The anatomy of the Baseline

Much has been read and heard about projects losing their shirts due to the Customer. Really? Why does it this keep rearing its head over and over? That cliche, Change in a way of life and it is one of those things that is inevitable. Attempting to find a sorry excuse for your losses under the guise of change may be a subterfuge and in some cases a rookie mistake.

Understanding a few key aspects of what the deal is goes a long way in being cognizant of the details. Ask a few questions-

1- What is the technical scope?

2- What are the commercial Terms and Conditions?

3- Is the scope firm and prescriptive?

4- What exactly is the Division of Responsibility? Who does what?

5- Is there a firm price associated with the above scope?

6- Is there a specific time frame to execute the above scope?

7- Are you going to be penalized if you finish late or is there a bonus clause if you finish early?

Hardly a revelation, but if the Scope, Price and schedule are clearly specified by means of understanding the Contract are truly understood, you are in with a fighting chance. Thus, the understanding of the Baseline is what was just described above.

Now that the Baseline is established, any deviation to the Baseline will constitute a Change. How the Baseline scope is executed strictly depends on you, as long is delivers the product within the framework of quality and safety.  Now its time to execute.

IC-change-managment

 

Always always refer back to the Baseline and whenever you become aware of a Change either due to errors/ omissions or Customer directions, stop and evaluate. This is the point where you make a massive difference to your bottomline. A legitimate deviation from the Baseline must be addressed as you go. Do not wait until the end of project to do a “global settlement”.

This is a trap- Customer unwillingness to keep moving and not recognizing change is a sure sign that you may not get a fair return on efforts. And the global settlement more often than not may end up in disgruntlement all around and repeat business could be impacted. The optimal way manner is to understand the baseline, recognize deviations, address changes and agree on a fair settlement and move on.

 

 

Productivity- Still a conundrum?

Ah- Good old productivity! After having built thousands of plants, the industry keeps struggling with the seemingly simple concept of earnings. Meeting the schedule to make your goals and earn your hours. Simple ? Yes. Easy? No! I am not trying to advertise a silver bullet but rubbing salt into an age old wound in reality.

Food for thought-

  1. Are short term gains with achieving productivity in the construction world hurting our chances of project delivery?
  2. Is a “Finishing” culture absent in the industry? Why are we all so good with Starting somethings and we get caught with our inabilities to Finish?

The Finishing culture is something that will always have a bearing directly on our abilities to deliver something to a downstream customer and also to earn the right hours. Of you think of this as a fishbone with the end game being “Finish” the roadblocks and show stoppers must be identified as soon as they are discovered and this doesn’t involve any fancy software but a basic process of being able to know the decision making chain. Each person in this chain is critical.

3. What drives the worker? Are a good percentage of them just here for a paycheck?

4. Does Data really help? Is Data going to a huge driver and can we actually see this improving productivity?

 A simple footnote- Its always good to earn more than you spend. As simple as that

 

 

 

 

BRAVING THE STORMS- PROJECT MANAGEMENT BASICS – IS THIS FOR YOU? LET US KNOW

BRAVING THE STORMS- PROJECT MANAGEMENT BASICS
The intended publication is more of an experience sharing piece of literature; emphasizing more on the experience of professionals from across several industries. With project execution comes challenges and opportunities that a project manager maneuvers through on a day to day basis. From inception to execution to project delivery, myriads of hurdles have to be dealt with and the essence of this book is to bring forth these challenges as faced in real life situations and prepare project managers to address them and more importantly address them in a timely manner.
This book does not intend to be a classic text book that provides “silver bullets” for success; it is written by a team of diverse group of industry professionals, Information Technology, investment Banking, Construction, Government.
As proposals turn into projects, challenges and opportunities evolve and this book deals with the twists and turns encountered during the life cycle of the project. As the project evolves from its early phase through development, peaking and culminating in the home stretch and achieving production, the book takes the reader through the entire journey.
Several sections of the book include “war stories” using real life examples to bring forth numerous success or the not-so-successful factors. The book takes project execution challenges head with focus on with all project phases and includes interesting practical concepts related to baselining, “as-sold” cost and schedule, key real life interpretations of sticky situations, change management and contingency. Furthermore, the book addresses a rather critical issue faced by project managers- Declining project performance; performance of projects can vary depending on the contract type, geography, market conditions et al. The section on performance management provides key insights and offers valuable recommendations for an objective way to evaluate project performance.
The intent of this book is to pass on lessons learned and “tribal knowledge” from thoroughbred professionals to a vast cross section of people ranging from project managers to aspiring managers; from undergraduate students to seasoned members of the academic circle across all industries; IT to construction, banking to manufacturing.

