Pinnell/Busch: Project Management Consultants for the Design & Construction Industry

American Society of Civil Engineers
Issues in Engineering - October 1980
By Steven Pinnell

INTRODUCTION

Engineering management is in many ways different from construction management, yet both should use the same project management concepts and techniques. Many organizations and individuals do manage both design and construction of the same project.

This paper reviews the definitions and practice of construction management and engineering management in order to examine their similarities and differences. It then briefly considers project management concepts and techniques that are applicable to each and concludes with some suggestions for better project management.

OVERVIEW

Definitions.—These include:

1. Construction Management—The management of construction projects and construction organizations by contractors. For clarity this is referred to as the management of construction.

2. Construction Management (CM)—A professional service to manage the design and construction of a project. This is referred to as CM.

3. Engineering Management—The management of design projects and engineering organizations.

4. Project Management (Project Management Services)—A professional service to assist the Owner and his architect/engineer in managing the design and construction of a project. This is designated as Project Management Services.

5. Project Management—The concepts and techniques of managing projects, whether it be a design project, a construction project, or a design and construction project. This is referred to as project management.

6. Design/Build—A method of project delivery that provides both final design and construction based on scope documents and other criteria. It combines professional design services with construction in one contract.

7. Turnkey—This is the same as design/build except that the designer builder provides financing until the key is turned over to the owner.

Management of Construction Projects.—This is the management of individual projects. It is usually accomplished by an isolated project team with a project manager, project superintendent, and project engineer at a site separate from the rest of the organization. The project manager generally has a great deal of authority and must be a good general manager. The project manager often operates with limited supervision or assistance, much as an independent company. Construction project management is a very different environment from CM or engineering management. A project manager must have an intimate knowledge of labor law and be skilled at dealing with union leaders and supervisory personnel. Also required is a great deal of experience in construction methods, equipment maintenance, building materials, and cost control, in addition to skill in project management techniques.

Although many construction project managers are graduate engineers, few are registered engineers. They also have different attitudes and philosophies than their contemporaries in engineering management.

CM Services.—CM is a professional service and a project delivery method that is quite different from the traditional design-bid-construct method. A construction manager, as an agent of the owner, manages the overall process. CM often, but not always, includes: (1) Fast tracking or phased design/construction; (2) multiple prime contracts; (3) special contract provisions such as guaranteed maximum price; and (4) modem project management techniques such as CPM/PERT scheduling, cost and scope management, cash flow forecasting, value engineering, etc.

CM is usually practiced with one of three basic approaches, which include:

1. General Contractor or GSA CM—A general contractor provides a guaranteed maximum price (after the basic design is established), provides input to the design process, and subcontracts most (or all) the construction work for the owner. The General Contractor CM often does a portion of the work with his own forces.

2. Designer CM—An architect/engineer manages the process and sometimes does the design. Characteristically, they place a heavier emphasis on design input and less on construction supervision. Sometimes the construction is done with one general contractor instead of multiple prime contracts.

3. Business Manager CM—A specialist in some business management area, like computerized data processing or scheduling, provides the same services but emphasizes cost/time tracking or some other management tool. Management of CM projects is an integrated effort of four teams: owner, architect/engineer, contractor(s), and construction manager. Each team manages their own part of the project and the construction manager integrates their efforts. The CM project manager must have a great deal of skill at negotiation and interpersonal relations. Other needs include expertise in the project management process and a good general knowledge of the design process, the construction process, construction methods, and the actual design for the particular project. CM project management is different from engineering management or the management of construction. The CM project manager usually has no direct control over the people doing the work but must rely on others to carry out the plan they have jointly developed.

The popularity of CM has encouraged a few unprepared or unqualified firms to offer CM services. Some problems, owner dissatisfaction, and some dissatisfaction in the CM concept have been the result. Hopefully, owners are becoming more sophisticated in identifying their needs and in the selection of qualified firms to do the job.

There are also some problems with the CM concept itself. Everyone should be aware of these problems and try to avoid them. The first problem is the name itself: “Construction Management." It really should be "design and construction management." Some people mistakenly believe that they have to have a contractor to do CM. There are many fine contractor CMs and, in fact, many of the largest and best CM firms are general contractors. However, a good general contractor is not necessarily a good CM. Many do not use CPM scheduling, value engineering, or project monitoring and reporting techniques. Some also have trouble working closely with designers and in providing a true professional service since their contracting work so often puts them in an adversary role.

