Project Management Regency Plaza

Table of ContentsPage 1. Executive Summary (207 words) 2. Introduction (280 words) 3. Project Definition Phase (949 words) 3. 1Problems Encountered during the Project 4. The Project Manager (790 words) 4. 1Assessment of Kris Hodgkins 5. Risk Management (938 words) 5. 1Evaluating Risk Management 6. Miller’s Dilemma (821 words) 7. Final Discussion (398 words) 8. Conclusion (142 words) 9. Appendix 10. References 1. EXECUTIVE SUMMARY Being a successful hotel operator, the Regency Hotel Group (RHG) has the experience, the resources as well as the capability of managing the Regency Plaza Project. So the question is, why has the project been dogged by various problems? From slow sales growth, unhappy customers to increasing costs, internal conflict as well as work delays, the list is extensive. One major reason for this appears to be poor planning. With proper planning and project management in place, scheduling and coordination is made much easier. Any arising problems could be identified and resolved which would lead to less time and money spent on rectification. This would in turn enable more time and resources to be spent on the refinement of the works which would result in the completion and success of the project. The RHG has established a reputation and a brand name associated with good service, luxury and an extensive range of amenities. Failure or even further delays on this project would be detrimental to their reputation. This goes to show the importance of project management in relation to the organization’s strategic mission. This report will assess how the Regency Plaza project was managed and implications for future project managers to take note of. 2. Introduction Lewis (2005; P23) mentioned that haste makes waste and it is very true. But in the â€Å"hurry up and get it done world†, there is little patience with â€Å"wasting time† on all that planning. The result? Rework and rectification, which is 100 percent waste. Experts estimated that one-third of the cost of the average project goes to correcting errors through reworks. Having said the above, there is still no flawless project process. Why is that so? This is because we are all human beings, and human beings tend to make mistakes. In situations where time, cost and resources are of special concern, project anagers tend to make more irrational decisions, resulting in more re-work. The Regency Plaza case study is a key example. So how can these errors be minimized? What projects managers can do to minimize these errors is to ensure that there is proper planning, project design and project management. Projects are stepping stones of corporate strategy and its success is the lifeblood of every organization RHG is well known for her luxurious fitt ings and high service quality in the hotel industry. The Regency Plaza project was formulated using this strategy in the challenging market environment. The role of the project manager (which in this case is Hodgkins), is to take responsibility for the overall success of the project. However, this is not seen in the Regency Plaza project. As indicated, this project has been racked with many uncertainties. This essay will evaluate the following: 1) The Project Definition Phase of Regency Plaza, 2) The Role of the Project Manager, 3) The Overall Risk Assessment, and lastly 4) The Implications for the Project Manager facilitating the pace of the project. 3. Project Definition Phase The overall project definition phrase goes according to the following cycle diagram which shows the interrelationship between the 3 stages of project definition. Goals RHG had a clear goal in mind of what they wanted to achieve in this project development; that is, to develop Regency Plaza. This is their first attempt venturing into building luxury condominiums units together with hotel rooms. The financial aim was to earn projected gross profits of $134. 4 million and net profits of $26 million. In the development of Regency Plaza Project, luxury condominium units are also included. The management failed to take into account the fact that they are venturing into a new business territory involving long-term residential condominium units. Hotel guests and condominium residents have different levels of expectations not to mention the fact that the Regency Plaza is a luxury development. While being established and successful in their main business is good, perhaps this has also contributed to the over-confidence of the management and their failure to set appropriate realistic goals. A project priority matrix was first developed to identify the various levels of project priorities in terms of time, performance and cost which interelate to the goals set. Project Priority Matrix | | | | | | | | | | | | This would signify the following for the Regency Plaza Project: ? If the project is behind schedule, there will be a reduction in the completion time in order to successfully market the product ? If the project is behind schedule, cost budget will be increased to speed up work ? The original specifications fixed cannot be compromised Specifications When the project management team under the leadership of project manager Hodgkins was set-up by RHG management, plentiful amounts of information/data/specifications was provided. It was a tough period for Hodgkins as she needed to undertake many decisions of deciding on the project’s main specifications. For instance; she had to decide on the number of units that would be offered when the project was completed. From RHG’s perspective, obtaining the maximum profit from the 96 units would be deemed as a wise decision, whereas considering the duration and deadline of the project, choosing to build more units would be tedious not only in terms of planning and meeting deadlines but also with regards to cost in terms of materials. At the same time, one of the key strategies of the development was allowing buyers the option