Now, more than ever, there is a need for stronger project management protocols in public works departments. As of the end of Q3 2008, tax revenues are down across the nation in virtually every state and local community. Some states have raided infrastructure trust funds just to provide operating funds. Construction costs have skyrocketed as fuel costs and material costs continue to escalate. Meanwhile, our US infrastructure continues to age and deteriorate and there is real documented needs for repair or replacement.
The near collapse of the US investment banking industry exacerbates the problem by making less investment funds available for private funding of infrastructure. While the cry: “Do more with less” has resounded through the decades, this time it is real. Until someone comes up with a "non-raidable” trust fund, or some other creative means of funding public infrastructure, we will have to do more with less; particularly funding new construction.
Although public works agencies have been in the construction business since before we were a nation, historically we have not done a good job of “doing more with less”. Truth be told, we have not done a good job as stewards of the public trust. No less a respected organization than AASHTO recently conducted a study of over 26,000 transportation projects in 22 states delivered over a five year period and learned that over 83% of the larger projects (>$5mil) exceeded their bid price, 30% of these exceeded over 10% of their bid! Bear in mind that these are state departments of transportation experienced in project delivery with an internal organization focused on project delivery and with an annual Transportation Improvement Program (TIP) in the multi-millions of dollars. How much more difficult is it for a smaller public works agency that has to use the energy and experience of its senior people to deal with the challenges of a less sophisticated operational system and ever-present political concerns?
In order to maintain the confidence of the communities that our public works agencies serve, we need to routinely do two things:
Maintain construction cost growth as <5%.
Deliver >85% of our annual Capital Improvement Program.
We need to do those two things day after day, year in and year out. Only then can we go to our public and ask for additional funding while maintaining their confidence in us to deliver on our promises. In a fairly sophisticated public works agency with which I worked in the Southwest, construction cost growth routinely exceeded 13% until it devised and deployed a program to manage and control construction cost growth. After implementing this program, the agency reduced cost growth to less than 5%. It wasn’t easy, but it was necessary – more so now than ever before.
According to the AASHTO study, the preponderance of cost growth was blamed on “construction surprises”. The study goes on to assert that underground conditions, inability to obtain permits (environmental), inability to get right of way and inability to get utilities relocated were the primary causes. In a municipal public works environment political concerns and political and public acceptance are additional causes. How many of these “causes” are really surprises? We know that virtually every project needs some form of permitting; most need right of way and many have utilities that need to be moved. Building a public project and spending public funds always entails involving the public. Why, then, are these surprises? Just like in design, there is a process with a timeline to accomplish each of these tasks. Integrate them into the project delivery process just as you would with design and manage these activities accordingly. With respect to underground conditions, the savvy project manager or public owner will not shortchange the underground investigation, even if he thinks he knows what the investigation is likely to uncover.
There are several steps that a well-run agency needs to do, these can be considered “best practices”:
Build a culture of project management within the organization. This is more than lip service and more than simply “hoping” to do better (hope is not a strategy). This means instilling within the organizational culture a fundamental precept that projects will be delivered to the public on time and within 5% of the low bid. While not difficult, such a cultural change means that senior management will conduct periodic reviews of project status including not only design status but the status of utility relocation, public acceptance, right of way and permits. Such a cultural change means that project managers will be trained in project management skills and protocols and that program and senior managers will follow up to support and guide the project manager throughout the project delivery process.
Integrate planning, design and construction oversight into a seamless project delivery process. While the three phases of project delivery have different purposes and the skills to deliver each phase are different, there must be integration of the phases for a project to be successful. This is particularly true between the design and construction phases. What is designed must be constructible - particularly by the low bidder. This means regular oversight of the design process by knowledgeable construction managers – preferably the construction manager who will be on-sight during the construction phase. Phase integration means having a formal transfer process as the project moves through the phases. While the plan assembly (PS&E) is a widely recognized transition document between design and construction, the Project Charter should be widely adopted to transition between the planning and design process.
