View from the Field Part 5 – Field Labor Disruption - Effective Project Management & Strategies

The Series – View from the Field

View from the Field is a series of blog posts providing a practitioner’s view of the management processes and challenges associated with construction megaprojects as well as large and complex projects. Addressed by both Edward W. Merrow of Independent Project Analysis, Inc. (IPA) and construction lawyer Andy Ness at a recent ABA Forum on Construction Law conference, their high-level perspectives are elaborated herein. This multi-part series has and will expand upon some practical aspects of the many challenges facing managers as well as highlight suggestions for implementation by inside or outside counsel.

Summary – Forensic Labor Productivity Management and Disruption

Purpose – The importance / value of this post:

• Protect Clients / Direct Hire Contractors from compensable losses due to overruns in Field Labor Direct Labor Hours.

• Protect Clients / Owners (reimbursable cost contracts) from improper charges for unproductive Field Labor Direct Labor Hours by the direct hire party.

• Enhance probability of success and amount of damage recovery in dispute resolution processes.

Disruption

By the terminology Forensic Labor Productivity Management, I refer to productivity issues / losses or disruption that occur during changed work or that has occurred in a completed project.

Field Labor Disruption – the other “D” (Delay)

It is crucial to differentiate between delay and disruption.  While the two may exist concurrently or on the same project, either (delay or disruption) can occur or be present without the presence of the other.  Further, either (delay or disruption) can be recovered (through dispute resolution process) without reliance on the other being recovered or recoverable.

This has several important implications.  In dispute resolution process, a two (or more) paths forward to recovery of damages enhance the probability of recovery.  Potentially, Disruption and Delay are two separate paths.  Recovery of damages from one (delay or disruption) does not necessarily rely on entitlement or recovery of damages from the other.  Further, since the two derive damages from different cost pools or cost accounts, the potential recovery is increased.

The following table differentiates between the Disruption and Delay at a relatively high level:

Parameter	Disruption	Delay
Stakeholders	Owners, Construction Managers, General Contractors, Non-Direct Hire Contracors, Direct Hire Contractors	Owners, Construction Managers, General Contractors, Subcontractors, Vendors
Contract Provisions*	Assumptions about construction contracts – contractor entitled to economical operations, Implied Duty to Cooperate, contractor acts reasonably in planning**	Time, Schedule Specifications, Changes, others
Fact Set	Factors that impact the field labor productivity baseline (planned or experienced during project execution)	Facts that impact variances from the As-Planned schedule
Cause	Derived from Fact Set	Derived from Fact Set
Effect	Variances resulting from the “Causes”	Variances resulting from the “Causes”
Entitlement	Derived from Contract provisions and Fact Set / Cause	Derived from Contract provisions and Fact Set / Cause
Analytical Methodologies	Lost Labor Productivity – measured mile, for example	Forensic Schedule Analysis – typically Critical Path Analysis
Impacts	Labor Direct Work Hours exceed baseline without increased productivity / production / output	Project Completion later than originally planned date
Damages / Cost Pool	Direct Costs – labor and equipment	Indirect Costs – site and home office
Many Others	See References	See References

*M&M is a consulting firm.  We are not attorneys.  These are practitioner views.

**See Construction Scheduling: Preparation, Liability, and Claims, Wickwire et. al.

Changes and Variances – this is basic project “blocking and tackling.”

The presence and need for changed work provisions within larger projects is a necessary managerial and contract administration tool.  Scope of Work, external conditions, other factors depart from the contract baseline.  Equitably adjusting the contract for variances makes the stakeholders whole.  Regarding disruption, the party(ies) taking the risk of labor Direct Work Hour quantities must be compensated for change-related variances.  This includes one-off impacts such as cumulative impact.

Pricing changed work will use contemporaneous project productivity from the Field Labor Productivity curve (see below).  This ensures full compensation for changed work.

Change Order releases must be skillfully implemented.  Specificity and completeness are key.  For example, if productivity impacts and costs are to be resolved by the change, it is essential that the intent is clear and that the releases are consistent with the intent.  If cumulative impacts are not resolved (generally, cumulative impact cannot be resolved until project completion), make sure that the release is clear in this regard.

