Changes to large-scale projects in the engineering and construction industry are inevitable—and oftentimes, it is how firms and project owners deal with these changes that determine the overall success or failure of a project.
Understanding that the risk of change cannot be completely avoided due to the thousands of internal and external factors that affect budget, scope and schedule predictions, business leaders can minimize risk by being more proactive and transparent.
To improve project and construction execution, companies are focusing on strategies to help better manage change and reduce risk, especially given the increasing pressure to deliver projects more quickly. Two areas are garnering newfound attention in this quest:
- precise, integrated project planning; and
- collaborative relationships among project sponsors, engineering and construction firms, and their network of subcontractors and consultants.
Enterprise project portfolio management (EPPM) methodologies and tools play an increasingly vital role in both areas.
EMPOWER EVERYONE WITH ACCESS AND AWARENESS
Even in the most well-designed projects, changes can be nearly impossible to predict. Materials costs, labor shortages, unanticipated weather conditions and shifts in regulatory requirements are just a few examples. And, the larger the project, the more complicated it becomes to predict and manage these risks. Therefore, project leaders must create strategies to adapt to change with the goal of delivering the project within the set scope, timeline and budget.
This is easier said than done. An Economist Intelligence Unit survey sponsored by Oracle revealed that roughly half of respondents (both project owners and leaders) rank their organizations as average or below average at anticipating change (55 percent), measuring the impact of change after it is implemented (55 percent), making contingency plans to accommodate potential change (51 percent) and conducting a risk analysis of the change (48 percent).
Further, the only areas in which respondents showed some confidence is in assessing the feasibility of implementing a change and its likely cost, which 60 percent say they do effectively.
The data underscore that project owners are willing to spend extra time and money to get a project done right, but predicting how much time or money it will take to achieve their goals is an uncertain process. Until they improve their tracking and change management processes, they are likely to continue to incur added cost and time when changes occur.
With a proper EPPM strategy, all project elements are managed in one place, including resources, budget, facilities, supply chain and risk. When project financials are integrated with product delivery and controls, organizations can create more detailed budgeting and forecasting, which in turn reduces project risk.
More importantly, having everything in one place means that project elements are available to all of the stakeholders in the project value chain. This enables closer collaboration, information-sharing and better change management.
IT ALL STARTS WITH COMMUNICATION
While all parties in the construction ecosystem can better manage risk by having information in one place, it can be a struggle to get that information in the first place. Often, transparency and trust is lacking between project owners and their partners or trade contractors. In turn, this can lead to disputes, which can result in schedule and budget overruns.
To avoid unplanned change, engineering and construction firms need to enable the project lead to establish and maintain strong lines of communication flowing in both directions. This collaborative relationship should be defined at the start of the project, leveraging EPPM as the foundation.
Using EPPM methodologies, project managers can accomplish the following:
- involve contractors earlier in the planning and design process, and identify potential problems in earlier stages of the project when they are easier to fix;
- enable greater visibility into resource demand and capacity while helping project leaders communicate requirements and decisions throughout a project’s life cycle, offering a glimpse of possible unforeseen resource limitations;
- facilitate activity status, budget and cost information-sharing to help all stakeholders remain informed and vested in the project and its progress; and
- clearly define goals during planning, communicate with contractors, and conduct frequent progress reviews with all stakeholders using interactive dashboards, web applications and simple forms to consume role-specific information.
Change cannot be completely avoided, but its impact on the project can be minimized by defining a clear plan of action before a project begins; building strong, integrated lines of communication; and continuously assessing progress and emerging threats. By working together as a team and clearly defining goals and strategies for project delivery from the outset, project leaders and contractors can spot unexpected issues sooner to devise solutions that keep projects on track.
Instead of disregarding change, embrace it. With thorough planning and collaborative contractor relationships, owners experience projects that might not have the same planned steps, but do have planned outcomes.