A survey conducted by the Construction Financial Management Association revealed that participants felt their companies were ineffectively managing several key functional areas of business.
• 54 percent of respondents said contractors were ineffective in managing people;
• 37 percent said project sales and customer satisfaction management were ineffective;
• 35 percent said there was ineffective management of risks insurance, contracts, risk and safety; and
• 27 percent said there was ineffective management of project delivery.
Marc McKerley, CPA, partner at Crowe Horwath LLP, said the survey demonstrates the challenges the construction industry faces and the opportunity for improvement through a strategic planning process.
“Every business is faced with the same issue — limited resources. A dollar can only be used once. Material can only be used once. Organizations that best leverage limited resources have a greater chance to succeed,” McKerley says.
Smart Business spoke with McKerley about ways companies can simplify the planning process and implement performance management techniques that will get results.
What are the barriers to an effective implementation strategy, and how can they be overcome?
Several barriers exist that prevent successful implementation of strategic goals:
• Management — Management is busy ‘putting out fires’ and rarely discusses strategy.
• Resources — Budgets often are not linked to strategy.
• Vision — The work force does not understand management’s strategy.
• People — Incentives are not linked to strategy.
Overcoming these barriers is crucial to successfully implementing strategy. Using tools like strategy maps can help translate vision and strategy into action and results.
How can a project scorecard help with performance management?
Most people think of a scorecard as a tool to measure financial performance. Building an effective project scorecard that moves beyond the traditional financial performance model requires an understanding of the construction project lifecycle, including the significant risks inherent throughout this process and business processes designed to effectively manage those risks.
A well-designed project scorecard should include key processes intended to manage critical risks throughout the construction lifecycle. It should also define key performance indicators (KPIs) that represent desired performance thresholds. The exhibit provided (on the following page) illustrates a working grid for building a project scorecard for several key areas of the construction lifecycle. Other important factors in building a scorecard include:
• Weighting critical processes or KPIs.
• Identifying the source of data input. Is the information contained in the existing accounting information system or does it reside in spreadsheets or manual logs? Accessibility of the information is critical.
• Who is the responsible person? The project manager? The contract administrator? The project accountant?
The final scorecard can take many forms. Some choose to use a traffic light approach:
• Green light — Acceptable and desired compliance and performance.
• Yellow light — Warning signal that compliance and performance are below desired levels.
• Red light — High-risk issue that requires immediate attention.
When implementing performance management in your company, remember the following simple goals:
• Know what you’re trying to accomplish and why;
• Keep yourself accountable; and
• Move beyond traditional financial ‘rear-view mirror’ performance measurements.
Marc McKerley, CPA, is a partner with Crowe Horwath LLP. Reach him at (214) 777-5209 or firstname.lastname@example.org.
SAVE THE DATE Webinar: Implementing Performance Management Techniques, Wednesday, Feb. 20, at 10 a.m. CST. To register, visit www.crowehorwath.com/events.
Most business owners are not in the real estate or contracting business. So, when they’re relocating, building or renovating, they probably have limited resources or knowledge when it comes to managing this time-consuming process. They have a choice: go it alone or align with a professional that has the technical expertise to manage the delivery of the project within clearly defined scope, schedule and budgetary requirements.
“Whether it’s a ground-up new building construction project or the renovation and remodeling of space, project managers are subject matter experts that can drive value in their ability to identify opportunities and mitigate potential project risk events,” says Eric Verh, director of Project Management at CBRE, Cleveland. “They can properly manage and coordinate teams of multidiscipline design, construction and vendor professionals and provide strategic consulting through all phases of the project’s lifecycle.”
Smart Business learned more from Verh about the value of project management, whether you’re facing a new building construction project, renewing a lease and renovating, or looking for new space and considering landlord turnkey or tenant-controlled improvement projects.
When should a user or owner of real estate hire a project manager to assist in the design and construction process for a proposed project?
The simple answer is the sooner you bring a project management professional in to manage a project the better. During the pre-construction phase, typically where only 20 percent of the project cost is incurred, 80 percent of the value creation can be realized in value engineering, design efficiencies and speed to construction that a project manager can lead if brought on board at the conception of an idea for new space or renovation or contraction. Full-service companies such as CBRE offer strategic consulting through business and conceptual planning stages of a project before the design actually takes place. CBRE Project Management offers clients up-front assistance during their space and building search. By providing comprehensive financial and qualitative analysis of alternative sites or buildings, our clients understand overall budget and scheduling implications associated with each site and, therefore, are better positioned to negotiate more advantageous lease or purchase terms with prospective landlords and sellers.
