CAPITAL PROJECTS COST CONTROL

 

In light of the 2017-2018 Construction Forecasts, Capital Projects Cost Control is paramount and one to take a more acute focus.

In Project Execution, Field Labor Shortages Represent The Highest Risk To Achievement Of Time & Cost Objectives Large And Complex Projects.

Major Shortages in Construction Field Labor Will Influence (Negatively) US Construction Costs.

In Execution (After Stage Gate Three), A Major Risk to Project Cost Management Resides in Labor Cost (overruns),

The Highest Risk to Achieving Project Cost Management Occurs In Execution – After Stage Gate Three/Full Funding.

Driven By A Long History of Cost and Schedule Overruns, Managerial Thinking Now Prioritizes Cost Certainty.

On Complex Capital Projects, Cost Certainty Has Become a Compelling Objective.

 

McLaughlin & McLaughlin has assisted numerous  Major Capital Projects successfully over the years by providing cost effective business solutions and recovery plans.

What makes McLaughlin & McLaughlin unique from the others is that we  not only perform project management services but dispute resolution as practitioners.

 

It is important to note that McLaughlin and McLaughlin Project and Dispute Consulting LLC [M&M] is not a law firm and is not intending to provide legal advice.  M&M is a consulting firm providing (among other services) non-legal expertise in construction claims, dispute resolution and litigation support.   For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

 

CAPITAL PROJECTS MANAGEMENT – US Gulf Coast

Capital project construction forecasts (US Gulf Coast) concur regarding robust project activity and growth for calendar years 2017 and 2018.  These glowing forecasts are tempered with forecasts of craft labor, field supervision and project/construction management shortages.  Demand for experienced project resources is expected to exceed supply.  This is similar to Venezuela (post-nationalization), Canada (oil sands expansion) and other marketplace imperfections.  M&M has evaluated these forecasts and rationalized the supply and demand implications as well as professional managerial options and paths forward.  This is an emerging and dynamic managerial, consulting and legal business opportunity.  M&M’s recent and extensive work in the field at active job sites of large and complex projects confirms the emerging situation.  Here are a few topics, questions and/or observations:

  • Skilled, experienced and dynamic management will be required.
  • Cost and/or Schedule Certainty is clearly at risk regardless of the development and delivery system (PMI, CMAA, CII, AACE, IPA, proprietary or other systems).
  • Construction schedules will be driven or constrained by human resource shortages (field labor, engineering, project management).
  • Managerial planning and management must focus on:
    • Acquisition of adequate supervision and field labor force
    • Optimization of your field labor (and engineering labor).

 

It is important to note that McLaughlin and McLaughlin Project and Dispute Consulting LLC [M&M] is not a law firm and is not intending to provide legal advice.  M&M is a consulting firm providing (among other services) non-legal expertise in construction claims, dispute resolution and litigation support.   For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

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CONSTRUCTION CLAIMS and DISPUTES – Subject Series Summary

Construction Claims and Disputes is the most popular subject on Project Professionals and has been for several years.  Further, it is the most requested line of services provided by McLaughlin & McLaughlin.    M&M are project management practitioners (in the field) and, yes, we practice what we preach.  Further, our choice of topics for Project Professionals posts is driven by and reflective of practical and current issues.  This is not esoteric, academic or hypothetical “stuff”.

This summary update provides readers with an overview of prior posts and provides a baseline for future posts that will follow on a timely basis.  Initially, this Subject Series, Construction Claims and Disputes, was posted during January 2011 through August 2013.  During the past several years, greater than 25% of views by visitors have been to this Subject Series.

Ideally this Subject Series  provides a starting point to investigate best practice on many planning and execution features of construction claims and disputes.

Construction Claims and Disputes (Part 0)  – This introduction formats the discussion with definitions, claim categories and key industry references.  This post is consistent with M&M experience in many years of professional services.

The Overview (Part 1)  –Part 1 updates Part 0, the introduction.

Construction Claims Management Planning (Part 2) – This is the most popular post in this (most popular) Subject Series.  Construction claims (or the risk of claims) can and should be professionally managed.  View this process as a piece of project (execution) planning [link].  This post outlines elements of a Construction Claims Management Plan.  Further, it addresses elements of defining a Claim Strategy.  Stakeholders include Owners, Prime Contractors and Subcontractors.  Do not miss this post.

Current Project Professionals Posts (Part 3) – Claims are organized into four general categories.  These categories are consistent with the frequency of occurrence, methods of management and other key managerial considerations.  The categories are

  • Scope of Work, Changed Work or Variations
  • Delay and Acceleration, Time-Related
  • Disruption / Productivity (usually labor/labour)
  • Terms and Conditions.

