HM

TREASURY

Central Unit on Procurement

No. 52 Programming and Progress Monitoring for Works Projects

This is one of a series of guidances prepared by CUP on the management of works projects. Its use is not mandatory but a statement of good professional practice. References to the EC rules are to the EEC Treaty, the EC procurement directives as implemented in UK legislation, rulings of the European Court of Justice and other relevant EC law. Departments can obtain advice and guidance on the EC rules from PP Division, HM Treasury. 1. INTRODUCTION 1. 6 This guidance is in seven parts with supporting annexes: 1. 2. 3. 4. 5. 6. 1. 8. Introduction Scope Planning techniques The role of the project sponser Project planning Progress monitoring Progress reporting Use of computers for planning and control developed and used in the context of a thorough understanding of the projects risk assessment. 1. 5 This guidance provides an overview of programming and progress monitoring techniques. There are many different systems, mostly computer based, which use these techniques and advice can be sought from project advisers, project managers, computer software suppliers or from specialist books and publications It. supersedes guidance no 7, copies of which should be destroyed.

1 1 Programming and progress monitoring are particularly important in project work and all project sponsors should understand the techniques available and be aware of their benefits. It is important to appreciate that these techniques are used for forward planning with the aim of eliminating potential future problems. In addition, they are used for reporting progress and this is also covered in this guidance. 1. 2 Project sponsors should be able to interpret programmes prepared by project advisers, project managers, consultants and contractors without being experts in the field. Sponsors should ensure that such progress monitoring is stringent, comprehensive and relevant to departmental reporting requirements. 1. 3 It is important to start programming activity as early as possible, even if this is fairly basic. Programmes which cover the whole project process (including for example, key project approval dates, planning applications approval, design production etc) will help the project sponsor achieve success. Programming and progress monitoring are not just about the construction phase and how well the works are progressing physically on sit - the entire project e development process should be programmed and monitored from the start. 1. 4 The entire planning process should be considered in the context of risk management (see guidance no 4 1 - Managin g Risk and Contingency for Works Projects). A key aspect of the quantification of risk includes the possibility of time delays. Programmes should be

A list of relevant CUP guidances is at Annex 1 and a list of contents at Annex 2. 2. SCOPE

2.1 This guidance describes some of the techniques available for programming and progress monitoring and should enable a project sponsor to interpret programmes prepared by project advisers, project managers, consultants and contractors. It is assumed that the sponsor will have no background in project management or construction but is an experienced generalist, 3. PLANNING TECHNIQUES

3.1 In its simplest form, a programme (or schedule) identifies the work to be carried out (the activities) and plots the time periods (the durations) required to execute and complete each activity. These are known as bar (or Gantt) charts and are one of the fundamental tools for planning and managing projects.

3.2 A further aid to project planning is the use of a network. This is a logic framework that links dependent activities. The development of this technique has revolutionised the work of the programmer and made huge practical improvements in the usefulness of programmes. Until relatively recently, sophisticated programming techniques were only worthwhile for very large projects (and then, generally only during the construction phase), However, the widespread availability of computers has increased the quantity and speed at which information can be processed and the benefits of a network approach to programming are now available for all types of management activity. 3. 3 Subsequent progress monitoring allows actual progress to be compared with the programme and provides a feedback loop enabling programmes to be updated and modified. The logic incorporated in the network can be used to obtain optimum future courses of action, what if analyses and a better understanding of the impact of risk events. 4. THE ROLE OF THE PROJECT SPONSOR

On flights between Earth and the Moon, the Apollo ships were off-course more than 90% of the time. It did not matter that the lunar voyagers were actually on the correct trajectory only 10% of the time, what mattered was results. They got to the Moon and they got home thereafter. They did it by having control to get themselves back on course, repeatedly. They were not on a perfect path but a critical path. While people guiding the astronauts had to be precise, they were not hung up on perfectionis m the dreaded paralysis by analysis, Whether one is headed for the Moon or controlling costs [or time] on a construction project, there is always the unpredictable, the ambiguous, the surprise, the change that calls for course correction. On course does not mean perfect. It means that even when things dont go perfectly, you are headed in the right direction. Charles Garfield Peak Performers 5. PROJECT PLANNING

