Reference no: EM131189463

CASUAL LOOP DIAGRAM

The following causal loop diagram will help the project managers in construction industry to manage the uncertainties and unexpected dynamics on project performance. The purpose of this tool is to foresight how the relation of the factors causing uncertainties impact on the project performance.

Primarily, the processes executed within the project are represented as a stock of work remaining into work done through 'rate at which work is performed', 'rate of resource usage' and 'quality'. Work remaining is determined by the scope and changes with the scope change. When the work done achieved is 100% of the total scope of the project, the project is completed.

At the beginning of the project, a time-span is estimated for the project completion, i.e. time estimated for completion. Within a timeframe, a completion date is estimated, determining the finish date of the project. If time taken to complete the project is more than the time estimated for completion of the project, this will in turn increase the project instability, such as more resource usage, low performance and quality.  A scheduled review process is conducted, to examine whether the project will be completed within the estimated completion date. On reviewing the project, it may be difficult to balance the scheduled completion time and progress, thus in turn requiring a revised scheduled date.  

The estimated completion date is reviewed to check whether the project is progressing as scheduled or not. Following the review, a revised scheduled date is set up which may be because of uncertainties or external factors. The project manager must consider the time constraint as an important factor to stabilize the project and avoid fluctuations within the project.

The revised schedule date causes delay in the work scheduled, and thus a proper time and work balance must be maintained else it could take several months to stabilize the project and achieve the project on time.

The delay in the work schedule is directly proportional with the budgeted cost of work scheduled. The more the delay in work scheduled, more the budget has to increase because of high resource usage rate, more labor requirement and cost associated with penalty for not completing work on time.

If the Budgeted cost of work-scheduled turns out to be more than expected, it will lower the scheduled performance of the overall project. The project must be in equilibrium; else high budget will cause poor scheduled performance, requiring a new longer estimated finish date and so on.

A longer time estimated for completion leads to greater estimated delay in the project, which in turn increases the managerial work pressure. As a result of the work pressure, work quality and work productivity decreases, finally leaving a worst impact on scheduled performance.

In order to maintain the quality of the work, the rate at which work is performed needs to be increased so that there is no longer time estimated for completion, less delays and low work pressure. Whereas lower productivity requires higher rate of requirement of resources in order to maintain productivity thus pressurizing higher rate at which work is performed. This affects the task to be performed within an estimated budget, as resources are being consumed more readily, causing budget over run.  These additional resources but in turn grant a better scheduled performance and lower estimated delays in the project.

Lack of business experience in construction industry arises issues such as over-trading, lack of systematic approach to manage project and lack of financial capacity. They are the primary factors for difficulty in acquiring work, bad judgments, lack of experience in firm's line of work, lack of managerial experience, difficulty with cash flow and low profit margins (Mahamid, 2011).

Time is the most important factor in construction projects, which accounts for starting date, completion date, approval of appropriate budget for projects and import dates in contract submission by contractors. Thus, reluctance in timely decision by top management leaves a negative impact on lack of systematic approach to manage projects.

Due to lack of systematic approach, potential management risks that could have been omitted are left unattended, there are lack of resources and poor estimation of events leading to poor risk management.

Poor performance of contractors and sub-contractors is one of the causes for delay in construction projects.  According to Banaitiene and Banaitis, 2012; "ten overall contractors delay factors were identified, namely: contractors' financial difficulties, client' cash flow problems, architects' incomplete drawings, subcontractors' slow mobilization, equipment break-down and maintenance problems, suppliers; late delivery of ordered materials, incomplete structural drawings, contractors' planning and scheduling problems, price escalation, and subcontractors' financial difficulties".  Poor risk management is the key factor leading to such actions and inactions of contractors and sub-contractors for delay in construction projects.

Such performance from the contractors and sub-contractors adds to the initial delay, which in turn increases the work scheduled as more rework will be required from contractors to sub-contractors. It also has a negative impact on completion date of the project, as more delay will disturb the equilibrium of the project and surprise with uncertainties.

In large construction projects, communication is the key factor for successful projects. There should be a clear communication between the project manager and the contractor in order to make sure that progress is tracked regularly. If the progress is not tracked and both parties function without any sign of communication between them, the end result will be undesirable and add up to more cost, resources and wastage of time for project managers, thus arising conflicts between project managers and outside contractors. These conflicts affect the productivity and the quality of the project, with a final affect on 'rate at which work is performed'.

The project suffers lack of cash flow, budget over-runs and delays because of lack of business experience. They all contribute to the lack of financial capacity causing project failure because of cost and lack of time management, as well as affecting the budget allocated to each task.

Changing needs of clients, such as frequent changes in design, changes the scope of the project. It addresses project failure because of project stakeholders unable to implement change once the project is completed, as well as failure to manage those changes.

REFRENCES:

Ibrahim Mahamid, 2011. Causes of Contractor's failure: Contractor's view. 2nd International Conference on Construction and project management. IPEDR vol.15 (2011) IACSIT Press, Singapore. [online]. Available at:

https://www.ipedr.com/vol15/1-ICCPM2011A00002.pdf [Accessed 2nd July 2016]

Nerija banaitiene and Audrius Banaitis, 2012. Risk Management in Construction projects. [online]. Department of Construction Economics and Property Managament; Vilnius Gediminas Technical University, Vilnius, Lithuania. Available at:

https://cdn.intechopen.com/pdfs/38973/InTechRisk_management_in_construction_projects.pdf [Accessed 3rd July 2016].

Attachment:- CASUAL LOOP DIAGRAM.rar