| |
| Project management: are the local investors ready? |
| Real Estate Review #5'2005(52) |
Concept of project management widely used abroad in all economy branches, not once has proved its expediency. However in the Ukrainian market of the real estate this model of business dealing began to be applied rather not for a long time ago. As consequence, there are more questions, than answers to them. To clear the situation we have addressed to Milan Pajevic, the operating director of company " Slav-Invest ", in the portfolio of which there is a set of objects of various structures « from zero » and "on a turn-key basis".
- Mister Milan, in your opinion, has the market of project management services developed in Ukraine? If not, why, that stirs: insufficiency of the companies’ technological maturity, incompetence of the Clients, superprofitability of construction?
- the Market of granting of project management services in Ukraine is in a stage of becoming. An attribute of this is an increasing investors’ demand for such services. Prominent feature of the Ukrainian society today is the participants of that market understanding what means under granting professional services on projects management. First of all, it is "game rules" which do not vary during the project realization.
It is known, that one of the basic processes in project management is realization of a high-grade control over all kinds of works which are carried out by contractors. By the developed tradition, information from certificates about works have been executed is not enough to judge the project status and to do forecasts about, whether the project will be completed “in time” according to the allocated budget. Hence, an additional administrative control over the project is needed from the Client’s side.
If the Client for different reasons has no corresponding resources, he passes project management to an external independent managing company. Any contractor, naturally, is not interested in the additional control of the Client. Therefore very important is the process of entering a contract with duly inclusion of necessary positions in their texts.
One more not less important factor influences the necessity to involve an independent, professional managing company. This is a requirement of investment funds and banks to present reports about usage of means and forecasts about results of the enclosed means not from the direct addressee of the demand credit line, but from the company which renders such specialized services.
- - Project management assumes a system approach to solving of the primary goals of management of time, quality, and financial resources by means of information technologies. Coming out of your observation, are all these goals really interesting to the companies equally, or something dominates more (for example, management of the budget with the detriment of quality)?
- As for the usage of system approach in project management, it is necessary to notice, that its basic principle is representation of some system in the form of interconnected elements. The project is always a set of systems with variety of elements and connections between them. To build the system, to establish all the connections, to suggest and force all participants of the project to accept the "game rules", at the intuitive level to feel weak places of the project – here is the talent and art of the project manager supported by experience and knowledge of the team.
It is necessary to give the due, but not necessary to exaggerate the value of information technologies. Any project management package is only a tool of management which is very necessary and important, but reflects only a model of the project, that is our understanding of it. Hence, more important is how the system and connections, communications between the parties of the project, put in a basis of the project models, are built.
- How does your company insures itself against incompetence of the Clients, at each phase of the project’s life cycle, at each stage?
- It is impossible to get insured from incompetence of the Client. But thus always there is a choice of acceptance or refusal of the proposal to participate in the project of such a Client. Refusal of the project simply liquidates such a risk which is the most serious at our market.
Participation in any project is a certain risk for the managing company. We have our own system of selection of potential projects by such criteria, as object purpose, competence of the Client, maintenance of financing from the Client, a risk level in the project, maintenance of the project with resources of the managing company, unique characteristics of the project. We do not participate in those projects, in which risk of interaction under the project with the given concrete Client is above our expectations.
- In your opinion, in which cases it is necessary for companies to pass managing of the project « from idea to realization » to the management company, and in what cases it may be made independently?
- From our point of view it is necessary to pass the project to management and to appoint the concrete responsible person. The question concerning transfer of the project to an external management company is always solved by the Client/investor. If in the company constantly realizes standard projects which are characterized by a standard set of works, settled organizational structure, approximately identical terms of realizations, but naturally having certain unique features, for such projects it is more reasonable to create own project office in the existing organizational structure.
If the project is unique, connected with many works, has a complex organizational structure, prospective term of realization not less than year, in that case it is more pertinently to involve an external independent management company. It is also necessary to involve the management company if many participants take part in the project realization, for example, the expert in marketing, conceptualist, designer (s), contractor (s), subcontractor (s), supplier (s), in order to coordinate their interaction in the project.
If in short from the point of view of the organization it is expediently to have such a structure, but sometimes it is unacceptable for the creditors who want to see not the Client’s a department or its internal structure on the managers’ places, but an independent expert company.
- So in such cases there is no necessity to organize a separate project department in the company’s structure, but it’s easier to pass these functions to a foreign management company to carry out?
