Plan, Assess & Execute
The domestic construction and real estate industry is increasingly turning towards professional project management solutions in their bid to control costs and ensure timely project completion. Rajesh Kulkarni finds out what makes PM a critical tool for managing projects from start to finish.
A n integral part of construction processes worldwide, Project Management Services (PMS) are now slowly making inroads in the Indian context as well. A specialised tool/service, PMS includes providing clients (builders/realtors) end-to-end solutions at every step starting from project conceptualisation to its completion.
“Project management in construction and real estate industry can be defined as – The planning monitoring and control of all aspects of the project and the motivation of all those involved in it to achieve the project objectives on time and to the specified cost, quality & performance”, explains Gayatri Sahni, who heads the project management division of the Mumbai-based Property Solutions (I) Pvt Ltd (PSIPL), which has established a project management team with experience in the management of interior & construction projects.
“In general, project management describes the work required to start a project and the processes of controlling and managing the project once it starts. It also includes the work necessary to close the project after the solution is completed,” adds Sahni.
PM in Pre & Post Construction
While effective PM plays a key role in the successful culmination of projects from start to finish, there are however several key differentiators in the pre and post-construction phase in terms of the scope of its services.
“Pre-construction phase would normally include scheduling and scope preparation, reviewing the time schedule and preparing a preliminary budget cost estimate,” says Jalandhar Reddy, executive director, KNR Constructions, a Hyderabad-based company that specialises in road development projects.
“This can be achieved by a detailed material quantity take off and unit pricing. While in the post construction phase, PM is responsible for construction closeout, including a comprehensive project cost report and operation and maintenance procedures of all construction components.”
“Pre and post construction are two distinct phases in a project management cycle,” states Sumit Rakshit, executive director – occupier services, Cushman & Wakefield.
“In the pre construction stage, PM partners start by helping clients find the right vendors for various aspects, finalise on the project timeline and budget and ensure a complete signed project brief is adequately communicated to all stake holders.”
“In the post-construction stage, after the premise is handed over, role of the project management partners is to assist a smooth transition from project to facilities,” he adds.
“The team would commission various systems to ensure de-snagging of the entire premise and a smooth handing over of all documentations needed to run the facilities unhindered. The back end processes are passed on seamlessly to ensure that the project is operational at the earliest.”
PM in India – An Overview
With the ongoing recession and liquidity crunch putting the spotlight back on finding ways and means of cutting project costs, optimising resource utilisation and ensuring timely project completion, the deployment of inhouse/outsourced PMS is already on the rise. However industry players are clearly divided on the extent of awareness about PM and its end benefits among domestic construction and realty majors.
“Project management is a new concept in India therefore the awareness for the same is low,” says Rakshit. “While developers have some idea in terms of the role and function, project management is generally assumed to be a sub set of construction management. There is still a gap in comprehension of what a PM firm can bring to the table in terms of cost effectiveness by careful value engineering, compliance to standards and effective process by which projects are managed.”
“The awareness level of PM is high in India, but the hiring of such services has not become routine as yet,” counters Jitendra Jain, MD, Neev Group, a Mumbai-based realty and infra development company with a professional inhouse PM team. “While a large majority of developers still depend on their in-house PM teams for their projects large developers are known to outsource their requirements.”
“Today’s realtor is aware of PM’s role and influence on a project but prefers to depend on his inhouse team rather than outsourcing his needs to a professional body,” avers Sachin Joshi, MD, IDDC Engineers Pvt Ltd, a multi-discipline consulting company which has recently tied up with the US-based PM major EPC Consultant Inc, to enhance its potential to provide professional PM solutions for major transportation infra projects.
“The ingress of professional realty players has changed the approach to real estate development in India,” says Joshi.
“The need for liquidity and pressure to maintain profits during economic ups and down has created the urge to induce a more professional approach to normal construction practices. Technological innovations have also induced the need for PM. Today PM is on the threshold point where it will grow by about 20 to 40 times from its existing level.”
Costs & End Benefits
“Professional PM firms charge anywhere between 1-5% of the project cost depending on the scale of the project,” reveals Sunaina Gera, VP (product development) of the Pune-based Gera Developments Pvt Ltd, which has deployed PM extensively at two of its projects namely Gera Astoria at Goa and Emerald City at Kharadi (Pune) . “It may vary on the higher side depending on the expertise and the value addition they bring to the table.”
“The benefits are that efficient PM can bring about close to 100% predictability in the progress of the project in every aspect be it time or budget,” she adds. “Timely completion of a project is often not factored in as an expense/cost. However, cost over runs in projects today would be the highest owing to projects not being implemented as per original schedules.”
