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Project management essentials
Winners give it a high priority and common sense approachBy MICHAEL D'ALESSANDROPSMJ Resources, Inc. In today's heated economy and complex design world, project management has never been more essential to success. It's even more important for the small projects than the large ones. Does the following story sound familiar? A client wants a design firm to complete a small project over a couple of weeks. In fact the project is so small, the client authorizes the firm to proceed with the work via fax authorization. The written authorization states that since the project is small, the design firm should simply invoice for the charges incurred with no limit on fees. The design firm is excited about the new work and views the time and expense, no limit authorization as a low risk project. The work is completed in a way that meets or exceeds the client's expectations.
But the client is surprised by the $10,000. He thought it should be no more than $6,000. After all, it was only two weeks worth of effort. The design firm is committed to client satisfaction, and in the interest of retaining the client, the parties agree to split the difference and settle on $8,000. What was considered a low risk project has resulted in a $2,000 write-off!
A better balanceMost professional design firms view time-and-expense, no-limit contracts as having the lowest financial risk. In fact, financial data suggests otherwise, as summarized by surveys conducted by PSMJ Resources, a management information firm based in Newton, Massa-chusetts. PSMJ data suggests that time-and-expenses, no-limit contracts result in the greatest percentage of write-offs as compared to other contract methods. Why is this? Because of the lack of defined expectations. There is always a limit! A time-and-expense, no-limit contract simply means the limit has not been documented and mutually agreed to by the design firm and the client. Someone is sure to be surprised. This was reinforced during a recent conversation with a representative of a prominent insurance company. This company is involved in underwriting professional liability policies for architects and engineers . When asked about the primary reason these professionals are sued by clients, the answer was not negligence, but rather the lack of a well-defined scope of work. The scope of work is the foundation of project management. What is project management? Conventional thinking has it that it is practiced only by design professionals. Yet even for design professionals, project management has not received the credibility it was due. Often clients would not recognize its value as a professional service, and challenge budgets that included hours for project management. In a break with tradition, project management has been increasingly accepted as a separate discipline in recent years. Nothing demonstrates this better than the growth of the Project Management Institute, a non-profit organization dedicated to the advancement of project management. PMI's global membership ranks have more than doubled over the past three years. Designers, clients, and owners alike are recognizing the value of project management and how weaknesses in project management can have dire consequences. But often we fail to recognize the pragmatic elements of project management by embracing the theory of what it should be. Project management is the implementation of common sense and not a proprietary process of using forms, checklist and software. Forms, checklists, and software are simply tools to accomplishing the end result. Simply stated, project management is the process of defining expectations. Having established an appropriate understanding of expectations, the process involves establishing a baseline to measure performance during project execution. How much should project management cost? As a general rule, it should represent 10 percent of the total hours for a small to medium size project. A small to medium size project represents fees less than $1 million. Larger fee projects will see project management hours less than 10 percent but rarely less than 5 percent. These hours should be used to complete the project plan including development of the schedule and financial baseline, periodic status checks of the project, and client liaison to understand expectations. Should you add project management hours if you presently do not include these hours in your project budgets? Absolutely not! By investing these hours in good planning and tracking, you will see a savings in excess of those hours from improved efficiency and reduced rework in the project. One proven tool for better planning involves preparing a project management plan. One could argue that the majority of the planning activities should be completed as part of the proposal process. Developing a project management plan then involves repackaging that baseline scope, schedule, and financial information and communicating the information to your team and your client. Typical contents of a plan include:
Our focus as architects and engineers tends to be the creative or technical aspects of our practice. However, the reality is that we must fulfill our passion within the confines of a business. How do we balance the need for profitability while at the same time meeting or exceeding our client's expectations? The key to accomplishing these conflicting objectives is implementation of sound project management techniques resulting in mutual agreement of expectations.
Michael D'Alessandro is an engineer and consultant with PSMJ Resources, Inc., specializing in project delivery. Prior to joining PSMJ, he spent 20 years in the design industry, the last 17 of which where with Parsons Engineering Sci-ence, a unit of Parsons Infrastructure & Technology Group.
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