What Should You Do When You Spot A Possible Claim On Your Construction Project?

No one can argue that having better chances in winning a claim depends on how fast an organization can react and be ready for the claim. Being fast is not limited for giving the right formal notices as required by the contract agreement but also being fast in documenting and collecting the particulars of the claim.

The Most Common Reasons of Construction Claims

Project Management Information System (PMIS) like PMWeb is used today by many organizations to better manage their construction claims. PMWeb is used to issue the claim notices using predefined contractually correct letters, capture daily reports, meeting minutes and other claim related project communications, storing documents that supports claim submissions among others.

In this article, we will show how PMWeb will be used to formalize the implementation of what will be called as Occurrence Report. This is a document template that the content will be specific for each possible reason of a construction claim. The manual, “Construction Claims Organization System” by Robert S. Brams and Christopher Lerner have identified 39 headings that details some of the most common reasons of construction claims.

1.         Acts of God

2.         Acts of Government

3.         Actual Acceleration

4.         Adverse Weather

5.         Bankruptcy

6.         Cardinal Change

7.         Commercial Impracticability/ Performance

8.         Commercial Impracticability/ Supply

9.         Constructive Acceleration

10.     Constructive Change

11.     Defective Specifications

12.     Delay of Approvals

13.     Delayed Issuance of Change Orders

14.     Delayed Notice to Proceed

15.     Destruction of Work

16.     Destruction of Materials

17.     Differing Site Conditions

18.     Early Completion Prevented

19.     Impossibility of Performance

20.     Improper Inspection

21.     Inadequate Supervision

22.     Inadequate Utilities

23.     Interference

24.     Labor Shortage

25.     Lack of Access

26.     Lack of Information or Decision

27.     Lack of Permits

28.     Lack of Right of Way

29.     Late Drawings

30.     Late, Defective Material, Etc.

31.     Payments Not Made

32.     Scheduling Difficulties

33.     Stacking of Trades

34.     Strikes

35.     Subcontractor Delay

36.     Superior Knowledge/ Misrepresentation

37.     Supplier Delay

38.     Suspension of Work/Delay

39.     War and Other Hostilities

A data list will be created in PMWeb to capture those 39 claim reasons and others to make them standard across all claim related communications. Those could include the Occurrence Report, notice letters, RFI, potential change orders, change orders, daily reports, risk register among others. The claim reasons list can be expanded if the organization has identified additional claim reasons that could be relevant to their projects. For example, the correspondence module below shows how one of the correspondence communications was assigned the construction claim reason it belongs to. Of course, the organization can develop more attributes that can help in better managing and reporting on the project information.

The Occurrence Report: Capturing the Facts

The “Construction Claims Organization System” manual has proposed the content of the Occurrence Report for each claim reason. Each Occurrence Report has two sections, the first is to identify the information that needs to be captured by the field supervisor or site engineer whenever one the possible claims occur while the second is to capture the Project Management Analysis and Action List. Of course, the organization might decide to have more sections in the Occurrence Report depending on the information to be captured and by who.

The list of information and actions to be captured in the first section of the Occurrence Report could differ from one claim reason to another. For example, for the Occurrence Report for Differing Site Conditions, the first section will include the following details:

1.      A warning for the Site Supervisor for not disturbing the site condition until he/she have notified the project stakeholders of the condition.

2.      The location of the differing site condition.

3.      Description of the condition along with photographs of the condition

4.      When the condition was first observed

5.      Who observed the condition

6.      Describe how the condition affected the current work

7.      Describe how the condition could affect future work

8.      Whether the project owner or authorized representative are aware of how the condition would impact the work

9.      If the condition delayed or disrupted the workforce or resulted the work to be done inefficiently

10.  If the condition would require the use of additional labor, equipment, material or supervisory efforts

11.  Where any materials lost or damaged due to this condition

Using PMWeb What-You-See-Is-What-You-Get (WYSIWYG) Custom Form Builder, the organization can create their own list of actions and queries that the Site Supervisor or the Site Engineer needs to document as soon as this claim reason do occur. The form below is just an example of how section A of the occurrence report for the Differing Site Condition could be. It should be noted that many of the fields that includes locations, resources, dates among other standard contents will be picked up from predefined list to reduce the chances of data entry error as well as expedite the process of data capturing.

Since PMWeb is a zero-foot-print application, this means that the same form can be also be accessed from any web browser including those of smart phones. In other words, the field supervisor can complete the Occurrence Report on the field using his/her iPad or any other smart phone device. This also allows capturing content for the form by either typing it in or saying it and have the speech-to-text recognition to type it in.

Using the attachment command the Field Supervisor can take pictures or videos of the differing site condition and upload those to the Occurrence Report. In addition, the Field Supervisor can attach documents that are stored in PMWeb document management repository like drawings, specifications among others that are relevant to the site condition. Further, other PMWeb records like daily reports, timesheets, RFI among others can be linked to the Occurrence Report.

When the Field Supervisor completes Section A of the Occurrence Report, he/she will use the predefined workflow to submit the same form to the designated project management team member to perform the needed analysis and take the needed actions. The workflow assigned for the same Occurrence Report, that is, Differing Site Conditions, could include predefined conditions to branch out and involve other team members in the review process depending on the actual content of the form. In others, there will be no time wasted in figuring out who show be involved in this process.

The Occurrence Report: Analyzing and Responding

The same Occurrence Report will have section B, Project Management Analysis and Action List. Using the PMWeb security levels, access to section B can be restricted only to the authorized users. Similarly, section B has pre-defined queries and actions that need to be taken. Those could include for example:

1.      After reviewing section A, what additional facts to be considered and added

2.      Determine the schedule impact of the condition

3.      Confirm if the conditions of contract states that the occurred site condition is considered as unforeseen conditions

4.      Review the variation, dispute and notices requirement of the contract

5.      Decide whether to submit a potential change order, formal notice of a claim or both (Those are also forms that should be ready to use using PMWeb own forms or custom forms)

6.      Confirm if the project owner or any of his authorized representatives has made any statements or taken any actions that the reviewer believes constitute an admission of fault, liability or responsibility in any way for the delay, added cost or other impact resulting from this occurrence. If this has happened, then all details need to be provided.

7.      Attach any supportive documents or facts to support the claim using the Attachment command.

The Occurrence Report: Real-Time Reporting

Similar to all other processes managed in PMWeb, real-time logs and reports of all those occurrence reports by category can be produced to track their status. A real-time dashboard can be also created to summarize the status of all those occurrence reports summarized by the 39 most common reasons of construction claims. The organization can also have a real-time dashboard that will analyze and report those occurrence reports across their complete projects portfolio. The indicative schematic chart below explains this real-time dashboard concept that allows management to drilldown to the source of the reported claim.

The Occurrence Report: Business Intelligence

In addition, the use of Business Intelligence (BI) applications like MS Power BI, Qlik, Tableau among others provide the project management team with the ability to analyze the information captured in the Occurrence Reports across on a single project or all projects that the organization is involved with to analyze trends and identify correlation between the different project events. As an example, the BI report shown below is used by an organization to analyze the trends of change orders on projects that are they are executing.

In other words, technology not only will help organizations in reducing the massive volume of data and information that they fail to capture in a complete and integrated forms, but will also help in improving the chances to win due claims and additional scope of work by ensuring that the needed information to support the organization’s request for contract adjustment is done in the right format, at the right time by the right project team member.

Can technology reduce the cost of managing construction project’s information?

Regardless of the level of governance and control an organization wants to enforce on their construction projects, technology can drastically reduce the cost of managing the everyday information generated from the different events, actions and communications. This article will only address the savings that could result from improving the efficiency of generating, capturing, administering, reporting and sharing this everyday information.

Those potential savings will be limited for performing the following tasks which are common to any construction project regardless of its size, type, location or value. Those tasks are:

1.      Project Filing System

2.      Creating Project Communication Records

3.      Distributing and Sharing Project Communication Records

4.      Tracking Project Communication Records

5.      Reporting Project Communications Performance

Project Filing System

Regardless what project you are involved with, there will be always a filing room where folders that have the project documents and records. Those include the contract drawings, workshop drawings, as-built drawings, incoming and outgoing correspondence, daily reports, transmittals, inspection forms, authorities’ approvals, proposed change orders, change orders, safety incidents, permits, request for information, weekly progress reports among many others.

