The Four Cs of Good Project Management Practice

So many theories on project management, so little time.  How do we distill all of the advice, ideas and principles into an elegant summary?  In the real world, we know that there are no packaged solutions for complex problems.  There are, however, experience-tested frameworks which act as underlying threads to guide good project management practice.  

I have wrestled with the question of outlining good project management practice and have reflected on the established doctrines.    For the past several weeks, as I introduced principles and best practices to my summer project management class at NYU, I began to see how many of these principles have common references and recurring themes.  While there are no magic pills or summary level treatises which capture the full range of project management discourse, there are underlying concepts which clarify project management behavior.  Here are a few powerful common denominators to project success that stand out after the background noise is filtered out:  

1.  Clarity…project managers and project teams that practice clarity are better equipped to succeed.  Promoting a culture of clarity requires active direction and support from top of the organization.  If senior management is not committed, there can be no clarity; the default scenario in that case is ambiguity and chaos. 

2.  Communication…this was, in a way, too easy a common denominator to miss.  Simple, yet very powerful.  Project managers, their stakeholders and their teams must appreciate and embrace the need for proper, timely, concise and relevant communication.

3.  Commitment…One of the key roles of a project manager / leader is securing the commitment of the project team.  The project leader cannot do this until she has demonstrated the same level of commitment that is demanded and required from the project team.  

4.  Credibility…This goes hand-in-hand with trust.  You cannot convey your arguments if you are not credible.  You cannot achieve credibility if your integrity is suspect.  There are no short cuts to credibility.

This is not a comprehensive list and is just a very tiny snapshot from one viewpoint.  I’d like to get other views and thoughts which could expand on this.   Your comments and perspectives are welcome.

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Information Management > Project Management Challenge or Opportunity?

Contractors and construction professionals are increasingly realizing that their success depends on their organization’s ability to process, manage, filter, keep and leverage information.  We live in the age of information and therefore, we understand that our ability to sort through the barrage of data that surrounds us is critical.  We need to extract meaningful information from the cloud of data which surrounds us, and then use that information to achieve business advantage.  In speaking and interacting with contractors, builders, investors and industry professionals, I have found a common source of frustration that begs a very important question: How do we manage information to become better at what we do?  We cannot make sound decisions without good and timely information.  The management of information is a key driver for success in construction.  It impacts the following:

  • Estimating
  • Purchasing
  • Staffing
  • Contract management
  • Scope Management
  • Planning
  • Logistics
  • Financial Record Keeping
  • Legal and Insurance Documentation
  • Accounting and Tax Reporting
  • Sourcing
  • Materials Management
  • Scheduling
  • Quality Assurance
  • Project Closeout
  • Tracking of Lessons Learned
  • Sustainable Profitability
  • Long-term Survival

I am focused on raising industry awareness regarding information management, and ensuring that we remain sensitive to the manner in which we process, and filter information within project teams (and across project platforms).  There are significant opportunities that stem from information asymmetry in the industry.  The key is to change our mind set and recognize the fact that we are purveyors and consumers of information.

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Building Great Project Teams 101 > The Learning Organization

There is a marked difference between good project teams and great project teams.  The ability to tap into that “thing” that  drives people towards innovation and self-motivation is what separates project leadership from project management.  To really inspire greatness, leaders have to connect with their people and demonstrate that they care about them.

Let’s think about what it takes to build great project teams.  It’s a lot more than hiring good, smart, dedicated people.  It’s about motivating people and teams to become self-actualizing entities that grow and evolve beyond the point suggested by their talent level.  Greatness in project teams emerges when the sum becomes greater than the sum of its parts.

Todays project leaders have to understand that teams are faced with:

– incredible pressure to produce.
– increasing complexity stemming from changing technologies and steeper learning curves. 
– stiff resource constraints.
– a changing competitive landscape.

The only path that will be sustainable is to create an environment which promotes organizational learning.  I highly recommend the following book which changed the way I thought about team building and raised my awareness of the immense potential that remains untapped in our people and in our teams – 

The Fifth Discipline: The Art and Practice of the Learning Organization is a book by Peter Senge (a senior lecturer at MIT) focusing on group problem solving using the systems thinking method in order to convert companies into learning organizations. The five disciplines represent approaches (theories and methods) for developing three core learning capabilities: fostering aspiration, developing reflective conversation, and understanding complexity.

