Four Project Management Trends: What They Mean to Your Firm TOP 4 PROJECT MANAGEMENT TRENDS & WHAT THEY MEAN TO YOUR FIRM

Transcription

1 TOP 4 PROJECT MANAGEMENT TRENDS & WHAT THEY MEAN TO YOUR FIRM Christopher P. Martersteck, AIA, LEED AP, DBIA PSMJ Resources Bob vanarsdall, MBA XL Group s Design Professional team This presentation contains proprietary information protected by XL Group plc companies copyright and PSMJ copyright. All rights reserved. Using the Technology 2 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 1

2 Webinar leaders Christopher P. Martersteck, AIA, LEED AP,. DBIA A/E/C Project Delivery Seminar Leader & Consultant - PSMJ Resources Director of Integrated Services - LTC Past Vice President & Director of Project Management - 4 top 50 A/E/C firms Past Chair - AIA Chicago Design-Build Knowledge Community Past Board Member - DBIA Great Lakes Chapter Design-Build Certification Course Leader - Design-Build Institute of America cmartersteck@psmj.com or PSMJ Resources - Connect on LinkedIn: linkedin.com/in/christophermartersteck Bob vanarsdall has worked in engineering and consulting since 1983 and has been with XL Group s Design Professional unit since As an author, vanarsdall has contributed to national and international business publications, and is called on frequently to speak on marketing and management issues at industry, national, and international forums. He has been a frequent speaker at the US national and regional AIA conferences, ACEC conferences, and at GLOBE in Canada. 3 About XL Group s Design Professional unit Specially designed loss prevention for today's A/E firms Having served both large and small A/E firms for more than 40 years, we understand the challenges today's design professionals face, and we've tailored our solutions to their unique risks and requirements. Our mission is simple: to bring policyholders the resources and protection they need to run a successful business. Our innovative professional liability insurance programs offer broad, costeffective coverage that's tailored to your firm. Industry-leading educational programs draw on real claims data to help you implement proven risk management techniques. Through a dedicated national network of underwriters, claims consultants, agents and loss prevention specialists, we work with each of our clients to reduce the cost of loss and preserve valuable business relationships. 4 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 2

3 Get more. Learn more. Webinar attendees will get more risk management information From XL Group: Complimentary test drive of XL Group s Contract eguide XL/PSMJ 2012 & 2013 webinars OnDemand From PSMJ: PSMJ s limited time offers Project Management Bootcamp register for one of the upcoming 8 locations and bring a colleague to this seminar for 50% off the regular registration fee. PSMJ Newsletter Webinar participants receive 18 months of this newsletter for the price of 12 months. 5 About PSMJ Content providers of management information Focused exclusively on the A/E/C industry for over 30 years 6 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 3

4 Learning objectives After participating in this webinar: Attendees will be able to identify and recognize the new skill sets demanded of project managers under the four new project demands presented. Attendees will learn why the new pressures on project delivery place different demands on project managers than in the design-bid-build world. Attendees will learn to anticipate the added risk exposure to the firm by these four project management trends, and how to limit that risk. Attendees should be able to recognize and classify the additional pressures on the firm inherent in these trends. 7 AIA Certificate of Completion This webinar is registered with the national AIA, and units earned by architects are directly reported to the AIA. Engineers can, in general, use certificates of completion to self-report Professional Development Hours. Not all States and licensing boards accept these programs for learning units. The live webinar is registered with the AIA by PSMJ. In order to receive a copy of the Certificate of Completion, please send an to: education@psmj.com The OnDemand webinar is registered with the AIA by XL Group. Visit: xldp.com/learnmore/ondemandwebinars.com Upon receipt of your , an electronic PDF version of the certificate will be sent to you. 8 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 4

5 4 project management trends & what they mean to your firm 1. More accelerated / fast track schedule projects 2. Alternative Project Delivery (APD) & Design-Build / IPD 3. Lump Sum projects 4. Harder to hire PMs so you have to train your own 9 Agenda 1. Why these 4 project management trends? 2. How each trend affects your firm 3. Strategies for addressing each trend in your firm 4. Summary of needed skills 10 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 5

