Monitoring Contractor Performance

Engineering Encyclopedia
Saudi Aramco DeskTop Standards
MONITORING CONTRACTOR PERFORMANCE
Note: The source of the technical material in this volume is the Professional
Engineering Development Program (PEDP) of Engineering Services.
Warning: The material contained in this document was developed for Saudi
Aramco and is intended for the exclusive use of Saudi Aramcos employees.
Any material contained in this document which is not already in the public
domain may not be copied, reproduced, sold, given, or disclosed to third
parties, or otherwise used in whole, or in part, without the written permission
of the Vice President, Engineering Services, Saudi Aramco.
Chapter : Project Management

File Reference: PMT-105.05
For additional information on this subject, contact

PEDD Coordinator on 874-6556
Construction Management
Monitoring Contractor Performance
CONTENT
PAGE
MAJOR CONTROL ELEMENTS IN EFFECTIVELY MANAGING A

CONSTRUCTION CONTRACT....................................................................................... 3
Introduction........................................................................................................... 3
Contractual Control Requirements ....................................................................... 4
Schedule Control ....................................................................................... 4
Cost Control............................................................................................... 5
Manpower .................................................................................................. 6
Progress .................................................................................................... 7
Productivity ................................................................................................ 8
Quality Control ........................................................................................... 8
Safety......................................................................................................... 9
PROGRESS AND PRODUCTIVITY TRACKING MECHANISM.................................... 10
Introduction......................................................................................................... 10
Importance of Accurate Information.................................................................... 10
Progress and Productivity Tracking Mechanism................................................. 11
Construction Progress Tracking............................................................... 11
Construction Productivity Tracking .......................................................... 15
Analysis and Forecasting.................................................................................... 17
UTILIZING A PROGRESS MEASURING SYSTEM TO ADMINISTER
CONSTRUCTION PROGRESS PAYMENTS................................................................ 19
Introduction......................................................................................................... 19
Progress Payment Considerations ..................................................................... 19
Measuring Actual Project Progress .................................................................... 21
Avoiding Conflicts in Progress Payments ........................................................... 22
ISSUES INVOLVED IN RESOLVING FIELD PROBLEMS............................................ 24
Introduction......................................................................................................... 24
Typical Field Problems ....................................................................................... 24
Resolving Field Problems ................................................................................... 25

Importance of Good Communication .................................................................. 26
WORK AID 1: GUIDELINES FOR CALCULATING CONSTRUCTION
PROGRESS, PRODUCTIVITY AND FORECAST MANHOURS
FOR A CONSTRUCTION CONTRACTOR ........................................... 30
GLOSSARY .................................................................................................................. 31
ii
MAJOR CONTROL ELEMENTS IN EFFECTIVELY MANAGING A CONSTRUCTION

CONTRACT
Introduction
Effective planning and control of construction contractors is
essential to ensure successful execution of a Saudi Aramco
project.
The Saudi Aramco Project Management Team
(SAPMT) must institute meaningful management controls that
help to monitor the performance of construction contractors.
Since the construction effort is always on the critical path of a
project, any delays or slippages in construction will adversely
impact the project completion date.
Proper project controls should be established in order to identify
any deviations from the project baseline. Similarly, contractors
should be required to implement planning and cost control
techniques that provide early warning signals if the project is
falling behind the schedule baseline.
Without the implementation of effective project controls, the
projects tend to suffer from:
Poorly defined work scope
Constant changes and additions of work
Poor progress reporting
Lack of coordination among groups
Ineffective project coordination
All of the above are early symptoms of poor project

performance.
Contractual Control Requirements

The SAPMT provides the control guidelines to the contractors
that they should follow in designing and implementing
management controls for Saudi Aramco projects. To ensure
their effective implementation, these guidelines should be
incorporated in the contractual documents. The management
control guidelines should be clearly communicated to the
contractors during the earliest stages of the Construction Phase.
Typical parameters to monitor a construction contractor's
performance are:
Schedule Control
Cost Control
Manpower
Progress
Productivity
Quality Control
Safety
It is impossible to evaluate a contractor's performance by

tracking one or two project control elements, e.g., schedule,
progress, or cost, etc. For a complete evaluation of the project
status, the SAPMT must rely on a combination of all of the
above project control elements.
Schedule Control
Meeting the schedule requirements is a key performance

parameter for a construction contractor. The construction
contractor should develop a detailed construction logic schedule
which supports the SAPMT's Project Milestone Schedule. Since
the construction phase is always on the critical path, any
slippages of the construction program will impact the overall
project schedule.
Contractual Control Requirements, cont'd

