All Chapters Performance MGNT & Optimiz

CONSTRUCTION
PERFORMANCE AND
REOURCE OPTIMIZATION
(COTM 5164)
DELIVERED BY:
TEKLEBRHAN K. (MSC, COTM)
LECTURER , EIABC, AAU
ISO 9001:QMS EXPERT
BSc. IN CONSTRUCTION TECH. & MANAGEMENT, EiABC, Feb. 2024

Course Out line
2
 COURSE OUTLINE
Chapter 1: Overview of Performance
Management (2 wks)
 Overview of Construction performance in the globe and
in Ethiopia
 Construction Performance management (Performance Planning,
Carrying out the Plan (Execution) AND Measuring & evaluating construction
performance)
 Factors that affect Construction performance (Change,
Risk and Uncertainty, Project Complexity)
Course Out line
3
Chapter 2:
Performance Indicators and Performance Evaluation of Construction Project
Execution (5 wks)
 2.1. Key performance indicators for construction projects
 2.2. Measuring and Evaluating Construction Activity and project over all Performances
 2.2.1. Productivity
Concept of productivity and its measurement
 Importance of productivity
 Factors affecting productivity
 Loss of productivity
 Common causes of loss of productivity
 Measuring loss of productivity
 Productivity improvement
 2.2.2. Quality performance measurement and evaluation
 2.2.3. Measuring and evaluating physical progress of construction projects
 2.2.4. Measuring and evaluating financial progress of construction projects

Course Out line
4
Chapter 3:
Performance Improvement Tools & Process
Optimization (1.5 wk)
 3.1. Benchmarking
 3.2. Lean Concept
 3.3. The Kaizen Event
 3.4. Balanced Score Card
 3.5. Introduction to Building Information Modeling (BIM)
 3.6. TQMS
 3.7. ISO 9001

Course Out line
5
Chapter 4:
Construction Resource Optimization (3.5 wks)
4.1. Revision on Resources in Construction Projects
4.2. Construction Wastes
4.3. Optimization During Design development through
Standardization (Modularization) and use of
Prefabrication.
4.4. Construction Resource Optimization via resource
leveling (allocation) and resource smoothening
4.5. Techniques of mathematical Resource optimization
 Graphic methods / Algebraic methods
Performance Management and Resource
Optimization
6
Chapter 1:
Overview of Construction
Performance Management
1.1. Overview of Construction Performance in the
Globe and in Ethiopia
7
 The construction sector is one of the largest in the world

economy, with about $10 trillion spent on construction-related
goods and services every year. By 2025, that amount is
projected to total $14 trillion. (Reinventing Construction, McKinsey Global Institute
(MGI), Feb. 2017)
 However, the industry’s productivity has trailed that of other

sectors for decades, and there is a $1.6 trillion opportunity to
close the gap.
 It means if labor construction productivity were to catch up
with the total economy, the industry’s value added could rise by
$1.6 trillion a year.
 That would meet about half of the world’s annual infrastructure
1.1. Overview of Construction performance in the globe
and in Ethiopia…
8
 Globally, construction sector labor-productivity growth averaged 1% a

year over the past two decades, compared with 2.8% for the total
world economy and 3.6 % for manufacturing.
 In a sample of countries analyzed, less than 25% of construction ﬁrms
matched the productivity growth achieved in the overall economies
where they work over the past decade.
 In the United States, since 1945, productivity in manufacturing, retail
and agriculture has grown by as much as 1,500%.
 but productivity in construction has barely increased at all.
1.2. How does construction industry perform?
Even if current researches are required, previous

researches showed that the construction industry
performance is characterized by:
1.2.1. Industry’s clients are not satisfied
1.2.2. The supply team is not satisfied
1.2.3. Industry’s bad reputation
1.2.4. Low profitability
1.2.5. Lack of innovation and development
1.2.6. Low Productivity
1.2.1. Industry’s clients are not satisfied
10
 Quality of construction is poor (repairs and reworks)

 Inefficiency of the construction team to respond to clients
complaints and inquiries
 Lack of innovation on behalf of the contractor and
designer
 Disputes and claims
 Incomplete as built drawings and information about the
building and its requirements
1.2.2. The supply team is not satisfied
11
Workers are not satisfied

 Bad health and safety record (too many accidents)
 Bad working conditions (weather, facilities)
 Job security
 Frequently changing location of work
 According to the Egan’s rethinking construction

report, the health and safety record of construction
is the 2nd worst of any industry.
1.2.2. The supply team is not satisfied ...
12
Statistics shows that people working in the

construction industry...
 are getting older
 are likely to work for a small firm
 are quite unlikely to be self- employed
 are working longer hours than other industries
 are more likely to be involved in an accident
 are paid around the average for all industries and services
13
 Design and construction are two separate processes

• longer than necessary duration
• inefficient design
• tension and adversarial culture
 Architect is project leader
• focus on design and aesthetics rather than cost, time and
quality of service
• limited project management skills
14
 Competitive tendering is the most common way in which

contractors and professionals obtain work
• focus on cost rather than value
• innovation suffer
• discontinued project teams
• high tendering cost
• planning and estimating suffer
 Construction is dominated by the old craft culture (site based)
• quality control suffer
• sensitivity to weather and site conditions
• less reliance on technology and modern production methods
• limited standardisation and hence high cost and duration
15
 Industry is fragmented and construction is performed by

specialist subcontractors
• long supply chains that are difficult to manage & control
• training and development suffer
• disputes and tension rise
 Different projects are procured by different temporary teams
• discontinuity of teams means that on each new project
practitioners face an initial period of team building
• different organisations would have different processes and
technology.
• no branding and strategic product development b/n design,
manufacturing and assembly.
16
 Project team responsibility ends at completion of construction
• life cycle costing is not taken into account
• Limited fed back to project teams on the performance
information of the building in meeting consumers’ (occupiers)
needs.
 Need to price before production
• high financial risk
• need to complete all design before construction cost can be

estimated.
• project performance is judged by the extent to which cost can be
kept to the estimated (rather than the extent to which value is
maximised).
1.2.3. Industry’s bad reputation
17
Industry has bad reputation due to:

 Low performance
 Lack of innovation and development
 ‘Cowboy’(unreliable) builders
 Industry dominated by the old craft culture
 Fragmented and adversarial
 The competition for the best talent is very high (for
example the choice between becoming a doctor,

lawyer or civil engineer).
1.2.4. Low profitability
18
According to the Egan’s rethinking construction report, the

construction has a low and unreliable rate of profitability due to
the following but not limited to:
 short cuts, bankruptcy, lack of investment in research and
development (R&D)
 High business failure (mainly SME’s)
 Profitability is low (across the board)

.
19
THANK YOU (DAY

1)!!!
1.2.5. Lack of innovation and development
20
Lack of innovation and development which is reflected by:

 Lack of high technology in design and construction
 Lack of branding
 Building products are behind in terms of value and
intelligence.
 High reliance on site based and unskilled labour
 Demand for buildings is largely client led
Questions to be asked
21
 How can the Construction Industry be improved?

 What are the developments needed?
 How can project management contribute to this
development
 Assuming that road for change is a long one,
where do we initially put our effort to get

maximum returns?
Main Findings and the Change Agenda
22
 Tackle fragmentation and adversarial (Confrontational) culture
by partnering and teambuilding
 Improve productivity, quality and cost by adopting “new”
management concept (Lean, Benchmarking, VM, SCM (Supply
Chain Management), Process mapping and Reengineering etc)
 Industry must measure its performance and define scopes for
improvement (KPI)
 More use of standardisation and pre-assembly
 Respect the people working in the industry (training, better
working conditions, etc)
 Take full advantage of IT and other new technology
 Develop people and culture necessary to facilitate all of the above
.
23
Low Productivity
1.2.6. Low Productivity
24
Many reasons for this poor performance:

a. The industry is extensively regulated, very dependent
on public-sector demand and highly cyclical.
b. Sometimes corruption distort the market.
c. Construction is highly fragmented.
d. Contracts have mismatches in risk allocations &
rewards.
1.2.6. Low Productivity …
25
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27
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Cost Overrun
 As depicted in figure, the aggregate cost overrun at
industry level is 76%.
 The summary of cost overrun is compared to the initial
contract prices that mostly arise from variation orders,
quantity re-measurement during construction and other
cost varying factors.
29
30
Reasons for Cost Overrun

 The potential reasons for the cost overrun fall in 7 categories:
I. Incomplete Designs
II. Design Change
III. Scope change
IV. Change in quantity
V. Contractor’s poor Capacity
VI. Inflation/Price Hike
VII. Other reasons such as force majeure, construction difficulty,
employer’s inactions and work acceleration measures.

31
Time Overrun
 The maximum time overrun is recorded in the building
sector which is 160.7% and followed by water
subsector nearly 150% of the initially planned
completion period while the minimum is in the Road
subsector (63.34%).
32
33
The reasons of time overrun for the three sectors are:

1. Design changes
2. Contractor's low capacity
3. Changes in quantity
4. Scope change
5. Incomplete design
6. Adverse weather conditions
7. Poor initial estimation of completion time, and
8. other reasons such as problems related to land
acquisition and shortage of construction
34
Quality
 The measurement of the quality of completed work
requires recording the details of quality issues in a
project quality register for the duration of the project.
35
Survey result with regard to

quality management practice
shows:
about 10% of the contract
implementers perform little or
no quality management practices
the other 32% of the contract
implementers' quality
management practices is at an
incomplete practice maturity
level, and
the remaining are at basic
practice maturity level.
36
37
Innovative firms suggest that acting in 7 areas

simultaneously could boost productivity by 50 - 60 %.
They are:
1. Reshape regulation
2. Rewire the contractual framework to reshape industry
dynamics
3. Rethink design and engineering processes
4. Improve procurement and supply-chain management
5. Improve on-site execution
6. Infuse digital technology, new materials and advanced
automation
7. Re-skill the workforce
38
1. Reshape regulation; transparency in permitting and

approvals processes, incentives to innovation
2. Rewire the contractual framework to reshape industry
dynamics:
 tendering processes can be based on best value & past
performance rather than cost alone.
 appropriate alternative contracting models such as
integrated project delivery (IPD) helps build long-term
collaborative relationships.
 Sufficient investments in up-front planning
incorporating all parties’ input have been shown to raise
productivity substantially.
39
3. Rethink design and engineering processes;