of customising their units. As such, the decision to opt for more units is a core decision which would greatly affect the project’s main specifications whereby the rest of the specifications that follow would be affected as well. Tasks and Responsibilities As ambitious as RHG may be, following the concept development, they not only left key decisions but also the majority of the project responsibilities and decision-making power to Hodgkins. However, this fact was not communicated to the rest of the project participants, resulting in many individuals influencing the project manager’s decision. RHG management had failed to organize the task and responsibilities in a systematic manner where there is proper information dissemination and a tight chain of command. The management also failed to supervise and maintain a series of checks and control for the entire project. It was also noted that the management had a different project team working on the hotel but the same contractor. It is essential that both teams work closely as any delay by either party would impact on the other as could be seen when construction slowed down on the hotel nearing the completion date due to issues with the condominium units. Conflict and unhappiness with the contractor and vice-versa also impacted the other. Decision making process hindered by too many parties pic] 1. Problems Encountered during the Regency Plaza Project Unable To Complete Before Scheduled Time In the case of the Regency Plaza Project, the hiccup encountered by the project manager was behind schedule If a clear and sufficient time frame was pre-planned in the project definition phrase, the possibility of such a problem occurring would be greatly reduced. The project manager had failed to allocat e and include an amount of time/duration into the entire project duration as a contingency plan to rely on in the event of phrase failure or delays.. In the initial tender stage with the contractor, the lowest bid selected and the selected contractor was persuaded to cut off 3 months from their target date. This was agreed with the understanding that the timeline was tight but with minimal changes and disruptions, the time line could still be met. With this in mind, the project manager should note that no disruptions or delays could be tolerated. There also appears to be a lack of proper checks and progress updates, as if this was present, the problem would be flagged earlier on and measures to resolve this could be established. Decision making hindered by multiple stake holders The decision-making process, right from the conceptualisation stage had to go through tedious discussions with the stakeholders. The nature of the project itself, with two separate project teams (hotel and condo) as well as the customisation element, meant that while the responsibility laid with Hodgkins and she was tasked to make major decisions, she had difficulty doing so as she needed to accommodate and take the various stakeholders into consideration while trying to obtain the optimum profit/benefits. If the major decision maker has been determined during the project definition phrase, a systematic flow utilising the decision making matrix should be used to avoid the problem of too many decision-makers. 4. the Project Manager The role of the project manager involves integrating, planning, organizing, controlling and leading. Hodgkins needs to be able to properly communicate and combine the crossing points of functional departments, the subcontractors and other stakeholders. In the initial planning stage, Hodgkins needs to identify the task each stakeholder is involved in and the targeted completion deadline. This will provide a better picture of the resources availabile at each stage of the project. Hodgkins is required to manage and organize the project team that was put together for her by Regency. This controlling role requires the project manager to plan out the objectives and processes required to reach the end goal. Following which, the assigned processes need to be implemented and at various stages, the results need to be tracked and tallied to ensure that the expected outcomes are reached. Lastly, project manager must be flexible and react decisively. There is a eed to constantly keep track and analyze the cause of any differences and re-evaluate the whole process and make the necessary changes. A project manager should lead by example as it is a highly visible management style that will build and sustain cooperative relationships. The skills required as a project manager would be as follow; 1. Good communication ensures that valuable information related to the project status is provided in a timely and effective manner. 2. Ability to work as a team will allow team members to understand their roles and responsibilities on the project and work collaboratively. 3. Listening skills is important because good listening skills is needed to truly hear and try to understand what others on the project are trying to say 4. Planning skills will help the project manager provide each functional department a clearing schedule of their work. 5. Persuasion techniques – influencing without direct authority and obtaining win-win situations 4. 