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Time Contingency

11 replies [Last post]
Sun, 2008-10-12 01:11
Mohamed Thabet
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Hi Guys,

I just wanted to share a concept, which i wish it may be implemented one day somewhere. (Never in Dubai anyways)

Usually, from a client point of view, or a client consultant, when preparing the project overall expected budget before starting the project, there will be some identified risks (Known Unknowns) , which will be quantified and the monatry value of this risks will then be covered by cost contingency added to the project expected cost to form the budget, and then if any of these risks occured during the course of the project, the project manager (without refering back to the client), will use the allocated contingency to cover the impact of those risks.

Now, the concept which i wanted to share is: have any of you guys tried to use "Time contingency" during the course of the project, if yes, i would like to discuss further, if no i guess its really worth a good discussion.

Cheers,

Moe
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Replies

Fri, 2009-01-30 00:38
#1
Ali Farhat
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This is business, the client is always right and has the right to impose any constraint. It is up to the contractor to bid correctly...the client wants it done in 2 years, so it is, but it costs him more.


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Wed, 2008-10-22 13:45
#2
Samer Zawaydeh
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Dear Shaikh,

Your comment is valid for small or single end user projects.

For major or critical projects, usually the operational costs on a monthly basis far exceeds the cost of the project. Hence, the delays or the increasing the duration of the project has a large associated cost with it, and it will not be allowed or is not feasible.

Best Regards,

Samer
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Fri, 2008-10-17 03:30
#3
Samer Zawaydeh
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Dear Mohamed,

Yes we did use a "buffer" or "overall float" for the delivery of projects with high importance to the client. The client was part of the discussion and project planning team and since the end date was very important to the client, everyone agreed on a one month (float on a 12 months project) to be a added to the project time in order to ensure that all the scope will be delivered at a specific time.

The project was part of a larger project and dozens of Contractors would be waiting if the project was not delivered per milestone.

Best Regards,

Samer
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Mon, 2008-10-13 07:52
#4
Mohamed Thabet
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Well, i really do not agree on the fact of PM companies in Dubai, i can still see Turner, & Hill as two project management companies which is giving their clients a good service worth the money they are getting paid.

Some other co’s are just acting as postmen, with no added value to the projects, but still in those companies the change should be introduced from bottom level up, since no valuable procedures are in place like the two other giants Turner & Hill.

I think i should give up construction & join NASA, at least i might get a chance to implement some Risk management practices, even Airbus they sucked big time on the A380 project due to the absence of risk management in place, take that as the ultimate proof of the need of time contingency based on a proper risk management.

Cheers,

Moe
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Mon, 2008-10-13 07:29
#5
A D
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Yes u r absolutely true.

But one more problem is that there will be change in scope and for that there is no EXTRA timeframe to do it.

And the main reason behind this is non-availability of GOOD PROJECT MANAGEMENT CONSULTANTS in Dubai Market. U must b aware of teh fact one of teh biggest developer in Dubai is not hiring PMC’s anymore as they act more of a postman rather than a catalyst. All Client expects WORK shud have been finished yesterday (As suggested by Projcet Management Consultants)

I m not going to explain u what a QS consultant in Dubai, adds value to the project. There are very few good QS Consultants available and each has got plenty of jobs with positions being filled without even checking the credential of the candidate.

I believe same problem shud be there in other parts of region as well and not DUBAI alone.

Lets, Hope for the best

Cheers,

Rav
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Mon, 2008-10-13 06:13
#6
Mohamed Thabet
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Change of scope is not an excuse for poor project management, i believe the problem is not with the market as it is with the people working on the market.

Giving the client the idea that anything can be changed anytime without any impact on time & scope is the root of all the problems in Dubai construction industry, despite the client wont mind someone to stand up and say Mr client doing so will jeoperdize your project completion date, and present a what-if scenario to demonstrate the time & cost impacts & increase of risks.

Its mainly not a problem of change, its an issue of starting the project without getting the proper apporvals from the relevant authorities or even completing the design to a stage where the changes will be limited to the normal range of a project under execution, the mess is caused when the project starts & the design is 30% completed.

