• Internal Code :
  • Subject Code : PROJ6001
  • University : Laureate International Universities
  • Subject Name : Change Management

Change Management System & Organization Project Environment Assessment

Table of Contents

Introduction
Change in organization’s project environment 
Evaluation of change in project management
Impact of change on project plan and cost
Impact of change on project time
Impact of change on Integrated project control
Impact of change on project life cycle
Justification
Conclusion
References

Introduction

Delays disputes between contractor and client contribute to cost and time overruns. Many types of research in the construction industry reduce the problems associated with delays. Here the existing management system doesn't focus on predicting or forecasting the risk and delays. Rather they monitor the planned progress according to achieved progress. To date, there is no accurate method to resolve the problems involved in delays. Effective decisions have to be taken before a construction project started to avoid bad issues in projects. Forecasting of cost and time in a construction project can make the project manager aware of problems due to risks and delays. It can provide a sense of direction that will allow the project manager to predict future trends and change their company objectives to achieve success in the environment with the implementation of an earned value-based management system. Looking at what has happened in the past and can help companies predict what will happen in the future. By forecasting regularly, it forced companies to continually think about their future and where their company is headed. One of the advantages of forecasting cost and time is that it allows companies to predict how much resources will be needed to complete the construction project in time. To receive financing for new work or to fund an existing scope of work forecast will need to be completed. Forecasting helps how much inventory should be on hand at a given time. By choosing the right amount of inventory, the construction firm will be able to save on warehouse and transportation costs. A drop in construction cost is never good for a construction firm. Through forecasting costs, drops could be easily identified and dealt with quickly. Prediction of time and cost in projects may be done with the help of earned value analysis. Traditional forecasting methods include regression and trend analysis, etc (java statistics for management, 2013). As accuracy is very important for forecasting methods, very little accuracy evaluation has been done on real projects. Most of the studies so far have been based on simulated data. (Mathieu Wauters et.al, 2015) For doing earned value analysis, clear project scope is required together with the project budget and project schedule. As per ASQ journal different knowledge areas are studied in this case which includes effective time and cost management. 

The earned value-based management system is purely based on a prediction of future costs of the project without affecting the overall budget of the project. Here anticipated risk and delays are reconsidered for an effective management process. So the probable risk will be modeled, analyzed, and prioritized based on similar case studies. The project chosen here is the construction of Airway apron, parking bays, and artificial ground lighting system. The awarded value of the project is 1.63 billion.

Table 1: Objective and Scope

SL NO

OBJECTIVE

SCOPE

1

To determine major factors contributing to risk  in construction projects

Airport construction project is considered

2

To evaluate different forecasting methods

Earned value based formulae are only considered

Change in organization’s project environment

From the above table its clear that an effective management system was not implemented as the planned progress was not achieved. An earned value-based management system helps the project manager to improve project delivery. The details of the work scheduled and completed are as per the above table. Some of the works were not completed as per the plan due to climatic conditions, availability of labors.

Who asked for the change

The change was asked by the Managing director of airport authorities as the work was not finished as per the plan. More resources and material were to be utilized for the project deviating from the initial plan.

Reason for change

Main reason was to control the project cost and time as huge deviations was observed between planned progress and achieved progress of the project.

Risk in the project

The risk involved in the project included the determination of all the major factors that contributed to the delay and implementing certain measures to control the cost and time in the project.

Evaluation of change in project management

Forecasting of cost and time help project manager to clearly understand the future of a project from cost and schedule point of view. Here it helps to know about the fund and duration that are required to complete the project based on different perspectives. Prediction of the future performance is done based on the estimated cost of work to be completed as well as by earned value methods.

Impact of change on project plan

The deviations in the project plan were very much decreased when an earned value-based system is introduced. As the change method was implemented in the middle of the project the progress work was completed with the scheduled time as per the plan.  

