scheduling

SCHEDULING

There are dichotomies in life that don't always make sense, like why insurance companies secretly like paying claims when it cuts into profits, or why stores like clustering together in malls with all the competition. Believe it or not, construction too has its own senseless dichotomies, such as why a construction customer is happy when the contractor makes money, but disgruntled when the contractor loses money. You'd think the disgruntled customer would be ecstatic over the contractor donating six months of time for free, but they rarely are. I'm sure there are many logical reasons why this happens, but I will just concentrate on oneperception of value.

What do I mean by perception of value? Imagine you have two watches: a Timex and a Rolex. Considering only money, which do you perceive as more valuable? Most would say the Rolex because more money went toward its purchase. In many ways this is the same with a house. When a customer pays for what their construction projects are worth they are likely to value it more than if they get a huge discount. If they pay less, they value it less. People don't mind paying a lot of money for something if they perceive it as valuable. If this were not true there would be no yachts, Mercedes-Benz automobiles, or Armani suits. How many times have you seen a wealthy person living in a mansion described as "cheap"? They were willing to spend vast amounts of money for their home, yet they argue over a nickel for an apple. If they were really that cheap wouldn't they just live in a trailer? No. It isn't that people don't want to spend money, the simple reality is that people want value.

One way to increase perceived value for an owner is when a contractor provides a productive and proficient schedule. Owner delays influence everyone and shifting the blame to the contractor is easy without a well-documented schedule. It is not only valuable as a "nuts and bolts" management tool, but is a basis for additional compensation and can increase customer satisfaction. Most customers will not volunteer more time or money like they should when they disrupt your job because they do not know the true impact of their actions. Educate them early and you may reduce or entirely eliminate any owner's interference because of the change in their perception of value.

How then does a contractor make the schedule pay?
First a contractor must understand the rules of scheduling:

Types of Schedules

There are several types of schedules and scheduling software programs available to the contractor. Most are more than adequate for the average construction project. I would suggest keeping it simple, especially when starting out. Some programs are so powerful and complicated that using and updating them may become burdensome. The types of schedules listed here are not brands of software packages, but approaches to scheduling your project. Many programs such as Primavera or Microsoft Project are just tools for implementing sound principles in scheduling your project. It would be better to use a pencil and paper with correct and beneficial information than a fancy scheduling program that spits out bad information. The following are some examples of scheduling types.

Critical Path Methods
Critical path method scheduling, or CPM, is a simple but powerful tool in the science of project scheduling. Delay is always measured by its effect on the project's "critical path." Even if the owner causes a delay to an off-critical path activity, you may still be entitled to the additional cost from disruption to the activity. It is the most commonly used schedule and when used properly can take a snapshot of a project's health at any given moment. It also is a valuable tool for "what if" questions. Sometimes a slight change in sequence or duration of one event can have a dramatic impact on the overall schedule. For example, a three-day delay in a one-line item can compound into an overall delay of two, three, or more times the initial delay as it impacts the other trades.
How a Critical Path Schedule Works
Twenty years ago I had the good fortune to add a second story onto a house located on Stanford University property in Palo Alto, California. As it happens, the house belonged to Jerry Porras who was a Professor of Organizational Behavior at the University. In addition to being an excellent customer, during the coarse of his project, he became a mentor of sorts explaining and showing several strategies for project management. The main subject was critical path scheduling. I have often wondered if my successes and mistakes ended up in some sort of test case report, but who cares. A recognized and masterful authority on efficiency and scheduling personally tutored me. His explanations were simple but distinct. There are many publications and software programs that go into depth on how to use bar charts and critical path scheduling, but I will attempt to explain it the same way it was explained to me twenty years ago.

Critical path scheduling identifies "critical tasks." Critical tasks are those items that must be done in sequence before the next critical task can be done. For example you must set forms before pouring concrete. They can not be done at the same time. There is a line or "path" that runs through a job schedule made up of critical tasks that determine the amount of time the job takes. Activities that take less time then a "critical task" and can be done at the same time are called "non-critical tasks." The left over time available for non-critical items is called "slack or float time." A non-critical item can become critical in two ways. The first way is if the item is neglected and all of the slack time is used up causing it to take more time than the critical item. The second way is if the parallel critical item's time is accelerated to the point it takes less time then the non-critical task. In these two ways non-critical items becomes critical. Time saved or lost on the critical path items change the completion date. Items not on the critical path are non-critical and saved time does not affect the completion date. However lost time on a non-critical item may affect the schedule if all of the slack time is used up causing it to become critical.

