Building Industry Game (B.I.G.) A Computer Simulation for Construction Management

Introduction

B.I.G. is a construction business simulation.  It puts the individual players or teams of players in a company setting.  This company comes complete with all of your normal company financial information: i.e. balance sheets, income statements, schedules.  B.I.G. allows the game administrator to place the player or team into a situation or incident that could require a quick short term solution or possibly a long term change in the company bidding/business strategy.  The application provides users with the opportunity to gain experience, learn from their mistakes and to experience some of the analysis required of the construction professional.

 The skills required of today's construction management team is a combination of management skills and technical knowledge.   Managing in construction often demands the inevitable trade-offs between time, cost, quality and resources and identifying and solving variety of issues facing the construction manager.

Ultimately, their goal is to achieve the best possible project and company outcome by developing the ability to analyze situations, gather data and make strategic decisions between time, cost and quality - the essence of project management.

Using the Simulation

Getting Started

Introduction to Game

This program creates an environment that allows the students in Construction Management to participate in the bid process and create business/bid strategies.  Students play the roles of construction contractors who obtain the largest percentage of their work through the bid process.  Players start with a beginning balance sheet.  Generally all the teams that are competing would start with approximately the same financial position.  In reality most businesses start with a complete business plan but in the computerized B.I.G. case students will develop their own strategy in the early periods of the simulation.  During the play of the game, overhead costs, bidding expenses, and lack of work can quickly impact the companies’ balance sheet.  B.I.G. produces dynamic balance sheets that add profits and subtract costs and losses from projects.  The simulation uses a Percentage of Completion form of financial statement and records project and business expenses period by period.  Projects are bid among the teams playing the game.  It also allows for an additional “computer” Contractor X who bids, keeping all the players from taking work at too large a profit.   The simulation will also reject bids that are substantially low.  Projects are titled by type: school, industrial, commercial, etc.  All have different network schedules and slightly different activities with different labor and material costs. 

Starting a New Game and Beginning Company Information

Beginning the game the team (company) finds a main menu with report (information) options,  financial information,  and consulting information.  The simulation is broken into periods representing 2 calendar months.  Each team has a unique password and can name their companies when logging in their first time.  A team name does not have to contain any player’s information, but the instruction can match team and player at any time.

The Setting

As noted in the Introduction, each team acts as a construction firm that relies on a competitive bidding environment.  The projects available each period differ in the types of works as well as number and size of projects.   The simulation is played in periods, each of which represent 2 months.  During these periods, the teams will have the opportunity to bid on new work and monitor projects they have been successful in procuring.  As mentioned, a varying number of projects are available to bid each period.  They fall into five different types:

1. apartments

2. school buildings
3. office buildings
4. hospitals,
5. industrial plants.

To be awarded a project, the company must place a bid that is the most competitive among the teams in the game.  It should be noted that the “computer” Contractor X mentioned above also bids on the projects.  A team will use all available information to schedule the methods of each project in the most efficient time and cost combinations.  Again the sensitivity of the method to outside influences must be taken into consideration.  The second part of the work is the monitoring of the project schedule.  Most projects generally increase in the time required to complete them.  Some of the game variables will also tend to increase the length of the project.  Schedule overrun in the simulation is penalized by liquidated damages.  The company must be aware of the overhead cost of running a business and how these costs may continue to increase during the duration of the project.  The results of good bidding and project monitoring will be noted by increased cash on the balance sheet while poor management in these areas can lead to a company (team) going into bankruptcy.

Information used to Bid

All jobs in the simulation are broken into 9 different activities.  Each activity can be completed by using one of five different methods.  Each method can either shorten or lengthen the team’s project.  Every activity has a different cost and each one has a different sensitivity to weather and labor uncertainty.  The activities are:

1. Excavation
2. Foundation
3. Basement
4. Framing
5. Closure
6. Roof
7. Siding
8. Finishing
9. Mechanical and Electrical

There are three different reports on every project available to bid.  These reports are:

1. Productivity Report
2. List of available Jobs.
3. Estimating Time and Cost Report

Examples are given in Appendix A.  Remember that the range of uncertainty affects the project once the project is started and will continue to create plus and minus changes to original budgets. 

 Teams are not required to do takeoffs but analysis of time and cost is required to pick the methods that have the best time and cost balance.  Quantities are given to methods and are based on a fictitious “construction” unit.

Productivity Report

The productivity reports gives the company production rates for every method.  Another important piece of information given on the productivity report is the range of uncertainty and weather sensitivity.  The logic being that labor is affected by both temperature and rainfall.  It should be noted that both temperature and rainfall variability is another item that is set by the instructor.  See sample report in Appendix A.

