The Use Of Project Definition Rating Index Business Essay

I work as a cost estimator and a major problem I face in my work is that of incomplete or poor scope definition to do the estimates. I am not alone in this dilema; my colleagues in the planning and scheduling team also face similar problem. It is in fact recognized as an industry wide problem. According to Gibson, G. Jr., and Wang, Y., 2001, Poor scope definition is recognized by industry practitioners as one of the leading causes of project failure, adversely affecting projects in the area of cost, schedule and operational characteristics [1] .

The impact of poor scope definition on projects is enormous. There was therefore a need to develop a project management tool to assist with project scope definition. The Construction Industry Institute (CII) championed this effort which gave birth to the Project Definition Rating Index (PDRI), a scope definition tool, in 1996. The tool is still in use as evidenced by examples of current usage.

This paper will define key scope definition concepts, discuss the reasons for poor scope definition, the impact of poor scope definition on projects and how scope definition can be improved using the Project Definition Rating Index.

The paper also examines the usefulness of PDRI in an Integrated Project Delivery (IPD) approach as well as in a Building Information Modeling (BIM) environment.

The paper concluded that PDRI improves scope definition by identifying poorly defined elements, focusing attention on them and updating their definition to an acceptable level and that the tool is most useful in a traditional construction environment but has limited use in a BIM environment. It recommended wide publicity of the tool and the updating of the tool so as to be relevant to modern project delivery approaches such as IPD and BIM.

Keywords: Scope definition, Preproject planning, Work breakdown Structure, Project Definition Rating Index, Integrated Project Delivery, Building Information Modeling.

TCMF Processes: 3.2 – Asset Planning; 4.1 – Project Implementation; 7.1 – Project scope and execution strategy development; 7.6 – Risk Management; 11.5 – Value Management and Value Improving Practices

2. INTRODUCTION

Inadequate or poor scope definition, which negatively correlates to the project performance, has long been recognized as among the most problems affecting a construction project [2] . Due to poor scope definition, final project costs can be expected to be higher because of the inevitable changes which interrupt project rhythm, cause rework, increase project time, and lower the productivity as well as the morale of the work force [3] . Unfortunately many owner and contractor organizations do a poor job of adequately defining a project’s scope leading to a poor design basis [4] . Scope definition activities take place at the pre-project planning phase.

2.1 Pre-project planning

Pre-project planning is the project phase encompassing all the tasks between project initiation to detailed design. Development of the project scope definition package is a major subprocess in this phase [5] . The Construction Industry Institute (CII) defines preproject planning as the process of developing sufficient strategic information with which owners can address risk and decide to commit resources to maximize the chance for a successful project [6] . The scope definition package when properly done, gives information to analyze and address project risk as well as form a basis for estimates and schedules which would enable management take decision to commit resources to the project. “Research has shown the importance of preproject planning on capital projects and its influence on project success. Findings of a Construction Industry Institute (CII) study carried out in 1994 proved that higher levels of preproject planning effort results in significant cost and schedule savings. Specifically, the research study categorized 53 capital facility projects into three different intensities of preproject planning effort and compared total potential cost and schedule performance differences as follows:

A 20% cost savings with a high level of preproject planning effort

A 39% schedule savings with a high level of preproject planning effort

Because of the significant savings associated with improved project predictability, the study concluded that a complete scope definition prior to project execution is imperative to project success” [7] .

2.2 Project Scope Definition-What is it?

The project scope defines what the work is (i.e.,the work that must be performed to deliver a product, service, or result with the specified features and functions ) [8] . Project scope definition is the process by which projects are defined and prepared for execution and It is at this crucial stage where risks associated with the project are analyzed and the specific project execution approach is defined [9] .

It follows from above definitions that if the work to be done in a project is not clear or not properly defined, the execution of such project will run into problems. One of such problems is cost overruns. “Poor scope definition and loss of control of the project scope rank as the most frequent contributing factors to cost overruns” [10] .

2.3 Work Breakdown Structure (WBS) and WBS Dictionary

A scope is better understood when broken down into smaller manageable bits or components and the WBS helps to do this. The WBS is a tree structure of successively further breakdowns of work scope into component parts for planning, assigning responsibility, managing, controlling, and reporting project progress [11] . The top of the tree represent the whole and subsequent levels represent divisions of the whole on a level by level basis until the smallest element desired is defined [12] . What the WBS contains are scope deliverables and not the activities and task to accomplish the deliverables. These task and activities are covered in the project schedule. However a schedule draws from the lowest level of the WBS which is the work package.

The WBS is further defined as “an effective display technique for defining and organizing project work. For the owner, the WBS represents what is being bought while for the contractor, it contains all work being performed on the project” [13] . The WBS is derived from the Asset Owner’s scope statement.

