Probabilistic Forecasting of Project Duration Using Bayesian Inference and the Beta Distribution

Reliable forecasting is instrumental in successful project management. In order to ensure the successful completion of a project, the project manager constantly monitors actual performance and updates the current predictions of project duration and cost at completion. This study introduces a new probabilistic forecasting method for schedule performance control and risk management of on-going projects. The Bayesian betaS-curve method (BBM) is based on Bayesian inference and the beta distribution. The BBM provides confidence bounds on predictions, which can be used to determine the range of potential outcomes and the probability of success. Furthermore, it can be applied from the outset of a project by integrating prior performance information (i.e., the original estimate of project duration) with observations of new actual performance. A comparative study reveals that the BBM provides, early in the project, much more accurate forecasts than the earned value method or the earned schedule method and as accurate forecasts as the critical path method without analyzing activity-level technical data.     

Construction Engineering—Reinvigorating the Discipline

Construction engineering is all about production, and producing something useful is the very reason for projects to exist. How then to explain why construction engineering has progressively fallen out of focus in construction project management education and research? For an answer, the development of the discipline of construction management since the 1950s must be understood, a development that yielded a non-production-oriented approach to project management, one that provides the currently accepted operating system for managing the work in projects. This paper first traces the history of the development of the traditional operating system and related commercial terms and organizational practices. It argues that traditional practices rest on an assumption that careful development of a project schedule, managing the critical path, and maximizing productivity within each activity will optimize project delivery in terms of cost and duration. Subsequently, an alternative operating system, developed and proposed by the Lean Construction community, is described. In contrast to the traditional approach, lean defers detailed planning until closer to the point of action, involves those who are to do the work in designing the production system and planning how to do it, aims to maximize project performance (not the pieces), and exploits breakdowns as opportunities for learning. The history of this development will be traced in broad strokes.     

Project Performance Evaluation Based on Statistical Process Control Techniques

The earned value management (EVM) method is considered as a powerful tool that supports the management of project scope, time, and cost. However, conventional EVM may cause some project managers to ignore the information that it can provide about the performance variations of their projects as well as their causes and effects. This paper attempts to refine and improve the performance of traditional EVM by the introduction of statistical control chart techniques. Individual control charts are used as tools to monitor project performance data so that adverse changes can be detected in a timely manner. This allows analysis of in-progress project cost and schedule performance variations and highlights possible needs for corrective action. A comparative analysis between traditional EVM and the new approach is undertaken to identify the effectiveness of the new approach.     

Probabilistic Control of Project Performance Using Control Limit Curves

This study introduces a new probabilistic project control concept to assure an acceptable forecast of final project performance, in terms of not exceeding planned budget and schedule risk levels. This concept consists in the implementation of performance control limit curves for both actual cost and elapsed time, obtained with a probabilistic approach and a graphical representation referred to as Stochastic S curves (SS curves). In order to facilitate the project control process, control limit curves can be used to display and evaluate actual project performance status without the need of actualizing at completion performance forecasts. Three different approaches (quality, benchmarking, and incremental variance) are proposed in this paper for obtaining the project performance control limit curves. In order to find the control limit curve definition with more conservative acceptable performance variations, these approaches are tested in an example project. A further managerial advantage is found in the recommended approach, as it allows monitoring the use of both cost and scheduling contingencies, along the project execution.     

Computer-Integrated System for Estimating the Costs of Building Projects

The cost estimate is considered one of the most important and critical phases of a construction project. Preparing reliable and accurate estimates to help decision makers is the most challenging assignment that cost engineers and estimators face. For decades, practitioners in the construction industry focused only on estimating the initial cost of a facility, neglecting costs associated with operating and maintaining it. Today, more interest lies in investigating the economics of facility management, which include the cost of owning and operating a building over its useful life. This paper presents a methodology that can be used for an integrated conceptual cost estimating and life-cycle cost analysis for construction projects during their initial phase. The methodology describes the development and implementation of a system that automates the preparation of parametric cost estimates and forecasts future running costs of building projects. The system integrates relational databases, a parametric cost estimate module, an AutoCAD module, a global module, a cost estimate forecasting and decision support system module, and a life cycle costing and sensitivity analysis module. The system will automatically generate a new parametric estimate upon any modification in building design. Once the capital costs are identified, the system forecasts the cost of running and maintaining the new building throughout its expected service life. After assigning the range of deviation, a sensitivity analysis is conducted, which identifies the most sensitive parameters for further consideration and analysis. Designing the system in a user-friendly environment allows owners and decision makers to envision the feasibility of new building projects within their anticipated life cycles. Moreover, it assists architects and cost engineers in generating parametric cost estimates in a dynamic environment. A numerical case example is presented to illustrate the usefulness and capabilities of the developed system.     