 Institutionalizing value engineering into the design process with a greater focus
on constructability and pushing for repeatable design elements in those projects
that do not require tailored solutions, would make a contribution to boosting
productivity. (standard design library)
 Encouraging off-site manufacture, minimizing on-site construction through the
extensive use of pre-cast technology, assembling panels in factories and then
finishing units on-site.
4. Improve procurement and supply-chain management;
 Improved planning and increased transparency among contractors and suppliers
would reduce delays significantly.
 Properly skilled central procurement teams can drive economies of scale for
certain products across those sites.
 Best practice in areas such as digitizing procurement and supply-chain workflows
will enable more sophisticated logistics management and just-in-time delivery.
(E.G. use of internet of Things for supply chain, ERP etc)
40
5. Improve on-site execution;
 There are 4 key approaches:
o Introduce rigorous integrated planning: the Last Planner® System (LPS) is a useful
tool to ensure that key activities are achieved on time and on budget. The use of
integrated planning tools on a large-scale oil & gas project, for instance, achieved a 70 %
increase in the project’s productivity.
o Implement collaborative performance management: reshaping the relationship and
interactions b/n owners and contractors and key performance indicators (KPIs) being
agreed on and used at regular performance meetings at which on-site issues are resolved.
Complementing commonly used KPIs with additional forward-looking plan conformance
metrics such as Tasks Made Ready (TMR), Tasks Anticipated (TA) and Percent Plan
Complete [PPC] to identify and subsequently reduce variance is critical.
o Mobilize projects effectively: improving the mobilization for new projects by ensuring
that all pre-work (for instance, obtaining approvals and developing project milestones)
has been completed prior to starting on-site.
o Collaborate to reduce waste and variability: careful planning & coordination of
different disciplines on-site along with the application of lean principles to reduce waste
& variability. Integrate technical & management systems & fully utilize workers’
41
6. Infuse digital technology, new materials and advanced

automation:
 3D building information modeling (BIM) universal within the company,
Drones, using platforms such as 5D BIM to establish transparency in design,
costing, and progress visualization; advanced analytics enabled by the
Internet of Things, robotics etc.
7. Re-skill the workforce:
 continuously reskill and train to use the latest equipment and digital tools.
 training frontline workers in core skills that are currently developed
 Ensure knowledge retention and management
 Parts of the industry could move toward a manufacturing-inspired
mass-production system that would boost productivity up to 10
fold.
1.3. Performance management
42
Dictionary meaning;
Performance: how well a person, machine, etc. does a piece of
work or an activity.
 Performance is understood as achievement of the
organization in relation with its set goals.
 It includes outcomes achieved, or accomplished
through contribution of individuals or teams to

the organization‘s strategic goals.
 Performance management is a continuous process
1.3. Performance management…
43
 If one does not measure performance, one could

not have basis to plan improvement.
 Companies set best practice and achieve
challenging performance levels
 PM is important for organizations to evaluate its
actual objectives against the predefined goals and

to make certain that they are doing well in the
competitive environment.
1.3. Performance management...
44
Performance is often confused with productivity.

 Productivity is the ratio b/n output and input,
 Performance refers a broader concept that includes

profitability, productivity and other non-cost factors such as
quality, speed, delivery and flexibility.
 The two terms, efficiency and effectiveness, are cross-
functional in regard to performance, profitability and

productivity (Tangen, 2005).
 Efficiency measure & compare the actual amount of used
resources to the minimum level that is theoretically required

 Effectiveness view the actual output in relation to the expected
output (Grünberg, 2004).

1.3. Performance management...
45
46
 Performance management enables supervisors and their subordinates:

 gain a shared understanding of work expectations and goals,
 exchange performance feedback,
 identify learning and development opportunities and
 evaluate performance results.
 Through Performance management, organizations are able to create
and sustain a workplace environment that:
 Values continuous improvement
 Adapts well to change
 Strives to attain ambitious goals
 Encourages creativity
 Promotes learning and professional development
 Is engaging and rewarding for employees
47
 Performance Management is the process of:

 Planning Performance (setting KPA’s, objectives and
standards that are linked to corporate strategy,
development plans).
 Maintaining Performance (monitoring, feedback, coaching
and mentoring, regular interactions, goal achievement)
 Reviewing Performance (formal feedback and ratings –
evaluating performance)
 Rewarding of performance (increases, bonuses, incentives,
etc)
PERFORMANCE MANAGEMENT MODEL
Planning Performance:
-Setting objectives
-Outlining development plans
-Getting commitment
Reward Performance:
-Link to pay
-Results = performance
PERFORMANCE
MANAGEMENT
PROCESS
Maintaining Performance:
Reviewing Performance: -Monitoring performance
-Formal reviews
-Coaching
-Assess against objectives
-Feedback
49
 Some of the major concerns of performance

measurement include:
 “What to measure?”
 “Which measures are used?”
 “How to measure?” and
 “How to interpret results?”
.
50
THANK YOU (DAY 2)!!!

51
Construction Performance management Process:
 Construction Performance Planning
 Carrying out the construction work as per Plan
 Measuring & Evaluating actual construction
performance against plan

52
Construction Performance Planning:

 Planning is the 1st step of the performance management
process
 Clear expectations established on:
 The major areas for getting results (Goals).

 The specific objectives to be achieved in each of the major
areas.
 The standards that will be used to evaluate how well the work
executed has achieved each objective.
 The key performance factors (KPI) or behaviors that will be
important in determining if the results are achieved.
 Frequency of feedback/ report to be generated every period.
53
Carrying out the construction work as per Plan:

 Carry out necessary preparation for execution
 Check necessary project organization & availability of
resources (manpower, material, equipments & money)

 Carry out necessary tests and inspections on input
resources and construction works deliverables

 Execute the construction activities as per plan
 Authorize ongoing necessary changes etc

54
Measuring & Evaluating construction performance:

 Measure actual performed construction works
 Reviewing overall goal completion
 Evaluate the degree to which the different elements of the plan were achieved.
 Identify problem areas.
 Reviews the construction performance strengths and weakness.
 Generate periodic report & make report to concerned management hierarchy
with in the organization and/or parties
 Discuss construction performance results achieved (effectiveness) & efficiency,
overall performance assessment & development progress at different
management level.
 Re-plan in case of major deviation (add resource, Improvement of the
effectiveness of the construction processes, Improvement of product to fulfill
customer requirements)
55
Performance Measurement
Definition
 process of quantifying the efficiency and
effectiveness of action.
 metric (or indicator) used to quantify the efficiency
and/or effectiveness of an action.

 “the process of determining how successful
organizations or individuals in attaining their
objectives”
 are the numerical or quantitative indicators that show
how well each objective is being met.

Performance Measurement …
56
WHAT TO MEASURE?
1) Efficiency (productivity) focuses on operational
ratio (e.g., m3 concrete placed/person hour),

2) Effectiveness comprises measures that focus on
how closely goals have been met, including the

trend of improvement since last time.
• The amount of rework
• the number of accidents and
• owner satisfaction of completed projects etc.
Performance Measurement …
57
The Benefits of Measuring performance:

 Reveals problems that bias & emotion cover up.
 Doing jobs for a long time without measurements can make an organization
assume incorrectly that things are going well. They may or may not be, but without
measurements, there is no way to tell.
 Ensures decisions are based on fact, not on emotion.
 Decisions to take any action in improving business are based on measurement.
 For effective utilization of resources:
 Consequences of the inefficient utilization of resources has led to loss of
opportunities and profits in the industry.
 To evaluate actual objectives met against predefined goals and to make sure
that they are doing well in the competitive environment.
58
Performance Measurement and monitoring:

Models of Performance Measurement/Management
I. BSC
II. Pyramid
III. International key Quality Awards Models
IV. New generation models
V. EVA
VI. And others
59
Performance Measurement and monitoring:

Balanced Scorecard /BSC
 BSC is a performance management system which incorporates four
main measurement categories (perspectives) each of which with a
wide range of potential sub-measures. They are:
1. Financial Perspective
2. The Internal Business Process Perspective
3. The Customer Perspective
4. Innovation, learning & growth perspective (Recent
Contributions)
Performance Measurement and Monitoring; BSC ...
60
Performance Measurement and Monitoring;
BSC ...
61
International key Quality Awards Models
Malcolm Baldridge National Quality Award (MBNQA)
62
1. Leadership: How upper management leads the organization and how the
organization leads within the community.
2. Strategy: How the organization establishes and plans to implement strategic
directions.
3. Customers: How the organization builds and maintains strong, lasting
relationships with customers.
4. Measurement, analysis and knowledge management: How the
organization uses data to support key processes and manage performance.
5. Workforce: How the organization empowers and involves its workforce.
6. Operations: How the organization designs, manages and improves key
processes.
7. Results: How the organization performs in terms of customer satisfaction,
finances, human resources, supplier and partner performance, operations,
governance and social responsibility and how the organization compares to
its competitors.
(MBNQA)
63
The EFQM (European Foundation for Quality Management) excellence
model)
64
 A non-prescriptive framework based on 9

criteria, can be used to assess an
organization's progress towards excellence.
The EFQM (European Foundation for Quality
Management) excellence model) …
65
Performance pyramid
66
Performance pyramid
 The strategic measurement analysis and reporting
technique (SMART) system (also known as the

performance pyramid) was developed as a result of
dissatisfaction with traditional performance measures
such as utilization, efficiency, productivity and other
financial variances.
Performance pyramid
67
 Level 1: At the top of the organization is the corporate vision
or Mission through which the organization describes how it will
achieve long-term success and Competitive Advantage.
 Level 2: This focuses on the achievement of an organization's
CSFs/Critical success factors and core competences/in terms of
market-related measures & financial measures. The Marketing &
financial success of a proposal is the initial focus for the achievement
of corporate vision.
 Level 3: The marketing and financial strategies set at level 2 must be
linked to the achievement of customer satisfaction, increased
flexibility and high productivity at the next level. These are the
guiding forces that drive the strategic objectives of the organization.
 Level 4: The status of the level 3 driving forces can be monitored
using the lower level departmental indicators of quality, delivery,
Performance pyramid …
68
1.4. Factors that affect Construction performance
69
 Risk
 ProjectComplexity
 Uncertainty and
 Change
1.4. Factors that affect Construction performance
70
Risk
 Risk is an unplanned event and if it occurs it may affect any of your project
objectives.
 Risk refers to decision-making situations under which all potential
outcomes and their likelihood of occurrences are known to the decision-
maker and
 uncertainty refers to situations under which either the outcomes and/or
their probabilities of occurrences are unknown to the decision-maker.
 There are separate risk response strategies for negative and positive risks.
 The objective of a negative risk response strategy is to minimize the impact of
negative risks and the objective of a positive risk response strategy is to maximize
the chance of positive risks happening.
 Two more risks terms: known risks and unknown risks.
 Known risks are those risks which you have identified during the identify risks process and
unknown risks are those risks which you couldn’t identify during the identify risks process.
 A contingency plan is made for known risks, and you will use the contingency reserve to
1.4.1. Risk management …
71
What is risk management?

 Identifying, analyzing, prioritizing, and responding to risk
events
 Integration of risk management activities into your other
project management functions
 Developing responses to risk to meet your project objectives
 Project risk management is PROACTIVE
Risk Management Process
72
Project
Scope/Strategy/
Conditions
Risk
Management Structuring
Implementation
Risk
Risk
Management
Planning Identification
Risk Risk
Analysis Assessment
73
Some of the strategies to deal with negative risk on your projects include:
 Avoid and try to eliminate the threat and protect the project from its impact.
 Transfer the impact of the threat to a 3rd party and own the response
together.
 Mitigate the likelihood of occurrence or impact.
 Accept the risk and take no action until and unless it occurs.
Some of the strategies to deal with positive risk on your projects include:
 Exploit the opportunity and make sure its value is realized.
 Enhance the risk by increasing the likelihood of its impact.
 Share by allocating the responsibility to a 3rd party who can increase
likelihood of capturing the opportunity.

