27R-03 .72

AACE Internationa Internationall Recommended Recommended Practice Practice No. 27R-03 27R-03

SCHEDULE CLASSIFICATION SYSTEM TCM Framework: 7.2 – Schedule Planning and Development

Acknowledgments: H. Lance Stephenson, CCC (Author) Edward E. Douglas, III CCC PSP Dennis R. Hanks, PE CCE John K. Hollmann, PE CCE CEP Angyan P. Jagathnarayanan Copyright 2010 AACE International, Inc.

Michael R. Nosbisch, CCC PSP Kul B. Uppal, PE CEP Phillip B. White, PSP David C. Wolfson

AACE International Recommended Practices

AACE International Recommended Practice No. 27R-03

SCHEDULE CLASSIFICATION SYSTEM TCM Framework: 7.2 – Schedule Planning and Development

November 12, 2010 PURPOSE

This recommended practice (RP) is intended to serve as a guideline, not a standard. As a recommended practice of AACE International, the intent of the guideline is to improve the understanding and the communication among stakeholders involved with preparing, evaluating, and using project schedules. Various enterprises often misinterpret the quality and value of the information available to prepare schedules and the various methods employed during the scheduling process. It is understood that each enterprise may have its own project scheduling processes and terminology, and may classify schedules in their own particular ways. This guideline provides a generic and generally acceptable classification system that can be used as a basis of comparison. If an enterprise or organization has not formally documented its own schedule classification system, then this RP guideline can be used to provide an acceptable basis. This recommended practice introduces a schedule classification system, which provides the guidelines for applying the general principles of schedule classification to project schedules. A schedule classification system maps the phases and stages of scheduling with a generic maturity and quality matrix that can be applied across a wide variety of industries. It is intended to be applied to any schedule in any industry, and across all stakeholders including government and academia. A separate recommended practice provides a guideline for describing the specific use of schedule levels to project schedules. Schedule levels provide the details necessary to recognize the characteristics of each of the schedule levels for the purposes of communicating, executing (controlling and monitoring) and reporting the specific details of the project. Schedule levels consider reporting requirements for each of the stakeholders and the appropriate amount of information necessary for effective communication and decisions. This recommended practice has been developed such that it: 

•

• •

Provides common understanding of the concepts involved with classifying project schedules regardless of the type of enterprise or industry Fully defines and correlates the major characteristics used in classifying schedules so that enterprises may determine how their practices compare to these guidel ines Uses degree of project definition as the primary characteristic to categorize schedule classes Reflects generally accepted practices in the cost engineering profession

This classification guideline is intended to help those involved with project schedules to avoid misinterpretation of the various classes of schedules and to avoid their misapplication and misrepresentation. Improving communications about schedule classifications reduces business costs and project cycle times by avoiding inappropriate business and financial decisions, actions, delays, or disputes caused by misunderstandings of schedules and what they are expected to represent.

Schedule Classifications versus Schedule Levels

As indicated below, schedule classifications define to the team the required engineering definition and “degree of completeness” needed for schedule development. Schedule levels establish the breakdown and amount of detail required for communication and reporting. The following diagram (Figure 1) illustrates the two discrete ways that schedules can be developed and/or presented.

Copyright 2010 AACE International, Inc.


Schedule Classification System

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Figure 1 – Schedules: Classifications versus Levels As identified in Figure 1, there is a clear delineation between the schedule classification index and schedule levels. By establishing two separate and discrete functions, we can establish a basis for developing the project to the right amount of detail with the right information for the right audience. The will assist in our ability to improve project team communication, collaboration and effectiveness while achieving excellence in managing our projects and resources.

INTRODUCTION AACE International has developed and published two recommended practices related to cost estimate [1] classifications. RP 17R-97 provides the general guidelines and principles of the cost estimate [2] classification system. RP 18R-97 serves as an addendum for application in engineering, procurement and construction for the process industries. This guideline is intended to provide a generic methodology for the classification of project schedules in any industry. It is intended to be supplemented with recommended practices that will provide extensions and additional detail for specific industries. This recommended practice will: • •

Provide a classification methodology applicable across all industries Identify, cross-reference, benchmark, and empirically evaluate the multiple characteristics related to the class of schedule

CLASSIFICATION METHODOLOGY There are numerous characteristics that can be used to categorize schedule types. The most significant of these are degree of project definition, end usage of the schedule and scheduling approach used. The time and effort expended to prepare the schedule and expected accuracy range will not be discussed in this RP. It is recommended that each company develop an approach based on their historical data, project type, and business rules. The primary characteristic used in this guideline to define the classification category is the degree of project definition; other characteristics are secondary.




