Standardizing Project Management Processes in the AEC Industry
With the right enterprise technology platform, architecture, engineering and construction services (AEC) firms can increase efficiency.
by Maneesh Chhabra, June 2011
Architecture, engineering and construction services (AEC) firms are at an important juncture. The industry is growing at a healthy clip despite the economic recession. This growth is driven by the U.S. government’s stimulus money and continued investments in the healthcare and energy sectors. Larger AEC firms are also acquiring regional and smaller players to expand their footprint and client base.
However, there are few wrinkles in the growth story. AEC firms cite low profit margins as the number one business pressure. Many AEC firms lack standardized and consistent processes for managing projects. Project management processes are highly variable because of differences in customer and business needs, and cultural variations of different local offices. Performance review and reporting of projects is also highly variable. For example, earned value management (EVM) is an increasingly important performance methodology for AEC firms — yet many firms lack a common and consistent approach for measuring and monitoring the health of projects.
AEC projects have increasingly virtual teams comprised of members from different offices, locations, partners, sub-contractors and customers, but lack robust collaboration tools. Email and spreadsheets remain the primary tools for collaboration. Project managers use multiple tools to manage different aspects of project management. Yet most of these are desktop-bound tools with project data locked away in islands of information. Project managers and their team members spend extensive time and manual effort in filling out forms, building reports, doing project accounting and invoicing, and coordinating other non-value-added tasks.
Key Capabilities for Standardization
AEC firms must invest in standardizing, codifying and documenting project management practices across the enterprise. Standardization means having not just one way of managing projects, but a portfolio of consistent processes for managing different types of projects across the enterprise. AEC firms that are still using spreadsheets and manual processes must use enterprise-level project management solutions for scheduling, costing, management and reporting to drive enterprise-level collaboration and visibility.
Key capabilities to consider for a technology platform include:
1. Standardized core project management processes across the enterprise: Business units and verticals in many AEC companies follow different methods and templates for managing projects. Many of these process variations are critical to meet the needs of specific customers and markets. However, these process variations can lower project margins and performance. For instance, a lack of standardization and automation in change management can reduce management’s ability to track, control and consistently price changes requests and manage scope creep, resulting in lower margins and increased project risks. AEC companies can leverage an integrated and centralized project management platform to foster standardization of processes such as change management, scheduling, costing, and project reporting. Formalized processes and automation can also help scale the business.
2. Consolidating and integrating project data: The proliferation of desktop tools and custom applications means critical project data is locked away in different system silos. These silos not only inhibit the ability to report on project performance, but also restrict the project team from accessing, changing and transacting on project data. For instance, the earned value management (EVM) methodology is becoming an industry standard for measuring project performance. However, many AEC companies struggle to collate critical input data items (such as budgets, and actual and percentage of work completed), residing in customized and non-integrated systems. AEC companies must explore solutions that can help consolidate and integrate project data from different silos to enable reporting. Project teams can also improve productivity and effectiveness by working off of a consolidated project data repository, accessible over the web.
3. Reporting and billing capabilities: AEC companies need to deploy an integrated and enterprise-wide reporting platform to expose project performance across all layers of the enterprise, in quasi-real time. A strong reporting infrastructure and culture can ensure issues are identified and addressed early on in the project lifecycle rather than toward the end of the project, when they result in higher costs and risk. Strong reporting capabilities that integrate data from multiple systems can also reduce extensive manual effort involved in delivering customized invoicing and billing outputs demanded by customers of AEC companies.
4. Collaboration and web 2.0 capabilities: Engineering and construction projects are increasingly becoming virtual, as these teams include members drawn from different offices in a typical AEC company, and involve close working interactions with sub-contractors, third-party partners and external customers. AEC companies must innovate with web 2.0 capabilities to improve access to project data, facilitate virtual interactions (chats, conferencing, white boarding), and generally enable a more cohesive and collaborative project environment.
The Benefits of Standardization
Companies that combine standardized project management processes with the right technology drive significantly better outcomes than their peers. These include improved project team productivity, lower project losses, and a higher instance of projects that get completed on time and under budget.
As per the IT research firm Aberdeen Group, AEC companies that combined standardized project management best practices with enterprise-level technology solutions delivered 39 percent more projects early or on time, and 22 percent more projects within budget. Furthermore, best practices and the right technologies also limited budget overruns to less than 10 percent. In addition a standard enterprise platform and processes for project management, improved visibility into schedules and project progress status was also one of the most important reasons for this improved performance.
AEC firms must strategically pursue standardization opportunities in the project management area while preserving the spirit of entrepreneurism and flexibility at an individual project manager level. An enterprise technology platform doesn’t only help with standardization of key project management processes across the enterprise; it also improves performance management, team collaboration and client specific reporting at an individual project level.
Maneesh Chhabra is a director of Industry Strategy and Insight at Oracle.