4.1 The project sponsor is responsible for arranging the production of the programme and monitoring progress. The sponsor should be satisfied that: - programmes s have been prepared covering all requirements of the project; ~~ all phases of the project are covered adequately; ~~ assumptions on resources are valid; -due account has been taken of risk; and --appropriate project monitoring procedures are in place. 4 .2 The project sponsor is responsible for the whole of the project and should have an overview of progress in relation to the programme. It is also important to be aware of potential risks and problems. The sponsor should review the programme against progress achieved in order to understand where difficulties are likely t o arise and to establish what alternative courses of actio n available to mitigate their impact, are especially where the overall objectives of the project are threatened realised d that a plan or programme is 4. 3 It should b e a n estimate e how activities will be carried out and of how long they will take. It is based on many assumption s some of which will prove incorrect in practic eTo some extent, deviations from the plan should be expected but as long as the overall project objectives are achieved, these are acceptable. 4 4 The project sponsor should pay particular attention to the effect of progress on expenditure forecasts s (cash flow) and receive advice on the financial implications of any proposed change to the programme.

5.1 Bar chart programmes 5.1,1 For any project (or a part of it) it is possible to analyse and represent the work to be done in the form of a programme. Simple programmes (such as bar (or Gantt) charts) list the sequence of activities at the left hand side of the page, the passage of time across the page, with the duration of each activity plotted against the timescale. The aim is to show pictorially a feasible plan of action. It is also possible to show limited interdependencies between activities. An example of such a programme is at Figur 1, e Figure 1 Typical bar chart programme

Briefing Design Development

Procurement Shell and Core Fitout Occupatiori

5,1,2 Such a programme is easy to use and under stand, highlighting the progress of the activities listed on the chart However, it is not so useful for exploring alternative resourcing options or activity sequences.

Generally, a new bar chart will be necessary for each option. Specific bar charts can be produced for example, for: -particular resource activities; or -similar activities; or -dependent activities; or -individual elements of the work. Bar charts are a simple and flexible method for showing activity/time relationships. 5.1.3 Their ease of use has made bar charts the most widely used tool for presenting programme - but they s have two seriou weaknesses when used to analyse a s project: -there is no opportunity to check that realistic assumptions have been made for the resources needed to ensure each activity is completed to programme; and -it is difficult to show the complex interdependence of activities. Because of this, most programmes are now developed using network planning techniques. 5. 2 Network planning dependent activities in a logical sequence. They are used where complexity dictates a better analysis of interdependencies and the implications of resource allocation than can be provided by basing the analysis on bar charts. 5.2. 2 Network planning allows the programmer to get answers quickly for different constraints or changes in the assumptions on which the programme is based, for example: -what is the shortest overall duration? -how much resource of each type is required? -how sensitive is the project to different assumptions of resource and other factors? -what is the likely effect of a specified delay? and -what is the probable impact of an identified project risk occurring? If there are any variations in the scope of work, computer based networks can accommodate them and calculate the effects. 5.2.3 Such questions can be examined by changing the data in the network, provided appropriate computer software is available for the large amount of data processing necessary 5.2.4 Basically, the process of network planning is simple and comprises the following stages: -defining the work breakdown structure; -defining the activities; - establishing their logical relationships; -determining the work content (or duration) of each activity; -making assumptions of resource availability and project risk;
5,2.1 A network is a logic framework which links

-determining the critical path (ie shortest project time); and - optimising the plan by resource levelling. The following sections describe what each stage involves,
5.3 Work breakdown structure 5.3.1 This is the fundamental framework for defining the work content of the project, for organising the cascade of activities and for coding activities on a consistent basis. It defines discreet elements of work and ensures that the entire scope of the project has been identified.

5.3.2 Typically, a work breakdown structure is organised into levels of detail as illustrated in figure 2 These are usually described as:
level level level level level 0: the project; 1: basic elements (overall programme); 2: work packages; 3: generic tasks; and 4: detailed tasks.

5.4 Define the activities

chart) is usually an iterative process. Starting from past experience (most project advisers, project managers, consultants and contractors will have standard lists of activities for their scope of work), typical activities specific to the project (or a part of it) are identified and others thought necessary added, until a list is compiled covering all the requirements. 5,4, 2 The overall programme (level 1) should not go into too much detail. The activities listed should be limited to those that are genuinely stand alone. Each activity can be divided and subdivided in successive levels (see figure 2). 5.4.3 By a system of coding (also figure 2) each of the activities at the different levels cascades back to the overall programme. The number of activities and detail into which the network is divided must be decided carefully in the light of what the programme is to be used for and th overall l requirements. e
5.5 Establish the logical relationships of the activities

5.4.1 The selection of activities for a network (or a bar

5.5.1 This is the next step in network planning and requires careful thought. Each activity is assessed to determine which other activity or activities must be complete before the activity in question can be started (this is called precedence logic). Care is needed, because it is very easy to build in artificial or traditional practice rather than genuine logical constraints. If an activity needs only to be partially complete before another can start then the activities must be further subdivided. The result should be a schedule showing which activities must precede and which must follow. A typical network is at figure 3.

