The Importance of Proactive Construction Schedule Risk Management for Owners | StoneTurn

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Construction projects require the constant balancing of the competing goals of cost (budget), quality (scope) and time (schedule) – often referred to as the “project management triangle”. To meet the needs in this triangle, monitoring leading indicators related to schedule health and specific schedule changes made by the general contractor can be efficient and cost-effective.

Owners are ambitious when starting construction projects, know what they want, how much they are willing to spend and when the project should be completed – and they usually hire general contractors to implement it. Alignment between the owner and general contractor is important as it is a trusted partnership to complete the project on time and on budget without compromising scope.

Construction projects require the constant balancing of the competing goals of cost (budget), quality (scope) and time (schedule) – often referred to as the “project management triangle”. This is not a new concept; However, each project team must choose the right elements to focus on, and this focus often varies between owners and general contractors.

The project management triangle presents challenges for both the owner and general contractor project teams, as constant alignment is required between each of the three elements to achieve the desired quality of the project. While general contractors should focus on all elements of the project management triangle, their priority is often scope and schedule to meet the owner’s goals and contractual requirements, while knowing that untimely and on-scope delivery is more likely to cause problems with contract compliance and disputes.

Owners often prioritize scope and budget to meet their inherent risks with their board and shareholders, shifting the focus of the schedule to the general contractor with limited visibility and oversight.

In many cases, as construction progresses, key stakeholders or external factors influence or add to the scope of the project, putting pressure on the schedule and budget. Owners’ unbalanced focus on the budget while scope is being changed can result in schedule delays that result in change orders from the general contractor to increase the budget to meet the project schedule. In short: it can get complicated.

A proactive approach to schedule management by owners can mitigate many of the scope and budget risks inherent in construction projects. But how can owners with limited planning knowledge proactively monitor and manage planning risks? Monitoring leading indicators related to plan health and certain timetable changes by the general contractor can be efficient and cost-effective. This proactive approach often results in:

  • Increased stakeholder satisfaction because a project is delivered on time
  • Reduced costs through fewer deadline-related change orders
  • More insightful and accurate project forecasts and reports
  • Easier project completion and less chance of disputes and claims

plan health

Starting with a “healthy” schedule and maintaining that health throughout the project is critical to project success. Adherence to schedule throughout the project ensures that the general contractor appropriately manages schedule changes and that the schedule for decision making and reporting is reliable. A “healthy” schedule includes sufficient detail, appropriate logic, and accurate and reasonable task durations. Key metrics that should be monitored by each owner specifically for schedule health include:

  • Task logic and relationships – A high volume of end-to-start relationships usually indicates the use of good logic. The use of other relationship types (e.g. start-start, start-end, etc.) is acceptable but should be restricted. Tasks with no predecessors or successors should be delimited and examined to ensure that the impact of each schedule change is accurately reflected throughout the schedule.
  • plan delay – Delay or the waiting time allotted between two tasks is acceptable but should be limited. Using delays to set specific start dates for activities makes schedule boundaries transparent to impacts associated with other schedule changes.
  • Activities on the critical path – A low or high percentage of critical path activity in a schedule can mean that the schedule is not detailed enough or that a schedule is being compressed, a leading indicator of potential problems.
  • High Duration Activities – An increased level of long-duration activities may indicate a schedule lacking detail, logic, or complexity. A good rule of thumb is the 8/80 rule – task duration should typically be between 8 hours and 80 hours.

schedule changes

Contractors are constantly changing a project plan, either by updating task progress, changing durations, managing resource constraints, or resequencing activities. In some cases, this may not be transparent to the owner and is only reported with a “Schedule” status update. However, at certain points in any project, these ongoing changes in duration, resources, and activity order increase the risk of schedule delays. Key metrics that should be monitored by each owner specifically for schedule changes include:

  • progress – Often overlooked by owners, continuously monitoring planned and actual completion of activities, rather than just monitoring key milestone dates, can provide early insight into potential schedule issues and allow more time to prepare for such disruptions.
  • delay – An analysis of the delays associated with individual activities, particularly the cumulative delays of activities on the critical path, can provide early indications of problems. If critical delays occur and the project finish date is not affected, it may indicate manipulation of other schedule activities.
  • changes – Changes to activity duration and logic can jeopardize the schedule and provide indications that the schedule is being artificially manipulated, especially when many changes are made in a single reporting period without affecting the planned completion date or major milestones.
  • compression – Schedule compression shortens the project schedule without changing the project scope to meet schedule constraints, imposed completion dates, or other schedule goals. Compression does not occur at a single point in time, but builds up by manipulating or changing schedule activities until the schedule is no longer realistic and more resources (cost) are required to maintain completion dates and/or project quality.

Proactive schedule monitoring

Owners believe general contractors act in their best interests, and while this is usually the case, schedule risks are often overlooked because owners monitor budget and scope or mistakenly believe that a planning professional is required to review complex project plans. This is not always the case.

Using schedule analysis technology can quickly provide insight into how healthy and well-managed a project schedule is at any given point in the project. Incorporating schedule review and analysis activities focused on the key metrics discussed previously into the monthly payment claim review and approval processes can mitigate schedule risk and increase the likelihood of a successful project.

In summary, balancing the risks of budget, scope and schedule is important and should be monitored by both the owner and general contractor to ensure alignment with project objectives. Well-informed owners can proactively mitigate risk throughout the project and are equipped for a smooth project completion and transition into operations.

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