INFORMATION TECHNOLOGY CONTROL ON TIME AND COST OVERRUN OF CONSTRUCTION PROJECTS
Dr.K.Ramalingam*
Abstract
Major construction projects record high time and cost
overrun. This paper discusses the conventional construction processes and
inherent system deficiencies in handling the projects. The man-made influencing
factors, which cause delays and cost overrun, are reviewed. The new
methodologies in handling construction projects by using Information Technology
project management tools are presented. Some details on useful and project
related website addresses and software packages are listed.
1.Introduction
The Government very often prefers fast track modernization
and development projects, which are economic. The Government projects have
recorded cost overruns as high as 62%. This figure is very alarming and
disheartening. Construction projects form a major share of Government's special
schemes on projects of national importance. The construction projects even
though large and cost intensive have a low margin of profits, due to
competition in the Industry. Obsolete construction techniques that are ill
equipped and labour-intensive are used for the construction projects. This
makes the system of construction cut corners in quality, cost and time, the
single motive being profits. The cost and time of the projects can be
controlled activity-wise by adopting IT enabled project management tools. The
ever-changing project management software tools address most of the man-managed
deficiencies, which contribute to cost and time overruns at the cost of project
quality. This paper attempts to trace down certain man-made influencing
factors, which contribute to overruns in cost and time. It also advocates the
use of IT enabled project management software suite, which facilitates
cost-effective, time-managed, and quality assured projects.
2.PROJECT LIFE CYCLE
The construction projects have five phases in the project
life cycle. There are inherent systems deficiencies, which cause delays in
decision making in each phase of the project life cycle. The following
subsections review the commonly noted deficiencies in handling construction
projects.
2.1 Conceptual phase
This phase accounts for the scope and requirement of the
project. Considerable time is spent to set up the scope. The factors
influencing delay in this phase are
Inadequate and incomplete scope of the project
Frequent changes in the concept, scope and
requirements
Lack of planning and inadequate knowledge on the
requirement
Lack of experience in a particular technology
Fear in deciding the scope
Inadequate executive support
Lack of user involvement. Scope is wrongly defined.
The life of the utility and the scope of its various
facilities are not known
Changes in the requirements are considered due to late
thinking.
Project is conceptualized on critical / emergency
situation.
Hurried finalization of conceptual planning
Facilities and associated sub systems not thought of as a
whole system
Concentrating only on the main portion of the cost, thus
causing delay to decide on the contingencies during advanced stages of the
project
Flexible acceptance of changes without examining the
feasibility and cost effectiveness of introducing additional facilities at a
later stage
Absence of activities charter concerning outside
departments on regulatory requirements for local clearance for the whole
project.
Conventions are followed without examining alternatives.
Alternatives may be cheaper, easier and better
Inadequate knowledge on advances in technology
Detailed concepts based on previous experience and
knowledge of similar projects could avoid all the above pitfalls. Technology
provides such an opportunity.
2.2 Planning Phase
The detailed designs of all systems are carried out at
this phase. The detailed specifications, drawings and work schedules are
defined along with the cost details of the project. A lot of time and workforce
are spent in processing the above activities. In these processes, the following
factors contribute to delays at the planning stage: -
Too many contributors are planning a project and Piecemeal
planning of sub-systems.
Divergent groups in the organizational structure have
different attitude towards the project.
Conventional methods are followed in planning
Inadequate knowledge of advanced technology and
availability of systems
Inaccurate cost data of various components &
systems
Adequate and accurate site data are not available for
planning and design
Specifications, designs, conditions and scheduling are
poorly drafted causing ambiguity in contract.
Inadequate information on unique problems of the project
& Shortage of experts in certain areas of the projects cause delays.
Reference to regulatory requirements, environmental
clearance, local clearance etc. is not taken on time.
Poor expertise in the planning group, not having complete
knowledge of the full system results in poor planning
Defective planning due to inadequate / wrong site data is
accepted.
Non-involvement of users / operators at the planning
stage
Planners are different from executors and users
Delay in clearing planning stages due to discipline
interest, namely Engineering, Operation, Finance etc. instead of organizational
interest
Changes in the project team midway of planning
Information Technology tools could well address the above
problems.
