CPM payment schedule on the Atlantic City/Brigantine connector project
Joseph W. Delaney, P.E., Construction Program Manager, C&S Engineers
This paper discusses the author's experience with developing, progress monitoring, and updating a computerized CPM payment schedule on the Atlantic City/Brigantine Connector project. The author was the Deputy Project Manager for the Design/Builder: a joint venture of Yonkers Contracting Co., Inc. and Granite Construction Company. The paper focuses on the Author's experience with the CPM scheduling technique on this large-scale design/build transportation project.
At the time of award, the project was the largest design/build project ever undertaken by the State of New Jersey. Linking the Atlantic City Expressway and the city's marina district, the project included both design and construction of the four-lane, 2.3-mile Atlantic City/Brigantine Connector. The project scope included 16 bridges, interchange modifications, 23 retaining walls, drainage, landscaping, traffic signals, highway lighting, curbs, median barriers and highway safety appurtenances. The scope also included construction of a 2,900 lf cut and cover tunnel with open depressed roadway sections on either end. The tunnel, which goes under Route 30 and a residential area, included a storm water pumping station, ventilation, s.i.d.a, electrical, and mechanical systems.Numerous utilities including water, steam, cooling water, sewer, gas, electric, telephone and c.a.t.v. were installed or relocated. An existing sewer pumping station was demolished and relocated off the right-of-way of the highway. Environmental mitigation measures, a landscaped park, a pedestrian bridge, widening and resurfacing of local streets, and demolition of several city blocks of residential housing as well as portions of the Atlantic Electric power facility were also performed during this fast-tract construction project. Total project cost was $330M.
Figure 1. Revenue Projection
Original Baseline CPM Development
The contract documents required that the Design/Builder develop a cost and resource loaded computerized CPM payment schedule. This Original Baseline CPM was to be used as the basis for progress monitoring as well as for monthly progress payments.
The Design/Builder recognized early on the importance of properly developing the Original Baseline CPM. Factors considered, in their order of importance to the Design/Builder, included:
A. Utilization of the Original Baseline CPM for Progress Payment Purposes. This was of particular importance because the construction phase of the project would generate up to $11M/month in revenue and associated expenses for the Design/Builder (see Figure 1). Proper scheduling and cost allocation would ensure that cash flow would be adequate to meet these anticipated expenses.
B. Utilization of the Original Baseline CPM for potential delay claims. The contract documents specified 13 months for design and a 28-month construction period. Everyone associated with the project understood that this was a very aggressive schedule. The Owner had set liquidated damages for late completion at $64,500 per day. In addition a penalty equal to 5% of a $28M contingency fund would be accessed for each week of delay past the Guaranteed Completion Date. The Design/Builder could potentially be assessed damage fees totally $1.7M for each week of delay.
C. Utilization of the Original Baseline CPM as a project management tool. During the estimating process the Design/Builder realized that the scope of the project would require the use of state-of-the-art project management tools. Scheduling both the design and construction phases of the project required the use of special planning techniques, including what-if analysis, resource leveling, and schedule compression, that only computerized CPM scheduling provided.
D. Computerized CMP scheduling was a contract requirement.
Given the importance of these factors in developing the Original Baseline CPM, the Design/Builder allocated resources and personal early on, in fact well before a formal NTP was in place with the Owner. It was also recognized by the Design/Builder that the 30 days allowed in the contract documents for preparation of the Original Baseline CPM was not adequate in order to properly address all the factors previously noted.
Initially, the Design/Builder considered outsourcing the development of the Original Baseline CPM to a qualified minority contractor. Primarily because of the prohibitive cost to subcontract the service ($550,000), and because the qualified personnel and scheduling software (Primavera Project Planner) were available, the Design/Builder elected to develop the Original Baseline CPM in-house.
The Design/Builder based the Original Baseline CPM on the concept plans provided by the Owner, the detailed estimate prepared for the bid, and some very preliminary design work. The Design/Builder had not yet performed value engineering and had not established means and methods for many work items, therefore the Original Baseline CPM had to be developed in a very generalized format. Each of the16 bridges, for example, was scheduled with only basic component descriptions: piles, foundations, substructures, structural steel or AASHTO beams, superstructure, and appurtenances. The idea was that once detailed design was complete and means and methods were established, the Original Baseline CPM would be revised to reflect the added detail. As a result the completed Original Baseline CPM contained only 1,460 activities and 2,374 activity relationships.
The Original Baseline CPM was divided into four major work packages: Design (including design deliverables), Permitting, Construction Procurement (including the submittal review cycle), and Construction. The Design/Builder's Engineer of Record developed the design work package independently and it was later merged with the other work packages developed by the Design/Builder's Constructor.
