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Some Red-Flag Comments from Owners / Developers 
on their way to
Mediocre Project Performance
By:
Dr. J. Gordon Davis, Ph.D., P.E.
C.E.O., Davis Consulting Group

As project management consultants to Owners, Developers, Architects and Engineering firms, Contractors, and Subcontractors, we have clearly seen the value of having these members of the project function in a true team relationship. Someone has to make this "Team" Structure come into being and provide the leadership to keep it functioning effectively. This someone should be the Developer. (Hereafter, the term Owner/Developer will be used to denote both the Owner functioning as his own Developer and the Developer with an Owner client).

If the Owner/Developer fails to create and manage a team approach to the project, he is passing up his best means of having a truly successful project outcome. That is not to say that the project will not be completed or even that it won’t make a profit. But what is lost is almost certainly many times more than it would have cost to provide strong leadership in team building and team management.

When discussing various elements of the Owner/Developer-led team approach with Owner/Developers, it is obvious that many of them are staking their project outcomes on misconceptions of what really happens on their projects. These misconceptions surface in comments such as the one below and others that we will focus on in the coming weeks. While no one of these positions is fatal, each is an indication of a weakness in that Owner/ Developer’s approach to project management. Most of them represent an effort to avoid exercising managerial control in the expectation that some other party will protect the Owner/Developer’s interest better than he can himself. We might as well send the rabbits to bring in the lettuce.

When the following comment is heard, you can expect that project success is at risk.......

Contracts are a necessary evil, necessary but not sufficient to define project team organization. Contracts are pairwise, adversarial, somewhat negative starting points for building team relationships. What the Owner/Developer is really doing is building a one-time organization made up of diverse firms with quite different internal management policies and procedures. He is asking that this organization function as if it were a single experienced firm operating under a single, well-defined, management system. It is no wonder that so many communication and coordination problems occur in every development project.

The traditional organizational tree diagram does not really work very well even in a single organization to define operational relationships. For a multi-firm organization, it is even less useful. A big step forward in improving on the structuring of the project team is the Linear Responsibility Matrix. This fairly simple device provides a row on the matrix for each repetitive function, such as Process Pay Request or Issue Revised Drawing and each activity which cuts across firm lines. Each position represented on the project team is given a column on the matrix.

The cell at the intersection of a row (function) and column (position) is coded according to the involvement of that position in the carrying out of that function. Codes may be as extensive as desired, with such possibilities as:
A=Initiates Function,
B=Must be Consulted in Advance,
C=Receives Copy of Finished Product,
D=Must Approve Before Release, etc.

A typical Linear Responsibility Matrix will have 10 - 20 codes developed.

Such a device allows the project team to document all relationships which it decides are necessary to its effective operation. Some organizations set up the LRM as completely as possible in advance and modify it as experience dictates. This is a considerable effort but one which many users feel is well worth the price. Other organizations set up the LRM with positions and codes, but fill in functions or activities and the appropriate coding only as organizational problems arise and solutions are developed. For an Owner/Developer who is interested but wishes to test the LRM first, this latter method provides an inexpensive trial run.

The Owner/Developer who relies solely on contract language to define project team organization is assuring himself of paying a disorganization penalty. Regardless of the methodology adopted, time spent on detailing the relationships among the team members is highly likely to be cost effective.

Do you have a response, question, or comment regarding this week's topic? Use our feedback form or visit The Project Management Discussion Board and let us know what you think.

Next Week's Red-Flag Comment: “It is the Architect’s Responsibility To See That The Project Is Carried Out In A Timely Manner.”

Last Week:

 

"I Don't Want Any Change Orders on this Project."

 

If you don’t get any change orders on your project, you either took too long designing it or your pricing had so much fat in it that actual changes could be covered without reducing the Contractor’s overhead and profit line item amount. Change orders are a necessary and valuable means of moving a project forward while some uncertainties regarding design still exist. A budget line item of 1% - 3% for change orders is a reasonable way to acknowledge the likelihood of such changes and have the cushion to absorb them without having each C.O. be a budget bust.

While no one wants to pay for an unnecessary or overpriced C.O., an adversarial approach with prolonged reviews is likely to result in a deterioration in the team attitude which every Owner/Developer needs to take the lead in establishing and promoting. Prompt, decisive action on C.O.’s will usually require that the Owner/Developer not leave the matter solely up to the Architect. The Architect’s design role frequently puts him in an untenable position for judging the merits of a Contractor’s claim for added compensation and/or extension of completion time. The Owner /Developer who assumes no C.O.’s will be required, and who established no specific procedures in advance for processing C.O.’s is certain to be disappointed. He will either pay unknowingly for C.O. insurance through higher than necessary pricing or will find a growing area of controversy which diverts effort and enthusiasm from the major thrust of project completion.

Davis Consulting Group, Inc.

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1800 Peachtree St,  NE - Suite 350
Atlanta, Georgia 30309
Phone: 404-355-3233
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