Hisham Haridy 1 - Project Management

P ROJECT M ANAGEMENT
CCP_Section 5 Hisham Haridy, PMP, PMI-RMP, PMI-SP

Content
1. Project Management Fundamentals

2. Project Organization Structure
3. Project Communications
4. Project Labor Cost Control
5. Leadership and Management of Project People
6. Quality Management
7. Value Engineering
8. Contracting for Capital Projects
9. Strategic Asset Management
10. Change Management Practical Guide
11. Overview of Construction Claims and Disputes
PROJECT MANAGEMENT
PROJECT MANAGEMENT FUNDAMENTALS
The management of projects focuses on:
1. Identifying risks
2. Maximizing cost savings
3. Minimizing time delays
4. Improving economic return
These results can only be achieved through:

1. Effective management of people
2. Tough but fair project objectives
3. Efficient business techniques
4. Outstanding leadership skills
PROJECT MANAGEMENT
Project
An item of work that requires planning, organizing, dedication of resources and expenditure
of funds in order to produce a concept, a product, or a plant.
It is a temporary endeavor with a definite starting point and ending point undertaken to
create a unique product or service
Project characteristic
Projects are temporary.
Has definite beginning and end, the end is reached when the project’s objective have
been achieved.
Projects are unique.
Every project creates a unique product, service, or results.
Progressively elaborated.
Progressively: proceeding in steps.
Elaborated: worked with care and detail.
PROJECT MANAGEMENT
Project Objectives
Something toward which work is to be directed, a strategic position to be attained,
or a purpose to be achieved, a result to be obtained, a product to be produced, or a
service to be performed.
Each project must have at LEAST one objective.
The objectives of the project MUST be made known and communicated.
Project objective MUST follow the SMART rule;

S = specific
M = measurable
A = attainable
R = realistic or relevant
T = time bound
PROJECT MANAGEMENT
Project Management Function
Cost Management
Time Management
Human Resources
Communications
“Poor administrative practices” barriers
are common to all companies and are
generally referred to as Matrix
Interface Conflicts (MICs)
Major Factors That Are Essential for the Successful Execution of Projects
PROJECT MANAGEMENT
Project Phases
Most of these phases will overlap, and the degree of overlapping will depend on the work
content of each phase and the efficiency of decision making present in the project.
Development
1 planning
Feasibility
2
study
Conceptual
3 study
4 Project
planning
5 Basic design
Detail design and

6 procurement
7 Construction
Commission
8 and start-up
PROJECT MANAGEMENT
Project Life Cycle
Engineering
Request
Solve Problems Project

Upgrade Quality Development
Addition Quantity Technical budgeting and
Project Conditions
Management
Environmental
Stay In Business Regulatory Phases
Project
Conceptual Cost estimate Funding Execution
Economics Estimate Quality
Small
Execution Strategy
Large
Project Resources
PROJECT MANAGEMENT
Projects are designed and built by people, not companies. People do it singly, or in
multiple groups; and if there are skilled people and good relationships, there is a
chance of success.
If the people and relationships are poor, there is little chance of success.
Greater personnel efficiency and increased
operational quality are essential
requirements in today's difficult business
environment.
The “Bean Counter” Syndrome is a wide

spread practice, where effective cost control
is absent or greatly diminished.
It is a dangerous and unacceptable
practice.
PROJECT MANAGEMENT
PROJECT ORGANIZATION STRUCTURE
Projects are impacted by, and have impact on, the cultural norms, management
policies, and procedures of the organizations of which they are a part.
The best project managers look for these influences and manage them for the
benefit of the project and the organization.
One of the main forms of influence is how the company is organized.
Project organizations can be as strong as the processes that have been put in place,
but in the end―success is measured by the quality of the leadership and the
members of the project team
Organizational structures can be defined in terms of the project manager's level
of authority.
Types of organizations
Functional organizations
Matrix organizations
PROJECT MANAGEMENT
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PROJECT MANAGEMENT
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Matrix
PROJECT MANAGEMENT
Matrix Organization
Effective information exchange and efficient coordination of project workload.

More efficiently use resources.
Clearly defined project execution plan (accept, commit to, and work to the agreed
execution plan)
Project manager having inadequate authority.
Individual who is doing the work reports to two bosses.
Conflict management.
It needs strong project management culture and effective company leadership.
The “matrix” failed

SO,
The solution was a new approach called Quality Management that was
introduced by Dr. Edward Deming.
PROJECT MANAGEMENT
Project Organization structures have become dynamic as a result of the numerous
international perspectives that have been applied.
The successful companies embrace a quality of empowerment and reward,
which allows them to maximize the organizational programs.
Many of these new organizational changes come from the Demingism programs
which developed the Total Quality Management (TQM) philosophy.
Term “Demingism” coined after Dr. Edward Deming’s approach to TQM in the
1960s and 1970s
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Demingism and Total Quality Management (TQM)
Criteria for Developing a Quality Management Program ( 6 components of total

quality management)
1. Client satisfaction
2. Understanding and reducing variation
3. “Top-down” management leadership and commitment
4. Continuous change and improvement
5. Ongoing training and education
6. A culture of personnel pride and job satisfaction
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Use of TQM for Effective Project Delivery
1. Owner qualification to perform as project manager
2. Organization structure alignment with contracting arrangements
3. Project manager qualification
4. Determine if project manager reports to the client or to projects/engineering
5. Use of project task force (PTF) “Used on larger projects, more efficient communication channels,
challenge of brining individuals from many parts of a company is a substantial task, use of a business
manager”
6. Correct emphasis on business management

7. Efficient and effective project team
8. Project organization structure
9. Use of project organization charts
10. Establish authority of the project manager
11. Define project controls reporting relationship
PROJECT MANAGEMENT
Project Manager Key Qualification and Authority
AUTHORITY
QULIFICATIONS
Full authority to
Technical
make both design
expertise, project and cost decisions,
experience, with appropriate
business capability, limits of authority
leadership ability, and management
reporting
and people skills.
requirements
PROJECT MANAGEMENT
PROJECT COMMUNICATION
Communication
Communication has been identified as one of the single biggest reasons for project
success or failure.
Openness in communication is a gateway to teamwork and high performance.
It improves relationships among project team members and creates mutual trust.
A formal and informal structure of effective communication is absolutely essential for

successful project execution.
Many company organizations and cultures have poor administrative practices that
also form barriers to project success.
These barriers are common to all companies and are generally referred to as Matrix
Interface Conflicts (MICs).
The total quality management programs sweeping the industry are an attempt to
solve these problems.
PROJECT MANAGEMENT
Communication Model
Communication involves the exchange of information:
The sender is responsible of making the information clear unambiguous and
complete, to receiver.
The receiver has to ensure that the information received in understood and
correctly understood.
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Body Language and Personality Types
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Nonverbal Communications
Four key principles:
1. Context is important
2. Observe behavior holistically
3. Watch for changes in body language
4. Watch for congruence (body language and words match)
Positive nonverbal clues

