Productivity and operation

Project work-breakdown level

• The project work-breakdown process involves breaking

down of the project into manageable parts arranged in a
hierarchical order till the desired level is reached.

1• The work breakdown levels are broadly classified into five

levels .

• These levels are arranged in a descending hierarchical

order as :- 1. Sub project level 2. Task level.
3. Work package level. 4. Activity level.
5. Operations level .
• Sub-project level: Sub project levels are derived by dividing
the project work into independent large volume mini projects or
task groups . For instance, in a housing project, each group of
major works which can progress in a systematic manner , without
interference from other works can be termed as sub project.

• Task level : Task level is used in the direct-summary plan, the

design - preparation plan and the task objectives . The task
execution is ensured to a task responsibility unit, headed by a
manager or senior engineer.

• Work packages level : A project can be further sub divided

into one or more work packages. Each work package contains a
sizeable , identifiable , measurable , constable and controllable
package of work . The work package concept leads to the simple
management theory of managing, designing ,estimating, planning,
organising, directing ,communicating and controlling using work
package as the base lines.
• Activity level : A work package can further be broken
down into various identifiable jobs, operations and processes,
which consume time and possibly other resources and are
necessary for its completion . Each one of this is called an
activity.

• Operation level: An activity comprises one or more

operations. Each operation contains a part of the work
content of the activity . It generally has a particular type or
fixed group of resources associated with it . It is performed
during the scheduled time duration of the activity. Some
operations may start with the commencement of the activity ,
while others may take place during its time duration .
 ACTIVITY DURATION
• Duration of an activity is defined as the expected economical
transaction time . The estimation of this time is based upon the
current practice carried out in an organised manner under the
normal prevailing conditions and its assessment is done
preferably , by the person responsible for its performance .

• Activity duration implies the following :

• 1. Duration is transaction time : the transaction time of an

activity is the time taken to change from one state to the next
within system.

• 2. Duration is assessed : generally smaller the level of details

pf an activity , the better the assessment of its duration . In
the long run , during the progress of a project , the minor
variations in activity duration tend to get adjusted. It may be
noted that duration is only an assessment . It may differ with
the actual time which an activity may take for its transaction .
• 3. Duration is economic : The assessment of expected time should be
based on the most economical method of execution of an activity under
the prevailing working conditions by using the available resources.

• 4.Duration is estimated in terms of predetermined units of time

• 5. All activity in the network or schedule use same unit of time.

• 6. Duration estimation is based on current practices

• 7. Duration estimation is based on work being carried out under

normal prevailing conditions.

• 8. Duration estimation method presuppose that activity is

performed in an organised manner.

• 9. Duration is assessed preferably by the person responsible for its

performance .
 Duration estimation basis
• The construction activity accomplishment process combines resources like men ,
materials , and machinery .

• The first step in duration estimation is the methodology to be used for transforming
these input resources into the desired activity .

• The method of choosing and combining these resources may vary.

• The choice of the method of execution of an activity depend upon the past
experience , the market availability of the appropriate resources , the resources
available with the contractor and cost benefit analysis of the various method of
reduction .

• In short it is method of production that dictates the resources required for

accomplishment of an activity .

• In the initial stage of time planning , it is necessary to make a preliminary

assessment of the resources of men , machinery and materials required for the
execution of each activity . This assessment is used to determine the duration of an
activity, to develop a time schedule based on the optimum level of resources or on
resource constraints and to evaluate the connected costs .
 Duration estimation method
• Methods :

• 1. One time estimate 2. Three time estimate 3. Non linear distribution ( eg trapezoidal
distribution ) estimate

• ONE TIME ESTIMATE : discussed in CPM

• THREE TIME ESTIMATE: discussed in PERT

• TRAPEZOIDAL DISTRIBUTION ESTIMATE : The one time activity duration estimate

methodology as discussed in CPM assumes average daily uniform man power (or
effort) of work throughout the execution of activity . But execution of some
activities may need effort in a non linear pattern . Such non linear distribution may
follow triangular , trapezoidal , binomial , beta or other pattern . In such cases
activity duration estimation needs to be modify accordingly .
In practice , the profile of most activities takes the shape of trapezoidal distribution
.

