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Have
a Project Management Question?
We
Just May Have the Answer!
The
DPC SIG has enlisted the support of Subject Matter Experts
from around the world to address your project management-related
questions. Questions and answers will appear in upcoming
issues of the DPC SIG newsletter and monthly bulletin.
Submit
Your Question
to VCMarketing@dpcsig.org.
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| Question
1 |
| In
the United States, various professional organizations
(i.e., AIA, AGC, and EJCDC) have developed standard
contract documents, but each is written from the specific
organization's point of view. Recently, a consortium
of organizations collaborated on a set of contract documents
called Consensus DOCS, which is creating quite a lot
of press. (See ENR 5-Nov-2007). I'd like to know what
other countries have standard contract documents, who
developed them, and are there competing alternative
documents? |
| |
| Answer
1
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One
of the most famous international organizations that
provides Standard Contract Documents that are used
across the globe is FIDIC. FIDIC, the International
Federation of Consulting Engineers (the acronym stands
for the French version of the name) which represents
the consulting engineering industry globally (www.fidic.org).
The FIDIC Secretariat is located at the World Trade
Center, Geneva Airport, Switzerland. The FIDIC contract
is used by the World bank for all the projects financed
through it and that is what gives the FIDIC its reputation
and credibility world wide and is also used after
some modification to meet special requirements.
In
Europe, professional Organizations or associations
like ICE, ICC, IEEE, and International Project Management
Association (IPMA),APM etc. have there standard documents.
International Chamber of Commerce (ICC) introduced
the first version of Incoterms - short for "International
Commercial Terms" - in 1936. Since then, ICC
expert lawyers and trade practitioners have updated
them six times to keep pace with the development of
international trade. INCOTERMS (www.iccwbo.org/incoterms)
are standard trade definitions most commonly used
in international sales contracts. Devised and published
by the International Chamber of Commerce (ICC), they
are at the heart of world trade, claims their website.
Among the best known Incoterms are EXW (Ex works),
FOB (Free on Board), CIF (Cost, Insurance and Freight),
DDU (Delivered Duty Unpaid), and CPT (Carriage Paid
To). The correct reference is to "Incoterms 2000".
Unless the parties decide otherwise, earlier versions
of Incoterms - like Incoterms 1990 - are still binding
if incorporated in contracts that are unfulfilled
and date from before 1 January 2000. Versions of Incoterms
preceding the 2000 edition may still be incorporated
into future contracts if the parties so agree. However,
this approach is not recommended because the latest
version is designed to bring Incoterms in line with
the latest developments in international commercial
practice.
In
US, professional organizations like Construction Management
Association of America (CMAA),DBIA,ASCE, AIA, AGC,
EJCDC, DBIA ,etc. have their own contract guidelines
and more information can be collected from their respective
websites.
In Latin-America, the FEPAC “Federacion Panamericana
de Consultores”, a branch of FIDIC, which has some
publications that deal with some contracts, documents
or templates.
In India, many professional bodies exist. A few notable
ones are UNDP,BIS,and CEAI. In particular, United
Nations Development Programme (www.undp.org.in)
is the UN's global development network, advocating
for change and connecting countries to knowledge,
experience and resources to help people build a better
life. UNDP does not represent any one approach to
development; rather, it assists partner governments
in finding their own approaches, according to their
own unique national circumstances.
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| Question
2 |
| What
is meant by Project Management Information System
(PMIS) and its scope in the IT and construction
industries? What is its methodology to implement in
a project? |
| |
| Answer
2 |
|
According
to the PMI®
PMBOK®
Guide, PMIS
is an information system consisting of the tools and
techniques used to gather, integrate, and disseminate
the outputs of the project management processes. It
is used to support all aspects of a project from initiating
through closing, and can include both manual and automated
systems. PMIS is frequently used in the construction
industry in the form of reports, charts, tables, and
progress curves. It is gaining acceptance slowly in
the IT industry.
All leading commercially available PM software (Primavera®,
MS Project®,
DekkerPMIS®,
Deltek®,
Prolog®,
Artemis®,
etc.) have PMIS features that can be used to monitor
and control or track projects.
Generally,
a PMIS links projects and programs to organizational
goals and objectives at the activity level while tracking
performance across the enterprise. Some PMIS software,
in addition to generating reports and charts, integrates
PMIS with the company’s accounting system and supports
full earned value management compliance.
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| Question
3 |
| How
do you measure client satisfaction for the engineering
services offered? What are the factors that should be
considered for evaluating the satisfaction index? |
| |
| Answer
3 |
In
a service industry, a client or a customer is someone
who pays for the services provided. One of most often
used techniques for measuring the customer satisfaction
is the “feedback questionnaire or survey” after
the service is over. Satisfaction is somewhat a vague
concept. Satisfaction should be seen a continuous variable
ranging from “not satisfied at all” to “completely satisfied”.
