DPC Project Management Technology in Russia

1. DPCProject Management Technology in Russia Vladimir Liberzon Oksana Sakhraui Victoria Shavirina Spider Management Technologies, Moscow, Russia E-mail: spider@mail.cnt.ru

2. INTRODUCTION • Construction management technology in Russia is based on approaches not described in the PMBOK Guide®. In this presentation we shall discuss the core differences in our approaches to construction project management. I hope that it may be of interest to all construction management professionals, and not only to those who work in Russia.

3. INTRODUCTION • Our approach differs from that used in the PMBOK Guide® in many aspects. Most of the differences are related to Time, Cost and Risk management, including WBS definition, activity definition, resource assignment, project scheduling, risk evaluation, cost management, performance measurement, project control.

4. INTRODUCTION • Participating in the management of the International projects we have met with the necessity to develop common approaches and to achieve mutual understanding. • I hope that this presentation will lead to further discussions that might be useful for all professionals engaged in construction management.

5. Themes for discussions • Below are several topics for discussions and then we shall describe the process of construction project scheduling step by step.

6. Duration and Volume • PMBOK Guide® and most project management software packages regard planned activitydurationas initial information necessary for project scheduling. • This approach works in many areas but not in construction. In Russia we usually regard thevolume of work to be doneas initial activity information while planned duration depends on the number and productivity of assigned resources.

7. Planning and tracking costs • Planned activity cost is usually based on thestate or corporate normsthat define the costof corresponding works per unit of activity volume. • Construction workers’ wages depend on the volume of their work and measuring performance we focus on the volume of work done but not on the time spent on this work.

8. WBS, Risks • We use several parallel WBS for planning and estimating project performance. • We vary resource productivity (but not activity duration) toestimate risks.

9. Design • During Design stage it is not yet known who the contractors will be and cost, material and resource requirements on a given activity are determined only from the state construction norms. • The plan developed during Design stage is then used during Procurement stage to assess contractors’ bids.

10. Procurement & Construction • Contractors plan their work basing on actual cost and productivity of their resources per unit of time or volume. • Extensive use ofactivity, resource and assignment databasescontaining the state or corporate norms for cost and material requirements per unit of activity volume or volume of work to be performed by assigned resource, resource productivity and workload on different types of assignment are typical for construction planning in Russia.

11. Risk • Classical approach (PERT) to internal risk evaluations is based on the estimations of expected duration. Usually we estimate not duration butvolumes of work to be done and expected resource productivity. • We create optimistic and pessimistic databases of resource productivity. Applying different databases we obtain optimistic, pessimistic and expected schedules. This approach provides good results and is much less time and effort consuming.

12. Cost Management • Inflation rate in Russia is high which creates a necessity to use different project cost measures simultaneously. It is also necessary to assess different models of project financing and supplies of materials. • Thus we schedule projects taking into account not only resource constraints but also the schedules of supplies and project financing. We calculate not only the activity start and finish dates and project budget, but also the project cash and material flows.

13. What’s next • There are many other differences, but since our time is limited we shall focus on construction project scheduling and budgeting, technological processes which allow to demonstrate the difference between the approaches. The following slides will illustrate the main construction planning processes step by step.

14. What is next • The main processes of construction project scheduling and budgeting are illustrated by the following scheme.

15. Main Project Scheduling and Budgeting Processes

16. ProjectScheduling & BudgetingStep by Step 1)Defining project purpose (it is usually defined in the contract or invitation to bid). 2)Defining deliverables to be controlled. 3)Defining primary WBS basing on existing library of typical project fragments.

17. ProjectScheduling & BudgetingStep by Step 4)Defining project resources. 5)Checking and updating resource database if necessary. 6)Checking, updating or adding cost and material requirements per resource work hour.

18. ProjectScheduling & BudgetingStep by Step 7)Checking and updating existingproject fragments. 8)Defining resource productivity, material usage and workloadsfor new types of assignment. 9)Updating assignment databases.

19. ProjectScheduling & BudgetingStep by Step 10)Defining sequence and volumes of project fragments that should be included in the project computer model. 11)Creating new fragments necessary for the current project and including them in the library. 12)Adding phases and activities specific for a given project and lacking in the library of fragments.

