CIVE 4273 Test I Review

What is a project?

"A project is an endeavor that is undertaken to produce the results that are expected from the requesting party" -Oberlender

Components of a project

Scope, Budget and Schedule

Phases of a project (activities associated with each phase)

Project Conception: Owners needs for project. Usually rather vague concept. List of required spaces and equipment.

Conceptual Design: Draw up a design services contract. Prepare detailed program description including the needs and desires of the owner. Establish a pre-design construction estimate. Prepare a schematic design or alternatives. Perform feasibility test.

Preliminary Design: Design contract must be signed by this stage. Program, budget, and main design direction have been established in previous stages.

Detailed Design: Plans. Working drawings. Show a graphical representation of every item in every facility.

Procurement: Construction contracts. Special equipment. Bulk material.

Construction: Complete work. Monitor and track. Manage risk. Align with goals.

Project Close-out: System testing. Final inspection. As-built drawing. Lessons learned.

Steps in project management

1.) Definition

2.) Scope

3.) Budget

4.) Planning

5.) Scheduling

6.) Tracking

7.) Closeout

Project success criteria

1. Meet safety goals

2. Finish within budget

3. Meet quality goals

4. Finish on schedule

Definition of a project manager

"The art and science of coordinating people, equipment, materials, and schedule to complete a specified project on time and within approved costs"

Project participants

1. Owner

2. Designer

3. Contractor

Roles of project participants

Owner: Set operational criteria. Establishes cost and schedule limits. Final approval and payment.

Designer: Produces plans and specifications. Provides initial budget and schedule. On site inspection -maybe.

Contractor: Completes the work. Prepares accurate estimates and schedules. Monitors estimates and schedules.

Roles of project manager

Planning, organizing , staffing, directing and controlling.

Leadership roles

Interpersonal roles, informational roles, decisional roles and business management roles.

Traits of a good project manager

1. Project enthusiasm

2. Change management

3. Ambiguity tolerance

4. Team building

5. Customer first

6. Business priorities

7. Industry knowledge

Project definition

Identify owners needs and objectives (need vs. want). Develop project scope that defines what the project will and will not include. Prepare preliminary budget and schedule. Determine if project is feasible via a feasibility study.

Project definition rating index (PDRI)

Manufacturing objectives criteria.

Business objectives.

Basic data research and development.

Project scope.

Value engineering.

Site information.

Process/Mechanical.

Equipment scope.

Civil, Structural and Architectural

Max point= 1000

Lower is better

Cut off point= 200

Design-Bid-Build

Advantages: Known quantity to owners designers and constructors. Reduced level of risk. Protection for owner.

Disadvantages: Costly changes after contract awarding. Long process. Adversarial relationship.

Design-Build

Advantages: Fast track, Reduced adversarial relationship. Reduced owners management responsibility.

Disadvantages: No guaranteed final price. Last checks and balances in inspection.

Integrated project delivery (IPD)

Early involvement of important project participants. Collective project goals. Shared risk. Shared profit. Open sharing of information.

Challenges: Changes in culture. Contractual framework.

Construction Management (CM)

Advantages: Allows for value-engineering program. Owner receives cost benefit of the competition among subcontract bids.

Disadvantages: Penalized by uncooperative party. Requires high owner involvement. Fast tracking can be risky for unsophisticated owners.

Contract types

Single fixed price (lump sum): Applicable to design/bid/build. Requires renegotiation of contract if changes happen.

Unit price contract: Applies when quantification of work is difficult. Eliminates the risking of negotiating a fixed contract. Enables fast tracking. Incurs unbalanced bid. Final price is not known until project is done.

Cost plus a fee: Enables a fast track. Applicable to design/build. A variation: guaranteed maximum price (GMP)

Project goals. S.M.A.R.T.

S- Specific

M- Measurable

A- Agreed upon

R- Realistic

T- Time component

Type of estimates

1. Order of magnitude (-50% to +50%)

2. Square foot and cubic foot (-20% to +30%)

3. Assemblies (-10% to +20%) (Detailed)

4. Unit price (-5% to +10%) (Detailed)

Order of magnitude

Educated guess or guesstimate. Sketches or concepts. Based on previous experience and comparisons with similar projects.

Square foot and cubic foot

Early schematic stage. Used prior to plan development during budgetary phase. uses floor areas or building volumes.

