Does Client’s Contract Help To Share Resources To Reduce Project’s Cost?

The most used method to manage projects is by considering each project as a separate cost centre where you have full budget and resources allocated to deliver the project. This project might extend form a day to years.
Here it comes the difficulties that, it will cost the project more if you will consider a cost for a machine or a person as a full-time for the project even he/she/it will operate not full time. For example, an asphalt paving machine is used in a road project for less than 5% of its total delivery time. It makes no sense to keep it full time from the start of the project as a standby while there are a lot of activities to be done before starting the asphalt works. Therefore, we plan it to be mobilised a day or two before the first asphalt paving activity starting to have full continue works until the last asphalt paving activity in the project. Even that planned scenario of having the machine active with limited standby time form first task of asphalt works until the last task is not always guaranteed because any issues on the other sections might happened to delay the continues sequence of activities. This example goes to all project members, tools and machines. If there is a good live system clearly showing what happened in any project for the contractor in the area to allow him to rotate, share and allocate the limited resources between the different projects in the area to limit the standby time for the machines and to reduce the project cost, he will apply it without delaying any project. Although there are risks to be managed here.
Let’s highlight that client requirements and contracts might impose not to demobilise any assigned resource without their approval. Some clients will impose no demobilisation until the last task is done by its relevant team. Here the contractor prices their bid considering such terms or actually, the contractor tries their best to go around it where they can. The contract terms are not encouraging the contractor to limit the standby time for resources except on proper planning and scheduling where if noticed by the client’s planner, he/she will ask to change the schedule to limit the standby time. This standby time sometimes planned (BY CONTRACOTR) or forced (BY CLIENT) for whatever reason. Sometimes, it is clear it will take a week or more to finish the tasks and the resource is still standby on site. Which if caused by the client allows the contractors to claim its cost.
Moreover, for contractors, it is always a portfolio mode. He tries to share his resources between projects as much as possible. Not because he is wised on using project portfolio management, but because some teams are vey qualified and limited to just use them in one place. Moreover, outsourcing and subcontracting is another way of going around of such client’s requirements. A clear example of this is “a concrete pouring machine” which is part of the concrete delivery team which is on most times outsource team. The team comes for hours or a day to finish its activity and leave the project for the next location until the site is ready to come again. Such example goes on and on for every single member, tool and machine for the project. In my experience works as a planner and cost controller, I never become very busy on delivering one project. I finish my tasks easily within few hours in a day. Therefore, I believe planners should not work in one project unless it is over USD50 million project. In Australia I noticed that some clients are wised to consider the planning and scheduling as a part time job only which allow them to reduce their cost a lot. I used to work two hours maximum to update a weekly big project schedule. Another 5 to 10 hours to finish its cost report. I might cost one day to 5 days only (as a total) to finish a schedule from scratch until it is approved depends on its size. This happened because the contracts allow the contractor for getting intensives of any cost reductions. The contractor always try to reduce cost in all times. Sometimes, I do the work from my office without traveling to the site which reduce my transportation cost and travel time too. In some countries there is also an E-Sharing system for construction human and equipment’s resources. Such systems are for governments only and some are available for all contractors. With the new emerging cloud technologies there are many solutions for resources E-Sharing and resource portfolio management.
Therefore, here in Middle East, they still far away of such practices. Although recently, UAE allowed for part time work to allow sharing the human resources. This is a very good step. However, contracts should be modified to make it possible and easy. Some project managers are still finding it difficult to trust if the resource demobilised, /he/she/it will come back again on timely manner. Therefore, the one way to reduce project cost in the region is to change the contracts and give intensives to share the benefits of cost reduction (of the estimated budget) between the client and contractors. It is a step we are looking to see in the Middle East. Some contractors might jump up and say we are already losing and pricing with high risk. I might agree; this could be tested further through cost reduction intensives. However, it is not the interest for the client to push the contractors to collapse and close. It limits the competition and drive to more project cost. It is a common interest for all to use resources to the maximum efficiency.
Finally, reducing cost and increasing efficiency are the main benefits of using project portfolio management. If your work culture is not encouraging it, start now.

Best wishes for all.
Ziad Albasir

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