Process

Productivity Key Performance Indicators (KPI)

During the execution of the work, contemporaneous Productivity Ratio (PR) should be calculated, graphed and reported (in Monthly Progress Report – MPR).  This Field Labor Productivity graph serves to detect variances over time, compile the data, report results (Cumulative and Incremental – 3-week moving average).

Time Periods 1, 2 and 3 indicate (possibly) differing cause(s) of reduced Field Labor Productivity.  Hence, the fact set / evidence for each Time Period must be established / compiled.  An effective compilation tool is shown below:

Contract Types and Stakeholder Considerations

In his ABA Forum on Construction Law presentation, Mr. Merrow, IPA presented the following regarding Contract Types and Outcomes:

Focusing on disruption, in any of the Contracting Approaches:

• Fixed Price – generally the direct hire contractor is at risk for labor overruns due to disruption.

• Reimbursable Cost – generally the owner is at risk for labor overruns due to disruption.

The at-risk / aggrieved party must have a mechanism for recovering damages that are caused by others.  This is particularly true in the Reimbursable Cost Contracting Approach.  Hence, contract provisions must be fashioned such that the risk profile has processes for recovering damages.  This is particularly tricky when the risk is Field Labor Disruption.

Single Source of Truth (SSOT) 

The data management associated with field labor productivity is a key consideration.  A major limitation on both the recognition and recovery potential of disruption damages is the lack of data.  More specifically, the data needs to establish output or progress per Direct Work Hour.

Define the productivity-related data in the Project Execution Plan. Gather the data on a contemporaneous basis (needed regardless), and control access to the editing or changing of this data. This ensures availability if claims for additional compensation for productivity-related losses become desirable.

Analytical Methodology
Analytical methodologies, along with order of preference, are thoroughly discussed in AACE International Recommended Practice No. 25R-03, ESTIMATING LOST LABOR PRODUCTIVITY IN CONSTRUCTION CLAIMS.

Damage Calculation Options and Methods

Guidance regarding damages in general may be found in ABA Forum on the Construction Industry CONSTRUCTION DAMAGES AND REMEDIES, 2^nd edition.  Another useful reference is ASCE Identifying, Quantifying, and Proving Loss of Productivity; ANSI/ASCE/Cl 71-21.

Reconciliation to Actual As-Built Conditions

Delay – When performing schedule analyses, the analyst typically reconciles from the schedule baseline (As-Planned) to As-Built schedule.

Disruption – When performing disruption analyses, the analyst should reconcile to Actual Direct Work Hours.  Payroll data is a typical source.  The reconciliation can be displayed graphically using a pie chart where the entire pie represents Actual Direct Work Hours.  Slices of the pie are groupings of key allocations such as: As-Planned, Issue #1 DWH’s, Issue #2 DWH’s, Contractor Responsible or Unallocated.

References

Useful references are available through: CII, AACE, ASCE, MCAA, NECA, USACE, SCL, BRT, Ibbs, Bramble & Callahan, Wickwire, Dale & D’Onofrio, ABA, Schwartzkopf and others.

Conclusions (Part 5)

Forensic Direct Labor Productivity management focused on field labor productivity can have many business and dispute resolution considerations: 

• Using proper Key Performance Indicators (KPI’s) during project execution can achieve timely recognition of field labor productivity issues as well as facilitate contemporaneous gathering of data and documentation to support a potential change order request or claim (see prior post – Part 4 for suggestions).

• Incorporating a disruption claim into a dispute resolution package can enhance probability of a successful outcome.

• Costs of dispute resolution process can be mitigated by spreading the elements over the elements of the claim / complaint.

• For the direct hire contractor, disruption recovery becomes a potential Competitive Edge.

• For the owner (cost reimbursable type contracts), disruption recovery becomes a potential leverage or claim relative to the managing entity.

View from the Field – Scope of Work Management (Part 6)

Having discussed Retrospective Labor Productivity Management, Part 6 of this series will address managing the scope basis / baseline including changes thereto.

