Project Life Cycle Economics This page has been left blank intentionally Project Life Cycle Economics Cost Estimation, Management and Effectiveness in Construction Projects Edited by MassiMo PiCa Foreword by RUssELL D. aRCHiBaLD © Massimo Pica and his contributors 2015 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. Massimo Pica has asserted his right under the Copyright, Designs and Patents Act, 1988, to be identified as the editor of this work. Published by Gower Publishing Limited Gower Publishing Company Wey Court East 110 Cherry Street Union Road Suite 3-1 Farnham Burlington, VT 05401-3818 Surrey, GU9 7PT USA England www.gowerpublishing.com British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-4724-1964-4 (hbk) ISBN: 978-1-4724-1965-1 (ebk – ePDF) ISBN: 978-1-4724-1966-8 (ebk – ePUB) Library of Congress Cataloging-in-Publication Data Pica, Massimo. Project life cycle economics : cost estimation, management and effectiveness in construction projects / by Massimo Pica. pages cm Includes bibliographical references and index. ISBN 978-1-4724-1964-4 (hbk) -- ISBN 978-1-4724-1965-1 (ebook) -- ISBN 978-1-4724-1966-8 (epub) 1. Construction industry. 2. Project management. 3. Product life cycle. I. Title. HD9715.A2P477 2015 624.068’4--dc23 2014041194 Printed in the United Kingdom by Henry Ling Limited, at the Dorset Press, Dorchester, DT1 1HD Contents List of Figures ix List of Tables xiii About the Editor xv About the Contributors xvii Foreword xxi Preface xxiii List of Abbreviations xxv Part I Fundamentals oF Project lIFe cycle economIcs: IntroductIon to Part I 1 The Essence of Project Management and its Challenges 3 Massimo Pica 2 Project Management, Projects and Their Life Cycles: Historical Views 13 Massimo Pica 3 Projects and Their Life Cycles: Some Current Views 27 Francesca Montanari 4 Introduction to Project Life Cycle Cost, Schedule and Requirements Management 37 Federico Minelle and Franco Stolfi 5 Initiating the Project 55 Claudia Spagnuolo 6 Estimating and Budgeting for Project Activities: Project Work Breakdown Structures and Cost Breakdown Structures 69 Tommaso Panetti 7 Developing and Managing the Project Schedule 85 Tommaso Panetti vi ProjeCt Life CyCLe eConomiCs 8 Resource Issues in Schedule Management 99 Tommaso Panetti 9 Measuring, Monitoring and Controlling the Project Performance 111 Federico Minelle and Franco Stolfi 10 The Percentage of Completion as a Metric of Project Control: Concepts and Calculation Methods 119 Massimiliano Arena 11 Project Change Management 137 Fabrizio Colista 12 Project Closeout and Lessons Learned 155 Carmine Russo 13 Human Factors in Project Life Cycle Economics 175 Barbara Boccasini Part II Project cost and Value For constructIons and FacIlItIes: IntroductIon to Part II 195 14 Planning for the Project Life Cycle of Constructions and Facilities 199 Massimo Pica 15 Fundamentals of Construction Economics 215 Massimo Pica 16 Identifying Cost and Life Expectancy Information 235 David Churcher 17 The Evolution of Construction Cost Estimation and Project Management 247 Massimo Pica 18 Environmental Impact and Lifetime Cost-Effective Sustainability of Constructed Assets 267 Massimo Pica Contents vii 19 Value for Money Assessment in Construction Projects: The Economic Effects of PPP/PFI in Projects 281 Massimo Pica 20 Driving Towards Successful Progress and Delivery of Construction Projects 297 Massimo Pica 21 Construction Project Monitoring in Complex Contexts 313 Massimo Pica Conclusions 327 Massimo Pica Appendix 1 The New ISO Standard 21500 Guidance on Project Management 339 Carmine Russo Appendix 2 Project Optimization through AHP Decision Support Methods 355 Barbara Boccasini Appendix 3 The PILOT Method and Software Tools for Decision Making 369 Barbara Boccasini Appendix 4 Project Evaluation through Impact Analysis Methods: An Example 389 Federico Minelle and Franco Stolfi Index 403 This page has been left blank intentionally List of Figures 1.1 Applicability matrix of Project Management in projects 4 1.2 Applicability matrix of Project Management in projects: The level of technology is added in Quadrant 2 5 1.3 Matrix of Project Management applicability to projects 6 2.1 The Pantheon in Rome 16 3.1 Six-Phase Comprehensive Project Life Cycle Model 34 4.1 Project process groups effort 38 4.2 Requirements Management approach 40 4.3 Risk Matrix 43 6.1 Graphical WBS 70 6.2 Project phases and deliverables 71 6.3 Hierarchical structure of a WBS 73 6.4 WBS dictionary with component descriptions 76 6.5 Project budgeting process 81 7.1 Example of a Gantt chart for Executive Management and sponsors 86 7.2 Project schedule for discussion with customers 86 7.3 Project schedule for discussion with team members 87 7.4 Project milestone schedule 87 7.5 Dependencies between project activities 91 7.6 Network diagram example 91 7.7 Example of a critical path 92 7.8 Correlation of tasks in a precedence diagram 94 7.9 Example of a precedence diagram 95 7.10 The precedence diagram at a glance 96 7.11 Detail of the precedence diagram: Boxes with a white background are placed on the critical path 97 8.1 The RACI chart 102 8.2 Example of the crashing technique 104 8.3 Impact of the crashing technique on consecutive project activities 105 8.4 Impact of the fast-tracking technique on consecutive project activities 106 8.5 Resource histogram 107 8.6 Resource histogram showing project team member roles 108 9.1 Risk class and risk drivers (examples) 112