1. Uncrossed arms/legs
2. Open hands
3. Rubbing the chin
4. Moving closer
5. Eye contact
6. Matching (movements of speaker/listener)
Negative nonverbal clues
1. Crossed arms/legs
2. Clenched or hidden hands
3. Moving away
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Effective Listening
The receiver should decode the message carefully and confirm the message is
understood.
This includes watching the speaker to pick up physical gestures and facial
expressions, thinking about what to say before responding, and using active
listening, in which the receiver confirms he or she is listening, expresses
agreement or disagreement, or asks for clarification.
Listening is an important part of
communication.
Listening techniques, both active and
effective give the user insight to problem
areas, negotiation and conflict management
strategies, decision making, and problem
resolution.
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Elements of LISTEN
1. Look interested and give the speaker your undivided attention.
2. Involve yourself by responding to show you are listening.
3. Stay on target.
4. Test your understanding of what is being stated.
5. Evaluate the message and respond appropriately.
6. Neutralize your feelings
Improving Listening
1. Don’t Interrupt
2. Put the Speaker at Ease
3. Appear Interested
4. Cut Out Distractions
5. Periodically Sum Up What Was Said
PROJECT MANAGEMENT
Top 5 communication barriers
1. Lack of common language
2. Use of slang and terminology
3. Loss of nonverbal communication clues
4. Lack of team interaction
5. Use of information filters
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Communication Dimensions
Internal (within the project) and external (customer, other projects, the media,
the public).
Formal (reports, memos, briefings) and informal (emails, ad-hoc discussions).
Vertical (up and down the organization) and horizontal (with peers).
Official (newsletters, annual report) and unofficial (off the record
communications).
Written and oral.
Verbal and non-verbal (voice inflections, body language).
PROJECT MANAGEMENT
Communication Forms
Forms Characteristics Example

Written Precise Project Charter, Scope Statement, Project
Formal Transmitted through Plan, WBS, project status.
the medium of Complex issues
correspondence Contract related communication
Written Email, Notes, Memos, Letters

Informal Regular communication with team members
Oral Formal High Degree of Presentations, speeches.

Flexibility Negotiations, conflict resolution
Oral Informal Use the medium of Conversation with team members

personal contact, group Project Meetings
meetings or telephone Break-room or war-room conversations
Non-verbal 55% of total Facial expressions, hand movements, tone of

communication voice while speaking etc.
PROJECT MANAGEMENT
Written Communications
Email is now the most common form of written communication
Best practices when writing and managing email:
1. Consider your audience before writing the email.
2. Use the subject line to describe email contents.
3. Keep email short, concise, and coherent.
4. Do not type in all UPPER case or all lower case.
5. Proofread your document before sending (grammar and spell check).
6. Do not attach files unnecessarily.
7. Be aware that email is not confidential.
8. Do not send emails when you are angry.
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Use of Technology for Business Purposes
PROJECT MANAGEMENT
Identify Stakeholders
A key first step for effective communications is identifying the stakeholders you
need to communicate with on the project.
Stakeholders are those people who are directly or indirectly affected by the project or
who can affect the project.
Stakeholders can view the project as positive or negative, and can be either internal or
external to the organization.
There are multiple classification models
available such as;
i. Power/interest grid
ii. Power/influence grid.
iii.Influence/impact grid.
PROJECT MANAGEMENT
Team Charter
An agreement on operating guidelines and group behavior norms for the team
Covers more than communications
Team member roles/responsibilities
Administrative procedures
Reporting hours worked
Team performance measures
Decision-making process
Ground rules for team conduct
Dealing with issues and conflict
Meeting commitments
Returning telephone calls and emails
PROJECT MANAGEMENT
Virtual teams
Virtual teams have become much more popular over recent years.
A virtual team is a group of geographically dispersed individuals who work across
space and organizational boundaries to complete projects.
Instead, they typically use communication tools to meet online, share
information, and collaborate on deliverables.
Achieving better virtual team communications:
1. Connect with all team members
2. Prepare e-communication plan
3. Use effective communication tools
More than 66% of business professionals

engage in virtual work, and that number is
rapidly growing
PROJECT MANAGEMENT
PROJECT LABOR COST CONTROL
Labor costs is a variable element of a construction project.
The 3 components of labor costs
1. Quantities installed
2. Production rates
3. Wage rates
The two prevalent construction labor cost control reporting systems are:
1. The Earned Value Method
2. The Unit Rates Method
Labor cost control is best achieved by using a feedback loop.
Cost control should be approached as an application of Pareto’s Law.
80 % of the outcome of a project is determined by
only 20 % of the included elements.
PROJECT MANAGEMENT
Factors affecting construction craft productivity include the following:
Crew sizes and craft composition
Craft density (area per worker)
Interference with other crews
Scheduling
Material availability
Equipment and tool availability
Information availability
Rework as a result of design, fabrication, and field errors
Site layout
Weather
Constructability
PROJECT MANAGEMENT
Measuring Inputs & Outputs
(Input) Workhours expended or Labor dollars

Labor cost efficiencies =
(Output) Quantities produced
Input Output
Workhours are measured directly Quantity cannot be measured with a

using cost codes and time cards. common unit of measure.
Labor Dollars= workhour The output cannot be measured with a
expended X the wage rate common unit of measure.
Examples m3 of excavation, m2 of
formwork, tons of steel, lineal meters of
pipe, ... etc.
Cost control requires matching each unit of output to the input (resources) that was
required to produce it.
PROJECT MANAGEMENT
Earned Value Method
The earned value method can be compared to the value of work scheduled as part
of an integrated project control system
Acronym Terms Formula
%
% Complete (single account) = Actual Qty / Forecasted Total Quantity
Complete
BCWP Earned Value = Actual % Complete X Budget for the account
%
% Complete (multiple accounts) = EV (all accounts) / Budget value (all accounts)
Complete
= Scheduled % Complete X Budget dollars or Workhours
BCWS Schedule Value
= Qty scheduled X Budget unit cost or production rate
CV Cost Variance = Earned value - Actual cost
CPI Cost Performance Index = Earned value / Actual cost
SV Schedule Variance = Earned value – Schedule Value
SPI Schedule Performance Index = Earned value / Schedule Value
PROJECT MANAGEMENT
Work from this point forward will

= Actual cost to-date + (Budget - EV)
progress at the budget (CPI = 1)
EAC
The performance to-date will continue = Budget / CPI
Uses historical curves that show the normal variation in the CPI as the cost account
progresses
What the cost would have been if the actual quantities were installed at the budget
unit rate? Credit Value (Dollars or Workhours)
Terms Formula
Credit Dollars (C$) = Actual Quantity x Budget Unit Cost
Credit Workhours (CWH) = Actual Quantity x x Budget production rate
Unit Cost Index (UCI) = Credit Dollars / Actual Dollars
Productivity Index (PI) = Credit Workhours / Actual Workhours
PROJECT MANAGEMENT
Unit Rates Method
The advantage of the unit rates method is that the unit costs and production rates
are used for estimating and are therefore familiar to most managers.
Work from this point forward will progress at budget = Actual dollars or workhours to-date
unit rates + [To go qty X Budget unit rate]
EAC
The unit rate prevailing to-date will continue to prevail = Total qty X Actual unit rate
Uses historical curves that show the normal variation in unit rates as the cost account progresses
A frequent question is what or who is responsible for the total difference between the
budget and the EAC? Two way variance analysis is one method for answering this
question.
Two way variance analysis

1. Quantity variance
2. Rate variance
PROJECT MANAGEMENT
Quantity Variance = CQ x PB
Where:
CQ Change in Quantity = QB – QF
QF Forecast Quantity
QB Budget Quantity
PB Budget Production Rate or Unit Cost
Unit Rate Variance (Production Rate or Unit Cost) = QF x CP

Where:
CP Change in Production Rate or Unit Cost = PB – PF
PF Forecast Production Rate or Unit Cost
PB Budget Production Rate or Unit Cost
QF Forecast Quantity
Estimated Total at Completion (EAC) = QF x PF
Budget = QB x PB
The project manager concentrates corrective efforts on those activities whose actual
performance deviate from the budget.
The effectiveness of the corrective action is monitored by the feedback loop.
PROJECT MANAGEMENT
Example
Total Budget Duration Elapsed Duration

$1,440 20 days 5 days
Budget quantity Forecasted quantity Actual quantity Actual cost

2880 2880 608 $288
Acronym Terms Formula

BCWP Earned Value =(608/2880) x $1,440 = $304
BCWS Schedule Value = (5/20) x $1,440 = $360
C$ Credit Dollars = 608 x (1440 / 2880) = $304
CV Cost Variance = 304 – 288 = 16

