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Schedule and Cost Buffer Sizing: How to Account for the Bias between Project Performance and Your Model
Abstract
Bias in project performance causes schedule and cost to overrun baseline estimates (your model). Bias is the onesided tendency of actual schedule or cost to overrun the model. A Guide to the Project Management Body of Knowledge (PMBOK® Guide) and supporting literature recommend estimating the variability for all project time and cost estimates, and sizing appropriate schedule or cost buffers (also known as contingency or management reserve) using Monte-Carlo analysis or PERT. This paper describes a number of sources of bias in performance of projects to schedule and cost estimates, and provides recommendations to size buffers that ensure your projects come in under your baseline schedule and budget.
... positive risks) (Hillson 2002;PMI 2013). Even though several authors have postulated that the management of opportunities is critical for project success (Hillson 2002;Leach 2003;Godfrey 2004;Molenaar et al. 2010;Laryea, Hughes 2011;PMI 2013;Ortiz et al. 2014;Eldosouky et al. 2014), no references have been found about how general contractors actually manage opportunities during the construction phase. Another aspect that some authors consider as critical to success is trust among the project team members; indeed, Solomon and Flores (2001) consider that trust leads to cooperation, while Lofton and Monteith (2004) see cooperation as a source of competitive advantages. ...
... Others focus on how to dynamically adapt the amount of contingency to the existing risk throughout the project (Godfrey 2004;Noor, Tichacek 2009;Howell 2012). A number of studies provide information about the decision-makers who are involved in contingencies management (Ford 2002;Laryea, Hughes 2011) or about the transparency of contingencies (Smith, Bohn 1999;Leach 2003;Chan, Au 2009;Laryea, Hughes 2011;Goldratt 1997;Yeo 1990;Thompson, Perry 1992;Baccarini 2004). However, despite the previously mentioned relevancy of opportunities management, most of the authors use the term "risk" synonymously with the term "threat" (Dake 1992;Chapman, Ward 2003). ...
... Contingencies can be hidden or transparent. Contingencies may be hidden within cost estimates and work schedules through inflated unit costs or longer task durations (Smith, Bohn 1999;Leach 2003;Chan, Au 2009;Laryea, Hughes 2011). Alternatively, they may be explicit, as a fixed percentage line added to the base estimate (Yeo 1990;Thompson, Perry 1992;Baccarini 2004) or as time buffer allocated at some point along the critical path of the schedule (Goldratt 1997). ...
The management of threats and opportunities plays a key-role in enhancing project performance. However, there is a gap in literature concerning how general contractors manage threats and opportunities in construction projects, in particular in the use of time and cost contingencies. This research partially addresses this gap through a case study of two large Spanish construction companies. The research presented two key factors determining how the contractors analyzed manage time and cost contingencies: project objectives and existing mistrust among the contractor’s team members. The research also found that managers use time and cost contingencies not only to manage threats, but also as tools for managing opportunities, thereby providing insight into a previously undescribed form of contingency: the negative contingency. The research results enable a better understanding of the actual behavior of general contractors, which contributes to paving the way for developing enhanced methods for contingencies management.
... This approach was advocated to compete with the Critical Path Method (CPM). Critical Path project planning has an often hidden assumption that an acceptable way to account for potential resource constraints on the project is to first identify the critical path, and then perform resource leveling [11,12]. However, the early CCM suggested estimating activity durations to their 50% probability of being completed on time and consider a buffer (project and feeding buffers) at the end of each chain of activities to allow for uncertainties [2]. ...
... Finally, a stochastic selection of time buffer is proposed. . Fig. 1 illustrates a typical deterministic project schedule studied by Leach [12] where the colors represent unique resources. The plan identified the last activity as a critical path activity. ...
... Many studies were conducted to characterize suitable time buffer system [2,4,12,15,21,22,24,25]. Lumsden [13]used buffers to protect the continuous workflow and defined for the line-of-balance scheduling: stage buffers and activity buffers. ...
Theory of Constraints in Goldratt's international best seller "The Goal" identified the Critical Chain as “The sequence of dependent events that prevents the project from completing in a shorter interval. Resource dependencies determine the critical chain as much as do task dependencies.” Such a criterion derived the salient notion of the Critical Chain Project Management (CCM). This approach was advocated to compete with the Critical Path Method (CPM). In this paper, an in-depth review is performed to outline the main Pros and Cons of CCM and a comparative scheme is made among the refinements proposed by various investigators with a focus on buffer sizing. A light is then shed on such practice in Location-Based Scheduling (LBS) on the local region with emphasis to national projects. The New Suez Canal project is selected as a case study for applying CCM. Based on stochastic approach, the current study finally presumes the Best Unbiased Logical Estimate (BLUE) for buffer distribution in Location-Based Scheduling that provides a reliable guideline for sizing process with acceptable confidence level.
... Project management literature refers cost estimation which is essentially performed using two methodologies: probabilistic and deterministic [1,2,3,11]. Probabilistic estimation is used when there isn't much information available, when uncertainties exist in early estimates of the project or to simplify the probability of cost overruns of the project the management reserve funds. ...
... Cost assessment practices may be categorized into qualitative and quantitative procedures [1,2,3,11,12]. Qualitative cost estimation procedures employ historical data and with expertise experience is drawn an estimate project costs [13,14,15]. ...
Regardless the extensive literature in project management, the model for cost estimation remains unclear and unexploited mainly in terms of simple methods. Accuracy effort and schedule estimation is still a challenge. This paper introduces stream lining procedures from project work breakdown structure (WBS) evaluating the duration processes and either the input cost hour or the fixed costs. The measures are made via hypothesis testing over the responsibility assignment matrix (RAM). We propose a method for project cost construction using a spreadsheet to create an early-stage budget allocation. In this paper we argue that the simulated cost results present superior accuracy while establishing the applicability of the proposed simulation procedure. Generally, the precision is related with the WBS detailed design. The cost methodology approach offers a simplified decision tool for assessing the construction cost on the project managers’ decision.