Pricing Construction Claims (Part 4) – This post addresses the…  Think you know how to price your (or other’s) claims?   Andrew (Andy) Ness, 2012-13 Chair, ABA Forum on the Construction Industry probably disagrees with your answer.  Read this post and consider Andy’s position as well as other considerations regarding claim pricing/damages.  The content of the recent ABA book on the subject is covered.

Pricing Construction Claims (continued) (Part 5) – Are construction claims and disputes “all about the money?”  Some believe this to be the case.  This post (Part 5) expands on Part 4 by addressing pricing and citing additional references.

Scope of Work – Baseline (Part 6) – It is widely believed and accepted that Scope of Work and/or Changed Work is the single largest source of claims and disputes in engineering and construction (as well as many other contracted services).  In order to establish departures from the baseline scope of work, you must be able to define the applicable baseline.  This post cites various sources for baseline definition,

Scope of Work Plans and Specifications (Part 7) – Several industry sources (publications) are used to elaborate on execution and contracting strategies that rely on plans and specifications as a major component of scope or work definition.  This discussion includes typical contract documents and contract provisions wherein scope of work, services, supply and / or facilities is / are defined.  Suggestions for configuration and change management in the field are included.

Other Subject Series that are both relevant and popular include:

Going forward, we will post other features of CONSTRUCTION CLAIMS and DISPUTES.

My we wish you the best of luck and let us all attempt to confront and deal with these and other project management challenges.  It is crucial that recognition and anticipation of these issues occur during initiation and planning.  However, the recognition and management should continue through execution, controlling and closeout.

Please note that McLaughlin and McLaughlin [M&M] is not a law firm and is not intending to provide legal advice.  M&M is a consulting firm providing (among other services) non-legal expertise in dispute resolution and litigation support.  The Resource Center is for the convenience of blog visitors and M&M does not offer this for commercial purposes.  For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

 

 

CONSTRUCTION CLAIMS AND DISPUTES – (Part 1)

This McLaughlin & McLaughlin post is an introduction to an ongoing Subject Series regarding Construction Claims and Disputes in engineering, procurement and construction industry.

OVERVIEW

In relation to construction claims and disputes it is important for all readers, contributors, participants and others regarding the general subject of claims and disputes to be equally informed.  This discussion is directed toward engineering and construction claims and disputes.

In the engineering and construction industry, contract claims and disputes are common issues.  They occur between: owners and contractors (prime), contractors and their subcontractors, contractors and (their) vendors, and at other contractual interfaces.  Resolution of the claims and disputes can be a costly, disruptive and aggravating process for all parties.

[Read more…]

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 8) –Project Manager and Industry, Domain and/or Technical Experience

This McLaughlin and McLaughlins Project Professionals post is the eighth in a series of discussions regarding current challenges with the staffing aspects of your project management team.   This post (like Parts 4, 5, 6 and 7) addresses acquiring the human resources (people) or staffing.  In this case, we focus on the project manager.  The Subject Series can be viewed here.

This, the fourth post on acquiring the project manager, addresses the relevance and/or importance of industry, domain and/or technical experience in a professional project manager.

According to Google, LinkedIn is the World’s Largest Professional Network.  As a member of several Discussion Groups that pertain to project management, I posed the following discussion:

In Project Program or Construction Management, how important is industry, technical or domain experience?

“When project management candidates or persons are being considered, selected, and engaged or hired, technical or domain experience is frequently an expressed consideration. Often, criteria for the individual includes industry, project-specific scope, technical or other experience with the content of the project are expressed requirements. There are differing views on this subject. What are your views?”

“PMI’s PMBOK discusses many activities and skills that are (in part or entirely) focused on the Project or Program Manager. All of these process requirements are managerial in nature, virtually none are technical or domain related.”

“In his authoritative book PROJECT MANAGEMENT, A Systems Approach to Planning, Scheduling, and Controlling, Dr. Kerzner lists ten proficiencies for effective project management. Only one of the ten is Technical Expertise (assume same as domain expertise). Industry or similar project experience does not make the list.”

“Having managed many projects in many industries and with varying underlying technology, it is fair to say that opinions vary widely on this topic.”

“What is your perspective, opinion, experience or view?”

The comments are both thoughtful and revealing.  In the following, we have extracted typical (but not all) of these comments. [Read more…]

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 6) – Acquiring the Project Manager

Selection Considerations

This McLaughlin and McLaughlin Project Professionals post is the sixth in a series of discussions regarding current challenges with the staffing aspects of your project management team.   This post (like Parts 4 and 5) addresses acquiring the human resources (people) or staffing.  In this case, we focus on acquisition of the project manager.  This acquisition of project manager resource will be the subject of several posts over the next several weeks.  The Subject Series can be viewed here.