CPI Cost Performance Index = 304 / 288 = 1.056
SV Schedule Variance = 304 – 360 = - 56
SPI Schedule Performance Index = 304 / 360 = 0.84
EAC Estimated at Completion = 1,440 / 1.056 = $1,364
VAC Variance at Completion = 1,440 – 1364 = 76
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Unit Rates Method
PB Budget Unit Rate = $1,440 / 2880 = 0.5 $/L.F
PF Cost Performance Index = $288 / 608 = 0.4737 $/L.F
EAC Estimated at Completion = 2880 x 0.4737 = $1,364
CQ Change in Quantity = QB– QF = 2880 – 2800 = 0
Change in Production Rate or

CP = 0.5 – 0.4737 = 0.0263
Unit Cost = PB – PF
VAC Variance at Completion = (0.00 x 0.5) + (0.0263 x 2880) = 76
PROJECT MANAGEMENT
LEADERSHIP AND MANAGEMENT OF PROJECT PEOPLE
The project manager must be able to lead, motivate and persuade people to act in
the best interest of the project and must be able to build a team and lead
members to give their best effort to the project.
Effective project managers acquire a balance of technical, interpersonal, and
conceptual skills that help them analyze situations and interact appropriately
Leadership
Team building
Motivation
Communication
Influencing
Decision making
Political and cultural awareness
Negotiation
PROJECT MANAGEMENT
Leadership
Leadership involves focusing the efforts of a group of people toward a common
goal and enabling them to work as a team.
Leadership is the ability to get things done through others.
Respect and trust, rather than fear and submission, are the key elements of
effective leadership.
Although important throughout
Effective leadership is critical during the beginning phases of a project when the
emphasis is on communicating the vision and motivating and inspiring project
participants to achieve high performance.
Throughout the project, the project team leaders are responsible for establishing
and maintaining the vision, strategy, and communications; fostering trust and team
building; influencing, mentoring, and monitoring; and evaluating the performance
of the team and the project.
PROJECT MANAGEMENT
Leadership styles concepts
1. Theory of X and Y (Douglas McGregor’s)

Theory “X” Theory “Y”
People inherently dislike work. People view work as being as natural as play
People must be coerced or controlled to do and rest .
work to achieve objectives. People will exercise self-direction and control
People prefer to be directed basic human towards achieving objectives they are
needs are arranged in a hierarchy. committed to.
People learn to accept and seek responsibility.
PROJECT MANAGEMENT
People are self-motivated and will exercise self-direction and self-control toward
achieving objectives to which they are committed
PROJECT MANAGEMENT
2. Hygiene / Two Factors Theory (Frederick Herzberg’s).

Hygiene factors: A series of hygiene factors create dissatisfaction if individuals
perceive them as inadequate or inequitable.
Motivators: It is
intrinsic factors that
determine satisfaction.
PROJECT MANAGEMENT
3. Organization and Human Problem (Chris Argyris)
Advanced some of McGregor’s theories.
Organization may be the source and cause of human problems.
Individual needs and organizational needs were not met effectively in most
organizations.
Part of the problem was due to bureaucratic and hierarchical structures.
Solution
1. Ad hoc work groups, or project teams.
2. Challenges and opportunities for responsibilities.
3. Open communication and trust are needed.
PROJECT MANAGEMENT
4. LIKERT’S 4 systems of Management (Rensis Likert)
The development of an attitude measurement approach known as the Likert -

type scale.
Developed the concept of the linking pin “a person who belongs to two
groups in the organization”.
Four basic styles of leadership
1. Exploitive – Authoritative
2. Benevolent – Authoritative
3. Consultative
4. Participative Group
Ideal for a human-concerned organization.
Trust between employees and management.
Widely delegated decision – making.
PROJECT MANAGEMENT
5. Managerial/Leadership Grid Theory (Drs. Robert Blake and Jane
Mouton)
open-
minded,
flexible and
one who
inspires
involvement
doing just enough

to keep their job
PROJECT MANAGEMENT
Team building
The process of helping a group of individuals, bound by a common sense of
purpose, to work interdependently with each other, the leader, external
stakeholders, and the organization.
Good leadership + Good team building = Teamwork.
Team building activities consist of tasks

(establish goals, define, and negotiate
roles and procedures) and processes
(interpersonal behavior with emphasis
on communication, conflict
management, motivation, and
leadership).
PROJECT MANAGEMENT
PROJECT MANAGEMENT
Cross-Cultural Concerns
By understanding the cultural differences, the project management team is more
likely to create an environment of mutual trust.
Cultural differences can be both individual and corporate in nature and may
involve both internal and external stakeholders.
An effective way to manage this cultural diversity is through getting to know the
various team members and the use of good communication planning.
Culture can impact the speed of working and the decision-making process.
This may lead to conflict and stress in

some organizations, thereby affecting the
performance of project managers and
project teams.
PROJECT MANAGEMENT
Leading, Managing, Facilitating, And Mentoring
Leadership
Ability to conceptualize the vision, direct the project, and communicate or sell this
vision to the team members and other stakeholders.
Encouraged to ask questions about project purpose and to offer opinions.
Gain credibility and must demonstrate managerial actions and behaviours.
Being the team’s voice to the outside world.
Communicate actively to address stakeholders in terms of supporting and buying
into the project goals.
Management
Manager role ensures the project is completed on time, within budget, and at
acceptable levels of performance.
Create the administrative procedures and structure to complete the project
PROJECT MANAGEMENT
Facilitation
Help others get their work done.
It involves communication, conflict resolution, procure necessary resources,
motivate both individual team members and the team as a unit.
The goal is to provide team members with choices, options, and then trust that
the team members will create the desired outcome.
Mentor or Coach
Being a role model who demonstrates desired skills, behaviour, and attitudes.
Demonstrating personal interest in professional growth of team members.
Think-out-loud with team (suggestions, possibilities, problem solving
approaches)
Assisting team members in identifying and achieving long-term professional
goals.
PROJECT MANAGEMENT
Effective Project Manager
Leader Facilitator
Manager Mentor
PROJECT MANAGEMENT
Motivation
Project teams are comprised of team members with diverse backgrounds,
expectations, and individual objectives.
Motivating in a project environment involves creating an environment to meet
project objectives while offering maximum self-satisfaction related to what
people value most.
These values may include

Job satisfaction
Challenging work
Sense of accomplishment
Achievement and growth
Sufficient financial compensation
Other rewards and recognition the individual
considers necessary and important.
PROJECT MANAGEMENT
Motivation Theories
1. Biological Perspective
Actions contribute in preservation and expansion of
the species will produce motivation.
It is appropriate when confined to the more basic
aspects of human behaviour, such as hunger and
thirst, reproduction.
2. Drive Theories
Certain behaviors are the result of individuals meeting the requirements of

specific drives.
The goal of reducing tension is to achieve an
internal state of equilibrium or balance.
Motivation by attempts to maintain this balance.
Similar to evolutionary.
PROJECT MANAGEMENT
3. Incentive Theories
Individual behavior is pulled in certain directions based on the external conditions
in the specific setting
It can work when the manager and team member have the ability and the
resources to identify a desired behaviour that can be awarded.
The incentives must be valued by the group.
The incentives need to be appropriate to the culture of the organization.
3. Theory Of Needs - Acquired Needs Theory (David McClelland)

