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Publication Citation: Economic Value of Combined Best Practice Use

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Author(s): S H. Lee; Stephen R. Thomas; C L. Macken; Robert E. Chapman; R L. Tucker; I H. Kim;
Title: Economic Value of Combined Best Practice Use
Published: July 01, 2005
Abstract: This paper measures the value of best practices based on data taken from the Construction Industry Institute Benchmarking and Metrics database. A three-step process provides the basis for measuring the potential benefits of increased best practice use. First, a practice use index is derived to model the way in which best practices are utilized on actual projects. The index combines data from eight best practices to create a single measure of practice utilization. Second, a project performance index, combining cost and schedule metrics, is derived as an indicator of overall project performance. Third, the practice use index is correlated with cost, schedule, and overall project performance metrics. Both owners and contractors benefit from increased practice use. Potential cost savings for owners range from $1.7 million to $2.4 million, depending on industry group and project size. Potential cost savings for contractors are higher, averaging $7.2 million for the typical $88 million heavy industrial project. Benefits from schedule reductions are most apparent for owners. On large building projects, schedule reductions for owners average 27 weeks. Finally, improvements in overall project performance on the order of 30 % are observed for both owners and contractors.
Citation: Journal Of Management In Engineering
Volume: 21
Issue: 3
Pages: pp. 118 - 124
Keywords: best practices;construction projects;cost performance;economic analysis;schedule performance
Research Areas: Building and Fire Research