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The Importance of Gate Reviews in Design and Pre-Construction

Gate reviews are essential to well-managed planning and pre-construction phases of a construction project.  The concept is simple in its execution and elegant in its simplicity.  I caution industry professionals that simplicity does not mean that they should let their guard down.  Often the root of project failure lies in a planning process that lacked discipline and formality.  We all know that real world economics impose severe pressure on project teams compelling fast track planning, frenetic schematic design and rushed design development.  As project leaders, we must not fall prey to the kind of groupthink which rationalizes hasty design decisions.

To avoid the instant gratification of moving projects along rapidly from conceptual design – to schematic design – to design development – to construction documents, we implement phase gate reviews (or phase approvals).  These reviews ensure that the team has rationally confirmed that the current phase has been completed, and that the project is ready to move on to the next phase.  A well-run gate review answers important questions and ensures that key issues are raised and properly reviewed.  Some questions that should be raised and answered during a gate review include:

  • Are all of the Owner’s requirements reflected in the current design documents?  If some are missing, they should be included or formally omitted by the Owner.
  • Is the business case for the project still intact? 
  • Does the project leader believe that the existing phase has been completed?  Is there buy-in from the project sponsor?
  • Have the planned schedule and budget been updated to reflect the information included in the completed phase?  Are these in keeping with the Owner’s expectations?  
  • Have potential risks been identified to reflect the current phase?  
  • Have known project issues been validated?
  • Have constructability issues been addressed?
  • Has the design team validated resource availability and materials selection?
  • Is the team controlling the scope or has the scope become a moving target?

Here is a list of gate reviews on construction projects:

  • Project Approval
  • Conceptual Design Approval
  • Schematic Design Approval
  • Design Development Approval
  • Construction Document Approval

The purpose of a gate review is not to cast blame or to generate unnecessary paperwork.  The intent is to subject the project to strict scrutiny by the team that will be charged to deliver the project per the requirements in an economical manner.  Remember the old but timeless adage, “measure twice, and cut once.”

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Contracts Negotiation

The best lesson I learned about negotiation was a simple one.   Contracts negotiation involves a lot of work.  It is all about the willingness and ability of the team to prepare, document, analyze and demonstrate its case.  It is not glamorous and it is often time-consuming.  But if you do your homework, it can be rewarding and satisfying.

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CASH FLOW MANAGEMENT – A key Driver of Contractor Success

CASH FLOW MANAGEMENT – A key Driver of Sub-Contractor Success
One of the biggest challenges for contractors is CASH FLOW management.  You can make an accounting profit and still get wiped out.  This can happen in any economic climate, but is a particularly acute problem in a down market when competitive pressure is severe.
Contractors (and especially subcontractors) are often at risk for cash flow imbalances because they indirectly serve as a short-term financing arm for developers, owners, general contractors and even government agencies.  They are also at lower rungs of the contracting ladder, at least two-to-three levels removed from the money.   In a tight market, the cost of money can be squeezed out via the bidding process, increasing the risk that late cash receipts will erode profitability.
There are steps you can take to ensure that cash flow has visibility within your organization and is a priority for your project teams.
1.  Be sure that mobilization requirements are clearly spelled out in your contract.
2.  Find out if the GC, CM or owner you work for has an imprest account for job start-up.
3.  Review the payment clause(s) in your contract.  Generally, CM contracts stipulate a “pay-when-paid” requirement.  If this is the case, see if you can negotiate better terms.  Check the payment requirement laws in your area and be cognizant of them.
4.  Make sure that retention is managed properly.  Push to have the retention reduced at the mid-way point in the project. For example, from 10% to 5%.  This must be clearly delineated in your contract.
5.  Be aware of prompt payment terms, which are often required in government-funded projects.  Know the requirements of the agency administering the project, and verify that these terms have been included in your contract.
6.  Tie-in executive and project management compensation to cash flow.  This is an effective method of conveying the importance of cash flow within your organization, and leads to proactive cash flow management.
7.  Timely cash flow, like most elements of effective project management, derives from proper project management, communication and documentation. Update your project schedule monthly and demand that it is issued with a narrative that explains how the critical path has changed!
8.  Change orders, if improperly administered, can bury a subcontractor.  Again, it comes down to proper communication, documentation and follow-up. Payments for change orders can be negotiated and should be part of the agreement.
9.  Know your contracts inside-out and understand the pitfalls and opportunities inherent in your agreements.
10.Final payment problems usually result from quality issues at the end the project.  These can stem from extensive punch lists, poorly administered permitting processes, disorganized close-out and TCO issues.  Implement a standard process for managing close-out and be sure to communicate this to your team and to your client.  Remember that well executed job close-out is a process.  It does not start during the end of the project.  Rather, it is the result of sound project management practices and effective project communication and controls.
Be aware that cash flow is as important as profitability.  Evaluate the diversity of your cash flow against your ability to access cash, either via savings or from credit lines.  Be sure that your contract agreements clearly address payment terms.  Communicate these terms to your project managers and to your executives.  Remember that Cash is King in the construction industry.

