JUNE 2005 ISSUE
Owner’s Role Critical to Project’s Success
Editor’s Note: This is the second part of an article outlining a step-by-step guide to following your project through to success. Last month, the first article addressed getting started and defining the project. This one covers assembling the team, implementation and close out.
BY DR. GEORGE
JERGEAS, P.ENG.
Department of Civil Engineering
University of Calgary
Part 2 of 2
Assemble the Team
Decide Contracts
The obligations and relationships between the owner and members of the project team must be expressed in contractual agreements that
• Deal with all key issues
• Are clear and unambiguous terms and conditions
• Are compatible with each other
• Balance risk, responsibility and reward.
The project manager should satisfy the project sponsor that these principles are being applied throughout the supply chain.
Contracts should support the project team by making all roles and responsibilities clear, including coordination and communication. Each contract must clearly define
• The allocation of risk
• Payment arrangements
• Responsibilities and procedures for control and management of change
• Procedures to deal with any disputes as they arise
• Any incentives for good performance
• What would happen in the event of non-performance by either party, including suspension and termination.
Wherever possible, standard contract forms should be used. The project sponsor should not accept amendments to standard forms unless satisfied that they result from a careful examination of the client’s objectives and priorities, that they are technically and legally sound, and that they can be applied consistently throughout the contractual chain.
Select the Project Team
Members of the project team should not be chosen simply because they are the cheapest. Good value for money requires a balanced assessment of price and quality of service or product, with particular regard to the lifecycle cost of the project. The project manager should recommend selection criteria that reflect the owner’s priorities.
Selection of team members can be based on competitive tendering, negotiation or a combination of these approaches. Sufficient time must be allowed for bidders to prepare their submissions.
The project manager must
• Ensure that all bidders are treated equally, and that confidentiality is maintained
• Ensure that all information at the owner’s possession is disclosed
• Make selection criteria and other requirements clear in advance
• Ensure that invitations to tender make clear what will be supplied and what risks are covered in the price
• Allow sufficient time for preparing for and administering the process.
Implementation: Design and Construction
The project sponsor should clarify the owner’s requirements when necessary, and make sure the owner understands and approves of the developing design. The aim should be to “freeze” progressively and sign off parts of the design before starting construction relating to it.
If the owner wishes to keep options open until a later stage, this must be explicitly recognized when developing a strategy for the project and must be reflected in the choice of contracting strategy.
Contractors and subcontractors can make significant contributions to the design. The project manager should make sure that they are involved as early as possible.
Construction
Before starting to build, the project manager must ensure that the site is fully available, and that legal, financial and insurance arrangements are in place.
Changes made once construction begins are likely to have a greater impact on time and cost. It is important that the project sponsor not initiate or approve significant change without an estimate of the implications.
Build and Sustain Project Team
The project manager and the project sponsor should encourage teamwork and the development of a high degree of trust between the parties. This can be achieved through a formal and structured process called partnering.
The partnering process is designed to establish working relationships among the parties through a mutually developed formal strategy of commitment and communication. It attempts to create an environment where trust and teamwork prevent and resolve disputes, foster a cooperative bond to everyone's benefit, and facilitate the completion of a successful project.
The project manager must provide leadership for successful implementation of the partnering concept by facilitating and encouraging
• Commitment from senior management
• Equity of all parties
• Development of mutual goals and objectives
• Regular self-team evaluation to ensure the health of the relationship
• Timely responsiveness and issue resolution at the lowest possible managerial level.
Manage and Resolve Problems
Potential problems should be identified before they become disputes. In the event of a disagreement, the first step should be discussion between the parties using a non-adversarial issue resolution mechanism developed in advance as part of the team building process. If necessary use a facilitator to help reach a settlement.
Any dispute resolution beyond negotiation including arbitration or litigation is regarded as project failure.
Review Progress and Performance
The project manager is responsible for managing work to the required specification, time and cost, and should monitor and analyze all aspects of progress. The project manager should enable the project sponsor to maintain a strategic overview by regularly providing
• Information on current status and performance regarding schedule, cost, quality, health and safety
• Forecasts of completion date and final costs
• Information on the health of team relationship
• Explanations and recommendations for action where necessary.
Reports should highlight issues to be addressed by the project sponsor.
Close-Out
The owner’s requirements for taking over and operating the completed work should be detailed and taken into consideration in the design. Requirements for testing, commissioning and handing over the work (including partial or phased completions) must be explicit in the tender and contract documents.
Project manager is to ensure
• The facilities have been completed as specified and work properly
• A record of the actual execution, together with operating instructions, are provided
• Staff is trained in the use of the works
• Contractual relationships are formally closeout
• Deficiency list is prepared
• Development of final report and documentation of lessons learned
• Sign off on final report, and client’s acceptance of project work and deliverables are obtained.
Summary
In reviewing their practices owners must consider these key items for better project delivery.
• Spend enough time at the beginning of projects defining the project scope — cost can dramatically increase for changes later on.
• Appoint the right people to represent and advise on projects — they must be qualified, experienced and able to work with the owner and each other.
• Clearly understand the risks involved in the project, quantify them, and develop a plan for them.
• Identify stakeholders involved in the project, understand their needs and expectations, and develop plans to deal with them.
• Define success and when it will be achieved.
• Clarify owner priorities regarding time, cost and quality.
• Take account of the costs of the project over its whole life, not just the initial cost of construction.
• Regularly monitor progress and performance using suitable techniques.
• Ensure that the financial and other resources necessary for the project are available, productive and looked after.
• Ensure that lessons learned are documented and incorporated on new projects.
Dr. Jergeas has a bachelor of science degree in civil engineering from Baghdad Technical University , and he earned his master’s and PhD at Loughborough University of Technology in the U.K.
His major areas of expertise are in project management, claims and disputes, dispute resolution and team-building. He gained this experience while working in infrastructure civil engineering and building projects.
Dr. Jergeas presented on project management during the 2005 APEGGA Annual Conference Professional Development Program.
FURTHER READING
Construction Success Owner's Role is Critical to a Project's Success (Part 1), the PEGG, May 2005 |