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09 MANAGING PROJECT PROGRESS

The GUILD closed my objections and issued some cosmetic changes I am in complete disagreement. Therefore I am opening this discussion again as to have a place to openly discuss my further comments. 

I am having difficulties as how best to transfer the discussion subject-body when points not included under the topic subject-body surfaced during the discussion and were moved to multiple discussion forums by GPC Admin.

 

Sorry for any inconveniences. 

09.5.3.1.3 Adding Activities

  • 09.5.3.1.3 Adding Activities to the CPM Schedule 

09.5.3.1.3 photo 09.5.3.1.3_zps2zwyiaan.jpg

  • The above suggestion to leave the original logic in place by the GPC is wrong, leaving deleted activities as well as leaving the original logic in place among other issues:
  • 1. will distort resource leveling
  • 2. will distort cost loading
  • 3. will distort schedule updates on activities no longer existing
  • 4. will be confusing and misleading
  • 5. will miss necessary logic revisions common when as a result of change in scope it dictates a need for a change in logic, among others, such as necessary logic revisions common when preferential logic is used. 
  • 6. GAO Schedule Assessment Guide Best Practices for Project Schedules suggests keeping deleted activities and logic while setting duration to 0. But this is not fail safe and error prone as can be if you miss the impact of still active lag in progress or any other remaining lag as well as if you miss to delete any fixed cost assignment. 
  • http://www.ronwinterconsulting.com/Making_CPM_Transparent.pdf
  • In-Progress Lag Report and Value: Remaining Lag should be displayed just as remaining duration is shown and editable. The CPM feature of Remaining Duration was added so that Schedulers could monitor and change this calculated duration result. Lags are to relationships what durations are to activities.
  • 7. Spider Project allows you to display deleted activities on a conspicuous way when comparing schedule versions and without the risk of interfering with current schedule. Easy, everything is transparent, no need to tweak schedule versions. If your software lacks enough functionality it is no excuse to promote such misleading and error prone practice. 

https://www.linkedin.com/puls

In our state and municipal

In our state and municipal construction jobs as wel as in private construction jobs it is not unusual to allow some flexibility with regard to the billings cutoff date.

Say that during a given billing period 100% of billable work is zero because no billable activity was not realized. Such can be the case of concrete on a mat foundation delayed a couple of days because of rain. All preparation activities that are non-billable was done during the financial period but the pouring happened a couple of days after the end of the financial period. Here it is not unusual to allow some flexibility with regard to the billing period. The contractor will be allowed to submit a payment request for a slightly different financial/billing period and not forced to wait until next billing period. This causes no problem with the time phased data if using Excel or Spider Project that allows for flexible financial/billing periods, on the other hand if using P6 or MSP software as a payment tool you will not have such flexibility.

  1. How does the GPC proposes to deal in a reasonable way with this issue when P6 is used when is dependent on a single fixed financial periods definition? 
  2. How does the GPC proposes to deal with P6 if using a common database when there are multiple jobs requiring different financial periods?
  3. MSP being less functional in this regard will present more challenges to tackle such issues.

The same happens with other similar concrete pouring preparation activities where no payment is allowed until concrete is placed.

Everything is becoming too complicated for the average job, too many restrictions on the use of the tool as if every job will end in court.

  • For the settling of ordinary change orders and scheduling issues it is common for those who will make the decision not to rely on a schedule and software intricacies they cannot understand and use common sense.
  • If a job ends up in court it will be to the expert analyst to fix the schedule as for it to be valid as a claim tool; once again most judges will end up doing the same, not to rely on a schedule and software intricacies they cannot understand and use some common sense. 

No wonder most field supervisors as well as many Contractors disdain and dislike formal scheduling procedures to the point they prefer to outsource it to meet contractual requirements and use manual methods and electronic worksheets to plan their own work. 

If the GPC wants to elevate how others view the CPM Schedule it would be good not to forget there is another side of the coin. 

PP Admin,How can we help?

PP Admin,

How can we help?  Please email PP Admin with what you want on there and we will update it.  As I said in my earlier post; the top thread must have (1) the GPCCAR text that you are questioning, (2) how YOU feel the text should be presented in order to be correct and (3) your logic / reasoning for it.  

  • There is so much said within my already segregated posts that I doubt the space provided will be enough, I do not know how I can adequately fix it other than to cross reference the discussions prior to GPC Admin segregating them all as well as rolling back the title to the original title before it was segregated. 
  • A better solution would be to roll back until all segregated discussions return to where they started to where thy belong but this is out of my hands. It was very simple everything I wanted to debate about Section/Chapter 9 in a single open discussion. 
    • http://www.planningplanet.com/forums/guild-project-controls-gpc/586276/090-managing-project-progress-and-bobbys-world
  • This would never happened if not by the insistence of GPC Admin to invade other domain and take over PP FORUM as if having their own GUILD CLOSED FORUM full of restrictions is not enough.
    • OPEN TO ALL PP MEMBERS
    •  photo PPForum_zpsz8gyxmjs.jpg
    • CLOSED - OPEN ONLY TO THE GUILD MEMBERS
    •  photo PPGuild_zps4gvr23no.jpg
  • I am posting in what I believe to be an OPEN FORUM not in a GUILD CLOSED FORUM/DOMAIN along with their particular rules you are applying to my discussion within PP OPEN FORUM.
  • My interest is to have open discussion in an OPEN FORUM that have no such requirements. Such as an OPEN FORUM that does not require an "open source" published reference for each statement you make. All I am asking is a place to present my views and debate it without so many restrictions. Same as PP FORUM was before, same as it is currently applied to other discussions in PP OPEN FORUM. 
  • If the GPC do not want their paper to be discussed then they should keep it within the GUILD and not make it available to anyone outside the GUILD. As soon as they make it public then it becomes a concern of anyone that can be impacted by its adoption.
  • Currently only about 2% of construction jobs in the USA are mandated to use CPM Schedule as a payment tool and close to 0% of construction jobs are mandated to use EVM. Construction contracts are radically different to defense development contracts, the DOD recognizes the reality but the GPC do not. The adoption of GPC ideas by our state and municipal agencies can be detrimental to our practice. 
  • To the GPC there is no distinction by location or industry sector.  The GUILD says - "The Guild of Project Controls Compendium and Reference (GPCCaR) to all intents and purposes defines the subject matter that the Global Project Communitybelieve to be neccessary in order to be a fully-rounded practitioner irrespective of Location or industry Sector." 

Best Regards,

Rafael

Dear All,We recieved numerous

Dear All,

We recieved numerous "flag as abusive" alerts to the past few posts on here (so what I think is unecessary) have been edited out; I think I had to edit 3 or 4 different posts on this thread.

ADVICE: If anyone is unhappy about what somone has said then advise the Administration and they will deal with the problem but by retailiating both party's become the problem - so please everyone, let's have some more careful use and choice of words.

Please, if anyone sees anything I have missed (and I should be working and not wasting time doing this so shame on any offenders) please email PPAdmin@planningplanet.com and we will have it addressed by whomever (whomever or whoever?) is on duty.

Rafael Davila, the GPC Admin advised that you are having a problem in editing the top most thread?  How can we help?  Please email PP Admin with what you want on there and we will update it.  As I said in my earlier post; the top thread must have (1) the GPCCAR text that you are questioning, (2) how YOU feel the text should be presented in order to be correct and (3) your loigic / reasoning for it.  

If the issue and how it should be fixed is not presented then how can we effect change for the better?

Regards.... PP Admin

Paul,You might have

Paul,

You might have disagreement with the USA DOD but you are so biased that you publish within the GUILD a one side version about mandating EVM and a one sided version about mandating the CPM Schedule as a Payment tool. 

You said - Rafael, IF you or any other contractor, whether in the USA or Indonesia or Outer Mongolia or the Antarctic is being paid for the work they have physically completed (which is almost certainly 100% of us) then they are using SOME FORM of "Earned Value Management".

  • Your statement misses that there is an abysmal difference between EV and EVM, here a single letter makes a huge differene. By the same token EV and PV look similar but represent different concepts.
  • There is an abysmal difference you are unable to see and accept, a difference the DOD understands. 
  • EVM attempts to integrate Cost and Schedule time element using simplified approach that is very poor as it does not distinguish between critical and non-critical activities. Basic EV does not attempt to mix schedule time element, does not attempt to mix oil and water.  

Your article are wrong, your call for ambiguous practice is wrong.

  • To promote ambiguous versions of any standard is wrong. The correct approach would be to use different standards/specifications. In some cases the correct approach would be not to mandate standards not applicable to the particular case. 
  • Any further EVM as well as for ES [Earned Schedule] limitations such as their dependency on a Baseline that in many cases is ever changing may be inherent to the concepts.
  • Private sector uses EV without using the unnecessary acronyms EVM depends so much.
  • To say private sector uses EVM is wrong, a few do, many do not.
  • To say private sector across the board uses ANSI 748 is wrong.
  • To pretend mandating use of EVM without disregard to contract type and volume threshold is foolish, no one size fits all.
  • There is no such thing as multidimensional WBS in use, all are vertical structures, the needed to have different views or different WBS structures is another thing. What you call dimensions can be represented by different WBS levels. Any CPM software can handle more than 3 WBS levels, calling for only 3 levels is not a good call. 
  • To say the primary driver for government contractors appears to be compliance to protect the contractor in the case of a government audit is not true, cannot be substantiated by wishful thinking, until the requirement is taken out of the contract it cannot be quantified and substantiated.
  • If only 1.7% of the contractors partially meet the NDIA requirements it shows there is no desire of private contractors to use it and makes a statement in favor of the primary driver for government contractors to be compliance with the mandated contractual conditions.
  • I take no side regarding LOE Activities as the software I use do not have such thing. Spider Hammocks and LOE activities are not the same and the differences are documented.

The DOD do not recommends EVM except for Development Contracts that meet specific thresholds and discourage its use on firm-fixed-price [FFP]contract to the extent it would require a waiver by the DOD for it to be used on FFP contracts, it is your inability to recognize USA practice that is an issue.

I do not want to add something else to Section 9 of the GUILD document, I would like it to be corrected by someone else that is not so biased as you are.   I do not want to be part of it but to raise my independent voice about the many wrong things (I think) it promotes.

My experience with the AACE International when at one time I was considering becoming part of it was that as a condition I would be required to abstain criticizing the AACE International. By asking me to abstain criticizing the GUILD unless I become part of it you are showing the same attitude, not everyone wants to be part of a group that promotes ideas they do not agree and find extreme/biased. I have no interest in becoming part of the GUILD. 

Your frequent references of articles of your authoring as to substantiate your own work seems to me a poor choice, too much of self-promoting yourself.

Best Regards

Rafael

Rafael, IF you or any other

Rafael, IF you or any other contractor, whether in the USA or Indonesia or Outer Mongolia or the Antarctic is being paid for the work they have physically completed (which is almost certainly 100% of us) then they are using SOME FORM of "Earned Value Management".

4328
EVM can be very basic as shown above or it can be very complex, as used by the US DoD, but the fundamental concept underlyng earned value mannagement is PAYMENT FOR PERFORMANCE (Quantum Meruit) and it is based on the "Piece Work" system developed back in the 17th and 16th Century factories and is still in use today.

Suggest that you read over these two papers:

http://pmworldjournal.net/wp-content/uploads/2013/04/pmwj9-apr2013-giammalvo-do-small-contractors-comply-ANSI748-FeaturedPaper.pdf 

and

http://pmworldjournal.net/wp-content/uploads/2013/07/pmwj12-jul2013-giammalvo-practical-look-enterpreneurial-contractors-evm-FeaturedPaper.pdf

THEN if you feel you have anything else you want to see included in the GPCCAR, that you FOLLOW THE PROCESS.....

Otherwise arguing with you is clearly futile and going nowhere......

Regards,

Dr. PDG, Jakarta, Indonesia

In the USA the requirement to

  • In the USA the requirement to use the CPM as a payment tool in public construction contracts is for practical purposes exclusively mandated on federal contracts, in less than 2% of our total volume of construction contracts. In over 35 years bidding for hundreds of jobs I have never seen it outside federal contracts.
  • In the USA the requirement to use the CPM as a payment tool in private construction contracts is for practical purposes nonexistent. In over 35 years bidding for hundreds of jobs I have never seen it in private construction contracts.
  • In the USA the requirement to use EVM in private construction contracts is for practical purposes nonexistent. In 35 years bidding for hundreds of jobs I have never seen it in private construction contracts. 
  • In the USA the requirement to use EVM is for practical purposes exclusive on federal development contracts, this essentially rules out all construction contracts.

By looking at the US Census on Construction we can estimate what is the USA collective wisdom.

 photo USAConstCensus_zps2984hlgk.jpg

  • https://www.census.gov/construction/c30/c30index.html 

If you calculate the percentage by volume of work of all construction contracts that mandate the CPM as a billing tool you will have that in less than 2% [100 x 22,043/1,133,932] of USA CONSTRUCTION contracts the CPM schedule is mandated to be used as a payment tool

Because for practical purpose no single construction contract falls into the category of "Development Contracts" where EVM is required by Federal Government then for practical purposes in 0% of USA CONSTRUCTION contracts EVM is mandated.

The results of this simple mathematical exercise are overwhelming. 

To say that the collective wisdom in the USA does not matter is nuts. That over than 98% of USA construction contracts value do not mandate the CPM as a billing tool and that for practical purposes 100% of construction contracts do not mandate EVM is a clear message of what is our collective wisdom. In the USA many of us agree with the wisdom of over the 98% of our construction contracts that do not require the use of CPM as a billing tool in construction contracts, many of us agree with the 100% of our construction contracts that do not require formal EVM in construction contracts. As a general rule we do not make use of what we find of little or of no justified value. 

I do not pretend to say USA wisdom/practice is near perfect, it is not. While 75% of our construction volume is private work where the contractor have real bargaining power in the remaining 25% it is common for the Agencies to require CPM software by brand specification, illegal in theory but rarely enforced. This practice is creating an oligopoly of a couple of software vendors that have no interest in providing good enough resource modeling capabilities.  This 25% is way too much of an imperfection. 

The collective wisdom in the USA is the opposite of the GUILD collective wisdom. 

  • Paul said - "Context is everything and what works under one set of circumstances or for one sector or application may not work in others.  There is no “one size fits all” .
  • The GUILD says - "The Guild of Project Controls Compendium and Reference (GPCCaR) to all intents and purposes defines the subject matter that the Global Project Community believe to be neccessary in order to be a fully-rounded practitioner irrespective of Location or industry Sector."  

Best Regards,

Rafael 

Rafael, having grown weary

Rafael, having grown weary from what seems to be a never ending debate with you this is my last posting on this subject.


I stand by my first hand experience IN THE USA and apparently you stand by YOUR EXPERIENCE , which to be candid, I don't all that many differences.  Seeing how you seem to disagree with the collected wisdom compiled and codified in the GAO's "Best Practices in Scheduling" and "Best Practices in Capital Budgeting", which included some of the top names in the industry,  then either you are off track or collectively, all the rest of us are off track.

BUT if you want your experiences (which I have no question, when put in  the appropriate context, are valid) included in the GPCCAR, then I can only urge you to follow the process we have of updating it......


IF you don't want to do that, then I'm sorry, but I have better things to do with my time than to continue this endless debate...

BR,
Dr. PDG, Jakarta, Indonesia

Paul and the GPC,1) Update

Paul and the GPC,

1) Update the schedule with all Actual Finishes as of the Billing Closing Date; 2) Reconcile any Out of Sequence Progress by showing the correct logic as it actually happened and include that reconciliation in the billing package (along with soft copy of the updated CPM schedule).

I do not see any DRAFT watermark on the GUILD document, so I read it as a finished product, unless it will forever be a DRAFT and therefore forever useless. 

I have mentioned multiple times that changing the schedule any change in the schedule  for whatever reason it shall be subjected to a long revision procedure and that non approved schedules will be rejected right away, it goes beyond your whims.

In USA practice it might be a handful of Federal Government Agencies require the CPM as a payment tool as it was in my only such experience at a Navy Job. Such requirement became a nuisance to the point it was agreed:

  • waiving the contractual requirement to use retained logic and use progress override,
  • waiving fixing all OOS logic keeping all activities with pending payment items open no matter how small as it was not as detrimental to the payment process and use progress override with all the implications this have in the usefulness of the schedule as a planning tool.

Here private jobs as well as state and municipal government jobs are not required to use the CPM as a payment tool. It is practical and sensible compromise that keeps away the need for too much granularity and the frequent revisions of the CPM model that using the CPM as a payment tool requires. Such approach in any way prevent us from issuing our payment applications and schedule updates that meet the requirement to represent true progress but without the complication the requirement to use the CPM as a payment tool creates.

3) Filter out ONLY those activities which have an actual finish from the last billing closing date to the current billing closing date; (The rest of the unbilled activities showing the status of the entire project are included in the soft copy of the schedule which we also submitted with the billing).

This is just a report filter good for those having knowledge on the CPM software, but here many responsible of approving the Application for Payment do not have knowledge of the software.  

Here everyone knows and understand Excel but not Primavera P6, MSP, Asta PP, Spider Project or perhaps a GUILD favorite. It would be irresponsible on their part to require CPM software as a payment application tool and not use it to verify the payment application calculations as well as the required schedule changes when activities must be split as to fix out-of-sequence caused by the requirement to use the CPM as a payment tool.

What CPM software are you advocating to be imposed to the Contractor who is responsible for the means and methods and all the other parties having some say in the submittal and approval of the payment application in order to prevent the payment process becoming a Tower of Babel?

4) Because (consistent with GAO’s “Best Practices” ) we keep our activity durations to less than a single billing period (in most cases, 30 days) so we can use the 0% - 100% rule, meaning we can only bill for those activities which are PHYSICALLY 100% complete, which means “normal” (not serious) punch list items do not count as that is covered by the retention. This results in an added "big push" to finish as many activities as possible before the billing closure date, which is good for both the owner as well as contractor).

We do not use 0%-100% rule it makes no sense at all either for billing or for schedules that are to be resource leveled. Say a $150,000 equipment unit is 90% installed, such nonsense rule means no payment or full payment. Acceptable in Indonesia but not in the USA.

By splitting activities resource leveling can schedule them apart instead of contiguous. Acceptable in Indonesia but not in the USA. I had no idea the GUILD oppose to BEST resource leveling models. 

Big push makes not much sense, if unattainable it can promote delaying the activity to start early during next payment period. The emphasis on managing the schedule though the payment application is not a good management approach. 

