Owners are ambitious when embarking on construction projects, knowing what they want, how much they are willing to spend, and when the project should be completed—and they typically engage general contractors to help deliver. Alignment between the owner and general contractor is important as it is a partnership of trust to complete the project on time and within budget without compromising scope.
Construction projects require the constant balance of competing objectives of cost (budget), quality (scope), and time (schedule) – often referred to as the “project management triangle.” This is not a new concept; however, every project team must choose the right elements to focus on and this focal point often varies between owners and general contractors.
The project management triangle challenges both owner and general contractor project teams because of the constant alignment required between each of the three elements to deliver on the desired quality of the project. While general contractors should focus on all elements of the project management triangle, often their priority is scope and schedule to meet the owner’s objectives and contractual requirements while knowing that failure to deliver on time and within scope more often results in contractual compliance issues and disputes.
Owners often prioritize scope and budget to satisfy their inherent risks with their board of directors and shareholders, shifting the focus of the schedule to the general contractor with limited insight and oversight.
In many cases, as construction progresses, key stakeholders or external factors impact or increase project scope which places pressure on the schedule and budget. An imbalanced focus on budget by owners while scope is being modified may result in schedule delays prompting change orders from the general contractor to increase the budget to maintain the project schedule. In short: it can get complicated.
A proactive approach to schedule management by owners can minimize many scope and budget risks that are present in construction projects. But how can owners with limited scheduling expertise proactively monitor and manage schedule risks? Monitoring leading indicators related to schedule health and specific schedule changes made by the general contractor can be efficient and cost-effective. This proactive approach often leads to:
- Increased stakeholder satisfaction because a project is delivered on-time
- Reduced cost resulting from fewer scheduled-related change orders
- More insightful and accurate project forecasting and reporting
- Easier project closeout and reduced likelihood of disputes and claims
Starting with a “healthy” schedule and maintaining that health throughout the project is critical to project success. Maintaining schedule health throughout the project ensures that the general contractor is appropriately managing schedule changes and that the schedule can be relied upon for decision making and reporting. A “healthy” schedule includes sufficient detail, appropriate logic, and accurate and reasonable task durations. Key metrics that should be monitored by every owner specific to schedule health include:
- Task Logic and Relationships – A high volume of Finish to Start relationships typically indicates the use of good logic. While acceptable, the use other relationship types (e.g., Start to Start, Start to Finish, etc.) should be limited. Tasks without a predecessor and successor should be limited and investigated to ensure that the impact of any schedule change is accurately reflected throughout the entire schedule.
- Schedule Lag – Lag, or the amount of wait time assigned between two tasks, is acceptable but should be limited. The use of lag to set specific activity start dates makes schedule limits transparency into impacts associated with other schedule changes.
- Critical Path Activities – A low or high percentage of critical path activities in a schedule may mean that there is not enough detail in the schedule or that a schedule is being compressed, a leading indicator of potential issues.
- High Duration Activities – An increased level of high duration activities may indicate that a schedule lacks sufficient detail, logic or complexity. A good rule of thumb is the 8/80 rule – task durations should typically be between 8 hours and 80 hours.
Contractors are constantly modifying a project schedule, either through updating task progress, changing durations, managing resource constraints, or re-sequencing activities. In some cases, this may not be transparent to the owner and only reported with an “On-Schedule” status update. However, at certain points in every project these ongoing changes to duration, resources, and activity sequencing increase the risk of schedule delays. Key metrics that should be monitored by every owner specific to schedule changes include:
- Progress – Often overlooked by owners, the continuous monitoring of planned versus actual activity completion, rather than monitoring only key milestone dates, can provide early insight into potential schedule issues and provide more time to prepare for such disruptions.
- Delay – An analysis of delays associated with individual activities, especially the cumulative delays of critical path activities, can provide early indications of issues. If critical delays are occurring and the project end date is not being impacted, this may indicate manipulation of other schedule activities.
- Changes – Changes to activity durations and logic can compromise schedule health and provide indications that the schedule is being artificially manipulated, especially if a high-volume of changes occur in a single reporting period without impacting the planned completion date or key milestones.
- Compression – Schedule compression shortens the project schedule without changing the project scope to meet schedule constraints, imposed completion dates, or other schedule objectives. Compression does not occur at a single point in time, but rather builds 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 that general contractors are acting in their best interests, and while this is usually the case, schedule risks are often overlooked because owners are monitoring budget and scope or incorrectly believe that a scheduling expert is needed to review complex project schedules. This is not always the case.
The use of schedule analytics 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, with a focus on the key metrics previously discussed, into monthly payment application review and approval processes can mitigate schedule risks and increase the likelihood of a successful project.
In conclusion, balancing the risks of budget, scope and schedule are all important and should be monitored by both the owner and general contractor to ensure alignment with project objectives. Well-informed owners can proactively mitigate exposure to risks throughout the project and are positioned for smooth project closeout and transition to operations.