The contractor's construction schedule should be approved by
the SAPMT, and closely monitored to avoid any slippages. To
meet the scheduled dates, the SAPMT and the contractor
should ensure the following:
Schedule logic is sound
Activity durations are realistic
Required manpower/resources are assigned
Critical Path activities are closely monitored
Frequent schedule updates and analysis are performed
Schedule slippages and causes are identified early
Changes to the approved work scope are minimized
Drawings and materials are readily available
Closely monitoring the schedule, early identification of problem

areas, and implementing corrective solutions will help in meeting
the construction schedule goals.
Cost Control
The construction contractor is required to perform within the

established budget and as per the cost baseline. The project
control budget should be agreed to by the SAPMT and the
contractor, and documented in the contract documents. The
SAPMT, with the help of the contractor's cost control staff,
tracks the project cost performance. Any adverse deviations
can not only result in cost overruns, but can also impact the
project schedule. Some causes of construction cost overruns
which could impact the overall project performance are:
Poor field productivity
Higher manhour expenditure than plan
Shortages of qualified manpower
Excessive work scope changes
Poor change order control system
Delays in material deliveries
Shortages of construction equipment
Delays in engineering drawings
Excessive rework and misfits in the field
The SAPMT should direct its effort toward identifying the causes
of any cost overruns and developing solutions to eliminate
problem areas.
Manpower
The construction contractors are required to report, on a daily

basis, the actual number of Field Crafts, Support Staff and
Supervision working on a Saudi Aramco project. The contractor
provides a comparison of actual versus the planned manpower.
For effective control, the construction contractor's manpower
should be broken down by:
Field Crafts
Field Supervision
Support Staff
In addition, the field crafts should be broken down by their area

of specialty, such as:
Piping welders
Boilermakers
Electricians
Insulators
Others as needed
The contractors are required to explain any deviations if the

actual manpower is different from the base manpower plans.
Progress
The success of a construction project depends, to a great

extent, on the effectiveness and accuracy of the methods used
to measure and report progress. Without a meaningful progress
reporting system, management can be left guessing about the
real status of the construction program. Such a situation can
result in erroneous decision making, and thus, effect the overall
performance of the project.
The progress reporting criteria and mechanism should be
finalized with the contractors at the earliest phases of the
construction effort. Progress reporting should be based on
actual quantities installed, and the actual status should be
compared with the control baseline. The progress status of
various categories of construction work, such as civil, piping,
etc., then can be summarized, or "rolled-up" into an overall
reporting denominator, e.g., manhours. "Guess work" has no
place in physical progress reporting or in managing construction
work.
The SAPMT should ensure that the construction contractor's
progress reporting system meets the following criteria:
Based on installed quantities
Independent of expended manhours
Supports the project Work Breakdown Structure
Emphasizes analysis vs. merely reporting
Easy to understand for decision-making
Productivity
Good productivity is essential in meeting construction

schedules. Constant changes in execution approach and work
scope additions can be very disruptive and adversely impact the
construction productivity. Poor construction productivity can
easily translate into schedule slippages, manhours and cost
overruns.
The SAPMT and the contractor should work closely to eliminate
the following common causes which adversely impact the
construction productivity:
Work scope additions
Poor project controls
Management inaction and slow decision-making
Delays in material delivery
Absence of any productivity enhancement programs
Poor communications between SAPMT and contractors
Quality Control
To meet the project schedule, quality of the construction effort is

an essential project objective and requirement. Poor quality of
construction not only impacts the construction performance, but
is also disruptive to the project completion. In addition, a poorly
constructed project will adversely impact the reliability and
operability of the facility, and may cause increased concerns for
potential safety hazards that may take years to materialize.
Poor construction adversely impacts the project schedule
performance, as it has the following repercussions on the
project:
Construction rework problems
Impacts the maintainability of the facilities
Compromises operational reliability
Disruptive to the start-up effort
To eliminate these problems and ensure minimal impact on the