Preparing for and Administering a Time-Impact (Schedule) Claim

Preparing an effective schedule claim requires diligence, preparation, communication, documentation and pro-active project management. If the contract is not administered properly from the onset of the project, a successful time-impact claim is highly unlikely.
Generally, the burden of proof is on the contractor.  You cannot demonstrate that your schedule has been impacted if you do not have a clear and viable baseline schedule.
Here are some basic steps involved in tracking and demonstrating schedule variances:
  • Establish a logical baseline schedule before the start of the project.  Ensure that it ties into your job estimate.
  • Verify that the baseline schedule has been communicated and included in your contract.
  • Document your assumptions.
  • If you are the prime contractor (CM or GC), be sure to include the baseline schedule in your subcontract agreements.
  • Specific task activities should be clearly defined.
  • Keep the schedule current.
  • When updating the schedule status, be sure to verify the logic of your assumptions.
  • Do not override the logic of the schedule; this will only increase risk and reduce the credibility of your schedule and any time-impact claim(s).
  • Submit updated schedules with a critical path analysis at least monthly (or periodically as needed).
  • Each activity should have a unique owner (source) of responsibility.
  • Activities should be descriptive: Object / Action / Location
  • Use the Critical Path Method (CPM) to manage the project.
  • Bar charts are only used as a summary tool after the CPM has been constructed.
Time Evaluation Concepts
The critical path is the longest sequence of activities in the schedule, and therefore, activities on the critical path have zero float.  This is an important concept.  If you deplete the float in an activity, by definition, it will fall on the critical path.  Thus, the critical path is dynamic and can change, especially on a large and complex project.  As a project manager, you must recognize the tendency of the critical path to change and be ready to document how it changed and who or what caused the change.  Also, the CPM schedule must be presented prospectively, i.e., it should be based on the best information currently available and on project assumptions that have been verified.
Include external interfaces and owner-supplied information and deliverables.  Remember that the CPM should represent all of the scope of the contract.
When preparing a time-impact analysis for a claim, you can show the progression of the schedule up to the point of the delay event and use “BUT FOR” analysis.  This entails showing how the schedule deviated from plan, and how it would have progressed IF the delay event had not happened.  Also, verify that all activities which you include in your delay claim were “critical” at the time the delay occurred.  If there were non-critical activities which lost their float because of the delay, and were forced to become “critical”, demonstrate this using the schedule history as back-up.
Effective schedule management and time analysis requires attention to detail and a project management team that communicates and documents changes.  Often, large changes are the result of small changes that the project team views as being minor.  The lesson is that even small schedule changes should be documented and communicated, so that the schedule (and the project) does become a victim of “death by a thousand cuts”.

Innovation Report > Using Very Small Strain Analysis to Monitor Structures

It is quite common in the construction industry to monitor structures for potential damage from ongoing construction activities. Impact to retaining walls, foundations, adjacent buildings, abutments, etc. from ongoing construction are typically undertaken through the application of optical based laser surveys, crack gages, pre/post photographs, vibrating wire strain gages, accelerometers, and tilt meters. These tools are, of course, well-known across the North American construction industry and found on most job sites. It is recognized, however, that these traditional applications provide evidence of deformation or movement after it has occurred and it is then a matter of extrapolation and analysis to determine the effect of the movement on the structure. For example, if vibration readings from installed accelerometers are beyond accepted levels, what is the impact on the asset being monitored? Can we be sure there has been no damage to the asset? If there was movement, has the structure stabilized? Is there damage that may be accelerating? What are the inherent risks and how can they be managed or minimized?

These questions represent very real concerns to contractors and developers. Issues associated with progressive damage pose safety risks, scheduling risks and liabilities for project stakeholders.  They portend unforeseen costs. It is recognized that traditional approaches can often only demonstrate a change without providing demonstrable proof of what that change might mean to the project. STRAEN Inc. has been working in the US to introduce complementary tools to work with contractors, developers and engineers to provide immediate answers to these critical questions. Using new wireless fiber optic strands that can be installed in as little as fifteen minutes, contractors and engineers are able to benefit from new high resolution data that measures accumulated strain from an installed baseline level to any changes to the ongoing dynamic operating conditions of a structure.

