LECTURE 3

COST ENGINEERING STANDARDS

The professional field of Cost Engineering have developed a range of national and
regional professional standards over many years. The professional bodies that came
up with these standards include: The Royal Institution of Chartered Surveyors
(RICS), the European Committee of Construction Economists (CEEC) and the
International Cost Engineering Council (ICEC).
Global Standards in Comparative Fields
The International Organization for Standardization (ISO) is the leading authority on
global standards. They describe a standard as “a document that provides
requirements, specifications, guidelines or characteristics that can be used
consistently to ensure that materials, products, processes and services are fit for their
purpose”. More pointedly they note that “for business, (standards) are strategic tools
that reduce costs by minimizing waste and errors, and increasing productivity. They
help companies to access new markets, level the playing field for developing
countries and facilitate free and fair global trade” (ISO 2015, p.1). They have a
membership of over 164 national standard bodies throughout the world and publish
over 19,500 standards. The Organization for Economic Cooperation and
Development and the US Department of Commerce have estimated that standards
and related conformity assessment (checking that products and services measure up
to standards) have an impact on 80% of the world’s trade in commodities (ISO,
2015). Perhaps more importantly major global entities such as the World Trade
Organisation (WTO) require their members to use international standards where
available. This helps to avoid the technical barriers to trade that can be caused by
differing national or regional standards. It is notable that there is no ISO Standard or
any other global standards that relate directly to the core processes/services of the
project cost manager. Whilst ISO standards exist in allied fields such as Risk
Management, Quality Management and Environmental Management there are none
that relate specifically to project cost management.
The project management profession has made tremendous progress in the
development of international standards that the quantity surveying/cost engineering
profession can learn from. Cost management and project management are clearly
inter-related with Quantity Surveyors/Cost Engineers commonly carrying out
project management services and Project Managers commonly carrying out cost
management as part of their suite of services. However, cost management should be
regarded as a specialist field requiring specialist standards and processes. The first
ISO standard in project management was published in 1997 and updated in 2003 –
ISO 10006: Quality Management Systems – Guidelines for Quality Management in
Projects. However, CBIS (2014) note that this standard was not widely adopted by
the project management profession. The profession realised the issue with not having
a globally recognised and used standard so embarked on a 5-year project to develop
a standard with the input of 31 countries and 5 other countries observing the
development. This culminated in the publication of the ISO 21500:2012, Guidance
on Project Management in 2012 that provides project management principles and
processes that have universal application (CBIS, 2014).
The profession also has a range of other global standards outside the ISO gamut. The
most prominent are the internationally recognised Project Management Body of
Knowledge (PMBoK®) Guide and the Prince 2 (PRojects IN Controlled
Environments) standards. There are no comparable international standards and/or
guides for the project cost management profession. The accounting profession
provides a good example of global standards that have been developed and now form
the basis for financial reporting in most countries around the world. The
development of these standards importantly had the support of major global
organisations such as the G20, World Bank, International Monetary Fund.
The objective of the standards is to provide a common global language for business
affairs so that company accounts are understandable and comparable across
international boundaries. Most countries are now adopting these international
standards in lieu of their own national standard. They enable accountants to prepare
accounts using a common international framework that can be understood across
international boundaries (IFRS, 2014). These standards have the added benefit of
uniting the accounting profession through common goals and frameworks. Global
standards have also recently been developed in the property field. Methods used to
measure property assets such as residential buildings, office buildings, retail centres
and other income producing assets vary markedly around the world. This is
particularly the case with floor area measurements and definitions. It was contended
that there are numerous national and regional standards that suffer from professional
inconsistency which has adverse ramifications particularly for international
investors. These issues ultimately led to a landmark meeting at the World Bank
premises in Washington in 2013 between major organisations who have developed
their own measurement codes. With the support of major global entities such as the
World Bank, the International Monetary Fund and the Building Owners and
Managers Association (BOMA) these organisations formed a global coalition to
address this problem and plan the development of a global measurement standard.
This coalition, titled the International Property Measurement Standards Coalition
(IPMSC), has gained considerable momentum and is developing standards for
property measurement (separately from construction measurement). The coalition
comprises over fifty not-for-profit, standard-setting organisations and non-