The critical path schedule's power lies in its ability to manage the ramifications every task on a project has on the completion date. The key to accelerating a schedule is to run any item on the critical path as fast as possible. As "critical" items are completed faster, some drop to a non-critical status. You then concentrate on the new "critical" item to see if it can be accelerated. And so on, until you are sure you can not squeeze another minute out of the project.

Let's say you want to shave a week off the completion date of a project. If the framing was on the critical path and you figure out how to shave a week off the time, you may find that the plumbing is now on the critical path. You learn that shaving five days off the framing may not net 5 days off the completion date if another task becomes critical. Lets say the roofing was the next item in the critical path and the old schedule had the plumber working concurrently to have the pipes stubbed through the roof the exact minute the framer finished so it would be ready for the roofer. Still with me? …. If the plumber doesn't also accelerate his schedule the roofer may be waiting 3 days for the pipes to be stubbed out through the roof and can't start anyway. The net result of the framer accelerating 5 days may only net 2 days. The key is identify the new critical path item and accelerating it also. The "what if" power of this schedule shows the ramifications each task has on each other. This same schedule may show that accelerating the plumbing by three days actually might save even more time if other related items can be started earlier.

For example, on a project currently under construction, our normal sequence was to install the hardwood floor before the cabinets. We had an unusually wet June, which created a problem with the moisture content in the wood, and the whole project was going to be delayed while we waited for the hardwood to dry. Using the "what-if" power of the schedule, we found that if we took the hardwood floor out of the normal sequence and installed the cabinets early, it shaved fourteen days off the schedule.

Everyone asked: "How can a two day task shave fourteen days off the schedule?" After a lot of moaning, groaning and educating we finally convinced the subs that there was logic in our thinking and they cooperated.
The reason this two-day item made such a drastic change was because by putting the cabinets in early the Corian counter top templates could be made early. This allowed the counter tops to be made while the painting was being done instead of after. The only whining we heard came from the painter who did not want to paint around the cabinets. I offered him a hundred dollars for the extra masking work which he accepted and my superintendent added: "now…. Mr. Painter, do you want some cheese with that whine?"
The old critical path was in the following order: paint, hardwood, cabinets, counter templates, counter installation, plumbing trim. The new critical path was cabinets, counter templates, paint, plumbing trim. The counter tops and hardwood flooring could be installed in non-critical status. The painter was satisfied with the extra hundred dollars and we shaved 14 days off the schedule.
This problem had a surprise happy ending and saved $1050 in carrying costs and about $500 in general conditions with the early completion. Scheduling visibility also works in reverse in flagging cause and effect from delays, which is discussed in the next section. Non-critical items can easily become critical when they use all of their slack time. To learn the power of the schedule I have included examples and templates which are located in the appendix along with some sample work sheets. It is one of the few forms I have included in this publication because of its importance.
Changes, Disruptions, and Other Schedule Killers
Changes are the single most cause of cost escalation and schedule delays on a construction project. There is normally a clause in the contract that allows an owner to make changes on a project without the consent of the contractor. Although the contractor's recourse is in the form of additional time and money, even reductions in scope can cause disruption and delays. The owner may expect credit for less work when the disruption may actually cost the contractor more money. Work done under a change order can sometimes cost up to three times what it would have cost in the original planand unfortunately, it may be three times harder to collect on. Changes themselves can be divided into three different categories:

Failure of the owner to disclose technical or other pertinent information.
Untimely or defective owner-furnished specifications or contract drawings.
The owner ordering work from others who will affect the work.
Building inspectors or other governing authority ordering extra work not specified in the contract documents (for example, plans and specs).
Unreasonable denials of time extension requests, forcing an acceleration or change in the normal sequence of events.
Unreasonable rejection of work.
Unreasonable strict contract interpretation by the owner.

Again, educating customers on why they owe money when they breach the schedule is easier and friendlier with a viable and visible schedule. Claims for additional compensation or time are sometimes viewed as hostile if the contractor is unclear, inconsistent or has a muddled explanation behind the claim.
Managing Changes
One important step in managing a "change happy" customer is to be consistent in your methods and paperwork. Inconsistency or hesitation communicates uncertainty and randomness. Randomness has the appearance of guessing and may even be perceived as an "angry charge." Following a set of consistent steps will communicate confidence and professionalism.
Steps to Managing Changes
1. Recognize the change.

