Vico in digital environment
As the present situation is in the building industry, there is an ongoing tendency that building projects are getting more complex, this results in more detailed project descriptions from the building owner. This have created a big desire for trying and move the industry towards a 100 % digital environment, where all buildings are constructed directly from the 3D model. In the light of the governments growth package from 2002 “vækst med Vilje” was the construction industry on the agenda. The purpose was to create a higher productivity I the construction industry by moving towards a 100 % digital building environment.
But to be able to manage these highly complex building projects, it is necessary for the project team to have a software tool that can help organize and manage the increased flow of information and degree of details as the project progresses.
When doing procurement on a building project. The contractor have to deliver a payment plan over the project. To do that the contractor traditionally sits down and calculate the amount of quantities within the different building tasks eg. A column. This will then be compare with the schedule to know when the building objects should be produced from the supplier and send to the construction site, to ensure that the object are delivered on time.
But as the payment plan and main schedule are made before the project are in the construction phase, this will often result in the payment plan and main schedule will be revised a certain number of times. In the construction industry project modifications is estimated to almost 10% . of the total building cost. Therefore it is highly necessary that the project team have a tool that can help creating new procurement when there is a change in the project description.
In a project management environment a tool is an aid that can help the project team to effectively manage different task or activities. These activities can be in some ways be related to some of the PMBOK subject groups; Integration, stakeholder, scope, recourses, time, cost, risk, quality and procurement. In this case VICO is a construction-oriented software that can be used in a digital environment and thereby help the project manager to perform different task or activities in a construction project.
This article will treat how procurement described in the PMBOK can be undertaken in a digital environment. The article will mainly focus on the first 3 processes within procurement management; Planning, conducting and Administrer the procurement and how some inputs can be managed with software tools like Vico.
Project procurement management handles the different processes that are highly important for the organisation to conduct when buying products or services that are necessary to deliver the desired result. As shown in figure 1 project procurement management can be divided into four processes that ensure a good procurement management between the buyers and suppliers of the project. Each of the four processes have a number of inputs, tools and techniques and a output. This will be explained in the following. The four processes are overlapping each other as each output will figures in the next process as inputs..
The first process in procurement management is the planning part. This process includes the documentation of different purchasing decision, the planned approach, and the beginning of identifying several possible suppliers as shown in figure 2. At this point in the procurement process the project is in the initiating phase..
Input Scope baseline this gives a basic understanding on the specific requirements and criteria for the given project. Requirements documentation shall include which criteria's there have been discussed through the planning of the project. Teaming Agreements sets the boundaries for the arrangements between the parts in the project. This will help decide the roles between the building owner and the supplier. Risk register involves information associated to the identified risks which leads to the next input. Risk contract decision here the parts shall make different contracts including aspects such as insurance, this ensure each project team know their responsibilities. Activity resource requirements here the project team shall include individual requirements for the task. Project schedule here the project team shall include the time schedule for the construction, this will ensure that object is bought, produced and delivered on time. Activity cost estimates this is done for the project team to be able to evaluate the different solutions given from the suppliers. Cost performance baseline this together with the time schedule makes it possible for the project team to get overview of the present planned budget through the construction period. Enterprise environmental factors is focusing on the surrounding conditions, such as products that are available, how the supplier have performed in earlier construction project. This ensure a reliable supplier and makes sure that the given object is on the market at the needed time. Organisational process assets will ensure that if the organization itself, have a policy or guidelines that must be followed. If this is not the situation there can be created systems based on earlier projects.
Tools & Technique
Make or buy analysis this technique is a common known in management. Here the project team has to consider whether the objects shall be made internally or if a external supplier would be better. This must include all the different cost for either make or buy, and further the time related to either make or buy. This analysis itself Is very comprehensive and takes a lot of criteria into consideration, to be able to determine which option that is most affordable for the organisation. Expert judgment contains judgement used to evaluate the given inputs and outputs. The technique can help the project team develop the source selection criteria, for the project team to create or adjust the selection criteria's. This can also be used for determining the different procurements issues that are connected to the project. Contract types helps the project team to determine the risk between the parts, here several different contract types can be used to achieve the desired result. By choosing good contract types the risk connected to buying and selling will be reduced, as it already has been decided how the payment shall proceed through the project time.
