ENGINEERING PROJECT MANAGEMENT

Second Edition

Nigel J. Smith Prqfessor qf Consrruraion Pr(ljcrr Manngcrncwt

Univel-.sif?: r,J' Leeds

Blackwell Science

Contents

Preface List or Contrihutcjrs Ackncrwlcdgcments List of Ahhreviations

1 Projects and Project Vanagcmcnt Drnisr flower

1.1 The: function of project management 1.2 Projwls 1.3 Project management 1.4 Project initiation 1.5 Projects risks 1.6 Prqiect objectives 1.7 Project success

2 Value Management Ton7 Memu 2.1 Introduction 2.2 Definitions 2.3 Why and when to apply VM 2.4 HowtoapplyVN 2.5 Reviews 2.6 Procedures and techniques 2.7 Benefits of value management 2.8 Summary

xi xiii XV

xvi

3 Project Appraisal and Risk Management 30 Nigel Smilh

3.1 Initiation 30

3.2 Sanction 32

3.3 Project appraisal and selection LLRC 33

V

vi Contents

3.4 Project evaluation 3.5 knginecring risk 3.6 Risk ~nanagemen t

3.7 Risk and uncertainty management

4 Projcct Managcrnent and Quality Ton). Merau 4.1 Definitions 4.2 Quality systems 4.3 lmplcrnentation 4.4 Quality-related costs 4.5 Qualit! circles 4.6 Quality plans 4.7 Total quality management (TQM) 4.8 Business process re-engineering (RPR) and TQM

5 Environmental Managcrncnt 58 Jan Vickr id& 5.1 Environmental impact 58 5.2 Environmenlal impact assessment {EIA) 60 5.3 Screening 62 5.4 Environmental legislation 63 5.5 Scoping 65 5.6 Base-Iine study 66 5.7 Impact prediction 67 5.8 Environmental impact statement 68 5.9 Presenting EIA information 69 5. I0 Monitoring and auditing of environmental impacts 73 5.1 1 Environmental economics 75 5.1 2 Environmental management 80

6 Project Finance Tnny ~ W r r n a 6.1 Funding for prqiects 6.2 Sourcesoffinance 6.3 Project finance 6.4 Financial instruments 6.5 Fiwancial engineering ti.6 Debt financing contract 6.7 Types of loans 6.8 Appraisal and validity of' financing projects 6.9 Risks

7 Cost Estimating in Contracts and Projects 105 iVige1 .Yrnith

7.1 Cost estimating 105 7.2 Cost and price 107 7.3 Importancc of the early cstimates 109 7.4 Estirnaling techniques 112 7.5 Suitability of estimating techniques to project stages 1 14 7.6 Eslimating for process plants 121 7.7 Infbrmation technology in estimdting I23 7.8 Realism of cslimatcs 124

8 Project Stakchuldcs 127 Kris MoordIej'

8.1 Stakeholders 1 27 8.2 Primary project stakeholders 127 8.3 Secondary project stakeholders 128 8.4 Understanding the interests and influences 1 29 8.5 Stakeholder management 131 8.6 Stakeholders and co~nmunication 134 8.7 Summary 135

9 Planning Nigei Smidh 0. I Planning 9.2 Programming 9.3 Network analysis 9.4 Updating the network 9.5 Resource scheduling 9.6 Planning with uncertainty 0.7 Software and modelling

14) Project Control Using Earned Value Techniques den is^ B O M ' P ~ 10.1 Project control 10.2 Earned value definitions 10.3 The theory and development of earned value analysis 10.4 Relationship of project functions and earned value

10.5 Value of work done control 1 0.6 Earned value analysiq techniques 10.7 Application of EYA 10.8 Examples of EVA 10.9 Summary

viii Contents

11 Contract Strategy and the Contractor Selection Proccss Du 17 id N'rigli i I I .I Context 1 1.2 Factors af'fecting strategy 1 1.3 Contractual considerations 11.4 Contractur choice 1 1.5 Prqject ohjectives 11.6 Contract selection 1 1.7 Project organisation 1 1.8 Risk allocation 1 1.9 Terms of payment 11.10 Model or standard cond~tians of contract 1 1.11 Sub-contracts

Contract Policy and Ducuments David Wriglrt 12.1 Tendering procedures 12.2 Contracting policy 1 2.3 Conuact planning 12.4 Contractor prc-qualification 12.5 Contract documcnts 12.6 Tender review 1 2.7 Tender evriluation 12.8 Typical promotcr procedure

13 Project Organisation Design/Structure Kris Mnnd/eLbl 13.1 Organisations 13.2 Building blocks of organisations 13.3 Organisation types 13.4 internal and exlcrnal projects 13.5 The human side of structure 13.6 Structure of collaborative relationships 13.7 Slructure in thc international context 13.8 Summary