commercial firms. The coalition has developed a “top down, bottom up” strategy
that will facilitate the collaborative development and adoption of a set of high level,
principles based standards that will be recognized across the global community,
while allowing locally based practices to continue. The IPMSC selected real estate
experts from around the world to form its Standards Setting Committee (SSC) and
develop global standards for property measurement. The SSC comprises 18 property
experts from 11 different countries and 5 different continents. Between them, the
Standards Setting Committee has the experience of property measurement
methodologies in almost 50 countries. The SSC has recently published its first
standard for Offices (Muse & Sullivan, 2014). These global initiatives in
comparative fields provide important examples of what is possible for the
development of global standards in the project cost management profession field.
National & Regional Standards in Project Cost Management
The most common standards developed for the Cost Engineering/Quantity
Surveying profession are Standard Methods of Measurement for building work.
Standard methods of measurement are also commonly prepared in many countries
for civil engineering works. Quantity Surveyors generally adopt a Standard Method
of Measurement that has been developed for their particular country, region or
market sector. These standards are commonly adapted by Quantity Surveyors to suit
their particular measurement approaches and or client/market requirements. An
example is the adaptation of a standard method of measurement to a more
concise/abbreviated form. However, the Cost Engineering approach generally
allows contractors to base their estimate on their individual methods of measurement
and pricing – this often forms a distinct competitive advantage for contractors when
bidding on projects. Whilst standard methods of measurement are used by many cost
engineers they are not as widely used compared to the quantity surveying profession.
The first Standard Method of Measurement (SMM) of building works dates back to
1922. This was prepared by the Royal Institution of Chartered Surveyors (RICS) in
the United Kingdom. The RICS have subsequently developed numerous versions of
this standard. The RICS standards have been widely adopted by the quantity
profession in Commonwealth countries. Mills et al. (2006) found that the RICS
SMMs are the most widely used around the world for the building sector. Nanil et
al. (2008) reported on research that has shown that the use of SMMs is widespread.
A global survey by the Building Cost Information Service (BCIS) identified 32
different SMMs in various countries (RICS, 2003) while Mills et al. (2006)
identified 44 SMMs used in 32 countries. This research also found that many SMMs
are amended versions of the RICS SMMs. The RICS have recently undertaken a
major overhaul of their most recent version (SMM7) to address contemporary
measurement issues. The following provides a description of this initiative (RICS
2015). A measurement initiative steering group was set up by the RICS to research
the problems associated with the measurement of building works at all stages of the
design and construction process. The steering group found that significant
improvements were required and this led to the development of a suite of documents
covering all aspects of the measurement and description of a building project – called
the RICS new rules of measurement (NRM).
The NRM is a suite of documents issued by the RICS Quantity Surveying and
Construction Professional Group. The rules have been written to provide a standard
set of measurement rules that are understandable by anyone involved in a
construction project. The rules provide essential guidance to all those involved in,
as well as those who wish to be better informed about, the cost management of
construction projects. Although the RICS new rules of measurement are principally
based on UK practice, the requirements for a coordinated set of rules and underlying
philosophy behind each volume have worldwide application. The specific methods
are: NRM 1: Order of cost estimating and cost planning for capital building works
NRM 2: Detailed measurement for building works NRM 3: Order of cost estimating
and cost planning for building maintenance works (RICS, 2013).
There have also been measurement standards developed on a regional basis. This
includes a European Code of Measure developed by the European Council of
Construction Economists (CEEC, 2015) and the Africa Standard Method of
Measuring Building Work developed by the Africa Association of Quantity
Surveyors (AAQS, 2015).
The Association for the Advancement of Cost Engineering International (AACE)
have developed a Total Cost Management Framework (TCM) that is being
increasingly used in many countries. The AACE are based in the United States but
have sections in many countries around the world. Whilst not strictly a measurement
standard it provides a standard for the whole cost management process. Examples of
other common measurement standards include: - Hong Kong Architectural Services
Department - Standard Method Of Measurement For Building Elements (2001) -
Hong Kong Standard Method of Measurement for Civil Engineering Works (1992)
- UK Institution of Civil Engineers - CESMM4 Civil Engineering Standard Method
of Measurement (2012) - New Zealand Standard NZS 4202:1995 – Standard method
of measurement of building works - Australian standard method of measurement of
building works. - 5th ed., AIQS (rev 2012).
There are also well over one hundred national associations representing the
profession around the world. The proposed International Construction Measurement
Standard (ICMS) which is attempting to bring all of these associations together for
a common purpose is hopefully the first step in the development of a range of much
needed global standards.