I have been in Dubai for 4 years now, and i believe the best practices should be implemented sooner or later as the competion between developpers will get more close while the range of mega projects is decreasing in the near future, and by then all the Crap practices being used at the moment will be gone, so as the people who are not ready to enhance the way they manage the projects.

Cheers,

Moe
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Mon, 2008-10-13 05:13
#7
A D
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It all happens because there is lot uncertainty in project scope. Most of the projects here in this part of the world are large developemnt projects, where project duration is between 4-6 years. End user requirements will definitely change over this period.

Also, contract analysis and arbitration system is not sound as u can found in EU/USA or Asian Sub-continent. Most of the EOT awards are not settled with complete analysis and neither full entitlement amount is paid. Construction management especially with Contracts is very poor and contract is always designed to be in favour of Client even though outline is similar to FIDIC.

Scope changes abruptly with NO NOTICE period sometimes.

So, then u need to more practical to suit and survive in Dubai market ratehr than making formats and guidelines which sometimes ur BOSS doesn’t care abt it. U need to be very lucky to get good senior team and follow BEST PRACTICES.
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Mon, 2008-10-13 03:43
#8
Mohamed Thabet
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Dear Raviraj,

The idea of two Time schedules is very frequently used in the Dubai projects, but the problem is as you said is totally based on unrealistic assumptions rather that risk assessment & a proper study of the potential Time impacts of identified risks.

It is similar to the cost contingency included in the project budget which is totally unjustified amount of cash.

But still i cant see any reason to dictate the completion date during the tender, it should be a free estimate by the tenderes compared against an independant one prepared by the Engineer or Project management firm onboard.

The ability of the tenderer to prepare a proper time schedule considering the risks & reflected into a proper project plan should be considered as one of the criterias for tender award.

However, the independant estimate should be updated accordingly & used as a second baseline for the time performance, & the variance between the two should be considered as the client Time contingency, based on that the client will be able to make better committments with external stakeholders.
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Mon, 2008-10-13 02:50
#9
A D
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U r absolutely correct mohamed,

But the practice what v follow is very RAW.

Being working from Client Side, we normally develop two programs; One as Management Sign-Off and other as Internal program.

Time Difference between these two programs is time contingency. Say, for Infrastructure Works, in the managemnet sign-off program, total duration is 690 calender days, whereas, say Internal traget for the same is only 590 calendar days.

We have kept 100 calendar days as buffer for infra works. Cash flow and other calculations are based on sign-off works.

While working with my previous employer, we used to have risk register and risk analysis sheets, but here in Dubai there is nothing like that.

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Mon, 2008-10-13 01:43
#10
Mohamed Thabet
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Hi Omar,

Thats exactly what am trying to explain to my sr. management & clients, its vital to have few months / weeks under your sleeve, to be able to deal with the impacts of identified risks incase they occur during the course of the project.

As a client represntative, am trying not to depend on the contractor risky time schedule, we are trying to do some PERT analysis for the indentified risks, to give our client a more feasible and reliable completion date.

My only problem is that most of the people in the industry do not know much about risks time impact quantification, i guess it will take another 7-10 years at least to have enough qualified ppl here in Dubai to understand that concept.

Another aspect of the issue, is that we allow during a tender for the contractor to estimate the cost of the project, and we evaluate the tenders based on the lowest bidder in addition to some other criterias, however time (completion date) is always dictated by the client, with no opportunity for the contractor to study & evaluate a reliable completion date, which will be an important part of the tender evaluation as well, why this aspect is not considered in the construction projects ? it may be considered in some IT or R&D projects but not in construction.
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Sun, 2008-10-12 16:52
#11
Omar Grant
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Hi Mohamed. Time contingency is an absolute must in any schedule; by definition, the baseline schedule is how we see the future works and ultimately it is an estimate. By using some method/software of criticality analysis & measurement, say, Pertmaster, you can identify activities/paths/events within any schedule which may have a high probability of overrunning the planned dates. Sometimes the schedule may have two completion expectations, one which includes a time contingency on the CP and a ’stretch’ target completion based on the simple network analysis. It has always amused me that you come out of a feasibility study (eg) with a cost expectation +/- variance but nothing equivalent for schedule. Failure to carry out schedule risk analysis early on in the schedule development process is, I believe, a bad omen for the future of the project. Regards, Omar
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