2.3 Tendering Phase
The cost overrun takes root at the tendering phase. Some
of the factors adding time and cost to the project are:
Poor response to tender notification due to non-publishing
of Notice Inviting Tender (NIT) in newspapers, and not widely publishing due to
cost of press publications
Unclear terms in press notification about deciding
parameters for qualifying bidders. The schedule, specification, terms, and
conditions of contract in the tender document contain inadequate and ambiguous
terms.
Presentation of Illegible documents on drawing,
specifications and schedules in tender documents. Obsolete specifications and
unavailable materials are mentioned.
No time conscience in framing document and processing
tender
Incomplete tender documents with incomplete designs and
scopes are used. Inadequate qualifying parameters for bidder
participation
Multiple disciplines are involved in tender processing -
Engineering, Users, Finance etc
Non-observance of tender instructions by bidders to
furnishing EMD, Technical clarification, pricing and conditions that deviate
from user's requirement
Influences and interference from different bidders at the
time of tender evaluation
English terms in the tender are often interpreted to
violate the intentions.
Non-adoption of tender procedures by User, Bidder and
Finance
Interference and influence from higher ups are
entertained
Delay in award due to mishandling of tender process at
tender opening, in evaluation and at final decision-making process.
Bidders always intend to have dialogue with owners and
hence keep terms ambiguous in their offers. Keep details incomplete and delay
tender processing by creating unethical influence from external sources
Delay due to pre-occupation of officers on jobs other than
routine and unnecessary reference to higher officers for sheer fear of
responsibility.
Casual approach of bidders in adhering to time schedules
for tender processing as their priority is not in consonance with the owners
objective
Too many decision makers in hierarchy, having different
priorities and objectives, are involved in deciding the tender process
Decisions are reversed at an advanced stage of tender
finalization due to procedural changes
2.4 Execution Phase
The impact on quality, cost and time is felt more at the
execution stage of the project. The main contractor, after award of the work,
searches for sub- vendors who can supply materials at cheaper rates. In this
process of identifying the cheap vendor, the time and quality are compromised.
The factors normally encountered during execution are: -
Delay in site clearance and handing over the site to the
contractor after the award
Contract Analysis to understand the intention of the
contract terms and conditions clearly is not made. Programme schedule for
execution is not done in the beginning
Execution Time Schedule for all activities and their
inter-relations are not decided
Sub-vendors are not identified in time. Sub-vendors'
specifications are not checked with the contract specifications
Delay in approval of drawings by the owner. Delay in
Inspection schedule by the contractor and the sub-vendors. Delay in the
accepted inspection schedule by the owner.
Delay in inspection clearance due to non-adherence to
specifications, and delay in manufacturers programme. Delay in transport of
materials to the site by the sub-vendors
Inadequate coordination in supply of material from the
sub-vendors is encountered.
Supervision and site coordination are not done by the
contractor during execution at site
Obsolete construction methods with labour intensive
activity are used which contribute to loss of time and poor quality of
construction
Non-use of automated machines to ensure quality and
increased daily turnover
Poor initial funding of the project by the contractor and
weekly wage payments are uncertain.
Lack of timely resources of materials, machineries and
workforce and their management
Delay in measurements of works executed by the
owners
Delay in preparation of bills by the owner. Delay in
scrutiny of bills by the accounts.
Delay in payment of bills by the owner, and stoppage of
works for want of daily site financing
Delay in final testing of system due to little enthusiasm
by the main contractor
No concern about settlement of final bills, on contract
closing
Poor site storage conditions for construction materials,
difficulties in finding skilled manpower, absenteeism, temperamental job
supervisors - all cause expensive delays in job completion
Minor associated works are not included in the
contract.
Inbuilt contract clause such as 10 cc to advocate delay
for monetary benefits is included.
Incompetent project managers mishandle the project
Quality and experienced project managers avoid project
execution responsibility by shear fear of vigilance and audits.
Standard modern project control techniques through use of
technology are advocated to address the above problems.
2.5 Commissioning Phase
At the commissioning phase, most projects are completed in
a hurry, to declare the system 'functional', due to political pressure. All
team members work to 'somehow commission the project' on the politically
declared date of completion, ignoring many factors. These shortcomings cause
functional problems at a later stage. The lessons learnt are not analyzed and
documented for improvement in future projects. The factors, which depict a poor
picture of the project in reference to cost and time overruns, are:
Poor documentation is prepared on commissioning
activities.
Failure of sub-system components during
pre-commissioning.
