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The Rambler, Kitsap Peninsula, WA USA,

Courtesy: GO'C,

Photography: Kevin Scott

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How Logistics is a Major but Underestimated Contributor to Project Risk

Introduction

Logistics is the lifeline of any project, often working behind the scenes to ensure everything runs smoothly. Despite its crucial role, logistics is frequently overlooked in risk assessments and project organizations. From our extensive experience consulting on large, complex industrial projects worldwide, we’ve observed that logistics is a significant source of disruptions. This article delves into why logistics is underestimated and how to address this risk effectively.

Categories of Logistics Risks

Logistics risks can broadly be categorized into two types: loss and damage during transportation, and on-site logistics affecting erection productivity.

Loss and Damage During Transportation

Loss and damage during transportation occur more often than most project managers realize. Over the years, we've seen numerous projects jeopardized by mishaps such as ships sinking, containers lost at sea, lifting accidents, and oversized trailers encountering obstructions like bridges. These incidents result in the damage of critical equipment, leading to long delays and increased costs far exceeding any insurance compensation.

On-Site Logistics and Erection Productivity

On-site logistics, although less prone to physical damage, significantly impacts project productivity and schedules. Often, the productivity shortfalls blamed on erection teams are actually due to poorly organized logistics. Inefficient logistics can create bottlenecks, delaying material delivery to the erection site, which hampers productivity and escalates costs.

Mitigation and Problem Solving

Proper planning and risk assessment are crucial in mitigating logistics risks. However, managing the logistics chain is complex due to the involvement of multiple service providers, making it challenging to ensure that each link in the chain adheres to necessary precautions.

Comprehensive Logistics Planning

A comprehensive logistics plan is essential and should be analyzed for risks so that appropriate mitigation actions can be taken. This planning should include ordering additional spare equipment, diversifying logistics routes, and spreading deliveries over time to avoid common causes of loss.

Spare Equipment and Diversified Routes

Ordering additional spare equipment ensures that projects have backups in case of damage or loss. Diversifying logistics routes reduces the risk of all materials being compromised by a single incident, such as a ship sinking.

Freight Forwarders and Tracking Systems

Hiring competent freight forwarders and relying on comprehensive tracking systems are crucial. These measures help monitor the movement of materials and ensure timely deliveries, reducing the risk of delays and damage.

Packaging and Transporter Reliability

Investing in robust packaging and identifying reliable transporters, even if more expensive, is necessary to safeguard materials. Proper packaging can prevent damage, and reliable transporters can ensure that materials reach their destination safely.

On-the-Ground Presence at Critical Points

Having an on-the-ground presence at major logistics rupture points, such as between transportation modes, is essential. This presence ensures that materials are handled correctly and any issues are promptly addressed.

Early Nomination of a Logistics Manager

A logistics manager should be nominated early in the project with sufficient resources to manage critical steps in the logistics chain. This role is vital for preserving project equipment and ensuring smooth logistics operations.

Construction Site Planning

Construction managers must plan construction sites and material flows to achieve intended productivity. This involves creating strategies for prefabrication versus on-site construction and accounting for site specifics like access restrictions.

Managing Brownfield Projects

In brownfield projects, it is crucial to separate the flows of materials and people between ongoing operations and new construction sites. Dedicated access gates and procedures can help minimize interference and enhance safety.

Internalizing Logistics Planning and Coordination

Debates often arise around the coordination of logistics involving multiple contractors. Internalizing a strong logistics coordination team with the authority to manage priorities and interferences is recommended. This team should be part of the construction management team, ensuring that logistics arrangements benefit the project.

Conclusion

Logistics is an often underestimated area of project risk but plays a significant role in project success. By increasing attention to logistics during planning and risk mitigation, and involving experienced professionals early, projects can effectively manage logistics risks. This proactive approach can prevent costly delays and ensure smoother project execution.

FAQs

1. Why is logistics often underestimated in project management? Logistics is frequently viewed as a secondary function, leading to insufficient attention during planning and risk assessments. This oversight can result in significant disruptions and delays.

2. What are the main categories of logistics risks? Logistics risks can be categorized into loss and damage during transportation and on-site logistics affecting erection productivity.

