Project Scope and Profitability
Updated: Apr 19, 2020
About the author: Don Archibeque is a Project Executive with Planifi, bringing more than 25 years of experience in construction and A/E (architecture and engineering) Project Management, as well as associated professional managerial services.
Architecture and Engineering (A/E) project management can feel like juggling 15 balls at a time. You check one thing off the list and 14 more immediately require your attention. Then, as soon as one thing gets off course, everything else comes crashing down. The difference between juggling and project management though is pretty clear– juggling, you can pick up the balls and try again. With an A/E project, there’s money, time, and reputation at stake. Architecture and Engineering (A/E) firms puts a lot on the line with every project that goes out the door.
It’s impossible to control every risk on every project, just like it’s impossible to watch and track 15 balls in the air at the same time. However, you may be surprised at the effectiveness of identifying and prioritizing potential risks throughout a project’s life cycle.
How can your firm effectively manage project risks and avoid “dropping the ball?”
Every A/E firm has projects that suffer from “scope creep.” Without proper management this means your project team is working for free. And, to make matters worse, this free work often results in conflict between firms and their clients.
What causes scope creep? Most projects have multiple stake holders. Some stakeholders read the contract and understand the parameters of the project. However, many do not. Then, they go on to ask for services not included in the original scope of work. Oftentimes, these stakeholders are lay people who don’t understand project documents or the design/construction process.
Designers and project managers understand where their bread is buttered. They don’t want to raise these issues with the client because that might put the relationship at risk or upset the client. However, ignoring out-of-scope work often has the opposite effect. Poor communication (or complete lack of it) results in frustration for both the A/E firm and client and can lead to more serious, legal, disputes. These disputes can compromise strategic client relationships and lead to nonpayment, delays, or claims while a project is underway.
Contract documents are the “rules of engagement” for a project. They spell out every detail of the project schedule, requirements, review process, etc. You can’t require that stakeholders read contract documents. However, firms can manage project risk by making sure the project team feels comfortable with the contract documents relevant to their projects. When designers knows the rules, they are in a much better position to successfully navigate scope creep and deliver the project on time and within budget.
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Design and construction is a litigious process and much of that litigation is between the design firm and the owner. Most of this litigation results from confusion. Clients are expecting one thing and design professionals deliver another.
For many project managers, it’s outside of their comfort zone or skill set to deal with unrealistic owner expectations. However, it’s critical to reach a mutual agreement, between client and designer, on the perception of what the agreement calls for, what work is the be delivered, and when.
Even once a mutual understanding is reached, this agreement is not set in stone. Projects change, that’s the nature of the business. Project managers must maintain those lines of communication throughout the project. That way, if anything changes, the key stakeholders can be informed in a timely manner and involved in the decision process. Finally, be sure those changes are properly documented.
Out of scope work may have a significant impact on the project manager’s ability to deliver a profitable project for the firm. If this is the case, or it is otherwise deemed necessary, the PM should issue a change order to ensure the firm gets paid for the additional work. Otherwise, for any number of reasons, the PM may decide not to request additional fee for the change. In this case, issue a “no cost change order.” This shows the client they are aware of the project scope, but are willing to go above and beyond to meet the needs of the project. Plus, this documentation puts the PM in a stronger position to request additional dollars should the scope change again in the future.
Delivering an A/E project can feel like a daunting task at times. Projects change, deadlines shift, and clients ask for more. However, with proactive project risk management and solid communication, the impossible can turn into a profitable result for your firm.
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