Normal construction activities and their effect on monitored assets are measured dynamically as are any changes to normal operating conditions such as excessive vibration, blasting, drilling, excavation, collisions, etc., which may compromise the structural integrity of the asset. By continuously sampling at 50Hz, the technology measures the accumulation of strain on monitored structures, and provides immediate (alarmed) feedback if normal conditions have been exceeded, and how the structure has responded to the activity. Dynamic changes can be highlighted and the response of the structure is made available for immediate analysis. This high-resolution data illustrates the effect of the movement, if the structure has returned to its normal operating conditions, of if there are any changes (and where) to normal operating behavior.  The goal is immediate and objective data on critical issues.

While relatively new to North America, the technology was developed by French-based OSMOS SA and has been used across Europe and Asia for over ten years with over 4,000 installations globally. Landmark structures including the Euro Tunnel, Eiffel Tower, Manhattan Bridge and even the monitoring of adjacent buildings at Ground Zero post 9-11 demonstrate the wide-variety of uses for the instrumentation. With the introduction of the new wireless units developed by OMSOS SA, STRAEN Inc. anticipates a very rapid adoption of the technology in the US given the ease of installation and the significantly increased data available for managing risk on project sites.

STRAEN Inc. is focusing on the introduction of the new wireless sensors for the construction industry as an inexpensive contribution to the real questions needing to be answered onsite for contractors, developers, and engineers to manage risk proactively and avoid costly emergencies.


Bidding & Estimating Insights for Heavy Construction Projects > Podcast 2 > Negotiation

This podcast is the second of a PLG series that focuses on bidding and estimating insights for heavy construction projects.  Shyam Bhatia answers our questions regarding negotiation, contracting strategy and purchasing methods for complex infrastructure projects.  Please click the MP3 file below.

PLG Podcast 2

Shyam Bhatia retired in 2012 as VP Estimating for SKANSKA Civil (New York City) after a 50-year career in estimating, engineering, purchasing and contracts negotiation on mechanical and civil construction projects.  

The opinions expressed in this podcast do not necessarily reflect the opinions of PLG, Project Leadership Guru or its affiliates, members, associates, business partners, advertisers and clients.  This podcast is meant for general information sharing purposes only, and is not meant to serve as a source for professional guidance or direction.  Any reliance on the opinions provided in this podcast is at the risk of the listeners and readers of this blog.  You are urged use your own judgement and that of your professionals when making decisions regarding construction bidding, estimating, negotiation, contracts and project management. 


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Clarity in Project Management Communication

Effective communication for project managers comes down to the ability to convey ideas, expressions and viewpoints in a clear and concise manner.  Historically, the best communicators are usually those who understand that clarity of thought is important.  They also know that it is not the size, quantity or complexity of words that matters.  What matters is the impact the words make, and the fact the message is received and understood.

Some quick tips.  Avoid fancy words that are not suitable.  Ensure that your ideas come across clearly with an economy of words and sense of purpose.  A short clear message is more likely to be understood than a long-winded essay.  If you are explaining a technical concept to a non-technical person, you want to explain the essence without unnecessary jargon.  Economize your words and optimize your message

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Bidding & Estimating Insights for Heavy Construction Projects > Podcast Series > Part One

This podcast is the first of a PLG series that focuses on bidding and estimating insights for heavy construction projects.  Shyam Bhatia answers our questions regarding the bidding process, the pitfalls of estimating and the rigor involved in estimating large and complex infrastructure projects.  Please click the MP3 file below.


Shyam Bhatia retired in 2012 as VP Estimating for SKANSKA Civil (New York City) after a 50-year career in estimating, engineering, purchasing and contracts negotiation on mechanical and civil construction projects.  

This podcast is the second of a PLG series that focuses on bidding and estimating insights for heavy construction projects.  Shyam Bhatia answers our questions regarding negotiation, contracting strategy and purchasing methods for complex infrastructure projects.  Please click the MP3 file below.

PLG Podcast 2

Shyam Bhatia retired in 2012 as VP Estimating for SKANSKA Civil (New York City) after a 50-year career in estimating, engineering, purchasing and contracts negotiation on mechanical and civil construction projects.  

The opinions expressed in this podcast do not necessarily reflect the opinions of PLG, Project Leadership Guru or its affiliates, members, associates, business partners, advertisers and clients.  This podcast is meant for general information sharing purposes only, and is not meant to serve as a source for professional guidance or direction.  Any reliance on the opinions provided in this podcast is at the risk of the listeners and readers of this blog.  You are urged use your own judgement and that of your professionals when making decisions regarding construction bidding, estimating, negotiation, contracts and project management. 