3. How can projects mitigate logistics risks effectively? Effective mitigation includes comprehensive logistics planning, ordering spare equipment, diversifying routes, hiring competent freight forwarders, and ensuring robust packaging and transporter reliability.

4. Why is an on-the-ground presence important at logistics rupture points? An on-the-ground presence ensures that materials are correctly handled and any issues are promptly addressed, reducing the risk of delays and damage.

5. What role does a logistics manager play in project management? A logistics manager oversees critical steps in the logistics chain, ensuring smooth operations and preserving project equipment. Early nomination and sufficient resources are essential for this role.

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Streamlining Procurement Documentation for Effective Project Management

Overview: In the realm of large projects, procurement documentation often resembles an unruly jungle—extensive, contradictory, and daunting, especially for smaller suppliers. This issue stems from a lack of rationalization, where various stakeholders contribute without alignment, leading to a maze of requirements that can be overwhelming.

Procurement Documentation: General Overview: In large industrial projects, procurement documentation is a beast of its own. It consists of general requirements and specifications, alongside specific ones tailored to the product or service being acquired. The general requirements span various areas like safety, quality, technical specifications, logistics, etc. This documentation, often amassed from diverse sources within the client organization, can easily run into thousands of pages. Unfortunately, not all of it is relevant, and internal inconsistencies are common.

The Blind Spot: This isn't just theoretical—it's a real blind spot for many client organizations. We've seen instances where suppliers found the documentation unbearable and simply walked away from the industry. And when we've reviewed client specifications, we've discovered intrinsic inconsistencies that render them practically unusable. However, many clients fail to grasp how this impacts project delivery.

Effects of the Classical Situation: For smaller suppliers, dealing with this documentation can be a nightmare, leading to misunderstandings and disappointments. The uncertainty about which requirements are truly applicable complicates matters further. The traditional solution involves suppliers drafting their understanding of requirements, but this is inefficient and often leads to delays.

Improvement Approaches: There are two main approaches to tackle this issue: simplifying and standardizing client requirements, and using requirements management methodologies.

1. Simplify and Standardize: Simplifying existing requirements is challenging, but standardization across the industry offers promise. By aligning expectations and involving suppliers in the process, we can trim excessive demands and promote more cost-effective procurement. This effort can be funded by the savings obtained through standardized specifications.

2. Requirements Management: Adopting a systems engineering approach to requirements management involves extracting, listing, and rationalizing requirements from existing documentation. While this is a significant effort, it promises consistency and clarity. However, it requires a comprehensive approach across all specifications to be truly effective.

Summary: The lack of rationalization in procurement documentation is a significant productivity hurdle, exacerbated by the natural inflation of requirements over time. Addressing this issue requires concerted efforts at both organizational and industry levels. It's crucial to streamline and standardize requirements, ensuring they're understood by all stakeholders, including suppliers. This is a challenge many organizations overlook, but one that must be confronted for effective project management.

In conclusion, "Lack of rationalization of requirements and specifications, combined with their natural inflation over time, is a major impediment to productivity." It's imperative to "Simplify and standardize the client standard requirements, and align all client contributors" to overcome this obstacle and drive successful project outcomes.

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Rainer Köberl - House H, Rorschach 2006. Photos © Lukas Schaller.

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10 Issues That Will Sink Your Project

Many projects seem just as solid at the outset, buoyed by the optimism that naturally comes with new things. But there are a myriad of obstacles that can quickly turn a project into a disaster.

While there's no surefire way to eliminate all of the potential challenges that may arise, being aware of them and making good preparations in advance can make them much easier to manage.

1. Unclear Goals Having a project without clear goals will just confuse and frustrate people. It's like asking them to shoot an arrow blindfolded with no idea where the target is. After all, if you don't know what your intended destination is, how will know when you arrive?

A good project goal should be short and simple—you should be able to fit it into a tweet (140 characters).

2. Insufficient Plan Detail All too often, project plans don't provide sufficient detail to ensure success. Not only can this be confusing to team members, but it can lead to inaccurate time and cost estimates.