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November 12, 2010 Categorizing schedules by degree of project definition is consistent with the AACE International philosophy of total cost management (TCM), which is a quality-driven process applied during the entire [4] project life cycle . The discrete levels of project definition used for classifying schedules correspond to the typical phases and gates of evaluation, authorization, and execution often used by project stakeholders during a project life cycle. Five schedule classifications have been established. While the degree of project definition is a continuous spectrum, it was determined from benchmarking industry practices that three to five discrete categories are commonly used. Five categories are established in this guideline, as it is easier to simplify by combining categories than it is to arbitrarily split a standard. The schedule class designations are labeled Class 1, 2, 3, 4, and 5. A Class 5 schedule is based upon the lowest degree of project definition, and a Class 1 schedule indicates full project definition and maturity. This arbitrary countdown approach considers that scheduling is a process whereby successive schedules are prepared until a final schedule closes the process.

SCHEDULE CLASS

Primary Characteristic DEGREE OF PROJECT DEFINITION (Expressed as % of complete [1] definition)

Secondary Characteristic

END USAGE

SCHEDULING METHODS USED

Concept screening

Top down planning using high level milestones and key project events.

1% to 15%

Feasibility study

Top down planning using high level milestones and key project events. Semi-detailed.

Class 3

10% to 40%

Budget, authorization, or control

"Package" top down planning using key events. Semi-detailed.

Class 2

30% to 70%

Control or bid/tender

Bottom up planning. Detailed.

Class 1

70% to 100%

Bid/tender

Bottom up planning. Detailed.

Class 5

Class 4

0% to 2%

Table 1 – Generic Schedule Classification Matrix [2]

[1] RP 18R-97 provides the range in percentages for each class.




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November 12, 2010 CHARACTERISTICS OF THE SCHEDULE CLASSES As stated, the schedule class designations are labeled Class 1, 2, 3, 4, and 5. A Class 5 schedule is based upon the lowest degree of project definition, and a Class 1 schedule is closest to full project definition and maturity. The schedule classifications must be consistent with that of the scope of work, the design development and the cost estimate. The following are brief discussions of the various characteristics used in the schedule classification matrix. For the secondary characteristics, the overall trend of how each characteristic varies with the degree of project definition (the primary characteristic) is provided.

Degree of Project Definition (Primary Characteristic) This characteristic is based upon percent complete of project definition (roughly corresponding to percent complete of engineering). The degree of project definition defines maturity or the extent and types of input information available to the scheduling process. Such inputs include project scope definition, requirements documents, specifications, project plans, drawings, calculations, learnings from past projects, reconnaissance data, and other information that must be developed to define the project. Although there are some deliverables that would be common to almost all projects, each industry grouping or each project will have a typical set of deliverables that are used to support the type of schedules used in that industry. The set of deliverables becomes more definitive and complete as the degree of project definition progresses. The availability of these deliverables is directly related to the degree of project definition achieved. The variations in the deliverables required for a schedule are too broad to cover in detail here; however, it is important to understand what drives the variations. Each industry group tends to focus on a defining project element that drives the schedule maturity level. For instance, chemical industry projects are process equipment-centric. i.e., the degree of project definition and subsequent schedule maturity level is significantly determined by how well the equipment is defined. Architectural projects tend to be structurecentric. Software projects tend to be function-centric and so on. Understanding these drivers puts the differences that may appear in the more detailed industry addenda into perspective.