1Assessment of Kris Hodgkins Hodgkins dismissed Farley’s, a renowned condominium marketing consultant, suggestion on building larger but less units. Her focus was to hit the projected sales targets and failed to consider the merits of Fraley’s suggestion. She also realized that customization had disrupted the completion of the project, but did not try to persuade the management on giving up the idea. If she had done so with the evidence of the increase in cost, wastage of materials and potential complaints from customers that may likely lead to damages to the company’s reputation, the management may have reconsidered their commitment. Hodgkins choose not to discuss with the buyers about the option on customizing individual units, as she felt that most of the customizing could only be done after the building was completed. This resulted in the wasting of materials and resources as the base design that was constructed had to be ripped out and rebuilt according to the buyers’ changes. This has also resulted in a delay in the work flow because with incomplete drawings the main contractors are not able to get accurate quotes from the subcontractors. By not processing and disseminating vital information promptly, miscommunication occurs, the work process is lengthened and the pressure is placed on the final recipient. A key example of this is the situation where Hodgkins only delivers sketches from the interior designer to O’Brian and Sinclair when she had the time. An instance where miscommunication results is when Hodgkins never explains to Helen Miller that the reason why the bills she received are so expensive is because of the complexity of the work and the incomplete design provided by Susan Randolph. Incomplete control and bad planning where there is no proper task breakdown structure in place resulted in continual changes to design even while the opening date is closing in. This causes the already tight timeline to be stretched even further, not to mention the fluctuation in manpower, increasing costs and subsequent further delay to the project. As mentioned earlier, the two project managers from Regency are working as different entities although the main objective is for the building to be completed sooner. Furthermore when Hodgkins realize that sales was not doing very well, she did not discuss with Farley and the sales staff on ways to improve sales figure. It can be concluded that Hodgkins is not a good project manager. She failed to communicate vital information to the stakeholders. She was given a team to help on the sales but did not make good use of it. It was only till things were getting out of hand that she called for a meeting. If she had done so earlier, this would have reduced the amount of time and resources wasted. There is also evidence of poor control and checks, bad planning and a refusal to address issues and update management of problems. 5. Risk Management The Risk Management Process consists of four stages which are elaborated below; 5. 1Stage 1: Identify – Risk Identification Identification ensures that actions and contingencies are focused upon specific risks. Actions may then be developed to specifically target this risk and attempt to reduce its impact. Risk Breakdown Structure i. Complexity – The strategy of customisation of condominium units resulted in the delay of the project’s completion. Hodgkins did not identify and assess such risks when she took on this project. If she had done so, it would have allowed her to factor this in when assessing the contractors and costs and would also have given her ample time to develop choices of strategy to tackle the problem. ii. Subcontractors – Time was an issue during the designing process when making alterations to the condominium. This would have been acceptable if the issue had been addressed at the beginning and contingency plans were made. But Hodgkins preferred to take the chance of hoping customers would settle for what was given instead. This was a curious decision that she made in view of the fact that customisation was a selling point for the condos and the target market consisted of wealthy couples who were likely to have higher expectations and would want something personalised and unique. It would not be surprising and would in fact be expected that they would opt for customisation despite the additional cost to them. This judgement error by Hodgkins resulted in problems with regards to work schedules and budgets. Once alterations were required, the process of designing these changes would take weeks. This placed a lot of pressure on the contractors. iii. Construction Management – Due to the customization option available to the buyers, Hodgkins was required to ensure proper management of the overall construction of the project. Any delay on any aspect of the project, eg the delay in completing floors would have a chain effect and cause delays to other parts of the project (i. . the Millers’ case) and result in additional costs. While the buyers are willing to pay for the cost of alterations that they have made, the extra costs associated with the delaying of the entire project would not be their responsibility. Due to the fact that the contract between RHG and the contractors was a fixed sum contract, as such the contractors would be extremely cautious of committing to anything. 2. Stage 2: Analyse – Risk Assessments Rank risks according to the likelihood that the risk will occur and also the severity of its occurrence. The ranking is usually done using words such as ‘Severe’ or ‘Highly/Likely’ which are then linked to numerical values that can be multiplied together. The results can then be ranked, with the highest number the one which most requires attention. For Regency Plaza Project, the major potential risks are plotted below Risk Management Assessment Matrix | | | |Contractors- Time Length | | | | |Complexity |Construction Management | | | | | | | | | | | | | | | | | | | | 5 4 Likelihood 3 2 1 1 2 3 4 5 Impact Red zone–Major Risk Yellow zone-Moderate risk Green zone–Minor risk 5. 