Running a Project on a Shoestring Budget

The post is made possible by the great people at Seavus, creators of online Project Management tools such as ProjectOffice.net, Project Viewer, and Project Planner.  Please visit their site for more information.

If you’re working in a large corporation with a very professional PMO already in place and a handsome budget set for the project you’ve just acquired, then this article is probably not for you.

Budget management is always important, but it’s highly likely that the amenities you need to manage your project with the high-paying customer that has been lined up are already built into the overhead of the project. The flights to the customer site are built in by Sales during the negotiation process, as are some additional equipment that may be needed specific to your project and implementation.

However, if that is not the type of project you’re running, then please read on as you might find something interesting or helpful from this information. I’ve been working mostly remotely as an IT project manager for the past 3+ years. Sometimes that has involved running large multi-million dollar projects for deep-pocketed clients meaning the little things and extras on a project definitely aren’t an issue. No concerns with cutting back because certain things are expected and are built in to the overall price of the project.

On the flipside, if you’re an independent consultant – as I am – and you have a mix of customers, then you’re likely to have a few clients that do not have deep pockets. These clients watch every dime they spend and that means of course that everything you do can and will be subject to their scrutiny. It also means that you have to watch how you do business carefully because you’ve likely not been able to price the project with a comfortable profit margin. It’s more likely that your margin is small and if something goes wrong causing extra work – and it’s your fault – you could be doing much of the work for free!

Here are some specific things that I do to reduce costs, keep things greener in terms of resource usage, etc. and keep the customer’s expectations steady in terms of on-going project costs:

• Bill the client a fixed price every two weeks or every month. This is basically like a retainer and if I’m doing this, I bill the work up front. It’s too risky in this economic climate to bill after the fact. Only do that if you really want (or need) this particular customer and they won’t budge at all on the upfront billing issue. Most will budge or meet you halfway letting you bill at the beginning of a two-week period and then pay you one week into it.
• Use video conferencing and teleconferencing whenever possible. This way you can avoid costly travel for the project and for your client. You can get video conferencing setups free at places like DimDim (www.dimdim.com) and you can get free conference calls at Freeconferencecall.com.
• Use free over-the-web fax services. Faxzero (www.faxzero.com) allows you to send faxes for free and Faxdigits (www.faxdigits.com) gives you a number to receive faxes with – they then come to you as a pdf file and you retrieve them online.
• Use a free pdf document converter. There are an increasing number of free pdf converters available now. It use to be that you had to have an expensive version of Adobe Acrobat to convert files to pdf format. Now you can download software like PrimoPDF (www.primopdf.com) and CutePDF (www.cutepdf.com), among others. I’ve tried several of these and the quality so far has been good on every one that I’ve tried.

Summary

There are a lot of options available these days to make the small vendor or independent consultant look bigger and many of them are free. The key is to start looking now, test out your different options and chose the best one. You definitely want to look professional and be ready when the need is there, so don’t procrastinate.

Construction Software State of the Industry from Software Advice

My friends at Software Advice have sent over another interesting original article that they have put together pertaining to software in the construction industry. This one comes from Houston Neal and it kicks off a series of reports the group is doing on trends within the construction software industry. Please visit their site at www.softwareadvice.com for the original report.

Construction Software State of the Industry Report

This is the first in a series of “state of the industry” reports in which we will share our observations on construction software industry trends. While reporting the recessive state of the industry is not breaking news, there are some interesting trends that we can share. Not everything is gloomy, and significant technological shifts are underway.

Our observations are based on roughly 6,000 conversations with construction software buyers over the past year. In these calls, our team listened to buyers’ “pain points” – the business problems they were looking to solve with new software. From there, we recommended what we felt were the best solutions. We later surveyed each buyer to find out if they ended up buying software, what they bought and how it all went.

Estimating and takeoff solutions are in demand

We’ve seen a very healthy level of interest in construction estimating software across all divisions. Over and over we hear contractors saying something to the effect of, “Bidding has gotten very competitive, which means I’ve got to be as accurate as possible.” As a result, we’ve seen a lot of estimators replacing their spreadsheets and manual processes with database-driven estimating systems.

We’ve also seen plenty of interest in on-screen takeoff software. We’ve seen three primary reasons for this:

• Increasing the speed and accuracy of takeoff measurements (see previous paragraph);
• Avoiding the printing costs of paper plans; and,
• Responding to increasing electronic plan delivery and use of online plan rooms.