Cost influence- It’s all about timing

 

When the project is in its infancy there seems to be plenty of optimism around; there is time and the budget looks healthy. The team feels upbeat about progress and there is a general belief they will be able to meet deadlines and make a decent profit. If this sounds like a great position to be in, what makes it more promising is how much of an influence the team can have on project costs at this stage. What factors can the team influence-

  • Ability to optimize design to affect raw material – Early on, the design team has flexibility to evaluate several options on design and how design could specify low cost raw material by way of both labor and freight
  • Ability to optimize design for capital cost reduction- Design optimization plays a significant role with constructability options thereby leading to reduced labor cost. This becomes a key cost driver especially for projects in locations where labor costs form a high percentage of project costs
  • Ability to optimize the schedule by managing project float- The early part of the project is always the ideal phase at which time the execution team have the ability to look at options in terms of constructability, sequencing, heavy equipment usage, temporary facility sizing

You got the timing, you got it right. If you now plan to make changes when you are close to half way done, you may be too late! That’s right, its all about timing!

 

Planning happens between the ears!

The mantra to Project Setup:

ppl

  • Know your Contract (Scope and T’s & C’s)

  • WBS-OBS alignment

  • Budget and time ownership and accountability

  • Execution plan- Clear vision and strategy

  • Prescribe project goals and the “food chain”

 

PLANNING DEFINITELY HAPPENS BETWEEN THE EARS! DONT LET ANYONE TELL YOU DIFFERENT!

Do not be a Wildebeest! Cost vs benefit-$$

Cost vs Benefit? What gives?

It’s a project and yes changes are inevitable and to a large extent, so are delays. On a construction project, a delay could mean a critical path delay which for most part is instantly discoverable when it occurs. A cumulative delay is more of a cancer that continues to eat the project and is usually not discoverable until sometimes its too late. Do not be fooled into a false sense of security; if your end dates are holding just because your schedule says so, that’s only part of the news. Continue looking into how your project is going, are you making physical progress, is your SPI decent?

Back to the main story, when delays happen, project management reacts and most likely they will get all hands on deck and scream “Recover!” Yes, I know panic stations set in and all that but after the shouting, slow down and get down to doing something that will lend some sanity to the situation.

Ok, there is a delay and you have to recover, but here is the catch do you really need to recover? Remember all said and done, recovery costs $$!

A few points to consider-

  1. What do you achieve by recovery? If your project was ahead of schedule and even after the delay you can still deliver when the customer wants it, do you still want to recover.
  2. What do you gain by recovering? Is there a substantial bonus at stake?
  3. If recovery is going to cost you $ X and end results do not matter to the customer as long as product is delivered when the customer needs it, why spend the $$!
  4. If delays are translated into lost revenue for you in terms of liquidated damages amounting to $ X, but if the recovery costs you $x + $y, do you still want to recover?
  5. If the recovery helps gaining net revenue for you and protect your reputation by timely delivery, yes it may be worth it.

If you can truly slow down and assess the real cost-benefit of recovery, you are on the right track. Do not be wildebeest and go with the herd, learn to stand out and think on your own, a lone wolf perhaps?

Risk Flowdown- A Myth?- What do you think?

Not an opinion but an open forum for anyone contractually savvy to provide their “two cents”. For Prime contract that is either Cost reimbursable, Unit Prices or Time & Material, how true is the notion that risks from the Prime are flowed down to the sub-contracts? Are all costs being eventually paid up by the Customer?

May be you don’t get profits and Overhead on specific overruns, but all sub-contract costs are certainly included. Now how about Prime contracts that are Lumpsum; a different ball game here.These are contracts where risks and opportunities would be borne in its entirety by the contractor.