An Investigation of Field Rework in Industrial Construction

An Investigation of Field Rework in Industrial Construction May 16, 2001 COAA - Field Rework in Industrial Construction

Capsule Summary of Research Funded by the Construction Industry Institute (CII) Directed by the “Causes & Effects of Field Rework Research Team” (RT-153) Conducted by Oregon State University (OSU) May 16, 2001 COAA - Field Rework in Industrial Construction

Field Rework Research Team RT - 153 Jim Atkinson US Steel (Chairman) Richard Calhoun Phillips Petroleum Co. Francis House Kellogg Brown & Root William Wright Chemtex International Andrew Beal Air Products & Chemicals May 16, 2001 Joe Beffa Black & Veatch Phill Stassi Jacobs Engineering Group, Inc. Tom Falso Eichleay Dr. David Rogge (Researcher) Oregon State University COAA - Field Rework in Industrial Construction 3

Presentation by Dr. David F. Rogge Program Coordinator Construction Engineering Management (CEM) Oregon State University May 16, 2001 COAA - Field Rework in Industrial Construction

Overview May 16, 2001 COAA - Field Rework in Industrial Construction

RT-153 Objectives 1 Identify methods being used to track rework. 2 Identify the major causes of rework. 3 Identify practices that most effectively minimize field rework. 4 Develop a tool (Field Rework Index, FRI) that will foretell the degree of field rework. May 16, 2001 COAA - Field Rework in Industrial Construction 6

Definition Field Rework is: CTotal direct cost of rework in the field regardless of initiating cause or source. Field Rework is not: DChange orders for new work DOff-site fabricator errors DOff-site modular fabrication errors May 16, 2001 COAA - Field Rework in Industrial Construction 7

Calculation • % Field Rework = Total direct cost of rework performed in field Total field construction phase cost May 16, 2001 COAA - Field Rework in Industrial Construction 8

How BIG is the Problem? CII Data & Research Summary 10 -2 (1989) 12% rework on 9 industrial projects & Benchmarking & Metrics Data Report (1997) 3. 4% for 19 industrial projects & This Research 4. 4% for 109 industrial projects Ranges between 0% and 25% High levels impact schedule May 16, 2001 COAA - Field Rework in Industrial Construction 9

How is Field Rework Tracked? Objective 1 O O O Þ May 16, 2001 CII’s Quality Performance Management System (QPMS) – CII 10. 3 – Measures field rework and design rework – Measures cost of prevention and appraisal Adaptations of QPMS elements Company internal systems RT-153 Final Research Report will present a simplified system for field rework tracking only COAA - Field Rework in Industrial Construction 10

Rework Causes and Cures Objectives 2 & 3 Analysis of 145 projects shows strongest relationships between field rework and: Ù Owner organization alignment Ù Engineering rework Ù Constructability Commitment May 16, 2001 COAA - Field Rework in Industrial Construction 11

Rework Causes and Cures Objectives 2 & 3 Conclusion: Improve the upstream processes (pre-project planning and engineering) and you will improve the downstream process (construction). >> Not Rocket Science << May 16, 2001 COAA - Field Rework in Industrial Construction 12

Predicting Field Rework Objective 4 » The Field Rework Index (FRI) » Accurately predict field rework % ? -- NO. » Provide early warning? – YES. » BONUS – Early warning for cost growth! May 16, 2001 COAA - Field Rework in Industrial Construction 13

Predicting Field Rework Objective 4 » How the FRI works: » Project team answers 14 questions » Scores are summed X 1 + X 2 … X 14 = FRI Xn = Team score for a question May 16, 2001 COAA - Field Rework in Industrial Construction 14

FRI Form May 16, 2001 COAA - Field Rework in Industrial Construction 15

FRI Rework Danger Chart May 16, 2001 COAA - Field Rework in Industrial Construction 16

What are the Questions? Three categories of questions: Team Planning & Organization Information Availability Staffing or Schedule Constraints May 16, 2001 COAA - Field Rework in Industrial Construction 17

