Industrial Report

Managing Changes in Construction Projects

The report is based on a three-year research project (2001-2004) funded by the Engineering and Physical Sciences Research Council (EPSRC) under its System Integration programme.
Written and compiled by the research team:

University of the West of England, Bristol

Professor Ming Sun

University of Salford
Dr Martin Sexton Professor Ghassan Aouad Andrew Fleming Sepani Senaratne

University of Loughborough
Professor Chimay Anumba Professor Paul Chung Dr Ashraf El-Hamalawi Dr Ibrahim Motawa Mei Lin Yeoh

Collaborating Companies
Kier Construction Ballast Plc WS Atkins BIW Infomatrix Six Continents

Contents
Executive Summary.................................................................3 1 2 3 Introduction .................................................................4 Aim of Research...........................................................6 Changes in Construction Projects ...............................7 3.1 3.2 3.3 4 Types of change...............................................7 Causes of change.............................................7 Effects of change.............................................8

Change Management Process ....................................9 4.1 4.2 4.3 4.4 Start Up ............................................................9 Identify and Evaluate ......................................9 Approval ..........................................................9 Implement and Review ...................................9

MCD Change Management Toolkit..........................11 5.1 5.2 Knowledge component ................................11 Support component ......................................11

6 7 8 9 10

Change Dependency Framework .............................12 Change Prediction Tool.............................................13 Workflow Tool ...........................................................15 Knowledge Management Guide ..............................18 Conclusions ................................................................19

Bibliography ........................................................................20

Executive Summary
The practice of the construction industry is project-based. The basic unit of work is individual projects, which may vary in size, length and complexity. However, some features are common to all construction projects. Project change is one of these common features. During a construction project many decisions have to be made based on incomplete information, assumptions and personal experience of the construction professionals. Changes and adjustments at a later stage are inevitable. Managing change effectively is crucial to the success of a project. If changes are not managed appropriately, they can cause project delays and overspending.
At present, in practice there are no widely accepted standard and comprehensive change management methods. Each project team usually adopt ad hoc procedures for managing project change. Current deficiencies include poor effectiveness of these methods and difficulty for project teams to learn and improve their change management skills from project to project. This report presents a study, which developed a change management toolkit to assist project teams during construction projects. The toolkit consists of the following key elements: Change Dependency Framework. The Framework presents a generic process for considering construction project change. It defines a standard procedure for managing change in construction projects. The process is supported by a set of definitions and guidance documents. Change Prediction Tool. This tool is capable of simulating different scenarios of change options by predicting and evaluating their impacts, and providing advice on the most appropriate course of action in response to a change event. The simulations can be carried out either at the planning stage or at project execution stage. Workflow Tool: This tool helps project team to adjust workflow when a change occurs. It also helps individual team members to identify project changes by comparing different versions of workflow so that they will carry out the correct tasks based on the latest instructions. Knowledge Management Guide: This guide helps project teams to understand the key issues of project change management and helps them learn from experience. The system is aimed at organisations involved in the delivery of construction projects. It is designed to prompt thought and discussion of the issues that surround project change. It is envisioned that organisations who use the toolkit will further refine and develop it in accordance with their particular needs.

1 Introduction
The report is based on a research project (2001-2004), Managing Change and Dependency (MCD) in Construction Projects, funded by Engineering and Physical Science Research Council (EPSRC) under the System Integration Programme.
Delays in completion, over spending and quality defects are common problems besetting the project delivery process in the construction industry. In 1988, the Construction Task Force, led by Sir John Egan, concluded that more than a third of major clients are dissatisfied with contractors performance in keeping to the quoted price and to time, resolving defects, and delivering a final product of the required quality. More than a third of major clients are dissatisfied with consultants' performance in coordinating teams, in design and innovation, in providing a speedy and reliable service and in providing value for money. The clients dissatisfaction is due to the fact that over 50% of construction projects suffer from delays and over-spending and more than 30% of the completed projects have quality defects. Furthermore, some 30% of construction is re-work. Project delays and overspending are not automatically the fault of the project team. In many cases, delays are often caused by client requirement changes that result in a different specification of work. Similarly overspending may be attributed to better materials or equipment being used so that the end product is of better quality. However, re-work, whether at the design stage or the on-site stage, is usually pure waste, and should be avoided.

