A Presentation to the Construction Industry in the cities of Bangalore, Bombay, Calcutta, Madras and New Delhi on behalf of the Consultancy Development Centre, New Delhi, India - January 1990

Table of Contents | Introduction | Understanding | Environment
Education | Summary | Appendix A | Appendix  B | Appendix C

Understanding and Running a Successful Project

As projects become larger and more complex, the effective management of them becomes proportionally more significant. For these projects, the consequences of decisions on, essentially, how well the project is to be managed, with commitment to communication and coordination, will generally far outweigh the consequences of how well a specific technical role is performed. The tighter the schedule, the more this need is magnified.

The required skills are thus quite different from the technical design, engineering or construction skills usually associated with most projects. Indeed, on a large complex project there are aspects outside of the scope of these technical areas that have to be well managed, if the project objectives are to be met. For this reason, great emphasis must be placed on the project management team approach, backed by broad based specialized resources.

2.1 The Keys to Success

The key to the successful management of any large project is therefore highly dependent upon the following:

  • A demonstrated leadership through a management organizational form capable of providing effective planning and management
  • The use of a project management system as a model for management philosophy and strategy
  • The use of proven, contemporary project management theory and practice in planning, organizing, leading and controlling the use of project resources

In the last analysis, the test of effective project management is the degree to which the project objective has been accomplished on time and within budget to the satisfaction of the "stakeholders".

This means working with people to achieve results. This is especially true of highly technical and complex environments such as those involving modern day construction projects. Consequently, it is essential that the project manager and his team are sympathetic to, and comfortable with, their cultural and organizational environment. Therefore, let us first consider the traditional corporate management environment.

2.2 Traditional Corporate Management

Traditionally, management education has not been concerned with projects but with the running of an on-going enterprise. Time is not an immediate concern. Change is minimal and protracted, and hence can be thoroughly programmed and progressively integrated. The work places of such enterprises are bounded by traditional hierarchies, lines of authority, centralized control and repetitive, assembly-line type jobs.

Unfortunately, this traditional corporate management approach breaks down where projects are concerned. Consequently, new management relationships are required, which tend to cut across the normal flow of authority and responsibility and radiate out side of the functional unit. Happily, project management is a much more exciting and challenging work environment, even though a clear understanding of its concepts is relatively new.

This is because Project Management is a different type of management applied to project-type work. However, associated with almost all capital projects are many people who are not trained in the process of bringing a capital project on stream. Without embarrassment, I include politicians, owners, sponsors, financiers, bankers, operators, lawyers, accountants and, I regret to say, even engineers.

Thus, it is essential to establish competent Project Management capability long before even putting in place appropriate design, engineering or construction capability. But first let us understand the project manager's organizational environment.

2.3 The Project Manager's Organizational Environment

Typically, the project group to be managed will consist of consultants, contractors, specialists, the staff of the owner and the project control team itself. A typical situation is shown in Figure 1. Each unit or person in the group has two allegiances or "bosses", the project manager and his "home" department or firm. This dual reporting relationship is often referred to as a "matrix" structure and accounts for much of the complexity of project management on a large project.

<b>Figure 1:</b> <b>Project management in a corporate environment</b>
Figure 1: Project management in a corporate environment

Ideally, the project manager will receive an "Authority" or "Mandate" from the project's "Executive", i.e. the party that has the authority to approve further project funding. This mandate should be to direct all operational activities including planning, design, procurement, construction and commissioning. As such, he will have requirements for such project support activities as estimating, forecasting, scheduling, procurement, project accounting, and progress reporting.

In addition, on a larger project, he will require other more specialized services such as financial accounting, payroll, systems development, personnel, legal, public relations and property acquisition. Because they do not normally affect project control decisions, these activities are usually carried out by independent departments or companies, not under the project manager's direct supervision. Nevertheless, if the project manager is to get the quality of information and service that he needs, he must maintain good communications with all such parties.

The project manager will also be required to report to the Executive on a regular basis. For this he must render a succinct digest of the available information on progress, forecast, resource requirements, and actions required.

In contrast, the Executive's interest will tend to focus on expenditure to date, forecast final cost, and the scheduled commencement of the facility.

2.4 Project Phases

As shown in Figure 2, there are four distinct project periods which make up the typical project life span.

Figure 2: Project Life Span: Four Basic Periods
Figure 2: Project Life Span: Four Basic Periods

æThese four basic periods are:

  • Concept - for developing the project parameters in outline
  • Development - of the plan and design and definition of the facility
  • Execution of the plan
  • Transfer of the completed facility over to operations.

These periods or phases may be more easily remembered by the letters C-D-E-F standing for: Conceive Develop Execute andæFinish.

