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Evidence of "Out-of-Control" Project Management (?)

  • 1.  Evidence of "Out-of-Control" Project Management (?)

    Posted 10-12-2020 06:45 PM
    • Why do many Design & Construction Firms budget 15% to 30% profit on their project's contract price, and "celebrate" when the completed project realizes 2% to 5% profit?
    • What, if anything, would be worth re-thinking?
    • How might such change(s) be identified?

    Stay Healthy!

    Cheeers,
    Bill

    ------------------------------
    William M. Hayden Jr., Ph.D., P.E., CMQ/OE, F.ASCE
    Buffalo, N.Y.

    "It is never too late to be what you might have been." -- George Eliot 1819 - 1880
    ------------------------------


  • 2.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 10-19-2020 09:02 AM
    Hi Bill,

    In my opinion, the problem lies in an inadequate study of the risks of the contract, which is not an easy task. The risks are related to various factors, but it is worth noting:
    - The type of project and its characteristics. Is it our specialty?
    - The client and her management team. Do they have good disposition and technical preparation?
    - Quality and availability of suppliers, subcontractors and workforce. Many times we don't have what it takes.
    - The conditions in which the contract is established (the price, the term, the milestones, etc.). Sometimes they are too demanding, but they are accepted by the company. It is better if the lawyers are involved in the drafting of contract.
    In adition, if the company participates in a very competitive market, it tends to be more optimistic (is there a less competitive market ?, just maybe some "niches"). Therefore, the company tends to believe that everything will work out, but its planning may be skewed by optimism.
    I think it is necessary to rethink whether the company is really more interested in sales or profit. Sales are important to grow, but without profit, the company does not exist.

    Kind Regards

    Ricardo Fierro F.
    Santiago de Chile.

    ------------------------------
    Ricardo Fierro Aff.M.ASCE
    Partner Senior Consultant
    GEDD CONSULTORES
    Santiago
    ------------------------------



  • 3.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 10-20-2020 03:41 PM
    Dear William Hayden
    Research and development in the field of value engineering is very important in construction projects.
    Today, project control and project management and quality control and assurance are very important in identifying project bottlenecks.
    Proper planning in charting the cash flow, Time flow and critical load can be effective in realizing the intended initial profit .
    I think the project management infrastructure should be commensurate with the strong financial value of the project in order to get the best profit.

    ------------------------------
    Reza Mokarramaydenlou, Ph.D., C.Eng, P.E., S.E., M.ASCE
    Structural Engineering and Seismic rehabilitation Consultant
    Author of the book in Elsevier
    ------------------------------



  • 4.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 01-22-2021 12:43 PM
    Hi Ricardo, The problem is that competitive pressures force the prices down, and however good your estimate you still go with your most optimistic scenario.  If you want a job you need to be the lowest bidder.
    If there is an answer, it is to focus on putting systems in place to ensure that you do the most efficient and cost-effective job possible.  If your costs are consistently below your competitors you will get jobs and make money.
    Regards / Derm

    ------------------------------
    James Wood M.ASCE
    Dermod Wood Assoc. LLC
    Pittstown NJ
    ------------------------------



  • 5.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 01-22-2021 05:28 PM
    Hi Ricardo and Mike,
    Thanks for your opinion which cover issues I see as common within our profession.

    Please consider the note below as intended to start others asking questions similar to yours.

    A 'tag line' I now write to help traditionally educated engineers question what, going forward
    from the year 2021 is essential to their success:

    "Engineering knowledge is necessary, but not sufficient to assure project success."
                                                                                                            -w. m. hayden jr.,

    My desire is they start to ask themselves, "What knowledge, added to my current engineering
    do I need to consider?"


    Stay Healthy!
    Cheers,
    Bill

    ------------------------------
    William M. Hayden Jr., Ph.D., P.E., CMQ/OE, F.ASCE
    Buffalo, N.Y.

    "It is never too late to be what you might have been." -- George Eliot 1819 - 1880
    ------------------------------



  • 6.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 01-22-2021 05:30 PM
      |   view attached
    Hi Ricardo,
    After a "Nap," I re-read your notes above.

    Of course, they are absolutely right-on!

    The paper I have attached has many similar insights to your own.

    Stay Healthy!
    Cheers,
    Bill

    ------------------------------
    William M. Hayden Jr., Ph.D., P.E., CMQ/OE, F.ASCE
    Buffalo, N.Y.

    "It is never too late to be what you might have been." -- George Eliot 1819 - 1880
    ------------------------------



  • 7.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 01-24-2021 09:42 PM
    Dear bill
    Thank you for sharing your interesting paper, referring to Human Systems Engineering. It is precisely the failure or lack of several of those 45 points (and also others that are not mentioned there) what cause disputes and claims in construction contracts, which sometimes end up in court trials. My consulting company is dedicated precisely to the resolution of conflicts in engineering and construction contracts and I am convinced that the root of the problem is 100% concentrated in human factors that could be corrected, with less or greater effort.

    best regards

    Ricardo Fierro F.