Further, through proper planning and strategy development early on there are many unforeseen scheduling and budgetary missteps that can be avoided. Understanding roles and responsibilities of those involved in a project and clearly defining the approval process for critical issues are often overlooked. If understood early on, extra time can be planned into the schedule and an expedited process for time-sensitive matters can be developed by a project manager to reduce time and expense.
What types of building owners or tenants are best served to retain the services of a project management professional?
Small, medium and large companies that have single building project needs to corporate and institutional owners and users of real estate on a regional, national or global basis can benefit from the services of a project manager. For example, companies looking to lease or own real estate can focus on their core business while allowing the project manager to oversee their best interests in managing a specific construction project that aligns with the company’s expectations in terms of quality, cost and timing of delivery.
On the other hand, corporations that may be rolling out national rebranding initiatives that either fully outsource or supplement their existing staff with a project management representative can benefit from local market experience and relationships. It runs the full gamut, from small companies to large corporations, whatever their real estate project management needs may be.
Even on small lease renewal projects involving simple renovations of just new carpet and paint, users of real estate may not understand the full implications of what that may mean. For example, the type of carpet selected can lead to the need to tear down, reinstall and re-cable workstations and the moving of employees and their contents, all of which can significantly add to project costs and employee disruption. Project managers can help companies identify these implications up front and to make decisions for alternative material selections or scheduling adjustments to mitigate such costs and disruption. So even on small projects, it’s beneficial.
Does the value offered by a project manager offset the associated costs for these services?
It is a win-win situation in the sense that a full-service project manager can represent a client’s best interest, while concurrently offering value engineering suggestions and efficient project planning, scheduling and design consultation from project inception through furniture, fixture and equipment selection and move services. For instance, at CBRE, our project management platform often saves our clients on average $2-$3 for every dollar spent on project management fees. It’s our ability to offer up strategic project solutions and best practice methods, as well as our preferred national vendor pricing for building materials and systems that are passed through to our clients in the form of cost savings from day one.
How can a business reduce operating costs through project management?
It comes down to details and aggressive and proactive planning in design early on that the project manager can help manage that process to reduce operating expenses within a tenant space. Selecting appropriate types of construction materials and design, as well as types of finishes, lighting, building controls and water usage can all lead to a more efficient building, which costs less to maintain and operate. Sustainability is big these days. For instance, LEED-certified projects can include environmentally friendly solutions that provide cost savings over time. Project management can not only help clients get into a new building or space, but also going forward have the savings of operational efficiencies.
Eric Verh is director of Project Management at CBRE, Cleveland. Reach him at (216) 363-6455 or email@example.com.
Insights Real Estate is brought to you by CBRE
G. Michael Campbell and his company MCA International LLC specialize in business transformation projects from launching or developing new products to changing organizational structure. Campbell, who is president of MCA, has seen countless project undertakings that have both ended well or turned out to be project management nightmares.
From planning and tracking to specifications, budgets and timelines, strong project management can be a very big differentiator in your company. To aid companies in project management and how to develop the best techniques, Campbell wrote his latest book, “The Idiots Guide to Project Management, Fifth Edition.”
While Campbell says that you don’t have to be a genius to run a project, you do need to understand that doing a project by following some best practices will make a world of difference.
Who would get the most out of this book?
The book is really targeted for a more experienced manager who has suddenly been handed an important business project for them to manage. They understand the importance of it and they recognize the business need, but they really don’t understand how to manage a project beyond sitting down and preparing a checklist. They’re really looking for some practical guides and some practical tips that they can apply right away to increase their chance of success on this.
What do leaders often overlook in project management?
Leaders should keep the project focused more on the business goals and objectives. You need to stop at certain points and do a recheck and say, ‘Is this project still on track to deliver the business goal that I was looking for?’ Project managers want to deliver on budget and on time and that’s good. From a leader’s perspective you want to be focusing on the business value that you were looking for. The business leader is the one that has to focus on that. Business leaders can read this book and begin to make the connection for keeping that business focus on any of their projects or initiatives.
What are common mistakes that this book addresses?
The first one is keeping the project aligned to the business objectives that where the reason the project was sanctioned in the first place. Some projects, particularly the business transformation projects, can often take two or three years to complete. The business landscape can change pretty dramatically over a two- or three-year period and one of the problems is that the project team over that period of time really didn’t adapt to the new business landscape. If they had kept abreast of changes and built those into their project, they would have been much better aligned with the business and the business goals when they finally delivered on the project.
