Article #540 The Great Value of Correlation Analysis in Identifying Relationships Between Different Business Processes on Capital Construction Projects

Those who are involved in delivering capital construction projects, know that there are some kinds of relationships between the different business processes required to manage the delivery of those projects. The relationships between the different business processes are important as it helps project stakeholder to predict future outcomes based on today’s results or actions.

For example, it is almost a fact that there is always a relationship between the Contractor’s quality of work completed and inspected on-site and the extent of Non-Compliance Reports (NCR) issued to the contractor for works that do not comply with the specified quality requirements. The details of those two requirements are captured in the Work Inspection Request (WIR) and Non-Compliance Report (NCR) business processes.

The extent of this relationship can be better visualized and established by using correlation analysis which is a statistical measurement of the relationship between two variables. Possible correlations range from +1 to –1. A zero correlation indicates that there is no relationship between the variables. A correlation of –1 indicates a negative correlation between two variables means that the variables move in opposite directions. An increase in one variable leads to a decrease in the other variable and vice versa. On the other hand, a positive correlation between two variables means both the variables move in the same direction. An increase in one variable leads to an increase in the other variable and vice versa.

Accordingly, if an organization has access to the data associated with the transactions for the Work Inspection Request (WIR) and Non-Compliance Report (NCR) business processes, then a correlation analysis can be established to identify the extent of this relationship. For example, the correlation chart below indicates that there is a perfect positive correlation relationship, 0.989, between and WIR and NCR.

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Nevertheless, when entities and in particular Capital Project Owners use a Project Management Information System (PMIS) like PMWeb to digitize the hundred-plus business processes needed to manage the delivery of their projects, then they will automatically have access to the massive volume of clean, valid and trust-worthy data that can be used to identify all possible relationships between the different business processes. For example, the report below confirms the strong relationship between the Work Inspection Request (WIR) and Non-Compliance Report (NCR) business processes but at the same time, it also shows that there is no relationship between the Request for Information (RFI) business process and the Work Inspection Request (WIR) nor the Non-Compliance Report (NCR) business processes.

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The advantage of correlation analysis and in particular when it has access to real-time data captured from the complete projects’ portfolio being managed by the entity, is that the correlation analysis can become more focused. For example, when all projects for all contractors were selected for the correlation analysis, the correlation relationship between Requests for Information (RFI) and Claim Notices was +0.368 which is although positive but not a very strong positive.

Nevertheless, when reviewing the correlation analysis for Contractor A30000, the correlation relationship between RFIs and Claims jumps to +0.97. This could be an indication that this Contractor is a claim-oriented contractor that uses Requests for Information (RFI) as the ground for submitting Claim Notices. Although this might not be true, nevertheless, it gives the project owner team a valid alert to investigate this matter and understand what were the reasons behind the reported strong relationship.

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The digitization of business processes in PMWeb will ensure that every single transaction for each business process along with its supportive documents and the details of all those individuals who has a role in submitting, reviewing, and approving tasks for the transaction are captured in real-time. Access to those business processes will be restricted to ensure that only authorized projects individuals can collaborate in executing those business processes regardless of where they are located and which entity they represent. The captured data will be automatically structured in the required format to ensure that is clean and valid for the correlation analysis.

This captured big data will be stored on a single PMWeb data source that can be filtered to select specific contractors, projects and even business processes to be analyzed. In addition, it will help in identifying relationships between different business processes that were never considered before. Of course, the larger the data volume will become, the better and more meaningful correlation analysis will become available. The correlation analysis is one of the algorithms needed to train Machine Learning (ML) so it can be of value for Artificial Intelligence (AI) platforms.

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About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services, and project management information systems to over 200 projects with a total value over the US $100 Billion. Those projects included Commercial, Residential, Education, and Healthcare Buildings and Infrastructure, Entertainment, Hospitality, and shopping malls, Oil and Gas Plants and Refineries, Telecommunication, and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training, and business development.

Bassam is a frequent speaker on topics relating to Project Management, Strategic Project Management, and Project Management Personal Skills. Over the past 40 years, he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe, and South America. He has written more than 500 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP), and Earned Value Professional (EVP) from the Association for the Advancement of Cost Engineering (AACE) and Green Project Management (GPM).

Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA, and London Business School, London, UK.


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