6 Trend 1: Accelerated/Fast Track Projects 11 Moving the curve forward 1 PD: Pre design SD: Schematic design DD: Design development CD: Construction docs PR: Procurement CA: Construction Admin OP: Operations and functional Effort/Effect Ability to impact cost and functional capabilities Cost of design changes Traditional design process Preferred design process PD SD DD CD PR CA OP Project Phase Graphic originated by Patrick MacLeamy, AIA / HOK 12 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 6

7 Every project should have a project management plan 1. Proposal is your first draft 2. Finalized after project is secured 3. Consolidates information Request for proposal Proposal due diligence Proposal document Negotiations Contract 4. Planning & Communication tool Project team Client Why plan? 1. Get your team informed 2. Get your client on-board 3. Make the PMP your first milestone deliverable and invoice 8-12% upon submittal 13 Internal & external client kick-off meeting agendas 1. Team Members 2. Project Description Overview 3. Client Vision / Goals *Not for External Distribution Internal Team Kickoff ONLY 4. Client Critical Success Factors & Metrics 5. Firm Goals / Critical Success Factors* 6. Scope of Work 7. Detailed Schedule 8. Financial Plan* / Invoice Review 9. Team Organization, Resources & Responsibilities 10. Project Delivery Strategies 14 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 7

8 Internal & external client kick-off meeting agendas 11. Quality Control Process 12. Change Management Process 13. Communication Plan *Not for External Distribution Internal Team Kickoff ONLY 14. Contingency / Risk Mgmnt Plan - Internal Risks* 15. Contingency / Risk Mgmnt Plan - External Risks 16. Client Required Data & Reviews 17. Client Care Plan with Potential Expanded Services & Relationship Growth* 18. Next Steps / Immediate Actions 15 Process of endorsement 1 Input Gain Commitment 3 BUY IN 2 Filter/ Incorporate 16 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 8

9 But first XL s top 4 non-technical Risk Drivers 45% 40% Percentage of Claims Affected 39% 35% 30% 25% % 24% 25% 27% 20% 15% 13% 16% 10% 5% 6% 0% Negotiation and Contracts Client Selection Project Team Capabilities Communication Design Professional group Risk Drivers research 2014, XL America, Inc. All rights reserved 17 Negotiation and Contract issues 38% Unclear or inappropriate scope 16% No formal project evaluation 12% No contract before work started 8% Lack of construction phase services 8% Other 6% Lack of mediation clause 5% No contingency fund 3% Deal Breakers in contract Design Professional group Risk Drivers research 2014, XL America, Inc. All rights reserved 2% Client agreement not reviewed by lawyer 2% Field staff didn't have/understand contract 1% Client agreement not reviewed by senior management 18 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 9

10 Trend 2: Alternate Project Delivery (APD) 19 Survey: Trends in alternative project delivery What trends in the AEC industry do you see in your market area for the use of IPD and forms of alternative project delivery? 1. I see IPD use increasing 2. I see the use of IPD methods staying about the same 3. I see the use of IPD methods decreasing 4. I m not involved in these types of projects 20 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 10

11 What do these things have in common? Design-Build Construction Management Construction Management At-Risk Public-Private Partnerships Integrated Project Delivery (IPD) Lean Construction 21 What do these things have in common? None of them came from the design sector 22 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 11

12 Why do owners want change? 23 According to a recent FMI/CMAA survey of owners Document quality is declining Architects should be held more responsible for quality docs Architects are external inhibitors to contractor productivity Poor quality plans & specs Slow response time = 70% = 98% = 60% = 51% Owners should contractually define collaboration approaches = 78% 24 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 12

13 But what is preventing us? According to a 2007 AASHTO Report on Projects >$5 million 82% exceeded the original bid 30% exceeded the original bid by >10% 65% of projects were delivered late This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 13