The design work package was scheduled with resource (man-hour) driven activities using the NJDOT Project Delivery Process Standard for activity sequencing. Because the CPM was to be used for payment purposes, all of the Engineer of Record's typical work tasks had to be included. This proved problematic for items such as RFI reviews that were easy to resource and cost allocate but very difficult to schedule. To resolve this problem the Engineer of Record scheduled these items with large total float values because increasing the duration of these resource driven activities was not possible.
The Constructor's work packages were scheduled with duration driven activities using sequence logic determined during preparation of the detailed estimate for the bid. The Constructor had determined during the bid phase that finishing of the project by the Guaranteed Completion Date would depend on three major critical items: relocation of utilities totaling $20M in contract value, construction of the Tunnel and Boat Sections which included 125,000 cy of c.i.p. concrete, and the placement and preloading of over 650,000 CY of embankments. This fundamental logic was used as the basis for all activity sequencing in the Original Baseline CPM.
All activity information, including duration, cost, and resource allocation, was extracted directly from the detailed estimate. Items were cost allocated based on the original 37 lump sum payment items that comprised the bid this resulted in a schedule of values totaling 1,289 items. All activities were resource allocated which included manpower, equipment, and materials.
For the Earthwork activities, a forth resource category was added: quantity of earth-moving material. Although the project was complex in many ways, the Constructor viewed the project as fundamentally a “big earthmoving job.” Even before any formal scheduling had been done it was obvious to the Constructor that the critical path of the project would run through the Earthwork activities.
Figure 2. Earthwork Flow Diagram
There were six major Earthwork activities: excavation of the tunnel (295,000 cy), installation of wick drains (1,150,000 lf), placement of the roadway embankments (650,000 cy), placement of surcharge (40% of the embankment height), pre-loading of the surcharge for six months, removal of surcharge following the pre-load period, and final grading. Scheduling of this work required the consideration of several important factors. The Constructor had estimated that for each fleet of his earth-moving equipment a total of 1,500 CY of material could be moved per shift. The schedule had to reflect this production rate. The schedule had to allow for an efficient use of the equipment fleet. Continuous operations where a must; the equipment fleet could not be idle during the embankment pre-load period. The correct number and size of the equipment fleet had to be determined.
The approach to addressing these considerations included the following steps:
A. Determining the best sequence logic that would permit continuous equipment fleet operations. Several sequence logic diagrams were produced until the best solution was found. The final solution is shown in schematic format in Figure 2.
B. The CPM was resource leveled based on the earth-moving material resource limit of the 1,500 CY/Day/Heading limit.
C. “What-if” analysis was performed on the CPM to determine the most efficient and cost effective size of the equipment fleet, variables included the number of equipment fleet headings, individual equipment production rates, individual equipment rental rates, and the number and composition of each equipment fleet.
The final solution resulted in the division of the project site into five earthwork areas. Three equipment fleets would be utilized, one excavate the Tunnel and two to place the embankment and surcharges.
Acceptance of Original Baseline CPM
Thirty days following NTP-1 the Design/Builder submitted the proposed Original Baseline CPM to the Owner. The Design/Builder had worked an estimated 1,285 mhrs developing the Original Baseline CPM. After reviewing the Original Baseline CPM for 97 days, the Owner rejected it. Itemized in Table 1 are the major reasons for rejection and the Design/Builder's accepted responses.
It was evident to the Design/Builder, based on the review comments received, that the Owner did not understand the general approach to the project. Compounding the issue was that the Owner was made up of three separate entities (South Jersey Transportation Authority, The New Jersey Department of Transportation, and Mirage Resorts Inc.) and that none of these entities had experience with cost-loaded CPM scheduling. In addition, none of the entities had experience with the application of the CPM scheduling technique on design-build projects.
Table 1. Original Baseline CPM Review Comments/Responses
|Owner's Reason for Rejection||Design/Builder's Accepted Response|
|The schedule lacks the appropriate level of detail.|| |
The CPM schedule was submitted based on information provided from concept documents and thus represents our initial planning effort to date. It is our opinion, based on our experience from past projects that this “concept” CPM is adequate in both detail and logic, to establish a baseline and for updating and monitoring purposed, at this phase in the project.
We believe we have established an original project baseline, which confirms our obligation in regards to the Project Milestones and Guaranteed Completion Date, and which is in compliance with contract requirements and what we see as good construction practice.
