Project Management Institute

The CRAM system

a new PM system in the Chinese construction industry

img PM IN CHINA

Li Shirong

China's construction industry has entered a new era with the reform of the country's economic system. Billions of funds have been invested in various construction projects in recent years. Since modern construction projects have dynamic characteristics, owners and clients often have difficulties in managing them. They know that small mistakes in construction management lead to large economic losses. The efficiency of managing construction projects becomes an important issue. Without strong project management skills, people cannot be successful in managing construction projects.

The traditional construction management system in China cannot meet the requirements of the developments in the construction industry, the changes in construction market, the reform of economic system, and be consistent with the international rules in construction management. Construction management professionals are urgently needed in China's construction market.

In 1988, a new management system began in China's construction industry—Construction Project Administration and Management (CPAM). CPAM includes two parts: Governmental Administration of Construction Project (GACP) and Professional Management of Construction Project (PMCP). Given China's different economic and management system and unique history, it is certain that the CPAM system has different characteristics compared with other concepts, such as Construction Management [1] and Professional Construction Management [2].

This article focuses on the CPAM system. First, it introduces the development of construction project management in China. Second, it presents the basic concept of the new system, including its meaning, components, and characteristics. Finally, it concentrates on PMCP, explaining its organizations, main tasks, and responsibilities.

Project Management History in China

Project management in China's construction industry has a long history. It has been developed and improved in recent years. The development and improvement mainly result from the development of the commercial economy and the socialization of production. There are five stages to the development of project management in China:

Stage 1. During the long history of China's feudal society, the project management system was simple. Most construction projects were small in size and simple in structure. All projects were managed by either feudal officials (usually for palatial or defense projects) or owners (usually for private projects).

Stage 2. After the Opium War of 1840, some production methods were introduced by Western countries. Professional designers and builders appeared in some large cities. Large construction projects included designing, bidding, and constructing. Supervisors were involved in each phase. There is no doubt that this supervision system played an important role in cost, schedule, and quality control at that time. But project management remained simple.

Stage 3. After the establishment of the People's Republic of China in 1949, China had a system of socialist public ownership. The purpose of construction activities was to found an initial industrial and capital economic system and to improve people's living conditions. From 1949 to 1983, China followed the Russian management system in construction, namely, it adopted a planned economic system with a high degree of centralization. All construction projects were financed by the national government as planned. Construction tasks were assigned to construction companies by the government. Materials used in construction were supplied directly to the project by the government as planned. Users, designers, and builders of construction projects had no self-interest in the projects. They were merely the executors of construction tasks. Government administration departments supervised the project during construction. Funding for the construction projects was fully supported by the central government according to the actual amount as planned, using a process that sometimes lacked careful approval. Participants paid no attention to the profits of the project. They all had a common objective and only managed the schedule and quality. Sometimes they overemphasized scheduling, leading to low benefit. Quality control was performed by the builders themselves, with no other supervision.

Stage 4. The years between 1983 and 1988 presented a new stage of reform with the opening of China to the outside world. During this period, many changes occurred in the construction industry, especially in investment, for example, the use of investment with interest and the multiple resourcing of investment (investment from government, enterprises, and individuals). Owners were able to choose designers and builders by tendering. With these changes, designers and builders had more self-interest and became real commercial producers. A chain was formed between owner and contractor within the economy, which accelerated the development of the construction industry and led to an active construction market. However, with this reform in the construction market, some problems soon became evident. For instance, to increase profits, constructors began to make decisions for their own benefit, sometimes leading to lowered construction quality. The contractors themselves evaluated the project's design and construction qualities, a process that was often unreliable. Therefore, in 1983, a supervision system for construction quality was developed in China, with the government administration department as the supervisory department.

Stage 5. The year 1988 featured the reform of China's economic system. To ensure benefit to the society and the owners, a new management system was developed: Construction Project Administration and Management (CPAM). Although the system was totally new, its efficiency was high in the construction industry, and people are beginning to realize its importance and conscientiously carry it out.

Figure 1. Parties Involved in Construction Project Management

Parties Involved in Construction Project Management

The Project Management System

Construction Projects in China. With the development and improvement of science and technology, living and working conditions in China have improved rapidly. To meet the requirements of the society, today's construction projects are becoming more and more complicated. The changes appear to be good for the user and beneficial to the industry, but are at times confusing. The changes are affecting both construction engineering and management. Today's construction project features the following:

  • Large-scale in size and complex components in structure
  • Huge investment
  • Long duration of construction
  • Huge risk of investment
  • Commercial activity
  • Close relation to natural and social environment
  • Complicated techniques
  • Complicated interdependencies and variations in relationships among its organizations and institutions
  • Proliferating regulations and demands from government.