End Usage (Secondary Characteristic) The various classes of schedules prepared for a project typically have different end uses or purposes. As the degree of project definition increases, the end usage of a schedule typically progresses from strategic evaluation and feasibility studies to support funding authorization and budgets for project control purposes to guiding project execution activities. The end usage for a schedule should typically be the same as for the cost estimate classes. While there are common end uses for schedules, that usage is often relative to the different stakeholders’ identity. For instance, an owner company may use a given class of schedule to support project funding, while a contractor may use the same class of schedule to support a contract bid or tender. It is not at all uncommon to find stakeholders categorizing their schedules by usage-related headings such as “budget”, “study”, or “bid”. Depending on the stakeholder’s perspective and needs, it is important to understand that these may actually be all the same class of schedule (based on the primary characteristic of degree of project definition achieved). Owners may use Class 5 to Class 3 schedules to manage their respective projects, whereas the contractor will provide the Class 2 and/or Class 1 schedules for each of their respective contracts. This does not preclude the owner nor the contractor from developing Class 5 to Class 1 schedules at any given time. At the preparation of each schedule one should take advantage of all the engineering




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November 12, 2010 definition available. The schedule classifications are not precluded by contract type (lump sum, cost plus, or unit price, etc), nor project size.

Scheduling Methods Used (Secondary Characteristic) Scheduling methods for the purposes of development and presentation fall into two broad categories: bar charts, and network logic diagrams. With bar charts (e.g. Gantt charts) activities or phases are expressed as bars with the end points representing start and end dates. In logic diagrams, interrelationships between activities are added. As the degree of project definition increases, the scheduling methodology tends to transition from development of bar charts to network logic diagrams. The processes used to produce the final schedule may vary; there are numerous methods on how to develop the schedule and determine the schedule completion date.

RELATIONSHIPS AND VARIATIONS OF CHARACTERISTICS There are complex relationships that may be exhibited among the schedule characteristics within the schedule classifications. The overall trend of how the secondary characteristics vary with the degree of project definition was discussed above. This section explores those trends in more detail. The degree of project definition is the driver for the other secondary characteristics. Typically, all of the secondary characteristics have the degree of project definition as a primary determinant. While the other characteristics are important to categorization, they lack complete consensus. Typically, there are commonalties in the secondary characteristics between one schedule and the next, but in any given situation there may be wide variations in usage, scheduling method, accuracy, and planning effort. Characteristics such as accuracy and schedule planning effort can vary markedly between industries and even from scheduler to scheduler within a given industry. The execution style of an enterprise, the type of work to be executed, and the team executing the work also creates variability in determining accuracy and amount of effort to prepare. The schedule and cost estimate should correlate at the appropriate amount of detail. The cost estimate class and the schedule class are both defined by the primary characteristic: the degree of project definition.

SCHEDULE CLASSIFICATION MATRIX One important aspect of developing the schedule is to ensure that the correct degree of project definition is provided so that the project team can execute the project with efficiency and effectiveness. In order to complete this task, the project team needs to understand the requirements necessary for providing the appropriate degree of project definition. The schedule classification matrix was developed to ensure that the relationship between the schedule and estimate classes would establish consistency and clarity. In order to ensure this, the characteristics [1] of schedule classifications are aligned with RP 17R-97: Cost Estimate Classification System . Similar to the cost estimate classification system, five schedule classes are identified. Tables 2a to 2e provide information to recognize the characteristics of each schedule class. The schedule classes (Classes 1 to 5) are defined by the following characteristics: • • •

Degree of project definition End usage Scheduling methods used




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Class 5 Schedule Description: End Usage: Class 5 schedules are generally prepared based on Class 5 schedules are prepared for any number of very limited information, and subsequently have strategic business planning purposes, such as but wide accuracy ranges. not limited to: market studies, assessment of initial viability, evaluation of alternative schemes, project The Class 5 schedule is considered a preliminary screening, project location studies, evaluation of document, usually presented in either Gantt (bar resource needs and budgeting, long range capital chart) or table form. The class 5 schedule should planning, etc. have, as a minimum, a single summary bar per stage with major project milestones identified. Scheduling Methods Used: Gantt, bar chart, milestone / activity table Degree of Project Definition Required: 0% to 2% Top down planning using high level milestones and key project events. Table 2a – Class 5 Schedule