The solution to this is to break down each segment of the project into more detailed tasks and sub-tasks. These should be tasks that can be completed in no more than a day or two in most cases. For larger, more complex projects they should take no longer than five working days.

3. Scope Creep Every project suffers some degree of changes in scope. It's inevitable, because unforeseen issues will arise that demand some change. The key is to not let them derail the entire project.

A good manager must carefully consider requests for change in scope. If the scope of the project is expanded, make sure to expand the budget and deadlines accordingly. Otherwise, the project and team members will become too strained to accomplish everything on time.

4. Wrong People for the Job Make sure the right people are working on the project. They need to have the experience, skills, and knowledge needed to complete the tasks assigned to them. A careful, honest evaluation should be done by the project manager prior to the start of the job. Sometimes some training or mentoring can fill the gap. Other times it may be necessary to outsource some of the work involved.

5. Accountability Issues It's critical that each person on the team is clear on his or her roles and is accountable for their completion. A lack of accountability can lead to a total project breakdown, particularly where there are task dependencies.

You'll want to make sure that any project is translated to actionable items assigned to team members. You can use tools like Trello to make sure responsibilities are clear.

6. Inconsistent Processes Having consistent templates, tools, and procedures make projects easier to manage and run more efficiently. While each project may change in size, scope, and team members, the process is often the same, or very similar.

Diagram the work flow using a flowchart. Create it from the perspective of the job, not the individual doing the work. That way, new team members or outsourced contractors can quickly understand their role and how it fits into the overall project structure.

7. Poor Communication Project managers need to keep lines of communication open with team members at all times. This needs to be a two-way street. Set this up as part of the project process, so that there is regular communication. Knowing about any possible delays or issues early can help you avoid more serious problems down the road.

8. Unrealistic Deadlines Sometimes, a short deadline for a high-profile client with an important project can get a team focused and energized. But successful project managers know that setting unrealistic deadlines on an ongoing basis is a recipe for disaster. It will kill morale and lead to late deliveries, making for unhappy customers.

9. Risk Mismanagement Sometimes a project is planned out in detail, everyone is on board, and things are running smoothly. Then an unforeseen occurrence happens and the project skids off the rails. Why? Failure to manage for risks. A good project manager must not only plan but also prepare for contingencies. Constantly ask "what if?" questions - both of yourself and of your team members.

10. Stakeholder Apathy Often, this is a byproduct of projects that don't mesh with the organization's strategic plan. Those that do are far more likely to receive management's support for resource and budget requests.

It's also critical for the project manager to communicate clearly and consistently with all stakeholders—team members, vendors, contractors, management, and the client—throughout the life of the project. Encourage feedback, as well. Keeping all parties engaged in the process will lead to less stress and a more positive project experience.

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When Planning & Uncertainty Collide

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As project managers, we like planning. There are degrees, of course, as in all things. Some of us plan the general themes of our week. Others would like to micromanage very detail of every resource allocation.

Regardless of where you personally live on this spectrum, there is a plan. On some level, you expect it to be followed. And that's wonderful, right up to the point where reality happens.

One of Eisenhower's more famous quotes was, "In preparing for battle I have always found that plans are useless, but planning is indispensable." There is a great deal to love about that quote. For starters, it values the action, not the result. In Eisenhower's view, the plan that is the physical result of the planning process isn't worth the paper it's printed on, but the actions that led up to the creation of that plan have huge relevance and value.

What tends to be true of most project plans is that they don't predict reality in any meaningful way for any meaningful amount of time. Even a week into a project, you may deal with some activities not progressing, others starting early or finishing late, and new activities appearing out of the ether that no one had identified or considered. Trying to ride herd on all of that is pretty analogous to rearranging deck chairs on the Titanic; it also has about as much relevance and usefulness.

That's just a normal project, mind you. Where it really goes sideways is when we try to deal with significant, cosmic shifts and uncertainty—sort of like what we are experiencing right now, with the COVID-19 pandemic. For most organizations, sometime around mid-March of this year, normal work stopped. The weeks since have been a sideways lurch into reacting and responding, as staff went off-site, clients went AWOL and supply chains got massively upended. This meant most projects stopped cold. Whatever the plan said was supposed to be done probably has very little to do with what has actually been done.