 Accept opportunity if it arises, but don’t take proactive approach to make it
happen.
1.4.2. Project Complexity
74
 Complexity can be difficult to define as it has

a number of different connotations. The
Collins English Dictionary (2006) defines
complexity as “the state or quality of being
intricate or complex”, where complex is
defined as “made up of many
interconnecting parts”.
1.4.2. Project Complexity …
75
 Construction is often described as a complex and risky

business, Baccarini (1996) states that the construction
process may be considered the most complex undertaking
in any industry,
 However, the construction industry has developed great
difficulty in coping with the increasing complexity of major
construction projects.
 Therefore, an understanding of project complexity and how

it might be managed is of significant importance for
achieving successful projects for all the parties involved
1.4.3. Uncertainty and Change
76
 The two most important issues considered in

project Management are Uncertainties and
Changes.
 Uncertainties are issues that can either be
difficult to reasonably predict or unknown

during the planning phase project
Management.
 Changes are issues requiring alterations
during project implementation.
1.4.3. Uncertainty and Change
77
…
 Uncertainties are multi-dimensional. They can be
Information related, and / or Time based, and / or Ambition
related; etc.
 Besides, they deal with complexity, risk, opportunity,
ambiguity and chaos associated with the project under
consideration.
 E.g., when uncertainty is understood as the difference
between the amount of information required to perform the
task and the amount of information already available by the
planning team one can clearly understand that uncertainty
is the major factor that conflicts with prediction or planning
1.4.3. Uncertainty and Change…
78
Uncertainty is higher in the early

phase and reduces through time by
getting more and better information
79
Uncertainties can be mitigated using the ff four interventions

used in project contracts:
 Absorbing: Understanding projects are planned under

uncertainty and changes are expected during implementations,
Provisions in the form of Contingencies, Alterations, etc are
made and used to absorb changes caused by uncertainties.
 Dividing or Splitting: When a project uncertainty is high or

there is less past experience, dividing projects into packages or
different phases or to make them smaller sizes, etc is to divide
or split to minimize the uncertainties.
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 Postponing: When Contracts could not clearly

state specifications, quantities and estimates, they
often place Provisional Quantity or Provisional
Sum to postpone uncertainties.
 Transferring: Lump Sum Contracts, DB and BOT
delivery systems are some form of contractual
approaches to transfer uncertainties from Owners
to Providers.
.
81
THANK YOU (DAY

3)!!!
Chapter 2: Performance Indicators and Performance Evaluation of
Construction Project Execution
82
2.1. Key performance indicators for construction projects

What is KPI? Also referred to as "key success indicators (KSI)".
 KPI‘ A set of quantifiable measures that a company or
industry uses to gauge or compare performance in terms of

meeting their strategic & operational goals.
 E.g. A Benchmark is the best performance indicator practiced
 Benchmarking is continuously comparing once performance
against others, then using lessons from the best to make

improvements
 KPIs vary b/n companies & industries, depending on their
priorities or performance criteria.

Key Performance indicators ...
83
Objectives of KPI
 improve personnel’s awareness of performance maintenance.
 are directly linked to the overall goals of the company.
 are measurements that define and track specific business
goals & objectives.
 are utilized to track or measure actual performance against
key success factors.
84
Key Success Factors (KSFs) only change if there is a fundamental shift in business
objectives.
Why do we Use KPI’s
 For Performance effectiveness.
 For the accuracy,
 actual reflection of the process
 closely monitor the results of actions
 detect potential problems and it can drive improvement.
 efficacy in delivering the outcome.
 to analyze the operational details of the organization.

 It helps to focus on the facts clearly.
 used periodically assess the performances of organizations, business units, and
their division, departments and employees.
 to improve ongoing process performance.
 the effects of a change can be monitored accurately by KPI.
85
How to design KPI’s

 KPIs should be clearly linked to the strategy, i.e. the things that
matter the most.
 KPIs have to provide the answers to our most important questions.
 KPIs should be primarily designed to empower employees and
provide them with the relevant information to learn.
 Identify what makes the organization success or failures.
 Controllable and accountable.
 Qualitative and quantitative.
 Long term and short term
 Consider Stakeholder needs.
 Identify important aspects.
86
Advantages of KPIs
 Identifies everything that is easy to measure & count.
 Visibility (Measurability) on performance and strategic goal
 Quickness in decision making
 Efficient management
 A team work on the basis of shared and measurable objectives.
 KPI’s do not give answers, rather they raise questions and
direct once attention

 Improve operations.
 Increase project flexibility.
 KPIs helps employees to focus on tasks and its processes.

87
Disadvantages KPIs
 The KPI’s is intended to simply improve future
results without reference to external parties and
benchmarks.
 In that case one must develop KPI’s which use
existing data available to the organization.
 Frequency of Data Collection. Data measured
frequently
 No connection with the external database.
88
Types of KPI
1. Process KPIs - measure the efficiency or productivity of a
business process. Examples - Days to deliver an order.
2. Input KPIs - measure assets and resources invested in or used to
generate business results. Examples – Amount/Dollars spent on
research and development, Funding for employee training,
Quality of raw materials.
3. Output KPIs - measure the financial and nonfinancial results of
business activities. Examples - Revenues, Number of new
customers acquired.
4. Leading KPI - measure activities that have a significant effect on
future performance. Drive the performance of the outcome
measure, being predictor of success or failure.
89
5. Lagging KPI is a type of indicator that reflect the success or

failure after an event has been consumed.
 Such as most financial KPIs, measure the output of past activity.
 customer retention, brand awareness.
6. Qualitative KPI - A descriptive characteristic, an opinion, a
property or a trait.
 Examples are employee satisfaction through surveys which gives a
qualitative report.
7. Quantitative KPI - A measurable characteristic, resulted by
counting, adding, or averaging numbers. Quantitative data
is most common in measurement and therefore forms the
backbone of most KPIs.
 Examples are Units produced per man-hour.
90
Characteristics of a good KPI

• KPI is always connected with the corporate goals.
• A KPI are decided by the management.
• They are the leading indicators of performance desired
by the organization.
• Easy to understand
• A KPI need to be: Specific, Measurable, Achievable,
Result-oriented or Relevant and Time-bound
What are the most common KPI for construction Projects?
91
S.N Author Name Country KPI

1 Jastaniah (1997) Saudi Arabia 1. Client
satisfaction
2. Planning period
3. Staff experience
4. Communication
5. Safety
6. profitability
7. Payment
8. claims
9. Closeness to
budget
Most common KPI for construction Projects …
92

1 Egan (1998) UK 1. Predictability
Time, cost
2. Construction cost
3. Construction
time
4. Productivity
5. Safety
6. profitability
7. defects
8. Client
Satisfaction
93

1 Rankin et al. (2008) Canada 1. Time
and Canadian
2. Cost
Construction
Innovation Council 3. Quality
(CCIC)(2007 4. Safety
5. scope
6. Innovation
7. Sustainability
8. Client
Satisfaction
94

1 Department of the UK 1. Time
Environment,
2. Cost
Transport, and the
Regions (DETR), 3. Quality
2000 Department of 4. Client
the Environment, Satisfaction
Transport, and the
Regions (DETR) 5. Client changes
(2000) 6. Business
Performance
7. Health and safety
95

1 Luu et al. (2008) Vietnam 1. Construction cost
2.Construction time
3. Customer
satisfaction
4. Quality
management
5. Team
Performance
6. Change
Management
7. Materials
management
8.Safety
96
The main KPIs in Infrastructure sector

The main five KPI’s in Infrastructure sector are:
1. Client Satisfaction.
2. Construction Time & Cost.
3. Productivity.
4. Defects.
5. Profitability
Example KPIs for Construction
97
 Number of accidents  Labor cost - Actual versus baseline
 Actual working days versus available working days
 Labor cost over project timeline
 Cash balance - Actual versus baseline
 Liability ratio (over asset) on current versus
 Change orders - Clients
completion comparison
 Change orders - Project manager
 Client satisfaction - Client-specified criteria
 Number of defects
 Customer satisfaction level
 Percentage of equipment downtime
 Client satisfaction product - Standard criteria  Percentage of labor downtime
 Client satisfaction service - Standard criteria  Percentage of unapproved change orders
 Cost for construction  Productivity (company)
 Cost predictability - Construction  Profit margin - Actual versus baseline profit
 Cost predictability - Construction (client change margin
orders)  Profit predictability (project)
 Cost predictability; Construction (project leader  Profitability (company)
change orders)
 Cost predictability - Design
 Quality issues at available for use
 Cost predictability - Design and construction cost to
 Quality issues at end of defect rectification
rectify defects period
 Day to day project completion ratio - Actual versus  Repeat business (company)
baseline  Reportable accidents (including fatalities)
 Fatalities  Reportable accidents (non-fatal)
Example KPIs for Construction
98
…
 Return on capital employed (company)
 Return on investment (client)
 Time for construction
 Time predictability - Construction
 Time predictability - Construction (client change orders)
 Time predictability - Construction (project leader change
orders)
 Time predictability - Design
 Time predictability - Design and construction
 Time taken to reach final account (project)
 Time to rectify defects
.
99
THANK YOU (DAY

4)!!!
2.2.1 Productivity
100
What?
 Productivity is commonly defined as a ratio of a volume measure of output
to a volume measure of input used

 Or, as a measurement of rate of output per unit of time or effort usually
measured in labour hours. For example, cubic meters of concrete placed,

linear meters of conduit or pipe installed per hour.
Productivity in Construction
 Construction productivity, which is measured by output per unit of
resource input, plays a key role in the success of a construction project.

 High productivity leads to lower unit cost to carry out a task or operation.
It is highly related to cost and time performance of a project.