This, the second post on acquiring the project manager, will address the selection criteria that are important in a professional project manager.  Before looking at sources for a project manager candidate, one needs to settle on the key characteristics (personal and other) that are needed in the specific project and the project execution strategy for your project. [Read more…]

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 5) – Acquiring the Project Manager

Personal Characteristics and Attributes

This McLaughlin and McLaughlins Project Professional’s post is the fifth in a series of discussions regarding current challenges with the staffing aspects of your project management team.  The focus is on the managerial aspects of human resource planning and acquisition.  This post (like Part 4, our last post) addresses acquiring the human resources (people) or staffing.  In this case, we focus on acquisition of the project manager. This acquisition of project manager resources will be the subject of several posts over the next several weeks.

A key action, many believe that this selection/acquisition (the project manager) is the most important activity in staffing the project management team.

In past posts, the acquisition strategies have been discussed and evaluated.

This, the first post on acquiring the project manager, will address the personal characteristics and attributes that are important in a professional project manager.  Before looking at sources for a project manager candidate, one needs to settle on the key characteristics (personal and other) that are needed in the specific project and the project execution strategy for your project.  From past posts, it has been asserted that enterprise environmental factors are key inputs.  These factors influence the characteristics and attributes that are needed for a project within your organization.

Please RememberTeams of people [not machines and not software] build projects. Consequently, if you cannot acquire the requisite staffing, you are not prepared to execute the project [at least as planned].

Please Remember This is a team, not a group of individuals. Have you noticed that so many sports teams with superstars rarely win championships?  Further, have you noticed that championship teams have few, if any, superstars?  It is the project team, not the individual that must be staffed and developed.  As they say, there is no “I” in team. [Read more…]

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 3) – Acquiring People

This post is the third in McLaughlin & McLaughlins Project Professionals series of discussions regarding current challenges being encountered in today’s efforts/environment associated with the human resource aspects of your project management team.  More specifically, we have titled the series STAFFING YOUR PROJECT MANAGEMENT TEAM, and we intend to focus heavily on the managerial aspects of human resource planning and acquisition.  This post focuses on acquiring the human resources (people) or staffing.  While the planning may be the most important activity or action in the process, the challenge ultimately is obtaining the people to implement your intended execution strategy.  There are many acquisition strategies.  These acquisition strategies differ for various market conditions, organizational situations, project needs and other project variables.

Please RememberTeams of people [not machines and not software] build projects.  Consequently, if you cannot acquire the requisite staffing, you are not prepared to execute the project [at least as planned].

Please Remember –This is a team, not a group of individuals.  Have you noticed that so many sports teams with superstars rarely win championships?  Further, have you noticed that championship teams have few, if any, superstars?  It is the project team, not the individual that must be staffed and developed.

In order to present this topic in a logical manner and with an industry-recognized lexicon, we are using the PMI Project Management Processes for a Project as presented in A Guide to the Project Management Body of Knowledge (PMBOK® Guide).

Sources that are used in this post are:

STAFFING YOUR PROJECT MANAGEMENT TEAM (Part 1) – Introduction

McLaughlin and McLaughlins Project Professional’s post is the first in a series of discussions regarding current challenges being encountered in today’s efforts/environment associated with the human resource aspects of your project management team.  More specifically, we have titled the series STAFFING YOUR PROJECT MANAGEMENT TEAM, and we intend to focus heavily on the managerial aspects of human resource planning and acquisition.  This post is the introduction which frames out or structures the developing discussion.

Authoritative information and guidance regarding project management comes from many sources.  A few that may be obvious include:

In order to frame and organize this topic, we are using the PMI Project Management Processes for a Project as presented in A Guide to the Project Management Body of Knowledge (PMBOK® Guide) .

Sources that are used in this post are:

MANAGING RISK OF DELAY – Schedule Updates and Progress Considerations (Part 10)

This post is the tenth in a series of discussions regarding various aspects of time management as it relates to the risk of delay.  This post addresses planning for and implementing progress measurement and schedule updates.

The challenge associated with managing time is intensified in the case of larger and more complex projects as well as fast-track and high technology projects.

In order to professionally manage time (and, therefore, risk of delay) the manager must have a time baseline [typically a Critical Path Method schedule and a Performance Measurement Baseline – please see earlier posts on these topics] and a method to recognize variations from the baseline.  In order to detect variances, the managerial team must have an effective process to measure progress data and update the schedule (or time model). [Read more…]