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PROJECT MANAGEMENT IN THE CONSTRUCTION INDUSTRY: OVERVIEW AND ADVANCEMENTS

As defined in the PMBOK® Guide, “project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.” These same components and processes apply in construction, with additional practices to deliver an end product that is functional and meets stakeholder needs. It uses the same Process Groups and is characterized by similar interactions among the groups and processes. Section 3 introduces the practitioner to the Knowledge Areas and Process Groups, and offers an overview of some advances in technology and management techniques that make project management unique in the construction environment.

3.1 Project Management Knowledge Areas, Process Groups, and Processes

The most commonly applied project management methods and processes in the construction industry use generally recognized good practices that are applicable to most projects most of the time. It is the application of these practices, however, that makes this industry unique.

The Knowledge Areas in the PMBOK® Guide are applicable to construction projects, albeit with modifications to address the unique attributes, practices, and applications across the Process Groups and Knowledge Areas. Actions derived from these Knowledge Areas are applied to the construction project at each distinct project phase.

This Construction Extension introduces two additional Knowledge Areas that are applicable to construction projects:

• Project Health, Safety, Security, and Environmental (HSSE) Management; and
• Project Financial Management.

It is important to note that the project manager in construction is responsible for recognizing not only what the project owner needs, but also how common practices and specific construction applications should be applied. Table 3-1 maps the Process Groups against the Knowledge Areas to assist the practitioner with this responsibility.

Sections 3.1.1 to 3.1.12 introduce the Knowledge Areas as they relate to construction projects.

3.1.1Project Integration Management

Project Integration Management in construction is uniquely positioned to address fast-paced, time-sensitive, and cost-sensitive projects. The project complexity, stakeholder challenges, and geographically and culturally imposed constraints when combined with project funding, intricate procurement processes, and the management of risk, contribute to the imperative need of integrating these efforts. This Knowledge Area is most suited to incorporate a holistic approach for the construction project. Construction project management's core function is integration, that is, avoiding discrepancies between the various technical and support disciplines. Project Integration Management begins at the project's front end, when an owner makes a business decision to renovate an existing facility or build a new one. Many of the processes that would typically begin when the project is chartered now play a much larger role for the owner. The procurement and engagement of performing organizations begins immediately with the owner's need to acquire the special expertise to plan, develop, design, and construct the project.

The planning and executing activities, along with processes of all Knowledge Areas including project financing, may utilize different design and construction life cycles, which add complexity to the delivery of construction projects. Contract clauses may describe extensive progress and performance reporting requirements that enhance the level of detail and accuracy needed for monitoring and controlling during project execution. Changes are often considered inevitable in construction; thus, the focus on integrated change control is a significant contractual process. Inadequate management of this activity often leads to contract disputes.

3.1.2Project Scope Management

Project Scope Management for construction is an interesting but complex topic where the priorities vary depending upon which stakeholders are managing the project.

Project Scope Management begins early in the project life cycle and evolves constantly during the early stages. The Planning Process Group is of great significance as the ability to influence cost is greatest in the early stages of the project, which makes early scope definition critical. Stakeholder requirements as well as documents such as the contract, drawings, and specifications should be reviewed thoroughly in scope planning. A scope baseline should be created to aid in tracking and managing changes on a construction project.

The Monitoring and Controlling Process Group plays a pivotal role due to the potential for extensive changes on a construction project. These changes can quickly and easily derail a project in ways such as schedule slippage or cost overruns. Scope validation is an effective process integrated with scope control.

3.1.3Project Schedule Management

Project Schedule Management is critical for a successful project. Since construction is heavily dependent on time restrictions within contracts, there is an added emphasis on finishing the project within the allotted time frame. Schedule management plays a large role since a typical construction project often involves a large number of individual contracts (sellers) that are sequenced and coordinated over the project life cycle.

Since most construction projects emphasize finishing the project on time, and may instill monetary damages for late completion, Project Schedule Management has evolved into a very technical scheduling process. Careful detail is developed into the project schedule to identify delays, coupled with an accurate assessment of the source of the delay, so the responsibility can be assigned.

