THE INFLUENCE OF PROJECT COMMUNICATIONS TO COST

MANAGEMENT

Name: Mahmoud Amin

Member Number: 59554

Date: 15th August 2010

 i. T ABLE OF C ONTENTS
i. Table of Contents ........................................................................................... 2
ii. LIST OF GRAPHS & ILLISTRATIONS................................................................... 4
iii. ABSTRACT....................................................................................................... 5
1 INTRODUCTION .............................................................................................. 6
2 WHAT IS?? Communication ............................................................................ 7
2.1 In general .............................................................................................................................. 7

2.2 In project management .......................................................................................................... 7

3 WHY TO?? Communicate (GOALS) .................................................................. 8

3.1 Communication leads to success............................................................................................. 8

3.2 It is critical ............................................................................................................................. 8

3.3 It is Professional ..................................................................................................................... 9

3.4 It is cost management tool ..................................................................................................... 9

4 HOW TO?? Communicate (METHODS) .......................................................... 10

4.1 Introduction......................................................................................................................... 10

4.2 It is no accident .................................................................................................................... 10

4.3 It is Leadership ..................................................................................................................... 10

4.4 Methodology of communication........................................................................................... 11

4.5 Phase 1: Design .................................................................................................................... 12
4.5.1 Project communication (1A-1) ......................................................................................................... 12
4.5.2 Drawing issuing and distribution (1A-2) ........................................................................................... 12
4.5.3 points of contact (1B) ...................................................................................................................... 13

4.6 Phase 2: Construction........................................................................................................... 13

4.6.1 Kick off meeting (2A) ....................................................................................................................... 13
4.6.2 Technical standards and advice (2B, 2D) .......................................................................................... 13
4.6.3 Upwards feedback (2B, 2D) ............................................................................................................. 13
4.6.4 Project Meetings (2C) ...................................................................................................................... 14
4.6.5 Keep people "in the loop" (2) .......................................................................................................... 14

4.7 Advice applicable for the whole construction project ............................................................ 15

4.7.1 Take your time with communication ............................................................................................... 15
4.7.2 New communication technology ..................................................................................................... 15

Page 2 of 36
5 IMPROVING COMMUNICATION SKILLS (TECHNIQUES) .................................. 16
5.1 Improvement expected effects ............................................................................................. 16

5.2 Social and Communication Skills ........................................................................................... 16

5.3 Improvement considerations ................................................................................................ 17

5.4 Clarification of roles and responsibilities within a team:........................................................ 17

6 Communication Plan Template (TOOLS) ....................................................... 18

6.1 Format for communications ................................................................................................. 18

6.2 Points of control .................................................................................................................. 18

6.3 Media .................................................................................................................................. 18
6.4 Kick-off meeting ................................................................................................................... 18

6.5 Biweekly project team meetings........................................................................................... 18

6.6 Weekly status meetings ....................................................................................................... 19

6.7 minutes of meeting .............................................................................................................. 19

6.8 Meeting agenda ................................................................................................................... 19

7 Communication Influence to Cost Management ........................................... 20

7.1 Communication and total cost management (TCM) ............................................................... 20

7.2 Contract communication and cost impact ............................................................................. 21

7.3 Communication between management and the job site........................................................ 22
7.3.1 Why we need this communication to control? ................................................................................ 22
7.3.2 communications cost impact ........................................................................................................... 23
7.3.3 Communication cost for project categories ..................................................................................... 24

8 ILLUSTRATIONS............................................................................................. 28
9 Case study .................................................................................................... 31
9.1 Summary ............................................................................................................................ 31
9.1.1 Project summary: ............................................................................................................................ 31
9.1.2 Case summary: ................................................................................................................................ 31

9.2 Analysis .............................................................................................................................. 32

9.2.1 Failure in achieving communication goals ....................................................................................... 32
9.2.2 Failure in achieving communication methods.................................................................................. 32
9.2.3 Results of miscommunication .......................................................................................................... 33

9.3 Recommendations ............................................................................................................... 34

10 CONCLUSION ................................................................................................ 35
11 References .................................................................................................... 36

Page 3 of 36
ii. LIST OF GRAPHS & ILLISTRATIONS

Figure (1) Project communication management………………………………7

Figure (2) Project communication methodology …………………….11

Figure (3) Cost influence curve………………………………………………20

Figure (4) organization physical control points………………………...…24

Diagram (3) Project management, knowledge and skills areas……………28
Diagram (4) Basic elements of the proposed Quantity Surveying Model…28
Diagram (5) The sequences of the model……………………………………..29
Diagram (6) Contract procurement……………………………………………29
Diagram (7) Claims………………………………………………………………29
Diagram (8) The model……………………………………………………….…30

Page 4 of 36
 iii. ABSTRACT
Communication as an English word is simple to say, but can influence an industry
behavior.
“Every year defects in the UK construction industry cost at least £20 billion to repair or
rebuild. Some of the defects will be the result of poor communication, for example, a
poorly detailed drawing, operatives being given, incorrect instructions or technical
3
information not being available”
Communication leads a project to proceed in a timely, cost-effective and quality manner

which no doubt satisfies all the people involved in the business.

This paper explores the definition of communication, what is the need of communication,
how to plan for communication, how to improve existing communication skills.

Also how the communication can influence cost, illustrating a study case for current
running project.

One of The project management goals is planning; controlling and coordinating budgets
and cost plans, as well as limits Claims and facilitates the processes of contract
management.

