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A project can be considered to be the achievement of a specific objective, which involves a series of activities and tasks which consume resources. It has to be completed within a set specification, having definite start and end dates. In general, the project manager is responsible for the overall success of the project. In some companies, this person might be called a Project Coordinator, or a Team Leader. However, the key aspect is that the person is responsible for ensuring the success of the project, with the main success parameter for any construction company being profit (Ten Steps 2007).
The primary focus of all businesses within the U.K. construction industry is to maximise their long-term profitability. Balfour Beatty has always put a large precedence against its financial performance. In the modern day construction industry time management, quality control, sustainability and safety management are all emerging as key factors, which are changing the focus away from profitability. This section of the report is a study into the change of focus from profitability of the project manager's roles.
Before the 1970's the profitability of a project was the main concern for construction companies and project managers. Much of the project manager's role was focused on completion of the construction works on time and to budget. This had an adverse effect on other aspects of the construction process. Any construction projects undertaken by Balfour Beatty were of generic designs. The repeat construction of road designs or railway designs allowed for the maximisation of profit. The relation of time to cost was the main focus of the project manager to maximise the profit from a project. Modern project management covers a wider range of responsibilities which have taken the focus away from project profit. Client's demands for unique, innovative designs have led to a cost-time-quality focus for project managers.
Figure x (http://www.the-self-build-guide.co.uk/images/Time-Cost-Quality-Triangle.jpg)
In an economic climate such as the recession the United Kingdom is facing now, with ever increasing demands by clients for high spec quality products, Balfour Beatty has seen a decrease in profit margins to keep up with the market. A profit margin of 3.5% experienced by Balfour Beatty in 2009 is not by any means the smallest in the construction industry; however, it is a lot lower in comparison to when quality was not such a big factor in the industry. For more information regarding Total Quality Management see pages x-x of this report.
Introduction of Modern Contracts
With the introduction of NEC3 in 1993 to promote greater flexibility, clarity and simplicity in the construction industry the role of the Project Manager changed. Under an NEC3 formed contract the Project Manager is at all times acting on behalf of the Employer (NEC 2010). The Project Managers role is not to act on behalf of the contractor (Balfour Beatty) but to instead manage the time-cost relationship of the project on behalf of the Employer. This style of management reduces costs for the Employer and therefore having a negative effect on the Contractors profit margins.
Before standard forms of contract documents were introduced into the construction industry the general culture of the relationship between the Employer and the Contractor was of argument and dispute. It was common place for contractors to submit low tenders on the basis that they would make a lot of claims on completion to increase profit from a project. The introduction of ICE and NEC forms of contact has stopped this from taking place. It is made the Project Manager's (or Engineer if ICE) responsibility to value or assess compensation events made by a contractor under the new forms of contract. Under ICE Conditions of Contract (Eggleston 1999) the conditions for a compensation claim are limited to:
Variations to works
Exceptional adverse weather
Other clauses referred to in conditions
Any other special circumstances.
Limitations set on compensation events, limit the claims a contractor can submit and therefore it could be seen that a contractor will see lower profits from a project. These forms of contract favour the Employer (client) and are widely used as a project management aid on Balfour Beatty construction projects.
Public Contracts Regulations (2006)
With the introduction of the Public Contracts Regulations in 2006 greater constraints on a construction companies profitability arose. The Public Contracts Regulations section R30 limits a Local Authority to choosing the lowest price tender or most economically advantageous tender submitted. The tendering process is done under open conditions with sealed tenders. The restrictions limit the profitability of the project for the contractor. Balfour Beatty work on a lot of highways and railways projects for local authorities. Due to competition for contracts, construction companies submit the lowest value possible without compromising their business. The focus on profitability has gone out of Local Authority contracts since the introduction of the Public Contracts Regulations.
Lean Construction and Waste Management
Balfour Beatty in an attempt increase the profitability of its construction sites are starting to introduce new management systems. Lean construction is a translation and adaption of lean manufacturing principles and practices to the end-to-end design and construction process. Unlike manufacturing, construction is a project based-production process. Lean construction is concerned with the holistic pursuit of concurrent and continuous improvements in all dimensions of the built and natural environment: design, construction, activation, maintenance, salvaging, and recycling (Abdelhamid 2007).
Lean construction is a "way to design production systems to minimize waste of materials, time, and effort in order to generate the maximum possible amount of value (Koskela et al. 2002)". This is only possible through the collaboration of all parties including the owner, contractor and end users. A new role of the project manager is to oversee this collaboration to achieve the end result.
Some project managers explain the concept of "lean project management" as an offshoot of Six Sigma. Other professionals regard this practice as an adaptation of traditional project management principles
by computer programmers working on fast paced assignments. Regardless of how it evolved, lean project management is a methodology that has become attractive to team leaders looking for fast results on critical "turnaround assignments." Most project managers decide to "go lean" when faced with budget cuts or other constraints. Tasked with eliminating waste throughout a project or a process, managers can discover how to make their teams more effective using fewer resources (Taylor 2010).
Lean construction and lean project management are tools used by project managers and construction companies such as Balfour Beatty to achieve more efficient quicker construction. The quality of the finished product is not compromised by utilizing these methods. The role of the project manager adapts under these management styles into a finite management roles. Planning and control of works is carried out in a more detailed fusion to reduce waste and time on construction. That in turn increases the profitability of a project.
Before the 1970's the focus of project management was targeted towards the time-cost relationship. The role of the project manager was to manage the construction to completion in the shortest time possible with the greatest profits possible. Most construction contracts were tendered low, with the assumption that the construction company would make many claims for lost time and compensation. Project evolution led to a greater emphasis on quality and safety, reducing the projects profitability. The introduction of standard forms of contracts gave the clients much more control over projects costs, tendering and compensation events. The project manager's role changed under NEC3 and Ice forms of contract, working for the client instead of the contractor as was traditionally the project manager role. Under NEC3 and ICE forms of contract the project manager is again focused on the time-cost relationship, however, this is for the clients and not Balfour Beatty. With a reduction in profit margins over the last 30 years, 3-5% margins are now common in the construction industry. With an attempt to increase these margins, project managers and contractors such as Balfour Beatty are not introducing lean management and construction techniques. The idea is to reduce waste and increase productivity. Developed after studying Toyotas Lean Production methods, project managers are more engaged with unifying contractors, clients and end user to make the product cheap with a greater scope for profit. The role of the project manager has taken the focus away from just profitability and instead introduced a much broader scope of management. The complexity of the job has greatly increased with much more emphasis on quality.
The role of a project manager has changed the focus on profitability in the construction industry into a much more complex collaboration of quality, safety, waste management, risk control, time management, planning and contract management. Project Managers were traditionally contractor based, however, with changes to construction contract processes the role of the project manager now incorporates the clients and end users requirements. The focus on the time-cost relationship is still a large part of the project manager role; however, who the results of this focused are targeted for depends on the forms of contract in use.