Kenneth F. Reinschmidt

Probabilistic Forecasting of Project Duration Using Kalman Filter and the Earned Value Method

The earned value method (EVM) is recognized as a viable method for evaluating and forecasting project cost performance. However, its application to schedule performance forecasting has been limited due to poor accuracy in predicting project durations. Recently, several EVM-based schedule forecasting methods were introduced. However, these are still deterministic and have large prediction errors early in the project due to small sample size. In this paper, a new forecasting method is developed based on Kalman filter and the earned schedule method. The Kalman filter forecasting method (KFFM) provides probabilistic predictions of project duration at completion and can be used from the beginning of a project without significant loss of accuracy. KFFM has been programmed in an add-in for Microsoft Excel and it can be implemented on all kinds of projects monitored by EVM or any other S-curve approach. Applications on two real projects are presented here to demonstrate the advantages of KFFM in extracting additional information from data about the status, trend, and future project schedule performance and associated risks.

Parameters Influencing Corrosion and Tension Capacity of Post-Tensioning Strands

A 12-month long strand corrosion test program with 298 specimens was conducted to identify and quantify parameters influencing corrosion and tension capacity of strands in post-tensioned bridges. The parameters investigated were grout class, moisture content, chloride concentration, void type, and stress level. The test specimens were 41 in. (1041 mm) long, in unstressed or stressed conditions, partially or completely embedded in cementitious grout, and exposed to various environmental conditions representing possible field conditions. After the exposure period, the grout material was removed and the strand surfaces were cleaned and visually evaluated for corrosion damage. The tension capacities of the strands were then determined. Results indicate that the corrosion was most severe at or near the grout-air-strand (GAS) interface. Corrosion evaluation and statistical analysis of the strand tension capacity results show that orthogonal, inclined, and bleedwater void conditions caused more corrosion and tension capacity loss than parallel and no-void conditions. The change in grout class did not result in statistically significant changes in the tension capacity of the strand samples evaluated. Statistically significant changes in tension capacity were observed with changes in the GAS interface, stress level, moisture content, and chloride concentration.

Combination of Project Cost Forecasts in Earned Value Management

Reliable cost estimates are essential for effective project control and the management of cash flows within the project and at the company level. Conventional approaches to project cost forecasting, which rely on detailed information developed for a specific project (the bottom-up estimate or inside view), often result in cost overruns. It is argued here that the inside-view project cost estimates should be adjusted by combining them with the outside (or top-down) view of the project, which is based on statistical models of historical project data. This paper presents a probabilistic cost forecasting method and a framework for an adaptive combination of the inside view and the outside view forecasts of project cost using Bayesian inference and the Bayesian model averaging technique. During the project execution phase, the Bayesian adaptive forecasting method incorporates into the predictions the actual performance data from earned value management and revises preproject cost estimates, making full use of ...

Effects of Contractors' Risk Attitude on Competition in Construction

Competitive bidding is the major mechanism of competition. Bidding is risky because the actual cost of the job is unknown. Thus, the bid should be high enough to make a profit but low enough to win the bidding. The result of competition depends on the competitor’s risk-taking behaviors, which are affected by the organization’s risk attitudes. A contractor’s risk-taking is an essential element of the construction business. The current study explores the domain of competition at the aggregate market level. An evolutionary simulation model was developed to investigate the effects of risk attitude on a contractor’s success and on the market structure. The analysis accounts for different risk-taking behaviors in competition, different performances by contractors, corresponding organizational changes, and aggregate patterns in the form of the market structure. The study finds that risk attitude is a competitive characteristic of contractors. The results provide new insight on competition in the market place, an...

Market Structure and Organizational Performance of Construction Organizations

AbstractThe structure of a market can be described by how the market is composed of firms of different sizes and how these firms are diversified into different subsectors. In construction, few empirical studies exist on organizational performance at the industry level considering market structure. This paper presents a study investigating the market structure of the construction industry and the organizational performance of large contractors and design firms, focusing on size, growth rate, business stability, and market diversification. The study performs an empirical analysis using publicly available U.S. construction industry data. Four hypotheses were tested to determine relationships among strategic management issues and organizational performance. The study identifies particular patterns and similarities and differences in market structure between contractors and design firms and provides a new finding on market diversification—the existence of certain thresholds at which a firm’s diversification le...

