In the world of engineering and construction projects, we often, if not always, meet the natural requirements of effectiveness and efficiency. In fact, a lot of money, time and effort is devoted to ensuring that projects are carried out effectively and efficiently.
Let us begin with the definitions of these terms. Effectiveness is the “Ability to produce the desired effect or to go well for a certain thing", that is the ability to reach the objective, although usually it is not necessarily associated with reaching it in an economic way.
“… the triple constraint: scope, cost and time. If one of these restrictions is compromised, the other two must compensate…”
Efficiency, on the other hand, is the "Ability to perform or fulfill a function properly"1, so here the term "properly" does lead us to the economy of resources with which a goal is reached.
The point is that, while typical market demands seek to obtain both concepts: that the project team achieves effectiveness (the project is completed and begins its operation quickly by overcoming all possible obstacles), and efficiency (within the budget). These two concepts may find themselves opposed very often.
It is thus sought that activities that would normally run in series be executed in parallel, method known as "fast track", or increase resources in order to shorten deadlines, method known as "crashing". It is a known fact within the project execution methodology that "fast track" increases risk, while "crashing" increases cost.
In the Project Management discipline, there is a principle called the triple constraint: scope, cost and time. If one of these restrictions is compromised, the other two must compensate the deviation. Thus, if a project falls behind schedule (delay), it can be realigned with the plan by reducing the scope, increasing the cost or a combination of both actions.
As can be intuitively seen, time impacts often lead to cost increases, even if they do not affect scope. However, changes in scope have both cost and time impacts. Cost impacts may not affect time or scope, but trying to mitigate them usually affects scope, rather than time.
Going back to the concepts of effectiveness and efficiency, it is easy to see that effectiveness is quite related to time, while efficiency is related to cost. Usually what is sought from the beginning in every project is to define the scope ("freeze it") and, on that basis, set the baselines for the cost or "capex" (from "capital expenditure") and the time, reflected in the schedule.
Some common ways to proceed are to start construction work before the engineering is completed (it means "fast track") or speed up the mobilization of the construction team to the construction site to "break the inertia".
I have worked in engineering and construction for more than 25 years and I have heard the phrase "...get in at once to break the inertia" with a really important frequency. The thing is, in construction, the operation is tremendously expensive. If a contractor is to be mobilized to the construction site, it is essential for such mobilized contractor to produce.
Some owners may think that it is the contractor’s responsibility and that they have hired the contractor to solve all the problems. I have news for you: the problems are not the contractor’s, they belong to the project and, when these problems appear, it will be the owner who ends up assuming the costs, in one way or another.
To instruct the mobilization of the contractor without having set the agreed-on conditions as per the contract (i.e. free access to the construction site, areas for temporary facilities, timely supplies when they are the owner’s responsibility, etc.) will certainly lead to problems and claims.
Not only will there be time extensions, whether or not the owner grants them to the contractor, the actual schedule will need to be extended; but the contractor will claim low productivity, stand-by resources and overhead costs for the extension. There will be a conflict with cost overruns and the final date of the project will not be as expected. As a consequence, the philosophy of "get in at once to break inertia" will not improve the final date but, on the contrary, will also cause cost overruns and a controversy.
The reality is that the best, most effective and efficient way to proceed, is to order the mobilization of the contractor when there is reasonable certainty that all the agreed-on conditions are in place, so that the contractor has no argument for subsequent claims.
This may even involve delaying the mobilization order to the construction site, but if that delay ensures that the contractor is mobilized and immediately able to produce, the result will be an optimization of the work schedule and a significant reduction in the risk of cost overruns. Moreover, contractors in the situation of being able to "run" with the execution will be happy to complete the work and get their money as fast as possible.
The fact is that a construction work is like a military operation, success resides in entering and leaving quickly. Delays only mean loss of money for contractors and such contractors will be tempted to try to charge the owner. It is essential for the owner to be able to prove that all the agreed-on conditions were fulfilled, so no claim from a contractor has any base.
In times of change, when agility and economy are needed at all levels, the use of specialized services provides that precise mix of capacity, effectiveness and efficiency that organizations need to succeed.
At DC&R we are able to meet these requirements with professional solvency and the experience of more than 25 years in complex engineering and construction environments for heavy industrial markets of high demand such as mining, gas & oil, or energy, as well as for infrastructure and commerce.
DC&R also offers technical assistance services to businesses that need to interact with engineering and construction companies, from tender and project management to contract administration.