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Float or Time allowance

11 replies [Last post]
Mon, 2009-04-27 06:33
Carmen Arape
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Groups: Petro-Chem / Oil & Gas
Dear Planners

Can someone give me a reference regarding Float allowance for schedules associated to lump sum project.

Much appreciate any link in order to get information on this matter.

Cheers,
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Replies

Tue, 2009-05-05 04:59
#1
Carmen Arape
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Joined: 26 Jun 2004
Posts: 292
Groups: Petro-Chem / Oil & Gas
Mike,

Thanks for your comment about having a practical approach towards the early identification of risky activities.

I built schedule from bottom to top. I use the internal schedules prepared by discipline leads. The process of building a schedule is like a Lego game. First pieces completed and the final stage is the final assembly.

This process is time consuming and at the end there is no time for risk analysis using any software.

The method allows me to prepare a risk check list. Early identification of risk based on : knowledge of the scope of activity and related links (mainly multidiscipline links). Analysis of critical path report are taken into account.

As you, I am interested in Samer’s concept of money cushion. In my case time cushion as being considered as a “grace period” after official project finish date.

Cheers,


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Wed, 2009-04-29 22:22
#2
Samer Zawaydeh
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Dear Mike,

The "cushion" would be all gone when we are in a delay situation, and no body would be talking about it actually. Chances are it was calculated incorrectly.

I am sure that someone will use it sometime for preparing a claim if the correct information about all the activities in the project is known.

With kind regards,

Samer
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Wed, 2009-04-29 15:00
#3
Mike Testro
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Hi Samer

The main reason for my interest is that one of the common heads of claim in a delay analysis is extra work.

If the baseline programme has been resource modelled from the BOQ/Cost Plan then any increase / decrease in the measured work can be transferred directly to the resourced programme.

Best regards

Mike Testro
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Wed, 2009-04-29 13:54
#4
Samer Zawaydeh
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Dear Mike,

Usually, the marketing and sales department would allow for a certain contingency percentage. After completing the Tender program, the effect of this percentage on the time of completion can be determined and the new duration can be reported in the Tender as the duration of completion.

If you want to do a risk analysis, then, you need to do a risk matrix and determine the duration as you stated.

With kind regards,

Samer
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Wed, 2009-04-29 04:29
#5
Mike Testro
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Hi Samer

I am interested in your concept of a money cushion being replicated in the programme.

A 10% cost contingency does not necessesarily represent 10% extra time.

If it is just a general contingency affecting all activities then it may be reasonable to increase them all by 10% but that would absorb a lot of float before the end date is affected.

If the 10% is focused on a few activities then the 10% can be allocated more accurately and a clearer result obtained.

I think Carmen has the best - most practical - approach by indicating the two risky activities and and using a best case - worst case duration to calculate a reasonable time risk buffer.

Bets regards

Mike Testro
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Mon, 2009-04-27 13:12
#6
Samer Zawaydeh
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Dear Carmen,

If you are in the tendering stage and you are calculating the best time to complete the project, we did a study for a project by determining the project duration that will increase the cost by about 5%.

That was the contingency for that project. Hence, the float was determined by determining the time that will increase the cost of the project by 5%.

Hope that this helps.

Best,

Samer
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Tue, 2009-04-28 13:10
#7
Samer Zawaydeh
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Dear Carmen,

In order to have a more accurate figure for Risk, you will need to do a qualitative and then a quantitive risk listing. Subsequently, you determine the possibilities and the importance and you get the most likely risks numbers.

A team responsible for executing these two activities within your company or a subcontractor who has experience in these activities might also shed more information.

Since the issue here is float, and we are at tendering stage, then the level of risk associated with the project will determine the contingency that the company wants to load the tender with. Usually this is a marketing and upper management decision. Let them give you the "money cushion" then want, and then you can determine the time associated with this money.

With kind regards,

Samer
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Tue, 2009-04-28 13:01
#8
Carmen Arape
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Hi James,

I know Pert master in theory. It is the official software in my company. I have never used it. I find too much work with min and max durations.

Being at tender phase, pert master is time consuming when the proposal manager would like to have a quick figure.

My method of identifying durations under great uncertainty gave me a good result.

Cheers,

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Tue, 2009-04-28 07:30
#9
Oliver Melling
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I have used Pertmaster to work out P90 schedules. It is possible to model the risk of certain activities not occuring.
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Tue, 2009-04-28 06:38
#10
James Shimmon
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Carmen
Do you guys use Pertmaster to determine scheduling uncertainty within a project?

Shimmo
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Tue, 2009-04-28 01:15
#11
Carmen Arape
User offline. Last seen 7 years 14 weeks ago. Offline
Joined: 26 Jun 2004
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Groups: Petro-Chem / Oil & Gas
Hi Samer,

It helps, thanks. You gave me a figure that I can use as a benchmark for my figure.

I am in a tendering stage, trying to sell an execution of 24 weeks. By building the schedule, I have detected two high risk activities. For different reasons, I consider these two activities with a high probability of no occurrence with the actual duration. Of course these two activities are part of the critical path.

Thinking in the most appropriate duration for theses activities, I have mentioned the time risk allowance for the project schedule. I left the decision to my project manager whether He would like to take this risk allowance as guarantee of the schedule.

My time risk allowance was the 10% of the schedule duration.

Cheers,
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