Project Schedule Management includes the processes required to manage the timely completion of the project. Planning is of key significance due to the inherent uncertainties involved in a construction project. In the Planning Process Group, activities are defined, activity sequencing is established, activity duration and resources are estimated, and activity weights are defined. The level of detail becomes important due to the multitude of stakeholders involved in a project. Many projects run the risk of not finishing on time due to ineffective schedule development and control.

The Monitoring and Controlling Process Group plays an important role in establishing mechanisms to signal deviations from the baseline and the need for preventive or corrective actions to get back on schedule. Integrated schedules pose unique challenges, but are critical for a successful project. Records, such as site diaries, are an important tool in schedule control.

3.1.4Project Cost Management

Project Cost Management is of vital importance to a construction project's success as it impacts the organization's profitability. Project Cost Management entails managing the day-to-day project costs and poses unique challenges due to the multitude of stakeholders. Estimating and budgeting occur within the Planning Process Group. Estimates are very important, because decisions to proceed with a project are based on cost estimates. Cost estimates vary depending on the size of construction projects, from a single-page high-level estimate to a detailed estimate containing thousands of line items. Risk analysis should be performed to develop project contingency. Most diagnosed risks in construction have a financial or cost impact.

The Monitoring and Controlling Process Group plays a pivotal role in improving cost predictability and containing costs. The construction industry is fragmented and many complex and ambitious megaprojects run the risk of project cost overruns due to ineffective cost control. Effective cost control techniques may differ on projects, depending on the project contracting strategy. A critical success factor (CSF) in cost control is having an integrated change management plan. Actual costs provide a snapshot of the current expenditure of a project, while forecasting provides an indication of whether the project is on budget or not.

3.1.5Project Quality Management

Project Quality Management seeks to satisfy the owner's needs as outlined in the contract requirements and specifications. It is integral to risk, safety, and environmental management, and applies to all attributes of project management. For construction projects, Project Quality Management manages both the process and the product. Project Quality Management is critical to all projects, with critical impacts to construction projects.

The Planning Process Group reviews construction-specific documents that outline quality standards that are required to be met for the project to be successful, including contracts, construction documents, and specifications.

The Executing Process Group discusses quality compliance audits and quality technical audits that may require licensed or certified professionals to achieve project requirements and objectives.

The Monitoring and Controlling Process Group for construction projects may include conformance reports to validate quality or require rework. Rework can have a significant impact on a project's cost and schedule. The sooner nonconforming work is identified, the lesser the impact, and the sooner preventive actions can be established to eliminate nonconformance. Preventive measures should be established in the planning phase to address known risks pertaining to nonconformance.

3.1.6Project Resources Management

Construction projects utilize a variety of resources, such as human resources, machinery and tools, equipment and bulk materials, and others. Factors such as project site location, type, and size should be taken into account when mobilizing, utilizing, and demobilizing resources.

Project Resources Management includes aspects such as acquiring, handling, storing, and monitoring validity terms for particular goods, as well as staffing, team building, and honing interpersonal skills.

The human resources who manage and execute project activities manipulate other resources in order to build the product of the project. The volume of resources required and the time required for their manipulation are key factors for achieving time and cost objectives. Thus, productivity rates and resource consumption rates are planned and actively monitored and controlled.

When the project reaches the end phase, all remaining resources—people, equipment, and materials—are demobilized. The demobilization phase can be expensive and time-consuming. When not taken into account during the early stages of project time and cost planning, demobilization can turn a project result from success into failure from a business point of view.

3.1.7Project Communications Management

The efficiency and effectiveness of the construction process strongly depend on the opportunity for, and quality of, communications. Section 10 on Project Communications Management highlights the complexity and diversity of communications in construction environments; describes the different levels of communications that usually operate within the construction environment; distinguishes the different types and channels of communications, communication networks, and media; identifies communication challenges and corporate concerns; and provides additional industry-specific guidelines for managing construction project communications.