People who value the need for achievement
are often those people who are the leaders
in the areas of creativity and economic
growth.
The need to achieve within one’s discipline
can self-motivate many individuals.
PROJECT MANAGEMENT
5. Fear Of Failure
A strong motivator in situations when the consequences for failure are
especially catastrophic.
It should be employed only in unusual circumstances
6. Maslow’s Hierarchy of Needs Theory (Abraham Maslow)
The basic human needs are arranged

in a hierarchy.
The lower needs must be satisfied
before the higher needs can be
addressed.
According to this concept, people are
always in some sort of a ‘‘needs’’
state.
PROJECT MANAGEMENT
7. Career Theory (E. Schein )
A different approach through a model that describes major stages in a personal
career.
An understanding of an individual’s current career stage by the leader can be used in
developing tangible approaches to individual motivation. This model has ten career
stages.
Stage 1&2: life before entering the world of work
Stage 3: The first formal entry into the workplace
Stage 4: Training in the concrete application of skills and professional socialization
Stage 5:The individual is observed as having gained full admission into the profession
Stage 6: The individual gains a more permanent membership in the profession.
Stage 7: The natural mid-career assessment or crisis
Stage 8:The career starts to move into its final chapters.
Stage 9: Beginning to disengage from the world of work.
Stage 10: The retirement stage
PROJECT MANAGEMENT
8. Empowerment Theory - J.R. Meredith and S.J. Mantel
A team environment be established in which the members experience a strong sense
of empowerment through the use of participatory management methods.
Empowerment is defined as an approach that stresses individual initiative,
solution creation, and accountability.
The team is then motivated by the opportunity to be self-determinative in creating
the structure and methods to achieve its goals.
9. Ethical Theories and Applications
Ethics is an emotionally and intellectually charged word for any professional.
It is science of judging specifically human ends and the relationship of means to
those ends.
It prompts images of moral responsibility and obligation, scholars debating the
intricacies of profound issues, and arguments between professionals and social
commentators about right and wrong behavior.
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Total Quality
Quality Management
Assurance
Quality
Involvement Continuous
Control
Improvement
Inspection Compliance to
specification
Allocating blame
PROJECT MANAGEMENT
QUALITY MANAGEMENT
People Materials Environment
Equipment Method
PROJECT MANAGEMENT
QUALITY MANAGEMENT
What is Quality? ”‫“إن يحب إذا عمل أحدكم عمال أن يتقنه‬

Conformance to established requirements
OR the degree to which the project fulfills the requirements
Quality Grade
The combination of all of an entity’s A category or rank given to entities

characteristics that enable the having the same functional use but
satisfaction of stated or implied needs. different technical characteristics.
Low quality is always a problem Low grade may NOT be a problem
Quality MUST BE planned in NOT inspected in
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Standard and Regulation
Standard Regulation
A document established by consensus

Is a government imposed
and approved by a recognized body
requirement, which specifies product,
that provides, for common and repeated
process or service characteristics,
use, rules, guidelines or characteristics
including the applicable administrative
for activities or their results, aimed at
provision, with which compliance is
achievement of the optimum degree of
mandatory.
order in a given context
Example: the size of a computer disk

Example: Building codes
and the ISO standards.
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Juran’s Trilogy
(PDCA) Cycle
W. Edwards Deming, advocated a similar and now well-
accepted set of steps with his “Plan-Do-Check-Act”
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Categorizing quality costs
1. Error-free costs
2. Cost of Quality (COQ)
1. Costs of conformance
1. Prevention
2. Appraisal
2. Costs of non-conformance
1. Internal failure
2. External failure
3. Hidden poor quality costs
1. Postponed profits
2. Lost profits
3. Customer incurred costs
4. Socio-economic costs
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Cost of Quality
Cost of Conformance Cost of Nonconformance

Prevention Cost (Build a quality
product) and Appraisal Cost (Assess Failure Cost.
the quality).
Prevention Appraisal Internal Scrap.

(pre customer)
Planning. Testing. Rework.
“Fixes prior to
Training. Destructive delivery” Inventory cost.
Auditing. testing loss. Warranty.

Inspections. External
Controlling. Service.
(post customer)
Recalls.
Money spent during the project Money spent during and after
to avoid failures. the project because of failures.
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Cost of Quality before and after TQM
Before TQM After TQM
PROJECT MANAGEMENT
QUALITY MANAGEMENT
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Value
This is a major challenge for executives, and it involves increasing value.
Value is an ambiguous term and can be highly subjective.
A primary responsibility for executives is to create value for the customer while
increasing economic wealth for employees and shareholders—all at the same time!
Performance
Value =
Cost
With this math, value increases if the numerator goes up or the denominator goes
down.
Quality management is an essential element for

managing costs.
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Quality Evolution
1940s and 1950 1960s and 1970
PROJECT MANAGEMENT
QUALITY MANAGEMENT
National Standards Institute (ANSI) represents the United States. ISO 9000 is not a
set of standards for products or services, nor is it specific to any one industry.
Instead, it is a quality system standard applicable to any product, service, or
process anywhere in the world.
The information included in the ISO 9000 series includes:

ISO 9000: This defines the key terms and acts as a road map for the other standards
within the series.
ISO 9001: This defines the model for a quality system when a contractor demonstrates the
capability to design, produce, and install products or services.
ISO 9002: This is a quality system model for quality assurance in production and
installation.
ISO 9003: This is a quality system model for quality assurance in final inspection and
testing.
ISO 9004: This provides quality management guidelines for any organization wishing to
develop and implement a quality system. Guidelines are also available to determine the
extent to which each quality system model is applicable.
PROJECT MANAGEMENT
QUALITY MANAGEMENT
1 2 3 4 5 6
Becoming
Getting prevention
Everyone
Writing a Defining Following everyone oriented
wants to
policy Procedures them else to follow continuously
follow them
them improving
organization
TOTAL QUALITY MANAGEMENT
ISO 9000
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Principles of TQM
Customer-oriented
Leadership
Strategic planning
Employee responsibility
Continuous improvement
Cooperation
Statistical methods
Training and education
PROJECT MANAGEMENT
QUALITY MANAGEMENT
W. Edwards Deming “Quality is a management problem”
The 14 Points “standard reference for quality transformation”
1. Create a constant purpose toward improvement.
2. Adopt the new philosophy.
3. Stop depending on inspections.
4. Use a single supplier for any one item.
5. Improve constantly and forever.
Continuously improve your systems and processes. Deming promoted the Plan-Do-
Check-Act approach to process analysis and improvement.
Emphasize training and education so everyone can do their jobs better.
Use kaizen as a model to reduce waste and to improve productivity, effectiveness, and Oct.1900 – Dec. 1993
safety.
By improving
6. Use training on the job.
quality, companies
7. Implement leadership.
will decrease
8. Eliminate fear.
expenses as well as
9. Break down barriers between departments.
increase
10.Get rid of unclear slogans.
productivity and
11.Eliminate management by objectives.
market share.
12.Remove barriers to pride of workmanship.
13.Implement education and self-improvement. “Out of Crisis”
14.Make "transformation" everyone's job. 1982
Quality problem (85% management and 15% worker)
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Dr. Joseph M. Juran (The Father of Quality) “Fitness for Use”
Quality begins with who, how, and why these customers will use it, without
this information any improvement will be guesswork.
In other words, all improvement activities should be customer focused
Juran’s ﬁve attributes for “fitness for use”:
1. Quality of design
2. Quality of conformance (Dec. 1904 – Feb. 2008)
3. Availability Needs of the

customers and
4. Safety Stakeholders are
5. Field use defined and then
attempted to
He development 80/20 principle
satisfy.
Quality is fitness for use.
1Quality Control Handbook, 2Managerial Breakthrough, 3Management of Quality “Quality Control
Control, 4Quality Planning and Analysis, 5Upper Management and Quality, and Handbook 1951”
6Juran on Planning for Quality.
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Philip Crosby “Zero defects and prevention or rework results ”
Zero defects is a way of thinking and doing that reinforces the notion
that defects are not acceptable, and that everyone should "do things
right the first time".
The idea here is that with a philosophy of zero defects, you can
increase profits both by eliminating the cost of failure and increasing
Jun.1926 - Aug. 2001
revenues through increased customer satisfaction.
Defects are not
Zero defects is NOT about being perfect. Zero defects is about
acceptable, and
changing your perspective. It does this by demanding that you: that everyone
1. Recognize the high cost of quality issues. should "do
things right the
2. Continuously think of the places where flaws may be introduced. first time“
3. Work proactively to address the flaws in your systems and
“Quality is free
processes, which allow defects to occur. 1979”
Quality is conformance to requirements.
PROJECT MANAGEMENT
QUALITY MANAGEMENT
Kaizen Philosophy “Continuous Improvement”