Another one is the scope of the project. What I’m going to deliver and how it’s going to be judged is really not well-defined. When you don’t have a project with a well-defined scope, you’re really not certain what exactly you’re going to deliver and what kind of requirements it’s trying to achieve and you begin to wander around and you waste a lot of time and money bumping into walls.
The last one is just keeping your stakeholders aligned and informed with what you’re doing. Particularly in these larger projects, you have a lot of people that get impacted by the projects and making sure they’re all informed and understand and ready for it is really critical.
What is the role of senior management during a project?
The problem with senior managers in these things is typically when they’ve decided to do a project they’ve been thinking about it for a while, considering it against other options and alternatives, and once they make a decision, they’re ready to dust off their hands and move on. The fact is as a project manager, occasionally I’m going to need their help for certain kinds of business issues. Senior managers need to understand they still have a role in this when the project starts. They’re not going to be in the day-to-day operation of it, but I’ve got to be able to have them ready when I need them.
HOW TO REACH: MCA International LLC, (281) 768-8014 or www.mcaintl.com
When you think of project management, you tend to think of massive IT implementations, construction projects or enterprise-wide endeavors. Or, you think of meetings, bureaucracy and headaches. But truthfully, almost any change you implement in your professional life can be broken down as a project. The Project Management Institute’s definition of a project is “a temporary endeavor undertaken to create a unique product, service or result.”
“Through the use of project management techniques, companies have found a new and exciting culture change that can drive project and organizational success,” says Ed Siurek, director of Quality for Corporate College.
Many Fortune 500 companies have successfully incorporated this methodology into their way of doing business. But how can every organization take advantage of this opportunity? The key to understanding what is necessary and how to achieve those goals may lie in providing project management certification opportunities for employees.
Smart Business spoke with Siurek about project management and the importance of certification.
Why do projects fail?
The Bull Survey (1998) was conducted to understand how and why IT companies in the UK had project failure. It showed three primary causes: breakdown in communication (57 percent), lack of planning (39 percent), and poor quality control (35 percent) as the primary reasons. Given that most companies think they do these things well, it gives reason for pause. How can we do these things better and what are we doing wrong? The secret may lie in what we think project management really is. Companies typically rely on individuals rather than methodology. If everyone is not on the same page as the project manager though, problems can and often do arise.
What are the benefits of formal project management?
It is process based and allows everyone to work from the same philosophy. Creating organizational standards, templates and procedures helps increase productivity, communication and employee understanding of the task at hand. Most employees involved in a project know what needs to be done but too often the lack of control and ability to manage all project details can be overwhelming. Using a formal approach keeps everyone on the project team on the same page and moving in the same direction. They know each step of the process and the expectations, and it forces everyone to think about risk and unforeseen obstacles. Planning for these obstacles can keep them from becoming project derailments.
Why is certification so important?
Certification in project management is not for everyone. It takes training, experience and using proven methodology to be successful. The certification process requires not only up-front training, but documentation of past experience, testing and continuing education. Those that gain certification understand the importance and have the skill set to drive all aspects of a project to successful completion.
Certification to any of the project management standards is a great opportunity. Individuals can apply the skills learned across most industries and professions. It is a methodology that is highly valued by employers because of its success rate and discipline.
How does a certification impact your business?
Assigning a certified project manager to a project helps minimize risk. Projects are managed in a highly effective and efficient manner that produces on schedule, on specification and on budget results. Project managers understand that not every variable can be accounted for in a project, but they have learned how to manage and mitigate those risks before they become larger problems. Success in projects typically yields higher return on investments (ROI) and a better end product.
There is also a cultural benefit to providing a consistent approach. Employees understand their responsibilities and spend less time away from daily tasks while still being able to focus on the project. Highly engaged employees and successful projects will both contribute to a better working environment and higher returns for any organization.
What about the cultural aspect of project management?
When projects work properly and employees see success, confidence grows in the methodology. They begin to incorporate some of the tools into their work. Everyone wants to succeed, so what better way to do it than by using something that is proven? Soon, it becomes a way of doing business. Not only does this create commonality in practices in the company, but it also makes projects more successful. Project management can influence many aspects of an organization. Take, for example, a customer complaint. Using project management methodology, the complaint can be taken, evaluated and processed in a systematic manner. The reason for the complaint may lead to other projects to correct the product, process or system. The initial documentation from the first project will help to ease each subsequent project.
Who needs to get certified in an organization, and what certifications should they seek?