List of Available Jobs

When a new period is changed, a new list of projects available to bid is generated. See the sample in Appendix A.

Estimated Time and Cost Report

Bidding

Construction work is either negotiated or companies bid for the projects.  B.I.G. at this time only simulates the bidding side of the equation.  Most firms have reoccurring main office overhead or expenses whether they are working on a project or not.  Having projects that pay for main office overhead, and make a profit is the key to business success.  Each period these simulation projects will be available to bid, but companies need to do more than just bid, they must be competitive. (the low bidder).

Determining Bid Prices

 Determining bid prices is a combination of scheduling and the methods used that the team chooses.  Most of the time spent in the simulation is spent determining the best

combination of schedule and methods.  Students have used spreadsheets and computerized scheduling packages to create the “what ifs” needed to perform these functions while others have been successful doing the process completely manually.  Some instructors may want to use one method over the other, while other instructors may leave this process up to the individual teams.

Using the Bid Estimate Form

A bid estimate form is provided as a template for the teams and shown in Figure 3.

Submitting Bids and Bid Closing

Bids are inputted into the computer on all projects a firm wishes to bid on.  Generally most teams will bid on a number of projects, remembering that having too much work or too much unprofitable work can slow their company in the simulation.  Having effective strategies is important.  A company can “retract” their bid to cancel  before the period changes, but not after the bid (period changes) closes.

The lowest bidder generally will be awarded the project but not always.  Adequate cash-on-hand is needed to be given the project.  Also, the bid can not be substantially low, and if the company has too much work this also will impact  the award of the project.  Also the computer bids the project with a contractor X to keep firms from over maximizing profits on projects that may   have one bidder.  The program does allow a company to put higher than normal profits on projects, but it is controlled.

Report From Bid Opening and Complete List of Bids Report

Two reports are generated at bid time, one called Report from Bid Opening and the other Complete List of Bids Report.  The first has minimum amount of information and is free while the second gives additional information and costs a small amount to receive.  See Appendix A for example of these two reports.

Consulting Services

There are three major conditions that change during the simulation.  These conditions are weather, labor availability, and material cost index.  As with all of the simulation parameters, the administrator of the game can set the amount these vary and to the randomness that the changes can occur.  If one is simulating working in the Seattle area the weather factor may be more volatile.  Material prices have continued to become more expensive but at a slow and steady basis.

Once a company (team) has a project, a method to monitor for the conditions must be done.  Methods can be changed during the progress of the project to reflex changes of conditions;  i.e. working overtime to make up lost time due to weather.  As a team evaluates a project’s progress and expected completion dates, the team must evaluate what the impact of liquidated damages may play in the financial success of the project.  On some projects this will have little or no effect, while other projects (with large liquidated damages) who run the risk of being late may necessitate the need to change methods for a speeder completion.  This constant monitor is much like the evaluation we make on a week to week basis on real live projects.  The reports like the complete bid reports have a normal cast that is applied against overhead costs.

Labor Availability Index

Labor availability index report gives the company a look at the availability of labor.  “Unsatisfactory” labor availability can increase $/LU 1% to 4 %.

Material Cost Index

Material cost index reports adjusts the different material costs .  A value of 90% would actually lower the estimated cost for the period by 3%.

Weather Forecast

Weather forecast report gives the contractor information on rainfall and temperature.  Rainfall may decrease the number of days available to work.  Activities that are affected by rain are the only activities changed. 

Market Analysis of Future Construction Demand

In developing a strategy or just in planning the next periods, knowing the numbers of available projects is helpful.  The market analysis of future construction demand a report projection of these items.  Again the sensitivity and numbers can be set by the instructor.

Progress and Financial Reports

At the end of each period (2 months), companies have the opportunity to assess their bid results.  Also a progress report and a financial report is generated.  These reports help in the decision making and strategy assessment that is completed each period.  Companies may wish to adjust schedules and methods on going projects, review their financial condition and any trends that may be occurring.  Understanding a companies successes and upcoming trends in key financial areas is one of the most important aspects of these simulations.  This is a good time to have individual and group discussions on what has worked and why; also what has not worked and what are the reasons for these poor results. 

Project Administration

Jobs are started one month or one-half the period after award of contracts.  Companies may change methods previously chosen at bid to lower budgets or to complete work in a timely manner.  (Remember faster generally has a cost penalty)  Another tool of the project manager is the use of overtime.

Change Orders

Change orders are a normal part of construction contracts.  B.I.G. uses a simplified method of automatically negotiating the changes for the firm.  Change orders increase the total price of the contract and also increase the LU's of the job.  In B.I.G., change orders do not hurt the contract.