Apply continuous small improvements to reduce costs and ensure consistency.
Kaizen (Ky’zen) is meaning “change for the better” in Japanese.
改
In united Stated and most of Western Europe, improvements are thought of as big improvements.
In Japan, improvements are thought of as small improvements.
PROJECT MANAGEMENT
VALUE ENGINEERING
Value Engineering
Value engineering has the goal of lowest lifecycle costs.
Value engineering Benefits
Value Engineering for complex projects much more beneficial than simple
projects.
Pareto’s Law of Optimality states that 80% of the costs come from 20% of
the items therefore to achieve maximum benefit we should focus on those high-
cost areas.
Value engineering can prove to be a
powerful tool in an increasingly-
competitive world market that every
dollar spent on value engineering, a
return of from three to four dollars
can be expected from this activity.
PROJECT MANAGEMENT
VALUE ENGINEERING
Factors causing poor value

1. Poor attitudes
2. Poor habits
3. Poor ideas
4. Poor information
5. Time constraints
6. Temporary circumstances
7. Mistaken beliefs
PROJECT MANAGEMENT
VALUE ENGINEERING
Value Types
Cost Value Exchange Value Use Value Esteem Value
Refers to the totality of Refers to the Refers to the Refers to the

labor, material, equipment characteristics of the characteristics of characteristics of
, and overhead costs, project, product, or the project, the project,
involved in actually service which allow it product, or service product, or
producing and bringing to be traded for which enable it service which
to market the project, something of to accomplish make
product, or service. value, such as its intended ownership
currency. purpose. attractive.
PROJECT MANAGEMENT
VALUE ENGINEERING
Level of Influence Curve
Early application of value
engineering techniques in the
design phase makes the most
sense.
VE application during the

construction process can be
problematic.
Engineering/design – High
influence on costs with low
expenditure
Procure/construct – Low
influence with high expenditure
PROJECT MANAGEMENT
VALUE ENGINEERING
Project Schedule
Optimum project duration results in the lowest life cycle cost
PROJECT MANAGEMENT
VALUE ENGINEERING
Functional Analysis Systems Technique (FAST)/Functional Approach
Identify unnecessary costs
Use an active verb and measurable noun
Identify primary functions and secondary functions
Use “Why” and “How” to stimulate thinking
Value Engineering study team
Diversified team members
Variety of relevant specializations
PROJECT MANAGEMENT
VALUE ENGINEERING
Value Engineering job plan
1 Information Phase
2 Speculation Phase
3 Analysis Phase
4 Development Phase
5 Basic design
1. Follow-up and
6 Implementation Phase
PROJECT MANAGEMENT
VALUE ENGINEERING
PROJECT MANAGEMENT
VALUE ENGINEERING
Value Engineering success steps
1. An organized creative approach to cost reduction
2. Target fonctions versus technique
3. Targets areas of unneeded costs
4. Enhance the value of the product or service
5. Same level, or improved performance level, at reduced cost
6. Does not harm quality or reliability
PROJECT MANAGEMENT
CONTRACTING FOR CAPITAL PROJECTS
Contract
A contract is a mutually binding legal agreement that obligates the seller to provide
the specified products, services, or results, and obligates the owner to
compensate the contractor.
A contract is a legal relationship subject to remedy in the courts.
The difference between a contract and an agreement is the element of legal
enforceability.
PROJECT MANAGEMENT
Requirements of a Contract
1. An offer
2. Acceptance
3. Consideration (Something of value, not necessarily money) to warrant performing the work
4. Legal capacity (Separate legal parties, competent parties) Legal and mental capacity
5. Legal purpose (You cannot have a contract for the sale of illegal goods or services)
PROJECT MANAGEMENT
Parties to a Contract
There must be a minimum of two parties in a contractual arrangement.
1. Owner (the first party)
2. Contractor (the second party)
3. Related parties
4. Third parties
PROJECT MANAGEMENT
Mistakes that Make Contracts Defective
Nature of the transaction the property is not zoned for such
a facility
Identity of a party
Identity of the subject matter location at which Facility A
cannot be constructed
Existence of the subject matter facility is destroyed by fire
Mistakes that Do Not Make Contracts Defective

Value, quality or price
Terms of the contract
Other Factors Affecting Enforceability of Contracts
Statutory or regulatory provisions
Valid contractor’s license
Valid professional engineering or land survey
registration
PROJECT MANAGEMENT
Contents of a Contract
Invitation to Bid or Request for Proposal
Instructions to Bidders
Addenda Issued During the Bid Period Bid or Proposal
Contract
Bonds
General Conditions
Special or Supplemental Conditions
Scope of work (Technical Requirements of the Contract)
It define what work is to be accomplished by which party, when, and to what
level of quality.
Disagreement over what in/out scope is one of causes of disputes.
Change orders or contract modifications
Permits, environmental agreements, geotechnical reports, technical requirements
PROJECT MANAGEMENT
Types of Contract
Contract
Guaranteed Maximum
Price [GMP] contracts
Fixed Price– Fixed Price - Cost Target

Lump Sum Unit Price Reimbursable Contracts
Fixed Price Indirect Costs

Fixed Price
With Economic Direct Costs (Overhead Mark Up Costs
With Incentives
Adjustment Costs)
Types of Costs
PROJECT MANAGEMENT
Advantages Disadvantages
Fixed-Price/ Final Cost are known and the Changes are difficult and costly
selection of contractor is fairly Contractor chooses cheapest solutions
Lump-Sum easy Bidding time and design time make early
Contracts Lowest risk and minima start not possible
supervision (mostly quality / Contractor include high contingencies in
schedule) price
Contractor quickly solve his
problem
Fixed-Price/ Flexibility (scope and quantity Final cost is not known since BOQ
can be varied). estimated on incomplete engineering.
Unit Price Good design definition is not Staff needed to measure, control, and
Contracts essential. typical drawings are ok report on the cost / status of the work.
Very suitable for competitive Biased bidding and front end loading
bidding may not be detected.
PROJECT MANAGEMENT
Advantages Disadvantages
Cost Early start can be made. Final cost is unknown.

Flexibility in dealing with Difficulties in evaluating proposals.
Reimbursable
changes. Contractor has little incentive for early
Contract Owner control all work completion or cost economy.
aspects. Contractor may assign its “second
division” personnel to the job.
Owner carries most of the risks and faces
the difficult decisions
Target Early start can be made. Final cost initially unknown

Flexibility in dealing with No opportunity to competitively bid the
Contract
changes. targets.
encourages economic and Variations are difficult and costly once the
speedy completion target has been established
PROJECT MANAGEMENT
PROJECT MANAGEMENT
PROJECT MANAGEMENT
Project Delivery Method
1. Design-Bid-Build
Project is fully designed before contractor is employed.

Owners who employ fixed price contract that choose this type to know the
cost before construction.
2. Design-Build
Engineering-Procurement-Construction contract (EPC), fast track, flash track,

or turnkey methods.
Construction can start prior to the completion of the design.
PROJECT MANAGEMENT
3. Indefinite Quantity Contract
Task Order Contracting, or Job Order Contracting.

