Drawing on Concepts in Finance for Construction Schedule Performance Measurement

Catholic University Of America, Washington DC

Investigators

Abstract

The research objective of this project is to investigate how performance can be made comparable across a wide range of construction project sizes and types. Performance is at the core of all managerial functions of decision makers; planning how projects should progress, controlling how they perform, and, if necessary, deploying remedies to bring lagging ones back on track. Yet despite, or perhaps because of the size of the construction industry as being a major contributor to the overall economy, its enormous number of projects, and their variety, no single measure has emerged that provides such a desired snapshot assessment. Existing attempts, which simply provide the percentage of total work or cite the 'value' that a schedule or budget has achieved, conceptually suffer from the problem that they converge to 'one' (work completed) or 'zero' (work remaining) at the project end, so that the mere fact that it was eventually finished makes a project appear successful and any problems that occurred are forgotten. This gives an overly optimistic, incomplete, and non-predictive view. This research will therefore glean inspiration from finance, where notwithstanding the diverse nature of publicly traded companies, investors have long quantified stock performance with universal metrics. Specifically, the proven concept of 'beta', which expresses volatility of a stock compared to its market, will be explored for adaptation as a schedule performance metric. If successful, this research will enhance transparency of construction projects in light of still-too-common schedule delays and productivity shortfalls, enable identification and targeted improvements of underperforming activities, projects, or firms, and support the competitiveness of participants within the U.S. construction economy. Educational outreach at the after-school ACE mentor program, which serves many minority high school students, will build a group activity that playfully embodies insights from the research. The research methodology is a process of knowledge transfer, from concept extraction via adaptation to verification and validation steps. The research team will collate analogies by mapping and matching them in a concept matrix with their equivalents of project management. Criteria for inclusion and any adjustment, assumption, or limitation will be proximity in meaning and predictiveness toward creating a functioning model that can reflect schedule performance. Validating the new approach will employ statistical analysis of artificial and real-world schedules from corporate partners.