CTPM by Chitkara

Author construction project management: planning, scheduling

Krishan K. ChitkaraAuthor and Program Director, CPMT Plus

Krishan K. Chitkara is the Executive Director of the Institute of Construction Project Management,Gurgaon, located at about 15 KM from New Delhi international airport. He has vast experiences inconstruction and academic fields.

Chitkara has worked at senior levels for over 30 years in reputed construction establishment and academicinstitutions in India and abroad. The diverse construction tasks executed by him include defence works,residential and commercial complex, precast turnkey jobs, roads and airfields, and lub-oil refinery works.He was Project Planning Manager and Construction Manager in Iraq, Chief Engineer (Planning) andChief Engineer (Construction) in United Arab Emirates and Sultanate of Oman and General Manager of aconcrete precast Company in Saudi Arabia. In India, he served as the General Manager in a ConstructionCompany, Project Manager and Planning Manager in Military Engineering Service and Advisor inReady-mix Concrete.

He is former Director of the National Institute of Construction Management and Research, New Delhi, andwas Professor in Works Management in the College of Military Engineering, Pune. His book titled "CONSTRUCTION PROJECTS MANAGEMENT: Planning, Scheduling and Controlling" was publishedby Tata McGraw-Hill, New Delhi. He has published several papers and conducted number ofseminars/workshops in Project Management with computer application for senior managers ofgovernment, public and private sectors.

Lt Colonel (Retd) K.K. Chitkara, AVSM, was commissioned into the Corps of Engineers of Indian Armyin the year 1954. He graduated in Civil Engineering and secured first class first in M B A. In India, he isFellow of the Institute of Engineers, Institute of Surveyors and Institute of Valuers. He was awarded ATIVISHISHT SEVA MEDAL by the President of India for the distinguished service of exceptional orderrendered by him for construction of a road in high altitude areas in India.

CPMT plus, Krishan K. [email protected]

Contents construction project management: planning, scheduling

Contents

Lessons

Appendices

Illustrations

LESSON - 01 construction project management: planning, scheduling

Construction Project Management Techniques Plus

Lesson Contents

Lesson 1: Construction Project Management Framework

1.1 Introduction and objectives.1.2 What is a project?1.3 What are the salient characteristics of a construction project?1.4 What are the broad phases and processes encountered in a construction project life cycle?1.5 What does construction project management imply?1.6 How does the management of construction projects differ from the management of ongoing

process industries?1.7 Who are the participants involved in the management of a construction project?1.8 How is construction project management organized?1.9 What is the role and responsibility of a project manager?1.10 Why do construction projects usually fail to achieve their mission?1.11 What makes a competent project manager?

Appendix A: Indian Construction Scenario.SAQ : Q 01A to Q40A

Exercises : Ex 01A to Ex 14A

Lesson 2: Project Management Techniques: An Overview

2.1 Introduction and objectives.

2.2 What are the techniques employed in making a project go-ahead decision?

2.3 How is project scope defined and communicated?

2.4 How is project time planned?

2.5 How are project resources scheduled?

2.6 How are project costs budgeted?

2.7 How are project objectives controlled?

2.8 Why and how is the planning system codified?

2.9 How is the project information system managed?

2.10 What are the benefits of systematically planning, scheduling and controlling projects?

Appendix B: Project Feasibility StudySAQ : Q 01B to Q40B

Exercises : Ex 01B to Ex 16B

Lesson 3: Project Work Breakdown3.1 Introduction and objectives.

3.2 What does project work breakdown imply?

3.3 How are project work breakdown levels classified?

3.4 What are the methods used for identifying project activities?

3.5 How is the duration of an activity defined?


3.6 How is the duration of an activity assessed?

3.7 What are the elements of an activity cost?

3.8 What are the benefits of Work Breakdown Structure (WBS) technique?

Appendix C: Sizing of Work PackagesSAQ : Q 01C to Q20C

Exercises : Ex 01C to Ex 17C

Lesson 04: CPM /PERT Network Analysis

4.1 Introduction and objectives.

4.2 What are the basic features of a CPM network?

4.3 How is the CPM network of a major task developed?

4.4 How is a CPM network time compressed?

4.5 How is a PERT network modelled and analysed?

4.6 How does PERT deal with uncertainties in a project duration estimation?

4.7 How is the probability of meeting a project completion date determined in PERT?

4.8 What are the differences between CPM and PERT?

Appendix D: Project Duration Assessment Using Monte Carlo Simulation TechniqueSAQ : Q 01D to Q20D

Exercises : Ex 01D to Ex 7D

Lesson 05: Precedence Network Analysis

5.1 Introduction and objectives.5.2 How is a Precedence Network modelled?5.3 How to time analyse a Precedence Network?5.4 How to draw a Precedence Network for repetitive works projects?5.5 Why and how networks are classified?5.6 How to draw precedence network of a major project?5.7 What are the similarities and differences among the project network analysis techniques?5.8 What are the merits and limitations of network analysis techniques?

Appendix E : Project TimeCost Tradeoff TechniqueSAQ : Q 01E to Q25E

Exercises : Ex 01E to Ex 4E

Lesson 06 : Project Work Scheduling

6.1 Introduction and objectives.6.2 What is bar chart scheduling technique and what are its merits and

limitations?6.3 Why network plans are time scheduled?6.4 How network plans are time scheduled?6.5 How to apply the Line-Of-Balance (LOB) technique for scheduling repetitive projects?6.6 How to forecast resource requirement?


6.7 How are schedules classified?

Appendix F: Decision Network AnalysisSAQ : Q 01F to Q25F

Exercises : Ex 01F to Ex 9F

Lesson 07 : Planning Construction Manpower

7.1 Introduction and objectives.7.2 What are project manpower planning functions?7.3 How are construction workers categorized ?7.4 How are workers productivity norms developed?7.5 What are the factors affecting workers productivity?7.6 How to schedule manpower requirement?7.7 How is project manpower grouped?7.8 How is indirect manpower forecast prepared?7.9 What are the guiding principles of organizing workers teams?7.10 What are the principles of designing a good incentive plan?

Appendix G: Project Management OrganizationSAQ : Q 01Gto Q20G

Exercises : Ex 01G to Ex 11G

Lesson 08: Planning Construction Materials

8.1 Introduction and objectives.8.2 What is the ABC classification of materials?8.3 How is materials provisioning planned?8.4 How is materials quantity estimated?8.5 How is materials procurement processed?8.6 What influences regular stock inventory?8.7 How is project materials inventory planned?8.8 How Operations Research solves materials planning problems?8.9 What is the scope for application of Value Engineering in the procurement of materials and

how to implement it?

Appendix H : Resources Allocation Using Linear ProgrammingSAQ : Q 01H to Q25H

Exercises : Ex 01H to Ex 11H

Lesson 09: Project Construction Equipment

9.1 Introduction and objectives.9.2 How is major construction equipment classified?9.3 How ground conditions affect the performance of earthwork equipment?9.4 What are the salient features of earth excavating equipment?9.5 What equipment is commonly used for earth cutting with short hauling distance?9.6 What equipment is commonly used for scraping and transporting earth with long hauls?9.7 How the transportation distance affects the selection of earth hauling equipment?9.8 What are the types of earth compacting and grading equipments?9.9 What are the types of commonlyused concreting plants and equipments?9.10 What are the common types of cranes used for material hoisting?

Appendix I : Earthmoving Equipment: Approximate Production Planning Data forPrimary Tasks


SAQ : Q 01I to Q22I

Exercises : Ex 01I to Ex 10I

Lesson 10: Selecting Construction Equipment

10.1 Introduction and objectives.10.2 What are the factors that affect the selection of construction equipment?10.3 How task considerations dictate the choice of the equipment?10.4 How cost considerations influence the equipment selection?10.5 What are the equipment engineering factors considered during the selection of an equipment?10.6 What are the equipment acquisition options available to the contractors.

Appendix J : Time Value Of MoneySAQ : Q 01J to Q30J

Exercises : Ex 01J to Ex 10J

Lesson 11 : Planning Construction Costs11.1 Introduction and objectives.11.2 How is cost estimated during the project life cycle?11.3 What are the methods of estimating project costs?11.4 How is detailed cost estimate structured?11.5 How are construction costs classified?11.6 How are resources unit cost standards developed ?11.7 Why and how is work package standard cost determined ?11.8 How are S Curve used as a forecasting tool?

Appendix K: Break-Even AnalysisSAQ : Q 01K to Q25K

Exercises : Ex 01K to Ex 10K

Lesson 12 : Planning Construction Budget

12.1 Introduction and objectives.12.2 Why a project needs budget?12.3 How is a project budget structured?12.4 How is a sales revenue budget prepared?12.5 How is an operating expenses budget compiled?12.6 How are the cost inflation, escalation and contingencies are catered

for in the budget?12.7 What forecasts are included in the master budget?12.8 What is a flexible budget?12.9 What are the essential features of an effective project budget ?

Appendix L: Capital Budgeting ProcessSAQ : Q 01L to Q30L

Exercises : Ex 01L to Ex 9L

Lesson 13 : Project Scope Control13.1 Introduction and objectives.13.2 What does the scope control imply?13.3 How are projects designs and drawings processed?13.4 What are the various modes of executing construction projects?13.5 How is project time and cost performance controlled?13.6 What does a project scope closeup involve?


13.7 How is scope control system organized?13.8 What are the prerequisites and benefits of an effective scope control system?13.9 What are the guiding principles for implementing project management practices?

Appendix M: Project Quality ManagementSAQ : Q 01M to Q40M

Exercises : Ex 01M to Ex 9M

Lesson 14: Resources Productivity Control14.1 Introduction and objectives.14.2 What does resources productivity control involve?14.3 How is labour productivity controlled?14.4 How is equipment productivity controlled?14.5 How is materials productivity controlled?14.6 How can a jobsite construction manager influence the project success productively?

Appendix N: Workers Safety Comes FirstSAQ : Q 01N to Q40N

Exercises : Ex 01N to Ex 10N

Lesson 15 : Project Cost Control

15.1 Introduction and objectives.15.2 What is project cost control approach?15.3 How is cost performance measured?15.4 How is the value of work done (sales) controlled?15.5 Why and how is direct cost controlled?15.6 How is contribution controlled?15.7 How is budgeted performance controlled using the earned value analysis?

