Thursday, November 29, 2007
Tapping out the Potential of IT
The construction industry is clearly one of the major industries both in India and the world at large. It is an amazing fact that most of the industries that relate to us in our daily life such as airline industry, automobiles, railways, manufacturing etc. generally exhibit high quality products, timeliness of service delivery, reasonable cost of service and low failure rates. The construction industry, on the other hand, is generally the opposite. Most projects exhibit cost overruns, time extensions, and conflicts among parties. According to a survey conducted by the Department of Trade and Industry in UK;
54% of all construction projects finish behind schedule
24% of construction projects are completed unsatisfactorily, 48% of those having a significant negative impact on business operations
Another study of a research advisory firm, reports that companies across all industries spend an average of 2.54% of revenues on IT & technology. The same research shows that the construction industry, far behind most other industries, spends only 0.34%.
We all know construction project management attempts to achieve project mission objectives within specific constraints. It needs information to make decisions. Managers do not need loads of input data generated in the control process. It is the information extracted from the data that helps managers performing their functions efficiently and effectively. The worlds richest man Bill Gates, put it, “How you gather, manage, and use information will determine whether you win or loose.”
IT can promote various degrees of organizational change ranging from incremental to far-reaching. Three kinds of structural organizational change that are enabled by IT:
The most common form of IT-enabled organizational change or the first phase of IT adoption is automation. This has allowed employees to automate a number of time-consuming and error-prone activities and gain benefits in cycle-time, productivity, and accuracy. For example, a main contractor makes use of standalone software to keep track all Request For Information (RFI) in a project.
The knowledge and information revolution began at the turn of the twentieth century and has gradually accelerated. In a knowledge and information based economy, knowledge and information are key ingredients in creating wealth. Never before have owners and directors of smaller construction, building & civil engineering companies felt so much pressure to do more with less. To ensure that the development meets the budget and remains profitable, developers must monitor tightly the project throughout the lifecycle. The imperative pressure from the top hierarchy to build cheaper, faster and better will force the whole project team for seeking enduring improvement in construction project management, and this demands a lot of data processing. The following simple example will tell you the importance of information in a work like earth work excavation. This illustration of a breakeven analysis would be to compare two methods of road construction for a road that involves a limited amount of cut-and-fill earthwork. A breakeven analysis determines the point at which one method becomes superior to another method of accomplishing some task or objective. Breakeven analysis is a common and important part of cost control.
Relationship existing between volume of production and costs can be expressed by the following equations:
Total cost = fixed cost + variable cost × output
C = F + NV
UC = F/N + V
Figure 1.1 Breakeven Example for Excavation.
If, on a set of coordinates, cost in dollars is plotted on the vertical axis and units of production on the horizontal axis, we can indicate fixed cost for any process by a horizontal line parallel to the x-axis. If variable cost per unit output is constant, then the total cost for any number of units of production will be the sum of the fixed cost and the variable cost multiplied by the number of units of production, or F + NV. If the cost data for two processes or methods, one of which has a higher variable cost, but lower fixed cost than the other are plotted on the same graph, the total cost lines will intersect at some point. At this point the levels of production and total cost are the same. This point is known as the "breakeven" point, since at this level one method is as economical as the other. Referring to Figure 1.1 the breakeven point at which quantity the bulldozer alternative and the manual labor alternative become equal is at 500 cubic meters. We could have found this same result algebraically by writing F + NV = F' + NV' where F and V are the fixed and variable costs for the manual method, and F' and V' are the corresponding values for the bulldozer method. Since all values are known except N, we can solve for N using the formula N = (F' - F) / (V - V')
IT & Technological Push
The advent of various new technologies like the Internet and wireless network with the potential to address some of the limitations facing current construction project management practices has created a major impact on the industry. The role that IT & technology plays in the construction industry has gradually been changing the way companies conduct everyday business. What used to be a paper-and-pen world is starting to become a monitor-and-keyboard world in the immediate future.
Some technologies and advancements pushing the external project management & collaboration adoption change include:
Application software packages meeting the specific construction industry needs including project management, scheduling, document management, estimating, job costing, accounting, field administration etc;
Web based technologies enabling for the sharing and transmitting of information, including drawings, photos, voice, print and computer data. The Internet merges perfectly the time honoured adage that a picture is worth a thousand words, with the contract-mandated assertion that time is of the essence, to produce an on-line, visual construction management system.
Wireless technologies, including 3G, Satellite Broadband, WiFi, WAP, that enable the transfer of information to remote sites without the requirement for, or restrictions of, hard infrastructure such as cabling or wires and that are accessible via mobile phones and other hand held devices.
