Program Management vs. Project Management...Who Will Survive?

Constructech Magazine

Bob Rakow, Features Editor

Understanding the difference is part of the challenge that the construction community is facing. However, once construction professionals delve deep into what these two solutions offer, making the right selection for managing multiple projects becomes a whole lot easier.

Project management. Program management. The terms sound a lot alike, but the fact is there are very few similarities between the two methods of managing construction projects. Most construction professionals are familiar with project management. Quite simply, it’s an approach employed by owners, project managers, superintendents, and other supervisors to oversee all phases of a job—from owner contracts to close-out documents and everything in between.

As technology has blossomed within the industry, a rising number of contractors have turned to automated project-management systems to keep tabs on a job. Requests for information (RFIs), requests for proposals (RFPs), bids, estimates, schedules, drawings, documents, photos, and much more can be accessed and constantly updated using a project-management system. The result is realtime information available—often via the Web—to any project participant who requires it.

The reality is, a project-management system has become a requirement for effectively overseeing a construction project. It is not, however, the best approach for organizations that need to manage multiple construction projects, and that’s where program management comes in. Program management lends itself to large projects. That is, projects that include multiple components under a single umbrella, such as a corporation or government entity. Like project management, program management encompasses all phases of a project, including pre-planning, budgets, and scheduling through design, bid and award, construction, and move-in. Yet unlike project management, there are almost always multiple jobs involved, such as a retailer rolling out several new stores or a government agency building numerous facilities. Other market segments that rely on program management include education, corrections, wastewater, public utilities, and transportation.

Often, owners in these segments have multiple projects occurring simultaneously and rely on a program manager to oversee the ongoing and sometimes overlapping work. In many instances, program-management services are outsourced. The tight economy has prevented many owners from maintaining in-house program managers, or if a construction project is of a short duration, hiring outside consultants is often a more efficient approach. Additionally, many program managers have specific areas of expertise and can draw on lessons learned from other projects. “A program manager steps into the shoes of the owner,” says Tom Roger, vice president of program management for Gilbane Building Co., Providence, R.I. “The program is usually a multiproject type of situation.” Why program management rather than project management? “While project-management tools have expanded to include new features and functions, the original premise of managing milestones and task relationships on a specific project has remained constant,” says Ken Hirshey, CEO of Cyntergy Technology LLC, Tulsa, Okla., the developer of Thumbprint CPM, a collaborative program-management tool. “Few (project-management providers) have looked beyond the single project mentality to gain a global-level program-management perspective.” Instead, they are designed to track a specific job but are too cumbersome and inflexible to oversee multiple projects, he adds. Some project-management vendors would take issue with Hirshey’s contention.

For example, John Bodrozic, president of Meridian Project Systems (MPS), Folsom, Calif., points out that his company’s solutions are definitely appropriate for program managers. The state of Arizona, for example, used Meridian’s ProjectTalk to manage a massive school renovation project, while the city of Jacksonville uses Prolog Manager to manage its infrastructure project, Better Jacksonville. In fact, Prolog Manager 7.0, the most recent version of MPS’ project-management system, includes new functionalities designed to help users handle data from multiple projects. “Prolog will help our clients build a vital company knowledgebase and further standardize development and construction processes,” says Bodrozic. Prolog Manager 7.0 is designed to automate all aspects of the construction lifecycle. More importantly, however, the latest version includes a new Executive Dashboard module that allows companies to track key performance indicators and monitor all levels of profitability, efficiency, and performance, allowing team members to identify and mitigate potential areas of risk before they impact project delivery or the bottomline. “It’s analysis of the data rather than just rolling up (individual) reports,” says Bodrozic. For example, instead of simply tracking individual RFIs, a contractor can determine the average time required to close RFIs, which is much more valuable information. “There are many definitions in my mind of what program management means,” Bodrozic continues. For example, a program could include the roll out of a series of retail stores within a specific time period or it could encompass a city’s capital construction program. “You still need to manage a budget. Either way, the processes are relatively the same,” he adds.

Jon Antevy, CEO of e-Builder, Fort Lauderdale, Fla., says his company’s project-management solution was aimed specifically at contractors when it was launched eight years ago, but focuses on owners today and provides functions from which a program manager could benefit. For instance, the Miami/Dade school district uses e-Builder to manage its new construction initiative, which mandates low bidders be hired for each job. As a result, there are far more project participants involved than on a private job, which would feature a single architect, general contractor, and so on. “They aren’t taking one plan and using a cookie-cutter approach,” Antevy points out.