Author George T. McLaughlin PMP CCM has worked worldwide in this industrial marketplace since the early 1980’s. He serves Owners, Prime Contractors, and Subcontractors. For the most part, Mr. McLaughlin’s work is performed on-location where the relevant work is being performed hence the title “View from the Field.” Mr. McLaughlin is a testifying expert, speaker and author.  Mr. McLaughlin is a principal of McLaughlin & McLaughlin out of Austin, Texas.

View from the Field Part 4 - Labor Productivity Management - Prospective

View from the Field is a series of blog posts providing a practitioner’s view of the management processes and challenges associated with construction megaprojects as well as large and complex projects. Addressed by both Edward W. Merrow of Independent Project Analysis, Inc. (IPA) and construction lawyer Andy Ness at a recent ABA Forum on Construction Law conference, their high-level perspectives are elaborated. This multi-part series has and will expand upon some practical aspects of the many challenges facing managers as well as highlight suggestions for implementation by inside or outside counsel.

Summary – Prospective Labor Productivity Management

Labor productivity issues and challenges in the construction industry have been studied, analyzed and chronicled for decades. Highly respected sources of strategic and managerial thinking such as McKinsey & Company have offered extensive macro-level perspectives on labor productivity in the construction industry. This practitioner-level review and analysis offers a micro-level perspective with an emphasis on managerial pragmatism. Even further, labor productivity can be bifurcated into prospective and retrospective considerations. This first offering is prospective – with managerial tools and techniques that can be implemented promptly with potential for significant benefits for the direct hire contractor. For the direct hire contractor, Labor Productivity can be your Competitive Edge or your Curse. This is your tool kit to achieve Competitive Edge.

Part 5 of this series will address Retrospective Labor Productivity Managerial Options.

Labor Productivity Management – Elevated Importance

In many industries, the project delivery contracting strategy has shifted from Design/Build (D/B) or Engineer, Procure, Construct (EPC) to Design-Bid-Build (DBB). IPA’s recommended strategy for large and complex projects is DBB. For the construction contractors (subcontractors), DBB places heavy reliance on the management of direct labor, hence labor productivity. 

For the direct hire contractor, the risk profile of the individual project/contract can be quite high. When direct labor costs are a high percentage of the contractor’s direct cost pool, labor overruns can have serious consequences. Schedule-centric managerial approaches, such as Lean Construction, Advanced Work Packaging (AWP), Installation Work Packing (IWP) and others must be combined with labor productivity management techniques. Together, this combination optimizes the time/duration to perform the work as well as sizing of the labor crew. This harmonizes time and related schedule management with labor productivity management. Thus, direct labor-related costs.

Finally, craft labor shortages in the construction industry are well recognized and highly problematic. Improving the labor productivity of existing direct hire workforce serves to mitigate shortfalls as well as to enhance the competitiveness of the contractor’s construction business. 

Direct Hire Contractor Management Recommendations

Key Performance Indicators (KPI’s)

KPI is the best leading indicator of project conformance with or variance from the project baseline. Measure your actual field labor productivity weekly. Productivity KPI’s can be calculated using “Earned over Burned” (Earned Work Hours / Actual Work Hours). Since Actual Work Hours are determined weekly for payroll, weekly assessment or calculation of earned value (e.g., billing quantities) or related Earned Work Hours budgeted is all that is needed. Weekly assessment of labor productivity on the path of construction provides a “leading indicator” of project success or problems. McLaughlin & McLaughlin has managed projects with serious labor productivity issues and found that they can be resolved efficiently during erection and/or resolved with greater certainty when using dispute resolution processes.

Peak Labor Reduction

In times of construction craft labor shortages and individual skill shortfalls, the direct hire contractor can achieve a competitive edge by managing to achieve a reduction in the contractor’s peak labor count on the job. For example, a job budgeted at 100,000 direct labor hours over one year duration would have a peak labor force of approximately 72 workers. If labor productivity (PR) was .75 (worse than 1.0), the peak would be approximately 89 workers. However, enlightened management could improve this PR to 1.15. If done, the peak labor would be reduced to approximately 61. This reduction in crew size (89-61=28) reduces the demand for additional workers. In times of labor shortages and supervisor challenges, this serves to lower costs and supervision complexity.

