Project management in the construction industry
If you’re in the construction industry, you’ll know that to deliver great projects you need effective project management. Whether you’re trying to minimise project costs, deliver under budget, reduce waste, or better manage deadlines, embracing project management processes can help you get there.
In this guide, we’ll explore how project management can help you improve every aspect of your construction business. No matter the size of the job.
What is project management in construction?
Construction project management involves organising people, processes, resources, and budgets for successful project delivery.
As far as project management in the construction industry is concerned, the dedicated project manager will be responsible for overseeing, organising, and tracking every aspect of a construction project from conception to completion.
Wayne Barelds, VP of Product for simPRO, recommends determining how and what you will communicate before the project begins: “Being a project manager for a large construction project means you are responsible for not only ensuring you have detailed planning before the project begins, it also means you must continue to carefully monitor the project throughout every phase.
“Communication is key to staying on track and making adjustments. Setting these systems and processes in place before you start work helps everyone stay on the same page and know how to respond when issues arise.”
Construction project management: basic terminologies
Before you go all-in on project management, you need to learn the language. Here are a few key terms:
An s-curve in construction project management helps you visualise project progress over time by mapping actual progress against projected progress.
S-curve graphs are simple to create with the right software. Xero provides an accurate live view of your income and expenditure, so you can export your expenditure reports and use them to build your s-curve graph.
Front-end loading means directing a disproportionate level of planning and resource towards the early stages of a project. This concept hinges on the belief that if you focus more energy on the planning and coordination of a construction project at the beginning, you’ll achieve a seamless delivery.
As rigorous as your planning might be, sometimes the stakes change midway through a project.
The client will submit a change request if something in the existing project scope needs to be adapted. Change requests can also be submitted internally, by project members who identify faults or needs for improvement.
What is the difference between construction management and project management?
Project management is not unique to the construction industry, but is a field in its own right. IT, marketing, engineering, and healthcare sectors all benefit from effective project management.
Construction project management focuses on the nuances of the industry, such as day-to-day activities on a construction site and how these impact other aspects of the project – like scope, time, cost, quality, resources, risks, and procurement.
What type of project management is used in construction?
There are plenty of project management methodologies to choose from, so you're bound to find one that fits your goals. Here are some of the most popular ones:
Waterfall project management
This is a sequential approach to project management that involves completing each stage of a project before moving on to the next phase.
Agile project management
This method started with software companies that wanted to take a more iterative approach to development. Teams working under the agile methodology can be flexible, and adapt quickly to changes in scope, schedule, or budget.
Lean project management
Maximum efficiency, minimum waste – that’s the key principle of lean project management. This method comes from lean manufacturing and hinges on achieving the greatest value for the customer by minimising waste (think: costs, materials, and human resources). This approach works if you’re dealing with a tight budget.
Critical Path Method (CPM)
This method is all about calculating the best route or “path” in a project schedule by determining the earliest and latest time each task can begin and end.
Earned Value Management (EVM)
Using EVM, you’ll compare the work you planned against the work you’ve completed. You’ll be able to predict whether your project will come in under budget and on time.
Building Information Modelling (BIM)
Using modern technology, BIM lets you combine the data points of a construction project to produce a digital representation of the physical facility (and all its characteristics). With BIM, you can visualise each phase of a project, from conceptual design to construction and operations.
What are the benefits of construction project management?
Here are just a few reasons why you should adopt project management for your projects:
1. Improved efficiency and productivity
When you map out a project lifecycle, you can line up teams, tools, and resources at the right times. This means no more waiting around for resources before you can get started on the next phase.
2. Better cost control
A significant part of project management is tracking and monitoring all activities. When you track costs, you can see whether money was well spent or wasted.
3. Enhanced communication and collaboration
Using project management principles gives everyone a framework to determine their approach. Everyone knows what they need to deliver, and when they need to do it.
4. Increased quality
When you measure and monitor meticulously, it’s much easier to identify areas of improvement. Construction project management helps you deliver high-quality services by keeping you focused.
5. Reduced risk
By mapping out risks ahead of time, you stand a much better chance of mitigating them further down the line. And you can take that learning onto future sites, too.
6. Better safety
People need processes to stay safe on a construction site. Having a framework to follow means your staff can stay safe whilst working on site.
7. Better tracking and monitoring
Project management gives you a framework for regular tracking and monitoring. Make sure you’re choosing tools and software that ease the administrative burden, too.
8. Smooth project completion
Hand over the keys with confidence, knowing that every stage of the project was properly managed, tracked, and completed.
9. Better resource management
Let good project management show you what's being used where, and by who. This will reveal opportunities to cut costs, or increase efficiencies by lining up resources earlier on.