Appendix O: Project Risk ManagementAn OverviewSAQ : Q 01O to Q40O

Exercises : Ex 01O to Ex 15O

Lesson 16: Project Time Control

16.1 Introduction and objectives.16.2 How to monitor time progress?16.3 Why and how to crash the project time?16.4 What is whatif analysis?16.5 How to determine the extension of time in a contracted project ?16.6 What are the guidelines for reviewing work progress?

Appendix P: Construction Contracts AdministrationSAQ : Q 01P to Q40P

Exercises : Ex 01P to Ex 17P

Lesson 17: Planning Data Codification

17.1 Introduction and objectives.17.2 Why is project data codified?17.3 What data in a project needs codification?17.4 How are codes labelled?17.5 How to assign codes at various levels in a work breakdown structure?17.6 How to structure activity identification codes?17.7 How to define resources codes?17.8 How to develop cost and finance accounting codes?


17.9 How to prepare technical document codes?17.10 What are the principles underlying an effective codification system?

Appendix Q: Managing Privatized Infrastructure ProjectsSAQ : Q 01Q to Q40Q

Exercises : Ex 01Q to Ex 10Q

Lesson 18: Project Management Information System

18.1 Introduction and objectives.18.2 What is meant by information?18.3 What information is needed for managing projects?18.4 How PMIS is designed to deliver the information?18.5 How is monitored information communicated?18.6 How can project management software support PMIS?18.7 How to select the software for PMIS?18.8 How have advances in Information Technology supported PMIS?18.9 What are the functions of the Project Monitor ?18.10 What is the role of management in PMIS?

Appendix R: Upgrading Total Project Management SkillsSAQ : Q 01R to Q40R

Exercises : Ex 01R to Ex 14R

Appendices construction project management: planning, scheduling

Appendices Contents

AppendixA: Indian Construction Scenario

Construction and Scope.Construction Contribution in the Indian Economy.Growth of Indian Construction Industry.

Domestic Construction Tasks Ahead.

Globalization: Challenges for the Construction Industry.

AppendixB: Project Feasibility Study

Purpose of the Feasibility Study.Analysing Factors Affecting Project Feasibility.Feasibility Report.

AppendixC : Sizing Project Work Packages

Importance of Work Packages.Factors Affecting Sizing of Work Packages.Re-sizing Work Packages.

AppendixD: Project Duration Assessment Using Monte Carlo Simulation Technique

Introduction.Concept.Activity Duration Probability Distribution Function.Methodology.Examples.Risk in Assessed Project Completion Time.

AppendixE: Project TimeCost Tradeoff Technique

TimeCost Relationship. Concept. Plotting Project CostTime Function. Time Crashing.

A Word of Caution.AppendixF: Decision Network Analysis

Scope.

Types Of Decision Network Analysis Techniques.

Decision Network Analysis. Decision Tree Analysis. Conclusion.

AppendixG: Project Management Organization

Project Organization Concept. Project Organizational Forms. Project Organizational Structure. Project Responsibility Centres.


Strengths and Weaknesses of the Project Management Matrix Organization.Conclusion.

AppendixH : Resources Allocation Using Linear Programming

Introduction and Scope.Solution of Linear Programming Problems by Graphical Method.Solution of Linear Programming Problems by Simplex Method.Solution of Linear Programming Problems by Dual Method.Conclusion.

AppendixI: Earthmoving Equipment: Approximate Production Planning Data forPrimary Tasks

Introduction. Tracked Bull Dozer Ideal Output Per Hour in Bulk Volume in Easy-To-Do

Loose Soil. Front-End Loader Ideal Output Per Hour in Bulk Volume Easy-To

Haul Loose Soil. Ideal Output of the Tracked Loader Shovel. Excavating and Lifting Equipment Ideal Output Per Hour in Bulk Volume. Scrapper Ideal Output Per Hour in Bulk Volume in Easy To Scrap Soil.

Performance Factors.

AppendixJ: Time Value Of Money

Time-Money Link. The Future Value of a Single Amount. The Future Value of an Annuity of Equal Amount. The Present Value of a Future Amount. The Present Value of an Annuity of Equal Amount. The Present Value of Cash Inflow of Unequal Amount and Discount.

AppendixK: Break-Even Analysis

Introduction.Break-Even Analysis Methodology.Assumptions and Limitations.Uses of Break-Even Analysis.

AppendixL: Capital Budgeting Process

Importance of Capital Budgeting.Estimating the Cash Flow.Establishing the Cost of Capital.Applying the Investment Appraisal Criterion.

AppendixM: Project Quality Management

Introduction and Scope.Quality Concept.Quality Management Principles.Corporate Quality Policy.Production Quality Management Processes.Quality Cost Analysis.Total Quality Management.Quality in Total Project Management.


TQM Vs TPM.

AppendixN : Workers Safety Comes First

Why Safety Comes First?Causes of Accidents at Construction Site.Statutory Safety Measures in India.Formulating Project Safety Policy.Building Safety in Site Layout and Temporary Facilities.Safety Related Role of the Project Personnel.Conclusions.

Annexure (i): Extracts from The Building and Other Construction Workers ( Regulation of Employment andCondition of Service ) Act 1996 and Central Regulation 1998.Annexure (ii): Construction Safety Checklist.

AppendixO: Project Risk ManagementAn Overview

Introduction and objectives.

How are risks identified?

How are project risks analyzed?

How is risk response plan developed? How are project risks controlled? How does the human side affect the management of risks? What is the role of a Project Manager in managing risks?

What are the benefits of managing project risks?

AppendixP: Construction Contracts Administration

Introduction and Scope. Role of the Participants. Production Performance Control. Specification Interpretation. Scope Change Control. Sub-contractor Approval. Disputes, Claims and their Modes of Settlement. Contract Termination Control. Interim Valuation Payment Control. Contract Bonds and Securities. Project Close-out. Formal Correspondence Rules. Guidelines to Minimize Problems in Contract Administration.

AppendixQ : Managing Privatized Infrastructure Projects

Introduction and Scope.Stakeholders.Role of Government in Designing and Implementing the Concessions.Concessionaire Project Management Process.Key factors in Management of Privatized Infrastructure Projects.Conclusion.


AppendixR: Upgrading Total Project Management Skills Introduction and Scope.

Knowledge Areas Needed for Managing Construction Projects.Skills Development Model.Skills Up-gradation Methodology.Academia-directed Project Management Education.Corporate-directed Project Management Training.Individual-directed Self-learning.Distance Learning in Virtual Classroom to Speed up Delivery.Conclusion.

ILLUSTRATIONS LIST construction project management: planning, scheduling

Illustrations ListLesson 1 Construction Projects Management Framework

Illustration # 1.1 Typical Housing Project (CPMPSC Exhibit 1.01 pp27).Section 1.8

Lesson 2 Project Management Techniques: An Overview

Illustration #2.01: 2000 Housing Units Project: Sub-project Work Breakdown Structure (CPMPSC Exhibit 3.1pp74). Section 2.4.1

Illustration # 2.02: Residential Building Task Work-breakdown Structure (CPMPSC Exhibits 3.2 pp 75).Section 2.4.1

Illustration # 2.03 : Residential Building Foundation Work Package and Activities Work Breakdown Structure(CPMPSC Exhibits 3.3 pp 76). Section 2.4.1

Illustration # 2.04 Primary School Construction: Work breakdown Structure( CPMPSC Exhibit3.6 pp 83). Section 2.4.1

Illustration # 2.05 Construction of Education Buildings: Activities Matrix with Duration (CPMPSC Exhibit 3.7pp 84). Section 2.4.1

Illustration # 2.06: Pumping Station Project: CPM Network Time Analysis ( CPMPSC Exhibits pp 105). Section2.4.2

Illustration # 2.07: PERT Network of Pumping Station Project (CPMPSC Exhibits pp 133). Section 2.4.2

Illustration # 2.08 PNA Network of Raft Foundation Construction (CPMPSC Exhibits5.1 pp 148)Noteillustration Section 2.4.2

Illustration # 2.09 Summary Precedence Network of Educational Buildings (CPMPSC Exhibits 5.5 pp 164)Section 2.4.2

Illustration # 2.10 Summary Precedence Network of Primary School (CPMPSC Exhibits5.4 pp 163) Section2.4.2

Illustration # 2.11 Raw Water Clarifier Tank Construction Precedence Network and Schedule (CPMPSCExhibits 5.7 pp 167) Section 2.4.2

Illustration # 2.12 Site Development Project CPM and PNA Networks (CPMPSC Exhibits 5.8 pp 174) Section2.4.2

Illustration # 2.13 Site Development Project: Bar Chart Work Programme (CPMPSC Exhibit 6.1 pp 183).Section 2.4.4

Illustration # 2.14 Site Development Project: Resources Limited Schedule (CPMPSC Exhibit 6.5 pp 196).Presentation to be improved. Section 2.4.4

Illustration # 2.15 2000 Housing Units Project: Summary Schedule of Education Buildings (CPMPSC Exhibit6.6 pp 197) Section 2.4.4

Illustration # 2.16 Residential Buildings Foundations Construction Cyclograph, (CPMPSC Exhibit 6.7 pp 204).Section 2.4.4


Illustration # 2.17 Residential Building Finishes Plan: Derived Using Line-of-Balance Technique, (CPMPSCExhibit 6.8 pp 205). Section 2.4.4

Illustration # 2.18 Residential Building Finishes Control Chart : Derived Using Line-of-Balance Technique(CPMPSC Exhibit6.9 pp 207) Section 2.4.4

Illustration # 2.19 : 2000 Housing Units Project: Residential Building Monthly Target Tracking Chart( CPMPSCExhibit 6.10 pp 209-210). Section2.4.4

Illustration #2.20: 2000 Housing Units Project, Summary Schedule of Construction Tasks (CPMPSC Exhibit 2.2pp 44). Section 2.4.4

Illustration # 2.21: 2000 Housing Units Project, Manmonth Requirement and Earned Value Forecast(CPMPSCExhibit 2.3pp 48). Section 2.5.1