Path of Construction

Use an execution strategy that is focused on labor productivity on or near the Path of Construction. Apply this focus and the rest of the job will almost take care of itself. Use Workface Planning coupled with Lean Construction, in some blend or fashion, on the Path of Construction. Coupled with a sound productivity management concept and plan for site logistics, the direct hire contractor will enjoy the benefits of effective field labor productivity management. Use a weekly Key Performance Indicator (KPI) of “Earned over Burned” (Earned Hours / Actual Hours). This leading indicator will give supervisors and managers positive control of the productivity. 

Lean Construction

Lean Construction has achieved richly deserved popularity in the industry. The Lean Construction Institute’s mission is “…to transform the fragmented design and construction industry through lean thinking, tools and technology.” Advocates Joe Donarumo and Keyan Zandy offer workshops and have authored The Lean Builder, A Builder’s Guide to Applying Lean Tools in the Field.  “Hoots on the Ground” is highly informative.  While very popular and apparently highly effective, a complimentary management tool is still needed to address field labor productivity. Just as the Last Planner System^TM uses Key Performance Indicator (KPI) “Percent Plan Complete,” a labor productivity management plan and KPI is needed. Weekly Productivity Ratio (PR) is simple, efficient and effective. “Earned over Burned” is easily implemented and is compatible with Last Planner System^TM.  All direct hire contractors and trade partners should incorporate a Labor Productivity KPI into their managerial tool bag.

Advanced Work Packaging (AWP) and all

Advanced Work Packaging (AWP), Workface Planning, Installation Work Package(ing) (IWP), Construction Work Package(ing) (CWP) and other related schedule-centric managerial approaches have considerable value in managing labor productivity. Construction Industry Institute (CII) offers publications that cover these approaches. Using this managerial process is a strong option with planning as the key.

Acceleration

During project planning and execution, the project / construction management teams are often confronted with requests or demands to accelerate performance. Whether using specific methods or performance-based approaches, the acceleration requirement, virtually without exception, degrades or reduces field labor productivity. Regardless of the rationale for acceleration, the contractor should choose an approach that minimizes the negative impact on the contractor’s field labor productivity. Prolonged scheduled overtime (more work hours per week than planned) rapidly degrades field labor productivity. Avoid widespread use of this choice. If necessary and feasible, apply scheduled overtime to the path of construction, not the entire site. Rotate the specific personnel. A better choice is shift work where a second shift can be implemented on or near the path of construction. Use proven techniques for planning and managing this second shift. Above all, manage acceleration involving field labor with great care.

Single Source of Truth (SSOT) 

The data management associated with field labor productivity is a key consideration. Define the productivity-related data in the Project Execution Plan. Gather the data on a contemporaneous basis (needed regardless), and control access to the editing or changing of this data. This ensures availability if claims for additional compensation for productivity-related losses become desirable.

Modularization

Likely, the most commonly suggested managerial option to labor productivity management is to fabricate or erect modules (portions of the total scope of work) using an offsite fabrication facility. A legitimate discussion of a modular erection strategy would require a dedicated post. Suffice to say that the strategy has merit, given the right circumstances. Like AWP, advanced planning of work packages is needed. Further, logistics planning associated with transportation of the module(s) from fabrication facility to the job site work front is a must and requires substantial skill.

Conclusions (Part 4)

Proactive management focused on field labor productivity can have many positive impacts:

• Offsets Labor Shortages – reduces the number of field labor, mitigates the impact of shortages and reduces the complexity of the related supervision.

• Reduces Risk – reduces the risk of cost overruns by managing the smaller total labor force at the site and the need for new hires.

• Facilitates timeliness – identification of negative events and variances, when recovery options are still available.

• Creates Acceleration Options – Allows management of the productivity-related negative impacts of acceleration situations.

• Enhanced Profitability – The direct hire contractor can reliably operate at or beneath the contractor’s cost and labor estimate baseline.

For the direct hire contractor, this becomes the Competitive Edge not a Curse.

View from the Field – Retrospective Labor Productivity Managerial Options (Part 5)

Having discussed Prospective Labor Productivity Management, Part 5 of this series will address the challenges of Retrospective Labor Productivity Managerial Options.