Your prior statements about how bad some US Government performs is erratic and self-serving: the US DOD by your standards is bad while the GAO is a US Government Agency is a good reference; only when convenient it is good reference, when not convenient it is a bad reference. If GAO scheduling practice is so good why taking the effort to make a duplicate of it unless something is wrong? Why re-invent the wheel?

Many of us consider DOD reference and its assessment of no requiring EVM in firmed-fixed-price contract based on years of experience and a good assessment, on the other hand I do not believe the GAO reference is a flawless reference, similar to the GUILD it is biased in favor of some flawed theories like placing artificial limits to activity duration. Many such as The American Bar Association believe other references adopted by the GUILD, such is the case of AACE International RP for forensic analysis is nonsense. 

The danger with the GAO reference is on their lack of making it clear it is intended as a management guide for the agencies not to be imposed to their private contractors. It would be easy for morons with initiative to copy and paste it in into private contractor contracts. We do not need more cookie cutter guidelines that people have a tendency to view as black and white when referenced in our contracts become a legal mandate. Mandating the contractor such strict control on their means and methods by incorporating such references into our contracts is an intromission not welcomed by everyone here, different to Indonesia/Jakarta.

5)  We review the proposed billing with the project manager and/or contracting officer who agree that it is acceptable to them. (Informally unless there is an issue).

In our practice prompt payment is very important and we have no time for informal process we do not recognize, the vast amount of out-of-sequence events that using the schedule as a payment tool will create a vast amount of issues to be solved by a lengthy formal review of the changed schedule, changes that will require a change in the Contract Baseline activities no matter if EVM is required or not. In public contracting formal informal changes are not recognized and prohibited by law, different to private practice. Different to Indonesia/Jackarta were there are no requirement for formal changes no matter if public contract. 

6) We compile the supporting documentation to prove that the work has been completed in substantial compliance with the technical specifications. (i.e. concrete break test reports, NDT test results etc). 7) We provide any supporting documentation to establish that we have met of fulfilled all the “shall” clauses in the contractor, which most often meant certified payrolls and having met the minority set aside requirements;

So do we, but this can be a frequent source of OOS issues that must be solved and submitted for a lengthy approval process when the CPM is required to be used as a payment tool. On a 10,000 thousands activity schedule it is to be expected a few such occurrences will happen on every payment application. 

8) We officially submit the bill, which has already been pre-approved and within 30 days, we get paid.  Assuming the paperwork is in order, IF we are not paid within 30 days, we are entitled to bill a late payment penalty of (back then 16% per year).

We have similar requirements but the paper work will not be in order until all OOS issues are formally submitted and approved after a lengthy process.

9) Having outlined this process, the question is whether this process is or is not necessary for a projecct control professional with less than 5 years experience to "Know and Understand".  (See Module 02.2- Developing the Project Control Career Path Development Plan, Figure 3 http://www.planningplanet.com/guild/gpccar/develop-project-controls-career-path-development-plan.

Your outline might be good for Indonesia/Jakarta but does not automatically apply to the USA where the practice is so different.  To understand USA process as outlined in my answer does not require more time than submitting a couple of applications under the supervision of an experienced PM. If between these two applications there is a month period a month shall be enough to figure it out how OOS events can delay the payment process if the CPM is required as a payment tool.

10) IF the Fellows, who are the Peer Review Committee, believe the answer is YES then we include it.  If not it is expected that this information is picked up through reading and understanding the SUPPORTING information which in this case is the GAO's "Best Practices in Capital Budgeting's section on Earned Value Management," the GAO's  "Best Practices in Scheduling"  along with the NDIA , NASA and other referenced documents.

That the Fellows believed the answer is YES with regard to mandating EVM and use of CPM as a billing tool tells me the Fellows are unqualified to make judgments on how things are done in the USA and what is best to USA.

That GAO call it “Best” many of us find it wrong as if there are no other better practices. As if mandating artificial limits to activity duration is best practice when it is not a universal truth.

While NDIA does not specifically distinguish between firm-fixed-price contracts as to determine when to apply EVM in DOD contracts it does increases the threshold. Because NDIA partnered with DOD and does not make any comment against the DOD discouraging the use of EVM in firm-fixed-price [FFP] contract it shall be interpreted as that they are in agreement. The GUILD makes reference to NDIA which partnered with the DOD but says DOD is not good and do not mention their agreement/disagreement with NDIA with regard to the thresholds and application to FFP contracts, this is weird.

Hope this makes sense to you so that you can better understand the USA processes and the practical and legal constraints we are working under my jurisdiction, a USA territory.

Best Regards,

Rafael

Hi Paul,Thank you for the

Hi Paul,

Thank you for the comprehensive answer to my post.

[PDG] We have known each other for many many years now and as one trusted and respected professional to another, I feel owe you nothing less….

I will answer to some of your statements and will clarify my concerns.

[PDG] And I will do my best to respond to them, at least on an individual basis…..  (I am not authorized to respond for and on behalf of Planning Planet or the Guild so my responses may or may NOT reflect those of either organization.)

I appreciate the work of small group of professionals that develop first version of the Guild standard as appreciated the work of Bill Dunkan and others developed the first version of PMBOK Guide.

[PDG] Actually that analogy is very apropos to the procedure we followd in creating the GPCCAR….

I am sure that you remember that this first version of PMBOK Guide was free for the download at PMI site. PMI at that time tried to build professionalism in project management and I expect that the Guild is trying to improve professionalism in project planning.

[PDG] Yes, again that is exactly what we are trying to do, not just for "planning" but for all of project controls, which includes cost and forensics……  This context is important as we cannot look at scheduling without looking at costs and the potential for claims and disputes...

I hope that the Guild will try to avoid PMI destiny and will be as open for criticism and discussions as possible letting all members and non-members to contribute to Guild and its standards development. Open discussions is the best way to keep the Guild and its standards alive.

[PDG] Again we are trying to avoid exactly what you and I both know happened at PMI.  Which is why we are:

1)    Not charging anything for the GPCCAR (The GPC do esnot want to be greedy and charge members after we all collectively donated and shared our knowldge)

2)    Making the GPCCAR available under “Creative Commons” license rather than trying to copyright and own everything.  This is what PMI was notorious for and now evem AACE has started charging for their TCMF, which was not what John Hollman had in mind when he wrote it)

3)    Updating the GPCCAR in as close to “real time” as possible by creating an open and transparent process whereby everyone who is interested, whether member or not, has the opportunity to contribute and be part of the decision making process.  However, in the end, SOMEONE has to make a decision what is in and what is out and that is left to the Fellows to decide, understanding that to become a Fellow all one has to do is APPLY and meet the qualifications. The GPC Fellows is NOT a “good ol’ boys club”. where only a select few are "invited" to join. Anyeone who is interested and qualifies can apply.

I have my own concerns about the content of Guild standards. I would include only those areas that are truly international and useful for all planners. I fully agree that the schedule shall be resource and cost loaded, that project success criteria shall include costs, that project planners shall control and compare Planned Value, Earned Value and Actual Cost but few of them manage payments that are certainly organized different ways in different countries.

[PDG] What you describe is a really tough call, Vladimir as the practices vary so much around the world.   Not only that, but unlike PMI and AACE, which only take the OWNER’S perspective, the Guild went to great pains to ensure that BOTH the OWNER and CONTRACTOR perspectives were represented.  Also as the Guild not only represents planner/schdulers but also cost managers , forensic analysits and project controlles, we have to look at  the entire process, not just that of the planner;schdulre. Because of that PAYMENT must be included even though in Russia, a planner/scheduler may not be responsible for billings or payment reconciliation in many parts of the world , the project control professional, especially one workng for a contractor, is almost guaranteed to be involved in billings and payments, if nothing more than reconciling them.

Why are you so sure that the Guild standards describe the best practices?

[PDG] You need to be careful of the terminology.  The Guild is NOT advocating “best” practices as that implies an unsubstantiated OPINION. What the Guild has gone to great lengths to ensure is that what we claim as being “BEST TESTED AND PROVEN” practices are backed up by sound research, applying the scientific method. It also implies that what is recognized as a "best tested and proven" practice today, may well change as  new research based proof comes in that there is in fact something "better" out there.   It also means that what is a "best tested and proven" practice in one sector may NOT be in another sector, which means we may end up with more than one "best tested and proven" practice, based on different parts of the world or different even different perspectives- i.e. what may be a "best tested and proven" practice for a CONTRACTOR may well be too much granularity for an OWNER.  BUT all this is going to take time to evolve.  THe GPCCAR is a STARTING POINT only.

For many years I presented at different conferences much more advanced practices that are in use in Russia. Few people understood what I spoke about. Unfortunately so called “developed” countries use the project management practices that were the best in the early 60-s.

[PDG] Yes, I am well aware of your presentations and while I agree 100% that much of what you advocate is AHEAD of where much of the developed countries are, for whatever reasons the market has been resistant to accept them.  HOPEFULLY the process developed by the Guild will help correct this by providing a much more open and transparent approach  to determne what is a "best tested and proven" method than that used by PMI,, AACE et al, but only time will tell.

You suggest Russians to adopt them?

[PDG] No, what we are suggesting is that Russia and other developing nations BENCHMARK what you are doing and if you believe you are doing BETTER, then we have put in place what we hope to be an open and transparent system that will enable those “best tested and proven” practices wherever they come from, to be adopted into the GPCCAR.

I always answer to questions of Russian managers like how "they" manage their projects with so poor tools, without considering volumes of work, resource productivity, without integrating scheduling with estimating, and a lot more?

[PDG] I agree. As nearly all my life has been spent as a CONTRACTOR, I can assure you that those “hard money” contractors who are able to stay in business longer than 5 years do exactly what you describe above.  Some of the huge contractors who do cost plus contracts maybe can get away with it as well as owners, but I can promise you that what you describe is how SUCCESSFUL small to medium sized contractors do things, otherwise they are quickly and unmercifully driven out of business as they are working on slim, single digit EBIT margins

“Developing” countries like Russia have developed tools and techniques that are successfully used in many projects and by thousands companies. But to receive credentials they shall study methods and tools that are not used in their countries, that are obsolete but are the best practice somewhere else.

[PDG] This is exactly why the Guild has developed an open and transparent peer review system built on the scientific method as the basis to update our GPCCAR in real time.   The ONLY requirement is that people follow the process.  Doesn’t matter if you come from Russia or Nigeria or Brazil or Indonesia.   Your practices have just as much a chance of being adopted PROVIDED you can provide some PROOF that they work.   Simply saying “your process is better than my process” is not sufficient. There needs to be empirical PROOF to back up the claim.

When I prepare people to PMP exams I always suggest my students to forget how they manage real projects and imagine that they know nothing except PMBOK Guide to be able to pass the exam. I would not be pleased to tell the same to people who would try to get Guild credentials.

[PDG] I will PROMISE you that will not happen, at least not if I have any say in things.  The whole idea behind the GPCCAR was to avoid the insanity of having to tell students “forget what you know works and only follow what the book says”.  But to do that, we had to start SOMEPLACE which is why we researched over 5,000 pages of documents when compiling the INITIAL GPCCAR.  Now the next challenge is to get enough people to research and update the GPCCAR, which is why researching and writing papers is such a major part of the GPC Credentialing process. http://www.planningplanet.com/guild/certification

Thank you for your good opinion about Spider Project. It includes methods and techniques widely used in Russia but when I try to promote our approaches I hear that MS Project and P6 do not support them and these packages are required to be used in most contracts in the “developed” countries. Spider Project was developed to include all the best in the project management, in “developed” countries best practice includes what is supported by Microsoft and Oracle. Feel the difference.

[PDG] I cannot guarantee that Spider will ever replace MSP or P6, but I do know it has some really impressive features and my best advice would be to get more Russian practitioners to write papers, but try to keep them focused on a specific FEATURE.   Submit those papers as part of the GPC credentialing process and at the same time, fill in the form suggesting a CHANGE.  I can promise you that the Fellows are open to changes as we are well aware that “Business as Usual” just is not sustainable and if we want to raise the professional image of project control professionals then we MUST be willing to embrace change.

Returning to the topic I think that the standards shall include only those topics that are necessary and typical for most planners in most projects in most countries. Managing of payments is not one of them. Making standards too large we do not motivate people to study them.

[PDG] As noted above, while I agree that we need to minimize the topics, because we are representing both owner and contractor perspectives and because the practices change around the world, while you MAY be correct about SCHEDULERS not being involved in payments, I can ASSURE you that Cost Engineers and Project Control Professionals ARE involved in payments, especially if you are working for a contractor.

And thank you for considering Rafael's opinion. I am sure that PP shall be open for any discussion and Guild standards shall be improved basing on PP members feedback even if it was not formal.

[PDG] Rafael has brought up some good points. If we can get him to follow the open and transparent process we developed in order to get our GPCCAR ISO certified as a standard and our certifications ISO 17024 certified, then I am confident he would get a lot of his ideas adopted. 

He also would be much better received if he stopped making demeaning comments about what others have used and know works. 

Context is everything and what works under one set of circumstances or for one sector or application may not work in others.  There is no “one size fits all” and we hope to be able to modify the GPCCAR to accommodate those changes, but the process to do so needs to be followed, and with 120 days MINIMUM for comments and debate should give everyone a chance to have their two cents heard.

Enough for tonight….

BR,

Dr. PDG, Jakarta, Indonesia

PS Rafael,To respond to your

PS Rafael,

To respond to your question here is MY answer (not neccessarily the Guilds) 
 

First, we hae to establish the CONTEXT, recognizing that your experience may be different which does not make either one of our experiences "right" or "wrong" merely different.

I am responding based on 18 years (1974-1992) serving New England and Alaska, as a private sector, small to medium sized, Union general contractor, doing "hard money” (firm fixed price) contracts, performing work for the US Park Service (Cape Cod National  Seashore) as well as State (MA, NH, VT, ME and AK) and City projects.  We also executed FEDERAL contracts as a SUBCONTRACTOR on several projects in AK including the DEW Line Site Upgrades and several other projects at Fort Richardson and Elmendorf AFB in AK.  Meaning we have "hands on" experience with both government and private sector practices., where our own money was on the line if the project was a "success" or "failed".

In that context, when we bill by the activity, using AIA G702, this is the process we were required to follow:

1)    Update the schedule with all Actual Finishes as of the Billing Closing Date;

2)    Reconcile any Out of Sequence Progress by showing the correct logic as it actually happened and include that reconciliation in the billing package (along with soft copy of the updated CPM schedule);

3)    Filter out ONLY those activities which have an actual finish from the last billing closing date to the current billing closing date; (The rest of the unbilled activities showing the status of the entire project are included in the soft copy of the schedule which we also submitted with the billing)

4)    Because (consistent with GAO’s “Best Practices” ) we keep our activity durations to less than a single billing period (in most cases, 30 days) so we can use the 0% - 100% rule, meaning we can only bill for those activities which are PHYSICALLY 100% complete, which means “normal” (not serious) punchlist items do not count as that is covered by the retention. This results in an added "big push" to finish as many activities as possible before the billing closure date, which is good for both the owner as well as contractor)

5)    We review the proposed billing with the project manager and/or contracting officer who agree that it is acceptable to them. (Informally unless there is an issue)

6)    We compile the supporting documentation to prove that the work has been completed in substantial compliance with the technical specifications. (i.e. concrete break test reports, NDT test results etc)

7)    We provide any supporting documentation to establish that we have met of fulfilled all the “shall” clauses in the contractor, which most often meant certified payrolls and having met the minority set aside requirements;

8)    We officially submit the bill, which has already been pre-approved and within 30 days, we get paid.  Assuming the paperwork is in order, IF we are not paid within 30 days, we are entitled to bill a late payment penalty of (back then 16% per year)

Having  outlined this process, the queetion is whether this process is or is not necessary for a projecct control professional with less than 5 years experience to "Know and Understand".  (See Module 02.2- Developing the Project Control Career Path Development Plan, Figure 3 
http://www.planningplanet.com/guild/gpccar/develop-project-controls-career-path-development-plan

IF the Fellows, who are the Peer Review Committee, believe the answwer is YES then we incude it.  If not it is expected that this information is picked up through reading and understanding the SUPPORTING information which in this case is the GAO's "Best Practices in Capital Budgeting's section on Earned Value Management," the GAO's  "Best Practices in Scheduling"  along with the NDIA , NASA and other referenced documents.

Hope this makes sense to you and that you better understand the processes and the constraints we are working under?

BR,
Dr. PDG, Jakarta, Indonesia

Rafael,I am responding as an

Rafael,

I am responding as an individual, not speaking in any role I played with the GPC, meaning my comments are mine and may or may not reflect the views of the Guild.  [PDG]…..

[RD] The GUILD never adequately addressed the issue of what to do when a pay item within a CPM activity is not finished or accepted for full payment while some or all of the activity successors can start crating a distorted CPM schedule that requires a schedule fix.

[PDG] The GPCCAR is currently around 650 pages long.  It was “summarized” or “compiled” from over 5,000 pages of external published references, including “standards of practice” published by the US GAO, US Park Service, US DoE and the NDIA as well as CSI, AIA. AACE and SAVE. Also cited were many Australian, Canadian, Singaporean, Hong Kong and UK documents as well.

So you need to appreciate that

1)    Much of what was written came from OFFICIAL US standard of practice documents or US professional societies;

2)    It is IMPOSSIBLE to cover every combination and permutation of what can or might happen. SOMETHING had to be edited out which was the responsibility of the Peer Review Committees, which consist of Fellow of the GPC.

What you describe is the kind of question which will appear on the “Competent” or even “Advanced Certification” level which requires at least 5 and 8 years’ experience, which is why the peer reviewers did not believe it was necessary to include UNLESS enough people think it should be in which case it will be added in, PROVIDED the procedure to make changes is followed.

[RD] This schedule fix is usually required by our agencies to be re-submitted and approved before being accepted for any purpose because of the legal implications creating a serious issue for the submittal of the Payment Application.

[PDG] On this point we agree…… Which is why we NEVER would submit any activity for billing unless it met all three criteria- 1) Work physically COMPLETED, 2) work done in substantial conformance to the technical specifications and in 3) fulfillment of the contractual terms and conditions.  IF my work does not meet those criteria, with substantiating proof, then for me to bill using G702 opens me up to criminal fraud charges if I make false claims.

[RD] This does not happen in our private jobs as there the use of CPM as a payment tool is not required and it is accepted to declare finished an activity if all its successors can start no matter if a few pay items are on hold for payment. 

