What is good project management ?
Brown & Root, Inc.
L. R. Wilby
Brown & Root, Inc.
Unfortunately, in recent years the term project management (PM) has become popularized without definition. It has taken on a meaning that is not only misleading, but also untrue. To most people it implies only good things. Therefore, if you have PM on a project, it is good. If you do not, it is bad.
In the beginning the PM concept was not readily accepted, but it must have had something of lasting value because it managed to survive. Now the trickle of acceptance has become a torrent. Everybody wants one. PM has become fashionable on a world-wide basis and the demand for its usage has far exceeded the available supply of qualified personnel.
What PM Isn’t
Because PM has no agreed-upon definition, it isn’t surprising that too many persons in high levels of PM are incompetent. They were never required to deliver a respectable performance against their pre-contract promises. We can qualify and classify a project as having (1) no PM, (2) bad PM or (3) effective PM.
Most of us well know the first two. In this article we want to share our experiences and opinions on the third. We will deal with our personal observations and experiences — and not a company position of Brown & Root.
PM Is Money
Two factors have combined to escalate the money value of time tremendously in the last two or three years. One of these is inflation. The other is high interest rates. They have hit us simultaneously. Result: a tremendous premium for on time project completion.
Consider the cost of money and “rate of return.” A one-month delay in completion of a hydrocarbon processing industry (HPI) facility can cost from 4 percent to 6 percent of the total capital cost of the project. And this doesn’t depend on the time planned for construction. It doesn’t depend on the size and nature of the facility. (One major exception is in the public utilities areas, the regulated power generation industry, where the return on investment (ROI) will run usually much less than those in unregulated industries.) This means that on a $100-million job, a comparitively small HPI plant, we’re talking about $4 million to $6 million per month for cost of delay, or $200,000 per day.
Quality, Schedule, Cost
Management’s objectives for a project and the client are generally expressed in the areas of quality, schedule and cost. In each of these areas, planning establishes standards of performance. In each of these areas, management needs information on progress to compare with the planned standards. Information systems do not provide control; they provide feedback. Control is considered action. The action may be the issuance of an order. But it may more probably be a conference, seeking an agreement with a colleague, negotiating with a vendor, or any other interpersonal action.
The action is the result of a decision. Decisions are best based on adequate information. The collection, accumulation, sorting and reporting of progress information for schedule and cost deal with common elements. These elements are the successive activities that people do to complete the project.
People perform all the activities. The manager’s job is to coordinate and enforce the ground rules for “people activities.” For this reason all elements of the PM information systems need to be related to the activities they affect. People’s activities produce results or problems.
Where Information Is Needed
There are seven key areas in which managers need information. Other areas are also of value. But if these seven are covered systematically, managers will have at least nearly all the information they need to manage projects. These areas are:
1. Personnel and manpower.
2. Contract and design scope changes
3. Equipment and materials
4. Schedules and planned operations
5. Physical progress: quantities in place and to go
6. Costs and manpower expended and for what — to include commitments, cash flow and forecasts.
7. Quality assurance in all design, procurement and construction activities, keyed to management responsibilities at appropriate levels.
The project manager’s problems include:
• Organizing the work and keeping it organized and coordinated
• Keeping up with the changes in the project and its design, purchase and construction
• Acquiring the right resources at the right time, cost and place for what needs to be done
• Managing all the people who cause and resolve the problems.
In connection with changes, it is axiomatic that the job you estimate and propose is NEVER the job you complete! Besides client changes and regulatory-agency-caused changes, there are always late deliveries of key items, weather and other acts of God and man. These combine to keep the project general manager from becoming bored.
The basic organizing responsibility of the project manager is to delineate — in writing — the responsibilities of each supervisor and staff assistant on the project. These statements of responsibility constitute the organization of the project. Other actions can contribute to the strength of the project organization. But without clearcut, well-defined responsibilities, there is no organization.