While demand for onscreen takeoff appears fairly strong and growing, we have seen a considerable amount of downward pricing pressure in that market.

Software as a Service is in the right place at the right time

Software as a Service (SaaS) is gaining momentum in many software markets. In fact, we would agree with other IT prognosticators that SaaS is a major structural shift in software deployment and is here to stay. We’ve seen this model succeed in the project management segment where there is a clear need for the collaborative benefits of web-based software. Moreover, the current recession is making the SaaS model more attractive to contractors because:

• Subscription pricing can easily be added to a project’s general conditions;
• Low up-front costs allow project managers to avoid an onerous approval process; and,
• Faster and less expensive implementation makes the new systems more digestible.

We have not seen much demand for SaaS accounting, estimating or service management, although we do get asked about it now and then. We also have not seen many vendors emerge to deliver that sort of solution. We would not be surprised to see SaaS accounting and/or estimating solutions emerge over the next few years.

LEED credit tracking creates new demand

Another trend driving the adoption of SaaS project management systems is the increasing demand for LEED credit tracking. LEED certification has grown in popularity; so too has the need to track the detailed documentation requirements related to earning LEED credits. At their core, projects seeking LEED certification need document control and efficient communication. This is the core of what project management systems deliver. Going one step further, we are seeing a number of project management vendors building in specific LEED credit tracking modules within their system. Houston Neal wrote a great post on how to Track LEED v3 Credits in Project Management Software back in July.

Stimulus funds are trickling down, slowly

Government and other civil construction has remained healthier than commercial and residential construction. However, we have not seen the American Recovery and Reinvestment Act of 2009 (ARRA) have a big impact on software spending. We believe that the temporary nature of stimulus spending is not enduring enough to drive capital investment in software systems. Our hope is that ARRA will help accelerate the economy to a point where traditional IT investment levels resume. However, Chris Thorman recently wrote a quick analysis of the ARRA that showed that stimulus spending has had a nominal effect on putting roughly 1.6 million unemployed construction workers back on the job.

There has been speculation that Stimulus-funded construction projects would drive sales of project management software. The thinking behind the forecast was that ARRA projects would require a higher level of accountability. Project management software – known for strong document tracking capabilities – would provide the audit trail needed for this transparency. However, we have not seen this translate into a meaningful increase in sales.

Fewer accounting & job costing replacements

We’ve seen fewer firms replacing their core accounting and job costing systems over the last year. In prior years, we had seen replacement activity when company growth pushed existing systems to their limits. In the absence of growth, more firms seem to be staying put with their existing systems. Firms that are buying new accounting systems tend to identify one or more of the following three pain points:

• Inability to achieve detailed job cost reporting from “generic” accounting systems;
• Lack of integration to project management or service management systems; and,
• The need to accomplish same amount of work with fewer employees.

Outlook for 2010

As the construction industry begins to rub its sleepy eyes, we agree with most experts who say that 2010 will be a transitional yet slow year for the industry as a whole. Company budgets likely won’t fully recover in 2010, limiting the purchase of construction software. However, so far we’ve noticed more activity this quarter than any other this year. Hopefully this level of interest will carry over to 2010.

This article originally published at: Construction Software State of the Industry Report.

The Project Business Case

Every project needs a business case. This may be informal – especially for small and/or internal projects. It may also be very formal, as is likely the case for very large and very visible projects run for customers outside of your organization. In most cases, the customer has put together a business case in order to gain their own funding for the project. In some cases, they’ll need your help – as the project manager – in putting together the project business case and thus justifying the project and associated expenses to others within their organization.

Below is Carl Pritchard’s take on the Business Case documentation as outlined in his book “The Project Management Communications Toolkit.” I found it to be an interesting read and hope that some PMs find this of value on the projects they are working or getting ramped to work on.

The Business Case Documentation

Purpose

The business case establishes the fundamental rationale for a course of action. It is the documented history of why a project, effort, or approach was selected. It details the objectives, the projected outcomes, and the projected investments associated with the effort. As such, it allows decision makers to examine the breadth of information currently known about the effort to determine whether or not the project is a good idea in terms of cost, benefit, and organizational objectives. It may include statements about the impacts on existing business practices, resource constraints, and environmental considerations so as to provide a comprehensive understanding of the project. In some instances, risk analysis is a key component. It is the primary document defending the rationale for the project.

