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Construction Cost Management &Construction Cost Management &The Impact of the Project Schedule on CostThe Impact of the Project Schedule on Cost
Part 1: Fundamentals of Project ManagementPart 1: Fundamentals of Project Management
By Ted Garrison
Garrison Associates
www.TedGarrison.com
www.StrategicPlanningforContractors.com
www.NewConstructionStrategies.com
http://www.tedgarrison.com/http://www.strategicplanningforcontractors.com/http://www.newconstructionstrategies.com/http://www.newconstructionstrategies.com/http://www.strategicplanningforcontractors.com/http://www.tedgarrison.com/7/30/2019 Dammam - Module 1
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IntroductionIntroductionWhose fault are the problems in construction?
The real problem is:
You!
I n reali ty it s not about faul t but accountabi l i ty!
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Too Many People InToo Many People In
Construction Are Insane!Construction Are Insane!
Albert Einstein: Doing
the same thing over and
over and expecting toget different results.
Therefore, we need to
do something different!
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The ProgramThe Program
Part 1 Fundamentals of PM
Part 2 Defining the Project
Part 3 Cost Managements of Fundamentals Part 4 How Schedule Impacts Costs
Part 5 Risk Management
Part 6 Procurement and Subs
Part 7 Summary
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Part 1: Fundamentals of PMPart 1: Fundamentals of PM
Module 1: Challenges to the Industry
Module 2: Role of Project Management
Module 3: Information Measurement Theory
Module 4: What is the Key to Effective Project
Manager?
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Module 1: Challenges to theModule 1: Challenges to the
IndustryIndustry
The way to achieve success is first to have
definite, clear, practical ideal a goal, anobjective.
Second, have the necessary means to achieveyour ends wisdom, money, materials, and
methods.
Third, adjust your means to that end.
-Aristotle
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Typical PM Process
Enthusiasm.
Disillusionment.
Panic.
Search for the guilty.
Punishment of the innocent.
Praise for the non-participants.
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Are You the Obstacle toAre You the Obstacle to
Change?Change? #1 Failure to see the need for change:
#2 Fail to take action: (It takes courage)
Fear of loss of control Uncertainty about the future
Loss of competence
Loss of familiarity
Surprises
#3 Fail to finish: Harder than anticipated
Takes longer than anticipated.
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Obstacles to ChangeObstacles to Change
Our beliefs determine how we think and act.
Our beliefs may be in conflict with good ideas.
Successful people are more resistant to
change.
Often intelligent individuals attempt to solveproblems themselves.
Traditional ways are breaking down therefore need change.
Instead: Need greater collaboration throughdialogue!
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Industry Challenges
Rosabeth Moss Kanter
Secrecy
Blame
Isolation
Avoidance Passivity
Turf battles
Feelings of helplessness
Solution
Better communication
More collaboration
Greater respect
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Module 2: Role of Project
Management Project Management is a collection of skills that
when used effectively produces better results.
But you must understand that planning is morean art than a science.
One of the key roles of an effective projectmanager is being a decisive planner.
Objectives: Optimize the use of resources
Deliver high value
Minimize risk
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PM is a Management Process
That
Creates structure and purpose. (Planning)
Identifies & focuses resources. (Planning)
Identifies & sequences activities. (Planning)
Monitors and controls progress. (Execution)
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A Few Benefits of PM
A system that focuses on priorities.
20% of what you do generates 80% of the results.
Better management techniques.
Better tracking techniques.
Effective structures for communications.
Adds value for the customer.
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Functions of Management
(In reverse order of importance)
#1 - Planning
#2 Organizing
#3 Staffing
#4 Directing
# 5 - Controlling
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5 Phases of PM
D e f i n e
P la n
E x e c u te
M o n it o rA d j u s t
C o m p l e t e
E v a lu a te
T h e
L o o p
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Key Elements of a
Project Plan Project requirements (Defining-Part 2)
Work Breakdown Structure (WBS Part 3)
Schedule (Part 4) Gantt Chart
Network Diagram
Budget (Part 3)
Organizational chart (Planning)
Operating Procedures (Execution)
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Project Management Myth
Project Management is about tools!
Instead:
People problems cause difficulty in applyingtools.
Without people skills difficulty in
completing projects.
Leadership is needed instead of abusing,
manipulating, or beating on people.
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Project Management Myth
The workers arent as good as they need to be.
