Sunday, May 02, 2004

Project Planning

The starting point for a good project plan is a proper understanding of the requirements – what exactly is the project supposes to achieve?

Planning is essential to the successful execution of a project. Planning involves thinking hard about the project, what it is to achieve and how the team will go about it. A project plan is a statement of what the project team intend to do in order to meet the project’s objectives and provide all project deliverables within the constraints of “Time, Cost and Quality”. The main purpose of project plans is to guide project execution. Plans must be realistic and useful. A fair amount of time and effort must go into the planning process, and the people knowledgeable in doing the work need to plan the work. Planning assumes two items:

(1)That there is sufficient information available for planning purposes and
(2)That the people planning have sufficient experience to use the information wisely.

Plans should be realistic with regard to timely performance and reasonable cost. Meeting these criteria ensures that the actual project will be performed successfully within the scheduled time and financial constraints. Planning must be done logically and thoroughly if we are to have any chance for the project to succeed. In planning philosophy, we must understand two key points:

1.A project plan without some float or contingency for unforeseen events is a trap.
2.A fat plan is wasteful of money and time. Parkinson’s law tells us “the work always expands to fill the time allowed.

The master project plan must address how we will plan, organize, and control the major work activities to meet our goals of finishing the work on time, within budget and as specified. One important point before planning is that we do not want to do more than necessary to satisfy customer needs, since that is wasting money. On the other hand, we should not do less than necessary, or we may lose the customer.

The planning processes in construction projects consist of the following activities: -

a) Activity planning – devising a workable scheme of operations, which is designed to accomplish construction activities. Activity planning begins with the generation of a Work Breakdown Structure (WBS). Traditionally, activity planning for the schedule is independent and separate from the cost. The accuracy and usefulness of the breakdown and relationship is dependant upon intimate knowledge of the construction elements, judgment and skills of the planner. WBS provides a tool for planning the activities, including estimates of resources, activity durations and costs. The basic aim of a WBS is to split the project into tangible deliverable items. The more work packages we split the project into, the more interfacing with other people, departments, functions or even companies there may be. However the less work packages there are, the harder it will be to budget and estimate resource requirements. It is advisable that a work package should not be more than 8 hours of work (or a day’s work). Otherwise, it will be difficult to assign resources, monitor progress and carry out performance measurement. In most construction programme, the activities define are mostly too large to be classified as a work package and at such it is difficult to assign specific quantifiable resources, difficult to estimates duration, and most of all difficult to provide a logic – predecessor/ or successor in a network diagram.

b) Scheduling and costing – after developing the activities, the next step is to estimate the duration and the activities sequence. From thereon, the network diagram is finally developed, which form the construction master programme. The contract’s department, which is home for the project quantity surveyors and estimators normally, carries out the cost estimate and budgets. Once the project estimate and budget is established by the QS, the project manager is given a copy for his review and comment. If agreeable, the budget will then be sent for the project sponsor’s approval.

c) Quality planning – Projects do require the contractor to submit a Quality Assurance Plan (QAP) for the client’s approval and agreement. The quality plan has to meet the minimum quality specified in the contract specification and drawings. Due to the government and CIDB’s intensive promotion of the ISO 9000 quality system, it has become mandatory for projects to have a competent quality officer to manage and be accountable for the quality control processes in a project. Planning and controlling standards for quality are fundamental in both the design and construction phases of a project. Quality assurance involves the economic studies to select the types of materials and methods to be included in design and controlling processes, making certain that the works are carried out in accordance with the contract specification and drawings. Methodology ranges from computerized documentation, technical design, to sampling and testing products and structural dimensioning in the field. A proper and well-documented quality assurance plan should be submitted to the client’s consultant for approval. A good quality assurance plan will assure the client of your ability and provide confidence to the level of control and inspection conducted by the client’s representative. Quality assurance is always considered as the in-plant representative of the customer. Quality assurance is also the agent for improvement of the processes and product.

d) Resource planning – in the staff acquisition phase, existing staffs are assigned to the projects after the project site organizational chart is submitted to project sponsor for approval. In the event of shortage, the management would outsource by advertisement or the project manager may recommend others known to him for employment particularly previous colleagues in the same industry or his friends. Materials and equipments acquisition are normally handled by the purchasing department and the machinery department. The project manager will have to make formal request for them. Sometimes, the available resource may be insufficient or untimely and the project manager has to bargain and negotiate with the key functional managers.

