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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.
Be sure to include your name and contact information in the email.


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

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.

 
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.

 
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

 
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.

 
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/

 
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.

 
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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