Application

The business case is normally applied early in the project and may be developed by senior management, marketing groups, the project office, or by any group or organization responsible for initiating large-scale activity within the organization. Business cases in mature organizations follow consistent formats to allow managers to review multiple projects in similar contexts.

The business case will list the key proponents of the project, the sponsor, the users or beneficiaries of the project, and any deliverables. At a high level, it will describe the approach to be used and the business justification or rationale for that approach. Normally, that rationale will incorporate some form of cost/benefit analysis, although the types of cost/benefit analyses and their applications vary widely.

A general outline for a business case might look like this:

• Executive Overview
• Project Description
  • Proponent(s)
  • Sponsor(s)
  • Users/Beneficiaries
  • Deliverables and Quality Criteria
  • Rationale
  • Cost/Benefit
  • Schedule/Time Frames
  • Communications and Reporting Requirements
• Environmental Considerations
  • Project Development Environment
  • Project Implementation Environment
  • Organizational Processes
• Risk Factors/Risks
  • Risk Management Approach
  • Preliminary Risks Identified
• Assumptions

Content

The information supporting each of those outline components should be developed as objectively as possible. To achieve that, each element should be reviewed by at least one other person. The content may be expanded (or compressed) based on the business needs of the organization conducting the analysis. At a high level each section should contain the specific information discussed in the following subsections.

1.0   Executive Overview

The executive overview is a general scope statement identifying the time, cost, and requirements for the project, as well as the business need driving the effort. It should include the names of the project sponsors and project manager, as well as a description of the beneficiaries of the effort. The executive overview should provide a synopsis of the cost/benefit analysis, regardless of whether those costs and/or benefits are tangible or not.

2.0   Project Description

The project description should provide more depth on most of the issues raised in the executive overview, including the background, sources, and history for any data provided as rationale for the project or the cost/benefit analysis. This section may include cross-references to other project documentation, including draft plans, product descriptions, and stakeholder analyses or surveys.

3.0   Environmental Considerations

The cultural, technical, or physical environment may described here in depth, providing information on the practices and protocols typical within the environment.

4.0   Risk Factors/Risks

The risk approach described here may include the means and practices to

be employed for risk identification, qualification, quantification, response development, contingency allocation, and risk reassessment. Any initial or signifi

cant risks identified in developing the preliminary information (like the cost/benefit analysis) should be identified here as well.

5.0    Assumptions

Assumptions are beliefs that are held as true to allow for ongoing planning. In an effort to ensure that they have value, assumptions identified here regarding all aspects of the project (resources, environment, client culture, organizational behavior, and so on) should be validated as practicable.

Approaches

Business cases in some organizations may be voluminous and detailed. Others span only a page or two. Regardless of the level of depth, they should provide insight into the considerations that were used to determine if there is a valid business reason for moving forward with a project. They should be directed at an internal audience, because they may include information about the internal response to and structure for the customer relationship. The internal audience should, at a minimum, include the project sponsors, the project manager and executive management.

Considerations

Because the business case may contain sensitive competitive information, it should be disseminated only to those who have achieved a level of trust within the organization. The author of the document should be clearly identified, and contact information for that individual should be included as well. Although the business case is an initiating document, it should be reviewed and revisited on a regular basis to ensure that the cost/benefit analysis and proposal are still being pursued.

Phases of a Construction Project Life Cycle – Part 2

In Part 2 we’ll continue to look at the phases of a construction project as laid out in F. Lawrence Bennett’s book entitled “The Management of Construction – A Project Lifecycle Approach.” In this article, we’ll see how Mr. Bennett desribes the pre-project, planning, and design phases.

As I’ve already mentioned, I find this interesting as my experience has been almost exclusively with software development projects. If any of our PM readers are in the construction industry, I’d enjoy hearing your feedback and perspective.

