The increased focus on understanding the challenging mix of economic conditions, weak demand, budgetary limitation, and high costs mandate executives and program managers for large construction projects to strategically analyze their business model and supporting processes & technologies.
The industry has seen increasing pressure from all sides, including high expenditure, complex supply chains, and increased demand for quality and esthetics. In addition, regulatory mandates for governance, risk management, safety and environmental sustainability mean that project performance must be a vital component to improving the profitability of construction businesses. A key factor to profitability in this industry is to empower and increase the skills of employees. This means that employees (as well as subcontractors, independent contractors & business partners) have efficient tools to perform their tasks, including methods and means to optimize processes and drive efficiency & profitably. The goal is to complete projects efficiently, on time and within budget estimates.
Research and feedback from customers and construction management teams indicates that a strong set of business processes, coupled with effective tools and the following common principles will lead to successful construction project management:
Early and complete planning
The various issues surrounding efforts of coordination, collaboration, and communications are a key challenge to both customers and contractors; constitute major confusion on projects. Thus, the ability to implement effective collaborative tools early is a crucial first step toward project mobilization. At this stage it is important to ensure the following processes are implemented:
- Document control system
Risk log - document risks and identify corrective actions (or exceptions).
Identify the organizational hierarchy to support this project – this is critical to ensure accountability for both project execution and governance/regulatory requirements.
Create a “cost-loaded” project schedule to identify and organize tasks/costs into an executable sequence of events. The process of creating a schedule ensures identification and understanding the areas of risk, key milestones, task dependences and resource requirements. The schedule provides the Project Manager with means to establish goals for the project team.
Establish an Effective Schedule of Values – Planning how you intend to bill and collect on a project is a vital part of effective Project Management. This includes billing qualification, customer approvals, timing of submission and collection activities.
Establish workflows for submittal and transmittal of deliverables.
Strong customer focus and collaboration
Utilizing a Customer Relationship Management (CRM) application provides the team with necessary flexibility to quickly respond and deliver effective customer focus and support. CRM can provide the team with ability to respond immediately to market requirements and can be integrated with most ERP systems. This means that the CRM enables the straightforward transfer of information to and from the project and financials systems.
Support from senior management
This allows the project team to operate efficiently, obtain proper delegation of authority and have a direct line to resolve any customer disputes in a timely manner.
Well defined scope of work and contractual agreements
It is highly critical for project teams to clearly understand the terms of the contract. In many contracts, key personnel, consultants and subcontractors are listed & therefore are critical to ensure that provisions are understood to avoid issues which may affect project delivery and costs.
Effective change management process
Projects follow a standardized Scope Management which includes the processes required to ensure that the project captures all the work, and only all the work required to complete the tasks successfully. It is primarily concerned with controlling what is and what is not in the scope. A Charter is signed and agreed; it may not be changed or updated. Any changes will be noted in the Change Request database, which can be reviewed and approved separately.
Using an ERP facilitates the effective deployment of an organization’s resources including financial resources, asset management, personnel selection & assignment, project resources, and information technology (IT) tools. In order to effectively manage construction projects, it is crucial to estimate & track resource usage including labor and materials. Both are critical elements of a comprehensive project management plan and are mandatory to execute and monitor a project successfully. Selection of an effective set of tools to manage project tasks and resources can tip the scales in the profitability of the project.
Regular project reviews
The goal is to ensure that key stakeholders remain current on the project, commitment of resources and other relevant information. It is critical to get a realistic update to project milestones and commitment dates, any budgetary issues (e.g., overrun), issues that may be affecting the customer, company, subcontractors and thus impacting the project timeline (e.g., supply chain issues), and any resources which may be needed or released.
Effective project implementation and success relies on utilizing risk management. From the project management perspective it is common to consider planning, identification, classification, analysis, response, monitoring and control as the main steps. Risk analysis aims to estimate or assess the likely outcomes or impacts of risks under consideration, in case they materialize. This approach is used to determine whether there are inherent risks to the project and established plans to manage those risks, as needed. Thus large projects will typically imply higher risk. This risk could be reduced, for example, by using an experienced project manager. Depending on project characteristics, an evaluation can be as simple as High, Medium, or Low. Projects with many high-risk characteristics will require a plan to manage the risk; to ensure that the risk is mitigated and does not occur. Medium-level risks should be assessed to determine if the impact is severe enough to require a risk mitigation plan. Low-risk items may be listed as assumptions & recognized for potential problems. The activities associated with managing the various risks should then be moved to the project work plan.
Effective project management team
Selecting the right mix for the project workforce is a primary responsibility for Project Leadership. Effective teams make higher quality decisions and accomplish more in less time and with less distraction and frustration. A key to the success of such teams includes transparent processes and tools which ensure transfer of knowledge to rest of the stakeholders. Thus, processes can be collaboratively documented and available to the personnel responsible for continuing support, and end users. Effective project management ensures that the project team is committed to a thorough understanding of all processes so that they may take ownership of on-going activities and improvements.
While all of the above are crucial to successful project execution, it is crucial to keep the end game in sight. Project closeout is perhaps the most important part and will ensure that each component is complete and accepted by the customer. This is the final phase when the project’s construction & installation of products is complete and transferred to the customer for ownership. Components of project closeout may include the following:
- Complete set of As-Built Drawings
- Operations and Maintenance Manuals
- Copy of all plans and specs
- Equipment list
- Software delivered/archived
- Copies of all inspection reports
- Copies of all testing and commissioning reports
- Copies of all system turnover and acceptance reports
- Certificate of completion
- Change orders finalized/accepted
- Final invoices
- Closed punch list
- Final waivers/release of liens
- Certification of customer training