- From our point of view, creation of a separate projects department or project office is always pertinent for the company whose primary activity is realization of typical repeating projects. The organization of such office’s work will allow having a functioning intracorporate standard of project management in stock at the enterprise. Employees of project office are, analytics, project administrators, project managers’ assistants.
- How expensive is preparation and keeping project management experts for the company?
- The question of project managers professional training is very actual. Higher educational institutions of Ukraine prepare experts in «Management of projects and programs», but far not everyone even prepared expert can work as a good project manager. Keeping experts on project management depends, first of all, on the level of his responsibility in the project, on his own experience, from an operational experience of the whole team and from his ability to work in this team. Value of such an employee and his importance to the company matters too.
- What are the forms of project management in Ukraine and abroad? What are the basic differences and the pursued purposes? For example, abroad, search and a choice of general contractor is done by the management company, in Ukraine – the owner of the project. Is it so, what are the differences?
- In projects realized by us search and a choice of general contractor are carried out by the management company. Otherwise high-grade management of the project is reduced to usual technical control. The earlier the Client involves the management company into the project, it is literally at the stage of concept development, the more influence levers the management company and the manager of the project have.
We have already talked about the system approach in project management. On the basis of initial data the manager creates a scheme of project realization which, in particular, includes interactions of participants, streams of information in the project. It is always necessary to remember that project management is, first of all, management of human resources, therefore the main risks in projects are connected with this factor.
In the West specialization is very developed and, speaking roughly, the form is necessary to them. Unequivocally it is easier for the western companies because there are exact game rules to which everyone adheres.
Everything is different at ours. Project management requires distribution of powers and local investors are not ready to it. The majority of them simply does not want it. That’s why it’s very difficult here for the "pure" western management companies and they, as a rule, work only with the western investors or on behalf of certain investment funds. But all the same they exist and it says about becoming of the market of granting project management services.
- Please, more in detail about the basic key functions which you provide to the companies-clients?
- Our company can render a full spectrum of services: from the concept development to putting the object in operation by a principle of «key in hands». The list of functions when managing projects is very wide and depends on for realization of which phases of the investment project the management company is involved. Basically, these functions concern realization of technical control, planning and control over the terms and cost of design and construction-engineering works execution, coordination of the designers, contractors, suppliers of materials/equipment.
At some projects our functions consist in realization of technical control over the construction, at others we bear the responsibility before the Client for handing-over the real estate object within the directive terms and the budget of the project. It is the answer to a question – what we do in the project. Use of the existing world standards on project management and own experience of the company has enabled to develop own technology of projects management.
- What risks can you allocate in supporting projects in Ukraine, abroad? Are they different and in what. What methods on insurance, levelling of risks are used by your company?
- Project management is somewhat of purposes management, that is the management aimed at the result. Except for three known criteria one more is considered recently – management of risks. The risk is something what everyone should accept as a reality but which according to the last theoretical researches are may and must be modeled. Different scripts of project development, in which it is possible to predict possible risks, carry out monitoring and supervise possible approach of risk events, are used for it
The market of insurance services is aimed basically at insurance of well-known risks – such as insurance of civil and erection works, insurance of cargo transportations, insurance of the responsibility before the third parties, complex insurance of the personnel, insurance of vehicles. Such kinds of insurance are used by us too.
But in fact except for the risks listed above there are risks of works execution terms failure by contractors or failure of object’s hand-over terms, risks of Client/investor having undertaken the profits, risk of incorrect estimation of construction cost.
Hence, one of methods of risks reduction in the project is division of risk between project participants. It is a very effective tool which reduces possible occurrence of risks not only at the stage of project planning, but in some cases at the phase of initiation. On the basis of detailed plan of works execution, for each project we develop the responsibility matrix, defining a degree of responsibility of each project participant at each work, phase, stage.
The Client, management company, general designer, general contractor, subcontractors, some suppliers of materials/equipment act as participants of the project. Competent planning of the project is the keystone to the project success. By experience it is well known that exactly those problems which at the planning stage we don’t consider valuable and to which we don’t pay enough attention, turn to risks, to operate with which is much more difficult at the stage of project realization.
When realization the project we on a regular basis carry out monitoring of the project to receive the operative information concerning the point we are at now in relation to the project directive parameters. If there is a risk of termination dates failure by works contractors, we re-plan the remained works with increase in time of the working day, involving more resources.
An interview with Milan M. Pajevic
Operating director of “Slav-Invest” LTD
<<<Other articles
|
 |
|
|