[PDG] On this point we do NOT agree….  For the 18 years I was a general contractor in New England and Alaska, and even now in our consulting and training business, I have always been paid off the schedule of values which were derived using Activity Based Costing. So I object to you stating that it does NOT happen.  It may not have happened in YOUR EXPERIENCE but in mine and many others, it has and still does.  And the case study from Freeport serves to validate that it does happens, even on large, complex projects, by an American company working in Indonesia. 

[RD] It does not requires much experience or thinking to imagine the above issue even if you are a rookie and never experienced it before.

[PDG] This issue is whether or NOT this is a task that  a person with <5 years’ experience would be expected to KNOW or UNDERSTAND, much less APPLY, however I do agree that for the Professional or Advanced Levels that you are correct. But to keep the GPCCAR within “reasonable” size, it cannot include everything that a project control professional needs to know.  The expectation was that in addition to reading the GPCCAR which forms the basis for the INTERMEDIATE or ENTRY level credential with the understanding that for the Professional, Advanced and Expert Level, that the SUPPLEMENTAL or SUPPORTING references would also be read if the person needed or wanted more information. 

Have you taken the time to read over and understand Module 02.2 Creating the Career Path Development Plan http://www.planningplanet.com/guild/gpccar/develop-project-controls-career-path-development-plan?  If you had, you would realize that the GPCCAR was designed to cover the ESSENTIAL KNOWLEDGE  up to the PROFESSIONAL LEVEL.  The GPCCAR PLUS the SUPPLEMENTAL/SUPPORTING REFERENCES will take the practitioner beyond.

[RD] It is hard to imagine someone can miss such possibility.

[PDG] Again as has been stated on so many occasions is that YOU have the opportunity to WRITE UP WHATEVER YOU THINK NEEDS TO BE INCLUDED and submit it using the template provided and follow the procedure developed.  If you aren’t willing to do that then (speaking as PDG, not the Guild) then you are welcome to debate the issue but it should not be done in this forum with the expectation that it will result in a change to the GPCCAR.  Better debate the issue in some other forum.  Complaining and expecting OTHERS to kow-tow to your complaints without being proactive by proposing changes following the change management procedures is not something you would do in the working environment and is not something that the GPC encourages or will support either.

[RD] It means that the documents and the reasoning used by the GUILD are poor and as a result the GUILD is a poor reference for developed countries like the USA, as it does not consider what happens in the USA where use of EVM is discouraged on Firm-Fixed-Price contracts and the use of CPM as a payment tool is extremely rare in private jobs. 

[PDG] It appears to me that you have not even bothered to read over the GPCCAR at all.  How can I surmise this? If you had, would see that after researching hundreds of global standards, you would find out that at least 80% of the GPCCAR is based on US standards, including but not limited to US GAO, US Park Service, US DoE and the NDIA as well as CSI, AIA, CMAA, AACE and SAVE.  The only US professional organization we did NOT cite was PMI, mostly on the grounds that what PMI advocates are NOT “best tested and proven” practices, but “those good practices used on most projects, most of the time”.  With very few exceptions, as the PMI standards did not meet our criteria, they were not included in the GPCCAR.

[RD] I would not be surprised if the GUILD never provides their answer to this easy to foresee issue I have been consistently asking, an issue you understood very well and answered at the blink of an eye.

[PDG] The question is not whether it was understood or not or even whether or not it can be answered in the blink of an eye.  The issue is whether it is or is not of sufficient importance that it should be included in the GPCCAR, understanding that we are at ~650 pages now and the total underlying “body of knowledge” we referenced was 5,000+ pages, which we INCLUDED at the end of each Module?  So where do we draw the line as to what we include and what we incorporate by reference?

To answer that question IF enough people agree that we SHOULD expand the GPCCAR to include this information, and that it is something that a person with <5 years’ experience needs to know,  requires that SOMEONE take the time to fill in the TEMPLATE, and follow the OPEN and TRANSPARENT process developed for exactly that purpose.

Bottom line Rafael, being certain you understand I am responding as an individual and not for or on behalf of the GPC, to put it as delicately as I can, my most sincere recommendations are that you need to:

1)    Read over the ENTIRE GPCCAR in the context that the GPCCAR was designed to address the needs of the GLOBAL PRACTITIONER, with LESS than 5 years’ experience and that for any needs beyond 5 years, it is expected that the SUPPLEMENTAL or SUPPORTING references be read and understood;

2)    Read over the entire GPCCAR, making certain you understand the PROCESS of how the modules relate to one another before making any comments to ensure that the issue you are concerned with has not been addressed in another Module. Explained another way, you cannot look only at Module 9 unless you also look at Modules 3, 4, 5, 6, 7 and 8, as those modules all lead up to Module 9.

3)    Recognize and appreciate that  an open and transparent process has been put in place which is based on the scientific method which will enables the GPC to UPDATE the GPCCAR in real time, as opposed to the 5 years it takes PMI to update their PMBOK Guide or AACE who knows how long to update their RP’s. This level of real time updating is unheard of in any other standard setting organization and makes the Guild very special.

4)     Accept that until or unless you are willing to follow the same process everyone else uses to update the GPCCAR, your issues may be debated but they will not be actioned until or unless you follow the process, which is required as we are in the process of getting or GPCCAR and Credentialing Program ISO certified.

Hope this makes sense to you and will help you become a valuable contributing member of the GPC instead of a whiner and complainer with nothing to contribute but attacks…..?

BR,
Dr. PDG, Jakarta, Indonesia

Hi Paul,thank you for the

Hi Paul,

thank you for the comprehensive answer to my post.

I will answer to some of your statements and will clarify my concerns.

I appreciate the work of small group of professionals that develop first version of the Guild standard as appreciated the work of Bill Dunkan and others developed the first version of PMBOK Guide. I am sure that you remember that this first version of PMBOK Guide was free for the download at PMI site. PMI at that time tried to build professionalism in project management and I expect that the Guild is trying to improve professionalism in project planning. I hope that the Guild will try to avoid PMI destiny and will be as open for criticism and discussions as possible letting all members and non-members to contribute to Guild and its standards development. Open discussions is the best way to keep the Guild and its standards alive.

I have my own concerns about the content of Guild standards. I would include only those areas that are truly international and useful for all planners. I fully agree that the schedule shall be resource and cost loaded, that project success criteria shall include costs, that project planners shall control and compare Planned Value, Earned Value and Actual Cost but few of them manage payments that are certainly organized different ways in different countries.

Why are you so sure that the Guild standards describe the best practices? For many years I presented at different conferences much more advanced practices that are in use in Russia. Few people understood what I spoke about. Unfortunately so called “developed” countries use the project management practices that were the best in the early 60-s. You suggest Russians to adopt them? I always answer to questions of Russian managers like how "they" manage their projects with so poor tools, without considering volumes of work, resource productivity, without integrating scheduling with estimating, and a lot more?

“Developing” countries like Russia have developed tools and techniques that are successfully used in many projects and by thousands companies. But to receive credentials they shall study methods and tools that are not used in their countries, that are obsolete but are the best practice somewhere else. When I prepare people to PMP exams I always suggest my students to forget how they manage real projects and imagine that they know nothing except PMBOK Guide to be able to pass the exam. I would not be pleased to tell the same to people who would try to get Guild credentials.

Thank you for your good opinion about Spider Project. It includes methods and techniques widely used in Russia but when I try to promote our approaches I hear that MS Project and P6 do not support them and these packages are required to be used in most contracts in the “developed” countries. Spider Project was developed to include all the best in the project management, in “developed” countries best practice includes what is supported by Microsoft and Oracle. Feel the difference.

Returning to the topic I think that the standards shall include only those topics that are necessary and typical for most planners in most projects in most countries. Managing of payments is not one of them. Making standards too large we do not motivate people to study them.

And thank you for considering Rafael's opinion. I am sure that PP shall be open for any discussion and Guild standards shall be improved basing on PP members feedback even if it was not formal.

Vladimir,The GUILD

Vladimir,

The GUILD never adequately addressed the issue of what to do when a pay item within a CPM activity is not finished or accepted for full payment while some or all of the activity successors can start crating a distorted CPM schedule that requires a schedule fix. This schedule fix is usually required by our agencies to be re-submitted and approved before being accepted for any purpose because of the legal implications creating a serious issue for the submittal of the Payment Application. This does not happen in our private jobs as there the use of CPM as a payment tool is not required and it is accepted to declare finished an activity if all its successors can start no matter if a few pay items are on hold for payment. 

  • It does not requires much experience or thinking to imagine the above issue even if you are a rookie and never experienced it before.
  • It is hard to imagine someone can miss such possibility.

It means that the documents and the reasoning used by the GUILD are poor and as a result the GUILD is a poor reference for developed countries like the USA, as it does not consider what happens in the USA where use of EVM is discouraged on Firm-Fixed-Price contracts and the use of CPM as a payment tool is extremely rare in private jobs. 

Best Regards,

Rafael

Hi VladimirAppreciate the

Hi Vladimir

Appreciate the thoughtful response. See my specific responses below…… [PDG]…..

The fact that other associations use peer reviews does not prove that this is the best process to develop something useful. The documents they created using this process proves it.

[PDG] Fair points, but what is the alternative? You and I have both been around for a long time now and contributed to PMI and AACE as well as the GPCCAR and as we know, EVERYTHING is a compromise.  What is it Abraham Lincoln said?  Something about you can please all of the people some of the time and some of the people all of the time but you cannot please all of the people all of the time?

The GCCAR was published as a STARTING POINT as a LIVING DOCUMENT.  Is it complete yet? No.  Will it ever be “completed”? Unlikely as long as things change.

Why did we do this? Because in order to start a credentialing program for project control professionals there MUST be some standard in place against which to test and validate COMPETENCY. And we recognize that will change from from year to year and maybe even month to month in some areas. (i.e. Building Information Modeling and Using Mobile Devices in Construction)

The strength of Planning Planet always was in open professional discussions on any topic. If GPC standards will be developed and improved by the close group of "peers" they will become one more set of "recommended practices" that only "peers" will use.

[PDG] As noted above, the dialog is very important but at some point if we want to validate competency against a standard ,that dialog has to be captured, compiled and published.  See additional comments on that issue below as well.

Honestly I do not understand at all why payments issues were included in GPC standards. Few planners are involved in payment processes, contracts are different in different countries and I do not take part in this discussion just because in Russia everything is different and instructions that were developed are absolutely useless.

[PDG] Speaking as both a contractor and a cost engineer/project control professional, in nearly all the parts of the world I have worked in, we  are almost always involved directly or indirectly with billings, either at the front end (cost loading the schedule, calculating physical % complete etc) or at the back end, (updating the cost and productivity databases, settling claims etc)  The reason for publishing what our research indicates was “best tested and proven practices” wherever we found them was to enable countries like the BRICS (Brazil, Russia, India, Indonesia, China, South Africa and other Emerging Nations with a BENCHMARK against which to measure and compare what they are doing vs what the “Developed” world is doing. 

By opening up the process to be more transparent than what PMI or AACE use, the hopes and expectations are that IF a country like Russia benchmarks what you are doing that by having a compendium of processes that if you are doing something LESS than ideal you would be able to upgrade your processes by referring to the GPCCAR and supporting references and if you are doing something BETTER than the benchmark that you would take advantage of the process to make what you are doing known to others in the Guild. (and I truly believe Spider is an exceptionally robust program that hasn’t gotten the global exposure it deserves)

Do we develop Global standards or something that will be used by a group of peers?

[PDG] What the Guild of Project Controls is trying to do is identify “Best Tested and Proven” practices wherever we find them, and then as the name implies, COMPILE and PUBLISH them as REFERENCES, with the hopes that ANYONE can access and use them, ESPECIALLY practitioners from the developing/newly emerging nations.  Which is why we made the GPCCAR available FREE OF CHARGE not only to the Guild Members but to the members of Planning Planet. Neither PMI nor AACE do that.....

To be certified by Guild Russian planner shall study some theory that he/she will not use. Is it right?

[PDG] The answer all depends on your perspective.  Consider looking at it from this perspective. Given that so many projects “fail”- being delivered late, over budget, quality problems and claims- by researching and compiling “BEST TESTED AND PROVEN” practices, the question is IF those in the Developing/Emerging nations have access to a compendium of “best tested and proven practices” to use as a benchmark, wouldn’t it make sense to at least try them out, even if in their country these practices were still considered theoretical or even unknown?

Explained another way, IF the projects in Russia (or anywhere else) consistently finish on time, within budget, meeting the specified technical requirements with few or no claims or disputes, then by all means continue what you are doing and please share what you are doing with the rest of the world.  But if your projects are NOT meeting those criteria wouldn’t it make sense to be able to  access a SINGLE SOURCE to see what OTHERS around the world are doing and have documented that they work and at least consider adopting/adapting them for use in your country?

THAT is the purpose of the GPCCAR…

Why to get one more certification that is as practical as certifications of PMI, IPMA, AACEI, etc.?

[PDG] Unlike PMI and AACE, the Guild Certifications are COMPETENCY rather than EXAM based, much like IPMA and AIPM.  HOWEVER, the Guild Certifications are SPECIFIC to Project Controls which PMI and AACE only partially touch on but do not validate COMPETNCY and IPMA, which does validate competency, has ignored. Thus the Guild is filling a major void.

It is sufficient to get any of them to prove that you know the theory that was considered useful by some peers in some part of the world but is not applicable in the real projects.

[PDG] Given AACE has been around since 1956 and both IPMA and PMI since 1964 and 1969 respectively, wouldn’t you think that IF what these organizations were advocating actually worked, that after ~60 years , we should be seeing some measurable improvements in successful project delivery?   Applying Einstein’s philosophy that “doing the same things over and over again but expecting different results is the definition of insanity, the Guild has taken a DIFFERENT approach, which is rather than trying to reinvent the wheel, look at what already is WORKING in different parts of the world,  COMPILE those “Best Tested and Proven” practices into a single REFERENCE DOCUMENT, make it available at NO COST, then open it up to comments and editing by ANYONE, Guild Member or not, who can document a “BETTER IDEA” that has proven to work better?

Another concept that the Guild has built in is the ability to generate “real time” updates.  Unlike PMI who updates their PMBOK Guide every 5 years and AACE which only occasionally updates their RP’s or even the GAO which published the “Best Practices in Cost Estimating and Capital Budgeting back on 2009 and is just starting to update it now in 2016 and is unlikely to actually publish  the updateuntil  2018, the Guild has committed to generating real time updates as quickly is humanly possible.

A perfect example is the point Rafael raised about two weeks ago.  Recognizing that he identified an area of the GPCCAR  had not addressed as completely as it could have/should have, the Peer Review Team acted on his suggestions, even though he refused to follow the policy we established and fill in the templates provided, we reviewed what he proposed, analyzed it in the context of the overall GPCCAR document and made not one but two changes and all in less than 3 weeks?  That same change would have taken 5 years with PMI and who knows how long with AACE.

The problems that are not openly discussed will stay forever.

[PDG] Couple of issues with this.

1)    “Discussion” alone is nothing more than talk.  EVERYONE has opinions and opinions without substantiation that they work are worth nothing and may even be dangerous.  What we need to do is create a STRUCTURED APPROACH to identify what works, DOCUMENT it as any scientist is required to do and then publish it for peer review to see if others can duplicate the results.  Only then can we be able to state with any credibility that it is in fact a “best tested and proven” process. This is the process created back at the turn of the 19th Century by Frederick Taylor, Henry Gantt et al which is known as the “Scientific Method” and that is the process  the Guild has adopted as  the basis for initially developing our GPCCAR and the process we are using to ensure it stays current and up to date..

2)    Where did anyone get the idea that items are not being openly discussed?  The GPM Admin moved some of Rafael’s postings around because they didn’t fit very well under the heading they were posted and ONE of his postings was closed out because it was addressed by making changes to the GPCCAR.  Understanding that NONE of us is going to get 100% of what we want, and understanding that we are NEVER going to be able to satisfy everyone 100%, IF those who want to contribute would only follow the process we have developed and stop the personal attacks and be more constructive by identifying specific actionable items and then following the scientific method to document and show how or why they are in fact “best tested and proven” practices, the Guild is confident we have a much more transparent, open and RESPONSIVE process in place than PMI, AACE, IPMA or the GAO.


BR,

Dr. PDG, Jakarta Indonesia

Vladimir,Thanks for your

Vladimir,

Thanks for your prompt reply, it will take me some time to absorb what implications it has in our practice on a 10,000 activities CPM if on average there are four pay items per activity. Because it is possible on any given activity all successors can start even if the four pay items are not completely finished then the use of 4 additional activities might be required, and this adds up to 50k activities instead of 40k, WOW quite a CPM updating challenge. I will continue the discussion in due time at Spider forum.  

Regarding:

  1. work could be done and still not approved - is not uncommon here, it happens, a good call that in our case would require a Ghost Schedule until work is formally approved, common situation when client issues a change directive. An alternate mechanism for directing the contractor to perform additional work to the contract when time and/or cost of the work is not in agreement between the owner and contractor performing the work.
  2. advance payments are usual - not uncommon for material on site but not recognized as work performed and kept separate under our payment application forms. In our practice we do not schedule any amount for material on site [MOS] on the payment application template, we plug them when need be. The value of MOS accepted is not a pre determined value but the actual invoice value. Needless to say I will eventually ask the GUILD for their recommendations on how to deal the MOS issue when CPM schedule is used as a payment tool. 

Best Regards,

Rafael

Hi Rafael,Your thoughts are

Hi Rafael,

Your thoughts are interesting and thanks for taking the time to share them.  It is only when we discuss things (effectively) that change is brought about.  You have shown some issues in your reply to me.  Those of us who are sufficiently interested in making it happen will indeed make it happen if indeed change is necessary.  

In my experience you need to show WHAT is right and WHY it is right then people can UNDERSTAND and change WILL happen.  

Please thought, address the issue raised in my most recent post my friend.  Thank you.

Regards.... PP Admin

I have a meeting with the Guild people on Monday and will have them more clearly define / shape their Change Control Procedure; which is what you appear to find frustrating.

PP Admin,The continuous

PP Admin,

The continuous re-editing and continuous relocation of my discussions is what created this mess.

My differences with the GUILD are abysmal so I doubt I will ever be in agreement with it, all I will be able to do is to raise my dissenting opinion in this and any forum I see the GUILD is present or referenced.

I doubt the GUILD will ever be adopted by our local private sponsors are they are not so picky as to use or require EVM or to use the CPM as a payment tool.

On the other hand I see much bias on the GUILD in favor of EVM and the use of CPM as a payment tool that I find it detrimental to our practice if it is ever adopted by reference by some of our Agencies.

