PROJECT MANAGEMENT FOR ENGINEERING AND CONSTRUCTION PROJECT MANAGEMENT FOR ENGINEERING AND CONSTRUCTION 2nd Edition James A Bent Albert Thumann, P.E., C.E.M Published by THE FAIRMONT PRESS, INC 700 Indian Trail Lilburn, GA 30247 Library of Congress Cataloging-in-PublicationData Bent, James A., 1931Pro'ect management for engineering and construction I James A Bent, dlbert Thumann -2nd ed fi,"Ifdes index ISBN 0-88173-182-X Engineering Management Construction indust Management Industrial project management I Thumann Albert g - - ~ i t l e TA190.B38 1994 624.068'4 dcd 93-29879 Project Mana ement for Engineeripg and Construction / James A Bent, Albert humann, Second Ehtlon Copyright O 1994 by PennWell Publishing Company 1421 South Sheridan / P.O Box 1260 -Tulsa, Oklahoma 74104 All rights resewed No part of this book may be reproduced, stored in a retrieval system, or transcribed in any form or by any means, electronic or mechanical, including photocopying and recording, w~thoutprlor written permission of the publisher Printed in the United States of America I S B N 0- 66173- 182- X FP I S B N 0- 13- 107269- PH While e v q e f b a is made to rovide dependable information, the publisher, authors, and editors cannot be held responsibye for any e m n or omissions Distributed by FTR Prentice Hall Prentice-Hall, Inc A Paramount Communications Company Englewood Cliffs, NJ 07632 Prentice-Hall International (UK) Limited, London Prentice-Hall of Australia Pty Limited, Sydney Prentice-Hall Canada Inc., Tomato Prentice-Hall Hispanoamericana,S.A., Mexico Prentice-Hall of India Private Limited, New Delhi Prentice-Hall of Japan, Inr, Tokyo Simon & Schuster Asia Pte Ltd., Singapore Editora Prentice-Hall Brasil, Ltda., Rio de Janeiro Dedication This book is dedicated to George Pudlo and Victor Hoffman These individuals, through their accomplishments, have demonstrated what it takes to be the "best" in project management Contents Preface Chapter The Project Management Approach Chapter Organizing an Effective Engineering Team 23 Chapter Fundamentals of Scheduling 31 Chapter Computer Methods for Scheduling 73 Chapter Managing Cogeneration Projects 103 Chapter Cost Estimating: Conceptual and Detailed 131 Chapter Keeping a Project On Time and Within Budget 187 Chapter Contract Planning Essentials 237 Chapter Economic Decision Making 247 Chapter 10 Case Studies and Examples 277 Chapter 11 Personal Performance Company Culture and Project Leadership for the 1990's 297 Appendix A Sample Schedules 313 Appendix B Cost Estimating References 323 Index 327 Preface A "Project" can be defined loosely as an item of work which requires planning, organizing, the dedication of resources and the expenditure of funds, in order to produce a concept, a product, or a plant The second edition of Project Management for Engineering and Construction focuses on "Plant Projects," all of which require design engineering, the purchase of materials, and their installation Almost all companies have personnel who are trained, skilled and dedicated to the execution of their projects The individuals who lead these efforts are called project engineers andfor project managers Supporting these project managers are such personnel as design engineers, procurement personnel, contracts officers, estimators, cost engineers, planners, construction managers and a variety of technical specialists In many cases, the type, size and complexity of projects vary greatly and, therefore, the skills and experience of project engineers, project managers and support personnel can, similarly, vary in capability The major factors which are essential for the successful execution of projects are: cost Management Many projects have cost as the number one objective This requires the project to be completed within budgeted cost Adequate business skills of the project manager are essential to meet this objective - Time Management To meet the "cost objective," the efficient management of time is essential This means that the predetermined schedule, upon which the cost estimate was based, must be met Human Resources Of all the resources required for plant projects, the people resources are the most difficult to manage Inter-personnel skills and the effective motivation of people, at all levels, are essential for successful project execution Communications A formal and informal structure of effective communications is absolutely essential for successful project execution In addition to a lack of people skills, many organizations form barriers to project success These "barriers" are generally referred to as the Matrix Interface Conflicts (MICs) The conflicts or bamers are caused to departmental jealousies, rivalries and failure by management to create a "culture" where "project consciousness" and esprit de corps are common to all personnel The 'Total Quality Management" programs sweeping industry are an attempt to solve these problems The second edition of Project Management for Engineering and Construction includes a new chapter on Personal Performance, Company Culture and Project Leadership for the 1990's This chapter deals with improving communication and removing bamers for effective project management channels In addition, a new chapter on contract planning essentials addresses "tricks of the trade" for developing contract strategies, defining responsibilities and addressing various forms of contracts