    ------------------------------
    Ricardo Fierro Aff.M.ASCE
    Partner & Senior Consultant
    GEDD CONSULTORES
    Santiago de Chile
    ------------------------------



  • 8.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 10-20-2020 03:40 PM

    Need to identify where things go wrong.  Formal postmortem procedure, preferably one that several D&C firms would be willing to subscribe to.  Maybe under ICE/PMI auspices.

    Derm

    Dermod Wood, PhD MASCE
    Pittstown, NJ



    ------------------------------
    James Wood M.ASCE
    Dermod Wood Assoc. LLC
    Pittstown NJ
    ------------------------------



  • 9.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 10-21-2020 09:55 PM
    Derm, to your point about the need for postmortems, there are companies like Independent Project Analysis (IPA) that already do this sort of thing for different industrial sectors. Not in any way promote IPA, but they have a a number of free resources on their website that make for insightful reading. I also found the attached presentation doing a simple search https://www.nwccc.org/wp-content/uploads/2015/06/tapia.pdf. I think this type experience and insight, largely from industrial projects, has bearing on infrastructure projects,

    Mitch

    ------------------------------
    Mitch Winkler P.E., M.ASCE
    Houston, TX
    ------------------------------



  • 10.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 10-22-2020 09:02 AM
    Hi Mitch, in the 1980s I worked for some years for Revay Associates, Montreal, on several construction claims including delays to the Detroit People Mover.  They specialise in construction claims and have now been in business for over 40 years.  If they could be persuaded to do a meta-analysis of old claims I think it would be invaluable.  Of course, they would want to be paid...

    Regards / Derm







  • 11.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 01-22-2021 12:42 PM
    Thanks Mitch - Sorry for my very late response.  I'll check these out.

    Regards / Derm

    ------------------------------
    James Wood M.ASCE
    Dermod Wood Assoc. LLC
    Pittstown NJ
    ------------------------------



  • 12.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 01-22-2021 04:07 PM
    Hi Mitch,
    Thanks for your insight.

    If I may, it was my project/program experiences that if the postmortem is the
    the source for improvement, I learned that change that lasts is rarely implemented.

    Also, please see the note above for Ricardo.

    Stay Healthy!
    Cheers,
    Bill

    ------------------------------
    William M. Hayden Jr., Ph.D., P.E., CMQ/OE, F.ASCE
    Buffalo, N.Y.

    "It is never too late to be what you might have been." -- George Eliot 1819 - 1880
    ------------------------------



  • 13.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 01-21-2021 09:21 PM
    Hi Dermod,
    Please consider my comment posted above to Ricardo.

    Stay Healthy!
    Cheers,
    Bill

    ------------------------------
    William M. Hayden Jr., Ph.D., P.E., CMQ/OE, F.ASCE
    Buffalo, N.Y.

    "It is never too late to be what you might have been." -- George Eliot 1819 - 1880
    ------------------------------



  • 14.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 10-21-2020 12:16 PM
    Separating the question into design profit and construction profits, I presume the question goes to the design profit. ASCE published two manuals on this topic (among others). MOP-45 (How to Select and Work Effectively with Consulting Engineers: Getting the Best Project) in chapter 4 discusses the design firm profit. I know the answer to this, but does this document address your question? ASCE MOP-  73 Quality in project delivery discusses in Chapter 7 the design agreement. Again, does this document address your question?

    I raise these issues because these documents should give guidance to younger professionals on these critical issues.

    Cheers
    Mike OConnor

    ------------------------------
    Michael O'Connor ,P.E., M.ASCE
    Vice-President
    Silver Spring MD
    ------------------------------



  • 15.  RE: Evidence of "Out-of-Control" Project Management (?)

    Posted 11-01-2020 12:27 PM

    Many researchers believe that the failure of construction projects to achieve their objectives without exceeding the cost and schedule
    is due to the failure of the project managers to manage the risks that are likely to be encountered during the project life cycle.

     A common statement by PMs some years ago to their upper-level managers:

                     "Scope, Schedule, Budget. . . . Pick any two!"

    Dr. W. Edwards Deming proved that when projects fail:

                    "It's the system, not the people."

    And given the org's executives are the only people who can change their system, until they do "Project Chaos Reigns!"

    In the after "Construction Complete" phase, I wonder how many develop and deliver a "Risk Management Guide" for the project's "Operational Risk Management?"

    The best "first stop" for the above question presented is at pmi.org

    Stay Healthy!

    Cheers,

    Bill
    p.s. We learn that "Post Mortems" are useful if, and only if that type of process starts at "Project Start-up,"
    and continues during the project's life, at least on a three-week cycle.

    The Standard for Risk Management in Portfolios, Programs, and Projects [1]

     

    [1] https://www.pmi.org/pmbok-guide-standards/foundational/risk-management



    ------------------------------
    William M. Hayden Jr., Ph.D., P.E., CMQ/OE, F.ASCE
    Buffalo, N.Y.

    "It is never too late to be what you might have been." -- George Eliot 1819 - 1880
    ------------------------------