project's completion schedule, the SAPMT and the contractors
should implement an aggressive quality control program during
the construction phase of the project.
Safety
Safety performance of a construction contractor is an essential

ingredient of project success. Contractors must implement an
effective safety program during the construction phase of a
Saudi Aramco project. Safety should never be compromised in
order to achieve a project's cost and schedule objectives.
The contractors are required to submit, on a regular basis, the
safety performance reports. Any accident reports should be
submitted immediately after the accident. The contractor's
safety reports should provide information such as:
Number of hours worked on project
Number of safety incidents
Number of reportable accidents
Results of safety audits
PROGRESS AND PRODUCTIVITY TRACKING MECHANISM

Introduction
Progress and productivity tracking are important elements of
project controls on a construction project. The success of the
construction phase depends upon the accuracy and timely
development of this information. Progress and productivity
information is essential for decision making and for making
necessary adjustments to the construction execution plans.
The SAPMT and the contractor managements should agree on
a common approach to measure progress and productivity
during the earliest stage of the construction phase. This will
avoid any conflicts about accuracy and measurement methods
during the construction phase.
Importance of Accurate Information
In order to effectively manage the construction effort, it is
essential that the progress and productivity is measured, based
on systematic and proven techniques. Inaccurate reporting or
guess work can lead to wrong decisions, and ultimately result in
poor construction performance.
Accurate project status
reporting helps in achieving the following objectives:
Realistic status of construction
Comparison with the project baselines
Identification of deviations
Reasons for deviations
Effectiveness of corrective actions
With the above information in hand, the construction

management team can make prudent decisions in managing the
construction contractors.
10
Progress and Productivity Tracking Mechanism

To achieve effective progress and productivity tracking, the
SAPMT and the contractor must ensure that the project status
measuring mechanism meets the following criteria:
Progress based on physical quantities
Actual progress independent of expended manhours
Progress representative of earned value
Reflects current work scope
Agreement and consensus of all participants
Timely and easy to comprehend
Documented and supported by field data
Emphasis is on analysis, not just reporting
Compliance with the above criteria will ensure that the actual
progress and productivity reports are accurate and have the
agreement of all of the participants.
Construction Progress Tracking
The contractors are responsible for tracking construction

progress on a Saudi Aramco project.
The progress
measurement method and reporting requirements should be
established early, to avoid any conflicts and misunderstandings.
To accurately assess the overall progress status of the
construction program, the contractor should develop and
provide the SAPMT with the following information on a regular
basis:
Actual progress vs. the baseline plan
Progress status of major milestones
Expended manhours vs. planned
Installed quantities vs. planned
11
Progress and Productivity Tracking Mechanism, cont'd

For easy comprehension and analysis, the above information
should also be provided in a graphic format. This will help to
ascertain the actual status vs. the planned progress through the
reporting period.
Calculating Physical Progress - Construction progress should be
measured against the construction baseline work scope. The
progress reporting system should be based on an established
and mutually agreed upon method. The Saudi Aramco progress
measurement procedure provides guidelines to the contractor
and indicates the necessary steps to calculate progress percent
completion. The contractor is responsible for providing and
distributing this data to the SAPMT.
The contractor should establish budgeted manhours by

summing the manhours allowed for each category. Project
control, office supervision and support functions which do not
produce measurable work are not included in the calculations.
Budgeted manhours are the basis used when establishing each
category's weighted percent of the construction manhour
budget.
Earned Value Concept of Progress Measurement - The earned value
concept of progress measurement is widely accepted in the

construction industry. It uses mathematical computations to
express completed work vs. planned scope, in terms of earned
work units. The work units could be standard manhours, or
other established and agreed upon units to express the control
base of construction work scope.
As progress is made, and measured by quantifying completed
tangible work, the work units are earned by multiplying the total
planned work units by the completed percentage. A total sum of
"earned work units", encompassing several construction
activities, divided by the base total work units, reflects the
overall construction physical percent completion.
The earned value concept is the best-known method of
measuring physical progress. In this method, actual work done
is expressed in terms of work units earned, based on the
original planned effort.
12