Satisfaction scales normally range from 1 to 10. The
lowest point on the scale represents a situation when
a customer is not satisfied at all and the highest point
represents a situation when customer is completely satisfied.
A value in between represents a degree of satisfaction
perceived by the customer. The scale should be such
that it gives the customer enough flexibility to express
his or her opinion and yet be simple. Some times, in
addition to a continuous scale like the one cited above,
some service providers also include a “text box” in
the feedback form to prompt the customer to be creative
and free in expressing
their opinion about the service provided in their own
sentences. Thus, when creating a customer satisfaction
feedback form or questionnaire, it is important to not
only create a structure that can be used for measuring
overall customer satisfaction but also to use a method
that makes it possible to calculate the impacts of different
components of the service provided on the overall satisfaction.
It
is better to first find out the critical to quality
(CTQ) or critical to satisfaction (CTS) parameters
from the customer by having a stakeholders meeting.
The Customer Satisfaction Index (CSI) can then be
evaluated on based on the service provider’s performance
on those parameters. For example, the following factors
may be considered as critical to satisfaction (CTS)
factors in an engineering service industry:
1. Number of unresolved issues in a month.
2. Total number defects in designs.
3. Total number defects in drawings.
4. Delay in getting approvals from Consultants /Government
bodies.
5. Schedule variance.
6. Cost variance.
7. Compliance with latest standards and regulations.
8. Portability / compatibility of drawings to various
computer systems.
9. Number of change orders (CO).
10. Number of value engineering change proposals (VECP)
submitted.
The
above factors, not limiting to them, may be used as
a guide line, to design a feedback system and rate
them on a continuous scale after the service provided
to evaluate the customer satisfaction or arrive at
the customer satisfaction index.
Additional information on customer satisfaction index
for consumer products and general services can be
found in
The American Customer Satisfaction Index (ACSI) website
(www.theacsi.org)
and the American Society for Quality
(www.asq.org)
website.
The
American Customer Satisfaction Index (ACSI is an economic
indicator that measures the satisfaction of
consumers across the U.S. It is produced by the National
Quality Research Center (NQRC).
The
ACSI interviews about 80,000 Americans annually and
asks about their satisfaction with the goods and services
they have consumed. Respondents are screened to cover
a wide range of business-to-consumer products and
services, including durable goods, services, non-durable
goods, local government services, Federal government
agencies, and so forth. Results from data collection
and analysis are released to the public each quarter.
The
information is used by academic researchers, corporations
and organizations, market analysts and investors,
industry trade associations, and consumers. For more
information see http://en.wikipedia.org/wiki/American_Customer_Satisfaction_Index
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| Question
4 |
| In
most cases a Project Manager will be assigned after
bagging a contract. In this case, should he or she again
do the Cost estimation and budgeting process? |
| |
| Answer
4 |
| The
answer to this question is mostly NO. The kind of situation,
as explained in the question,is deliberately created
by the senior management in a highly competitive field
in order to encourage internal competition and innovation
between the project marketing/tendering PM and the project
executing PM. Let us see why they do so.
Many performing organizations do not give an opportunity
to the executing PM to let his or her "should-cost"
estimate be the basis for executing the project, especially
when the project has been already bagged, as it would
mostly be substantially higher than the already bid/tendered
price. I am yet to come across a person who has told
the senior management that the bid price was very
comfortable and he or she would be able to execute/
complete the project well below the "budget given
to him or her".
The executing PMs tend to overestimate in order to
be "safe" while executing the project and
sometimes to prove that the marketing / tendering
PMs do not know the project job so well.Unfortunately,
the senior management has already bagged the contract
at a cut-throat competitive price. Hence, they insist
on sticking to the price already quoted by them and
expect the executing PM to find ways and means to
execute the project within the quoted price, ignoring
the executing PM's new estimate.
Surprisingly, many executing PMs,in the past, have
completed the project/contract within the so called
"under-bid price" by adopting innovative
techniques of execution, new cost-control measures,
efficient project/people/risk management techniques,
etc thereby eventually justifying the senior management's
stand that the so called "under-bid price"
was actually "sufficient" for the project.
In a highly competitive field, senior management will
be mostly of risk-seeking nature in bagging contracts
even at a price lower than the “should-cost” price
to just keep the company floating and to encourage
adoption of innovative techniques by the executing
PM. Senior management knows that "necessity is
the mother of invention". Surprisingly, the executing
PMs do come with innovative methods to finish "their
projects" on time and within the (insufficient)
budget. In such cases, the efficient performance of
the current executing PM becomes a stumbling block
for the next executing PM who also has to now execute
a project that has been bagged at a "low price"
on time-within budget. This situation automatically
forces the executing PM to protest that the bid price
was "too low" and so he or she can not execute
the project unless a new estimate or budget is prepared
by him or her.