Managers tends to attribute problems to
workers instead of looking at systemsInstead:
6 Sigma statistics indicate that people are the
problem on 5% to 15%
Systems failures are the problems (Materials, machines, measurement, methods, and mother
nature)
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Causes of Problems
Too much work for available resources
Constantly changing priorities
Estimates based on guesswork
In other words Insufficient planning
Best positive way to eliminate variability is throughinclusive planning & empowerment.
When people participate in planning they tend torestrict behavior to behaviors & activities agreedupon.
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The AnswerThe Answer
Must examine the system
Project managers role is to offer solutions
We need to give project managers greater
responsibility (of course need to be
qualified)
Must listen to workers
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SMART GOALS
v Specific
vMeasurable
v Approved
v Realistic
v Time-bound
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Collaboration with Clients
It creates an environment of open dialogue through trust and mutual respect.
Allows you to learn more about your clients the
more you know about them the more valuableyou are to them.
It allows you time to learn and developinnovations that add value.
Collaboration is not about partnering or sharingrisk
But more on collaboration in Part 2
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A Few Trade Secrets of
Effective Project Management
A plan must be realistic dont promisewhat you cant deliver.
A good plan manages the expectations of allthe stakeholders.
Make sure your plan has a way to measurethe success of every thing the plan promises
often the schedule and budget are easierto measure than softer issues.
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A Few Trade Secrets of
Effective Project Management
Get buy in from the key team players.
It is just as important to eliminateunnecessary tasks, as it is to make sure youdont miss any focus on the most important20%.
Develop task lists for different types ofprojects it will save time and avoid mistakes.
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Project Checklist
Valuable tool to avoid forgetting
especially under pressure.
Should have one for each type of project.
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Module 3: InformationModule 3: Information
Measurement Theory (IMT)Measurement Theory (IMT)
(The material on IMT is copyright material of the Performance Based
Studies Research Group at Arizona State University and is provided with
their permission.)
IMT is a deductive logical explanation of an
event. It includes the use of relative and
related data to create information thatproduces the future outcome of an event.
Dean Kashiwagi, Ph.D. @ ASU
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Lessons Learned Through IMTLessons Learned Through IMT
Dont trust anyone!!!
Experience or information has value
How we look at life is subjective and may not
always be in our best interest
It is important to know what we dont know
It is important to be able to predict the future
outcome
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Lessons Learned Through IMTLessons Learned Through IMT
You can put yourself in a position where youhave no way to win
Even though you control your own destiny, itmay seem as if you do not if you are not usingthe right information
When you are in a bad spot, it really doesnt
matter if you didnt understand, had a badday, got caught in the wrong place at thewrong time, or deserved it, you are in a badspot
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Objectives of IMTObjectives of IMT
Minimize subjective decision-making
Minimize data required to accurately transferinfo
Identify relationships between information usage,processing speed, and performance
Identify structure that minimizes the
requirements for management Optimize processes by identifying and removing
entities which add no value or bring risk
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Deductive LogicDeductive Logic
Deductive logic is the redefining orreordering of existing information to definean outcome.
It simplifies complex situations, allowingindividuals to understand what is going on
with minimum information, or without atremendous amount of education ortechnical training.
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Initial
conditionsFinal
conditions
An EventAn Event
Time
Laws Laws
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The more information we have before the event, the
easier it becomes to predict the final outcome.
The less information we have before the event, theharder it becomes to predict the final outcome.
However, the lack of information will never change the
final outcome.
The information system should minimize decisionmaking and surprises need to do with minimalamount of info since too inefficient to collect all info.
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Perceive
Process
Apply
Change
Cycle of LearningCycle of Learning
100%
Information
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Perceive
Process
Apply
Change
Learning SpeedsLearning SpeedsAll Individuals Learn At Different SpeedsAll Individuals Learn At Different Speeds
100%
Information
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Types of IndividualsTypes of Individuals
Perceive
Process
Apply
Change
100%100%
InformationInformation
Pe
rceptionofInform
ation
Time
A
C
0%
100%
B
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The RealityThe Reality
The more perceptive individualThe more perceptive individual
perceive at a faster rate, changesperceive at a faster rate, changesat a faster rate, and makes moreat a faster rate, and makes more
accurate predictions.accurate predictions.
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Exercise on IndividualsExercise on Individuals
(Type A or Type C)(Type A or Type C)Perceives more information
Knows their constraints
Measures performance
Controls other people
Manager
Emotional
Long term planning
Works harder
Gets surprised
Prepared
Decision Making
Type A
Type A
Type A
Type C
Type C
Type C
Type A
Type C
Type C
Type A
Type C
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How Does This Relate toHow Does This Relate to
Effective PM?Effective PM?
