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HIGHLIGHTS


Post-award project success determined by pre-award processes

Authors: Heath Mitchem and Mark Hillman

OVERVIEW

Your organization has successfully completed a comprehensive bidding, negotiation and award process for a major construction project, including major industrial equipment that will be installed in the facility. These are important steps, but they are only the beginning chapter of a successful end-to-end construction project.

Effectively managing the construction schedule, post-award, is the next critical success factor, with many risks, but also many opportunities to drive success. This article outlines some best practices and key considerations to manage project schedules once suppliers are selected and awarded will largely depend on the processes, milestones and working relationships that your organization defines in the early stages of the bid process.

TIMELY, EFFICIENT AND EFFECTIVE PROJECT SCHEDULING
Major constructions projects are highly complex, requiring an excellent blend of high-level project management skills, blended with deep, in-the-weeds schedule management, including aligning supplier goals to motivate on-time delivery. How can an organization ensure that the project is completed in a timely, efficient, and effective manner?

The first priority is to ensure that supplier and client expectations are aligned during the bidding and contracting phase. There should be a contractual requirement that the asset owner and supplier have defined–and mutually agreed to–a regular reporting and project update frequency over the life of the project. This helps both parties remain aligned on major milestones, keeps the asset owner informed, highlights concerns and issues as they arise, and allows for joint problem solving to mitigate issues that are highlighted. If an organization is uninformed about delays, it cannot push its suppliers to develop recovery plans to ensure the project schedule is recovered and no further delays are incurred over the issue. Suppliers must inform the client of any delays that impact the final schedule or a major milestone and be prepared to suggest a corrective action plan that defines recovery and subsequent action steps.

As part of defining a recurring cadence to review project status and address issues, owner and supplier should document the following items at a minimum to ensure alignment and visibility on the key issues for a major project:

  • Define and document lead times for specific pieces of industrial equipment.

  • Define and document related key milestones over the term of production/installation during the quoting process.

  • Establish a “liquidated damages” clause which establishes penalties, and puts some teeth behind the agreed-upon schedule.

  • Confirm assignment of supplier project manager and get their contact information.

  • Confirm assignment of high level internal supplier contacts for major issue resolution.

  • Confirm major sub-suppliers.

  • Agree on the reporting frequency and minimum data to be shared in each update.

KICK-OFF AND DESIGN STAGE
We recommend that owners require suppliers publish their first project schedule within a few weeks of contract award, and that the owner kick off the first of the ongoing project review calls at the same time. Additionally, we recommend that owner and supplier agree to more frequent updates during the design and early stages of the project so that if/when questions arise they can be addressed quickly and keep the project moving forward.

Also during the design phase, the supplier should provide a work breakdown structure that provides detail on precursors, dependent ties, critical path items, major subcontracted components, fabrication periods, etc. of the major project components.

POST-DESIGN APPROVAL REVIEW MEETINGS
Once the design is approved, reporting and project review meetings should transition to a bi-weekly basis. The agenda for these meetings should include a review of the overall progress of the project, with detailed reports about recently completed items, recently started items, potential issues and roadblocks both for supplier and owner, proposed solutions to address those roadblocks (if known), and next steps.

The owner should be sure that the supplier is flowing key requirements, milestones and problem resolutions to major sub-suppliers so that critical items can be tracked down to lower levels if deemed necessary or schedule impacts require.

Effectively sourcing and selecting key suppliers and contractors and negotiating effective contract terms and pricing is one important and critical element of a large construction project, but effectively managing the post-award production schedule can make or break a project. Project management is integral in determining that the project meets deadlines and meets return on investment targets and its importance cannot be stressed enough. This article outlines some important key steps in post-award project schedule management, that must be considered in RFP development in order for your organization to greatly increase the likelihood of delivering your next major project on-time and on-budget.

KEY ACTION

Proactively managing major project schedules, post-award, can mean the difference between overall project success or significant delays or cost over-runs. By beginning with alignment during bidding and contractual phases and putting contractual tools in place, owners can proactively work with suppliers to identify key project scheduling elements, critical dependencies and lead-times, establish a schedule for recurring status updates and problem resolution sessions, establish penalties and/or rewards to align owner and supplier incentives, and actively monitor the project to ensure successful delivery.

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