The project manager’s second most important coordination responsibility is to establish the information system to ensure:
• Advice and estimates from appropriate people for planning, and re-planning
• Estimates and data needed for scheduling, and rescheduling
• Regular periodic announcement of coming work assignments for all equipment and crews on the job, sufficiently in advance in each case to permit movement of equipment, and detailed coordination by foremen
• Factual statements of physical progress periodically, without overlap and without gaps
• Collection and reporting of all commitment, expenditure,
and cost accounting transactions in accordance with company policy and procedures
• Recognition and upward reporting of potential or actual problems (hopefully before they become critical) at all levels of supervision. Each supervisor or staff assistant receiving or perceiving such information should immediately ask himself the coordinating question: “Who else needs to know?”
Planning the project means to make decisions about the methods, machines and men to be used for each state of each part of the project. What to make and what to buy? What to sub and what to fabricate on the job? How to get resources to the job? How to coordinate their use?
Besides coordinating the planning on the job and continually refining the understandings of who does what, the project manager’s published administrative procedure manual establishes routine coordinating actions in many areas. And the coordination of on-going activities to meet current and future milestone dates is best communicated through the project schedule.
The principal uses of the schedule are: for reporting progress; for short-range planning of work assignments in the near future; for checking future deliveries of drawings, equipment and material; and as a model of all the activities with which the project manager can investigate the effects of various changes in plans, in sequence or in timing, on the total project.
Project Management Team
This is a fairly recent expression. It has a different meaning to each user. To us, it can be partially defined by inclusion of these personnel, all reporting directly to the project manager: construction manager, engineering manager, scheduling engineer, cost engineer, estimator and procurement manager.
The client may provide a matching team to assure a more effective project coordination. The effectiveness of the client team is proportional to their decision making powers at the contractor’s office or jobsite.
Elements of PM Success
A project has a greater assurance of success if most of these elements are present:
• It would be desirable, but not mandatory, for the members of the PM team to have prior experience in the type of project they are going to manage.
• The lead member of each category of the team should have served as a lead man or as an assistant before being given the lead position on the current project.
• By virtue of experience and ongoing training programs, each team member should have a good working knowledge of each other member’s jobs and each other member’s needs and responsibilities. Each should be able to understand the major control documents produced by the others.
Computers, Plans, Tools
On projects that have large rates of activity per unit time, use computerized management tools to avoid what Alvin Toffler calls “Future Shock.” The computer programs should fill the user’s need and not the programmer’s ego. Where possible, computer tools should use a common data base to minimize the inherent risk in manually preparing duplicate input.
At the earliest possible time, the team should develop, in detail:
• Project scope
• Project plan and schedule
• Project estimate
• A procedure that identifies, quantifies and documents change of scope that requires revision to the schedule, the estimate and other project documents.
Another element of a successful project is less visible than the others, but nevertheless important. The management tools used by each member of the team within their area of responsibility, and those tools that link areas of responsibility, should be standardized within each operating division. The team is assembled in an operating division; it does its job and then is disbanded. Rarely are the same persons of one team together on the next project. When tools are standardized, the next team is ready to function quickly as a team.
Types of Project Managers
The detailed organization chart can often foretell the prospective success for failure of a project management effort. It characterizes two types of project managers.
• Type 1 will divide the project into well defined work areas. He will assign an assistant project manager (equipped with responsibility and authority) to run each area. He delegates carefully and effectively. He thus shares the management load of the project while creating a training situation for the next crop of project managers.
• Type 2 is the mother-hen variety. He is the only big chief on the project. To show he is still humble, he maintains an open door policy to every employee. He thus becomes the chaplain and Dear Abby for financial and domestic problems and trivial disagreements on the job. He has less and less available time to solve the more important problems. Type 2 is often liked, sympathized with, and more vulnerable to pressure-cooker health problems.
The expertise of each member is very important. But their talents will not be wasted if their methods of communication are not equal to the task. Therefore, we feel that the common denominator for the more successful projects involves development of the scope, development of the schedule, development of the information system, followed up by an effective, continuous and accurate repetition of the communication-control-feedback-communication cycle.
Progress reporting needs to be tailored to different levels of management and different functional areas. Usually the project general manager and his reporting people and the client staff have agreed on general content and format for periodic progress reports to the client, often monthly. These same progress reports can meet the needs of top management in the contractor organization.