Measuring the Performance of Value Management Studies in Construction: Critical Review

Value management (VM) is a useful method to use when dealing with issues such as budget and schedule challenges arising in the construction industry. However, little research has been done to measure the performance of VM studies, which has made many potential users reluctant to use VM. This paper presents a critical review of the development of performance measurement in general and the performance measurement in the construction industry, with a special focus on the performance measurement of VM studies in construction. The strengths and weaknesses of the existing measurement frameworks are investigated in the context of VM studies. It is concluded that traditional performance measurement of VM studies focusing on cost reduction is insufficient. Many other perspectives, such as clarifying objectives, and improving communication among stakeholders, should be considered seriously when making the measurement. This paper reveals that the existing frameworks to measure VM studies are inappropriate. It suggests that perspectives such as multicriteria measurement, flexible framework for different practice, and benchmarking to identify best practice could be adapted to develop a performance measurement framework for VM studies.     

Greening Project Management Practices for Sustainable Construction

Environmentally sustainable building construction has experienced significant growth during the past 10 years. The public is becoming more aware of the benefits of green construction as prominent politicians, celebrities, documentarians, and journalists highlight the built environment’s impact on greenhouse gas emissions and natural resource consumption. Other factors, including higher energy prices, increased costs of building materials, and regulatory incentives, are also pushing the green building market to grow and expand. However, barriers to green building continue to exist, including the ability to deliver a green project within acceptable cost constraints. In order for project managers to deliver sustainable construction according to clients’ cost expectations, modifications must be made to traditional project management processes and practices. The objective of this paper is to suggest specific modifications to conventional building practices to optimize the delivery of cost-efficient green building projects. This paper presents an overview of research related to the costs and trends of green building and uses these research findings to make recommendations for greening project management practices for the construction industry. Our research results show that greening project management practices can add significant value to a sustainable construction project while delivering it within acceptable cost constraints. A detailed analysis using matrix present specific adjustments to traditional project management practices, with a premise that a green project improves its chances for financial success if a cross-discipline team is involved at the earliest stages and throughout the project.     

Discriminant Analysis for Predicting Ranges of Cost Variance in International Construction Projects

Unanticipated market conditions as well as project-related risks can easily lead to cost overruns in international construction projects. For a contractor to be financially successful in international projects, a careful examination of the project is a prerequisite to understanding the cost variance characteristics. Based on the reasonably accurate characterization of the cost performance, the markup or contingency amount is determined to ensure both a decent level of profit and a good chance of winning the contract. This paper presents a classification model to categorize international construction projects, particularly faced by Korean contractors, into five cost-variation classes: extreme cost overrun, moderate cost overrun, neutral, moderate cost saving, and extreme cost saving. The model is able to characterize an international project for its cost performance prediction in comparison to the contractor’s initial cost estimate. A linear discriminant analysis is utilized to develop the predictive classification model with the support of the bootstrap method. Tests show that the proposed model is able to help cost estimators determine a proper level of cost contingency before bidding on an international project.     

Strategic-Operational Construction Management: Hybrid System Dynamics and Discrete Event Approach

A significant number of large-scale civil infrastructure projects experience cost overruns and schedule delays. To minimize these disastrous consequences, management actions need to be carefully examined at both the strategic and operational levels, as their effectiveness is mainly dependent on how well strategic perspectives and operational details of a project are balanced. However, current construction project management approaches have treated the strategic and operational issues separately, and consequently introduced a potential conflict between strategic and operational analyses. To address this issue, a hybrid simulation model is presented in this paper. This hybrid model combines system dynamics and discrete event simulation which have mainly been utilized to analyze the strategic and operational issues in isolation, respectively. As an application example, a nontypical repetitive earthmoving process is selected and simulated. The simulation results demonstrate that a systematic integration of strategic perspective and operational details is helpful to enhance the process performance by enabling construction managers to identify potential process improvement areas that traditional approaches may miss. Based on the simulation results, it is concluded that the proposed hybrid simulation model has great potential to support both the strategic and operational aspects of construction project management and to ultimately help increase project performance.     