 Whether it is in manufacturing, white‐collar work, professional sports, or
construction, productivity is one of the major components that

distinguish success from failure.
2.2.1 Productivity:
Influence of productivity
101
National Level
 Productivity is a measure of economic growth and success; therefore, it is
monitored by members of government agencies.
 Improvements in productivity, partially increases real income per capita b/s
they provide a proportionate offset to increasing wage rates and other input
costs.
Industrial Level
 In industries, higher productivity rates lead to a relative decline in the price of
goods and services and increase competitiveness nationally and internationally.
 High productivity leads to decreasing prices, increasing sales and increasing
output.
 Low productivity rates tend to increase prices which causes reduced sales &
output.
2.2.1 Productivity:
102
Corporate Level
 In corporations, productivity rates influence both profitability
and the survival of firms.
 Increased productivity rates translate into higher profit margins.
 Lower productivity rates might lead to company
reorganizations, dissolutions, or bankruptcies.
 Corporate-level productivity rates contribute to maintaining
national-level productivity goals.
2.2.1 Productivity:
103
Personal Level
 At the personal level, in some circumstances higher productivity
rates contribute to personal self-fulfillment and possibly career
advancement.
 When workers are involved in increasing productivity rates,
they are contributing to the achievement of corporate goals
and also to national productivity goals.
Productivity Measurement
104
 The productivity could be measured at various levels,

Hence, there are three main measures of productivity:
i. industry or sector level,
ii. project level, and
iii. activity or process level measurement
Example: Impact of productivity on construction
time and cost
105
IMPACT OF PRODUCTIVITY ON TIME & COST
Productivity
Crew Organization No. of Hour
Activity Name Unit Qty of crew Rate.(Birr/hr) Total cost (Birr)
(Man-Hour)
Resource name Unit Qty No. of crew (Output/Hr)
A B C D E F G H I = C/(G*H) J K = F*G*I*J
Foreman No. 0.2 15 3000
HCB Wall m2 1500 Mason No. 1 10 1.5 100 9 9000
Daily Labourer No. 2 4 8000
Example: Impact of productivity on construction
time and cost
106
1. Decrease the no of crew from 10 to 5 and discuss the impact on time

& cost
2. Increase the no of crew from 10 to 20 and discuss the impact on
time & cost
3. Decrease the amount of work in place from 1500 to 1000 and
discuss the impact on time & cost
4. Increase the amount of work in place from 1500 to 3000 and discuss
the impact on time & cost
5. Decrease the productivity of crew from 1.5 to 1 and discuss the
impact on time & cost
6. Increase the productivity of crew from 1.5 to 3 and discuss the
impact on time & cost
The Importance of productivity in Construction
Projects
107
 Improved productivity in the construction industry can be viewed from two
perspectives, the consumer and the contractor.
 From the consumer’s perception, improved productivity
i. lowers costs,
ii. reduces construction schedules,
iii. offers more value for the money and
iv. achieves better returns on investments.
 From the contractor’s perception, improved productivity
i. leads to a more satisfied customer,
ii. providing a competitive advantage and
iii. in return leading to faster turnover and increased profits
As Peter Drucker said:
“What gets measured gets improved.”
Types of Productivity
108
One can split productivity into 4 main categories:

 Labor productivity: measures the total economic output (revenue)
per labor hour.
 Capital productivity: determines the efficiency in which capital
(such as machinery) is used to produce a specific output.
 Material productivity: measures the total economic output
generated per unit of material used.
 Multifactor (total factor)productivity: indicates the total
productivity generated by all the other factors combined.
How to Measure Productivity?
109
Construction productivity is often measured as:
1. Output per labor hour – how much work gets done in the time spent.
 Lobour productivity = Out put/Work hours
 E.g., 4m of 4” pipe/Lobour hour
2. Production output can be expressed in terms of physical quantities (e.g., square

feet)
 Productivity = Out put/Resource Input
 Productivity indicates how efficiently one can turn inputs: materials, time, people, and any other
resource into a final result, typically a product or service.
 The fewer resources you use, the more productive you are, and vice versa.
3. Financial units (e.g., dollars).

 Lobour productivity = Out put/Labour Cost …
 Total out put/ total cost of input including overhead cost, tells economic productivity per
dollar/ETB input. E.G. Total concrete produced is 160 m3 and total labour cost is 70,000
Birr, concrete Material cost 1,700,000 Birr, equipment cost 40,000 Birr and over head
cost 45,000 Birr. Determine the per m3 cost.
How to Measure Productivity? …
110
Productivity Ratio (PR)

PR = Actual Productivity/ Planned Productivity
Example PR =3m per hour/4m per hour = 0.75
Factors Affecting Construction labour Productivity
111
After the analysis of questionnaire of a study, top ten

factors which affect labour productivity in construction
are:
(1) Lack of skill and experience of the workers;
(2) Late payment;
(3) Poor health of the workers;
(4) Low amount of pay;
(5) Lack of empowerment;
(6) Poor work planning;
(7) Design changes;
(8) Lack of labour ..
2.2.1 Productivity …
Factors affecting construction labor productivity
112
113
In general, factors affecting construction labor

productivity can be broadly classified into:
1. Industry related factors
2. Project related factors
3. Labor related factors
4. Management related factors
114
Industry related factors

 Investment
 Government
 Research and development (R & D)
 Weather
 Building code and specification

115
Project related factors

 Project design
 Design changes
 Method of construction
 Type of contract
 Location
 Type of project
 Work type
 Physical element
116
Labor related factors

 Supply and demand
 Unions rules
 Crew composition
 Crew size
 Skills
 Capabilities
 Motive
Labor related factors
117
The two most important measures of labour productivity are:

1) the effectiveness with which labour is used in the construction
process;
2) the relative efficiency of labour doing what it is required to do at a
given time & place.
 E.G 1, labour dollars required to produce a square metre or square foot of
living area,
 E.G 2. the number of square metres of formwork or linear metres of
conduit that can be installed per hour at a given time and place.
 Contractors and organized labor are more interested in the 2 nd measure, the
relative efficiency of labour.
 Labour efficiency is the basis of most tender estimates, as well as the
yardstick by which performance is measured and monitored.
Measuring & interpreting work & crew
effectiveness
118
Measuring work & crew effectiveness involves:

1. Field rating
2. Work sampling
3. Field survey
Productivity …
1. Field rating
119
 used to estimate the level of activity of a construction operation.
 categorizes the observed worker as either "working" or "nonworking" and
uses the working" fraction as a measure of effectiveness.
 To collect a random sample, an observer on site observes the workers. the
field It is calculated as total observations in the "working" category divided
by the total number of observations, plus 10% to account for foreman and
supervisory activity
 Field rating = total observations of working/ total number of
observations + 10% of total number of observations.
 Roughly, it should score over 60% for a job to be satisfactory.
 E.G. if a foreman made 100 observations of workers and only 40 were classified as
working at the time, then the field rating would be 50%, i.e., 40/100 + 10. The job
would, therefore, be considered unsatisfactory.
 The method does not tell the analyzer anything about the sources of
Productivity …
Field rating
120
Productivity …
Field rating
121
Productivity …
Field rating
122
Productivity …
Field rating
Muluken & Million

Productivity …
Field rating
124
Productivity effectiveness measurement…
2. Work sampling
125
 Work sampling is based on statistical sampling

theory and is a slightly more sophisticated method than
field rating.
 The basic objective is to observe an operation for a limited
time and from the observations infer how productive the
operation is.
 The number of workers observed is normally a small sample
taken from the entire population of possible observations.
 It estimates the percentage of time a labourer is
productive relative to the total time the person is involved in
the operation. To accomplish this, the ff approach can be
Productivity …
Work sampling
126
 Step 1: Classify the worker's activity as one of three

modes of activity:
 productive,
 semi-productive (involved in supporting the main

activity) and
 non-productive.
 E.G. semi-productive activity (support work) can be of

the form "material handling," "instruction and decision
making," "equipment maintenance," and others.
Productivity …
Work sampling
127
Productivity …
Work sampling
128
Step 2: Develop a data collection form that will facilitate

adding the observations on site
Step 3: Take random observations of workers involved in a
given operation in the field and indicate the workers' activity
mode, i.e., productive, non-productive, or semi-productive.
Step 4: Record all observations on the form.
Step 5. Add up all the checkmarks under each mode and
calculate the percentage of activity.
E.G. (Figure 2.1 ), the 'percent productive' is calculated as 4/9
(= 45%), the 'percent non-productive' is 3/9 (= 33%), and the
balance of 22%, semi-productive.
Productivity …
Work sampling
129
Productivity …
Work sampling
130
Productivity …
Work sampling
131
Productivity …
Work sampling
132
Five-minute rating
 Unlike work sampling, this is not based on statistical sampling theory.
 The method relies on simply observing an operation for a short time.
 The observation does not result in a large enough sample to support work
sampling.
 The ff procedure can be used to implement the 5-minute rating technique:
 Step 1. Identify the members of the crew to be observed and structure a form
similar to that shown in Table 2.3, with the crew to be observed noted in the
column headings and the time of observation listed in the rows of the first column.
 Step 2. Observe the crews as they are working. For the observation interval of 5
minutes, determine whether the crew member has been active for over half the
interval. If so, mark the observation cell with an "x"; if not, leave the cell empty.
 Step 3. Add the "x" observations for the entire table and divide the sum by the total
number of observations. In the example of Table 2.3, 22 observations were positive
out of a total of 32; therefore, the effectiveness is 22/32 or 68%.
Productivity …
Work sampling
133
Productivity …
3. Field surveys
134
 The work sampling and 5 minutes rating measure efficiencies in

the site operation, but do not go far enough in identifying the
leading cause for the inefficiency.
 Field surveys using questionnaires are made by involving the
foreman or craftsman in the site.
 Craftsmen are probably the persons most familiar with their work
activity. They can easily identify sources of delay and obstacles in
their progress.
 Likewise, a foreman is the person most familiar with the crew and
the problems that restrict improvement in their productivity.
Foreman Delay Survey (FDS)
135
 Foreman Delay Survey (FDS) relies on a questionnaire which is to

be filled out by the job foreman at the end of a working day
according to a particular survey schedule, e.g., one work week in
each month.
 This is to identify the number of hours of a day lost due to
delays.

Most FDSs are divided into rework & delay categories.
 Once a form has been filled out, the information is extracted in the
form of percentages & action taken to ensure that sources of delays
are avoided or reduced.
Foreman Delay Survey (FDS)….
136
Method Productivity Delay Model (MPDM)
137
 The MPDM was proposed to combine both time study &

productivity measurement.
 an observer collect data, on a special form, pertaining to
the cycle time of a leading resource on the operation.
 Then, a set of computations is carried out that measures
the productivity of the operation, indicates the major
sources of delay and gives other useful statistics.
Productivity …
138
MPDM consists of the ff phases:
Phase 1: Identification of the production unit and the production cycle
 The production unit is a measurable amount of work that can be visually
identified by the observer.
 The production cycle is the total time that it takes the crew to place one
production unit.
 Examples of this would be a bucket of concrete, a truckload of dirt, or a row of
bricks.
Phase 2: Identification of the leading resource
 The resource involved in the operation with the most impact on the productivity
and it will be the centre of observation for cycle time determination.
 E.G.
 A crane in a concrete placement operation
 The mason in brick-laying
 A dozer in an earth moving operation.
Productivity …
139
Phase 3: Identification of the types of delay that can be encountered in the
process
 Five possible types of delay include those caused by:
 environment,
 equipment,
 labour,
 material and
 management.
Experience shows that users should define their own types of delay.
Phase 4: Data collection
 The observer records the production cycle time for each production unit placed.
The observer must also determine whether a delay took place during a given
cycle. If a delay occurs, the observer must indicate its nature based on the
categories of delays given in Phase 3 above.
Phase 5: Data Processing

Productivity …
140
Productivity …
141
Summary of Steps
 Step 1: Identification of the production unit & the production cycle
 Step 2: Selection of leading resource
 Step 3: Analyze the possible delay factors interms of Environmental,
equipment, labour, material, management
 Step 4: Data collection /actual condition
 Step 5: Developing intervention method based on step 3 & 4 finding
Productivity …
142
Productivity …
143
.
144
THANK YOU (DAY

5)!!!
145
Management related factors

 Planning and scheduling
 Control
 Project organization
 Supervision
 Materials and tools availability
 Lack of motivation of workers
 Site layout
 Work redoing over crowded areas and delays

 Authority and decision making
 Information and communication
146
Causes and Effects of Management

Ineffectiveness
 The management ineffectiveness causes ….. delays
which result in …..poor productivity.

