There is a common misconception that a prerequisite of location-based management is using IPD or some other collaborative contract form. Although these new contract forms provide better transparency and a better way to share the savings, over 90% of projects using LBMS (Location-Based Management System) in Europe and in the US have the traditional hard bid as the contract form. However, there are great differences in how LBMS is used in different contract forms and where the ROI is going to come from. This article discusses the use of LBMS in projects where subcontractors are working on a hard bid basis.
Master Schedule
The goal of the master schedule is to define "need times" for procurement, the Location Breakdown Structure for the project, the overall strategy of construction (multiple crews/single crews), milestones for construction phases, total project duration, and production rate requirements for all the main subcontractors. Because the master schedule is typically planned before subcontractors are selected, productivity rates may be unavailable for subcontracted work unless the GC has been using LBMS in previous projects and collected these productivity rates.
The master schedule should be planned by using model-based quantities and productivity rates from RS Means or company's own database. The actual number of resources is relevant only for checking the feasibility of the production rate. It will change when the subcontractor is selected. The critical thing is to establish a production rate requirement (for example, sf/week) which is used in the Request for Proposal.
Procurement Schedule
In location-based scheduling, procurement events (such as design needed, RFP, bid evaluation, contract) are pulled based on the production schedule. Production gets the first priority and latest possible dates are used for procurement to minimize changes to bid documentation.
Bid Evaluation
Bids are evaluated based on location-based quantities. Quantities can be sent to subcontractors as indicative quantities and subcontractors should be asked to provide unit rates. This helps the GC to validate the total price and find out the reasons for differences in unit rates. Contracts can still be done as total price. Bids should include a production rate that the subcontractor is able to achieve in good conditions (units / day or / week assuming that the drawings are available, the location is clean, materials are available, RFIs answered, etc.).
Detailed Planning
After the subcontractor has been selected, his/her work should be planned in detail using the productivity and resource information. Subcontractors should be required to give this information. If they do not, the GC will be able to calculate it anyway during production. The result of integrating the subcontractor's information with the schedule is an accurate resource graph. The subcontractor should commit to the general resource loading although specific mobilization dates and crew sizes will be adjusted based on schedule forecast information and actual productivity. Typically a resource loaded schedule will show different resource loading than expected by the subcontractor. This is typical because the subcontractor does not know about requirements of other trades.
Production Control
Actual start and finish dates in each location are tracked. Subcontractors should be required to provide this information weekly (daily for tasks with production problems). Actual resources should be reported daily but they do not need to be allocated to locations or tasks because that can be automated based on ongoing tasks and locations on that date. By combining actual production with resource number, actual labor consumption (manhours / unit) will be calculated and can be used for forecasting future progress. If a subcontractor is not achieving their production rate targets, it is a simple calculation to determine how much productivity needs to be improved or how many more workers need to be added to achieve the required production rate.
Alarms are used to prevent subcontractors from causing problems for the other trades. When an alarm happens, the GC needs to take immediate action to prevent cascading delays. In typical projects, cascading delays increase project duration by 10% (see my earlier article about cascading delays).
Claims Support
Because the location-based management system contains planned quantities, production rates, resources and productivity and actual values for the same variables, it is straightforward to negotiate any claims. All the required information is contained in the BIM model or LBMS, supplemented by meeting memos, RFIs and other information. Typically, the objective data contained in LBMS can be used to prevent litigation because facts are not subject to interpretation.
For more information on scheduling strategies in a hard bid enivronment, please review the archived Fridays with Vico episode.
For more information on model-based scheduling, please review the archived BIM 401 webinar from Fridays with Vico.