Figure 2 Detail of a Work Breakdown Structure Code Activities 5,5, 2 This is constructed by linking activities in accordance with the precedence logic only. The estimated time and work content of each activity, and any possible resource constraints are now used to build the network. When established, the network should be thoroughly checked to establish that: -the logic is sound; -there are no omissions; -there is sufficient detail in each area; and the network revised or amended accordingly. 5. 6 (Work Packages) 3000 Level 2: 3100 3200 3300 3400 (Generic Tasks) 3400 Level 3: 3410 3420 3430 3440 (Detail Tasks) 3420 Level 4: 3421 3422 3423 3424 Procurement - Project Manager - Designer - Quantity Surveyor - Contractor for Phase I - etc Contractor for Shell and Core Prepare Tender Documents Prequalify Contractors - Tender Period - Tender Evaluation e t c Prequalify Contractors - Advertise in Official Journal - Evaluate Submissions - Interview Preliminary List - Select Tender List - etc Figure 3 Determine the work content (or duration) of each activity

(Overall Programme) The Project 0000 - Definition, Briefing and Approvals Level 1: 1000 - Prepare Design 2000 - Procurement 3000 - Phase 4000 - etc

5.6.1 Having defined the activities and the network, the work content of each activity and any resource constraints are applied. Where the time period for an activity is not dependent on the resources available then a fixed duration may be applied. 5. 1 Make assumptions of resource availability

Produce tender documents Prepare specifications

5.7.1 Resources comprise principall labour ,plant, y materials, staff, equipment and related items which create time dependencies. For each activity a resource assumption is made, and with that level of resource the activity duration is calculated. Along each sequence of activities or path through the network the estimated times are progressively totalled. The earliest time any activity can start is controlled by the latest finish time of any logically preceding activity. This series of calculations through the network is called a forward pass and determines the earliest start date for each activity. The whole process is then repeated but working from the end of the project back to the beginning, a backward pass. This determines the latest start, the date on which each activity must start if the completion date is to be met. For example, if activities 1 and 2 can start on day 35 but 1 takes 10 days and 2 takes 20 days the earliest start for activity 1 is day 35 (the forward pass) and the latest start is 45 days (the backward pass). For activity 2 the earliest and latest starts are the same. 5.7.2 This set of calculations and their associated assumptions is crucial and will need to be checked for realism both for time and resource assumptions. 5. 8 Determine the critical path

b Draw up conditions of contract

Debrief

5.8.1 The difference between the earliest and latest start for each activity is called the float. Float defines how much slippage in each activity can occur before the completion date is compromised. By definition there must be one path through the network where for each activity on that precedence path there is no float. This is called the critical path, It is the shortest possible overall duration based on the network logic and resource assumptions.

5.9

Optimise the plan by resource levelling

5.9.1 The next step is to use the network to determine the overall resource requirements, and then to compare the calculated requirements with those actually available. A first , resource requirements are t likely to be uneven, with peaks and troughs at different times. Through an optimisation process (recalculating the network to spread resources more evenly) a more consistent and realistic programme can be developed. This process is calle resource elevelling. Most d computer systems can do this and recalculate the network to give a new critical path and overall duration. The process is important because it highlights the time implications of resource restrictions. It enables judgements to be made about where to use available resources to optimum benefit and the time/cost benefits of using additional short term resources. 5.9.2 When the network has been completed and agreed, a framework for ongoing review must be established. At this stage, it is usual to prepare a series of bar chart programmes from the network for individual groups of activities to highlight important features. 5.1 0 Network planning for cost control 5.10.1 The use of a network will improve cost control and expenditure forecasts, particularly for large projects. 5.10.2 Briefly, the technique is to select activities from the network that are linked (usually at work package level 2) and to assign to each activity a unique cost code. Estimates are built up relating to the costs in each work package (by cost code) and are allotted an d totalled to the relevant accounting period by the network which then informs the project budget. 5.10.3 The technique is very useful for assessing the impact of changes on cash flows and for forecasting revised expenditure profiles. This technique and related matters are considered in more detail in guidance no 15 Estimating for Works Projects and no 25 Cost Management for Works Projects. 6. PROGRESS MONITORING

with the programme this should give the sponsor information to judge the realism or otherwise of the forecast completion date. 6. 2 Percentage complete