14 How PSMJ views various project delivery methods Approx. % of Project Delivery Method U.S. Const. Trends Market Design Bid Build 60% Slowly receding Fastrack 15% Steady Engineer Procure Construct 15% Steady Construction Management 15% Increasing Program Management 5% Increasing Bridging 1% Increasing Design Build (incl. Turnkey) 30% Increasing Design Build Own Operate 1% Experimental only Integrated Project Delivery <1% Experimental only Federal Industrial Commercial State/Municipal Institutional Europe/ Asia Note: Percents exceed 100% as some projects use multiple delivery methods. 27 How do various project delivery methods compare? D B vs. D B B CM at Risk vs. D B B Level of Certainty Unit cost 6% less 2% less 99% Construction schedule 12% faster 6% faster 89% Delivery schedule 34% faster 13% faster 88% Cost growth 5% less 8% more 24% Schedule growth 11% less 9% less 24% Source: Construction Industry Institute 28 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 14

15 IPD: Considerations & issues Table of Contents 1. Compensation 2. Risk allocation and reliance 3. Design ownership and access 4. Intellectual property 5. Model hosting 6. Insurance 29 APD: Different methods How do I make sense out of all these delivery options? What is IPD anyway? And what about P3? And what is happening to Design-Build? EPCM? DBOOM? What does this alphabet soup mean to me? Do I need to be able to use BIM to get involved? 30 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 15

16 Integrated Project Delivery How did IPD begin? What are the goals? Master Builder" concept Single Purpose Entity. IPD-Lite or IPD-ish Integrated Supply Team or Integrated Design-Build 31 Motivators for alternative delivery options Problems created by traditional Design-Bid-Build 1. Skyrocketing materials costs 2. Complex regulatory and political environment 3. Difficult financial environment 4. Construction claims, changes and adversarial dealings with the construction entity 5. Desire to minimize risk and maximize collaboration Fact: According to a recent AASHTO study, 83% of large transportation projects were over budget Possible solutions by improved project integration 1. Earlier team-building 2. More detailed goals tied to incentives for performance 3. Focused responsibility and accountability 4. More knowledgeable project delivery team 5. Mutual respect and trust between all members of the project delivery team 6. Shared risk and rewards 32 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 16

17 Most alternative delivery methods intend to accelerate the schedule Traditional Linear Process Planning Design Bid Construction Occupancy Overlapping Phase Process Planning Design Construction Occupancy 33 What are the implications? Scope definition Are we good at this? Where does scope creep occur? Quicker decisions Are we good at this? Rework Huge problem sector-wide. XL estimates 5%-7% of total project profit is written off due to rework & scope creep Collaborative behavior vs. contractual behavior We are still learning how to do this 34 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 17

18 How do we need to respond? Teamwork Connect to Clients Professionalism Leadership Partner 35 Design-Build Owner hires one firm (or team) to perform all design and construction Owner Design-Build Firm(s) Design Firm Equipment Suppliers Construction Subcontractors 36 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 18

19 Program and Construction Management Owner hires an independent firm to oversee design and construction activities Owner Program/Construction Manager Design Professional Contractor 37 CM at risk Owner hires independent CM firm to oversee procurement and construction activities Owner Design Professional CM Firm Equipment Suppliers Trade Contractors 38 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 19

20 Bridging Owner hires A/E design firm to do front-end design, then A/E design firm critiques construction team Design Phase Construction Phase Owner Owner Construction Firm A/E Firm Designer Equipment Suppliers Construction Subs 39 Cultural barriers to IPD adoption Team commitment vs. differing agendas (finger pointing) Clients typically wish to shed risk to A/E/C team Clients may be reluctant to sign a Single Purpose Entity Contract Bureaucratic clients will inhibit team decision-making Old ways of doing things are hard to change 40 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 20

21 Procedural barriers to IPD adoption IPD requires a sophisticated owner A/Es need to take on added risk BIM maximizes the value of IPD Constructors need to be flexible 41 APD: Contracts The 3 main contracts currently used for IPD Relational v. Transactional Contracts Creation of a Single Purpose Entity (SPE) in purest form Defined Roles & Responsibilities Design-Build Step 1 / Step 2 Contracts Public Private Partnerships = QBS Competition 42 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 21

22 APD: Compensation Guaranteed maximum price with incentives When costs exceed the target cost estimate plus A/E/C team s profits, then the owner pays remaining direct costs Added owner scope increases GMP / target cost Individual A/E/C team members profits & risk Shared savings & profit incentives Deferred profits 43 APD: Insurance issues Insurance products are still in development Single Project insurance Project-Based IPD insurance Owner-Controlled Insurance Program (OCIP) Wrap-Up policy Contractor-Controlled Insurance Program (CCIP) 44 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 22