20. ProjectScheduling & BudgetingStep by Step 13)Defining project risks (external and internal). 14)Defining and including in the project computer model risk mitigation phases and activities. 15)Updating resource, activity and assignment databases 16) Linking project activities from different fragments.

21. ProjectScheduling & BudgetingStep by Step 17)Defining volume of work to be done or fixed duration for all new activities. 18)Assigning type codes to new activities. 19)Defining cost and material requirements per unit of volume for new activity types and including this new data in respective databases.

22. ProjectScheduling & BudgetingStep by Step 20)Assigning resources on new activities. 21)Adding assignment type codes for new assignments. 22)Defining productivity and workload for new assignment types. 23)Updating assignment databases.

23. ProjectScheduling & BudgetingStep by Step 24)Defining project activity and resource calendars. 25)Checking and updating unit cost components for project materials. 26)Checking and updating work hour costs for project resources. 27)Checking and updating resource independent costs of activities and assignments.

24. ProjectScheduling & BudgetingStep by Step 28)Calculating initial resource constrained schedule. 29)Checking target dates and optimizing project resource quantities. 30)Calculating project budget.

25. ProjectScheduling & BudgetingStep by Step 31)Checking and updating optimistic and pessimistic versions of project databases. 32)Creating optimistic and pessimistic calendars.

26. ProjectScheduling & BudgetingStep by Step 33)Calculating optimistic and pessimistic resource- constrained schedules. 34)Optimizing necessary resource quantities for optimistic and pessimistic scenarios. 35)Updating optimistic and pessimistic resource- constrained schedules.

27. ProjectScheduling & BudgetingStep by Step 36)Calculating optimistic and pessimistic project budget. 37)Calculating optimistic, expected and pessimistic duration and costs for controlled project deliverables. 38)Defining target probabilities. 39)Calculating target dates and costs.

28. ProjectScheduling & BudgetingStep by Step 40) Defining and creating additional WBS. 41)Creating OBS. 42)Creating cost, resource and material centers. 43)Preparing reports for cumulative optimistic, expected, target and pessimistic cost and materials.

29. ProjectScheduling & BudgetingStep by Step 44) Negotiating about project financing and supplies of materials. 45)Creating the schedule of deliveries. 46)Creating project financing schedule if necessary. 47)Including both schedules in the project computer models.

30. ProjectScheduling & BudgetingStep by Step 48) Recalculating project schedules. 49)Recalculating target dates and costs for all centers, WBS and OBS elements. 50)Negotiating about target dates and costs. 51)Adjusting project schedule and resource requirements. Preparing bids or contract drafts

31. ProjectScheduling & Budgeting • These processes are typical for all construction projects. • Suggested approach appears to be quite natural for construction management. It was implement in project management softwarepackage Spider Projectwidely used in Russia.

32. Conclusions • Russian construction companies employ such approach to construction management that is not supported by the traditional project management tools and software. The maindifference lies in the fact that Russian construction managers plan, control and monitor volumes of work. Activity duration depends on assigned resources. Calculations of duration are usually based on resource productivity defined by the state norms or company standards.

33. Conclusions • Russian managers use construction databases to define resource productivity, resource workloads, material requirements, costs, etc. • Resource shortages make project managers focus on resource and cost management. They have to simulate material production and supply, project financing.Resource leveling should include material and cost leveling and produce the best possible results.

34. Conclusions • Risk management is also different. Risks are simulated not through estimations of activity duration but through estimations of resource productivity, amounts and calendars. • Suggested approach appears to be quite natural for construction management.

35. Conclusions • Russian project managers often wonder how their Western colleagues manage their projects using the software that does not optimize project schedules, cannot calculate project schedules in accordance with the schedules of deliveries and financing. They cannot understand how construction projects can be managed basing on activity duration estimations, how to monitor project performance basing on actual work hours.

36. Conclusions • I explain to them that this is a different approach, that construction processes are so perfectly organized that one can plan them using time measures instead of volumes, that project financing and deliveries of necessary materials are always reliable, and resource shortages are rare. • But I wish I could understand it myself.

37. Conclusions • I hope for the future discussions and invite everybody interested in the development of common approach to write me. • My e-mail address:spider@mail.cnt.ru • I am sure that together we shall be able to elaborate the methodology that could be applied throughout the world.