Utilized on repetitive work such as routine repair and maintenance projects.
Owner and contractor establish set prices for labor, equipment, markups, etc.
As a result, scope does not need to be fully known prior to commencing
work.
PROJECT MANAGEMENT
Contracting Arrangements
1. Single Prime Contractor Organization
Design-bid-build.
Owner contracts with a design
professional.
Owner contracts with a single
contractor ASA design complete.
limited extent from claims or disputes
arising from vendors, suppliers, and
subcontractors.
2. Multiple Prime Contractor Organization
Series of contracts to several

contractors.
Construction is more quickly.
Coordination Risk.
Conflicts, delays or
coordination problems.
Consequently, claims to the
owner.
PROJECT MANAGEMENT
3. Design Build Organization
Shorten delivery time
Single point of responsibility for both design and
project execution.
A variation of the typical Design-Build Contract
is a Turnkey Contract
4. Agency Construction Management Organization
Project management or program

management contracting.
Owner contracts directly with designer
and contractor.
Owner retains independent construction
manager (Coordination and overseeing
the activities)
Construction manager has limited
authorities.
PROJECT MANAGEMENT
5. Construction At-Risk Organization
Employs construction
manager, project
manager or program
manager in lieu of a
general contractor.
All trade contracts are
issued by the
construction manager.
The construction
manager executes a
contract with a firm
fixed price―lump sum
PROJECT MANAGEMENT
Contractor Prequalification
Owners may find themselves in a position of having to prequalify contractors.
Prequalified bidders can be assured that they are bidding against relatively equal competitors
understand the work and will estimate rationally.
An owner benefits as there is some degree of assurance that all contractors submitting bids
are qualified and capable of successfully performing.
If an owner chooses to prequalify contractors, an objective, rational system must be
established―such that all potential bidders can easily determine whether they are, in fact,
qualified.
Such objective measures may include the following:
Past experience on projects of similar size, complexity, technical and schedule
requirements.
Past experience with the design build team proposed on this project.
Current financial capability.
Safety ratings on past projects.
Experienced project team, etc.
PROJECT MANAGEMENT
Decision to Bid
1. Expertise
No similar projects and spread risk.
2. Financial Capability
Insurance or bonding requirements, Payment provisions.
3. Bonding Capacity
Performance or payment bond and bonding capacity.
4. Personnel
Owner staff has sufficient experienced personnel to perform the work.
5. Equipment
If a project requires specialized equipment to perform the work.
6. Specialized Knowledge
Owner has requisite skills and knowledge to successfully perform the work.
7. Risk Analysis
Determine how project risk is allocated under the contract.
8. Workload and Other Potential Projects
Impact equipment, key personnel, logistics, bonding and financial capabilities.
PROJECT MANAGEMENT
Key Contract Clauses
1. Audit 12. Limitation of Liability
2. Changes 13. No Damages for Delay
3. Contractor Responsibilities 14. Order of Precedence
4. Delays 15. Owner Responsibilities
5. Differing Site/Changed Conditions 16. Payments
6. Dispute Resolution 17. Quantity Variations
7. Force Majeure 18. Schedules
8. Governing Law 19. Suspension of Work
9. Indemnification 20. Termination
10. Insurance 21. Time of the Essence/Time of Performance
11. Late Completion Damages 22. Warranty
PROJECT MANAGEMENT
PROJECT MANAGEMENT
PROJECT MANAGEMENT
STRATEGIC ASSET MANAGEMENT
Total Cost Management Framework
The sum of the practices and processes that an enterprise uses to manage the
total life cycle cost investment in its portfolio of strategic assets.
The practices are called Cost Engineering and the process through which the
practices are applied is called Total Cost Management (TCM).
Asset Management sub-process of Total Cost Management (TCM).
Strategic Asset
Any physical or intellectual property that is of long term or ongoing value to an
enterprise.
Strategic assets may vary from industrial plants to transportation systems to
software programs; essentially anything that an enterprise makes significant
investments in can be considered a strategic asset.
Each asset has a life cycle. For example, a building owner evaluates designs, builds, leases,
maintains, renovates, and eventually demolishes a building during its life cycle―at each stage
of the building’s life the owner makes cost investments in it that must be managed.
PROJECT MANAGEMENT
In the building example, Strategic Asset Management is the process where

the building owner measures the building’s operating performance, assesses
improvement ideas, and conceives, evaluates, and initiates building investment
projects.
The Strategic Asset Management and Project Control sub-processes are
linked in TCM.
Project System
The bridge or link between the owner’s Strategic Asset Management and
Project Control processes.
It is a subset of the Strategic Asset Management process that includes the
steps for planning asset investments, implementing investment decisions, and
then measuring project system and asset performance.
PROJECT MANAGEMENT
Levels of Goals/Plans and their Importance
PROJECT MANAGEMENT
The Total Cost Management Process
PROJECT MANAGEMENT
The Strategic Asset Management Process

PROJECT MANAGEMENT
PROJECT MANAGEMENT
The asset owner performs the following steps for each asset in their portfolio, and for
their project system.
1. Performance Measurement
Measurements (e.g., safety, cost, operability, etc.) are taken of how well existing
assets and the project system is performing.
2. Performance Assessment
Performance measurements of assets and the project system are compared to
strategic plans.
3. Planning
Considering the enterprise’s objectives and requirements, asset portfolio and
project system improvement ideas are conceptualized, evaluated, and converted
into plans for investing resources in new or improved assets or project systems.
4. Implementation
Investment plans and requirements are communicated to and executed by project
teams.
PROJECT MANAGEMENT
Asset and Project System Performance Measurement
1. Asset performance measurement
Safety
Cost
Quality
Operational efficiency
Resource consumption (e.g., materials, labor, energy, etc.)
2. Project system performance measurement
Safety
Cost
Quality
Schedule
PROJECT MANAGEMENT
Asset Planning
Owner identifies asset investment and Project System options, defines and evaluates
them, and decides upon which options to move.
Investment options identification step, finds ways to improve asset or Project
System performance.
Implementation
Based upon the decision process to implement an asset or Project System
improvement idea
Planning focus on developing the technical scope and execution plans
Formal documentation inclusive of budget and operating cost should be added to
the capital budget
During implementation, the asset is reviewed continually on its technical scope
and execution plan
Project definition is also known as the front-end loading (FEL) phase
With good FEL, late changes in scope are minimal
At completion of FEL, project has a detailed budget and schedule that serve as
the basis for
project control during execution
PROJECT MANAGEMENT
Application - Capital or Fixed Assets
Includes items such as manufacturing plants and equipment, buildings, roads,
utilities, and similar items that are not easily moved and have significant-useful
lifespans
Generally created, modified and retired through a project process
List of opportunities and challenges identified by strategic planning is long
Review improving technology against plans, basis and

assumptions
Process application is reviewed against estimating,
historical data, schedule, risk, value engineering and
then results in the decision analysis
Documentation and decision analysis are key to the
process
PROJECT MANAGEMENT
Application - Product
Include such as items as manufactured goods and similar items that have a
limited useful lifespan
Products are created through an ongoing, discrete or continuous manufacturing
or production process, rather than a project process
Teams should develop a flow chart of business operations that reviews flow of all
backgrounds
Process for products is similar to capital planning
Application—Software
Difficult to classify software as either a capital asset or product
May or may not have a limited-useful lifespan
May not be fixed depending on installation in a particular device
Software estimates deal with configuration and coding activities versus
construction or actual assemblies
PROJECT MANAGEMENT
CHANGE MANAGEMENT PRACTICAL GUIDE
Change Management Overview

Projects have always involved change. However, they tend to have varying
degrees of change management approaches.
Change management is the process for identifying, resolving, reporting, and
administering changes to a project that affects its scope, cost, or schedule.
Change management and control has proven to be an essential part of controlling a
project and is critical to the project team’s ability to successfully manage the work
effort.
The change management methods, if appropriately applied, will more clearly identify
project change the degree of change impact on risk, and the potential
consequences.
Successful application of these methods will save money and minimize the
effects of negative events identified through the change management process.
PROJECT MANAGEMENT
TCM Process Map for Change Management

