As Africans, we love our traditions! From our language, to our culture all the way to our clothes and how we do our hair (Ladies?). Our tradition forms the fabric of who we are. It’s our DNA, our identity. But what happens when tradition becomes stifling and needs to evolve…
The need for change in the project management field was recently debated during the JLL Real Estate Masterclass series that occurred in March, in collaboration with the Harvard Business School Alumni Association. The subject, Delivering value through collaborative working and sustainability looked at the inherent challenges with the traditional project management model and laid out possible solution for its evolution.
How can this existing model be described? The best illustrative image that comes to my mind is the car assembly plant. Each individual is an expert in their field and focusses on just their own component; their singular contribution to the project. For example, design is kept separate from construction. The architect works with the project owner to conceptualize the vision of the project, incorporating zoning and other restrictions to maximize value for the owner (assuming a commercial project). Once done, the drawings are handed over to mechanical and engineering team who focus on the structure of the building and technical elements like HVAC systems. Additional contractors are brought into the picture; electrical engineers look at the electrical mechanisms of the building, plumbing incorporate their elements and so on and so forth. This continues until the entire mapping or building drawing is complete before its finally handed over to the construction team for development. Like the car industry, this assembly plant method has had its share of successes – in the past. Today however, this traditional approach is no longer sufficient. There is a need for greater efficiency, integrated project management, flexibility, timeliness and cost savings that the existing model isn’t able to adopt with ease.
Inherent challenges thus exist with the traditional model. The ‘separate to conquer’ approach that has each consultant working in a silo is quite inefficient. By working independently, consultants are unable to incorporate key elements in a timely fashion which can lead to unnecessary project delays. Changes to design for instance, a frequent occurrence in development projects, becomes a major and costly challenge within the traditional model. Since each person works independently it becomes difficult to determine who did what and how one change can impact another. The time it takes to correctly address these changes not only causes further project delays, but leads to additional costs factors. Addressing and maintaining quality controls in advance is also quite problematic with this model and so is the management of various teams that work independently.
Given these issues with the existing model, there is now a need for change. Innovation is key! During the JLL Real Estate Masterclass, what this innovation would look like was discussed amongst industry professionals and an idea around effective collaboration emerged. The revised model focused on bringing all work packages together right from the start. Hence, instead of an assembly line approach where work product was ‘handed-over’, it was now more of a ‘soup-kitchen’ – another imagery that I use to define the strategic consulting methodology adopted by companies such as McKinsey and Bain, or IT firms like Microsoft and Google. Their approach focuses on effective collaboration whereby teams work together to enhance the existing work products. In this model, the whole does become greater than the sum of the individual parts. By bringing the consultants together early on particularly during the design phase of the project, cost over runs are more effectively managed since the consultants are able provide their insights early. In addition, changes can more easily be incorporated as “unpacking” existing decisions are easier to address in an integrated relationship than in an independent working environment. Managing the various teams also becomes more practical. This collaborative approach results in time savings which immediately equates to cost savings – key value adds!
In order for this collaborative environment to work however, it is important to have on board an effective project manager (PM) – one who truly understand the client’s vision, has the experience working with and managing multiple teams/consultants, and understands the true value of collaboration. This individual has to have a proven track record of execution and an ability to be flexible while respecting time and budget constraints. It will be up to the PM to ensure that all the consultants buy into the client’s vision of the project particularly around quality. PM’s can make or break a project, hence it’s important for clients to be quite selective in their procurement process for a PM.
A final key element that was discussed at the Masterclass was the existing model for remuneration – percentage lump sum. Similar to the traditional project management model, the existing remuneration model was designed to reward individual contribution to the project as each individual is paid a percentage of the whole. Seems fair, right? Well, not exactly, at least not for the project owner. The incentives of the consultants are not adequately aligned to the project objectives. The existing model incentivises individuality, sometimes at the expense of the whole project and fails to reward key qualities or deliverables such as creativity, time and cost savings, flexibility -characteristics that are essential for project success. Innovation is thus also required for the revenue model. Solutions such as Guarantee Maximum Price which incentivizes contractors to save money were also reflected and discussed at the class.
In this day and era of technology and sophistication in terms of skill-sets and products, it is important and even essential to evolve in order to remain relevant and succeed. This applies to the existing real estate project management model. The model needs to adopt innovation and evolve to a collaborative approach in order to meet the ever changing client needs and real estate industry dynamics.