Why Schedule Projects ? - Introduction

There are several parties involved in any project (stakeholders). They all need and benefit from project scheduling but from different perspectives. Following is a group of reasons for why project scheduling is needed, from two different perspectives: contractors and owners.

Contractors need project scheduling to:

1. Calculate the project completion date: In most construction projects, the general contractor (GC), including subcontractors and other team members, is obligated to finish the project by a certain date specified in the contract.  The contractor has to make sure that his or her schedule meets this date. Some contracts contain clauses for penalties for finishing the project later than contractually required and/or incentives (financial or other) for finishing earlier. Also, the schedule may show the stage of substantial completion, when the owner may start occupying and using the facility while the contractor is still doing some final touches.
2. Calculate the start or end of a specific activity: Specific activities may require special attention, such as ordering and delivering materials or equipment. For instance, the project manager may want special and expensive equipment to be delivered just in time for installation. Long-lead items may have to be ordered several months in advance. Delivery of very large items may need coordination or a special permit from the city so that such delivery does not disrupt traffic during rush hour. The schedule must show such important dates.
3. Coordinate among trades and subcontractors, and expose and adjust conflicts: In today’s construction, the GC’s role is mostly to coordinate among different subcontractors. The responsibility of the GC may be to allocate the time of use of a tower crane among subcontractors or just to ensure that adequate work space is available for all subcontractors. These tasks are in addition to coordinating logical relationships such as when a subcontractor’s activity depends on the completion of another subcontractor’s activity. For example, the drywall contractor cannot start until the framing has been done; once the drywall is installed, the painter can start painting; and so on.
4. Predict and calculate the cash flow: The timing of an activity has an impact on the cash flow, which may be an important factor for the contractor (or the owner) to consider. The contractor (or the owner) must know his or her total spending in any month or time period. He or she may delay the start of certain activities, within the available float (this term is explained subsequently) to make sure that the cash flow does not exceed a certain cap.
5. Improve work efficiency: By properly distributing workers and equipment and having efficient materials management, the GC can save time and money.
6. Serve as an effective project control tool: Project control must have a solid and sound base with which current performance can be compared. Project control is achieved by comparing the actual schedule and budget with the baseline (as-planned) schedule and budget.
7. Evaluate the effect of changes: Change orders are almost inevitable, but well-planned projects may have few or minor change orders. Change orders may come in the form of directive, that is, an order to the contractor to make the change, or request for evaluation before authorization. This change may be an addition, a deletion, or a substitution. Change orders may have an impact on the budget, schedule, or both. Cost estimators estimate the cost of change orders (including the impact on the overhead cost as a result of the schedule change), but schedulers calculate the impact of the change on the project schedule. It is the contractor’s responsibility to inform the owner on such impact and obtain his/her approval on the change to the budget and/or schedule.
8. Prove delay claims: Construction delay claims are common. Contractors must be able to accurately prove their claims against owners (or other parties) using project schedules. In most cases, only a critical path method (CPM) schedule can prove or disprove a delay claim, which can be a multimillion dollar one.

Project owners and developers need project scheduling to:

1. Get an idea on project’s expected finish date: Before an owner demands that the general contractor (GC) complete the project by a certain date, he/she needs to make sure that this is a feasible and reasonable date. This date is calculated by a CPM schedule prepared either by the owner or by the designer or other consultant hired by the owner. This date is also important to the owner, even before selecting a contractor, to conduct feasibility studies and financial planning.
2. Ensure contractor’s proper planning for timely finish: Owners may demand a project schedule from the prospective or bidding contractor, however, it is very important for the owner to review such schedule and make sure that it is reasonably accurate and realistic. Owner’s approval of contractor’s prepared schedule may imply a liability on the owner’s side.
3. Predict and calculate the cash flow: The owner is obligated to make timely progress payments to the contractor and other parties along the life of the project. Failure to do so not only may delay the project and/or incur additional cost but it also may—at certain point—be deemed a breach of contract.
4. Serve as an effective project monitoring tool: Both owner and contractor must monitor progress of work and compare actual progress (schedule and cost) with the baseline (as-planned) schedule and budget. The contractor uses this process to detect and correct any deviation and also to prepare progress payments. The owner uses this process to verify actual work progress and contractor’s payment requests.
5. Evaluate the effect of changes: Owners may desire or require change orders. In many instances, owners don’t expect or fully appreciate the impact these change orders may have on the schedule and/or budget. It is a wise idea for an owner to find out this impact before making a decision regarding such change order. It is also recommended that owners analyze the contractor’s assessment of the change order to make sure that it is fair and reasonable.
6. Verify delay claims: Owners use CPM schedules to analyze, verify, and/or dispute contractors’ delay claims. Although most delay claims are initiated by contractors against owners, it is possible to reverse roles and have an owner’s claim against the contractor, and/or have other parties involved. In either case, a CPM schedule is vital for the owner to prove his/her case.

Other parties involved in the project may also need a CPM schedule, such as the designer, project management consultant, and financial lending institution. The need for a CPM schedule varies with several factors. In general, it increases with the increase in size and complexity of the project. For example, a home builder who has built tens or hundreds of almost identical homes may not have much need for a CPM schedule. Project control is still needed but may be conducted through simpler methods.

Keywords:  Why Schedule Projects, CPM Schedule, Project Control,  Delay Claims, Cash Flow Calculation, Project Completion Date Calculation, Claim against Contractors, Project Monitoring Tool, Effective Project Monitoring Tool