The earned value concept of progress measurement ensures
that the actual progress is calculated as per the following
criteria:
Based on actual work performed
Gives credit to partially completed work
Compares performance to control baseline
Isolates the added work scope
Helps to identify problem areas
In the earned value concept, each activity on the construction

program is assigned budgeted manhours and the quantities of
the work to be accomplished. At the reporting period, the actual
accomplished quantities are measured and the actual progress
percentage is determined. Based on this information, the
earned manhours are calculated as follows:
Earned Manhours
= Budgeted Manhours X Actual Percent Complete.
For Example:
Plan:
Pour 100 cubic yards of concrete.
Budgeted Manhours, @ 10 manhours per cubic yard, are 1,000.
Actual:
Poured 50 cubic yards at report time
Actual Manhours spent is 600.
13

Physical Progress:
Actual Progress to-date
Actual Poured Cubic yards

Budgeted Cubic yards
50
100
50%
Budgeted Manhours X Actual Percent Complete
1,000 X 50%
500
Earned Manhours:
Earned Manhours
In this example, the earned manhours are 500, as compared to

the 600 spent manhours. In other words, this account of the
construction program is experiencing poor productivity.
The same earned value approach can be used to calculate the
progress for an equipment foundation as follows:
Activity
Excavate
Form Work
Install Rebar
Pour Concrete
Strip Forms
Backfill and compact
Total
Budgeted
Manhours
Actual
Progress %
Earned
Manhours
100
350
100
150
150
150
100
100
100
100
100
350
100
150
1000
70%
700
14

This approach is used to measure various elements of the
project, and then the total earned manhours can be compared
to the budgeted manhours in order to calculate actual progress
for the overall construction program.
Since progress of all accounts can be reduced to earned
manhours, this provides a method for summarizing multiple
accounts and calculating overall progress. The formula for this
is:
Percent Complete
= Earned Manhours for all accounts

Budgeted Manhours for all accounts
Construction Productivity Tracking
When one thinks about productivity, the first thought goes to a

worker who may or may not be working to his capacity. If the
construction progress is behind, the logical explanation is to put
the blame on poor productivity. This perception comes from a
widely accepted definition of productivity as the amount of work
performed per manhour of work effort.
In reality, productivity is a much deeper subject than labor effort,
and it can be improved through various methods and
management approaches. Estimates of labor manhours contain
a company estimator's best assessment of the number of
manhours that it will take to accomplish a certain scope of work.
The Productivity Rate is generally calculated by using the
following formula:
Productivity % =
Budgeted Manhours
Actual Manhours
Productivity can be expressed as a percentage expressed as

the budgeted manhours divided by the actual manhours
required to complete a given scope of work. By this definition,
productivity over 100% is good, while any number below that
represents lower than estimated performance.
15

The productivity of construction may be adversely affected by
several factors, including:
Late availability of drawings
Constant changes in work scope
Delay in material deliveries
Construction scheduling conflicts among contractors
Too much rework in the field
Inexperienced labor
Inadequate supervision
Poor planning and management controls
The construction productivity can be impacted by several

factors. The SAPMT should stay on top of the construction
effort, and recognize adverse productivity trends so that
corrective actions can be implemented, where necessary, to
improve construction performance.
Information to Calculate Construction Productivity - To calculate
construction productivity on a project, the SAPMT and

contractors rely on accurate and timely information. The project
must have mechanisms to collect relevant information, analyze
it, and determine construction performance trends. Based on
the performance trends, the Project Engineer should be able to
develop a forecast for the remaining construction effort. To
accurately calculate the construction productivity, the contractor
must develop the following information:
Physical percent completion for each account
Expended manhours
Actual installed quantities vs. budgeted
Actual manhours per installed quantity vs. the estimate
16