Certification is available ranging from the Certified Associate in Project Management (CAPM) to the Project Management Professional (PMP). Which certification is best for a particular employee? It depends on that individual’s experience. Experienced project managers will seek a PMP credential while those just entering the work force will seek the CAPM. Both provide valuable insight and training and can be assets to any project team and organization. As CAPMs continue to progress and gain experience, they can take on more responsibility and more complex projects. Ultimately, this leads to seasoned project managers. Once the CAPM has gained the necessary experience, they can gain further certification by means of the PMP.
Ed Siurek is director of Quality for Corporate College. Reach him at (216) 987-2838 or Edward.Siurek@tri-c.edu.
Projectization is increasingly embraced by companies to cope with the challenges of the competitive global environment such as tighter budgets, diminishing resources, aggressive time constraints and competition to improve efficiency. The short-term ventures allow companies to maximize precious resources and tools while responding quickly and efficiently to changing market conditions. But today’s burgeoning portfolios pose tactical and strategic challenges that can create an operational nightmare or, worse yet, produce a string of project failures that can derail an entire company.
“Managing multiple projects is a competitive necessity,” says Dr. Vish Hegde, associate professor of management for the College of Business and Economics at California State University, East Bay. “But unless executives provide direction so projects are prioritized and aligned with the company’s strategic and financial goals, they can create an operational mess and cause project managers to fail.”
Smart Business spoke with Hegde about the challenges of managing multiple projects and how executives can avert operational meltdown by providing guidance and considering multiple characteristics when organizing projects.
Why is multiple project management so challenging?
Occasionally a project is so large and complex it requires the undivided attention of a single manager. In many companies, it is not uncommon to see project managers have to simultaneously juggle as many as five to 13 mid-size projects without dropping the ball. Their mission is complicated by the fact that projects are constantly being added, changed, or removed in response to changing market conditions, which alters the dynamics of the portfolio and forces managers to cope with an inefficient workload or fight for limited resources. Executives need to consider several characteristics when grouping projects or assigning resources, and provide project managers with the tools to balance multiple priorities and make prudent decisions on the fly.
How should projects be grouped to create synergies?
Grouping projects randomly can create inefficiencies, so most companies evaluate tactical characteristics when organizing projects. Certainly managers should consider project duration and complexity as well as technical and functional similarities when grouping projects, but they also need to consider the objectives and goals of the project, time pressures, workflow and resource availability to optimize every possible synergy. It’s imperative that executives provide guidance so project managers can balance tactical needs with strategic considerations and optimize efficiencies by sharing common resources.
What should executives consider when assigning projects?
Realistically, project managers can’t handle too many simultaneous projects without affecting quality and efficiency. If they’re juggling too many ventures, project managers will spend most of their time transitioning and won’t have time to dive into detail, devise a plan and actually lead the project. In fact, they’ll be inclined to simply go with the flow, which is symptomatic of an over-leveraged project manager. Balance a project manager’s slate of assignments by considering the mix, types and phases of the various initiatives in addition to his or her capabilities, because a project manager needs a broad range of technical and non-technical skills and the ability to multi-task in order to master a complex portfolio.
How can resource allocation and planning create efficiencies?
Sometimes CIOs launch multiple projects without considering the availability of critical resources, so employees struggle to balance conflicting priorities as project managers haggle for their services. Consider projected completion dates and the number of projects in the queue when evaluating the availability of shared resources as well as the organization’s overall capacity to handle a large portfolio. Help project managers avoid conflict and optimize scarce resources by providing benchmarks or a decision template that spells out the company’s priorities and the best way to schedule and allocate shared resources in various situations.
How does resource scheduling fit in?
Team members have to refocus and get their bearings each time they switch assignments, which impacts productivity and may ultimately delay the project portfolio. Executives should consider these challenges when scheduling shared resources and provide training in time management and multitasking to enhance their basic competencies. It’s important to control costs by leveraging the cost of human capital, but, at some point, over-scheduling critical resources becomes counter-productive.
Should project managers consider project interdependencies?
Certainly executives want to maximize the savings from working on several interdependent projects and select ventures that maximize investments. To achieve this important objective, the CIO should provide guidelines to help project managers select interdependent projects from a bank of possibilities, since their priorities and schedules could change as projects are added or removed from the process. Project managers should evaluate several criteria when making their selections, including the project’s benefits, available resources and technical synergies.
Dr.Vish Hegde is an associate professor of management for the College of Business and Economics at California State University, East Bay. Reach him at (510) 885-4912 or firstname.lastname@example.org.