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Cost Management Solutions (1)

There are two concepts which are central to change management and contracts management on projects: Cost Attribution and Cost Segregation.  These concepts relate to a systemic thinking of costs and promote a proactive approach to the treatment of costs including clarity in project reporting and decision-making.

Cost Attribution – This involves connecting costs to specific activities and/or sources.  It is the discipline of categorizing the causes of the costs; it facilitates a better understanding of the project status and direction.  For example, if you were managing the development of a hotel project, you would want to ensure that the causes of cost increases were clearly visible.  You might want to assign one of the following categories to each scope change or potential scope change – hotel operator, owner, retail, spa, food & beverage operator, site conditions, weather, adjacent properties, marketing, guest experience, errors & omissions, scope ambiguity, scope omission, scheduling error, coordination, et al.  By doing so, you could generate reports indicating the relative size of each of the attributes and their contribution to the overall project cost increases.

Cost Segregation – This enables project managers to connect specific costs with their associated activities or contractually stipulated group of activities.  Proper cost segregation involves  discipline and is consistent with good project management and contract management practice.  It also connects with the work breakdown structure (WBS) and earned value analysis (EVA).  For example, lets say your company has a cost reporting system which has a nine digit code which includes location, project number and a three-digit suffix.  It might read like this, LOC-JOB-XYZ.  The XY might denote the type of trade work (masonry, carpentry, electrical, plumbing, etc.).  The Z would indicate whether the work was contract work, an owner-directed change, a pending prime contractor claim, an unresolved subcontractor change, an approved change, overhead, force-majeure, marketing, an internal charge or a parent-company charge.  A number from 0 to nine could be assigned to these categories.  The project manager could identify the categories of work and make informed decisions regarding specific work types including whether or not to add resources or start/stop certain activities.  Executives would also be able to assess the health of projects based on the types of activities in progress and in the pipeline.

The implementation of cost attribution and cost segregation into the day-to-day management of projects is an important step towards increased clarity and better project management.  It also provides executives with the information necessary to make strategic decisions regarding projects, staffing and resources.



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Construction Claims Management for Contractors (Part 1 of 4)

Here are some fundamentals of claims management for contractors (and subcontractors) –

  1. Your claim must be credible.  It must be based on facts!
  2. Focus on the big issues.
  3. Don’t make it personal.  That will only detract from your objective.
  4. Ensure that settlement discussions are without prejudice, i.e., without any loss or waiver of rights or privileges.
  5. Show entitlements with substantive back-up: reports, files, meeting minutes, etc.
  6. Demonstrate how the critical path was disrupted.
  7. Show how additional scope, cost and time was imposed incrementally.  If applicable, show how schedule compression was constructive in nature.
  8. Present facts supporting how hardships were imposed on you by the Owner or its agents.
  9. Understand the contract provisions with regards to assertion of claims, disputes resolution and termination language.
  10. Maintain accurate and timely project accounting data.
  11. Hire an excellent construction attorney!
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Construction Management Alignment Issues (Part 1 of 4)

Over the past forty years, the construction industry has witnessed the evolution of the construction management (CM) delivery methodology.   Today, when we speak generically about CMs, we usually refer to CM-At Risk, which is different that CM-As Agent.  The latter refers to an entity, which acts as an advisor to the Owner but does not directly manage the construction process.  The former, or more familiar role, is CM-At Risk, in which the CM actively and directly manages the construction process and provides certain financial guarantees with respect to the project execution and completion.

We are painfully aware of the lack of alignment that often occurs between the interests of the Owner, the Architect and the CM.  The CM engages directly with subcontractors, vendors and the construction supply chain.  The Owner depends upon the CM to deliver a specific set of services, within a specific set of cost and schedule targets, and with certain contingencies and defined shared cost savings.  The CM is tasked with the management subcontractors and vendors, which it must work with repeatedly.  To remain effective, CMs must forge and maintain good working relationships with its supply chain.  There is an inherent conflict between the CM’s clear obligation to the Owner and its less clear interest in maintaining ties with its supply chain.

What can the industry do to mitigate conflicts and ensure greater alignment of interests between the Owner, the Architect and the CM?  How can Owners leverage the CM’s relationships to reduce risk and cost on its projects?  What steps can Owners take to ensure that the change management process is handled as diligently as possible?

This summer, we will explore potential solutions to the aforementioned problems.  We will also identify ways to mitigate potential disconnects and lack of alignment between the key members of project teams.  We look forward to your feedback and recommendations.

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