Optimizing Capital Improvement Programs

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800.580.9322 • info@e-builder.net e-builder.net 1 Hurdle 2 Hurdle • Don't let optimism cloud reality. Be smart. Measure the important things first. Control costs. Measure what your baseline budget is, measure who makes commitments and approves changes, and score yourself on the ability to measure and control budget and changes. • Know where your project stands concerning milestones, budget, and scheduling. Most owners take over 30 days to measure project health— that delay can be the difference between success and failure. • Measure everything about schedule performance. Not a planner/scheduler like your contractor? Simply ask for their baseline schedule and import it into your system. Care about what changes are being done to the schedule as they impact costs. • Create a common report that describes progress on major performance metrics, with a special focus on those essential to project success. While common reports can benefit any project, they are especially critical for turnarounds, where struggling teams tend to rely on intuition when making difficult choices. • You could spend a lifetime trying to control everything. We find that world-class owners take a very pragmatic approach to establishing a performance baseline. They tend to know the top 3-5 places where scope gets out of control. • Technology can also help. You can work smarter by implementing a proven, purpose-built owner PMIS that will help keep everything in one place, reduce review and approval times and tighten cost and schedule control. Because these systems are very efficient compared to spreadsheets and e-mails, you can boost the productivity of people. BEST PRACTICES Bigger is not always better (Continued) Organizational Limitations More projects, smaller budget is a common refrain in the CIP world. An often- used benchmark is that an owner's project manager can manage roughly $10 million USD of projects at any given time. While there are many variables including project complexity, number of contractors, and schedule risk, it is reasonable to say that managing one $10 million project is vastly different from managing ten $1 million projects. Overworked project managers are fertile ground for tension and burnout. Senior executives or elected officials often overlook the increased overhead of having many, smaller projects. They will often assume that if the capital programs budget remains essentially the same, internal staff costs should too. The construction professional knows this is not true. Each project includes its own set of designs, RFP and award cycles, contractor and design coordination, project oversight, and commissioning process. Each project introduces a new opportunity for an emergency issue that leaves most project managers in perpetual firefighting mode, pushing necessary projects further and further away from getting off the ground. Similarly, a doubling or tripling of a CIP budget can result in distracted priorities, project delays and schedule inconsistencies.

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