Therefore a proper effective communication tools should be implemented in the project

since day one.

Page 5 of 36
 1 INTRODUCTION

Communication as an English word is simple to say, but can lake of its efficiency change a

project original contract value of 11,000,000.00 (AED)1 and 120 working days duration to

revised contract value of 18,000,000.00 AED and 300 working days duration?

The answer is yes2, it happened and that is the actual situation motivate me to explore the

magical effect of the word communication in cost management

“Every year defects in the UK construction industry cost at least £20 billion to repair or
rebuild. Some of the defects will be the result of poor communication, for example, a
poorly detailed drawing, operatives being given, incorrect instructions or technical
3
information not being available”

With the intention to monitor and control project performance, cost, time and safety, we

cannot ignore communication role and influence to the project. Therefore any organization

should consider communication aspics implantation and improving.

All the people involved in developing the project should have the basic knowledge of

what the project communication management is, or a least the team leaders so that they

can convey it’s concept to the hole team.

Project communication management knowledge may include the definition of

communication, what is the need of communication, how to plan for communication, how

to improve existing communication skills.

The purpose of this paper is to explore communication in construction filed , and how it

leads a project to proceed in a timely, cost-effective and quality manner which no doubt

satisfy all the people involved in the business.

1
AED is local currency for United Arab Emirates
2
Study case to be mentioned later in this paper illustrating the miscommunication effect
3 th
BSI Business Information (http://www.bsigroup.com/en/)- PD 7503 – 30 September 2003

Page 6 of 36
 2 WHAT IS?? C OMMUNICATION

2.1 I N GENERAL
“Communication is a process whereby information is enclosed in a package and is
4
channeled and imparted by a sender to a receiver via some medium.”

“Communication is one of the most persuasive,

5
important, and complex aspects of human life.”

Even while driving a car you need to communicate with

others, using car indicators, lights and horn in a proper way.
Otherwise the probability of accidents is increased.

2.2 I N PROJECT MAN AGEMENT

“Project Communication Management includes the processes required to ensure
timely and appropriate generation, collection, distribution, storage, retrieval, and
6
ultimate distribution of project information.”

Generation Storage
Data /
Distribution
Information

Collection Retrieval
X
Fig. 1: Project Communication Management

Figure (1) illustrates the flow of data or information, and the criticality of retrieving the
historical information.

You might lose your life if started losing blood, so no project can continue its life cycle
without communication, which is the blood of any project.

4
http://en.wikipedia.org/wiki/Communication
5
Littlejohn, 2002, p.3
6 @ th
PMBOK Guide 4 Edition -Chapter 10 - Project communication management, page 243

Page 7 of 36
 3 WHY TO?? C OMMUNICATE (GOALS)
3.1 C OMMUNICATION LEADS TO SUCCESS

One of the reasons leads the projects to success is people using their abilities to the
maximum, encouraging and supporting team work efforts, and keeping in their mind
project’s success.

Selecting the people who affect the work environment in a

project, also defining team member roles, and give approaches
that encourage team members to maintain a positive
environment, finally helps to start any project on the right path.

“Effective communication creates a bridge between diverse stakeholders involved in

a project, connecting various cultural and organizational backgrounds, different
levels of expertise, and various perspective and interests in project execution or
7
outcome.”

Keeping all the individuals involved in controlling a project coordinated and aware of
project progress and changes is critical, and only good communications can achieve that.

3.2 I T IS CRITICAL

“Whenever more than one individual is engaged in an activity, communication is a

critical factor in achieving successful results.”8

All projects have a great amount of paperwork, which is necessary for the execution of
the project. Such as time schedules, reports, shop drawings, other submittals, variations
or change orders, the payment certificates, etc. which is the recorded history of the
project development, so it is critical in case of any dispute raised. Refer to (Fig. 1 – Page
7) which showing that retrieving the historical information is critical.

Therefore a proper document control system will be one of the effective communication
tools.

7 @ th
PMBOK Guide 4 Edition -Chapter 10 - Project communication management, page 243
8
The Keys to Forecasting—#6 Communications - Cost Engineering Vol. 46/No. 7 JULY 2004 by James E. Baar and
Stephen M. Jacobson, CCC

Page 8 of 36
 3.3 I T IS P ROFESSION AL
Poor communication result to lake of the information, which gives a negative affects to
technical performance of project team members. So the intention to establish a
professional team work is essential, and can be achieved through a well prepared
communication planning. If you fail to plan, you plan to fail.

Even when a professional engineer goes for any worldwide international certificate, he
must be familiar with communication management.

As our parents used to advice us “you get out what you put in.”

3.4 I T IS COST MAN AGEMENT TOOL

“TCM is an integrative process in which the practices and methods all rely on the
creation, collection, communication, understanding, analysis, and/or use of data,
information, and knowledge.”9

“In applying TCM, cost engineers not only use information (e.g., process steps of
estimating, scheduling, etc.), but facilitate its flow (i.e., communication) in respect to
cost management.”7

9
Total Cost Management Framework - An Integrated Approach to Portfolio, Program, and Project Management
First Edition - Edited by John K. Hollmann, PE CCE - 2006

Page 9 of 36
 4 HOW TO?? C OMMUNICATE (METHODS)
4.1 I NTRODUCTION
The unique nature of construction projects result that communication plan for cretin
project may not be applicable for another project.

“A project is a temporary endeavor undertaken to create a unique product, service,

or result “10

However, these recommendations should offer some relevant information to any

construction project or site.

