PROJECT MANAGEMENT

Construction Planning, Tendering and Finance

Construction Planning, Tendering and Finance

Introduction

Project management is the study for projects with an allocated budget, cost, time and capacity. The most important tool in this context is the critical path method. This method is used to plan the timing of a project, control costs and human resources associated with it. CPM can also be quickly adapted to obstacles along the way. This paper analyses a case associated with project management with the help of CPM and PERT. It starts with a brief overview of the topic, summary of the case under review, analysis of the project and ends with a conclusion and recommendations.

Summary of the Case

A construction firm is in a framework of contractors involved in the building and refurbishing of industrial projects for a pharmaceutical manufacturing company. It is already working on more than three projects at a particular manufacturing site. The company has been invited to tender for another project. This is an important and apparently profitable refurbishment project. Management is quite willing to work on it. Two other companies are also competing for the project. The following table summarises the information provided by the planning and estimating department of the construction firm.

Network Diagram

Normal Duration of the Project

Activity

 

Normal Days

1-2

6

3

1-6

15

3

1-8

5

0.625

2-3

4

2

3-4

6

3

4-5

16

8

6-7

10

5

6-3

5

1.666666667

7-5

8

4

8-9

5

2.5

9-4

8

1.333333333

9-10

10

5

10-11

5

2.5

11-5

3

0.428571429

Total Days

106

42.05357143

Normal Duration of the project = 42 Days

Normal Cost of the Project

Activity

Normal Time

Normal Days per one activity

Normal cost/day

 

 

 

(£/day)

1-2

6

3

36,000

1-6

15

2.5

30,000

1-8

5

0.625

7,500

2-3

4

2

24,000

3-4

6

3

36,000

4-5

16

8

96,000

6-7

10

5

60,000

6-3

5

1.666666667

20,000

7-5

8

4

48,000

8-9

5

2.5

30,000

9-4

8

1.333333333

16,000

9-10

10

5

60,000

10-11

5

2.5

30,000

11-5

3

0.428571429

5,143

Total Days

106

41.55357143

731,000

Normal Cost of the project is £ 731000.

Shortest Possible Duration For The Project And Its Associated Cost

Activity

Normal Time

Normal Days per one activity

Normal cost/day

 

 

 

(£/day)

1-2

6

3

36,000

1-6

15

1.5

18,000

1-8

5

0.625

7,500

2-3

4

2

24,000

3-4

6

 

0

4-5

16

 

0

6-7

10

5

60,000

6-3

5

 

0

7-5

8

4

48,000

8-9

5

2.5

30,000

9-4

8

1.333333333

16,000

9-10

10

5

60,000

10-11

5

2.5

30,000

11-5

3

0.428571429

5,143

Total Days

106

27.88690476

731,850

The shortest possible duration of the project is 28 days.

Optimum Project Cost With Its Associated Duration

Activity

Normal Time

Normal Days per one activity

Normal cost/day

 

 

 

(£/day)

1-2

6

3

36,000

1-6

15

2

24,000

1-8

5

0.625

7,500

2-3

4

2

24,000

3-4

6

3

36,000

4-5

16

 

0

6-7

10

5

60,000

6-3

5

 

0

7-5

8

4

48,000

8-9

5

2.5

30,000

9-4

8

1.333333333

16,000

9-10

10

5

60,000

10-11

5

2.5

30,000

11-5

3

0.428571429

5,143

Total Days

106

31.38690476

727,850

The optimum cost with its associated duration is £727,850 in 31 days.

Analysis of the Project

Before analysing the project, it is imperative to understand the process of critical path methodand PERT along with some of the basic concepts. The critical path method network may be referred as a graph which represents a complete sequence of tasks between the beginning and end of a project. The links between critical tasks are represented on the graph by a line called critical path. By adding the times of all critical tasks, we obtain a fair estimate of the total duration of the project (Newell, 2003, pp. 98). With this method, the consequences of delays are highlighted and management also prepare schedule for resource levelling and controlling. A delay in a critical task directly affects the timing of the whole project. This method takes into account a number of jobs with precedence constraints, which have a certain processing time.

It starts at zero time with processing jobs that have no predecessors. Once a job is completed, process is lined to activities with predecessors. In this type of sequence, all jobs that have no predecessors would start processing in the “early start” (ES) time and is completed at the “earliest finish” (EF) time. This process is called the forward pass (Walker, 1959, pp. 7). Next step is the backward ...