Figure 2 also shows typical activities which are required in each phase for building, say, a hydro electric facility or a process plant. Of special significance is the variation in the level-of-effort (LOE), which is associated with these activities, and which is required to conduct a project through its life span. Note especially that "approvals" are called for at the end of each of the first two phases. These are really like "gates" between major phases of the project, also known as "major milestones", or "Executive Control Points".

2.5 Executive Control Points

Every project should have Executive Control Points acting like closed gates which only open following Executive Approval, see Figure 3. At these points, the project manager presents certain predetermined "deliverables" to the Executive that will enable them to make an informed decision on a "go" or "no-go" basis for further work.

Figure 3: Project Life Span Control Gates

Figure 3: Project Life Span Control Gates

It must also be emphasized that it has been estimated that it costs about ten times as much to implement a change in each succeeding phase. Hence, during construction, changes (and consequent delays) will cost ten or more times as much to implement, compared to making the same changes during the planning phase.

Therefore, these points provide the opportunity for the Executive to exercise a high level of control over the shape and timing of the project. The Executive can thereby ensure that either the project is developing in a manner consistent with their objectives, or the project can be modified with minimum upset if the objectives have changed. It is also the opportunity for the Executive to provide a morale boost by injecting enthusiasm, excitement and discipline into the project team.

Equally, these formal approvals provide the project manager with his authority to drive the project through to the conclusion of the ensuing phase. It is also his opportunity to ensure that the Executive is behind him and that he is proceeding in the right direction.

Undoubtedly, the most important control point in the project life cycle is reached at the conclusion of the development phase because this marks the project's transition from feasibility to implementation. At this point, a project "go" decision must be based on sound and well documented information. This information should be presented in a comprehensive document referred to as the Project Brief. It is the means whereby the Executive know precisely what they are getting.

2.6 Project Brief

The Project Brief, when approved, becomes the prime source of reference for the project implementation phase. A good Project Brief will include:

  • Executive summary
  • General statement of business aims and objectives
  • Technical approach
  • Statement of project scope
  • Regulatory approvals and requirements
  • Preliminary design sketches, block diagrams, standards; o project team organization
  • Implementation schedule
  • Procurement plan
  • Project estimate and proposed appropriation budget
  • Other resources required from the sponsoring organization (e.g., land, space, staff, etc.)
  • Financial statement and economic projections
  • Cash flow projection
  • Justification, alternatives; and
  • Areas of uncertainty and risk.

2.7 Project Management Functions

The management functions involved in a project typically include scope, quality, time, cost, risk, procurement of human and material resources, and communications management. Each represents a separate discipline calling for special training, and the requirement for each function depends on the size and nature of the project in question. These functions are now considered to be part of the "Project Management Body of Know ledge" or PMBoK as it is called, as developed by the Project Management Institute.

This subject is discussed in rather more detail in Section 4. A copy of the PMBoK is available from the Project Management Institute, in Pennsylvania, U.S.A.. However, the functional descriptions given in Appendix A will be more familiar to construction people.

2.8 Project Control Cycle

The basic cycle of management control can easily be remembered by the mnemonic "POEM" standing for: Plan, Organize, Execute, Monitor-and-control.

Plan - The first step is to plan the project with respect to scope, quality, time and cost. What precisely is to be done? Why? If it is, say, a new plant, what is the purpose and process in the plant? How is the job to be done? Why should the project be done one way rather than another? Indeed, why should it be done at all? Where is it to be built? Who will design and construct it? What resources in terms of materials, manpower, finances and time are required? What risks are involved? What strategies are required to deal with unplanned occurrences?

Organize - The second basic step is an extension of the first. A careful analysis must be made of the various activities required in planning and executing a project, to provide a closely related project team structure. For every project activity (e.g. programming, estimating, design, planning, procurement, construction) there must be a very clear definition of who is responsible, and who has the authority to execute that activity. That person must also have a very clear idea of its scope, quality, time and budget.

Execute - The methods by which the Plan is executed or implemented are critical. No project manager (or other member of the project team) will be successful unless he understands the basic needs of human beings, their strengths and weaknesses, mental and social abilities, and how to weld a complex mixture of humans into a dynamic and productive team. The single most important characteristic of a successful project manager is his ability to manage people.

Monitor and Control - Continued monitoring, reporting and fore casting must take place during project implementation, and the forecasts compared to the Plan. Deviations must immediately receive management attention, either by reallocation of resources or modifications to the Plan (with Executive approval if the project objectives are affected). Without a detailed Plan, there is no baseline for comparison, no determination of deviation, and hence no satisfactory basis for corrective action.

Clearly then, a successful project management system is one which monitors and responds by a control action as early as possible after an event. Figure 4 shows the elements of a project control system.

Figure 4: Elements of a project control system

Figure 4: Elements of a project control system

2.9 Function-Process-Time Relationship

æThe relationship between the functional components, the control process and the project phases may be viewed as three-dimensional. This relationship is shown in Figure 5.