14 Design Management P e t ~ r Harpurn 14.1 RoIe of designs 14.2 Understanding design 14.3 What design has to do 14.4 The role of design management

Contents ix

14.5 Managing the project triple constraink 247 14.6 Design liability 255 14.7 Briefing 257 14.8 Interface control 259 14.9 Design for manufacturing 261

15 Supply Chain Management Strcen Mule 15.1 Background 1 5.2 Perspeclives on Icrminology 15.3 Supply chain strategy 15.4 The nalurc or Ihc organisation 15.5 World-class organisation in manufacturing 15.6 The projcct value chain 15.7 Procurement and the project value chain 15.8 Prime contracting E 5.9 Thc operation of future construction supply chains 15.10 Summary

16 'Team-Bad Supply Chains and Partnering Dcnis~ Bower 16.1 Background 16.2 Team working 16.3 Partnering 16.4 Establishing the relationshp 16.5 Making the relationship work 16.6 Benefits of partnering 16.7 Constraints to partnering 16.8 Summary

17 Private Finance Initiative and Public-Private Partnerships To t ~ y Mcrna 17.1 Concession contracts 17.2 Definition of concession projects 17.3 Organisational and contractual strvclurc 17.4 Concession agreements 17.5 Procurement of concession project strategies 13.h Concession periods 17.7 Existing facilities 17.8 Clnssificalion of conccssiun projects 17.9 Projects suitnbFc I'or concession strategies I 7,10 Risks rundamen tal 10 concession projects

X Contents

Concession package structure Advantages and disadvantages or concession projects The origins of PFI The arguments for privately financed public services PFI in the UK Bidding and compclilion Outpi11 specification Financing public -privafc partnerships

18 Aspccts of Tmplementing Industrial Projects .Wjgei Smith 1 X . I Multi-disciplinary projects 18.2 tndustrial projects 18.3 Large engineering projects 18.4 UK off-shore projects l 8.5 Legal systems in the EU countries 18.6 innovation

19 Project Management in Dcvcloping Countries

I m Yickridre 19.1 What makes dcvcloping countries dirrcrent? 19.2 Thc construction industry in developing countries 1 9.3 Finance and funding 19.4 Appropriate technology 19.5 Labour-intensivc construction 19.6 Community participation 19.7 Technnlo~y transrer l Corruption 1 . 9 Summary

20 The Future for Engineering Project Management Nigd Smillr 20.1 The role of thc parties 20.2 Guidelines for project management 20.3 Project management - the way ahcud

Sug~estcd Answers to Exercises in Chapter 9

Index 372

Index

Note: Figures and Tables are indicated by ifalfc ppcrge numbers

act~vlty modeling, sortware for 148 activ~ty-on-line networks ,SC'P arrow diagrams activity-on-node netwurks .TLT precedence

diagrams actual cost of wurk performed ( A C W ) 157 admeasurement cuntrncts 1 9 6 7 allowances. in cos1 tstimales 122 alternative rnaferials 343 appra~sal co5ts 51 appraisal eslimate 106, 120 appraisal stage 30, 33-7

VM review 26 appropriate technology 347-9 archirecl

management role 304 trzgining 245

arrow diagrams 139 compared with prececlence diagrams 142

assembly breakdown structure (ASS) 243 assesssynthesise-t.val~~a~e model (of creativity)

239,240 Associated General Contractors of America, on

partnering 293 Association Tor Project Management (APM) 2,

3. 45. 357 auditing

of environmenlal impact 74 of quality 49

hnck~vard pass calculation (in network analys~s) 1 44

ballpzirk est~rnalcs I T 3 bar charts 139. 140 base-line study, fur environmental Impact

asse~sment 61, 6 6 7 b ~ d conditioning 2 14 15

bill-or-quantities (BoQ) cosr cstlmating method 108, 1r6, 196

Bolnm's test 256 bottom-up design nlcthnd 240 'branded product' concept 286 breach of contract ?SS breakdown structures. md software 148 Brent Spar oil platrornl 130 brtbery 354-5 Brrt~sh Standards

definition of project management 3 on env~ronmenlal management 80-81 on qu:tl~ty assurance 45

hudgctcd cost of work performed (BCWP) 157 budgeted cost of work scheduIed (RCWS) 157 butid->an-pcrate (BOO) projects 307 Guild-operaternown-transfer (BOT) projects 308 btlild-onm-jper;ttc-trader (BOOT) projects