Team Planning & Organization 4 Alignment within the Owner’s organization 4 Degree of use of Project Execution Planning 4 Design firm’s qualifications 4 Change of design discipline leaders 4 Commitment to using Constructability by design and construction contractors May 16, 2001 COAA - Field Rework in Industrial Construction 18

Information Availability 4 Field verification of conditions by Engineering 4 Quality of interdisciplinary design coordination 4 Availability of vendor information 4 Level of design rework May 16, 2001 COAA - Field Rework in Industrial Construction 19

Staffing or Schedule Constraints 4 Compression of design schedule 4 Design overtime 4 Quality of Vendor prequalification 4 Availability of skilled craftworkers 4 Construction contractor overtime May 16, 2001 COAA - Field Rework in Industrial Construction 20

The FRI is available through CII The Field Rework Index: Early Warning for Field Rework and Cost Growth Research Summary 153 -1 February 2001 (http: //construction-institute. org) May 16, 2001 COAA - Field Rework in Industrial Construction 21

Background May 16, 2001 COAA - Field Rework in Industrial Construction 22

Why Does the FRI Work? • Research Methodology – Industry survey • Attitudes and practices • Identify “best practices” • 85 responses from 46 organizations – Focus group – Database of actual project data • Evaluate relationships • Identify variables for early warning May 16, 2001 COAA - Field Rework in Industrial Construction 23

The FRI Database • Field rework measures from completed projects – Percent – Subjective rating • Retroactive evaluations May 16, 2001 COAA - Field Rework in Industrial Construction 24

Predictor Variables • Selection process – – – Industry survey analysis Research team brainstorming Focus group 63 variables Forced ranking 44 variables Analysis of initial 43 -project database 19 variables – Final FRI tool 14 survivor variables May 16, 2001 COAA - Field Rework in Industrial Construction 25

Database • • • 153 total projects 144 with subjective rework ratings 137 with complete info. for FRI 109 with measured rework 107 with cost growth information May 16, 2001 COAA - Field Rework in Industrial Construction 26

Database • Project size (US $ -- Construction Phase) – – May 16, 2001 Minimum = $200 thousand Maximum = $558 million Mean = $58 million Median = $17 million COAA - Field Rework in Industrial Construction 27

Database May 16, 2001 COAA - Field Rework in Industrial Construction 28

Factors Related to Field Rework • FRI variables in descending order of relationship with field rework rating – Owner alignment – Design Rework – Constructability commitment – Interdisciplinary design coordination – Degree of project execution planning May 16, 2001 COAA - Field Rework in Industrial Construction 29

Factors Related to Field Rework • FRI variables (continued) – – – – – May 16, 2001 Design firm’s qualifications Field verification Expected craftworker availability Expected construction overtime Engineering overtime Design leadership changes Design schedule compression Supplier prequalification Supplier information COAA - Field Rework in Industrial Construction 30

How Strong Were the Relationships? May 16, 2001 COAA - Field Rework in Industrial Construction 31

% Rework vs FRI May 16, 2001 COAA - Field Rework in Industrial Construction 32

Rework Rating vs FRI May 16, 2001 COAA - Field Rework in Industrial Construction 33

Database Analysis • CONCLUSION: Accurate prediction of percent field rework not possible. • BUT, is early warning possible? May 16, 2001 COAA - Field Rework in Industrial Construction 34

Yes. • For the database – FRI >45 • 6. 8% mean rework (16 projects) – FRI < 30 • 2. 5% mean rework (34 projects) May 16, 2001 COAA - Field Rework in Industrial Construction 35

Rework Rating for FRI <30 May 16, 2001 COAA - Field Rework in Industrial Construction 36

Rework Rating for FRI >45 May 16, 2001 COAA - Field Rework in Industrial Construction 37

But Wait, There’s More! May 16, 2001 COAA - Field Rework in Industrial Construction 38

FRI Warns of Cost Growth! FRI Score Number of Projects >45 25. 8% 15 30 -45 6. 0% 54 <30 May 16, 2001 Cost Growth (%) -7. 8% SAVINGS! 31 COAA - Field Rework in Industrial Construction 39

Cost Growth versus FRI May 16, 2001 COAA - Field Rework in Industrial Construction 40

