Construction Project Management Consulting
Staying Profitable While Dealing with Uncertainty
Organizations that manage construction projects face a large problem; uncertainty. Often, projects are begun before the final design is complete. These organizations can’t design everything during the bidding process, so certain estimates are made: technology, site conditions, construction methods, resource availability, and more. They are then forced to deal with “learning” problems in execution by using change orders that may or may not be accepted by their clients.
These organizations, producing complex, capital intensive structures, cannot simply tell their customers to wait until the uncertainty is resolved. In particular, as nature plays an important role in most construction projects, the uncertainty involved is extremely large. Furthermore, the construction business is cyclical with long lead times, and missing a contract award can mean the difference between staying in business for the next few years or not. Even at the award, there is enormous pressure to accept contracts even though there are significant unknowns. What gets compromised is delivery performance and operating costs (few construction projects finish on time within budget). Project lead times stretch and budget performance suffers. In response, excessive change orders and late penalties rise. This not only hurts the bottom line, but also jeopardizes customer relationships and reputation.
Construction project organizations need a solution that recognizes the inherent uncertainty in their work, but still allows projects to progress smoothly and on time.
Having a robust project management process is integral to long term organizational sustainability.
Taming Uncertainty –
The Key to Robust Project Management
The problem with the conventional approach to managing project uncertainty has its roots in planning, but also has ramifications in execution. In planning, most managers in a project try to protect every task completion against uncertainty by adding time to estimated durations. The ratio of work content wait time (task contingency) is typically 1 to 4. This means that the duration of almost every project plan will be shown to be far longer than the sum of all the work content. The greater the uncertainty or perceived risk, the greater the task duration estimate.
In project execution, this additional time built into the task is lost.
When a task is delayed, team members know they can catch up, so there is little effort to recover the delay. However, there is some sense of knowing that not all tasks can be delayed, so in some cases, the project managers will attempt to aggressively manage task completion dates, attempting to recover delays at every task. The result in most projects is that the managers oscillate between tight control and loose control of the project depending on how much pressure they are feeling.
This is compounded by procrastination by the resources, who know the task estimates contain plenty of padding. However, when they do start a task, problems are frequently found, delaying the task, wasting the padding. These delays create pressure on subsequent resources by compressing their time, resulting in higher costs and / or further schedule compromise. Thus, tasks very rarely finish early and that additional time for uncertainly is lost.
This makes for a very unpleasant project environment.
A Solution for Construction Projects
To manage projects well, we must recognize, first of all, that not everything can be known about any project and deal with that uncertainty in a rational way. The Critical Chain Project Management (CCPM) approach is to first of all, recognize that uncertainty exists, but only matters in the context of the project rather than each task. Therefore, we should aggregate a part of each of these individual time buffers and place it strategically where it can best protect the entire project from an overrun, creating a project buffer. This project buffer acts as a shock absorber to soak up the impact that delays on individual tasks will have on the completion date.
The amount of the buffer remaining provides something that is missing from conventional project plans: a quantified statement of schedule risk at any time of the life of the project. The project team knows at any time what the danger of missing the completion date is and can, therefore, take reasoned action before the customer is affected. The project team can work collaboratively to proactively solve potential problems before they become reality, reducing rework and increasing the likelihood of completing on time.
The real solution is dealing with the behavioral response to
uncertainty. We provide a framework and process to identify
and eliminate the ineffective behavior and processes and substitute
them for behaviors and processes that work. We help you
eliminate the expediting and rework. Using our project
transformation process employing the well proven
Critical
Chain Project Management (CCPM) methodology, you’ll be able
to strengthen your team and achieve the results you’re looking for
in less than 6 months.
To learn more about our approach, contact us or call 972-899-1734.