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Unformatted text preview: Risk Management II, Quality Monitoring & Control, and Project Learning Nathaniel Osgood 4/26/2004 Announcements Optional "Skyscraper" video screening Tuesday (5-8pm), Thursday (5-7pm) Follows major project through all phases Extra credit if write 5 page essay analyzing Talk on Design-Build-Operate-Transfer projects Who: Robert Band, President & CEO of Perini When: Thursday, 3:30pm Recitation Field Trip (Airport T) Tuesday May 4 Topics Quality Control Risk Management Project Reviews Logistics Functions Reviews in Construction Quality Performance Control Quality Control Quality Assurance Quality Management Total Quality Management (TQM) Note: Tightly tied in with other factors Cost, schedule depend on quality (rework,...) Lifecycle cost has heavy quality dependence Quality becoming increasing focus Some contracts (particularly federal contracts) mandate "contractor quality control" regimens Many Checks on "Quality" Local building department (code compliance) Utility company inspectors Manufacturer's representatives OSHA safety inspectors Insurance company inspectors Financial institution inspectors Quality and Construction Method Pre-fabricated components: higher quality Tighter tolerances Manufactured under tightly controlled conditions More rigorous quality control mechanisms Shortcoming: Longer delay if identify problems! Site-created components: generally lower quality Weather, looser tests, shooting for less accuracy, etc. A major challenge is combining these on site e.g. combination of pre-cast panels with site-cast concrete Factory Inspections Examples Precast concrete Steel plate fabrication Concrete plants Pump station manifolds Welded steel tanks Large, specialized pieces of equipment May also do monitoring during transport Quality Assurance (QA) Usually done by production people themselves (designated `QA instructors'), in order to identify and correct quality related problems During the process QA instructors mainly provide guidance and leadership to the production people rather than criticizing their work Increasing amounts by contractor Double-Guessing Quality Contractors are not really sure of true quality bottom line Often tighter tolerances specified than are really required just to be suree that meets true spec in case of `corner cutting' Contractors may propose substitutes at last minute Worsened by testing for `substantial compliance' Quality Control (QC) Usually done by appointed inspectors of the owner (producer) Often at the end of major phases during the production The parties are placed in adversarial positions by the management (although both QC division and production division belong to the same organization) The production people tend to cover and hide their mistakes by nature. Often just confirm that contractor has checked things Quality Management Initiated and orchestrated by senior managers Involves all parts of the organization Through a systematic, comprehensive and well-documented QA process Controlling quality helps cost in the long run Aiming at `Zero Defects' Eschews notion of just ensuring quality by rejecting failures;p Looks to underlying causes Total Quality Management (TQM) Not just operational strategy A philosophy Aimed at continuous improvement of the organization and personal growth of its individual members Quality is viewed in the broadest sense including: Quality of Life (QOL) Well-being and satisfaction of all people Involved Long-lasting relationships with customers and suppliers etc. Note: Actions much more important than words! Forecasting Quality Industry and project specific Measurement of quality is very dependent on specific operations and products Difficult to aggregate quality measures up a work breakdown structure or organizational breakdown structure to develop an overall assessment of quality Relatively small quantities of operations and products developed which prevents or challenges the use of statistical quality control methods Topics Quality Control Risk Management Project Reviews Logistics Functions Reviews in Construction Recall "Risk": uncertainty about some consequence Management of risk of change from schedule, budget is the key job during project control Must examine risks in both original plans and change orders Myriad causes of risk Three key components Risk Identification Risk Classification Risk Response (Mitigation) Risk Risk Identification and Mitigation FUNCTION CHART RISK MANAGEMENT Risk Management Identification External Unpredictable External Predictable Uncertain Internal Non-Technical Mitigation Response Planning Response System Data Applications Technical Legal Insurable Impact Analysis Regulatory unanticipated government intervention Natural hazards Market risk Major changes