Into the Unknown

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Well I finally bit the bullet and decided to go solo. I have always relished the idea of working for myself and now I am on my own away from the corporate comfort blanket and all the other nonsense that entails.

Setting up your own business is very straightforward and I have one simple goal, that is to enjoy what I do day to day. It is not about making enormous amounts of money, it is about being happy.

To date I have not canvassed anyone, cold called companies or called upon colleagues and friends in the construction sector. Simply because I have been too busy dealing with clients who have sought me out. There are a lot of distressed projects and many builders and subcontractors who simply need some assistance.

In Australian capital cities there has been a boom in high rise apartment developments. With any boom there are casualties. Developers unable to make final payments to builders because apartment sales contracts have fallen through, subcontractors being strung out by builders, everyone blaming each other for their losses on projects. When you roll your sleeves up and get into the nitty gritty of the problems it usual is caused by companies taking work on without understanding risk and then they employ staff who do not know how to manage risk.

So I get approached to “fix” a project and very quickly identify it is not the project but the way the company is organised to handle projects in the first place.  The project may never achieve its tender margin but sometimes the damage can be reduced. Fixing the business is the key and usually it all relates to the contract that was signed and the way the procurement is managed.

I was hoping to get away from the sixty hour working week in the corporate world but the potential workload may keep me even busier – if I am not careful!

Premdale Consulting 2017

Zero Overheads

v-30-PreviewSimple premise – reduce overheads, become more competitive, then win more work. So what overheads does a construction company essentially need. Perhaps if the projects were set up with the right resources we would not be as reliant upon a head office. The project becomes, in effect a stand alone business and if it needs anything from head office it has to pay for it. Simple. But in reality , if the project runs this way it will incur costs never envisaged in the cost plan and instead of wearing head office overheads, it just bleeds dollars and drags the business down anyway. It is all down to how the budget is managed, reported and controlled.

So we need to be competitive in the tender process, run the project pretty lean and not rely on additional resources from head office. The answer is smart people, good communication and the best IT we can buy.

Let’s start with IT. We  love to blame it, cannot function without it, do not embrace it and do not use it to its full potential. The IT department is an overhead that needs to charge the project for providing services and hardware.  First thing we can do is to stop buying hardware. Bring your own phone, ipad, tablet, monitor and simply connect to the company’s access points. Companies don’t provide cars any more so why provide computer hardware. All IT provide is the core software and managing internal communication. Everyone has a mobile phone so why is it most staff have two, one for work and one for personal.

Site office space is always a problem as we never seem to have enough. We need to understand space should be determined by function not status. Give everyone access to an open plan area and meeting rooms for meetings, not for egos. Site offices are expensive. We do not need a dedicated office for a project director who visits once a month, whilst others are working on top of each other.

But this is just simple good housekeeping. We need to look at all the functions that the project could manage themselves and ensure those they cannot are paid for. We all think very seriously before calling in external legal advise, yet pick up the phone at the drop of a hat if we have in-house counsel. Internal lawyers (if the company has them) are our best friends and having access to them is a true luxury. But we need to be aware not only do they have a cost, the resource is limited and whilst we are tying them up they are not available to our colleagues on other projects.

It is interesting to consider say fifty years ago we employed all the major trades for us to construct buildings and did not have internal support such as legal, marketing, green advisers, real estate novelists etc. Now we have various none core support divisions and we subcontract the construction.

Of course our support teams are vital and we need to make full use of their expertise, we simply need to remember we have to pay for them.

 https://gkeating.com/

picture courtesy of http://graphicriver.net/

Oh No, they have brought in a Quantity Surveyor

Budget Meeting

Builders hire external quantity surveyors only as a last resort. Usually after months of trying to convince themselves that the project bottom line will improve, they realize that they are in for a contractual fight with the client and any straw needs to be grasped.

Month after month of cost reports with ever diminishing margin, force them to consider the battle ahead. That means finding every conceivable error, ambiguity, inference in the contract documents or any slip by the client’s representative. Project managers think they are experts in construction law, directors look for blame, and the site based project team convince themselves they have a cas against the client. Delusion has set in.

Wonderful expressions are uttered, “global claims”, “unfair enrichment”, deceptive and misleading conduct” All are bandied about with as much abandon in the site office as in the boardroom. Sight is completely lost of the simplicity of contractual claims:

  • What did the client do or not do?
  • Did this cause us costs?
  • Is it recoverable under the contract?
  • What are those costs?