... Source: Elaborated by the author based on (Ashtiani et al., 2007;Fallah et al., 2010;Ghoddousi et al., 2017;Goldratt, 1997;Herroelen & Leus, 2004;Liu & Whangbo, 2012;Iranmanesh et al., 2015;Kuchta, 2014;Leach, 2003;Li et al., 2022;Min & Rongqiu, 2008;Newbold, 1998;Poshdar et al., 2016;Roghanian et al., 2018;She et al., 2021;Shi & Gong, 2010;Slusarczyk et al., 2013;Tenera, 2008;Tukel et al., 2006;Van de Vonder et al., 2005;Zarghami et al., 2020;Zhang et al., 2014Zhang et al., , 2016Zohrehvandi & Khalilzadeh, 2019). ...
Elaborating and applying a new model for estimating the time buffer size of a project programme, which shall guarantee a 90 % probability of timely project execution. The research included source text analysis to provide information on a research gap and the identification of the research problem. The research problem was identified: the time buffer size in a critical path programme does not guarantee a 90 % probability of timely project execution. A new model was then elaborated to estimate the buffer size; it was applied in a technical production preparation project. An additional comparative analysis was performed using the following methods to verify the model more accurately: half of the time total of a path, the sum of squares (SSQ), and the root square error method (RSEM). The application of the fuzzy model to estimate the buffer size in a critical chain programme offers can shorten the total planned project duration. It has a higher probability of timely project execution than other methods for estimating the buffer size. It guarantees a 90 % probability of timely project execution, keeping aggressive task times, which eliminates unwanted situations such as student syndrome, Parkinson’s law, overestimating task duration, and multitasking. Project programming is an inherent part of the project planning stage in project management. Recently, project management has been increasingly developing, which has been confirmed by the article’s source literature analysis. The analysis revealed a research gap in models estimating project buffer size, which might guarantee a 90 % probability of timely project execution. Thus, a fuzzy model for estimating time buffer size in a critical chain was developed, constituting added value to the science of management and quality of production engineering (currently, mechanical engineering). The fuzzy model for estimating time buffer size was applied in one Polish enterprise in a project for a new product’s technical production preparation. The fuzzy model for estimating time buffer size permits the shortening of the duration of tasks to aggressive times, guaranteeing a 90 % probability of project timely execution. The elaborated model for estimating time buffer size may be applied further in practice in projects programmed using the critical chain method.
... Despite the use of various approaches to determine contingencies, including traditional percentage [97,98], Monte Carlo simulation [99][100][101], artificial neural networks [102], theory of constraints [103], and reference class forecasting [104], these methods were criticized for being inefficient when it comes to cost overruns [96,105]. ...
Mega projects delivering rail infrastructure are constantly seeking cost-effective and efficient technologies to sustain the growing population. Building information modeling (BIM) and BIM for cost management (5D-BIM) have shown great potential in the building industry and have been adopted widely. However, 5D-BIM implementation in rail infrastructure is still in its infancy. This paper presents a systematic literature review of 380 publications related to cost overrun, cost management and 5D-BIM for rail infrastructure, including rail projects. The review identified knowledge gaps and synthesized existing research on cost overrun in rail projects, cost estimation models, and the current use of 5D-BIM. The review revealed that there is no current study integrating 5D-BIM into the rail project lifecycle. This paper highlights the importance of integrating 5D-BIM systematically in the rail project life cycle to avoid/minimize cost overrun. The review provides researchers and practitioners with crucial information for deploying 5D-BIM to minimize cost overruns in rail projects.
... The risk of the system's ability to achieve specified tolerances and test sequences should be assessed, and the project team should consider if the deviations from specifications and necessary changes have been communicated [153]. An impartial assessment of the system test run is needed [204] to elicit problems and learnings, which inform the plans for the following phase. ...
This paper aims to propose an Industry 4.0 implementation model relevant to the composite manufacturing industry and offer it to academia and manufacturing practice in order to aid successful change and adoption. The research scope is defined at an intersection of challenges within the composites industry, as well as Industry 4.0. A critical review of relevant papers was used to establish key trends and gaps in professional practice. Exposed challenges and opportunities were then synthesized to propose a conceptual framework for implementing Industry 4.0. Findings suggest that the predicted growth of the composites sector depends on the paradigm shift in manufacturing. Industry 4.0, including automation, and horizontally and vertically integrated business models are seen as enablers. However, the value proposition or organizational resistance in establishing such integration is not sufficiently addressed or understood by the industry. Achieving a successful design for manufacturing (DFM), or, more generally, design for excellence (DFX), is identified as the target performance objectives and key business process enablers used to introduce Industry 4.0 technology. The identified key gap in professional practice indicate the lack of a model used for structuring and implementing Industry 4.0 technology into composite businesses. The existence of an identified gap, evidenced by the lack of literature and available knowledge, reinforces the need for further research. To enable further research, and to facilitate the introduction of Industry 4.0 in composite manufacturing firms, a conceptual implementation framework based on the systems engineering V model is proposed. The paper concludes with topics for further investigation.
... In order to reflect the adaptability and superiority of our method, the Cut-and-Paste Method (C&PM), the Root Square Error Method (RSEM), and the buffer calculation method proposed by Gong Jun et al. [25] were selected for comparison and analysis with the setup method in this paper. This comparison was carried out using 1000 Monte Carlo simulations with Crystal Ball software, set at a 95% confidence level [48]. The durations of all methods satisfy the triangular distribution. ...
In order to solve the problems such as project duration delay caused by unreasonable buffer zone setting, a critical chain buffer zone setting method is proposed based on fragility theory. Firstly, we propose that the construction process is brittle and the brittleness of the construction process was analyzed. Secondly, this paper introduces a risk-integrated impact rate to describe the uncertainty of the construction process and establishes a brittle risk entropy function. Then, it presents entropy models and modification models of project buffers and feeding buffers based on the original Root Square Error Method. Finally, an engineering project was selected as an example, and the simulation was carried out using the Monte Carlo simulation software Crystal Ball, and the resulting method was compared with three buffer zone calculation methods. The results show that the method can effectively reduce the construction period and is effective and practical when compared to the other three buffer calculation methods. The results of the study provide a new way of thinking about buffer settings based on existing critical chain project management methods.
... The rule of thumb is that the less experience the organisers have in preparing similar exercises, the bigger should be the buffer regarding planned time and budget. Leach [36] recommends no less than 25% buffer for planning both schedule and cost in projects. Further core aspects of process management in CSX are legal, human resource, and communication aspects. ...