Lessons Learned

The program-management perspective is necessary for large organizations that want to manage multiple projects in the most efficient and cost-effective way possible. For instance, it makes little sense for a national retailer that is rolling out several new stores to manage each project separately. The stores will have a similar if not identical appearance and will require many of the same materials and construction methods. Why not let a program manager oversee the entire construction process, thereby gaining significant economies of scale and efficiencies and apply the lessons learned at one jobsite across the entire project? “If you don’t centralize punchlisting, for example, no one learns from mistakes,” says Rich Sampson, president of Rich Sampson Associates, a project-management consulting firm located in Pleasanton, Calif. Sampson maintains that a program manager’s input and expertise is critical at the beginning of a project. “They’re needed at the beginning of a program. They’re going to create the greatest value at the beginning,” he says. “If you don’t do it at the beginning, it will never happen. Program management is the intelligence supplied before and during a project.” It’s at a project’s inception, after all, when numerous efficiencies can be attained, including choosing the appropriate architect, engineer, general contractor, suppliers, and subcontractors. Additionally, real estate negotiations and the permitting process are handled early on and can be completed more quickly and easily if handled by a program-management team.

Finally, program managers have more bargaining power if they procure materials and equipment for several projects at once. “The [program manager] has to lay out some procedures for his project manager,” Sampson continues. “The project level affects what’s going on at the program level.” One retail organization that is almost constantly building new stores is Wal-Mart, Bentonville, Ark. The retailer recently implemented Thumbprint CPM to better manage the construction process and get a handle on the data that carries over from one project to the next. In the past, Wal-Mart’s realty division relied on Excel spreadsheets to manage the construction process. “That’s all we had. All the information was a couple of days old, even a week old,” says Pat Carroll, director of construction for Wal-Mart Realty. Carroll and his team are involved in 400-500 projects annually, including subdividing and leasing Wal-Mart stores that are closed to make room for Wal-Mart Super Centers as well as the construction of individual businesses that are located at the front of existing stores.

The use of Thumbprint CPM is not limited to Carroll’s team. Architects, contractors, suppliers, and tenants all tap into the system to access project information. “It really works well as a program-management tool,” says Carroll, who explains the system builds a model for each construction project. Specifically, Thumbprint CPM asks questions of users during project creation to apply knowledge learned on past projects—an approach Cyntergy Technology calls “learn as you build.” The system’s learning knowledgebase captures project and process information and then shares that information across the program. For Wal-Mart, one of the most immediate results was a reduction in the number of meetings required to update project participants. “It’s going to help with our efficiencies, our communication,” says Carroll. Additionally, electronic access to documents has eliminated the need to fax project photos and reports. “There are all these aspects of a project that are similar,” says Doug Karmel, a senior vice president for the distribution business unit of The Facility Group, Smyrna, Ga., an organization that provides program management and construction services. “There are a lot of components that are similar,” especially in warehouse construction, which Karmel’s group specializes in. “There are all these aspects of a project that are inter-related. It’s extremely difficult to manage them without some sort of tool,” says Karmel, who adds that poor communication is one of the most significant problems encountered by construction organizations that do not have some type of program-management system in place.

A Growing Market Program management has flourished during the last decade as construction projects have become more complicated. When the Transportation Equity Act for the 21st Century (TEA-21) was approved a few years ago, significant funding became available for major infrastructure projects—just the kind of work that benefits from program management. Other drivers include the growth of green construction and fast-track projects. “It’s been a growing market segment for us,” says Gilbane’s Roger, who agrees the tighter economy has led many owners to outsource program management services. “I think owners are getting more confident with getting an outside firm to take over their responsibilities,” says Roger. Gilbane’s program management division, which is responsible for about 20% of the company’s business, is currently working on a 13-year, $1.1 billion education project that calls for rebuilding every school in New Haven, Conn. “There’s a tremendous amount of public involvement,” says Roger, who adds that government agencies prefer outsourced program management. For instance, the state of Connecticut agreed to reimburse a portion of New Haven’s program-management costs because the work was outsourced. “That’s happening in most states,” he says. Thus, the need for program management is truly beginning to take center stage as more and more construction professionals realize the benefits that can be achieved when trying to manage multiple projects.