Construction is a business in which success for an owner is measured by the ability to complete construction projects on time and within budget. In today's construction environment, however, projects have become so large that a higher level of management is required: the level of program management. The majority of today's owners find themselves responsible for the simultaneous management of multiple interrelated construction projects within a program, or the management of several projects within an agency.
It is the ability to manage these multiple projects in a comprehensive manner that defines the program management space in which many owners live today. The management of the construction program balanced against a single bottom-line cost and schedule represents the new challenge and current parameter for success for today's owner.
The following are key issues that must be addressed in order to manage a successful construction program:
Multiple-project management. The interrelationships of projects are of critical importance and must be managed carefully, as the success of one contract within a project, or one project within a program, does not define success for the entire construction program.
Planning. If success is measured by the ability to complete projects under budget, then the establishment of project budgets during the planning phase is mandatory.
Funding. Funding sources to complete these projects must be established and managed with extreme care. Mismanagement of funds can shut down a program because, in most cases, funds from one source cannot be used to pay for work under another source. Additionally, the proper management of funds in interest-earning accounts allows the owner to maximize each construction dollar.
Document management and control. During the life of a major construction program, an owner creates and receives an enormous number of construction documents that can affect the outcome of the program. Management and control of these documents is vital to success as the one document lost can contain information about a claim or some cost-saving measure. A centralized document control system allows owners to access information quickly, a required merit in today's fast paced construction industry.
Change management. As changes to a construction plan are inevitable, an owner must respond proactively, managing changes and keeping project personnel and financiers abreast of potential cost ramifications so that positive cash flow is constantly maintained.
Forecasting/risk analysis. Nothing is more important to an owner than finding out the cost of a project. The owner's job depends on the ability to answer this question accurately, based on a combination of facts and speculation. The factual portion must be based on the accurate documentation of the current state of original contract amounts plus current contract changes. Conversely, the speculative portion must include the identification and management of building trends that may affect the contract value.
Cost-schedule integration. In no industry is the phrase "time is money" more relevant than in the construction industry. Owners must continually monitor the schedule to see if work is proceeding according to plan.
Reporting. The new electronic economy has changed the construction industry tremendously. Reports are generated and transported electronically. This immediate availability of project data is a requirement, as analysis and decisions on tough construction issues must be made faster than ever because delays in decision-making can cost millions of dollars.
Program close-out. Although the construction may be complete, a great amount of time and money is spent on project close-out. Most close-out issues are the result of the use of inefficient tracking systems during the life of the program. Because administrative costs during program closeout can be high, they should be factored into the total program expenditure, and an owner cannot assess financial success until after the close-out is complete.
Claims mitigation. The construction industry is becoming more litigious every day. As profit margins decrease, a single claim can mean the difference between a program being completed under or over budget. Today's owner must proactively manage claims by creating and filing all documents electronically in a relational database where documents can be proactively or retroactively sorted and grouped around issues.
Ultimately, the success of a project is directly related to completing a program on time and within specified cost parameters. These 10 success factors directly relate to this goal, and with the establishment of a streamlined-electronic program management system, the owner will be able to come out on top.