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Project Management Construction Agreement

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Project Management Construction Agreement Powered By Docstoc
					 Challenges in Project Delivery
and Project Management for the
         21st Century
  Charles J. (Chuck) Williams PE, DBIA, PMP
            Capital Projects
     Drive Economic Development




Public & Private Infrastructure (power, airports,
highways, wwtp, etc.), Institutional Facilities,
Private Manufacturing, Private Service Facilities
    21 st
       Century Challenge
    PROJECT DELIVERY
  Delivering the needed projects with
limited $$$, less people, safely, in a
shorter time, at lower unit cost, with
    the required level of quality
   21st Century Challenge
 PROJECT MANAGEMENT

 Developing the people with the needed
talent, knowledge, skills, experience and
  motivation to be 21st Century Capital
            Project Managers
 Demand for Capital
Projects is Enormous



                Demand for capable
                Project Managers is
                ASTRONOMICAL !
      Meeting these Challenges
   will take innovative owners and
design – construction industry leaders
          who invest in - - - -
• more effective project delivery
  methods (more bang for the $)
• the people to lead and manage
  them
         Traditional Delivery Approach
                    last 150 years
                   Design-Bid-Build
• Owner defines project need and hires architect / engineer
• Architect / engineer develops scope and detail design
• Scope becomes construction documents: Owner warrants
  accuracy – completeness)
• Bid documents prepared and bids solicited for low price
• Construction proceeds with architect / engineer oversight
• Owner coordinates parties, arbitrates disputes and pays
  invoices or defends claims.
             WHERE IS PERFORMANCE ??? !!!
     Traditional Delivery (Design-Bid Build)
               Disadvantages
 High Owner liability - Owner is the “ham in the
 sandwich” between designer and contractor
   – Disputes go through Owner
   – Owner bears design adequacy risk
 Designers and constructors have some conflicting
 agendas/objectives – don’t align with owner objectives
 If and when construction low bid comes in over
 budget, there can be delays and $$$ problems
 Initial low price doesn’t necessarily give best value
 or even the lowest final price !
    Results of Traditional Delivery
               Approach
•   Extensive disputes and litigation
•   Longer or busted schedules
•   Overrun budgets / extensive COs
•   Questionable quality
•   Unacceptable accident rates
•   Poor coordination and communication w/ 3rd
    parties and the public
          THE
   DESIGN-CONSTRUCTION
    INDUSTRY IS GOING
   THROUGH ENORMOUS
        CHANGE
   CAPITAL PROJECT DELIVERY
IS RIGHT IN THE MIDDLE OF IT
             !!!
               OWNERS WANT
•   Shorter schedules
•   Reduced risk
•   Performance accountability
•   Early firm price & schedule
•   Reduced cost - - and no cost growth
•   Delivered “as promised” quality
•   Reduced owner admin. costs

       OWNERS NOW HAVE ALTERNATIVES
       TO ACHIEVE THESE REQUIREMENTS
Project Assessment - Delivery Selection
            Considerations
 • Can clearly define scope – performance and quality
   requirements
 • Potential delay issues - environmental permitting, ROW,
   internal owner issues, community requirements
 • Schedule demands
 • Funding source and early firm cost requirement
 • Budget restrictions – cost growth unacceptable
 • 3rd party involvement - requirements
 • Innovative technical solutions available
 • Complex warranty issues
 • Available owner staff resources
 • Owner risk level tolerance
         Project Delivery Alternatives
               Major Categories
• Design – CM Agency –Trade Contractors Build
• Job Order Contracting – pre-qualified designers and
  constructors are assigned or compete for various works

21st Century emphasis – More Accountability

• Design – CM @ Risk – contractor hired early on qualifications
• Design – Build – One entity responsible for both design and
  construction
• Public – Private Partnerships
   Design / Construction
   Management @ Risk
             Owne
             r

Designer                     CM @
                              risk




           Multiple Subcontractors / Suppliers
            Design / CM @ Risk
                 Advantages
• More Owner control to choose constructor
• Can semi fast – track project schedule
• Can get early contractor input by contractor who will
  build the project
• Can develop early basis for partnering and problem
  solving with designer and constructor
• Improved cost control during design development
BUT, owner must manage designer – constructor
 interface assertively
                  Design-Build
Design – builder may be general contractor, design firm, an
integrated design – constructor, or a joint venture of firms
       Design – Build Advantages
•   Maximum fast track on schedule
•   full partnering opportunity
•   Performance accountability – single source
•   Clearer assignment of risk
•   Innovative technical solutions
•   Better alignment with owner objectives
•   Early firm price & schedule
•   Clearer warranty responsibility
•   More options and confidence for funding
Comparison of Traditional Delivery
        to Design - Build
• Construction Industry Institute study of 350
  building projects:
    Unit cost average 6% less with DB
    Construction schedule 12% faster w/ DB
    Project time (design & construction) up to
    33% faster w/ DB
    Better quality w/ DB using seven
    performance measures including warranty
    call-backs
       Design Build is also a
    Platform for Added Services
• DB-OM: Operation & Maintenance
• DB-M: Maintenance only
• DB-F: Bring the $$$ (Finance)
• DB-O-F: Bring O&M & $$$ (Finance)
• DB-O-OM: Bring the Owner, the $$$
  Investment, & O & M
• DB-O-OT: Bring the Owner, the $$$
  Investment, the O&M, leaseback & transfer
         Design-Build-Operate (DBOF)
              w/ Project Finance
                          Owne            Owner’s
                                          Consulta
                          r
                                             nt