  • The GUILD advocates everywhere for the use of EVM but cannot understand and cannot accept the US DOD is against the use of EV in firm-fixed-price [FFP] contracts and declare irrelevant whatever the US DOD say. 
  • The GUILD advocates for the use of the CPM as a payment tool but do not adequately address the issue of what to do when a pay item within a CPM activity is not finished or accepted for full payment while some or all of the activity successors can start crating a distorted CPM schedule that requires a schedule fix. This schedule fix is usually required by our agencies to be re-submitted and approved before being accepted for any purpose because of the legal implications creating a serious issue for the submittal of the Payment Application. This does not happen in our private jobs as there the use of CPM as a payment tool is not required and it is accepted to declare finished an activity if all its successors can start no matter if a few pay items are on hold for payment. 

The reluctance by the GUILD expressed in this debate to recognize how things are done in the USA, the reluctance by the GUILD to recognize how the US DOD is against the use of EVM in FFP contracts and call it irrelevant we call it stubbornness, similar to the UK Cambridge dictionary definition.

We use the figure of the mule to represent stubbornness and therefore I do not believe it to be unprofessional to use it as an illustration especially when the GUILD have demonstrated much stubbornness with regard to EVM and the CPM as a payment tool. 

Best Regards,

Rafael

PS - Happy father's day.

Rafael,we recommend to use

Rafael,

we recommend to use following rules for creating project activities in detailed schedule:

1. Activity shall be measurable and so shall use certain unit of volume,

2. Resources assigned to activity shall have certain productivity,

3. Activity shall have certain unit cost or fixed cost,

4. An amount of materials required by an activity may be fixed or the same per each unit of volume,

5. Activity duration shall not exceed two periods of schedule performance analysis.

If unit cost, productivity, materials are different at activity parts create several activities instead of one.

If these rules are followed then grouping activities by types we get the reports of volumes planned and done by types. This information is used for estimation of Earned Value but as I wrote previously it is used for comparison with the payment documents and not as the payment documents for many reasons: work could be done and still not approved, Contractors for some resons may want to be paid for some part of already done work, advance payments are usual, payments may require achiving certain milestones, etc. A lot depends on contract conditions.

One activity may include different types of work in higher level schedules. Such schedules may be used for calculating Earned Value only if the payments are done for the finished activities. In this case activity contract cost shall be assigned to activity finish moment.

In Spider Project it is possible to use workarounds and to set several volumes of work for the same activity but it will work only if their execution is proportional. In the real life people different types of work are done at different times and so such estimates are too rough to be used for estimating Earned Value.

Everyone on this thread is

Everyone on this thread is providing interesting thought and comments.  Now will it introduce change for the better; we shall see.  Nonetheless (productive) debate is required in order to initiate change; that's why we are all here.

However, Rafael you are required to reEDIT the top post of this thread to adequately describe and introduce the specific issue being debated in this thread.  The current nonesne is unhelpful and adds no value.  Please therefore edit the initating post so that readers can understand the specific issue you are debating.  

If you do not then we will ask GPC Admin to do it, failing that it will be removed.

Regards... PP Admin

Dear Paul,the fact that other

Dear Paul,

the fact that other associations use peer reviews does not prove that this is the best process to develop something useful.

The documents they created using this process proves it.

The strength of Planning Planet always was in open professional discussions on any topic. If GPC standards will be developed and improved by the close group of "peers" they will become one more set of "recommended practices" that only "peers" will use.

Honestly I do not understand at all why payments issues were included in GPC standards. Few planners are involved in payment processes, contracts are different in different countries and I do not take part in this discussion just because in Russia everything is different and instructions that were developed are absolutely useless.

Do we develop Global standards or something that will be used by a group of peers?

To be certified by Guild Russian planner shall study some theory that he/she will not use. Is it right? Why to get one more certification that is as practical as certifications of PMI, IPMA, AACEI, etc.? It is sufficient to get any of them to prove that you know the theory that was considered useful by some peers in some part of the world but is not applicable in the real projects.

The problems that are not openly discussed will stay forever.

Best Regards,

Vladimir

Rafael,You wrote It is not a

Rafael,

You wrote It is not a rude statement as long as it is true. I am sharing the experience in a forum discussion I hope will not be censored. I do not want to submit my comments via a template to a closed membership club.

[PDG] The peer review process is a time honored and accepted approach used by ALL professions, be it medicine, law, engineering or teaching in setting their "best tested and proven" or "recommended" or in the case of PMI "good" standards.....

PMI, AACE, IPMA, GAO.......  They all use the peer review process in developing their standards and having been or being a member of all four of those standard setting organizations I can state factually that the peer review process developed and being used by the Guild is by FAR more transparent, open and fair than those used by PMI, AACE and IPMA. (The GPCCAR peer review process is comparable to and was modelled after the process used by the GAO)

Bottom line- IF you are unwilling or unable to submit your suggestiions or proposed changes to a peer review process, then no matter how good they may be, they will never get recognized or accepted as a "standard of practice".  IF you feel you are wasting your time tilting at windmills by posting in this forum and don't think the GPC "club" is the right venue to get change, then what you may want to consider as an alternative would be to join the US Government Accountability Office (GAO) team as a subject matter expert?  They just are starting the process of updating their "GAO Cost Estimating and Assessment Guide Best Practices for Developing and Managing Capital Program Costs" http://www.gao.gov/assets/600/591240.pdf which along with the "GAO Schedule Assessment Guide Best Practices for project schedules" http://www.gao.gov/assets/600/591240.pdf, were heavily cited in writing the initial version of the GPCCAR. (To see the SME's who was involved in contributing to these standards go to pages 305 to 307 in the Cost Estimating Best Practices document and pages 199 to 206 to see who influenced the creation of the Scheduling Best Practices document)

 

 

 

Rafael,Given the rather

Rafael,

Given the rather abysmal track record of US government projects (see published research from NASA's Glenn Butts- http://www.build-project-management-competency.com/wp-content/uploads/20... and Oxford's Bent Flyvbjerg http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2424835) I would hardly hold up US Government , in particularly how the corrupt and inefficient DoD does things, as being an example of "best tested and proven" practices.  Thus a lot of the research underlying the creation of the GPCCAR was based on the US Government Accountability Office (GAO) "Best Practices in Capital Budgeting" http://www.gao.gov/new.items/d093sp.pdf and "Best Practices in Scheduling" http://www.gao.gov/assets/600/591240.pdf rather than that of the DoD.  

Having worked for the US Parks Department (Cape Cod National Sea Shore) for many years as a prime or general contractor, as well as the DEW Line Site Upgrades and several other US Government funded projects in Alaska (Elmendorf AFB and Fort Richardson) as a SUBCONTRACTOR, I stand by the Guild's interpretation of EVM AS IT APPLIES TO THE PRIVATE SECTOR CONTRACTOR WORKING ON FIRM FIXED PRICE CONTRACTS.

Now if someone wants to write up and submit an ALTERNATE or OPPOSING interpretations or applications, then the Guild has committted to adding ANY or ALL practices, provided they meet the definition of being a "BEST TESTED AND PROVEN" practices.

And clearly, as evidenced by the US GAO "Best Practices" and the fact that so many other countries around the world have adopted/adapted their own version of it, Earned Value is ONE of them.

Bottom line- IF all you are going to do is complain, find fault and ridicule the work of your colleages, and not be proactive by provding alternate solutions that can be peer reviewed, and considered for inclusion into the GPCCAR, then I am not interested in further debate with you.  And if you don't feel that the "peer review process" the Guild has adopted is fair, the GAO is now updating their "Capital Budgeting Best Practices" and you are welcome to contribute your two cents worth to them instead of the Guild.

BR,

Dr. PDG, Jakarta, Indonesia

The Guild in its insistence

The Guild in its insistence to force feed EVM do not even mentions that in the USA EVM is discouraged on Firm-Fixed-Price Contracts. I suspect because some of the GUILD members have a vested interest in selling at all cost EVM services and training, perhaps EVM training within the GUILD cerification program. 

For those passionate about

For those passionate about Project Controls and wish to become part of the decision making team, to help shape what the Guild Commnity collectively consider to be best practice guidelines, you are cordially invited to Join the Guild where you will have a voice in making these kinds of decisions.

The call for the postulates to represent BEST is SNOBBISH & WRONG.

I have seen other publications claiming theirs to represent GOOD practice but do not recall any claiming to be THE BEST.

I recall those who advocate strict adherence to be the subject of much criticism by those of us that believe there are many alternatives as good or better.

Many of us believe such Flat Earth theories are wrong and promote a monopoly on knowledge and that anyone who objects is deemed to be wrong. 

Well the Earth is not Flat.

Some humility by the GUILD in all its modules would do no harm while none will eventually cause much harm when those who adopt it and enforce it by reference into our contracts and make literal interpretations because that is preciselly what it promotes by being so biased and stubborn. 

My apologies to the Founders of Planning Planet, but this is far from what it was years ago. 

Rafael Davila answers are in

Rafael Davila answers are in Bold.

PS Rafael as a follow up to my comments on the damage delayed payments are causing, here are two articles from ENR:

One of the undocumented causes is the obstruction some procedures impose on the contractor as well as on those approving the payment requisitions. An utterly detailed payment application linked to a CPM schedule that is distorted as soon as a an activity payment item is not approved but the successors are allowed to start as said many times before is one such case I experienced in the Hangar Job.

There are also no shortage of credible academic research published on this topic, which is why I believe it is ESSENTIAL to stop following the US Government divorcing payment from performance and get back to implementing earned value as was developed during the 17th and 18th century, was formalized by Henry Gantt around 1910 or so and is still in use in the private sector, "hard money" contracting as well as modern factories from the maquiladora of Mexico and Honduras to the Nike and Reebok factories in Bangladesh and Vietnam.....

The EV theory developed in the 18th/19th century is very different to EVM developed during the mid 1900’s where a crude attempt to tie CPM time element to EV was done by the PERT team, a crude attempt that misses to distinguish EV by critical versus non-critical activities as if it does not matter. In any case as said before it is a fallacy EVM is needed to use the CPM as a payment tool. 

Given contractors live and die by our cash flows, nothing serves as a better incentive than to enable us to enhance our cash flows by doing what you the owner want, which is to finish as many activities as soon as possible.  But to make it work, the payment has to be closely linked to and made as soon after the activity is done as possible.

Given that contractors live and die by our cash flows we welcome simplified procedures that meet the need and do not get into obstructing the payment procedure.  An utterly detailed payment application linked to a CPM schedule that is distorted as soon as an activity payment item is not approved but the successors are allowed to start is not welcomed here.

EVM promotes the blind idea to finish as many activities as soon as possible without any consideration to the delaying effect it can have on critical activities when resources are scarce. A wrong approach promoted by the above statement. 

 

Rafael Davila answers are in

Rafael Davila answers are in Bold.

Let me respond to your comments one at a time but for the future PLEASE try to keep your posting to a single topic as it makes it easier to respond. 

Because you took the initiative to ask me how to submit my posts I will take mine and ask you to PLEASE do not segregate my postings as it is more difficult to follow the multiple postings every paragraph will generate, it might take you a bit longer but keeps some order. 

How did G703 get into the discussion?

If you ever read G702 you will notice G703 is the continuation of G702. No discussion about G702 is complete without addressing G703 or its equivalent. 

  • http://aia.org/contractdocs/AIAS076752
  • http://www.cptitle.com/docs/disbursement/g703.pdf

Do you really think this is a "best tested and proven" practice"?

Do you really think the idea of billing by CPM activity is a "best tested and proven" practice"? A practice that is so granular that can yield a 40,000 line billing document on a 10,000 activities CPM with an average of 4 pay items per activity. The proposed practice I consider too granular, excessive micro management when current practice in the USA have been not to require the use of the CPM as a tool to be married to the billing document because of the issues it creates when all activity successors can start but not all pay items are fully closed.

I asked you to tell me how do you propose to handle the out-of-sequence issue each occurrence creates and how to handle the contractual requirement for any changes in the CPM as well as the billing document be duly submitted and approved before they can even be considered for review as a billing document.  I will appreciate if you address this issue in accordance to USA contracting practice once and for all.

On February 23, 1857, 13 architects met in Richard Upjohn's office to form what would become the American Institute of Architects.

All this is nice information but what does it add to the discussion or debate?

It adds to the discussion because it shows that for decades, if not for centuries contractors in the USA have been billing without use of CPM, a practice that is most common today. Only a few Agencies require such marriage and my experience in a single job in over 35 years representing contractors was so bad that the job ended in court and the contractor was awarded a substantial amount. The billing process was a nightmare.

[PDG] No, this is your misinterpretation.  As noted in the GPCCAR we can only bill for work which has fulfilled three criteria

No this is a misinterpretation by you and the GUILD who have no understanding on how billing documents are required to be presented in the USA.  For your knowledge in the USA it is required that once the billing template is approved it shall be submitted in full, meaning no single line will be omitted no matter if no work have been performed on this line. It is a standard requirement we in the USA understand and accept while the GUILD do not. The document must be submitted unfiltered for it to be available to the view of those who have to stamp their approval, many experts in construction issues but not hooked into particular CPM software. It is not uncommon for them to be given a full PDF unfiltered version of the application.

[PDG] OK I understand what you are saying but because the GPC advocates Activity Based Costing, what you describe would not happen, at least not as part of the billing process.  If you go to Module 08.6

Well it might not happen in Jakarta but it does in the USA where it is not uncommon for many CPM activities to include several pay items. One such example was already provided in the discussion. As a reminder it refers to the case when a Lighting Fixture installation activity includes the installation of several fixtures of different types, each type with different quantity and different unit price. Then I posted an example of how this is done within P6 and asked Vladimir about how this is done within Spider Project as it only allows for a single volume of work per activity while in my example each lighting fixture have their own volume of work within the activity.

I know how to make the 40,000 lines document for a 10,000 activites schedule with an average of four different pay items per activity in SureTrak. A piece of cake just a few trees required for the paper documents required, we are not 100% paperless as it look it is the case in Jakarta, especially with legal and pay documents, computer files are not good enough for everything. Seems like module 08.6 is equally biased on the one sided view that billings via CPM is a good idea.

[PDG] Now this is a rude and totally unnecessary statement. Having survived as a union contractor for 18 years and with the exception of South America, having worked all around the world, says that I have at least some understanding of “how things are done” as a private sector, for profit contractor working on firm fixed price or unit in place contracts.  Are there other experiences or contexts?  Absolutely. Are yours different from mine? Want to share them? Then you are welcome and encouraged to submit them via the templates developed and made available for that purpose.

It is not a rude statement as long as it is true. I am sharing the experience in a forum discussion I hope will not be censored. I do not want to submit my comments via a template to a closed membership club.

[RD] You said: "Note the grayed out cells (5000 to 10,000 activities) represent what the reference cited by you recommended as the typical or ideal size of CPM schedule, which I do agree with." This is not correct, I said it is not unusual, and that is different to typical, my most common activity count is close to 900 activities and each would contain several/many cost codes if used to generate payment applications.[PDG] I was only quoting from the reference that YOU cited.  You need to be very careful about your citations.  Putting on my Academic’s hat, I look at every reference your provide to see if it does or does NOT support the point you are trying to make, So if you cite something, you had better make certain that is supports your statements. In this case your reference did NOT support what you asserted.

I never said a 10,000 activities schedule is typical, I said it is not uncommon, typical and not uncommon have different meanings in the English language.  In any case you need to be very careful about your calls. Putting in my non-academic but snobbish hat my reference do not pretend to support typical and ideal size is not the same, knowledge of the English language is enough.

If there are no financial constraints there is no value in linking payment application to figure out an overly detailed cash flow. Optimum cash flow management requires consideration of financial constraints, calculating NPV of a poor portfolio selection is not good enough.

No NPV required, just applied common sense to a very simple problem that in order to make it very simple it is not required to consider NPV. Are you still wondering if NPV is to be considered in my sample problem? For your information NPV is not relevant in short duration schedules.  Then apply common sense to the sample schedule and show the value of your Hat.

[RD] Following an approved Baseline makes no sense as soon as there are changes in the scope of work, any change matters as was disclosed in the infamous BIG Dig job where contractors were required to follow an always obsolete baseline schedule. [PDG] Then why bother having an approved baseline at all? This is why the GPCCAR advocates that we REBASELINE whenever the original baseline no longer accurately represents what is happening in the field.

I advocate for having an approved baseline as a reference but not as an active management document.  I am against the urge to tie payment applications to a CPM Baseline doomed to always be obsolete. Tying payment application to EVM is wrong because EVM requires the baseline to be approved.

And having brought up Boston’s Big Dig, although we were not a contractor on that project, I know of several of my fellow contractors who were and given this was an unmitigated disaster in terms of project management, I would hardly hold that out as an exemplar of “best tested and proven” practices, but more an example of what NOT to do.

This job is an example of why the idea of using Baseline Schedules and EVM as a tool to manage a job is a bad idea and belongs to any discussion the pushes so much for such a flawed idea.

PDG] Yes, I agree that there are weaknesses in using EVM and over the years, many of them have been addressed.  Have you taken the time to look at the NDIA document we incorporated by reference into the GPCCAR?  Well worth doing as they have fixed a lot of the weaknesses.

A lot of BS into the NDIA document, it do not adequately address the fact that EVM do not distinguish between critical and non-critical activities in their EV calculations.

At the same time, I know of no other method which so clearly and unambiguously links performance and payment.

Well it is not needed; it can be done without the need of EVM that is so dependent on a Fixed Baseline. The micro management of the schedule as proposed by the GUILD can be done within the CPM using regular cost loading directly into the current schedule.  The fundamental issue of distorted schedule as the result of successor activities started when the activity is not finished because some pay items are not is not automatically solved by either approach. A problem that is exacerbated by the common contractual requirement for the payment document not be changed until approved. The advocated procedure to tie the CPM to the payment application generates the need for a changed payment document even in the absence of a change in scope of work.

Once again it appears to me that you are trying to find excuses or justification for “Business as Usual”  practices, while common, are NOT “Best Tested and Proven” practices but the kind of BS that PMI advocates in their PMBOK Guide(from page 3 or page 5, using “those practices used on most projects, most of the time”.)  That is NOT what the GPCCAR was designed to be. We worked hard by doing extensive research to ensure that what the GPCCAR was advocating was BETTER or to a higher standard than the PMBOK Guide OR AACE’s RP’s advocate……

It looks to me you are trying to find excuses to push your one sided agenda for "New Flawed Business Practice" worse than “Business as Usual”.  Not everyone is a blind advocate of the PMBOK, I am not one such advocate. Of course I do not fund it as bad as the AACE Forensic RP.

http://barbaconsulting.com/wp-content/uploads/2011/12/fall-2009-const-lawyer-w-judd_001.pdf

I do not buy everything I read. 