The re-work problem is often caused by poor project change management. During construction projects, many decisions have to be made under uncertain conditions. Designers, engineers and other professionals have to make assumptions based on existing available information and their experience. If any assumption is proven wrong, some decisions have to be revised. In other words, changes are often inevitable. The key is how to avoid or reduce the negative impact of changes. The need for effective change management is clear from the following testimonies of different stakeholders of construction projects:

Client We commission hundreds of new build and refurbishment projects of various sizes every year. Many of them do not complete on time or within budget. As a result, we suffer significant losses in terms of both higher construction costs and delayed business opening. Design consultant In many of our projects, we have to make late changes to the design because the client keeps changing their requirements. This results in a waste of staff time as high as 30% in a typical project. Contractor We often have to delay the work on-site and even re-do the work because the drawings provided by the designers are either incomplete or inconsistent with the site conditions. Project manager Many serious project delays can be traced to some seemingly insignificant delays that happened sometime ago somewhere upstream in the project delivery process.

2 Aim of Research
The aim of the MCD project is to develop a project change management toolkit, which supports a project team in anticipating and evaluating potential changes and their impacts, thus reducing the disruptive effects of unplanned change. The toolkit also facilitates the communication of any change to all project team members whose work might be affected by the change.

3 Changes in Construction Projects

In construction projects, a change refers to an alteration or a modification to pre-existing conditions, assumptions or requirements. It can be caused by either internal or external factors. Different changes may have different effects or consequences. The objective of change management is to forecast possible changes; identify changes that have already occurred; plan preventive impacts; and coordinate changes across the entire project. 3.1 Types of change
A change that occurs during a project can be a gradual change or a radical change, depending on the degree of severity. A gradual change, also known as incremental change, happens slowly over a prolonged period and its intensity is low. A radical change is sudden, dramatic and has a marked effect. Gradual changes often occur during the design development stage, where many decisions are fine-tuned and refined progressively. Radical changes occur more often at postfixity or post design development phases. Project changes can also be classified as anticipated changes and emergent changes. Anticipated changes are planned in advance and occur as intended. On the other hand, emergent changes arise spontaneously and are not originally anticipated or intended. Another way to view project change is through its necessity. In this way, project changes can be classified as elective changes and required changes. An elective change is where one may choose whether or not to implement; and a required change is where there is no option but to make the change.

3.2 Causes of change

The causes of project change may originate from either external or internal pressures that are being applied to the project. External causes may be due to technological changes, changes in the customer expectations and tastes, changes in competitors activities, changes in government and policies, changes in the economy and finally demographic changes in the society. Internal causes may result from changes in management policy, changes in organisational objectives and changes in the long-term survival strategy of the organisations involved. At a more detailed level, the causes of construction project change are usually generated from either design or construction activities. The designgenerated causes include design changes, design errors, omissions and operational improvements. Construction driven causes are often linked to the unsatisfactory site conditions that hinder good workmanship, material handling and plant operation. The design and construction issues must be considered in conjunction with how the team is managed, co-ordinated and communicated with to reduce problems resulting from insufficient work separation, insufficient construction planning and disturbance in personnel planning.

External causes:
Economic issues Environmental issues Technological issues Regulatory issues

3.3 Effects of change

While some changes may bring benefits to a project, most changes, if not managed properly, can result in cost and time overruns. The major cost due to change is by the cost of rework or revision of work. Rework

Direct effects
Addition of work Deletion of work Demolition of work already done Rework Specification change Time lost in stopping and restarting current tasks in order to make the variation Revisions to project reports and documents Reorganise schedule and work methods to make up lost time

Internal causes:
Organisational level Organisational culture Ineffective decision-making

is the unnecessary effect of re-doing a process or activity that was incorrectly implemented in the first place and can be created by defects or variations. The cost of rework in

Project level Design Improvements Inadequate skills and knowledge amongst the team Inclement weather Late change of client brief Designer change of mind Design errors Inadequate knowledge of the site conditions Revised design parameters Minor field-originated changes Contract disputes Ambiguity in project goal, scope, and resources Any one or a combination of the above factors may result in changes to the design and construction of a building.

construction projects can be as high as 10-15% of contract value. Rework is an example of a direct effect of project change. In addition to direct effects, project changes can also bring some indirect effects, which will ultimately have an impact on project cost and schedule.