Impact of change on project cost

The predictive power of the new changed method is considered here. The term used for estimating the cost is EAC known as estimate at completion. Several formulae are depending on the nature of the project in various scenarios

Different scenarios are represented by EA(C1-5). They are described as follows:

Table 2: EVM based formulas for cost forecasting

METHOD

FORMULAE

EAC1

Actual Cost+Budget At Completion-Earned Value

EAC2

Actual Cost+(Budget At Completion-Earned Value)/Cost Performance Index

EAC3

Actual Cost+(Budget At Completion-Earned Value)/Schedule Performance Index

EAC4

Actual Cost +(Budget At Completion-Earned Value)/(Cost Performance Index *Schedule Performance Index)

EAC5

Actual Cost +(Budget At Completion -Earned Value)/(0.8*Cost Performance Index +0.2*Schedule Performance Index)

Table  3: Earned value parameters

SL.NO

MONTH

PV(Rs)

EV(Rs)

AC(Rs)

SPI

CPI

1

Dec 14+Jan15

22500000

12850000

14900000

0.57

0.86

2

Feb-15

128200000

61392889

84300000

0.48

0.73

3

Mar-15

265200000

15693557

205700000

0.59

0.76

4

Apr-15

440700000

28664820

332000000

0.65

0.86

5

May-15

613500000

38021904

438900000

0.62

0.87

6

Jun-15

681600000

42719319

487600000

0.63

0.88

7

Jul-15

730800000

45284423

516500000

0.62

0.88

8

Aug-15

785400000

49738718

548400000

0.63

0.91

9

Sep-15

876500000

53306397

575000000

0.61

0.92

10

Oct-15

1011600000

55149045

599000000

0.55

0.92

11

Nov-15

1157900000

57100000

608200000

0.62

0.94

12

Dec-15

1292200000

64150000

665900000

0.62

0.96

13

Jan-16

1398600000

69100000

720200000

0.63

0.98

14

Feb-16

1478300000

82100000

837100000

0.63

0.99

15

Mar-16

1560700000

94150000

963100000

0.64

1.01

16

Apr-16

1605300000

104250000

1068500000

0.64

1.03

17

May-16

1633000000

105410000

1087200000

0.65

1.04

Clear project scope is required together with a budget and schedule to implement an earned value-based management system. The budget shall be distributed to overall activities in the project. The budgeted cost over time is the first measure together with planned value (PV) and actual cost (AC). By adding these budgeted costs over time a first measure is obtained, the Planned Value (PV). Earned value is the monetary value of the activities that are finished. The other measure is the actual cost (AC).(Byoang et.al, 2011). This represents the real cost for all work that is executed at a certain point in time. 

Parameters include:- 

Planned Value (PV) = (BCWS) Budgeted cost of work scheduled

Earned Value (EV) = (BCWP) Budgeted cost of work performed 

Actual Cost (AC) = (ACWP) Actual cost of work performed

Costs that are used for analyses were collected from GVH P Ltd and earned value from the amount they quote to CIAL for each month after completion of the required work.

Table 4: Cost  forecast

SL.NO

MONTH

EAC1(Rs)

EAC2(Rs)

EAC3(Rs)

EAC4(Rs)

EAC5(Rs)

1

Dec 14+Jan15

1635050000

1898795349

2857268421

2459336842

2837460976

2

Feb-15

1655907111

2237186453

3358481481

2474452481

3304806375

3

Mar-15

1823006443

2333734793

2946897361

2289009994

3506325394

4

Apr-15

1936335180

2197506023

2800207969

2454658854

3207152652

5

May-15

2033878096

2272208156

3011445316

2677014425

3227323245

6

Jun-15

2077880681

2294737138

3011855049

2708944443

3238950659

7

Jul-15

2104215577

2320722247

3077331576

2770031787

3253940650

8

Aug-15

2131661282

2288247563

3061513146

2835332963

3178402130

9

Sep-15

2154693603

2292058264

3164661644

2957488713

3147790884

10

Oct-15

2176850955

2314055386

3467819918

3238314325

3119528682

11

Nov-15

2184100000

2284689362

3149974194

2997467742

3117594904

12

Dec-15

2234750000

2300118750

3196303226

3095087097

3102002484

13

Jan-16

2284100000

2316016327

3202580952

3152933333

3096947720

14

Feb-16

2388000000

2403665657

3298846032

3274228571

3165778679

15

Mar-16

2501950000

2486713861

3367553125

3391597656

3226114706

16

Apr-16

2597250000

2552723301

3457171875

3528832031

3264979885

17

May-16

2614790000

2556036538

3437338462

3531344000

3263254131

Impact of change on project time

EAC(t) is used to forecast the time required for completing a project.