189,307 fixance For 99 rrr niso concession contracts

building contracts 188, 196, 203 bureaucracy 222. 223 busineqs ethics 208 busmess process re-enpneering (BPR), and total

quaIity manztgement 55-7

C-spcc 157 cash llow z~nalysis 8, 31. 35

faclors affecting 90 chanses

and contract types 184-5, 1 8 5 4 effects 361

Channel Tunnel project 87-8. 91-2. 31 1 . 323 chcck-lists

for destgn brief 258-9

Index 373

for ETA ~rrtbrmarron 69-70 c~ml eng~neering projects

earned value analysis In 168 -9 type of contract used 189. 196, 197, 203

clicnt SW promoter collaboraii~e relat~onships 228. 2 3 3 4

organ~sational structure in 2 3 3 4 commercial r ~ s k s 39, 101-3. 316, 319 cornmisslon~ng. VM review during 26 communications 12

between project partic~pants 247 in organisativn 224 and stakcholders 1 3 4 5

community part~cipatlon, in developing countries 351-2

competitive tenderlnp 206, 209. 28 1, 3 13 c~mllprehensive contracts

for rnduqtr~al projects 335 for offshore oil!gas projects 337 organ~ration;il structure for 187. 188-9

concept stage design 241 VM review 2.-

concess.lon agreements 3 1 2 concecsion contracts 189. 307-8

acronyms 308 advantages 321-2 classification 31 5-1 6 construct~on packages for 320 contractual structure 309. 3 10 definilion 30% disadvantages 322 dorne.;itic/lnterna~ional projects 316 examples 323 and ex~sting Fdcilities 3 14-1 5 finance for 99 financial packages for 320 infrastructurelindustrral projects 31 5-16 lnvited bidc 312-13. 315 market-led!contr;ict-led 31 h objectives 324 operational packages for 320 organisati0n;il structure 309-10 package structure 3 19-20 procuremcnt of 31 1-13 projects sui~able for 3 17 rcvenuc packages for 320 risks assoc~ated w ~ t h 3 16, 3 17-1 9 spcculatrve blds 312. 315

concession periods 3 1 3-1 4 cond~tions of contrnct scr contract conditions construction contract 28 1 , 3 10 Construction lnduc~ry lnqtitute ICII). on

partnenng 293 construction stage. cost estlrnate at 121 con tlnpnt-valuat~on method, for nnt~netislng

environmental costs:'bencfits 79 contract conditions

rn~del~standard 201 4. 339 111 teilcler docunlsnts 21 7- 18

contract documents 21 2-1 3 contract-led projects 31 h contract management, factors afiecting 177-9 contract planning 208-10

number of contracts 209-10 pre-contract stage 210 pre-tender stage 2 10

contract stratcgy 14. 174-5 factors affecting 175-7, 3 6 M l

contracting policy 207-8 business ethics 208 procedures 207-8

conlmctor-led procurement systcms 277. 280 contractor pre-qualification 21 1 contractors. select~on of 174-80. 210. 361 contracts

analogiejcs 178 factors affecting selection OF 182-6 runclion OF 193 rclr partnering 299-300 payment terms 194201 and project organisation structure 186-93 see rrlscl conccssion contracls: cocr-

rcimbursahle contracts; price-based contracts; quantities:'rates-hased contracts, target casl contracts

contracts department, purpose 215 16 contractual concession agreement 3 11 control of projects 13, 360 corn~ption and br~bery 353 5 cost 107

as project objective 10, 179 cost analysis 102 cost-benefit analysis (CBA)

in environmenval economrcs 7-56 in project exaluatic~n 35. 37-8

cust codes. in earned value analys~s I 6 6 7 cost control, o f design work 253

cost control cube 157, 1-58 cost estimating 105- 26

;it each project Fklge I06 historical data used 1 12-1 3 information technulogy used 1 2 3 4 Tor procesc plants 121 -2 range of eslirnates 106 technique? l l 2 -19

cost per!-ormancc lndex (CPI) 159 cost planning 161 2 coct reduction. compared wi-lth value

management 21 cost-reim bursable contracts 176, 197 9

a d v a n t a ~ s I98 charncterislics 182, 1x3, 184. 185. 186 disadvantages 198 Tor industrial projects 335 for oKshore nil:gas prcljccts 337 8 and target cosl 199 tender review for 213-1 4

cost variance {CV) 158 costs

included in estimate 114 qunlity-related 5&52 quantity-pmport~ond 108 time-related 108

counselling 14 countertrlide {goods cxchanp) 95. 97 covcrage rat10 (for debts) 93 creativity 230 critical path analys~s 144 culture. effect on management 235-6 currency exchange risks 1 02. 31 9