3Stage 3: Planning – Risk Response Development Risks cannot be ignored. They may be tolerated, treated, transferred to another party or terminated. Below are some plans that can be used to tackle the major risks: i. Complexity – Solutions of strategy to reduce possible risk damage will be accepting the recommendation offered by Farley on building larger units. If Farley’s recommendation had been taken up, the risk of complexity will be reduced due as there will be lesser buyers and conversely less complications and liaison required. This will result in lesser probability of alterations and the progress of the project can be increased tremendously, while additional cost due to delays is avoided. In terms of the consideration of revenue, bigger units can be priced higher thereby making up for the lesser units. Another alternative will be as mentioned before, if Hodgkins had identified the risk of complexity upon taking up this project, she will then have the necessary time to plan out and tackle the source of this risk. Other than factoring in sufficient contingency time, she would also be able to appeal to management and stakeholder to lengthen the time scheduled for completion. This additional time would enable additional marketing of the units and possible recommendations from satisfied buyers which would assist in the slow sales. ii. Subcontractors – If the issue had been tackled earlier then a visible framework could have been set up with adequate and fixed deadlines that would cause little or no problems to the contractors and allow the changes to be made before critical areas of the condominiums were constructed. This difference would also help avoid the majority of complaints from customers regarding delays and slow service. iii. Construction Management – This again could have been planned more effectively if the scope of change had been correctly defined and agreed at an earlier date, allowing for more efficient use of resources and better planning. 5. 4Step 4: Management – Risk Response Control Hodgkins should monitor the project progression, do an extensive risk assessment, anticipate possible risks and handle unforeseen new risks. All these should be updated to project team members and stakeholders during regular meetings. Problems should be embraced and resolved and not concealed and denied. All the team members should be encouraged to identify problems, mistakes and new risks, and ensure that constant communication and information flow amongst the project members. Hodgkins should also make an effort to communicate and highlight issues specifically to the hotel project team who will be directly affected by any problems on the condominium project. 6. Miller’s Dilemma In view of the Millers’ predicament, Hodgkins was found to be trapped in a tight spot with only five options to consider. Option 1: The first option of telling the Millers that it was too late to customize the unit would have a disastrous impact. The buyer-seller relationship and reputation of Regency Plaza and its management would be put at stake if the Millers, who are active and influential members of the Boston social circles, were to spread the information amongst their social circle (who are the potential target market of this project). Even if the Millers decide to undertake this option, extra time and coordination would be required as changes to the unit might involve shutting down the entire floor, hindering construction on other units and causing further delay to work schedules. At the same time, the positive effect of this option might not be beneficial to Hodgkins either as it may make no significant impact on the already delayed work schedule. Option 2: The second option would involve pushing through the changes. This would reduce the amount of demolition work required and keep the Millers satisfied. However, on a macro view, putting the unit on hold would delay schedules and have impact on both direct and indirect costs, eg delaying the hotel project and thereby the loss of possible income from occupancy. Should the Millers decide to draw out this option and the changes take a longer time, the cost liability during the holding phase would be a grey area which would add on to the complexity of the problem. Option 3: The third option to hire a small general contractor to finish the unit before closing may not resolve the Millers’ problems. Extra overhead expenses would be extremely expensive and it would be tedious for Hodgkins to handle two general contractors. The possibility of conflicts and disagreements on roles and responsibilities might arise between the different groups of contractors, adding complexity and delay to the project. This may also impact the morale of worker in Kelly Construction thereby impacting quality of work. But the advantage of hiring small contractors could be beneficial looking at it from a microscopic view. Changes to the Millers’ unit could be accomplished while works on other units could be carried out concurrently. This would allow works to be completed and costs would not be borne by Kelly Construction which would minimise any other inconvenience. On hindsight, this option might be appealing to the Millers as well as they could get their unit on time. But, the price of satisfying the Millers by increasing management expenses significantly may be too great for Hodgkins to justify paying for. Option 4: The fourth option involves stopping work and handing over an empty unit. The advantage of this approach will be that the Millers could finish the unit at their own convenience while works on other units could be done concurrently. However, Hodgkins could still be trapped in the dilemma if she were to execute this approach. On top of the fact that the costs have already been incurred and work would need to be undone, the bank’s unwillingness to lend money could add on to the Millers’ frustration, which could be extremely unfavorable to the reputation of RHG. Regency would also lose control over the project and may be forced to deal with other occupants who want this option. In a construction sense, there may be future issues with works to units done by external contractors. Option 5: In general, the last option of moving the Millers to a different unit on a higher floor would be a more feasible and win-win alternative. It would generate the least negative impact on both time and cost. Most importantly, all parties – the Millers, Kelly Construction, Susan Randolph, Hodgkins and even the RHG, could benefit from this approach. A higher floor unit is of a