The Importance of Proactive Construction Schedule Risk Management for Owners | stone tower

Construction projects require the constant balancing of competing goals of cost (budget), quality (scope) and time (schedule) – often referred to as the “project management triangle”. To address the needs of this triangle, tracking leading indicators related to schedule health and specific schedule changes made by the general contractor can be efficient and cost-effective.

Homeowners are ambitious when embarking on construction projects, knowing what they want, how much they are willing to spend, and when the project is expected to be completed, and they usually hire general contractors to help them get it done. Alignment between owner and general contractor is important as it is a trusted partnership to complete the project on time and within budget without compromising scope.

Construction projects require the constant balancing of competing goals of cost (budget), quality (scope) and time (schedule) – often referred to as the “project management triangle”. It’s not a new concept; however, each project team must choose the right elements to focus on and this focal point often varies between owners and general contractors.

The project management triangle challenges both owner and general contractor project teams due to the constant alignment required between each of the three elements to deliver the desired quality of the project. While general contractors must focus on all elements of the project management triangle, their priority is often scope and timing to meet the owner’s objectives and contract requirements, knowing that failure to meet deadlines and of scope more often leads to contractual compliance issues and litigation.

Owners often prioritize scope and budget to satisfy their inherent risks with their board and shareholders, shifting the focus of the schedule to the general contractor with limited vision and oversight.

In many cases, as construction progresses, key stakeholders or external factors impact or increase the scope of the project, putting pressure on schedule and budget. Unbalanced focus on the budget by owners during the scope change can lead to schedule delays, prompting the general contractor to change orders to increase the budget to maintain the project schedule. In short: it can get complicated.

A proactive approach to schedule management by owners can minimize many of the scope and budget risks that are present in construction projects. But how can owners with limited planning expertise proactively monitor and manage planning risks? Monitoring of leading indicators related to health calendar and specific schedule changes done by the general contractor can be efficient and profitable. This proactive approach often leads to:

• Increased stakeholder satisfaction because a project is delivered on time
• Reduced costs due to fewer planned change orders
• More insightful and accurate project forecasting and reporting
• Easier project closure and reduced likelihood of disputes and claims

Plan for health

Starting with a “sound” schedule and maintaining it throughout the project is critical to project success. Maintaining the health of the schedule throughout the project ensures that the general contractor properly manages schedule changes and that the schedule can be relied upon for decision making and reporting. A “sound” schedule includes sufficient detail, appropriate logic, and specific and reasonable task durations. Key metrics that should be monitored by every homeowner based on planning health include:

• Logic of tasks and relationships – A high volume of Finish-to-Start relationships generally indicates the use of good logic. While acceptable, the use of other relationship types (eg, start-to-start, start-to-finish, etc.) should be limited. Tasks with no predecessor or successor should be limited and reviewed to ensure that the impact of any schedule changes are properly reflected in the overall schedule.
• Jet lag – Lag, or the allocated waiting time between two tasks, is acceptable but should be limited. Using the offset to set specific activity start dates limits timeline transparency into the impacts associated with other schedule changes.
• Critical Path Activities – A low or high percentage of critical path activities in a schedule can mean that there is not enough detail in the schedule or that a schedule is compressed, a leading indicator of potential problems.
• Long-term activities – An increased level of long-running activities may indicate that a schedule lacks detail, logic or complexity. A good rule of thumb is the 8/80 rule – task durations should generally be between 8 hours and 80 hours.

Schedule changes

Contractors are constantly changing a project’s schedule, either by updating task progress, changing durations, managing resource constraints, or reorganizing activities. In some cases, this may not be transparent to the owner and only reported with an “On-Schedule” status update. However, at certain points in every project, these continual changes in duration, resources, and the sequencing of activities increase the risk of schedule delays. Key metrics that should be monitored by every owner based on schedule changes include:

• Progress – Often overlooked by owners, continuously monitoring the completion of planned activities against actual activities, rather than just monitoring milestone dates, can provide early insight into potential schedule issues and allow more time for prepare for such disruptions.
• Delay – An analysis of the delays associated with individual activities, especially the cumulative delays of critical path activities, can provide early indications of problems. If critical delays occur and the end date of the project is not affected, this may indicate manipulation of other schedule activities.
• Changes – Changes to activity durations and logic can compromise the health of the schedule and provide indications that the schedule is being artificially manipulated, especially if a high volume of changes occur in a single reporting period without affecting expected completion date or milestones.
• Compression – Schedule compression shortens the project schedule without changing the project scope to meet schedule constraints, imposed completion dates, or other schedule goals. Compression does not happen at any given time, but rather builds by manipulating or modifying schedule activities until the schedule is no longer realistic and more resources (cost) are needed to maintain schedule dates. completion and/or quality of the project.

Proactive schedule monitoring

Owners believe that general contractors act in their best interests, and while this is generally the case, schedule risks are often overlooked because owners watch budget and scope or mistakenly believe that a planning expert is needed to review complex project schedules. It’s not always the case.

Using schedule analysis technology can quickly provide insight into the health and good management of a project schedule at any given point in the project. Incorporating schedule review and analysis activities, with a focus on the key metrics discussed previously, into the monthly payment request review and approval processes can mitigate the risks associated with to the schedule and increase the probability of a project’s success.

In conclusion, the balance between budget, scope and schedule risks is important and should be monitored by both the owner and general contractor to ensure alignment with project objectives. Knowledgeable owners can proactively mitigate risk exposure throughout the project and are positioned for a smooth project closeout and transition to operations.