Many design and construction projects are managed and delivered in a matter that makes outcomes unknowable and uncertain. It’s time to rock the boat.
Many owners are primarily focused on completing projects for the lowest cost. Cost is, of course, an important concern, considering the many millions of dollars that are often at stake. The focus on cost is so strong that many tools and processes have been designed specifically to maximize competition and minimize cost. However, the track record of these competition-oriented processes is not very good.
I recently Googled the phrase “buildings over budget” and found more than 48 million entries. The first few entries told a common tale of woe from coast to coast: “City justice center over budget, cost of building materials blamed (Rocky Mountain News); “Hospital project goes $1 million over budget” (Sarasota Herald Tribune); “Vancouver Olympic Village $132 million over budget” (Vancouver Sun). And so on, and so forth.
The first entry on the list portrays the typical nightmare for projects in severe budget trouble. Rising construction materials costs translated into a 24 percent increase of the project cost over original projections. Because the project is a new justice center for the city of Denver, the overruns also reflect extremely poor management of public funds, which also damages the public trust.
When Googling the phrase “buildings behind schedule” I found only 2 million hits, but the citations were equally depressing: “New science building behind schedule” (Richland Chronicle); “South Dade Arts Center Behind Schedule” (Miami New Times); “Metairie bridge work seven months behind schedule” (New Orleans Times Picayune).
The Dade Arts Center report marks a systemic problem, with the county blaming the contractor for being more than 431 days behind schedule and $2.3 million over budget. In addition, the county criticized the contractor for owing payments to more than 50 workers on the project.
The results of these searches is simple confirmation that many design and construction projects are managed and delivered in a manner that makes the outcomes unpredictable, sometimes wildly so. These unpredictable outcomes steal power from the owner, who is obliged to make decisions without the benefit of accurate market or coordination information. To make matters worse, the focus on competitive cost control has created barriers to acquiring this information. Even if the mythical competition-driven search for lowest cost arrives at a project that is within or below budget, it absolutely does not provide highest value for the owner.
I have heard it said that design-bid-build, the industry’s most competitive process, provides the owner with the lowest first cost but almost never delivers the lowest final cost. The real final cost can be devastating to an organization, especially if it is unplanned. As noted in some of the examples above, project costs in a traditional process can exceed planned budgets by enormous percentages. If these unexpected costs had been anticipated, this information might well have changed decisions.
The argument for information-rich processes that produce predictable outcomes should perhaps be the primary focus of the owner, and perhaps the path of seeking predictable outcomes will provide owners the opportunity to control their own destiny.
So what does an owner do when good, reliable information that so many decisions depend on is hard to come by? Upon arriving at Rice University to run project management and planning, I was faced with the classic owner’s dilemma. How would I deal with the inefficient processes put in place by Rice’s project managers, consultants, and contractors? How could I change my team’s focus from lowest cost to predictable outcomes? What improvements could I as the owner make to help my teams do a better job of communicating, collaborating, and performing? Could the owner drive changes to ensure predictable and successful project outcomes? I began to find my first answers in three simple action words: standardize, analyze, and react.
Imagine for a moment that each project is like a ship in the navy. Perhaps Russell Crowe as Capt. Jack Aubry in the movie Master and Commander is at the controls of one of these ships. Capt. Aubry, meticulously trained by the British Navy, constantly scans and analyzes information produced from maps, navigation, and the weather, and he knows how to apply these data to react to changing conditions. The challenges may include weather, war, and wounds, yet due to reliable processes and critical analysis of information, “lucky” Jack Aubry can react creatively in the moment to sail the HMS Surprise to great success. As captain of my ship at Rice, I wanted to gain control of the projects and improve performance without taking on water. I needed to rock the boat, but carefully.
- Standardize. As I reviewed the Rice projects a decade ago, each seemed to have a life or personality of its own. This was to be expected, since teams and challenges differ from project to project. However, if the differences are so profound that project managers cannot rely on basic standardized information or processes, then they are sailing without a compass. Therefore, my first navigational efforts to direct Rice’s fleet of projects was to standardize all project budget formats, reporting formats, contracts, management processes, coaching processes, and staff communications. The results were immediately satisfying. Simply standardizing the budget format was powerful. Suddenly every project manager was treating every change in the same manner. Definitions were coordinated. Information quality quickly improved, and our credibility with senior administration and the Board of Trustees began to strengthen. The stars were aligning.
- Analyze. The next step was more challenging as the Rice teams began to analyze the new information we were collecting. The teams had to determine what data was meaningful and how it should be used. We needed to connect the stars to the maps and factor in the currents and the winds to understand where we were. We reviewed project budgets and schedule information monthly to predict and assess project performance and risk with great care. We tracked cash flow performance on each project, allowing the university to manage capital and providing insight on the schedule. Contingencies became risk analyses rather than spending accounts. Shop drawing and request for proposal logs began to tell stories of team dynamics and further challenges. Confidence grew not only in the quality of information but also in the reliability of the teams.