Planning and scheduling
 Lack of project planning and scheduling is one of the
important reasons of low construction productivity.
 Planning a project can reduce:
 production costs by increasing productivity of craftsman and
 optimizing utilization of available resources.
147
Control
 Problems arise every day that could not have been foreseen.
 Adverse weather
 Material delivery delays
 Labor disputes
Can disrupt the original
 Job accidents
plans
 Without time control, rescheduling could not

accomplished and so productivity will suffer due to lack of
coordination and communication and resource shortage.
148
Project Organization
 The main task of any organization is to plan, direct and control.
 Poor organization result in poor productivity.
 Defining individual positions of authority and responsibility
will lead to an effective operating environment and good
productivity.
149
Supervision
 Although unnecessary supervision will increase the cost of
work, insufficient supervision will result in confusion, delays
and decrease productivity.
 The labor productivity is increased by increasing the number of
man hours per day that the field supervisor spent in contact with
the crew.
150
Material and tool availability

 Unavailability of material and tool had a significant adverse
impact on the productivity of labor.
 Material unavailability loss between 6.4 and 8.4 man-hr/week
 Tool unavailability loss between 3.4 and 5.1 man-hr/week
 When formal material management programs are applied in
any project, a minimum 6% improvement in labor productivity
should be achieved.
151
Work redoing and delays

 Work redone maintained a position as one of three worst
problems leading to poor productivity.
 The amount of times spent on rework was between 4.9 – 7.7
man-hr/week.
 Causes of work redone were mainly due to engineering and
management inefficiencies.
 Craftsmen spent an average of 14.3% of their time redoing work.
152
Lack of motivation
 The greater the worker motivation, the greater his expenditure of
effort.
 The ff frustrates workers and make them produce low:
 Lack of material
 frequent change orders
 conflict of crews because of improper scheduling
 lack of equipment etc..
153
Site layout
 Site layout of the project is a very important organization tasks.
 The assigned location of different job components affects
productivity, safety, workers satisfaction and communication.
 Approximately, 7% of a day is nonproductive because of a
non optimal site layout.
154
Information and communication

 Lack of information, uncertainty regarding design factors, site
conditions, client wishes and regulatory requirement result in
design delay and redesign that contributes to substantial loss of
productivity.
 Approximately, 9% of a day is nonproductive because of poor or
inadequate communications at the job site.
155
Authority and decision making

 Group participation in decision making has been
proven to be an effective method of increasing
productivity.
 Participation of work group in changing work methods
increases productivity by 14% compared to non
participating groups.
156
Productivity VS Quality
 Quality management means; inspection, quality
control, quality assurance, quality planning and total

quality management.
 Low quality of construction will cause redoing
work.
 In turn ‘Redoing work’ affects the production rate
and decrease the output.

 When output decreases, productivity decreases.
157
Production rate increase if one can:

 Use shifts
 Use two or more shifts instead of one shifts
 Apply overtime
 Increase shift period to 10 hours instead of 8 hours
 Increase resources
 Use more resources to increase production rate

158
Methods to improve construction productivity

 Step 1  Inspire Your Workers
 Step 2  Improve Communications
 Step 3  Lay Out A Productive Jobsite
 Step 4  Schedule Your Work properly
 Step 5  Analyze Project Reports
 Step 6  Manage Equipment Productively
 Step 7  Improve Safety
 Step 8  Pay Attention To Quality
 The question is how to apply practically step 1 to 8?

2.2.2. Quality performance measurement &evaluation
Quality Management as Construction Performance Indicator
159
Definitions of Quality:
 The degree of excellence of something. (Oxford Dictionary)
 Conformance to customer’s requirements. (Philip B Crosby )
 Fitness for purpose. (Gunter Zietlow )
 Ability to satisfy stated and implied needs. (British Standard, BS4778)
 How well a set of inherent characteristics comply with
set of requirements? ISO 9000,9001,9004
 Fulfilling contractual requirements (for construction projects)

 However, what satisfies customers today may not be satisfying
tomorrow….
Definitions of Quality: ….
160
Definition of quality from different perspectives

 For Engineers: quality is conformance to specifications
 From manufacturing point of view: quality is fitness for use
(Juran).
 From customer point of view: Quality means fitness for use and
meeting customer satisfaction.

 From process point of view: Quality means conformance with the
process design, standards and specifications.

 From product point of view: Quality means the degree of
excellence at an acceptable price. Quality is all about reducing

variations: precision and accuracy of production.
 There are natural (unavoidable variation) and assignable (avoidable,
caused simply by mistake and random) variations (Deming).

Evolution of Quality Management
161
Evolution of Quality Management
162
Three key elements of quality
163
 The 3 quality elements which influence a product or

serviceability to satisfy customer needs are:
 Quality of Design: A product needs to be designed to
satisfy customer needs.
 Quality of Conformance: Closeness with which the
finished product or supplied service matches the
specifications of the original design.
 Quality of Reliability: ability of the finished product to
provide trouble free performance in the field, over an
acceptable time period.
Project Quality Management Process
164
The major project quality management processes are:

 Quality planning: identifying which quality standards
are relevant to the project and determining how to satisfy

them.
 Quality Assurance: evaluating overall project
performance on a regular basis to provide confidence
that the project will satisfy the relevant quality standards.
 Quality Control: monitoring specific project results to
determine if they comply with relevant quality

standards and identifying ways to eliminate causes of
unsatisfactory performance.
The quality management plan
165
The quality management plan includes the ff information:

 Roles and responsibilities: describes the different quality related roles
on the project. These could include quality audits, third-party testing,
etc
 Completeness and correctness criteria: work with the client to define
what it means for a deliverable to be considered complete & correct.
 Quality requirements process: Describe the process you will use to
uncover and validate the customer’s expectations for quality.
 Quality assurance activities: that will be used on this project like;
Quality audits, Quality training and quality assurance checklist (ensures
that a standard process was followed)
 Quality control activities: describe the major quality control activities
and techniques that will be used on this project.
 Quality standards: List quality standards that this project will utilize
 Quality tools: List any quality-related tools that this project will utilize
Costs of Quality
166
Costs of Quality
167
Costs of Quality
168
Construction Quality Performance
169
170
Corporate level Quality Measures
 Corporate quality refers to the image that

customers have of an organization.
 corporate quality are defined at organizational
rather than project level.
171
172
173
Product level Quality Measures

 The final output of the construction process consists of products
and services, so customer satisfaction at this level will result from

both elements.
 With reference to product quality, Garvin (1984) suggested 8
dimensions which are applicable to the products of the

construction industry.
Service level Quality Measures
 While product quality is mainly associated with the users and
occupants of the finished facility (clients could also be users), in

construction clients are the direct recipients of service quality.
 Parasuraman (1985) suggested 10 dimensions for service quality
which could be adopted in the construction industry.

174
2.2.3. Measuring and evaluating physical
progress of construction projects
175
Construction performance can be analyzed by comparing construction

work schedule (in terms of physical schedule) with actual physical
progress or completed works.
 The physical progress alone is not enough to show the overall
construction performance.
 In addition, cost (Financial) and time performance are complementary
and go together with physical progress evaluation.
 Quality best practices and problems with their possible solutions are also
reported to show quality performance problems & solution.
 It should be further noted that productivity is construction performance
indicator by itself and indicator for physical, time and cost performance
as well.
 The form of physical progress report/analysis can differ from company to
company.
2.2.3. Measuring and evaluating physical progress of construction projects (Sample taken from on-going building project)
176
Excavation NS OP CO Structures NS OP CO Roofing NS OP CO

Site clearance ◙ Footing Pad ◙ Truss members ◙
Bulk excavation ◙ Footing column ◙ Purlins ◙
Pit excavation ◙ Mat Foundation ◙ Roof covers ◙
Trench excavation ◙ Basement slab ◙ Roof water proofing ◙
Back fill around foundn. ◙ Basement column ◙ Flashing ◙
Back fill under HC ◙ Shear wall ◙ Skylight frame ◙
Stair case ◙ Acrylic skylight ◙
Pavements works Lift shaft ◙ Light weight concrete ◙
Trench excavation ◙ Grade beam ◙
Trench masonry ◙ Ground slab ◙
Pavement works ◙ Suspended slab ◙
Pointing ◙ Elevation column ◙
Top tie beam ◙
Roof slab ◙
NS = Not Started
OP = On progress
CO = Completed
physical progress
177
Stair finish NS OP CO Ceiling NS OP CO Openings NS OP CO

Chieseling ◙ Chieseling ◙ Wooden door frame ◙
Soffit plastering ◙ Soffit plastering ◙ Wooden door leaf ◙
Soffit painting ◙ Painting ◙ Aluminum window leaf ◙
Handrail ◙ Aluminum window glazing ◙
Guard rail ◙ Aluminum door leaf ◙
Thread ◙ Aluminum door glazing ◙
Riser ◙ Aluminum Louver leaf ◙
Aluminum Louver glazing ◙
PVC door ◙
physical progress
178
Internal wall Finishing NS OP CO Floor finishing NS OP CO External wall NS OP CO

Partition wall ◙ Screed ◙ External wall ◙
Conuit installa tion ◙ Marble ◙ Window cil ◙
Pla stering ◙ PVC ◙ Pla stering ◙
Fine coat ◙ Ceramic ◙ Quartz ◙
Painting ◙ Terrazzo ◙ Aluminum curtain frame ◙
Corner protection ◙ Cementious ◙ Aluminum curtain gla zing ◙
Ceramic ◙ Skirting ◙ Guardrail stainless steel ◙
2.2.4. Measuring and evaluating financial progress of construction projects
179
 The planned financial value is compared with actual

performed financial value of periods (daily, weekly,
monthly, quarterly and yearly etc).
 Commonly, the work schedule is the base for financial
schedule.
Students: Please Refer to sample financial
performance report of any construction project.
Sample financial performance Evaluation
180
.
181
THANK YOU (DAY

6)!!!
2.2.5. Earned Value management (Cost & Time Measuring and evaluating)
182
 EVM is one of the most effective performance measurement & feedback

tools for managing projects.
 It enables managers to close the loop in the plan-do-check-act management
cycle
 Project controllers or managers should know:
a) how much has been spent?
b) how much is left to spend? and
c) how the project is performing against targets?
 If the EVM reveals that the project is behind schedule or over budget, the
project manager can use the EVM to help identify:
• Where problems are occurring
• Whether the problems are critical or not
2.2.5. Earned Value management (Cost & Time
Measuring and evaluating) …
183
 EVM compare the "planned standards” (baseline) of work plan