Non-availability of standby components for replacement at
the time of commissioning
Incomplete sub-systems and associated activities
Rectification of defects is ignored. Taking over by
operation staff is delayed
No training is provided on operation of systems. Operation
procedure is not developed after commissioning
No system of documentation is followed on in-built
systems' layout and drawings
No documentation is made on operating instruction of
functional systems
No trained staff is provided at the time of commissioning
of the system and for further operation
Supervisors and executors are transferred before
finalization of work
3.IT ENABLED SOFTWARE SUITES
The IT enabled software suites wonderfully address the
time and cost dependent project activities. The efficient IT application does
not allow interference in manipulating major project activities related to cost
and time. The conventional procedures of project management contribute to
delays and compromise on the quality with the interest of achieving individual
profits against the organizational interests. The different players-the owner,
the Project Manager and the contractor have differing strengths of enthusiasm
at different times during project execution. Figure 1 depicts as to how the IT
Project Management tools can control the enthusiasm in synchronization of the
project schedule in comparison to the conventional attitudes of the Project
Manager and the Contractor in completing the Projects.
The IT enabled Project management Software suite
contributes to improve the quality, time and cost of the project at each phase
of the project cycle.
3.1 Conceptual Phase through IT suites
The Internet technology has created a virtual world of
information storage Knowledge management web sites provide information on
lessons learnt and best practices on different types of similar construction
projects. A source of site data and detailed specifications on a variety of
systems / equipment etc. used in construction projects are available. Detailed
procedures on conceptual planning of projects with micro details of project
activities are obtainable. The digital project site map is possible by using
Geographical Information System (GIS) software. Internet websites provide
details on various sub systems, their specifications and the prospective
vendors. These facilities equip the planners to finalize the scope, methods of
construction, detailed specifications and vendor details for execution of the
project. The technology solutions could well be used to organize systematic
conceptual planning in the following areas:
Collect data for large information from Internet resources
in respect of site data, weather reports, environmental inputs, regulatory
requirements, procedures for local clearances, details on natural resources at
project sites etc.
Collect data on availability of local construction
materials, rules for collection and use of natural resources for construction,
market prices on material and labour services and other technical inputs.
Develop sets of conceptual proposals using different data
sets to decide on the optimal project proposal at the concept stage.
Simulation of concepts with different sets of data could
well lead to alternative paths of solutions.
The inputs considered in the concepts are actual (not
assumed values) and are available on-line.
The conceptual proposal of the project selected by
simulating various alternatives becomes the best one, which may not require
major changes in its scope, design or cost at a later stage.
3.2 IT enabled planning tools
The IT planning tools facilitate the identification of the
schedule of quantities, the detailed design, drawings, system integration and
micro definition of the project activities. The details of the time and cost of
each step of the project execution are programmed. Accurately timed activity
charts and the inter-dependency of the thousands of project activities are
detailed and used. The following steps expedite sanction of the detailed
estimates from the management.
The IT tools enable conceptual proposal with optimally
chosen constituents and resources, which needs less time for detailed
design.
The designs, specifications, costing, work schedule and
project control techniques are decided with innermost penetrating
details.
Financial resources and time chart for the cash flow are
known in advance.
The time and project cost are more accurately decided with
the optimal integration of all activities.
The sanction for the project is faster as inputs are
detailed as in reality and transparency is established. Confidence is built on
the quality of the proposal by adopting technology tools
3.3 IT suites for tender process
A large number of vendors are involved in the tenders
processing. The IT enabled tools make the preparation of the tender documents
easy and faster with the standard conditions of contracts. The Internet web
publication of the Notice Inviting Tender ensures wider publicity to
prospective bidders. The following steps expedite tender processing easier and
ensure real bidding of projects.
The tender documents of the project should be in the
electronic form while developing in the first two phases.
The changes wherever required could be implemented with
speed and accuracy.
To attract wider participation, the notice inviting tender
can appear on the Internet web site. Abridged Press Notice with web address can
appear in the media to save cost.
The terms and conditions of contract should be clear,
definite and implementable. The prospective bidder views should be heard and
honored before firming up the terms and conditions of the bids at the technical
evaluation stage.
The bidder should undertake to accept all terms and
conditions in its entirety without deviations failing which the conditional
offer is non- responsive.
The bidder should finalize his sub- vendors for the
project before the offer is made.
The technical and commercial bids should be decided first
before opening of financial bids.
The tender analysis and fixing the lowest bidder shall be
exclusively by IT tools and no manual calculations are encouraged.
