WHY PROJECTS RUN OVER THEIR DESIGN BUDGET

By Howard Birnberg 

GENERAL COMMENTS

Design firms are in business to provide solutions to their client’s need and to make a profit.   If the project manager is not successful in controlling project design costs, then he or she will have likely failed to achieve the latter goal.  Often, client service suffers if a project is running over  the planned budget, and the result may be a failure to  provide a satisfactory solution for your client’s needs.  The causes of this failure are many including: 

1.  Meddling by senior managers results in the diminishing of the project manager in the eyes of the project team.  Control of scope, schedule, and budget may be lessened or removed from the PM as a result of  meddling.  When this occurs, the project management system is compromised and will result in poor communications, multiple points of contact for clients and consultants, lack of decision-making by the (nominal) PM, and often crisis management by principals.

2.  Excess perfection can afflict designers who delay projects by not committing to a design solution, technical staff who burn up the design firm’s budget by over detailing project drawings, specifiers who select products  beyond the budgetary and performance requirements of clients, clients who have unrealistic expectations of building performance, etc.  Project managers must learn techniques to control excess perfection wherever possible.  Common techniques include making certain the staff knows project expectations, understands the scope of services required, and has participated in the preparation of the schedule and design fee budget.

3.  Overburdened project managers can become crisis managers unable to fully  study issues and problems, who lack the time to properly monitor a project’s status, and who fail to communicate effectively with all team members.  This crisis management situation can quickly harm service and the ability to meet project design budgets.  A major reason PMs become overburdened is due to a large number of design change orders/scope changes that can turn one project into many.  Cross-training of staff may provide capable assistant project managers or other individuals to relieve some of the burden.

 4.  Change orders are common, but it is important to avoid working outside of the agreed upon scope of services.   In an effort to please clients, some project managers agree to do tasks without adequate/any compensation.   Unfortunately, seemingly small changes may grow into costly items for the design firm.   Tools must be developed to manage scope changes.   If needed changes are not promptly communicated to other team members they may continue working based upon previous directives.  This may result in the need to redo work and wastes time and the project design budget.  The PM is responsible for communicating changes to other team members.  In particular, the need for information from the client must be anticipated.  Equally important is anticipating the need for client decisions.

5.  Poor project documentation makes it difficult for the project manager and other team members to quickly, accurately, and completely communicate information to each other.  Errors, omissions, and poor drawing coordination may result.  Historical records may be incomplete or inaccurate causing future problems long after the project is complete.  In the short term, rework may be necessary because a team member did not receive information regarding changes, decisions, or errors.

 

TURNING PROBLEM PROJECTS AROUND

Perhaps the most difficult challenge for project managers is the identification of  problems.  This is not always easy when the manager is close to the project.  Others may need to help in this process, particularly the client, as they may have insight based on their previous projects. 

There are several other steps to turning around a troubled project.  Once the source of the difficulty has been determined, the project manager needs to set priorities--decide what steps need to be undertaken first. It is important to examine the scope to determine if the work is beyond what was agreed  under the contract.  A job cost reporting system is crucial to the early discovery of problems.    Once issues are determined, it may become necessary to adjust the staff assigned to the project.  In particular, the project manager may be overburdened and other PMs or assistant PMs may need to help. 

If feasible and required, the technical/design staff may need to be changed.  When a project is seriously behind schedule and/or over budget, staff may need to be added if available.   It may also become necessary to revise the design budget to reflect the new/current conditions.  Revised time schedules should be set and a buy-in obtained from the project staff for the proposed solutions/new budgets and schedules.

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Howard Birnberg is executive director of the Association for Project Managers.  He may be reached at hbirnberg@gmail.com, 312-664-2300.    This material is drawn from his book, "Project Management for Designers and Facilities Managers," fourth edition, J. Ross Publishing, ISBN:13:978-1-60427-120-1

Howard Birnberg