Illustration #2.22: 2000 Housing Units Project: Extract from Workers 'Requirement Forecast (CPMPSC Exhibit7.1 pp 235). Section 2.5.2

Illustration # 2.23 :Residential Building's Sub-Project: ABC Classification of Direct Material ( CPMPSC Exhibit8.1 pp249) Section 2.5.3

Illustration # 2.24: Functional Classification of Construction Equipment (CPMPSC Exhibit 9.1 pp 277). Section2.5.4

Illustration # 2.25: 2000 Housing Units Project: Major Plant & Equipment Planned (CPMPSC Exhibit 2.6 pp53). Section 2.5.4

Illustration # 2.26 :Construction Equipment Costing: Hourly Owning and Operating Cost Estimate ( CPMPSCExhibit 10.3 pp 328). Section 2.5.4

Illustration # 2.27: Foundation Construction Sub-Project: Activity-wise Workers' Requirement Estimate for OneFoundation Module Construction (CPMPSC Exhibit 2.7 pp 54). Section 2.6.1

Illustration # 2.28: Foundation Construction Sub-Project: Major Materials Requirement Estimate for OneFoundation Module (CPMPSC Exhibit 2.8 pp 56). Section 2.6.1

Illustration # 2.29: 2000 Housing Units Project: Organisation Chart ( CPMPSC Exhibit 12.1 pp 368 same asExhibit 1.01 pp27). Section 2.6.2

Illustration #2.30: 2000 Housing Units Project: Task Responsibility Centres (CPMPSC Exhibit 12.2 pp 369).Section2.6.2

Illustration #2.31 Project Expense Budget Formats (CPMPSC Fig 12.2 pp 374).Section 2.6.2

Illustration # 2.32: Project Control System (CPMPSC Exhibit 13.1 pp 395).Section 2.7.1

Illustration # 2.33 : Project Performance Control ( CPMPSC Fig 13.2 pp399).


Section 2.7.1

Illustration # 2.34 Typical Performance Control Responsibility Matrix ( CPMPSC Exhibit 13.6 pp 418). Section2.7.1

Illustration # 2.35: Labour Productivity Accounting System (CPMPSC Fig 14.1 pp 421). Section 2.7.2

Illustration # 2.36 Project Budgeted Cost Chart ( CPMPSC Exhibit 15.11 pp-463). Section 2.7.3

Illustration # 2.37 Integrated Time- Cost Performance Chart ( CPMPSC Fig 15.1 pp445). Section 2.7.3

Illustration # 2.38 CPM / PERT Updated Network (CPMPSC Fig 16.1 pp 474).

Section 2.7.4

Illustration # 2.39: Primary School Construction: Updated Summary Precedence Network (CPMPSC Exhibit16.1 pp 478).Section 2.74

Illustration # 2.40: Updated Line-of-Balance Chart (CPMPSC Exhibit 16.2 pp 479). Section 2.7.4

Illustration # 2.41: Updated Bar Chart Schedules ( CPMPSC Exhibit 16.3 pp 481) Section 2.7.4

Illustration # 2.42: Pumping Station Project Original and Time Compressed Network (CPMPSC Exhibit 16.6 pp488). Section 2.7.4

Illustration # 2.43 2000 Housing Units Project Work Codes ( CPMPSC Exhibit 17.1 pp 507). Section 2.8

Illustration # 2.44: Labeled List of Drawings for a Health Centre Building ( CPMPSC Exhibit 17.3 pp 526).Section 2.8

Illustration # 2.45. Project Team Functions and Software Requirements. ( CPMPSC Table 18.1 pp 538)Section18.3

Lesson 3 Project Work Breakdown

Illustration # 3.1: 2000 Housing Units Project: Sub-project and Task Level Work Breakdown (CPMPSC Exhibit3.1 pp74) Section 3.3.2

Illustration # 3.2: Construction of Residential Building: Work-breakdown Structure (CPMPSC Exhibits 3.2 pp75) Section 3.3.2

Illustration # 3.3 : Construction of Residential Building Foundation : Work-breakdown Structure (CPMPSCExhibits 3.3 pp 76) Section 3.3.2

Illustration # 3.4: Pumping Station Project: Work-breakdown Structure (CPMPSC Exhibit 3.4 pp 80) Section3.4.2

Illustration # 3.5 Primary School Construction: Work breakdown Structure ( CPMPSC Exhibit3.6 pp 83)Section 3.4.2

Illustration # 3.6 :Planning of a Factory Project During Feasibility Stage: Task Matrix (CPMPSC Exhibit 3.5 pp82) Section 3.4.3

Illustration # 3.7: Construction of Education Buildings: Activities Matrix with Duration (CPMPSC Exhibit 3.7 pp84) Section 3.4.4


Illustration # 3.8: CI/SfB Table No.1 (CPMPSC Table 3.2 pp 85 ) Section 3.4.5

Lesson 4 Project CPM/PERT Network Analysis

Illustration # 4.1 : Pumping Station Project: CPM Network Time Analysis ( CPMPSC Exhibits pp 105) Section4.3.1

Illustration # 4.2 : Pumping Station Project: Layout Drawing ( CPMPSC Fig 3.1 pp 78 ) Section 4.3.1

Illustration # 4.3 Activities of Pumping Station Project (CPMPSC Exhibits pp 122) Section 4.3.3

Illustration # 4.4 Activities Dependence Table of Pumping Station Project (CPMPSC Exhibits pp 123) Section4.3.4

Illustration # 4.5 Work Package Logic Diagram of Pumping Station Project (CPMPSC Fig 4.15 pp 125)Section 4.3.5

Illustration # 4.6 Logic Diagram of Pumping Station Project (CPMPSC Fig 4.17 pp 127) Section 4.3.5

Illustration # 4.7 Draft Network of Pumping Station Project (CPMPSC Fig 4.18 pp 129) Section 4.3.6

Illustration # 4.8 Critical Path Calculation of Pumping Station Project (CPMPSC Fig 4.19 pp 131-132) Section4.3.10

Illustration # 4.9 Pumping Station Project: Time Compressed Network (CPMPSC Exhibits16.6 pp 488) Section4.4

Illustration # 4.10 PERT Network of Pumping Station Project (CPMPSC Exhibits 4.3 pp 133) Section 4.5.1

Illustration # 4.11: Normal Distribution Table (CPMPSC Table 4.4 pp143 with figure) Section 4.7

Lesson 5 Precedence Network Analysis

Illustration # 5.1 Precedence Network of Raft Foundation Construction (CPMPSC Exhibits5.1 pp 148) Section5.2

Illustration # 5.2 Repetitive Works Project: Precedence Network of Four Rafts Foundation Construction(CPMPSC Exhibits 5.2 pp 156) Section 5.4

Illustration # 5.3 Summary Precedence Network of Educational Buildings (CPMPSC Exhibits 5.5 pp 164)Section 5.4

Illustration # 5.4 Primary School Structure Construction Precedence Network( CPMPSC Exhibits 5.3 pp 162)Section 5.5.1

Illustration # 5.5 Summary Precedence Network of Primary School (CPMPSC Exhibits5.4 pp 163) Section 5.5.2

Illustration # 5.6: Raw Water Treatment Clarifier Layout (CPMPSC Exhibits pp 165) Section 5.5.2

Illustration # 5.7 Raw Water Clarifier Tank Construction Precedence Network and Schedule (CPMPSC Exhibits


5.7 pp 167) Section 5.5.2

Illustration # 5.8 Site Development Project CPM and PNA Networks (CPMPSC Exhibits 5.8 pp 174) Section5.7.3

Illustration # 5.9A: Factory Construction Project Conversion of CPM into PNA Network (CPMPSC Exhibits5.9a pp 175) Section 5.7.3

Illustration # 5.9B: Factory Construction Project: PNA Network (CPMPSC Exhibits 5.9 b. pp 176) Section5.7.3

Lesson 6 Project Work Scheduling

Illustration # 6.1: Site Development Project: Bar Chart Work Programme (CPMPSC Exhibit 6.1 pp 183)Sections 6.2.1 & 6.4.3

Illustration # 6.2 2000 Housing Units Project: Summary Schedule of Education Buildings (CPMPSC Exhibit 6.6pp 197) Section 6.2.2

Illustration # 6.3 Site Clearance Project Earliest Start Time Schedule ( CPMPSC Table 6.2 pp188} Section 6.4.5

Illustration # 6.4 Site Development Project: Time Limited Optimum Resources Schedule ( CPMPSC Exhibit 6.4pp 193) Section6.4.8

Illustration # 6.5 Site Development Project: Resources Limited Schedule (CPMPSC Exhibit 6.5 pp 196) Section6.4.11

Illustration # 6.6 Residential Buildings Foundations Construction Cyclograph (CPMPSC Exhibit 6.7 pp 204)Section 6.5.1

Illustration # 6.7 Residential Building Finishes Plan: Derived Using Line-of-Balance Technique (CPMPSC Exhibit6.8 pp 205) Section 6.5.5

Illustration # 6.8 Residential Building Finishes Control Chart : Derived Using Line-of-Balance Technique(CPMPSC Exhibit6.9 pp 207) Section 6.5.5

Illustration # 6.9 : 2000 Housing Units Project: Residential Building Monthly Target Tracking Chart( CPMPSCExhibit 6.10 pp 209-210) Section 6.5.5

Illustration # 6.10 2000 Housing Units Project: Summary Schedule of Construction Tasks (CPMPSC Exhibit2.2pp 44) Section 6.5.5

Illustration # 6.11: 2000 Housing Units Project: Manmonth Requirement and Earned Value Forecast (CPMPSCExhibit2.3 pp 48) Section 6.6

Lesson 7 Planning Construction Manpower

Illustration # 7.1: Typical Building Construction Workers Production Planning Data( CPMPSC Table7.3pp225) Section 7.4.1

Illustration # 7.2 :2000 Housing Units Project: Extract from Workers 'Requirement Forecast (CPMPSC Exhibit7.1 pp 235) Section 7.6.4


Illustration #7.3: Typical Housing Project Organisation ( CPMPSC Exhibit 1.1 pp27and Exhibit 7.2 pp 237)Section 7.7.1