Indirect effects
Need for communicating change to all project members Dispute and blaming amongst project partners Loss of productivity due to reprogramming; loss of rhythm, unbalanced gangs and acceleration Change in cash flow, financial costs, loss of earnings Increased risk of co-ordination failures and errors Lower morale of work force Loss of float, therefore increased sensitivity to further delays

4 Change Management Process

Based on case studies and a review of existing research, a generic change management process model is defined (figure 1). The generic model consists of four stages, Start Up, Identify & Evaluation, Approval, and 4.2 Identify and Evaluate Implement & Review.
During a construction project, some changes can be anticipated while others may occur unexpectedly (section 3.1). The aim of the project team is to actively seek to identify potential changes at the earliest opportunity. This can be achieved by considering whether any of the potential change causes are likely to be present in a project. Once a potential change is identified, evaluation can be carried out in order to assist with the decision making process. Evaluation steps may include implications assessment and optimum selection of change options.

4.1 Start Up
This contains the proactive requirements that are essential for effective change management. These requirements enable the project team to respond readily to change, to manage change effectively, and to facilitate contingency plans for any anticipated change.

4.3 Approval
Once the evaluation step has been completed it will need to be approved by appropriate member of the team (usually the project manager) and maybe by the client depending on the nature of the change. In order to approve a change it is necessary for the people involved to see the impact that the change will have on the project. There may be several iterations during the approval process.

4.4 Implement and Review

Once a change is approved, it needs to be communicated to all team members whose work is affected by the change. If necessary, schedule of work needs to be adjusted and new schedule needs to be agreed by the whole team. Finally, the project team should review and learn lessons from the process of the change event.

Figure 1 Generic project change management process

Start Up Idenify & Evaluate

Approval for minor changes

Start up

Identify change

Criteria Evaluate change Options

Internal review

Rejection

Approval
reconsider other change options

Client approval
yes

no

Rejection Negotiation

yes, but not sure about estimation

Final change proposal & confirm instructions

Team notified

Implement & Review

10

Issue information to relevant project team members

Dispute resolution (if applicable)

Design and project base-line updated & issued to all parties involved

Record decision reached

Finish

5 MCD Change Management Toolkit

MCD project has developed a change management toolkit in order to facilitate project teams to apply the generic change management process in practice. Figure 2 illustrates the conceptual architecture of the toolkit. It consists of two components, a Knowledge Component and a Support Component. 5.1 Knowledge component
The Knowledge Module contains a high-level generic change process (as explained in section 4) that interfaces with a project change dependency framework (explained in detail in section 6) to identify, evaluate and approve changes. It also contains a Knowledge Management Guide (explained in section 9), which can be used either as a standalone guide or to be interrogated and manipulated by the support tools.

5.2 Support component

The Support Tools comprise a change prediction tool (explained in detail in section 7) that assesses the likelihood of changes occurring and a workflow tool (explained in detail in section 8) to assess the effect of change on the project programme. The toolkit can be used as a standalone tool during construction projects. It can also be integrated with other project management tools and methodologies, such as external construction process models and third party project management software tools.

Figure 2 MCD change management toolkit

External Construction Process Models

Third Party Project Management Tools

Change Management Process Workflow Tool

Change Prediction Tool Change Dependency Framework Knowledge Management Guide

Knowledge Component

Support Component

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6 Change Dependency Framework

On the basis of the generic change management process, a Change Dependency Framework has been developed to consider the cause, effect and project characteristics in greater detail. The Framework provides a standard structure to enable users to produce a rich description of a change event. It covers all aspects of project change, including the types of change, causes, effects and the inter-relationship between them. It is, in essence, a taxonomy of construction project change management.
Figure 3 Illustration of change dependency framework hierarchy

The Framework has a hierarchical structure with four levels. Level 1 describes the key activities of the generic change management. Levels 2, 3, and 4 are decompositions at increased degree of details. Figure 3 is an illustration of the Framework, using Consider causes of change as an example. The whole Framework is presented as a set of diagrams similar to this illustration. No special or technical skills are required to interpret and use the Framework. Furthermore, the definitions included in this Framework are used directly by the supporting tools of the MCD toolkit.