From the planning process the project team will now get a number of outputs, that will make It possible for the project team to continue the procurement process and start conducting process. The outcome is; Procurement management plan is an assembly of the inputs and are based on the certain needs within the project. It explains how the different procurement planning process shall be used from both the development of the documents to the contract closures. This will often provide a guidance for the given inputs. Procurement statements of work (SOW) is the outcome from the scope baseline. The SOW explains the procurement objects in an acceptable detail level, that makes it possible for the supplier to decide whether if they can deliver the given object. The SOW can have a different level of detail, based on the supplier needs or the chosen contract type. The information that can be include in the SOW are details like; quantities, quality, location or other requirements that are specific to the project. The SOW will in any construction project be revised through the process until the procurement has be signed a contract award. Make or buy decisions is the output from the analysis technique make or buy and results in a document, describing which objects or task that needs to be required from either internally or externally. Procurement documents creates documents that are used to solicit solutions from the different suppliers. Source selection criteria are often created for the project team to evaluate and rate the different supplier solutions. The Criteria are either subjective or objective and can e.g. only be rating the price. The number of criteria often gives the most desired result but if it is done to detailed it can reduce the number of suppliers that are able to the meet the criteria's.
The focus in this process is for the project team to collect the different supplier responses, choosing the supplier and the making the contract. The project members will collect the different suggestion outputs from the planning process and then uphold them to the selection criteria. This process is necessary for the project team to select those suppliers that are qualified to complete the given task. At this point in the procurement process the project is in the design phase..
From the planning procurement (section 2.1) the given outputs will now figure as the inputs for conducting the procurement. This is the result from the combination of the inputs in 2.1 and the used tools and techniques that gives the inputs as shown in figure 3. The given inputs will now be analysed through different tools and techniques to give the project team a good foundation for closing the procurements.
Tools & Technique
Before the project team can close the procurements, the following technique and tools can be used for conducting procurements and finding the right supplier; Bidder conferences is a technique very commonly used. Here the buyers invite the all the different suppliers to ensure that the suppliers have a common insight of the task. Further it gives the opportunity for the supplier to ask questions. Proposal Evaluation Technique is not a common technique and Is mostly used during complicated procurements. The evaluation will be established trough the supplier responses to the criteria's described in the planning processes. Independent Estimates can be used by the project team, to do an internal estimate on the procurements. If there is big difference in the estimate mate internal compared to the supplier estimate, it can be a warning sign that the SOW was inefficient or that the suppliers does not understand the procurement. If this is the case the project shall revise the SOW. Expert judgement can be used by the project team to have an expert to evaluate the procurement. Most likely this consist of a team with different expertise's to give a broad review on the procurement documents. Advertising is a common technique for the project team to try a get a broader range of suppliers, but important for the team to check any jurisdictions from the government. Procurement negotiations is done between the buyer and supplier and helps clarify the needs and requirements for the procurement. This is done so the parts can agree before the actual signing of the contract
After the project team have evaluated the inputs by the different suitable techniques, the team are now ready for doing following; Selected sellers is a list of those suppliers who have been in the competition for the procurement based on the outcome of the proposal evaluation. Procurement Contract Award will be given to each of the suppliers that have been selected to the given procurement. The contract award contains all the decision, information and evaluation from the planning and conducting process and will be legal binding when the buyer and supplier have signed the contract. The contract award can vary depending on the complexity of the procurement. Resource calendars list the availability and quantities of the resources. Dates on when the different resource are available on the market e.g. in the summertime where suppliers have vacation and therefor many products can have a longer production and delivery time. This will be specified here. Change request are secondary documents, this shall be evaluated through the administer process, as it takes place in the construction phases. Management plans update will help the project team to ensure the project management plan is aligned with the project.