This paper shows how communication can be improved to a construction site.

Improvements in communication should increase the quality of the work executed and
decrease defects probability, which helps avoiding delays, claims and controlling the
cost.

4.2 I T IS NO ACCIDENT
Effective communication never happened without proper planning. Using the
communication planning to identify, who?? Needs what information?? How and when it
will reach them?

Having many types of communication decreases the probability of missing any required
information.

4.3 I T IS L EADERSHIP

Only a professional leader can achieve the desired communication, we have to start with
assigning a leader to manage this process. Leadership
defined as the total influence of a person over another or
over a group of members; through leadership we can drive
a team into the right path.

Monitoring and controlling any team members executing

specific tasks cannot be achieved without the leader. A company could not run only with
workers, High level of leadership required to maintain the company on the right path as
well.

10 @ th
PMBOK Guide 4 Edition -Chapter 1 – Introduction , page 5

Page 10 of 36
4.4 M ETHODOLOGY OF C OMMUNICATION
Figure (2) demonstrate the simple methodology for communication during the different
phases of a construction project.

Designer – Client
Transfer of Meeting
1A
drawings:

Post / Fax & Appoint the

E-mail contractor

Appoint the
Supplier

Phase1: Design Appoint the

Subcontractor 1B

Time Kick of Meeting Contact Detail

Who to invite
Minutes Structure

2A Agenda

Project Progress Construction Quality of Work

2B

Project Meeting Outstanding actions

Actions from
Previous meeting Structure New actions
2C

Defect Reported
2D
Construction Subcontractor Contractor Architect

Phase2: Construction Amended Drawings

Project Completion &

Handover
Phase3: Completion
Figure (2) Project communication methodology
For each phase position in figure 2 is noted. Therefore, the text should be read in along with
the communication methodology.

Page 11 of 36
4.5 P HASE 1: D ESIGN
4.5.1 P R O J E C T C O M M UN I C A T I O N (1A-1)
“Pre-construction communications management – ensures the proper collection,
dissemination and reporting of pre-construction information.” 11
Before construction stage the ways in which project will communicate to be agreed
include the following, even if mention in the contract agreement:

What kind of Meeting required and frequencies?

How the drawing will be transferred?

How to amended missing or unconfirmed drawings.

How to communicate with sub-contractors, etc.

“Cost managers should be continuously involved from design to the ordination and
auditing, to insure best cost results, especially in commercial property, where investment
is required to yield the best financial returns.”12
“Cost managers while communicating alternatives and options to the designers and
client, should remember the role of relative quality, affordability , returns , as well as the
latter’s link to design and specifications “13

4.5.2 D RA W I N G I S S UI N G A N D D I S T RI BU TI O N (1A-2)
Drawings considered as a technical communication tool, if produced in good quality.
Therefore, careful attention must be paid to how drawings are going to be produced,
checked and distributed. The following points might be helpful if considered:

Having the drawings as early as possible and complete for all stages.

Ensure that drawings are detailed enough and checked before site work starts.

Follow the standards in drawings presentation, to help construction work progress
smoothly (e.g. color coded, by trade or element, laminated, small or large sized)

How and where to keep the drawings?

Involve the manufacturers in preparing drawings, in case of any special or new
method used.
“A complete set of correct drawings is important as ensuring that materials and
manpower are available.”

11 COST ENGINEERING -The AACE International Journal AUG 2010

12 Managing cost, Contracts, Communication and Claims: A quantity surveying perspective on future opportunities – Page 2. JIP (Baise) Verster –
University of free State , Bloemfontein, South Africa
13 Managing cost, Contracts, Communication and Claims: A quantity surveying perspective on future opportunities – Page 3. JIP (Baise) Verster – University
of free State , Bloemfontein, South Africa

Page 12 of 36
 4.5.3 (1B)
PO I N TS O F CO N T A C T
In subcontractors and suppliers appointing stage, points of contact to be clearly defined
and distributed officially. This should avoid delays, confusion and double effort.

4.6 P HASE 2: C ONSTRUC TION

4.6.1 K I C K O F F M E E TI N G (2A)
Kick off or “pre-start” meeting is very important for project communication, because of
benefits may be gained from such a meeting, as the following:

It helps people to know each other, “Ice breaker” this leads to better

communication and less tension atmosphere as the work progresses.

It offers a good chance to discuss how communication will go.

It offers a good chance to record contact details for each organization, and make sure

that all stakeholders are connected and aware of each other.

4.6.2 T E C H N I C AL S T AN D A RD S AN D AD VI CE (2B, 2D)

There are too many of best practice information documents on design, material
selection and construction which available from many sources like the following:

Manufacturers and suppliers

British Standards Institution

Building regulatory authorities

Trade associations

Insurance companies

Consultants and research organizations

4.6.3 U PW A RD S F E E D B A CK (2B, 2D)

While construction is going in progress, information should be effectively fed back up
through the management chain. At this time two areas are important, as follows:

Workers or supervisors to site office (e.g. reporting on incorrect or missing details

in a drawing).

Site office to head office (e.g. if an incorrect detail is discovered, this should be
reported back to the design office and the drawings to be corrected).

Page 13 of 36
4.6.4 P R O J E C T M E E TI N GS (2C)
Communication, safety and quality improvements are the benefit of a proper number of

well prepared meetings. These benefits should make the time spent useful and not a

wasted time. Technical or co-ordination meetings have also a respected benefit,

especially helping site work to progress smoothly.