23 APD: Risks, Rewards & Pitfalls Who should take what risks? Who should get what rewards? What are the biggest potential problems in alternative project delivery? Work sequencing / Rework Being a Sub to an IPD / D-B Prime Fee distribution 45 What are the implications? Need to define and commit to scope earlier Quicker decisions by entire team Out of sequence work, rework and value engineering are continuous facts of life Document change tracking systems needed Collaborative behavior not just desirable it s a necessity! Client/owner leverage no longer available for internal AE vs. GC issue resolution 46 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 23

24 What are the opportunities? Lower Construction Documents costs if achieved via Shop Drawings by Subcontractors Potential fee reallocation to spend more $ earlier & later in the process, less in CDs More early collaboration & decision-making data = better design information & results Architects can attain greater potential profits Higher involvement / energy / fulfillment / partnering Lead the entire process rather than being a subconsultant / subcontractor 47 What s wrong with this deal? Contractor: Let s go after this project together. I need enough design from you so I can do take-offs to estimate the construction cost. I need a lump sum price from you for all design services. You cover your bidding costs; I ll cover mine. If we are selected, you ll profit from the design; I ll profit from the construction. 48 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 24

25 Sequencing of design packages is key to success When structural steel drawings are released before foundation drawings 49 Design-Build / IPD considerations Design sequence Design Freeze dates Process changes BIM implications Design reviews Shop drawings and other submittals Communication / Education and Trust issues 50 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 25

26 Risk considerations: Liability Liability expands Involvement in construction supervision No recourse to owner to report construction problems A/E insurance may not cover added exposures Insurance coordination issues Surety bonds + personal indemnity or guarantee 51 Risk considerations: Financial Traditional Errors & Omissions Workplace Accidents Specification Errors Material Failures Construction Errors & Delays Upfront Costs Incurred Prior to Full Client Commitment Exceeding GMP after Agreement on Contract Price 52 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 26

27 APD evolution Grow D-B / IPD Projects Cost estimating / scheduling / construction administration skills A/E IPD evolution Relationships Alliances A/E(&C) Project Manager the critical link 53 Trend 3: Lump Sum Projects 54 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 27

28 Does contract type relate to risk of losing money? Contract Type High Medium Low Lump Sum or Unit Price % Of Actual Construction Cost Hourly (No Limit) Hourly Not-to-Exceed 55 How top 10% firms achieve high performance 1. Higher pricing strategies 2. Target multiplier viewed as floor, not ceiling 3. Most jobs done lump sum, unit price or w/ incentives 4. More capable project managers 5. Strong focus on organizational priorities meeting/exceeding budget expectations meeting/exceeding client expectations 6. Systematic implementation of earned value tracking 7. Strong accountability for project performance dealing appropriately with those who don t perform rewarding those who excel 56 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 28

29 WBS/Scope of work strategies What is the advantage? 57 XL s Top 4 Non-Technical Risk Drivers 45% 40% Percentage of Claims Affected 39% 35% % 25% 23% 24% 25% 27% 20% 15% 13% 16% 10% 6% 5% 0% Negotiation and Contracts Client Selection Project Team Capabilities Communication 58 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 29

30 Communication issues 51% Lack of procedure to identify conflicts, errors and omissions 17% Project issues and potential disputes not handled correctly 13% Scope of services not explained to client 9% Lack of documentation re: changes in scope, budget, etc. 6% Project staff not aware of responsibilities 3% Other 1% Regular progress reports regarding changes not approved 59 Four risk management strategies AVOID Project & Client Selection TRANSFER Insurance & Contracts ASSUME Self-insurance CONTROL Systems in place to recognize & mitigate risk 60 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 30

31 Trend 4: Harder to hire PM s, so 61 PM maturity levels Level 7 The best PMs become a principal-level position Level 6 Level 5 Level 4 Level 3 Principals develop a team approach with PMs Principals turn over all PM duties to PMs Principals designate PMs who perform some (but not all) PM duties Non-principals manage small projects and/or tasks on large ones Project Size Level 2 Level 1 Principals manage all projects; non-principals do the work Principals perform (and manage) all projects Maturity Level 62 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 31