Dartford Rridge/Crossrng 98 9. 3 17. 3 13-1 4. 315, 323

debentures 95 debt. financ~ng by SR. 9 0 91. 93-6, 310 debt financ~np contract 92-3 debt servicc ratio 93 decision-tree technique 146 d c c ~ s ~ o n s

reasons Tor 13 representarion In 12

d s c o m ~ s ~ i o n i n g , VM r c v ~ e a during 27 deleration of authority 13 Derning circle 47 dependencies (in network d~ngrams) 142,250 dependency struclurc matrix (DSM) technique 250

dcscrzpt~ve check-l~sts 69 design for assembly (DFA) 262-3 deslgn brief 257-9 design equivalence. for lahour-intcnslve

conslructlon 35 design interfacc control 25941 deqign liability 255-7 des~gn management 2 3 8 6 3

role of 243-7 dcsyn for mailufacturing (DFM) 26 1-2 deslgn models 239 41 design stage(s) 6. 241 -2

cost estlmate at 106, 121 resource profile Tor 251

deq~gn-and-suppIy contracts 188-9 desimers

and implementers 245-6 t r~ba l behaviour 244

d c t ~ ~ l e d desr~w 242 VLM review 26

developing countries approprfate technology in 347- 9 climatic considerations 341-2 community participation in 35 1-2 concescion contract\ In 31 1. 31 7 construction industry TR 3 4 5 4 finance and Tunding 344, 346 7

metcrials/equipmcntiplan~ availability 343 population prowrh 342-3

prnjecr managemenl in 341-56 socio-cultur;iI factors 344

dcvclopmen L banks 346 direct labour departments 191-3 discipline, in contracts 1x2, I83 dispute prevention;'resolurion 297 divtsional organnations 2 2 6 7 docurnenkition

contract 212 13 quality system 49-50 tender 2 1 7-20

earncd xilue. relationsh~p with projcct functions 161 2

earned value analysis (EVA) 157 applicalion of 1 h&7 examples 167-72 repnrl~ng rcquirements 172

Index 375

theory and development 1 59-61 effect-on-production methods. for rnonetlsing

env~ronmental cocts!benefits 77 Egan Rcport 28 1 .2934 cmcrgcncy projects 12 cmpowcrment of project tcnnl 2323 engineer-procure-construct (WC) contract 192 engineer-procure-institl].-~~rnmicsion (EPIC)

contract 192 En$neering and Construction Contract (ECC)

186, 204 engineering supply chain sysfem 287 -9

~mplementalion-and-assembly process 288-9 materials and products 284 professional services 288

cnvironmen tal economics 75-80 cusf-henefir analysis 75-6 valuation methods 7G80

environmental Impact 58-60 auditing of 74 rnonltor~np of 7 3 4 predict~on of 61. 67-8

cnvironrnenlal impact asscssrnent (ETA) 6 M 2 baseline study 61, 66 7 impact prediction 61. 67-8 1e.qslalion on 61 4 presenting EIA infurma~ion 69-73 projects for which ErA is mandatory 63 projects for which ETA is recommenrfed 63-4 scoping h G 6 l , 6 5 4 screening 60, h2

env~ronmental impact statement (EIS) 60. 68-9 environmental intcrest/pressure goups 130. 133 enrrironmental legislation 6 3 4 environmental management 8 W 4 environmental management system (EM S) RC84

checking and corrective action 84 lrnplementiition and operation methods X 3 4 managcmcnt re~jew for 84 planning s t a g X2 3 policy stage 8 81-2

environmental qnality index 71 environmental nsks 39 environmental v;ilues 76

actual use value 76 existence value 76 option use v:ilue 76

equipment supply contracts 203

equity finance 87, 91, 9 6 7 , 310. 330 erection contracts. control of value of work done

l h4 estlmatcs

importance of carly 109-1 1 realistic 3, 124-5

estimating techn~ques 1 12-19 IT tools used 123-4 su~tahility for vnrinus project stages 1 10-21

EU counlnes, legal system in 338-9 European Bank For Reconstruction and

Development (E3 RD) 97, 346 European Commun~ty:Union Directives:

regulat~ons on environmental impact assessments 63 4 on procurcincnt procedure5 21 2, 3 2 6 8 , 339

European Investmenl Rank (ElB) 97. 98 evaluai~on ~echniques 3 7 4 experience, learning fmm 14 expert systems 124 external assurance quality costs 5 1-2 external projects, organisational sLructure for

231-5

hcilitalur un international project 236 partnering workshops 298-9

factorial cost estimating techniques 112, 1 1 5 1 6 failure costs 5 1 feaslbllity stage

cost estimate at 106. 120 desigi~ at 241-2 VM review 25

feasibility study 5 4 . 30, 35 feedback 27 finance

for overseas pro,jccts 97, 344. 34&7 sanrccs 87-8

financial analysis 102 financidl cngjneering 91-2 financial instrumenb R9-91 financial market analysis 102 financial risks 39, 41, 100 financing o f projects 86104

appraisal of 98-9 fixed-price contracts 1 9 M . 335 float (In network analysis) 141-3

utllisatlon in resource levelling 14-56 forward pass cdculation (in network analysis) 144