The WBS does not stand alone, as a dictionary of actual scope must accompany the WBS structure [14] . The WBS dictionary describes the specifics and exact scope of each deliverable.

While the WBS is an attempt to properly define scope its success has however been limited. The main reason is that its elements and descriptions are not standardized even within the same organization. Some organizations and project managers are even confused about the proper use of the WBS. Humphreys, G, 2002, alluded to this confusion when he asked the question, “If this structured approach to organizing the scope of work (referring to WBS) is commonly used, why is there confusion?” [15] . Humphreys’ answer is that some persons use the WBS to reflect the organization that is accomplishing the work rather than the work itself [16] . Other misconceptions are equating the WBS with a schedule or list of activities to deliver the works. The end result of these misconceptions and lack of standards is poor scope definition.

2.4 Poor Scope Definition and Reasons for it.

Poor scope definition refers to scope whose definition is incomplete, inadequate, inaccurate or vague. As earlier stated poor scope definition is the root cause of many project failures. One may want to ask, what are the reasons for poor scope definition? I state below a few of the reasons:

Absence or non use of a scope definition tool

Absence of standardized WBS

The haste to get budget approval

Poor interface between Engineering (Design) and project team

Customers/Client not making up their minds on time.

Incompetence of design team

Misinterpretation of clients requirements

For 1st time asset owners; non appreciation of the end product from the beginning.

Owner not willing to commit resources for full scope definition

3 THE NEED TO IMPROVE PROJECT SCOPE DEFINITION

The need to improve project scope definition arises from the impact poor scope definition has on projects. Where scope definition is poor a project is impacted in several ways. Some of these impacts are summarized here below:

3.1 IMPACTS OF POOR PROJECT SCOPE DEFINITION

Impact on cost estimates: Poor scope definition leads to delay in the delivery of estimates, over or under estimation, high level of contingency allowance and continuous revision of the estimates as omitted items are added or inaccurate items are corrected. Furthermore final cost will be higher than budgeted. According to O’Connor and Vickroy 1986, final project costs can be expected to be higher because of the inevitable changes which interrupt project rhythm, cause rework, increase project time, and lower the productivity as well as the morale of the work force [17] .

Impact on schedule: Poor scope definition leads to schedule slippage and consequently late delivery of the project. A typical example is the addition of necessary work items that were omitted from the scope the schedule was based on. These will require additional time to plan and execute. There would also be delays resulting from the integration of the new works into the existing works as the project rhythm will be disrupted and some items reworked. Poor scope definition leads to an unrealistic schedule and this will give false information during progress measurement. This means that a contractor could be overpaid or underpaid when earned value measurement is based purely on the schedule. Another impact is that resources will be wrongly allocated to activities as their exact scope is unknown.

Impact on risk assessment: One of the risk events that projects cater for is lack of, or poor scope definition. This risk is mitigated by the use of contingency, monetary in case of cost estimates and additional resources or longer durations in terms of schedule. Contingency is an amount added to an estimate or schedule to allow for changes that experience shows will likely be required [18] . These are usually referred to as “Known Unknowns”. Experience has shown that once a contingency is provided, it is often used up. Furthermore the cost of the changes covered by contingency for items that are not similar to existing works are higher because of time difference and lack of competition during the execution phase, thus the asset owner pays more than he should have paid if the scope was completely defined before execution phase.

Claims and many change orders: Poor scope definition leads to schedule slippage which in turn leads to contractual claims for extension of time as well as extended project management, head office overhead and site indirect cost. Apart from time extension claims, there would also be claims for loss of profit, underutilization of planned resources, standby time necessitated by many scope changes and outstanding work scope definitions and clarifications.

Where there is schedule slippage, the project owner may order acceleration measures to clear out the slippage. The cost for this acceleration is recoverable by the contractor if the cause of schedule slippage is due to poor scope definition. The project owner ends up paying more than he should have paid if scope was well defined.

Project Abandonment: If the impacts discussed above are extensive, the project may be abandoned as the owner may not have the necessary funds to continue with the works. This is usually the case with many government projects. Furthermore the return on investment (ROI) may no longer be attractive forcing the owner to abandon or suspend the project.

If we must avoid or minimize the above impacts, a lot more work need to be done at defining the project scope. Following this need for improved project scope definition, the Construction Industry Institute (CII) funded a research which resulted to the development of a project definition tool, called the Project Definition Rating Index (PDRI), Industrial version in 1996. The Building version followed in 1999.

The next segment of this paper will discuss the Project Definition Rating Index and how it is used to improve project scope definition

4 PROJECT DEFINITION RATING INDEX (PDRI)

4.1 WHAT IT IS

The Project Definition Rating Index (PDRI) is a project management tool designed to increase the likelihood of project success by improving project scope definition, specifically by identifying deficiencies in scope definition early during the front-end planning process [19] . Cho C. S and Edward Gibson Jr described it (PDRI-Industrial) as a scope definition tool that is widely used by planners in the industrial projects sector [20] . Edward Gibson Jr (2004) described it as a risk management tool as it identifies and measures risks related to project scope definition [21] .

