by George Hedley
All of your construction projects must be running smoothly. As you walk from office to office asking your project managers how things are going. Their responses include:
"99% complete, just a few little things left."
"I think we'll finish on time."
"I'm getting all the signatures tomorrow."
"The paperwork is almost done."
"We're coming in close to budget."
"Only a few issues left to resolve."
"No problems I can't get handled."
But, are things going as well as you were told? A few days later, you get a call from an angry customer screaming his project is three weeks late. Another is upset he is not getting the quality and service he contracted for. Another client demands you drop everything and fix his problem now. Your accounting manager tells you some project managers are not doing their required paperwork timely and several change orders have not been approved in advance by the owner. An irate subcontractor calls threatening to pull off a job unless they get paid for work completed two months ago. On an important job, the concrete cylinder tests for the footings are not coming up to the design mix requirements. You find out a building inspector has not approved a major installation your foreman changed in the field.
And then it gets even worse. Your accounts receivable aging report is not good and payments are being received slower on most projects. Four customers still owe your company final retention payment on projects completed over three months ago. The city will not release your offsite improvement bonds as there are still outstanding items left to complete from over a year ago. There are six outstanding change orders a customer refuses to pay. The month end job cost reports show the estimated final profit on five projects has slipped again without notice.
No project problems?
These problems are symptomatic of companies run by owners who haven't taken the time to make installing pro-active project management systems a priority. These owners struggle and fail as they let project managers continually tell them what they want to hear instead of the truth. This avoids conflict until it's too late. Typical project management problems are encountered when companies don't have standardized systems in place that guarantee everyone does business the same way. You want consistent performance and results. You want everyone to do business in a similar manner. You don't want to rely on your constant reminding, checking, and confronting to make sure everything is performed exactly the way you want it done. You want your project managers to be accountable and keep you informed of the real situation on every project.
Even if you have great managers, they will do things differently unless you have written systems in place for all to follow. Six good project managers will do things six different ways, late, or not at all. This creates chaos, disorganization, stress, and loss profits. Your customers, subcontractors, and suppliers can't deal with a company that doesn't have consistent business standards and systems in place or followed. Could you imagine doing business with a bank that let each loan officer lend based on their own personal standards? It wouldn't work. Can you imagine a construction company where each project manager could decide if and when lien releases or signed change orders were required or if the subcontract terms had to be followed? It wouldn't work either.
Typical reoccurring problems like those described above are a result of the company owner not requiring everyone to follow the company project management systems. Most companies have general rules to follow but don't have them written down. The owner then tries to keep project managers herded like cats to follow the company rules. But, busy owners, over time, let their people slip from following written company procedures, if they even have them. It's hard to keep people accountable to systems that aren't written, reviewed, trained, tracked, followed, and adhered to.
Get project driven!
Construction companies are project driven. Successful projects lead to profitable growing companies. Owning and managing a successful general contracting company for over twenty nine years has taught me a simple truth, to build an excellent company, you must get your project management systems installed, pro-active, and permanent. Excellent companies consistently hit their overall goals and project management targets in the areas of time, budget, customer satisfaction, quality, and safety. They are focused on more than getting the jobs done as efficiently as possible. They focus on being organized and have a systemized pro-active approach to project management so they can:
1. Consistently measure success
2. Start & finish projects fast
3. Be on-time & budget
4. Meet their commitments
5. Keep customers happy
6. Create a great place to work
7. Build teamwork
8. Identify problems early
9. Train & improve people
10. Maximize & allocate resources
12. Make above average profits
What are pro-active systems?
Pro-active project management systems are repeatable and standardized written organizational methods, procedures, and guidelines that achieve project goals and optimize resources of time, energy, money, people, equipment, and materials within a specific deadline. Project management is composed of several different types of activities such as planning, assessing risk, estimating resources, organizing work, assigning tasks, directing activities, monitoring, tracking, reporting progress and finally analyzing results. Pro-active project management systems control all project activities and deliver the desired and targeted results on-time, on-budget, per the contracted scope of work while minimizing risk.
4 Stages "Pro-Active" Project Management Systems
1. Project Goals & Objectives
Consistent performance and success is more than getting organized and training project managers to do business the same way. Most projects start work without a plan and hope something good happens. Successful projects start with clear objectives and measurable results to shoot for. Just trying to "do your best" or "try and bring it in on budget and schedule" will not guarantee the bottom-line results you want at the completion of every job. Without clear targets, you can't make project managers accountable or responsible for their results either. Every project must have clear, written and measurable targets and goals to shoot for and use to measure success. Before every project, sit down with the project team and lay out the goals and objectives to aim at including:
A. Overall project objectives
B. Budget & Financial
- Job cost
C. Time & schedule
G. Customer satisfaction
2. Project Planning
Successful projects have written plans to insure they stay on track and hit their goals. You wouldn't start a construction project without a detailed set of working drawings or plans to build from. Project management is no different. There are certain steps every project must follow that guarantee on-time and on-budget completion and success. These steps must be identified and perfected as part of your project management system. These systems can include pre-project start-up meetings, procurement procedures, change order systems, and shop drawing standards.