Interoperability, or seamless information exchange via integrated technologies and based on object modeling, allowing participants in the process to access and value add to the information in a form suitable for their needs. This allows all disciplines and project partners to share information thus avoiding duplicating effort and encouraging shared working processes.
Construction and Building company owners and directors are discovering that IT and technology in construction project management is becoming key to successful construction projects. The challenge they face is persuading other project team members to embrace the technology. The resistance to change, no matter how actively or passively, at the micro or macro levels of the industry, contributes to the major impediment of IT and technology take up in the construction industry. The simple, central argument presented here is that electronic project management & collaboration systems implementation is political as well as, sometimes far more so than, technical in nature. When that is understood and accepted, politics are then the process of getting commitment, or building support, or creating momentum for change.
In today’s world, people are talking about the ‘Real Time Enterprise”. Increasingly decisions need to be made quickly. It could be a few hours or even a day, but in today’s increasingly competitive environment it couldn’t be longer. Without the right information that is shared by everyone collaboratively, at the right time, you become a real-time enterprise - in the sense of making the decision making process swift - is not going to be able to compete let alone survive.
Depending on the investment time horizon, the specific challenges and tools available may change, but the overall direction is unmistakable. The construction industry is about to experience a profound change: leaner organisations, more consistent and rigorous performance metrics, and relentless productivity improvements. The net result of these changes should also be increased profitability for those who are successful at mastering the new IT & technology tools with the promise to enable these changes.
Thursday, October 25, 2007
Types of Estimates:
There are several kinds of estimating techniques; these can be grouped into two main categories
1. Approximate estimates
2. Detailed estimates
1. Approximate Estimates
An approximate estimate is an approximate or rough estimate prepared to obtain an approximate cost in a short time. For certain purposes the use of such methods is justified.
2. Detailed Estimate
A detailed estimate of the cost of a project is prepared by determining the quantities and costs of every thing that a contractor is required to provide and do for the satisfactory completion of the work. It is the best and most reliable form of estimate. A detailed estimate may be prepared in the following two ways
(a). Unit quantity method.
(b). Total quantity method.
(a) Unit Quantity Method
In the unit quantity method, the work is divided into as many operations or items as are required. A unit of measurement is decided. The total quantity of work under each item is taken out in the proper unit of measurement. The total cost per unit quantity of each item is analyzed and worked out. Then the total cost for the item is found by multiplying the cost per unit quantity by the number of units. For example, while estimating the cost of a building work, the quantity of brickwork in the building would be measured in cubic meters. The total cost (which includes cost of materials. labour, plant, overheads and profit) per cubic meter of brickwork would be found and then this unit cost multiplied by the number of cubic meters of brickwork in the building would give the estimated cost of brickwork. This method has the advantage that the unit costs on various jobs can be readily compared and that the total estimate can easily be corrected for variations in quantities.
(b) Total Quantity Method
In the total quantity method, an item of work is divided into the following five subdivisions:
(I) Materials
(II) Labour
(III) Plant/Machinery
(IV) Sundries & Contingencies
(V) Overheads & Profit.
The total quantities of each kind or class of material or labour are found and multiplied by their individual unit cost. Similarly, the cost of plant, overhead expenses and profit are determined. The costs of all the five sub-heads are summed up to give the estimated cost of the item of work. For example, the cost of brickwork in a building would be determined as below:
I ( i ) Cost of Materials at the source Rs. xxxxx
Bricks Rs. xxxxx
Sand Rs. xxxxx
Cement Rs. xxxxx
Water & Electricity Rs. xxxxx
(ii) Cost of Handling and transporting above materials Rs. xxxxx
II Cost of Labour, both skilled and unskilled Rs. xxxxx
III Cost of plant/machinery Rs. xxxxx
IV Sundries & Contingencies Rs. xxxxx
V Overhead & Profit Rs. xxxxx
Total Cost of Brickwork Rs. xxxxx
Data Required for Preparing an Estimate
In order to prepare a detailed estimate the estimator must have with him the following data:
1. Plans, sections and other relevant details of the work.
2. Specifications indicating the exact nature and class of materials to be used.
3. The rates at which the different items of work are carried out.
To enable an estimator to take out the quantities accurately, the drawings must themselves be clear, true to the fact and scale, complete, and fully dimensioned. The estimator has also to bear in mind certain principles of taking out quantities.
Steps in Preparation of an Estimate:
There are three clearly defined steps in the preparation of an estimate.