Incidently, a designer CM also may not really have expertise in CPM scheduling, value engineering, cost management, etc. Just as there is a tendency for the contractor CM to be very skilled at the construction phase but less skilled in the design phase of CM, there is similarly a tendency for the designer CM to be less skilled in the construction phase. The business management CM also has an area of strength (usually CPM scheduling, cost management, computerized monitoring and reporting, etc.) and a possible area of weakness (design and construction methods).

The second problem with CM involves the difficulty of the task itself. The design of a major project, the construction, and the management of either are very challenging responsibilities. The integration of all and the management of the overall process is therefore complex. It requires an intimate knowledge of the design, of the construction, of CPM/PERT scheduling, cost estimating, value engineering, electronic data processing, human relations, and numerous other skills. Few individuals have a good grasp of the overall process and few organizations have the breadth of skills and experience.

Although it has a few problems, CM is an excellent professional service and project delivery system that more and more owners will be using in the future.

Management of Engineering Projects.—This is the management of an engineering design or planning project. It can be accomplished within a functional organization where a project manager is not designated. It can also be accomplished with project management.

Project management of an individual project can work in an otherwise functional organization. This may cause some problems but sometimes works very well to accomplish a high priority project within project objectives (usually expressed in terms of cost, time and scope/quality).

Project management of engineering projects can also be accomplished in a matrix organization. This is an organizational structure and certain management practices that combine functional departments with project teams in a matrix of responsibility. Properly administered, a matrix management approach is ideal for the management of engineering projects.

Today, most engineering tasks are managed as projects and are often done within a matrix organization. Besides the obvious need for a strong technical base in the primary discipline of the project, a project manager must also have a good grasp of the other design disciplines involved and considerable knowledge of the design process itself.

Usually the design project team is a part of a larger organization which provides most of the support needed. Unlike the manager of a construction project who must be a good general manager, the design project manager must have a high level of interpersonal/organizational skill as well as the ability to get support and resources from throughout the organization. Informal communication and implementing skills are essential.

Project Management Services.—Project Management Services is one of the latest "buzz words" in the industry. Some owners still prefer the traditional approach to project delivery, i.e., design-bid-construct but recognize that they and their architect/engineer might not have sufficient in-house capability to manage a major new project. They sometimes retain a project management. specialist to assist them in managing the project. Owners often see this as preferable to CM with its many unknowns. Project Management Services is especially desirable when an owner is going design/build or turnkey and does not have a staff with the available capacity to deal with a large, sophisticated, design/build contractor.

Project Management Services can vary from simply assisting with the initial scheduling of design and construction to complete services, comparable to CM. The Project Management Services project manager is usually limited to the management of the process rather than being closely involved in the design or construction. He often has only a monitoring and reporting role with major responsibilities revolving around computer processing, CPM scheduling, cost estimating, and project monitoring and reporting techniques. Usually the project manager acts as an independent consultant and a resource person advising the owner or architect/engineer.

Project Management Services works very well, in most instances. Occasionally, however, an owner is not willing to pay for sufficient effort to allow the project management firm to do more than passive cost/time tracking. Often this is heavy on computer usage and business management techniques but short on authority to take effective action to correct problems.

As more owners become aware of the advantages of outside Project Management Services, there will be a considerable demand for this service.

Design/Build and Turnkey.—These two concepts both involve management of design and construction. Both are usually negotiated and involve a high degree of service, repeat work through referrals, and a need for a good reputation in order to get new business.

The design/build or turnkey project manager must manage the entire process just as the CM project manager. In addition, however, he usually directly manages the construction and oversees the design.

Comparison.—The three types of project managers are: (I) Design; (2) construction; and (3) design/construction (CM, project management, design/build, and turnkey). The first two must have an intimate knowledge of methods (design practice and construction methods). They also must be skilled in the management of the process (design or construction) and need to use good project management techniques. In addition, the design project manager must have a grasp of the construction process in order to fulfill his obligation during construction.

The design/construction project manager must have a good grasp of design practice, the design process, construction methods, and the construction process. In addition, he or she must be expert at managing the overall process of project conceptualization, planning, design, construction, move-in, and startup. Needless to say, this requires a high level of expertise in project management concepts and techniques.

PROJECT MANAGEMENT CONCEPTS AND TECHNIQUES

Good project management concepts and techniques are needed on all projects – design, construction, design/construction, or even administrative projects.

This section first looks at the functions and concepts of project management and then at some of the techniques.

Basic Concept of Project Management.—Project management is really a philosophy and an approach to managing a "project." Projects can be managed without a project management approach, but they merely become a series of related tasks performed by semi-independent departments without clear-cut responsibility and authority to achieve project objectives.