VS the "earned standards" of the physical work actually
accomplished.
 Then relates the "earned standards" with the "actual costs"
incurred to perform the work, to measure the true performance of
a projects.
 EVM uses the fundamental principle that patterns and trends in
the past can be good predictors of the future.
 EVM provides integrated management of project scope, schedule
and cost.
184
 EVM answers management questions that are critical to the success of

every project, such as:
• Are we ahead of or behind schedule?
• How efficiently are we using our time?
• When is the project likely to be completed?
• Are we currently under or over our budget?
• How efficiently are we using our resources?
• What is the remaining work likely to cost?
• What is the entire project likely to cost?
• How much will we be under or over budget at the end?
For Better Understanding of EVM, Please
Refer to PMBOK 2017 Page 259-268
185
186
187
The key practices of EVM include:

i. Establish a performance measurement baseline (PMB)
 Decompose work scope to a manageable level
 Develop a time-phased budget for each work task
 Select EV measurement techniques for all tasks
i. Measure and analyze performance against the baseline
 Record resource usage during project execution
 Objectively measure the physical work progress
 Determine EV
 Analyze and forecast cost/schedule performance
 Report performance problems and/or take action
EVM Units
188
Key elements of earned value are:

• BCWS = Budgeted cost of work scheduled (Planned)
• ACWP = Actual cost of work performed (Actual)
• BCWP = Budgeted cost of work performed (Earned)
• SV = Schedule variance = BCWP - BCWS
• CV = Cost variance = BCWP - ACWP
• SPI = Schedule performance index = BCWP/BCWS
• CPI = Cost performance index = BCWP/ACWP
• BAC = Budget at completion = Project contract value
• ETC = Estimate to completion = (BAC-BCWP)/CPI
• EAC = Estimate at completion = ACWP + ETC
EVM Units Explained
189
BUDGETD COST  It is the amount of money that was planned, or budgeted, at
OF WORK each time period in the project.
SCHEDULE
(BCWS)  It is determined by cost loading the CPM diagram, in
accordance with the project plan (schedule)
 The S-curve for a project represents the BCWS
BUDGETED The BCWP is the amount of money earned based on the work
COST OF WORK that has been completed.
PERFORMED
(BCWP)
ACTUAL COST  The ACWP is the actual amount of money that has been
OF WORK spent at any point in time during the project.
PERFORMED
(ACWP)  It is determined from accounting records or the responsible
party that keeps records of actual expenditure of money.
 Obtaining a reliable cost data of the project at a given time is
EVM Units
190
 Variances
 Schedule Variance (SV): Comparison of work performed
during a given time to what was scheduled to be performed
 SV = BCWP – BCWS = Earned - Planned
 SV < 0 Project is behind schedule
 SV > 0 Project is ahead of schedule
 SV = 0 Project is on schedule
EVM Units
191
 Variances
 Cost Variance (CV): Comparison of budgeted cost
of work performed with actual cost of work
performed
 CV = BCWP – ACWP = Earned - Actual)
 CV < 0 Project is over budget
 CV > 0 Project is under budget
 CV = 0 Project is on budget
EVM Units
192
 Indices
 (Schedule performance index (SPI) =

BCWP/BCWS = Earned/planned)
 Cost performance index (CPI) =

BCWP/ACWP = Earned/Actual
EVM Units
193
EVM Units
194
 Forecasting
 Budget at completion (BAC) = Original project
estimate
 Estimate to complete or the remaining cost to

complete the project (ETC) = BAC- BCWP/CPI
 Estimate at completion or estimated project cost at

completion (EAC) = (ACWP + ETC)
EVM Units
195
EVM Units
196
 Example -1
 Provide an earned-value analysis to evaluate the progress of the sewer and
water lines project. The original budget is $147,500 and the project is
scheduled to be completed in 94 working days. A status report after 10
working days into the project includes the following information:
 Activity 10, 100% complete as scheduled, actual cost = $1,500
 BCWP = $7,600
 ACWP = $7,700
 BCWS = $7,600
 BAC = $147,500
EVM Units
197
The BCWS and BCWP shown above are the same values as shown on the
tenth working day because Activities 10,20, and 30 were all completed
according to the original planned schedule.
Cost and Schedule Deviations:
 Cost variance, CV = BCWP - ACWP
= $7,600 - $7,700 = -$I00
 A negative value of CV represents a cost overrun. Based on the status
report the actual cost is greater than earned by $100.
 Schedule variance, SV = BCWP - BCWS
= $7,600 - $7,600 = 0
 Since the SV is zero, the project is progressing as planned. The project is
not ahead of or behind the planned schedule.
EVM Formulas
198
 Cost and Schedule Performance:

 Cost Performance Index, CPI = BCWP/ACWP
= 7,600/7,700
= 0.987
 The CPI is less than 1.0, which indicates a poor cost performance.
The earned value is less than the actual costs.
 Schedule Performance index, SPI = BCWP/ACWP
= 7,600/7,600
=1
 The SPI is equal to 1.0, which indicates the schedule performance
is progressing precisely as planned.
Benefits of EVM
199
Forecasting Cost at Completion


 Estimate to complete, ETC = (BAC-BCWP)/CPI

= (147,500 - 7,600)/0.987
= 141,743
 Based on the analysis of the status report, the remaining cost to complete
the project is $141,743.
 Estimate at completion, EAC = ACWP + ETC
= 7,700 + 141,743
= 149,443
 Based on the analysis of the status report, the estimated cost of the project
at completion is $149,443, which is $1,943 over the original budget of $147,500.
Benefits of EVM
200
 integrates scope, cost and time management.

 Provides an early warning system of potential cost overruns or delays. Management
therefore can take timely corrective actions
 Management is able to forecast cost and time trends based on the existing
performance and obtain crucial information of future costs and time shifts due to
delays
 simplifies project management since all parties involved use a single performance
measurement tool.
 provides a high level of objectivity through its calculations and removes human
subjectivity, emotion and perception.
 when properly and sufficiently implemented, provides motivations to project
members, since good work by high achievers can be identified and acknowledged.
Limitation of EVM
201
 This approach has also its own limitations. These included:

 the cost and effort to make the system is initially
extensive,
 the inability to reveal cost information’s immediately
causing time gap for decision making and
 the reliance on a single, that is; financial which is an
objective system of measurement.
.
202
THANK YOU (DAY

7)!!!
.
203
Chapter 3:
Performance Improvement Tools &
Process Optimization (---2 wks)
Chapter 3: Performance Improvement Tools & Process Optimization (---2 wks)
204
Performance Improvement Tools:

 3.1. Benchmarking: is a point of reference by which the
performance is judged or measured.
 3.2. Lean Concept
 3.3. The Kaizen Event
 3.4. Balanced Score Card (Already discussed in Chapter
One as performance measurement, Please refer back)
 3.5. Building Information Modeling (BIM)
 3.6. TQMS
 3.7. ISO 9001: 2015 etc
3.2. Lean Concept
205
 Lean Concept is more than a business strategy, Lean is a school of thought
that values quality, efficiency and being innovative.
 Optimization is an ongoing process and the best way to drive continuous
improvement is by making incremental and sustainable changes.
 The constant changing of project conditions: including work site
location, weather and soil conditions adds significant complexity to the
process of managing resources to fit changing situations.
 Lean as a management tool is:
 overall operating system that links company goals with waste
identification
 designed to eliminate the waste that gets in the way of
accomplishing these goals
 The main idea of “lean production” is about highlighting the
things that add value by reducing everything else (waste).
3.2. Lean Concept…
206
 How to implement lean strategically?

 Goal Establishment → Waste Identification → Lean Tool Deployment
 → Goal establishment
 The purpose of goal setting is to align everyone’s thinking, attitude
and behavior centered on a common target.
 the leadership team needs to establish meaningful, relevant,
measurable goals for their team(s) to attain.
 Here is an example from a contractor.
 Increase of 3% gross margin over original booked margin
 2% saving in labor cost
 25% of all labor hours in prefab or modular
 10% increase in labor productivity by improving our material handling process
 100% availability of machineries
207
Goal establishment ….
Some questions raised by employees as a barrier for goal implementation
1. “These goals are too vague.
 What does it mean to be ‘the best construction company in the industry’?
 How are we measuring this?”
2. “The goals don’t address problems that I actually deal with on a day
to-day basis, so why bother?”
3. “I only work in our domestic construction markets. Two of these
four goals have no relevance for me whatsoever.”
4. “What does it mean to exemplify ‘The best customer service in the
industry’? How is this different from what we are already doing?”
208
Goal establishment …
For goals to be meaningful, they have to be SMART:

(E.G. your research objective shall also be SMART)
 S = Specific
 M = Measurable
 A = Achievable
 R = Relevant
 T = Time bound
209
→ Waste Identification
 After goals are established, identify areas of waste in
the form of flow stoppages that could negatively
impact our ability to achieve our targeted goals
 The Toyota’s chief engineer, Taiichi Ohno, is
considered the father of the Toyota Production System
(TPS), also known as lean manufacturing.
 He defined seven types of waste (muda) to describe
those activities that add cost but no value.
210
What is considered as waste in lean production? the “7 wastes of lean”?

 1. Transportation – Don’t unnecessarily move products or materials
 2. Inventory – All the excess products and material that are not being
processed
 3. Motion - All movement of equipment not done in the easiest possible
way
 4. Waiting – idle production time where processes are not optimally
synchronized
 5. Over processing – Investing more into a product than customer values
 6. Overproduction – the waste of making too much too soon
 7. Defects – mistakes and errors that take time to fix
 Other types of waste
 Underutilization

211
What is considered as waste in lean production?
 In general we can define waste as something unwanted, poor or bad; something that doesn’t
bring anything positive, usually appearing after a specific process has been completed.
 In business, a more formal definition would be that waste is all those activities that don’t
create any value for the market.
 In other words, valuable are all those activities that directly or indirectly lead to an outcome
which a customer would be willing to pay for (creating higher added value). Everything else is
considered as waste.
 It’s important to understand that every organization must also perform activities that do not
directly lead to value for customers, but do create value indirectly. That’s why Toyota
Production System (TPS) defines two types of Muda:
 Type-1: Necessary non value-adding activities for customers (necessary waste). E.G,
inspection and safety testing does not directly add value to the final product; however, they are
necessary activities to ensure a safe product for customers.