Develop and utilize a formal “Release for Construction Process”. A single individual, senior in the management chain should have the sole authority and responsibility to release a project for bid. This individual should interview both the design project manager and the construction manager and review a checklist prior to signing off on the plan assembly releasing is for construction. This release should include verification that quality checks have been made, that utilities are out of the way, that permits have been obtained, and that the right-of-way has been acquired. It should also contain an acknowledgement that the public has accepted the project and that it may proceed. Finally, it should include a statement that the plans have been reviewed for constructability and, where appropriate, maintainability by a knowledgeable individual.
Manage Right-of-way acquisition, utility relocation and environmental permitting as you would design. If you ask any of the individuals responsible for the above activities, more than likely they will explain that they get involved in the project too late in the game and then are expected to move mountains to get the permits or approvals. In your organization, flow-chart the steps that must be taken to obtain these permits or that right of way. Consider how long it takes. Right-of-way acquisition by a public agency is a highly structured process with statutorily mandated time lines. In many cases, by statute, acquisition cannot be significantly compressed. So respect the rules and integrate those persons responsible for gaining permits, right-of-way, and approvals into the project delivery process. Make them part of the project delivery team and respect their protocols and processes. Above all, start the processes early enough in the delivery cycle so they can get what you need when you need it.
Establish a “shadow” project management accounting system that is an effective tool for the project manager. Every public agency has an accounting system that is based on a federal model, fiscal year and governmental chart-of- accounts. These accounting systems were developed in response to audit findings over the years. Unfortunately, they do not work well as a tracking and control tool for a project manager. Thus, in too many cases, project managers are forced to rely on out-dated or stale accounting reports that do not address project specific charges. The end result is that too often a public sector project manager simply does not have good, timely and accurate financial information on which to base project decisions. Contrast this with our colleagues in the private sector. Private consultants business is based on project delivery on time and within their agreed upon budget. Going over budget will guarantee the financial failure of the project and over time, the firm itself. Thus, a good project financial management system is vital to a private firm. We, in the public sector, need to adopt a system that allows the project manager to track project costs and schedule (including right-of-way, permitting costs, utility costs, public acceptance costs, design costs and in-house oversight). This system needs to be compatible with the public accounting system although it will gather different data and be used for project management not public accountability.
Never rely on software to manage your projects. Too many public agencies when faced with the inability to deliver projects on time launch a quest for the “ideal” project management software. Software is nothing more than a tool for a project manager to use. It is not a substitute for a culture focused on project delivery or for project management training, nor will it assist in getting the all important permits. Consider software as the 9/16ths wrench in the tool box. Whether the wrench is made by Snap-On, Craftsman or is a cheap knock-off, it will do the same thing. First, develop the culture then get the simplest software that your project managers can use, one they can apply to their project in minutes and get real-time results on which they can make informed judgments and, finally, report the status of all project to senior management.
Respect the project managers. In the private sector consulting world, the most respected position is that of project manager. In most consulting cultures, management exists to assist the project manager - acting as a check and balance, providing oversight (sometimes more than the individual project manager might like), distributing resources and acting as a mentor. Most members of senior management came up through the ranks of project manager and have faced the issues that project managers face. This same culture of respect needs to be fundamental to us in the public sector.
With all this as background, what is the public works agency director to do? First of all, take a look at your project delivery record of the past few years. What is your construction cost growth? What percent of the annual CIP was actually delivered in the intended year? If the results are not acceptable to you, take a look at what caused the problems. Is it caused by the typical inability to obtain permits, move utilities and obtain Right-of-way? Are your customers making changes late in the process and causing redo? Are you having problems with design quality? Are your consultants or design team delivering projects late? What about the underground conditions - are you having problems with soil conditions or hidden utilities that you did not find during the design process? Once you have identified the source of the problem you are well on your way to fixing it. Meanwhile, start institutionalizing some of the seven protocols outlined above.
With foresight, good planning and a little bit of luck your project delivery will be just fine. In which case, it is time for celebration. Announce your victory, let the public know that their public works agency is doing just fine thank you and will continue to deliver projects needed for the community on time and on budget. Good luck!
Michael Ellegood is Senior Consultant, PSMJ Resources, Inc., Phoenix. He can be reached at 602-690-1428 or email@example.com.