Productivity Calculation - To calculate construction productivity,
the Project Engineer needs to know how many actual manhours

have been expended for an activity as compared to that
activity's budgeted manhours. The budgeted manhours are
used to calculate "Earned Manhours" by multiplying it with the
progress percent completion. Then, the actual expended
manhours are compared with the earned manhours, in order to
calculate productivity. For example:
Budgeted Manhours
= 1,000
Progress Completion
= 50%
Actual Expended Manhours
= 400
Earned Manhours
= 1,000 X 50%
= 500
Productivity to-date
Productivity
= Earned Manhours
X 100
Actual Expended Manhours
= 500
400
X 100
= 125%
In other words, productivity is 125%, i.e., better than the
planned productivity of 100%.
Analysis and Forecasting
While it is important to know the exact status of a project at any
point in time, it is equally important to analyze the project status
so that appropriate actions are taken to enhance the
construction performance. The SAPMT should ensure that the
contractors, as part of their reporting, must emphasize an
analysis of actual progress status, and based on this, develop
the project forecast.
17
Analysis and Forecasting, cont'd

Each project status report has significance in itself, but is
usually takes analysis of a combination of project status reports
in order to evaluate the total situation and establish performance
trends.
For example, poor labor productivity is certainly a problem, but it
does not point to the cause of the problem. By analyzing the
productivity problem, the Project Engineer may point to any of
the following causes:
Delay in material deliveries
Misfits and rework in the field
Poor supervision
Poor initial estimating
Constant changes in execution approach
Unusually adverse weather environment
If the project status analysis points to definitive causes,

corrective actions can be implemented. Similarly, based on the
actual construction performance data, the Project Engineer can
develop the forecast for the project. By analyzing the progress
and productivity data, the SAPMT should be able to develop the
forecast, as it relates to:
Project completion date
Estimated required manhours
Revised manpower requirements
Cost forecast
Final quantities to be installed
For successful execution of construction programs, the SAPMT

has to rely on accurate progress and productivity information,
and analysis of this information, in order to forecast the project
performance at job completion.
18
UTILIZING A PROGRESS MEASURING SYSTEM TO ADMINISTER

CONSTRUCTION PROGRESS PAYMENTS
Introduction
The SAPMT is responsible for reviewing a construction
contractor's invoice to ensure that the invoiced progress
payments reflect the true construction status. The invoice
should be supported by the actual field progress calculations,
and these should be verified by the SAPMT prior to their
approval for payment. The invoiced information should be in a
format that can be verified and cross-referenced with other
construction status reports.
Depending upon the contractual arrangements, the payments to
the construction contractors can be based on any of the
following methods:
Progress Payments
Completed Milestones
Completed Work Units
Reimbursement of Actual Expenditures
Depending upon the nature of the work and contract, partial

payment can be paid prior to the work, and sometimes a
retainage is held from the invoiced amount. The contractor's
invoice, in addition to providing cost and progress information,
must also comply with the contractual terms, e.g., frequency,
format and the invoice breakdown, etc.
Progress Payment Considerations
Under the progress payment arrangement, the contractor
invoices for the amount proportional to the progress percent
completion earned for the reporting period, less any retainage
(10%). For example:
Construction contract value
$1,000,000
Earned progress to-date
50%
Earned progress this invoice period
10%
19
Progress Payment Considerations, cont'd
Invoice Calculations
Total invoiced amount
This period invoiced amount
$1,000,000 X 50% - 10% Retainage
$500,000 - $50,000
$450,000
$1,000,000 X 10% -10% Retainage
$100,000 - $10,000
$90,000
This approach is probably the simplest form to administer

payments to the lump-sum contractors, and is based on the
following criteria:
Independent of expended cost of contractor
Inclusive of all contractor costs
Must be tied to Schedule Milestones
Based on mutually
method/techniques
agreed
progress
calculation
To minimize any conflicts, the parties involved must agree on a

progress measurement criteria. This criteria should be agreed
to, between Saudi Aramco and the contractor, prior to the award
of the construction contract.
The SAPMT reviews the construction contractor's invoice to
validate its accuracy and ensure that it reflects the construction
program status through the invoiced period. The construction
contractor should also provide the following information in
support of his invoice:
Progress percent completion
Progress accomplished for the invoiced period
20
Progress Payment Considerations, cont'd
Schedule status
Performance against the major milestones
The SAPMT reviews the above invoiced information prior to

certifying the invoice for payment to the contractor. The SAPMT
cross-references the information with other project reports to
ensure consistency and accuracy. The Project Engineer, with
the assistance of cost analysts, also considers the following
issues prior to his approval:
Verify invoice against other project reports
Correctness of charge account numbers
Compliance with contractual terms
The progress measurement method
Consistency in measuring construction progress
Actual status against the schedule plans
Measuring Actual Project Progress