Author George T. McLaughlin PMP CCM has worked worldwide in this industrial marketplace since the early 1980’s. He serves Owners, Prime Contractors, and Subcontractors. For the most part, Mr. McLaughlin’s work is performed on-location where the relevant work is being performed hence the title “View from the Field.” Mr. McLaughlin is a principal of McLaughlin & McLaughlin out of Austin, Texas.

View from the Field Part 3 - Interface Management

This series of blog posts provides a practitioner’s view of the management processes and challenges associated with megaprojects as well as large and complex projects. Addressed by both Edward W. Merrow of Independent Project Analysis, Inc. and construction lawyer Andy Ness at a recent ABA Forum on Construction Law conference, their high-level perspectives are elaborated herein. This multi-part series has and will expand upon some practical aspects of the many challenges facing managers as well as highlight suggestions for implementation by inside or outside counsel.

Mr. Merrow’s High-Level Findings

In Mr. Merrow’s presentation, he addressed Contracting Approaches, Contract Types and Project Outcomes.  His findings are captured in these (his) diagrams:

Relative to other Contracting Approaches (i.e., Engineer, Procure, Construct (EPC) Lump Sum, Reimbursable EPC, Integrated Project Delivery), adjustments and accommodations to ways of working for “Mixed” are needed.  In “Mixed,” the risk profile is changed.

Mr. Ness’ High-Level Findings

Mr. Ness wrote a paper Why Megaprojects Fail So Often and Why You Should Care, No Matter the Size of Your Project and focused on business decisions in “4. Business Decisions That Hurt Prospects for Project Success.”  Regarding the discussion, Mr. Ness’ key point is:

Analysis of IPA’s database demonstrates that the form of the contract actually has very little impact on project success…And IPA’s database demonstrates that attempts to transfer risk wholesale to the contractor – such as by using a tough contract that has few holes and assigns the contractor responsibility for most everything – is simply ineffective.

Mr. Ness continues “The monumental mistakes usually belong to the business side.”

Why Consider Interface Management and Risk?

Given Mr. Merrow’s findings and Mr. Ness’ perspectives, it is legitimate to question the value of “Mixed” since most projects, although they may be large and/or complex, are not industrial megaprojects.  The reasons:

• Large & Complex success rate is 60%+, therefore, failure rate is 30%+.  However,

• The use of Mixed Contracting Approach (over, for example, EPC) significantly increases the number and complexity of interfaces and, as a consequence, risks.

• Interface management represent a valuable tool for planning and execution of large and complex projects (as well as megaprojects).

View from the Field – The Front-End

Interface Management – This skillset is elevated to a very high importance. Under “Mixed,” the number and complexity of the interfaces increase, possibly dramatically. The potential for managerial system breakdowns, delays, gaps and other issues is much larger (than EPC, for example).

Interface Audits – Prospective audits of all significant interfaces are effective managerial tools. These audits include: management, scope, technical, project controls, administration and others. Interface audits aid in the creation of robust interface definitions as well as reveal gaps and inconsistencies.

Resources include PMI Project Management Body of Knowledge (PMBOK), Project Integration, as well as Kerzner, Project Integration Management. The Responsibility Matrix (aka RACI) tool provides excellent interface definition when developed in a collaborative environment.  Alignment can be achieved using these (and other) processes. Some include RM/RACI work products as contract documents. The processes can be implemented within the Project Execution Plan (PEP, also known as Project Plan, Project Management Plan and other titles) using an extensive PEP workshop process.

Stakeholders such as inside or outside counsel may achieve insight into the preparation for Interface Management by attending a few workshop sessions and/or reviewing the PEP deliverables.

Owner Project Management Teams (PMT’s) – Under “Mixed,” Owner PMT staffing requirements are more extensive and demanding to manage or interface (quality, quantity, complication) with contractors and stakeholders. However, newly hired personnel often lack skills to manage interfaces.

