.
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• Submittals approved - when a submittal is returned, it is either
approved or some other notation. Once the submittal is
approved, the date that this approval was received is placed
into this column.
• Order released - many vendors will not release any equipment
until submittals are approved and returned with signatures.
When the approved submittal is forwarded to the vendor, the
date that this happens is entered into this column.
• Order received - there are two columns under this heading,
shop or site. When equipment is delivered, it is either sent to
our shop or it is sent directly to the site. If equipment is sent to
the shop, I also want to know when it was delivered to site.
• Installation complete - this is self-explanatory.
• Comments - this section is used for any notes that people
should be aware of. If a vendor is going to make a partial
shipment, this should be noted. An additional item should be
entered onto the material control sheet so that the second
portion of the delivery will not be lost in the paper confusion.
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Project:Location:
Sub Sub Sub
Part Order mittals mittals mittals Order Expected Order Received
Item Number Placed Received To Arch Approved Released Delivery Shop Site
Material Control Sheet
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5.5.8 Change Orders
Change orders are normal parts of the construction
process. The architects and engineers who put together original
documentation are human beings who do not always foresee
every possible issue. Unfortunately many owners, engineers, and
contractors think that change orders should be avoided at all
costs. There is a certain amount of validity in this statement
however, probably 15 percent of the time spent on change orders
is actually in the pursuit of the guilty. One of the difficulties with
these changes is that often they are a result of quickly put together
requests for quotation documents. This would include oversights,
mistakes in documents or occasionally, completely neglecting
parts of the specifications. Paperwork always becomes a major
part in change orders; these changes have a stigma about them.
The engineering companies think that it makes them look less
professional, the contractor looks at them for additional income,
the owner shakes their head because it will mean additional costs.
So much time is spent trying to point the proverbial finger, simple
change orders often become very arduous undertakings. There
are according to Andrew M. Civitello, Jr. author of Contractors
Guide To Change Orders published by Prentice Hall, ten reasons
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for change orders. There are relatively few causes for all change
orders, they include:
1. Design errors.
A. Contradictions, discrepancies, impossibility's,
inconsistencies
2. Changes in market conditions.
A. Specified products become unavailable.
B. New products become available, offering price
advantages or other benefits.
C. New information becomes available, affecting the choice
of the specified materials.
3. Change in the owner’s requirements.
A. Scope of work change.
4. The uncovering of undisclosed existing conditions.
5. The uncovering of unknown existing (latent) conditions.
A. Unexpected soil variations.
B. Conditions uncovered during alterations in existing
structures.
6. Suggestions to initiate better, faster, or more economical
construction.
7. Change in designer preference.
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8. Discrepancies in the contract documents have described
situations contradicting the intent of the project.
9. Change in external requirements.
A. Building codes.
B. Using agency needs or prefers (public projects).
10. Final coordination with N.I.C. (not in contract) equipment.
A. Space.
B. Mechanical and electrical provisions.
When a change order has been identified, notification
needs to begin immediately. When the first letters are put together
they should include all of the pertinent information so that the
Owner or Owners representative can quickly make an evaluation.
This initial letter should quote specification sections and drawings.
Keeping facts private will not assist the process. There are no
secrets on a construction project, if your arguments are presented
clearly, concisely, and logically they will usually meet with less
resistance. It is important to check the specifications for change
order procedures. Follow these procedures exactly, failure to do
so may exclude the company from receiving reimbursements.
The Project Manager needs to address change orders in a
very logical fashion. When there is some type of ambiguity
between the actual project and the design specifications, issues
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need to be opened. Following the previous format for issues will
begin the change order process. It is not terribly important to
locate the guilty party. What is important is that the proper
sequential documentation of the issue be started and there is a
complete follow through on the paperwork.
