Construction Procurement Activities

Construction Procurement

How to Effectively Schedule Procurement Activities by Michael Pink, CEO, SmartPM Technologies

The question that’s increasingly coming up in the construction industry is this: What’s the best way to schedule procurement activities? For the purposes of this paper, procurement activities are defined as the activities necessary to engineer, fabricate, and deliver materials and equipment in construction. Procurement is a crucial part of all construction projects, and something that’s believed to be one of the more difficult things to effectively plan, manage and track.

Generally speaking, most procurement activities are scheduled as would be expected — by listing the series of activities necessary, assigning durations and establishing logical relationships among the activities. Typical activities that are scheduled for each materials package include the process to submit, review and approve shop drawings; material procurement; and fabrication and delivery of materials (see Figure 1).

Figure 1: Procurement Activities Schedule

 

Usually the first few activities (e.g., shop drawing procurement; submit, review, approve sequence) are discrete enough in detail and short enough in duration to warrant entering an activity in the schedule to manage the process. However, far too often, procurement and fabrication activities have long durations that become problematic.

The Risks Associated with the Status Quo

Long-duration activities are challenging for two reasons: first, because it’s generally more difficult to provide a status for them accurately; second, because they make it difficult to accurately assign relationships to other more discrete activities. In the case of procurement activities, it’s even harder to accurately provide a status for fabrication activities because the work is being done off-site. All the risks associated with this typical methodology being deployed on procurement schedules vastly increase the probability that the schedule will have an erroneous critical path, which typically results in overruns, delays and disputes.

Often these activities are updated by a percentage that’s difficult to calculate, and the remaining duration adjusts to a figure that’s not accurate. Long activities can easily take over the critical path of the entire project, obscuring the view into what is critically delaying a project at the actual site. When this happens, the logic tie is often removed between the fabrication and delivery activity, decoupling the activity from the most important data — what it’s driving and when it’s due. Or, on the other hand, site teams sometimes like to see these things on the critical path because it explains a story of delay unrelated to their work.

Another issue that arises when adding many long-duration activities to an overall schedule: Doing so can skew the earned-value numbers that are calculated, particularly in schedules that are not resource-loaded (which is also the norm). Scheduling systems can calculate earned value. However, when a schedule lacks cost or resource data, the scheduling program must rely on duration data to calculate earned value. When a schedule has many long-duration fabrication and delivery activities that represent a considerable proportion of “man days,” earned-value calculations of the actual installation work going on at the site — where the real dollars are tied to — can be skewed. This becomes problematic when attempting to accurately quantify earned value through the schedule data.

Needless to say, the typical process utilized to schedule procurement promotes significant risk in construction, is often mismanaged, and can easily result in overruns and delays.

Moving Forward

What can be done to solve the challenges presented by the status quo?  To read more, download:

How to Effectively Schedule Procurement Activities White Paper Download

 

Author: Michael Pink

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