Lesson 8 Planning Construction Materials

Illustration # 8.1: Residential Building's Sub-Project: ABC Classification of Direct Material (CPMPSC Exhibit8.1 pp249) Section 8.2.2

Illustration # 8.2: Monitoring Material Schedule ( CPMPSC Table 8.5 pp261 )Section 8.5.3.Illustration # 8.3: Minor Materials Mobilisation Stock (CPMPSC Exhibit 8.2 pp 270) Section 8.7.4

Illustration # 8.4 (CPMPSC Fig 8.3 pp268). Section 8.7.2

Lesson 9 Project Construction Equipment

Illustration # 9.1: Functional Classification of Construction Equipment (CPMPSC Exhibit 9.1 pp 277)- newlyadded illustration in the lesson 9.2. Section 9.2

Illustration # 9.2 : 2000 Housing Units Project: Major Plant & Equipment Planned (CPMPSC Exhibit 2.6 pp53). Section 9.2

Illustration # 9.3: Earth Excavating and Lifting Equipment (CPMPSC Exhibit 9.2 pp 281) Section 9.4

Illustration # 9.4: Earth Cutting and Hauling Equipment ( CPMPSC Exhibit 9.4 pp 286) Section 9.5

Illustration # 9.5: Common Earth Compacting Equipment ( CPMPSC Exhibit 9.5 pp 293) Section 9.8.1

Illustration # 9.6 Typical Major Compacting Equipment: Salient Features (CPMPSC Exhibit 9.6 pp299) Section9.8.1

Illustration # 9.7: Major Concreting Equipment ( CPMPSC Exhibit 9.7 pp 301) Section 9.9

Illustration # 9.8: Materials Handling Equipment (CPMPSC Exhibit 9.8 pp 306) Section 9.10

Lesson 10 Selecting Construction Equipment

Illustration # 10.1: Standard Methods of Determining Depreciation (CPMPSC Exhibit 10.2 pp 322) Section10.4.1

Illustration # 10.2: Construction Equipment Costing: Hourly Owning and Operating Cost Estimate ( CPMPSCExhibit 10.3 pp 328) Section 10.4.3

Illustration #10.3:Plant Leasing Offer of a Concrete Pump (CPMPSC Exhibit 10.4 pp 335) Section 10.6.3

Illustration #10.4: Equipment Replacement Decisions Data (CPMPSC Exhibit 10.5pp 338) Section 10.6.4

Lesson 11 Planning Construction Costs

Illustration # 11.1 Typical Indirect Costs Classification of a Multi-national Company ( CPMPSC Exhibit 11.1pp347) Section 11.5.3


Illustration # 11.2 Indirect Costs: Functional Breakdown ( CPMPSC Exhibit 11.2 pp348) Section 11.5.3

Illustration # 11.3 :Foundation Construction Sub-Project: Activity-wise Workers' Requirement Estimate for OneFoundation Module Construction (CPMPSC Exhibit 2.7 pp 54) Section 11.7.1

Illustration #11.4 Foundation Construction Sub-Project: Major Materials Requirement Estimate for OneFoundation Module (CPMPSC Exhibit 2.8 pp 56) Section 11.7.1

Illustration # 11.5 Readymix Concrete Production Cost ( CPMPSC Exhibit 11.2 pp348) Appendix K

Lesson 12 Planning Construction Budgets

Illustration #12.1 : 2000 Housing Units Project: Organisation Chart ( CPMPSC Exhibit 1.1 pp27andExhibit 12.1pp 368). Section 12.3.2

Illustration # 12.2: 2000 Housing Units Project: Task Responsibility Centres (CPMPSC Exhibit 12.2 pp 369)Section 12.3.2

Illustration #12.3 : Typical Contractors Monthly Interim Payment Application (CPMPSC Table 12.1 pp 372)Section 12.4

Illustration #12.4 : Typical Expense Budget Breakdown (CPMPSC Fig 12.2 pp 374) Section 12.5.1

Lesson 13 Project Scope Control

Illustration # 13.1 : Project Performance Control (CPMPSC Fig. 13.2 pp 399)Section 13.2

Illustration # 13.2: 2000 Housing Units Project: Design and Drawings development Schedule (?)Section 13.3.1

Illustration # 13.3: 2000 Housing Units Project: List of Drawings for Health Centre Building. (CPMPSC Exhibit17.3 pp526) Section 13.3.2

Illustration # 13.4: 2000 Housing Units Project Typical Responsibility Centre Performance Reports ( CPMPSCExhibit 13.2 pp 403) Section 13.5.2

Illustration # 13.5: Project Control System (CPMPSC Exhibit 13.1 pp 395)Section 13.7.2

Illustration # 13.6 Foundation Construction Sub-Project (CPMPSC Exhibit 13.3 pp 406) Section 13.5.2

Illustration # 13.7 : Typical Performance Control Responsibility Matrix ( CPMPSC Exhibit 13.6 pp 418) Section13.8

Lesson 14 Resources Productivity Control

Illustration # 14.1: TimeKeeper Daily Time Card (CPMPSC Table 14.1 pp 422). To be developed by theprogrammers Section 14.3.2

Illustration # 14.2: Supervisor/Foreman Daily Labour Employment Report (CPMPSC Table 14.2 pp 424)Section 14.3.2


Illustration # 14.3: Weekly Labour Productivity Report (CPMPSC Table 14.3 pp 425) Section 14.3.2

Illustration # 14.4: Labour Productivity Control Chart (CPMPSC Exhibit 14.1 pp426. Section 14.3.2

Illustration # 14.5: Typical Daily Equipment Employment Report (CPMPSC table 14.4 pp 428) Section 14.4.2

llustration # 14.6: Weekly Equipment Productivity Sheet (CPMPSC Table 14.5 pp 429) Section 14.4.2

Illustration # 14.7: Stock Record Card ( CPMPSC Table 14.6 pp 432) Section 14.5.3

Illustration # 14.8 Typical Materials Requisition and Issue Control (CPMPSC Table 14.7 pp 433) Section 14.5.4

Illustration # 14.9: Typical Materials Return Control (CPMPSC Table 14.8 pp 434) Section 14.5.4

Illustration # 14.10: Typical Stores Accounting Ledger Sheet (CPMPSC Table 14.9 pp 435) Section 14.5.5

Lesson 15 Project Cost Control

Illustration # 15.1 : Project Budgeted Cost Chart (CPMPSC Exhibit 15.1.1 pp 463) Section 15.7

Illustration # 15.2 : Integrated Time- Cost Performance Chart ( CPMPSC Fig. 15.1 pp 445 ) Section 15.7

Lesson 16 Project Time Control

Illustration # 16.1 : CPM / PERT Updated Network (CPMPSC Fig 16.1 pp 474). Section 16.2.2

Illustration # 16.2 : Primary School Construction: Updated Summary Precedence Network (CPMPSC Exhibit16.1 pp 478) Section 16.2.2

Illustration # 16.3 : Updated Line-of-Balance Chart (CPMPSC Exhibit 16.2 pp 479) Section 16.2.2

Illustration # 16.4:Updated Bar Chart Schedules ( CPMPSC Exhibit 16.3 pp 481) Section 16.2.2

Illustration # 16.5: Master: Network of Pumping Station Project (CPMPSC Exhibit 16.4 pp 483) Section 16.5

Illustration # 16.6 : Pumping Station Project: Modified Network Incorporating Changes ( CPMPSC Exhibit 16.5pp 484) Section 16.5

Lesson 17 Planning Data Codification

Illustration # 17.1 : 2000 Housing Units Project Work Codes ( CPMPSC Exhibit 17.1 pp 507) Section 17.4.2

Illustration # 17.2 : CI / SfB Table 1 (CPMPSC Table 17.1 pp 505) Section 17.4.4

Illustration # 17.3 :CSI MasterFormat ( CPMPSC Table 17.6 pp 516) Section 17.4.5

Illustration # 17.4 : Manpower Code ( CPMPSC Table 17. 10 pp 524) Section 17.7.1

Illustration # 17.5 :Materials Code ( CPMPSC Table 17.4 pp 512) Section 17.7.2

Illustration # 17.6 :Equipment Code ( CPMPSC Table 17.7 pp 519) Section 17.7.3


Illustration # 17.7 :Finance Accounting Code ( CPMPSC Table 17.9 pp 523)Section 17.8.3

Illustration # 17.8 : 2000 Housing Units Project Health Centre Building: Labelled List of Drawings ( CPMPSCExhibit 17.3 pp 526) Section 17.9.1

Lesson 18 Project Management Information System

Illustration # 18.1 : Typical Software Requirement in Project Management (CPMPSC table 18.1 pp 538) Section18.3

Acknowledgements construction project management: planning, scheduling

Acknowledgements

Krishan K Chitkara, the author, expresses his sincerest thanks to the contribution and supportextended by the following in making the CPMT Plus:

Construction Industry Development Council, India. Author is grateful to theHon. G. V. Ramakrishna, Chairman, for writing the Foreword in CPMT Plus, andthankful to Mr. P. R. Swarup, Director, CIDC, for his encouragement andcooperation in developing this CD-ROM.

Housing and Urban Development Corporation (HUDCO). Author is thankful toMr. V. Suresh, Chairman, Directors and Staff for their support in developingthe CPMT Plus. In particular, Dr. P. S. Rana, Director Corporate Planning hasbeen the main source of inspiration in bringing out this CD and the students fromHUDCO have made valuable contribution in the development of the CPMT Plus.

Primavera Systems, INC, of USA, for providing and permitting to use the workingmodel of Primavera Project Planner 3.0 and SureTrak Project Manager 3.0 in theCPMT Plus. Primavera Project Planner (R), P3 (R), and SureTrak Project Manager(R) are registered trademarks of Primavera Systems, Inc.

International Labour Organisation, Geneva, for permitting to reproduce theChecklist from Safety, Health and Welfare on Construction Sites: A TrainingManual. published in 1995.

Project Management Institute, Inc, PA 19073-3299 USA, for allowing to includethe project manager skill model titled The Superior Project Manager, from TheQuest To Find The Superior Project Manager, published in PM Network, July1998.