PS Rafael as a follow up to

PS Rafael as a follow up to my comments on the damage delayed payments are causing, here are two articles from ENR:

http://www.enr.com/articles/38953-subcontractors-report-longer-payment-d...

and

http://www.enr.com/articles/1769-slow-payment-is-sapping-contractors-821...


There are also no shortage of credible academic research published on this topic, which is why I bellieve it is ESSENTIAL to stop following the US Government divorcing payment from performance and get back to implementing earned value as was developed during the 17th and 18th century, was formalized by Henry Gantt around 1910 or so and is still in use in the private sector, "hard money" contracting as well as modern factories from the maquiladora of Mexico and Honduras to the Nike and Reebok factories in Bangladesh and Vietnam.....

Given contractors live and die by our cash flows, nothing serves as a better incentive than to enable us to enhance our cash flows by doing what you the owner want, which is to finish as many activities as soon as possible.  But to make it work, the payment has to be closely linked to and made as soon after the activity is done as possible.

BR,
Dr. PDG, Jakarta, Indonesia

http://www.build-project-management-competency.com

PS Tong, a quick commercial

PS Tong, a quick commercial here.......

We have a 6 month long, graduate level, blended learning course in preparation for both the Guild of Project Controls Certifications  and the AACE family of certifications which will be starting in July of this year.

If you or any of your colleagues would be interested, email me <pauldgphd@gmail.com> and I will get the detailed course information sent out to you.  

By the time the course is done, we hope to have the first of the Guild Certifications "live" which means you would end up with the opportunity to earn a very low Guild Certification number.

BR,
Dr. PDG, Jakarta, Indonesia

http://www.build-project-management-competency.com


 

Hi Tong,The problem I am

Hi Tong,

The problem I am having with these debates is we are trying to cover too much content in a single posting.  If we could narrow the scope covered in each posting to only a single issue which has an ACTIONABLE OUTCOME, (a change we can at least consider making) I think we could address each issue much more quickly and efficiently.

As to the payment issue, I have no idea how old you are but having lived and worked in SE Asia for a total of 25 years , 2 of which were spent in Vietam, (CanTho, Vinh Long, My Phuoc Tay) I know that the ORIGINAL purpose for the advance payments of 10% was for the contractor to pay off his/her benefactor or patron. While I agree that this form of bribery has lessened somewhat over the past 25 years, I know it is alive and well in Indonesia, Thailand, China and Malaysia and although I don't have any recent first hand experience in Vietnam, I would guess your country remains pretty mcuh as corrupt as well.

As for "relationship contracting" that too is a peculiarly Asian phenomena started by the Chinese with their "Guanxi".  In the West, we look at that as "favortism" or "cronyism" and while it exists everywhere, as we move to a more global environment where you may never get to actually meet the people youa re working with face to face,  it is far more preferable to work based not on personal relationships, which in our increasingly virtual world may never happen,  but based on sound, enforceable contracts which cllearly spelll out who is responsible for what.  Ultimately as we become more virtual and more dispersed, that is the only workable approach unless you are a very small local contractor.

Lastly, as I asked before do you give your puppy a treat BEFORE he does the trick or afterwards?  With Earned Value Management as shown in Mod 09.3, Figure 19 , you can see that payment is made PROMPTLY for whatever you the owner want  the contractor to do.  Meaning if you want me to MOBILIZE, then you do NOT pay me in advance for mobilization, but only when I have actually mobilized.  But to be effective as an INCENTIVE or REWARD for performance, the payment has to follow very closely behind the performance.  You cannot wait 60 or 90 or 120 days to pay me for my work. The contractor SUCCESSFULLY does something the owner wants, then the owner pays him/her promptly for that task.  

Seriously, I can promise you, based on first hand experience here in Indonesia,  the "green grocer method" (which you have no problem doing in the traditional market!!!) works just as well for your contractors also. And it eliminates the need for advance payments and and "relationship contracting" as the only relationship becomes very Pavolovian.......  I (contractor) do the work correctly and you (owner) feed me the "doggy biscuit" in the form of prompt payment.  Try it on a pilot project you are working on and see if it doesn't impprove your contractors performance significantly.  (Some free consulting to help you get started)

BR,
Dr. PDG, Jakarta, Indonesia

Hi Rafael,Let me respond to

Hi Rafael,

Let me respond to your comments one at a time but for the future PLEASE try to keep your posting to a single topic as it makes it easier to respond.

 

·        [RD] We have no problem at all with the AIA G702 I have used for over 35 years, it is our billing template.  But we do not make use of CPM activity link for every line. About AIA G703 we find it not good enough as it does not provide columns for quantities but only for dollar amounts. 

[PDG] OK so you are admitting that G702 is a "best tested and proven" practice so that the only disagreement is whether to bill based on milestones or activities?  I see that as a "professional judgement" decision, which depends on the context of any specific project or even specific parts of the same project.

How did G703 get into the discussion? The GPC did the research and the "best tested and proven" template we found was G702, which is what we advocate whether you agree to use Activity Based Costing/Activity Based Management or not.

·        [RD] We do not have a standard that substitute this form. It is not difficult to figure it out some better alternatives, AIA G703 we find it archaic. We use Excel worksheet and calculate Total to Date Dollar Amount from total to Date Quantities and agree unit prices, then Work this Period Amount is calculated as Total to Date Amount minus Previous Period Total to Date. 

 

[PDG] The reason the GPC is advocating G702 is because it is easy to set up in Excel and it offers the ability to customize it if necessary.  Explained another way, it is a STARTING POINT, from which to customize to be "fit for purpose".

·       [RD] AIA billing forms have been in use long before CPM software was widely available, AIA was in existence before CPM was coined in the 1950's, about a hundred years before CPM. Construction have been in existence much longer. We link payment application to production process items that can span several/hundereds of CPM activities, frequently we detail the pay items per area but not by all CPM items the area includes. In any case we can track them via cost accounts that can can span several/hundereds of CPM activities but it is considered an unnecessary burden, in general we keep unmarried the CPM and the Payment Application. 

 

[PDG] Do you really think this is a "best tested and proven" practice"?  As noted in my response to Tong below, I show that the origin of Earned Value came from the factory floor of the 17th and 18th century sweatshops in the form of PIECEWORK, which has proven to be so successful that it is still in use today in all production factories around the world.  And while I realize that for some unknown reason the US Government has divorced performance from payment, as a private sector general contractor under a firm fixed price contract, I can assure you in that context we are paid ONLY for work performed and that applies not only in the USA but in other countries where I have contracted work. 

·       [RD] http://www.aia.org/about/history/AIAB028819 On February 23, 1857, 13 architects met in Richard Upjohn's office to form what would become the American Institute of Architects."

[PDG] All this is nice information but what does it add to the discussion or debate?   Posting extraneous information may be interesting  but unless it helps us address legitimate issues you are raising, it only serves to muddy the waters. 

·       [RD] You said: "Given that I used the AIA G702 form for the 18 years I was a contractor  and never had any problems with the number of pages, I took the liberty of redoing your calculations in a way that made more sense" Well here your interpretation does not make any sense at all, here once approved the schedule of values template it must be submitted in full without a single line being omitted no matter if some or no progress is reported, it must still add the total contract amount.

[PDG] No, this is your misinterpretation.  As noted in the GPCCAR we can only bill for work which has fulfilled three criteria: (See Module 03.6 http://www.planningplanet.com/guild/gpccar/accepting-completed-deliverables )

1)    The Activity must be finished

2)    The work for that activity must be in substantial conformance to the technical requirements

3)    The work for that activity must have been executed in conformance with the contractual terms and conditions- the “shall clauses”.

What we do is filter ONLY those activities with actual finishes between the last billing date and the current billing date and dump them into an Excel file.  Takes about 1 minute total time and then another 30 minutes or so to do a quality check to ensure we didn’t miss any activities or include any we are not entitled to bill for.

 

·        [RD] I got different numbers because in the case of a 10,000 activities it frequently happens that many pay items occur within a single activity, each with a different quantity and different price. Therefore a 10,000 activities schedule that will disclose the need to account for different quantities and unit price if an average of 4 lines per activity will result in a 40,000 schedule of values, a 1,290 pages document which in some jobs might be more.

 

[PDG] OK I understand what you are saying but because the GPC advocates Activity Based Costing, what you describe would not happen, at least not as part of the billing process.  If you go to Module 08.6 http://www.planningplanet.com/guild/gpccar/developing-the-contractors-cost-estimate-bottom-up and review the section on Activity Based Costing, you will see that there is only a single unit price used for billing purposes.  What you describe where there are multiple pay or cost items per activity  does not happen at billing but is done by the home office accounting staff who have to allocate bulk materials, labor and overheads to specific activities by reconciling time cards, rebar deliveries, or concrete delivery stubs against the ACTIVITY.

 

·       [RD] Your statements shows your complete lack of understanding how things are done in other places. 

[PDG] Now this is a rude and totally unnecessary statement. Having survived as a union contractor for 18 years and with the exception of South America, having worked all around the world, says that I have at least some understanding of “how things are done” as a private sector, for profit contractor working on firm fixed price or unit in place contracts.  Are there other experiences or contexts?  Absolutely. Are yours different from mine? Want to share them? Then you are welcome and encouraged to submit them via the templates developed and made available for that purpose.

 

·        [RD] You said: "Note the grayed out cells (5000 to 10,000 activities) represent what the reference cited by you recommended as the typical or ideal size of CPM schedule, which I do agree with." This is not correct, I said it is not unusual, and that is different to typical, my most common activity count is close to 900 activities and each would contain several/many cost codes if used to generate payment applications.

[PDG] I was only quoting from the reference that YOU cited.  You need to be very careful about your citations.  Putting on my Academic’s hat, I look at every reference your provide to see if it does or does NOT support the point you are trying to make, So if you cite something, you had better make certain that is supports your statements. In this case your reference did NOT support what you asserted.

 

·        [RD] You said: "The contractor is enhancing his/her cash flows by billing by activity rather than against milestones, which tend to be way too far apart for optimum cash flow management".   If there are no financial constraints there is no value in linking payment application to figure out an overly detailed cash flow. Optimum cash flow management requires consideration of financial constraints, calculating NPV of a poor portfolio selection is not good enough. The following is a very simple example of how financial constraints affect optimum schedule. As a proof that you practice what you preach I suppose you can give us at a blink of the eye your optimal or near optimal schedule, should be a piece of cake for you. 

[PDG] I have no clue why or how NPV fits into this calculation.  As a Union contractor, working in New England and Alaska, I knew I had a weekly payroll to meet and I knew at the end of the month, what I would need to pay to my subcontractors and vendors.  Based on knowing my committed costs, I would look at the schedule and after assigning my resources to the critical path and near critical activities, I would manually level my remaining resources, applying them to the high value/high profit activities, trying whenever possible to be revenue neutral- that is, revenue in equaled or exceeded revenues out.  Simple as that…..  No NPV required, just applied common sense.


For more on this, have you looked at Module 09.3 Figures 15-18 where we go into great detail looking at both contractor and owner cash flows?  http://www.planningplanet.com/guild/gpccar/capturing-progress-updating-schedule

 

·        [RD] Following an approved Baseline makes no sense as soon as there are changes in the scope of work, any change matters as was disclosed in the infamous BIG Dig job where contractors were required to follow an always obsolete baseline schedule. http://warnercon.com/wp-content/uploads/2012/08/AContinuouslyChanging1.pdf

 

[PDG] Then why bother having an approved baseline at all? This is why the GPCCAR advocates that we REBASELINE whenever the original baseline no longer accurately represents what is happening in the field.  What the GPCCAR advocates is that to be of any use more than pretty wallpaper, the schedule should always represent as close as possible what the field actually plans to do and when. Not what management WANTS to see or what the scheduler thinks might happen but what those executing the work actually plan on doing.  For more on this topic, the GPCCAR dedicated an entire Module 10 to Managing Change http://www.planningplanet.com/guild/gpccar/introduction-to-managing-change from both the owners and contractors perspective and we also advocate as a “best tested and proven” practice that it is NOT the scheduler who creates the schedule but the people who are going to execute the work.  See Module 07.3 http://www.planningplanet.com/guild/gpccar/identify-capture-schedule-activities

 

And having brought up Boston’s Big Dig, although we were not a contractor on that project, I know of several of my fellow contractors who were and given this was an unmitigated disaster in terms of project management, I would hardly hold that out as an exemplar of “best tested and proven” practices, but more an example of what NOT to do.  We address these kinds of “death march” projects in Module 08-1, Figure 1- http://www.planningplanet.com/guild/gpccar/introduction-to-managing-cost-estimating-budgeting

 

·        [RD] EVM as a prediction tool has been subjected to much questioning, every EVM advocate has its own correction method. Also one of the well known flaws of EVM is that it does not distinguishes work done on critical activities versus work done on non critical activities and promotes wrong sequnecing of activities. http://www.spiderproject.com/images/img/pdf/Project%20Control%20Methodology.pdf "It motivates project managers to do expensive tasks first delaying cheaper activities that could have higher priorities. "It suggests to forecast future performance basing on past experience that may be wrong if resources that planned to be used in the future are not the same as in the past,"

[PDG] Yes, I agree that there are weaknesses in using EVM and over the years, many of them have been addressed.  Have you taken the time to look at the NDIA document we incorpoated by reference into the GPCCAR?  Well worth doing as they have fixed a lot of the weaknesses.

At the same time, I know of no other method which so clearly and unambiguously links performance and payment. As noted previously I too have manually leveled my crews to work on high value/high profitability work but NOT at the expense of critical/near critical activities.  To solve this problem or weakness, if you look at Module 09-5 http://www.planningplanet.com/guild/gpccar/project-performance-forecasting  and scroll down to Figure 19 you can see that the GPC has shown both owners and contractors how to use float and the SPI to identify what you describe above BEFORE it becomes a problem.

 

·        [RD] It is wrong to imply EVM tied to a baseline schedule is required to calculate billings, billings can be calculated using current schedule budgets for payment accounts. You get better predictions if using current CPM model projections with adjusted production rates, a reflection of true plan, better than if using a fixed in time baseline. These cost as well as time/duration projections and trends can be further enhanced if using schedule risk analysis. 

[PDG] OK, what you describe may be valid under some circumstances where the baseline is wrong or that the contractor is not following the schedule.  But ASSUMING that the baseline is correct or that if it is NOT correct that it has been REBASELINED to reflect what the field really plans on doing and then they actually follow what they said they were going to do,  then EVM works and works just fine. Which is why I added the Freeport examples showing that Activity Based Costing/Activity Based Management, combined with Earned Value Management works extremely well, even on large, complex projects.

 

Once again it appears to me that you are trying to find excuses or justification for “Business as Usual”  practices, while common, are NOT “Best Tested and Proven” practices but the kind of BS that PMI advocates in their PMBOK Guide(from page 3 or page 5, using “those practices used on most projects, most of the time”.)  That is NOT what the GPCCAR was designed to be. We worked hard by doing extensive research to ensure that what the GPCCAR was advocating was BETTER or to a higher standard than the PMBOK Guide OR AACE’s RP’s advocate……

 

·        [RD] The reference to failure rates is for new companies. Here such new companies do not make it to public contracting or to high value jobs. Our bidding requirements for such jobs usually requires proven experience above 5 years on the specific type of work being procured, this rules out 100% of those failed companies. 

[PDG] OK fair points Rafael…….. So how about this.  Seeing how you brought this point up, and given that you clearly have so much time on your hands, how about I challenge you to do this.  ENR just published the Top 400 contractors for 2016.  Why don’t you go back to say 2007 and see just how many of the contractors from 2007 are still in business today.  Now I have no idea what that will turn up but my “best professional guess” is you will find a SIGNIFICANT number of them, especially those in the bottom 300 are no longer around…..

 

Bottom line Rafael, I think you are a smart guy and have a lot to contribute. Having said that, instead of taking pot shots at the GPCCAR and attacking the integrity and experience of those who invested thousands of man ours to research, compile and publish this document, why not take the time to read it over and understand what we have done BEFORE making your attacks.  Many of the points you raise are valid but because we took a PROCESS based approach at least some of them appear in other modules and unless you are familiar with all 12 modules you bring up issues which were more appropriately addressed someplace else.

Then when you have read it over and know where the different processes meet or interact, when you do want to make a suggested improvement (which we encourage) that you follow these guidelines:

1)    Only post one suggested improvement at a time- try to keep the debate focused on a SINGLE ACTIONABLE CHANGE OR IMPROVEMENT you want to see made  I promise you that the GPC Peer Review Teams take them seriously and do look at them even though it may take a week or more to review, research and analyze what you want changed.

2)    Focus on the ISSUES. Don’t attack or denigrate any person.  Everyone who contributed to the GPCCAR (including Vladimir!!) are all well-known and highly respected PRACTITIONERS.  To date, there have been no pure academics who were involved in the research, writing or review of the GPCCAR. 100% of the content, whether you agree or not, was derived from the collective professional opinions of  PRACTIONERS.

3)    Cite all your supporting references, keeping in mind they need to be:

§  Non-Proprietary- That is, they are not copyrighted by someone else or if they ARE copyrighted that permission to use them has been obtained. Why? Because the GPC does not want to be sued for any copyright violations.

§  Contributions must be donated or contributed to the Guild under Creative Commons License BY.  This means if Spider wants to contribute a graphic or something proprietary from your manuals,  then to ensure  you maintain OWNERSHIP you need to  license what you contribute to the GPC to USE your materials

§  Free of charge- Because much of what we are publishing was intended for use in the developing nations, unlike PMI and AACE, we have made the GPCCAR available free of charge. However as it costs money to keep these sites running, we have to rely on CORPORATE SPONSORSHIPS and MEMBERSHIPS in the Guild to provide the investment capital to provide these “free” products and services.

§  References must be accessible via mobile or internet devices. Why? Because the GPCCAR was designed by practitioners for use by practitioners, many of whom are working at remote sites in Alaska, Africa, Indonesia, Mongolia and even the Antarctic, to be of any useful value not only does the GPCCAR need to be accessible via the internet but also the supporting or supplemental references, which in total, exceed 5,000 pages.

 

BR,
Dr. PDG,  Jakarta, Indonesia

http://www.build-project-management-competency.com

Hi Rafael,Let me respond to

Hi Rafael,

Let me respond to your comments one at a time but for the future PLEASE try to keep your posting to a single topic as it makes it easier to respond.