On the other hand, for internal use within the porject, the project general manager should insure that each manager of each craft and each discipline on the project and each subcontractor knows where he stands against his own planned standards of performance. Progress reports should be of more use and value internally in a project than externally.
To illustrate a portion of the team effort, let us focus on the:
• Project manager
• Project scheduling engineer
• Detailed project scope
• Detailed project plan and schedule.
Although there are many means of communication, a document or drawing is the best means of establishing a permanent audit trail of original and revised thoughts for a construction project. The “detailed project scope” can be in narrative form. The narrative can be brief or detailed. In either case, it does not give you the feel for:
• Time sequencing of the work
• Establishing priorities for strategy or time cost trade-offs
• Establishing the rate of demand for manpower, construction equipment or money
• The validity of the target completion date.
A detailed bar chart is better. But it does not indicate the order of priority, or the change in impact to logically related work items or the end date. The scope of activities and a project schedule can be better and more specifically defined by a detailed CPM (Critical Path Method) network.
Detailed CPM Network
A detailed CPM can be prepared for engineering, procurement and construction (regardless of size) when two items are available, (1) a preliminary equipment location plan, and (2) a preliminary major equipment list.
These two items permit us to divide the project into logical geographical scheduling areas and to detail the entire project scope on standardized preprinted CPM networks. (Standardized networks and standardized grid systems of node numbering are a development of Brown & Root). These 10 networks are defined below:
1. Engineering drawing packages
2. Procurement cycle for all major equipment
3. Install piling
4. Pipe-rack foundations and pipe-rack erection
5. Place equipment foundations and erect equipment
6. Install underground piping
7. Install underground electrical
8. Fabricate and erect pipe and insulation
9. Install above ground electrical
10. A universal network to fit your needs.
The job of these networks is to define all work items and their relationships; show normal workday durations for each activity; include manpower and major construction requirements and costs. Having done all this, we would have a meaningful project and activity scope.
The MSCS/CPM Program
After defining project tasks or work items, we add standard logic restraints. We also include any special restraints required to reflect the thinking of the people who do the work. Using the MSCS/CPM program, we process the network data and produce reports tailored for the use of each member of the team. We have now developed data for the project plan and schedule.
The reports are distributed to and reviewed with the members of the team. This establishes lines of communication.
On a daily or weekly basis, each work schedule is manually reviewed and updated for completions and the reason for non-completions. This represents our control mechanism.
All completions, revisions, additions and deletions are reported to the scheduling engineer. He reprocesses the networks monthly, on the computer, and produces reports and schedules that reflect the current picture. This is the feedback portion of the cycle.
The new reports are again distributed to members of the team and the communication cycle begins again.
The level of detail used in our CPM must be reportable. If the activity is big or complex, you achieve the Blob Effect. When this occurs, you create a Tower of Babel where no one really understands the scope of the activity or how to measure its status. Where too much detail is used you drown all concerned. The “just right” size is based on one’s experience.
We can summarize the makeup of good PM this way:
• The project is a very dynamic thing. The plant you finally build is rarely the same one you started to build.
• The dynamic project needs dynamic PM and dynamic communication tools that quickly accommodate to an ever changing situation. These include effective cost management and personnel management as well as schedule management.
• PM is a team effort. Every member must pull his own weight or else you invoke the “weakest link-in-the-chain” concept.
• The PM team is a highly leveraged group. Its decisions can have a thousand-fold effect on the project cost and project schedule. Therefore, the price of putting together and maintaining such a team is an investment and not a cost. A good rule is to get the caliber of person to fit the job, rather than fit an outmoded wage structure.
• Effective PM is a very fragile thing. It needs constant tender loving care. You cannot relax or lower your standards because you did well the last few months. The only thing you will be measured by is the bottom line of net performance for the total project.
• Effective PM cannot exist without reliable systems to record the past and present, and project the future. The “MSCS/CPM standardized network” system is not new. It has been used for over 10 years on large projects and is currently performing successfully on more than $800 million worth of HPI construction.
(This article adapted from a paper originally presented at Spring Meeting, Texas Section of American Society of Civil Engineers, Fort Worth, Texas, April 2, 1976, and reprinted by permission from Hydrocarbon Processing, August 1976.)