Overtime

Overtime can apply to any project on any activity.  This is applied at the second shift with the second shift carrying the cost burden.  These crews are also penalized at an increased rate.

Loans

Loans are also available when ever needed to increase cash-on hand.  This will allow a bidder to bid additional projects or larger projects.  The instructor can set the maximum number of loans and the loan amounts.

Completion of Game

Games can be completed in two different ways. The instructor can choose to just simply  end the game without completing the projects that are still in progress because their end is still months into the future. Or  the instructor may wish  to include the profits and other information from ongoing/active projects.  In this case, the instructor can choose to finalize the game and have the simulation forecast the financial information which requires repayment of loans and a estimation of final cost for each active project.  Each of these can produce different final numbers for the teams.  The second method of ending the simulation can give you a financial “winner”, while the first method can give you a great place to kick off a discussion on where teams feel they are and what methods they are going to use to improve their financial health.

Administrator Issues

The instructor controls when a period ends, (thus when a new period starts).  The instructor must balance the overall time to play the simulation and having the optimum number of periods.  Note that 6 periods is equivalent to 1 year of time.  Many of the variables that can be adjusted by the instructor have not been fully explored.  The default set in the simulation have given the games to date realistic information and variability to the simulation.  It is recommended that new administrators  use the defaults the first time through the simulation, then exploration is encouraged.

System Overview

The system does not require heavy duty computer serving.  The philosophy of B.I.G. was to create a program and system that would be inexpensive to own and operate.  The choices of equipment and software then became based on this principle.  The transition from original code in Pascal running on a VAX computer in the late 1980’s, to C running in DOS on PC in the 1990’s, then to the current multiuser, web enabled, version using a database structure on a PC server running Linux.  This latest version allows people in remote locations to participate either as an administrator or a player.  The object based nature of the current software codebase allows for much easier addition of functionality to the simulation as compared to the older hard coded version.

Hardware

                Server:    Dell Workstation

                                                GX400:  Pentium 4 Processor, 1.7 GHz, 256 Cache

                                                128 MB RDRAM

                                                20GB EIDE Hard Drive

Software

Operating System:  Linux RedHat 7.3

Running: Tomcat (servlet container and JSP engine) and using Struts framework for building web applications.

                Data Base:             PostgreSQL

The Complexity and Nuances of the Simulation

Students tend to be very superficial early in the simulation.  Sometimes the abstractness of methods and the projects slows student creativity.  This program would be a great supplement to estimating, management of the firm, and even a capstone class.  It is important that the instructor spend time discussing the many levels of complexity with the students.  It must be emphasized to the teams that financial condition can change very quickly and that it is a slow process back from the brink of bankruptcy.  Often student feel that all they need to do is get one good job.  Sounds familiar.  I think that I have heard that from struggling construction owners.  The market place is not a kind and gentle place and just getting a loan does not solve poor bidding procedures and practices nor does it solve poor project management.  B.I.G. does not forgive the teams easily.  By changing some of the parameters, we believe that the instructor can soften the potential harshness that the simulation can levy on the companies.

Summary

Computer simulations can provide students in construction management the opportunity to experience management and business decision making.  Simulations allow the users to analyze the results, discuss different strategies, and see the result of planning and implementation of business/ bid strategies. This simulation is a work in progress and continued development is being done to date.  Additional functionality in the area of obtaining negotiated work, increased complexity of the project management piece, and expanding the types of projects to include other segments of the construction industry;  i.e. heavy civil and highway construction, are the next pieces to be completed.  It is anticipated that this simulation will be available to the Associated School of Construction programs on a measured access basis in early 2003.  The simulation has under gone thorough testing and is working up to expectations, but as with any work in progress, it will greatly benefit from input from the anticipated new users and individual  instructors.

References:

Borland, J., Johnston, H., Craig, K. (April 2002). BIG: Building Industry Game Instruction Manual. San Luis Obispo, CA: Integrated Media Services, Information Technology Services, Cal Poly State University

Borland, J., Johnston, H., Craig, K. (April 2002). BIG: Administrator Manual. San Luis Obispo, CA: Integrated Media Services, Information Technology Services, Cal Poly State University

Harrington, J. L. SQL Clearly Explained. Chestnut Hill, MA: AP Professional

Nemeth, E., Snyder, G., Seebass, S., Hein, T.R. (1995). Unix System Administration Handbook. Upper Saddle River, NJ: Prentice Hall

Tackett, Jr. J., Gunter, D. (1997). Using Linox. Que Corporation

Worsley, J.C., Drake, J. D. (2002). Practical Postgre SQL. Sebastopol, CA: O’Reilly and Associates, Inc.

Appendix A