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Reducing rework costs in construction projects

Mastenbroek, Y.C. (2010) Reducing rework costs in construction projects.

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Abstract:In this report the results of the research on rework events in construction projects of Grupo Williams (GW) are presented. The objective of the research has been formulated as: "To assess rework costs in construction projects of Grupo Williams and suggest improvements to reduce these rework costs." The assessment was done through analysis of realized projects. At first a financial analysis was done to determine the amount of rework costs GW is dealing with. Secondly, to find the causes of the rework events personnel was interviewed. Based on these analyses and information gathered from existing literature recommendations and suggestions for improvement were made. Failure costs are all costs that are made unnecessarily to reach the final product. Rework costs are an example of failure costs. Rework has been defined as: "The unnecessary effort of re-doing a process or activity that was incorrectly implemented the first time." Rework can have severe consequences, such as cost overruns and time overruns. Besides these direct consequences, there might also be indirect consequences, such as stress, de-motivation or loss of future clients. Rework events can have many different origins and for this research they have been categorized into four categories; changes, errors, omissions and damages. To assess the gravity of rework costs in GW's projects the financial results of several realized projects have been analyzed. Rework indicators (labour, material, cost, or time overruns and revised contract values) have been studied and from these studies several conclusions were drawn. It was concluded that GW deals with high failure costs, cost overruns of up to 54% were identified and that rework makes up a large part of these cost overruns. Change orders were also very frequent and were found to be the most important cause of rework events. The causes were further analyzed by interviewing employees. Based on existing literature an extensive list of rework causes was made and during the interviews the interviewees were asked to confirm or deny statements regarding rework causes. The causes that were most frequently confirmed, can be grouped into the understanding categories. 50% of the causes are change-related, 37% is error-related and 13% falls into another category.  Change orders  Lack of coordination  Late material deliveries  Changes to construction methods  Personnel-related causes Knowing what causes rework events is already a step in the good direction. Now improvements have to be introduced to avoid these failures from happening again in future projects. Therefore for all of the mentioned groups improvements have been suggested. Besides implementing these suggestions it is important that GW starts evaluating rework events more properly to adopt inter-project learning. To do this rework events should be reported and processed into a database. A report form and database set-up have therefore been developed. Furthermore has a rework monitoring checklist been made to monitor rework during a project. Another conclusion, that did not regard rework, was that the financial evaluation of projects left much to be desired, that is why it is highly recommended that GW evaluates the processes related to accounting (contabilidad) and balance sheets (presupuestos) in the near future.
Item Type:Essay (Bachelor)
Clients:
Grupo Williams, San Pedro Sula, Honduras
Faculty:ET: Engineering Technology
Subject:56 civil engineering
Programme:Civil Engineering BSc (56952)
Keywords:rework costs, construction projects, real estate
Link to this item:http://purl.utwente.nl/essays/59691
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