Thus, the cycle of “reduce price to get contract and
innovate new execution/ design methods to be within
the reduced price” goes on until a radical design
comes out.
|
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| Question
5 |
|
I've
been hearing a lot about e-Procurement systems and
how they can save significant amounts. Have these
systems been used on construction projects? If so,
what are the results?
|
| Answer
5 |
| E-Procurement
is a comprehensive e-infrastructure that will help the
government and the citizens realize the vision of fuelling
growth via profitable B2B e-commerce. Providing a robust,
proven platform used by the largest companies in India
and the world, it enables trade between companies of
different sizes, platforms and locations.
The
services provided through E-procurement generally
are eTendering, eSelling and eAuctions.
The
eProcurement platform provides its members with access
to several trading suppliers. Eprocurement Auction
Services offers government departments easy-to-use,
web-based solutions for conducting dynamic exchanges
in an on-line environment. It provides real-time bidding
solutions for buyers and sellers that bring an unprecedented
level of profitability, control, and simplicity to
corporate procurement and liquidation processes.
The
benefits of e-Procurement are as follows:
• Free, Fair and Fearless participation of Vendors
• Cartel formation can be arrested
• Greater transparency in procurement
• Eliminates procurement cost difference between various
government wings/corporate
• Better Response, Increased Visibility
• Vendors can participate anytime – even on holidays
• Eliminates the limitation of distance
• Very cost effective compared to conventional tendering
• Shortens the procurement cycle drastically
• Lesser hassle of communication and administration
• Increased savings due to better competition and
other miscellaneous like stationary, publishing in
newspapers,
less manpower etc.
E-Procurement
has been adopted by many Government departments/Corporate
as their mode of procurement and they have saved considerable
amount of money.
How
it works
A
PKI (public key infrastructure) enables users of a
basically unsecured public network such as the Internet
to securely and privately exchange data and money
through the use of a public and a private cryptographic
key pair
that is obtained and shared through a trusted authority.
The public key infrastructure provides for a digital
certificate that can identify an individual or an
organization and directory services that can store
and, when necessary, revoke the certificates. A public
key infrastructure consists of
•
A certificate authority (CA) that issues and verifies
digital certificate. A certificate includes the public
key or
information about the public key
• A registration authority (RA) that acts as the verifier
for the certificate authority before a digital certificate
is issued
to a requestor
• One or more directories where the certificates (with
their public keys) are held
• A certificate management system
For
more information on e procurement, reader can visit
the following websites:
www.dgsnd.gov.in/e-tendering.htm
www.abcprocure.com/
www.eprocurement.gov.in/
https://tender.eprocurement.gov.in/
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| Question
6 |
| There
are projects; big and small. For big projects there
is no particular problem, the PMBOK®
Guide is the backbone to follow - initiating through
closing process groups. But, with regard to the small
projects (may be less than a year), it can represent
a considerable volume for one year. How, then, to manage
such small projects? Is there a methodology, a process
and/or a toolbox to consult for managing such small
projects? |
| Answer
6 |
| The
experts, in general, are of the opinion that the PMBOK®
Guide can be used for both small projects and large
projects as well. However, the PMBOK®
Guide clearly states (on the 3rd page) that “PMBOK®
Guide describes good practices and good practice does
not mean that the knowledge described should always
be applied uniformly on all projects; the project management
team is responsible for determining what is appropriate
for any given project”.
It
means, the project management team, after making the
detailed scope statement, can discuss with the key
stakeholders of the project ( say, sponsor or owner,
senior management, project manager, consultant, technical
lead, etc) as to what knowledge areas and what processes
are needed to be used in the project as a minimum
and what all can be skipped due to the size of the
project or otherwise. Again, if it is a small in-house
project,the project management strategy will be different
and if it is a small but third-party project, then
project management strategy will be yet different.
For example, for a small in-house project, the need
for external procurement or outsourcing may be very
less and for such projects, the procurement knowledge
area and its processes may be skipped totally or partially
depending on the contractual terms and the enterprise
environmental factor like organization’s culture.
There
is a book about managing small and big projects called
"Managing Projects Large and Small: The
fundamental skills for delivering on budgetand on
time" by Harvard Business school publishing
ISBN: 978-159-139-3214.
The
Construction Industry Institute (CII) (www.construction-institiute.org)
website for has lots of books / resources on Small
Projects execution.
Please
visit this link for Small Project Execution.
Small
Projects Toolkit :Implementation Resource 161-2, July
2001 Small Project Execution: RS161-1 , Research Summary
161-1, November 2001 Manual for Small (Special) Project
Management- SP13.
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| Question
7 |
| Should
a project be allowed to be exist in several programs
or portfolios at once? What issues does this cause? |
| Answer
7 |
| The
Answer is NO! A project MUST be managed within one,
and only one, program or portfolio. A duplication will
only lead to chaos, non-performance, and finger pointing
as to who is at fault. Responsibility must not be divided.
Single responsibilty is a basic management tenent. |
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