Definitions for Project Management.—These include the following:

1. Project—A series of related tasks (usually called activities) that lead to some specific objective or endpoint within a period of time.

2. Activity—A discrete task with a definable beginning and end that must be accomplished, along with other tasks, in order to complete a project.

3. Program—A group of individual projects undertaken by an organization. Often, the projects are related in that they are directed towards some long-range general organizational goal. Programs are broader in scope than projects and may be open-ended.

4. Function—An ongoing series of similar (but not directly related) tasks that are repeated indefinitely to fulfill the responsibilities assigned to an individual or organization.

5. Program Management—The task of overseeing the project management of many projects and integrating their accomplishment in the achievement of some organizational goal.

6. Project Management—The art and science of effectively and efficiently managing projects.

7. Project Manager—An individual with authority (hopefully) and responsibility for accomplishment of project objectives. Sometimes called project coordinator, project engineer, team leader, or project expeditor, but if so, usually with less than full, i.e., sufficient, authority.

Functions of Project Management.—The functions of project management are those of general management: planning, organizing, staffing, directing, controlling, and decision-making. They can be summarized as shown in Fig. 1.

A well-conceived plan to achieve project objectives should be made before taking action. The action should follow the plan. Feedback should describe the results of the action. A revised plan should be prepared based on the feedback of prior action and new action taken.

Project Management Objectives.—Objectives are essential to the concept of project management. They are also a key part of the techniques of managing projects.

Project objectives are usually expressed in terms of cost, time, and scope (quantity and quality). First, a scope should be established to fulfill a need. Then a cost estimate should be made from the scope and a contingency added to form a budget. Normally this budget is approved by some authorized group or individual before the project proceeds. Also, a schedule (or at least a completion date) should be developed from the scope and cost.

Often the project scope is described in what is termed a "scope definition" or "architectural program." Normally, all three (scope definition, budget, and schedule) are combined into one document called the scope document. This document is prepared during the planning phase. Its approval initiates the design phase.

Figure 1: Functions of Project Management

Properly managed, the scope document becomes the standard against which to measure the design as it develops, and against which the completed project is compared in some final analysis and report. If the scope is modified, the modifications must be identified, their cost and time impact estimated, an approval given, and the scope document changed. Success in managing a project should be measured in terms of accomplishment of project objectives as described in the scope document.

Delegation and Verification.—To make project management work, the program manager has to delegate both responsibility and authority to the project manager. This responsibility should include clearly identified objectives, preferably in writing. The program manager does not transfer this responsibility but creates new responsibility so that both the program manager and the project manager are now responsible.

Verification is the corollary to delegation. If the program manager is to delegate responsibility, he must have some assurance that the delegated responsibility is properly discharged. The project manager should, therefore, be required to monitor and report progress so that the program manager can verify performance and take corrective action when required, before it is too late.

Evaluation of Results.—Performance must be monitored periodically for corrective action to be taken before it is too late. When necessary, assistance must be given to help subordinates meet assigned objectives. A project manager's performance should be largely measured by his or her success in meeting project objectives with proper documentation of the reasons for variation. Evaluations should also consider interpersonal relations and other less measurable factors.

Planning.—Good project management requires prior planning. This should include the following steps:

1. Identify, evaluate, and select the project objectives. This is sometimes the most difficult task in a project. Unfortunately, it is sometimes slighted and some projects end up accomplishing the wrong objectives.

2. Establish a basic strategy and identify the major tasks needed to achieve the project objective(s).

3. Estimate the resources and cost needed to accomplish the major tasks. If given previously, compare the budget with the estimate and reconcile any differences.

4. Develop a detailed plan and schedule. This is usually done with CPM/PERT techniques.

5. Forecast the cost and resource needs over time and reschedule or obtain more resources if required.

6. Organize the project team. This normally includes determining the number, type, and responsibilities of staff in addition to obtaining that staff and other resources. It also includes establishing communication channels and project monitoring and reporting systems.

7. Set the project policies, procedures, and standards. These need to be in conformance with organizational policies and procedures and must lead to the accomplishment of the project objectives.

Scheduling Techniques.—Critical path scheduling (CPM/PERT) is an extremely powerful, adaptable, but simple technique for project planning and controlling. Unfortunately, most project managers in design or construction do not use it. Much of this may be due to an overemphasis on computer scheduling and a lack of understanding of what is really a very simple technique.

The process of CPM/PERT network diagramming is the key to the project manager gaining a grasp over project. It should not be delegated to a scheduling technician and a computer; it should be done by or under the close supervision of the project manager. It can then be expanded, computerized, and maintained by others.

