The Construction Company I work with deals with medium to large scale projects of varying disciplines. The projects involved are of high degree of Architectural and state of the Art projects requiring high skill and precision. As these projects are time bound involving Government and Political heads, any delay will cost the company large amount of money.
With the ongoing recession and globalization there has been a dramatic shift in the construction industry. The shift is right from senior management to unskilled labor.
During this time the in-house project team has undergone a significant change. There has been senior management roll over and the new management team is dynamic creating a turbulent environment.
At one instance the company was awarded with a construction project of a high end condominium development. The project was of a high end and there were major stakeholders involved, which had a strict time and cost outlined in the contract. Sensing the priority of the project the company MD (Managing Director) suggested that the project should be closely monitored, managed and constructed by the in house project management team in order to achieve targets of in time project delivery, budget and quality.
The project took off with traditional procurement system and started on the proposed date because of the time bound factor.
Practical Problems encountered Brief:
Within the second quarter of the project since it began, it was evident that the project was not moving forward, i.e. the project schedule had overrun. All well planned schedules that looked good during planning stage were falling apart.
Some of the elements of the project were not finalized and the details were provided at a later date. Hence, there was a short fall during the cost estimation. Where by, the contractor, was expected to ask for a higher mark up in order to take care of the un foreseen contingences. Hence, the client initially transferred all the risk to the contractor.
The very first hurdle encountered on site was foundation issue in relation to ground conditions. The site had varied geology and the proposed foundation design could not be used throughout the substructure. Hence, time was lost during the redesign phase. This change also affected the foundation budget.
Second hurdle encountered was when one of the major stake holders interfered with the main design and insisted in having cantilevered balconies. This change was not effectively communicated to the site team by the design office and as a result the building was built up to that stage with no cantilevered balconies. As a result, the construction was halted and designs were re assessed and modifications were made to the structure to incorporate the balconies.
The project was not having stage wise checks and interference of the client with little or perhaps no contractual knowledge was given encouragement without realizing the consequences of such decision. This affected the forward mobility of the project adversely.
The main cause of the practical problems was that the project scope was not defined at the start and hence no proper work schedule was finalized. A clear project scope is the key to project success.
The foundation problem was a foreseeable problem because there was lack of project investigation during project estimation. This again affected the project scope. The omission of balconies during construction exhibits poor project coordination and control between the design team and the site project management team. The changes made by the client were not effectively transferred to the project delivery team.
It can be summarized that,
The contractors were not being correctly guided
Priorities were not being effectively communicated
Supervising staff was inadequately trained to meet the targets.
Sub-contractors were appointed without doing proper initial back ground checks.
Another reason for the poor management could be due to ineffective project management which involves that the managers may believe that they already have appropriate practices and there may be constraints from more pressing constraints. (Guest and King 2001, cited in Kezner 2009)
“ A problem in organizations occur whenever the work practices and processes required producing specific results either in terms of product or service delivery or both do not actually produce the desired results. The management/leadership task is to address the problem as effectively and efficiently as possible and to restore the organization to either profitability or effective service delivery or both.” (Wallace 2012, cited in www.qub.ac.uk)
Failure of traditional procurement method:
Over the duration of the project, it was noticed that there was poor selection of project managers with respect to their skills and capabilities. Back ground checks and pre assessment was not done on appointed contractors and there was no risk register maintained or cost evaluation done during the different stages of the project.
Overall, the main organizational problem observed was that the strategy was being done like “ON THE RUN”. It was also observed that the project manager was not adopting an organic approach as per the rate of changing situations. He was still following the stable environment approach, where by the lower level employees were obliged to comply often with reluctance. The strategy of the company was really not agreeable as per the circumstances. Managers should de-centralise authority to employees to achieve goals.
“The traditional structure is highly bureaucratic, and experience has shown that it cannot respond rapidly enough to a changing environment. Thus, the traditional structure must be replaced by project management, or other temporary management structure that are highly organic and can respond very rapidly as situations develop inside and outside the company.” (Kerzner, pg 2, tenth edition, 2009)
Thus the problems observed in the organization can be categorized as;
“Employee issues: Individual problems, personality conflicts, supervisory issues or failure of organizational communication.
Team problems: Lack of complete information communication, lack of effective leadership producing a poorly functioning team.