Class 4 Schedule Description: End Usage: Class 4 schedules are generally prepared based on Class 4 schedules are prepared for a number of limited information and subsequently have fairly purposes, such as but not limited to: detailed wide accuracy ranges. They are typically used for strategic planning, business development, project project screening, determination of "do-ability", screening at more developed stages, alternate concept evaluation, and to support preliminary scheme analysis, confirmation of "do-ability", budget approval. economic and / or technical feasibility, and to support preliminary budget approval or approval to The Class 4 schedule is usually presented in either proceed to next stage. Gantt (bar chart) or table form. The Class 4 schedule should define the high level deliverables It is recommended that the Class 4 schedule be for each specific stage going forward (since the reconciled to the Class 5 schedule to reflect the previous stage has passed). This document should changes or variations identified as a result of more also provide an understanding regarding the timing project definition and design. This will provide an of key events, such as independent project understanding of the changes from one schedule to reviews, committee approvals, as well as the next. determining the timing of funding approvals. A high level WBS may be established at this time. Scheduling Methods Used: Gantt, bar chart, milestone / activity table Degree of Project Definition Required: 1% to 15% Top down planning using high level milestones and key project events. Semi-detailed. Table 2b – Class 4 Schedule




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November 12, 2010 Class 3 Schedule Description: End Usage: Class 3 schedules are generally prepared to form Class 3 schedules are typically prepared to support the basis of execution for budget authorization, full project funding requests, and become the first appropriation, and / or funding. As such, they of the project phase "control schedules" against typically form the initial control schedule against which all start and completion dates and resources which all actual dates and resources will be will be monitored for variations to the schedule. monitored. They are used as the project schedule until replaced by more detailed schedules. The Class 3 schedule should be a resource loaded, logic-driven schedule developed using the It is recommended that the Class 3 schedule be precedence diagramming method (PDM). The reconciled to the Class 4 schedule to reflect the schedule should be developed using relationships changes or variations identified as a result of more that support the overall true representation of the project definition and design. execution of the project (with respect to start to start and finish to finish relationships with lags). The amount of detail should define, as a minimum, Scheduling Methods Used: the work package (WP) level (or similar deliverable) PDM, PERT, Gantt / bar charts per process type/unit and any intermediate key steps necessary to determine the execution path. “Package” top down planning using key events. (The WP rolls up into the predefined WBS.) In Semi-detailed. some circumstances, where there is a high degree of parallel activities, the critical nature of the project, or the extreme complexity and/or size of the project, it may be warranted to provide further detail of the schedule to assist in the control of the project. Degree of Project Definition Required: 10% to 40% Table 2c – Class 3 Schedule

Class 2 Schedule Description: End Usage: Class 2 schedules are generally prepared to form a Class 2 schedules are typically prepared as the detailed control baseline against which all project detailed control baseline against which all actual work is monitored in terms of task starts and start and completion dates and resources will now completions and progress control. be monitored for variations to the schedule, and form a part of the change/variation control program. The Class 2 schedule is a detailed resource loaded, logic-driven schedule that should be It is recommended that the Class 2 schedule be developed using the critical path method (CPM) reconciled to the Class 3 schedule to reflect the process. The amount of detail should define as a changes or variations identified as a result of more minimum, the required deliverables per contract per project definition and design. work package (WP). The schedule should further define any additional steps necessary to determine Scheduling Methods Used: the critical path of the project necessary for the Gantt / bar charts, PDM, PERT appropriate degree of control. Bottom up planning. Detailed. Degree of Project Definition Required: 30% to 70% Table 2d – Class 2 Schedule




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November 12, 2010 Class 1 Schedule Description: End Usage: Class 1 schedules are generally prepared for Class 1 schedules are typically prepared to form discrete parts or sections of the total project rather the current control schedule to be used as the final than generating this amount of detail for the entire control baseline against which all actual start and project. The updated schedule is often referred to completion dates and resources will now be as the current control schedule and becomes the monitored for variations to the schedule, and form a new baseline for the cost/schedule control of the part of the change/variation control program. They project. may be used to evaluate bid-schedule checking, to support vendor/contractor negotiations, or claim The Class 1 schedule may be a detailed, resource evaluations and dispute resolution. loaded, logic-driven schedule and is considered a "production schedule" used for establishing daily or It is recommended that the Class 1 schedule be weekly work requirements. reconciled to the Class 2 schedule to reflect the changes or variations identified as a result of more Degree of Project Definition Required: 70% to project definition and design. 100% Scheduling Methods Used: Gantt / bar charts, PDM, PERT Bottom up planning. Detailed. Table 2e – Class 1 Schedule

