This column covers issues of CPM and also Construction Law. Today’s blog covers the interaction of the two – the CPM specification.

A little background on why this topic now. The Association for the Advancement of Cost Engineering annual conference ended June 30th. Two papers I presented covered issues of risk and issues of trend-based forecasting. (The second was covered in our blog of May 18 – and your comments were incorporated into the discussion by AACE members attending this session).

Several other papers covered similar scopes. And so, the night after my return I had dinner with Jim O’Brien to discuss the many issues raised at the conference.

Jim reiterated that the primary purpose of a CPM specification is to provide additional assurance that the contractor can (not will) finish the project on time. Included in this assurance is some proof that the contractor has thought through the project in sufficient detail.

We discussed that this specification is for a shop drawing – after all it is typically under CSI 01310 within the shop drawing section of the specification.
 
Do we typically see clauses regarding pay apps and rules for litigation in the specification for shop drawings for rebar or masonry? We again agreed that such language does not belong in the CPM spec either, and that the spec remain primarily to provide those further assurances desired.

We noted the resurgence of papers on risk analysis and Monte Carlo simulation based scheduling, and Jim found such heartening.

While we all learned the infamous PERT formula (O + 4M + P)/6, most practitioners do not know that the formula is incorrect and that the calculated PERT or CPM completion date for a project has only a 22% probability of achievement. Or as Jim stated in his 1964 text, CPM in Construction Management:

“There is a definite tendency for the actual completion date to exceed the first CPM end date. It is, then, reasonable to allow for some contingency between the CPM end and the actual desired completion dates. [This] will vary with the specific circumstances of the project. However, if you need a 12-month period for completion of the project, set your CPM goal at about 11 months, and so forth.” [Thus, a CPM calculated to finish in 11 months has a 22% likelihood of completion within 11 months, a 50% likelihood of completion within 12 months, and an 80% likelihood of completion within 12½ months, etc.]

While the mainframe computers of the 1960s and 1970s (and microcomputers of the 1980s) were not powerful enough to economically calculate this necessary factor of safety, our current computers can, and software is available to calculate the possible raw CPM completion date, but also the statistically validated probable completion date. (Examples of software include Oracle Primavera Risk Analysis, aka Pertmaster, Deltek Open Plan, and add-ons such as Risk+ and @Risk.These examples all import files from P3, P6 and Microsoft Project).

Our readers from the oil and gas sector may want to know why I bother to write all this – they have readily embraced the concept of schedule risk assessment.

So Jim wants to know why our construction (read public) owners appear reluctant to change specs to read “Contractor shall provide a CPM which is calculated to have an 85% likelihood of completion on or before June 30, 2011”. Do these owners (and professional engineers providing them advice) suggest the contractor provide shop drawings showing the least amount of rebar that theoretically may hold up an elevated slab but ignoring factors of safety required by code? Why then require a CPM that shows possible but highly unlikely completion by the desired deadline and without the contingency understood to be required by the folks who first developed CPM?

Jim has demanded that I take on this quest to educate owners and professional engineers on this topic. Providing education is easy. But gaining the necessary audience and especially moving against inertia are tasks that I fear are beyond me. I need your help to convince owners to ask for that which they desire.

Update on Construction CPM Conference