Project Management Implementation Strategies
Project Management is the operations function of Sonoran Steel Services. The lone member of this department must divide time between other departments. Typically, he spends about 8 hours a day in these functions. As the
company grows, there is a risk that this department may become overloaded. With current revenue projections, it will become necessary to hire another project management trainee within two years.
Duties in this department are as follows:
• Interaction with customer
• Contract Management
• Purchasing
• Scheduling
• Change order costing and management
• Subcontractor management
• Management of records
• And More
Sonoran is a steel re-seller or broker. The marketing department sells a project and it is this department’s duty to execute the contract. Steel fabrication is a custom or job process. Krajewski and Ritzman, 2000, describe a job process as one that “creates the flexibility needed to produce a variety of products in significant quantities”. Almost every project in construction is unique. Occasionally, similar projects will be built, but identical projects are extremely rare. This forces drafting firms, fabricators, erectors, and project managers to review each project and develop schedules and manufacturing plans for that unique project.
Very little inventory is maintained in a steel fabrication shop. Operating similar to a “Just in Time” manufacturing facility, all materials are ordered and scheduled for delivery as they are needed. Storage is kept to no more than two weeks inventory. There is such a vast array of material sizes and specifications; there is no other reasonable way to provide the materials needed. Sonoran will purchase material directly from the steel warehouses for some projects and will buy materials from the fabrication shops on smaller projects. No management of inventory is required for Sonoran.
While not in the possession of the latest technology and software, Sonoran has a file of spreadsheets that have been developed over the past five years. These ease the transfer and storage of information. Fewer documents need to be stored as hard copy. Enlisting the use of the Internet for both gathering and transmitting information saves the company time and money.
Project Management situation analysis
PROJECT MANAGEMENT STRENGTHS
? 20 years construction experience ? Relative strengths
? Multiple seminars ? Core competencies
? Taught by a great mentor ? Key factors of success
? Scheduling tools
? Very good understanding of the whole project
? Establishes good relationships with contractors
? Excellent computer skills
? Skillful negotiator
? Works toward greater good of subcontractors
? Good mentor and trainer
The company principal, Richard Oxford, has extensive experience in the steel industry. He has attended many seminars on project management, time management and negotiation. To add to this, he was trained by one of the best managers in the steel industry. With over 40 years in the steel industry, his mentor was a strong influence in Mr. Oxford’s development. Mr. Oxford has successfully managed several projects greater than $10,000,000 in value. This requires a deep understanding of project scheduling and schedule maintenance.
Mr. Oxford also has a history of extremely good relationships with contractors. Many of the projects that Sonoran is able to bid are opportunities given by people with whom he has previously worked. One reason he is able to establish such relationships is his understanding of the larger project and the impact of steel fabrication and installation on other trades. This understanding and concern has built lasting relationships that are paying off today.
PM Weaknesses
• Only one person with time divided
• Can get overloaded and not take care of projects
• Not a strong estimator
• Works from small home office
As with any single employee company, there is a risk of being too successful. This leads to overloading. With the need to divide time between sales, estimating, finance, and project management it is easy to miss an important task. Working from a home office saves money, but is somewhat cramped. There is occasionally the need to spread out multiple plan sets.
Another weakness is that the project manager often needs to provide estimates for change order work. The financial situation at the company has forced the owner to become an estimator. These projects are all hard bids. If a project is underbid, the company has to absorb the loss.
PM Opportunities
• Available upgraded scheduling tools
• New hire to expand capacity
• Freedom to develop new PM systems as necessary
There is relatively cheap scheduling software available called SureTrac Project Manager. This software costs approximately $500 and is able to perform more than enough tasks to manage schedule on steel projects. This software would allow the company to track multiple projects on any interval it chooses. Resource loading options can be used to track project finances. Basic Excel software is also extremely versatile. It is easy to develop job specific spreadsheets from this platform.
The company’s intended growth will require departmental growth. This will require the hiring of a new project manager. Several areas can be tapped for potential employees:
? Shop Personnel
? Other companies project management teams
? Detailers
? Estimators
? Field personnel
? Recent construction management graduates
Any intelligent individual from one of these areas can be trained in the art of project management. Each of these areas would bring strengths and weaknesses. Computer and communication skills are a must.
PM Threats
• Overloading
• Schedule interruptions by general contractors
• Non performing subcontractors
• Bad budgets from sales
The greatest threat to quality project management is job overloading. It is not always easy to predict how and when this will happen. Projects are bid to fill schedule holes, but sometimes the schedules slip or are accelerated. The general contractor may not be performing in a proper manner causing the steel schedule to slip into a conflicting position with another project. Subcontractors sometimes do not perform at expectation. All of these factors lead to overloading of the project team and possibly to poor performance.