The client’s quantity surveyor has  either dismissed or taken a blow torch to variation claims and because builders are not in the quantity surveying club, they are forced to seek the services of an external professional – the QS.

by Gerry Keating

So we go through the very expensive exercise of our people talking to their people and if we are lucky end up with a compromise on the steps of the court.

The alternative is to start the process from the day the first variation is carved up by the client’s QS, not wait until the dire cost report forces the issue. Get in early, don’t get time barred, and do not put up with any nonsense from a QS who probably created the errors or ambiguities in the first place.

The jungle is dense and the river is deep

This little gem of advice was given to me some years back up in the farthest reaches of Kalimantan (Borneo as we used to call it). I was PM on my first resources project, building new infrastructure on a brand new open cut coal mine.

The team consisted of me,  my resident engineer, a contracts manager and 750 locals. The project included all buildings, plant maintenance facilities, barge loading, purchase of all mine plant, and a 45 Klm haul road. Total value about $US100m. All carried out through virgin rain forest with the only access by sea or helicopter. That was the construction side, but the other part of the project was to set up a cost structure for getting the coal out of the ground, taking it to the river, loading barges and delivering it to coal ships moored in deep water. A cost structure that would accurately manage costs and report/forecast on the profitability of the business.

The mine was Indonesian owned and the owners had a very simple philosophy. They knew how much they could sell a tonne of coal for, so they simply wanted to know the cost of getting it out of the ground and delivered to their clients’ ships.

The way it had been set up was haphazard with all subcontractors charging on a cost plus basis. One of my tasks was simply to stop this and get everyone working on fixed price lump sum term contracts. Maybe easy to do in sunny Brisbane but a bit more challenging in deepest Kalimantan. So I set about the task by working out what it was costing, the average selling price of coal project over the next three years, discounted cash flows, capital investment, the normal run of the mill spreadsheet heaven.

I called a meeting of about 100 subcontractors, all locals. They turned up in pretty much the same uniform of shorts, ripped off tee shirts, and many with ubiquitous parangs (you call that a knife, a parang is a big bloody knife). So with my interpreter I commence my spiel, being ultra careful not to point, raise my feet to expose the soles etc etc. After about twenty minutes of extolling the virtues of the certainties of fixed price arrangements, the win win relationship plus all sorts of similar management speak, a small figure at the back stood up. Not only did the audience go quite, my Indonesian interpreter went visibly pail. The interlocutor spoke firmly for ten seconds and the room if it were possible went even quieter. My interpreter was reluctant to speak but after physically prodding him for the translation, he whispered to me, a feat in itself as I was two foot taller than him, that the firm spoken speaker had said, “The rivers are deep and the jungle is dense”.

I was baffled and asked him what does he mean. My diminutive friend responded in his best interpretation of my scouse accent, “Er keep this up mate and you won’t be going home in a box ‘cos they won’t find yer body pal”

I ditched fixed price negotiations immediately and from that point on we were all friends. The infrastructure was completed, the price of coal to China went up, the subbies made money, the client smiled (or was it wind) and I flew home a year later business class.

Project Success or Armageddon

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Ok we all know about KPIs, LTIs, positive/negative cashflows, WIP, cost reports etc etc. We have dashboards on our laptops spitting out critical data regarding our performance, document management software etc etc. But if you break it right down, what makes a project so bad that the PM pulls the pin before PC.

Consider three simple points

  • the project team
  • the client
  • the budget

My theory is if you can tick all three as acceptable or above, life is great, the project runs safely and financial well, the client is happy for us to build for him again, we all stay until the end and then we spruke about it on our resumes. Of course during the project life these three point can get better or worse but consider them as an average. If we can tick two then life is hard, there may be a reasonable client, but the job is under priced but at least the team gets along and we put it down to experience. If we can only tick one box things are getting serious. Bad client, crappy budget, but the team still gets along, and when we look back a year after PC we only remember the good laughs as we will all probably working for someone else. The worst case, no boxes ticked I shall leave to the end of this missive.

Now say the team is not great, there are some weak links, or in the worst case scenario, the PM has not picked the team, they have been chosen from on high and maybe the leftovers from other projects. Just names to fill in the organisation chart, keep the client happy and you get what you are given.

Now the client. We all have stories about difficult clients. My worst stories are not about clients but the ubiquitous client representatives. Over the last twenty years a whole industry has developed in companies engaged by clients supposedly to look after the client’s best interest, when in fact the only interest satisfied is the representative’s. They have to prove they are necessary so they crucify builders in every which way.

