Over eighty percent (80%) of construction projects are over-budget, late, or not competed correctly. Sixty (60%) percent of all project fail to meet both cost and and schedule targets. Fortunately there are proven processes to better manage construction costs, schedules, and quality.
Reasons for Poor Repair, Renovation, Maintenance, and New Build Outcomes
The fundamental reason for poor outcomes is the failure to implement and properly manage robust and integrated LEAN planning, procurement, and project delivery processes.
- 80% of cost overruns are due to poor scope of work definition, and associated inadequate and/or flawed construction cost estimates and otherwise poor planning, procurement, and project delivery management. The errors and poor processes result in change orders, project delays, and legal disputes.
- 10% are due to equipment and/or materials delays, most off which could have been foreseen.
- 10% are due to site related productivity issues, most of which could have been foreseen.
All off the require tools and support services to create integrated environments, to address all of the above issues, and more, are readily available.
Solution
Real property owners can establish collaborative, multi-discipline teams, working toward mutually beneficial outcomes whereby 90%+ of all projects are on-time, on-budget, and completed to the satisfaction of all participants and stakeholders.
The implementation of a long term programmatic approach versus continued use of traditional short-sighted project methods is critical. Integrated LEAN planning, procurement, and project delivery methods assure that each individual project is aligned with overall program and organizational goals as well as understood by and committed to by all service organizations (architects, engineers, builders…).
Sufficient time & resources are allocated to defining the scope of the project with the involvement of all participants and stakeholders. Everyone works jointly within a shared, common data and operational environment to identify and meet individual project and work order goals and objectives, required functions, phases, and schedules, within fully identified constraints.
A detailed scope of work is associated with a detailed line item cost estimate and builder’s proposal based upon a locally researched unit price book. It is defined within and Lean environment government by a long-term multi-party agreement and associated written Operations Manual / Execution Guide.
Fundamental Principals and Components of a Lean Integrated Planning, Procurement and Project Delivery Environment
- Owner leadership and commitment
- Required collaboration
- Best value procurement with collaboration between owner procurement and technical/facilities management teams
- Initial and ongoing training for all participants
- Long-term multi-party agreement and associated operations manual / execution guide
- Early and ongoing communication
- Common data environment – defined terms and definitions, locally researched detailed unit price book
- Enabling technology (program management, contract management, proposal/estimate management, work order management, document management, team management, issue/task management, building/location management, MBE/WBE management, BIM information integration…)
- Detailed scope of work and associated detailed line item construction cost estimate using CSI Masterformat
- Mandatory joint site visit
- Mandatory kick-off meeting
- Mandatory regular owner site inspections
- Note: The use of national average cost data, area cost factors, construction cost indices, parametric cost modeling, historical cost data is NOT recommended. In order to achieve cost visibility and transparency appropriate local unit costs for labor, labor productivity, materials, and equipment are required. Inaccurate granular costs for material unit costs, labor rates, major equipment costs, construction equipment will lead to gross errors in project costs and lead to unreliable schedules & increase overall risk of cost and schedule over runs. Locally researched detailed unit price books exclusively are capable of accounting for productivity “tight” work areas, or areas above normal working height, or variances in workers compensation and basic hourly working rates, as well as local material and equipment cost which can vary significantly. Field supervision, fringes / burdens, site establishment / temporary facilities, small tools, scaffolding, construction equipment, heavy lift cranes, clean up, field expenses, etc. are all defined. Labor productivity value for each craft /work area needs to be estimated at a detail level as it will significantly vary. Adequate time must be assigned both develop and an performed a detailed review of the final estimate to assure compliance with the overall program methodology and alignment of the estimated cost values with the detailed scope of work (SOW) description.
VIA www.4bt.us