The project life cycle is shown on the X axis with its classic four generic project phases, together with the typical variation in level-of-effort with which they are generally associated. On the Y axis are the major project functions to be managed, which in fact I believe apply to anyæ project, although they may vary in importance according to the field of application (industry). In other words, if project management is not paying attention to each and every one of these, then they are not so likely to get the best out of the project. On the Z axis is shown the traditional high frequency input-process-output-feedback control cycle.

æThe point is that this control cycle has to be applied to every one of the major functions as each of the latter are progressively "managed" through the project life cycle in order to reach the project's goals and objectives successfully.

Figure 5: The Function-Process-Time relationship

Figure 5: The Function-Process-Time relationship

2.10 Project Manager's Objectives

æIt follows from the foregoing that the Project Manager's personal objectives must be to:

  • Attain the willing commitment of people to assigned tasks
  • Achieve the coordination and collaboration of different work groups, responsibility centers, and entire organizations, including those of the owner
  • Achieve cooperation by placing a high premium on reliability and timeliness of information, and by discouraging unnecessary or irrelevant information
  • Steer the project to completion in an orderly and progressive manner
  • Ensure that trade-offs between scope, quality, time and cost are satisfactory and acceptable, and are seen to be so, and
  • Encourage the development of personal and professional skills amongst the project participants

2.11 Work Breakdown Structure

The process of project control described earlier requires the establishment of a firm base line defined in terms of scope, quality, time and cost on a compatible basis, and in units that can be more readily handled. One of the more important and powerful techniques for managing a large complex project, therefore, is the Work Breakdown Structure (WBS), which greatly facilitates control.

A Work Breakdown Structure (WBS) is a task-oriented "family tree" of activities, which organizes, defines, and graphically displays the work to be accomplished.

By means of a WBS the scope of the project can be broken down into a suitably coded structure that identifies manageable segments with clearly assigned responsibilities. See Figures 6a, b, and c for a typical example.

Figure 6a: Top level of a process plant project WBS

Figure 6a: Top level of a process plant project WBS

Figure 6b: Detailed WBS for the Conception and Definition phases

Figure 6b: Detailed WBS for the Conception and Definition phases

To be effective a WBS must:

  • Establish an information structure for describing the project's scope in entirety
  • Serve as an effective means of communication to integrate the objectives and activities of all the internal and external organizations involved in the project
  • Represent the planning of the project, step by step
  • Separate sequential and parallel activities assigned to different groups who will schedule, measure and control their own performance, and
  • Reflect the procurement strategy during the various stages of the project's life cycle

Figure 6c: Detailed WBS for the Execution and Transfer phases

Figure 6c: Detailed WBS for the Execution and Transfer phases

In practical terms this WBS and corresponding coding also requires:

  • Early implementation
  • Flexibility and expandability
  • Universal application
  • Simplicity, and
  • Capability of summation.

The "manageable segments" of the project referred to above, are called Work Packages. Thus, a Work Package describes the work to be performed by a specific organizational unit, and serves as a vehicle for monitoring and reporting on progress, cost and schedule. See Appendix B for essential rules.

All work packages fall into one of three different categories, namely:

  • Discrete Tasks which have a specific end result or objective. These normally cover 60 to 75 percent of the total work in a project.
  • Apportioned-effort Tasks which can be directly related and apportioned to discrete tasks. Examples include quality control or inspection. These tasks are required in support of the discrete tasks, and hence, their schedule and budget can be related to the discrete tasks.
  • Level-of-effort Tasks which have performance standards rather than specific end results. These consist mainly of the overhead accounts, e.g., management, administration, liaison, coordination, etc. These tasks are characterized by relatively level, time-phased budgets and are not time-limited as in the case of the discrete tasks.

2.12 Prerequisites for a Successful Project

The Project Executive has a vital role to play and should insist on the following:

Executive Support - The Executive must clearly demonstrate support for the project management concept by active sponsorship and control.

External Authority - The project manager must be seen as the authoritative agent in dealing with outside parties, and be the responsible and single formal contact with them.

Internal Authority - The project manager must have the necessary managerial authority within his organization to ensure response to his requirements.

Commitment Authority - The project manager should have capability and authority to control the commitment of funds within prescribed limits.

Competence - The project manager and his team members must be competent. Other functional personnel assigned to the project must also be competent.

Project Team - The project manager should have a say in the assembly of his project team, which will help him to obtain their personal commitment. The private sector should build up the best source of expertise.

Project Manager Involved in All Major Decisions - No major technical, cost, schedule, or performance decisions should be made without the project manager's participation.

Management Information Systems - Effective project management information and control systems must be in place, preferably with third party observation, scheduling and estimating resources.

While the foregoing do not necessarily guarantee success, their absence will certainly make success more difficult to attain.

Introduction  Introduction

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