Forming part of the Planning Process Group activities, planning project communications is important to the success of the project. Communication planning should be performed in the earliest project phases in design and construction projects. This section complements the PMBOK® Guide with additional considerations on the contract documents and project documentation assessment. Some of the major considerations in communication planning include determining how requests for information (RFIs) should be handled and identifying what information should be conveyed to the stakeholders and how.

When performing Project Communications Management, the Executing Process Group and Monitoring and Controlling Process Group activities help to ensure the effective and efficient generation and distribution of information.

3.1.8Project Risk Management

Project Risk Management in construction deals with the possibility of positive and negative events arising between others from the design and construction process, the interests of various project stakeholders, and project context. When performing risk management in construction, conditions may involve unique situations regarding stakeholders, international law, or international financial institutions (e.g., projects developed under collaborative construction project arrangements, public-private partnerships, or international construction projects). Risk response planning in construction projects is a more complex process because of the involvement of subcontractors. One major industry-specific characteristic of construction projects is the intensive use of insurance products as a principal risk transfer instrument to handle some of the liabilities. All organizations, individuals, or parties directly or indirectly involved with the project should evaluate and decide upon appropriate insurance policies for their circumstances. Insurance in construction projects discussed in this section provides a global view of the major insurance products available in the market.

Risk monitoring and control as part of the Monitoring and Controlling Process Group should be developed proactively and continually during the project life cycle, particularly for large construction projects or those in dynamic environments.

3.1.9Project Procurement Management

Construction projects are almost entirely based on the procurement of contractual arrangements between the multitude of sellers and buyers, and include the procurement of capital and project equipment and materials. The construction of a new home may only have one or two contracts in place; however, on large projects there may be thousands of contracts. Either way, Project Procurement Management focuses on planning and executing well-defined contract agreements for specific scopes of work throughout the project life cycle. Care is needed to ensure that the proper material and equipment is delivered in a timely fashion. Planning and executing for the procurement effort in many situations will overlap with project initiating processes in order to assist the owner with the preliminary scope definition and development activities. The results from this effort lead to all other procurement for engineering, design services, and construction work, for the purpose of moving contractors, suppliers, and consultants toward achieving the owner's objectives.

The basic foundation that all projects are unique is especially true in construction and extends to the various project delivery methods and contract arrangements. Special attention is needed during planning and executing of the procurement contracts to ensure that the correct expertise and skills for the design and construction of highly integrated components are satisfied. When coupled with the large number of contractors required to perform the work, the expertise for contract administration and management quickly become the controlling factors for a successful project. Interpreting and understanding general and special conditions within contracts, procurement documents, and associated reporting requirements are a vital contract administration function.

In the Closing Process Group, as construction draws to an end, deliverables in all contracts are validated and all outstanding change requests, progress payments, and potential disputes are settled.

3.1.10Project Stakeholder Management

The unique characteristics of construction projects influence the number, type, and roles of project stakeholders. Section 2.2 provides an overview of the stakeholders that could be involved in a construction project. Section 13 categorizes stakeholders, which may be useful when managing them. Those categorizations are approached in the Initiating Process Group.

The Planning Process Group discusses the relationships among the stakeholders in a construction project that are developed with regard to contractual provisions or other formal documents. Division of responsibilities is considered, and impacts on communications are included in the project communication plan.

The Executing Process Group emphasizes the relationships between project stakeholders and the importance of the interpersonal skills of project team members when managing stakeholder engagement.

The Monitoring and Controlling Process Group addresses the temporary nature of some stakeholders’ representatives and the resulting need to monitor the process for their replacement.

3.1.11Project Health, Safety, Security, and Environmental Management (HSSE)

This section emphasizes health, safety, security, and environmental management for construction projects. Site security and controlled access are discussed for construction job sites. Employee health and wellness are introduced for construction personnel as these directly affect construction project risk and safety. Trends include virtual technology and environmental certifications.