                  Design/Builder



Design
            Constructio          Financ     Operatio
            n                    e          n
    Public Private Partnerships
 Private Sector brings Resources to
        Public Sector Needs
• Not necessarily privatization
• Often needs supportive state legislation
• Can involve both financial and non-financial
  costs and benefits
• Can be for various time intervals
• Can create new revenue streams for both
  parties – creating the “win – win”
                            XYZ Environmental Technologies
                             Project Contracts “Structure ”
                                                            Own-Finance                                             Operation &
  Design Build                          Client Corporate                          Client Plant
                                                                                                                    Maintenance

                                                                                                                      O&M Company
      Design Builder
                                                        Service         Lease
                                                       Agreement      Agreement

                                                                                                 Operation and
                             Design Build
                                                                                                 Maintenance
                              Agreement
                                                                                                  Agreement
                                                           Project Company
  Sub to       Sub to
 Designer     Contractor


                                                   Equity                                            Residuals           Discharge
                                                                     Debt Finance
                                                  Agreement                                          Agreement           Agreement
   Sub-          Sub-                                                 Agreement
consultants   contractors

                                                                                                                        City Wastewater
                                                                                                   ABC Fertilizer
                                                                                                                       Treatment Facility
Suppliers       Suppliers         Owner 1                  Owner 2     Funding Source(s)
It’s difficult to know which direction to go !!
Plan Your Project Delivery Method
        with Confidence
We Need Project Managers who have the
Talent, Knowledge, Skills, Experience and
 Motivation to Lead and Integrate ALL
   aspects of Projects from Concept to
               Completion.
                   Project Manager
                     Main Roles
• Single point of responsibility & coordination
  to plan and execute all Project activities
• Extension of a Firm’s Management to
  represent the Firm with the Owner / User
• Point of Owner / User interface & trust to
  meet overall Project delivery objectives
• Interface w/ 3rd Parties on Project issues
                     Project Manager
                 Primary Responsibilities
•   Understand & Manage the Prime Contract
•   Mobilize / Establish the Project Team
•   Establish Project Operating Procedures
•   Establish / Maintain Stakeholder interfaces
•   Achieve Budget, Schedule, and Quality
•   Identify / Manage Change (scope & other)
•   Achieve Safety Program Objectives
                       21st Century Needs
                       Project Managers
•   Develop and lead integrated teams
•   Represent both design and construction
•   Both technical and commercial skills
•   Organization and communication skills
•   Risk management strategies & techniques
•   Management processes and systems knowledge
•   Both design and field construction experience,
    w/startup- commissioning
                       Project Manager
                Characteristics for Success
• Providing leadership, vision and direction, rather
  than following the landscape
• Creating results, rather than providing reasons why
  they can’t be achieved.
• Anticipating and avoiding problems, rather than
  just reacting to problems
• Creating solutions, with the Project Team rather
  than just reporting problems
• Promoting a sense of urgency
      Project Manager Qualifications
• Experience and industry knowledge relative to level of
  responsibility (breadth & depth)
• Skills in planning, organization & team building
• Skills in communication, motivation, and negotiation
• Understand both commercial and technical issues
• Understand project control philosophies, techniques, and
  computerized management tools
• Understand Project Team responsibilities and roles –
  and be an “integrator”of people and resources
• Ability to recognize priorities & act accordingly
PROJECT MANAGERS MUST
  PROJECT MANAGERS MUST:
 Understand the Project Organization functions
 (who does what, and when), give them the
 authority, and hold them accountable,

 Facilitate the interfaces efficiently and
 effectively, and

 Maintain team focus on the Project objectives,
 and continually measure performance
        Capital Project Organizations
            will vary based upon:
•   Size Project      •   Owner / User
•   Type Project      •   Site Conditions
•   Complexity        •   Support Offices
•   Schedule          •   Delivery Method /
•   Phys. Location        Prime Contract
•   Labor / Staff
    Availability
            TYPICAL INTEGRATED PROJECT ORGANIZATION