376 Index

front-end loading of project (with deslgn engineers) 250, 25 1

functional analyq~s 17, 19 functional organisstions 225-6 runding for projects 86

Gantt charts 139, 250 galed dcs~gn process 248

'fuzzy' gate 248. 249 hard gate 248. 249 soft gate 248,249

global cosl cstrmatlng method 172, 1 13-1 5 grace penod 33 1 Grccnpeace 130, 133

harmonisation (in EU) 339 head office work, valuation 01" 1 6 3 4 health and safety consrderntions 256 healthcare PFT projects 325 Heathrow Terminal 5 fac~lity 1 29 hedonlc methods. for rn~net l s~ng cnv~ronmcntal

costs 'hencfits 78-9 hierarchy of organisation 223 hosp~tals 325 'house of quality' 252. 2 5 4 5 human-cnp~tal method. for monet~s~ng

envitonmen tal costs/bcnefi ts 78 hypertext organisation 228-9

jmplementalion riskr 39, 40 implementation stage

cosl drivers 261 cost estimate E20 VM rreiew 26

incentrves and contracts 18.3, 184, 195. 199 in partnering arrangements 291. 296

induction 14 ~ndusrrial projects

concession conlr;icts in 3 15 contracts in 335 implementing 33340

influence curves 161 influence method 16C61 inrorm;ition technology ( I q , in estimating 123- 4 ~nfrastructure projects 98 -9, 312, 313-14,

315-16. 313 inltlation of project 57. 3112 innovations. in contract arrangements 339 4 0

~nnovatibe broker 286 Institution of Civil Engineers (TCE)

definition of value mansgemenl 16 model conditions of contract 204

inr;tructlonq to tendering cvntractors 213 in.r;ur;~nce 103 intepratcd project team (TPT), in prime contractr

283 Interest rale 9+5

nn loans 9 4 5 interface control 25941 ~ntcrmedinle technolo_ey 347-8 internal projects 237 Internananal Fedcratlon of Consulrmg

Engineers (FIDIC), code of ethics 354-5 intern;~tional Project Manapemcnt Association

357 ~nternari~mal projects

concession contracts for 31 6 organisational struclure for 234-6

investment curve 7 , 8, 31, 33 investment decisions. factors affecring 35 ~nvitation to tender 2 17 invited hids. for concess~on con tracts 3 12-1 3 , 3 1 5 IS0 ~randards

on environmental ~nanagernenl X 1 on quality assurance 45, 46

issue avoid~nc~~resolutiun process 296, 297

job plan 19 join1 ventures. in developing countries 352-3

knnwledgeablc clients, and supply chain 273.276

labour-~ntensivc construction 343, 349-51 largc engineering projects 3 3 6 7

fin;incial aspects 336 risks 336. 337

Latham Report 28 1. 290 leadersh~p style 232 lcgal liability for design 255-7 lcpal risks 39 leg~slat~on

un environmental ~rnpact assessment 6 3 4 on procurement procedures 212, 326-8,

338 9 Leopold rn;ltnx 72 Less-knuwlcdgeahle clicnts, and supply chain 273.

2 76

Index 377

lifecycle costing 14-20 life-cycle nf project 4-5, 30 line-of-balance (Lop) charts 139, 141 loan agreement. in concession contracl 3 10 loan ~ tock 9 5 4 loans 93 - 7, 34&7

interest rete 94-5 repayment method 93 securily for 95

1oc;il authority PFI projects 326 lucatlon-time diagrams 139. 141 1~1mp-sum contracts 176. 1 9 4 6

tender review for 21 3

make-or-buy decision 267 man-hours estimating 112. 1 I6 management contracts 1 9 W 2

advanlags 191r 91, 191-2 drawbacks 191 organisational structure for 187

manufacturing and production industries. earned vdue analysis in 169-10

market analysis 32-3. 102 market-led projects 3 16 market nsks 101. 102, 319 mnterials delivered to sile, ~aluation of 164 matrix methods

for ETA informatron 72-3 quant~fted and graded matrix 73 simple interaction matrlx 72

matrlx organisations 227-8 maturlty loan 94 maximisation of valuc 17. 21 meet-in-the-m~ddle design method 740 Mercedes Benz 166 rne.manine finance 91, 95 Ministry of Defence (MOD)

building down hurriers project 28 1 procurement methods 264,2R1-2

model condrtions of contract 2 0 1 4 in EU countries 339 facrors aFfectrng selection of 203-4

munetication. of entironmental costs and benefits 76 80

monitoring hy project manager 157 in earned value analysis 165, 1 6 6 7 of environmental impact 7 3 4

multi-attribute utility theory. for EIA information 7 1-2

multi-disciplinary projects 3 3 3 4 multi-project management 333 4

negligence. legal definit~on 255-6 negotrated procedure. for procurement 327- 8.