From the conducting procurement process where the different supplier was found and signed the next process is the administering process. Here the project team's overall tasks is to manage the different relationships between buyer and suppliers, to monitor the suppliers performance and check if they deliver the agreed terms in the contract award, at last ensuring changes will be detected and transferred to the project management plan. At this point in the procurement process the project is in the construction phase..
Inputs As illustrated in figure 4 the inputs for administrating the
For the project team to manage all information during the different procurement processes in a digital environment, the software tool Vico can be applicable for some inputs to create and manage the desired outputs. As described in the abstract the desire of the industry is that any project is build 100% out from 3D model. This is highly applicable and relevant for any project team in the construction industry. As Vico can manage time, cost, recourses and materials and from the 3D models. Therefore, when implementing the model into Vico the project team can include and manage the following inputs from the planning process to the administrating process;
- Project schedule; Is generated directly from the 3D model, by using the given quantities connected with time. This is extremely powerful when administering the procurements, when there is a change in the model. The project schedule consists all task during the project. Thereby if e.g. There should be done procurement on ventilation aggregates, the aggregate itself will act as a quantity in the model.
- Activity resources; To any task or quantities from the extract from the schedule that figure as a procurement, the project team can add what types of recourses that are necessary for that specific procurement
- Contract types; To any task the project team can enter how the contract type is and how the payment will be done for that specific procurement. This will be reflected in the Cost Performance Baseline.
- Cost estimates; To any task extracted from the schedule the project team can add the cost connected to the procurements necessary for completing the task. This Creates will help the project team creating a list for the contract awards.
- Cost performance baseline. When schedule, contract type and cost estimates are done, Vico automatically creates the cost performance through the entire construction period. Here the project team can see when they must pay the supplier and when they must get payed by the building owner. Further this can be used to find the given time for a procurement to be set into production to be delivered on time.
What makes Vico so powerful for managing these inputs is how the way everything is connected with the 3D model. So e.g if the building owner wants one more ventilation aggregate, he only has to implement this in the model. Vico will then automatically change the schedule, cost estimates and Cost performance. By defining procurement task in Vico, the project team can see all procurment connected to the model. If any task connected to a procurement is change, cost and time will be calculated without any form for manual work. As illustrated in figure 5, a possible set up for procurement in Vico. For any task e.g a Steel frame, all the necessary procurements are listed, and information as base cost and quantities will be updated if there is added more steel frames to the model..
When managing procurement in Vico, there is a number of limitations that makes it difficult for the project manager to use vico for procurement management;
- As this digitalizing of the industry is still an ongoing process, there can be limitations in form of the older generation of engineers. As Vico is a relatively newly used software tool, it requires that the project members know the tool, and know how to operate it. This can be a challenge due to the way the technology has been exploding the last decade. Therefore, there can be a large number of engineers not able to use the technology. This will then acquire a big amount of time and recourses to learn the older generation how to operate in Vico. Therefor the human aspect is a limitation for the industry
- Another limitation is the software itself. If Vico shall be able to implement all processes of procurement, there still must be developed a lot on the software.
- At last a limitation could be the construction industry itself. As shown in figure 6 the cost and staffing are illustrated over any given project period. As It is seen the smallest amount of time spent on a project is in the initiating phase, and as the project move towards the construction phase the work amount is at its highest. When looking at figure 7, it is recognized that the cost of change is at its lowest in the beginning of a project, and as the project developing the cost of change rises dramatically. As the 3D model itself has a huge influence on the quantalities that make up for the procurements, the management of the procurements in Vico highly demands a good working 3D model. And as the 3D model are developed in the beginning of the project, where the smallest amount of time is used, this is a limitation itself. By redefining the construction industry, and how the work flow is at present, the 3D model and preparation of the project could be improved if more time where used in the beginning of the project.