When presenting documentation to the Owner or Owners
representative, it is important that this paperwork be as complete
as possible. There are several components that must be
evaluated. First an internal review of the change needs to be
done. The purpose of this review is to see what the financial
impact of the change is. The effort required to pursue the change
order should be directly proportional to the amount of the financial
impact. Determining this amount is a function of first
understanding when the change order began and what activities
needed to be modified, changed, or added. There are direct costs
associated with these items such as labor, material, and any
special shipping costs. There are indirect costs associated also,
these would include project management, office overhead,
preparation for change order requests, general interference with
the project rhythm. It is important to take all of the costs and
present them in a fashion that will show that they are direct costs
due to the changes. This is not unrealistic because in order to
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present the change order, documentation must be done. This
documentation was not part of the original contractor plan. All of
the time spent researching the cause and effect of this change
were not included in the original proposal. One of the items
mentioned is project rhythm. This activity is very difficult to put any
financial value to and even more difficult to prove. This is one of
the phrases that attorneys use when litigation occurs. By placing
references to this in the beginning of a change order, later
assistance is offered to the company attorney if it becomes
necessary. Sometimes, these rhythm delays can clearly be shown
for example. If there were several repetitive tasks that required
one day to accomplish then, after the change, productivity clearly
showed that the same activity was now requiring two days, this
documentation would be clear and irrefutable.
When financing is secured for most projects there is a
percentage allocated as contingency funds. It is not uncommon for
ten percent of the estimated contract value to be held in this fund.
If at all possible do not commence with field labor to perform
change order work until agreements in the form of signed change
orders have been issued. Do not fall prey to the statement "we
will settle at the end of the job." This should never an acceptable
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answer. This is a paraphrase for “you will never receive your
money.”
5.5.9 Project Safety
In today’s project climate, safety has become paramount.
This activity requires diligence from the company owner, Project
Manager, to all of the field personnel. The old accepted statistics
that stated there would always be a certain percentage of
accidents are no longer accepted. Zero accident projects have
become expected. This is achieved through training of all
company personnel regardless of their position. Safety training on
projects today is a standard practice. Many specifications clearly
require that toolbox safety meetings be held regularly and that
each meeting be documented. This documentation requires the
names of all individuals present and the safety materials that were
covered.
Companies that have implemented excellent safety programs also
reap the reward by receiving lower Workers Compensation
Insurance rates. These lower rates also can significantly assist in
preparing estimates by providing a lower hourly rate for each
worker.
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5.5.9.1 Toolbox Safety Programs
Toolbox safety programs can be purchased from
several different safety vendors. These programs clearly
show all of the training requirements for basic construction
needs.
5.5.9.2 Safety Documentation Systems
Today, every accident regardless of the severity or
lack of severity needs to be clearly and concisely
documented. This is done to both protect the employee as
well as the employer.
Larger projects require that safety bulletin boards
be mounted in plain view with documents prominently
displayed.
All projects now require emergency telephone
numbers to be mounted by job trailers or any other
locations that are highly visible. The sizes of these signs
are clearly defined by the OSHA guide.
The material data sheets commonly referred to, as
MSDS sheets are required for every chemical used on a
project. This includes regular house oil to new HCFC
refrigerants.
Failure of contractors to perform these safety
requirements often will have financial Impacts in the form of
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fines. Unfortunately, many of these non-compliance
problems are located after a serious accident has occurred.
5.6 Construction Delays
Construction projects often experience delays due to many different
factors. These delays should be categorized under one of the following.
• Excusable or Not Excusable
•Comprehensible or Not Comprehensible
• Concurrent or Not Concurrent
• Critical or Non-critical
5.6.1 Excusable Delays
Unforeseen or uncontrollable forces cause excusable delays.
This is referred to in legal terms as “Force Majure”. Examples of
excusable delays
Fires
Floods
Intervention by outside agencies (environmental agencies,
historical societies)
Building code Modifications
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These types of delays are not within the control of the
contractor. They are excusable. Usually excusable delays do not
have any financial compensation connected to them. They should
however make an allowance for additional time to complete the
project. This time will usually only be awarded if the item was on the
critical path. If the item has float in the schedule, this is not
substantial reason for a time extension. This issue is not always this
clear. There may be cause for additional costs incurred by the
contractor. An example would be that the delay occurred which lasted
into the next pay increase for the labor on the project. This issue and
issues similar would most likely need to be resolved in the courts.
After the Midwest floods in 1994, the contractor was directed to restart
construction of the telephone system. This was not practical because
even though the floods had subsided the ground was complete mud.
The contractor was subsequently sued by many of the homeowners
due to yard damage caused by the large equipment being used. In
this instance the contractor did receive additional financial
compensation. Primarily this compensation was awarded because
they had been directed to continue work when clearly the work should
have remained delayed. The point of this explanation is that
sometimes reality and specifications will differ.
