How Does Project Management Help Deliver Design Projects With Profit?

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Whether you are working for an architect, a contractor, or an owner, you are involved in projects. Depending on your situation, you may call them design projects, construction projects, or development projects. Although they sound different, the fundamentals of how to start and end projects with profit do not change.

In this post, I will present how I learned to deliver design projects with profit as an architect.

I was doing well as an architect. I got my professional license and LEED AP and was leading great projects from start to finish.

Then, one day, when I was excited to close one of my projects, the office informed me that the project did not make any money!

I was shocked to learn at my project’s closing that it was my job to ensure that the project was profitable.

To be honest- I felt ashamed!

I started looking for ways to learn how to deliver projects with profit and PMP (Project Management Professional) training cracked the secret for me.

PMP training cracked open the secret of profitable projects

A friend of mine heard my story and advised me to take a PMP training course- I asked what was PMP? He explained- PMP stood for Project Management Profesional and I was sold instantly.

In the cold winter of 2010, my warm journey began in project management.

During the Christmas and New Year’s break, an amazing five-day-long intensive training program for the Project Management Professional exam, or PMP, changed me as an architect forever.

I realized that I had not known how to approach a project from a business perspective.

As architects, we drive architectural projects from the heart and not from our heads. We become emotional when designing and do not stop redesigning over and over until the owner goes crazy demanding, “where is the design?”

We drain out two or three times as many billable hours as we should for designing. When we hand over the design, which is still incomplete, to the production team, the poor fellows do not have enough hours left in the project budget to produce a good set of documents.

How in the world any project can be profitable if no one pays attention to tracking billable hours?

The result is that uncoordinated drawings and specifications go out for bidding. The contractors start laughing when they discover the gold mine of change orders planted in the documents.

The owner ends up paying for the resulting change orders, and you can imagine what they think of the architects after all of this.

I realized that this is how we, the architects become the losers and help the contractor become the sole winner in this game.

In addition, I also learned a few new things from the PMP training:

5 Stages of a project to track project cost

I learned that there are five stages of a project throughout which the project expenses needed to be tracked.

These stages are:
Initiating- Planning- Executing- Monitoring- Closing

I am calling them ‘5 stages’ to keep it simple, although PMI (Project Management Institute) calls them ‘5 process groups.’

five phases of project

Stage 1- Initiating:

Initiating happens when your firm is awarded the project, and you are assigned as the project manager. At this stage, what you need to do is to create a Project Charter.

The Project Charter will outline the project scope, schedule, cost, and quality. It will also present a list of stakeholders and a list of risks.

It can be as simple as a one-page document and will authorize you as the project manager. Ideally, the Project Charter should be approved and signed by your supervisor or the project’s client.

Stage 2- Planning:

Planning a project is about creating a project management plan. A project management plan defines the processes of how 5 stages and 10 knowledge areas of the project will be managed.

The project manager prepares the project management plan.

This plan can be as short as a few pages, or a long as a few hundred pages. I prefer the shorter versions.

Stage 3- Executing:

Executing an architectural project is simple- it is comprised of design and construction.

The project manager’s job is to inspire and lead the teams of professionals performing design and construction, as well as reward and discipline them as needed.

You may also want to split your project into two phases- a design phase and a construction phase, and treat them like two smaller projects. Both phases will have their own five stages.

Stage 4- Monitoring:

Monitoring is performed during the execution phase, ensuring conformity to the project management plan’s scope, schedule, cost, and quality.

Stage 5- Closing:

If you decided to split the project into the two phases of design and construction, then your project will have two closings, one at the end of bidding and the other at the end of construction.

Closing at the end of the design will include, but is not limited to: obtain all permits, conduct bidding, recommendation to select a contractor, payments to sub-consultants.

Closing at the end of construction will include but is not limited to occupancy, final payments to sub-consultants and contractor, warranty documentation, end of all sub-consultants’ and contractor’s contracts.

10 Knowledge areas of a project that impact the cost

There are 4 core (output) knowledge areas in any given project and all of them impact the cost, including the cost itself. These are: Scope- Time- Cost- Quality

In addition, there are also 6 supporting (input) knowledge areas that also impact the cost. These are:
Integration- Communication- Stakeholders- Risk- Human Resources- Procurement

The table below is a simplified and modified version of PMI’s knowledge area table that gives a holistic view of project management processes.