Organizational problems: An imbalance between demand and supply, failure of communication or significant disconnect between company culture and front line coalface culture.” (Sutherland and Canwell 2004, cited in www.qub.ac.uk)
From the above categorization, it can be analyzed that the company had in fact all the three problems. Due to the economic situation, the company had adopted strategy of multitasking to decrease the labor. Hence, the work load was more as compared to the work force available. This led to slacking, hence affecting the forward mobility of the project.
In order to effectively address the problem, it is important to address the issues systematically.
Steps taken by the company to resolve the problem:
The company MD analyzed the situation and realized his short fall when he was informed earlier about the status of the project but had ignored the problems thinking that the project will pick up with time and during phase completion. He realized that the problem was far larger than expected and affecting the overall project delivery. After analyzing the weakness within the system the management took the decision of adopting a PMC (Project Management Consultancy). The main reason for getting the PMC on board was to transfer the risk of failure in case the project fails and secondly getting a target group to deliver project on time.
“This strategy engages low cooperation and low confrontation possibly necessary if the problem is at least immediately surmountable or where resources are not currently within the organization to address the problem”. (Thomas and Kilman, 1976, cited in www.qub.ac.uk)
In order to make up for the lost time and maintain the company’s image the MD sensing the scarcity of resources in terms of non-availability of skilled management personnel and work force within the company team opted to go in for project management consultancy. It was observed that the entire strategy of the performance had to be changed seeing the nature of the problems faced. Adopting a new strategy helps to think about the nature of the problem, the opportunities and difficulties that are involved and the knowing of the strengths and weakness of the organization.
The new PMC did a great job. It properly identified the main causes of the problem which was basically poor management of resources. Divided the team to work phase wise and analyse and maintain a Risk Register for every phase which subsequently increased the productivity. During this procedure any loose ends were immediately sorted out , like any pending design of the requested balconies was immediately sent for approval and implemented. Every stage was monitored and results evaluated. The newly appointed PMC completed the project within the stipulated time and did not overrun the final budget.
The newly appointed PMC followed the scientific management school approach.
“By ‘Scientific Methods’, Taylor meant the systematic observation and measurement of work, – what he called ‘Scientific Soldiering’, which was intended to replace the traditional approach to work that were based on rule-of-thumb method, intuition, precedent, guess work and personal opinion”. (Taylor ,1947,cited in Allan and Lewis, 2007)
With respect to the functioning of the newly appointed PMC it was noticed that it was necessary to motivate people for good management and better productivity. This is well described by Howthorne effect,
“Workers respond positively whenever management showed concerns for people and not just productivity.
People are basically motivated by social needs.
People satisfy their needs through social relationships at work.
Work group exerts more influence on a worker than incentives and controls.
A manager will be effective only if he can satisfy the subordinate’s social needs”.
(Mayo, 1933, cited in Allan and Lewis, 2007)
Solution of the problem through an alternate perspective:
The two quotes below highlight the good functioning of an organization.
“Division of work specialization leads to greater productivity”. (Taylor, 1947, cited in Allan and Lewis 2007).
“ Alfred Chandler highlighted the importance of coordinating the various aspects of management. Prior to this, the various functions of management were separate and with little overall coordination. In his ground breaking work strategy and structure (1962), Chandler stressed that a long term coordinated strategy was necessary to give a company structure, direction and focus”. (Chandler, 1962, cited in Allan and Lewis 2007).
An alternate approach to resolve the problem would have been collaborative approach to problem solving. Which is to involve all the relevant stake holders, investigate the weak section in the management and carry ahead step by step and phase by phase build policy along with maintenance of risk register (this strategy was implemented by the PMC ) and design and agree a process or a problem solving plan.
Application of SWOT analysis of Tarmac: The internal and external factors of an organization should be analysed because many factors represent both opportunity and threat or both strength and weakness. Most managers’ advice against the idea of sticking rigidly to a business plan. It is important to have a flexible approach to business so that the company can respond to opportunity as and when it arises. (Mawhinney,2001,pg.51 &52).
Another type of approach is applying, “The CIRA type of model has a number of simple initial steps;
List all the risks, access their consequences and access their likelihood and look for methods of alleviation. Listing all the risks could be a very difficult exercise”. (Mawhinney,2001,pg.59).
It can be summarized that for a successful completion of a project in all respects the management team has to have a better understandability of client’s criteria when procuring for a project. It is important that all doubts and errors in documentation are identified by the contractor at the time of preparation of the tender.