The Structure of Project Management. As we know, project management is used to accomplish unique outcomes with limited resources under critical time constraints so as to achieve an organization's goals. In construction projects, however, owner, government and contractor are all involved, and they each represent and act on behalf of their own organization. Actually, they all simultaneously manage the project during the whole period of construction, as shown in Figure 1. They manage the project with each having their own objectives. The government manages the project to protect the public interest and to ensure reasonable development of construction industry. The owner manages the project to obtain the best economic benefit, to have quality work, to maintain the project cost within budget, and to complete the project on time. The contractor manages the project to pursue the best construction profit. The contractor tries to provide a quality product since it is the source of pride, to reduce the project costs required by the contract so as to earn a reasonable profit, and to work on schedule knowing that time delays reduce profit.

Figure 2. Project Management Categories

Project Management Categories

Figure 3. Components of CPAM

Components of CPAM

Project Management Categories. In general, government, owner, and contractor are the necessary parties in a construction project. Each of these parties has a role in each phase of construction. Because of the complexity of construction projects, owners sometimes feel that they don't have enough capacity to manage the project, especially for large construction projects. They sometimes don't know how to determine the scope, the budget, and the schedule of their own construction project. During the project's implementation stage, they cannot coordinate other parties because they lack communication skills. They cannot control project objectives well because of a shortage of knowledge in project management. Given this situation, the owners look to entrust the construction management professional to manage the project for them. A new party, therefore, appears in the implementation of construction projects. Actually, contractors sometimes meet with similar problems and need other's help, but this seldom happens in China. The project management categories are shown in Figure 2.

The CPAM System

The Definition of CPAM. CPAM is a comprehensive concept. It includes the management of all phases of the construction project process, from the original decision about the project's purpose and scope, through its performance specification, programming, preliminary design, budgeting, design, tendering, and construction. It emphasizes two aspects of management: Government Administration of Construction Project (GACP) and Professional Management of Construction Project (PMCP).

The GACP includes the supervision and administration of participants’ actions during construction. The work is done by the Project Administrator of Government. Besides administrating the construction project, GACP is also responsible for administrating the PMCP system, determining policies, laws, regulations, standards and procedures, long-range planning on the development of professionals, and so on.

The PMCP includes the supervision and management of contractors’ actions during construction. The work is done by a Professional Project Manager (PPM). PMCP treats the project planning, design, and construction phases as integrated tasks. It provides the owner with an opportunity to participate fully in the construction process. The PPM generally works from the beginning of concept and feasibility studies to project completion, with the common objective of best serving the owner's interests. The PPM's working scope is determined by the owner and is included in the contract. Interactions relating to construction cost, environmental impact, quality, and completion schedule are carefully examined by the manager so that an objective of maximum value to the owner is achieved in the most economical time frame. Figure 3 shows the components of CPAM.

The Relationship. The PMCP organization provides service to the owner and tries to satisfy the owner's needs, but its PPM does not work directly for the owner. They simply have a contracting relationship. The PPM does all those things that are included within the contract. The relationship among the parties in the CPAM system is shown in Figure 4. Here, contractors include designer, builder, and resource supplier.

From Figure 4, we can see that the Project Administrator of Government acts in the passive role of oversight administrator to supervise and administer the action based on national/regional policy, laws, regulations, standards, and procedures concerned with construction activities.

Figure 4. Relationship Among CPAM Parties

Relationship Among CPAM Parties

Table 1. Main Features of GACP and PMCP

Type Features
GACP Forced action Action of enforcing laws, regulations, and standards Macroscopic activities Interrupted activities Whole phases
PMCP Entrusted action Economic action Microscopic activities Continued activities Variable scope

CPAM Features. The necessary conditions to implement CPAM are:

  • The object – the construction project
  • The needer – the owner who entrusts the PPM to manage the project
  • The supplier – the PPM who manages the project for the owner
  • The basis – the policies, laws, regulations, and standards that can ensure the action benefits the nation/region.

GACP activities must be performed over the entire period of the project and at the macro level. They are based on construction rules, regulations, and standards established by the national/regional government. The main tasks include two aspects: supervising the personal acts of owners, PPMs, and contractors (for design, resource supply and construction) during all phases; controlling the main procedures and aspects of the construction project concerned with social benefit.

In contrast, PMPC activities are entrusted by the owner and is at a microlevel. They are based not only on the rules, regulations, and standards established by the national/regional government but also on the documents approved by the government and the contracts. Table 1 shows the main features of GACP and PMCP.

PMCP Organizations

Since PMCP is a new system in China, it needs time to develop. The number of PMCP organizations depends upon the need of PMCP activities by the society (the owner). To date, few professional organizations provide only PMCP service. Its development will depend on the owner's recognition of the new system. Several kinds of organizations, however, can provide PMCP service in China. They are:

  • PMCP companies
  • Consultant companies
  • Real estate development companies
  • Design firms
  • Research institutes.