Specification section “18.104.22.168.1 Revised Schedules” provides provisions for revising the schedule, including “additional detail and description”, on a monthly basis. Both planning and scheduling are ongoing efforts and both the revised schedules and accompanying narrative reports must be seen as dynamic documents, which will continue to evolve throughout the duration of the project.
|Several subjective comments such as “duration is to short,” “should have shorter duration”, etc.|| |
All durations have been established base on “as bid” activity productions and available resources. The schedule therefore directly reflects our assumptions, including risk, in establishing the Contract Price. We bear risks associated with the Guaranteed Completion Date, including substantial liquidated damages, and therefore cannot agree to adjust durations unless it is agreed that this obligation is relinquished.
|There are 23 separate critical paths…there should only be one critical path for the project.|| |
A properly scheduled and resource loaded schedule will result in multiple critical paths. Efficient utilization of men, equipment, and materials, will minimize resources and schedule float. Each critical path has been described in full in the narrative that accompanied the submittal.
The Design/Builder viewed the rejection of the Original Baseline CPM as fundamentally a communication problem and the approach to achieving final acceptance focused on finding better ways to communicate the schedule. A narrative describing the critical path was prepared, a Power Point presentation on CPM scheduling was performed, a Power Point presentation on the overall development logic of the Original Baseline CPM was performed, and a series of meetings was held with the Owner describing the Design/Builder's general approach to the project. After minor revisions, and 197 days utilizing this approach, the Original Baseline CPM was finally accepted.
Monthly Progress Updates of the Original Baseline CPM
Once accepted by the Owner, the Original Baseline CPM was used as the basis for monthly progress updates. The progress updates served two purposes, to provide a forecast of the current contract milestone dates and as a payment requisition for completed and partially completed work.
Because the updates served two purposes, establishing an accurate measurement for partially completed work proved problematic. The issue resolved around what progressing technique should be used, either physical percent complete, percent of cost expended, or the actual number of days remaining. To illustrate, the invert pours for the Tunnel can be used as an example. As shown in Scenario 2 in Example 1, the percent complete for the entire activity when 30% of the “install rebar” task is complete varies from 24.9% to 67.5%, depending of which progressing technique is used. This variation has a dramatic effect on the monthly payment amount and on whether or not the updated Original Baseline CPM forecast on-time completion of the Contract Milestones.
Compounding the problem was the fact that the contract documents did not address this issue at all and the Owner was not aware of the problem or the consequences. The Design/Builder realized it was generally in their best interest to use the days remaining progressing technique and this was established as the standard. As can be seen in the example above, this generally resulted in over-payment but more accurately reflected schedule progress.
Example 1. Progressing Techniques
The Contract Documents required that a Recovery Schedule be provided if the monthly updates showed the Guaranteed Completion Date falling behind by more than 2% of the remaining project duration. The Contract Documents further stipulated that all payment could be withheld to the Design/Builder if an acceptable Recovery Schedule was not provided.
The Recovery Schedule was an adjustment to the updated Original Baseline CPM, through either schedule logic revisions or duration acceleration, which eliminated any forecast delays to the Guaranteed Completion Date. The Design/Builder had to provide a narrative explaining the adjustments to the Original Baseline CPM outlining the steps to be taken to assure the project would be completed on time. Explanations would include items such as adding additional resources to accelerate activities on the critical path, working additional hours, working through holidays and weekends, and revising the overall sequence logic of the CPM to adjust the critical path.
The necessity for the first Recovery Schedule occurred during the 7th Original Baseline CPM update. Because the trigger mechanism (2% of the remaining project duration) for implementation of the Recovery Schedules shortened as the job progressed, and because of the fast-track nature of the work, Recovery Schedules were necessitated almost on a monthly basis thereafter.
The Owner was very adamant that the updated Original Baseline CPM did not show any delay in the Guaranteed Completion Date. They viewed the Recovery Schedules as a way to ensure that the Design/Builder was properly monitoring the Original Baseline CPM and addressing schedule delay issues as they occurred.
The Design/Builder however viewed the Recovery Schedules as counterproductive. Because the Recovery Schedules were required so frequently, the updated Original Baseline CPM never forecast the Guaranteed Completion Date to be behind more than 2% of the remaining project duration. The Design/Builder thought this could cause the effect of “missing the forest from the trees” and could potentially mask long- term schedule problems. Because of this, and the large liquidated damages associated with the project, the Design/Builder keep “two sets of books” in regards to the Original Baseline CPM updates. One that included the adjustments from the Recovery Schedules and one that did not.
The CPM Payment Schedule on the Atlantic City/ Brigantine Connector proved to be an effective management tool for both the Design/Builder and Owner. The CPM Payment Schedule provided a way for the Design/Builder to efficiently schedule the project, communicate the schedule and sequence logic, itemize payment amounts from the lump sum bid, apply for monthly progress payments, record schedule performance, and revise future work plans to avoid forecast project delays.
Issued encountered included finding the best means of communicating the Original Baseline CPM, selecting the appropriate progressing technique, and finding the proper point in time for implementation of Recovery Schedules to ensure on-time completion of the project.
Proceedings of the Project Management Institute Annual Seminars & Symposium
November 1–10, 2001 • Nashville,Tenn.,USA