The final one of the trinity is the budget. How many times have you heard PMs say “which bloody lunatic priced this” or a more recent one I heard was “that estimator knows as much about construction as a horse does about astronomy”

Now what happens when none of the three boxes can be ticked. The team is not yours, they have not interacted well, some have left and more hand me downs are parachuted in, the client (more usually his representatives) is impossible and the budget bears no semblance of reality, now we are in trouble. As the great man said “Forget Armageddon, you are in hell already”

Can someone book that one way ticket – please.

The Dog and the Tail

There is an old expression: something about the tail wagging the dog, the gist being the person who should be in control is in fact controlled by those he should be controlling. Apologies for the tautology but you get my drift.

The traditional project had a PM at the top of the pyramid and the next level would be site manager, project planner and contract administrator. the next level foremen, supervisers etc. Everyone new their role. The PM reported to the Building/ Construction/ Operations manager and they in turn reported to the Rgional/General Manager. Life was simple, comunication flowed up and down the organisation and everyone new their career path, what they were responsible for, and who they were responsible to.

Times have changed. In a world where the most junior cadet can email the client’s managing director and the first thing the PM knows about it is when the sh*t hits the fan, control of communication has become like knitting fog. OK we have Acconex (but don’t get me started) and other project controls, now that term did not exist a few years ago in Australia. Have you ever heard such American nonesonse “Project Controls Manager”. There is only one person in control – the PM, not some glorified QS.

Anyway I digress.

Back to the tail and the dog. Because the construction industry, in particular within the resources sector, is booming, we have had to hire people who if times were tough we simply would not entertain them. People who were supervising the construction of timber framed housing are now erecting structural steel, not on a domestic sub-division but inside a complex, dangerous production facility. Putting it simply – different rules, procedures, practices and trades. So these inexperienced “newbies” start to rely on advice not from the people they report to as that would show their shortcomings, but they ask the workforce. Before long the guys on the tools are asking for scale rules, contacting suppliers, organising deliveries and bacically running the job themselves. The canny PM spots this early and sorts it out, but if there is a long workforce it can go un-noticed until either someone gets hurt or the jungle grapevine tips him off.

Do you blame the person that hired these people? Normally you would say yes, but when you cannot get anyone who wants to be a supervisor and earn $50K pa less than those he supervisors, you eventually hire someone, anyone.

FIFO

Yes I have joined the legions of Fly In Fly Out (FIFO) construction people here in Australia. I live in Brisbane and now work in Port Hedland. To my Pommy friends that like living in London and working in Jerusalem.

But I am returning to site based construction – concrete and cranes, and I cannot wait. I reckon construction is in the blood, those of us who have spent many years trying to meet deadlines, budgets, etc must have a passion for it, otherwise why would we do it?. It does not matter if it is a high rise on the Gold Coast, resorts on the Mediterranean or coal mines in Kalimantan, there is a certain buzz about being based on site and seeing a job come out of the ground. I need a break from the “coorporate” world of Powerpoint, Politics and Platitude. I want to hear he sound of concrete pumps in the morning not the sound of some bloody management consultant. I also want to feel I have earned my salary not because of what it says on my business card but for what I and the team have achieved.

So farewell Mackay and thanks for all the fish and hello Port Hedland, 39C today and the best fishing in Australia.

Who Wants Sharepoint

SharePoint folks enjoying some Huey Lewis action

I cannot understand why many organisations have or are going down the road of Sharepoint implementation. My experience is in construction project management and have gone through Sharepoint implementation in two companies in the last five years. On both occasions it was sold to us as a document management system – it is a document repository, as simple as that. If you want it to be a management tool you have to get bolt ons or pay through the nose for consultants to adapt it. Instead you can simply buy Acconex, project Centre etc etc and straight out of the box you are managing your document flow, drawing storage, capturing project correspondence and all the other data you need to run projects.

When will IT people understand what we do instead of forcing us to change best practice to suit what they think we need ie collaborative software tools. Managing projects does have some collaboration between the various participants but that is outweighed by the need to have accurate real-time records and systems that are easy to learn, use and manage.I came across a great blog and I have reproduced part of it.

http://nkilkenny.wordpress.com/2006/11/13/whats-wrong-with-sharepoint/

“I tend to agree that Sharepoint sucks. Using it is like closing your eyes, holding your breath and spinning around for thirty seconds. When your done you don’t know where you are, you are very dizzy, and feel like you might throw up… I might create something in one place, but can’t delete it or rename it there. After 15 minutes of searching, I can’t find the same tool I used yesterday to do one thing or another. It’s like that house in 13 Ghosts, everything SEEMS to move around on you… What really bothers me is this is not version one. It is a great idea gone horribly implemented.

