The key to survival

Editorial Type: Opinion Date: 2018-05-01 Views: 1,131 Tags: Software, CAD, Construction, Project Management, Information Management, Elecosoft PDF Version:
Jonathan Hunter from Elecosoft explains why making the right strategic choice of project management software is fundamental to good corporate governance in construction businesses
After the collapse of a household name in any sector it would be unusual for there to be no concern about either its causes or implications for the industry and the economy. For construction, it became clear early on that 2018 would be a year of stress and scrutiny. Thankfully, the dust is starting to settle, with 9000 Carillion jobs now secured and work in progress to save more, infrastructure investment trusts starting to recover, and government monies helping to back up some sub-contractor liabilities.

Pain is still being felt by suppliers and contractors countrywide. Yet, with the receding of initial concerns the mainstream debate has turned to reflect on causal factors and consider how similar situations can be avoided.

It is becoming evident that corporate governance failings may have been a major factor in this case, and as no business wants to be under the spotlight in this way, it's essential that all construction businesses learn from this situation, and act to protect themselves for the future.

What does this mean in practice? Good overall governance in construction businesses depends significantly on the systems and procedures that are used to oversee and control projects themselves, just as critically as those that enable leaders to oversee and control traditional elements of business management.

Building the foundations of good construction governance must start with making a smart, enterprise-wide choice of project and programme management platform, embracing the opportunities for better visibility and transparency that come with digital data and technology.

Governance is recognised by most businesses, leaders, markets and governments as an essential control process. It spans all the mechanisms through which leaders manage and control the operation, and forms a foundation of trust for shareholders, for employees and for customers. There is no single model for good corporate governance, but the principles are well understood, and protect the interest of everyone involved.

When success rests on the delivery of projects, it is essential that good governance extends down to, and between, every project. The strong control and clear visibility that Boards are expected to have over operations and finance must be true for all the projects that go to make up those operations and channel that finance. The constant and careful mitigation of risks that is expected at a corporate level is just as critical at project level. Yet the importance and role of project governance is much less commonly recognised or discussed.

How can construction businesses ensure that their governance is unshakeable? Builders know that true stability must be built from the ground up. When your revenue foundations, resource requirements, supply chain dependencies and customer relationships are all centered around project delivery, that must mean excellence in project governance.

So, what is good project governance? Here's one definition: "The governance of portfolios, programmes and projects is a necessary part of organisational governance. It gives an organisation the required internal controls, while externally, it reassures stakeholders that the money being spent is justified."

The Association for Project Management believes the benefits of good governance include the minimisation of investment, avoidance of common reasons for failure, and motivation of staff through better communication. The application of good governance minimises risks arising from change and maximises the benefits.

Those familiar with project management software will notice that this list correlates perfectly with the benefits of good Project Portfolio Management (PPM) software.

Project governance must be addressed on every level, not only for individual projects, but also how all projects are managed, coordinated and controlled, and how this links back up to the organisation. "Project governance extends the premise of governance into both the management of individual projects via governance structures and the management of projects at the business level through coordination, planning, and control," according to the Project Management Institute PROJECT CONTROL
Any project manager will agree that keeping control, maintaining visibility, tracking project progress, and being able to communicate with stakeholders, cannot be done without professional software. But it also delivers clear governance benefits:

• Visibility of project progress, resource usage, and the critical path. It's effective on one project, but when you can see all projects it transforms a business's understanding of things such as risks to a stage completion on major projects, which can impact cashflow.
• Smart decision-making. Making the best decisions is impossible without full information. It is central to good governance, which the United Nations defines as "the process of decision-making and the process by which decisions are implemented (or not implemented)."
• Better communication and increased transparency. Good software enables easy, fast reporting and information exchange. Communicating better with both shareholders and stakeholders is vital to reverse the current erosion of trust.
• Enabling collaboration. This is not only a fundamental of BIM, but also of effective teamwork. Enabling multiple project planners to access and input into programmes ensures a single version of major project progress. Enterprise software eliminates laborious updates and integrates progress updates direct from site.
• Efficient and on-time delivery, every time. That is essential for reputation, customer relationships and a full order book. The time certainty gained with PM software also enables accurate projections to help you assure delivery, minimise delay, reduce retentions.
• Data gathering. PM software enables constant, timely, complete gathering of as built data and responses to change, forming a critical evidence base for any future delay and disruption claims, which can carry reputational as well as financial risk.
• Risk reduction. Analysing impacts and implications of every decision, change or issue minimises project risk. The ability to see this on aggregate across the business delivers an early warning system of corporate level risk, opening a vital window of opportunity to act.

Releasing these myriad business and governance benefits cannot happen without smart, strategic software selection. Yet many businesses continue to select their software at a project level, not enterprise-wide.

Our customers are often best practice leaders. Willmott Dixon has been promoting excellence through its FIIT Time project. It switched from MS Project to Powerproject for all construction planning, enabling consistent programme management and best practices. The company now empowers every level, engaging site managers directly into the progress tracking process via our Site Progress Mobile app. The progress, resource, and impending timeline risks on its live projects are now more visible to management as well as to project leaders. They benefit from more current and accurate information, which delivers more control overall.

The benefits of a single strategic choice of platform become even clearer as businesses scale. Southern Peru Copper Corporation manages more than 300 simultaneous mining, construction, planning and other projects using Powerproject Enterprise. Carlos Noriega, Plant Engineering manager, says: "For the first time, we can see and review all our projects, and monitor the progress of them all. We now have better communications between our departments, our coordinators, and with our contractors."

Making strategic choices on software may seem worlds away from maintaining reputation on the financial markets, or from ensuring actual business survival - but it is anything but.

Construction firms are working hard to embrace the opportunities that digital technology presents, for good reason. Their business sustainability will be measured increasingly on their adoption of digital and other modern methods of construction. Creating confidence about the ability to manage BIM projects, leverage digital data, integrate offsite, and utilise modern materials, will be essential. The piecemeal adoption of point solutions for project fundamentals cannot support such confidence or endorse the existence of a modern digital business model.

The OECD's Corporate governance principles recommend that companies disclose their frameworks to build trust and transparency. We suggest that the same holds true for project governance. Disclosing that you have made a proactive, reasoned choice of software to sustain project control, assure delivery, support transparency and deliver powerful visualisations on every project, cannot do anything but enhance customer confidence. Plus, relationships and reputation are now formally considered as intangible financial assets by markets and investors.

We urge construction players not to forget the fundamentals supported by what is often considered a routine piece of software. Make smart, reasoned and strategic software choices, think across the entirety of your organisation, and it really can be a tool for survival and success.