higher value. Offering to move the Millers there (it is of course recommended that RHG absorbs the price difference), would help to â€Å"compensate† the Millers for any inconvenience caused. This move would be a positive long-term investment in exchange for the satisfaction of the Millers and sustainability of the positive impression for RHG. Likewise, moving the Millers to a higher floor in which interior work had not yet started would buy additional time for the contractors as no demolition work is required. There would be no wastage of materials and significant cost savings would be anticipated. Susan Randolph would also have a larger time frame to make changes to the designs while cost assessment and approval could be done concurrently without affecting the schedule. In view of the fact that sales figures are not high, there would not be any significant inconvenience caused to RHG and in fact this move may assist in sales if the Millers are positive about the Regency Plaza Project and this is circulated in their social circle. 7. Final discussion The above evaluation has revealed that the Regency Plaza was not very well managed. A major factor contributing to the failure is poor planning. The project seems to be in a mess as roles and responsibilities are not properly defined and allocated, the decision- making process is muddled and is not well communicated. there are no proper checks. These problems could be easily overcome if delegation of roles and responsibilities was communicated clearly (refer to appendix on RAM). Every modification introduced within the project phase can have certain impact on the level of achievement of the project (Lock 1992). Each modification could take several weeks so that quotes could be gathered and reviewed. In t he case of the modification of the Millers’ unit, this caused the delay of the scheduled completion of the twelfth floor and has also affected the safety and infrastructure of the building. As such the risk management aspect was not well taken care of. If the issues had been addressed earlier through constructing a project network, this would cause little or no problems to the contractor as it allows changes to be made before critical areas of the condominium were constructed Newell (2002) suggested that assumptions must be made for the purpose of project planning. However in Hodgkins’ case, her assumptions are flawed and not thought through properly. She assumed that most buyers would not customize their units and would settle easily for what was given. By assuming such scenarios, she had overlooked the target market for the project, ie the wealthy. This error in judgement disrupted the completion of the project, raised overall budgets and caused much dissatisfaction among the project group. To make matters worst, the marketing strategy adopted by Hodgkins was that of word of mouth. With complaints of delay, cted the sales performance of the project was affected and a poor image of Regency was projected. Hodgkins would have done better to have done research on the buying patterns of her target market or spoken to her contacts, market specialists or even to have discussed with her team. If the above problem was to be addressed or realized earlier, the impact would have been minimized. While assumptions may not be a bad thing and in fact are encouraged, they must be made with a contingency plan and for Hodgkins case, she does not seem to have any. 8. conclusion The Regency Plaza project was a race against time and time means money. This situation put Hodgkins in a tight spot and many decisions needed to be made immediately to avoid any delays. Many irrational decisions were thus made which affected the overall progress of the project. As a project manager, success of the project should be the first priority. Coming up with possible alternatives to tackle the tough situation is critical. Although many possible solutions were provided, however Hogkins did not appear to have used many of them to resolve the current issues related to the project. Lock (1992) mentioned that to achieve the project objectives, People, Communication, Jobs and Resources must be properly organized. Planning and coordination is essential. To summarise, Project Managers are key to the success of any project and are worth their weight in gold. . Appendix Responsibility Assignment Matrix(RAM) Task/Resource |PM: Hodgkins |KDS |O’Brian and Sinclair |Kelly Construction |Millers Designer: Randolph |Consultant: Farley |Sales Team | |Sales and Marketing |R | | | | |C |R | |Building Architectural |A |R |R |C | |C | | |Customization |I | |C |R | | | | | Managing the subcontractors | |I |I |R | | | | |Miller’s interior design |I |I |C |C | R | | | |Construction invoices |R | |R |R | | | | | R = Responsible (People who do the work) A = Accountable (People who make sure the work gets done) C = Consulted (People who provide input before and during the work) I = Informed (People who are kept informed of progress) Blue boxes refers to the stakeholders 10. REFERENCES 1. Ballard G & Whelton M, 2002, Wicked Problems in Project Definition, Retrieved on 14th September 2009, from http://www. leanconstruction. org/pdf/WickedProblemsinProjectDefinitionIGLC10. pdf 2. Gray C. F & Larson E. 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J, 2009, Project Management 101, Retrieved on 16th September from http://management. about. om/cs/projectmanagement/a/PM101. htm 10. Shackleton E, 2005, Managing your people; real life lessons from top business leaders, BBC Books, London 11. Tusler R, 1996, An Overview of Project Risk Management, Retrieved on 22th September 2009 from http://www. netcomuk. co. uk/~rtusler/project/riskprin. html ———————– Performance Cost Time Constrain Enhance Accept Marking Consultant (Farley) Clients Vocal Neighbourhood Groups Boston Redevelopment Authority (BRA) KDS Associates Regency Hotel Management Project Manager Hodgkins Decision Making Process