including reimbursable, fixed-price and target contracts Hopefully, Project Management for Engineering and Construction will provide the tools readers need to complete their projects on time and within budgets James A Bent Albert Thumann Project Management for Engineering and Construction Appendix A - Sample Schedules 321 Appendix B Cost Estimating References A variety of publications and computer software is available to aid in cost estimating This list is not complete but simply serves as a sample of what is available Since the material presented is updated periodically, the user should contact the publisher for latest prices and editions Building Construction Cost Data 1993, Annual Editions, $74.95, available from R.S Means Co., Inc., 100 Construction Plaza, Kingston, MA 02364, (617) 585-7880 Features of this reference include: New materials, fixtures, hardware, and equipment items included in each section All items updated to reflect latest costs and construction techniques Hourly and daily wage rates for installation crews with crew sizes, equipment, and average daily crew output City cost adjustment factors for material and labor costs in 19 categories for each of 162 major U.S and Canadian metro areas Square foot and cubic foot cost section showing range and median costs for common building types with plumbing, HVAC, and electrical percentages tabulated separately Special cost advantages such as owned equipment, low-cost materials purchases, and low overhead, can be identified and computed separately Over 18 index pages for quick item location and cross-reference 324 Project M a ~ g e m e nfor f Engineering and Comlruction Helpful examples, instructions, illustrations, and explanations of how costs were computed National Mechanical Estimator, by Victor Ottaviano, $90.00, available from The Fairmont Press, 700 Indian Trail, Lilburn GA 30247: This 780-page comprehensive source reference for estimators provides accurate manhour figures, effective estimating techniques, and essential statistics on the impact of new technologies This latest edition contains an expanded sheetmetal section, piping section, and new sections on heating and air conditioning equipment and on computers Included are new budget prices, the latest sheetmetal programs, the most popular accounting packages, the latest nationwide productivity figures, new SMACNA gauges, 16 of the most common fittings, new industrial ductwork Richardson Rapid Estimating Systems, Annual Editions Available from Richardson Engineering Services, Inc., 909 Rancheros Drive, P.O Box 1055, San Marcos, CA 92069 The three-volume, 2,400page set and is used primarily for commercial and industrial projects and covers: * Civil Sitework Metals Specialties Structural Piling Carpentry * Mechanical Concrete Doors & Windows * * Electrical Masonry Finishes Process Plant Construction Estimating Standards, $387.00 per set The four-volume, 4,000-page set, the Richardson Rapid Estimating System for PROCESS PLANT CONSTRUCTION offers complete and current standards for Chemical Plants, Manufacturing Facilities, Solids Processing, Water Treatment Plants, General Construction Projects and Buildings General Construction Standards set contains illustrations, a keyword alphabetical index of the total contents, and is updated quarterly; quick access to the current information SDSI Estimating System and the Richardson Data Base is available from SDSI Business Systems, 9528 Miramar Road, Suite 129, San Diego, CA 92126, (619) 452-5123 Appendir B - Cost f i l i m l i n g Refcrences 325 Unit Price C o s t Files available from R.S Means Co., 100 Construction Plaza, Kingston, MA 02364 Unit Price C o s t Files can be used only in conjunction with Lotus 1-2-3 R.S Mean's software programs, Astro, Galaxy and Pulsar, are now available from Software Shop Systems (800)-354-6192 Bid Master available from Estimation, Inc., 805L Barkwood Court, P.O Box 488, Linthicum Heights, MD 21090, 1-800-2357078 This computer software system allows estimators to material takeoff for electrical, mechanical, HVAC systems utilizing a count probe and estimating keyboard The length probe is used to trace the length of linear area for calculating length of ductwork, pipe, etc., on a blue print Each item is then factored for material, labor prices and byproducts As an alternate to estimating keyboard and probes, system can be used with a sonic digitizer All measurements can be taken off with a stylus and touchpad without touching the keyboard Index Accurate Cost and Schedule Forecasts 198 Building An Effective Team 28 Business Decisions 191 Case Studies and Examples 277 CPM Planning and Scheduling 278 Cost Estimating 278 Project Organization of Time and Budget 279 Cash Flow Evaluation/Control208 Cogeneration Projects 103 Checklist for Major Contracts for Cogeneration and Small Power Production 113 Construction Phase 111 Engineering Phase 107 Detailed Engineering Design 110 Environmental Permitting 108 Feasibility Study 107 Preliminary Engineering 107 Utility Interface 109 Start-up and Testing Phase 112 Operating and Maintenance Procedures 113 Training 112 Company Organizations for the 1990's 301 Core Workers 302 Downsizing 302 Flexible Labor Force 303 Managing Contract Personnel 303 Managing the Flexible Labor Force 303 Computer Methods for Scheduling 73 Construction Labor Productivity 153 Area Workload/Peak Construction