Big upheaval or small meltdown, this is normal. It's to be expected, although they usually don't warn you of that in project management school. And it is, with some work and effort, mostly manageable. When a crisis hits, here are some practical and time-tested strategies to get back on track:

Remember what you came here to do. This is one of the reasons that planning is valuable as a process. It gives us the conversations about what is truly important to be accomplished, and why. What is the underlying problem that the project is trying to solve? Why is the solution relevant and appropriate? What are the most important results that need to be realized? What does success look like? What compromises would make success look unattainable? These are the questions that you need to keep front and center (or go find the answers to, if you don't already know them).

Confirm that what you came here to do is still worth doing. Projects are often initiated in a crisis. It is therefore very possible that the reason your project exists stems back to the last crisis, whenever and whatever that was. Is the project still relevant? Is the problem that it solves still a problem? This is not a rhetorical question. The Taurus project at the London Stock Exchange is a famous example of a project that ultimately ran to £75 million pounds, for a solution the industry largely no longer needed. It is always politically difficult to question the business case of projects sold as critical. Re-examining the underlying relevance is important, particularly as a new crisis takes hold.

Take stock of where you are and what has been accomplished. As you come back to work that was abandoned or slowed down, assess what really exists. That's not just accepting completed activities as completed. What has actually been produced in terms of tangible, useable and relevant work product? What is complete and still useful? There may be many activities that were in process, where at best some working notes may exist, but more likely the work will need to begin again (or at least some level of rework will be required).

Truly assess what is required to move forward. Here, you are not simply figuring out where to pick up and start working again. What is necessary is a triage of what results are actually relevant and valued now. This may be a subset of what was originally planned. Given current circumstances, new capabilities or approaches might be required. You need to get to the essence of what is needed, possible and valuable to deliver on, and what can be deferred or stopped.

Be clear about what is next. Re-planning in detail to the finished line is impractical, and often a waste of time and effort. Know what the overall building blocks are to get to the finish line. These are the major deliverables and chunks of work that need to get done, and represent the overall "how you will get there from here." From there, what are the immediate next things to get done? And what comes after that? Clarify immediate actions, ensure understanding of intent and follow up on progress as it happens.

Communicate broadly what is going on. Communicate what you know. Communicate what you don't know. Communicate that you don't know it, and communicate what you are doing to find out. Do it again. And again. And again. Communication is one of the most essential—and underutilized—tools available to project managers. Success here means that you feel that it can't possibly be of any use to communicate this piece of information for the 38th time. And yet it will be, so keep on communicating.

Escalate appropriately and proactively. It is a seldom-acknowledged fact that many project managers are utter control freaks. There is a strong desire to be successful and to be seen as confident and competent (you know who you are). This means that it can be extremely tempting to hang on to activities that are encountering problems, because you are fairly certain you can be successful. Don't succumb to the temptation. If activities are failing or you are encountering challenges, communicate it. Be honest in your status reports. Escalate early and clearly when you need assistance, answers or intervention. Sponsors are there to provide political support. Particularly in a crisis, don't be afraid to ask for it.

Don't assume your status reports are being read. It is easy to imagine they might not be read because there is a crisis, and so your sponsors don't have time to read them. While those statements are both true, they are in no way connected. It is surprising how much effort goes into writing status reports given how little attention they actually receive. If you need your sponsor to know something, do something or decide something, tell them. In person, if possible (but in an appropriately socially distanced manner). By phone, if available. By email, if necessary. Clearly identify what is happening, what you have done, and what action you need them to take. Don't presume they will figure that out on their own.

Remember to breathe. Managing in a crisis is a marathon, where every day feels like a sprint. You are only effective if you have the energy and focus required to be successful. That means taking care of you. Take a walk. Get exercise. Get sleep. Hug your loved ones and tell them you love them. Hug yourself, while you're at it. Keep clear about your purpose and the most meaningful actions you can take right now. Also be clear about the actions that can wait until another day.