合同管理在项目管理中的地位和作用

在现代建筑工程项目管理中合同管理具有十分重要的地位,已成为与进度管理、质量管理、成本(投资)管理、信息管理等并列的一大管理职能。合同管理对项目的进度控制、质量管理、成本管理有总控制和总协调作用,是工程项目管理的核心和灵魂,这是由合同在社会主义市场经济条件下以及现代建筑管理工程中的独特作用所决定的。在国标清单计价规范实施之际,作为一名造价工程师更应该熟悉和了解合同管理的地位和重要性。     

Stochastic Modeling for Pavement Warranty Cost Estimation

This paper presents a cost estimation model for long-term pavement warranties with multiple distress indicators. One application area for such warranties involves performance-based specifications (PBSs). In contrast to traditional approaches, PBS gives contractors the flexibility to select construction methods, materials, and even design. However, the contractors then must warrant the performance of their work for a specified period of time. Therefore, an accurate estimation of the risks associated with the warranty is a significant cost issue for any contractor to cover potential risks while still being competitive in bidding. Quantitative evaluation of the cost of risk incurred by the warranty has several difficulties. The deterioration of a highway project is a complex process, which is affected by pavement structure, material, traffic load, and weather conditions. Based on a probabilistic risk analysis of failures of performance indicators, the resulting model can estimate the warranty cost at a detailed level. The application of the model has been demonstrated via a numerical case study using long-term pavement performance data.     

Production System Loading–Cycle Time Relationship in Residential Construction

Production home building possesses characteristics similar to manufacturing processes, such as the construction of more or less similar houses repeatedly and a growing demand for mass customization of homes. As a result of these similarities, larger homebuilders often attempt to view their production system as an assembly line process. However, the management tools generally utilized by these home builders are those used in other sectors of the construction industry, such as critical path method scheduling, cost estimating, and earned value analysis. These management tools do not provide an explanation or control/prediction tools for many undesirable situations that arise during home building, such as increasing cycle time which slows delivery of product to consumers and increases project capital costs, and increasing amounts of work in process that increases capital investment and thereby decreases company financial performance. In order to bring better management tools to the residential construction industry, this study examines relationships between cycle time, work in process, system throughput, new construction starts, and the capacity of the production system using building permit data for new single family homes in Chandler, Ariz. The applicability of Little’s law, a basic equation used in factory production management models, to a residential production system is examined. This study shows a definite, predictable relationship between cycle time, work in process, and production system throughput. It provides a pathway for further study of production system characteristics that have historically not been included in construction management models, with the expectation of developing new construction management tools that will account for more of the characteristics of construction production systems that affect project performance and company financial performance.     

Data Preprocessing–Based Parametric Cost Model for Building Projects: Case Studies of Korean Construction Projects

For construction to progress smoothly, effective cost estimation is vital, particularly in the conceptual and schematic design stages. In these early phases, despite the fact that initial estimates are highly sensitive to changes in project scope, owners require accurate forecasts which reflect their supplying information. Thus, cost estimators need reliable estimation strategies. In practice, parametric cost estimation, which utilizes historical cost data, is the most commonly used method in these initial phases. Therefore, compilation of historical data pertaining to appropriate cost variance governing parameters is a prime requirement. However, data mining (data preprocessing) for denoising internal errors or abnormal values must be performed before this compilation. To address this issue, this research proposes a statistical methodology for data preprocessing. Moreover, a statistically preprocessed data–based parametric (SPBP) cost model is developed based on multiple regression equations. Case studies of Korean construction projects verify that the model enhances cost estimate accuracy and reliability than conventional cost models.     

Performance Measurement in Construction

Performance measurement has been subject to a considerable amount of research and attention over the past 15 years. The inadequacy of traditional financially based performance measurement systems and the introduction of nonfinancial measures have been the triggers for much of this research. The purpose of this paper is to review the main performance measurement frameworks and their application by U.K. construction firms and to identify gaps in knowledge and practice that suggest future research. The contemporary performance measurement frameworks are reviewed, including the Balanced Scorecard and the European Foundation for Quality Management Excellence Model. The status of performance in the U.K. construction industry is discussed, in addition to project/operational-level performance measurement and the linkage between performance measurement and strategic management. Gaps in knowledge and practice are overviewed both in general and for the construction industry in specific, thus suggesting future research.     