It is called an independent estimate at completion (IEAC(t)). The predictive power of the new changed method is considered here. The term used for estimating the cost is EAC known as estimate at completion. Several formulae are depending on the nature of the project in various scenarios.(Fleming et.al,2016).Different scenarios are represented by EA(C1-4). They are described as follows:

Table 5: EVM based formulas for time forecasting

METHOD

FORMULAE

EAC1

Planned Duration/Schedule Performance Index

EAC2

Planned Duration/Cost Performance Index*Schedule Performance Index

EAC3

Planned Duration +Actual Duration*(1-Schedule Performance Index)

EAC4

(Planned Duration/Schedule Performance Index *Cost Performance Index)+Actual Duration (1-1/Cost Performance Index)

Table 6: Time forecasting for clearing and grubbing work

sl no

month

planned qty
(cum)

earned  qty
(Cumec)

spi

cpi

eac1(d)

eac2(d)

eac3(d)

eac4(d)

1

Jan-15

169609

212000

0.57

0.86

175.43

150.87

151.6

131.34

2

Feb-15

221609

8100

0.48

0.73

208.33

152.08

162.4

107.69

3

Mar-15

241567

220100

0.59

0.76

169.49

128.81

149.2

90.91

4

Apr-15

273683

221661

0.65

0.86

153.84

132.3

142

112.77

5

May-15

 

221661

0.62

0.87

161.29

140.32

145.6

122.39

6

Jun-15

 

221661

0.63

0.88

158.73

139.68

144.4

123.31

7

Jul-15

 

221661

0.62

0.88

161.29

141.93

145.6

125.57

8

Aug-15

 

221661

0.63

0.91

158.73

144.44

144.4

132.57

9

Sep-15

 

221661

0.61

0.92

163.93

150.81

146.8

140.38

10

Oct-15

 

221661

0.55

0.92

181.81

167.27

154

156.83

11

Nov-15

 

222661

0.62

0.94

161.29

151.61

145.6

143.95

12

Dec-15

 

230353

0.62

0.96

161.29

154.83

145.6

149.83

13

Jan-16

 

230624

0.63

0.98

158.73

155.55

144.4

153.1

14

Feb-16

 

 

0.63

0.99

158.73

157.14

144.4

155.93

 

15

 

Mar-16

 

 

 

0.64

 

1.01

 

156.25

 

157.81

 

143.2

 

159

16

Apr-16

 

 

0.64

1.03

156.25

160.93

143.2

164.43

17

May-16

 

 

0.65

1.04

153.84

160

142

164.61

The work was planned to complete within 100 days, but the actual duration of the work is 120 days leaving 43059cumecs of work behind.

Table 7: Time forecasting for general concreting work

sl no

month

planned qty
(cumec)

earned  qty
(Cumec)

spi

cpi

eac1(d)

eac2(d)

eac3(d)

eac4(d)

1

Jan-15

0

0

0.57

0.86

491.22

422.45

452

85.76

2

Feb-15

700

10

0.48

0.73

583.33

425.83

488

41.3

3

Mar-15

1600

149

0.59

0.76

474.57

360.67

444

24.9

4

Apr-15

2600

182

0.65

0.86

430.76

370.74

420

67.19

5

May-15

3440

269

0.62

0.87

451.61

392.9

432

80.55

6

Jun-15

3940

380

0.63

0.88

444.44

391.11

428

85.13

7

Jul-15

4440

391

0.62

0.88

451.61

397.41

432

87.39

8

Aug-15

4940

419

0.63

0.91

444.44

404.44

428

104.84

9

Sep-15

5940

422

0.61

0.92

459.01

422.29

436

116.03

10

Oct-15

6940

434

0.55

0.92

509.09

468.36

460

132.49

11

Nov-15

7940

438

0.62

0.94

451.61

424.51

432

126.08

12

Dec-15

8940

468

0.62

0.96

451.61

433.54

432

138.17

13

Jan-16

 

570

0.63

0.98

444.44

435.55

428

147.39

14

Feb-16

 

995.4

0.63

0.99

444.44

440

428

153.1

15

Mar-16

 

1077.08

0.64

1.01

437.5

441.87

424

161.77

16

Apr-16

 

1434.08

0.64

1.03

437.5

450.62

424

172.58

17

May-16

 

1493.55

0.65

1.04

430.76

448

420

175.38

The work was planned to complete within 280 days, but the actual duration of the work is 400 days leaving 7446 cumecs of work behind.