PROJECT MANAGEMENT
Project Change Management Procedure Sample “30

days from notice to proceed”
PROJECT MANAGEMENT
Change Management Flow Chart – Contractor’s Perspective

PROJECT MANAGEMENT
Project Variance Notice (PVN)/Change Request
The form is a summary level document and should be supplemented with any
additional information needed to understand and justify the variance.
1. Section 1: “Title”
2. Section 2: “Change Information” Assign a sequential number to the PVN, log it into
the change register.
3. Section 3: “Approvals”
4. Section 4: ”Distribution” The PCM/CCM, or project controls person, will check
the appropriate blocks and arrange for distribution.
PVN Review Meeting
The contractor project manager will conduct periodic PVN review meetings to keep
the project team fully informed of the status of each new and pending variance.
1. Periodic Internal Review, weekly
2. Special Internal Review, impact which cannot wait for the periodic meeting.
Microsoft Office
3. Client Review. Word 97 - 2003 Document
PROJECT MANAGEMENT
Client Change Procedure
1. Change Request
i. Any variance is to be processed into a PVN and change request.
ii. 3 working days approval.
iii. The contractor will prepare an order of magnitude analysis.
iv. The client will have a reasonable period to approve or reject any change
request.
v. The client may respond as follows:

a) Reject the proposed change request
b) Approve the proposed change request immediately as a
change order.
c) Direct that a more detailed analysis of the change be
made and that it be resubmitted as a change proposal.
PROJECT MANAGEMENT
2. Change Proposal
i. Upon request by the client, the contractor will prepare a change proposal.
ii. The client shall bear the cost of preparing any change proposal.
iii. The client shall have a reasonable period of time to approve or reject any change
proposal.
iv. The client may respond as follows:
a) Reject the change proposal.
b) Approve the change proposal as a change order.
Change Order
Approved change request or a change proposal – by client.
Officially and Written.
PROJECT MANAGEMENT
Contractor Internal Change Procedure
This procedure is not dependent upon contract type, and should be followed for all
projects:
1. Project Manager’s Evaluation
2. Reject the PVN
3. Approve the PVN
Disputed Change
For any change, the contractor project manager must perform the following:
1. Consult with the contract and legal departments.
2. Explicitly follow the contractual change procedure and associated change
management protocols.
3. Dispute the change in writing.
4. Receive written instruction from the client defining the course of action.
5. Maintain separate and complete records of the time spent
PROJECT MANAGEMENT
Change Register
The contractor will maintain a change register containing all PVNs, change requests.
Logs will include the PVN number, the change request, change proposal
The contractor will issue the change register to the client as specified in the contract.
Pending Change Order
Each pending change order is to be maintained in a change log.
The cost of the pending change must be considered in the forecast.
The detailed cost distribution for the change should be tracked separately.
When approved by the client, the current budget and revenue is to be updated.
Change Order Identification
Identify each change order consecutively, using a three character numeric block.
Note that more than one variance may be included in a single change order.
If there is a client change order numbering convention, it should be cross referenced
to the contractor character number system.
PROJECT MANAGEMENT
OVERVIEW OF CONSTRUCTION CLAIMS AND DISPUTES
Changes/Variations
A frequent occurrence on virtually all contracts is change/variation.
It is incumbent upon both the owner/employer and the contractor to establish formal
systems to identify changes/variations as soon as they arise and to estimate and
negotiate the full scope, time, cost, and impact of the change/variation as quickly as
possible.
All such elements of changes/variations should be dealt with as promptly as possible
in order to avoid later disputes.
PROJECT MANAGEMENT
Contract Claims
Frequently, disagreements over contract requirements arise, which cannot be
resolved through the change/variation order process.
Typically, such disputes are referred to under the rubric of a claim.
Many design and construction contracts have clauses that address disputes or claims
and the notices required in order to properly assert a dispute or claim.
Claims, like changes/variations, should be addressed promptly and resolved in
accordance with the terms of the contract.
PROJECT MANAGEMENT
Claim Change/Variation Order

A written demand or assertion by one of A directive from the owner/employer, or
the contracting parties seeking, as a matter their representative, to the contractor
of legal right, payment of additional money, directing him or her to perform work
adjustment to the time of performance differently or perform different work than
and/or some other change/variation to the contracted.
terms of the contract, arising under or
related to the contract.
“Requests for additional time and/or
money”
PROJECT MANAGEMENT
Universe of Claims
There are only 11 types of claims in most contracts ….. As per causes!
1. Owner/Employer Directed Changes/Variations
2. Constructive Changes/Variations
3. Differing Site Conditions/Unforeseeable Site Conditions
4. Directed Suspension of Work
5. Constructive Suspension of Work
6. Force Majeure
7. Delay
8. Directed Acceleration
9. Constructive Acceleration
10. Termination for Convenience
11. Termination for Default
PROJECT MANAGEMENT
Directed Resulting from owner/employer directed change/variation.

Changes Involving a dispute over the time, cost and/or impact. Bilaterally or Unilaterally
Resulting from owner unintended change that requires the contractor to

do more than is required by the contract.
Constructive
Results in additional cost or time being incurred.
Changes
Comments on shop drawing submittals or Ambiguous contract
requirements.
Encounters with latent (hidden) physical conditions at the site differing

materially from the conditions indicated in the contract documents.
a) Type 1: Latent (hidden) physical conditions at the site is different (Rock,
Differing Site subsurface water, and Buried pipes).

Conditions b) Type 2: Unknown physical conditions at the site (Archaeological or
paleontological finds).
c) Type 3: Material unexpected encounters with hazardous or toxic
materials (Presence of waste oil deposit).
PROJECT MANAGEMENT
An owner directive to stop some or all of the work of the project for a
Directed
limited period of time.
Suspension of
The contractor is performing the work in an obviously unsafe manner,
Work
otherwise the contractor can claim.
Constructive Accidental or unintended work stoppage caused by owner.
Suspension of Delayed approval of shop drawings or issuance of changes/variations or
Work delivery of owner/employer furnished items.
Unforeseeable events caused by third parties or acts of God. Beyond the
Force Majeure control of both parties.
Fires, Floods. Earthquakes, Tsunamis or Acts of war or terrorism

An impact to the contractually specified completion date or the adjusted
contract completion date (7 types of delay on projects).
Most contracts deal with the following 4 types of delays.
Delay
a) Excusable, Non-Compensable Delay (Third party/FM), No Cost & NO LD’s
b) Excusable, Compensable Delay (Owner), time extension ok.
c) Inexcusable Delay (Contractor), Make up be him or LD’s

d) Concurrent Delay
PROJECT MANAGEMENT
Concurrent Delay / Overlapping delay
Case A: Contractor Delay

Time Extension only
Employer Delay due delays out of
Others parties control
Case B: Contractor Delay

Time Extension & Cost
Employer Delay & NO LD’s
Others
Case C: Contractor Delay

NO Time extension &
Employer Delay
LD’s
Others
Case D: Contractor Delay

Time Extension & Cost
Employer Delay For Employer’s delays
Others portion only
PROJECT MANAGEMENT
Directed Owner direct the contractor to complete earlier in order to maintain a
Acceleration completion date despite an acknowledged delay. Voluntary acceleration
Constructive Inadvertent owner action or failure to act, which results in a contractor