... Most of the research on this topic agree that there are two main approaches for cost estimation: probabilistic and deterministic [3,4,5]. The first one is applied when the information is not completely clear, at early stages of a project [6,7,8], while the second one is more useful for later computations, with more complete information [8]. ...
One of the main aspects that must be considered while developing any industrial project is its cost. Design to Cost (DtC) processes allow the design team to manage any kind of project based on the costs of each of the phases and of the elements, by applying a number of methodologies, techniques, cost models and tools. In this paper, a DtC framework is proposed, taking other DtC centered research as references and focusing on a probabilistic approach, in order to lead the early design stages of large industrial products, where most of the information is unclear or is still being defined. A literature review about DtC methodologies and techniques is first carried out in order to analyze, compare and classify them and identify the strengths and weaknesses of each one.
... The project knowledge management theory covers crucial issues in project management and divides those issues into nine consecutive elements. They are derived from best practice in project study cases and can be considered as the most important elements in project management (for example, see Leach 2003;Morris 2001;Zobel & Wearne 2000). Although each element consists of a number of processes, some differences in the detail of the project knowledge elements across various project types can be found, e.g., success criteria, requirements management, information management, performance measurement (Morris 2001 ...
... To quantify the external uncertainties, most of these studies use simple mathematical formulas, while several others apply fuzzy mathematics and risk assessment approaches. Leach (2003) argues that buffer size should cover both task duration variances and bias, which is anything that invalidates the aggregation of variances and increases the project schedule relative to the plan. He provides a list of bias factors, including merging paths and multitasking, and suggests increasing the buffer size in proportion. ...
Project management organizes about 30% of the world's economy. Many recent projects apply critical chain project management (CCPM) methodology, which requires the design of project and feeding buffers. Accurate sizing of these buffers is essential, because too small buffers result in emergency procedures to prevent late delivery, whereas too large buffers result in uncompetitive bids and lost contracts. Previous buffer sizing research, focused predominantly on the critical chain, typically results in excessive buffers, and in critical chains being challenged by feeding buffers during planning. This work also performs inconsistently, for example in makespan estimation, at execution. We propose a new procedure for buffer sizing based on network decomposition, which offers logical advantages over previous ones. First, the size of a feeding buffer is determined from all associated noncritical chains. Second, the project buffer incorporates safety margins outside the critical chain by comparing feeding chains with their parallel critical counterparts. Computational testing on a case study of a real project and extensive simulated data shows that our procedure delivers much greater accuracy in estimating project makespan, and smaller feeding buffers. Furthermore, the resulting critical chain is never challenged. Additional benefits include delayed expenditure, and reductions in work-in-process, rework, and multitasking.
... After validating the simulation models through pilot runs, the results should be communicated to stakeholders and their feedback should be recorded [269]. This should form the basis for a fullscale implementation plan. ...
Digital transformation is no longer a future trend, as it has become a necessity for businesses to grow and remain competitive in the market. The fourth industrial revolution, called Industry 4.0, is at the heart of this transformation, and is supporting organizations in achieving benefits that were unthinkable a few years ago. The impact of Industry 4.0 enabling technologies in the manufacturing sector is undeniable, and their correct use offers benefits such as improved productivity and asset performance, reduced inefficiencies, lower production and maintenance costs, while enhancing system agility and flexibility. However, organizations have found the move towards digital transformation extremely challenging for several reasons, including a lack of standardized implementation protocols, emphasis on the introduction of new technologies without assessing their role within the business, the compartmentalization of digital initiatives from the rest of the business, and the large-scale implementation of digitalization without a realistic view of return on investment. To instill confidence and reduce the anxiety surrounding Industry 4.0 implementation in the manufacturing sector, this paper presents a conceptual framework based on business process management (BPM). The framework is informed by a content-centric literature review of Industry 4.0 technologies, its design principles, and BPM method. This integrated framework incorporates the factors that are often overlooked during digital transformation and presents a structured methodology that can be employed by manufacturing organizations to facilitate their transition towards Industry 4.0.
... Fig. 3 shows an example of a network created by RDM. The RDM differentiates the existing PDM by adding the following key information to the PDM network [7]. First, add a node at the time the activity actually starts or changes. ...
... It is common for projects to overrun their baseline schedule and budgets. Therefore, it is crucial to be objective in the assessment of the pilot runs and not show bias either in favor or against, as that might hide the real results of the pilot run [224]. If the results are objectively assessed as unfavorable for the organization, then the project team needs to evaluate their performance and make use of their own risk management strategy, to identify and mitigate the issues. ...
Industry 4.0 (also referred to as digitization of manufacturing) is characterized by cyber physical systems, automation, and data exchange. It is no longer a future trend and is being employed worldwide by manufacturing organizations, to gain benefits of improved performance, reduced inefficiencies, and lower costs, while improving flexibility. However, the implementation of Industry 4.0 enabling technologies is a difficult task and becomes even more challenging without any standardized approach. The barriers include, but are not limited to, lack of knowledge, inability to realistically quantify the return on investment, and lack of a skilled workforce. This study presents a systematic and content-centric literature review of Industry 4.0 enabling technologies, to highlight their impact on the manufacturing industry. It also provides a strategic roadmap for the implementation of Industry 4.0, based on lean six sigma approaches. The basis of the roadmap is the design for six sigma approach for the development of a new process chain, followed by a continuous improvement plan. The reason for choosing lean six sigma is to provide manufacturers with a sense of familiarity, as they have been employing these principles for removing waste and reducing variability. Major reasons for the rejection of Industry 4.0 implementation methodologies by manufactures are fear of the unknown and resistance to change, whereas the use of lean six sigma can mitigate them. The strategic roadmap presented in this paper can offer a holistic view of phases that manufacturers should undertake and the challenges they might face in their journey toward Industry 4.0 transition.
... Optimism Basis Uplifts Ove Arup and Partners Scotland, 2004 Probability tree/influence diagrams Diekmann and Featherman 1998 Theory of Constraints Leach 2003 Analytical hierarchy process Dey et al., 1994 Interpreting traditional cost contingency methods in the construction industry ...
... This paper reviewed the various methods of computing contingency cost and proposed a forward difference summation by an orthogonal function method. The need to set aside a certain sum of money to offset risk impacted items (cost and time wise) resulted in construction industry's policy of contingency fund Picken 2000 andLeach, 2003). How representative and precise the contingency estimating methods are remains a subject of controversy in the construction industry (Curran, 1989, Oberlander and Trost, 2001and Rad, 2002. ...