The objective is more than to keep the job moving. The goal is to hit the goals and project milestones. Systems will make this happen. Project managers must breakdown the project into small incremental steps that will insure accomplishing the end results. By creating and following a project plan, the manager can assign tasks and hold people accountable. In order to draft a successful project plan, include the following:
A. Project specifications
B. Project requirements
3. Project Production & Implementation
The next step is to build the project. Ongoing organizational systems will keep your project headed and tracking towards the desired end result. Each project team member must know what is expected and what systems must be followed before starting work. By establishing clear measurements and procedures for project implementation, team members can get started on track and monitored on an ongoing basis as to their progress. Consider which project management systems will guarantee that every project will meet its' goals:
A. Project control systems
B. Procurement systems
C. Installation systems
D. Tracking systems
E. Cost control systems
F. Quality control systems
G. Productivity systems
H. Training systems
I. Safety systems
J. Customer systems
4. Project Monitoring & Evaluation
As you build each project, constant monitoring becomes easy for the owner or upper management when systems are in place and being followed. When project management systems are installed and used effectively, monthly evaluation meetings become a simple check of what has been done properly and what needs attention. When systems are used, problems become quick to identify, hard to overlook or hide, and can be addressed before it's too late.
P.M. systems are "pro-active"
A key success factor to owning and managing an organized and systemized company is to select the systems that will insure the success of your operation. To create pro-active project management systems, start by selecting the top ten systems and procedures you feel, if implemented and followed, will guarantee successful projects ninety percent of the time. Then you must be 'pro-active" and stay focused on these systems as 'musts' for your managers to implement, maintain, track and perform. It will be your job to monitor these priority systems and force your project management team to adhere to without exception. For example, when ordering something with a credit card, they always insist on getting your expiration date, no exceptions.
To create and draft project management systems, please refer to step 3 in my 'Entrepreneurial Excellence' series entitled: "Replace Yourself With Systems" or visit my website to obtain a copy of my "Construction Field & Project Management Systems That Work" program. Review this list of project management systems and select the top ten you feel are the ones which are a "must" in your organization:
__ On-going safety program
__ On-going training program
__ Change order management
__ Procurement procedures
__ General contract checklist
__ Subcontract checklists
__ Purchase order checklist
__ Required approval list
__ Insurance requirements
__ Submittal & shop drawing steps
__ Project scheduling & monitoring
__ Request for information system
__ Scope of work standards
__ Specification review
__ Customer service standards
__ Customer satisfaction review
__ Job cost reporting & review
__ Progress payment procedures
__ Project paperwork standards
__ Contract documentation
__ Contract administration
__ Contract management
__ Project communication
__ Project management meetings
Project Success System
At Hedley Construction, we selected, installed, and monitor fifteen project management systems on an ongoing basis. The overall system that holds it all together is our 'monthly project management meeting.' In this mandatory and valuable meeting held monthly, we review the progress of each project under construction with the project team. Each project team includes the project manager, project engineer, superintendent, foreman, contract administrator, and project bookkeeper. Each project management meeting takes about one hour to fully review. We review and check that each system is being followed, and if the project is on track and meeting its' goals, objectives and milestone targets. At each project management meeting we review and monitor the following for every project under construction:
1. Project goals targets
2. Jobsite photos
3. Updated schedule
4. Proposed change order log
5. Executed change order log
6. Subcontract tracking log
7. Accounts receivables
8. Accounts payables
9. Shop drawing & submittal log
10. Job cost update
11. Budget variance report
Company Success System
In addition to the monthly project management meetings, we hold an overall company success meeting to review the progress of the overall company and projects in progress. At this review we focus on hitting milestone targets for every project. Our review includes the following agenda items for the overall company success factors:
1. Current project milestone tracking
2. Sales & proposals
3. Estimates & bids
6. Project start-up
10. Overall strategy
Systems that work
The following are a few of the top priority project management systems I recommend to keep your projects on track.
Project Start-Up System
- Review bid/estimate/proposal
- Read complete contract
- Review complete plans
- Review complete specifications
- Visit job site
- Project goals & objectives
- Set-up project master budget
- Complete project checklist:
- Insurance requirements
- Bonding requirements
- Billing & payment requirements
- Cash-flow needs
- Discounts available
- Shop drawings & submittals
- Schedule & deadlines
- Long lead items
- Special tools & equipment
- Who has authority to sign
- City & permit requirements
- Site accessibility
- Loading & unloading needs
- Project close-out requirements
- Execute contract
- Always award to the lowest responsible bidder
Before awarding contracts, review:
- Bid scope of work
- Financial capacity
- Ability to meet schedule
- Adequate manpower
- Similar project experience
- Quality workmanship
- Training program
- Safety program
- Review contract terms:
- Final scope of work
- Delay clauses
- Mandatory meetings
- Clean-up & punch-list
- Change order procedures
- Notice requirements
- Payment procedures
- Execute all subcontracts prior to starting job
Shop drawing & submittal system
- Create list of required submittals
- Put submittal requirements in subcontract
- Put close-out requirements in subcontract
- Submit for approval within 30 - 45 days
- Get alternates & substitutions in writing
Change order system
- Never give it away
- Be firm but fair
- Charge the right price
- Never do "extra" work without understanding:
- Is the work extra?
- How is it to be charged?
- Who pays & when?
- Is there money available to pay?
- Who is authorized to approve?
- Always request additional time required
- Give proper prior notice per contract
- If it's not in writing, it didn't happen!
You can get your construction business to work without your constant attention and monitoring by creating, installing and using project management systems. The choice is yours to build an excellent company that is organized or not. The results you get are a direct result of your priorities and how you run and manage your entrepreneurial company. To make more money and have more fun with less stress, get organized! Install systems to produce consistent results and get everyone in your company doing business the same way.
George Hedley owns a $75 million construction and development company and
Hardhat Presentations. He speaks to companies on building profitable businesses,
leadership, and loyal customers. He holds 3-day in-depth "Profit-Builder
Circles" open to construction company owners in an interactive roundtable
format every 3 months. His "Profit-Builder System" includes proven
tools to always make a profit, build equity, create wealth, win profitable
jobs, motivate your people, and enjoy the benefits of owning a profitable company.