The success of any meeting comes from well prepared conditions, as the following:

Chairperson.

Agenda.

Set start and finish times.

Minutes recorded.

Minutes should always be circulated after the meeting and include action points with the
responsible person identified and dates to be completed by. Consider inviting all
concerned people to any meetings, also some people may only need to attend only parts
of a meeting.

4.6.5 K E E P PE O PL E " I N TH E L O O P " (2)

It is to provide everyone with the right information and involve them in the decision

making . If any information or data passed outside the correct channels we have to

inform all relevant parties.

For example, if the architect issues a revised drawing straight to a sub-contractor, the

main contractor must be informed officially and given a copy of the drawing.

Page 14 of 36
4.7 A DVICE APPLICABLE FOR THE WHOLE C ONSTRUCTION PROJECT
4.7.1 T AK E Y O U R TI M E W I T H CO M M UN I C A TI O N

Paying attention to and spending the proper time on implementing communication plan
and recommendations leads to success of the project, avoid any delay might happened
due to ignoring it and keep the professional performance of the organization.
The following are some typical examples:

Prior to make any communication we must be sure of the availability of the

requirements to support it, (i.e. ensure that someone given an instruction has the
support, resources and enough information to complete the task properly).

Make sure that the way of communication used as planned and as per common
professional practice.

Make sure that the message is clear and inform all people relevant to this issue.

Communicate as early as possible, to provide the sufficient time for the process.

Follow up and check that the instruction or any sort of communication has been
carried out.

Make use of the historical information or experience from old projects, either
positive or negative impact.

“Don’t Miss Out on Informal Communication”14

“While it is important to plan for communication, it is also true that some of the
best communication takes place informally and unexpectedly. You can nurture
the opportunities for informal communication. Be available. Get into the places
where the work is being done or the team members are eating their lunch.
Listen. Watch for the nonverbal, unofficial signs of excitement, confusion,
accomplishment, or burnout.”11
4.7.2 N E W C O M M UN I C A TI O N TE C H N O L O GY

The past few decades have seen a hug development in the

communication field, new technologies such as mobile phones, two
way radios, digital cameras and internet access become the most
useful communication tools. For example, documents, drawings,
minutes of meetings and periodical reports can be e-mailed between all parties, also we
can use the digital cameras to record progress, accidents and bad workmanship. Useful
Information such as building standards and good practice guidance can be downloaded
from the internet as well.

14 rd
The Fast Forward MBA in Project Management- 3 Edition – page 76, by Eric Verzuh

Page 15 of 36
 5 IMPROVING COMMUNICATION SKILLS
(TECHNIQUES)
5.1 I MPROVEMENT EXPECTED EFFECTS

If you don’t have history you don’t have future, therefore developing projects
communication methods and technologies based on historical information and
expertise, may help the organization to improve future projects communication.

Expectation of improving future projects communication maybe the way activities and
work are designed, planned and performed. For example providing internet access will
help saving time and get all stakeholders aware of changes happening to cretin project.

Improving communication skills became a critical issue for the construction field in the
last few decades.

5.2 S OCIAL AND C OMMU NICATION S KILLS

The key of any project success is people (starting with client himself ending with the
unskilled labor); In order to improve social and communication skills within a project
team, there shall be some considerations will reflect on communicative behavior and his
effect on dispute management.

Most of international projects might gather different kind of nationalities, religions and
mentalities. Providing seminars or training for team members will improve the
communication skills.

Role plays, simulation of work situations etc. will improve speaking skills (how to
express themselves, respond properly, give accurate information to superiors, engineers,
employers representatives etc.) also listening skills (Understanding simple explanations
and instruction in order to carry out the desired work )

Steps of social skills improvement as following:

Team work structure

Team awareness

Team sprit

Social responsibility of the individual within the team work.

Cooperation between individuals

Page 16 of 36
5.3 I MPROVEMENT CONS IDERATIONS
- A positive atmosphere of good relations and trust to be provided and
everyone should feel comfortable and responsible to work on
improving communication skills.
- Individuals to take their time to develop communication.
- Everyone should understand that effective spoken communication is
important in construction work.
- Transferring the information clearly is essential to everyone's safety
and successful work outputs.
- To develop communications skills we have to:

Always speak clearly

Report things quickly but also carefully and always in an understandable way

Keep to the facts

Remember to report all necessary facts

Keep facts in order
- Referring to actual experience can be used as good examples.

5.4 C LARIFICATION OF ROLES AND RESPONSIBILITIES WITHIN A T EAM :

The difference between roles and responsabilties within the team members should

be clayrified :

What is the role of each one at the site?

- By identifying the role of the project personnel we avoid the negative
competition atmosphere.

What is the responsibility of each one at the site?
- This is a critical issue; by identifying the responsibility of each one the
project, we can easily evaluate, monitor and reward the proactive people.

What is the mechanism between team members?
- What is the flow of work progress, what comes first and what comes after?

Who gives orders to whom?
- Whose got the power to take the decision, and to whom also? Means that
everyone have his own range of power

Page 17 of 36
 6 C OMMUNICATION P LAN T EMPLATE (TOOLS)
Communications Plan defines what are communication methods, channels and techniques and
how will be implemented in the project. The Communications Plan defines the following:

What is the required communication for each role?

What kind of data or information to be communicated?

What is the method that any data or information will be communicated?