In the construction industry, contingency cost continues to elicit discussions in terms of justification for its estimation. Many research works have offered different methods of estimating contingency cost to a certain level of precision. Yet, some of the methods continue to raise representativeness and subjectivity questions. Accordingly, the unseeming aspects of indeterminacy and subjectivity remain irresolute. This paper identified the inherent risks of cost (c) and time (t) of all work items as indeterminate entities of an entire project cost and postulates that they are vectors of uncertainty in a project that gives rise to contingency cost application. The paper theorizes that contingency cost estimation should representatively be contributed by all items unit rate cost on the basis of the difference in their infimium cost (least upper bound and upper lower bound cost) been the threshold values of contractor's risk absorption extremium accommodated in markup. This is with the aim of diffusing the risk elements (cost and time) of construction projects cost overruns. This process draws semblance with the vanishing properties of scalar products of orthogonal functions. A parallel construct was deduced towards the vanishing response of cost and time overruns that absorbs contingency cost. A unit cost rate of item idealized geometrically as a length aggregated by several disjointed sub cost and time on the basis of their length, their limiting value were idealized to be their infimiums. A foreword dynamically responding partial summation of cost infimium converges by orthogonal properties as a contingency cost estimation model. A valid application lies in the extrapolation of upper and lower threshold values of unit rate cost of all work items and summing their difference which necessarily, this operation can be performed at the total cost point of the construction project.
... CCPM literature is not only built upon the broader TOC body of knowledge but also is married with a list of project-specific recommendations that are beyond scheduling. CCPM literature also include other aspects of project management such as procurement management (Budd, 2010;Yeo & Ning, 2002); project reporting (Budd, 2010); cost management (Bevilacqua et al., 2009;Budd, 2010;Loung & Ohsato, 2008); project reporting (which emphasises communication management) (Budd, 2010); and risk (Bevilacqua et al., 2009;Leach, 2003;Loung & Ohsato, 2008;Steyn, 2002;Yeo & Ning, 2002). CCPM is also credited with reinforcing motivational energy among team members (Ishibashi et al., 2008;Kishira, 2006;Morris, 2013, p. 92). ...
... Nearly all projects in the construction industry involve both predictable (known) and unforeseen (unknown) risks that limit the ability of managers to envisage real project performance (Leach 2003). There are always uncertainties in planning and estimating cost and schedule for projects, which will be accounted for in the cost and schedule baselines developed in existing project progress management techniques. ...
In this paper, a novel framework is presented for estimating, allocating, and managing schedule contingency using the theory of constraints and the earned schedule technique. The main aim of the proposed framework is to present a practical technique to manage schedule contingency in a manner that is easy to use and simple to understand; can overcome the drawbacks of earned value management for the schedule component; can overcome the inaccuracy caused by using critical path method; and takes into account the statistical nature of each activity and merges them to form a single framework. The framework introduces two new measures, buffer performance index and buffer variance, for measuring the expected remaining buffer and the actual remaining buffer on critical and noncritical chains based on the percentage completion for each activity at the end of the reporting period, respectively. To verify the proposed framework, the processes and measures have been applied to three projects, each with different complexities. The results show potential for managing buffers when placed at the project level, without the involvement of complex mathematical models or tedious equations.
... We do not know of a CCPM source that lists stochastic dependence as a reason for that recommendation, however. By contrast,Leach (2003)perhaps the most solid explanation of the CCPM buffer setting approach-lists eleven other reasons (such as the Jensen gap and the Parkinson effect). ...
The Research Notes series (copyright © 2009, 2010 by Kenneth R. Baker and Dan Trietsch) accompanies our textbook Principles of Sequencing and Scheduling, Wiley (2009). The main purposes of the Research Notes series are to provide historical details about the development of sequencing and scheduling theory, expand the book's coverage for advanced readers, provide links to other relevant research, and identify important challenges and emerging research areas. We invite comments and corrections.
... The same type of buffer strategies used in manufacturing can be applied in construction as long as they are adapted to the peculiarities of its production environment. Some examples are time buffer, such as schedule contingencies (Leach 2003) and float (Kim and De la Garza 2003); inventory buffer, such as site materials (Tommelein 1998); or even capacity buffer, such as purposely excessive labor or equipment capacity for variable work demands (Horman 2000). However, traditional management practices in construction rely primarily on intuition and experience, which lead to superficial analysis and erroneous or poor decisions (Laufer et al. 1994). ...
Buffers have been commonly used as a production strategy to protect construction processes from the negative impact of variability. Construction practitioners and researchers have proposed several buffering approaches for different production situations and contexts. However, these solutions have been impractical for managing buffers. To overcome this, this study proposes a new site methodology for managing work-in-process (WIP) buffer in repetitive projects, on the basis of the reliable commitment model (RCM). RCM is a decision-making tool based on lean principles, which uses statistical models to develop more reliable work plans at the operational level. RCM helps to manage WIP buffer in work plans by using site information and planning reliability indicators that result in improved project performance, such as labor productivity and process progress. A repetitive building project was used as a case study. The main finding was that labor productivity, process progress, and waiting times improved when using larger WIP buffers than those typically used among crews. This shows the potential of RCM as a practical tool to manage WIP buffer sizes and to promote the use of lean production strategies at the operational level.
... Tukel [10] referred to this as the 'Cut and Paste Method' (C&PM). Leach [11] refers to this as the '50% of the Chain' method, and clarifies by stating that one should not count gaps in the chain or path when applying this method. Advantages include, simple to apply method, and it provides a large enough buffer. ...
Critical Chain Project Management (CCPM) provided a tangible progress to the Project Management Body of Knowledge. The Critical Chain Project Management (CCPM) differs from the traditional Critical Path Method (CPM) which includes never changing resource dependencies. CCPM improves the project plan by aggregating uncertainty into buffers at the end of activity paths. In this research, one hundred twenty random projects were generated and analyzed using Microsoft Project software according to the traditional CPM and the CCPM once using the Sum of Squares (SSQ) method and another using the cut and past (C&PM) method. CCPM-SSQ method revealed an average savings of 13% and 43% in duration and cost, with a standard deviation of 21 and 11 for duration and cost respectively. While the CCPM-C&PM method revealed an average overestimation of about 2% in duration and 43% savings in cost, with a standard deviation of 25 and 11 for duration and cost respectively.
