Published June 2003

Project managers offer
tips for success

By John Wolcott
SCBJ Editor

BELLINGHAM — Three experienced project managers shared their successful construction practices at a recent half-day workshop presented by the Northwest Construction Consumer Council, telling more than 75 of their peers how to establish value improving practices, avoid losing money during new plant start-ups and avoid claims through dispute management programs.

Robert Nissen, a project manager with Jacobs Engineering in Houston, led off the program talking about VIPs — value improving practices — describing them as “out of the ordinary” steps to improve costs, schedule and reliability of capital construction projects.

Normally, saving even 5 percent on the average cost of a project reflects well on the contractor, Nissen said, “but VIPs often enable managers to save as much as 12 to 17 percent, and perhaps even more.”

His own employer, Jacobs, uses the VIP planning system and frequently achieves as much as a 23 percent savings on its contracts.

“You have to get everyone’s commitment to get started early, in the project definition stage, and apply the VIP practices to the entire project scope, not just some special aspect of the work,” he said. “If you wait until the last minute, you won’t have time.”

Nissen said VIPs include such things as:

• Continually evaluating project constructability issues to save time and money, even if it means hiring a third-party site manager to evaluate and monitor the project.
• Being sure equipment is designed to capacity. Too many projects waste money because of installing equipment with excess capacity.
• Using VIP evaluations of projects as a communication tool, to set the tone and provide everyone involved with a coordinated view of the construction plan as seen by operations, maintenance and engineering teams.
• Making the best use of technology, such as three-dimensional integrated computer-aided engineering programs.
• Evaluating ways to recycle project wastes by converting, selling, recycling or even eliminating potential waste during construction.

Richard Campbell, manager of technical services for The Industrial Co. of Denver, believes that once a production facility is finished, there are opportunities to make money — or lose it — during the start-up and commissioning phase.

“Begin your start-up planning early and consider start-up activities during all phases of the project. Don’t wait for the mechanical start-up,” Campbell said, noting that too often the focus on building the project overshadows the operational launch phase, resulting in higher costs later.

He recommends integrating start-up planning with construction planning so there is adequate time allowed at the end for putting a power plant or production facility into operation, an obvious and unavoidable need that he finds is often given little attention until it’s too late, when “it can be pretty painful.”

“People usually put an appropriate amount of time in the schedule for start-up, but then people are off doing something else, construction starts and suddenly delivery of a major piece of equipment is delayed by several months, so you end up recovering the time from the start-up calendar. The start-up period needs to be protected. It’s not a big chunk of time out there that we don’t really need,” he warned.

Because something always “goes wrong” in every project, he suggests being realistic about allowing time in a project’s start-up planning for things that don’t work right that shut the project down for a day or a week, “because statistically, that’s what happens and you need to allow for that.”

To counter the challenge of planning and conducting successful start-up phases for production facilities, Campbell’s company developed its own manual of guidelines, covering everything from realistic scheduling and how to avoid conflicts with “the construction guys” to identifying who’s responsible for each step.

“Also, watch the details and do the stacks of paperwork. It’s a headache and the last thing you want to work on, but not doing it means a huge mess and makes start-up a huge task at a time when you’re trying to turn over a system and walk away with a clean job,” Campbell said.

Steve Pinnell of Pinnell Busch in Portland, a civil engineer who has managed engineering and construction projects for more than 30 years, offered tips on how companies can avoid claims through dispute management programs.

Author of “How to Get Paid for Construction Changes,” Pinnell said he helps clients focus on preventing, recognizing and settling disputes. Common dispute issues are becoming more frequent, he said, because of current construction industry trends: more competition, reduced margins, tighter schedules, weakened relations between contractors and subcontractors, and insufficient job site staff.

“Counter-trends for solving those problems, and reducing conflicts and financial losses, include using dispute avoidance and resolution techniques, partnering, project re-alignment and dispute management programs,” Pinnell said.

Most dispute problems arise from “ill-defined, fuzzy scope of project descriptions, inadequate budgets and inadequate construction schedules,” he said, along with poor record keeping and change-order management, as well as poor working relationships between people and companies.

Frequently reminding his audience that construction is a “people business,” Pinnell offered a list of common-sense tips: improving people skills and communication; partnering with others to share common goals, thus avoiding disputes and encouraging collaborative problem solving; establishing win-win negotiation techniques so both sides gain from the process.

“Remember, it’s about people,” he said. “When you’re behind schedule, the best way to get time back is to get a commitment from the people involved. That counts much more than fancy rescheduling.”

He also emphasized the importance of dispute review boards, neutral experts, mediation and arbitration as useful ways to avoid the extreme settlement technique, litigation.

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