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Developing Effective Work Breakdown Structures

The Work Breakdown Structure (WBS) is an often misunderstood and underappreciated tool of project management. I would argue that it is a critical piece of the foundation of any project management methodology. Many misconceptions exist about what a WBS is, how it is used and why it is such an important part of the project management process

A WBS is a deliverable-oriented, hierarchical grouping of the work to be executed by the project team to accomplish the project objectives and create the required deliverables. It organizes and defines the total scope of the project. Each descending level represents an increasingly detailed definition of the project work (ie decomposition).

What should it NOT include?

No reference to WHO is doing the work

No reference to WHEN the work is being done

No reference to HOW the work is being done

Rules for WBS attributes:

Use NOUNS and ADJECTIVES to describe the work

No dependencies, durations, resource assignments

The WBS addresses the WHAT of a project. The next step in determining the HOW is the job of the Network Diagram. And finally, the Project Schedule will be used to determine WHEN and WHO will do the work.

A good WBS will keep you on track for delivering the full 100% scope and prevent you from scope creep.

Once you establish the 1st Level of the WBS -- the real project management process begins at Level 2 and below.

How many levels do you need? Every project varies -- so it should be decomposed to a sufficient level where there is a clear understanding of what the deliverable is. Or as someone very wise once said to me "Stop when it starts to get "silly".

For More Information on Project Management & Construction Management; www.constructivemanagement.net

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Increasing Construction Productivity

According to a recent study of over 12,000 projects by the Independent Project Analysis Group, more than 35 percent of all construction projects will incur a major change. What’s more, almost any change in a project will have a negative impact on construction productivity resulting in inefficiencies.

Inefficiencies, such as schedule slip and project growth, are the biggest contributors to job overrun, impacting schedules, budget, and labor productivity that result in an average cost increase of 80% of original value

While most construction professionals are starting to become aware of the costs of ignoring low productivity, few realize that when construction productivity increases, everyone benefits, especially owners and contractors • Projects are completed faster • Project costs are reduced • Contractors can bid more competitively • Projects are more profitable When it comes to increasing productivity, engaging a Project Manager is the fastest path with the biggest payoff, to eliminate wait times and reduce costly rework.

Poor document control is a primary cause of rework which negatively impacts construction productivity and the bottom line. By making the switch to Constructive Management, construction professionals will be able to: • Save time • Eliminate rework

7 Steps to Success

1. Bring Technology on Board - Getting the boots on the ground to adopt technology is usually the biggest hurdle. Constructive Management teams collect, manage, and collaborate in real-time on drawings, submittals, markups, photos, issues, and RFIs.

2. Improve Planning with More Data - It goes without saying that improving planning will improve productivity. You can start by analyzing the entire construction process from end-to-end on previous jobs to locate and determine productivity weaknesses and strengths.

3. Improve Productivity Training and Require More Job Site Experience - Supervisors need to be trained not to look at a job on a day-to-day basis, but on how to increase the odds of on-time completion. We also reduce conflict between designers and contractors and help designers create more “constructable” designs

4. Increase Use of Prefabrication - Repetition is a fact of life with large projects  & using prefabricated elements not only decreases costs, but also increases quality. Prefabrication increases efficiency, allowing construction professionals to maximize value, minimize risk, and control cost

5. Move Toward Shorter, Team-Friendly Contracts - When each party seeks to provide as much legal insulation as possible, it makes it more difficult for team members to engage directly with each other, increasing the likelihood of errors and discrepancies that lead to inefficiency. Where shorter contracts require less legal mediation and more direct engagement, solutions are discussed fully and openly and compensation is agreed upon with less legal involvement

6. Improve Safety Training and Provide More of it - Contractors need to offer more safety training to make employees more aware of hazards and risks in their environment. Continually incorporate new methodologies into daily operations will reduce risks and liabilities

7. Communicate Better - It goes without saying that productivity impacts everyone on the job site, but contractors can really shift the dynamic on their projects by communicating. Constructive Management bilingual team allows contractors to immediately communicate a change or error to managers

Conclusion -  There are many quick and easy ways to make productivity improvements that will have a dramatic effect on your bottom line & projects success. Armed with these seven key insights on how to improve your productivity, you’ll be better equipped to keep your projects on schedule and under budget

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