Feasibility of Automated Monitoring of Lifting Equipment in Support of Project Control

One of the differences between industrial manufacturing or processing plants and construction sites is the temporary nature of the construction site, which has traditionally precluded installation of sophisticated production monitoring systems. Monitoring of production progress, cost, and quality is performed almost exclusively manually, with the result that it is expensive and approximate, and is commonly delivered with a time lag that does not allow for an effectively closed control loop. Automated monitoring of construction lifting equipment to provide useful feedback information for project management is a strong potential candidate; almost all components and materials must be transported by machines, and monitoring of machines is relatively straightforward. A system concept, employing a “black box” monitor and an electronic building information model, was developed. A field study was conducted to test the feasibility of the concept. The results indicate that the system is technically feasible, and offers the potential to deliver real-time, accurate project control information at very low cost.     

Time Series Analysis of ENR Construction Cost Index

Every month, Engineering News-Record (ENR) publishes the construction cost index (CCI), which is a weighted aggregate index of the 20-city average prices of construction activities. Although CCI increases over the long term, it is subject to considerable short-term variations, which make it problematic for cost estimators to prepare accurate bids for contractors or engineering estimates for owner organizations. The ability to predict construction cost trends can result in more-accurate bids and avoid under- or overestimation. This paper summarizes and compares the applicability and predictability of various univariate time series approach for in-sample and out-of-sample forecastings of CCI. It is shown that the seasonal autoregressive integrated moving-average model is the most-accurate time series approach for in-sample forecasting of CCI, while the Holt-Winters exponential smoothing model is the most-accurate time series approach for out-of-sample forecasting of CCI. It is also shown that several time series models provide more-accurate out-of-sample forecasts than the ENR’s subject matter experts’ CCI forecast. Cost estimators can benefit from CCI forecasting by incorporating predicted price variations in their estimates and preparing more-accurate bids for contractors and budgets for owners. Owners and contractors can use CCI forecasting in reducing construction costs by better-timed project execution.     

在建工程项目管理信息系统的开发与应用

在建工程项目管理信息系统以各级工程项目为主体,以各类合同为主要切入点,以工程项目资金流为主线,以实现工程项目协同管理、信息共享为目标,通过对在建工程项目全过程大量的、动态的数据和信息及时、准确的分析和处理,采用软构件、中间件、WEBSERVICE、XML等新技术实现整个建设项目资金、物资、成本事先计划、事中控制和事后反馈,从而达到合理利用资源,增强企业应变能力,提高资金使用效益的目的。     

Cognizance of Visual Design Management in Life-Cycle Project Management

This paper presents a unique approach to information management within a life-cycle project management model. Focus is shifted from the delivery of the physical facility to the creation of a business to service the project objectives employing concurrent engineering∕construction approaches. Typical life-cycle objectives are life-cycle cost and net worth, or cost/worth ratio. The definition and broad design of the facility and its components will be a collective responsibility, discharged by composite teams whose members are drawn from the respective participants. Their inputs are evaluated in real time against the above objectives. The traditional responsibility for detailing and conformity to the relevant codes and standards will still reside with the relevant design professionals. This paper introduces a visual design management system that has been developed to reflect the fundamentals of information and design management within the life-cycle project management paradigm.     

Comparative Analysis of Project Delivery Systems Cost Performance in Pacific Northwest Public Schools

Alternative project delivery systems such as construction management at risk (CMR) are increasingly used in public school construction in the United States. CMR is expected to benefit owners with a guaranteed maximum price (GMP), decreased change order cost, and increased cost “certainty.” This paper empirically compares cost growth performance of the CMR and design-bid-build (DBB) methods in Pacific Northwest public school projects. Data were collected from state records and previous studies on 297 completed schools in Oregon and Washington. The analysis of the data shows no statistically significant difference between CMR and DBB in construction change order costs, school project costs exceeding the GMP in 75% of the cases, and a statistically significant difference in cost growth between CMR and DBB projects during buy out, making CMR projects less efficient at controlling cost growth at buy out. These results counter some of the traditional expectations of the CMR delivery method.     

General Contractors' Management: How Subs Evaluate IT

A large set of criteria by which top quality subcontractors evaluate the managerial performance of general contractors under whose management they have worked during the construction process and by which they may differentiate their bids to different generals for the same future project are listed and described. These criteria can also be seen as the intrinsic managerial, cost‐and time‐sensitive factors by which general contractors or any manager of construction could improve performance, competitiveness and profitability. It also describes separate, “most important” and “super‐important” subsets of the foregoing criteria∕factors for office and site staff, etc., and the range of effects of the generals' good and bad managerial performance against these criteria∕factors on the costs and duration of the subcontractors' work. The cost and duration effects, etc., that each lump sum bidding general contractor and appointed construction management agent has on the subcontractors' work are compared, and the carefully formatted research process which produced these results is outlined.