... Forecasting construction duration plays a critical role in initial project phases (Stoy et al. 2007). A number of research efforts have been undertaken regarding project construction time forecasts, but the need for enhanced systems to provide reliable and repeatable project times still exists (Leach 2003). ...
Construction schedules are uncertain in nature; therefore, predicting construction duration is a difficult task. Extensive research has proposed mathematical models to predict construction duration based on regression analysis, Monte Carlo method (MCM), and so on. Yet regression analysis cannot capture duration uncertainties. Studies normally use Monte Carlo methods to simulate hundreds to thousands of activities in a project schedule. This can be complicated, time-consuming, and unrealistic because the statistical properties of all the activities cannot be readily determined in practice. Typical construction sequences in condominium building construction were first identified, and then the statistical distributions of controlling activities on the sequences were surveyed. Two-stage questionnaire surveys and goodness-of-fit statistical tests were conducted to achieve the mentioned objectives. Subsequently, a model for predicting the duration of building construction was proposed and applied to a high-rise building project. The results showed that the proposed model reasonably predicted the construction duration for this apartment building. The model fills the gap in knowledge of construction time forecast by introducing the concept of controlling activities to simplify the evaluation of the schedule uncertainty in multistory building construction. This research is beneficial for practitioners to estimate an overall construction schedule of building projects, especially in preconstruction phases. (C) 2013 American Society of Civil Engineers.
... One of the detailed approaches was formally described by Tukel et al. [10]. The issues of buffering some project characteristics, other than duration, were considered by Leach [7], Gonzalez et al. [5], Błaszczyk and Nowak [2]. The model featured in the next part of this research takes into account the use of partition function the bonus fund for early implementation of the project. ...
Depending on your view of the allocation of risk between the project owner and contractor use are two main types of contracts. In this paper, we analyze the problem of optimal selection of sub-contractors in the case of the application of a fixed price and a cost-plus contracts. Models described in the article can be found applicable in the relations between the project owner and the contractor and between the contractor and sub-contractors. As a methodological basis we use the multi-criterial decision model assigning each task to specific contractors (or subcontractors) in the project with the function of distribution of penalties arising from delayed completion and potential benefits in the event of early termination of the project.
Technical debt, the long-term impact of decisions made to achieve a short-term benefit, has a unique impact on a project schedule. Technical debt does not impact the ability to complete the task on which it is incurred but rather impacts successor tasks causing unplanned schedule delays or budget increases. The impact of technical debt is uncertain and therefore must be modeled probabilistically. When unaccounted for and unmanaged, technical debt can build up in the project with increasing impact, eventually forcing forward progress to stop while the technical debt is remedied. Traditional project scheduling methods allow for uncertain task durations but do not provide explicit means of modeling the impacts of technical debt. Instead, they assume that each task is unaffected by the completion status of its predecessors and its duration is only dependent upon the initial estimates. This research addresses this gap by providing a novel model of the impact of technical debt on the project schedule through estimating the dynamics of value creation in the presence of technical debt. Equations are developed for estimating the probabilistic impacts of technical debt on the generation of earned value. These equations are then inverted and used to calculate task duration in the presence of technical debt and included in a Monte Carlo analysis. Comparisons are made to an existing Monte Carlo schedule analysis and technical debt impacts are explored.
This study sheds light on the relationship between financial buffers and joint value production in infrastructure programs consisting of multiple projects, often referred to as “megaprojects.” We define a financial buffer as unallocated funds assigned to a megaproject during the business case phase to address unpredictable stakeholder claims, in addition to the contingency allocated for addressing quantifiable risks. Using a formal model, and assuming the institutional environment limits rent creation leading to adverse effects on society, we posit that financial buffers enhance the process of joint value production when a budget overrun carries a reputational cost and nonmarket stakeholders possess holdup power. Under these conditions, and up to a lower threshold, a financial buffer enables an increase both in the economic returns of a megaproject and in stakeholder value appropriation. Beyond an upper threshold, an additional buffer has no effect on the choice between maintaining cooperation and engaging in competition with stakeholders. We investigate the variability of these thresholds in relation to the megaproject sponsors’ organizational purpose, stakeholder bargaining power, and the subjective evaluation of the value appropriated by stakeholders. We conclude by highlighting the implications for the global policy trend of procuring megaproject suppliers through alliances and other forms of collaborative procurement.
Projects continue to offer a superior means for organizations to realize many advantages, including improving internal operations, achieving commercial success, and fostering greater society benefits. In spite of the enthusiasm with which projects are undertaken, in company after company, there is clear evidence of chronic under-performance, frustrating project managers, and making efforts to achieve success difficult. While there are a number of causes of poor project performance, one consistent theme running through under-performance is a failure to account for a variety of behavioral missteps. This article explores some of the reasons for consistent poor project results, particularly with schedule slippages, arguing that many of the causes of project failure are attributable to human error. In identifying some of the most common behavioral mistakes, this article explains the implications of these often well-meaning actions that can have a deleterious effect on project performance, including rework, Brooks’ Law, motivation behind padding activity duration estimates, the dangers of overtime, and more. Finally, we will consider suggestions for improving project delivery by recognizing and correcting behaviors that, through thought to remediate projects in difficulty, are actually exacerbating our challenges.
Although contingency allocation management is widely accepted as a proactive concept rich in theories, its applications do not seem to be well embraced in many countries due to many factors. This study aims to broadly investigate this theory-practice gap concerning contingency allocation in building projects in Sri Lanka. Twelve case studies with a desk review on seven local projects were carried out to explore the contingency allocation practice at the site level. Fifteen independent consultants were interviewed to share an understanding of the practical relevance of this research while largely eliminating the need for further justification. Code-based content analysis was used to analyze data. Nearly 44 incremental approaches were found to have theoretically evolved in a history of 35 years. It was revealed that the practice of ascertaining contingency sums is ad-hoc, informal, and subjective. More than 25 gaps were detected, while nearly 50 strategies were introduced. An impression among the practitioners is that the formal methods are overly theoretical.
