The CEO of a company I worked for once outlined three simple steps to success. “Win work, Do Work, and Get Paid”. Simple, I hear you say – well, he was rather a simple chap to be fair. Unfortunately what he actually did was “Buy Work, Do Work but manage it poorly, and Get Paid much less than was spent”. The company closed down and everyone lost their jobs!
However, I also believe it only takes THREE things to succeed (in your project).
- Have the right TEAM
- Have enough BUDGET
- Have enough TIME
It’s a cliché, but the team delivering the project are the most important part of it. Get your recruitment right. Make sure you have the right people in the right jobs. That means difficult conversations with people. That means people might be replaced. It might mean people are unhappy. However, have you ever been in a position where you are out of your depth? Like, really out of your depth? In a position of responsibility where you just can’t cope, or asked to do a job that you just can’t do? How does it feel? It’s horrible, stressful, causes you to lose sleep. I once worked in a production environment managing 92 women. I gained some useful skills, knowledge and experience, but when I finally admitted to myself it wasn’t for me and moved on what a relief I felt.
Your project can’t tolerate having the wrong people in the wrong job. And neither can your team. How many of you have experienced the negativity which breeds when a member of the team isn’t pulling their weight? Or when they are simply incompetent. Unfortunately construction projects are not places for people to be developed into jobs – if you haven’t done it before or can’t do it, then unfortunately it’s not for you.
From top to bottom in the project organisation the right people need to be in the right places. That requires the senior level in the organisation to be competent enough to appoint a project board equipped for the job. Get it right at the top first, and continue to get it right at every level. And remember, in a Construction project, personnel costs will be a small percentage of the total budget. Pay well to get the right people. Saving £100 on a day rate, or a few grand on an annual salary by employing inexperienced people will not protect your project profit, it is more likely to damage it.
The whole supply chain needs to make a profit. It’s important that everyone remembers that, and it is something that I think gets neglected. Whilst in offshore wind we are trying to reduce costs we need to remember that companies need to survive. The base case needs to be priced, and contingencies and risks need to be added on. And external factors, like exchange rate fluctuations, market instability, and competition all need to be considered. What’s the point in basing your quote on using a supplier 30% cheaper than everyone else, if he only has the one piece of equipment you need? Chances are when you finally win the work that equipment will be gone, and you will need to go with a more expensive supplier, and you have already taken a hit. Be honest with your clients. As the industry moves more and more towards lump sum contracts risk is being pushed further and further down the supply chain. This is unsustainable. It either leads to massively inflated prices, where suppliers use price to fully insulate themselves from risk, or it leads to suppliers over exposing themselves and getting into trouble.
The other issue with budget setting is taking a top down approach e.g. The total price will be £10m, let’s find a way to do it for that. That’s not how it works – start at the bottom and work up.
It’s a simplification, but consider if everyone in the supply chain priced things on cost+overhead+10percent. How do you think projects would go if that was the approach taken?
Most projects start with an end date. We need to energise by end of 2020, or we need to launch the product by November etc etc. Starting with an end date doesn’t give you the opportunity to schedule the project properly, unless you are given freedom over your resource levels. Usually it’s a case of – achieve the end date, with this finite resource, and you need to make it work. Start at the beginning – identify all the tasks required, and allocate resources to see when the project will be completed. If that doesn’t suit the client, or your target date, then consider additional resources, or outsourcing. Don’t reduce quality and don’t cut corners. And don’t progress with a plan that everyone feels is unachievable. Speak up and voice your concerns.
The hardest projects I’ve been involved in have been the ones where at all levels people haven’t spoken up. They haven’t moved to improve the team, they haven’t communicated that the project couldn’t be afforded and they haven’t voiced concern about schedule.
The priorities of a client, regardless of the project are:
- Project completed safely
- Project completed on-time
- Project completed on-budget
If a supplier goes bust, then getting the project completed just became more difficult. As a supplier (internal or external) you need to have an honest conversation with your client – this is a problem. It’s a difficult conversation, but the client will appreciate it.
If you get these three things right, everything else is simple. Let me know your thoughts, or get in touch to hear how Alan Kelly Projects can help you with your project.