Identify change

Level 1

Project level issues

Organisational level issues

Level 2

Construction issues

People issues

Organisational culture

Level 3

Site conditions

Poor workmanship

Level 4

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7 Change Prediction Tool

The MCD system provides a change prediction tool, which works on the basis of interrelationship, in fact interdependency relationship, between project characteristics, causes of change and effects of change. Its main purpose is to predict change events at the early stages of projects and therefore enable appropriate actions to minimize their disruptive effects. In addition to managing proactive changes, the tool can help the project team in their decision-making when faced with an unexpected change event.
Project characteristics
Figure 4 Example of change cause-effect dependency

Figure 4 illustrates a typical change cause-effect dependency diagram and an illustration of a change event. The relationship between change cause and effect is not necessarily a one-to-one relationship. Instead, multiple causes can lead to a change event that results in multiple effects. Different causes may be responsible for a certain effect or a set of effects. For example, the effect of a change cause C1 and C3, occurring together, may result in more than the sum of the effect of change cause C1 occurring on its own and the effect of change cause C3 occurring on its own.

There are no predefined dependencies between each set of variables with another. Every project team have to define the dependency routes for their projects through a purpose built user interface as illustrated in figure 5. The system then can estimate the amount of a certain effect due to certain causes of change under specific project characteristics. The output can help project team to identify the most effective project characteristics from change management perspective so that corrective actions can be taken as early as possible to reduce negative effects of change.

F1

F2

F3

F4

Cause of change

C1

C2

C3

C4

C5

Effect of change

E1

E2

E3

E4

A change event example, which is based on F1 and F4 of project characteristics that lead to C1, C3 and C5 of change causes, which in turn result in E3 and E3 of change effects

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Figure 5 Change predication tool

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8 Workflow Tool
When a change occurs during a project, work schedule or workflow needs to be adjusted. Workflow management systems are information systems that support workflow assistance and partially their execution.
In construction industry, the main goals of workflow management are the control of construction processes, the coordination of project members, and the control of construction information. Although the construction industry has been recognised as a process based industry, the application of workflow technologies in supporting construction processes is relatively new. MCD project developed a workflow tool - wfChange, a software system that incorporates a formal approach for identifying workflow changes by matching two versions of a workflow specification. The goal of workflow matching is to compare two versions of a workflow specification in order to detect the differences in terms of a series of workflow process changes. wfChange can assist project change management in a number of ways: It allows the project team to make changes to schedule at any point of time and save the modified schedule as a new The system can be used by all team members to identify any changes that may have an impact on their own work. By doing so, it helps to improve the coordination during change management of construction projects. The system provides a library of generic schedules, so that project team does not have to start scheduling from scratch each time. Schedules from completed project can also be saved into the library for future use. The workflow tool can be used in parallel with the execution of a construction project to ensure changes are properly executed, managed and recorded (figure 7). version. At a later stage, the system can compare different versions of a schedule and identify any changes or proposed changes occurred (figure 6).

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Figure 6 Versioning and change identification

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Figure 7 Workflow management tool

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9 Knowledge Management Guide

Managing change in construction projects is a collective problem-solving process. It requires the sharing of tacit (personalised knowledge) and explicit (codified knowledge) knowledge between the project team and appropriate application of the knowledge. This Guide provides a set of guidelines from knowledge management perspective in the following areas.
Identify and use team members expertise in change decisionmaking. The extent to which team members hold common and unique knowledge and the extent to which they know one another prior to discussions can affect how they make decisions. Therefore team members need to know who knows what and make effective use of both tacit and explicit knowledge in appropriate balance during the process. Consider face-to face settings for change decision-making. Tacit knowledge that originates at a collective level is the most strategically significant type of knowledge. Therefore it is important to promote team
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interactions to create this tacitcollective knowledge. Virtual communication techniques are insufficient to this end and faceto-face settings at regular intervals are crucial. Create a knowledge-sharing team culture. It is important to create a team culture that use shared language / narratives and improve personal relationship through trust, care and openness. This can be facilitated by collaborative team approaches such as partnering arrangements, design & build approaches and concurrent engineering. Encourage socialisation activities during managing change. Tacit knowledge can pass between team members through observation, imitation and practice when they share their knowledge during team discussions. Socialisation activities such as apprenticeships and training; participation in outside activities (such as site visits, fairs and social functions); and informal working arrangements (community of practices and informal networks) can improve members tacit knowledge base. Encourage members to make their tacit knowledge explicit during team discussions. Tacit knowledge can be made explicit by effective use of stories, myths, examples, metaphors, analogies and models during team

