Monday, April 1, 2013

Challenging in Project Management Today: What Challenges Managers Face Today in Projects Due to the New Management System, Development and So on?

“I keep six honest serving men (they taught me all I knew): Their names are What and Why and When and How and Where and Who.”  Rudyard Kipling

There are so many challenges that the project managers are encountered during the period of the project life cycling. I have brought here the most important ones that I had experienced while I was working as project manager in EPC projects.
Before to proceed toward the challenges which the project managers face today, let me start by using guidelines of PMBOK book (Project Management Body of Knowledge) as the Bible of the Project Management field. Here is the Project Management framework in accordance with PMBOK.

                                                Project Management Framework

Regarding to above chart, I am willing to divide all challenges to three parts which are Stakeholders’ needs and expectations, 9 Knowledge Areas and Tools and Techniques. In fact, I can consider the challenges as External and Internal. You can see that we are again speaking about External and Internal analysis. Therefore, let me tell you that the first step to practice the Project Management by managers is to learn the basic of Strategic Management as follows:

Why should the project managers learn about the Comprehensive Strategic – Management Model?  The reasons are as follows:

  • To issue the large tenders
  • To evaluate the bids and the quotations, purchase orders
  • To predict the strategies, mission and vision of the main contractors, vendors
  • Bid meetings, negotiations

In fact, the SWOT analysis of each main contractor or vendor will give good information to the project managers to save the cost and time accompanied by quality of the project.

At the first let me have the debate about external challenges as follows:
  • The first step is that the project manager as well as knows the Stakeholders of project to familiar their needs and expectations.
Who are the Stakeholders of the project? They are Customers, Consumers, Owners, Partners (Joint ventures), Funder, Main contractor, Subcontractors, Society and Government, Internal Personnel, Shareholders and Clients.
If you don’t know your stakeholders, you won’t perceive what they expect. Then you are not able to have a good communication among them. If Stakeholders have the conflicts all together you cannot coordinate and integrate them and consequently your project will be failed. In the other word, the project manger should know the real concepts of the Expected Return rate and Risk.
  • Your client has uncertainty about the scope and specifications of project and the client doesn’t really know what they want. One of the most important problems that I had in my first project was the approval of the Layout of the project in which the client should confirm their needs. It took so long time for confirmation.
  • Your client has delay with your communications.
  • Please consider that you have been chosen as the project manager and the client ask you to handle the project which had been already determined the Cost, the Time and the Scope. What will be your action? Do you agree with the quotation obtained by the client without to take your analysis? Here will be the origin of the conflict between you and the client. Because if there is not any balance among the scope the time and the cost, you have to decrease the quality of the project in all sections such as procurement, low standard in engineering, low quality in construction, the limited communication, limited vendor list, high risk project and so on. On the other hand, you see that the client inject some unskilled people in your team project. Definitely if you do not accept the analysis of the client, you should leave your job. This is the big challenge form the project managers today.
  • Another challenge is a huge fluctuation on economic indicators such as inflation rate, exchange currency and so on during the period of the project life cycle. Sometimes the changes are affected on the cost and risk of the project so that you have to stop the project because the project is not feasible any more.
  • One of the most important external challenges for the project managers is the authority. What kind of authority (if any) does the project manager has or exercises?
In most cases the project manager has no authority at all on the resources, and he's under the mercy of the functional manager. However, the project manager through diplomacy, communications, and by setting himself/herself as an example for the resources, he/she can impose his/her authority (even without having formal authority). Of course, maybe it is logical issue because all responsibilities which are associated to the penalty and lost in the project are assigned the owners. There are two kinds of authority. The authority on the people and staff that it doesn’t matter very much because even the CEO uses his/her influences to push the skilled people to do their obligations. The second kind of authority is decision – making authority. This is a major problem for many project managers, especially when it comes to decisions to spend money. When you are a project manager, you are not allowed to spend the money more than for instance $50 without any approval. What will be the outcomes? Definitely the outcomes will be approached to increase the time of the project in which the balance of the scope, the cost and the quality consequently will be changed. It is possible; the project will be failed because of too much delay. For instance, sometimes the project manager has to cross – check some documents, data sheets, DWG’s or invoices of subcontractors. He/ she should spend money to get the consultant services outside of the organization. To prevent of delay, the project manager should pass some regulations rapidly. Therefore, he/she will be charged the additional cost. If each issue should be approved by functional manager, the project manager certainly needs to new overall time schedule every day.  I don’t understand while the client has project budgets of hundreds of thousands of dollars; do not trust the project manager.
Now, let me bring some examples of internal challenges in which the approach is 9 knowledge areas and tools and techniques in project management.
  • Project Integration Management
- Approach of the project management should be always help and cover the executive agents such as Consulting Engineers, Main and Subcontractors, Project team in addition to coordinate among them to reach his target. The project manager should know that only someone does not take a mistake who does not work. Therefore, sometimes he should shut one’s eyes on some negligible issues. In other words, he should be flexible. Of course, the project manger should have the concern about balancing of Time, the Cost, the Scope and Quality during the period of project life cycle.
- The project manager should obtain enough information from his sub-projects before to put out to the bid among the subcontractors for instance, to estimate time and cost of the sub- projects (Items price list or break down price list) in which there is a high return rate accompanied by low risk. Therefore, he needs to have basic and details engineering and details time schedule before the bid by coordinating Human resources such as engineering department, commercial department and so on.
  • In Procurement (Sales contract)
- It is suggested to the project manager that details time schedule presented by main contractor is enclosed as an article of shipment documents included in Sales contract so that main contractor could not supply any machinery at the site before commencement date of civil work or erection work. Because main contractors are not usually interested in doing their obligations in Construction contract (“C” in EPC) and they will take the most their profits by Procurement of equipment and Engineering (“P&E” in EPC) that these margins are often more than P.B.G (Performance Bank Guarantee) presented by main contractor.
-Break down price lists should be checked exactly because it is possible that shipment of a machine or equipment only absorbs 50% of L/C. In the result, the main contractor, which has gained so much profit by shipping only one or two equipment at the site, is not interested to doing his obligations included in the construction contract. Because the civil and erection works are always accompanied by high risk level.
-Details time schedule should truly be designed so that it should be established a logical relation among shipments of the equipment (procurement) and progress of civil and erection works.