Pre-project phase

A construction project begins with an idea, a perceived need, a desire to improve or add to productive capacity or the wish for more efficient provision of some public service. Whether the idea will be converted into a completed project will be decided during the planning and design phase. However, prior to that, among the first things the owner must do is to decide what sort of project delivery system will be used. How will the various parties be related? Will the owner engage a design professional to prepare plans and specifications and then contract separately with a construction contractor? Or, will a single entity be responsible for the entire project? Other possible options include several separate specialty contractors, each related by contract with the owner, the use of a construction manager as an advisor to the owner, the use of the owner’s own construction forces and the phasing of the project such that individual portions of the field work are commenced prior to the completion of all design work.

The other primary decision required by the owner early in the project relates to the type of contract to be used with the contractor. Will the contractor be paid a specified fixed price, regardless of the actual quantities used in the project and regardless of the contractor’s actual costs? Will the quantities of materials be measured and the contractor paid on the basis of those quantities and pre-agreed-upon unit prices for each material? Or, will the contractor be reimbursed for its actual costs, plus a fee, perhaps with an agreed-upon upper limit? The owner will also need to decide the basis upon which the design professional will be paid. Often these decisions are not made without consultation and advice. Depending upon the owner’s expertise and experience in administering construction contracts, the owner may engage a professional engineer, an architect or a project manager during this pre-project phase to advise on these important decisions.

Planning and design phase

The project is fully defined and made ready for contractor selection and deployment during the planning and design phase. It is convenient to divide this phase into three stages. The goal of the first stage is to define the project’s objectives, consider alternative ways to attain those objectives and ascertain whether the project is financially feasible. In this process of planning and feasibility study, a project brief will be developed, more details will be set forth in a program statement, various sites may be investigated, public input may be sought, a preliminary cost estimate will be prepared, funding sources will be identified and a final decision on whether to proceed with the project will be rendered.

In the second stage, the design professional will use the results of the planning efforts to develop schematic diagrams showing the relationships among the various project components, followed by detailed design of the structural, electrical and other systems. This latter activity is the classical hard core engineering familiar to students in the design professions, in which various engineering principles are used to estimate loads and other requirements, select materials, determine component sizes and configurations and assure that each element is proper in relation to other elements. The output from this design development effort is used in the final stage, wherein contract documents are prepared for use in contractor selection and installation work at the construction site. The design professional prepares not only the detailed construction drawings but also written contract conditions containing legal requirements, technical specifications stipulating the materials and the manner in which they shall be installed and a set of other documents related to the process of selecting the contractor and finalising the contract with the successful tenderer.

Next

In Part 3 we’ll look at Mr. Bennett’s description of the contractor selection and project mobilization phases.

PPM Hero

Ok…this one caught me off guard. It came in the way of a nice follow-up comment to my post on “The Attributes of a Successful Project Manager – Part 3” and it came from Gregor Petri from CA (formerly Computer Associates – name changed in 2006).

Here is Gregor’s original comment:

“Brad, a very thorough and serious exploration of the topic. May I point you and your readers to our PPM Hero game for a bit more of a light hearted approach to the topic? http://www.ppmhero.com”

At this point, my curiosity got the best of me and I had to check and see what PPM Hero was. It’s a game that appears to be created by CA in association with Butler Group, the IT end user division of Datamonitor. What it amounts to is a project setting game where you’re answering questions in a pac-man type layout (although the graphics are waaaay more advanced) and trying to stay on budget with your project.

The Scenario

As Gregor states, it’s a lighthearted approach to testing your PM knowledge and trying to correctly identify some of the key elements that drive successful projects. The scenario – at least the one I encountered – is that a PM is knocked out of work and you have to take over their big project. You answer questions as you move your player over the “Q” - successfully answering questions adds money to your project budget.

Your project budget drops with time and for answering questions wrong. The red flashing Project Police that are moving around can also cut your budget. The levels of the game – called ‘floors’ are Information Technology, Business Operations, and finally Executive Offices. And, of course, the questions get harder as you progress through the game. You can challenge friends to beat your score, there’s a leaderboard for all to see, and you can even submit your own questions for consideration in the game.

Give It a Try

We all have major responsibilities on our shoulders most of the time – sometimes our leadership of the projects we manage can really be a make-it-or-break-it type of situation if our client or delivery organization is small enough for us to make that much of a difference to the bottom line. No matter what, being a PM is no easy task and definitely comes with major pressures and stress. So, take a break and try PPM Hero – it’s an interesting sidebar to the work we normally do as PMs. Thanks Gregor for passing this on to us.