What is the optimum time required to distribute any information?

Who will be implementing the communication for each team?

Who receives the communication?

6.1 F ORMAT FOR COMMUNICATIONS

Communication templates prepared by the project manager should be in clear format and
easily to understand, then to be forwarded officially to all stakeholders and team members.

6.2 P OINTS OF CONTROL

The project manager will be responsible to implement all communication plan templates;
Team leaders will assist the project manager by following up communication plan within
and between team members.

6.3 M EDIA
All project communication templates shall be distributed in written form, Copies will be
filled in the document control system. E-mails will be helpful in distributing such formats.

6.4 K ICK - OFF MEETING

Any project manager should arrange for kick-off meeting (per-start meeting) inviting all
stakeholders to review in detail the “Statement of Work”15 as soon as it has been completed.

6.5 B IWEEKLY PROJECT TEAM MEETINGS

Every two weeks, at a specified time, the project team members will meet to review the
following items at a minimum:

a. Overall progress status.

b. Any missing or required data/information.
c. Any new risk might come in future.
d. Outstanding escalations.

15
“A statement of work (SOW) is a formal document that captures and defines the work activities, deliverables and
timeline a vendor will execute against in performance of specified work for a customer. Detailed requirements and
pricing are usually included in the Statement of Work, along with standard regulatory and governance terms and
conditions.” http://en.wikipedia.org/wiki/Statement_of_work

Page 18 of 36
6.6 W EEKLY STATUS MEETINGS
Every week, on a specified day, the project team leaders will meet at least for 30 minutes to
report on the following:

a) Progress update vs. target plan of the project.

b) Risk management feedback.
c) New escalations feedback.

6.7 MINUTES OF MEETIN G

The project manager will distribute minutes from all above mentioned meetings through
document control system. Team leaders will be responsible for forwarding minutes of
meetings that they held.

6.8 M EETING AGENDA

Meeting Agenda should be distributed 5 business days before the meeting, and to identify
the responsible for each minute with a time limit for that topic. Review of action items from
the previous meeting will be discussed prior to add any new topic.

Page 19 of 36
7 C OMMUNICATION I NFLUENCE TO C OST M ANAGEMENT
7.1 C OMMUNICATION AN D TOTAL COST MANAGEMENT (TCM)
Total cost management starts from the deployment process, from the briefing stage to

completion. Total cost management benefits are gained during project different stages

including the briefing, sketch plan, approved sketch plan, production drawings, receipt of

tender, and construction stages.

“Communication systems are a subset of information systems, but an area of concern

for cost engineers because of their role as translators and communicators in TCM.
They may translate customer needs to requirements, requirements to technical scope;
technical scope to cost plans, cost plans to measures, and measures to knowledge
about the scope that can be acted upon.”14

In fact this is not an easy job especially in case of poor communication, which lead to
misunderstanding of what does the customer actually need? What is the plane to achieve it?
What are the risk expectations?

Figure (3)16
Cost influence curve

Figure (3 ) illustrates cost influence curve, which showing that planning and design phases
has the great ability to influence the project cost at the starting time, and becoming less
during execution.
During the project cost influence curve keep increasing up to the highest when project
over, so cost engineers communicate with other project team members to assist them,
monitor work progress and advice which actions required to meet the planned time and
cost.

16
Project Management for Construction - Fundamental Concepts for Owners, Engineers, Architects and Builders –
Figure 2-3: Ability to Influence Construction Cost Over Time - by Chris Hendrickson, Department of Civil and Environmental
Engineering, Carnegie Mellon University, Pittsburgh.

Page 20 of 36
7.2 C ONTRACT COMMUNICATION AND COST IMPACT

“In law, a contract is a legally binding agreement between two or more parties

which, if it contains the elements of a valid legal agreement, is enforceable by law or

by binding arbitration.”17

Therefore contract should serve this partnership by satisfying each party needs and

obligations, which should be clearly communicated to all parties and people involved

through contract terms, in order to avoid any misunderstanding of each word in the contract.

Planning, controlling and coordinating budgets and cost plans, as

well as communicating leads to limitation of claims and facilitate
the processes of contract management. It is clearly understood that
the contract is a communication tool for issues related to rights,
obligations and administration of the contract and by all the parties
involved. Therefore it is important to understand all issues related
to contract communication to avoid cost impact of claims and
facilitate the processes of contract management

“For this reason the following constrains are used by courts to evaluate contracts:

Avoidance of absurdity

Upholding the contract or clause as opposed to ineffectual or void interpretations

Equitable interpretations

The intentions of parties

The recitals are subordinate to operative part of the contract

The grammatical meaning of the words used

The contract will be interpreted as a whole in respect of the purpose and scope

The technical meaning of words

The written contract itself as opposed to verbal explanation “18

17
http://en.wikipedia.org/wiki/Contract
18
MANAGING COST, CONTRACTS, COMMUNICATION AND CLAIMS:A QUANTITY SURVEYING PERSPECTIVE ON
FUTURE OPPORTUNITIES - by JIP (Basie) Verster – University of the free state, Bloemfontein, South Africa

Page 21 of 36
7.3 C OMMUNICATION BETWEEN MANAGEMENT AND THE JOB SITE

7.3.1 W H Y W E N E E D T H I S C O M M UN I C A TI O N TO CO N T RO L ?

We need this flow of information between management and the job site for the

following:

1) At that time before “international crisis year 2007 – 2008”19 construction costs were

huge and booming in this filed made a good business environment, one of the best in

the history of the business. Therefore construction costs needed a proper constant

control to handle that amount of investments.