6,2,1 The most used single measure of project completion is the percentage completion. This is usually quoted a x per cent complete and can be s plotted on a graph against time to compare actual progress with programmed (see figure 4). As variance from programme occurs, the impact can be assessed and appropriate action taken, Figure 4 Typical percentage complete progress chart

Time

6. 1 Introduction 6.1.1 In order to ensure that the agreed programme remains most effective and economic, it is essential that progress to date i known and problem areas identified s and resolved. For most projects with hundreds (if not thousands) of activities, the key to success is to look ahead and identify the critical activities and to focus managers attention on these in sufficient time to develop strategies to prevent delay. 6.1.2 Actual progress should be regularly compared with the programme both in detail bar chart and network format. The sponsor will want to understand the overall (and rat ofe progress and any problems or ) difficulties that have been identified. When compared

6.2.2 To reduce the many activities in a network or programme to single reliable percentage figures can lead to distortion by giving undue weight to some activities. There must be a consistent approach which should be simple to apply but will depend on an agreed definition of terms. As there is no single recognised technique (many of the most commonly used terms can mean different things to different people), the project sponsor must agree terminology relevant to the projects needs and ensure that these are used in all calculations. A simple example of possible confusion is that completion date can mean the date that the: -building is available for occupation; -defects list is completed; -maintenance period ends; -final account is agreed; or -all financial issues are settled. 6,2. 3 The five most common measurement techniques used in comparing actual progress with programme are

-planned progress monitoring; -weighted progress monitoring; -payment progress monitoring; -overall work content monitoring; and - milestones. Each technique is explained in the following paragraphs. 6. 3 Planned progress monitoring 6.3.1 This is a simple approach, which meets the needs of many projects. All the activities to be monitored are listed on a bar chart with their programmed duration. At each date for recording progress, an assessment of the percentage actually complete of each activity is made . Overall lprogress is then calculated by taking the total actually complete as a percentage of the total duration. 6.3.2 This approach is simplistic in that no account is made of the relative importance of each activity, their inter-action nor of the work content (time is measured, not work done), If sufficient activities are selected and they are representative, this simplification may not be so important. However, its limitations should be recognised and other indicators used to check that progress is as reported. 6. 4 Weighted progress monitoring 6.4.1 This is sometimes referred to as the value of work done method. In order to give a more realistic balance, a system of weighting is given to individual activities to reflect their relative importance when assessing the overall completion of the project. This approach attempts to take account of work content and work completed. Although it can avoid some of the distortions of the simplistic planned progress monitoring approach, it is not perfect and the weighting system used must be carefully selected if it is to be realistic, 6.5 Payment progress monitoring 6.5.1 As a balancing check it is useful to monitor actual cash flow with predicted cash flow. As a rule of thumb, a comparison of the two will indicate progress. However, care is needed when using this approach to ensure that proper account is taken of payment timing, delays and distortions due to unsettled variations, disputes and claims. 6.6 Overall work content monitoring

6.6.2 Careful evaluation of resource proposals submitted by tenderers enables a judgement to be made of their capacity to meet the plan. Actual resources deployed should be monitored and compared with th resourced programme to e determine if progress difficulties are to be expected. 6. Z Milestones 6.i. 1 The four monitoring systems above all attempt to compare actual progress with that programmed or planned. Often, assessing actual progress can require specific knowledge and judgement, and the project sponsor may not be able to verify reported progress satisfactorily. In this case a useful technique is to select some simple measurable activities normally identified on the network, and to monitor each of these for completion. This approach is called establishing milestones, 6.7. 2 The milestone approach can be a simple and sometimes superficial method, but it has the advantage that if self contained easily identifiable activities are chosen, then progress in terms of the completion of those activities can be clearly seen, The disadvantage is the difficulty of monitoring progress between milestones and the resulting inability to identify problems and take action, It is therefore rare for the milestone progress monitoring approach to be used in isolation, but it is often added as a simple spur to progress and for motivating those involved. For this reason, milestones are increasingly being used to identify points at which responsibility can be transferred and payments made to works professionals and construction contractors. 7. PROGRESS REPORTING 7.1 The final and vital piece of the jigsaw is regular reporting of progress. All monitoring systems can and do throw up anomalies, and mistakes can easily be made. The best control system to minimise the risk of discovering problems too late is the issue of a comprehensive monthly report. I.2 The sponsor should discuss information needs regularly. These should strike the correct balance between the potential reporting burden and the need for- proper management control. 7. 3 This section provides a number of questions to be considered when reviewing progress reports. They are not exhaustive: -are risks identified and their status updated? -what is the potential impact of residual risks if they occur? -is the completion date realistic and substantiated? -is the report consistent with previous reports? - are differences explained? -have questions raised in previous reports been answered? -does it give adequate information on all aspects of the project?

