July 29, 2010

Role of independent project management firms evolving

PETER KENTER

correspondent

Project managers may have been with us since the days when, legend has it, Moses was brought in to manage construction of projects in ancient Egypt. In an increasingly complex world, however, the role of independent project management firms is evolving.

A recent position paper presented to the Ottawa-area Building Industry Liaison–Designers, Contractors, and Owners (BILDCO) by the General Contractors Association of Ottawa (GCAO) identified concerns about the impact project management firms may be having on the industry.

“It was an accumulation of experiences that prompted us to write that paper, not one project,” says GCAO president Michael Assal.

“There’s no one body representing construction project managers that we can appeal to. The Project Management Institute represents a methodology, not construction project managers.”

In a recent bid, a project management firm asked GCAO members to take on risk outside of the standard contract document. Objections were raised with the project management firm that were not addressed before closing and the contractors chose to submit qualified competitive bids. The owner and project management firm canceled the bid, and proceeded to negotiate with each of the bidders, not the low bidder.

“When you work hard to establish a level playing field and rules everyone can live with, then introduce a lot of variables, you create mistrust,” says Assal.

At best, project managers working on behalf of owners are seen as efficient supervisors, offering expertise and ensuring that a project is completed on budget in a co-operative atmosphere.

At worst, they’re seen as inefficient middle managers, adding an expensive layer of supervision, forming a wall between owners and stakeholders, and identifying problems to justify their existence.

“Concerns about this issue aren’t just related to Ottawa or Ontario, but from coast to coast,” says Clive Thurston, president of the Ontario General Contractors Association.

“There are good, professional project management firms out there. But just because a company has identified itself as a project management firm, doesn’t mean it has the skills to handle construction project management.

Changing the relationship between stakeholders has consequences, and owners need to understand that procurement policies aren’t as messed-up as they’re being told.”

GCAO contractors, for example, report being asked to take responsibility for “unforeseen conditions” which are difficult to monetize.

“If owners are getting smarter and bring someone else to the table who can turn the tide in their favour, then the contractor should pony up to the table and negotiate,” says Doug Boebinger, president of Integrated Process Developers, Inc. of Plymouth, Mich. and project management trainer at universities across Canada. “However, if the risk is being transferred, it has to be something that the contractor can put a price on.”

Whether project management firms constitute an additional expense is debatable.

“It’s not an added expense, because, whether the project management is in-house or outsourced, the work still needs to be done,” says Cam Kourany, Senior Managing Director, Project Management Canada with CB Richard Ellis. “Owners consider it part of construction cost.”

Kourany notes that successful project managers foster co-operation between disciplines that are becoming increasingly isolated in their responsibilities. Traditional roles are changing, he argues, not because of project management, but because stakeholders are becoming more focused on their core expertise.

James Mansfield, an Associate with Kasian Architecture Ontario Inc., agrees. “Architects have taken on non-traditional roles in the past few years,” he says. “Now with design-builds, P3s and AFPs each project is unique and more convoluted. It’s not an architect’s role to provide those services. If ever there was a need for project managers, it’s now.”

But Assal notes that contractors are competent project managers when they’re asked to manage design-build projects. Likewise, he notes, that once the financing is in place, many architecture firms can manage the construction phase of a project on behalf of the owner, depending on the size of the project.

Some stakeholders hearken back to the day when they could speak directly to the owner.

“Everyone likes to have face time with the boss,” says Boebinger. “What some owners may not tell you is that they use project managers because they don’t want to deal with every little problem that comes up.”

Kourany notes that in successfully managed projects, owners are clear on the authority invested in project managers.

“That may not provide all the answers, but scheduled meetings between the stakeholders and the owner can deal with the remaining issues,” he says. “Less experienced project managers may believe that controlling the relationship with the owner puts them in a better position. Likewise, if a project management company justifies its cost on the number of problems it can identify to owners, it’s on the wrong track. Nobody makes themselves look good by making others look bad.”

Choosing a good project manager may also be essential to receiving quality bids.

“If you’re dealing with a firm that displays sheer arrogance when there’s lots of work in the market, you’re going to get fewer bidders and higher prices,” notes Thurston.

Stephen Bauld, President and CEO of Purchasing Consultants International Inc. says that poorly written contracts also tend to exacerbate difficulties in managed projects.

“A good document doesn’t guarantee a perfect project, but I guarantee that a bad document will end in a bad result,” he says. “If roles are unclear and stakeholders are fighting, the project manager has to take the side of the person paying them.”

Bauld notes that government owners may have unique reasons to engage project managers.

“They rarely have available staff and they can’t negotiate the way a private owner does, so a project manager can give them a little latitude in getting things done,” he says.

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