Crashing stochastic activities implies changing their distributions to reduce the mean. This can involve changing the variance too. Therefore, crashing can change not only the expected duration of a project but also the necessary size of its safety buffer. We consider optimal crashing of serial projects where the objective is to minimize total costs including crashing cost and expected delay penalty. As part of the solution we determine optimal safety buffers. They allow for activities that are statistically dependent because they share an error element (e.g., when all durations have been estimated by one person, when weather or general economic conditions influence many activities, etc). We show that under plausible conditions the problem is convex and thus it can be solved by standard numerical search procedures. The purpose of the paper is to encourage software development that will include valid stochastic analysis for scheduling and crashing using current estimates and historical performance records.
Crashing stochastic activities implies changing their distributions to reduce the mean. This can involve changing the variance too. Therefore, crashing can change not only the expected duration of a project but also the necessary size of its safety buffer. We consider optimal crashing of serial projects where the objective is to minimize total costs including crashing cost and expected delay penalty. As part of the solution we determine optimal safety buffers. They allow for activities that are statistically dependent because they share an error element (e.g., when all durations have been estimated by one person, when weather or general economic conditions influence many activities, etc). We show that under plausible conditions the problem is convex and thus it can be solved by standard numerical search procedures. The purpose of the paper is to encourage software development that will include valid stochastic analysis for scheduling and crashing using current estimates and historical performance records.
روشهای تعیین اندازه بافر در مدیریت پروژه بهروش زنجیره بحرانی
باتوجه به فلسفه تئوری محدودیتها و مدیریت پروژه بهروش زنجیره بحرانی که بر اساس آن شکل گرفتهاست، پس از تشخیص صحیح زنجیره بحرانی و زنجیرههای تغذیه، موضوع تعیین اندازه مناسب بافر پروژه، تغذیه، و منبع در مدیریت پروژه بهروش زنجیره بحرانی، جهت تخصیص، از اهمیت شایانی برخوردار است. از سال 1997 و همزمان با شکلگیری تئوری محدودیتها و مدیریت پروژه بهروش زنجیره بحرانی، تا سال 2019، تعداد 32 روش جهت تعیین اندازه بافر در مدیریت پروژه بهروش زنجیره بحرانی، ارائه گردیدهاست. در این مقاله، سعی بر آن است تا ضمن تبیین اصول و کلیاتی که در هریک از روشهای 32گانه تعیین اندازه بافر در مدیریت پروژه بهروش زنجیره بحرانی، جهت تعیین اندازه بافر، مورد استفاده قرار گرفتهاند، جزئیات نحوه محاسبه نیز ارائه گردد تا راه برای برنامهریزان پروژه، در مدیریت پروژه بهروش زنجیره بحرانی، جهت تعیین و تخصیص اندازه مناسب بافرهای پروژه، تغذیه، و منبع، فراهم آورد. ارزیابی روشهای 32گانه تعیین اندازه بافر و انتخاب بهترین روش و شبیهسازی جهت اطمینان از مناسببودن اندازه بافر، در راستای جلوگیری از سردرگمی برنامهریزان پروژه، میتواند در تحقیقات آتی مورد استفاده قرار گیرد.
مروری بر مطالعات بافر در مدیریت پروژه بهروش زنجیره بحرانی
با توجه به اهمیت بافرها در مدیریت پروژه بهروش زنجیره بحرانی، تاکنون مطالعات فراوانی درخصوص مدیریت بافرها و روشهای تعیین اندازه بافر، ارائه گردیدهاست. اندازه مناسب بافر و مدیریت بافرها، از این حیث حائز اهمیت است که چنانچه اندازه بافر، بیش از اندازه مورد نیاز، تعیین و تخصیص گردد، علیرغم اینکه از پروژه دربرابر بروز تأخیرات محافظت میکند، ولی موجب تحمیل هزینههای اضافی به پروژه، میگردد. در مقابل، چنانچه، اندازه بافر، کمتر از اندازه مورد نیاز، تعیین و تخصیص گردد، امکان محافظت از پروژه در برابر بروز تأخیرات را فراهم نمیآورد. لذا مقوله بافر در مدیریت پروژه بهروش زنجیره بحرانی، از اهمیت شایانی برخوردار است. در این مقاله سعی شدهاست، کلیه تحقیقات انجامشده درخصوص مدیریت بافر و همچنین روشهای تعیین اندازه بافر، از زمان شکلگیری مدیریت پروژه بهروش زنجیره بحرانی، مبتنی بر تئوری محدودیتها، تا سال 2019، مرور گردد.
This research describes the managerial approaches that contractors follow to determine different types of contingencies in construction project management. Two large Spanish general contractors were selected for an in-depth analysis. Interviews and surveys were conducted with six additional companies to explore the external validity of the findings. Managers constrain time and cost buffers through project objectives, applying heuristics to determine inventory buffers. The management of capacity buffers is entrusted to subcontractors. The contractors take advantage of scope and quality buffers to meet project objectives but rarely share these buffers with the owner, unless the owner is an internal client.
Particular scenarios of emergent and future conditions are more disruptive than others in terms of project schedules and the evolving priorities of project managers. It is essential to associate the scenarios with cost and schedule impacts to guide corrective or precautionary actions. The innovation of this paper is to use scenarios to investigate two modes of project disruption: (1) scenario-based preferences that change the relative emphasis placed on project management success criteria, and (2) scenarios that may change the structure of the project network and parameters of the constituent activities. These disruptions are used to reprioritize the activities of projects across scenarios subject to precedence constraints. The developed methodology is demonstrated with applications to strategic planning, capacity expansion, and operations of a shipping container port with billions of dollars of planned investment and millions of container transactions per year. The results characterize the scenarios that are most and least disruptive.
A key project management capability is time management, prioritizing activities in time while tracking emergent and future conditions along with the influences of those conditions on project metrics. The research objective of this paper is to introduce a method of updating of importance for project activities as a class of entity. The methodology is based on identification of scenarios with two modes of disruption: shifting preferences related project management objectives, and disruptions of project networks and constituent activities. The findings are that time management and control can be guided by this approach to recognize and address the most and least disruptive scenarios as combinations of emergent and future conditions. The management implications point to allocating managerial resources where most needed. The results are demonstrated in a time-critical example of posthurricane disaster response.
