Project Management for the 21st Century

by Lee D. Smither

     Director of FMI Management Consultants to the Construction Industry

One of the biggest changes in our industry is the role of the project manager.  It used to be that the project manager was solely a builder of projects working with field supervision to bring the job in with quality, on-time and within budget.  As construction management has become more prevalent and general contractors have become less involved in the actual “building” of the job, project managers have become as much business managers as they are builders. 

In today's competitive environment knowing the construction side of the equation is fine, but knowing how to manage a project in such a way so as to make a profit even when the odds are against you is a coveted talent.  Project managers must understand the impact of their decisions on the financial results of the job.  It is amazing that companies give millions of dollars of responsibility to newly minted project managers to spend wisely, when in fact they have typically had little training in how to manage those dollars effectively. 

Project managers must be builders, accountants, lawyers and salesmen.  They must be adept at contract management, cash management, cost analysis, building customer relationships, selling extra work, negotiating profitable outcomes and building the project.  They must also be organized in order to administer the project paperwork effectively and not let profits erode.

The ability to build a schedule that is truly used to manage multiple aspects of the job is a crucial skill to have.  A schedule is the primary tool for the project manager to use in managing the job.  The schedule should be built using a standard software program.   Two or three week look-ahead schedules can be broken out of these “master” schedules and used to run the project phases that are at present being focused upon. 

Once the critical path is established, it provides insight as to where to focus your attention in order to ensure that certain tasks are not forgotten and cause a delay in the completion date.  Many general contractor project managers use the pre-construction meeting to get input from their subcontractors to put together the first schedule. Not only does this provide buy-in from the subs, but it also makes for a more accurate schedule with regard to sequencing and duration of tasks.  The schedule is updated monthly or even weekly depending upon the job circumstances, but the key is to take it seriously and discuss it at every project review meeting. 

Float time or contingency should always be built into the schedule. This allows for that 12 inches of rain that creates a mud bath or that unsuitable soil condition that is discovered as you prepare to pour footings that delays the project. As the job progresses, project managers are always using the schedule to examine “what-if” scenarios. Overlaying tasks in the schedule can provide what a “best case” scenario might look like and allow the project manager to show the owner what can be done if the job is tightly managed. 

One final function of schedule is its value as a communication tool. The master schedule shows the owner and others where you stand at any point in time on the job.  Your client must be able to look at that schedule and see the exact status of their project. Your job schedule may not be as detailed and only shows the major phases of work so that the superintendent can use it to manage the various trades on the project for the next few weeks.  Thanks to scheduling software, you can have multiple versions of a schedule that are for different purposes but are all tied together in terms of logic and duration. 

As project management has evolved, documentation has become a key skill particularly as projects become more complex and difficult.  Organized documentation is the best defense against claims.  Here are the major pieces of documentation that every project manager must have at their disposal:

• Proposal and Bid Estimate – These documents describe how the contractor envisioned the construction of the project and his plan to accomplish the work. It includes information about costs and schedule as well as construction methods. 
  
• Project Schedule – This is one of the most overlooked project records and it can provide the best documentation in a claim situation.  The original baseline schedule sets the mark for monitoring the effects of any delays or unforeseen project disruptions. 
  
• Project Change Orders – Any variances from the original contractual requirements must be documented and separated from the original scope of work requirements.  Daily reports, time sheets, letters of correspondence and meeting minutes or any other documentation discussing agreements made between parties should be readily available. 

Most project managers get plenty of education on the technical aspects of their job, but they rarely get training in the essential business skills required to be able to manage a customer relationship and project profitably.  In our experience, how well you manage the customer relationship often dictates how much money you make on the project. Contract management, cash management, selling and negotiating skills, and documentation skills are all essential business skills that all project managers should possess.

Contractors should strongly consider spending part of their training budget on developing these skills in their project managers since this is where the money is either made or lost. These skills are even more critical as project managers get involved in more complex project delivery methods such as design-build.