• A trapezoidal distribution has a built up phase , peak period , and rundown phase .

• The built up and run down phase can be expressed in terms of total activity
duration .
• Assuming built up and rundown times as 20 % & 10 %
respectively of total duration , the activity duration can be
expressed as under :

O 7d XP t xp
Total man drys 0.221 xp 1
D B DP
Duration d Total man days in drys

Trapezoidal
PeeyePeriod mm.rs D
sipIe n
pungent
up
i I
I
1 Run down
N l
Br p pl
l
l l

lK d Id
l
a old 4
K 0.2 d
 Activity costs and earned
• Cost clarification : The term cost implies expenditure incurred in monetary terms by a
person or an agency to acquire a product or service , or to accomplish an objective . For a
given product, the expenditure incurred or the money spent by the customer to acquire it.
The manufacturer to produce it and the retailer to sell it , is not the same. The cost of an
item is related to the purpose for which it is incurred , it varies when it passes through
various agencies .

Cost purpose Cost clarification

Estimating cost Direct and indirect cost

Accounting cost Production cost and earned (sales ) value

• Activity direct cost : This is the cost that can be traced in full with the
execution of a specific activity . It consists of costs of direct materials ,
direct labour , direct equipment and other direct costs .

• For example in the activity of roof concreting the following direct cost
would be involved.
 Type of costs Items of costs

Direct materials Cost of concrete & steel

Direct labour Cost of labour employed

Cost of equipment hired for placing

Direct equipment
ready mix concrete

Framework hiring and repair

Direct other expenses
charges
• Activity indirect cost : This is the cost that is incurred
while performing an activity , but can not be traced directly to
its execution. In other words , all costs other than the direct
ones fall in this category. These represent the share of
supervision , general and administration costs, and are
commonly referred to as overheads. Generally the overheads
f
charged to an activity are expressed as percentage of direct
costs.

• Activity production cost : This is the sum of direct cost and

indirect cost.

• Activity contract value : It is the contract value of the work

done. It is the amount which the Client has agreed to pay for the
satisfactory completion of work .
 FORECASTING PROFIT & LOSS
• Business motive is to make profit. A business firm needs profit to
cover its risks, to assist in its growth and to meet the financial
needs of its stakeholders , directors, staff and workers .

• A construction firm takes risks when it tenders for a project and

after winning the contract it expects a reward in the form of
calculated profit which is expected to be higher than what it can
get through safe investments like bank fixed deposits and
government bonds and securities.

• In this process, the instruction firms also face the risk of losing
money . Higher profit projects usually involve more risk and
greater uncertainty .

• The profit and loss statement depicts the profit or loss resulting
over a specified period.
• Gross operating profit= Earned values revenue— cost of
production

• Generally the gross profit can be forecast by plotting the

cumulative effect of earned values revenue and production
costs in the project time-related “S” CURVE CHART.

• The point of time at which the cumulative earned value curve

intersects with the cumulative production cost curve is
termed the project break-even point and time at which
break even occurs is called the project break-even time . The
project break-even point shows the no-profit-no loss
situation , and after the break-even time, the project trend
trend changes towards making profit.
A

financial trend a

7EiEa

a.iq

cost
production

vote
earned

Time
 Sensitivity analysis in project management
• Sensitivity analysis can determine as to how the uncertainties affect each project
objective.

• Merits of sensitivity analysis :

• 1. It shows how vulnerable project is to changes in values of the variable parameters .

• 2. It indicates where further analysis is required.

• 3. It is intuitively very appealing to the project evaluators.

• Shortcoming of sensitivity analysis :

• 1. It merely shows what happens to investment when there is change in some variable ,
without indicating how likely that change will be.