LECTURE 4
BASIC PROJECT PLANNING AND SCHEDULING
INTRODUCTION
‘Project Planning and Scheduling’, though separate, are two sides of the same coin
in project management. Fundamentally, ‘Project planning’ is all about choosing and
designing effective policies and methodologies to attain project objectives. While
‘Project scheduling’ is a procedure of assigning tasks to get them completed by
allocating appropriate resources within an estimated budget and time-frame.

The basis of project planning is the entire project. Unlikely, project scheduling
focuses only on the project-related tasks, the project start/end dates and project
dependencies. Thus, a ‘project plan’ is a comprehensive document that contains the
project aims, scope, costing, risks, and schedule. And a project schedule includes the
estimated dates and sequential project tasks to be executed.

Project Planning
The project planning phase refers to:
  Developing a project to make it ready for investment
 Determines the jobs/tasks required to attain project objectives.

Stages of Project Planning

The project planning stages are enlisted below:

1. Identifying the key project sponsors and stakeholders, to determine the basis
of project scope, budget, and time-frame for project execution.
2. Upon enlisting the stake-holder requirements, prioritizing/setting project
objectives.
3. Identifying the project deliverables required to attain the project objectives.
4. Creating the project schedule.
5. Identifying the project risks, if any, and develop suitable mitigation plans.
6. Communicating and presenting the project plan to stakeholders.

Benefits of Project Planning

 Route-Map: The project plan offers a road-way that gives direction to the
project from start to end.
 Documentation of Customer Requirements: A well-articulated project plan
enables the record of the requirements of the customers in a documented form.
This provides a precise direction instead of relying on assumptions, which
could be incorrect and may lead to project errors.
 Task Autonomy: Planning enables one to assign tasks to specific team
members and gives autonomy. The team feels a sense of responsibility and
ownership of the success or failure of a project. Consequently, it urges them
to work better or encourages them to bring consistent results.
 Resource Estimation: Planning is vital as in a way, it enables us to estimate
resources, costing and time. It gives a judgment of any delays if several
members are working on various projects at a time.
 Mitigation Plan: The project plan gives a way to forecast risks, if any, and
plan for mitigation strategies accordingly.
 Identification of Employee Capabilities: The planning phase enables to
identify employees with certain skill-sets or expertise. And as the tasks get
assigned, team members get trained on a lacking skill-sets or either upgraded
on the ones they possess.
 Strengths and Short-Comings of Previous Projects: Project plans also help
to analyze and improve or learn from the previous project records and
facilitate decision-making.
Project Scheduling
The project scheduling phase refers to:

 Estimation of human resource and material requisite at every stage of the

project; and approximate calculative time to complete each of these tasks.
 Indicates the start and end date of each project task and logical connectivity
among various project tasks/activities.

Stages of Project Scheduling

1. Plan schedule management

The groundwork for a good project schedule is to establish the procedures,

company policies, and documentation guidelines that will govern your project. The
plan for schedule management outlines resources available for the project and the
contingencies that may arise.

It also lists project stakeholders, itemizes individuals who must approve the
schedule, and lists others who need to receive a copy.

This document also establishes who has the authority to make schedule changes,
the process team members should follow in order to request a change, and a project
communication plan to alert the team of changes made during the course of the
project.

2. Define the project activities

This can be as simple as creating a list of tasks that must be completed in order to
deliver your project. In the case of complex projects, it may be helpful to organize
these tasks in the form of a chart visualizing project tasks and their sub-tasks and
to stay organized at work.

One challenge in this part of the project scheduling process is knowing how to divide
activities. Consider the 8/80 rule, which states that a single activity should take
between eight and eighty work hours.

In team task management, tasks requiring fewer than eight hours could be grouped
with others and tasks over eighty hours are likely too cumbersome and should be
broken down further. Activities should also be measurable, easily estimated, and
related to both a project deliverable and a budgeted cost.

3. Determine dependencies

Once you have all the project activities listed, think through each one carefully to
identify which tasks rely on others to be completed. If you’re building a house, for
example, you can’t put the roof on until the frame is completed. It’s important to
correctly define all your project dependencies so you can schedule accurately
and avoid project delays.

You can use the best project management software to tackle project task dependencies
by engaging with stakeholders, brainstorming constraints related to dependencies.

4. Sequence activities

After you’ve established dependencies among your activities, you can sequence them.
At this point, you aren’t assigning any time to your activities in terms of work hours or
due dates. Instead, you’re focusing on the order in which all project activities should
be done so that the most efficient flow is created.

5. Estimate resources

Each activity in your project will require resources in the form of personnel,
subcontractor costs, tools (physical and/or digital tools like software programs), and
workspace. Make sure to consider other resources that are specific to your industry or
project. Estimate the resources needed for each project activity.

Remember that resource allocation will affect your schedule; if the same team member
is responsible for multiple project tasks, they can’t be completed at the same time.

6. Estimate durations

This step is pretty obvious but very important. How long will each project activity
take? Underestimating will, of course, put you behind schedule and ultimately frustrate
your customer.