Labor 155 Extended Work Week - Productivity Loss 157 Job Size 155 Construction Progress/Productivity 203 Construction Earned Budget Report 206 Construction Manhour Report 203 Contingency Control and Rundown 206 Rundown Routine 207 Start-Up/Commissioning 207 Contract Contract Contract 238 Conditions of 245 Forms of Lump SumFixed Price 244 Measured 243 Reimbursable Cost 241 Target 242 Typical Forms of 245 Responsibility 239 Strategy 239 Coordination Procedures 19 Correspondence Procedures 21 Design Basis 19 Distribution of Documents 21 Drawing, Specifications and Models 19 Manufacturers' Drawing and Purchase Orders 20 Monitoring and Control Documents 20 Responsibility Determination 19 Scope of Work Changes 20 Security 21 Cost Capacity Curves 136 ct Management for Cost Estimating 131 Quality of Estimates 133 Typical Estimating Systems 135 Cost-Time Resource (CTR) Program 233 Contracting Arrangement 235 Defining the Program 233,235 Example of CTR Program 235 Design Constraint of Estimating Quality 139 Developing or Checking An Estimate 141 Bulk Materials 144 Construction Indirect Costs 149 Contingency 151 Direct Construction Labor 148 Escalation 153 Home Office Costs 150 Major Equipment and Materials 142 Project Conditions Review 142 Reviewing Significant Overall Relationships 142 Scope Review 141 Economic Decision Making 247 Effective Trending System 197 Small Projects 213 Engineering Change Log 228 Engineering and Construction Trend Curves 220 Engineering Manhour Control 223 Home Office Cost Expenditure Curve 220 Indirect Labor Manhour Curves 223,226 Purpose 220 Engineering Progress/Pmductivity 199 Engineeringmrawing Status Report 203 Engineering Progress and Productivity Report 199 Engineering and Consfruction Guide to Completion of Design and Drafting 199,201 Equipment Bid Evaluation 203 Equipment Ratio 136 Estimating Check List 157 Field Staff Control 229 Fudging and Detailed Estimate 138 Fundamentals of Scheduling 31 Interrelationship Between Owner, Designer, and Constructor 30 Investment Decision-Making 250 Key Cost Items Control/Report (Small Projects) 212 Life Cycle Costing 248 Capital Recovery 265 Gradient Present Worth 266 Single Payment Compound Amount 250 Single Payment Present Worth 251 Sinking Fund Payment 266 Uniform Series Compound Amount 264 Uniform Series Present Worth 265 Manhour Rate Curves 215 Construction Labor Curve 217 Home Office/EngineeringCurve 215,217 Material Commitment Curve 220 Matrix/Department Approach 24 Matrix Interface Conflict (MIC) 304 Benchmarking (Methods and Procedures) 309 Employee Empowerment 309 Matrix Theory 304 Personal Leadership at All Levels 309 Organizing an Engineering Team 23 Payback Period Method 248 Pre-Estimating Survey 157 Project Control 187 Cost Effective Program 191 Establishing ProjectJCost Consciousness 190 Project Control Defined 190 Project Manager Responsibility 190 Project Control Program 192 Estimating 194 Feasibility Studie* and D Projects Techniques 194 Intermediate/Large Projects Techniques 193 Potential Techniques (Supplementary) 193 Small Projects Techniques 193 Project Control Specification for Major Contracts 195 Project Management Approach Project Management Estimating Responsibility 139 Project Manager Project Objectives and Execution Plan Project Risks Codes and Regulations 11 Construction 8,12 Engineering 8.10 Financing , l Labor 9.14 Managing Risks 9, 15 Operations 9, 14 Site Conditions 9,13 Project Rundown Control 226 Design Changes and Start-Up Problems 228 Material 228 Purpose 226 Subcontracts 228 Quantitymnit Cost Estimates 137 Reports 79 Resource Management 77 Scaled Models 27 Scheduling 31 Arrow Versus Precedence Networks 35 Backward Pass 53 Calculation Process for Early Start @S) 39 Calculation Process for Late Finish 41 Construction Duration Trapezoidal Technique 64 Critical Path Evaluation 51 Duration of Determination 60 Fast Track Scheduling Relationship 62 Float Calculations and the Critical Path 55 Float and Its Application 43 Forward Pass 52 Free Float 47 Logic Ties 38 Network Development Example 37 Practical Scheduling - Basic Scope Appreciation 62 Resources 55 Schedule Development and Evaluation 57 Scheduling Systems 66 Summary Schedule 70 Typical Project Master Schedule 70 Scheduling Program 194 Schedule Development,/Operations 195 Technical Considerations 194 Scope of Work 4.6 Statistical/Historical Data 162 Subcontract Cost Control and Forecast 209 Claims 209,212 Low Bids 212 330 Project M a ~ g e m e n I f i Engineering r and Conrrruction Summary Report 209 Unit Price Quantities Variations 212 Subcontract Performance/Report23 Team Approach 25 Time Value of Money 249 Timely Cost ~ccoun~n~/Reportin~ 196 Trend Curves (Small Projects) 215 Vendor Drawing Control 209 Work Unit Tracking Curves 229 Piping Erection 231 ... for Engineering and Construction Effective project management for engineering /construction projects is essential in today's very demanding business environment A successful project management approach... 1931Pro'ect management for engineering and construction I James A Bent, dlbert Thumann -2nd ed fi,"Ifdes index ISBN 0-88173-182-X Engineering Management Construction indust Management Industrial project. .. furnishes materials and equipment not procured directly by the owner or engineer and erects the facility as designed by the engineer (continued) Project Management for Engineering and Construction Process