Construction analysis: Sarah Schütte of Schutte Consulting Limited discusses the challenges faced by project managers (PMs) in the construction industry and how good project managers (PMs) can become great.
Once again I write from New York (knee-deep in snow), where I am working. One of the recurring themes of my meetings has been the project management profession. This is interesting, as it mirrors recent discussions about training I have had with both the Association of Project Management (APM) and with PM Institute and a webinar I recently hosted for PMI UK, introducing its members to the legal aspects of project management. PMI sees a clear need for PMs to know about law, and PMs want to learn about law.
In the US and UK, it is accepted that many PMs are ‘good’, but not many are ’great’ or ’excellent’. PMs need a broader range of skills to improve personal and organisational performance and add value to a client’s project. Those who excel will become PMs ’of choice’. Challenges occur because legal and regulatory minefields exist and budgets are tight.
What is ‘project management’?
One of the inherent difficulties with project management is understanding its meaning. APM describes it as ‘the application of processes, methods, knowledge, skills and experience to achieve the project objective’. Each of us, in our own way, is a ‘manager’ of a ‘project’ of some sort, so what differentiates the ‘professional’ PM?
It was only in the 1950s that the discipline was first recognised as distinct (in the US). For UK practitioners, APM and PMI are now the foremost project management associations. PMI, established in 1969, has a global presence, with Chapters in most major cities. Each offers a highly-regarded qualification (PMI—PMP Credential, APM—Prince2), requiring periodical renewal/re-exam. Both hold the key to developing individual skills, and to driving quality and change within a broad profession, which encompasses not only construction and engineering but also IT, banking, products and other disciplines.
What is a construction industry PM’s role?
The PM is engaged by the employer (or ‘client’) to act as thier ‘eyes and ears’ so the main focus of the role is contract administration. The PM’s precise mandate arises from two contracts:
the project contract, which sets out specific actions the PM must take vis-à-vis the employer and contractor’s relationship, and
the professional appointment between the employer and the PM, which sets out the services the PM will perform for the employer
What services does a construction PM undertake?
A typical scope of services includes the following:
supervising the contracting parties’ activities against the programme
assessing payment applications and certifying sums due
managing change control (variations)
re-fixing the completion date where impacted by compensation or delay events o certifying practical completion and releasing retention
chasing snagging/remediation during defects liability period, using retention in the event of failure o assessing and certifying the final account
serving notices eg of non-completion, non-acceptance of programme
record-keeping and preservation of the project record (documents, photographs, videos, etc)
Is the PM independent?
Yes and no. The PM is engaged (paid) by the employer and acts on his behalf. However, English law requires a professional’s judgment not to be inhibited by the fact that one is in another’s pay, which takes precedence over any actual or perceived duty to the payer.
In addition, one should remember that PMs wear an independent ‘hat’ when exercising certain functions, and that principle is firmly established in case law—any PM who acts, or is seen to act, in a biased way, will have their decision quashed. A PM’s decision is binding on the project parties unless and until it is challenged.
So the PM has a difficult path to tread, and should do so carefully.
What can be done to overcome the difficulties faced by the PM?
Identify developmental needs and invest in quality training to plug the gaps in the PM’s knowledge/expertise. Legal familiarity is unlikely, so teaching PMs core legal skills is essential. By using law to support technical activities, a PM can improve their personal offering, and that of their organisation. I call this blending the science of law with the art of project management.
Law is complex and ever-changing. PMs should not expect to be legal experts, but a decent grasp on the basic functions of law, and the legal framework in which the profession operates and projects are realised, will pay dividends.
A wider benefit is this—adherence to law and the rules governing the professional qualification maintains credibility in the professional association and the esteem in which the qualification (and the individual) is held.
What are the five biggest legal hazards for PMs?
The biggest legal hazards are:
Not knowing your brief
The PM should read their appointment carefully, in particular the scope of services, and familiarise themselves with their duties eg, ‘inspection’, ‘checking’, ‘monitoring’, ‘Employer’s Agent’ etc. The PM must not stray beyond them, as this could put at risk their organisation’s professional indemnity insurance cover. Many issues stem from lack of preparation, and lack of time to prepare.
Insufficient knowledge about the project
PMs should be comfortable with the contractual structure (where risk begins and ends, collateral liability etc), and the project drivers (stakeholders, technical novelty, PR etc). A project starts off well where the PM has studied the required outputs and the risks (milestones, ground conditions etc) and has thought about how they can support the parties (within the proper limits of the appointment) to achieve them.
Legal issues arise on every project
Many can be handled by a competent and experienced PM, but some are more serious than others. It is rare for a PM to not have had their independence questioned, or performance criticised, probably by a frustrated party at a difficult time. An allegation of professional negligence is a serious one, and must be managed carefully by the organisation and disclosed to insurers. Nonetheless, allegations are common, and can often be resolved with expert legal and strategic support.
The PM is the link to each of the parties and their duties are numerous. PMs sometimes feel the weight of the world on their shoulders, yet they are not the only person responsible for bringing the project in successfully.
Experienced PMs should beware of complacency
No contract is ever identical in its words, or effect. No project is identikit. Know your limitations, ie when to seek expert legal advice. Plus, broadening experience is always good for the soul (and the CV).
How can PMs use law to go from ‘good’ to ‘great’?
In three words—training, experience and expertise. It is the combination that sets apart a ‘good’ PM from a 'great’ one. Professional associations are a valuable source of training, mentoring and networking.
Legal training is strongly recommended. If PMs become more legally astute in contract law, and if they then work with law as well as within it, then law will provide a solid foundation to their decision-making. Robust decisions based on sound legal principles demand credibility, and respect (even if the answer isn’t the one you wanted).
In turn, challenges are less likely, which facilitates relationships and project delivery, and avoids the distraction and stress of a dispute resolution process. Repeat engagements lead to experience and expertise, plus efficiency, so profit margins improve too.
Complimenting legal skills with soft skills is useful. Effective communication, writing and negotiation are often assumed as present, but targeted learning can effect great improvements with tangible results.
Cost and time can be inhibiting factors, but taking time out for training is essential. Putting training outputs into action immediately upon return to the workplace is the key to bedding in learning, and to motivation to further self-improve.
Looking forward, what challenges does the profession face?
The profession faces the following challenges:
a drop-off of entrants to the profession—the average PM is 45 (and male)
clients are demanding more from PMs, so skills must match
technology eg BIM Level 2—mandated from April 2016 on UK Government projects, but (real) knowledge is
the increasingly-popular NEC3 contract demands PM agility, so training is recommended
What can encourage industry organisations to tackle these challenges?
In my experience, they are particularly concerned about succession planning, so national schemes where the spend is underwritten by the Government are favoured, to encourage a long-term outlook on investing in junior staff, bringing them up to excellent level and retaining them:
apprenticeship funding for 16+ year olds to funnel new entrants into the profession
tax breaks to support long-term training (including in legal skills)
partnerships with universities, as students are studying project management theory, but need exposure via
industry placements to the real world of business and technology
Do lawyers have a role to play?
Yes. Lawyers should be alert to the pressures faced by PMs and project management organisations. They should assist their clients (on whichever side) to button down the appointment appropriately in respect of performance and required resources, and ensure the project contract is drafted properly to avoid gaps, which the PM may end up trying to resolve on site.
Next month’s Industry Insight will look at dispute resolution options for projects in the Middle East.
This article was first published on Lexis®PSL Construction on 22 February 2016.