- React. Once Rice had standardized the processes and established the ability to analyze the information they generated, we began to react and firmly steer each ship. As every captain will tell you, no ship can be directed from afar. It is the captain and the crew who must react in the moment to the weather and to the threats if they are to be successful. If Capt. Aubry had waited for orders from the admiralty, he never would have captured the French nemesis. So it is with projects: The project manager and the team must be charged with the responsibility and empowered with the authority to steer the project as necessary. In addition, when decisions and problems are pushed up the chain of command, senior administrators must have the will to react and set the project in the right direction.
But Capt. Aubry doesn’t just react; he leads in a manner that is caring, clear, and creative. He understands the focus of his command and the latitude that allows him to innovate as needed. He also has a code of honor that guides his decisions. Many project owners do not clearly communicate to the project team their responsibility and authority nor provide guidance on how to use that authority.
At Rice, the first steps in providing this clear path of empowerment started with a few simple directives. First, we asked each team member to implement a decision-making process that determined which decisions they and the team should be making and then to make those decisions. Team members who make decisions using this process in a non-frivolous manner are safe even if some decisions turn out to be incorrect.
The Rice decision process comprises seven steps, the first six of which can be completed in a single meeting:
- Clearly define the decision to be made with the team.
- Identify decision stakeholders.
- Identify decision risk.
- Determine what information is required to make the decision.
- Determine if the decision is the team’s responsibility or if it must be made by others.
- Schedule the decision process.
- Collect the information and make the decision. (Be tough and make it happen!)
This simple process clarifies the latitude given to the team and project manager, making it safe to make decisions responsibly and empowering the project manager to take command of the ship. After we implemented it, teams, project managers, and senior decision makers stopped drifting and began to tack purposefully through the challenges of design and construction.
Clarity, Consistency and Cooperation
The next directives were actually a simple set of values to drive leadership activity. The project managers were directed to manage clearly, consistently, and with a spirit of cooperation. Clarity was critical for improving team performance. Project managers were responsible for clearly defining roles and responsibilities as well as expectations and decisions. Managers were responsible for ensuring that decisions, once made, were immediately and accurately communicated to all stakeholders. Providing clear direction to the team is an extraordinarily effective method for managing and motivating teams. It’s a lot easier to sail when you are confident about the course before you.
In addition, managers were directed to apply a consistent standard in the management of each and every team member. If a manager asked for certain information on the first pay application, those demands could not be frivolously revised each month. A manager should not play favorites or arbitrarily manage team behavior and rules. Invoices would be reviewed within an allotted number of days, and payments would be made promptly. Communications would be reliable: E-mails and telephone calls were to be returned within 24 hours. If a project manager accepted an electronic submittal once, he or she should not insist on a paper submittal the next. Simply stated, team members should be able to predict the project manager’s behavior. Consistency lowered risk and calmed team environments.
In addition to clarity and consistency, project managers were directed to manage in a way that inspired cooperation. These days, the word more often used is collaboration, but in 2000, it was simply important for project managers to be considerate and respectful of their teams; to classify something as urgent only if it truly was; to consider carefully the effort required to develop options; and to understand that changes potentially have a broad impact. This last step sowed the seeds for important future collaborations.
In an environment where too much direction might have swamped project managers and teams, these directives were a reasonable and effective start. They acted as a few pieces of flotsam lashed loosely together, providing the life raft that we needed to navigate the stormy waters of those first few projects. Their overall success in quality, budget performance, and schedule provided me with the first proof that the owner could have an impact on the fortunes of a project and its team. That was evidence to build on. These were tools to hold on to and enhance. I had been faced with the owner’s dilemma and I had made my choice.
This article is adapted with permission from the book The Owner’s Dilemma: Driving Success and Innovation in the Design and Construction Industry by Barbara White Bryson with Canan Yetmen, Greenway Communications LLC.
Barbara White Bryson is the associate vice president for facilities engineering and planning at Rice University. During her 10 years at Rice, she has overseen design and construction projects totaling more than $1 billion that have added more than 2 million gross square feet to the campus. Bryson is a fellow of the American Institute of Architects and a member of the Design Futures Council and the Association of University Architects.
Canan Yetmen is principal of CYMK Group, an Austin, Texas, consulting firm that provides writing services to architecture and design firms around the country. From 1995 to 2001, she was publisher of Texas Architect magazine, where she directed marketing and business management of the magazine as well as the public outreach and communications efforts of the Texas Society of Architects.