FRI Warns for Field Rework and Cost Growth • For Database – Warning for field rework and for cost growth about equal – FRI target of <30 is good for both May 16, 2001 COAA - Field Rework in Industrial Construction 41

RECAP: FRI Development • 63 possible predictor variables identified • Analysis of 145 project database reduced variables to 14. • Survivor variables form FRI • Projects with FRI’s <30 – had low or very low rework – cost growth was negative • Projects with FRI’s >45 – two of three had high or very high rework – cost growth was >25% May 16, 2001 COAA - Field Rework in Industrial Construction 42

Other Findings • Field rework metrics are not standardized – Metrics used • • % of actual construction phase cost % of total installed cost % of labor hours or dollars (by craft or not) Other variations • Significant differences in magnitude • Example: 5% of labor may be 2% of construction and 0. 5% of TIC May 16, 2001 COAA - Field Rework in Industrial Construction 43

Other Findings • From the survey of CII companies – 87% track field rework – 79% unfamiliar with QPMS – Only 2 of 17 trying QPMS discontinued – 72% used field rework data to improve engineering May 16, 2001 COAA - Field Rework in Industrial Construction 44

Other Findings • Survey of CII companies (continued) – Ways to minimize field rework • • May 16, 2001 98% - up-front planning and scope definition 88% - constructability 48% - establish goals 31% - use PDRI (CII’s Project Definition Rating Index, Pre-Project Planning Tools: PDRI and Alignment, Research Summary 113 -1) COAA - Field Rework in Industrial Construction 45

Best Practices for Measuring and Managing Field Rework • Research Team studied “best practices” • Companies identified by – Questionnaire survey – Research team • Six site visits May 16, 2001 COAA - Field Rework in Industrial Construction 46

Earning Rework Incentive Best Practice Example: • Contract allowed increased profit through reduced field rework – Examine, flow chart, and improve engineering processes – Use of 3 D-CAD – Use of site photogrammetry • Incentives earned. May 16, 2001 COAA - Field Rework in Industrial Construction 47

QPMS for 10 Years Best Practice Example: • CII Research Summary 10 -3 introduced QPMS in 1989 – Measures field rework and design rework – Measures cost of prevention and appraisal • One company has used extensively – Average rework of 10. 1% in ’ 88 – Average rework of 2. 6% in ’ 98 – Revised procedures • Software to facilitate • Lessons learned May 16, 2001 COAA - Field Rework in Industrial Construction 48

Field Rework Incentives in Design Contracts Best Practice Example • Owner uses field rework measures – as factor in awarding design contracts – as incentive for fees in design contracts May 16, 2001 COAA - Field Rework in Industrial Construction 49

Construction Contractor Best Practice Example • Construction contractor tracks field rework – Norms by design firm – Constructor-caused • For continuous improvement • No cost to owner – even when cost-reimbursable May 16, 2001 COAA - Field Rework in Industrial Construction 50

Conclusions • Field rework is significant cost for industrial construction – Average 4. 4% of construction phase cost – Median 3. 0% – Range of 0% - 25% • FRI is simple tool providing early warning – for field rework – for cost growth May 16, 2001 COAA - Field Rework in Industrial Construction 51

Conclusions (cont’d) • Efforts to minimize field rework must start long before construction – Improve Owner organization alignment – Minimize engineering rework – Constructability commitment – Other 11 variables of FRI May 16, 2001 COAA - Field Rework in Industrial Construction 52

Recommendations • Use FRI on industrial projects to warn of potentially high field rework and cost growth • Include FRI variable scores in project summaries to build company-specific database. May 16, 2001 COAA - Field Rework in Industrial Construction 53

Thank you. Contact Dr. David Rogge with information or questions: Dept. of Civil Engineering Oregon State University Apperson Hall, Rm. 111 Corvallis, OR 97331 -2302 Phone: (541)737 -4351, FAX: (541)737 -3300 E-mail: David. Rogge@orst. edu www. engr. orst. edu/~rogged May 16, 2001 COAA - Field Rework in Industrial Construction 54