Probabilistic Capacity Models for Corroding Posttensioning Strands Calibrated Using Laboratory Results

The presence of air voids, moisture, and chlorides inside tendons or ducts was cited as a reason for the early age strand corrosion and failure in the Mid-bay, Sunshine Skyway, and Niles Channel posttensioned (PT) bridges in Florida, United States. Although rare, these incidents call for frequent inspection and structural reliability assessment of PT bridges exposed to moisture and chlorides. This paper develops and presents probabilistic strand capacity models that are needed to assess the structural reliability of such PT bridges and recommends a time frequency of inspection. A total of 384 strand test specimens were exposed to various void, moisture, and chloride concentration conditions for 12 and 21 months; the remaining tension capacities were then determined. Using this experimental data and a Bayesian approach, six probabilistic capacity models were developed based on the void type. The mean absolute percentage errors of these models are less than 4%, indicating that reasonably accurate prediction of the strand capacity is possible, when void, aggressive moisture, and chloride conditions are present.

Association of Risk Attitude with Market Diversification in the Construction Business

In construction, many large firms are diversified, and their diversification is recognized as a corporate strategy for growth and risk management. Diversification indicates extended competition into a different market sector. It is a departure from a firm’s experience base, and it can be riskier than improving performance in the currently operating market. Then, contractors’ diversification and their aggregate pattern in the market, if there is any, are realized outcomes through competition among contractors over different market sectors. The competing contractors may have different risk attitudes, which are the subconscious but critical basis of their risk-taking behaviors in competition. This study investigates the association of contractors’ organizational risk attitudes with their diversification on the basis of simulated competition among multiple contractors. The simulation replicates the actual diversification pattern of large U.S. construction contractors. The results provide new insight on the re...

Probabilistic Models for the Tensile Strength of Corroding Strands in Posttensioned Segmental Concrete Bridges

The presence of air voids, moisture, and chlorides inside tendon systems on segmental posttensioned (PT) bridges has been cited as a reason for the early age corrosion and failure of strands in these bridges. This paper develops probabilistic models to predict the time-variant tension capacity of PT strands exposed to wet-dry conditions. A total of 384 unstressed and 162 stressed strand test specimens were exposed to various void, moisture, and chloride conditions for 0, 12, 16, and 21 months; the residual tension capacities of the strands were then determined. Using these experimental data, a Bayesian approach is used to develop probabilistic capacity models for unstressed and stressed strands. The tension capacities of stressed strands under potential void, wet-dry, and chloride conditions in the field are predicted using the developed models. Probabilistic time-variant models are formulated in such a way that they can be updated by other researchers using additional information from the testing of unstressed strands only, avoiding expensive and cumbersome testing of stressed strands. The mean absolute percentage errors of these models are less than 3.2%, indicating good overall model accuracy.

A Second Moment Approach to Probabilistic IRR Using Taylor Series

This article presents a practical approach for computing the internal rate of return (IRR) of stochastic cash flows. The mean and variance of the distribution of the IRR are derived by a second-moment approach using the means, variances, and correlations of the costs and returns in a cash layout. Programmed as an add-in function, the second-moment algorithm was applied to three examples in the literature and the accuracy of the second-moment method was compared with more sophisticated, computationally intensive methods. The comparison indicates that the second-moment approach can serve as a quick and viable tool for probabilistic IRR analysis.

Impact of Public Policy and Societal Risk Perception on U.S. Civilian Nuclear Power Plant Construction

AbstractDue to the increasing demand for energy in the United States, the Nuclear Regulatory Commission is currently reviewing permit applications for 26 new nuclear power reactors. However, the previous generation of U.S. civilian nuclear plant construction experienced significant cost and schedule overruns. Previous research identified “regulatory ratcheting” (continuous, retroactive change in nuclear plant regulations) as one of the primary causes of this poor performance. Regulatory ratcheting was enabled by the nuclear industry’s two-step permitting and licensing process for civilian power plant construction, which allowed society’s perception of the risks associated with nuclear plant operation to impact nuclear plant construction. How will public policy and societal risk perception affect the next generation of U.S. civilian nuclear plant construction? This question is investigated using a dynamic simulation model of the public policy and social feedback processes that impact U.S. nuclear plant con...