Design firms usually provide PMCP service during the later stages of construction (including bidding and construction phases). Providing PMCP service during the design phase is not encouraged, especially for projects they design.

Since the features of the construction market in China are designed to protect the owner's interest, it is stipulated that the following organizations are currently not allowed to provide PMCP service:

  • General contractors
  • Construction companies
  • Departments belonging to general contractors and construction companies.

The PPM's Main Tasks

The Professional Project Manager's main tasks are to control the execution of the project for cost, schedule, and quality.

Cost Control. By continuously repeating cycles of cost estimating and budgeting as well as evaluating and making appropriate decisions, the PPM enables project cost elements to remain current and viable throughout design and during construction. The PPM must be proficient at estimating, with capabilities ranging from conceptual design to construction document development, and must be knowledgeable in the requirements and mechanics of project budgets. The PPM must have a complete and accurate understanding of project expenditures beyond the costs of construction.

Schedule Control. A fundamental task of the PPM requires that the total project and all of its elements be scheduled in significant detail. The PPM is the scheduler for the owner. The PPM not only must be an excellent scheduling technician but must know what types of schedules will be most effective in every situation, and how to make scheduling work effectively on the project. The PPM must have a grasp of the time requirements for all facets and elements of project delivery, as well as intimate knowledge of production rates of geographically located construction trades.

Quality Control. A major requirement of project delivery is adherence to the specified quality level desired by the owner. In order to ensure that the construction project will serve the owner from the practical and economical perspectives of the owner, the PPM must collectively establish and state the owner's standards prior to the start of design. With the standards in place, the PPM must install a quality control plan and suitably express its requirements in the contract documents. The project's quality control plan must accurately reflect and convey the owner's quality standards.

The PPM's Responsibilities

The function of the PPM is to professionally plan, implement, and control an overall construction program best suited to the owner's project objectives. The owner's objectives include minimum overall project cost (including the economic benefits of minimum duration), compliance with recognized owner's control requirements, and obtaining specified quality and utility in the finished product.

Responsibilities to the Owner. The PPM's duties and responsibilities to the owner include faithful and professional representation and advice free from economic conflict. This advice and representation will be conscientiously handled within the delegation of responsibilities that the owner elects to assign the PPM. The PPM should keep the owner fully informed at all times regarding the current status of the project in comparison to the overall plan. Although the PPM's primary duties and responsibilities are oriented toward achieving the owner's objectives, he or she has a professional responsibility for fair and businesslike practices in dealing with other project participants, including the designer, contractors, and the industry as well as the general public.

Responsibilities to the Designer. The PPM's relationship with the designer must be thoroughly professional. If the PPM is to be truly successful, he or she must achieve full cooperation from the architect or engineer who is designing the project. Only by working together can the full benefit of a design phase value engineering program be achieved. Successful reduction of project cost while preserving value must be a joint effort, the credit for which must be equally shared with the designer. The PPM provides his or her economic knowledge of construction as a tool for the designer in furthering the overall objectives of the owner.

Responsibilities to the Builder. The PPM's relationship with the project constructor must be equally professional. The PPM must faithfully interpret the plans and specifications. When plans and specifications are in error or are incomplete, he or she must assist in obtaining fair additional compensation for the constructor who has bid upon the original documents.

Responsibilities to Others. The PPM has a duty to the industry and to the general public. If qualified, he or she is aware of the many problems facing the industry. He or she should act as a knowledgeable professional in advising the owner and in conducting his or her own responsibilities in order to assist in solving underlying problems and economic conflict that are always present to some degree in a given project area.img

References

1. The Committee on Construction Management. 1987. Qualification and Selection of Construction Manager with Suggested Guidelines for Selection Process. Journal of Construction Engineering and Management, vol. 113, no. 1, pp. 51–89.

2. Barrie, D.S., and Paulson, B.C. 1992. Professional Construction Management. McGraw-Hill, Inc.

3. Barrie, D.S., and Paulson, B.C. 1977. Professional Construction Management. Journal of Construction Engineering and Management, vol. 102, no. CO3, pp. 425–435.

4. Chong, P.J., and Huang, Y.B. 1992. Objective Control and Management for Construction Project. Beijing Science and Technology Publishing House.

5. Liu, X.D., and Gao, W.M. 1993. Handbook for Construction Project Administration and Management. Yiuhang Publishing House.

6. Du, Y.M. 1993. Construction Project Administration and Management. Dizheng Publishing House.

 

Li Shirong is a research fellow at the University of Reading, U.K., and an associate professor at Chongqing Jjanzhu University in China.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network ● April 1995

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