Using a Project Management Information System (PMIS) like PMWeb, the organization can duplicate the filing system structure and upload a soft copy of those documents. Those could be scanned documents, PDF files and other type of electronic files. For those uploaded documents, attributes that can provide better information like the location, bid package, category of work, specification section and others. Information that will of great value when there is a need to report or locate those documents. PMWeb also allows sending notifications when new documents are uploaded into a folder as well as keeping the versions of all electronic files that were updated.

In addition, the project team can add remarks and comments on those uploaded documents where the comments made by each team member will be stored in different layer that can be reported on. The redline option allows adding text notes, shapes and stamps to the selected project document.

Having those documents uploaded on PMWeb document management repository, the project team members can search and locate those documents by giving the key words to be searched for. Something that project team members will spent hours if not days in trying to locate records or documents that are related to some event.

The savings in the team effort that an organization can attain from being able to locate needed documents when needed could be of great value specially when there is a need to locate those documents in a very short time. Having the documents in a document management system will also be of great value when those are archived and handed over at the end of a project.

Creating Project Communication Records

Almost every construction project has some kind of pre-defined templates for daily reports, RFI, non-conformance report, permits, inspection among others. Those forms are usually created in MS Excel, MS Work or PDF where the user has the option to print the form and fill it manually or fill it on the electronic template, save it and print it. Some of those electronic templates might have dropdown values to ensure that the project team member use the predefined values. The user also needs to attach the supportive documents that are referenced in the project communication. Depending on the project’s requirements the project team members might need to have 3 or 4 sets of those documents when the communication record is submitted.

Using PMWeb PMIS, most of the input forms needed in project communication comes ready out of the box. Those include RFI, Meeting Minutes, Safety Incidents, Daily Reports, Transmittals, Submittal, Potential Change Order, Change Order, Progress Invoice among many others. Those forms have fields that are designed to pick data form predefined lists including WBS, Activity ID, Phase, Specification Category among others that can be made common to all other forms used in PMWeb across all projects managed using PMWeb.

Of course, input forms are not limited to what comes ready out of the box, but they could include any other forms in any other language to capture the additional information needed on the project. For example, organizations can develop extensive site inspection forms that are specific for each building system like structural, mechanical, fire protection, electrical among others. The PMWeb form builder provides a unique What You See Is What You Get (WYSIWYG) capability to create the form that is identical to what the organization is used to have.

The output communication form that will be formally submitted to the communication recipient can be designed in form and format to be aligned with the organization’ color branding, logo as well as the specific project requirements. In other words, although there will be a single input form, but the output form could vary to meet the specific project’s communication requirements.

As stated earlier, some if not most of the project communications require supportive documents to be attached to that communication. For example, the transmittal form would require the drawings, manuals, schedules and other type of documents to be attached to the communication. Using PMWeb, those documents are usually uploaded into the document management repository to ensure that no project related documented is not accounted for.

Distributing and Sharing Project Communication Records

After creating the project communication, the next step is to send this communication to the intended recipient as per the project responsibility assignment matrix (RAM) which will detail for each project communication who will issue, who review will review, who could be consulted, who needs to be kept informed and who is authorized to approve. The authorization to approve could be linked to specific attribute of the communication such as if the communication could result in additional cost or extension of time among many others.

The RAM is usually detailed into a workflow to capture the sequence for submitting, reviewing and approving the communication where multiple reviewers and approvers could be involved. The workflow also help to detail the workflow branches that are linked to reviewer and approval authorities’ levels. Those workflows can prove to be of great challenge if the project team member wants to manually decide on who should be next on workflow step and ensure that branch conditions are fully respected.

Using PMWeb PMIS, workflows can be created for each communication form taking into consideration the sequence for the submit, review and approval steps. The workflows can include all the conditions that could affect the workflow branches. In addition, PMWeb allows to delegate and replace users already assigned to a workflow if there are not available.

For each step in the workflow, we can assign the time allotted for the step, what actions the step owner can perform, what will happen if the document was approved or rejected along with details on the objective of the step. PMWeb also allows to use to identify if multiple reviewers assigned to a step need all to approved the document or anyone can approve the document.

The savings of the effort needed to submit and share project communication that PMWeb would bring would bring by automating the workflow steps is massive even if we exclude the savings of rectifying the mistakes of sending project communications into the wrong the channels.

Tracking Project Communication Records

Many organizations continue to use MS Excel as the method to track the different project communications. The effort needed to maintain those records in a near-real time status can prove of great challenge as unless the communication record is available then those logs cannot be updated. In addition, with the wide variety and volume of project communications, the effort needed to extract the content and update those records not only needs a lot of effort to add the data but also to review and verify that the data is complete and correct. RFI, Meeting Minutes, Submittals, Correspondence, Safety, Daily Reports and Inspection are examples of the many forms that each organization must maintain a log of.

When PMWeb PMIS Forms are used to capture the information associated with those communication forms and workflows are used to circulate the form and attachments among those who are involved in submitting, reviewing and approving those forms, having real-time logs of all those transactions is a default option. The organization can design the output form in any desired format. The report could define the way the data will be sorted and grouped, what data fields to display and if there is need to add filters to limit the data to be displayed. It is possible for the same type of project communication, say RFIs, to different tabular and graphical reports to display the information.

Reporting Project Communication Performance

One of the requirements of managing any construction project is for the project team to have clarity on the performance and status of project communications. Again, the trend is that those organizations will extract this data from the MS Excel log files and apply formulas to measure and report on their selected Key Performance Indicators (KPIs). The issue is that the log file created in MS Excel is usually designed to display the current data and therefore creating trend charts is not possible due to the absence of historical data. The other challenge is that usually there are different files for each log that could be managed by different project team member. Consolidating those tables and KPIs in a single table can prove to be of high risk due to file size and the ensuring that all logs are received at the same time to produce the near-time dashboard.

For PMWeb users, this is not an issue as the project communication dashboard will provide real-time status of the selected project communication. The measures, metrics and KPIs are defined once and they will be calculated automatically when the project communication records get created or progressed. Historical and past periods data are automatically stored in the database to enable creating trend and growth charts. The dashboard can be designed in a format that will be aligned with the organization branding and reporting requirement.

The dashboard is usually designed to be a drilldown dashboard which means that a user can drilldown from this dashboard to the log of a specific communication record, say Meeting Minutes Log. For the Meeting Minutes log, the user can drill to the Meeting Minute output form for a specific Meeting Minutes record. The user can then drilldown to Meeting Minute form itself and review the documents attached to that form as well as other PMWeb records that had been linked to the same meeting minute. This traceability is impossible of MS Excel was the application used to manage the project communication.

Using PMWeb PMIS, the same approach will be followed for other project processes like those that relate to cost, schedule, quality, risk, procurement among others. Following the same drilldown approach, Senior Management who have access to projects portfolio dashboard can drilldown to a specific project. Then they can drilldown to desired management aspect whether it is project communication, cost, schedule, risk, procurement, quality among others.

Now even if an organization ignores the benefits of enforcing the best practices of governance, transparency and accountability when it comes to implementing professional project management processes, the benefits from improving the efficiency in capturing, communicating, tracking and real-time reporting the status and performance of those processes could be something worth looking at. It is estimated that almost 60% of the effort of senior project management team is wasted on capturing, reviewing, analyzing and sharing information that is crucial for them to have the insight to make informed decisions. Using an integrated project management information system (PMIS) like PMWeb could drastically reduce this wasted effort and create massive benefits by reviewing, analyzing and learning from this massive BIG DATA that an organization can capture across their portfolio of projects.

Can technology reduce the cost of managing construction project’s information?

Regardless of the level of governance and control an organization wants to enforce on their construction projects, technology can drastically reduce the cost of managing the everyday information generated from the different events, actions and communications. This article will only address the savings that could result from improving the efficiency of generating, capturing, administering, reporting and sharing this everyday information.