Although buffer sizing is one of the most investigated subjects in Critical Chain Project Management (CCPM), almost all the focus has been on its implications for single-project environments. Among the entire invented buffer sizing methods, the cut and paste method (C&PM) is the most accepted by practitioners and long-established CCPM software packages. This study concentrates on the use of C&PM in CCPM portfolios with different resource capacities with the aim of examining the performance of this method and identifying the most appropriate sizes of project and feeding buffers. This aim is pursued through considering ten different levels of resource capacity, conducting Monte Carlo simulations of randomly generated project data and comparing the results with deterministic duration values of the same portfolios with 30%, 40% and 50% buffer sizes. As a significant contribution, this study recommends what buffer sizes should be allotted in CCPM portfolios with different resource capacities.
The theory of constraint (TOC) has long been applied to planning project schedules, and critical chain and buffer management are both developed to reduce the impact of future project uncertainties. Several models are proposed for the project activity buffers, including: 1) the cut and paste method proposed by Goldratt, in 1997; 2) the square root error method proposed by Newbold, in 1998; 3) the adaptive procedure with density proposed by Tukel in 2005. This study proposes a multi-objective mathematical programming model that enables project managers to concurrently maximise the on time delivery of project activities. The multi-objective model is consolidated into a single-objective programming model using a fuzzy membership function. Maximising the value of this membership function leads to the maximisation of the probability of on time completion for all project activities. The model is applied to a real case and the result shows that the proposed fuzzy model determines the duration of activities, which ensures that a project can be completed with the highest probability compared to other methods.
Purpose
The purpose of this paper is to reengineer the process of cost management in large projects.
Design/methodology/approach
Considering the fact most large projects overrun their budgets because of the long time period needed to completion, it was decided to reengineer the cost management. Accordingly costs allocated to packages were reviewed and changed on a dynamic basis. Different types of contingencies were provided. Concepts of package contingency and project contingency were introduced. These were based on the project buffer and feeding buffer concepts popularised by Eliyahu Goldratt.
Findings
The re-engineered method of cost control worked well and yielded better than expected results, leading to the setting up of a new world record in the completion time for setting up a million tonnes per annum continuous, tandem cold rolling mill to roll steel sheets.
Research limitations/implications
In view of the total success of the reengineered approach, which was tested out on a large project over three years, it is felt that other projects could also try out this technique, especially since it is along the lines proposed by Eliyahu Goldratt who is an authority on project management. However the success can be better understood if the results of the testing become available. To that extent the contents of the present paper have limitations.
Practical implications
Large projects can deploy the methodology and complete their projects on time and under budget.
Social implications
The reengineering of the cost management was done primarily with a view to complete projects under budget. Since many governments spend many billions of dollars on publicly funded projects for the welfare of citizens, the use of this technique could have a salutary effect on the cost.
Originality/value
The method was innovated in the company by the author’s team and deployed in a live project over four years for the first time to achieve world-class results.
In project planning, it is presumed that resources will be available to pick up their allocated tasks as planned while what happens in reality is rarely this simple. This discrepancy between planning and reality intensifies in Critical Chain Project Management (CCPM) portfolios where no level of multitasking is allowed. Regarding this, Ghaffari and Emsley (2016) determined the boundary between good and bad multitasking in CCPM portfolios with various resource capacities that showed some limited levels of multitasking could be beneficial to alleviate resource availability issues in such environments. In this paper, the authors aim to investigate how good and bad multitasking affect buffer requirements of CCPM portfolios with the same resource capacities considered in the above study. In a deductive approach, a hypothesis is developed and tested through experiments of ten portfolios with similar size and complexity levels, each one containing four projects with a different resource capacity, and comparing the results to their simulated counterparts obtained by the mentioned study. The results show that buffer requirements of portfolios with resource capacity of 130% and lower can be reduced through allowance of higher levels of multitasking. As a major contribution, a framework for buffer requirements of CCPM portfolios with different levels of multitasking and resource capacity is recommended.
The Research Notes series (copyright © 2009 by Kenneth R. Baker and Dan Trietsch) accompanies our textbook Principles of Sequencing and Scheduling, Wiley (2009). The main purposes of the Research Notes series are to provide historical details about the development of sequencing and scheduling theory, expand the book's coverage for advanced readers, provide links to other relevant research, and identify important challenges and emerging research areas. We invite comments and corrections.
PERT(Project Evaluation and Review Technique) is typical method in order to probabilistically establish the schedule plan for large scale complex project or mega project. PERT technique is impossible to estimate relationship of each activity probabilistically when there are overlapping relationships because it is limited to Finish-to-Start(FS) relationship. In order to overcome this kind of limitation of PERT technique, PLET(Probabilistic Linkage Evaluation Technique) has been suggested to probabilistically estimate project duration for various overlapping relationships for each activity. However, estimating project duration by PLET technique only considers uncertainty of relationship between activities and not activity time, thus it is not the perfect duration estimating method. The main objective of this research is to propose the integration model of PERT and PLET and verify its probabilistic validity. By verifying application of time calculation method of integration model in practical case, this research will suggest probabilistic project duration estimating method in schedule plan of high-risk construction industry.
Elimination of bad multitasking, as one of the main features of Critical Chain Project Management (CCPM), implies that there is also a good level of multitasking that can be retained in such environment. Although there have been attempts to defi ne good and bad multitasking, the boundary between them is not yet lucid in practical terms. The present study intends to clarify this boundary for multi-project environments with ten different rates of resource availability using Monte Carlo simulations of randomly generated project data. The conclusions drawn from results of simulations of ten portfolios with similar size, variability and complexity levels, each containing four projects, show that while no level of multitasking is good for portfolios with resource availability rates of 170% of all resource requirements or higher, for lower rates, a good multitasking of up to two tasks at the same time can be distinguished from multitasking of 3 tasks and more as bad multitasking. This is a signifi cant contribution to the theory of CCPM because of its implications for the roadrunner mentality recommended by CCPM and the fact that for the first time a boundary is suggested for determination of good and bad multitasking in multi-project environments.
The aim of this paper is to show how to minimize the project costs by using fuzzy quantities and schedule buffers. Very often, companies make rigid schedules that do not allow changes to be made. In this article we propose utilization of buffers to create soft schedules that can allow the easy application of changes during the project.