-When  a new revision of the document ( contract, appendix, DWG, data sheet and so on) is issued by Contractor, the  project manager should check it out not only the cases are depended on decisions of the meeting but also other parts of the document should be controlled word to word and number to number. For instance, in one of the projects, I remember that we had discussed about mechanical specifications of machinery (App 3 from Sales contract) at the meeting. But I saw that it had been deleted some civil work specifications in another part of new revision APP (3) by Contractor so that total difference cost was more than one million Euro. And So I remember that the basic elevation code (BM) had been changed in new revision of DWG related to site plan and  had send us for our approval  while the real debate  on the site plan map was about the layout no BM code so that it was caused a subject of claim. The project manger should teach to his team that they should compare all numbers and words on the documents between previous and new document issued by the contractor.
  • Communication Management
     The most important challenge of the communication is the negotiation between the project manager and main contractor at the meetings. Here I have brought some examples for good negotiation as follows:
      - Each time we become nervous, we have to pay the cost of it. In fact, it will be the goodwill for the opponent (main contractor).      
      - At the meeting, when we are obliged to think, we will be at the extreme of   weakness and we have to surrender and give up (in fact, this is the important principal of our life. When we are thinking to solve of the problem, we are at the extreme of weakness and the problem is at the extreme of the power). Therefore, we should quickly say to the correspondent (at the meeting): “Let me check it and reply to you ASAP” or “What’s your mean, I don’t understand it” and so on. 
     - The best consequence of the meeting is to reach a Win-Win result. What are the superiority conditions to this outcome?
Before the staring of the meeting, the both parties should have a PEST, Industry and SOWT analysis as the initial information from each other and the project. Because there are two states at the meeting: 1) our opponent bluff     2) our opponent shows us that he is very stupid. The second one is very dangerous for us. Each time we bear in mind that the people do not understand and are stupid, it is the starting time of losing our opportunities and benefits. In fact, win – win approach is to reach the boundaries conditions.  Who are we able to reach the boundaries conditions? Definitely it will be done with the increase of our information.
  • Human resources Management
In the field of Human resource management, I am willing to depict the challenges on two groups of the project team which are engineering department and  control project department as follows:
Ø  In Engineering