Institute of Construction Project Management, Gurgaon, faculty and staffengaged in promoting state-of the art knowledge in Construction Management.

Construction Journal of India for the support in development of CPMT Plus.

Publisher and Developer of CPMT Plus, for their untiring effort in bringing thisproject to its present form.

Last but not the least, I am thankful to my family for their understanding andcontinued support which saw me through the extended working hours.

K. K. Chitkara,Author and Program Director,

CPMT Plus.

Disclaimer. Despite their best efforts, the author, supporters and contributors of thisCPMT Plus, accept no responsibility for any inaccuracy, errors or omissions resulting

Acknowledgements construction project management: planning, scheduling

from the text and conversion of the text into CD-ROM format.


Appendices Contents

AppendixA: Indian Construction Scenario

Construction and Scope.Construction Contribution in the Indian Economy.Growth of Indian Construction Industry.

Domestic Construction Tasks Ahead.

Globalization: Challenges for the Construction Industry.

AppendixB: Project Feasibility Study

Purpose of the Feasibility Study.Analysing Factors Affecting Project Feasibility.Feasibility Report.

AppendixC : Sizing Project Work Packages

Importance of Work Packages.Factors Affecting Sizing of Work Packages.Re-sizing Work Packages.

AppendixD: Project Duration Assessment Using Monte Carlo Simulation Technique

Introduction.Concept.Activity Duration Probability Distribution Function.Methodology.Examples.Risk in Assessed Project Completion Time.

AppendixE: Project TimeCost Tradeoff Technique

TimeCost Relationship. Concept. Plotting Project CostTime Function. Time Crashing.

A Word of Caution.AppendixF: Decision Network Analysis

Scope.

Types Of Decision Network Analysis Techniques.

Decision Network Analysis. Decision Tree Analysis. Conclusion.

AppendixG: Project Management Organization

Project Organization Concept. Project Organizational Forms. Project Organizational Structure. Project Responsibility Centres.


Strengths and Weaknesses of the Project Management Matrix Organization.Conclusion.

AppendixH : Resources Allocation Using Linear Programming

Introduction and Scope.Solution of Linear Programming Problems by Graphical Method.Solution of Linear Programming Problems by Simplex Method.Solution of Linear Programming Problems by Dual Method.Conclusion.

AppendixI: Earthmoving Equipment: Approximate Production Planning Data forPrimary Tasks

Introduction. Tracked Bull Dozer Ideal Output Per Hour in Bulk Volume in Easy-To-Do

Loose Soil. Front-End Loader Ideal Output Per Hour in Bulk Volume Easy-To

Haul Loose Soil. Ideal Output of the Tracked Loader Shovel. Excavating and Lifting Equipment Ideal Output Per Hour in Bulk Volume. Scrapper Ideal Output Per Hour in Bulk Volume in Easy To Scrap Soil.

Performance Factors.

AppendixJ: Time Value Of Money

Time-Money Link. The Future Value of a Single Amount. The Future Value of an Annuity of Equal Amount. The Present Value of a Future Amount. The Present Value of an Annuity of Equal Amount. The Present Value of Cash Inflow of Unequal Amount and Discount.

AppendixK: Break-Even Analysis

Introduction.Break-Even Analysis Methodology.Assumptions and Limitations.Uses of Break-Even Analysis.

AppendixL: Capital Budgeting Process

Importance of Capital Budgeting.Estimating the Cash Flow.Establishing the Cost of Capital.Applying the Investment Appraisal Criterion.

AppendixM: Project Quality Management

Introduction and Scope.Quality Concept.Quality Management Principles.Corporate Quality Policy.Production Quality Management Processes.Quality Cost Analysis.Total Quality Management.Quality in Total Project Management.


TQM Vs TPM.

AppendixN : Workers Safety Comes First

Why Safety Comes First?Causes of Accidents at Construction Site.Statutory Safety Measures in India.Formulating Project Safety Policy.Building Safety in Site Layout and Temporary Facilities.Safety Related Role of the Project Personnel.Conclusions.

Annexure (i): Extracts from The Building and Other Construction Workers ( Regulation of Employment andCondition of Service ) Act 1996 and Central Regulation 1998.Annexure (ii): Construction Safety Checklist.

AppendixO: Project Risk ManagementAn Overview

Introduction and objectives.

How are risks identified?

How are project risks analyzed?

How is risk response plan developed? How are project risks controlled? How does the human side affect the management of risks? What is the role of a Project Manager in managing risks?

What are the benefits of managing project risks?

AppendixP: Construction Contracts Administration

Introduction and Scope. Role of the Participants. Production Performance Control. Specification Interpretation. Scope Change Control. Sub-contractor Approval. Disputes, Claims and their Modes of Settlement. Contract Termination Control. Interim Valuation Payment Control. Contract Bonds and Securities. Project Close-out. Formal Correspondence Rules. Guidelines to Minimize Problems in Contract Administration.

AppendixQ : Managing Privatized Infrastructure Projects

Introduction and Scope.Stakeholders.Role of Government in Designing and Implementing the Concessions.Concessionaire Project Management Process.Key factors in Management of Privatized Infrastructure Projects.Conclusion.


AppendixR: Upgrading Total Project Management Skills Introduction and Scope.

Knowledge Areas Needed for Managing Construction Projects.Skills Development Model.Skills Up-gradation Methodology.Academia-directed Project Management Education.Corporate-directed Project Management Training.Individual-directed Self-learning.Distance Learning in Virtual Classroom to Speed up Delivery.Conclusion.

CPMT construction project management: planning, scheduling

Appendices

Indian Construction Scenario Time Value Of Money

Project Feasibility Study Break-Even Analysis

Sizing Project Work Packages Capital Budgeting Process

Project Duration Assessment: Using Monte CarloSimulation Technique Project Quality Management

Project TimeCost Tradeoff Technique Worker's Safety Comes First

Decision Network Analysis Project Risk Management: An Overview

Project Management Organization Construction Contracts Administration

Resources Allocation Decisions Managing Privatised Infrastructure Projects

Earthmoving Equipment: Approximate ProductionPlanning Data for Primary Tasks: Upgrading Total Project Management Skills

Lesson 1 Appendix construction project management: planning, scheduling

INDIAN CONSTRUCTION SCENARIOAppendix A

A.1 CONSTRUCTION SCOPE

The construction activity has been in existence since the dawn of civilisation, when the cavemanstarted building his dwellings. Even in ancient times, man created architectural marvels whichcame to be regarded as the wonders of the world, for example, the Pyramids of Egypt, the GreatWall of China, the Angkor temples of Cambodia, and the Tower of Babel. The medieval timeswitnessed the construction of world-famous landmarks like the Taj Mahal in India and the LeaningTower of Pisa in Italy. A more recent example of man's achievements in this direction is the EiffelTower in Paris and the high-rise skyscrapers.

In the present day world, technical breakthroughs have revolutionized construction activity.Modern construction areas include high-rise buildings, dams and irrigation networks, energyconversion and industrial plants, environmental protection works, infrastructure facilities likeroads, bridges, railways, airports and seaports, satellite launching stations, on-shore and off-shoreoil terminals.

In India , investment in new construction works during the year 199899 was of the order of Rs.1367.54 billion

A.2 CONTRIBUTION OF CONSTRUCTION WORKS IN THE INDIAN ECONOMY

Construction activity contributes to the economic development of a country. The GDP per capitaland the investment in the construction per capita generally follows a straight-line relationship, thatis, construction activity increases with the increase in per capita income. In some of thedeveloping countries, the growth rate of construction activity outstrips that of the population andof the GDP. In case of India, for example, during the last ten years, the total capital formation byconstruction was about 44% of the total investment and the contribution of construction in GDPwas nearly 5%.

Construction accelerates economic growth of a nation. In India, for example, during the planperiod 1980-85 for every rupee of investment, construction added 78 paise to the GDP ascompared with 20 paise per rupee of investment in agriculture.

Construction is an employment spinner. It generates more employment than most of the sectors.In India, during the eighties, the overall annual employment increased by 2%, whereas increase ofemployment in the construction sector during the same period recorded an annual growth of about7%. Further, in India, the number of persons employed in the Indian Construction Industry isaround three millions.

Indias planned development coupled with the reforms, despite the ever increasing population,have contributed to the remarkable growth in the countrys economy.

DEMOGRAPHIC INDICATORS


Year 1995 1996 1997 1998 1999

Population 946 963 980 998 999

Population Growth Rate 1.84 1.81 1.79 1.82

Source: Construction Industry Development Council, Third National Conference, Souvenir2; February

2000

Main Macroeconomic Indicators : GDP and Components INR in Trillions

Year 1995 1996 1997 1998 1999

GDP at Real Prices (1993-94) 8.76 9.38 9.99 10.49 11.02

GDP at Current Market Prices 11.27 12.06 12.86 14.27 14.98

Primary Sector 8.11 8.43 9.41 9.77

Manufacturing Sector 0.75 0.84 0.90 0.96

Service Sector 1.50 1.69 1.86 2.05

Construction Sector 1.70 1.90 2.1 2.2

Source: Construction Industry Development Council, Third National Conference, Souvenir2; February 2000

FINANCIAL INDICATORS

Year 1995 1996 1997 1998 1999

Changes in Consumer Price Index % 9.10 8.40 7.2 6.1 4.20

Short Term Interest Rate % 18-20 18-20 18-20 18-20

Long Term Interest Rate % 10-13 10-13 10-13 10-13

US $ Annual Average Exchange

Rate

Rs.31.0 Rs.32.0 Rs.36.0 Rs.42.7 Rs.43.8

Source: Construction Industry Development Council, Third National Conference, Souvenir2; February 2000

India witnessed a rapid growth in the production of the essential construction materials.

Production of the Essential Construction MaterialsAnnual Production in Million Tons Per Year

Year Cement Steel Coal

1947 3.2 1.0 -

1950 5.3 1.4 32.3

1960 - - 55.2


1970 14.7 4.5 76.3

1980 29.6 8.8 119.0

1990 45.8 12.6 225.5

1995 76.2 22.7 -

1998 82.9 24.8 318.9

During the last few years, the construction prices of the essential construction materials haveremained fairly stable.