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5.6.2 Comprehensible Delays
Comprehensible delays are similar to excusable delays in
that the contractor does not cause them. The major differences
between them are, comprehensible should receive additional financial
compensation as well as additional time to complete the projects
provided the task was on the critical path or the additional time
exceeded the float, which will make the task critical.
5.6.3 Concurrent Delays
Concurrent delays are a combination of two different delays
happening simultaneously. An example of this would be a labor strike
simultaneously with a change in the project by the owner. The
problem with concurrent delays are, the court generally will side with
the excusable delay rather than the non-excusable. This means that
if these two problems occurred, it is highly possible that the contractor
will receive no additional compensation. However, additional time
should be granted if any tasks affected were critical.
5.6.4 Critical Delays
Critical delays are ones that will have impact on activities that
are shown to be critical on the project schedule. These delays need
to be properly categorized for responsibility. These are perhaps the
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most damaging delays to the contractor. This type of delay is often
preventable if the Project Manager is asking what if questions
throughout the process. In the unfortunate events of this type delay,
careful documentation is essential.
5.7 Operation and Maintenance Manuals
Operation and maintenance manuals need to be delivered before
a project will be closed. Usually these maintenance manuals should be
delivered before training. This will allow the owners staff to read pertinent
information prior to training. Many projects neglect to construct these
manuals throughout the job. Careful vigilance on the construction of
these manuals is highly recommended.
5.8 Punch List
A punch list is a list of items that have not been completed to the
acceptable standard of the Owner or Owners representative. The project
engineer usually prepares the punch list. When these lists are put
together, it is strongly recommended that the Project Manager walk
through with the engineer. It has been my experience that working with
the engineering firm weeks ahead of the final close out will assist the
contractor in staying ahead of punch list items. Punch list items are
usually a result of poor workmanship or lack of quality controls. With a
solid quality control program in place, most punch list items can be
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avoided. I have seen engineering firms issue punch list items on a weekly
basis. The Project Manager needs to try and avoid this scenario at all
costs. These re-occurring punch lists often become contests between
the contractor and the engineer. There should be an issuance of 1 punch
list.
5.9 Project Close Out
The last item that the Project Manager is usually involved with is
the project close out. This activity has many steps, from delivering
operation and maintenance manuals, performing customer training and,
preparing as-built drawings. Most specifications have a section
dedicated to close out procedures. This section needs to be addressed
and clearly understood. Not following these procedures often delays final
payment.
5.10 Final Billings
Final billings often have meetings associated. Releasing of
retainage is usually negotiated at the ease meetings. Most contracts
clearly show how retainage is to be released. On occasions, retainage is
held for inordinate amounts of time after a project has been completed.
Usually, the contractor not properly delivering all required paperwork
causes this. Specifications often have requirements for sending final
billings, these specifications need to be followed. Unfortunately in the
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current construction market contractors are being awarded projects at
very low margins. Often the retainage is a large part of their profit.
Therefore constant vigilance to the project paperwork should begin the
same day the job does.
Releasing of liens will usually be the last activity on a job. Once all
maintenance bonds and warranty papers are delivered, retainage is
usually released and the final billing is accepted.
5.11 Project Manager Critique
Even when a project has gone extremely well, there is always
room for improvement. It is important when a project is completed that a
critique be performed. This should be strictly a learning process. All of
the people at this meeting should be intimately familiar with the project
and the associated problems. These problems can be from accountants
not receiving information from the field quickly, to certain vendors not
performing properly on the project. Conversations about things that were
performed correctly need to be covered as well. This is an opportunity for
the Project Manager to live in the past to make certain that the future has
fewer pitfalls.
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6.0 Summary
By utilizing this dissertation as a paradigm, it should remind the Project
Manager of important steps that need to be accomplished. Using the
appropriate forms or by modifying the forms presented, a clean, clear, and
concise paper trail can exist on each project. This paper trail should assist the
Project Manager in day to day activities by supplying easily understandable
formats, with logs that will allow quick retrieval of the information sought.
Unfortunately, reality shows that projects do go into litigation. The company
legal team should have a map clearly defined so that construction of the legal
defense should not be difficult to quickly and accurately construct.
The project management team should also have a clear map of the
project so that it is easy to review the history of the project. This history
becomes important when similar situations or problems occur in the future.