Those potential savings will be limited for performing the following tasks which are common to any construction project regardless of its size, type, location or value. Those tasks are:

1.      Project Filing System

2.      Creating Project Communication Records

3.      Distributing and Sharing Project Communication Records

4.      Tracking Project Communication Records

5.      Reporting Project Communications Performance

Project Filing System

Regardless what project you are involved with, there will be always a filing room where folders that have the project documents and records. Those include the contract drawings, workshop drawings, as-built drawings, incoming and outgoing correspondence, daily reports, transmittals, inspection forms, authorities’ approvals, proposed change orders, change orders, safety incidents, permits, request for information, weekly progress reports among many others.

Using a Project Management Information System (PMIS) like PMWeb, the organization can duplicate the filing system structure and upload a soft copy of those documents. Those could be scanned documents, PDF files and other type of electronic files. For those uploaded documents, attributes that can provide better information like the location, bid package, category of work, specification section and others. Information that will of great value when there is a need to report or locate those documents. PMWeb also allows sending notifications when new documents are uploaded into a folder as well as keeping the versions of all electronic files that were updated.

In addition, the project team can add remarks and comments on those uploaded documents where the comments made by each team member will be stored in different layer that can be reported on. The redline option allows adding text notes, shapes and stamps to the selected project document.

Having those documents uploaded on PMWeb document management repository, the project team members can search and locate those documents by giving the key words to be searched for. Something that project team members will spent hours if not days in trying to locate records or documents that are related to some event.

The savings in the team effort that an organization can attain from being able to locate needed documents when needed could be of great value specially when there is a need to locate those documents in a very short time. Having the documents in a document management system will also be of great value when those are archived and handed over at the end of a project.

Creating Project Communication Records

Almost every construction project has some kind of pre-defined templates for daily reports, RFI, non-conformance report, permits, inspection among others. Those forms are usually created in MS Excel, MS Work or PDF where the user has the option to print the form and fill it manually or fill it on the electronic template, save it and print it. Some of those electronic templates might have dropdown values to ensure that the project team member use the predefined values. The user also needs to attach the supportive documents that are referenced in the project communication. Depending on the project’s requirements the project team members might need to have 3 or 4 sets of those documents when the communication record is submitted.

Using PMWeb PMIS, most of the input forms needed in project communication comes ready out of the box. Those include RFI, Meeting Minutes, Safety Incidents, Daily Reports, Transmittals, Submittal, Potential Change Order, Change Order, Progress Invoice among many others. Those forms have fields that are designed to pick data form predefined lists including WBS, Activity ID, Phase, Specification Category among others that can be made common to all other forms used in PMWeb across all projects managed using PMWeb.

Of course, input forms are not limited to what comes ready out of the box, but they could include any other forms in any other language to capture the additional information needed on the project. For example, organizations can develop extensive site inspection forms that are specific for each building system like structural, mechanical, fire protection, electrical among others. The PMWeb form builder provides a unique What You See Is What You Get (WYSIWYG) capability to create the form that is identical to what the organization is used to have.

The output communication form that will be formally submitted to the communication recipient can be designed in form and format to be aligned with the organization’ color branding, logo as well as the specific project requirements. In other words, although there will be a single input form, but the output form could vary to meet the specific project’s communication requirements.

As stated earlier, some if not most of the project communications require supportive documents to be attached to that communication. For example, the transmittal form would require the drawings, manuals, schedules and other type of documents to be attached to the communication. Using PMWeb, those documents are usually uploaded into the document management repository to ensure that no project related documented is not accounted for.

Distributing and Sharing Project Communication Records

After creating the project communication, the next step is to send this communication to the intended recipient as per the project responsibility assignment matrix (RAM) which will detail for each project communication who will issue, who review will review, who could be consulted, who needs to be kept informed and who is authorized to approve. The authorization to approve could be linked to specific attribute of the communication such as if the communication could result in additional cost or extension of time among many others.

The RAM is usually detailed into a workflow to capture the sequence for submitting, reviewing and approving the communication where multiple reviewers and approvers could be involved. The workflow also help to detail the workflow branches that are linked to reviewer and approval authorities’ levels. Those workflows can prove to be of great challenge if the project team member wants to manually decide on who should be next on workflow step and ensure that branch conditions are fully respected.

Using PMWeb PMIS, workflows can be created for each communication form taking into consideration the sequence for the submit, review and approval steps. The workflows can include all the conditions that could affect the workflow branches. In addition, PMWeb allows to delegate and replace users already assigned to a workflow if there are not available.

For each step in the workflow, we can assign the time allotted for the step, what actions the step owner can perform, what will happen if the document was approved or rejected along with details on the objective of the step. PMWeb also allows to use to identify if multiple reviewers assigned to a step need all to approved the document or anyone can approve the document.

The savings of the effort needed to submit and share project communication that PMWeb would bring would bring by automating the workflow steps is massive even if we exclude the savings of rectifying the mistakes of sending project communications into the wrong the channels.

Tracking Project Communication Records

Many organizations continue to use MS Excel as the method to track the different project communications. The effort needed to maintain those records in a near-real time status can prove of great challenge as unless the communication record is available then those logs cannot be updated. In addition, with the wide variety and volume of project communications, the effort needed to extract the content and update those records not only needs a lot of effort to add the data but also to review and verify that the data is complete and correct. RFI, Meeting Minutes, Submittals, Correspondence, Safety, Daily Reports and Inspection are examples of the many forms that each organization must maintain a log of.

When PMWeb PMIS Forms are used to capture the information associated with those communication forms and workflows are used to circulate the form and attachments among those who are involved in submitting, reviewing and approving those forms, having real-time logs of all those transactions is a default option. The organization can design the output form in any desired format. The report could define the way the data will be sorted and grouped, what data fields to display and if there is need to add filters to limit the data to be displayed. It is possible for the same type of project communication, say RFIs, to different tabular and graphical reports to display the information.

Reporting Project Communication Performance

One of the requirements of managing any construction project is for the project team to have clarity on the performance and status of project communications. Again, the trend is that those organizations will extract this data from the MS Excel log files and apply formulas to measure and report on their selected Key Performance Indicators (KPIs). The issue is that the log file created in MS Excel is usually designed to display the current data and therefore creating trend charts is not possible due to the absence of historical data. The other challenge is that usually there are different files for each log that could be managed by different project team member. Consolidating those tables and KPIs in a single table can prove to be of high risk due to file size and the ensuring that all logs are received at the same time to produce the near-time dashboard.

For PMWeb users, this is not an issue as the project communication dashboard will provide real-time status of the selected project communication. The measures, metrics and KPIs are defined once and they will be calculated automatically when the project communication records get created or progressed. Historical and past periods data are automatically stored in the database to enable creating trend and growth charts. The dashboard can be designed in a format that will be aligned with the organization branding and reporting requirement.

The dashboard is usually designed to be a drilldown dashboard which means that a user can drilldown from this dashboard to the log of a specific communication record, say Meeting Minutes Log. For the Meeting Minutes log, the user can drill to the Meeting Minute output form for a specific Meeting Minutes record. The user can then drilldown to Meeting Minute form itself and review the documents attached to that form as well as other PMWeb records that had been linked to the same meeting minute. This traceability is impossible of MS Excel was the application used to manage the project communication.

Using PMWeb PMIS, the same approach will be followed for other project processes like those that relate to cost, schedule, quality, risk, procurement among others. Following the same drilldown approach, Senior Management who have access to projects portfolio dashboard can drilldown to a specific project. Then they can drilldown to desired management aspect whether it is project communication, cost, schedule, risk, procurement, quality among others.

Now even if an organization ignores the benefits of enforcing the best practices of governance, transparency and accountability when it comes to implementing professional project management processes, the benefits from improving the efficiency in capturing, communicating, tracking and real-time reporting the status and performance of those processes could be something worth looking at. It is estimated that almost 60% of the effort of senior project management team is wasted on capturing, reviewing, analyzing and sharing information that is crucial for them to have the insight to make informed decisions. Using an integrated project management information system (PMIS) like PMWeb could drastically reduce this wasted effort and create massive benefits by reviewing, analyzing and learning from this massive BIG DATA that an organization can capture across their portfolio of projects.