338 network analysis 139, 1 4 2 4

npdntlng the nctwork 145 worked example 143 see also precedence diagrams

nctwork methods, for ETA information W 7 1 network organications 229-30 Nnrih-South Eapresswny (Malaysia) 31 1, 3 15

objectives 9-1 1. 179, 18&82 offshore 011 industry, contracts 176, 192, 337-8 offtake contract. in concession contract 3 10 011 and gas industries, earned value :inaly~is in

P 70 open tendering 327. 338 uperation21 cost estimating technique 11'2,

118-19 operational risks 39, 40 operatrons contract, in concession contract 310 opportunity points, ror value management 2 3 4 opportunity to add value 9 order-or-magnitude estmates I1 3 organisalion breakdown structure (OBS) 148,

243 organ~sational structures 222-37

In collaborative relationships 2 3 3 4 of concessiun contracts 309-11) and contract types 1 8 6 9 3 factors affecting choice of 188 human aspects 232-3 and internaliexternal projects 23 1-2 in international projects 2je and purchas~ng!supply considerations 265-6,

264 -70 organisations 222-3

building blocks 223-5 types 2 2 5 3 1

outllne destgn stage 242 extra resources at 250. 231

output specification, PFI 328 -9 overheads 109. 120

for design work 252

378 Index

overlay mapping, for EIA inrormahun 70 overseas projects

and environmental irnpl~ct asscssment~ 64 finance for 97. 344. 346

Ozal formula 308

package deal contracts 188- 9 advantages 188-9 disadvantages 1 X9 urgan~sat~onal structure for I87

Parezo princrple, application 10 szipp14 c h a ~ n 286 participants in prosect 246 partnenng 290, 2 9 2 4

benefits 30+3 compared n ~ t h other procurement approaches

294 constraints to 303-5 cost savings 301, 302 definitions 2(53-4 establishing relationship 298-300 and improvement 296 and incentwe4 291,296 Issue avoidance in 296, 303 making relationship work 300 mutual objectlvec 295-6 project-spenfic 294 ctratcglc 294-5 workshops for 298-9

partnering charter 292, 299 pnrtnersh~ps 233-4, 303-4 persistent 99'& complete cyndrome 169 person-Iwel design method 241 phased, seamless team 2 8 6 7 planning 137-5 1

nf contracts 208 10 in design sstaps 250 In environmental management svstem 82- 3 cxerclse questions 151-5 project success affected by 11 purposes 137, 162, 360 with uncertainty 14&7

political influence 130 political risks 39. 319 population growth 342-3 portfol~o projccts 174, 27ri

SCM tools and techn~qucs for 274 powcr statlnn projects 313, 323 precedence diagrams 139. 1424

advantages uvcr arrow diagrams 142

predic~~nns of env~ronmental impact 61, 67-8 need for realistic 3

prc-feasibility stage. VM review 24-5 yrcference shares 96 prellrnlnary esiimrtc 106, 1 19 pre-qualification (of contractors) 21 1 preventative-ewpenditm method. for monetising

environmental costs!benefils 77-8 prevention costs 5 1 puce 107, 120

factors affecting l09 pr~ce-based contracts

advantage5 1 Y 6 characteristics 182. 183. 184. 1 8 5 6 disadvantage3 196 lender review Sor 21 3

primary stakeholders 127-8 prime contractrng 281 4. 285

core pnncipler 283 stages 284

Prince Edwarr! Island Hridge project 134 princ~pal, In ctlilcesslon cuntrncts 309 prisons 3 2 5 4 privlitc finance inztkit~ve (Pt'l) 285. 323-9

arguments against 324 bidding and competition in 32&8 examples 323, 3 2 5 4 healthcare projects 325 and local author~tlec 326 ob.iecr~ves 324 origins 323 output spec~ficaliun for 338-9 prison f;~cilitles 325 6 reasons Tor 3 2 3 4 in UK 325-6

Private Finance Panel (PFP), on output spcc~fications 328-9

privatc-scctor clients large cnpneering projects 33G7 and supply chain 272. 276

privatisatiwn 322. 339 process capability 253 process plant projects

characteristics 176 contracts for 189 estimnting for I21 2

process projects 274, 276 SCM tools and Lechn~ques Tar 274

Index 379

procure-and-consfrucl (PC) contract 192 procure-install comrniss~on (PIC) contracl 192 procurement

cornpared wlth partncrinp 194 of concessic~n contract5 3 1 1-1 3 EU Dirc.clive!sulcs on 21 2. 326 -X, 339 Mlnlstq o r Defence's approach 264. 281-2 negotirited procedure 327-8, 338 open procedure 327. 338 and project value chain 277, 280, 281 restricted procedure 327. 338