Schedule delays Changes in technology Licenses Direct property demage Baseline changes Allocation Definitions Historical data base Operational Cost overruns Operational performance Special project technology Changes and suitability Patent rights Indirect consequential loss Legal liability Criticality & amount assessment Legal liability In or out of scope Degree of uncertainty Contingency planning Variation of project life cycle Vandalism Sabotage Unexpected side effects Completion failure to complete Environmental impact Social impact Cash flow interruptions Contractual failure Lawsuits Mitigation revise scope, budget, schedule quality Insurance bonding Policies\ procedures Responsibilities Risk model Current project data base Post project assessment & archive Currency changes Inflation Taxation Force Majeure Unforseen Monitor & review; Systems adjustment Example Risks in Case Studies Delay, $ from concrete production workers strike Slower work due to space constraints imposed by temporary structures Reshoring Scaffolding Slower permitting due to Environmental concerns Endangered Bird Community opposition Discovery of unanticipated renovation conditions Delays due to complications linking w/existing structures Change in materials prices $ repairs when ball hits sprinkler Delays, $ for design changes Tenants' requests Artist's aesthetic requests Injury to schoolchildren Risk Identification Not all risks can be identified up front but some can be Experience does assist Just identifying these risks can be most helpful Should be conducted throughout project lifecycle Original design & At time of change orders All phases of work Common taxonomies can serve as reminder Takes time but lowers top-level crisis mgmt Can pursue add'l study before decide on handling Risk Classification Can be helpful in identification as well\ Example Classification Risk Classification: Prioritization 1 Estimate two key components Probability of occurrence Level of impact Models may help in assessing this Typically not fully sure of either don't let this stop you from examining it Try to at least examine upper/lower bounds Risk Classification: Prioritization 2 Don't just focus on the most imminent risks ! Psychological tendency to systematically misplace priorities: Important Urgent Rightful attention Not Urgent Not enough attention Rightful inattention Not Important Too much attention Example Simple Risk Taxonomy Forms of Risk Response Assume the Risk Attempt to Avoid the Risk Attempt to Control the Risk Attempt to Transfer the Risk Ongoing examples Risk of pile driving disturbance of adjacent structures Risk of heavy rain/temperature delaying pouring concrete slabs, cols Risk of high electric heating costs for school Risk of subcontractor failure to deliver Recognize and accept risk May hedge risk through Buffer Cost (contingency buffer) Time Risk Assumption Anticipate managerial response if risk materializes Examples Adjacent structures: Photos, work w/neighbors to guarantee quickly hear complaints, choose drive timee Rain/Temperature: Extra time for slab, column pours Heating cost: Higher electric heating in lifecycle cost Market conditions: Budget hotel unpopular Subcontractor: Understand contract, contingency Risk Avoidance Seeks to change practice or environment to avoid risk; e.g. change Requirements Practices/process Design/specification Often costs $ or time in short run, save in long run Examples Adjacent structures: Vibratory piles, slurry wall, relocate Rain/Temp: Use precast or steel construction methods Heating cost: Use gas- or oil-based HVAC instead Market conditions: Mixed executive/basic floors Subcontractor: Use a different subcontractor! Risk Control Put contingency plan in place Monitor closely Choose different course if problem arises Key components Minimizing delay until recognize, act on a problem Flexibility: Ability to act when need arises Examples Adjacent structures: Alt Equip. ready, schedule contigency Rain/Temp: Use tent, heating equipment Heating cost: Install radiant heat system; use if costs favorable Market conditions: Design w/big clearspan; upgrade to larger rooms if market favors higher-end hotel Subcontractor: Monitor carefully; use on-call contractor for chgs Risk Transfer Strategy: Transfer risk to Another party (e.g. via insurance) Another set of risks Examples Adjacent structures: Insurance coverage for claims Rain/Temp: Insurance coverage for claims Heating cost: Use gas system (depends on gas $) Market conditions: Combine with high-end health club Subcontractor: Impose contract risks on subcontractor Static vs. Adaptive Strategies As described, all but risk control represent static strategies Risk control is adaptive choose course of action to deal with situation once it shows signs of materializing Benefits: Greater