discussions. As well as listening to others experience and opinions, it is important to encourage each member to express and clarify their thoughts. Encourage team members to codify their change experience. It is important to organise ideas raised in discussions and make conclusions. These need to be codified in documents such as review reports, manuals, databases, publications and/ or computer programmes, in order to disseminate to the wider organisation. Access should be given to all members in the organisation to refer these codified documents. Encourage team members to learn after the change experience. Team members should be provided with time and resources to reflect, learn and experiment from their immediate change experience. Further, team members should be allowed to interact with other members within their individual organisations, so that their experience can be shared through further socialisation.

10 Conclusions
This report describes a change management toolkit, which aims at providing support for construction projects. It seeks to address the two important aspects of change management - predicting change and reacting to change by rescheduling workflows. The MCD system provides two tools for these purposes. The project Change Dependency Framework ensures that all team members will use standard procedures and terminologies at different phases of a project and for different projects. The Knowledge Management Guide provides advice not only on how to use this system but also on how to better understand project change and change management as well as on how to learn from the process of managing project changes. The system will help a project team to reduce unnecessary changes and to minimise the negative impact of unavoidable changes, thus help to reduce the project delay and overspending problem of construction projects.

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Bibliography
Project Change Management
CII - Construction Industry Institute, (1994) Project Change management. Special publication 43-1, Austin, Texas. CIRIA Construction Industry Research and Information Association (2001) Managing project change; A best practice guide. CIRIA C556, UK. Winch, G (2002) Managing construction projects. Blackwell science ltd, UK. Love, P E D and Li, H (2000) Quantifying the causes and costs of rework in construction. Construction Management and Economics, 18: 479-490.

Knowledge Management
Leonard, D and Sensiper, S (1998) The role of tacit knowledge in group innovation. California Management Review, 40(3): 112-132. Nonaka, I and Takeuchi, H (1995) The Knowledge-Creating Company, Oxford University Press, New York.

Workflow Management
Atkin, B., Borgbrant, J., & Josephson, P. (2003) Construction Process Improvement, Blackwell publishing, Oxford, UK, ISBN 0-632-06462-5. Hollingsworth, D. (1995) The Workflow Reference Model, Workflow Management Coalition (WfMC), Document No. TC00-1003, Issues 1.1, Hampshire, UK, 19 Jan 1995, http://www.wfmc.org/ standards/docs/tc003v11.pdf Allen, R. (2001) Workflow: An Introduction, Workflow Handbook 2001, Future Strategies, Published in association with the Workflow Management Coalition (WfMC), Oct. 2000, ISBN 0970350902. Chung, P.W.H and Cheung, L.Y.C. (2003) Managing the Compliance of Dynamic and Complex Processes, Workflow Handbook 2003, Future Strategies Inc., Florida, ISBN 0-9703509-4-5.

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Contact details: Professor Ming Sun Faculty of the Built Environment University of the West of England Coldharbour Lane, Bristol, BS16 1QY, UK Tel: +44 117 3283006 E-mail: ming.sun@uwe.ac.uk Professor Chimay Anumba Department of Civil and Building Engineering Loughborough University Loughborough Leicestershire, LE11 3TU, UK Tel: +44 1509 222615 E-mail: c.j.anumba@lboro.ac.uk Dr Martin Sexton School of Construction and Property Management University of Salford Salford, M7 1NU, UK Tel: +44 161 2953991 E-mail: m.g.sexton@salford.ac.uk

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