e) Communication planning – Project communication management plan is a document, which provides a detailed method of collecting and filing documents, a distribution structure and the method of accessing and updating information. Successful project execution is impossible unless there is an effective communication system. If communication breaks down, each of those contacts offers a potential barrier to information flow. Typically, project communications fall into the following categories: - Project correspondence, audiovisual presentations, project reporting, meetings, training, and listening. Performance reporting is part of the project communication system. A stakeholder analysis for project communications helps determine communications needs for different people involved in the project. Performance reporting – that include status reporting, progress reporting and forecasting are mandatory for every project which is stipulated in the conditions of contract. Project managers would be required to submit templates of the progress report format to the client for acceptance. Upon agreement of the sample format, the project manager would be required to submit biweekly or monthly reports, which would also include progress photographs of work-in-progress. Producing a concise and well-presented monthly progress report is the best way for project managers to set the standard for reports on the project. It is also a good instrument to check on how the project is going. The main purpose of the report is to inform the key stakeholders as to how the work is progressing and to keep a running history of vital project activities. Project forecasting predicts future project status and progress based on past information and trends. Earned Value analysis (EVA) can be used to estimate the budget at completion based on how the project is progressing. Project meetings are an integral progress review element of a project. Meetings help determine delays (that have occurred) and achievements according to the baseline plans. It is also important to get the entire project team members together at scheduled times to talk and listen about the project. Meetings can help team members know where the individual parts fit into the collective aim of the group, and where individual success can contribute to team success.

f) Risk management planning– is rarely done, or can be said “never done” in a formal manner. What most managers do is basically carry out “piecemeal” and informal management of project risk – based on his previous experience and knowledge – to manage the risks of the project. Construction works is often a hazardous undertaking. Owners and contractors have a number of options to protect themselves from the hazards of the business. Insurance forms a major option to shift designated risks to a financially strong party who, for an agreed premium amount, is willing to assume some or all of the financial responsibility of the loss. Payment and performance bonds give protection to owners against failure of the contractor’s contractual obligations. Licensing laws for contractors and design professionals are intended to help assure that participants on a construction project possess reasonable qualifications. Workmen’s compensation insurance is designed to provide the statutory benefits required by law to an employee who is hurt or killed as a result of employment. Occupational safety and health laws provides for ensuring safety, health and welfare of persons at work, protecting others against risks to safety or health in connection with the work activities. Occupational and health laws forms part of the contract conditions of which the contractor is to comply, but the quantitative extend of safety requirements are not stipulated. But not all risks can be eliminated. Project risk events typically have a negative effect on the project objectives of schedule, cost and quality. For risk to be managed it must first be identified and recognized and then the likelihood of its occurrence and its consequences can then be assessed and steps taken to minimize its impact by deflecting to another party (e.g. buy insurance, sub-contracting), mitigating its impact by reducing the probability of occurrence, or accepting the consequences should the risk occur.

Risk management plan identifies as many risk events as possible, minimizes their impact, manages responses, and provides contingency funds to cover risk events that actually materialized. Risk management is a preventive process designed to ensure that surprises are reduced and that negative consequences associated with undesirable events are minimized. The challenge of project risk management is in identifying the risk retained and recognizing the fact that a risk, which is transferred under some circumstances, may be retained under others. Basically, transferring risk does not reduce risk, but places the risk at the foot of another party. In some cases, transfer can significantly increase risk because the party to whom it is being transferred may not be financially capable of supporting the risk.

The Contract Form is the first reference by which risk will be assessed, thereby apportioning risk in a way, which is considered acceptable in the industry. In the event of dispute, it will be the first source of reference for an analysis of the respective rights, duties and liabilities of the parties.

A building contract is a trade-off between the contractor’s price for undertaking the work and his willingness to accept a degree of risk. If the contractor is to carry certain specific risk, he should expect to see them reflected in his contract by an increase in the contract price. It must be recognized that standard forms of contract do have provisions for excusing the contractor from many risks affecting the project. It is often the misconception among developers that irrespective of the form of contract chosen, once the lowest tender has been accepted, the contract signed between the contractor and developer, all the risk of failure will be transferred to the contractor. At such, many developers tends to indulge in pernicious editing of the standard forms of contract to “redress’ the balance of risk, ultimately, it will result in an interpretation by the courts by virtue of implied terms that neither party had intended. In principle, a standard form of contract is to serve the industry to which it relates and it must produce an apportionment of risk, which is broadly regarded as efficient within that industry, or at least, to the extent that it is not, the inequalities should be capable of being identified and financially evaluated. Exaggerated expectations of the standard forms of contract and the failure to appreciate the strength of a claim (due to difference of appreciations of the facts of law and the illusion of certainty) are all common sources of disputes.

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