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October 2008 >>
Project Management Solutions Offer Competitive Advantage
It’s no surprise that project-based organizations across several infrastructure-intensive industries are pushing for cost savings and streamlined business processes—particularly as capital building and construction programs grow in size and complexity. Market dynamics like green building and building information modeling, combined with the need for increased construction document control, make it clear why all capital projects must have some formal project management (PM) system in place.
According to a recent study by management consulting firm FMI, using a formal PM software solution clearly influences a company’s success. The most common challenges firms look to overcome by implementing a formal PM solution are a lack of document control and the need to standardize project management practices across organizations.
In the study, "Utilizing Construction Project Management Technology to Create Best in Class Organizations," FMI surveyed construction firms and building owners and concluded using PM software increased project controls, improved visibility and standardized operational processes. In fact, organizations experienced tangible return on investment metrics and business value, reporting average annual savings of $230,000. (Some organizations reported annual savings of more than $1 million.) Annual cost savings increased each year the PM system was used.
Overall, companies with PM systems in place experienced overall improvement in project controls due to better communication. More than 80 percent cited contract and change management and document management as the most widely used and beneficial functions in their system. Implementing PM software to create one system of record for capital project data also enables project stakeholders to evaluate project and program performance in real time.
In addition to the aggregated survey data, FMI interviewed a few of the industry’s leading public and private firms to gain insight into how PM solutions influence their corporate success.
According to St. Louis–based Alberici Corporation, the reduced risk exposure was a benefit of having a PM system in place. Brooks Williams, director of project controls, believes a PM system is a requirement.
“We couldn’t compete without it. Our clients realize the benefit of a contractor that has the communication and controls systems in place. It provides peace of mind,” Williams says.
CB Richard Ellis (CBRE), a global real estate firm, noted in addition to increased project control and reduced risk exposure, the company believes a PM system aids its business development efforts and client management.
“The fact that we have what we consider to be the best in class [capital project management software solution] available to our clients is a large part of our business development model. Our clients expect this of us,” says John Whitt, CBRE’s product management director.
The Haskell Company’s benefits of using PM software include greater visibility into projects, more controlled project response and lower operating costs. Although the exact return on investment is unknown, Susan McDowell, who manages Haskell’s technology applications, says, “It does save us money. Because it is web-enabled, this works even for our people who aren’t in the home office. It would be much larger of a capital expense if we were trying to run something ourselves in-house.”
Since switching PM systems, the Illinois Tollway project has realized several system benefits, including reduced turnaround time on communications and approvals, and improved access to project paperwork and forms. On the Tollway project, the web-based system has become effective for communicating messages to the project teams. RFIs and issues resolution have gone from multiple weeks to a few days.
Minneapolis-based Ryan Companies’ PM system’s ability to standardize project management processes across the organization has led to improved work consistency and staff productivity. “The ease of use for end users is very important,” says Mike Ernst, Ryan’s ERP project director.
Additionally, estimating the precise annual dollar savings of implementing a formal capital PM solution can be difficult. However, Ryan has been able to capture some of these savings. “We have noticed a reduction in hard costs on plan printing,” Ernst says. “On one job, we are going to save $20,000 to $25,000.”
Beyond that, Ernst has even bigger goals. “We are trying to accomplish $3.1 million annually in cost avoidance over the next three years.”
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Friday, September 3, 2010