While HSSE is applicable to all industries, the unique hazards in construction projects intensify the need for additional measures. The Planning Process Group includes a proactive view of health, safety, and environmental policy compliance. In addition to employee health and site security, a comprehensive health, safety, and environmental management plan is developed to address specialized stakeholders, reporting requirements, documentation and record storage requirements, training, and additional government requirements.

The Executing Process Group involves the systematic application of the health, safety, security, and environmental plans, while the Monitoring and Controlling Process Group focuses on employing a method of audits, analyses, and measurements to determine the effectiveness of the established plans for meeting regulatory and project requirements.

3.1.12Project Financial Management

Project Financial Management covers important aspects and considerations with an explanation of industry-specific documents, tools, and techniques to better understand and navigate the financial decisions of construction projects.

Project managers in construction should have a basic knowledge of project financial and accounting systems; be able to record and summarize project financial transactions; analyze, verify, and report the results; and provide financial cash forecasts as needed.

In the Planning Process Group, financial planning as a construction-specific activity covers the alternatives that may be used for the financial planning of a construction project. Guidelines are offered for identifying the financial requirements for construction projects, contract requirements, risk allocation, and tax planning.

Financial control in the Monitoring and Controlling Process Group is executed in the most effective way to ensure all items are within budget and aligned with the financial cash forecast. Effective financial monitoring and control is achieved when project progress reports are distributed regularly. Financial reports, financial internal and external audits, and project accounting systems are important topics discussed in this section.

3.2 Advances and Societal Influences in Construction Project Management

3.2.1Advances

The construction industry is evolving due to advances in technology, management techniques, and project delivery methods. The following advances in the construction industry are not necessarily new, but their use is becoming more prevalent.

3.2.1.1Technology

The modern job site offers a technologically connected collaborative work environment in terms of communication and information workflow. The following are a few examples of new technology:

• Machines equipped with geospatial positioning, sensing, and measurement equipment that offer real-time data for machine diagnostics, real-time work progress monitoring, and project site security.
• Sensors monitor embankments to predict landslides, measure structural deformation in nuclear facilities, and predict failure in tunnels and bridges.
• Centralized web-based and cloud-based construction document management systems monitor all data exchanges and ensure the effective flow of information.
• Construction collaboration technologies (CCT) software that enables geographically dispersed, fragmented, multidisciplinary, and multiorganizational project team members to share data through central repositories.
• Mobile technology (e.g., data-capable mobile, portable, and connected hardware, and wireless networks) and mobile apps facilitate project team connectivity by providing two-way access to real-time project information.
• 3-D printing technologies that create faster and more accurate three-dimensional components for use in the construction process. Through 3-D printing labor costs and waste can be reduced, and dangerous—not suitable for human workforce—environment construction can be undertaken.
• Unmanned aerial vehicles (UAVs) or drone technology equipped with high-definition video cameras used for land surveys, high-resolution geomorphology maps, construction site monitoring, progress reporting, and inspection while offering access to new perspectives, hard-to-reach spots, and higher elevations.
• Streaming digital video through extranet or internet facilitates real-time remote access viewing of construction sites.
• Sophisticated software animation, such as walk-through or fly-through aerial display animation, allows owners and clients to view the product virtually.

3.2.1.2Building Information Modeling (BIM)

Building information modeling (BIM) is an information-based system of processes involving the generation and management of digital representations of physical and functional characteristics of construction projects creating long-term value and enhancing the possibility of innovation. It improves how projects are designed and built, and benefits many areas of construction. BIM makes possible the distribution of information to all stakeholders for the duration of the project life cycle. It provides the means to construct complete virtual prototypes before actual construction takes place.

3.2.1.3Modern Methods of Construction

Prefabrication and modularization are not new activities to construction professionals; however, they are becoming more prevalent as key drivers to improve construction industry productivity through greater efficiencies. Modern technology is used by owners to reduce costs and compress schedules by transferring expensive onsite labor to offsite facilities and building in-house under a controlled environment. Quality and safety are also a big consideration in transferring onsite activities to offsite locations.

Modularization facilities typically follow manufacturing processes under controlled conditions where worker productivity is not impacted by external conditions such as weather, quality is better controlled, and workplace safety is better managed as compared to a construction site.

