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5 Things to Know Before Hiring a Construction Project Manager, by Corinne Maddox,CCM, CFM (as appeared in the Houston Business Journal)

This is a true story: After months into construction of a small retail building, the owner, acting as his own project manager, began receiving calls from his general contractor's subcontractors indicating that they had not been paid. After weeks of stalling by the general contractor, the owner learned the contractor had used payments for the expenses of another project. Quality of the work was poor, and the owner later learned there were building code violations. To make matters worse, the contractor had actually completed far less work than was indicated on his invoices. The contractor eventually abandoned the job, and the owner, architect, general contractor and subcontractors became entangled in lawsuits. In the end, the owner was forced to pay for building corrections, subcontractors, suppliers and legal fees and was not able to recover the money he had paid to the general contractor. Unfortunately, this is not an unusual story. Significant financial, contracting, regulatory and litigation risks have created a need for professional project managers to represent the owner's interests. If an owner's project manager lacks the proper training, tools and experience, it is at risk for substantial losses. Project management of commercial and institutional facilities projects has evolved into a professional specialty in the past 15 years in response to the increasing complexity and sophistication of design, construction and occupancy related disciplines.

John Cryer III, AIA, principal/CEO of PageSoutherlandPage, a globally-recognized Houston architectural and engineering firm, estimates that half of the companies involved in construction projects are outsourcing to third-party project management firms. "As today's companies are constantly growing, changing shape and looking for ways to maximize efficiencies and minimize costs in their facilities, the need for skilled project managers is growing as well," he says. "The growth of third-party project management has expanded and continues to expand since the cost of maintaining an in-house staff adds to a company's overhead cost."

An owner should know some particulars before hiring a project management consultant:

What does a professional project manager do? Beyond simply coordinating construction activities, project management professionals apply management techniques to all phases of a project for the purpose of controlling project costs, schedules, quality and safety. They assist owners in defining the project and selecting the best delivery method. They administer bids and contracts for dozens of consultants, contractors and vendors, obtaining the most favorable terms. They develop and manage budgets and schedules, and monitor design and construction for compliance with contract documents and owner objectives. One of the most important roles is to orchestrate the diverse project team and motivate them to achieve their best work.

Do all projects need a professional project manager? The higher the project cost and complexity, and the more challenging the schedule, the more value a professional can bring to the project. An owner should carefully consider its in-house resources:
  • Do staff members have the required project management skills?
  • Is their experience in projects of similar size and scope?
  • Are those individuals available at the required time and location?
  • Who will handle their normal workload?
  • What project management systems are in place?
Many large corporations turn to outside consultants for projects of all sizes. For example, BP's Global Property Management and Services organization has increased the use of outside consultants to manage all projects in their commercial office buildings, says Chuck Cervas, Projects Director of Design and Construction, Americas and Caribbean for BP in Houston. A major advantage of outsourcing, according to Cervas is that "It allows property management employees to focus on core business deliverables while relying on expert project management consultants for tactical delivery." BP also uses external consultants to "staff projects, leverage third-party experience and create business opportunities" in many countries in which it operates.

"Staffing requirements vary as more or less capital is available for commercial office projects," Cervas notes. "This variability requires a high degree of flexibility to support the ebb and flow of projects and is most easily accomplished through external consultants." He adds, "BP relies on continuous improvement and lessons learned to enhance its project delivery year on year. External consultants bring their experiences to enhance this delivery." He also notes that "project management firms also have back-office services such as project estimating that can be deployed to support specific projects. There was a time when BP managed its projects internally, but today it takes advantage of the skills of its consultants in delivering the best-in-class projects."

Do all project managers offer the same services? There are wide variations in project management services. Some project managers provide only construction phase services, and others add limited design phase services such as cost estimating and plan reviews. Some utilize an "ad hoc" approach without formal schedules, formal contracting techniques, or cost management tools. Some firms manage a project with a structured team of specialists, while others may assign a single project manager 10 to 15 projects. Many firms have just one project manager who manages the total volume of work for that office.

Well developed consulting firms maintain a diverse staff of professionals, a standardized approach, and a wide range of tools and techniques. Full-service firms have the capability to manage a project from conception to occupancy, including pre-design planning, technology, furniture and move management. An owner should clarify the level of services, activities in each phase, time commitment, products and work samples of project management candidates.

What is the process for hiring a project management consultant? The selection process begins with a review of basic qualifications of candidate firms. After providing firms with a project description and scope of work, the owner should request a technical proposal to include the candidate's proposed team, detailed services, approach to the project and their project management experience. Questions should include: What is the time commitment and current workload of proposed team members? Are they local or is travel required? What are some samples of project management tools and products?

Because fees vary greatly depending on the level of services provided, it is best to evaluate service options and needs before selecting a firm based on the low fee. Fees may be in the form of hourly billing rates, a fixed price, a percentage of project costs, or as a cost per square foot. Standard landlord leases often include a fee for construction services offered by the landlord. This service is usually negotiable and may be applied to a consultant selected by the tenant.

When should a project manager be engaged? A project management professional can add great value early in the project. For example, prior to a lease agreement, opportunities exist to reduce project costs by 30 percent or more by minimizing square footage, selecting the best delivery method, developing and managing a comprehensive budget and schedule, identifying lower cost design solutions and applying best practices to achieve the optimum consultant and contractor contract terms.

A project management professional can help the owner achieve a higher quality product, in a shorter timeframe, for the lowest possible cost. At the same time, a project management professional can reduce the owner's level of stress and risk, helping to assure that the owner's goals and objectives are met.

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