Critical Components to Effective Project Execution | CDP Inc.

This article appears in the current issue of Construction Connection.

The Economist Intelligence Unit (EIU) recent report, Building in change: project construction in asset-intensive industries, found that over one-third of asset-intensive companies miss their budget (39%) and schedule (34%) targets on major projects at least one-quarter of the time; and more than 60% of respondents blame unexpected change for at least one-half of all project overruns. While they frequently acknowledge that some change is inevitable on large-scale projects, E&C firms and owners admit that they could vastly improve how they deal with these changes.

Improved and less adversarial relationship between owners and contractors in recent years have certainly helped deliver better projects. The overall industry shift to fast-track project delivery such as design-build adds another element of speed to the overall process.

Frank Sarno, director of Project Controls at Mortenson Construction (Mortenson), says, "it wasn't that long ago that a project control group's focus was primarily document control. Today, it's imperative that we consider better forms of communication in order to become more responsive to changes as they occur."

Managing Change

Capital delivery and E&C projects in general require a high degree of collaboration across organizational boundaries with a dynamic and forward-looking accounting of unplanned changes. Poor visibility into project costs, progress, and potential problems leads to problems through the lifecycle of the project. A lack of communication between key project stakeholders and a lack of document structure create an inability to easily assess all documents and issues, which increase liability in litigation and claims.

More than 60% of EIU's survey respondents blame unexpected change for at least one-half of all project overruns. Barely half of the companies surveyed consider themselves effective at delivering projects within scope, budget, and schedule when confronted with change. Over half of the executives surveyed consider their companies as average or below at anticipating change (55%), measuring the impact of change after it is implemented (55%), making contingency plans to accommodate potential change (51%), and conducting a risk analysis of the change (48%).

To improve project and construction execution, owners and E&C firms must increase their ability to manage change while reducing risk in a faster project delivery environment, which requires more collaboration and communication. An integrated approach to project and construction execution requires that all aspects of project execution - project controls, planning and scheduling, supplier and subcontractor management and project document and collaborative systems - work together.

Systematic Control

As one of the industry's top development and construction contractors, Mortenson's integrated approach begins with systematic project controls and transparency.

Sarno says, "systematic project controls are dependent on effectiveness and efficiency - the two go hand-in-hand. Completing a task quickly does not necessarily make it effective, especially not when it comes to project controls, communicating to the project team, and managing risk."

The challenge is to find the right balance between control and open collaboration in a platform that works for the foreman on a jobsite and the decision-makes in a conference room.

"It's all about responsiveness to our customer and our ability to make change as needed and track those changes through an effective process workflow," adds Sarno. "Think about RFIs. Most companies handle RFI in a similar manner. The challenge is to communicate the outcome of the RFI to the project team in the most effective manner available."

Mortenson uses an enterprise-wide project management system to enforce cost controls to reduce risk of cost overruns. In addition, real-time cost summary data helps project managers gain full visibility into projects' financial health. As well, the company has seamless integration with ERP and financial systems for tracking of actuals at the project level.

Lifecycle Solutions

On a given project, Mortenson's primary project management administration system is Oracle's Primavera Unifier, a project lifecycle management solution for capital planning, project delivery, cost control, and facilities and real estate management. The company also uses Primavera P6 for scheduling and Oracle EBS for accounting and project financial management as well as other specialty tools such as Bluebeam Studio and Box.com to collaborate with the project team and share construction documents in an efficient manner.

Sarno says, "Unifier gives us the ability to have all project partners and the customer working in the same project controls system. We then utilize our collaboration tools to communicate the revisions to the field and to our trade partners. As pressure continually increases the speed of construction execution, project control systems need to have a balance of communication and collaboration along with their ability to provide transparency for customer and risk mitigation for the project team."