2) At this time (year 2009 till date end 2010) construction costs are less than past few

years and the international crisis made a risky business environment. Therefore

construction costs needed a proper constant control, to create an optimum

estimations as well as monitoring the construction costs trending.

3) Any project works within a limitation of time, budget control, and agreed cash flow.

So the last thing that the management or stakeholders need is a wrong indication of

their business, which is the result of poor communications between them and the job

site.

4) Periodically updates of the project conditions and forecasts are essential to

purchasing department, manufacturer, supplier, sub-contractors as well.

These updates created through planners, who are responsible to communicate this

updates to the top managers, to forward any concern to the stockholders who are

influencing and controlling the direction of the project.

19
“Is the 2007-2008 U.S. sub-prime mortgage financial crisis truly a new and different phenomena”
Social Science Research network - Is the 2007 U.S. Sub-Prime Financial Crisis so Different?
an International Historical Comparison - Carmen M. Reinhart & Kenneth Rogoff - January 2008

Page 22 of 36
 7.3.2 CO M M UN I C A TI O N S C O S T I M P A C T

In order to achieve the required successful communication to any project, there are
some considerations; what is the project scale? What is the budget? What are the
minimum communication tools to achieve the optimum results?
 For big scale projects
We have to consider the availability of the following communication tools:

Qualified team members who understand the basics of communication with top
management and stakeholders.

Establish a system to keep everyone informed with what has happened, what is
happening, and what is expected to happen in the project.

Selecting and assigning team leaders who can take the most efficient and
economical concerted action.
The expected expenditure here is the overhead for: cost engineers, computer time,

hardware and wireless devices expense, equipment rental, etc. all this should be

included in the allowance for modern communication. This modern

communications and techniques can also be helpful in reducing the impact of the

"curve of diminishing returns"20 which faces the construction projects.

 For smaller scale projects

A very high percentage of small projects are executed by small organizations. In

order for those small contractors to continue their job, they should apply cost

management tools; in this case a proper communication is the key to their cost

control.

Those small contractors do not have to apply a complex estimating and cost control

systems.

20
“Diminishing return (also called diminishing marginal returns) refers to how the marginal production of a factor of
production starts to progressively decrease as the factor is increased, in contrast to the increase that would otherwise be normally
expected. According to this relationship, in a production system with fixed and variable inputs (say factory size and labor), each
additional unit of the variable input (i.e., man-hours) yields smaller and smaller increases in outputs, also reducing each worker's
mean productivity. Conversely, producing one more unit of output will cost increasingly more (owing to the major amount of variable
inputs being used, to little effect).” http://en.wikipedia.org/wiki/Diminishing_returns

Page 23 of 36
7.3.3 C O M M UN I C A TI O N C O S T F O R P R O J E C T C A TE G O RI E S

Cost control of any project starts before, at the beginning and during the project up to

completion, also like any project is usually divided into about nine principal categories.

Six happens before the actual start of construction then construction and job close.

1) Planning.

2) Organizing.

3) Staff availability.

4) Application of systems or procedures.

5) Time and cost control which has to start with the estimation. The estimator should

start his job from the first step until the job completion.

6) Pre-planning and engineering, in order to accomplish the job.

7) Job start.

8) Coordination and direction of the actual physical construction accomplishment.

9) Job closing, completion, acceptance, payment, project functional and the historical

report.

Those nine categories are handled and controlled by three physical control points:

a) Head office or management control Head

Office
b) Job site or construction control

c) Accounting or financial control Communication

Accounts Job Site

Figure (4) organization physical control points

Communication let each of these control points aware of what the plane is? What is

completed? What is in progress and what the target is?

Usually an individual is assigned to coordinate all three control points, maybe known as

“projects director”.

Page 24 of 36
Briefly we will go through the nine categories to mention where communication can
influence cost.
1) Planning
Why Planning comes first? The answer is profit, if the objective very simply is to

spend less money than we receive, so we plan to accomplish the project in time, to

avoid any delays and penalties, which will be deducted from the profit.

Therefore we consider planning one of the communication tools that can influence

and direct the project cost in two directions:

Project accomplished on time

That means a proper plan was prepared to cover all project requirements and the
planned budgeted was met
Project delayed beyond the plan
Maybe a poor plan missed some of the project requirements or an unexpected event
caused project delayed beyond the planned completion date and project overrun the
planned budgeted.

2) Organizing (OBS)
To start preparing organization breakdown structure (OBS) first we have to define
the company existing structure as a basic then add any requirement in order to
successfully complete the project requirements.
That means new assignments can be made to fulfill those requirements. Good
selection of a professional stuff helps the project go smoothly and improve the
technical performance as well.

3) Staffing
Completing the OBS successfully is the start of market search to make sure that the
right overhead is allocated to the budget. Then start with project manager assigning,
to make complete overview the project. Then determine who will be in the
estimation team and planning team depending on the size of the organization and the
size of the project. These two departments will be responsible for the projected cost
and schedule.

Page 25 of 36
4) Systems and Procedures
Systems and procedures like construction methodology and program methodology
should be reviewed and utilized for each project regardless project scale.
Also authorities regulations in project specified area or zone should be well studied
and reviewed, to avoid any unexpected constrains might influence the cost or the
sequence of work of this project.
5) Project Control
The assigned estimation and planning department’s role in controlling the project
start from the beginning, a written description of controls and responsibilities can be
a part of the job file. Any expected cost of these controls or responsibilities should be
considered in the estimation stage.