-The most important thing to present a new design in the field of Engineering is to collect and select the exact basic data. In fact, the calculation note and engineering software help us to increase the rate of analysis so that the feedbacks show us the confirmation or non-confirmation of basic data. Therefore, we should know that engineering tools (software and calculations) do two works for us: 1) to analyze of basic data 2) to proceed toward the limits (for saving of cost and time).

    - The project manager should have the concern about a new design because it brings for the project the new science production and the innovation. Therefore, the project manger should cross - check the design of engineering department by using of locally information, previous executed designs, references, returning analysis, and using of other consultant engineers and vice versa. It means, when engineers proceed to design and calculate of some details in the fields of civil, mechanic, process, electric and so on, they should guess the details of final design completely before starting of the calculation by using of locally information, other projects just like to this project, returning analysis, references, their experiences and etc.
An optimum design will guide us toward the exact estimation and saving of money and time. For example: I remember that I rejected basic and details engineering of Electrical Substation Building in one of the projects so that the new revision had been changed from 2500 m2( Area) to 750 m2 and total saving money was about 800000 Euro accompanied by 6 months saving time. In another project, I remember that I warned to engineering department about some basic data for designing of utilities system (Cooling Towers, Steam Generators, Electrical system etc) in which engineering department had to changed the basic data logically in accordance with the real consumptions and matched  with the contemporary percentages. And so, I rejected basic engineering of sewage water (Domestic + foul water) and raw water treatment because of inlet volume (basic data) so that finally it had been changed from 6 m3/day to 1.5 m3/day. Therefore, when a project manager receives a new design from engineering department, he should spend money to obtain other designs to be planned by other consultant engineers outside of his company for comparing with this new design because he is expected to find out the best way to reach the target of project (saving the cost and the time). Of course, a project manager should care about locally information, previous executed designs, references, returning analysis too.

- Before final approving of details engineering included DWGs, data sheets and so on, the executive engineers and site manager should check them because a designing and calculating engineer usually works in 2Dimentioal system but an executive engineer always works in 3Dimentioal space. I mean that the site engineers should also sign all of these documents before final approval.

Ø  In Project Control:

-       Since preparing of a details time schedule (CPM) is the most important item in the projects, if we increase the number of activities (WBS) accompanied by relationships among them, we will be able to lead the project smoothly. In fact, a significant CPM should present us details activities. Therefore, basic data are very important just like to engineering field.
-       A good project controller should be able to have a good friendship with engineers in engineering department, engineers at the site, financial department, commercial department, and coordination among them. Because he/she is someone who is supposed to establish a logical cash flow compatible with engineering activities, civil and erection activities, procurement ( shipments) by tracking of critical paths.
-       I think that it will be valuable that a project manager spend money to get several details time schedule from different sources.
-       A good project controller should track compatibility between primary cost estimating and cash flow in addition to other tracking every day (for presenting warning to project manager).
-       Engineering department, site manager, financial department, and commercial department should sign the details time schedule (CPM) before final approval.

Nowadays, one of the most crucial things to consider is to monitor the project by using of new technologies. In fact, the project manager should familiar to new technologies of monitoring which will significantly help to the project manager for a better control of the project.

Finally, I would like to suggest you a very good reference book in the field of the Project Management which is: “Plant Project Engineering Guidebook for Mechanical and Civil Engineers” by Morley H. Selver, P. Eng.