PM Trends
• Greater technology
• Electronic data transfer
• Global subcontracting
Like many other industries, steel management is moving toward higher levels of technology. New computer programs that feed design information into “Computer Numerically Controlled” equipment is the latest development. This ends the need to duplicate information from one functional area to another.
Electronic data transfer has greatly increased the speed of information transfer. Project management is nothing without information transfer. Electronic files containing complete sets of design drawings are e-mailed around the world. This has led to increase in global subcontracting. There are many low cost, high quality detailers available in East Asia and South America. This could be a cost advantage for Sonoran.
Project Management Strategic Objectives
1. Project Manual
2. Develop purchasing methodology
3. Add new Personnel
4. Train new project manager
5. Online drawing Transfer
The goals in this functional area are developed around improving the department by developing better purchasing methods, hiring and training new personnel. If the company intends a 50% rate of growth, it will be necessary to develop a project manual to maintain consistency in project management. It is critical that high quality consistent management be provided to contractors. This consistency will develop into consistent profits.
Project Management Implementation strategies
1. Project Manual 06/30/2001
? Determine functional areas 12/31/2001
? Develop or adjust spread sheets 02/28/2001
? Text development for each area 05/30/2001
The intent of a project manual is to develop a consistent set of procedures to follow for each project. While it is usually easy for one individual to be consistent, it is difficult for multiple individuals to act in the exact same manner. A project manual will be used to help train new project managers in proper job methodology. This will lead to consistent documentation, filing systems, and measurements of job costs. The intent is not to clone the founder, but to recreate things that work. Latitude will be given for personal creativity.
2. Add new personnel 12/31/2001
? Job description 09/31/2001
? Hiring strategy 10/31/2001
? Interviews 12/01/2001
Future employees at the company will wear many different hats. It is important to write a good job description of the employee’s duties. This will help both the owner and new hire. From this description, it will be easier to determine the kind of individual that will best fill the companies need. A strategy for seeking such individuals will be developed and interviews scheduled. With current market conditions, the duration of the strategy development stage and interview stage may be greater than the month allowed.
3. Training 12/31/2002
? Introduce job sets 01/03/2001
? Plan reading 01/10/2001
? First Project 02/01/2001
? Estimating 06/01/2001
Training is intended to be a multi-year project. A quality project manager will take 3 to 5 years to develop. Training will include many more phases than are listed. These are the basics of development. Much training will be hands on and by observation of the existing project managers. The first project will be awarded very early in the process. At this stage of company development, the senior project manager should have time to mentor the new project manager through several projects. The company is small enough that help will always be near.
4. Purchasing methodology 03/30/2001
? Interview steel purchasers 11/20/2000
? Develop needs analysis for company 01/31/2001
? Needs analysis for sub-fabricators 02/28/2001
Purchasing is a function that many companies relegate to another department. At Sonoran, this function will be performed by the project manager. To develop a purchasing methodology, informal interviews will be staged with steel purchasers in the city. From these interviews, and interviews with sub-fabricators, a needs analysis will be conducted to establish proper and profitable formatting for the purchasing plan. Software is available, but it is very expensive. NPV analysis of the software purchase shall also be conducted.
5. Online drawing transfer 12/31/2003
? Equipment analysis 06/30/2003
? Software Analysis 07/30/2003
? Lease or buy plotter 10/31/2003
? Lease or buy computer 11/30/2003
This function is not just the wave of the future, it is now. Hardware and software is extremely expensive. It will be two to three years before the cost can be justified. It is possible to use equipment from other sources. The detailers generally possess the proper equipment to e-mail drawing files and plot incoming files. If the company intends to use international firms to do detailing functions, it can pay printing firms to plot the drawings. This is expensive, but not as expensive as equipment purchase. Ideally, the cost analysis will allow for the purchase of the equipment in three years.
SUMMARY
The project management department has more strength than any other department in the company. The company is based upon selling project management services. A weakness is in purchasing management. Work needs to be done to improve this process. Technologically, the company needs to make improvements. While the technology is available, money for such equipment and software is not available at this time.
It will be necessary to closely monitor the workload within the department, especially with the shared duties the lone employee possesses. With the companies intended growth, it will become necessary to hire and probably train another project manager within the next 15 months. Mr. Oxford is very qualified to train such a manager.