AVERAGE CONSTRUCTION MATERIAL PRICES (INR)

ITEM Unit 1995 1996 1997 1998 1999

Cement in bulk Tonne 2,600 2,700 2,750 2,800 2,800

Steel bars Tonne 14,000 14,500 15,000 15,000 15,000

Source: Construction Industry Development Council, Third National Conference, Souvenir2Feb.2000

Construction is the second largest industry on the basis of the total labour force engaged.Development patterns in the construction largely reflect the national trends in terms of growth,income generation, housing and other economic indicators. However, a lot remains to be done forthe construction workers, most of them live below the poverty line. This largely floating, mostlyuntrained workforce with no fixed accommodation and lacking other normal facilities, is engagedin hazardous work conditions with no appreciable compensatory benefits. The safety, training andwelfare of the construction workers must come first, always and every time.

A.3 GROWTH OF INDIAN CONSTRUCTION INDUSTRY

During Indias pre-independence period, the Indian Construction Industry was mainly confined tolow-tech nature of construction in the field of railways, dams, drains, canals, roads, buildings,ports, utility services and other facilities. With the dawn of independence, Indian constructionentered into a new era. The new construction increased rapidly from mere Rs2.00 billion in1951-52 to Rs1367.54 billion in 1998-99. It is expected to rise to Rs 3060.36 billion during2006-07.

GROWTH IN CONSTRUCTION INDUSTRY

New Construction in Billion IRS

1951-52 1961-62 1969-70 1980-81 1986-1987 19901991

Rs 2.00b Rs. 5.50b Rs 13.60b Rs 136.4 9b Rs 305.73b Rs 583.63b

GROWTH IN CONSTRUCTION INDUSTRY


FORECASTING GROWTH IN CONSTRUCTION INDUSTRY

New Construction in Billion IRS

1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001

Rs 1027.58b Rs 1129.56b Rs 1242.44b Rs 1367.54b Rs 1497.92b

(forecast)

Rs 1669.94b

(forecast)

Based on the bidding value, Indian contractors are broadly divided into three categories, i.e.bidding value over Rs 300m, between Rs 100m to Rs 300m, and less than Rs 100 million. Thereare over 28,000 construction companies. Majority of the constuction companies fall in the lastcategory having bidding capacity less than Rs 100 million. There are about 200 companiesincluding those with joint ventures, who can undertake large-sized turnkey / EPC contracts. Thetop ten construction companies in India are tabulated below:

LEADING INDIAN CONSTRUCTION COMPANIESName of the Companies Turnover

U.S $ MillionMain Work

Larsen &Toubro Ltd.(ECC Group)http://www.larsentoubro.comhttp://www.lntecc.com

448.24(96-97) Heavy Industrial Construction, Institutional Buildings, SpecialStructures.

Gammon India Ltd.http://www.gammomindia.com

61.23 (96-97)63.54 (97-98)

Hydraulic Structures, Tunnelling, Natural Draft Cooling Towers,Heavy Industrial Construction, Bridges and Flyovers

Hindustan Construction CompanyLtd.http://www.hccindia.com

87.31 (96-97)88.66 (97-98)

Hydraulic Structures, Bridges, Flyovers, Irrigation Structures, HeavyIndustrial Construction.

Jaiprakash Industries Limited 180.70(96-97)151.76(97-98) for 9months only

Hydraulic Structures, Hydro-Electric Power Plants, Heavy IndustrialConstruction.

Unitech Ltd.http://www.unitechlimited.com

64.07 (1997)54.86 (1998)

Roads, Bridges, Heavy Industrial Construction, Housing andInstitutional Buildings, Real Estate

Kvaerner Cementation IndiaLtd.http://www.kvaerner.com

50.50 (95-96)58.50 (96-97)

Hydraulic Structures, Heavy Industrial Construction

Continental Construction Ltd.http://www.cclindia.com

29.00 (95-96)27.00 (96-97)32.00 (97-98)

Hydraulic Structures, Roads and Highways, Hydro Power Plants.

National Buildings ConstructionCorporation Ltd.http://www.nbccindia.com

60.00 (96-97)61.00 (97-98)

Hydraulic Structures, Roads and Highways, Hydro Power Plants andCooling Towers, Directional Drilling.

Bridges & Roof Co. Ltd.http://www.bridgroof.com

54.30 (96-97) Hydraulic Structures, Roads and Highways, Hydro Power Plants andCooling Towers, Directional Drilling.

Punj Lloyd [email protected]

43.50 (96-97)51.50 (97-98)

Hydraulic Structures, Roads and Highways, Hydro Power Plants andCooling Towers, Directional Drilling, Pipelines, Heavy Construction.

Source: Construction Industry Development Council, Third National Conference, Souvenier -- 2nd Feb., 2000

A.4 DOMESTIC CONSTRUCTION TASKS AHEAD

The economic development of a nation is closely linked with investments in infrastructure. Indiawith its infrastructure development programme is emerging as one of the top construction marketsin the world.


SECTORWISE CONSTRUCTION FORECAST

New Construction in billion IRs

Sector 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Power 476.00 518.00 560.00 616.00 679.00

Railways 127.20 139.80 153.30 168.40 185.30

Road 105.70 114.40 124.20 135.20 147.60

Ports 26.50 29.30 32.50 36.20 39.00

Other transport 198.80 232.70 261.50 294.20 342.40

Communication 182.00 191.00 232.00 250.00 312.00

Storage 2.00 2.20 2.40 2.70 2.90

Total basic infrastructure 1118.20 1227.40 1365.90 1502.70 1709.10

Note: All figures in billion Rupees

Source: Union Budget & Construction Industry 1998-99, Context Data Services, Mumbai.

LIKELY INVESTMENT PATTERN BETWEEN THE PUBLIC AND PRIVATE SECTOR

Year Public Sector % Private Sector %

1999-2000 66.90 33.10

2002-2003 60.90 39.10

2002-2006 55.80 44.20

Source: Union Budget 1998 99 & Construction Industry Context Data Services

Business Opportunities and Major Projects in the Pipeline in January 2000 include:(Value in U.S. $ Million)

1.1 Jawaharlal Nehru Port, Liquid Cargo Berth 351.2 Mumbai (JNPT) Marine Chemical Terminal 5351.3 Six-berth Terminal at Nhava Creek 3351.4 Kandla Container Freight Station 51.5 New Mangalore Bulk Handling Terminal 1001.6 Port facilities for Expansion of Mangalore Refinery 351.7 Tuticorin Construction of New Outer Harbour (including modern

container terminal)1200

1.8 Container Haling Facilities at Berth No. 7 801.9 Chennai Construction of New Outer Harbour 7001.10 Visakhapatnam Construction of Outer to Outer Harbour (Port

Construction Through Private Sector)800

1.11 Construction of Captive and Multipurpose Berths 1401.12 Kochi Construction of Container Terminal 800


1.13 Construction of LPG & LNG Terminal at Puthuvypeen 1001.14 Calcutta Cargo Handling Facilities at Budge

Budge Container Terminal40

1.15 Second Dock Arm at Haldia 2501.16 Mormugao Construction of Outer Harbour 7001.17 Construction of FRH Master Plan Berths 751.18 Construction of Berths West of Breakwater 2001.19 Paradip Dry Dock Ship Repair Facilities 4701.20 Upgradation of facilities for Container Berth 351.21 Captive Fertiliser Handling System 35

Estimated Total Investment 6670

A.5 PROJECT EXPORT

Construction is an everlasting activity across the globe. Its profitability, like that of any otherbusiness, fluctuates according to the law of demand and supply. In most countries, theconstruction activity constitutes 6~9% of the gross domestic product (GDP). It covers more thanhalf of the fixed capital formation.

The total annual value of construction works in the world ranges from 1 to 1.5 trillion US dollars.Since the early 1980s, the contract market for international construction projects has risen to US$120-180 billion per annum. There are about 250 international companies competing with eachother for global construction tenders. But Indias share is negligible.

INDIAS ANNUAL PROJECT EXPORTS (for fiscal years)(Value in INR Millions)

COUNTRY 1994-95 1995-96 1996-97 1997-98 1998-99

South Asia 596.40 877.00 45.30 413.60 11464.80East Asia 440.00 208.10 7.60 1741.40 1193.20

North Africa - 757.30 - 83.60 -South and Other

Africa- 60.00 284.10 266.80 -

Middle East 1289.00 437.60 659.80 1802.50 2092.90CIS 273.20 - 111.60 - -

South America - - 17.30 - -Total 2600.00 2340.00 3125.40 4307.10 14751.70

A.6 GLOBALIZATION CHALLENGE FOR INDIAN CONSTRUCTION INDUSTRY

Globalization stands for the interdependence of the entire world and its people. In its generic form,the globalization aims at growing international linkages in all fields of human activity, i.e. finance,trade, market strategy, technology development, knowledge exchange, cultural reforms,governance regulations and political unification of the world. Globalization creates increasinginterdependence and interconnectedness of national economies. It brings about multiplicity oflinkages and interconnections between states, societies and corporate entities.

Although the facilities produced by the construction industry are immobile, the inputs used by itare highly mobile. Construction materials and services provided by Architectural, Consulting,


Contracting and Construction management firms are transferable across regional and nationalboundaries; however, these are subjected to certain national policies like procurement laws,immigration rules, and cross border movement of sponsors ,contractors and workforce. Theglobalization process will:

Accelerate technological exchange. Standardize labour practices. Increase exports of products and services. Shorten the product life cycle. Share costs in product development. Gain greater access to foreign markets. Provide access to highly qualified people. Broaden access to financial resources. Establish joint ventures and partnerships in the distance markets.

The tasks ahead, in the global context, will place high demands on the Indian constructionindustry. The construction promoters will demand better facilities at cheaper rates with shortdelivery period. Emphasis, especially in case of privatized infrastructure projects will be oncompletion within budget, earlier than the stipulated time and better quality than that specified.Construction related specialities and disciplines will grow. Mega projects, both at national andinternational level, will need global joint ventures. Innovation and creativity coupled withprofessionalism, new practices, new technologies and mechanization will win in the long run.

