Incidence of Electrocution Too High in the Construction Industry
Weekly Grind: Cheers to the New Year! New materials, innovative AI tech, and so much more...
How a 130-Year-Old Architecture Firm is Spearheading a Downtown Revitalization Project
Not-So-Good Vibrations: Is Hand-Arm Vibration Syndrome (HAVS) In Your Future?
Causes and Prevention of Cancer in the Construction Industry
Seven Steps to Having Positive Outcomes with Angry Customers
Hand Tools are Making Leaps and Bounds
Risks and Liabilities of Workplace Violence
By Duane Craig
August 14, 2017
If yours is a contracting business that handles multiple projects simultaneously, there are compelling reasons to use project portfolio management. Construction companies are project management companies. Yet, many operate project-to-project without ever assessing their project portfolio as a whole. That often leaves them drifting away from their core competencies and from their overall company goals.Top performers in companies handling multiple projects simultaneously do so by using a project portfolio approach. And there are telltale signs you might need to start doing this yourself.
The Resource ShuffleYou’ve got multiple projects needing the same resources at the same time. You’re regularly dealing with delays, work stoppages, and congested workspaces.The Margin SqueezeYou’re working on projects that have tighter margins than most and are affecting other projects. You find yourself robbing Peter to pay Paul, and worse, your overall profits are going down.The Core DrainYou find you are working out of your core competencies, doing projects you’re not well-experienced in, and that require skills and equipment you are stretching to provide. You might also be working outside your core geography.The Risk FactoryYou deal with safety incidents daily. Your insurance and bonding abilities are at their limits, and you find yourself placing liens for unpaid work. You also might be seeing increased liabilities arising from delays, defects, and lawsuits.Project Portfolio Management Rewards Run DeepBesides helping you avoid all of the above, managing your projects as a portfolio will improve efficiencies across your operations. You will use resources more effectively with less downtime and better task quality. You’ll see your timelines go from longer to shorter. You will improve communications across your projects, including your communications with owners, suppliers, and subcontractors. Your compliance on regulatory and environmental issues will become more accurate and timely. You will also gain insights into financial aspects that will help you see ways to lower costs. If it sounds too good to be true, just consider this:“62% of organizations that are highly effective at project portfolio management, meet or exceed their return on investment.” — Project Management Institute, Inc.First Steps Begin at Your Business Plan
Start managing your project portfolio by identifying the types of projects that support your business goals. For example, if your business plan calls for you to become a $50 million a year commercial contractor, you probably won’t include residential projects in your plans. This is the first place where the beauty of portfolio management becomes evident. When you start going after only the projects that support your business plan, you eliminate distractions.As you consider what projects will form the foundation of your portfolio, you should also consider their physical locations, the types of delivery methods and the primary sectors. Commercial contracting for example, includes many different types of projects from hospitality to retail and beyond. Initially, you’d probably focus your efforts in certain sectors that match your skills, the experiences of your people, your equipment, and your subcontractors. It’s not that you can’t have a goal of handling every type of commercial project. You’ll have to get there through a well-planned process where you put all the necessary resources in place for each project type. Project ScoringWith your project types identified, you can set up a scoring model to use in evaluating projects. Suppose you’ve decided the most important aspects for new projects are:
You’ve arrived at these aspects by weighing how well they match your capabilities and goals. Make sure you include items like the last one, which relate directly to your long-term business goals. That way you can make sure your selection process stays strategically on track.Next, assign a value to each aspect. So, if the location is most important, you might give it 15 points, while the least important aspect -- just one point. You could assign numbers between the two extremes to all the other aspects, based on their relevance to your business goals. Now, when you review projects up for bid, you can quickly assess how closely they match your business goals by scoring them, and comparing the scores. The ones with the highest scores become your targets as long as they also offer the profit potential you want.Keep Things BalancedAs you win projects, you need to reassess your scoring system. So, the scoring system evolves as your business evolves. For example, while you initially might have been focused on projects in the $1 million to $5 million range, if you never reassess you will forever stay working on projects in that range. You have to adjust the scoring system to account for business growth and the cyclical aspects of the construction market. You also have to adjust it to reflect the right mix of projects for your business as you win and complete them. And, because you have included aspects in your scoring system that track with your business’ strategic goals, you also need to reassess those aspects as you reach your goals.Taking in the Big Picture
Assuming you are landing and working on projects that advance your business goals, it’s time to get down to managing those projects as a portfolio. Get yourself a portfolio dashboard. The one in Procore’s Project Management solution is the Executive Dashboard.From your dashboard, you can see the various projects underway along with details about them. You can assess the financial picture of both individual projects and the whole portfolio. The notes you add to your dashboard can identify the goals the project supports as well as any other aspects you want to track at the portfolio level. Overall, from this central point, you can see how your total portfolio is tracking. And then, you can use that information to update your strategies, figure out responses to individual project issues, and even formulate strategies on risks and contractual obligations.Finally, you should understand that managing your projects as a portfolio is a journey that evolves with your business. In the PMI survey mentioned above, 17% of respondents said they were highly effective at it. So, it’s definitely not something you can just set up and run on autopilot. It takes a long-term commitment, but those who follow through, claim they have fewer failures and waste less money.
Project Management Guide Part 2: Scheduling
During ConstructConnect's 2018 Design & Construction Outlook webinar held on November 1, Kermit Baker, chief economist for the American Institute of Architects talked about the year-to-date movemen... Read More
If you're a construction worker, you're most likely working physical labor and it can get hot if you're working under the sun. Here's a guide for h... Read More
As an architectural statement, the campus is a monument both to Apple’s corporate success and centrality to the global tech culture. At 176 acres, ... Read More
August 8, 2016
"Some of the cool things that we're doing on job sites today are with Rovers and the alive platform. Alive is that software platform that glues to... Read More
You have worked hard all year long, so you deserve something extra special. Not sure what you want? Check out our construction-focused gift guide. ... Read More
We’ve compiled a list of our must attend trade-shows for 2018 that will help put yourself in a place that can open doors to your future. From green... Read More
We've selected eight women from all walks of life to ask them one common question: what advice would you give women who want to enter the construct... Read More