Overestimating could leave team members or other resources sitting idle as they wait
for antecedent tasks to be completed. The best way to estimate duration is to use data
from similar previous jobs.
 If you don’t have any data to work from and there’s no industry standard to which you
can refer, an estimate will be based on the average of the best, worst, and most likely
scenarios.

7. Develop the project schedule

At this point, you should have all the information you need to develop your project
schedule. Taking into consideration the duration and resource requirements of each
activity, as well as their dependencies and proper sequence, you can assign start dates
and due dates for each activity.

There are multiple models and formulas for developing the project schedule,
including critical path, critical chain, and resource leveling among others.

For example, Don’t ignore the calendar! Check vacation requests from team members.
Don’t forget to include factors like national holidays, corporate functions, stakeholder
events, and other occasions that may affect your schedule. If the whole company shuts
down for a holiday week, you’ll need to add that time to your due dates and manage
customer expectations accordingly.

8. Monitor and control

Unlike the rest of the project scheduling steps, Step 8 is ongoing. As a project manager,
you’ll be monitoring and controlling your project schedule for the duration of the
project. This step involves running project reports and assessing the progress of a
project against the schedule, managing performance, and communicating with the
team.

When schedule changes must be made, you ensure they are carried out and
communicated according to the plan laid out. Throughout the project, you will ensure
that each activity is on schedule and determine whether corrective action needs to be
taken if delays occur.

Project scheduling techniques – 3 main types

There are several project scheduling techniques that can help you break down your
project into small, manageable tasks. Some of these techniques include

 Task lists
 Gantt charts and
 Calendars
1. Task lists

This is the simplest scheduling technique and works for small projects without a lot of
interdependencies. However, for larger projects, it may not be the right choice as
tracking the progress can become a major challenge.

The task list contains the list of tasks and subtasks along with the team members
assigned to do them. An online project management software can come in handy when
you’re using task lists.

2. Calendar

The calendar can be used to depict the project timelines of all the tasks throughout the
course of the project. It’s a decent approach to view overlaps between activities. But,
this approach suffers from an inability to assign tasks and view dependencies.

3. Gantt charts

A Gantt chart is the most common tool used by project managers to visualize the
timelines and dependencies in a project. You can get a quick estimate of the time
required to complete every task.

The chart shows all the tasks, represented by bars, when they’re set to start and end,
how long each task will last, task dependencies, and where there are overlaps.

Benefits of Project Scheduling

 Reduces Lead Time: The project schedule gives an outline of the tasks that
are to be completed on a priority basis or simultaneously with other tasks. This
keeps the team members notified about it and prevents any delays or
postponing of tasks, thus reducing the lead time.
 Cost Reductions: It enables to monitor all the resources by preventing the
overlapping of tasks. It also leads to the effective utilization of resources and
returns the unconsumed resources in time, thus cutting costs.
 Facilitates Productivity: Upon evaluating logical connectivity between the
tasks, resources that are not optimally utilized can be assigned on extra tasks,
thus enhancing productivity.
  Foresee problems in Advance: A precise project schedule enables one to
foresee any problems in advance pertaining to either, under or over-
utilization, of resources and ensures optimum consumption of the same.
 Sets a Goal: A project schedule allows us to set goals, short-term or long-
term, providing a direction and vision while executing the project. It also
makes everyone in a team aware of the guidelines and methods to attain these
goals. Without a schedule, the project would be vaguely defined. Thus,
making it cumbersome to manage and organize the tasks so as to run it
successfully.
 Current Progress Updates and Alerts: The project schedule is a sketch that
gives way to the project. A project might go through certain challenges,
however, if there is no route map, how would a project move in the right
direction? In such a case, a project schedule helps in assessing how off-track
a project has been and possible ways to bring it in the correct direction.

Conclusion
It is evident that ‘project planning and scheduling’ go hand-in-hand and
are essentials of project management. In a nutshell, ‘Project planning’ is an
elaborative process that includes all details of the project, from its inception to
completion. And ‘Project schedule’ is the tracker that monitors the sequences and
tenure of project-related tasks.

A project schedule notifies/alerts the project team on any delays or if the project is
not in correct direction. It is a live document, requires periodic updating and
recording. The tools and techniques deployed for project planning are ‘Task
Breakdown Structure’, ‘Scope of Work’ and ‘Critical Path Method’ abbreviated as
‘TBS’, ‘SOP’ and ‘CPM’ respectively. While, project schedule uses software tools
and methods such as ‘PERT’ (Program Evaluation Review Technique), Gantt
charts, Pareto charts, and other networking illustrations.

A project is incomplete and cannot be a success without a well-developed project-

plan and precise project-schedule.To attain project milestones, Plan and Schedule it!