6) Pre-planning and Engineering

Description of controls and responsibilities is one of the necessary tools to be used in
the pre-planning and engineering, which is preparation procedures may includes the
necessary detailed drawings, descriptions, specifications, necessary permits and
permissions.
Under pre-planning and engineering comes a work schedule, which includes the
main contractor and the sub-contractors scope of work, and includes prequalification,
material and shop drawings submittal approvals. Also the long lead materials and
equipments delivery time (which sometimes by others). It is necessary to clearly
mention that in work schedules to control the change orders which may have
appeared during the execution period.

7) Job Start
Knowing how we are going to execute this project, who will be responsible for this
project and its several divisions, where our material and equipment is coming from,
and when it is planned to arrive on the site. So moving onto the job-site, the
engineering is done, the material is there, and the job actually begins to go.

A project manager or his assistants have to report work done daily, this information
can then be faxed, mail, or delivered to the head office management.

Page 26 of 36
8) Coordinating the Job
During project life cycle and incase of any problem arises, site supervisor has to
report daily to project manager helping him overcoming his difficulties and in
accelerating his activities to accomplish the job within the time and budget.
The same people who have been involved in planning, organizing, staffing, setting
up the procedure, estimating, pre-planning and engineering, can be informed as well
to know exactly what is going and where the problem arise. Their roles or outcomes
can be established through proper communication channels for saving time, before
regretting when it is too late to resolve the problems.

9) Job Closing
The project has been completed and the reports or tests are made, the inspections are
proceeding, then we have come to job closing.
This is a critical period, where full team efforts has been fulfilled, and the action at
this point is de-snagging of punch list after punch list and getting the owners and
inspectors acceptance of the project function.
In this stage a selected supervisor leads his minimal crew through the walk-throughs,
internal-inspection, internal-testing, final as built documents, the owners punch list,
the scheduled project closing procedures, final inspection, and its final acceptance by
the owner or his representative.
Then he has the final closing which is general cleaning and housekeeping, material
shifting, moving of all tools and equipment back to main stores.
a historical report which can be in details, or can be one sheet, but it should cover the
problems and achievements, who are the people recommended for the next job, and
who are not, a comparison of the actual labor productivity vs. estimated, and the
reason for any variance.

Files for all of these procedures and activities covering even the daily reports and
the daily problems and accomplishments can all be then assembled into a final file
which is still a very small package. These can then be filed in the home office
historical file for reference as similar jobs with their similar problems must be
estimated and accomplished in the future.

Page 27 of 36
 8 ILLUSTRATIONS
All the following diagrams was copied from good article21, it was really helpful to understand the
interrelation between communication and other project management areas.

Note: Same diagrams reference number from the mentioned article kept as it is for quick
reference.

21
MANAGING COST, CONTRACTS, COMMUNICATION AND CLAIMS:A QUANTITY SURVEYING PERSPECTIVE ON
FUTURE OPPORTUNITIES - by JIP (Basie) Verster – University of the free state, Bloemfontein, South Africa

Page 28 of 36
Page 29 of 36
Page 30 of 36
 9 C ASE STUDY
9.1 S U M MA R Y
As a planning engineer currently I am following up a running project. Base on the below, I
analyzed the current project status and miscommunication influence to the contract duration
and value.

9.1.1 P R O J E C T S U M M A RY :

 Project: Roads and Infrastructure Deferred Package for 50 villas & 7 towers

 Project contract value: 11,000,000.00 AED (Eleven million Arab Emirates

Dirham)

 Project contract duration: 15 days for mobilization + 120 working days for

execution

 Scope of work: to complete Roads and Infrastructure Deferred Package as shown on the

tender documents and to the directions of the Engineer. including the preparation,

submitting and approval of drawings, technical submittals, procurement, delivery,

installation and commissioning, including all required permits, No Objection

Certificates and approvals from all local authorities, and includes handover of the

complete Works in accordance with the terms of the contract.

9.1.2 C AS E S U M M A RY :

Project status as on September 1st, 2010:

 Advance payment 40% of original contract value released to the main contractor
 Time elapsed 40% of original contract duration
 Actual site progress 1.8% Vs. planned value 8%
 Earned value 2.12% Vs. planned value 12%

Critical issues as on September 1st, 2010:

 Design No Objection Certificates to be renewed from local authorities

 No work to start prior to obtain No Objection Certificates from local authorities

Page 31 of 36
  Existing sewerage network connections not aligned with existing hose connection

9.2 A N A LY S IS
After exploring the communication role in successes of any project on this paper, it was very

easy to analyze the main reasons of this case failure to meet the planned duration and cash

flow. So I will refer to specified section and mention how it was carried out in this case?

And what are the sequences?

9.2.1 F AI L U RE I N AC H I E VI N G C O M M U N I C A TI O N GO A L S

 Section 3.1: Regarding selecting the people who affect the work environment in a

project, also defining team member roles.

The fact is a project manager was assigned to the project after commencement date

also with no previous experience in the same kind of projects, which is here

infrastructure and road works. That leaded to miscommunication with the interfered

authorities’ regulations and requirements (Permits & No objection Certificate). And

the result was that it was discovered (No work can start in this specified area without

obtaining No objection Certificate)

 Section 3.1: That Poor communication gave the client and the supervisor consultant

a negative affects to the organization technical performance, because of starting the

work without a communication plan.