There are two versions of this tool, the PDRI Industrial projects and PDRI Building projects. PDRI Industrial was developed in 1996 for Industrial projects such as refineries, chemical plants, power plants and heavy manufacturing while the building version was developed from the Industrial version in 1999. It covers various building types such as offices, schools, apartment buildings, hotels etc.

The structure of the PDRI is as follows:

Table 1: PDRI Structure [22]

Version

Sections

Benefits of the PDRI

The PDRI has many benefits or uses. According to Cho, C.S and Gibson, G. Jr, 2001 [26] , “it can be used as:

A checklist that a project team can use for determining the necessary steps to follow in defining the project scope

A listing of standardized scope definition terminology

An Industry standard for rating the completeness of the project scope definition package during the planning process in order to measure progress, assess risk, and re-direct future effort.

A means for project team participants to reconcile differences using a common basis for project evaluation

A tool that aids in communication and alignment between owners and design contractors by highlighting poorly defined areas in a scope definition package

A training tool for organizations and individuals

A benchmarking tool for organizations to use in evaluating completion of scope definition versus the performance of past projects, in order to predict the probability of success on future projects.”

Using the PDRI to evaluate projects level of definition

This section deals with the actual scoring of a project to determine its level of definition.

A project team meets at any point during the pre-project planning phase to conduct the assessment. Amongst them is an independent facilitator who is preferably not part of the project team but has good knowledge of the project. The project team and facilitator are provided with the scope definition package of the project (scope statement, WBS, studies, design sketches/drawings, specifications etc) an un-weighted PDRI score sheet, detailed PDRI elements description and a weighted score sheet preferably for only the facilitator. It is not advisable to provide the weighted score sheet to team members at the scoring session as they may be tempted to target a particular score. An un-weighted score sheet for Buildings is shown in Appendix B.

Each element and its description are read from the PDRI and this is compared to what is provided in the scope definition package of the project being assessed. See extract of element description in Appendix C. The project team by consensus selects a level of definition (0 to 5) that fits the element under consideration and checks the box under the definition level that correspond to the element. The facilitator picks the weighted score that corresponds with the checked definition box (in un-weighted score sheet) and transfers it to the score column of the weighted score sheet and that becomes the score for the element. This process is repeated for all the PDRI elements. The elements score so derived are added together to give the category score and the categories score added together give the sections score and sections score added gives the PDRI score for the project. “The lower the total PDRI score, the better the project scope definition. Higher weights signify that certain elements within the scope package lack adequate definition and should be re-examined prior to construction documents development.” [27]

Improvement of scope definition using PDRI

The PDRI 70 or 64 elements (Industrial or Building) are comprehensive descriptions of all scope issues to be encountered in a project. They are issues that need to be addressed in pre-project planning [28] . If Project owners and design teams work with the PDRI elements, they are not likely to have omissions of vital elements in the project scope. It serves as their checklist in defining the project scope.

With the detailed description of the PDRI elements a facility owner is made aware of the additional information he needs to provide to ensure project success. When these are provided scope definition is improved.

One of the ways to improve project scope definition is the use of standardized work break down structure (WBS). An acceptable standardized WBS has been an illusion both in the Building and Industrial Sector. The hierarchy of PDRI sections, categories and elements can form the basis of a work breakdown structure (WBS) for proper scope planning [29] . This can be adopted as a standard subject to some amendments discussed later in this paper.

The PDRI scoring process throws up items that are poorly defined and thus require further action. So rather that go with incomplete scope into the next gate or execution phase, a better definition is sought and achieved before proceeding.

When doing a PDRI assessment ambiguous statements or definitions are identified and clarified from relevant stakeholders, thus improving on the scope definition.

Some Examples of Current Application of PDRI

The US Army Corps of Engineers in its’ Engineering and Construction Bulletin No. 2010-17 dated 29th July 2010 issued a guideline for the implementation of Project Definition Rating Index. It states ” Beginning with the FY11 USACE managed MILCON Program, implementation of PDRI will be a requirement.” [30]

The US Department of Energy also issued a guide for the use of PDRI for its Traditional Nuclear and Non- Nuclear Construction Projects, dated 22nd July 2010. It stated, “This Guide assists individuals and teams involved in conducting assessments of project definition (i.e. how well has front end planning been conducted to define the project scope) using a numerical project management tool developed by the Construction Industry Institute (CII) that has been tailored for DOE use. The tool is called the Project Definition Rating Index (PDRI)” [31]

PDRI IN AN INTEGRATED PROJECT DELIVERY APPROACH

The PDRI has generally been applied to traditional construction projects that follow the design, bid and construct approach. In this approach the design team finishes their work and handover to the construction team. The construction team first interface is usually after the completion or partial completion of the detailed designs. At this point the execution is ready to commence, and time and budget are already firmed up. Any discrepancies noticed between various drawings and omissions and or additions at this point onward translate to request for change orders. The effect of poor scope definition begins to manifest.