Critical Chain Project Management (CCPM) is a relatively new method introduced by Eliyahu Goldratt in 1997, which attempts to improve the traditional practice of project management by introducing a new mechanism for managing uncertainties in projects. A high number of studies on CCPM have been published since its introduction and it seems it is now time for an extensive review of its literature. This study consults the CCPM literature in an inductive manner in order to investigate the status of ongoing research on CCPM, identify the approaches taken by researchers and their contributions, and suggest areas for future research. The main aim is to describe the current status of research on CCPM and explore CCPM aspects that require more research in the future. This study covers 140 journal and conference papers written on CCPM through an "exhaustive with selective citation" approach identified through online and reference searching. Those papers are categorised into six groups of introductory, critical, improving, empirical, case-reporting and exploiting papers based on their positions on CCPM, using the "hierarchical coding" method. As the result of this research, the current status of research on CCPM is critically reviewed and 21 potential areas of CCPM for future investigations are recommended as a major contribution.
Generally, the most difficult works at scheduling are to estimate the duration of activities and linkages between them because the possibility that the duration and linkages could be exposed to the uncertainties is so high. When estimating a project duration, therefore, the probabilistic estimation of the duration as well as the probabilistic estimation of the linkages between activities should be considered concurrently. The PERT that is one of the most popular techniques applied for the probabilistic estimation of a project duration can not consider the uncertainties of the linkages because it only estimates the probabilistic duration limited to `FS0` relationship. The purpose of this study is to propose the new method "PLET" for stochastically estimating the project duration based on the probabilistic estimation of the BDM`s relationships, and also provide more wide and various probabilsitic information about the project duration by it.
Depending on your view of the allocation of risk between the project owner and contractor use are three main types of contracts. In this paper, we analyze the problem optimal selection of subcontractors in the case of the application a fixed price, cost-plus and time and materials contracts. Models described in the article can be found applicable in the relations between the project owner and the contractor and between the contractor and subcontractors. As a methodological basis we use the multi-criterial decision model assigning each task to specific contractors (subcontractors) in the project with the function of distribution of penalties arising from delayed completion and potential benefits in the event of early project termination.
The aim of this research was the trial of modelling and optimizing the time-cost trade-offs in project planning problem with taking into account the behavioral impact of performers’ (or subcontractors’) estimations of basic activity parameters. However, such a model must include quantitative measurements of budget and duration, so we proposed to quantify and minimize the apprehension of their underestimations. The base of the problem description contains both safe and reasonable amounts of work estimations and the influence factors matrix. We assumed also the pricing opportunity of performance improving. Finally we introduce fuzzy measurements for work amount. This paper is a revised, extended version of Blaszczyk et al. 2011, presented on the World Congress on Engineering and Computer Science 2011.
Most of today's projects are interdisciplinary and requires the involvement of contractors that specialize in different types of works. In various circumstances, it may be advisable to minimize their multiplicity or their diversification. In some cases it may be desirable to meet certain characteristics by contractors for selected tasks. The aim of this paper is to determine the model of selection of contractors in complex project from the point of view of the project owner or general contractor. As a methodological basis we use the multi-criterial decision model assigning each task to specific contractors in the project with the function of distribution of penalties arising from delayed completion and potential benefits in the event of early termination of the project.
This paper describes the development and application of a technique for measuring and controlling development progress for the Polaris Fleet Ballistic Missile program, Special Projects Office, Bureau of Ordnance, U.S. Navy. Project PERT (Program Evaluation Research Task) was set up to develop, test, and implement a methodology for providing management with integrated and quantitative evaluation of (a) progress to date and the outlook for accomplishing the objectives of the FBM program, (b) validity of established plans and schedules for accomplishing the program objectives, and (c) effects of changes proposed in established plans. In the PERT model, the R and D program is characterized as a network of interrelated events to be achieved in proper ordered sequence. Basic data for the analysis consists of elapsed time estimates for activities which connect dependent events in the network. The time estimates are obtained from responsible technical persons and are subsequently expressed in probability terms. This model is described. Test of the model on a specific component, design of a management control system properly related to existing management systems, reduction to the NORC computer, difficulties in implementation and preliminary results to date are discussed. Limitations of the model, and possible refinements and use of the computer model for testing schedules and for management experimentation in resource and performance tradeoffs are described.
Abstract Critical Chain Project Management,(CCPM) provides a substantial step in ongoing improvement,to the Project Management,Body of Knowledge (PMBOK). The critical chain differs from the critical path by: a) Including resource dependencies, and b) ,Never changing. CCPM improves the project plan by ensuring that it is feasible and immune,from reasonable common cause variation (uncertainty, or statistical fluctuations). It does this by aggregating uncertainty into buffers at the end of activity paths. The Project Buffer protects the overall project completion on the critical chain path, and Feeding Buffers protect the critical chain from path merging. Buffer Management enhances measurement,and decision making,for project control. CCPM implements,required changes in resource behaviors, including elimination of date-driven activity performance and multitasking. Most of all, CCPM improves the focus of the Project Manager and performers. Projects that use CCPM have a greatly improved record of schedule, cost, and scope performance. CCPM projects are normally complete in less than one half of the time of projects using previous planning and control methods. © Advanced Projects Institute, 2000 2
The authors explain the ways in which uncertainty is an important factor in the problems of risk and policy analysis. This book outlines the source and nature of uncertainty, discusses techniques for obtaining and using expert judgment, and reviews a variety of simple and advanced methods for analyzing uncertainty.
Successfully implementing concurrent development to reduce cycle time has proven difficult due to unanticipated iterations. We develop a dynamic project model that explicitly models these interactions to investigate the causes of the "90% syndrome," a common form of schedule failure in concurrent development. We find that increasing concurrence and common managerial responses to schedule pressure aggravate the syndrome and degrade schedule performance and project quality. We show how understanding of and policies to avoid the 90% syndrome require integration of the technical attributes of the project, the flows of information among participants, and the behavioral decision-making heuristics participants use to respond to unanticipated problems and perturbations.
The alternatives of estimating PERT activity times and standard deviations
- Y Huang
Project and program risk management, A guide to managing project risks and opportunities
- R M Wideman
Don't let TQM Drain you dry without any ROI
- S R Schmidt
- M J Kiemeie