9.2.2 F AI L U RE I N AC H I E VI N G C O M M U N I C A TI O N M E T H O D S

 Section 4.5.2: Regarding drawings was issued to the contractor, it was issued as
follows:
- Roads and Infrastructure Deferred Package issued by one party
- Villas drawings issued by second party
- Towers drawings issued by third party

Page 32 of 36
 No communication happened between the three parties and the villas or main
sewerage network contractors.

Every one executed the work separately then when making the final connection
problem raised, after studying Infrastructure as built drawings and comparing with
Villas drawings it was discovered that the executed main sewerage network
connections not aligned and not matching with villas connection.

Section 4.6.2: Regarding Building regulatory authorities, this is the first time that
the company executes infrastructure and road works project; the fact happened is no
one contacted with the roads authorities to get the latest regulations and
requirements to execute such project. The result was that work is on hold due to
missing “No objection Certificate”.

Also after applying to roads authorities to obtain this certificate, it was rejected, the

reasons is as per local authorities’ regulations the company should be registered and

listed in the approved contractors list, otherwise to subcontract of the list. Another

reason is that the design approval was expired and will take 2 to 3 weeks for renewal

9.2.3 R E S UL TS O F M I S C O M M UN I C A TI O N

 The client paid advance payment 40% of original contract and no progress happened.
 Time elapsed 40% of original contract duration
 Actual site progress 1.8% Vs. planned value 8% variance -6.20%
 Earned value 2.12% Vs. planned value 12% variance -9.88%
 Delay of project completion due to Design No Objection Certificates renewal ,obtain No
Objection Certificates from local authorities and Existing sewerage network connections
not aligned with existing villas connection
 The company may lose a client and left bad impression to the supervisor consultant
 Project revised contract value: 18,000,000.00 AED (Eighteen million Arab Emirates
Dirham) due to the wrong drawings received for construction, expiry of design approval
from local authorities and additional corrective works.
 Project revised contract duration: 15 days for mobilization + 120 working days for
execution + 180 working days extension of time due to the wrong drawings received for

Page 33 of 36
 construction, expiry of design approval from local authorities and additional corrective
works.

9.3 R EC O M M EN D A TIO N S
 Selecting experience and professional stuff improves the technical performance and give
good impression to other parties.
 A defined communication plan is essential to start the project smoothly and to avoid any
misunderstanding.
 More time to be spent studying and coordinating the project different trades, will save a
lot of project time and cost.
 Before starting new kind of project either to assign team members with pervious
expertise or to make sure that every regulation and requirement is clear and covered.

Page 34 of 36
 10 CONCLUSION
It is clear that good communication is a major factor to all successful

projects achieving the planned duration and budget, by coordinating

their roles, agree on responsibilities, monitor and control the cost,

time and quality.

Setting up the methodology that enables communication like progress

meetings, reports and change management puts the project on a stable

basic. The project control checklist should include communication planning and methods, to make

it easier for people to coordinate. Team leaders should understand the basics of communication to

help implementing its methods.

“Communication is the foundation of relationships. The project manager’s attitude and style
will color all relationships on the project. Consciously choose to lead by example in every action
you take.”22

The purpose of this paper was to explore communication in construction filed , and how it leads a

project to proceed in a timely, cost-effective and quality manner which no doubt satisfy all the

people involved in the business.

Therefore a proper effective communication tools should be implemented in the project like:

Communication plan

Approved work program

Proper documents control system

Minutes of meetings

Periodically reports to update progress

New communication technologies

22
The Fast Forward MBA in Project Management By Eric Verzuh – clear communication – page 315

Page 35 of 36
 11 R EFERENCES

The Keys to Forecasting #6 Communications - Cost Engineering Magazine

Vol. 46/No. 7 JULY 2004
James E. Baar and Stephen M. Jacobson, CCC

CONSTRUCTION COST MANAGEMENT, COMMUNICATION IS THE KEY

J. R. Grizzle
Construction Consultant
Member, AACE

A Communication-Based Critique of Traditional Cost Models

1996 AACE TRANSACTIONS
Dr. Paul A. Bowen, P.J. Edwards, and Cliff Hardcastle

A STANDARD FOR ENTERPRISE PROJECT MANAGEMENT

MICHAEL S. ZAMBRUSKI

RETHINKING COMMUNICATION IN CONSTRUCTION

PUBLISHED: May 2007 at http://itcon.org/2007/23/
EDITOR: B-C Björk

IMPROVING CONSTRUCTION COMMUNICATION

Robert S. Done, Ph.D.
Data Methods Corporation, 805 N. Camino Miramonte -Tucson, AZ 85716

MANAGING COST, CONTRACTS, COMMUNICATION AND CLAIMS:A

QUANTITY SURVEYING PERSPECTIVE ON FUTURE OPPORTUNITIES
JIP (Basie) Verster – University of the free state, Bloemfontein, South Africa

BSI Business Information (http://www.bsigroup.com/en/)

PD 7503 – 30th September 2003

PMBOK @ Guide 4th Edition - Chapter 10 - Project communication management.

Total Cost Management Framework - An Integrated Approach to Portfolio,

Program, and Project Management
First Edition - Edited by John K. Hollmann, PE CCE – 2006

COST ENGINEERING -The AACE International Journal AUG 2010

http://en.wikipedia.org

Page 36 of 36