 

·        [RD] We have no problem at all with the AIA G702 I have used for over 35 years, it is our billing template.  But we do not make use of CPM activity link for every line. About AIA G703 we find it not good enough as it does not provide columns for quantities but only for dollar amounts. 

[PDG] OK so you are admitting that G702 is a "best tested and proven" practice so that the only disagreement is whether to bill based on milestones or activities?  I see that as a "professional judgement" decision, which depends on the context of any specific project or even specific parts of the same project.

How did G703 get into the discussion? The GPC did the research and the "best tested and proven" template we found was G702, which is what we advocate whether you agree to use Activity Based Costing/Activity Based Management or not.

·        [RD] We do not have a standard that substitute this form. It is not difficult to figure it out some better alternatives, AIA G703 we find it archaic. We use Excel worksheet and calculate Total to Date Dollar Amount from total to Date Quantities and agree unit prices, then Work this Period Amount is calculated as Total to Date Amount minus Previous Period Total to Date. 

 

[PDG] The reason the GPC is advocating G702 is because it is easy to set up in Excel and it offers the ability to customize it if necessary.  Explained another way, it is a STARTING POINT, from which to customize to be "fit for purpose".

·       [RD] AIA billing forms have been in use long before CPM software was widely available, AIA was in existence before CPM was coined in the 1950's, about a hundred years before CPM. Construction have been in existence much longer. We link payment application to production process items that can span several/hundereds of CPM activities, frequently we detail the pay items per area but not by all CPM items the area includes. In any case we can track them via cost accounts that can can span several/hundereds of CPM activities but it is considered an unnecessary burden, in general we keep unmarried the CPM and the Payment Application. 

 

[PDG] Do you really think this is a "best tested and proven" practice"?  As noted in my response to Tong below, I show that the origin of Earned Value came from the factory floor of the 17th and 18th century sweatshops in the form of PIECEWORK, which has proven to be so successful that it is still in use today in all production factories around the world.  And while I realize that for some unknown reason the US Government has divorced performance from payment, as a private sector general contractor under a firm fixed price contract, I can assure you in that context we are paid ONLY for work performed and that applies not only in the USA but in other countries where I have contracted work. 

·       [RD] http://www.aia.org/about/history/AIAB028819 On February 23, 1857, 13 architects met in Richard Upjohn's office to form what would become the American Institute of Architects."

[PDG] All this is nice information but what does it add to the discussion or debate?   Posting extraneous information may be interesting  but unless it helps us address legitimate issues you are raising, it only serves to muddy the waters. 

·       [RD] You said: "Given that I used the AIA G702 form for the 18 years I was a contractor  and never had any problems with the number of pages, I took the liberty of redoing your calculations in a way that made more sense" Well here your interpretation does not make any sense at all, here once approved the schedule of values template it must be submitted in full without a single line being omitted no matter if some or no progress is reported, it must still add the total contract amount.

[PDG] No, this is your misinterpretation.  As noted in the GPCCAR we can only bill for work which has fulfilled three criteria: (See Module 03.6 http://www.planningplanet.com/guild/gpccar/accepting-completed-deliverables )

1)    The Activity must be finished

2)    The work for that activity must be in substantial conformance to the technical requirements

3)    The work for that activity must have been executed in conformance with the contractual terms and conditions- the “shall clauses”.

What we do is filter ONLY those activities with actual finishes between the last billing date and the current billing date and dump them into an Excel file.  Takes about 1 minute total time and then another 30 minutes or so to do a quality check to ensure we didn’t miss any activities or include any we are not entitled to bill for.

 

·        [RD] I got different numbers because in the case of a 10,000 activities it frequently happens that many pay items occur within a single activity, each with a different quantity and different price. Therefore a 10,000 activities schedule that will disclose the need to account for different quantities and unit price if an average of 4 lines per activity will result in a 40,000 schedule of values, a 1,290 pages document which in some jobs might be more.

 

[PDG] OK I understand what you are saying but because the GPC advocates Activity Based Costing, what you describe would not happen, at least not as part of the billing process.  If you go to Module 08.6 http://www.planningplanet.com/guild/gpccar/developing-the-contractors-cost-estimate-bottom-up and review the section on Activity Based Costing, you will see that there is only a single unit price used for billing purposes.  What you describe where there are multiple pay or cost items per activity  does not happen at billing but is done by the home office accounting staff who have to allocate bulk materials, labor and overheads to specific activities by reconciling time cards, rebar deliveries, or concrete delivery stubs against the ACTIVITY.

 

·       [RD] Your statements shows your complete lack of understanding how things are done in other places. 

[PDG] Now this is a rude and totally unnecessary statement. Having survived as a union contractor for 18 years and with the exception of South America, having worked all around the world, says that I have at least some understanding of “how things are done” as a private sector, for profit contractor working on firm fixed price or unit in place contracts.  Are there other experiences or contexts?  Absolutely. Are yours different from mine? Want to share them? Then you are welcome and encouraged to submit them via the templates developed and made available for that purpose.

 

·        [RD] You said: "Note the grayed out cells (5000 to 10,000 activities) represent what the reference cited by you recommended as the typical or ideal size of CPM schedule, which I do agree with." This is not correct, I said it is not unusual, and that is different to typical, my most common activity count is close to 900 activities and each would contain several/many cost codes if used to generate payment applications.

[PDG] I was only quoting from the reference that YOU cited.  You need to be very careful about your citations.  Putting on my Academic’s hat, I look at every reference your provide to see if it does or does NOT support the point you are trying to make, So if you cite something, you had better make certain that is supports your statements. In this case your reference did NOT support what you asserted.

 

·        [RD] You said: "The contractor is enhancing his/her cash flows by billing by activity rather than against milestones, which tend to be way too far apart for optimum cash flow management".   If there are no financial constraints there is no value in linking payment application to figure out an overly detailed cash flow. Optimum cash flow management requires consideration of financial constraints, calculating NPV of a poor portfolio selection is not good enough. The following is a very simple example of how financial constraints affect optimum schedule. As a proof that you practice what you preach I suppose you can give us at a blink of the eye your optimal or near optimal schedule, should be a piece of cake for you. 

[PDG] I have no clue why or how NPV fits into this calculation.  As a Union contractor, working in New England and Alaska, I knew I had a weekly payroll to meet and I knew at the end of the month, what I would need to pay to my subcontractors and vendors.  Based on knowing my committed costs, I would look at the schedule and after assigning my resources to the critical path and near critical activities, I would manually level my remaining resources, applying them to the high value/high profit activities, trying whenever possible to be revenue neutral- that is, revenue in equaled or exceeded revenues out.  Simple as that…..  No NPV required, just applied common sense.


For more on this, have you looked at Module 09.3 Figures 15-18 where we go into great detail looking at both contractor and owner cash flows?  http://www.planningplanet.com/guild/gpccar/capturing-progress-updating-schedule

 

·        [RD] Following an approved Baseline makes no sense as soon as there are changes in the scope of work, any change matters as was disclosed in the infamous BIG Dig job where contractors were required to follow an always obsolete baseline schedule. http://warnercon.com/wp-content/uploads/2012/08/AContinuouslyChanging1.pdf

 

[PDG] Then why bother having an approved baseline at all? This is why the GPCCAR advocates that we REBASELINE whenever the original baseline no longer accurately represents what is happening in the field.  What the GPCCAR advocates is that to be of any use more than pretty wallpaper, the schedule should always represent as close as possible what the field actually plans to do and when. Not what management WANTS to see or what the scheduler thinks might happen but what those executing the work actually plan on doing.  For more on this topic, the GPCCAR dedicated an entire Module 10 to Managing Change http://www.planningplanet.com/guild/gpccar/introduction-to-managing-change from both the owners and contractors perspective and we also advocate as a “best tested and proven” practice that it is NOT the scheduler who creates the schedule but the people who are going to execute the work.  See Module 07.3 http://www.planningplanet.com/guild/gpccar/identify-capture-schedule-activities

 

And having brought up Boston’s Big Dig, although we were not a contractor on that project, I know of several of my fellow contractors who were and given this was an unmitigated disaster in terms of project management, I would hardly hold that out as an exemplar of “best tested and proven” practices, but more an example of what NOT to do.  We address these kinds of “death march” projects in Module 08-1, Figure 1- http://www.planningplanet.com/guild/gpccar/introduction-to-managing-cost-estimating-budgeting

 

·        [RD] EVM as a prediction tool has been subjected to much questioning, every EVM advocate has its own correction method. Also one of the well known flaws of EVM is that it does not distinguishes work done on critical activities versus work done on non critical activities and promotes wrong sequnecing of activities. http://www.spiderproject.com/images/img/pdf/Project%20Control%20Methodology.pdf "It motivates project managers to do expensive tasks first delaying cheaper activities that could have higher priorities. "It suggests to forecast future performance basing on past experience that may be wrong if resources that planned to be used in the future are not the same as in the past,"

[PDG] Yes, I agree that there are weaknesses in using EVM and over the years, many of them have been addressed.  Have you taken the time to look at the NDIA document we incorpoated by reference into the GPCCAR?  Well worth doing as they have fixed a lot of the weaknesses.

At the same time, I know of no other method which so clearly and unambiguously links performance and payment. As noted previously I too have manually leveled my crews to work on high value/high profitability work but NOT at the expense of critical/near critical activities.  To solve this problem or weakness, if you look at Module 09-5 http://www.planningplanet.com/guild/gpccar/project-performance-forecasting  and scroll down to Figure 19 you can see that the GPC has shown both owners and contractors how to use float and the SPI to identify what you describe above BEFORE it becomes a problem.

 

·        [RD] It is wrong to imply EVM tied to a baseline schedule is required to calculate billings, billings can be calculated using current schedule budgets for payment accounts. You get better predictions if using current CPM model projections with adjusted production rates, a reflection of true plan, better than if using a fixed in time baseline. These cost as well as time/duration projections and trends can be further enhanced if using schedule risk analysis. 

[PDG] OK, what you describe may be valid under some circumstances where the baseline is wrong or that the contractor is not following the schedule.  But ASSUMING that the baseline is correct or that if it is NOT correct that it has been REBASELINED to reflect what the field really plans on doing and then they actually follow what they said they were going to do,  then EVM works and works just fine. Which is why I added the Freeport examples showing that Activity Based Costing/Activity Based Management, combined with Earned Value Management works extremely well, even on large, complex projects.

 

Once again it appears to me that you are trying to find excuses or justification for “Business as Usual”  practices, while common, are NOT “Best Tested and Proven” practices but the kind of BS that PMI advocates in their PMBOK Guide(from page 3 or page 5, using “those practices used on most projects, most of the time”.)  That is NOT what the GPCCAR was designed to be. We worked hard by doing extensive research to ensure that what the GPCCAR was advocating was BETTER or to a higher standard than the PMBOK Guide OR AACE’s RP’s advocate……

 

·        [RD] The reference to failure rates is for new companies. Here such new companies do not make it to public contracting or to high value jobs. Our bidding requirements for such jobs usually requires proven experience above 5 years on the specific type of work being procured, this rules out 100% of those failed companies. 

[PDG] OK fair points Rafael…….. So how about this.  Seeing how you brought this point up, and given that you clearly have so much time on your hands, how about I challenge you to do this.  ENR just published the Top 400 contractors for 2016.  Why don’t you go back to say 2007 and see just how many of the contractors from 2007 are still in business today.  Now I have no idea what that will turn up but my “best professional guess” is you will find a SIGNIFICANT number of them, especially those in the bottom 300 are no longer around…..

 

Bottom line Rafael, I think you are a smart guy and have a lot to contribute. Having said that, instead of taking pot shots at the GPCCAR and attacking the integrity and experience of those who invested thousands of man ours to research, compile and publish this document, why not take the time to read it over and understand what we have done BEFORE making your attacks.  Many of the points you raise are valid but because we took a PROCESS based approach at least some of them appear in other modules and unless you are familiar with all 12 modules you bring up issues which were more appropriately addressed someplace else.

Then when you have read it over and know where the different processes meet or interact, when you do want to make a suggested improvement (which we encourage) that you follow these guidelines:

1)    Only post one suggested improvement at a time- try to keep the debate focused on a SINGLE ACTIONABLE CHANGE OR IMPROVEMENT you want to see made  I promise you that the GPC Peer Review Teams take them seriously and do look at them even though it may take a week or more to review, research and analyze what you want changed.

2)    Focus on the ISSUES. Don’t attack or denigrate any person.  Everyone who contributed to the GPCCAR (including Vladimir!!) are all well-known and highly respected PRACTITIONERS.  To date, there have been no pure academics who were involved in the research, writing or review of the GPCCAR. 100% of the content, whether you agree or not, was derived from the collective professional opinions of  PRACTIONERS.

3)    Cite all your supporting references, keeping in mind they need to be:

§  Non-Proprietary- That is, they are not copyrighted by someone else or if they ARE copyrighted that permission to use them has been obtained. Why? Because the GPC does not want to be sued for any copyright violations.

§  Contributions must be donated or contributed to the Guild under Creative Commons License BY.  This means if Spider wants to contribute a graphic or something proprietary from your manuals,  then to ensure  you maintain OWNERSHIP you need to  license what you contribute to the GPC to USE your materials

§  Free of charge- Because much of what we are publishing was intended for use in the developing nations, unlike PMI and AACE, we have made the GPCCAR available free of charge. However as it costs money to keep these sites running, we have to rely on CORPORATE SPONSORSHIPS and MEMBERSHIPS in the Guild to provide the investment capital to provide these “free” products and services.

§  References must be accessible via mobile or internet devices. Why? Because the GPCCAR was designed by practitioners for use by practitioners, many of whom are working at remote sites in Alaska, Africa, Indonesia, Mongolia and even the Antarctic, to be of any useful value not only does the GPCCAR need to be accessible via the internet but also the supporting or supplemental references, which in total, exceed 5,000 pages.

 

BR,
Dr. PDG,  Jakarta, Indonesia

http://www.build-project-management-competency.com

IMHO, the root cause of this

IMHO, the root cause of this prolonged debate herein still not be discussed deeply. It due to the nature of engineering work for project, small changes vs large changes in work volume. For this reason, it divides project into different approaches. Each is most suitable for each specified situation. No one is fit for all.

Mr Paul,

Thank you for your clarification on black sides of back-to-back, I agreed fully. About advance payment, it has many purposes. Firstly, for quickly action for preliminary/preparation work. Secondly, It also depends on relationship between owner and contractor. If seller trusts buyer fully on proactive payment like many reputable owners, he does not need to subordinate this this advance payment.

The following is another

The following is another unilaterally closed post on the FORUM tab the GUILD is taking possession as if their own tab is not enough. 

http://www.planningplanet.com/forums/guild-project-controls-gpc/591410/r...

Dear Rafael,

Thank you.  These two statements are specific and actionable and as such have been recognized and are being reviewed and analyzed by the Guild Members.  When any changes / improvements to the module are agreed to by the peer review teams, we will post notice of those findings once a decision has been made.  

Because you have chosen to post your thoughts here and not via the GPCCaR Change Formsuggestion template I will have to close this thread so its content can be actioned as a specific and defined scope of work for the review teams.

Thanks and Regards, GPC Admin (@Jason)

For those passionate about Project Controls and wish to become part of the decision making team, to help shape what the Guild Commnity collectively consider to be best practice guidelines, you are cordially invited to Join the Guild where you will have a voice in making these kinds of decisions.

It looks like the GUILD have

It looks like the GUILD have intention to unilaterally close and censor all my discussions they are in disagreement. As I said before I do not have the required published, open-source references and in addition I want is to be an open discussion, not a closed discussion.

Planning Planet is no longerr the same open forum that encouraged diverse opinions and their open discussion. It looks new Admin members are taking over and are changing the rules. 

The following is the last unilaterally closed post on the FORUM tab the GUILD is taking possession as if their own tab is not enough. 

http://www.planningplanet.com/forums/guild-project-controls-gpc/591071/gpccar-m09-4-assessing-interpreting-progress-data-introduci

Dear Rafael,

Thank you.  These statements were specific and actionable and as such have been recognized and have been reviewed and incorporated by the Guild Members.  

Details of the changes will be communicated to Guild Members.

Because you have chosen to post your thoughts here and not via the GPCCaR Change Form suggestion template I will have to close this thread so that this change is concluded; any new comments should be made via the aforementioned Change Form or a new duscussion thread.

Thanks and Regards, GPC Admin (@Jason)

For those passionate about Project Controls and wish to become part of the decision making team, to help shape what the Guild Community collectively consider to be best practice guidelines, you are cordially invited to Join the Guild where you will have a voice in making these kinds of decisions.

Vladimir, In our jobs it is

Vladimir, 

In our jobs it is not unusual for some activities to include several pay items, each with a different quantity, different unit price, different dollar amount. How do you account for this under your proposed method?

We are required to show in a transparent way the quantity [volume of work], the unit of volume, the unit price, the extended dollar amount for budget, total to date and current period for every pay item. 

PA-Spider01 photo PA-Spider01_zpslrsfwyan.jpg

In the case of activities such as elevated slab forms it might have different pay items such as forms, electrical, mechanical, reinforcing steel, each with different quantity, different unit of work ... but multiple pay items and their corresponding activity must be modeled under the same activity as to keep the resources working as a team. 

I have not figured it out within Spider Project no matter if using cost loading at the activity level, at the resource level or material resource. It looks like an easy task if using P6. Looks easy but it do not solve the issue when an activity is 100% finished for purpose of successors to start but some pay items are not finished. It do not solve the contractual requirement for any changes in schedule to be approved prior to submittal of any updated schedule that include unapproved changes. 

CostRA01 photo CostRA01_zps3d2xtybr.jpg

I have seen the requirement to use the CPM Schedule as a billing document on a Federal Government job and the experience was a disaster. We used SureTrak and to include several pay items on a single activity was easy. The inspector did not understood the need to address the out-of-sequence issue with a changed "divorced" schedule whenever an activity is 100% finished for purpose of successors to start but some pay items are not finished. This was the Hangar Job I have mentioned you before and that maybe you recall. The only job requiring the CPM as a tool for payment application in my over 35 years experience preparing payment applications for my construction work jobs.

It was a relatively small remodeling job, perhaps less than $3M US dollars. Because of the paper reduction act we were not required more paperwork at time of submitting the payment application along with the schedule update. It was enough to submit 7 copies, each on a 2in binder and close to 400 pages, making it a box of about 2ftx2ftx2ft. It was fun to see the documents being rejected and asked to resubmit them because of a minor disagreement. They never understood the legal concept that any item in disagreement should be deducted but the payment shall not be placed on hold by requiring to resubmit the application. 