Type-2: Unnecessary non value-adding activities for customers (pure waste).
 As a result, Muda Type 2 should be eliminated.
 Reducing or removing Type-1 Muda should only happen after careful analysis and
consideration to make sure the reduction won’t impact the quality of the products or overall
212
 According to Gary Santorella and others, there are the traditional “Eight Areas of
Waste” that affects every construction company, drive up costs, frustrate
workers, interrupt workflow and erode profitability.
 They are also called “The 8 wastes of lean manufacturing” include:
 Rework/Defects: it occurs when the final or intermediate products does not fit the
quality specifications. Defects impact time, money, resources and customer
satisfaction. It can be caused by poor design and specification, lack of planning &
control, poor qualification of team work, lack of integration b/n design & production,
etc.
 Over/Excess Processing: we do something over and above what is laid out in our
contract and the customer doesn’t value it. This occurs whenever we put materials in
place that are above the specification. Excess processing is a sign of a poorly designed
process.
 Overproduction: production of a quantity greater than required or earlier than
necessary which may cause waste of materials, man-hours or equipment usage.
 Waiting time/ delays: occurs whenever you have to wait for someone to complete a
task in order to do yours, wait for an approval, or hunt and search for information.
8 Areas of Waste …
213
 Excess/unnecessary Inventory: occurs when we order too much material or
too many tools or unnecessary inventories which lead to material waste by
deterioration, losses due to inadequate stock conditions on site, robbery,
vandalism and monetary losses due to capital tied up. It might be due to lack of
resource planning or uncertainty on the estimation of quantities.
 Unnecessary Transportation: mainly concerned with the internal movement
of materials on site. It is usually caused due to either inadequate site planning or
highly restricted lay down areas or lack of planning of material flows.
 Unnecessary Motion: occurs when unnecessary or inefficient movements
made by workers during their job. Workers have to use extra time and effort to
perform, thus becoming fatigued. The longer the motion the larger time waste.
This might be caused by inadequate equipment, ineffective work methods or
poor arrangement of the working place.
 Non-Utilized Talent (Underutilized human resource): This is the greatest
area of waste in construction. We often ask people to execute some work, but
we often fail to ask them their opinion about how something could be done
better.
214
→ Lean Tool Deployment

 Once goals are established and the waste is identified, we
can select the proper Lean tool to help eliminate it, such
as
 Value streaming mapping
 Building Information Modeling (BIM),
 Last Planner,
 Standard Work,
 Kaizen events e.t.c.
215
Lean Tool Development: ….

Value streaming mapping
 With a specific goal in mind, each step of the process is identified.
i. How we are actually doing the process now is mapped out,
ii. the team puts forth their improvement ideas.
iii. After ideas are exhausted and adopted, a Future State Map
(FSM) (how we think the process should go) is created.
 The FSM reflects flow improvements that eliminate unnecessary steps and
build in missing collaboration points.
 After the FSM is created, the activities required to transform it into the new
Current State are identified and a Kaizen newspaper of anchoring activities is
created.
3.3. The Kaizen Event
216
The Kaizen Event

 The term Kaizen is composed of two Japanese words,
 Kai = eliminating the bad, and
 Zen = for the greater good.
 In other words, kaizen, (kai = change, zen = good), or
“good change” has been one of the most successful
continuous improvement approaches of the 20th century.
This is what the notion (Concept) of continuous
improvement truly means.
3.3. The Kaizen Event …
217
 A Kaizen event is simply a cross-functional gathering of

employees brought together to solve specific common
problems.
 Depending on the issues, we may include different
professionals.
 Once the waste is identified, we formulate goals in a
form of a question, brainstorm solutions as a team and
then discuss and decide on the ideas that will most
likely help us to achieve the goals.
218
The Kaizen Event

 Here is an example from one project - where a lack of safety
planning, lack of budgetary controls, difficulties with hostile
city inspectors, and achieving turn dates were the stated
worries - and how they were converted into questions.
 1. How can we improve our job site safety planning?
 2. How can we effectively manage the budget as a team?
 3. How can we work effectively with the Municipality
office so we can get what we need?
219
The Kaizen Event

Example
 Here are the ideas that the team selected to mitigate the specific waste that they were
experiencing.
1) How can we make our job site safety planning more effective?
a. Plan the safety into the activity. Bring the crew into the brainstorming process
with flow chart
b. Regular review of activities for improvement with crew input
c. Review lessons learned from previous jobs and near misses
d. Uniform training—one standard (can have variations from this—but we need to
establish a clear baseline)
e. Positive reinforcement to encourage feedback
f. Standard Operating Procedures for various systems
g. Identify experienced people, not just in management, but at the worker level as
220
The Kaizen Event

Example
2) How can we effectively manage the budget as one
team?
a. Create a mechanism for budget awareness
b. Be transparent throughout the companies
c. Review the numbers weekly as a team
d. Project next week’s/next month’s numbers
e. Assign responsibility regarding forecasting
221
Implementation of Kaizen
One can follow the following 5 S.
 “Five S” of Kaizen is a systematic approach which leads to
perfect systems, standard policies, rules and regulations to

give rise to a healthy work culture at the organization.
 Japanese employees never speak ill about their
organization. Yes, the process of Kaizen plays an important
role in employee satisfaction and customer satisfaction
through small continuous changes and eliminating defects.
Kaizen tools give rise to a well organized workplace which
results in better productivity and yield better results.
Implementation of Kaizen …
222
Five S of Kaizen (Common step in lean developments to drive change):

 Sort Out: employees should sort out and organize things well. Label the items as “Necessary”,
”Critical”, ”Most Important”, “Not needed now”, “Useless and so on. Throw what all is
useless. Keep aside what all is not needed at the moment. Items which are critical and most
important should be kept at a safe place. Eliminate unnecessary items from the work place.
 Organize (Set in order): Arrange items so that they are easy to use, find and put away.
Research says that employees waste half of their precious time searching for items and
important documents. Every item should have its own space and must be kept at its place only.
 Shine the workplace: Keep the items & work area neat &clean. The workplace ought to be
kept clean. De-clutter your workstation. Necessary documents should be kept in proper folders
and files. Use cabinets and drawers to store your items.
 Standardization: Create a consistent approach to tasks & uniform procedures. Every
organization needs to have certain standard rules and set policies to ensure superior quality.
 Self Discipline: Employees need to respect organization’s policies and adhere to rules and
regulations. Follow work procedures and do not forget to carry their identity cards to work.
 N.B: Some piece of literatures put Sustain as 5th Kaizen S instead of Self Discipline. Sustain
means make a habit of maintaining the correct procedure.
Read more
3.5. Introduction to Building Information Modeling (BIM)
223
What is BIM?
 BIM is one of the more promising developments in the architecture,
engineering and construction fields.

 So what is BIM? defined as rapidly evolving collaboration tools
that facilitate integrated design and construction management.

 It is changing the way contractors and engineers do business, but its
application is still relatively new and there is much to learn.

 BIM was introduced over a decade ago mainly to distinguish the
information-rich architectural 3D modeling from the traditional 2D

drawing.
 It is being admired by its advocates as a lifesaver for complicated
projects b/c of its ability to correct errors early in the design stage
and accurately schedule construction.
BIM …
224
 “BIM is the virtual representation of the physical and functional characteristics
of a facility from inception onward.
 BIM is an innovative process of generating a digital database for collaboration
and managing building data during its life cycle and for preserving the
information for reuse and additional industry-specific applications.
 It typically uses 3D, real-time, dynamic building-modeling software to manage
& increase productivity in building design and construction.
 BIM enables multidimensional models including space constraints, time, costs,
materials, design and manufacturing information, finishes, etc., to be created.
 It is Autodesk’s strategy for the application of information technology to the
building industry.
 It helps in better visualization and clash detection and is an excellent tool to
develop project staging plans, study phasing and coordination issues during the
construction project life cycle, preparation of As-Builts and also during
maintenance of the project.
BIM …
225
 BIM became a part of management tools in modern construction
companies.
 Progressive information and communication technologies support
cost management and management of construction project. One of
them is BIM.
 In construction projects there is a serious requirement for processing
the huge amount of information including design, construction, time
and cost parameters, economic efficiency and sustainability.
 In addition, BIM is the tool for managing relations between the
participants of a construction project.
 BIM is currently the most common denomination for a new way of
approaching the design, construction and maintenance of buildings.
Benefits of BIM
226
 list of main benefits of BIM:
 cost reducing in construction project management. BIM technology has big
impact to cost reducing. This is often reason, why companies want to implement
BIM technology.
 Among other benefits cost reducing and quality of documentation are the biggest
 time reducing in project documentation
 time reducing for the entire lifecycle of the construction project, including the
design phase
 faster access to information & relevant documents for all participants of
construction project
 increasing of employee productivity
 increasing of financial control, support and facilitate of decision-making
 increasing the quality of the documents, the elimination of error documentation
 elimination of errors in the construction process – increasing of construction
quality
BIM …
227
 The parties that they could have access to the BIM

models, as management tool, could include:
 the clients
 local authorities
 architects
 engineers (structural, civil, and MEP),
 main contractors,
 steelwork and concrete subcontractors,
 formwork contractors and
 all site personnel.
3.6. Total Quality Management (TQMS)
228
 TQM is defined as a continuous effort by management

to upgrade and improve the processes and systems to
ensure superior quality products.
 Every organization has to take care of its customers. Their
feedbacks are essential.
 Total Quality management creates processes and systems
based on customer feedbacks and various researches
which eventually help in the development of organization.
 Reading assignment:
 Read more about TQM and
 ISO 9001: 2015 QMS.
Chapter 3: Performance Improvement Tools &
Process Optimization (---2 wks)
229
Process Optimization
 Optimization means making the best out of a situation or the resources available.
 A Process transforms inputs in to outputs consisting of value-adding and non-
value-adding by-products.
 Construction processes are inherently cyclic and dynamic in nature. Construction
processes can be represented as input-process output (IPO) models hierarchically

integrated into larger production systems.
 Process optimization is the discipline of adjusting a process so as to optimize
(make the best or most effective use of) some specified set of parameters without
violating some constraint.
 The most common goals are minimizing cost and maximizing efficiency. This is
one of the major quantitative tools in industrial decision making.

 If the process is to be re-engineered, the project team may choose to map a desired
process map that allows the team to visualize the optimized process and ensure all
process weaknesses and threats are mitigated while sustaining process strengths
and implementing process opportunities.
Process Optimization…
230
 After the project team identifies process inefficiencies and causes of failure,
the focus of the team effort is on the identification, development and
implementation planning of the most viable solutions.
 The project team may optimize the process in different areas including the
identification of systemic enhancements such as software applications, reports
or email reminders that enable improved process communications or a direct
impact on process performance.
 Why Optimize? Benefits of optimized project techniques to owners include
better value through improved delivery times; higher-quality, processes,
communications, documents, safer workplaces, more efficient use of
resources; less waste of time and money; and much more effective use of
dollars invested in projects.
 What about for a contractor? A student need to answer this question.
 Construction processes can be slow and in some cases in need of optimization
 In the next chapter, we will look into a resource optimization.
.
231
THANK YOU (DAY

8)!!!
Chapter 4: Construction Resource Optimization (2 wks)
232
 4.1. For any construction Industry to be efficiently operating and be

successful the elements or the resources should be well known,
planned and made available.
 Revision on Resources in Construction Projects (You learned in many
previous courses, So Reading assignment)
 You need to go through:
 Manpower,
 Machinery
 Material
 Money
 Time
 Reputation (Goodwill)
 Information
4.2. Construction Wastes
233
 Construction wastes can be classified
broadly into Avoidable and unavoidable
wastes.
 The unavoidable wastes commonly results
due to natural loss in a process i.e.
efficiency is always less than 100% and this
kind of waste is labeled as allowable waste.
 The avoidable wastes are wastes that can
be avoided or possibly minimized by
 better design of a process (proper
planning),
 training staff and labor,
 hiring of experienced people,
 Motivating employees,
 better management exercise etc.
4.2. Construction Wastes …
234
 The “Eight Deadly Areas of Waste” that affects every

construction company, drive up costs, frustrate workers,
interrupt workflow, and erode profitability.
 Look again into section 3.2 Lean concept 8 wastes in
construction company.
Techniques of waste reduction
235
Source of waste Waste Reduction technique

Have clearly defined drawings and documents
Design standardized material dimension and design adequate building
component size, regular shape & spacing
Use experienced and sound design team
Avoid late design variation

Consider the environment during designing
1. Design Design off-site construction
Have accurate contract document
Accurate specification & quantity of materials
Simplified and proper details of drawings
Consider the availability of material during designing
Design renewable resources as much as possible
Techniques of waste reduction …
236

Deliver the required quantity of materials based on schedule
Purchase material that complies with the specification
Proper procurement management system
Identify and select the right suppliers
Proper storage of materials
Mechanical handling of materials
2. Handling of
materials & Use software for material planning and scheduling
procurement Properly inspect and check the quality of materials on site
Use experienced resources procurement team
Train workers about how to handle and install materials
Accurate inventory control
Carefully handle material during work
Adopt emerging technology product
Techniques of waste reduction …
237

Prefabrication can reduce about 52% of construction waste
3. Operation Use adequate tools and equipment during construction

(Construction Method) Use recent plants and machineries
Deliver required quantity of materials based on schedule
Provide incentives to motivate personnel to minimize material
4. Human Resource wastage
Train workers how to work in the site and use skilled personnel
Re-use leftover material on the site
5. Other Adopt recycling technology to recycle waste materials left over
on site
4.3. Ways of waste minimization
238
Resource leveling (allocation) and resource smoothening:
 Cost effective scheduling is one of the most important aspects of construction project
management.
 Traditionally, Critical path method (CPM) or PNA or the program evaluation and
review technique (PERT) combined with trial-and-error procedure are used.