1 . Taking out quantities
In the first step of taking out quantities, the measurements are taken off from the drawings and entered on measurement sheet or dimension paper. The measurements to be taken out would depend upon the unit of measurement. For example, in the case of stone masonry in superstructure, length, thickness and height of the walls above plinth level would be taken out from the drawings and entered on the measurement sheet, whereas, in the case of plastering only the lengths and heights of the walls would be entered. Obviously, the unit of measurement in the first case is cubic meter and that in the second case is square meter
2. Squaring out
The second step consists of working out volumes, areas, etc. and casting up their total in recognized units.
3. Abstracting
In the third step all the items along with the net results obtained in the second step are transferred from measurement sheets to specially ruled sheets having rate column ready for pricing. The second and third steps above are known as working up. All calculations in these stages and every entry transferred should be checked by another person to ensure that no mathematical or copying error occurs. An estimating/ documentation software will be handy while doing these type of work.
Qualifications of an Estimator
A good estimator should possess the following quantifications:
1. A thorough understanding of architectural drawings.
2. A sound knowledge of building materials, construction methods and customs prevailing in the trade.
3. A fund of information collected or gained through experience in construction work, relating to materials required with a clear understanding of its alternatives and substitutes, hourly output of workers and plant, overhead expenses and costs of all kinds.
4. An understanding of a good method of preparing an estimate.
5. A systematic and orderly mind.
6. Ability to do careful and accurate calculations.
7.Ability to collect, classify and evaluate data that would be useful in estimating.
Thus an estimator should always be alert in preparing estimates as he has to choose from a vast ocean of data. Collecting, classifying, evaluating and presenting it in a systematic way is not a simple task. Effective use of a tool, such as a software, can bring him a lot of ease and accuracy in his endeavor.
Labels: bill of quantity software, Construction estimating Software, estimator, preparing estimates, rate analysis
Thursday, October 11, 2007
Confusion is Good
Yes, I know that sounds a little odd (may be very odd!!). But I mean it. For me, it was not so some time ago, but now I realize that we need confusion in our life to find out what life is all about. I am not talking about the mess that one creates in one’s life because of one’s wrong perceptions and the decisions that one makes, even though that too helps to a great extent if only you would look at it in the way it should be looked. But often (and very often for some), we are faced with problems and predicaments which baffle us and we don’t know how to get through them. In short, we get into that most dreaded mental state called confusion. I said to get through the problems because that’s what the majority of us want; we don’t want to get over it. To get over the predicaments require courage, flexibility and persistence and when we get over them, we evolve, that’s the truth. But we don’t want it. Most of us don’t want to surmount the problems; we just want to get it over with, to get instant relief in some way. We are reluctant to grow or evolve, it is painful. The most powerful and successful people in the world are not so because they had no problems in their lives; they are so because they saw their problems as challenges, as opportunities to expand and become more. Is it because all of them are much wiser than the vast majority of us who “live lives of quiet desperation”? I doubt it. Most probably, the reason should be that they willfully accepted the confusion the problems brought with them, and went through it.
Whenever you are faced with a problem and your present knowledge and resources do not help you in finding the right solution, you are confused. In fact, sometimes we would feel that we have made a fool out of ourselves if that problem is a result of our own decisions and consequent actions. Then and there you have a choice; you can choose whether to continue in that state and feel bad about yourself or, to face the problem accepting the fact that the resources available to you are inadequate and put forth your efforts to find a way, no matter what it takes. If you choose the first option, you belong to the mass of mediocrity and you are running away from the situation. You don’t deserve those higher realms of wisdom and internal power that life will gift you with, if only you will have the commitment to persist in spite of anything. Life’s rewards are reserved for those few, who take the latter option. These are the people who grow and also, become capable of contributing meaningfully to the world. Am I suggesting that you make a martyr out yourself and succumb if you can’t get through? Of course not. I only mean that you be firmly committed to find a way, be alert to notice what is not working and have the flexibility to change your approach. In fact, this is called the Ultimate Success Formula. Let me say it again: you make a decision, you take massive action, you develop your alertness to notice what is not working and you keep changing your approach until you get what you want. But firstly, how would you decide what is the right solution to the problem? The best way is to find out people who have already faced similar problems and gotten over them; those whom we call role-models (many use this term so frequently, not knowing what it actually means!). If only you will have that “holy curiosity” (as Einstein put it) and the courage to persist, you will definitely be able to find out the right person as your guide. The best thing that you can do on a consistent basis is to associate with the right people, those who have the passion to accept and face challenges, to march forward in life and also the meekness to share what they have learned during their journey of life. Such an association will give you a positive focus and the ability to face challenges. The best antidote to confusion is to develop consciously a sense of curiosity towards the problem and ask yourself empowering questions like:
“What’s great about this problem?”