I wonder how it would be if a $20M dollar job not uncommon for my client, maybe over 2,500 pages per binder, a huge binder. Uncle Sam is second to none in bureaucratic paperwork, give them any excuse to add to the paper work and they will take it as if paper is more important than the end result. 

Best Regards,

Rafael

Paul,We have no problem at

  • Paul,
  • We have no problem at all with the AIA G702 I have used for over 35 years, it is our billing template.  But we do not make use of CPM activity link for every line. About AIA G703 we find it not good enough as it does not provide columns for quantities but only for dollar amounts. 
  • G703 Sample photo G703Sample_zpsdninu89j.jpg
  • We do not have a standard that substitute this form. It is not difficult to figure it out some better alternatives, AIA G703 we find it archaic. We use Excel worksheet and calculate Total to Date Dollar Amount from total to Date Quantities and agree unit prices, then Work this Period Amount is calculated as Total to Date Amount minus Previous Period Total to Date. 
  • AIA billing forms have been in use long before CPM software was widely available, AIA was in existence before CPM was coined in the 1950's, about a hundred years before CPM. Construction have been in existence much longer. We link payment application to production process items that can span several/hundereds of CPM activities, frequently we detail the pay items per area but not by all CPM items the area includes. In any case we can track them via cost accounts that can can span several/hundereds of CPM activities but it is considered an unnecessary burden, in general we keep unmarried the CPM and the Payment Application. 
  • http://www.aia.org/about/history/AIAB028819
  • "On February 23, 1857, 13 architects met in Richard Upjohn's office to form what would become the American Institute of Architects."
  • You said: "Given that I used the AIA G702 form for the 18 years I was a contractor  and never had any problems with the number of pages, I took the liberty of redoing your calculations in a way that made more sense"
  • Well here your interpretation does not make any sense at all, here once approved the schedule of values template it must be submitted in full without a single line being omitted no matter if some or no progress is reported, it must still add the total contract amount.
  • I got different numbers because in the case of a 10,000 activities it frequently happens that many pay items occur within a single activity, each with a different quantity and different price. Therefore a 10,000 activities schedule that will disclose the need to account for different quantities and unit price if an average of 4 lines per activity will result in a 40,000 schedule of values, a 1,290 pages document which in some jobes might be more.
  • Your statements shows your complete lack of understanding how things are done in other places. 
  • You said: "Note the grayed out cells (5000 to 10,000 activities) represent what the reference cited by you recommended as the typical or ideal size of CPM schedule, which I do agree with."
  • This is not correct, I said it is not unusual, and that is different to typical, my most common activity count is close to 900 activities and each would contain several/many cost codes if used to generate payment applications.
  • You said: "The contractor is enhancing his/her cash flows by billing by activity rather than against milestones, which tend to be way too far apart for optimum cash flow management".
  • If there are no financial constraints there is no value in linking payment application to figure out an overly detailed cash flow. Optimum cash flow management requires consideration of financial constraints, calculating NPV of a poor portfolio selection is not good enough. The following is a very simple example of how financial constraints affect optimum schedule. As a proof that you practice what you preach I suppose you can give us at a blink of the eye your optimal or near optimal schedule, should be a piece of cake for you. 
  •  photo Financial Constraints_zpsdphuu7yb.jpg
  • Following an approved Baseline makes no sense as soon as there are changes in the scope of work, any change matters as was disclosed in the infamous BIG Dig job where contractors were required to follow an always obsolete baseline schedule.
    • http://warnercon.com/wp-content/uploads/2012/08/AContinuouslyChanging1.pdf
  • EVM as a prediction tool has been subjected to much questioning, every EVM advocate has its own correction method. Also one of the well known flaws of EVM is that it does not distinguishes work done on critical activities versus work done on non critical activities and promotes wrong sequnecing of activities.
    • http://www.spiderproject.com/images/img/pdf/Project%20Control%20Methodology.pdf
    • "It motivates project managers to do expensive tasks first delaying cheaper activities that could have higher priorities.
    • "It suggests to forecast future performance basing on past experience that may be wrong if resources that planned to be used in the future are not the same as in the past,"
  • It is wrong to imply EVM tied to a baseline schedule is required to calculate billings, billings can be calclated using current schedule budgets for payment accounts. 
  • You get better predictions if using current CPM model projections with adjusted production rates, a reflection of true plan, better than if using a fixed in time baseline. These cost as well as time/duration projections and trends can be further enhanced if using schedule risk analysis. 
  • The reference to failure rates is for new companies. Here such new companies do not make it to public contracting or to high value jobs. Our bidding requirements for such jobs usually requires proven experience above 5 years on the specific type of work being procured, this rules out 100% of those failed companies. 
  • GPC Admin,
  • Your experience do matter as much as the experience of everyone, to follow the point of view of a single person would be wrong.
  • Best Regards,
  • Rafael

Excellent, Tong.......  Great

Excellent, Tong.......  Great points, however while I agree that what you describe are all COMMON PRACTICES, I would challenge you as to whether they are "Best Tested and Proven" practices, which is what the GPCCAR is trying to identify and establish.

Specifically:

+ Contract need to include strict clause for payment cycle duration, Contractor can claim some reasonable extra compensation if owner delay his payments.

[PDG] While "late payment penalties" are common clauses to insert into most contracts, they are becoming increasingly difficult to enforce or collect on, even in North America which has some stringent laws in place including the ability to file MECHANICS LIENS in the event the Prime Contractor is paid but fails to pay his subbies/vendors promptly.   

+ Always adopt Advance Payment, and it should have enough value to ensure positive cash flow in beginning period. 

[PDG] "Advanced Payments" are diametrically OPPOSED to the conept underlying Earned Value. Go to the GPCCAR Module 09-1 http://www.planningplanet.com/guild/gpccar/introduction-to-managing-project-progress and scroll down to Figure 4 or 09.3.3.2.4 Paying/Getting Paid under EVM, Figure 19 http://www.planningplanet.com/guild/gpccar/capturing-progress-updating-schedule.  THIS is how PRIVATE SECTOR contractors working on FFP contracts used EVM.  This is DIFFERENT than how the US Government uses EVM as they have somehow DIVORCED progress and payment, which is, IMPO, a very bad practice.

Let me ask you, if you have a dog, do you give the dog a doggy biscuit BEFORE he does the trick or afterwards?  Same analogy here.  Contractors are very Pavlovian.... We are in business for one purpose and one purpose only and that is to make money.  Thus anything that enables us to make more money or get paid for the work we do more quickkly is a strong incentive for us.

+ Insert milestones between key milestones (convergence points) to ensure each 2 months has at least 1 milestone

[PDG] Yes, that is exactly what I advocate.  However, milestones alone still do not necessarily look at the activities shown in the schedule as to how we GET to the milestone.  How many times do you put this great CPM schedule on the wall and then you find the field NOT following the scheule at all but doing their own thing?  Want to stop that? Then stop paying off milestones and start paying off activities instead and the contractor will be looking at your schedule every day.

+ Back-to-back and/or Flow-down payment method from Main Contract into SubContracts/Vendors to ensure Contractor will pay Subcontractors/Vendors when receive money from Owner.

[PDG] I love it!!!!  "Back to Back" or "Pay When Paid Clauses" in the contract.  That makes things even WORSE.  Go see this paper #29 http://www.build-project-management-competency.com/download-page/ and see the COST impact this has as each level of supply chain adds their carrying costs to the prices.  Also what happens when the prime does not even bother to pay the subs and vendors, which happens all too frequently here in Asia.   Go HERE to Modul 05.6.1 http://www.planningplanet.com/guild/gpccar/managing-contracts-closing-the-contract and check out what Lien Laws are and how they can stop this from happening. 

+ Another aspect is financial capacity of Contractor, it also help Contractor survives from bankrupt, and more competitive than other Contractors.

[PDG] Yes, I agree that both performance and payment bonds are helpful in ensuring that both the contractor and owner are financially solvent,  but as I am sure you know, that while North America and Europe require 100% performance bonds, both you and I know that in SE Asia and much of the Middle East, they only require 10% bonding or even cash bonds which are not even close to protecting the owner in particular, which is why we see contractors mobilising the project and finishing maybe 10% then threatening to stop work unless the owner pays them more money. For more on bonds, go see Module 05-1 http://www.planningplanet.com/guild/gpccar/introduction-to-managing-contracts or go here to Module 05-5 http://www.planningplanet.com/guild/gpccar/managing-contracts-managing-the-contract.

Bottom line Tong, while I agree that what you described is a very accurate depiction of what is happening NOW. given that neither owners or contractors are happy with the situation, how much longer are we willing to tolerate "Businees as Usual" and when are we going to become more professional and start doing with is RIGHT?

BR,

Dr. PDG, Jakarta, Indonesia

 

Mr Paul,Some solutions to

Mr Paul,

Some solutions to resolve the disadvantages of milestone method you mentioned can be:

+ Contract need to include strict clause for payment cycle duration, Contractor can claim some reasonable extra compensation if owner delay his payments.

+ Always adopt Advance Payment, and it should have enough value to ensure positive cash flow in beginning period. 

+ Insert milestones between key milestones (convergence points) to ensure each 2 months has at least 1 milestone

+ Back-to-back and/or Flow-down payment method from Main Contract into SubContracts/Vendors to ensure Contractor will pay Subcontractors/Vendors when receive money from Owner.

Another aspect is financial capacity of Contractor, it also help Contractor survives from bankrupt, and more competitive than other Contractors.

Tong, I have no problems with

Tong, I have no problems with using the milestone method which a well known and respected method, HOWEVER, keeping in mind that contractors live or die by their cash flows, most milestones I see at least here in SE Asia are between 3-5 months apart PLUS when you add in another 75-90 days before the contractor actually gets paid for work done 5 to 7 months previously is one of the reasons why so many contractors go bankrupt and why they cannot staff the projects with enough people or machines.

We were able to convince one of our clients here in Indonesia started paying twice a month and they have seen a 20% improvement in contractor performance.  Why? Because all contractors, especially those small to medium sized contractors in the developing nations, find it almost impossible to get interim project funding.

Not only that but because the WACC for a small contractor is often 2 or 3 times that of an owner, it also results in higher prices as we cannot afford to absorb the costs of that money.  To see a good paper on that topic, here is the research that one of our graduate students produced http://www.build-project-management-competency.com/download-page/ as part of earning his AACE certification.

BR,
Dr. PDG, Jakarta, Indonesia

So far, in my previous

So far, in my previous projects I've seen some payment methods below:

1. Lumpsum -> Activity Base Costing (Cost loading CPM Schedule)

2. Lumpsum -> Payment Milestones

3. Unit Rate: Pay by previous agreed unit-cost rate for Work Class x actual work volume done (in some special cases unit is workforce, eg.  expert services they record the timesheet...)

4. Cost Plus: pay by actual invoices

5. Open Book Estimate: similar to lumpsum but show all internal calculation and disclose for Owner, and final price will be agreed after commencement of work.

The ABC has at least 2 weak following
+ It's too rigid. It doesn't encourage Contractor to follow flexible ways to meet targets (convergence points). Contractor will try to work on large value activities rather than find optimized way (re-sequence, change logical relationship, critcal path, resource critical path). All you know that more flexible, more success

+ It depends very much on nature of design development, and type of project. If project is fast-track and current engineering phase is not detail enough, quantity/scope will frequently change, baseline estimate need to be revised frequently also.

When apply ABC method , the "many pages" issue, in my experience as a general contractor, owner needs two 2 things:

+ Physical % Progress at WBS level (hard copy)

+ backup data (Level 4,5,6,supporting documents) in native files (Excel, XER,...)

And he only sign-off on the Physical % Progress at WBS level --> only one (1) page!

Rafael,I think your graphic

Rafael,

I think your graphic showing the number of activities was a bit hyperbolic......

Given that I used the AIA G702 form for the 18 years I was a contractor  and never had any problems with the number of pages, I took the liberty of redoing your calculations in a way that made more sense, which is to look at the number of sheets one would expect to produce on a monthly basis.

Here is what I come up with:

4311
rafael_challenge_3.jpg

 

Note the grayed out cells (5000 to 10,000 activities) represent what the reference cited by you recommended as the typical or ideal size of CPM schedule, which I do agree with.

I guess my follow on question would be is if you don't like the AIA G702 template and billing by activity, what does YOUR recommended billing template look like, and how does it ensure that:

1) The contractor is enhancing his/her cash flows by billing by activity rather than against milestones, which tend to be way too far apart for optimum cash flow management;

2) The contractor can demonstrate he/she is following the approved baseline CPM schedule by billing off the activity and not against milestones only?

Lastly, here is a reference supporting the fact that being a contractor is an extremely risky business and especially so when you look at the razor thin (<10% EBIT) margins we are working under. http://smallbiztrends.com/2012/09/failure-rates-by-sector-the-real-numbers.html  As you can see, only 36.4% of construction contractors make it to 5 years.  Which is why I got OUT of construction contracting and got into property management as an owner, project management consulting and teaching.  ;-)

BR,
Dr. PDG, Jakarta, Indonesia

Dear Rafael, Tong Cong Tuan,

Dear Rafael, Tong Cong Tuan, Johannes and Vladimir,

Thank you.  These statements have been recognized and are being reviewed and analyzed by the Guild Members.  When any changes / improvements to the module are agreed to by the peer review teams, we will post notice of those findings once a decision has been made.  

In my personal experience on this particular matter I have:

  • Frequently had to provide level 4 or 5 activity listings to the client demonstrating the agreed percentage of work achieved each period.  
  • In all cases these had to be signed and / or sanctioned by the Employers Representative / Engineer / Architect.  
  • These agreed %'s were converted into the amount to be paid (i.e. are therefore formed the payment application document) as an agreed proportion of the contract sum (i.e. from % complete and resource budgets on activities).  
  • Such listings have been made in regard to "current and accepted programmes", which could be the Approved or amended or Working Baseline; all of which would include Approved Budget with any Approved Changes.  
  • Now whether or not the timing of payments followed the intended logic of the schedule, or if progress claimed was ahead, behind or even in conflict with schedule logic was not important because work done was work done and because it had to be sanctioned by the Employer or his / her Representative / Architect it formed an agreed, transparent and auditable payment request value, created down to the cent or pence as a funtion of the agreed % complete and the approved budget.  
  • Such payment request listings have normally exceeded 100's of pages of data so it is normal in my experience (from projects in Seattle, London, Middle East and Far East).
  • Some of these projects adopted "Activity Based Costing" while others adopted approved and apportioned contract budget amounts, per the Bill of Quantities / Bills of Materials and assigned to activity resources.  Same thing just a different name.  Some projects still required the latter detailed activity budget loading but payment was made via agreed payment values as specified by various "Achievement Payment Milestones"; but even in this case, good practice meant that the appropriateness, or otherwise, of the payment request was justified by the activity level budget loading / apportionment and agreed %'s.

I'm not sure any of that add's value but that describes my experience and I am not sure I should be adding my point of view as I am acting as an administrator; I will check; I may be in trouble!

Thanks and Regards, GPC Admin (@James)

For those passionate about Project Controls and wish to become part of the decision making team, to help shape what the Guild Commnity collectively consider to be best practice guidelines, you are cordially invited to Join the Guild where you will have a voice in making these kinds of decisions.

Convergence is defined by

Convergence is defined by hard logic not by cost unless you are leveling financial constraints that will create the temporal soft links something neither P6 or MSP can do. In the absence of financial leveling the cost link to the CPM is passive.

Using milestones as a mean to get a 100% divorce the time distributions will be very rough and unreliable. In such case the model will not yield reliable financial resource leveled schedules. 

Mr Rafael,Disagree, It

Mr Rafael,

Disagree, It depends on what the payment milestones are established by both Client and Contractor. If it is really convergence points, it will push the Contractor to follow CPM Schedule in an active way not passive way, For instance, A-> F, B->F, C->F. Then F will be the convergence points, like some milestones: Stack-up upper deck for offshore platform construction, 3D Model 60% review in detail design, Delivery for some LLI equipment, complete Piping hydrotest, etc...To meet these milestones, Contractor need to follow CPM schedule in an innovative way, they will know where are the first priorities in thousand activities in current period, how to meet them, how to make the CPM schedule more "intelligent", they control the work more effectively.

Another advantage is it resolves the painfulness of payment process, you know what I means when there are some small deviations between design and actual work completed on site, client will have reason to pend the payment of Contractor.

But sometimes, Contractor will trick Client when define payment milestones are not same with convergence points, like building of warehouse, complete shelter of equipment...which will never to be critical path. Still it's another story.

In addition, For identification of payment value of each payment milestones, both Contractor and Client still need to cost load the CPM Schedule independently, then mutual agreement will be reached during bidding phase to ensure good cash flow for both Companies but still link money with work process.

BR,

 

 

 

 

 

 

 

Tong, If using milestones as

Tong, 
  • If using milestones as a mean to get a 100% divorce the payments time distributions distributions will be very rough and unreliable.  
  • This milestone approach kills the purpose for the use of the CPM schedule as a payment tool.
Best Regards, Rafael

Mr Rafael,The "Divorced"

Mr Rafael,

The "Divorced" issue you mentioned is inevitable. In my exprience, sometime Client accept 80%=100% for small value task if they pursuit the EV payment method. No need to 100% accurate

However to resolve this issue, I prefer payment milestones rather than EV payment method. It's easy for both client and contractor, they just need to mutually agree on key milestones. These key milestones should be the convergence points of the projects, it's the keys for all down-stream tasks to be rescued.

BR,

 

I am still waiting for a

I am still waiting for a satisfactory answer by the GUILD to the fundamental question of how you approach a distorted  CPM schedule when the timing of payments do not follow the intended logic of the schedule. The so called Divorced Schedule requires the submittal and approval of a revised schedule as well as a revised baseline required for EV calculations, a time consuming effort that takes a substantial amount of time. 

For many activities the breakdown quantities per activity must be broken down into further detail to account for cost differences. Take for example lighting fixtures, a single lighting fixtures installation activity might have several fixture types some costing several times the cost of other fixtures included under the same activity. Or for example an elevated slab avtivity where different trade and WBS resources must be included within same activity as to keep them working as a team under resource leveling. Such single elevated slab activity will include form work, reinforcing steel, electrical and plumbing rough-in pay items that must be quantified in order to substantiate the billing cost. 