The construction contractor should measure the progress based
on a mutually agreed upon progress measurement system.
Without the SAPMT approved progress reporting system, there
would always be the potential of conflicts about the validity of
the actual progress.
An Earned-Value Method should preferably be used to measure
the construction progress. This system ensures that the actual
progress meets the following criteria:
Based on tangible work performed
Based on installed quantities
21
Measuring Actual Project Progress, cont'd
Gives credit to partially completed work
Actual progress verified by construction supervisor
The mechanics of calculating actual construction progress,

based on the earned value method, is explained in the previous
section of this module.
Avoiding Conflicts in Progress Payments
To avoid progress payment conflicts, the SAPMT and the
contractor must agree to an effective progress measurement
and payment system, prior to the award of the construction
contract. The issues of invoice payments and the validity of
actual progress claimed by the contractors have traditionally
been sour ones in administering construction contracts. Some
of the conflicting issues commonly encountered are:
Validity of actual progress status
Method of measuring progress
Work elements included in progress measurement
Progress status vs. schedule performance
Impact of work scope change on actual progress
Invoiced period and progress cut-off time
The SAPMT and the contractors should identify these potential

conflicts and establish a mechanism to avoid or resolve these
amicably, before they become counter productive to project
performance. Some of the steps that can be taken to avoid
these progress payment conflicts are:
Establish and follow an invoice payment procedure
Institute a progress measurement system
Integrate progress reporting and schedule performance
22
Avoiding Conflicts in Progress Payments, cont'd
Incorporate progress payment procedures in the contract
Ensure consistency of invoice with progress reports
Set up a task-group to resolve differences
These steps will help to reduce any conflicts in the

administration of progress payments on a construction contract.
23
ISSUES INVOLVED IN RESOLVING FIELD PROBLEMS

Introduction
The execution of a construction program involves the
participation of several organizations such as: contractors,
support services, vendors, etc. If proper coordination controls
and communication channels are not established, the projects
tend to become engulfed in all sorts of problems. Most of these
problems need to be resolved quickly and amicably, in order to
minimize any impact on the project performance. The SAPMT
plays an important role in instituting effective planning and
controls which impede the development of these potential
problems.
The cause and origination of these problems can significantly
vary.
Some of the problems may be caused by poor
coordination and communication among the participants. On a
construction program, it is impossible to identify and eliminate
all of the problems, but proper control mechanisms should be
established to identify and resolve them.
Typical Field Problems
In spite of the best efforts and good intentions of all of the
participants, the projects encounter several field problems, such
as:
Scheduling conflicts among contractors
Material delivery delays
Field misfits and re-work
Poor coordination with contractors
Differences on actual construction progress status
Excessive changes in work scope
Work permit delays
Lack of qualified crafts and supervisors
Inadequate field support services
24
Typical Field Problems, cont'd

Some of these field problems can be attributed to the following
causes:
Poor communications
Loosely defined contractual arrangements
Poorly defined organization and interface relationships
Lack of coordination procedures
No forum to identify problems
Poor management controls
The SAPMT and the contractor's management must play a

proactive role to identify any potential problems and initiate
actions to resolve them quickly and amicably.
Resolving Field Problems
The SAPMT should ensure that there is a reporting and
communication system for early identification of these problems.
This will facilitate the early identification of the causes and timely
institution of corrective measures. If not resolved quickly and to
the satisfaction of concerned parties, these problems tend to
grow and become disruptive to the project performance.
The first step in resolving the field problems is to analyze the
problem and identify the causes. Instead of pinpointing the
blame on organizations and individuals, the effective approach
is to make necessary adjustments to "the systems or
procedures" which are responsible for the origination of the
problems. The SAPMT must recognize the urgency and
importance of resolving these problems early. Some of the
steps that the SAPMT and the contractors can take to resolve
the field problems are:
Institute effective communication channels
Implement effective planning and management controls
Minimize work scope changes
25
Resolving Field Problems, cont'd
Institute detailed coordination procedures
Set up controls that forewarn about potential problems
Develop solutions and alternatives for early resolution
Set up forum to communicate and resolve problems
Insist on compliance to contractual terms
Implementation of the above steps will help to minimize these

