The contractor managing the construction of a new 20-story hotel had a well-planned schedule for the project. The schedule contemplated many scenarios that might sidetrack the work — natural disasters, material shortages, workplace accidents, even strikes.
Unfortunately, he didn’t think of everything: vandals hopped the fence at the excavation contractor’s storage yard and disabled four $200,000 excavators. This delayed digging by three weeks.
For insurance considerations related to excavation delays, see Excavation and Grading Bond Insurance.
Shortly after work began, the general contractor had to suspend the project because the municipal employee responsible for approving plans and issuing work permits became ill and checked into a hospital. Due to severe budget cutbacks, the municipality had no one on staff to perform her work while she was out.
All these events threw the contractor’s schedule out the window and cost the owner thousands of dollars in lost revenue. Had the contractor been able to accurately factor these risks into the plan and cost estimate, dealing with them would have been easier and less costly.
Principles of event chain methodology
- External events affect work tasks during the performance of the tasks. These effects can be both positive (14 straight days of sunny weather, allowing for the completion of exterior work ahead of schedule) or negative (an unexpected downpour occurs before the roofing contractor can cover openings, flooding the top floor).
- Events can cause other events, creating chains that affect the project. Municipal authorities question something in the architect’s plans. The architect answers, but the authorities question the answers. Construction halts while the questions are settled; when it finally resumes, subcontractors accelerate the work to make up for lost time and accidents may occur.
- If a contractor can define events and event chains, he can analyze them to measure how uncertain they are and calculate how event chains will impact the project.
- Critical chains of events are those that have the greatest potential to affect a project. If contractors can identify these critical chains in advance, they can plan for them and keep their impact to a minimum by analyzing each chain and estimating its potential to affect major project parameters, such as duration or total cost.
- Contractors can use data from similar past projects to determine how likely a chain of events is and what its impact will be on the project.
- To aid in the analysis of risks, contractors can create Event Chain Diagrams. These display the relationships between events and tasks and how one affects the other.
Using event chain methodology can lead a contractor to alter the original plan in a number of ways. Certain events (fires, flooding, vandalism) can make unplanned activities (clean-up, repair, replacement) necessary.
Other events (contractor or designer errors) can force subcontractors to repeat already completed tasks, such as wiring, plumbing, or installation of air quality systems. As deadlines approach, a task might require additional resources — personnel, materials, tools — requiring the contractor to re-allocate from other planned activities.
Event chain methodology allows project managers to assign mathematical values to risks, helping them decide how to prioritize loss prevention efforts. For guidance on managing construction risks and safety, see Construction Project Risks and Safety Tips.
Ideally, this will enable the project to finish with fewer surprises, resulting in a safer, on-time, and more profitable outcome. For specific policy questions or to review coverage options, you can talk to an agent.
Frequently Asked Questions
What is event chain methodology?
Event chain methodology models how external events and their interactions affect project schedules and costs, helping teams quantify uncertainty and plan responses.
How does it help construction projects?
It identifies likely event chains, estimates their impact on time and budget, and highlights critical chains so managers can mitigate or plan for them.
What data is needed to use this method?
Historical project data, probability estimates for events, and impact assessments for tasks are commonly used to build realistic models.
Can event chain analysis replace insurance and contingency planning?
No. It complements contingency funds and insurance by improving risk estimates and prioritizing mitigation actions, but it does not substitute for appropriate coverage.