Thursday, April 02, 2009: 04:40:32 PM

Project Management

CHALLENGES AND REWARDS

Kalyan Vaidyanathan and Ravi Mundoli emphasise the importance of active project plans for the successful execution of a construction project

It is widely acknowledged in the Indian construction industry that an effective project plan can be an important and useful tool in capturing information and enabling the smart execution of construction projects. The value of a project can be realised through better adherence to project plans, improvements in operational efficiency and increases in cost savings. In spite of the availability of planning and communication tools and technologies, project management in many cases is done in an ad-hoc manner. Project plans, once created, are only rarely updated. Does the construction process need to evolve? Will better training and education help? Are the existing tools and technologies capable of providing the necessary support? This article discusses these issues in detail.

Value of an updated project plan

To understand the benefits of maintaining an up-to-date project plan, it is necessary to identify who the various stakeholders in the construction process are and what is the value of having access to an updated plan for each of them.

Construction stakeholders

A typical construction project has many stakeholders. Some of the important stakeholders are identified and some of their interrelationships are captured in Figure 1. Together, the organisations and their interactions constitute what is effectively the construction supply chain. For example, in many cases, there is an owner (perhaps represented by a project management consultant (PMC)), the contractor and one or more labour subcontractors, equipment subcontractors and material suppliers. There are also architects, engineers and financiers involved in the construction project. These organisations bring together competencies in their fields of expertise and work in a virtual project organisation to execute the project. While they have to collaborate to successfully complete the project, in terms of the organisational structure, each of the entities belongs to different companies (typically) and as such is an external stakeholder in the project.

The unhindered flow of information in a collaborative manner across all these stakeholders is a pre-condition for carrying out effective project management. In a broader sense, it is also required for effective construction supply chain management.



Advantages of project plans

For seamless execution of a project from concept to commissioning, information flow across the construction supply chain has to be effective, efficient and timely. The information can be of different kinds: drawings and specificationsrelated information, schedule information, material stock and re-ordering information, payments and receivables information, etc. One could imagine that given the complexity of project organisation, there is tremendous value in keeping the plan updated and the stakeholders informed of the changes. During the construction phase, the project owner’s chief concern is to be able to take possession of the completed project in the lowest possible timeframe at the lowest possible cost, while meeting all the specifications. Owners need insight into potential schedule and cost overruns so that they can take appropriate operational and/or financial actions to mitigate the risk of slippage.

Depending on the type of contract, the contractor’s concern is to manage the cash flow of the project such that his business does not become highly leveraged. The risk to subcontractors and material suppliers could seem low. However, a potential failure of the project due to cost overruns and the inability to be managed efficiently could put their receivables (the labour and materials that they have supplied to the project) at risk, putting them at financial risk as well.

Some of the potential benefits of having better information are as follows:

  • Lock-up of working capital (that can be used more efficiently) can be prevented. This material is generally used elsewhere because of early (or late) mobilisation of labour and materials.
  • Schedule slippages that could affect the overall project delivery date can be addressed earlier and in a more proactive manner, thus mitigating the effect of the slippages.
  • Closer monitoring of big-ticket expenditure items such as expensive/bulk materials may help in preventing wastage and/or misuse.
  • The status of the project with respect to schedule, completed work, materials procured and consumed and costs can be obtained.


While these benefits are tangible and directly impact the bottomline, other intangible benefits may accrue. By keeping all the stakeholders informed (at the appropriate level), all parties can create and maintain a high degree of professionalism and reliability associated with them. Furthermore, a more efficient and systematic business process can be set up, which will enable better scaling up of the business without proportionately increasing resources and costs.

Hindrances to maintaining a plan
While there is an inherent and intuitive understanding of the issues associated with an outdated project schedule, it is a known fact that in many cases the plan is not kept up-to-date and ‘alive’ on a regular basis. There could be multiple reasons for this. At a macro level, the issues may relate more to culture, processes and awareness of the available technology options. The data collection for maintaining an updated schedule needs to take place at the ‘ground’ and site level. However, there may be a perception that collecting data is an additional burden, and it does not add value to the individuals involved. The people’s skills involved in a construction project vary from highly skilled to semi-skilled to unskilled. Typically, it is the semi-skilled and the unskilled who are closest to the ground in their ability to provide the data needed to keep the plans updated.