Enforcing Accountability in Managing Project’s Actions

Regardless of the project type or size, project managers as well as project team members always need to take actions either to resolve issues that are affecting the project or to take actions that could reduce the likelihood of issues to occur that could harm the project.

Those actions would usually identify the different tasks that the action issuer needs specific project team members to perform and report back when completed. The issued action is usually associated with other project’s communications such as Meeting Minutes, RFI, Change Orders among many others as well as it might require attaching supportive documents such as drawings, pictures among others.

Using MS Excel to monitor and evaluate the closure of those actions might prove to be of great challenge. Not only it will be difficult to capture the details of the steps to be performed by the project team members but also it is almost impossible to provide the link to the other project records and documents that are related to this action. Of course, there is always the massive effort to track and capture the progress details of those steps and when the action was completed.

Project Management Information Systems (PMIS) like PMWeb usually have the action management module as one of their default modules. The action management module allows the project team members to capture the details of all actions that need to be issued on each project. The PMWeb default input form includes fields for action title, date, Project WBS level it belongs to and many other attributes that need to be captured. Actually, PMWeb allows adding additional custom fields should this be needed. In addition, the form allows defining the different steps needed to perform this action. Each step will include a description, responsibility and due date. In addition, it includes the fields to identify if it was done and when it was done along with a field to provide comments.

In most cases, an action is created because of some project related events and communications. Therefore, it is a very common requirement to identify those records which could be meeting minutes, Request for Information (RFI), change order, daily report, submittal, correspondence among others. PMWeb will allow linking those records by simply dragging and dropping them on the action record.

Similarly, there could be project documents like drawings, specifications, pictures among others that are relevant to the Action record. Those documents, and similar to other project documents, need to be uploaded on the document management repository to ensure their availability. PMWeb will access those documents, as well as other documents, to allow attaching those documents to the Action record.

Now one can say that the Action record has all the details, links to related records and documents that will enable the project team assigned for this action to perform the necessary steps to ensure the successful closure of this action. One of the good practices that PMIS applications like PMWeb can provide is to invite the project team assigned action steps and maybe others to collaborate on this action record. The action owner can decide on what those invited to collaborate can do and cannot do in terms of if they can edit the Action record, notes, attachments among others.

Doing this will allow the project team who have been invited to collaborate to provide their input and feedback on the Action record and of course update the steps assigned to them. PMWeb captures the details of the collaboration input including remarks, additional documents uploaded and date of those actions.

In case there is a need to solicit the feedback of someone that is not part of those invited to collaborate, whether this someone is a PMWeb user or not, notification emails can be sent to those individuals providing the details of the action along with the attached documents, if needed. The details of those notifications will be captured in PMWeb to ensure having a trail of all such communications.

Should there a be a need to have those actions formally submitted and records, PMWeb allows printing the action form with all of the captured data. The layout and branding of this form can be adjusted and configured the organization’s project communication needs. The form would usually include the details of the action, action steps, linked project records along with other details that could be needed.

Having all of this data captured by the right project team members, in the right format and at the right time will ensure not only transparency and accountability in reporting this information, but the trust in what is being reported on. Real-time single version of the truth tabular and graphical reports can be designed to monitor and evaluate the performance of action management across a single project, a program or a portfolio of projects. The reports can provide summary charts of action by type, status and issuer as well as a detailed log of those actions and their particulars.

So if you are still one of those that continue to use MS Excel to manage their valuable projects’ data, think of the effort wasted in capturing, verifying, analyzing, reporting and sharing this mission-critical information not counting the delays of having this information ready to share and act on.

How Much Do You Trust Your Projects Dashboards?

You would rarely find any project, particularly in the engineering and construction industry, that does not have a dashboard to report and share the status and performance of a project. The question is, how much can we trust the information presented to us in those dashboards. This little trust that most of the stakeholders would have in those dashboards stem from the concerns that they usually have in the quality and validity of reported data.

The MS XLS Approach

Using MS Excel as method for capturing the data details of the different project management processes is always a concern. To start with, and assuming that the organization has standardized all of their data capturing templates, for which most of us will agree is almost to do, there always a concern that those tables are incomplete in terms of the data fields that will be captured. For example, the Request for Information log might not include the data fields of RFI query, proposed solution and answer or even the fields to capture the dates of when those fields were captured. Now imagine the same concern for the meeting minute log, submittal log, change orders log and the many other logs that an organization needs to report on.

The second concern comes from the fact that there could be entry mistakes either intended or by accident. Those could be mistakes in entering the right amounts, correct dates and complete text. Mistakes could also happen from spelling mistakes, wrong date format or using the comma at the wrong place. The third concern is the concern of deleting a cell by mistake or even intended. This could result in moving the cells or deleting a row or even a column.

Another concern would be when working on the same file by two different team members as the option for locking a specific record is not there. There is also the concern that the file size might become big where it not only will become slow to access but also increase the chances of crashing. There is the concern of saving the file under the wrong name or place.

The other concerns come from the fact for needing to have many MS Excel files to capture the data from the many project management processes that are in place. Those are usually maintained and updated by different project team members who are not using the same terminologies for data attributes that are common across all logs like company name, resource name among others. Actually, they might be using the same formats for dates, numbers and text.

Another concern is that those MS Excel files are located at different physical locations and computers. Those silos of data need to be extracted, integrated and prepared to ensure that they provide the needed information by the stakeholders. Having the data at different computers also increase the concern of how frequently the data is backup up and secured. There is another concern which would result from the fact the cut-off date for the data content of each file might not be the same. In other words, the RFI log file could be reflecting the data as of yesterday but the change order log reflects the data as of a week earlier.

There are other concerns where there is a need to report on the project history where there is a need to know what data was captured at a specific time period rather than having the latest status of the data shown. There could be a need to create trends charts to assess project’s performance, efficiency and transactions growth.

In other words, the concerns listed above and for which there are many others make the starting point of a having a semi real-time single version of the truth project dashboard almost impossible. Now if the need was also to have a projects portfolio dashboard to report the status and performance of all projects that are managed by the organization, this would be a dream unless the organization is willing to accept missing data.

It is no wonder that organizations who continue to use MS XLS as their projects’ data repository, waste on the average more than 60% of their most valuable resources to capture, review, verify, associate, blend, prepare and share their projects performance data. The information shared by those dashboards are never real-time and always carry high-level of mistrust as it is almost impossible to trace the source of the reported data.

The Project Management Information System Approach

Using a Project Management Information System (PMIS) like PMWeb will address all of the reported concerns above by providing a single web-enabled platform where the data for all project management processes are captured and stored on a single platform. This data will be captured using the many out-of-the-box forms as well as the many other user defined forms to capture other data that PMWeb does not provide a default form to.

In addition, all supportive documents such as drawings, documents, pictures among others will be either attached or linked to the input form. Those documents are usually uploaded and stored on PMWeb document management repository under the correct folder.

To ensure that the right project team members are involved in the right sequence in capturing the data on each document template, predefined workflows need to be associated with each document template. Those workflows which will be aligned with the project’s responsibility assignment matrix (RAM), will detail the steps for submitting, reviewing, sharing and approving each document template. Knowing that the responsibilities for reviewing and approving the same document template could vary depending on the project’s authorities and approval levels, each workflow could include conditions and branches to emulate those authorities.

This will ensure every-hour projects’ data captured in the right format, by the right project team member and at the right time, organizations need to have document templates to capture data, ability to attach all related documents and records, and to ensure that the document template will be received by its intended recipients.

A process that organizations who use MS XLS to report their projects’ status and performance would need to have the resources to manually capture and fill the appropriate MS XLS file with the new projects’ data. If the organization decides to ignore the cost of the man-days and wasted effort needed to complete this process, the organization cannot ignore that without having such automated process, there will be no transparency and accountability on the captured projects data.

Having the data logs which is the starting point for those using MS XLS to create their projects dashboards. The layout for those logs are completely customizable and they can be design to include grouping with the option to have filters to limit what transactions to display. It also means that instead of having to be limited to the MS XLS file that was created to capture the data, the organization can have different tabular and graphical reports to display the data for each project management process.