“Why is this problem so overwhelming to me?”
“What are the possible solutions?”
“What resources do I have to face this problem?”
“How can I get additional resources?”
And the best one:
“What can I learn from this experience and how can I use it to empower myself?”
It is a proven fact that asking the right questions helps to change what one is focusing on, dramatically. But simply asking these questions will not help. You have to feel that curiosity. Ask with a sense of certainty and positive expectancy. Keep asking to yourself and in time you will get the answers from within yourself. Are these my ideas? Definitely not! Of course, I have benefited a lot by learning them, but I have learned them from my role-models. Open your eyes and you will surely find people like them. Who knows, may be you would become a one like them, for someone else…….
Labels: art of decision making, change management, cofusion, Decision, growth, self help
Wednesday, October 3, 2007
An estimate is a well quantified and time bound list of resources used for the successful completion of a project. The very first step in planning a project is to estimate the resources involved in completing the Project. Care should be taken while preparing the estimate for it should have a close approximation of figures against their actuals. Whether or not the estimate actually agrees with the actual cost will depend upon the expertise and quality of tools used for estimating construction costs.
Deciding the budget of the construction and trying to keep it within the limits is one of the difficulties faced in the construction business. There are many problems that crop up during the actual process of construction for which allowances have to be made.
Four areas of Estimating
While the broad definition of estimating is to give a closely accurate idea of what a project is going to cost, it can actually be broken down into four different points. It is important that the estimate is very detailed and accurate, and this requires using four different areas. The four things that are very important to consider when doing constructing estimating in building include materials, labor, plant, and time.
Estimating Residential Construction
When it comes to estimating residential construction costs, most small and medium construction contractors find themselves in a state of flux. They work hard on collecting and collating data, but end up with little or no profits. To top it, they are operating in a fiercely competitive industry that's in the middle of a slump. To convert his estimates into actual sales invoices, a construction contractor has to be on the ball while estimating a residential construction project and here is a small primer on how a contractor must build his estimate.1. Location and environmental costsBefore beginning to work on the actual construction, a contractor should survey the residential plot upon which the building will be constructed. There may come up some building constraints due to various factors, such as the location of the construction site and even environmental factors, e.g., the land being located in a "wetland" kind of area. Other times, a contractor may be asked to clear the site by demolishing an existing structure. These factors add to the construction cost. It is, therefore, important that a contractor be thorough with his research so that these additional costs can be built into the residential construction estimate.2. Construction costsNormally, a contractor is given a house design and asked to give an estimate of the construction cost based on material costs and labor costs. While giving a residential construction estimate, a contractor must break up his quotation into:
a. Foundation: Foundation cost comprises of the cost of concrete used in laying the foundation of the house as well as in footings, walls, slabs and columns, plus the expenditure on the machinery used.
b. Framing and walls: This includes the cost of wood used in the building – paneling of walls, floors and ceilings consumes a lot of wood. Apart from wood, these structures also consume a whole lot of metal, brick, stone, laterite and so on.
c. Roofing: The cost of the roof, whether it is concrete or a combination of truss assembly and metal sheets/ tiles.
d. Flooring: Flooring cost includes costs related to any item used for covering the floor of a home – such as vinyl, tiles, carpet and even sub-flooring material such as carpet pads.
e. Exteriors: This includes the cost of the material required to do the exterior of a home, be it bricks, stones or a combination of these.
f. Interiors: Any material required to bring the inside of a home to a finished state should be included in the estimate, for example, kitchen cabinets, bedroom cabinets, wall paints, or anything extra desired by the client.
g. Doors and Windows: Doors and Windows consume wood, glass and small hardware sundries that must all be factored into the estimate.
h. Electric work: The cost of electrical work includes the costs for wiring, outlet points, lighting fixtures and connections from the main power supply.
i. Plumbing: This includes the cost for preliminary works such as connection to sewage lines and connections from water lines, and the cost of plumbing fixtures for the bathrooms, kitchen and utility room.
j. Appliances: A contractor is expected to finish a home with certain appliances such as fire safety gadgets, anti burglary gadgets, and a garbage disposal facility, so he should build these costs into his estimate. If any other appliances are needed, they can be added on.
