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CONTROLLING PROJECT DESIGN COSTS Howard G. Birnberg Controlling project design costs is a primary responsibility of project managers. Many project managers continually struggle with this issue. Unfortunately, projects often end up over budget and behind schedule. Why do projects get into difficulty in the first place? 1. Principal or senior manager meddling. Senior managers cannot continually reassign staff based upon which project they are most interested in or because a client is pressuring them. Project managers must be assertive participants in the control of staff and other resources. Otherwise, they have little chance of staying within project budgets and schedules. 2. Poor communication with clients, consultants and others. Accurate information must be promptly disseminated to those who need it. 3. Assigning staff based upon availability, not on project need or skill requirements. Occasionally, a project is viewed as a training opportunity for young or inexperienced staff. In other cases, high workloads force the assignment of unqualified staff. 4. Excess perfection afflicts many architects and engineers. Architectural designers who cannot commit to a scheme, ignore budgets and deadlines or view the program only as a rough guideline are infected with this disease. Engineers who over detail drawings or over specify materials also suffer from this illness. 5. Poor scope management. Many design firms lack an adequate system for monitoring scope of services and communicating with other team members. As a result, opportunities are lost for additional fee, and required changes are communicated to others only after additional costs for labor have been incurred. The same basic drawing may be redrawn three or four or more times. 6. Inadequate documentation. This ranges from poor meeting notes and minutes to inadequate design and construction change orders. ACTIONS In order to help project managers meet their responsibility for controlling project design costs, there are a number of steps to be taken. 1. The project delivery system selected must allow for effective project management free of principal/senior manager meddling. Decision making must be pushed down to the lowest effective level in the organization through a process of cross training and continuous improvement. 2. A great deal of homework must be undertaken before a contract is signed. The design firm and in turn, project managers, must know the overall company pricing scheme including multipliers, hourly rates and any other cost data required. An evaluation needs to be performed as to the suitability of your firm to work with a particular (potential) client. For example, if you have never worked for a U.S. government agency, you have a lot to learn before signing a contract. You must also prepare a detailed scope of services. A fee budget must be established based upon the proposed scope. Schedules must not only be prepared, but followed as much as possible. Forward price your work on long-term contracts as costs may rise over the life of the contract. 3. Communicate with all members of the project team. This team includes all consultants to the project, your client (the user), suppliers, vendors, etc. (not only your own staff). This communications should include a regular meeting process, and procedures to inform clients and consultants when design change orders have occurred . You should review your procedures, standard forms, etc. with clients and consultants before you begin work on the project so everyone knows what to expect. 4. Have an information reporting system to keep project and senior managers informed. This information must be complete, accurate and timely. There are many commercial software packages available that capably perform this function . The availability of frequent updates is crucial. This is where a daily timesheet can be of great value. FIXING A TROUBLED PROJECT If a project is m trouble, what can a project manager do about it? There are a number of steps to be considered. 1. Identify the problem. This may appear obvious, but often it is not. Another project manager may need to examine a job and make some recommendations. 2. Discuss the problem with the client. Project managers should not do this for every minor issue, but certainly should for important issues. 3. Provide support for a project manager who is overburdened, lacking adequate staff or inexperienced. In rare circumstances, another new project manager may need to take over the job. 4. Change the staff if those assigned to the project are also overwhelmed or inexperienced. 5. Prepare revised budgets and schedules to reflect the new situation. 6. Examine the scope to make sure you are doing what you agreed to do. 7. Have a monitoring system in place that allows you to catch problems as early as possible. Howard Birnberg is executive director of the Association for Project Managers. He may be reached at (312) 6642300. Return to the List of Articles Return to the Association for Project Managers Main Page Email the Association for Project Managers
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