Tabular reports can be also created to combine data from more than one project management process. This would like trying to create a MS XLS file that will be linked to the data source of those files. For example, the organization might need to create an earned value analysis report where the report would require data from the planned budget spending, the earned value and the actual cost or progress invoice spending. Data will be associated at the Cost Breakdown Structure (CBS) or Work Breakdown Structure (WBS) along with the project financial periods. There is no needed to copy the data from where it is stored as the PMWeb BI reporting tool is just extracting the data from the original data source.

Of course, the same data captured on those processes will be used to create the different dashboards that an organization might need. For example, there could be a need to have dashboards to report on the different project management processes groups. For example, dashboards for cost management, schedule management, document management, risk management, procurement management among many others. They could be also dashboards that are specific to one of the project life cycle stages, for example design development, bid and award, construction stage among others.

The same data source will also be the basis for creating the project, program and portfolio dashboards. The layout and content will depend on what information the organization needs to have on their projects status and performance. The one thing that using a PMIS like PMWeb will assure the organization is that they will be having access to real-time single version of the truth of their projects and programs portfolios status and performance.

One of the important features that PMWeb would bring to reporting projects’ status and performance is the trust it will build in the data sources by enabling what is known as “traceability using drilldown”. The concept behind this approach is that the stakeholder can start at the projects portfolio dashboard where it shows the overall projects and programs performance.

For the specific project that the stakeholder needs to have more details on how this project is performing, the stakeholder can click on the specific project name and then the project dashboard similar to the one shown above will be displayed. Now assume the stakeholder is interested to have more details on the project’s cost status, clicking on the cost KPI indicator will display the cost management dashboard which can be in desired format similar to the scheduling dashboard shown above. Again, if the stakeholder is interested to have the details of the change orders issued to date, he/she can click on the total value of change orders to date. This will display the change order log which will display all change orders with their particulars as per the design report layout. If the stakeholder clicks on any of those change orders, the change order form will appear. This will also enable the stakeholder to click on the attachment tab and view all supportive documents that were attached to that particular change order.

You Need to Decide

Organizations understand that projects data must be trusted and traced to its source for them to have real-time single version of the truth performance and status reporting. They understand that for them to have the insight to make better and faster informed decisions, they need to have timely information that they can trust.

Those organizations understand that MS Excel is not the solution that they can risk their projects investments with. But they also know that unless they take the initiative to end this bleeding of valuable information and knowledge, their chances of encountering the risk of project failure will be always on the increase.

How Can Technology Improve Managing and Administering Contracts in Engineering and Construction Projects? Part 3

Control Procurement

The third project procurement management process is control procurement. The purpose of this process is to manage procurement relationships, monitors contract performance, makes changes and corrections as needed as well as make payments for completed and approved scope of work.

Manage Procurement Relationships

One of the techniques used in managing the procurement relationships is to use the responsibility assignment matrix (RAM) or RACI chart to map the roles and responsibilities between the different parties of the contract agreement. For each contract management and administration process, the RAM will highlight the party Responsible (R) for performing the process, the party Accountable (A) for approving the process, the party that could be Consulted (C) and the party to be Informed (I).

In addition, the matrix will identify the workflow reference that will be used to map the sequence for the steps for submitting, reviewing and approving the process. PMWeb visual workflow will be used to map those processes. The workflow can incorporate conditions and branches to map the authorities and approval levels set in the contract agreement and other contractual documents that relate to the specific process.

Monitor Contract Performance

The procurement performance review is a structured review of the contractor’s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract. It can include a review of contractor’s prepared documentation and buyer inspections, as well as quality audits conducted during seller’s execution of the work.

The objective of a performance review is to identify performance successes or failures, progress with respect to the procurement statement of work, and contract non-compliance, which allow the buyer to quantify the seller’s demonstrated ability or inability to perform work. Such reviews may take place as a part of project status reviews which would include key suppliers.

Inspections and Audits

Inspections and audits are required by the project owner and supported by the contractor as specified in the procurement contract and can be conducted during execution of the project to verify compliance in the contractor’s work processes or deliverables. Those inspections and audit are not a substitute for the inspections that are performed by the project owner and his authorized consultants for accepting the work in place performed by the contractor. Those inspections and other related quality assurance and quality control processes are covered under project quality management.

One of the inspections and audit practices adopted by one of our project owners was to create audit lists that are aligned with the internationally recognized ISO standards like 9001, 14001 and 18001.  For each ISO Audit Checklist, the project owner has listed specific items that need to be inspected by the project team. Each item will be scored on a scale of 5 where a score of 1 indicates no compliance and a score of 5 indicates full compliance. This scoring will enable the performance trend of each specific contractor as well as compare the contractor’s performance with other contractors who might be working on the same project or other projects.

Make Changes or Corrections

A contract change control system defines the process by which the procurement can be modified. It includes the paperwork, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes.

In engineering and construction projects, there are two of change processes that the project owner needs to track. The first is the Potential Change Orders that could be raised by the contractor directly. Those are changes that could entail both additional cost and additional time. The contractor needs to attach all supportive documents and links to records which are relevant to the potential change order. The project owner needs to review those potential change orders and advise if the contractor’s request is approved or rejected.

The second change process, is Change Order which will be issued by the project owner to the contractor. The change order could be issued in response to change that was part of a potential change order or issued as a result of additional work that the project owner has requested. The change order could have cost and time impact.

Both potential change orders and change orders will have a pre-defined workflow steps to determine the roles, responsibilities and authorities in reviewing and approved those changes. Those will be part of the responsibility assignment matrix (RAM). The trend and status of change orders are of great importance for the project owner as they will have direct impact on the project investment viability. Change orders reports and dashboards are one of the key reports that project owners require having real-time access to.

Make Payment for Completed and Approved Scope of Work

Payments to the contractor are typically processed by the accounts payable system of the project owner after certification of satisfactory work by an authorized person on the project team. All payments should be made and documented in strict accordance with the terms of the contract.

Usually, the contractor will submit the progress invoice for the work in place that was completed during the past progress period. The estimate for the completed work can be either based on the actual quantities in place as per the bill of quantity or based on the percent complete of the project schedule activity linked to this specific scope of work. The contract would specify which method will be used to assess the work in place. The project owner or his/her authorized agents will review the progress invoice and advise if they agree with the reported percent complete or the contractor needs to adjust the same and resubmit.

In addition to the approval of the reported percent complete, it is highly recommended to have a checklist of all items that the contractor must be compliant with before receiving the actual payment. Those could for example could be if the contractor insurance and performance bonds are still valid, if the contractor has paid his/her subcontractors and employees among others. Again, using a PMIS like PMWeb will not only capture the details of the progress invoice but also the actual payment made against the progress invoice.

Claims Administration

Contested changes and potential constructive changes are those requested changes where the project owner and contractor cannot reach an agreement on compensation for the change, or cannot agree that a change has occurred. These contested changes are variously called claims or disputes. Claims are documented, processed, monitored, and managed throughout the contract life cycle, usually in accordance with the terms of the contract. If the parties themselves do not resolve a claim it may have to be handled by arbitration or court typically following procedures established in the contract.  Of course, settlement of all claims and disputes through negotiation is the preferred method.

In PMWeb, claims are all those potential change orders and change orders that would have a status of rejected rather closed, approved or pending. When there is a claim or a possibility of a claim, it is recommended that the project owner create an issue folder for all project records and documents that are relevant to this particular claim.

Records Management System

A records management system is used by the project manager to manage contract and procurement documentation and records. It consists of a specific set of processes, related control functions, and automation tools that are consolidated and combined as part of the project management information system (PMIS). The system contains a retrievable archive of contract documents and correspondence.

The PMWeb PMIS enables the project owner to create the different project records using predefined document tables as well as upload, store and retrieve all types of project documents. The PMWeb PMS comes ready with most of the records templates used on engineering and construction projects including but not limited to Request for Information (RFI), Transmittals, Safety Incidents, Meeting Minutes, Submittals, Punch List, Change Orders, Progress Invoices among others.