In the global environments, Government can make the construction industry competitive byreducing duty on imports of high tech engineering plant and equipment, giving incentives to thelocal equipment manufacturers, providing sale tax benefit to encourage precast industry, reformingcontract practices, providing facilities for capturing overseas markets, backing constructionprofessional bodies, reducing interest rates and encouraging money supplies through financialinstitutions. In order to prevent social crimes in the construction industry, the Government mustenforce exemplary punishments and heavy penalties for unsafe working, sub-standardconstruction, corrupt practices and other construction related crimes.

In todays dynamic global environment, the rate of obsolescence of knowledge is very high. Withthe fast emerging new knowledge and the rapidly changing technology, the organization needsmechanism to react faster than their competitors. Challenge for organizations is to make learningavailable to its members, faster than competitors, when and where the need arises. It is particularlyimportant in the highly competitive construction field. This has made updating of knowledge andskills a continuous process.

India is a member of the WTO. India has signed GATT. Therefore, there is no going back onglobalization. The Indian Construction Industry, to survive in the global context, must gear up toface the challenges ahead. In the construction field, upgrading of technology, improvingconstruction practices and upgrading managerial skills, is a continuous process and it is not aone-time effort.

Appendix B construction project management: planning, scheduling

PROJECT FEASIBILITY STUDY

Appendix B

B.1 Purpose of the Feasibility Study

Construction project are capital intensive. Capital expenditure decisions have long-term effects,are irreversible, and involve substantial outlays. The basic characteristic of a business- relatedcapital project, like real estate and privatized public infrastructure construction is that it needs ahuge investment of funds in the expectation of a stream of benefits extending far into the future.The success of such a project, to a great extent, depends upon the feasibility study.

The objective of feasibility study, invariably, is to analyze the factors affecting the viability of aproject and to present the findings with recommendations in the form of a project feasibilityreport for implementation. A feasibility report forms the basis for the investment decisions madeby the project promoters, for the support extended by the financial institutions, for the clearancegiven by the appropriate approving authorities, and for giving an insight to the project managerinto the techno-economic basis on which the project is approved.

B.2 Analysing Factors Affecting Project Feasibility

The factors influencing the feasibility vary with the nature of the project, e.g. the risk factor in aprivatized infrastructure five years' duration road project is far more dominant than that intwo-year duration lump-sum road construction contract. The typical factors considered in thefeasibility study of a business related construction project, like real estate development andprivatized infrastructure construction, are given below:

Market analysis. Technical and ecological analysis. Financial and economic analysis

The analysis of factors generates enough information to select the most appropriate course ofaction for implementing the project, if feasible.

B.2.1 Market Analysis. This is concerned primarily with the aggregate demand and marketshare. The market analyst requires a wide variety of information and appropriate forecastingmethods. These include:

Sales trends in the past and the present sales level. Past and present supply position. Competition. Cost structure. Consumer behaviour, intentions, motivation, attitudes, preferences and requirements. Distribution channels and marketing policies in use. Administrative, technical and legal constraints.

B.2.2 Technical Analysis. This seeks to determine whether the pre-requisites for the successfulcommissioning of the project have been considered and reasonably good choices have been made


with respect to location, size, process etc. or not. The important aspects considered in technicalanalysis are:

Preliminary investigations, tests and pre-feasibility studies already done. Conceptual design and specifications. Layout of the site, buildings and plant. Construction methodology. Availability of manpower, raw materials, power and other inputs. Equipment and machines required. Necessary auxiliary equipment and supplementary works. Pollution control measures. Work schedules. Approximate cost breakdown.

B.2.3 Financial Analysis. This ascertains whether the proposed project will be financiallyviable in the sense of being able to meet the burden of servicing debt and whether the proposedproject will satisfy the return expectations of those who provide the capital or not. The aspects,which have to be looked into while conducting financial analysis, are:

Cost of project. Investment outlay. Break-even point. Cash flows of the project. Projected financial position. Risks analysis and contingencies. Projected profitability.

A business related project is considered profitable if: Net present value (NPV) > 0 Payback period (PBK) < Target period Internal rate of return (IRR) > Cost of capital Accounting rate of return (ARR) > Target rate Benefit-Cost ratio (BCR) > 1

The projected profitability analysis methodology is covered in Appendix L.

B.3 Feasibility Report

Several institutes have published feasibility study guidelines. These institutions include UNIDOGeneva, the World Bank, Industrial Development Bank of India (IDBI), Planning Commissionand so on. The contents of a typical feasibility report include the following heads and each ofthese heads is supported with data:

1. Project background and mission statement.2. Market demand, where applicable.3. Project description and location.4. Scope of work and design feature.5. Resource inputs required and sources of supplies.6. Project organization.7. Implementation schedule.


8. Capital cost estimate.9. Cash flow and sources of funding.10. Cost benefit analysis.11. Risks analysis and contingencies.12. Profitability analysis.13. Conclusion.

Feasibility studies consume time. In large-sized projects, undertaking a feasibility study maybecome a project in itself. A project manager may or may not be associated with the feasibilitystudy but it is important that he understands how the project was conceptualized, analyzed andevaluated prior to a go-ahead decision.

Appendix C construction project management: planning, scheduling

SIZING PROJECT WORK PACKAGES

Appendix C

C.1 Importance of Work Packages

Work packages (WP) form a common base for linking the key functions in project management.In the project master plan or the contracted works control plan, each work package is assignedits performance objectives. These are generally stated in terms of its completion period, standardcost, resource productivity standards and the standard sale price. A project team useswork-packages as the common database. The work package duration forms the basis for the timeplanning and scheduling of the project work. Detailed information about the resources such asmen, materials and machinery needed for the execution of each activity in a work packageenables the preparation of resource forecasts. The work package sale price and the productioncost is used to determine the income and cash-flow forecasts. The measure of performance thus,gets closely linked with the execution of its work packages. The work package concept, thus,leads to a simple project management theory, i.e. use work packages as the base for designing,estimating, planning, scheduling, organizing, directing, monitoring, communicating andcontrolling projects. Sizing and defining the work contents of a work package is of primeimportance in project management

C.2 Factors Affecting Sizing of Work Packages

By definition, each work package contains an identifiable, quantifiable, costable, measurable,sizeable, assignable and controllable package of work. But there is a wide gap in its size anddevelopment methodology as it has no single solution. However, the following factors should beconsidered while defining and sizing a work package:

Identifiable. It is the smallest identifiable independent work element in which work can beexecuted with the least interference from the preceding and succeeding work packages. Ingeneral, each work package consists of identifiable and quantifiable inter-dependent activities,which consume time and, possibly, resources.

Quantifiable. A work package, generally, consists of more than one activity. In the case of amulti-activity work package, each activity has its own unit of measure which, in some cases, isrelated to the bill of quantities. It is necessary that a work package should be expressible in oneunit of measure, say length, area or volume, so that its performance can be measured. In case itis not possible to define its unit of measure, then its work content should be further divided intomore than one package, each becoming a work package.

Costable. Each work package consumes resources. Its cost is the sum of the costs of theactivities consisting the work package. The cost of executing a work package, while workingefficiently under normal conditions, is termed as the standard work package cost and it forms thebuilding block for planning, budgeting and controlling project costs.

The smaller the size of the work package, the lesser is the margin of error in estimating the timeand cost. The estimation errors, whether positive or negative, usually reduce the margin of errorswhen considered collectively.


Measurable. In contracted projects, the sales prices for various items of work are fixed andthese are listed in the bill of quantities (BOQ). The sale price in the BOQ, is generally expressedin the units of the work item. But for forecasting and monitoring the work done , it is necessaryto compute the sale price, preferably activity-wise. This computation is carried out bydeveloping a correlation between each work item and activity by breaking down an item of workinto activities, or sub-dividing an activity into items of work, as the case may be.

Example No. 1. Illustrates splitting up the sale price of the Bill of Quantities (BOQ) work iteminto work package sale price.

Consider a BOQ item representing Concrete M 25 in the plinth-wall of a module of a building ofthe repetitive type residential building construction complex. This work item can be brokendown into sale prices of connected activities of the work package as under:

BOQ Activity Qty. Unit Rates ($) Amount ($)A-5 Bitumen painting 362 SM 2.45 886.90

A-11 Reinforcement fixing - - - Included in raft work packageA-8 Shuttering 485 SM - -A-8 Concreting 43.7 CM 163.50 7144.95A-8 De-shuttering - - - -A-8 Curing - - - -

Total ($) - - - 8031.85

Standard unit sale price of work package of the plinth-wall expressed in work unit of CMconcrete poured works out to be $ 8031.85 / 43.70 = $ 183.80 / CM

Example No.2 - Shows the determination of sale price of work package for the construction ofground- floor-slab of one module from given BOQ work item.

BOQ Activity Qty. Unit Rates ($) Amount ($)A-5 Bitumen painting 319 SM 2.45 781.55A-2 Back filling 120 CM 5.00 600.00A-5 Plinth filling 305 CM 20.00 6100.00A-4 A-4 172 SM 7.50 1290.00A-6 Polythene sheeting 225 SM 1.00 225.00A-9 Shuttering 11 SM IncludedA-10 Weld mesh laying 0.651 TON 1518.10 988.28A-9 Concreting 28.34 CM 163.5 4633.59A-9 Curing - - - -

Total ($) 14618.42

Sale price of work package for the construction of ground-floor-slab in work units of CMconcrete works out to be $ 515.82/CM, i.e. 14618.42 divided by 28.34.

Sizeable. A small-sized work package is beautiful, but there is a limit. A work package must bereasonable in size, so that it can be assigned to a single supervisor. As far as feasible, it shouldcomprise of one large-sized group of sequentially interacting activities. Further, it should not


contain too many activities independent or parallel, requiring a suitably grouped team of workersfor each activity, as this will increase the foreman's span of control and adversely affect theinternal cohesion. As a rough guide, the package size can be kept within 0.25% to 5% of the costof the project and, in the case of non-repetitive work, the time duration for the construction workpackage could generally be kept between one to five progress reporting periods.