product breakduwn ctructure (PBS) 243 product liability 45, 256 productlrity factor, ratio 158, l h5

examples 168. 169, 170 profession-led procurement systems 277, 280 professional indemnity insurance 256 profit. ractors affecling 109 programming. 138-9 progresc. of value of work done l h5 prnject appraisal 30. 33 -7 project control 1 5 6 7 , l62 project cv~luation 37 8 project execution plan (PEP) 22 -3, 33 projcct finance 86-1 04

analysis 102 meaning of term 88-9

project functions. relat~onship with earned value 161-2

project implementation 6 7 project inillation 57, 30-32 project life-cycle 4-5, 30

pates in 247-8 and stakeholder rnanagcment 133-4

project management definlt~ons 3-5 function or l firture trends 362-3 gu~dchnes 359- h2

Pruiect Manngcrncni Jnctitutc PMT) 2, 2. 357 project managcr 12

in matrix organisations 227 in network osganlsations 229-30 rnle of 15b7, 215, 358.359 training of 14

project objectives 91 1 . 179, 180 82 project organisation, and contract types 18&93 projcct reports. and sortware 149 project risks 7-9

prqject-specific partnering 294. 301 projcct success. ractors affecting 1 1-1 5 project teams 12, 232-3

rfevelopment of 233 spec+n!ists In 304

project tr~ple constraints 10. 179 management in des~gn phases 247-55

project ~ a l u c chain 275, 277 cllent value syslem 275. 278. 279, 280 multi-value s j stem 275, 278, 279. 280 and procurement qystems 277, 280, 281 user value system 275, 278. 27Y, 280

promoter 12 in concession contracts 309-1 0 and des~gn briefing 257-X ohjjectives 10. 32. 159 responsibilities 358

publ~c-private pastnersli~ps 32+3 1 see also pnvale financc init~alive

public oprnion, on environmental impact 65-6 public-sector clients

large engineering projects 336. 337 and partnerrng arrangements 304 -5 and supply chain 272. 276

purchasing and supplv 2 6 5 4 tcrmint>logy 265 see alro fupply chain

quality 6 5 7 definltlons 44-5 as projcct objective 10. I79

quality assurance (QA) 45, 361-2 qualitv audit 49 quality circles 52-3 quality control (QC) 45 quality funct~on deploynent (QFD) 253-5 quality manusi 48. 49 quallty plans 53 quality policy 47 quality principles 48 qualrty procedures 48 quality-related costs 50 52 quality systems 4 6 Y

in design stages 253 implementazlon of 49-50

quant~nes,:ratcs-baced contracts 196-7 characteristics 182. 183. 184, 185, I86 strengths 196

tender review Tor 21 3 weaknesses 1 9 6 7

quant~ty-proportional costs 108 questionna~re check-lists 70

Reading Consrructtnn Forum, on partnerlng 293. 301

reference sltes. Tur environmenlal Impact assessment 73

se~mhursable contracts spe cost-rcimbursable contracts

relationships in contract management 177 and contract types 185

representation in decisions 12 research and developmcn't h resource cost estimating techn~que 112. 11 X-l 9 resource levell~ng 1454 resource planning, and sofrwase 148-9 resource schcdulrng 146 restrict~ve tendering 327. 338 revenue risks 39. 41, 101 risk miinagement 39-43. 178 risks

allocation of, in contracts 184, 19% assessnlcnt of 33 in concession contracts 31 h. 3 17-1 9 in contract management 178 design-associ;fted 252 elemental 39, 318 global 39, 31 8 minimisation!rcduction of 42, 103 and projcct appraisal 36 -7 in projects 7-9, 11, 39, 10C3, 110-11, 178 sources 1 1 1 typcs 39 S P P also commercial risks; currency exchange

risks: environmental risks; financial risks: implementation risks: legal r~sks; market risks; operational risks; political rrsks; revenue risks

royalty agreements 95 rule-of-tlum b estlmares 1 13 rules. in contract rnanapcmenl 178

S-curves 159-60. 164. 165 examples 160. 162, 168

sanctlon of project, information requ~red for 32-3

scaling check-lists 713 scal~ng-weighting check-lists 70 schedule perrurmance index (SPT) 159 schedule of rates 196 schedule variance (SV) 158 scheduling, of design work 2511 scheme deslgn. VM rcvlew 25 scoping, for environmental ~mpact assessment

6 M 1 , 6 -6. 73 screening. for environmental impact assessment

60, h2 seamless team 286-7 secondary svakeholders 128-9 security for loans 95 selective tendering 327. 318. 361 separatc des iy and implementr~t~on contracts.

organ~sat~onal structure for 187. 190 Severn Crossing, second 323 shareholder agreement. in concession ctlntract