information, less waste Cost: Cost of flexibility, risk that delay may hamper efforts Mitigation Escalation Often we escalate risk mitigation strategies as possible events are considered More severe More likely Typical sequence Risk acceptance Risk control Risk transfer Risk avoidance Models and Risk Models of many sort help represent Uncertainties and contingencies Decision trees Some simulation models "What if" scenario analyses Risk occurrence Risk response Simulation models help compute consequences Can help in risk identification and response Often want to combine a decision tree with consequences computed by other models Topics Quality Control Risk Management Project Reviews Logistics Functions Reviews in Construction Project Learning and Reviews Note: Some content in this section is based on F. Pena-Mora 2003 Transience of project teams complicates accumulation of institutional knowledge Already discussed: Use of models to capture understanding about a project Any sort of model CPM, WBS/OBS/CBS, fishbone, etc. help capture information Also critical: Constant monitoring for learning opportunities "Learning organizations" seen as having edge Project meetings play critical role here Role of external parties (e.g. consultants) Project Meetings Discussed here: 3 types of project meetings Reviews Audits Inspections Reviews Purposes Bridging Gaps Validation of Work Done Quality Assurance Learning Review Configurations: Peer Reviews Walkthroughs Inspections Established Processes in the Construction Industry: Value Engineering Review Construction Review Substantial Completion Inspection Definitions WHAT Tools for "Gate-passing", Quality Assurance and Learning During Project Development Means for Problem Solving and Learning Opportunity WHO Informal Reviews Performed on a Regular Basis among Co-workers Formal Reviews with Explicit Participants' List WHY Feedback Process and Coordination Result: Scaling Down Rework, Reducing Friction Between Participants, Accelerating Schedule, Cutting Down on Costs WHEN Continuous process but trade-offs between costs and benefits (after milestones common) HOW Focus on Project Development, Learning and Critic of the Review Process Itself Achieved Through Meetings, Reports and Lessons Assimilation Introduction Reviews in the Design and Construction Industry are Underdeveloped, Compared to Reviews in Product Development Industries (e.g. Software Development) Why the Need for a Formal Review Process in the Construction Industry? Design and Planning Phase Generating 75 % of the Problems Encountered in the Construction Site Need for Understanding and Coordination of Contract Documents and Technical Specifications Errors More Likely in current Fast-paced Construction Processes (errors 10-20% of total cost) Rising Requirements for High Quality and Corporate Effectiveness Technical and Managerial Reviews Introduction Technical Reviews Project Management Reviews Outline The Logistics of Reviews The Peer Review The Walkthrough The Inspection The Functions of Reviewing Work Unit Validation-Passing Gates Quality Assurance Knowledge Transfer and Teambuilding Construction Reviews Value Engineering Constructability Reviews Substantial Completion Inspection The Case of Twin Shopping Centers Technical Reviews Focus on Technical Problems Life-Cycle Economics of Project Interdependencies Between Design and Construction Methods Typical Technical Review Program at Project Startup System Requirements Review (SRR) System Design review (SDR) Preliminary Design Review (PDR) Typically reviews become more technical over time Project Management Reviews Focus on: Cost Quality Safety Performance Communication Channels Information Coordination Teamwork Effectiveness Client Relationships Supervision Efficiency Reliability Contract Management Learning Programs Reviews in Parallel MR A TR TR MR A TR MR A MR A TR MR MR MR A TR TR TR Keys: A Audit, comprising both technical and management function MR Management Review, incorporating technical input TR Technical Review, incorporating project management input Role of the Outsider Can provide new perspective, outside of politics Often courted by different factions Helps employees think through issues May generate hostility Can lead to "Closing the wagons" against outsiders Work vs Process-Oriented Reviews Work-oriented reviews Seek to identify issues with completed work Primarily focused on shorter-term issues Process-oriented reviews Seek to identify problems with processes Tend to be focused on longer-term Can recurse to higher-order reviews Can have mixture ...
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This note was uploaded on 10/29/2008 for the course PM 1040 taught by Professor Dr.nathanielosgood during the Spring '04 term at MIT.

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