• 2. Typically, in sensitivity analysis one variable is changed at time ,however ,variables

tend to alter together.

• 3. The interpretation of results is subjective. One decision maker may decide to accept
the project while another may reject it .
 Total quality management(TQM)

• TQM is an approach to put quality in every aspect of management .

• TQM means that everyone in the organisation is involved in the final

product or service to the customer .Quality means conformance to
requirements.

• TQM is strategic , long term set of practices that makes it possible

for management to introduce continuous improvement initiatives
across all functions .

• TQM is set of philosophies by which management systems can

direct efficient achievement of the objectives of an organisation to
ensure customer satisfaction and maximise stakeholder value

• TQM is a continuous process for improving quality of product.

 TOTAL PROJECT MANAGEMENT (TPM)

• The two key of TPM are the quality of the delivered product /
services and the quality of the project management process.

• TPM = technical management + project management + business

management
 TPM VS TQM
• SIMILARITIES : In the project context, TPM as well as TQM implies total
active involvement and commitment of everyone in the project for meeting
quality requirements of the clients, by managing the production efficiently
through preventive measures within the specified time and budget cost ,
with all working enthusiastically as a team to achieve specified target to
meet customer satisfaction .

• DIFFERENCES :

• TQM is a strategic approach to create a quality focussed culture in an

organisation for long term gains whereas TPM uses cross functional and
multi disciplinary project teams using technical approach to manage
product quality, and project management processes to attain project
stakeholders satisfaction .

• TQM aims at continuous improvement of the product in the long run

whereas TPM is designed to accomplish its mission within a limited time in
a temporary organisation.
Controlling resources productivity
• The term productivity as commonly understood, implies the ratio of
output to input.But productivity conveys different meanings to different
people.

• In construction context , resources productivity is the physical output

per unit of planned effort. More work done with there same input
implies higher productivity and less work done shows lower productivity
than the planned productivity.

• Standard output or planned productivity is the predetermined planned

output under normal working conditions, whereas actual output or
actual productivity is what is achieved during implementation.

• Productivity measures the trends in the performance of these

resources.

• Productivity index indicates the productivity trend .

• Resource productivity variance = standard productivity - actual productivity

• Resource productivity index =( actual productivity/ standard productivity )

• Productivity provides the scales to measure the performance of these input

resources. The various productivity parameters , which need to be controlled in
construction projects are labour productivity , equipment productivity and
material productivity .

• Workers productivity = (work done units / effort in man hours or crew hours )

• Workers job productivity variance= standard productivity —actual productivity

• Equipment productivity: it stands for quantity of work done per equipment hour

• Equipments job productivity= ( work done units/ effort in equipment hours )

• Equipment productivity variance = standard productivity - Actual productivity

• Equipment productivity index =

equipment actual performance / equipment standard performance

• Material productivity : it denotes quantity of work done per unit

material.

• Material standard quantity = Quantity of work planned per unit of material

• Material productivity index= (material actual consumption / material standard quantity )

• Labour productivity control : labour productivity achieved at the site
for a given work provides a measure of the labourers efficiency. It
shows the total time for which the labourer was employed at work, the
time he was productive on work and the time he remained
unproductive. Studies carried out a construction site reveal that the
labourers productive work time varies from 50% to 70% of his total
employment time and remaining time is wasted for various reasons
such as idle waiting , unnecessary travelling, late starting , early
quitting , unscheduled breaks , and delays in the receipt of tools ,
materials and work instruction .

• Equipment productivity control : The equipment productivity control

is under taken to determine its employment time, the output achieved
and its productivity at site. The main purpose of equipment
productivity control is to minimise wastage in utilisation . Equipment
productivity can be improved by suitably matching machines with the
job, employing experience operators and competent maintenance staff
, adopting correct methods for work execution , employing service
worthy machines , enforcing proper maintenance measures and having
an effective plant manager.
THANK YOU
MANISH SIR