10. Compliance with regulations
With multiple teams working on different aspects of a project, it's hard to know how everyone is performing. Project management creates regular opportunities and systems for checking in with teams.
What is the best project management methodology for construction?
The best project management methodology for construction depends on the project.
Natasha Anich, VP of Product Marketing at simPRO, says understanding what’s next is important when determining project management solutions: “A critical part of keeping projects under control is understanding workflow. Whatever project management methodology you choose, make sure it fits within your workflows.
“You should have a clear understanding of project dependencies and understand what tasks can’t be started until other tasks are complete. The more you understand and can see workflows specific to your projects, the easier it is to communicate what needs to be done and when it needs to be completed.
“With a clear view of the individual workflow and timeline, project managers have the tools to continuously improve efficient project delivery.”
If you’re working with a small team, you might choose to follow the agile method so you can work on multiple phases simultaneously, using an iterative approach.
If you’re balancing a big team and a tight budget, you might choose to follow the lean methodology to keep costs low and deliver value for the client.
There are some basic steps you should always follow for completing a construction project, regardless of the methodology. They are:
1. Defining project objectives and requirements
Identify the wants and needs of all the individual stakeholders. What are the objectives and end goal? What needs to be done to achieve them? The answers to these questions will form the basis of your project plan. Wayne Barelds, VP of Product for simPRO, says “You will need to create specific and measurable goals that are in line with your ultimate objective for the project, but most importantly, you need to establish a process to regularly review tasks and milestones.
“Only by implementing a process to regularly track how you are performing against project milestones can you get a clear understanding of where adjustments might be needed to get back on track. If possible, use reports like Gantt charts can help you to visualise tasks and their progress, so that you can see where bottlenecks are occurring and see where task dependencies may not have been met."
2. Developing a detailed project plan
You’ll need to outline the scope, schedule, and budget in your detailed project plan. You should also include a risk management plan that helps keep everyone safe.
3. Identifying potential risks and issues
Spend some time identifying the potential risks and issues for a project. By doing this early on, you can reduce the chances of blowing your deadline or experiencing an incident.
4. Selecting a construction team
With your goal set and your project plan in hand, you’ll be well-placed to find a team who can deliver on your vision. If you’ve already decided which project management approach you’ll use, try to find employees who are familiar with it.
5. Managing construction activities
Everything that happens on the construction site should be organised and managed strategically to keep you on schedule and budget. That's why having a live view of your progress and finances is so important.
“With integrations, you can set up automated tasks to request internal approval before an invoice is sent to the customer, and a separate automated task to request payment from a customer before pushing the invoice to your accounting package. These integrations make invoicing easy and accurate for both you and your customer. Keeping customers and staff happy is a great way to retain both.”
6. Closing out the project
It’s nearly time to hand over the keys. At this stage, you’ll be finalising all the documentation and obtaining final acceptance from the client.
Now you can analyse the data in your project management and accounting software to identify things like profitability and areas for improvement. This can inform future projects and help you continue improving and optimising.
How to achieve project success in construction project management
If you’re wondering how to achieve project success in construction project management, there are a few best practices that can help:
Clearly define project objectives and requirements
Teams can’t stick to the brief if there isn’t one to start with. Define your project objectives and requirements before work begins, so no one’s left in the dark about what they need to do.
Develop a detailed project plan
You can’t see into the future, but you can prepare for it with a detailed project plan. Don’t forget to map this out in your project management software so you can refer back to it.
Identify and mitigate potential risks and issues
Don’t wait until you’re on the construction site to start thinking about health and safety. Build it into the early stages of your project planning.
Select a qualified and experienced construction team
Think about the project goal and your desired approach. Then select a team who best matches these criteria. Top tip: if you’ve already selected a project management approach, search for teams that use it.
Continuously monitor and control project progress
Construction projects can shift at the drop of a hat. You need to be ready to step in when progress slows, costs rocket or the schedule is at risk of being jeopardised. Don’t do it all by yourself – find some project management software that suits your needs. Project management software can help automate tasks and notifications to keep you on track and help you focus on what's important.
Prioritise safety and quality
Your people are your project, so make sure they have everything they need to succeed. Check in at regular intervals, and line up the budget and resources for each stage of project execution.
Adopt technology to support project management
Use project management software to get a clear vision of how your project is progressing. If you’re feeling proactive, integrate your project management software with your accounting software, so you can see exactly where your money’s going.
Communicate effectively with all stakeholders
Don’t keep the important details in your head. Communicate regularly and consistently with all stakeholders to avoid misunderstandings and missed opportunities.
What construction project management software should you use?
Every day looks different in the construction industry, so you need project management software that shifts and scales to meet your needs.
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
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