k. Heating/Cooling: Central air conditioning costs, ductwork and other heating/cooling costs.Accommodating all the factors that contribute to the total cost is not a precise exercise. There are bound to be ups and downs because a contractor relies on too many variable factors. Therefore, it is prudent that the contractor builds in a contingency reserve, an escalation clause and a market condition allowance into his estimate. A contractor must also be careful if he is outsourcing any of the construction services – and he must insist on written commitments and penalty clauses with his suppliers.Other costs a contractor must be wary of:Normally, a small or a medium construction contractor will plug in the usual construction costs into his estimates. He must also take care to ask the client if he is expected to perform any or all of the following services:
1. Getting the site ready for construction.
Once the contractor has factored in all the visible and invisible costs, he must begin estimating the residential construction costs, add his margin and hope that the client accepts his estimate. Since a contractor has a whole lot of things to do and manage before and during construction, it will do him a world of good if he relies on an efficient software that gets everything organised and helps to get things done on time. A good construction estimation software will help him strategise and execute his plans without a hitch, without any hiccups in the schedule. Moreover, his estimation on construction costs will be accurate and fluctuations, if any, will be controlled and ironed out with a fool proof estimation software which in turn will give the contractor a solid grip on his business.
Labels: bill of quantity software, Construction estimating Software, cost analysis, estimates, estimating buildings, preparing estimates, quantity estimating, rate analysis
Monday, July 30, 2007
Building Construction is a fast growing Industry around the globe. Today, in this highly competitive scenario, your success relies on your ability to prepare quick accurate estimates and implementing effective cost control on your projects. Estimation and cost control are the key factors that determine your position in the industry. They demand your time and expertise for the successful completion of these tasks. With the advent of the information technology, construction industry showed a steadfast growth of technical advancements especially in the areas of planning, designing and implementation. They also succeeded in packaging and distributing the technical expertise, which in term boosted up the implementation of latest technologies. Estimating and cost control software programs are powerful tools for preparing estimates and implementing cost control with speed and accuracy. Increasingly, these programs offer incremental firepower that’s critical for managing your business and staying competitive. With all the functionality that new estimating and cost control programs offer, you can increase productivity, control costs and improve your bottom line.
The following points should be considered before buying a software
Is it the right software for your requirement? Your estimating software should be flexible and easy to use, or it won’t do you much good. The company you buy from should ideally understand both the software and construction businesses, and absolutely should offer support after the sale. And remember that price shouldn’t be the determining factor. Considering these things before you purchase will go a long way toward ensuring that you end up with estimating software that’s right for your business.
Does it comply with the construction standards prevailing in your location? A software is of no use if it doesn’t comply with the standards( eg: BIS, CPWD etc.) prevailing in your country/location. It should be compatible with the style of construction you usually follow in your location.
Is it customizable? It's nearly impossible to find one construction estimating software program which fulfills all of your estimating needs, so you may want to consider a program which can be customized to suit your business. The construction estimating software program itself may offer options so that it can be tailored to your needs, or the company which designed it may have programmers that can re-write portions of the program for you. If you choose ready to use software package, check whether there are options for updates.
Does it provide accurate management Information? The software should be capable of providing critical management Information reports such as Comparison reports, Graphs, Charts etc.
Is it easy to use? Unless you have days to devote to learning your new construction estimating software program, you'll want one which is very intuitive. The useful features shouldn't be buried in obscure menus that are difficult to access.
Is the package consists any self learning tools? Apart from user guide and product documentation, The product should have a self learning tool such as a video tutorial. It will help you to learn the software quickly right from the beginning.
Does it have a built-in Set Library? If your company does repetitive work on the same types of projects, your software should offer the ability to create and customise work sets, or groups of associated items with unit costs (e.g., materials, labor and equipment, man-hours, quantities). By creating a work set for a specific portion of your estimates, you can save considerable time and money.
Is help readily available? If your construction estimating software program crashes or isn't functioning the way you would like, the software company should have a help desk that is easy to contact, either online, by e-mail or by phone.
Will it work with your operating system? Most construction estimating software programs are written to work with Microsoft Windows 2000 or newer. If you have an older operating system or you use Macintosh computers, you'll need to make sure the construction estimating software program you've chosen is compatible.
Once you've narrowed down your choices based on the above criteria, contact each software company. Nearly all construction estimating software programs offer a free trial period or an extensive online demo. These can be a great way to get a feel for a program.
Labels: bill of quantity software, Construction estimation Software, estimating buildings
Monday, May 28, 2007
World of a star fish!
You can’t change the whole world. But your little acts of kindness can bring some positive change in this world. Don't hesitate to offer it even if you think it is least important. Let’s make this world a better place to live in! Have a nice day.
Labels: change world, Kindness, small help, Starfish
Wednesday, May 16, 2007
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