Impact of change in quality

For checking the changed method’s quality we use a term MAPE which is means absolute percentage error. Here we compare the accuracy of different forecasting methods. MAPE =1ni=1n |At -FtAt|

n   = no of observation

                At = Actual value

        Ft = Forecasted value

Table 8: Mean absolute percentage error of different EAC’s for cost

Impact of change in integrating the project

After comparing the five different earned value formulas, the MAPE was less for forecasting the cost as per the initial plan, earned value-based formulas were erroneous. It was easy to identify the less error method with the help of MAPE and the least error method was implemented in the project. With the application of earned based management system, it helped the project manager critically analyze the risk factors associated with as well as effective procurement of the materials saved with the help of the information in saving additional costs and time. Once a work break down structure is finalized, the project schedule is prepared. After preparing a schedule the estimate of quantities should match for cost and schedule integration. This is better done with earned value-based techniques. The progress that is accomplished is rechecked after the earned value analysis is done and the difference is cross-checked for future reference.

Table 9: Mean absolute percentage error of different EAC’s for time

Impact of change in project lifecycle

The cost and time forecasting method discussed here shows that the initial planned cost and time data has more accuracy than that of conventional earned value based formulae. The difference in error was around 100% when compared. The application of a new method affects the monitoring and reviewing of part of management. (Homestein et.al,2015).Anticipation and risk management was easier with the implementation of the new methodology.  

It was clear from the analysis that there exists a strong relationship between the success factor and earned a value-based system. Applying this technique at any stage of the construction project adds value to the company and project. Review of the project status and comparison of before and after implementation of the change technique provides a clear vision of cost and time management. With the help of the changed technique, the communication level between project team members has improved. It helped a lot in reducing the level of control on project performance and scope creep. Integrating the new management technique in different aspects of the project improved the safety and quality of the project.

After comparing the forecast with four different earned value formulas we determine that the mean absolute percentage error was comparatively less for the items of work. which is denoted as MAPE (act).

Justification for proceeding the change

It was observed while viewing the plan that the works were completed with much efficiency and accuracy after which the new management technique was applied. With the implementation of new management technique project managers and senior-level managers was able to forecast the risks and delays in the project and it was able to control the additional indirect cost and complete the work in proper time.

Conclusion

Time and cost management in the construction industry is always a tough task. Through the existing management system, it was not able to foresee the anticipated risks and delays in a project. If a proper change management technique is proposed like an earned value management system it helps to forecast the additional cost due to delays and funds that may be procured in earlier stages. This can effectively improve the total quality of the project as anticipated risks and delays are analyzed. Predictions help project and construction managers foresee future delays and risks in a construction project. Large deviations of the planned progress v/s achieved progress of the project may lead to high suspicions as to whether the contractor can manage the project at hand. Construction and high rise projects are delayed due to the issues between contractor and client.  The most important risk identified was the complexity of the structural design of the project and not receiving approved drawings in time as well as changes in drawings and specifications even after the completion of work. Other problems include delay due to weather conditions and additional resources spent for site clearance. If a proper analysis is done regarding anticipation of delays and risks, its effect may be noticed and project managers may be prepared for facing the risk of the project.

References

Heagney, J. (2016). Fundamentals of project management. Amacom. Retrieved from https://books.google.co.in/books. Cameron, E., & Green, M. (2019). Making sense of change management: A complete guide to the models, tools, and techniques of organizational change. Kogan Page Publishers. Hornstein, H. A. (2015). The integration of project management and organizational change management is now a necessity. International Journal of Project Management, 33(2), 291-298. Retrieved from https://www.sciencedirect.com/science/article/abs/pii/S0263786314001331

Kerzner, H. (2017). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons. Mathieu Wauters, Study of stability of earned value management forecasting, Journal of construction engineering and management, American Society of Civil Engineers 2015,141(4).:04014086. TimurNarbarv, Albert De Marco, Cost Estimate At Completion Methods In Construction Projects, IPEDR VOL .15,2011, IACSIT PRESS SINGAPORE

Byungcheolkim, Probabilistic Evaluation of Cost Performance Stability in Earned Value Management, Journal of Management in Engineering, ASCE 2015, 04015025. Byung - Cheol Kim, Combination of Project Cost Forecasts in Earned Value Management, Journal of Construction Engineering and Management,  ASCE November 2011, 137(11): 958-966. Franco Caron, A Bayesian Approach to improve estimate at complete in the earned value management system, Journal of Management in Engineering,  ASCE, DOI 10.1002/ PMJ, February 2013).

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