Cost/Schedule Change

RT-006d Topic Summary
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Overview

Changes on a project are inevitable and can significantly impact project cost and schedule as well as the ability of the project participants to manage and operate. When changes are small in scope and few in number, the impact on the project is relatively minor. As the number of changes increase, the damaging consequences to a project can be severe and difficult to understand and manage. In addition to the direct cost and schedule impacts to a project, changes often result in numerous and large indirect impacts such as reduced productivity due to loss of momentum, loss of efficiency, and extended overhead associated with administration of the changes. In practice, it is very difficult to estimate the true cost of indirect impacts even after the work is completed.

Poor scope definition ranks as the most common source of change on projects and the primary reason projects run over budget. There are many potential reasons for inadequate scope definition but market pressure for a product is the primary reason that causes owners to take the risk of proceeding on projects with poorly defined scope. The best way to reduce problems associated with poor scope definition is to better define the project in the early stages. In addition, changes can be more effectively managed and controlled by maintaining detailed records of the work, tracking project performance and other impacts as a consequence of changes, analyzing each change promptly, and using modern computer equipment and software.

Key Findings and Implementation Tools

1 : Work Interruptions

Any time craft workers are interrupted for a change, the workers become less productive due to loss of momentum. (SD-66, p. 6)
Reference: (SD-66)

2 : Crowding

Limiting access to an area or forcing a contractor to share work space with other contractors leads to inefficiency. When work areas are congested, craft workers are less productive. (SD-66, p. 6)
Reference: (SD-66)

3 : Overhead

Additional time and expense is often required by contractors to manage overhead costs attributable to change-motivated delays. (SD-66,p. 7)
Reference: (SD-66)

4 : Craft Inefficiencies

When supervisory staff of craft workers must expend additional time and effort in the evaluation and implementation of changes, they are less effective in completing the original work. (SD-66,p. 7)
Reference: (SD-66)

5 : Multiple Change Impacts

When there are multiple changes on a project, there is a compounding effect with deleterious effect on cost and time required. (SD-66, p. 35)
Reference: (SD-66)

6 : Cost Impacts

The loss of productivity associated with changes and interruptions almost always makes any changed work more costly on a unit basis. (SD-66,p. 37)
Reference: (SD-66)

7 : Scope Changes

Modification of scope is the single most common source of change on projects and market pressure for a product is the primary reason for poor project scope definition. Poor scope definition is the highest impact item that causes projects to run over budget. (SD-66, p. 10)

Reference: (SD-66)

8 : Scope Control

Given that poor scope definition can have significant negative impact to projects and that market pressure often precludes adequate scope definition, some ways of controlling scope throughout the project duration include:

  1. Improve the quality of early cost estimates and employ risk analysis techniques to identify the potential range of outcomes
  2. Utilize work breakdown structures
  3. Utilize computer aided design to estimate bulk quantities
  4. Make designers responsible for quantities generated
  5. Require estimators to document basis of estimate
  6. Utilize modern computer equipment and software
(SD-6, p. 77)
Reference: (SD-6)
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Key Performance Indicators

Improved cost, Improved schedule, Improved craft productivity, Reduced change orders

Research Publications

Construction Changes and Change Orders: Their Magnitude and Impact - SD-66

Publication Date: 04/1991 Type: Source Document Pages: 125 Status: Reference

Control of Construction Project Scope - SD-6

Publication Date: 03/1986 Type: Source Document Pages: 108 Status: Archived Reference


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