STAY AWAY… Sharepoint can be an incredibly useful tool, but in any office where I’ve seen it deployed, it’s acting merely as a web-based front-end to the file-system. If that’s all you’re going to be using it for, you might as well just use the file-system, via Explorer and mapped drives, and do away with the glorified front end.

I absolutely hate sharepoint even though it seems to be serving purpose here of a company with over 9,000 employees. i have to do the support and administrative stuff for it and have several users I can’t get connected to our Portal for some reason we can’t figure out.

Sharepoint…I hate Sharepoint with the passion of 10,000 burning Lotus Notes users…Sharepoint is a decent enough idea but it lacks a logical flow for navigation. Also, sometimes it just seems more cumbersome than it’s worth but eh, it works too.

Honestly, I found Sharepoint so inadequate and typical of a first generation MS product that I could only shake my head at it.  If it was made by anyone else than MS and had to compete on its merits I suspect most of us would have never even heard of it”

So any business that has an IT department as a support service is exposed to having software imposed on it by people who often do not even understand what that business does.

If you find yourself in that position, you can push back and if that fails simply move on

Goodbye Quantity Surveying

Monitoring and Control project activities

The other evening I met an old friend of mine newly arrived from the UK. He is a quantity surveyor who used to work for a large building contractor in the south of England. He is looking for a job in Brisbane and asked me to explain to him what a contract administrator does as the job does not exist back where he hails from.

So I gave him all the details of what a contract administrator does for their $140K per annum. I then went on to talk about the role of the project control manager. This role is widely understood in engineering in Australia and is prevalent on construction/engineering projects in the Middle East. The term is gaining widespread use in Australia especially in the mining/resources sector with salaries pushing $200K. That sort of salary equates to £130K sterling which is far more than a quantity surveyor would dream of earning.

How do you define project controls. A simple definition is “The skills in the project control disciplines provide the “eyes and ears” of good project management.”

Or

Project Controls encompass the people, processes and tools used to plan, manage and mitigate cost and schedule issues and any risk events that may impact a project. Project Controls are a necessity for the business to get paid for what we do, deliver projects on time and on/under budget. The key duties are:

  • Planning, Scheduling & Project Reporting
  • Earned Value Analysis & Management
  • Cost Engineering & Estimating
  • Change Management & Controls
  • Risk and Delay Claims
  • subcontracts and supply Management

My friend is now applying for a job as a project controls manager and never wants to be known as a Quantity Surveyor ever again, especially here in Australia because most people do not understand what that means.

Communication for Project Managers

Project Management Knowledge Areas
Image via Wikipedia

OK you have your first project as PM. There is nowhere to hide, nobody to blame, it is down to you, as we say in Australia “sh*t or bust.

I remember the day I was given my first project, and I mean real project ie tower cranes and unions. I had a mentor at the time and he said once I had delivered the project I should treat myself, and I did. I bought a Tag Heuer watch which I still wear every day. At the time it cost as much as a small car but every time I look at the watch it reminds me of my mentor and how I got my first “real” project under my belt.

I could bleat on about project management, the watch was 16 years ago, but what my current issue is communication and systems. There is  information we store for future use if needed and there is communication which  (I hate to use  IT geek speak) involves workflows.

So what is a workflow and what do we store for the future, workflow is communication that requires response, action, follow-ups and can cost you dollars, storage is what we keep if we have to prove the workflow.

Currently Sharepoint is well used as the storage facility or document repository.

The following quote whose source I have omitted for his personal reasons is seminal:

“In a panel discussion on SharePoint as a social platform, the consensus was that SharePoint contains many of the ingredients of a social application, but by itself doesn’t get you all the way there–not without extensive customization or the addition of a third-party product such as NewsGator Social Sites.”

Unfortunately some misguided IT professional believe Sharepoint can manage workflow as well, and in tandem with being a document repository. They are wrong and out of touch. Project Managers need information in real time and there are many proprietary software packages that will give them the information they need.

I am looking forward to the day when we bury Sharepoint as a workflow engine and linked spreadsheets developed in house to satisfy needs which can be met by software which is already available.