32 Coaching and mentoring Provide opportunities and support Give people autonomy and freedom Foster collaboration Listen to other points of view Encourage creative solutions to problems Express confidence in people s abilities Develop people s capacities and skills 63 All PMs need reinforcement and reminders Identify the most important PM practices Implement firm-wide Have a process to verify Most effective process is regular project reviews 64 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 32

33 Principal & PM monthly project review Scheduled meeting to coach PMs on project financial performance project delivery identifying problems/issues early & mitigating their impact client management All PMs use same template for reporting graphic presentation budget & schedule status 65 Monthly project review Key information PMs should compile & prepare for monthly project review Signed contract/letter of intent Budget status over/under budget / corrective actions Schedule status behind (with action), ahead (by how much) or on schedule PMP completed, reviewed and distributed Bottom-up budget A/R payment status Planned multiplier and achieved multiplier to date Recent / potential additional services Updated calculation of estimated progress EVA graph of budget & schedule status Client contact / status 66 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 33

34 Firm-wide PM practices Work planning / PMPs with Client kick-off Bottom-up budgets Earned Value Analysis (EVA) Project status reviews Project Director + PM Monthly project reviews PM job description PM process portal Structure Populate Maintain PM guidelines PM2 PM best practices implementation 67 Questions? 68 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 34

35 Learn More. visit xldp.com/learnmore/ondemandwebinars Get XL/PSMJ Webinar series OnDemand Each earns free learning unit(s). 69 Get More. visit xldp.com/learnmore Download our entire Top 10 series Test drive our Contract eguide copy/paste recommended contract language directly into your documents. 2014, X.L. America, Inc. All rights reserved 70 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 35

36 PSMJ Project Management Products & Tools Project Management Boot Camp This interactive, two-day seminar is extremely useful for those who are looking for all levels of project management Webinar participants register now for one of the upcoming 8 locations and bring a colleague for half off the regular registration fee. Project Management Newsletter This monthly newsletter provides PMs with great ideas on how to make their projects more successful. Webinar participants receive 18 months of this newsletter for the price of 12 months ($337 per subscriber) Significant discounts are available for multiple subscribers in the same firm Call Diane Constantine at PSMJ (7765) and mention that you participated in this webinar to receive these special offers for a limited time only. Offer ends March 14 th! *PSMJ PM Boot Camp offer not valid on previously registered and paid attendees 71 AIA Certificate of Completion This webinar is registered with the national AIA, and units earned by architects are directly reported to the AIA. Engineers can, in general, use certificates of completion to self-report Professional Development Hours. Not all States and licensing boards accept these programs for learning units. The live webinar is registered with the AIA by PSMJ. In order to receive a copy of the Certificate of Completion, please send an to: education@psmj.com The OnDemand webinar is registered with the AIA by XL Group. Visit: xldp.com/learnmore/ondemandwebinars.com Upon receipt of your , an electronic PDF version of the certificate will be sent to you. 72 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 36

37 Questions? 73 Thank you Contact us if you need further information or help Christopher Martersteck, AIA, LEED AP, DBIA Phone: connect on LinkedIn: eck Bob vanarsdall XL Group s Design Professional team Robert.vanarsdall@xlgroup.com Phone: PSMJ 74 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 37

38 XL Group is the global brand used by XLGroup plc s insurance subsidiaries. Coverages are underwritten by the following XL Group plc insurance companies: Greenwich Insurance Company, Indian Harbor Insurance Company, XL Specialty Insurance Company. Coverages not available in all jurisdictions. This publication is provided for information only and does not constitute legal advice. For legal advice, seek the services of a competent attorney. Any description of insurance provisions are general overview only. THE INSURANCE POLICIES, NOT THIS PUBLICATION, FORM THE CONTRACT BETWEEN THE INSURED AND THE INSURANCE OCMPANY. The policies contain limits, exclusions and conditions that are not listed in this publication. All coverage are subject to individual underwriting judgments and to state legal requirements. 2014, X.L. America, Inc. All rights reserved. This publication may not be duplicated without written consent. 75 This presentation contains proprietary information protected by X.L. America copyright and PSMJ copyright. All rights reserved. 38