 In this way, the cost effective project schedules are achieved in a time-consuming cost-
duration analysis of various alternatives for start times and durations of construction
project activities.
 Resource Levelling is a powerful tool used for effective Time Management during the
planning stage. This tool is the key tool for maximizing resource effectiveness. It
allows levelling available resources for reaching the most effective use of them during
the execution stage. Resource levelling is easily implemented with the help of PM
software such as Microsoft Project and Primavera.
 Remember that you have learned trial-and-error procedure of Resource leveling
(allocation) and resource smoothening concept in your Construction planning and
scheduling course.
 However, in trial and error method, doubt always exists as to whether or not the
4.3. Ways of waste minimization …
239
 To overcome the mentioned disadvantages, various different
optimization methods have been proposed for the cost optimization of
project schedules.
 Considering the exact mathematical programming methods, the cost
optimization of project schedules has been handled mainly by different
linear programming (LP) methods.
 However, the LP methods can handle only linear relations between the
variables.
 So nonlinear terms of the optimization models have been formulated
even if this is not our concern in this course.
 In this course, we will see that mathematical LP can be used to get the
optimal Resource leveling (allocation) and resource smoothening
instead of long trial and error.
 The concept of LP is discussed in the next section 4.4.
4.3. Ways of waste minimization
240
Optimization During Design development through

Standardization (Modularization) and use of
Prefabrication.
Module
 The unit of length of modular coordination, the size
of which is selected in order to achieve dimensional
coordination of building elements with maximum
flexibility & convenience.
241
 MODULE comes from Latin word “Modulus”

meaning small dimension
 Module is the basis of 3D rectilinear frame
which ensures that
 Standard materials and components can be used
together
 Which in turn fit into the general design layout
 Modular building component
 whose coordinating sizes are in accordance with
the basic module or its multiple.
242
 Modular coordination has proved to be not only an asset

with regard to industrialization of the building process, but
also a basis for decisions in the design stage of a structure
and resource optimization.
 In this stage decisions are taken with regard to the location
and the dimensions of the structural elements and to the
building materials.
 The decision on the location should be in harmony with the
choice of the building material.
 If the location of an element is, in the design, chosen
ambiguously, the dimensions of these elements are of less
importance.
 Therefore, it is important in the design to start with two
means of assistance, namely: a grid of center lines and
243
 Standardization (Modularization) of building or other

structure elements results to better use of resources
and time saving.
 During design development it should be taken into
consideration the optimal use of resources like rebar,
formwork, door and window height, structural precast
element etc.
4.4. Techniques of Resource optimization
(Graphic methods / Algebraic methods & Simplex Algorithm)
244
4.4.1. Linear programming (LP) (linear optimization (LO))

 The most common type of optimization is a single-criteria optimization.
 It assumes choosing one criterion and finding the optimal solution according
to it. E.g. minimizing the duration of a project or maximizing its profits.
 Key factors for project optimization (from a management perspective) are
time, capital (cost), and resources.
 LP can be applied to various fields of study such as business, economics and
also some engineering problems (planning, routing, scheduling, assignment,
design, etc.).
 LP has nothing to do with computer programming.
 The use of the word “programming” here means “choosing a course of
action.”
 LP involves choosing a course of action when the mathematical model of the
problem contains only linear functions.
4.4.1. Linear Programming
245
 Mathematical programming is used to find the best (most

suitable) or optimal solution to a problem that requires a
decision or set of decisions about how best to use a set of limited
resources to achieve a state goal of objectives.
 Steps involved in mathematical programming
 Conversion of stated problem into a mathematical model that
abstracts all the essential elements of the problem.
 Exploration of different solutions of the problem.
 Finding out the most suitable (best) or optimum solution.
 Linear programming requires that all the mathematical
functions in the model be linear functions.
4.4.1. Linear Programming…
246
DECISION MODELS in LP Model:

 A model is a simplification of reality. The purpose is to entangle
(catch up) the major assumptions for the decision and publish
them in an attempt to optimize the decision.
 A profit based decision model is as follows:
 Profit = revenues – cost.
 Mathematically we note that profit is a function of revenues and cost:
Y = f(X1, X2) were Y is profit and X1 and X2 revenues and cost.
 The profit (Y) is dependent on the two parameters; or how large are the
revenues (X1) and cost (X2) respectively.
 Y is therefore dependent variable and X1 and X2 are independent
variables.
 Revenues and cost are inputs and the profit the output.
The Linear Programming Model
247
Let: X1, X2, X3, ………, Xn = decision variables

Z = Objective function or linear function
Requirement: Maximization of the linear function Z.
Z = c1X1 + c2X2 + c3X3 + ………+ cnXn …..Eq (1)

subject to the following constraints:
…..E
…..Eq (2)
where a , b , and c are given constants

4.4.2. LP: Graphic methods / Algebraic methods
248
 The maximization or minimization of some quantity is

the objective in all LP problems.
 All LP problems have constraints that limit the degree to
which the objective can be pursued.
 A feasible solution satisfies all the problem's
constraints.
 An optimal solution is a feasible solution that results in
the largest possible objective function value when
maximizing or smallest when minimizing.
 A graphical solution method can be used to solve a linear
program with two variables as described next.
4.4.2. LP: Graphic methods / Algebraic methods…
249
Guidelines for Model Formulation

 Understand the problem thoroughly.
 Describe the objective.
 Describe each constraint.
 Define the decision variables.
 Write the objective in terms of the decision variables.
4.4.2. LP: Graphic methods / Algebraic methods…
250
Graphical Solution Method …
251
252
253
254
255
256
257
Summary of the Graphical Solution Procedure
for Maximization Problems
258
 Prepare a graph of the feasible solutions for each of the constraints.

 Determine the feasible region that satisfies all the constraints
simultaneously.
 Draw an objective function line.
 Move parallel objective function lines toward larger objective
function values without entirely leaving the feasible region. This
can be done by trial &error by obtaining the function value at x 1 &
x2 = 0 alternatively. Then increase the function value with out
entirely leaving the feasible region if the 1 st trial is with in the
feasible region.
 Any feasible solution on the objective function line with the
largest value is an optimal solution.
4.4.3. LP: The Simplex Method
259
 When decision variables are more than 2, it is always

advisable to use Simplex Method to avoid lengthy
graphical procedure.
 The simplex method is not used to examine all the
feasible solutions.
 It deals only with a small and unique set of feasible
solutions, the set of vertex points (i.e., extreme points)
of the convex feasible space that contains the optimal
solution.
4.4.3. LP: The Simplex
260
Method…
Steps involved:
1. Locate an extreme point of the feasible region.
2. Examine each boundary edge intersecting at this point to
see whether movement along any edge increases the
value of the objective function.
3. If the value of the objective function increases along any
edge, move along this edge to the adjacent extreme
point. If several edges indicate improvement, the edge
providing the greatest rate of increase is selected.
4. Repeat steps 2 and 3 until movement along any edge no
longer increases the value of the objective function.
4.4.3. LP: The Simplex
261
Method…
Please, continue your reading on pdf file named
chapter 4.4 LP graphical and simplex method.pdf
as given separately.
READING ASSIGNMENT
.
262
END OF CLASS
THANK YOU (10 th
Day)!!!

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CONSTRUCTION

BSc. IN CONSTRUCTION TECH. & MANAGEMENT, EiABC, Feb. 2024

 3.2. Lean Concept

 3.3. The Kaizen Event

 3.4. Balanced Score Card

 3.5. Introduction to Building Information Modeling (BIM)

 3.7. ISO 9001

 The construction sector is one of the largest in the world

 However, the industry’s productivity has trailed that of other

 Globally, construction sector labor-productivity growth averaged 1% a

Even if current researches are required, previous

 Quality of construction is poor (repairs and reworks)

Workers are not satisfied

 According to the Egan’s rethinking construction

Statistics shows that people working in the

 Design and construction are two separate processes

 Competitive tendering is the most common way in which

 Industry is fragmented and construction is performed by

• need to complete all design before construction cost can be

Industry has bad reputation due to:

 Lack of innovation and development

 Industry dominated by the old craft culture

 Fragmented and adversarial

 The competition for the best talent is very high (for

example the choice between becoming a doctor,

According to the Egan’s rethinking construction report, the

 Profitability is low (across the board)

THANK YOU (DAY

Lack of innovation and development which is reflected by:

 How can the Construction Industry be improved?

 How can project management contribute to this

where do we initially put our effort to get

Many reasons for this poor performance:

Reasons for Cost Overrun

employer’s inactions and work acceleration measures.

The reasons of time overrun for the three sectors are:

Survey result with regard to

Innovative firms suggest that acting in 7 areas

1. Reshape regulation; transparency in permitting and

3. Rethink design and engineering processes;

6. Infuse digital technology, new materials and advanced

through contribution of individuals or teams to

 If one does not measure performance, one could

actual objectives against the predefined goals and

Performance is often confused with productivity.

 Performance refers a broader concept that includes

functional in regard to performance, profitability and

resources to the minimum level that is theoretically required

output (Grünberg, 2004).

 Performance management enables supervisors and their subordinates:

 Performance Management is the process of:

 Some of the major concerns of performance

THANK YOU (DAY 2)!!!

Construction Performance management Process:

 Construction Performance Planning

 Carrying out the construction work as per Plan

 Measuring & Evaluating actual construction

performance against plan

Construction Performance Planning:

 The major areas for getting results (Goals).

Carrying out the construction work as per Plan:

 Check necessary project organization & availability of

resources (manpower, material, equipments & money)