Because project sponsor or his representative do not know the activity details and what pay items are included until the CPM is submitted and approved they will have to make a take off on their own to verify each quantity after the 10,000 activities schedule approval. On a 10,000 activities with several pay items per activity, say four/activity it means 40,000 items must be quantified and revised against the contractor estimate.

How much time and effort do you believe such endeavor will take?

Johannes and Vladimir,Thanks

Johannes and Vladimir,

Thanks for taking the time to debate and challenge my points of view. Thanks for your tolerance and understanding that while debating is confrontational in nature it is necessary when there are opposing views. 

Best Regards,

Rafael

Sorry but I do not see in the

Sorry but I do not see in the GUILD any allowance for different options and the reasonig for dissenting views. The GUILD cannot make changes to USA laws and their interpretation. There are no pragmatic suggestion on the GUILD that takes into consideration our scheduling practice, our contracts and the court interpretation.   
  • In the US it is not uncommon for payment applications be delayed for the most simple of excuses, most notably a small mathematical error used as to determine the invoice was in error. The best Contractor advocates groups have gotten is for some states to enact a prompt payment act that applies to private jobs but not surprisingly do not apply to jobs where public funds are used, perpetuating thir poor performance. If on top of this you add any procedure that makes complex payment application to be in error, no matter how small they will have their excuse to delay payment. 
  • http://www.lexology.com/library/detail.aspx?g=0fe3763a-4002-4fe5-a13b-2916414cc542
  • Not surprisingly as stated in the above reference "... provisions that are most frequently subject to override in private contracts include: requirements on invoicing "
  • https://www.fas.org/sgp/crs/misc/R41230.pdf
  • 25 See H.Rept. 97-461, 97th Cong., 2nd sess. 108 (1982). See also David M. F. Lambert & Nancy B. Wilson, The Prompt Payment Act: Requiring Government Agencies to Pay Their Bills on Time, 42 Nat’l Pub. Acct. 1 (January/February 1997) (referencing a 1978 study by the Government Accountability Office which found that government agencies paid up to 30% of their bills after their due dates).
The practice in the USA is so different to the European experience that the GUILD should warn it is not intended to be used in the USA and avoid falling in complete disregard of the impact on USA contractors such requirement will have. 

Hi RaphaelThe answer is quite

Hi Raphael

The answer is quite simple. There needs to be a pragmatic approach to the schedule updates and the approvals of baselines.

The point I am making is that the world is approaching challenges in a different part of the world in a variety of ways, and that is what it should be.

What is not a practical methodology in one part of the world it may be a mandatory requirement in one other part.

We have to accept these differences, and the Guild of Project Controls Compendium and Reference provides us with a useful handbook and reference guide to further develop the project controls processes,plans, procedures and manuals to suit our particular needs.

Regards Johannes

JohannesI am still waiting

Johannes

I am still waiting for a satisfactory answer to the fundamental question of how you approach a distorted schedule when the timing of payments do not follow the intended logic of the schedule. The so called Divorced Schedule requires the submittal and approval of a revised schedule as well as a revised baseline required for EV calculations, a time consuming effort that takes a substantial amount of time. 

Probably in your country revised schedule an revised baseline do not require approval but here it is a contractual requirement. Be reminded that here the acceptance of a revised baseline have legal consequences in the USA. 

In an industry where margins are razor thin, the mandated procedures of a payment application via CPM schedule are not understood by everyone and that will inevitably delay the processing of payment applications until the revised schedule as well as a revised baseline are duly approved as per our standard contract conditions resulting in slower payments that can can be devastating.

Best Regards,

Rafael

Hi RaphaelThank you for your

Hi Raphael

Thank you for your post.

“Here” I guess, is somewhere in the U.S. For me,”Here” is in Europe and more particular in The Netherland. You may understand that cultural differences can have an impact how projects and in this case payment payments are handled. Off course, general accounting principals and rules need to be followed.

Your second bullet point.

·         Agree on a CPM schedule, fully resourced and cost loaded and baseline.

·         Agree on Payment Schedule at the same time as establishing the baseline.

·         Establish Payment conditions and frequency

·         Update and agree on the progress of the work achieved

·         Run a report “Earned Value Cost” on the CPM scheduling tool

·         Establish the proposal invoice, by the Earned Value Cost data and issue for payment

·         Agree and sign off for payment

Regards Johannes

Johannes,How you handle the

Johannes,

  • How you handle the issue when activity successors can start but not approved as 100% because some cost elements are not approved for payment. Maybe this issue as presented in the AACE paper is just the imagination of someone but it never happens except at my location or Vladimir's.  I had no idea the author of the paper was from Bayamon, PR. or perhaps Russian where such scenarios are not uncommon. 
  • Here payment application must be checked to the cent, all application columns must add exactly to the decimal point as shown in accordance to our accounting standards, approximations are not allowed and will be rejected. Here the inspector and the architect must  verify, certify and sign the application but none are CPM software experts as it happens in your location. I am interested to know how CPM based payment applications at the activity level are processed in your location. 
  • Can you tell us how you handle different financial periods payment applications within same portfolio and provide some examples.
  • Can you provide some examples of 10,000 activity schedule payment applications for a couple of sequential applications. Just change activity descriptions to "Activity" as to safeguard the confidentiality and post the xer files on a file hosting service. Here without proof such bold statements are not acceptable.

Best Regards,

Rafael

Hi allInteresting

Hi all

Interesting discussion

I  have worked on contracts were the payment schedule was directly derived from the priced activities in the approved Primavera schedule. The Primavera schedule was resourced and cost loaded.

Most of these type of contracts were EPC, lump sum type contracts.

Regards Johannes

Rafael,I expected that this

Rafael,

I expected that this Spider feature is country specific and so we included it only in Russian version.

In Russia there are certain forms (KS-2, KS-3, KS-6) that contractors submit for payments. These forms report the volume done for different types of jobs and payments are made basing on agreed contractual unit costs. These documents are mandatory in most construction project and Spider Project can generate them.

But I never wrote that Spider Project may be used for accounting itself.

These documents are not created on activity level, they require grouping the works by contract defined types and reporting overall volumes by types together with associated contract costs.

So most contractors have two parallel budgets in their projects - for real expenses and for the contract with the different costs of the same jobs. And only few contractors use Spier Project for generating these reports for payments in the way I described in my previous post. I don't mix payment documents and accounting.

I am also curious about the way MSP and P6 can be used for generating payment documents since they do not plan and report volumes of work done.

Vladimir,No scheduling

Vladimir,

No scheduling software meets our accounting standards and no one here runs company accounting using a CPM software.

  • I have never seen an Accounts Payable report within a CPM Schedule.
  • I have never seen an Accounts Receivable Report within a CPM Schedule.
  • I have never seen a Payroll report that includes all payroll contribution accruals within a CPM Schedule.
  • I  have never seen a General Ledger report within a CPM schedule.
  • I have never seen the periodic reports businesses must submit to the IRS and Social Security.
  • I have never seen a Trial Balance coming out of a CPM schedule.
  • I have never seen standard Payroll and Income Tax reports to be submitted to local agencies coming out of a CPM schedule.
  • I have never seen a company that do not keep accounting using specialized software, manual accounting is long gone. 
  • I have seen some companies that do not use CPM but basic Gantt schedules and if asked for a CPM they just hire an outsider.

I am not an accountant and many reports shall be missing from the previous list.

  • For project time management we usually use CPM software, at times simple Gantts, at times tlime location charts. 
  • For accounting and project costing we always use accounting software.
  • For Schedule of Value billings we use Excel, a software everyone knows. We do not use a schedule of values linked line by line to a CPM list of activities, we find it too granular for this purpose. 

In an industry where margins are razor thin, the mandated procedures of a payment application via CPM schedule not understood by everyone resulting in slower payments can be devastating. So I wonder how the GUILD tacles all the issues I mentioned in my prior postings. I'm all ears waiting for the GUILD. 

Best Regards,

Rafael

Rafael,Spider Project can

Rafael,

Spider Project can generate payment documents from the schedule but it does not mean that they can be used for this purpose.

The work can be done but still not approved and accepted, payment method depends on contract conditions - in one project half finished job will be paid, in another payments are linked with certain milestones. Contractor may select what finished job shall be paid now and what later, the Client may pay in advance, etc.

So payment documents created by Spider Project are useful for comparison of the work done and the work paid.

In any case for creating payment documents we create special WBS where the jobs are grouped by types (all concreting jobs are under Concreting phase, etc), so phase volumes make sense. Here unit costs are applied to job types and payments are done for volumes performed unless the contract is fixed price and payments are linked with the schedule milestones.

So 10000 activities schedule has reasonable amount of work types or schedule milestones that are associated with payments.

But once again we warn our customers that payment information generated by the software shall be used for comparison only because project status is based on management information that could be not supported by the documents required by accounting.

But still there is workaround. Some of our customers want to use Spider Project for both project management and accounting, They create two parallel tracks of project versions.

After project plan and project baseline were approved they manage projects usual way entering actual data basing on line managers reports. But when they get the documents that confirm that certain amounts of work were done and accepted they return to the baseline and enter this information creating parallel project version. And so on, one branch of Spider Project versions is based on actual information, another one - only on documented data. It is possible to compare these versions and get reports on work done but yet not approved and accepted, or not finished but already paid.

But once again - I am afraid that our approaches and methods could be country specific and Spider Project specific. I did not meet other software that supports these methods.

Many of CPM software in use

  • Many of CPM software in use today have issues with the calculation of time phased cost distributions unless the user pre-define financial periods. The distorted distribution will impact activity in progress and therefore last period values if no strict adherence to the financial periods is followed. Fixing data entry errors in the financial periods table can be a nightmare. Each sponsor as well as each contractor contract might require different financial periods but Oracle/Primavera P6 user can define a single financial periods dictionary per database. 
  • What are the recommendations of the GUILD to tackle this issue? 

I do not believe the Banks and Sureties will accept partial solutions that do not adhere to accounting principles. A schedule generated payment breakdown that do not matches current period invoice is not an acceptable solution. 

To my knowledge Spider Project do not have this issue, maybe the GUILD is to endorse it as the only software capable of tracking payment applications in accordance to accounting principles.

Even if the GUILD require software capable of generating payment application reports that do follow accounting principles I do not believe the idea is practical. I am still waiting to see some documentation by the GUILD showing several 10,000 activities schedules used as basis for payment where all issues that I have mentioned are tackled. Needless to say I want to see several payments applications for a couple of projects on same portfolio using different financial periods. No doubt a piece of cake for the GUILD, I am not asking for too much as this is how the GUILD says it is regularly done. 

GPC Admin,I am not into

GPC Admin,

I am not into publish-or-perish approach by the GUILD that requires published open source references. 

My interest is on challenging the assertions of closed membership clubs that represent the interest of a few. Dangerous assertions that many times are adopted in our contracts as if the only acceptable way. Someone got to be an independent critic, if I become part of it then I must be in substantial agreement with the GUILD, but I am very far from being in agreement with a substantial amount of the GUILD assertions. 

For a start I am in complete disagreement with the GUILD assertion that using the CPM schedule as a payment tool is good practice because it misses the practical implications of such idea. The only published reference I have regarding the issues with the use of CPM as a payment tool falls short of providing a good answer and in addition I do not believe is "open source". 

Best Regards,

Rafael

____________________________________________________________________________

Dr. Paul D Giammalvo  

Hi Rafael,

I was on the development committee of the GAO's "Best Practices in Scheduling" and like you, I too do not agree with everything.  However, given the "committee" consisted of several hundred people, to get the consensus we did is nothing short of a miracle.

Which is why the GPCCAR was designed to be a "living document"-  If you or anyone else disagrees with what has been written then we have developed a process to follow and a template with which you can propose changes- terms_of_reference_for_gpcbok_editors_appendix_a_-_rev_1.01.  Theis process can be found at the BOTTOM of each and every page in the GPCCAR

There are only three requirements:

1) There must be some PUBLISHED REFERENCE to back up or support any proposed changes (Why? Because as publishing papers are a part of the certification process, if there are contentious or competing tools/techniques or methodologies then we want to see our members publishing papers on those topics)

2) The reference must be "Open Source" (non-proprietary) available under some form of Creative Commons License. (Why? Because we don't want to run afoul of copyright laws by using proprietary materials.  We also do not want those who are preparing for any of the Guild Certifications to have to go out and purchase expensive books- hence the use of the GAO, and DoE documents)

3) The reference must be accessible via the internet/mobile device. (Why? Because we believe the real need for the GPC Compendium and References (CAR) and the certifications will be coming from the developing/newly emerging nations where "hard copy" books are not only expensive but often unobtainable.

Explained another way, the GPCCAR was designed to be a STARTING POINT only and we expect it will evolve over time which is why we are encouraging constructive and robust debates here on the forum, recognizing that this is OUR document and if it means we have to include or incorporate opposing or differing views then so be it.

Hope this makes sense?

Thanks for updateing that

Thanks for updateing that Rafael,

I have been asked to advise that if you want a quicker turnaround / viewpoint forming on issues then you need to show how you recommend the narrative / images in the module be amended; i.e. what you propose to be removed, added and / or changed.  

If you are sufficiently inclinded to offer the solution as well as questions then we will collectively make better progress.  If not, then it will take longer.

Thanks and enjoy your weekend Rafael.

When the GUILD Admin decided

When the GUILD Admin decided to segregate my postings into several and moved some of my comments and questions it looks like some important questions just disappeared. Some are starting to be included but it is becoming very difficult to track all these changes.

Best Regards,

Rafael

GPC Admin  (Jason),What is

GPC Admin  (Jason),

What is wrong with my approach under this specific thread? 

He who asserts must prove. In order to establish an assertion, he must support it with enough evidence and logic to convince an intelligent but previously uninformed person that it is more reasonable to believe the assertion than to disbelieve it. Facts must be accurate. 

Sorry if you do not like the confrontational nature of any debate but I see absolute lack of supporting evidence and logic on the GUILD assertions I am contesting as mistaken or wrong.

Best Regards,

Rafael

Refer

Refer http://www.planningplanet.com/forums/guild-project-controls-gpc/591070/gpccar-m09-3-capturing-progress-updating-schedule-data-coll#comment-85533

GPC Admin,I cannot see why

GPC Admin,

I cannot see why the authors do not take the challenge and respond to my claims the source of the GUILD postulates I am challenging is poor, nonexistent and wrong. 

  • If the GUILD makes some postulates and there is sustaining evidence why not present it?
  • If the GUILD makes some postulates and are questioned with some reasoning behind why not the courtesy to answer with some good reasoning?
  • What is being said at the GUILD can be adopted by some contract authors that do not understand how wrong some statements are and therefore dangerous. 

I tried long ago to get some real answers on my initial postings and all I got were poor answers or none. I find in such abominable error some of what is being said at the GUILD that I find it dangerous and therefore my strong response. 

Because you have split original thread into many, following your approach I have no other option than to ask what is wrong with my approach under this specific thread? 

Best Regards,

Rafael

It looks like the authors of

It looks like the authors of the GUILD have no interest on debating when questioned or challenged.

It is not difficult to

It is not difficult to foresee that in many cases the proposed workaround using a single "Running Punch List" activity is not good enough for many instances where the portions of work transferred can be started before the single "Running Punch List" activity.  

The same goes with regard to Earned Value that is so dependent on a Baseline that as soon as revised will erase all variance unless cumbersome tweaking is applied.

What are the recommendations of the GUILD to solve these two issues we shall expect of common occurrence if the CPM Schedule is used as a tool for billing. 

DSU01 photo DSU01_zpslh0szlsd.jpg

Using the CPM as a basis for

Using the CPM as a basis for payment requires all project sponsor personnel responsible for reviewing monthly payment applications to be schedule-oriented and knowledgeable about both the progress of the project and the status of the schedule. The Inspector, the Architect and all required to sign the application approval shall be able to use the scheduling software in order to certify the application and the schedule are aligned. They must understand how to deal with the issues when a certain item within an activity is not finished but the activity successors can start. On big jobs with thousands of activities there is high probability that upon every payment request and associated schedule update several activities will have pay items not finished but with successors started.

One undesirable result of insisting with using the CPM as a payment tool will be that more and more specifications will hijack the planning tool selection away from those responsible of the means and methods, promoting a software monopoly that does no good to the industry as a whole.  

Because of their insistence on using the CPM as a payment tool I must ask the GUILD which CPM software monopoly they favor? 

  • I would expect for their selection to be something better than MSP or P6 as they cannot handle many advanced resource planning issues such as consumable resources, spatial resources and financial constraints just to name a few.

Because it is common for some contracts to require any changed schedule to be subjected to approval I must ask the GUILD what they propose when this happens?

  • Because for contractors payment is of critical importance I expect the GUILD will suggest no more than a couple of work days for schedule revision approval or if not approved for client to submit all his comments within the two days period and second revision within one work day. I also expect for some guidance if the second schedule revision is not approved and commented within one work day, perhaps some fast track dispute resolution to finally solve the issue within a total of two work days for a total of five days.

The following links provides

The following links provides a 7 page schedule of values that represents a typical schedule o values as done in my location,

http://www.opp.psu.edu/planning-construction/design_and_construction_standards/division-00-procurement-and-contracting-requirements/documents/job-kit-construction-services/Schedule%20of%20Values.pdf

SOV001 photo SOV001_zpsxewdfku9.jpg

Many activities will contain a subset of each line item, for example in the CPM we might have several activities for Door Frame installation. Each set will include different types of frames such as metal frames and wood frames.  

We are aware of the monumental task of using the CPM activities as a payment document and therefore it is not our practice to do so.

Usually it takes about 30 days to get the CPM submitted and 30 additional days for revisions and final approval. If first application for payment is delayed until this is approved the first payment will be delayed. Fortunately this is not how we prepare and submit our payment of values. We keep the Schedule of values and the CPM divorced of each other for many reasons as per following reference. 

Just imagine upon every payment application negotiating a re-schedule because some/many activities successors started before some payment items within the predecessor activities did not finished creating a distortion of the schedule that in order to fix it requires a schedule adjustment. A schedule adjustment that must be approved for the payment application be re-submitted in accordance to the approved schedule. 

Because each activity might consist of several different pay items broken down into different cost codes the 10,000 activities schedule will yield more than a 10,000 lines payment application report.  A report that must be exported into an electronic worksheet for further manipulation within the required AIA form or its equivalent/similar. 

Dealing with material on site [MOS] at the CPM activity level can also become a nightmare. It might be that some stored material ends up being installed at different activities depending on how the schedule progress and activities move. What initially was scheduled as MOS for certain activity will have to be moved, requiring a CPM re-schedule.