In addition, PMWeb comes ready with a custom form builder to enable the project owner to create additional form templates to capture the details of other project records. Those could for example Non-Compliance Notices, No Objection Certificates, Permits, Request for Inspection, Material Delivery among many others.

For all those records, whether the ones that come ready or those created by the project owner, PMWeb allows attaching all supportive documents to those records. Those documents will be uploaded to the PMWeb document management repository where folders and sub-folders will be created to store those documents and restrict access to only those authorized to do so.

The PMWeb visual workflow engine will be used to create the workflow steps for each type of project record to ensure that they are submitted, reviewed and approved by the accountable team member. Those workflow steps could include conditions and branches to map the project’s authorities and approval levels when it comes to approving those records.

Performance Reporting

Performance reporting provides the project owner management with the information about how effectively the contractor is achieving the contractual objectives. Using project management information system like PMWeb ensures that the data used in the performance reporting is based on trusted data that can be traced to its source. The performance report layout and content depends on what the project owner needs to have.

The real-time content of the contract performance dashboard depends on the contract management and administration processes implemented by the project owner. For example, those could include the performance audit, change orders, claims, progress payments, safety, quality inspections among others. All those processes will be managed using PMWeb to enable capturing all needed data and documents. This will allow the project owner to trace the source of any reported performance information.

To be continued.

How Can Technology Improve Managing and Administering Contracts in Engineering and Construction Projects? Part 2

Conduct Procurement

The next process in project procurement management is to conduct procurement to obtain seller (contractor) responses, selects seller, and awards contract. Again, using project management information system like PMWeb not only will enforce the adoption of project management best practices but it will help in enforce transparency and accountability.

Bidding

Bidding is the process where the project owner can get the contractors responses on the project’s scope of work to be outsourced. The project owner will usually send or announce the bid invitation to allow prequalified bidders to submit their technical and financial proposals. The existing list of potential bidders can often be expanded by placing advertisements in general circulation publications such as selected newspapers or in specialty trade publications. Some government authorities require public advertising of certain types of engineering and construction projects.

The contractors’ proposals must be prepared in response to the procurement document package prepared by the project owner or his authorized agent. This will form the basic set of information that will be used by the evaluation body to select one or more successful bidders.

PMWeb online bidding module will be used to have the bidders to submit their financial proposals as well as provide the confirmation for all technical and other requirements of the bid submission. The online bidding module also allow the bidders to attach all supportive documents that the project owner might have asked for in the procurement document package.

Bidder Conference

Bidder conferences (sometimes called pre-bid conferences) are meetings with all prospective sellers and buyers prior to submittal of a bid or proposal. They are used to ensure that all prospective sellers have a clear and common understanding of the procurement (both technical and contractual requirements), and that no bidders receive preferential treatment. The responses to questions must be incorporated into the procurement documents as amendments. To be fair, the project owner must take great care to ensure that all prospective sellers hear every question from any individual prospective seller and every answer from the buyer. The PMWeb meeting minute module will be used to capture the bidder conference details.

Proposals Evaluation

The successful bidder selection will be usually made based on the contractor’s responses to the technical and commercial requirement of the project. The project owner procurement policies would usually have pre-defined weighted criteria to assess the responses to ensure having an objective and formal evaluation review process. This will enable the evaluation committee to make their selection for approval by management prior to the award.

The financial bid data captured in PMWeb online bidding module will automatically appear in the bid analysis module where the rate for each bill of quantity line item for all bidders will be displayed. In addition, the estimated cost for the same bill of quantity line item will also get displayed from the cost estimate module.

The evaluation of proposals is usually accomplished by a multi-discipline review team with expertise in each of the areas covered by the procurement documents and proposed contract. This can include expertise from functional disciplines such as contracting, legal, finance, accounting, engineering and design. The output of this evaluation process will be captured in pre-defined custom forms to enable the project owner to have an overall summary of both the technical and commercial bids analysis.

Procurement Negotiations

The project owner will usually invite the bidder with the most attractive offer for negotiations to clarify the structure, requirements and other terms of the purchases so that mutual agreement can be reached prior to signing the contract and to ensure that the final contract language reflects all agreements reached. The subjects that are usually covered in this meeting include:

·        Responsibilities.

·        Authority to make changes.

·        Applicable terms.

·        Governing law.

·        Technical and business management approaches.

·        Proprietary rights

·        Technical solutions.

·        Overall schedule.

·        Payments, and final price.

Again, the PMWeb meeting minute module will be used to capture the details of the procurement negotiations meetings.

Selected Contractors

The selected contractors are those contractors who have been judged to be in a competitive range based upon the outcome of the proposal or bid evaluation, and who have negotiated a draft contract that will become the actual contract when an award is made. The final approval of all complex, high-value, high-risk procurements will generally require organizational senior management approval prior to award.

The PMWeb correspondence module allows the project owner to create templates of all possible project communications including the letter of award. The project owner might opt to initially issue a Letter of Intent (LoI) to the preferred bidder followed by the Letter of Award (LoA) when all pending approvals for award had been secured.

Contract Agreement

This will be followed by having the authorized representatives of the project owner and the selected contractor to sign the procurement agreement includes terms and conditions and may incorporate other items that the project owner specifies regarding what the contractor is to perform or provide.

The contract agreement for an engineering and construction project is a legal relationship subject to remedy in the courts or arbitration panel depending on what is specified in the agreement. The major components in an agreement document will vary, but may include:

·        Statement of work or deliverables.

·        Schedule baseline.

·        Performance reporting.

·        Period of performance.

·        Roles and responsibilities.

·        Seller’s place of performance.

·        Pricing.

·        Payment terms.

·        Place of delivery.

·        Inspection and acceptance criteria.

·        Warranty.

·        Product support.

·        Limitation of liability.

·        Fees and retainage.

·        Penalties.

·        Incentives.

·        Insurance and performance bonds.

·        Subordinate subcontractor approvals.

·        Change request handling.

·        Termination and alternative dispute

The PMWeb commitments module will be used to capture the details of the awarded contract agreement along with the agreed terms and conditions. It will also include the details of the bill of quantity or schedule of value for the approved scope of work. All contract documents that were the basis for reaching this agreement should be attached or linked to this contract agreement.

The next article will address the process of control procurement which will address how to manage procurement relationships, monitors contract performance, makes changes and corrections as needed as well as make payments for completed and approved scope of work.

How Can Technology Improve Managing and Administering Contracts in Engineering and Construction Projects – Part 1

Project Buyout, or procurement of contracts, is a phase that will exist in almost every single engineering and construction project as it is common that most project owners do not have the experience, capability, risk apatite and resources to undertake the full project scope delivery. Actually, project buyout is one of the strategies that a project owner would use for responding to risks, known as “Risk Transfer”.

The Project Management Institute (PMI) Project Management Body of Knowledge (PMBOK) provides a proven approach for managing the procurement of contracts in a project. The purpose of the project procurement management is to establish and maintain relationships with vendors of goods and services during the project life cycle. Achieving this purpose requires the project owner and his or her project management team to implement the following four processes:

·        Plan Procurement Management to document project procurement decisions, specifies the approach, and identifies potential sellers.

·        Conduct Procurements to obtain seller responses, selects seller, and awards contract.

·        Control Procurements to manage procurement relationships, monitors contract performance, makes changes and corrections as needed as well as make payments for completed and approved scope of work.

·        Close Procurement to complete project procurement.

Plan Procurement Management

The project manager and his or her team needs to develop the procurement management plan which will be used to address the following important points:

·        Whether to procure or not

·        Identifying which project needs can be best met by procuring.

·        How to procure?

·        Types of contracts to be used.

·        Who prepares independent estimates and when?

·        Actions taken by procurement department and the project team.

·        Where to find standardized procurement documents?

·        How to manage multiple providers?

·        What to procure?

·        How much to procure?

·        When to procure it?

·        Coordinating procurement with other aspects of the project.

Addressing those points in a comprehensive and integrated form, the project team needs to use the input from other project management processes and use their skills and other expert judgement to analyze and develop the needed deliverables for a successful project procurement management.