                                 Project Manager


         Engineering             Project Control          Procurement                 Construction
          Manager                   Manager                 Manager                   Manager (Site)
                                   •Estimating             •Purchasing
                                   •Scheduling             •Expediting
                    Process        •Cost Control           •Logistics
     Design
                    Engineer       •Administration
Lead Engineers
 •Civil
 •Structural
 •Architectural
 •Mechanical
 •HVAC
 •Piping
 •Electrical
 •Instrumentation

                      *                                                      *                                    *
                                       Project             Field         Industrial             Field
                Field Project                                                                                     Field
                                    Construction       Construction                          Procurement
                  Controls                                               Relations                              Accounting
                                     Engineering       Management     •Labor Relations     •Purchasing Agent
                •Cost Engineer   •Office Engineer      •Craft Sups.                                            •Cost Accountant
                                                                      •Human Resources     •Expediting
                •Scheduler       •Field Engineer       •Subcontract                                            •Office Services
                                                                      •Safety/Security     •Warehouse Ops.
                •Estimator       •Contract Engineers    Admin.
                                 •Inspectors
                                 •Survey & Testing
                                                            * NOTE: May be conducted offsite from Regional/Area Office
                                                                     depending on size/duration of projects.
            Design Build Project – Integrated Joint Venture

                                Owner
                                                          Management
                                Project                    Committee:
                                Manager                     Partner
                                                         Representatives



Project Design Manager                                Project Construction
   Design Partner                                           Manager
                                                      Construction Partner


  Design Team
  Site Civil
  Process                  Procurement     Project Controls    Site Const. Mgmt.
  Structural               Purchasing      Cost Engineer       Field Const. Mgr.
  Architecture             Subcontracts    Scheduler           Proj. Field Engr.
  Mechanical                                                   Admin. Support
  Electrical
  I&C
  SO, HOW DO WE
      IDENTIFY
      TRAIN, AND
      DEVELOP
21st CENTURY PROJECT
      MANAGERS
       21st Century Project Manager
         Elements of Competency
• Talent - basis for performance
• Knowledge - information necessary to perform
• Skills - tools to utilize talent & knowledge
• Experience - understanding how to perform
  efficiently and effectively
• Motivation - ambition to perform successfully
   Project Manager Talents
• Personal Drivers - what makes you tick
  –Achiever - - internal drive
  –Competitor - - comparative success
  –Mission Oriented - - achieve objectives
  –Ethically Based - - guiding lights
  –Professional Focus - - continued effort
  –Vision - - picture of the future
         Project Manager Talents
• Personal Capabilities - how you function
  –   Disciplined - - structured, organized
  –   Orchestrator - - operate teams
  –   Accept Responsibility - - accountable
  –   Problem Solver - - think through issues
  –   Creative - - innovate, create opportunity
  –   Performance Oriented - - want measures
          Project Manager Talents
• Personal Applicators - how you apply yourself
  –   Team Builder – invests in others
  –   Stimulator – creates enthusiasm
  –   Persuader – convinces others logically
  –   Commander - takes responsible charge
  –   Optimistic - looks to the positive
  –   Courage – willingness for personal risk
          Typical Capital Project Manager
                Knowledge Basis
•   Architecture, Engineering or other Technical Degree
•   Construction Management Degree Program
•   Design - Build Degree Program
•   Business Management Courses
•   Communication / Organizational Behavior Courses
•   Info. Tech. / Mgmt. Information Systems Courses
•   Human Resources / Supervision Courses
•   Contract Management / Risk Management Courses
        Project Management
       Experience & Skill Areas
•   Integration Mgmt.       •   Owner / Stakeholder Mgmt.
•   Scope Mgmt.             •   Budget / Cost Mgmt.
•   Schedule / Time Mgmt.   •   Procurement Mgmt.
•   Quality Mgmt.           •   Communications Mgmt.
                            •   Human Resources Mgmt.
•   Risk Mgmt.
            Project Manager
          Motivation Measures
•   Enthusiasm
•   Engagement
•   Commitment
•   Sacrifice
•   Initiative
•   Follow-through
•   Consistency
   Project Manager Development
• Identify the Talent and Motivation - Early
• Provide rotation assignments for PM
  development, especially in field construction
• Provide supplemental education opportunities,
  especially in business / risk management and
  human resources
• Provide mentoring by experienced PMs
• Provide rewards to attract / keep best talent
  The Successful 21st Century
    Project Manager will be both
   Broad & Deep in Knowledge &
            Experience:
A Leader and Communicator that can
   Build and Focus Teams to meet
             Objectives!
21 st
    Century Project Delivery will
 benefit from more Partnership
 between Owners and Design –
 Construction Industry Leaders

				
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