6.6.1 This approach relies on the fact that work content, resources deployed and progress achieved are linked by productivity. The most widely used measure that brings all resources to a common base is the hourly unit of staff time. It is used to plan and control progress for staff intensive activities such as design and site construction. It is less valuable where staff time is less significant eg where extensive machine or computer time is required.

-are cost and time changes identified as variances? -are reasons for variances clear? -does the report contain action plans to correct variances? -does the plan appear common sense? - are the timings for client activities clearly spelt out and realistic? -are charts supported by tabular data? -is there an adequate summary? 8. USE OF COMPUTERS FOR PLANNING AND CONTROL

ANNEX 1
LIST OF RELEVANT CUP GUIDANCES

No. 1
No.12 No.13 No.15 No.17 No.19 No.20 No.25 No.26a No.26b No 33 No.36 No.38 No.41 No.43 No 45 No 47 No 48 No 49 No 50

Post Tender Negotiation Contracts and Contract Management for Construction Works The Selection and Appointment of Works Consultants Estimating for Work s Projects Quality Assurance in Building and Construction PTN Update The P&S Function and Works Projects Cost Management for Works Projects Selection of Works Contractors: Prequalification and Tendering Procedures Selection of Works Contractors: Bid Evaluation and Award Pr oje ct tSponsorship Contract Strategy selection for Major Projects Appro val of Works Projects Managing Risk and Contingency for Works Projects Project Evaluation Debriefing Contract Management Bonds and Guarantees The TRIDENT Works Programme (A Case Study) Disputes Resolution

8.1 The calculation to determine earliest and latest start dates is essentially simple arithmetic, but for a complex network many hundreds of calculations are necessary. This is work ideally suited to computers and many systems have been developed to calculate and display this type of information, 8. 2 Systems can be small and simple, being little more than the addition of calendar arithmetic to a spread sheet, or very comprehensive and capable of analysing thousands of activities, linking purchases and stock of materials as well as resour ces to produce cost , forecasts and reports. 8. 3 The sponsor will be unlikely to make direct use of such systems, other than for overall programme management. However, the project team is likely to use them extensively, indeed the capability to execute a project may well be a function of the planning system employed. When assessing the value of such systems the sponsor should consider: --the confidence and experience of the project advisers, pr oje ct t managers, consultants and contractors in the system and its application to projects similar to that under consideration -the re lev anc e of the system outputs in relation to the sponsors requirements, the project brief and terms of engagement; -if system outputs in the form of mul ti co lou re d gr aphs and charts provide an accurate guide to pr ogress; -how easy is it to update the system? -how easy is it to produce sub programmes or dedicated resource or activity programme bar charts? -can resources be added easily at a level appropriate to the project? ~--ca n costs be managed using the system and forecasts generated? -how much resource will the tool itself require? 8. 4 Most computer systems are designed for a variety of uses, Often one may be more suitable than another for a particular project and this should be considered. As a general rule, it is better to accept the computer system with which the project team is familiar rather than require them to use a more powerful but less familiar system that may not be compatible with their established working practice.

ANNEX 2
CONTENTS Section 1. 2. 3. 4. 5. INTRODUCTION SCOPE PLANNING TECHNIQUES THE ROLE OF THE PROJECT SPONSOR PROJECT PLANNING Bar chart programmes Network planning Work breakdown structure Define the activities Establish the logical relationship of the activities Determine the work content (or duration) of each activity Make assumptions of resource availability Determine the critical path Optimise the plan by resource levelling Network planning for cost control 6. PROGRESS MONITORING Introduction Percentage complete Planned progress monitoring Weighted progress monitoring Payment progress monitoring Overall work content monitoring Milestones 7. 8. PROGRESS MONITORING USE OF COMPUTERS FOR PLANNING AND CONTROL 6.1 6.2 6.3 6.4 6.5 6.6 6.7 7.1-7.3 8.1-8.4 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 1.1-1.6 2.1 3.1-3.3 4.1-4.4

ANNEX 1 - List of relevant CUP guidances ANNEX 2 - Contents