Capital projects start with an expectation of on-time and on-budget delivery. In many cases, though, this isn’t how it pans out. As reported by owners and contractors in InEight’s Global Capital Projects Outlook survey for 2021, an average of 51% of projects are completed behind the original schedule while an average of 48% are over the original budget.
Though reining in the timelines and dollars for capital projects has long been a challenge for the industry, one project planning model in particular, advanced work packaging (AWP), is demonstrating this challenge can be overcome. How? AWP is designed to reduce costs and delays.
The proof is in the improved project performance metrics — specifically the schedule performance index (SPI) and cost performance index (CPI) that are monitored throughout a project’s construction life cycle.
What is it about AWP that boosts SPI and CPI?
Work has traditionally been organized according to engineering-driven standard work packages. The problem is, what it took to actually build the structure is often overlooked, leading to unrealistic schedules that couldn’t be met and underestimated costs that were overshot. No doubt SPI and CPI deviations were constantly being examined to fix what was not optimally planned to begin with.
From the very start of a project, AWP brings all job tasks more in line with what it really takes to build a project from a time, money and resource perspective. It breaks down the work outlined in a project scope into much smaller portions (Installation Work Packages or IWPs) sequenced along a construction-driven timeline continuum called a Path of Construction (PoC). How does this make a difference? It defines and ensures that the exact labor, materials, equipment and information resources are ready to go when and where the work package is set to begin. Here’s what that ultimately does:
Removes constraints that often cause delays. Those incrementally planned work packages are intended to ensure that adequate time is allotted to each one, with no out-of-sequence tasks that could throw off scheduling. It’s also intended to make certain the tangible resources assigned to those tasks are accounted for. AWP’s hyper-focused planning process is what removes many of the constraints that often plague capital projects.
Taken a step further, data from past projects with similar scope or components can be analyzed to determine what risk factors and constraints occurred and how they affected SPI and CPI values. Combined with early planning, this analysis can be used to pinpoint and eliminate many impacting risk factors and constraints ahead of time, so they’re not inadvertently built into the IWPs.
How, then, does all this constraint-free planning play out at the jobsite? Materials — from concrete and windows to drywall and screws — are ordered far enough in advance and delivered to the work area in time. That work area is prepped and has enough tools and the right equipment to complete the task at hand. Job-specific information like material safety data sheets and drawings are available, whether digitally or as hard copy. Site crews and individual craftspeople can be ready to go when work is slated to begin.
Results in fewer changes that can impact schedule and cost. One reason for the disparity between the original and final schedules and budgets can be attributed to the number and degree of changes submitted, approved and completed during the construction process. You may have noticed your own SPI and CPI values fluctuating as these changes materialized. Using AWP brings construction, engineering and procurement together well before builders begin to experiment with design and materials options as they work toward group consensus on the final choices. The benefit of this approach? The amount of potentially costly and time-consuming design or material changes further along in the project goes down considerably. Plus, breaking work into start-and-end IWP increments eliminates the rush factor and gives tighter control over work quality so there’s less likelihood of change orders being submitted for corrective work.
Fine tunes material quantities for more precise procurement ordering. The realism and accuracy that come from relying on an AWP approach to construction planning goes a long way toward ensuring a more accurate estimate for the resources that procurement is tasked with ordering. Knowing upfront what is required — how much and by what time — gives them time to purchase what’s needed and arrange for everything to be on-site when each work package starts.
For material quantities in particular, there’s an opportunity to order exactly what’s needed as a way to control costs. On the one hand, there’s a far less likely chance of underordering, which could create a delay in reordering and waiting for delivery, or force quick decision making among the construction, engineering and procurement teams to come up with a comparable, cost-effective alternative. And on the other hand, there’s an equally low chance of overordering, which would amount to wasted cost that can affect the bottom line.
The level of planning that AWP entails helps keep the SPI and CPI hovering within their established operating ranges. Even when any SPI and CPI fluctuations do occur, their source may be identified and addressed more quickly and directly when they’re attributed to a specific IWP. And, if a factor causing a skewed performance metric could affect other IWPs, it may give a bit of heads-up to adjust those similar work packages.
Advanced work packaging, now considered a best practice in the industry, has been showing that it’s possible to reduce the factors that can negatively impact schedule and cost performance, thereby improving project delivery. Our AWP-focused solution, InEight Plan, can help you better plan and manage your capital projects. A demo can take you through how it works and how it can improve your schedule and cost metrics.
