2007 AACE International Transactions

PS.18 Scheduling Management: Schedule Basis Memorandum

nderstanding how each schedule was developed, the information made available at the time of development, the parties involved in the development, and when the schedule was developed provides a great deal of information to the stakeholders of the project. Too many times, we neglect to capture the essence of the development of the schedule. By capturing why, how, who, when and what was used in the development of the schedule, we provide valuable historical information in reconciling current project schedules as well as supporting the development of future schedules. The schedule basis memorandum (SBM) is designed specifically to assist the project team in providing crucial information about the schedule and how it was developed. Most failures in anything we perform can be contributed to a flaw in process design. By developing a robust development process and establishing a set of minimum conditions of satisfaction, the success of the project will increase substantially and consequently, the margin of error will decrease. If the project goes astray, we can look back at the historical information to better refine the schedule development process. This will enable us to eliminate the flaws in the process, allowing the users to prepare better schedules using the right information, and the right people with the right level of definition and details. The schedule development process is as important if not more important than the schedule itself, because an improperly built schedule is perhaps worse than no schedule at all. By using the schedule basis memorandum, you increase the awareness of the development of the schedule. This paper will not address the technical qualities of the schedule (open ends, use of constraints, etc.) or the adherence of sound scheduling practices. The schedule basis memorandum (SBM) was designed purely to capture the information available and provide an understanding of what was used to develop the schedule. The SBM substantiates why the end date is what it is. A separate process, such as a schedule quality assessment and schedule validation process / report should be used for determining the quality, validity and do-ability of the schedule.

SCHEDULE BASIS MEMORANDUM The schedule basis memorandum (SBM) is a document that defines the basis for the development of the project schedule and assists the project team in identifying any key elements, issues and special considerations (assumptions, exclusions, etc.). The schedule basis memorandum further substantiates the confidence and degree of completeness of the project schedule in order to support change management, reconciliation, and analysis. This document also doubles as a tool for assisting any personnel who are transitioning into the project, specifically a new scheduler or project manager. The schedule basis memorandum can be used across all industries. Other enterprises may want to use this document as a framework for developing a similar process and set of tools that correspond directly to their needs. The scope of this section is to introduce the schedule basis memorandum. The document defines the following: project description, schedule process; scope of work (WBS, OBS); execution strategy; key project dates; planning basis; critical path; path of construction; scheduling threats; issues and concerns; risks and opportunities; assumptions; exclusions; exceptions; baseline changes/ reconciliation; and schedule reserve.

The following provides a further understanding of the requirements of the schedule basis memorandum. Project Description, Schedule Process This section of the SBM should briefly and concisely provide a description of the project. Also, since this document provides the basis for the development and control of the schedule, you should also describe the process and personnel involved in the development of the project schedule. A checklist should be

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2007 AACE International Transactions attached to indicate the available information (and the degree Identify source and methodology for determining logic and sequencing. of completeness). This provides an understanding of the information used for the development of the schedule. Please see the Identify labor productivity adjustments, including congestion assessment, extended work hours, winter work. attachment schedule input checklist for a complete listing of Identify construction equipment use plan. required deliverables. Document all production rates. Identify equipment, modular, fabrication and bulk delivery Scope of Work methodologies / strategies. The scope of work should be documented (what the project scope of work includes, as well as what it excludes) and attached Identify basis for any contractor schedules. as a supporting document to the SBM. Also, the work break- Identify basis for start-up and sequencing requirements. And, down structure, the organizational breakdown structure and the division of responsibility should be clearly and concisely identi- Identify owner requirements (regulatory, environmental, quality / inspection requirements). fied to each and every portion of the scope of work. This will eliminate omissions to the project scope and minimize redunCritical Path dancy and overlap of existing personnel, contractors, etc. The purpose of completing this portion of the document is to inform the project team as well as others of the critical path(s) Execution Strategy The execution strategy should describe and identify five of the project. Note, depending on the required level of detail, the complexity of the project, and the geographical size of the items. project, you may have more than one critical path. The amount of detail required to describe the critical path is Briefly describe the type of work (new project, addition or at the discretion of the project team, however, you should proexpansion, revamp, relocation). Briefly describe the execution strategy, specifically whether vide enough detail so that all involved can focus on the areas that could potentially delay the outcome of the project. The the project is considered one of the following: a. Standard execution (standard workweek, spot over- critical path described here need not be a detailed CPM of the schedule, but rather a high level description. A detailed CPM time, non-shutdown) b. An aggressive execution approach (non-standard schedule and near critical activities list should be attached to the schedule basis memorandum. workweek, high overtime) c. Fast-track approach (engineering incomplete at the Path of Construction start of construction plus aggressive execution) Briefly describe the high level construction sequencing of the d. Shut-down (planned shut-down, non standard workproject, and the area paths of construction (routing of people week, high overtime) and equipment while on the construction premises). Also, Briefly describe the contracting strategy. a. Self perform, prime contractor, multiple contracts, describe the construction accessibility, lay down and staging areas and temporary facilities. This will assist the project team alliance, joint venture Identify the cash flow profile (availability of funds) for the in determining the prioritization or postponement of modules and installation of equipment to allow construction equipment project. Identify the average and peak resource demand for the proj- and resources to be used more efficiently and effectively. ect, as well as the average and peak performance progress Scheduling Threats that the project can attain. Describe any sources of impending threats that may restrain the project from moving forward. Examples of schedule threats Key Project Dates Describe the key milestone dates, such as the project start and are internal craft availability, funding, etc. Schedule threats completion dates, regulatory / environmental key dates, and key should be considered events that the company can control interface dates. If the schedule is prepared as a re-baseline, then (internal to their organization). External threats such as a key project dates report identifying any significant variances extreme weather conditions, strikes, etc. are considered external between any previously approved schedules and the current conditions and should be identified on the risk log. schedule needs to be prepared and attached. Also, this section should identify the statutory holidays to be acknowledged, turn- Issues and Concerns A number of issues and concerns will surface during the around / shut-down dates, Christmas breaks, winter productividevelopment of the schedule. The purpose of this section is to ty loss dates, and summer extended workweek dates. identify any issues or concerns that could not be resolved prior to the approval of the schedule, or the turnover of the schedule Planning Basis Describe the methods and sources used for determining the to the implementation team, etc. An issues and concern log identifying open as well as closed project schedule, including: items should be provided to the project team for review. Identify resource planning methodology. Activity identification, duration estimating. Identify the funding source and cash release profiles. PS.18.2