Knowledge AreaInitiating PhasePlanning PhaseExecuting PhaseMonitoring PhaseClosing Phase
1)
Integration
Develop Project CharterDevelop Project Management PlanDirect Project WorkMonitor Project WorkClose Project
2)
Scope
Develop Scope and Work Breakdown StructureMonitor Scope and Change Orders
3)
Time
Develop ScheduleMonitor Schedule
4)
Cost
Develop Budget and Secure FundingMonitor Expenses
5)
Quality
Plan QualityMonitor Quality
6)
Resources
Plan Resources and Develop TeamMotivate TeamMonitor team Performance
7)
Communication
Plan CommunicationPerform CommunicationMonitor Team Communication
8)
Risk
Plan Risk MitigationMitigate RiskMonitor Risk Mitigation
9)
Procurement
Plan ProcurementPerform ProcurementMonitor ContractsClose Contracts
10)
Stakeholders
Identify StakeholdersPlan Stakeholders EngagementPerform Stakeholders EngagementMonitor Stakeholders Engagement

It is said that among the 10 knowledge areas, communication is where the project manager spends 90% of the time. A major part of this effort goes to tracking expenses and ensuring profit.

One thing you may have noticed that the project manager is not performing any execution activities for scope, time, cost, and quality, which are the 4 core outputs of a project.

So, it was an interesting discovery for me that these 4 outputs of a project are supposed to be performed by the team members and the project manager’s job is to facilitate and inspire them using the rest of the 6 inputs.

What about ARE 5.0 PjM- project management?

You may be wondering why I am suggesting PMP when ARE 5.0 covers the subject of project management.

While it is true that ARE 5.0 covers many important and useful aspects of project management, it is also true that it does not provide you with a holistic picture of a project.

Compare the PMP 5 stages and 10 knowledge areas with the following NCARB PjM topics:
1) Resource Management
2) Project Work Planning
3) Contracts
4) Project Execution
5) Project Quality Control

Did you notice that ‘cost’ is not one of the items that NCARB thinks as important for architects to know for licensing and practicing?

Besides, the architecture schools never mention a word about managing cost for design projects.

No wonder the architects are reluctant to discuss the money part of the project and rely on their luck to make a profit.

The NCARB’s list is a mixture of project phases and knowledge areas. It shows an incomplete picture of a project and does not address how to deliver projects with profit.

What happened after I passed the PMP exam?

After I digested the PMP training material, I took the time to study it further and I passed the exam on my first try- yay!

PMP taught me how project cost is interrelated to scope and time. You develop an estimate of the hours required for design, documentation, and construction administration. If the owner wants to change the scope or design then that needs more time that will be charged to the owner.

If the designers do 5 design iterations instead of 3 as budgeted, then the time spent for 2 additional iterations will eat up from the architect’s fee.

If a project has been budgeted for say 10,000 hours and it spent 12,000 hours, but the additional 2000 hours cannot be charged to the owner, then the architect’s budget will be blown by 20%. Most likely this project will not make any money for the architect.

The math is simple, but what is not simple is to have the partners share the fee numbers with the project manager at the onset and provide human resources support throughout to track hours being spent.

PMP certification gave me the confidence to demand the fee numbers and work with human resources on billable hours tracking.

Since then, I am able to determine the project budget based on the fee at the onset of a project, track billable hours throughout, and complete projects with profit.

PMP helped me win the challenge and help others win as well!

Now I oversee fund management for large projects in the public sector that includes guiding architects’ proposed fees accurately, reviewing architects’ base fee and additional fee requests.

Conclusion

With the project management certification under my belt, I have a greater appreciation for what I am doing as an architect with a much bigger purpose.

I have expanded my career into project delivery including funding, architect and contractor selection, and guiding them through designing and building.

Thus, I can facilitate and inspire architects and the entire team to deliver better and profitable architectural projects.

In my case, PMP certification drove my career.

If you are pursuing an architect’s license, consider PMP as the next credential. If you have given up on the licensing for good reasons, you should seriously consider pursuing PMP. As I did both, I can tell you first hand that it is not easy to pass the PMP test but a lot easier than passing the ARE exams. However, the market value for these credentials is quite compatible.

If you have a story to tell that the readers can learn from, please share it by writing a guest post. Please contact me if you like to do so.

If you want to know about the great contributions the future architects are making to fight COVID-19, read this post- “COVID-19: How Architects are Taking on The Challenge.”

There is more than one way to lead architecture that I presented in this post- “6 Ways to Lead Architecture in 2020 and Beyond.”

You may also be interested to read my first post- “The Future of The Future Architect.”

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