Schedule preparation is highly dependent on the size of the project, the complexity, the information provided, the planner/scheduler’s, as well as the team’s skills and knowledge, and the tools available at the time of preparation. Depending on the project execution strategy, it may be necessary to integrate all schedules into a single master schedule format. Use of the schedule classification matrix provides a common understanding and guideline for classifying project schedules, which will improve the project team’s ability to execute the project with efficiency and effectiveness.

OTHER CONSIDERATIONS – EXPECTED ACCURACY RANGE The accuracy range of a schedule is dependent upon a number of characteristics of the schedule input information and the scheduling process. The extent and maturity of the input information as measured by percentage completion (and related to degree of project definition) is a highly-important determinant of accuracy. However, there are factors besides the available input information that also greatly affect schedule accuracy measures. Primary among these are the project technology and the quality of reference cost and scheduling data. Project technology and complexity varies between industries and may affect schedule accuracy. Project technology refers primarily to the programmatic or technical uniqueness and complexity. Having full maturity of the project definition deliverables may be deceptive if they are based upon assumptions regarding uncertain technology. For a first-of-a-kind project there is a lower level of confidence that the execution of the project will be successful (all else being equal). There is generally a higher confidence for projects that repeat past practices. Projects for which research and development are still under way at the time that the schedule is prepared are particularly subject to low accuracy expectations. The complexity of project technology may have an order of magnitude (10 to 1) effect on the accuracy range.




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November 12, 2010 Quality of scheduling accuracy is also dependent on the quality of reference data and historical information. The scheduling process typically employs a number of factors to adjust for market conditions, project location, environmental considerations, and other schedule-specific conditions that are often uncertain and difficult to assess. The accuracy of the schedule will be better when verified with empirical data. Schedule accuracy will generally be correlated with schedule classification and the degree of project definition. Specific accuracy ranges will typically vary by industry. The accuracy of any given schedule is not fixed or determined by its classification category. Schedule accuracy must be evaluated on a schedule-by-schedule basis, usually in conjunction with some form o f risk analysis process.

REFERENCES 1. 2.

3. 4. 5. 6. 7. 8.

AACE International Recommended Practice 17R-97, Cost Estimate Classification System, AACE International, Morgantown, WV, (latest revision). AACE International Recommended Practice 18R-97 Cost Estimate Classification System – As Applied in Engineering, Procurement, and Construction for the Process Industry , AACE International, Morgantown, WV, (latest revision). th Amos, Dr. Scott J., PE, Editor, Skills & Knowledge of Cost Engineering, 5 Edition, AACE International, Morgantown, WV, 2004 Hollmann, John K., PE CCE, Editor, Total Cost Management Framework: An Integrated Approach to Portfolio, Program and Project Management , AACE International, Morgantown, WV, 2006. rd Lewis, James P., Project Planning, Scheduling and Control, 3 Edition, McGraw-Hill, New York, NY, 2006. th O’Brien, James J., Plotnick, Fredric L., CPM in Construction Management, 6 Edition, McGraw-Hill, New York, NY, 2006 Stephenson, H. Lance, CCC, Schedule Management: Schedule Classifications vs. Levels, AACE International Transactions, AACE International, Morgantown, WV, 2007. AACE International Recommended Practice 10S-90, Cost Engineering Terminology , AACE International, Morgantown, WV, (latest revision).

CONTRIBUTORS H. Lance Stephenson, CCC (Author) Edward E. Douglas, III CCC PSP Dennis R. Hanks, PE CCE John K. Hollmann, PE CCE CEP Angyan P. Jagathnarayanan Michael R. Nosbisch, CCC PSP Kul B. Uppal, PE CEP Phillip B. White, PSP David C. Wolfson



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