Project Scope of Work

Understanding the project scope of work and the scope of work of work to be outsourced is very critical for successful project procurement management. Having a detailed and complete Work Breakdown Structure (WBS) is important to manage any project management process. Using PMWeb PMIS, the WBS can be created to the desired level of detail or imported if it was done in another application.

As the description of any WBS level might not be detailed enough to give the exact scope of work covered by that WBS level, the PMBOK recommends creating what is known as the WBS dictionary. This will help in listing the scope of work included and maybe more important excluded from that WBS level. Using the PMWeb custom form builder, the project manager can decide on the additional content that this WBS dictionary form template should include. For example, it might have the provision of stating which bid package this WBS level could be part of.

This will enable the project manager to reduce the chances of encountering what is known as “scope creep” in the outsourced contracts. The scope of work for each contract will be the scope of work outlined in the WBS dictionary documents. In other words, the sum of the scope of work for all contracts should be the scope of work for the project overall, no more, no less.

Project Schedule

Similar to the fact that no project could exist without having a WBS, a project will never exist without having a schedule. The level of details of this schedule depending on the project phase and available level of details. Nevertheless, for procurement management plan, it is a must to have a project schedule that can determine the milestone dates for each bid package to be outsourced. The master project schedule can be created in PMWeb scheduling module or it can be imported from Oracle Primavera P6 or MS Project.

Project Cost Estimate

Having a reliable cost estimate for the project in general and for the scope of work to be eventually outsourced is very critical. The level of details of the cost estimate needs to be aligned with the project WBS level to enable having a realistic cost estimate for each bid package to be procured. PMWeb cost estimating module allows the project team to create estimate for which the rates for material and equipment can be used as well as for the prices of similar material or scope of work that was part of previous contracts. Should the project owner requires having independent third party cost estimates for the project scope of work, the same can also be imported to PMWeb cost estimate module.

Transferring Risks Through Outsourced Contracts

The decision of what scope of work to outsource depends to a large extent on the risk exposure associated in delivering the scope of work associated with a specific WBS level. The project risk management processes will help in formalizing the processes for identifying, analyzing, assessing and responding to project’s risks. The risk register provides an excellent document to capture the results of the risk management process and will be of great help when deciding on what to outsource. Again, PMWeb custom form builder will be used to design the risk management process and risk register.

Contract Documents

The scope of work for the bid packages to be outsourced should include the different drawings, technical specifications, site test results, bill of quantities, contract agreement and other documents that will help the contractor to come with a complete technical and financial proposal for delivering this scope of work. The project owner needs to ensure that not only all of those documents are provided to the contractor but also to ensure that the latest version of those documents is what is being provided. PMWeb drawing register will provide a log of all those documents and latest versions.

For each document version, the original document file which could be a drawing, technical specification or others need to be uploaded and stored in single document management repository. This will enable attaching those documents to the relevant version which will enable reviewing those documents when needed. Again, PMWeb document management repository will be used to complete this task.

Contract Form of Agreement

One of the most important documents that the project owner needs to finalize before starting the process of procuring contracts, is to have the contract agreement ready. The FIDIC, NEC3, AIA and other forms of contract agreements are contract agreements and forms that have been time-tested and proven to minimize risk for every type of engineering and construction project. They are crafted to meet the needs of all project parties involved. Of course, those agreements need to be modified to take into consideration the country, where it is used, current legal rulings and building practices.

The FIDIC suite of construction contracts is the form of agreement that is used mostly in the Middle East and GCC regions. It is written and published by the International Federation of Consulting Engineers. The different forms of contract within the FIDIC suite are organized around the extent of design and other responsibilities assumed by the Employer and the Contractor. The firm fixed price or lump sum contracts are the most common type of contracts in the Middle East and GCC regions. In this form of contract, it is a requirement that the project scope of work be very well defined as changes in the future will lead to troublesome and sometimes costly extras that will be borne by the project owner.

PMIS applications like PMWeb allows the project manager to capture the details of the clauses of the contract agreement. The project manager can assign who will be the team member responsible for responding to actions that are related to those clauses. It will also help in identifying of any of those clauses where excluded or replaced by other clauses. In addition, this can prove to be very of great value when project communications start to take place to link those clauses to the relevant communication.

Pre-Qualified Contractors

One of the requirements of planning procurement management is the identification of potential contractors or sellers that will be invited to bid on the project scope to be outsourced. Project owners should only work with companies that they are aware of their qualifications and capabilities which also include their legal registration status to allow them to do business with. It is a very common practice in the engineering and construction industry that contractors, vendors and suppliers need to renew their pre-qualification registration status on annual basis.

For example, PMWeb PMIS pre-qualification module allows the project owner to design their pre-qualification document so all contractors, vendors and suppliers will submit the needed details for a project owner to assess their capabilities. It also provides hyperlinks to selected public entities websites where the contractors might need to apply for health, safety and environment (HSE) certifications among others.

This will enable the project owner to have a single repository of all qualified contractors, vendors and suppliers who might be considered for the bid packages to be outsourced. The PMWeb companies’ directory will include the details of all pre-qualified contractors including but not limited the company registered address, list of formal points of contacts, insurance documents details, among many others.

Documenting Meetings

During the process of planning procurement management, there will be many meetings that will be held between the project team and project end users, public authorities, possible bidders among others. Those meetings not only will record important events that the project owner must maintain, but also important actions that need to be followed by the project team to ensure that there no delays to the planned project’s milestone dates. PMWeb meeting minutes’ module will be used to capture the details of those meeting and in particular the business items to be followed from each meeting.

Documenting make-or-buy decisions

Make-or-buy decisions document the conclusions reached regarding what project products, services, or results will be acquired from outside the project organization, or will be performed internally by the project team. It may also include decisions to require insurance policies or performance bond contracts to address some of the identified risks. The make-or-buy decisions document can be as simple as a listing that includes a short justification for the decisions. These decisions can be altered as subsequent procurement activities indicate a requirement for a different approach. PMWeb action management module will be used to document the make-or-buy decisions and all follow actions to be done by the project team.

Enforcing Governance

Deciding on project scope of work to outsource, what contract documents will be made available to explain the scope of work to be outsourced, select the form of agreement to be signed with the successful bidder and deciding on the list of qualified bidders to invite is not enough for the project manager to commence the process for inviting bidders. The organization might not have the funding available for project, might not see the project as a priority or attractive anymore, might not have the needed permits and authorities’ approvals to proceed with the project, might feel that project risk exposure exceeds the organization’s risk appetite among others.

The project stage gate is the recognized technique for enforcing project governance. The project owner needs to identify the deliverables of each project life cycle stage which will be reviewed by usually an independent project review committee to decide if the project can proceed for the next stage or not. Using PMWeb stage gate module, the organization can map those stages and their associated deliverables which will be linked to the source document to enable reviewing those deliverables when needed.

To ensure objective and comprehensive review of a stage gate, the organization would usually have a predefined list of items that the stage gate will be scored against. Those could include for example the current risk exposure, alignment with strategic objects, availability of funds, authorities and other stakeholders’ approvals among others. For each item, there will be score points and a weight factor. The organization can also create a form template to formalize the stage approval for which a workflow can be assigned to it.

The next article will detail the processes needed to conduct procurement to obtain seller responses, selects seller, and awards contract.

Is It Not Time to Improve the Delivery of Design Projects? – Part 2 of 3

Assigning the Project Delivery Team

Most consultants would have functional departments for each engineering discipline that the project delivery might require. The project manager should have a formal process for requesting the project team that will work on his or her project. Using PMWeb form builder, a template for capturing the details of those resources was created. The template can be designed in different form to capture the particular details that an organization might require for the resources assignment form.

Keeping Track of Assumptions

The project scope, schedule, budget and deliverables list developed by the engineering consultant will be based on the project’s scope of work as stated in the RFP. Nevertheless, the consultant will need to make any assumptions for the many unknowns that the project might have. Those assumptions will have an impact on the project’s completion date and budget. Therefore, it is a must that the consultant maintains the risk register that not only will identify those assumptions but what response actions the consultant have decided to take. Those details will be recorded in PMWeb risk register.