Assemblies

Used in later stage. Uses system or assembly units. Uses guidelines like masterformat or uniformat.

Unit price

Working plans/full specifications needed.

Unit cost estimates

This is not unit price. UC=(A+4B+C)/6

UC= forecast unit cost

A= minimum unit cost of previous projects

B= Average unit cost of previous projects

C= Max. unit cost of previous projects

Components of an estimate

Direct cost

-Material

-Labor

-Equipment

-Sub-contract

Indirect cost

-Overhead and profits

-Taxes

-Contingency

-Bonds

Sales tax

Material cost (always).

Equipment cost (typically, depending on state)

Exempted publics and non-profit works

-government jobs

-schools

-churches

Bonds and list what types there are and quality's of them

Bid bond assures contractor will sign contract with owner (typically 5-20% of the bid price).

Performance bond assures contractor will perform work.

Payment bond assures contractor will pay subs and suppliers.

Overhead

Job overhead- chargeable to a specific project. Superintendent/staff salaries: temp utilities: testing: permits.

General overhead- not chargeable to a specific project. Cost incurred at main office of company: executive/staff salaries: office rent: office equipment: office utilities: insurance: shops and yards.

Steps for a detailed estimate

1. Review the scope of project. consider factors affecting costs.

2. Quantity take off. Perform a quantity takeoff for all work items in the project.

3. Price material. Extend material costs.

4. Price labor. Based on probable labor production rates and crew sizes, determine labor cost.

5. Price equipment. Based on probable equipment production rates and equipment spreads, determine equipment costs.

6. Obtain subcontractor contractors bids. Receive and tabulate the cost for each subcontractor on the project.

7. Calculate taxes

8. Apply overhead and profit.

9. Contingency

10. Bonds.

11. Cost adjustments

Where do you get unit price?

RSMeans books

Estimate adjustments

Time adjustment.

Location adjustment.

Size adjustment.

Time adjustments

Economic factors (inflation)

Location adjustments

Labor, material and equipment factors. Climate. Regulations. Traffic.

Size adjustments

Project scale

Economic feasibility study

Projects must be economically feasible.

Private projects economic feasibility

economic analysis of return on investment.

Public projects economic feasibility

Benefit/cost ratio

Interest

A fee assessed to use borrowed money. The size of the fee will depend upon the amount of money borrowed and length of time which it is borrowed.

Interest rate

The percentage rate charged as interest.

Analyzing return on investment

Capital recovery.

Payback period.

Rate of recovery.

Capital recovery method

Evaluates amount of annual money, A, that must be obtained through the study life, n, of a project to obtain a recovery on the original capital investment, P.

Payback period method

Evaluates the number of years, n, that a project must be operated to obtain an interest rate, i, for a given investment, P, with an annual income, A.

Rate of return method

Evaluates the interest rate, i, that equates the initial investment, P, to the yearly net cash flow.

Benefit/cost ratio method

Generally, its is used in public works and governmental economic analyses.

Benefit/cost for a single project

For a given interest rate a B/C ratio >1 or B-C>0.

Definition of risk

Risk is an uncertain condition or event that, if it occurs, has an effect on at least one project objective, such as scope, schedule, cost, or quality.

Risk types

Known knowns

-These are things we know that we know

-Quantifiable

Know unknowns

-These are things that we now know we don't know

-Expected to be there

-Cannot be accurately modeled (measured)

Unknown unknowns

-These are things we do not know we don't know.

-Unrecognized or causes.

-Occurrence cannot be determined.

Risk areas

Funding

-what if I don't get all the money I need?

Time

-what if i cant find skilled people?

Staffing

-what if I cant find skilled people?

Customer relations

-what if I cant satisfy the customer?

Project complexity

-what if I cant control all of the project factors?

Organizational resistance

-what if I don't get support of management?

External factors

-What if governmental regulations change?

Risk management

Risk management is a planning for the possibility of a problem by estimating its probability, evaluating its impact, and identifying acceptable solutions in advance.

Contingency

Contingency is extra money added to the budget in case overruns occur.

Methods of assigning contingency

Percentage of base estimate

-Prepare the estimate and then add a small percentage

Expected net risk

-Evaluates maximum risk exposure and likelihood it will occur

Simulation

-Uses probability theory and tools like monte carlo simulation to assess risk