3.2.1.4Emerging Management Techniques: Alternative Project Delivery Methods, Integrated Project Delivery (IPD), Lean, and Agile

The increasing complexities of construction work and construction management processes have resulted in the development of new management techniques with the aim to improve project performance.

Integrated project delivery (IPD) is a collaborative approach for design and construction. The vision of IPD is a project team that is not partitioned by economic self-interest or contractual silos of responsibility, but rather is a collection of key stakeholders—primarily owner, architect, and contractor—with a mutual responsibility to help one another meet an owner's goals of maximizing efficiency through all project phases. Most of the fragmented practices and adversarial relationships common in the industry may be appreciably reduced through the use of IPD. IPD is quickly moving toward the preferred practice for project cost efficiency and is further enhanced by the incorporation of BIM.

Alternative project delivery methods are becoming more prevalent in the construction industry as a response to the need to improve efficiency and profitability, and many of them use an IPD approach. A few examples are:

• Design-build,
• Public-private partnerships (PPPs), and
• Multinational joint ventures.

Both lean and agile management approaches are beginning to create cost and time efficiencies with tools and materials, construction operation sequencing, and safer job sites. The goals of lean construction are to minimize waste on site, keep work flowing so that construction crews are always productive, reduce inventory of materials and fixtures, and reduce costs by adaptive, efficient processes. Agile management approaches when applied to construction projects offer additional abilities to deal with change.

3.2.2Societal Influences in Construction

The construction industry is dealing with many challenges that may have long-term impacts on the well-being of the industry. The following are a few examples.

3.2.2.1Sustainability and Social Responsibility

The society at large is becoming increasingly aware of, and active in, matters affecting climate change, environmental preservation, and respect for diversity. With regard to global climate, urban and rural populations, and impacts on natural resources, developing new project innovations and infrastructure solutions is a challenge for the construction industry. Construction projects are affected by policies that drive regulations for clean air, clean oceans, and clean habitats but also drive funding, resource exporting, technology sharing, and economics for developing countries.

3.2.2.2Skilled Human Resources

An evolving concern in the construction industry is the loss of skilled resources in the construction trades. New technologies in the industry require specialized training for the skilled worker in the use of equipment and tools and the assembly of materials, as well as for the construction management team in the planning and monitoring of the project. The Project Resources Management Knowledge Area is a crucial area of management for the construction practitioner. The practitioner's ability to acquire resources early and retain them during construction reduces the burden and risk of not meeting the project objectives.

3.2.2.3Global and Regional Recessions (Global Economies)

Construction organizations and consequently construction practitioners have to work and conduct a successful business through very lean economic times. Construction organizations may be faced with difficult decisions ranging from downsizing, selling assets, pursuing projects in unfamiliar communities, or even changing their service portfolio in search of new markets in which to conduct business. Coupled with these considerations are the industry sectors that also grow, shrink, or slowly morph to reflect the trends in the global environments.

3.2.2.4Global Markets and Future Projects

The prevalence of global trade and emerging economies, technologies, innovations, and new discoveries are taking the construction industry to global locations and places previously unknown to the construction practitioner. A project like the Panama Canal expansion is not only big, but it is expected to create and influence the entire region. Regional effects due to the changing climate and environmental conditions (e.g., water and other natural resources) are shifting design and engineering innovations to attain project requirements seldom contemplated in recent years. The capability to perform on these projects is a challenge to the organizations not only in having the proper human resources for the technical aspects but also the logistical, financial, ethical, and management capabilities.

3.2.2.5Ethics

There is a growing focus on compliance with professional codes of ethics on construction projects, in particular with the Code of Ethics and Professional Conduct [2], which is the responsibility of the project management professional and practitioner. Organizational enablers that can contribute to this compliance are leadership, policy, and strategy; internal processes; and the employees of the construction organization.

The promotion of ethics, integrity, and transparency in construction projects (especially in public projects) through the development of an integrity management plan has been a prerequisite in some countries as a part of their anticorruption strategy.