Personal hearing from bidders during the tender process
shall not be entertained.
The above steps ensure faster finalization of tenders. The
lowest bid becomes the genuine quote as the offered rates are as finalized with
the sub vendors. If clear terms and transparent procedures are followed
influence from external source and interpretations from hierarchy could be
avoided. Quick process through IT software helps locate the genuine
bidder.
3.4 IT Services in Project Execution
Extended project time and enlarged scope of the project
cause cost overrun. However, the quality compromise and time overrun become
actively contributing during execution stage. A large project with multiple
sub-projects and sub-contractors really make the project complex and escalating
if not controlled effectively. The decision makers on critical issues are far
away from the project site. Site coordination among multi-vendors and multiple
sub projects on services add complexity in manually controlling the project
with conventional project control models. IT Project Management tools help
completing the project within the time frame and cost by controlling the
following activities.
Carry out contract Analysis in detail to resolve
uncertainty, ambiguity of terms and conditions and identifying critical issues
demanding decision support services from management.
Develop a detailed work schedule for all sub systems for
integrated execution programme.
Prepare dynamic PERT & CPM Chart with all inputs, for
daily, weekly, monthly or whenever an activity is deviated from the original
plan.
Provide control alert chart whenever delay is observed
from the original schedule of time.
Resource coordination, manpower utilization, procurement
schedule and execution control etc. can be programmed well in advance and
monitored during execution.
Web enabled progress review meetings, through chat, video
conferencing and instant messaging, facilitate discussions among project teams
both at site and at corporate office.
Use of computer controlled machineries and equipment in
constructions ensures quality of the work in addition to higher
productivity.
Virtual visual meetings through Internet provide on line
conference with geographically dispersed team members to collaborate on design,
decisions, and engineering change orders that requires decisions and
directions.
Web based collaborative "Engineering Review
Meetings" encompasses the entire project team and supply chains.
Periodical site project inspections from planners enhance
quality of the work.
All collaborative project communication and decisions are
taken on real time environment.
The Internet interactions avoid all travel requirements,
which save lot of time and cost
3.5 IT Tools in commissioning
The trained manpower for operation of systems and
maintenance of infrastructure need project details such as pipeline layout,
cable layout, electrical conduits layout, air-conditioning ducts layout and
equipment details with guarantee information and operation instructions.
Built-in-drawings of services and inventory on facilities in the project are
needed for reference by the maintenance team. The unique problems faced and
critical solutions on expected operational problems are documented as lessons
learnt. The IT tools provide solutions for archiving and retrieving of project
details in the following are as:
Prepare detailed inventory of systems / facilities and
establish a database.
List out the operating instructions as per manufacturers
recommendations on systems
Finalize the project cost under different financial
heading as per actual.
Prepare the built-in-drawings as per actual from the
drawings used for construction
Document all activities of vendors for services during the
guarantee period.
Prepare maintenance schedules for each system as per
maintenance policy.
Document vendors database and their key performance in the
project completion.
Create knowledge bank on unique issues and lessons learnt
for knowledge management.
4. WEB SITES AND SOFTWARES FOR PROJECT MANAGEMENT
The software costs are crashing down and hence acquisition
of IT applications software from the project cost is possible within the
provision. These tools carefully selected are for one time expenditure, but
have repeated uses on projects. Some of the useful web sites and software
tools, which offer details on project management software, are listed below.
These sites and more could be accessed through any of the search engines in the
Internet. The most popular search engine is www.google.com
The Government projects need to focus on reducing
development times in planning the project and improving the internal processes
during project execution. Many new methodologies are employed to achieve the
desired level of success by using the resources scattered around the world. The
backbone to make this possible is Internet and IT software tools. It is the
ability for everybody to be on line in real time environment. The global
facility should be used to control the projects and to check the overrun in
time and costs.
5.CONCLUSION
The construction projects record very high overruns in
time and costs. The multiplicity of project activities, people and conventional
methodologies adopted in project execution creates uncontrolled escalation in
time and cost. The man managed deficiencies in the conventional project
management techniques are reviewed. The new methodologies using Information
Technology suites are reviewed to control the projects at each phase of the
project life cycle. Some details on Internet web sites and standard software
packages are presented. These tools are useful to control the projects
effectively to reduce overruns in time and cost.
* Dr.K.Ramalingam is with Airports Authority
of India. E-mail: editaai@vsnl.net