problems and assist in their early resolution.
Importance of Good Communication
Communication is a key management tool used to minimize
conflicts and reduce problems in the planning and execution of a
construction program. Communication among the SAPMT and
the contractors is vital to achieving quality in construction.
Especially on a project with various participants, proper
communications channels must be established for early
identification and resolution of field problems.
Whatever
methods of communication are used to produce the required
coordination throughout the project, it is important that they be
clear and frequent.
Methods for coordination and
communication during the project may include:
Identifying Saudi
requirements
Coordinating procedures established for the specific

project
Utilize budgets and schedule information to establish

realistic control baselines
Meetings of the SAPMT, including Program Management

Contractor (PMC) and contractors, when appropriate
Minutes or summaries of meetings, including identification

of and responsibility for follow-up actions
Aramco's
project
objectives
and
26
Importance of Good Communication, cont'd
Written contract clarifications
Discussions of team members with documented decisions

or conclusions
Memos and letters with appropriate distribution
Reviews with transmittal letters
Progress reports, written and/or oral
Joint reviews of documents, models, budgets, and

schedules
Results and decisions based on field reports
Formal reports of noncompliance/discrepancy/and other

design or construction problems.
Contract change order system
The SAPMT should create an atmosphere that encourages,

rather than inhibits open communication, which is essential to
project success. Problems that are not identified early and
addressed appropriately will degenerate until it is no longer
possible to correct, only to mitigate the situation.
Communication among project
participants is a highly complex process requiring effort and skill.
When speaking, or "sending," it is important to distinguish
clearly among:
Communication
Process
Giving project-related information and objective date
Revealing concerns, opinions, feelings, or subjective data
Initiating actions by way of requests, requirements,

commitments, and changes
27

When listening, or "receiving," it is important to pay particular
attention to words and phrases, ideas, concepts and mental
pictures, and feelings, whether spoken or implied. Listeners
should be certain that they understand that they are:
Receiving project-related information and objective data
Being advised of concerns, feelings, or subjective data
Expected to initiate action as a result of the communication
The most effective way to "receive" complete communication is

to summarize understandings with the "sender" and correct any
misperceptions immediately.
Forms of Communication - The communication on a project takes
place through various channels and forms, such as:
Documentation, e.g. contracts, procedures
Meetings
Progress reports
Studies
Memos, minutes of meetings, etc.
Management presentation and reviews
The project participants should ensure that information is

consistent and useful to efficiently plan and execute the project
Critical Points in Project Communication - The following are
examples of times or situations when coordination and

communication among the project participants are especially
critical:
At definition of project scope, budget, and schedule
At definition of performance and quality criteria (refinement

of scope)
28
When concluding alternative or feasibility studies (affecting

scope)
When reviewing
requirements
When assessing economic or scheduling impacts of

requested or necessary changes in scope
When evaluating contractor's suggestions for alternative

methods, materials, or execution approach
In unexpected situations that require changes in scheduled

dates, scopes, procedures, costs, or materials
When dealing with significant problems of design or

construction
At completion of significant project milestones
contract
document
language
and
When the parties involved in the execution of a project establish

a framework of dialogue that facilitates good communication,
serious gaps are avoided between intended and actual
understanding of project essentials. Attention to these essential
elements assists in producing a project that meets the
requirements of Saudi Aramco and the contractor.
29
WORK AID 1:
GUIDELINES FOR CALCULATING CONSTRUCTION PROGRESS,

PRODUCTIVITY
AND
FORECAST
MANHOURS
FOR
A
CONSTRUCTION CONTRACTOR
The Work Aid provides guidelines to participants in calculating construction progress,

productivity and forecast manhours for a construction contractor.
Guidelines
Use the following formulae to calculate progress, productivity
and forecast manhours:
Earned Manhours
Budgeted Manhours X Progress Percent Completion
Engineering Productivity
Earned Manhours X 100

Actual Manhours
Forecast Manhours
Budgeted Manhours X 100

Productivity Percent
30
GLOSSARY
PMC
Program Management Contractor
SAPMT
Saudi Aramco Project Management Team
31

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