Asset Performance – Ultimately, an Owner cares about the proper performance of its investment (e.g. plant, facilities).  Under EPC strategies, performance guarantees are generally obtainable from Prime Contractors.  This, since the prime(s) are in a position to assume and manage this risk.  Under mixed strategies, responsibilities and resulting liabilities can become so diffused that performance guarantees are difficult (if not impossible) to obtain and enforce.

Completion Management – With multiple parties and interfaces, the sequence and timing of commissioning and start-up is challenging.  Lack of competence in this process is a constant problem.  By default, completion management responsibility tends to fall upon the owner.  If in-house resources and expertise are limited, owner may need to hire a specialty contractor to perform this work.  Of course, that creates another interface that requires managerial skills and bandwidth.

Scope of Work – Under EPC strategies, the concept of “scope wrap” (a high-level contract provision that makes the contractor responsible for all scope necessary to complete the work) is viable, if not common.  With “Mixed,” this becomes increasingly complex.  Effective techniques for scope of work management are needed.  Interface audits are extremely valuable.

Deliverables Quality, Completeness and Timing – Deliverables (e.g., technical, documents, materials, equipment, lists and models), must be defined in terms of quantities, timing and quality.  The quality of the deliverables can impact the labor and related work necessary for the construction contractor(s) in fabrication and erection of the work.  Since these deliverables are typically the output of a predecessor contractor and defined by the related contract, the precession with which they are defined can have a large impact on the successor contractor.

The timing of deliverables must be carefully defined.  The timing of deliverables must be carefully defined.  The timing of the successor contractor’s receipt of deliverables influences the successor contractor’s ability to perform effectively and efficiently.  The sequence of these deliverables further exacerbates this influence.

Time Management / Schedule – The parties / stakeholders take on new roles, responsibilities and risks.  The project duration and delay to individual parties / stakeholders are decoupled.  Cause and effect for delays is difficult to isolate. The collection, status, controls and management of progress is highly complex. Critical paths for one contractor / stakeholder may not be the same for successor parties.  Time management problems tend to present themselves later in the project execution.  Interface audits are extremely valuable.

Conclusions (Part 3)

Interface management becomes increasingly complex and challenging when “Mixed” Contracting Approach is selected for project delivery. Prospective interface audits are essential tools needed to support interface management. Since the developmental processes are all the responsibility of the owner, owners must recognize and accept this role in order to implement Mr. Merrow’s most successful contract approach – “Mixed.” 

View from the Field – Supply Chain Management (Part 4)

Part 4 of this series will address the challenges of Supply Chain Management that is required when using “Mixed” contracting approach.

Author George T. McLaughlin PMP CCM has worked worldwide in this industrial marketplace since the early 1980’s. He serves Owners, Prime Contractors, and Subcontractors. For the most part, Mr. McLaughlin’s work is performed on-location where the relevant work is being performed hence the title “view from the field.” Mr. McLaughlin is a principal of McLaughlin & McLaughlin out of Austin, Texas.

View from the Field Part 2 - The Front-End Makes the Megaproject

This series of blog posts provides a practitioner’s view of the management processes and challenges associated with megaprojects as well as large and complex projects. Addressed by both Edward W. Merrow of Independent Project Analysis, Inc. and construction lawyer Andy Ness at a recent ABA Forum on Construction Law conference, their high-level perspectives are elaborated herein. This multi-part series has and will expand upon some practical aspects of the many challenges facing managers as well as highlight suggestions for implementation by inside or outside counsel.

Mr. Merrow’s High-Level Findings

In Mr. Merrow’s presentation, he advised and emphasized that only about 35% of Megaprojects are successful. By contrast, Major Projects less than $500 million have a success rate of approximately 63% (hence even these projects experience a failure rate of one-third). Key metrics are: Cost Index, Cost Growth, Execution Schedule Index, Execution Schedule Slip, and Production Problems. Mr. Merrow’s theme for success – “The Front-end Makes the Megaproject.”

The summary, highest level findings (regarding Megaprojects) of Mr. Merrow’s presentation are:

• The Front-end Makes (or breaks) (is essential for success of) the Megaproject
• Sponsors of Megaprojects have three critical responsibilities:
• Shaping – shape the project such that stakeholders are aligned
• Basic Data – technical data are correct and complete
• Front-end Loading – fully define the project before starting execution
• All of these are owner responsibilities alone (i.e., not contractors).

