Importance of Site Conditions and Capacity Allocation for Construction Cost and Performance: A Case Study

Traditional construction thinking that an ‘optimal’ solution to the problem of shifting project schedules can be found via a time-cost tradeoff analysis does not take into account the influence of capacity allocation and site conditions on cost and performance. Specifically, the time-cost tradeoff can only account for the direct costs of compressing an activity's duration, not its capacity costs. Loosely restated, the time-cost tradeoff accounts for the costs of a change in an activity's duration but not the costs of a change of when in time the activity takes place (which will affect a firm's commitments to other projects and hence cause capacity costs). Similarly, moving an activity in time may place the activity in a different set of site conditions than those which were assumed when the activity's cost-time curve was generated. The cost-time curve of an activity may change as site conditions change, which can only be accounted for in the time-cost tradeoff optimization method by manually generating new cost-time curves for each instance of site conditions and solving anew (an exercise that quickly becomes too cumbersome to perform). This paper presents an in-depth case study of a £100 Million project highlighting the limited applicability of the time-cost tradeoff approach to real world situations and discusses the impact of site conditions and capacity allocations on cost and performance.