Acceleration being required to complete earlier than required.
Termination for
Owner action to end work in whole or in part.
Convenience
Termination for
End work due to a material breach of the contract.
Default
Claims Categorize
Extra- Contractual
Contractual Claims Ex gratia Claims
Claims
Have a basis in the These claims have no Ex gratia (“Out of Kindness”)
contract itself where basis in the contract but claims are those where a
provision can be quoted entitlement stems from contractor is seeking something
giving rise to entitlement the governing law more tangible than sympathy.
PROJECT MANAGEMENT
Owner/Employer Claims; 3 types of claims
The owner/employer has the right to assess and collect damages for late
completion of the work caused solely by the contractor without any
Late owner/employer involvement.
Completion a) Actual Damages: The owner/employer as the claimant would have to
Damages keep careful track of all actual damages where incurred. Mutually waive.
b) Liquidated Damages: Stipulated amounts, usually on a daily basis,
agreed to at the time the contract is executed. Not need to be proven.
False or If a claim can be proven to be false or fraudulent as defined in various
Fraudulent statutes, recovery may include restitution, civil penalties, costs, punitive
Claims damages and attorney’s fees.
Design The basis for many contractor claims against owners/employers lies in the
Deficiency or deficient performance of the Architect/Engineer (A/E).
Standard of In turn, some owners/employers seek recovery from the A/E for the
Care Claims damages the contractor may recover from the owner/employer.
Sometimes called Special Damages, are damages that arise as a result
Consequential
of the failure of the owner/employer or the contractor to live up to their
Damages
obligations under the contract.
PROJECT MANAGEMENT
Burden of Proof
The basic equation of a successful claim is summarized as follows:
1. Notice
Formal, or sometimes informal (e.g. constructive notice)
Communication from one party that potentially will be seeking time and/or cost
relief for an issue that has arisen.
2. Liability/Entitlement
An event or circumstance has occurred during project performance such as a
change/variation, delay or differing site condition.
3. Causation
The event or circumstance such as some portion of the work is revised and
performed differently than originally planned and work has to be re-sequenced as
a result.
4. Damages /Quantum
The work costs more and/or takes longer than planned.
PROJECT MANAGEMENT
Damages
1. Direct Costs
2. Indirect Costs
a. Field office overhead
b. Home office overhead
3. Delay Costs
4. Impact Costs
5. Other Contractor Damages
6. Other Owner/Employer Damages
PROJECT MANAGEMENT
Claims and Project Delivery Methods
1. Unit Price, change in the number of units installed
2. Design-Bid-Build improper design, lumpsum
3. Design-Build, ambiguities in contract language
4. Fast Tack Construction, coordinate the interfaces between the multiple contracts
5. Multiple Prime Construction, multiple lots, coordination
6. Construction Management at Risk (CM@R)

7. Alliance Contracting/Integrated Project Delivery (IPD)
8. Public Private Partnership (P3)
PROJECT MANAGEMENT
Analysis of a claim
1 2 3 4
Entitlement
Damage Settlement
and Causation Delay Analysis
Analysis Negotiations
Analysis
Identify issues, evaluate Baseline and updated Complete the analysis,

Determine costs
all relevant contract schedules, compare negotiate settlement
and calculate
language, establish issue as-planned, updates with the other party,
damages
files, analyze issues, and as-built, use an independent
determine potential for determine delays, mediator or third-
contractual entitlement, associate claim issues, party-neutral.
magnitude, and request perform a detailed
additional information. analysis, and Identify
the party responsible
for the delay(s).
PROJECT MANAGEMENT
Dispute Resolution
Negotiation Mediation Arbitration
Alternative
Litigation Dispute
Resolution
PROJECT MANAGEMENT
1. Negotiation
Between project teams or elevated in both the owner’s and the contractor’s
organizations.
The concept is to discuss the disputed issue face-to face and mutually arrive at
an acceptable solution.
2. Mediation
A structured negotiation between the parties utilizing the services of an outside,
voluntary, neutral facilitator (the mediator).
The mediator’s only power is the power of persuasion.
3. Arbitration:
More formalized procedure by an outside organization operating under a
national/international set of rules.
There may be a single arbitrator or a panel appointed by one of these
organizations.
Arbitrator’s ruling is enforceable at law in a court of competent jurisdiction.
PROJECT MANAGEMENT
4. Litigation:
A formal lawsuit in federal court according to contract terms and under the rules
of the jurisdiction.
Lawsuits are time consuming, lengthy, and very expensive.
The outcome may rest more on legal technicalities than on fact or circumstance.
A party submitting a dispute to litigation retains no control over process or
outcome.
5. Alternative Dispute Resolution
There are numerous other forms of Alternative Dispute Resolution (ADR)
available to the parties involved in a dispute,
Many are voluntary and need not be mandated by contract.
PROJECT MANAGEMENT
Dispute Resolution Staircase
PROJECT MANAGEMENT
ECONOMIC ANALYSIS, STATISTICS, PROBABILITY AND RISK
1. Financial & Cash Flow Analysis
2. Practical Corporate Investment Decision-Making Guide
3. Statistics & Probability
4. Optimization
5. Risk Management Fundamentals
6. Risk Management Practical Guide
7. Total Cost Management Overview
8. The International System of Units (SI)
PROJECT MANAGEMENT
THANK YOU
PROJECT MANAGEMENT

Hisham Haridy 1 - Project Management

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P ROJECT M ANAGEMENT

CCP_Section 5 Hisham Haridy, PMP, PMI-RMP, PMI-SP

1. Project Management Fundamentals

These results can only be achieved through:

Something toward which work is to be directed, a strategic position to be attained,

or a purpose to be achieved, a result to be obtained, a product to be produced, or a

Each project must have at LEAST one objective.

The objectives of the project MUST be made known and communicated.

Project objective MUST follow the SMART rule;

Project Management Function

Detail design and

Project Life Cycle

Solve Problems Project

The “Bean Counter” Syndrome is a wide

(Green boxes represent staff engaged in project activities)

Effective information exchange and efficient coordination of project workload.

The “matrix” failed

international perspectives that have been applied.

The successful companies embrace a quality of empowerment and reward,

which allows them to maximize the organizational programs.

which developed the Total Quality Management (TQM) philosophy.

1960s and 1970s

Criteria for Developing a Quality Management Program ( 6 components of total

2. Understanding and reducing variation

3. “Top-down” management leadership and commitment

4. Continuous change and improvement

5. Ongoing training and education

6. A culture of personnel pride and job satisfaction

6. Correct emphasis on business management

Project Manager Key Qualification and Authority

Openness in communication is a gateway to teamwork and high performance.

A formal and informal structure of effective communication is absolutely essential for

Positive nonverbal clues

Formal (reports, memos, briefings) and informal (emails, ad-hoc discussions).

Official (newsletters, annual report) and unofficial (off the record

Written and oral.

Verbal and non-verbal (voice inflections, body language).

Forms Characteristics Example

Written Email, Notes, Memos, Letters

Oral Formal High Degree of Presentations, speeches.

Oral Informal Use the medium of Conversation with team members

Non-verbal 55% of total Facial expressions, hand movements, tone of

Email is now the most common form of written communication

Best practices when writing and managing email:

1. Consider your audience before writing the email.

2. Use the subject line to describe email contents.

3. Keep email short, concise, and coherent.

4. Do not type in all UPPER case or all lower case.

5. Proofread your document before sending (grammar and spell check).

6. Do not attach files unnecessarily.

7. Be aware that email is not confidential.

8. Do not send emails when you are angry.

Use of Technology for Business Purposes

More than 66% of business professionals

(Input) Workhours expended or Labor dollars

Workhours are measured directly Quantity cannot be measured with a

CV Cost Variance = Earned value - Actual cost

CPI Cost Performance Index = Earned value / Actual cost

SV Schedule Variance = Earned value – Schedule Value

SPI Schedule Performance Index = Earned value / Schedule Value

Work from this point forward will

The performance to-date will continue = Budget / CPI

Two way variance analysis

What is Quality? ”‫“إن يحب إذا عمل أحدكم عمال أن يتقنه‬