Mr. Ness’ High-Level Findings

Mr. Ness wrote a paper Why Megaprojects Fail So Often and Why You Should Care, No Matter the Size of Your Project and focused on business decisions in “4. Business Decisions That Hurt Prospects for Project Success.” Several key points follow:

Business-driven actions or inactions…

These include under-investing in up-front project development, failing to assign the full required team to the project, untimely changes to the project’s scope, demands to shave the budget or compress the deadline for completing the project without reducing the scope, and involving the company’s purchasing organization in the process of selecting key project contractors and other participants.

Mr. Ness continues “The monumental mistakes usually belong to the business side.” Hence, this is not “The Field” (defined below).

Why Study Industrial Megaprojects?

Given Mr. Merrow’s findings and Mr. Ness’ perspectives, it is legitimate to question the value since most projects, although they may be large and/or complex, are not industrial megaprojects. The reasons are:

• Problems are similar on large & complex (not megaprojects) projects – lessons learned are valuable
•  Large & Complex success rate is 60%+, therefore, failure rate is 30%+
• Formulas and managerial methodologies for success are valuable models for planning and execution of large and complex projects (not megaprojects).

View from the Field – The Front-End

What is the Field? In this case, we define “The Field” as any Project Management Team (PMT): owner, contractor(s) (including engineering, architectural, construction and specialty), suppliers and vendors. I have had all of these roles in large and complex projects, some megaprojects.

Shaping (shape the project such that stakeholders are aligned) – Stakeholder Alignment managerial process is addressed in several industry standards. These resources include PMI Project Management Body of Knowledge (PMBOK), Stakeholder Management and Project Management, as well as Kerzner, Stakeholder Relations Management. Stakeholder Alignment can be achieved using these (and other) processes. The processes can be implemented within the Project Execution Plan (PEP) (also known as Project Plan, Project Management Plan, and other titles) using an extensive PEP workshop process.

In Leading Complex Projects, Mr. Merrow describes the PEP as:

A project execution plan (PEP) is a document that is produced by almost all project teams in all of our clients across all industrial sectors. It is a ubiquitous document that is, in theory, supposed to tell the expected story of the project and its execution. Some PEP’s we see are very good and some of the PEP’s are utterly horrid.

Stakeholders such as inside or outside counsel may achieve insight into the status of Stakeholder Alignment by attending a few workshop sessions and/or reviewing the PEP deliverable.

Basic Data – requires specialized and suitably credentialed Subject Matter Experts (SME’s).  I have encountered these situations and made the decisions to acquire suitable SME’s. Credentialed SME’s should deliver a report assessing basic data status and readiness to proceed into the project development process.

Front-end Loading – How does the project team evaluate readiness (suitable front-end loading)? A creditable tool is Construction Industry Institute (CII) Project Development Readiness Index (PDRI). These tools are available for various industries. Business unit representatives/SME’s (not merely the PMT) provide creditable expertise for representing/contributing business interests, values and requirements. Further, stakeholders such as inside or outside counsel, could assess the status by attending working sessions and/or reviewing standard reports.

Conclusions (Part 2)

The Front-end makes the large and complex project. The developmental processes are all the responsibility of the owner. Hence, owners (including owner PMT’s) need to make sure that this process is robust and complete. Contractors need to evaluate the degree of completeness during the bidding process. Inside and outside counsel can use the managerial processes and deliverables as assessment tools in order to evaluate the large and complex project readiness for further development (or readiness for passage through the next stage gate).

View from the Field – Interface Management

Part 3 of this series will address the challenges of Interface Management that is required when using “Mixed” contracting approach.

Author George T. McLaughlin PMP CCM has worked worldwide in this industrial marketplace since the early 1980’s. He serves Owners, Prime Contractors, and Subcontractors. For the most part, Mr. McLaughlin’s work is performed on-location where the relevant work is being performed hence the title “view from the field.” Mr. McLaughlin is a principal of McLaughlin & McLaughlin out of Austin, Texas.