2007 AACE International Transactions Risks and Opportunities This section is to provide an understanding of the critical risks that may occur during the execution of the project. The items presented here should indicate the magnitude (impact) and the probability of occurrence. A risk assessment should be completed and all risks should be identified on the risk event log. Please note, any risk events that have a high probability (80 percent +) of occurring (and a medium to low impact to the project) should be managed as if the event will happen and therefore, the management team should apply the appropriate schedule reserves and buffers necessary for controlling the activities and the overall project. Assumptions Briefly describe the assumptions used while developing the schedule. Assumptions identify the parameters and conditions used for determining the outcome (project start to completion dates) of the project schedule. Some examples of assumptions are: Fabrication shops will complete the required work as per our priorities and timing, the required craft is available, the project will not incur any overtime, all project funding is available at project start, etc. Quantitative AssessmentDetermine the optimistic, pessimistic and most likely durations for the activities in order to calculate the expected durations. This process identifies what the project team should expect in regards to activity durations. Qualitative AssessmentBased on the magnitude and probability of each risk event identified on the risk event log, add the appropriate amount of specific schedule reserve for each risk event that may impact the project.

As an attachment to the schedule basis memorandum, provide a table or schedule identifying what activity or event has schedule reserve, and the amount being applied.

he schedule basis memorandum is a document used to provide an understanding of how the schedule was developed, the information and project definition provided for the development, and the team members involved in the process. The schedule basis memorandum increases the awareness of the development of the schedule for executing the Exclusions project to successful completion. This awareness provides an Describe items that have not been included and therefore not increased level of confidence, as well as an increased state of supported during the development of the schedule. Some preparedness and readiness. examples are: The use of a schedule basis memorandum provides the project team with the opportunity for improving the planning and Specialty contractors / resources; and scheduling process. The use of the schedule basis memoran Shared construction equipment dum can positively contribute to the success of the development of the project schedule. Some of the benefits that may be realExceptions ized by your organization are identified as follows. This section should identify any significant deviations from the standard operating practice for developing schedules, improved pre-planning efforts; including the process, reviews and acceptance of the project improved understanding of project scope, deliverables and schedule. Any deliverables identified on the schedule input responsibilities; checklist (see attachment) that were not provided or did not increased confidence in project execution; meet the degree of completeness necessary for the proper devel- better cash flow use and capital investment; opment of the schedule should be identified as an exception. maximized quality and minimized rework; effective historical reviews and efficient validation process; Baseline Changes / Reconciliation and, This section should be completed if and when a more increased profitability and return on investment (ROI). detailed schedule has been developed, or the baseline has changed. Provide a high level understanding as to why the The organization can anticipate an improvement to the effecschedule has changed from its original or re-baselined schedule. tiveness and efficiency in their ability to produce plans and If there has been a change to the schedule and a recovery schedules that are usable, reliable, and most importantly, proplan or a reconciliation effort has been completed, describe the vide predictability. This paper proposes a solution in applying events pertaining to the mitigation of the contributing factors to due diligence to the development and control of an organizathe delay or acceleration. tions approach to developing schedules and executing projects.

Schedule Reserve Based on the completed risk assessment and the understand- REFERENCES ing of the expected completion dates, the project team can then 1. Lewis, James P., Project Planning, Scheduling and determine the required schedule reserve for the successful comControl, Revised Edition, New York: McGraw-Hill, Inc. pletion of the project. 1995. There are two ways of applying schedule reserve in order to 2. Wickwire, Jon M., et al, Construction Scheduling: ensure the team achieves their desired outcome (probability of Preparation, Liability, and Claims, Second Edition, New success based on their confidence level and risk avoidance culYork: Aspen Publishers Inc. 2003. ture). PS.18.3

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2007 AACE International Transactions Amos, Dr. Scott J., (Editor), AACE International, Skills & Knowledge of Cost Engineering, 5th Edition, 2004.

H. Lance Stephenson, CCC Stephenson & Associates 135 Twin Brooks Cove Edmonton, Alberta, Canada T6J 6T1 Email: [email protected]

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2007 AACE International Transactions Attachments Schedule Input Checklist and Maturity Matrix (Attachment 1)

Table 1Schedule Input Checklist and Maturity Matrix

The schedule input checklist and maturity matrix (table 1) identifies the required details necessary to develop the project schedule. All items italicized are taken from the AACE International Recommended Practice No. 18R-97 [3]. The maturity level index identified in the table provides the user with the ability to confirm and record the completeness, and therefore, the usefulness of each deliverable. The schedule input checklist and maturity matrix should provide confidence in the final output of the project schedule while increasing the level of accuracy.

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