One of the most successful and simplest scheduling techniques is timescale arrow diagramming, which takes a little more effort initially than other network diagramming techniques but is vastly superior for communicating and understanding. It is similar to the bar chart yet shows relationships. If updated with status lines rather than redrafted, it is easy to maintain for monitoring, reporting, and controlling progress. It can also be used to prepare cash flow forecasts and manpower projections.

Cost and Scope Management Techniques.—Scope management first requires that the project scope be defined. Then the project manager must ensure that the design as it develops conforms to the scope. This includes careful review of preliminary and final design documents and construction change orders to identify scope changes. The cost and time impact of any proposed changes must be estimated, and all must be reviewed by the appropriate authority. Upon approval, the scope document (scope definition, budget, and schedule) must be revised. Upon project completion, the final project report should compare the authorized scope, cost, and schedule with the actual report.

Cost management is closely related to scope management as it requires that a scope definition be prepared and monitored throughout the project. If the budget is not prepared from the scope definition, then the budget must be reconciled with an estimate made from the scope definition. Periodically during the project, the budget must be compared with the current estimate. If the budget is exceeded, the project must not proceed until the design is changed so that the estimate is within the budget or until a budget increase is authorized.

To be effective, the comparison between the budget and the current estimate must be on a line item basis with increasing level of detail as the design progresses.

Monitoring and Reporting Techniques.—There are many excellent techniques for project monitoring and reporting. To be effective, however, they generally are: (1) Based on communication needs; (2) combined into a "system," (3) targeted on the "right" information; and (4) leading to a decision or action when required.

The “system" must provide the project manager with the feedback needed to verify that his actions are leading to the desired result. It must also allow the program manager: (I) To verify the progress of all projects; (2) to manage the overall program, i.e., all projects, so that resources (manpower, equipment, and money) are available when needed; and (3) to evaluate the project manager performance. Later, the “system" must provide data for estimating new projects, budgeting next year's work, and determining future manpower requirements.

A computerized Project Management Information System is often proposed as the solution to project monitoring and reporting needs. Unfortunately, a focus on computers without an understanding of fundamental communication needs can obscure more than it clarifies. Detailed costing and scheduling data is necessary but does not achieve communication. What is needed is a focus on the essential information in a manner that will lead to effective action. This should include:

1. A summary of project status.

2. Work accomplished this period (including the effort expended compared with the budget and the actual progress versus planned).

3. Work planned next period (including resource needs).

4. Problems and opportunities (with alternative solutions and their impacts).

5. Action needed, by whom, and when.

This type of report works as well to control a county's design effort of a $50,000 street improvement project as it does for total CM services on a $25,000,000 fast-tracked, CM-managed advanced wastewater treatment plant. The difference is detail. One is filled out by hand on a single page having the previous five headings reproduced on the page. The other is a 20-page typed report.

Other Project Management Techniques.—There are a number of other valuable techniques (such as value engineering) that are either unique to project management or common to any type of management. These should all be considered and used as appropriate. One should be aware, however, that an overemphasis on techniques and a failure to focus on essentials can result in a very efficient but ineffective effort.

APPLICATIONS

Common Definitions and Understanding.—A common set of definitions of the different project delivery systems and project management terms should help everyone. In addition, it will help project owners know what they need and how to obtain it from the right party.

Knowledge of What Others Do.—Each type of project management (design, construction, and design/construction) and each type of project (municipality, manufacturing, construction, etc.) has a different set of problems and solutions. All will benefit if individuals in those fields analyze their work. In addition, those seeking a career can better determine if that is really what they want to do.

Development of Project Management Systems.—Although the previously mentioned material is addressed to the project manager, it is also applicable to anyone with the authority to change or create a new project management system. In doing so, one should be aware of the basic concepts of project management, how they fit together, what techniques can be used, and how the different types of project managers use these techniques.

Use of Concepts and Techniques.—The basic concepts and techniques mentioned can be applied to any type of project within almost any type of existing project management "system." Many existing systems will not support the concepts with the needed data, but the project manager can make some improvements, e.g., all project managers can use CPM/PERT scheduling even without computers. They can also develop scope documents and manage the scope and budget. In addition, they can include the five recommended topics in their reports.

CONCLUSIONS

Management of engineering projects is quite different from management of construction projects, yet both use the same basic project management techniques. A better understanding of the different project delivery systems and project management concepts and techniques will benefit all project managers, improve the management of individual projects, and lead to better project management systems.

There is need for a clear and definitive expansion of the ideas expressed here and the communication of this basic information to all project managers. This is even more important than using more sophisticated techniques and systems.