Within this stakeholder segment, there is a lack of education and awareness with respect to the importance of an updated plan and a lack of appreciation for the value of seamless information flow. Most of the information needed for proactive schedule management is currently being obtained, although through different methods such as visiting the site personally and/or having phone conversations across multiple stakeholders to gauge the project’s progress. Any system designed to capture data will need to ease this burden and seamlessly integrate into the current field level of the daily processes, without increasing the workload of the already overworked team.

Even if raw data is available, it takes considerable human effort to collate across several media (verbal, paper, electronic, etc.) to produce concise status reports on projects, at the level at which project managers and others in management positions can find it functional. The process of analysing and summarising data from these diverse sources is time-consuming and labour-intensive. Finally, the beneficiaries of an updated project plan are unclear. At best, the perception is that the owner gets the project on time and within budget. However, the other stakeholders do not share the economic benefits and, hence, the motivation to keep the plan updated is not necessarily high.

As previously stated, each of the stakeholders takes on a risk to a varying degree if the plans are not updated. There is a varying degree of success across the industry in tackling this problem. Some have set up robust processes and documentation standards to capture progress, discuss issues and mitigate the risk of schedule slippage, but these are not necessarily the norm in the industry.

New approaches
Fortunately, there is light at the end of the tunnel. Visionary leaders from each of the stakeholder segments are awakening to the fact that it is beneficial for the members of the project organisation to work together. There is also a learning and awareness from watching other industries, particularly manufacturing and logistics, to realise the value of better information management in their supply chains. Also, during the past few years, there has been an evolution of tools and technologies and a better understanding of the construction processes to effect changes.

Change of culture

The organisations that wish to achieve better project planning and execution capabilities have realised the value of educating all its members, particularly the field personnel, about the various processes involved in the construction project. They feel that change management needs to be effected over time and sometimes needs to be instigated by providing economic and professional incentives. They have started to examine and measure continuous improvement, both in terms of personnel and processes. The availability of reliable data and methods of analysis is a pre-requisite for measuring progress and identifying areas for improvement.

Evolution of processes

There is an increasing awareness in the industry on the value of collaboration. Lean construction techniques have proven that project costs and schedules can be predictably controlled and monitored. Leading project teams are willing to work on integrated project delivery-based contracts, wherein each stakeholder shares the risks and rewards of the project through open and transparent sharing of information.



Evolution of tools
There have been changes and progress in the evolution of tools and technologies. The communications revolution on the Internet and in mobile telephony is the harbinger of this change. For enhanced communication, there is a near ubiquitous use of cell phones among those involved in the project. There is an increasing comfort among people while using computers, e-mail, spreadsheets, word processing and CAD software to create and manage information needed for a construction project.

IT tools
Does this mean that the latest IT tools offer a panacea? Tools are effective only if the following requirements are met:

  • The people using them and the data that is fed into them are effective.
  • The tools are adopted by all the stakeholders in the construction supply chain.
  • The process espoused by the tools is easy to adopt and does not hinder the way the people work on a project.
  • The tools are extremely user-friendly with a minimal learning curve for those involved in the project.
  • The data entry needed to manage the project is not duplicated, and can be done at the source where data is generated (for instance, at the construction site).

Finally, for successful evolution of construction projects through modern tools and associated processes, the following are the requirements:

  • Phased roll-out: It is important that a ‘big bang’ purchase of tools does not take place across all projects and/or business units. The successful adoption of IT tools stands a etter chance if they are rolled out in a phased manner. Ideally, the purchase will be made to ilot the solution across one project and if that is uccessful, then the footprint will be expanded enterprise wide.
  • Measured return on investment (ROI): The ROI for any tool has to be measured. If the ROI is acceptable, then further roll-out can be justified more easily to the decision makers.
  • Aligned organisation: As discussed earlier, tools are only a means to an end—the proposed or future business process. The end users need to adapt to the new business process and work with the tools as they are learning to use them. To that extent, change management is critical to the success of any IT project. If needed, people should be encouraged, trained and/or even incentivised to adapt new processes (that is, the tools that enable the process).

A construction project works according to a plan, even if it is not immediately apparent for a given project. There is tremendous value in keeping the plan updated since it impacts a number of stakeholders of the construction supply chain. Today, tools, technologies and effective construction processes are available to efficiently manage this information flow across the stakeholders in the construction supply chain. However, successful construction supply chain management can only be effected through meaningful adoption of tools and processes in a phased manner.

The authors are the co-founders of Nadhi Information Technologies

 


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