Assignable. Organizationally, a project is divided into a number of construction responsibilitycentres or cost centres. Each of these centres is allocated resources and assigned targets,expressed in terms of work packages. Each cost centre is further divided into work centres. Eachof these work centres consists of one or more work packages. Each work centre is assignedtargets to be achieved and is allocated resources to accomplish the targets. The work package isthe lowest level which can be assigned to a single person. If the work package is large in size,then it must be re-defined to enable a single supervisor to be its head. If it is not possible, then asingle person may have to be nominated to oversee the tasks.

Controllable. The project performance can be best measured and controlled in terms of workpackages. The smaller the size of a work package, the greater is the precision in measurementand controlling of performance.

C.3 Re-sizing Work Packages

The size of a work package should be determined after considering the factors given above. Ifthe work under consideration does not fulfil most of the above criteria, then it should be furtherdecomposed into more than one work package, if necessary, so as to be able to:

Identify the physical accomplishment of a work item. Avoid overlapping from the preceding and succeeding work packages. Reduce the parallel activities. Minimise the sequential inter-dependent activities. Further improve the time and cost estimates. Enable one person to supervise the work package. Eliminate time-breaks, if they occur in the execution of sequential activities. Reduce the variations in the type of resource needed for execution. Separate the quality acceptance criteria. Conform to the contract bill-of-quantity measurement unit.

Appendix D construction project management: planning, scheduling

PROJECT DURATION ASSESSMENT USING MONTE CARLOSIMULATION TECHNIQUE

Appendix D

D.1 Introduction

Monte Carlo simulation technique uses the model of a system to analyse the behaviour of asystem. In simulation analysis, the project network model is given the large number of sets ofrandom inputs within the specified probability distribution of each activity, and the output isthen statistically analysed to determine the probabilities of various project completion timeschedules.

D.2 Concept

Consider a construction contract pretender stage, where the preparation of the tender involvesthe following three concurrent activities:

Code Activity duration Assessed durationA Preliminary design 55 days

B Site investigation 60 daysC Preparation of bid documents 50 days

Based on the one-time duration estimate, the site investigation activity B is critical and isexpected to take 60 days. However, after considering various risk factors, the team reviews theone-time estimate and arrives at the following results using PERT, which indicates thecompletion period as 61 days with a 50% probability of completion.

Activity OptimisticTimeMost Likely

TimePessimistic

TimeExpected

TimeA 50 55 65 56B 50 60 75 61C 45 50 70 50

The above case, when simulated 10 times with randomly selected inputs, shows that thecompletion period works out to be 66 days with a 50% chance of completion, i.e., 6 days more ifone-time (most likely estimate) is used and it is 5 days more if three-time estimate (PERT) isused. The 100 iterations simulation gives assessed duration as 63 days with 50% probability ofcompletion.

COMPLETION ESTIMATION FOR TENDER PREPARATION


Duration Activity A50-55-65

Activity B50-60-75

Activity C45-50-70

CompletionTime

Iteration No. Ra Rb Rc1 62 71 48 712 57 58 65 653 55 67 59 674 60 55 49 605 65 60 52 656 50 63 58 637 52 57 47 578 58 72 56 729 51 73 53 7310 61 51 69 69

ExpectedMean

66.2 with50% Probability

Assessed Manually Using Simulation Technique (10 iterations)

The results obtained using different techniques are summarized below:

Technique Activity durationbasis Completion time (days)

CPM most likely time 60 with deterministicestimatePERT three-time estimate 61 with 50% chanceMonte Carlo (10iterations) three-time estimate 66 with 50% chance

Monte Carlo (100iterations) three-time estimate 63 with 50% chance

The 10 simulated iterations, given above, demonstrate that for project time scheduling, PERTestimates need further refinements. The Monte Carlo simulation process (say, with more than1000 simulation) gives a better estimation of the project completion time. It needs a computer tosimulate the model understudy in the Monte Carlo technique, say by 1000 a times, to determinea real life solution to a network having varying activity duration probability distribution.D.3 Activity Duration Probability Distribution FunctionThe duration of an activity, which forms the basis of network time analysis, is an estimate. Thechanges in estimates are inevitable due to uncertain future. Probability provides a yardstick tomeasure the uncertainty.Histograms constructed from small sample measurements do not show the exact pattern of thepopulation. If the number of supervisors estimating the activity duration is large, with relativefrequency plotted along ordinate axis and time against abscissa, the histogram will show moreand narrower rectangles. If the size of sample is made infinite, this discrete distribution willapproach a smooth curve profile. In Monte Carlo technique, each activity is assumed to have aprobability distribution pattern (i.e. a profile) for its duration. If by suitable choice of scale ofaxes, the area under the curve is made unity, the resultant figure is called a probabilitydistribution. The probability concept uses this scale that runs from 0 to 1. In probabilitydistribution, zero represents the impossible situation and one depicts the almost certain case.The divisions in-between represent the varying degree of likelihood.


The method of fitting of a distribution based on a set of data are covered in the standard books instatistics. There are computer programs available which can determine the probabilitydistribution function. But in practice the selection of an appropriate input distribution is basedon the estimator's perception of the range and probability of the likely outcome. Suchdistributions should be relatively easy to understand and simple to determine. For these reasons,the simple distributions pattern like uniform distribution, triangular distribution, binomial(trapezoidal) distribution, gamma distribution and exponential distribution and normaldistribution are considered adequate for project time estimation.A probability distribution gets defined when its equation, mean and standard deviations areknown. In PERT, three-time estimate of the activity duration is assumed to follow betaprobability distribution, with standard deviation as one-sixth of the difference betweenpessimistic and optimistic times (Note Beta distribution requires more than 3 points to define thedistribution, and as such, it cannot be simulated using Monte Carlo Technique). In triangulardistribution three-time estimate, the two extreme values are defined as percentage (or numericalvalue or percentile) with respect to most likely time (say minus 5% and plus 15% of most likelyvalue) rather than the end points of the beta distribution. The mean and variance of a projectprobability distribution are derived (as in PERT), and these are used to compute the probabilityof meeting arbitrary selected scheduled completion time or determining the probability ofmeeting the given scheduled duration without crashing the project.D.4 MethodologyThe Monte Carlo simulation for estimating probable project completion time follows theprocedure given below:

Develop the network model.Assess the probability distribution (uniform, triangular or trapezoidal) for the duration ofeach activity.Generate a uniform random number on the interval (0-1). Such data can be extracted fromrandom tables or can also be calculated manually (refer books on Statistics or OperationsResearch). Random numbers can also be generated by computer.Transform the random number to a random variant conforming to the activity durationprobability distribution, using relationship as explained in the examples given insubsequent paragraphs.Incorporate the random variant for the duration of each activity in the network model.Time analyse the network to determine critical activities and project completion time.Store this output data for further statistical analysis.Run the above process, number of times, using different random numbers.Analyse the stored output data of each iteration to determine project probabilitydistribution, its mean value and standard deviation.

The project probability distribution with its stored data, is then used to identify criticality


probability of activities that will be critical to project completion. This enables estimation of:

the probability of completion of a project on a given date, andthe probability of occurrence of a given scheduled event.

D.5 Examples

The procedure for the application of Monte Carlo technique for time scheduling of a project isillustrated in subsequent examples using a simple network model drawn below with varyingactivity duration distribution patterns:

D.4.5.1 Example Using Uniform Distribution

Formulae

Random number at x = R = Area of probability distribution at x = x h 'h' is the height ofrectangle represented by uniform probability distribution.

Random variant at x = R / h , within the range L ~ U

Since total Area of probability distribution = h( U L ) = 1

Therefore, expected duration at x = X = L + x = L + R ( U L )

Consider the model network given above with activities having durations that follow uniformdistribution pattern as tabulated below:

Activity Assessed DurationMinimum (weeks)

AssessedDuration

Maximum(weeks)

ExpectedDuration

X = L + R ( U L)

A 12 16 12 + Ra (16 12)B 10 15 10 + Rb (15 10)C 12 20 12 + Rc (20 12)


D 6 10 6 + Rd (10 6)E 8 14 8 + Re (14 8 )F 7 12 7 + Rf (12 7)

Where,

Ra, Rb, Rc, Rd, Re and Rf, are the random number in an iteration.

For example, if in an iteration Ra = 0.26, then expected duration of Activity A

Xa = 12 + 0.26 ( 16 - 12 ) = 13.04

The result of 10 iterations used for determining expected activity durations withprobabilities selected at random using statistical tables, are given in Table D 4.4.

Table D4.4. UNIFORM DISTRIBUTIONManually Using Simulation Technique (10 Iterations)

Blue colour shows critical activities and the percentage of an activity becoming critical can becalculated from this table. For example, chances of activity A becoming critical are 4 out of 10i.e. 40%.

D.4.5.2 Example Using Triangular Distribution by different methods

Duration probability distribution


Formulae1; when L < X < M,

Random number = R = Area of probability distribution at x = R = x h ....................1

But H (U L) = 1, and h / H = x / ( M L)Eliminating H, h ( U L ) = x / ( M L)(2).

From (1) and (2), Random variant = x =

Therefore X = L + x = L + , where 0 < R , Set X = U Consider the model network given above with activities having three time duration estimate thatfollow triangular distribution pattern as tabulated below:

Activity Assessed Duration Assessed Duration Assessed Duration


Minimum ( weeks) Most likely (weeks) Maximum (weeks)A 12 14 16B 10 12 15C 12 18 20D 6 8 10E 8 12 14F 7 9 12

The graph given below shows the probability of the activity becoming critical in Monte Carloand PERT.

D4.6 Risk in Assessed Project Completion Time

Risk is the possibility of economic or financial loss or gain, physical damage, injury or delay as aconsequence of the uncertainty associated with pursuing a course of action. It signifies asituation where the actual outcome of an activity or an event is likely to deviate from theestimated or forecast value. Risk consequences due to delay in the project completion do havefinancial implications. It can attract heavy penalty or a loss of goodwill. The contractor mayloose a contract in the offing. He may miss the bonus for early completion. He may fail totransfer resources planned elsewhere. All of these have financial bearing and the financial loss ineach case can be determined by the concerned stakeholder.

Risk has three components:

A situation leading to an event, the occurrence of which is likely to deviatefrom the estimated or forecast value.

The probabili

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