Managing the Development of Building Projects for Better Results

First published in 1981, updated for web presentation, Dec. 2000

Introduction | Principal Parties | Project Plan | Improving Performance
Project Life Cycle | Bar Chart Schedule | Manpower Loading Data
Information Explosion | Final Cost | Design Stages | Cost Effectiveness
Choices | Construction Costing | Value Management | Design Review
Cost of Building Ownership | Practice and Value Management | Summary

The Project Plan

Establishing a conceptual project plan in terms of scope, quality, time and cost in the earliest phase of the project may sound simple. But even if it is, the subsequent monitoring of the development phase against the plan may be anything but simple. The problem arises because the way a project feasibility (financial viability) is put together is not the way the building is built and consequent hard costs collected.

For example, a pro forma analysis may well be established on the basis of a cost per square meter or other similar parametric units. Examples includeas the number of suites in an apartment, number of rooms in a hotel, beds in a hospital, and so on. These parametric units are based on experienced and data collected on previous similar building projects. The construction costs on the other hand, and the forward estimating of these costs during the development stage for budgeting purposes will generally follow trade practices, as set out in the Canadian Masterformat or UCI coding systems.

The preparation of drawings and sketches during the development phase in effect converts concept unit costs into trade category costs by establishing form and choice of materials. Such matters as foundations, structure and finishes are selected from such alternatives as concrete, steel, aluminum, wood, glass, block, drywall, etc. Indeed, a number of materials and their respective installation trades may be used together to form a "system" such as the building "envelope." Certainly, the electrical and mechanical services designs will directly or indirectly affect a majority of the trades on the project and vice-versa.

Thus, the original budget in concept or pro forma terms must be converted into a corresponding working budget. This must be conducted through the design process, yet without losing control over the original project objectives. This essential aspect of the development stage is made the more difficult because the building industry is fragmented into various specialty trades. While each has a good understanding of its own technical processes, and vested interests, often they have less than complete understanding of the management process as a whole.

For example: the primary players

The owner as sponsor may have difficulty in understanding the length of time required to detail a preliminary design into working drawings, including meeting the necessary regulatory standards and approvals.

The owner as operator may have difficulty in understanding the importance of knowing in detail what he is getting as the design develops and the extra difficulty and costs involved in making changes and additions later on if he doesn't.

The designer is concerned with technical and professional excellence which impacts on the performance cost relationship and may conflict with cost effectiveness. Generally, neither the most expensive nor the cheapest ranks highest from a return on investment standpoint. The designer is understandably concerned with maintaining the profit from his fee by holding down the cost of design and supervision, as well as potential liability, This may well act as a brake on innovation. On the other hand, an increase in design scope may be promoted for an increase in fee, to the detriment of budgetary control.

The contractor may have difficulty in understanding the designer's problems and is probably never given the owner's objectives. He considers that these are not his concern. His concern is with productivity and costs on a fixed price contract and because contracting is a high risk business, his incentive is powerful. Other team members do not always appreciate just how powerful this incentive is, and the effect on the contract if this effort is frustrated by them, or the effect on the budget if the incentive is removed. The contractor, too, will be interested in genuine increases in scope of work since this will increase his opportunity to increase profit, although a myriad of small changes is almost always counter productive through reduced productivity.

There are others who are closely involved in the development process who may also have limited understanding.

For example: the secondary players

The financial accountant being generally unfamiliar with either the development or construction process has difficulty in understanding why the budget cannot be fixed from the beginning and hence is suspicious of any adjustments. He tends to be unsympathetic toward human error and oversight, not withstanding the highly complex nature of building design coordination and the construction execution of a modern building. Moreover, genuine savings between "actual" and "what might have been," receive scant attention because such numbers are "soft" and do not show up on a balance sheet.

The lawyer too, is often in a similar position and provides advice from the limited perspective of his professional calling. Indeed, there are all too few lawyers practicing in this specialized field with a knowledge of what it really takes to achieve a successful project,. Many contracts in use on building projects still consist of obscure legal language or legal niceties designed to protect one party against the other - perhaps unfairly. "Time is of the essence" and breach of contract are good examples of two such thorny issues.

Such contracts actually reduce the chances of success and increase the chance of conflict because of the difficulty the parties have in understanding their respective obligations. The situation is further exacerbated by the apparent absence of indications of good will and cooperative effort to mutual benefit. A contract can be so one sided as to be self defeating.

Misuse of standard contract documents

On the other hand, good contract documents prepared by standard documents committees, but applied without legal advice, may be used "off the shelf" without understanding the real intent conveyed between the parties. Attempts to modify such documents in order to change the underlying philosophy of the division of responsibilities between the several parties involved in the design and construction processes, even with using legal advice, should be avoided. This can lead to a legal maze and the raising of fundamental issues.

The very approach of Development Project Management is a good case in point. There are still no well-established and well-understood project contract documents and agreements in this area. Documents which reflect the requirements of the knowledgeable owner who wishes to manage the project process himself or manage it through a project manager as his independent agent have not been well established.

The project manager is himself constrained by the often conflicting goals of scope, quality, time and cost. He may not appreciate that upon their successful attainment, the accolade so richly deserved by the team fades like a mirage as the serious business of start up and revenue earning gets under way. In fact, there are other objectives which in retrospect are often seen as of greater importance and should not be lost sight of. These include client satisfaction, follow on work, and business development spin-off for the project manager's own company or division. A tightrope walk indeed.

Management of Principal Parties  Management of Principal Parties

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