What every Project Manager knows that you do not know: Time and Cost Overrun or Effective Planning and Scheduling?
By Ivan Hinkson FCIOB, FRICS, PMP, CCC
A Caribbean Construction Project Management Group – CCPMG White Paper –
Time and cost overrun is a major construction project management challenge, which has competency questions for the credibility and accountability of project managers and project sponsors in the current global environment.
The challenge is that can planning and scheduling be used to leverage project management and effectively monitor, evaluate and control the concerns and issues of time and cost overrun?
Available construction project management case studies, lessons learned, close-out reports and generally recognized best practices support the view that effective planning and scheduling have and can efficiently address the concerns and issues of time and cost overrun. But what really is time and cost overrun in the context of construction project management?
Definitions of cost overrun range from project cost in excess of estimated cost, to an excess of actual cost over budget. A considerable amount of confusion exists in defining cost overrun as cost escalation, cost increase and/ or as budget overrun. However it must be recognized that cost increase and budget overrun may not necessarily result in cost overrun, particularly if cost escalation and contingency plans are included as inputs of the budget.
In the determination of a construction project budget, it may be useful to recognize that there are fundamental differences between an estimate and a budget. Furthermore, the estimate, like the budget, has a cost value as well as a time (duration) relationship in the costing process. Overestimation or underestimation of the time value relative to the project estimate and/or budget can lead to another area of confusion in rationalizing the concept of time and cost overrun.
Time and cost overrun have further interpretation complications when project budget is sanctioned and project scope is not clearly defined at the project initiation stage. Furthermore at the project execution stage available research document the results that time and cost overrun trends are usually evident at 15% to 20% of project actual duration and not necessarily near to, or at the project due date.
The first step or foundation of highly effective planning and scheduling of construction projects is Knowledge Management, which ensures that the intellectual capacities of an organization are structured, shared, maintained and utilized within an appropriate knowledge base.
A highlight of the use of a construction knowledge base and six other steps for addressing time and cost overrun concerns and issues are progressively elaborated on in the Project Management Institute Southern Caribbean 5th International Conference Presentation “7 Steps to Highly Effective Planning and Scheduling of Construction Projects”, (http:// www.pmiscc.org/Pdf/Conference% 20Presentations/Ivan%20 Hinkson%20-%20Steps%20 to%20Highly%20Effective%20 Planning%20and%20Scheduling% 20of%20Construction%20 Projects.pdf).
Ivan Hinkson is a Certified Project Manager and Certified Cost Consultant with twenty four years’ post graduate experience and acknowledged competency, as a Project Manager, Contracts Manager, Project Control Manager and Lead on Design/ Built, Construction Management, Contract Management and Engineering, Procurement and Construction (EPC) projects in Trinidad and Tobago.