Construction today is moving from the traditional approach described above to Integrated Project Delivery approach. Integrated Project Delivery (IPD) is a project delivery approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of

design, fabrication and construction [32] . In an integrated process risk and benefits are jointly shared.

Key requirements in the IPD process are collaboration and early involvement of various stakeholders. The owner, architect, engineers, contractor, subcontractors are assembled at the inception of the project and they jointly work through the clients brief or statement of scope, making contributions from their various disciplines. This collaborative approach is continued through the various phases of the project until the works are completed and handed over to the owner.

Scope definition in this approach is a joint work making room for varied and comprehensive ideas; items that would have caused discrepancies on site are thrown up and resolved. Those who usually asked for information clarifications at execution stage are all part of the team developing the scope and are thus able to point out those areas that are usually incomplete in scope definition using the traditional construction approach. In this approach the PDRI in its current form can be used as a benchmark for the completeness of the information that the detailed design would be based on.

PDRI IN A BUILDING INFORMATION MODEL (BIM) ENVIRONMENT

BIM is an Integrated Project Delivery Approach with virtual models and data bases. “A building information model (BIM) is a digital representation of physical and functional characteristics of a facility.

As such it serves as a shared knowledge resource for information about a facility forming a reliable basis for decisions during its life-cycle from inception onward” [33] . The basic model is 3D but when sequence of construction is added, it becomes a 4D model. When linked with estimating software it becomes a 5D model. The use of 3D model in BIM enhances visualization and provides clarity particularly for persons with little skills in reading construction drawings. As an IPD process the project stakeholders are assembled early in the planning process and working collaboratively are able to generate a lot of diverse and comprehensive scope information within a short time. Based on the generated information, the Architect, Engineers, and fabrication contractors/subs develop their virtual models which are shared with the team members. By this approach areas of conflict are identified and fixed while still in the design development stage. In the traditional construction approach these conflicts are not identified until the execution phase and they generally lead to change orders and hence cost overruns. BIM is based on information and data which must be organized, stored, retrieved, and transmitted through out the life cycle of a project. One of the envisioned tools for organizing information in BIM is the Omniclass Construction Classification System (OminClass or OCCS). According to the US National Institute of Building Sciences, OmniClass is applicable for organizing many different forms of information important to the NBIM Standard, both electronic and hard copy [34] . OmniClass has 15 tables for classification of construction information. For example construction information can be classified by elements (table 21), products (table 23), disciplines (table 33) etc. Entries in the OmniClass tables can be explicitly defined in the IFDLibrary once and reused repeatedly, enabling reliable automated communications between applications – a primary goal of NBIMS [35] . IFD Library is a kind of dictionary of construction industry terms that must be used consistently in multiple languages to achieve consistent results.

The PDRI can find expression in BIM if its 64 elements are aligned with the OmniClass elements table. But herein also lies the limitation as the information in BIM can be organized with several other tables. Where this is the case the PDRI will not be useful.

CONCLUSION AND RECOMMENDATIONS

The PDRI is a scope definition tool that can be used on any project with tremendous benefits as earlier highlighted. Its’ use minimizes the effects of poor scope definition on a project. However the usage is still limited to America and some parts of Europe. Considering its contribution to project success I recommend that the tool be widely publicized for use by a greater audience.

Many people already use one form of WBS or the other for scope definition, the problem however is the non standardization of the WBS and its’ dictionary. OmniClass is proving to be a dominant classification system whose elements can be used to form the building blocks of a standard WBS alongside the IFD Library. It is recommended that the PDRI elements be updated and aligned with the OmniClasss elements to ensure its continued usefulness in a fast changing construction Industry. The PDRI is most suited for traditional construction approaches. With modern project delivery approaches such as IPD and BIM, the need for the recommended alignment of PDRI elements with OmniClass cannot be over emphasized. The PDRI in its current form has limited application in IPD and BIM environment.

The Project Definition Rating Index (PDRI) is a project management tool designed to increase the likelihood of project success by improving project scope definition, specifically by identifying deficiencies in scope definition early during the front-end planning process [36] . Analyses of scores from a project assessment using the PDRI isolates poorly defined elements of scope for which further action can be taken. When this further action is taken it leads to improvement in the overall definition of the project scope. I therefore recommend this tool for anyone who wants to improve project scope definition and ensure success in his project.

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