3 10 Single European Marker 339 soc~al impact 130 socio-culturdl ractors 344 snft loan 331 software

and activity modelling 147-8 analysis tools 149 for cost estimnt~ng 123-4 cost of 147, 151 integriit~on options 149-50 Tor project managcrnent;'planning 147-5 1 and resource handling. 14R9 usability 150

speculative blds, In concession contracts 312,3 15 s~akeholder analysis 127, 135 stakeholder management 131 4

and project lire-cycle 13.M stakeholders 127-36

and commun~cations 134-5 external 128 identlfyinp I32 information about 132 interests and influences 129-3 1 ~nternal 128 mrssion 132-3 objectives I0 pred~ction of behaviour 133 primary 127-8 secondary 12R9

Index 381

strcnglhv and wcaknrsses 133 rtnd value management 21, 22

standard condztionc of contract 2 0 1 4 stntutory cnnccssion agreement 3 1 1 strategic partnering 2945 . 302 strateg~c project plan 360 strategic supply chain broker 2 8 5 6 sub-contracts 2 0 4 5 success uT projects, factors affecting 1 1-1 5, 359 supply chain management (SCM) 264-89

client iniluenccs 272-5 framework for 2 8 7 4 future trends 285-7 and organisational structure 2 6 W 0 termlnolog y 266

rupply chain strategy 266-9 supply chalns. team-basccl 291-2 supply conlract. In concession contract 31 0 systcrns diayrarns, fur ETA information 7 k 7 1

target cost contr;ictc 199-201 adr antages 20&1 example 149, 200 problems in using 201

tax hol~days 3.3*31 team building 14 team norking 291 2

benefits 292 technology transfer 236, 322. 352-3 tender documents 21 7-20

brief description of works 21 8 conditions of contract 21 7-1 X contmct coord~nation procedure 2 19-20 drawingc and specilications 219 fusm of tendcr 220 indexes of drawings and specifications 2 1 X -19 instructions to tender~ng ctlntractors 217 inv~tation to tender 2 17 programme Tor works 2 18 promoter-provided tterns 21 9 rcgister of 216

tcndcr evaluation 214-15 tcnder package

approval by promnier 216 collation m d Issue of 221 documents included 217- 20 review of 22 1

tender review 21 3-14 and contract award recommendation 21 5

tendenng contractors invtructions to 217 invitation to tendcr senl tu 217 queries from 221

tendenng procedures types 106 typical procedure 21 5-21

term sheet (Tor debt financing) 82-3 t e rns of contract s('L' contract conditions time, as project D ~ J ~ C ~ ~ V C 10, 17Y tinw management. of design work 2 4 3 4 Lime-related costs 108 lime-scales. and coniraci types 185 timing of prosect 35-6 toll roads 316, 31 7, 323. 331 top-down approach to managemcnt 232 top-down deagn method 240 total quality manapement (TQM) 45, 53 5

advantages 54-5 and busmess process re-engineering 55-7

training o f project manager 14 in quality system 50

Transparency International 355 transport-oriented projects 98-9, 31 1, 312,

313-14, 315-16, 323 travel-cost method. for monetiring

envtronmental costs:henefitc 79 Turnhull Report 43 turnkey contracts 188-9

.we also package deal contracts turnkey procurement 281 twinning 353 trio-stage tendering 206. 281

uncerta~nty managemcnt of 42-3 planning with 146 and project appraisal 3 6 7

unique projects 274, 276 SCM tool5 and techniques For 274

unit-rate estimating 112, 1 1 6 1 8 urgent projects 12 US A m y Corps of Engineers, on partncring 293.

302 US Environrncntal Protection Agency (EPA),

Council on Envirimmental Quality 65 US Gulf fdctor (USGF) 170 utility theory, Tor ETA information 71-2

382. Tndex

value analysis (VA) 17 value chain activit~cs 275

sec rrlso project value chain value engrncerlng (VE) 17, I8 value management (VM) 1 6 2 9

applications 16 benefits 22. 28 compared - i t h cost rductlon 21 definitions 1C-20 plan 20 procedure to applv 22-3 rea5ons for use 2+22 reviews 23-7 techniques used 27 when to use 21-2

value planning (VP) 17. 18 valuc reviewing (VR) 17. 18 valuc of work donc 163

control of l h 3 4 plot of cxpendi turc against 163

5-curve for 162 vririancc at cornplet~on 158- 9 virtual organisations 23&3 1 vvlunle broker 286

win-win approach 296, 303, 305 work breakdown structure (WHS) 148. 243 work done, value of 1 6 3 4 work lnstructtnn5 48 nark packages

in design stages 242 and enrned value analysis 168. 1 71

a ork in progress I 60, l 63 workmanshp. quality of 361 workshops, partner~ng 298-9 World Rank 342. 346, 354 world-class organisation

crat~cal elemenls 270 -71 and procuremenl27I 2