Reducing Risk Exposure by Outsourcing

One of the known risk response actions in projects is to transfer the risk to another organization that can better handle those risks. For engineering consultants, this is a very common practice. The consultant might decide to outsource the structural design, electrical, mechanical and other services design, BIM modeling, quantity surveying and other scope of work to other consulting firms. For large consultant organizations, the outsourcing could be to other company owned entities or business units.

PMWeb commitment module will be used to capture the details of all those outsourced contracts. Again, it is highly recommended that the line items of those contracts are aligned with project’s WBS and deliverables. This will ensure full project scope alignment and less likelihood of encountering the scope creep risk.

It is very important to attach the details of the contract agreement and link all related deliverables to the outsourced agreement. PMWeb document management repository will be used to upload and store those documents so they can be attached to the appropriate contract.

Enforcing Efficiency and Accountability in Project Delivery

An emerging trend with engineering consultants is to use the same approach of project scope outsourcing with their own project delivery team. For each resource that will be involved in the project delivery, there will be an agreement between that resource and the organization. The agreement will list the number of man-days that this resource was budgeted to spend on the project. Those man-days are the full-time effort (FTE) that was estimated for delivering the relevant deliverables of the project scope. The resource’s performance appraisal and bonus scheme will be related to how efficient that resource was in not exceeding those estimated man-days for the original scope of work. Any additional man-days on what was estimated, means that the actual cost have exceeded what was estimated for.

Assessing the Actual Efficiency in Delivering Project Scope

Although the above practice will help in enforcing accountability and promoting efficiency, the engineering consultant needs to better understand what was the actual man-days spent on delivering the scope of work and what were the reasons for those variances. To achieve this, each resource must maintain his or her weekly timesheets. The PMWeb timesheet helps in capturing the hours spent every day for labor and non-labor resources and whether those resources where spent during normal working hours, after working hours or weekends. Again, hours will be captured against each project’s deliverable.

Capturing the Details of the Agreement with the Project Owner

What was presented above mainly focused on the cost for delivering the design project. Nevertheless, the consultant will be receiving revenue from the project owner when those project deliverables are done and formally approved. PMWeb contract module will be used to capture the details of this agreement which usually would have the stages of the project as outlined in level 2 of the WBS. Some agreements could be detailed to deliverable packages.

Those deliverable packages can also be mapped into PMWeb Submittal Sets to ensure full alignment between the deliverables list and the deliverable packages as stated in the contract agreement. This will detail the percent complete of each package and its current status. Those deliverables packages will be shown in the project schedule as milestone activities as the project owner would require the consultant to report on those milestones.

Capturing Changes to The Project Scope

No one can expect a project can be delivered without encountering changes. This is very common to all projects but in particular to engineering and construction projects. PMWeb change events module will be used to capture those changes and their impact on both the project budget as well as the commitments with third party consultants, other company business units and their own project delivery team.

Capturing Project Budget Changes

Changes to the approved project budget could result due to changes in the scope of work or any type of transfers from the approved contingency to project deliverable or from one deliverable to another. Regardless what was reason for the change, the PMWeb budget requests module will capture those details along with all supportive documents. Having a predefined workflow for reviewing and approving those changes is also very much recommended to have.

Capturing Proposed Change Requests

The contracting parties that the engineering consultant has outsourced the project scope of work to, might find it necessary to submit change requests for work that they believe is additional to what they have included in the contract agreement. PMWeb online proposed change orders will be used to capture those requests which if approved will generated as Change Events to assess their impact on the project cost.

Submitting Change Orders

Should the consultant find that the changes encountered on the project are due to the project owner and his/her representatives own actions, then there will be a need to issue a change order for the original awarded contract. The change order could have cost, time or both time and cost impact. All those change orders will be captured in PMWeb change order module.

Managing Changes for the Project Cost

Should the change orders encountered by the project have an impact on the outsourced contracts and the project team level of effort, change orders to those agreements need to be issued. Those change orders will be issued using PMWeb change order module could have cost, time or both time and cost impact.

To Be Continued

Is It Not Time to Improve the Delivery of Design Projects? – Part 1 of 3

Similar to the challenges that will face a contractor when it comes to managing a construction project, the engineering consultant is no better when it comes to manage the design stages of a project. Not only the engineering consultant have obligations to deliver the design deliverables within the agreed milestones, but also need to ensure that his cost for delivering this scope is within the approved contract budget. The engineering consultant is also responsible to ensure that contractual obligations for delivering the project’s design deliverables are fulfilled.

Unlike contractors who are required to deliver the project scope based on pre-agreed drawings and specifications, the engineering consultant need to capture owner requirements to come with the needed deliverables. In other words, the risks of scope creep, delays and going over budget are much higher during the project design stages. Therefore, the engineering consultant must adopt the project management best practices to reduce the likelihood of encountering those risks.

The availability of project management information system (PMIS) like PMWeb enables engineering consultants to better adopt the best practices of project management to increase the likelihood of delivering projects on schedule and within budget. The PMIS technology will help in reducing the massive knowledge wasted by those engineering offices by failing to capture the data generated from the different project management processes that takes place on their project every hour and every day during the projects delivery life cycle stages.

Defining the Project Scope

Similar to any project, the work breakdown structure (WBS) for the design stages need to be well defined and agreed on. The WBS would usually have the design stages as level 2 while the project will be level 1. The WBS can be further detailed to improve the level of control on the design stages.

It is also recommended to use the WBS dictionary to detail the scope of work included at each WBS level and in particular what is excluded. Actually, having the list of exclusions is very important and it must be shared and approved by the project owner.

Developing the Project Schedule

The WBS will help the engineering consultant to have a complete and better integrated project schedule. The schedule needs to project deliverables oriented, that is to say the schedule needs to ensure that all deliverables are listed and properly sequenced. For example, the design schedule would list the different drawings, specification sections and other deliverables as task. The tasks of creating the deliverable, reviewing and approving the deliverable will be part of the activity duration. The actual review and approval process details will be captured in the deliverable submittal review and approval process to be detailed at another part of this article.

The schedule needs to be resource loaded with the different design resources such as the project manager, architects, discipline engineering, BIM modelers, Draftsmen, etc. The schedule can also be uploaded with the equipment resources like CAD Station among others.

Regardless which planning and scheduling software is used in creating the schedule, the schedule tasks need to be imported into the PMIS, in this case PMWeb, to ensure that all future records and documents are linked to the schedule when needed.

Creating the Project Budget

The project budget represents the amount the funds that the engineering consultant must not exceed to ensure that the project is not in loss. The budget is usually based on the detailed cost estimate done by the consultant for delivering the project scope of work. It should include all direct and indirect cost as well as the contingency reserve for all accepted project risks. It is highly recommended that the budget line items are aligned with the project WBS levels. For some, the budget can be detailed to the project’s deliverables level for the ultimate cost control.

For each budget line item, we need to distribute the planned spending of those funds depending on the project schedule. If the budget was detailed to the deliverables level, then this will be associated with the relevant deliverable schedule task.

Developing the Deliverables Register

The engineering consultant needs to have a detailed log of all deliverables needed to execute the project. Those could include the drawings, specification sections, contract agreements among many others. Each deliverable needs to be associated with the relevant WBS and schedule activity it relates to.

The workflow steps for submitting, reviewing and approving each deliverable will be created using the PMWeb workflow engine. The workflow steps could vary much vary from one deliverable to another depending on the submittal type, stage and other user defined attributes.

Enforcing Governance in Project Delivery

The project stage gates will be used to enforce governance in project delivery. For each project stage as defined at level 2 of the WBS, the relevant schedule activity will be linked to provide the planned dates for completing the stage. In addition, all deliverables identified in the deliverables register will be mapped into their relevant project stage.

This will ensure that each project stage will have the formal review process to approve it before the next stage can formally commence. A scoring system will be added for each stage to list all items that must be verified before the project is blessed to proceed. Using PMWeb, the organization can have unlimited variety of all possible items to be checked with a predefined score to select form with the weight for each score.

To be continued