All individuals are necessary in an event
No individuals are better or more
important
Clients must understand that they have individuals at different levels.All are important. All are necessary for the event.
Those who change at a slower rate are constrained by their capability.
The rate that an individual changes is always the right rate for thatindividual.
Information System must not threaten any individuals (or they willresist the system)
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IMT ReviewIMT Review
Events happen only one way
Events are predictable with all information.More information results in more accuratepredictions (but too inefficient to collect all
information)
An Information System should pass theminimal amount of information
There is no wrong event and everyone isneeded in the event
Reality is reality regardless of someones biasor perception
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IMT ReviewIMT Review
Measure yourself and your organizationperformance
Efficiency is doing less work
Dont make decisions (minimize decision )
Minimize the Type C characteristics tobecome more efficient
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Module 4: Whats the Key to
Effective Project Manager?
Project Management is about leadership,
not about tools!
Its about being proactive not waiting for things
to happen.
Its about being a visionary!
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7 roles of a Project Manager
1. Charismatic leader.
2. Proactive change agent.
3. Effective communicator.
4. Decisive planner.
5. Committed administrator.
6. Creative problem solver.
7. Dynamic entrepreneur.
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# Option A Check
A
Option B Check B
1 Do you administer? Or do you innovate?
2 Do you copy? Or do you originate?
3 Do you maintain? Or do you develop?
4 Do you focus on systems andstructures?
Or do you focus on the long-range perspective and people?
5 Do you worry about how
and when?
Or do you worry about what
and why?
6 Do you always worry about
the bottom line?
Or do you look for the horizon?
7 Do you maintain the status
quo?
Or do you challenge the status
quo?
8 Do you do things right? Or do you do the right things?
Total # of A checks Total # of B checks
Self-Evaluation
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StrategicStrategic vsvs Tactical ThinkingTactical Thinking
Strategic thinking looks at the big picture
and therefore focuses on the what.
The opposite of sub optimization
Focuses on doing the right thing
Improved effectiveness
Tactical thinking focuses on the how Focuses on doing things right Improved efficiency
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What It Takes to Be a Leader.
What is leadership?
Leadership: the art of getting someone
else to do something you want done
because he wants to do it.
General Dwight Eisenhower
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Why Is Leadership Important?
Leadership is no longer the domain of topexecutives but virtually every managementposition.
People dont like to be managed. They want tobe lead.
When its done right its a competitive
advantage.
Project intensity has made in a necessity.
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Difference Between
Leadership and Management
Leadership is about aligning people insteadof controlling.
Management focuses on maintaining
systems and processes through control.
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Necessary Skills of PMs
Basic tools of project management.
Advanced PM skills.
People skills.
Human resource skills.
Business skills.
Other skills.
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Project Managers
Responsibilities Understand and insure the establishment of the
Strategic Goal .
Make sure all stakeholders are identified.
Understand all stakeholders requirements.
Resolve any conflicts or contradictions in those
requirements.
Become a Rainmaker.
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Project Managers
Responsibilities
Develop a motivating climate:
Create a vision.
Develop mutual trust insure fairness.
Build rapport through mutual respect.
Create win-win environments
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Project Managers
Responsibilities
Develop a productive climate:
Insure team goals exist and are clear toeveryone.
Insure individual goals are established
and understood. Meaningful work
Be a supportive leader.
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Who Is the Most Important
Person in Your Company?
The person standing in front of
the customer at that moment!
Why?
Because at that moment that
person is the company!
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PMs Role Is to
Add Value for the Client Understand the client
Understand the clients true needs
Act like the expert you are suppose to be
Properly define the project
More than specifications and plans
Providing added value stops you from being a
commodity provider
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Project Manager as a
Rainmaker
Teach clients to want what they need
Deliver your product the way the client wants
Deliver your product when the client wants it
Give your client a little more than they expect
Remind client of the value received
Almost be a client advocate
Ask to do it again
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The Ability to Lead
The ability to lead requires three
elements: Competence
Credibility
Relationship
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Review Your Planning SkillsReview Your Planning Skills
1. I meet with others to coordinate plans,activities, and priorities.
2. I schedule for unexpected events and
interruptions.3. I involve the work group to establish goals
that support our projects direction.
4. I plan ahead to ensure that sufficient
resources are available?
5. I establish deadlines to review progresstoward accomplishing goals.
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Action Steps
Please turn to the inside of the front cover
of the resource guide. Write down 1 to 3
action steps that you want to immediately
implement from Part 1 of this program.
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