Read the contract and review obligations and responsibilities.
Review and update the schedule.
Determine what has changed and what caused it.

2. Document the change.

Sometimes giving notice to the owner is delayed because the contractor is waiting for all the information to determine the final price. The problem here is either the work may be stalled while the "ball is in your court" or you have to proceed without the owner's full consent. If this is the case use a "potential change order," "construction directive," "additional work order," or any form that includes language such as "Proceed with changed work promptly in order to minimize delays. Final costs and/or extensions of time will be submitted in a subsequent change order or invoice." A timely notice gives the owner the chance to prepare for, alter, or reconsider all the consequences of the change. If the owner receives no notice, the contractor has not met the contractual obligations and may miss the opportunity to be paid for the added work.
Keep complete records (including photos and videos, where appropriate) before, during, and after the changed work. Documentation that tells the story of the change is essential to prove the costs and time involved, especially if the owner disputes the change.

3. Isolate the costs

Isolate and track changes as soon as you know about them. Keep a separate accounting that includes all the ripple effects of the change. Again, the ripple effects of change become apparent with an accurate schedule.

Ripple Effects and Mistakes
It is hard to estimate and account for all the ramifications a change produces. Some of the biggest ripple effects that come from changes are mistakes. Communicating every change to every affected member on a construction project can become a daunting task, and the higher the frequency, the higher the odds costly mistakes will occur. Once the owner has communicated the change to the contractor and the contractor has responded with a reasonable estimate, the contractor is then expected to wave a magic wand and compensate for every detail and problem that can and may occur.
Picture a ship headed full throttle toward Pango Pango Island. It is urgent that they get there by Friday night with their cargo of bananas. The captain is in the bowels of the ship barking orders to the crew members who are shoveling coal into the boiler. He's yelling, "Faster, faster, bigger shovels, more people!" He's making sure that everyone is running at full efficiency.
The customer is on the upper deck thinking, "Even though we have passed it up, maybe we should stop at Bongo Bongo Island to get some coconuts too, this is such a good crew they can make up the time." Now what? What does the contractor charge to cover the real costs? Is it just time and fuel? But what about the fifteen miles it takes to turn the ship around? What about the crew sitting on their hands, murmuring, while you recalculate the course? What about the lost opportunity of more cargo waiting at the dock at Pango Pango? But the customer, according to the contract, has the right to make changes so you hurriedly recalculate the time and cost, give it to the customer, and proceed to Bongo Bongo, hoping you have everything covered. But as you get to Bongo Bongo with your outdated charts and disgruntled crew, the ship runs into a sand bar. You have to wait for the tide to come in and then hire a tugboat. It is especially rewarding when the customer says, "Way to go lughead, now we will be late!" Who pays for this problem?
The contractor has the right to collect every penny this disruption costs, including mistakes and lost opportunity. If the owner is ordering you into uncharted waters by disrupting your normal sequence and methods, the total burden and risk, including mistakes, are the owner's responsibilities if you properly document everything. Your responsibility is to remind the owner that the scales have been tipped. To balance the scales you may need to receive time, and money. It is wise for contractors to include some language in a general disclaimer format in their change orders, such as, "Except for indirect costs and the cumulative impact of this and other changes on the work as a whole." This disclaimer allows you to recover future unknown costs. If the owner issues his own change order, the contractor may want to include information that says the owner will pay for all costs, including unknown future impacts.
Remember to Update Your Schedule
Unless a job is very simple and repetitive, even Einstein would have trouble mapping out a schedule that is 100% accurate. Tracking and updating the schedule, like any other task, requires work. Unless you update your schedule it quickly becomes inaccurate and therefore unreasonable and useless. Remember that you can and should change the schedule to reflect events as they occur.
To review, the benefits of a good accurate schedule include:

Resource leveling includes planning the crews, deliveries, parking space
Stops and reverses "crisis management" habits
Pinpoint lead times for "just in time deliveries"
Tracks customers delays for time and compensation claims
Gives the subcontractors reliable targets helping them to be profitable
Saves money by reducing total job time.

Again the biggest tool for visualizing, identifying, and flagging disruptions is a good, accurate, updated schedule. Time is money: your staff's time, your equipment's time, the time your valuable expertise saves will all equal the time it takes to produce the final product. Get paid for it!

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