“Sometimes costs are greater not only because the project is larger, but also because it entails different kinds of expenditures like those incurred for labour from an accountancy perspective,” elucidates Sahni. “The project costs would include labour (both internal chargeback and consulting fees, and travel and living expenses, including short-term apartment leases), hardware, work space, and furnishings/equipment, such as computers, servers, printers, desks, chairs, cubicles and so on.”
Concurs Rakshit: “The primary cost involved in any project management team is the man power cost required for the efforts and resources that are put in to ensure effective management. The secondary cost heads include material and infrastructure cost to support the resources on a project.”
While admitting the deployment of PMS at a project could result in increasing construction costs anywhere between 10-20%, Neev’s Jain stresses that it’s money well spent. “Managing issues, tight time-lines, budgets and a host of external consultants and contractors needs an integrated management solution like PM.”
“The end benefits to industry players is that they get help in facing challenges, either in terms of managing diverse property portfolios or providing integrated services to demanding clients. Moreover the costs are under constant check, resources are more efficiently deployed thus reducing the wastage. This enhances the quality of the project while simultaneously ensuring timely possession.”
“The project management partner acts as the eyes and ears of the developer and is there to manage and control the project from concept to completion so that the developer can concentrate on other aspects of the business,” summarises Rakshit.
“Professional project management helps in complete compliance and ensures all issues are strictly managed and controlled. It also creates better control and prediction on time – cost parameters ensuring highest benefits to the developer. PM teams are also extremely focused on enhancing the safety and environment aspects of the project.”
Key Issues and Challenges
The largely unorganised nature of the domestic construction industry continues to be a major road block when it comes to accepting and implementing new tools like project management. As Rakshit puts it: “While most other key sectors have evolved and progressed with time, the construction sector has not managed to keep pace.”
“We still see a lack of professional approach towards managing a project in terms of going through a defined procedure/process plan which is non-existent,” he avers. “What seems to be used is mostly ad-hoc construction management which is being misunderstood as project management. Another major issue is over commitment and under delivery from contractors and various other parties involved in a project which makes smooth operations tough.”
Reddy cites the frequent lack of clarity regarding the goals and objectives of a project as a major challenge. He says, “There is also a lack of alignment to project goals across stakeholders and non-participative sponsors. Other issues that are quite frequent include a poor communication of objectives and targets across the team, inadequate measures or information on project performance, unclear responsibilities across the project, lack of planning, poor supplier integration and finally a complete lack of ownership.”
“The unavailability of trained personnel and the lack of acceptability of PM by the industry as it perceptibly adds to the costs are some of the prime reasons why PM is used by only a few players and that too for select projects,” states Gera.
“On the manpower front, there is an acute need for more training centres which include project management as part of their curriculum. Currently in Pune, NICMAR and READ are the only major institutes offering programmes in project management.”
“PM training is rare in India,” concurs Joshi. “Most Indian PMs are either trained abroad or on field under some experts. To overcome this shortcoming, post graduate courses with industrial interaction is needed on very large scale. PM courses should not be restricted to just civil engineers, as PM requires multi disciplinary inputs. Many global companies have landed in India to provide this service however the cost of expat experts pushes the scale of service downwards. Training our engineers in PM locally and providing them with opportunities is the only long-term solution to this problem.”
It’s a view that is countered by PSIPL’s Sahni. She says, “In my opinion, there is ample supply of skilled and professional project managers and the truth is contradictory to the statement, we have some of the best training institutes in India which impart knowledge and training to its students keeping in mind domestic market conditions and needs of domestic developers.”
According to her the slew of ongoing projects, provide ample opportunity for training in various aspects of project management. “Construction firms are now using sophisticated construction methods and technology providing ample hands on training at various sites for different types of construction projects,” she explains.
The Way Ahead
With benchmarking and knowledge management becoming key requirements for the engineering, procurement and construction industry, the need for project management in the country is now fast gaining ground. “The primary aspect which will lead to the growth is the growing awareness amongst realtors, developers and other corporates of the value professionally managed PM teams are bringing to the table at an early stage,” says Rakshit.
However, with the country being a relatively late entrant to the PM domain, both PM service providers and end users are unanimous on the need for first creating a further awareness and understanding of this critical service tool and its many benefits.
With project execution time and cost overruns becoming crucial issues, players like Reddy stress on the need to learn from other countries. He says, “We need to take a leaf out of China which has done remarkably well in executing mega infrastructure projects. One of the primary reasons for their success is that while in India, we have approximately 6,000 globally certified project managers, China has 40,000.” Quite clearly India still has a long way to go before competing on the global PM platform, but on the bright side it’s a process that seems to have already begun.