Contract and Project Management
Overview
This chapter covers the essential elements of contract and project management, examining SMART objectives, describing both good practice and mistakes to avoid and covers contract management.
Introduction
Project management can now be studied as a subject on its own for an MSc, so this chapter can only be viewed as a superficial introduction to the topic. Projects can range from massive new building projects, to improving administrative procedures or opening a new center. Nonprofit organization projects are likely to be much smaller. In fact we probably all have experience of managing projects from the very beginning of one kind or another, namely projects such as organizing events, moving a team to a new location, or commissioning new buildings. However this work may not have actually been called project management.
The definition of projects in project management terms, is that they are not the “normal, repetitive” activities or services in an organization, but a one-off piece of work to develop a new service, product, or building, so requiring specific and explicit objectives. They are time limited, with a definite beginning and end, so the project management team is only temporary. Specific resources are assigned to achieve the objectives, which can be new or existing. Invariably project management involves new and sometimes unknown tasks and knowledge, requiring additional specialists to be recruited onto the team or outside consultants contracted; in other words it usually involves bringing together people, who have not worked together before, in a change to their working life.
Managing a large organization has been compared to conducting an orchestra, but every orchestra member plays from the same music sheet, they already possess adequate skills, and rehearsal time is built in. However in a large project, you may have people in your team that you don’t normally line manage, you don’t know their capabilities, while the time available is usually limited and other demands are directed at the project management team. So this gives great scope for errors.
Change Management
Change management is absolutely crucial if an organization is going to adapt to new circumstances and develop new work methods or new income streams. “You can’t change a (organizational) culture in three months,” states Andre Spicer of Cass Business School (Spicer 2013). “The only times that might be possible is if there’s a severe external threat or emergency.” More ambitious and far-reaching organizational changes, such as restructuring, require good planning, stamina and patience, along with a clear strategy. Mergers with other organizations can be problematic and demanding, and often do not yield the planned benefits for many years. Getting staff to buy into and support planned change is absolutely essential and staff engagement is dealt with in the Human Resource Management chapter. It is important to devise strategies to encourage change and one way to work these out is to go through a planning process such as the one outlined in the preceding Figure 5.1.
Figure 5.1 Action Spiral (Adirondack 2015)
Project Stages
It is generally accepted that there are four stages of project management:
1. Scoping the concept
2. Planning
3. Implementing
4. Evaluating the results
Before the project starts however, the project leader must be agreed, along with the main project sponsor or customer and which stakeholders must be consulted, as nonprofit stakeholders have more power. This process should be carried out very thoroughly. If this is not properly agreed and written down, others will try to push forward their own ideas for the project, after the project management team has started its work.
The objectives of this first stage is to ensure that all the possible demands and issues are properly discussed, examined, and included in the final plan. It covers:
1. Discussing and agreeing the key objectives of the project, the time scales, and resources with the project sponsor and stakeholders.
2. Identifying how the project fits with the vision, objectives, and plans of the organization or team.
3. Carrying out background research into all possibilities, including any viable alternatives.
4. Conducting a Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis on the project to check on its viability.
Useful questions for the scoping exercise include:
• Why?—What is the problem or value proposition addressed by the project? Why is it being pursued?
• What?—What are the major products/deliverables? What actual work will be carried out on the project?
• Who?—Who will be involved and what will be their responsibilities within the project? How will they be organized?
• When?—What is the project timeline and when will milestones be completed?
If the scoping is not done thoroughly, problems can ensue; for example, computers installed in the wrong places in a new building. Reputed examples of poor scoping include building hospital doors that are too narrow for trolleys.
Planning
Now comes the detailed work:
1. Developing a realistic and thorough plan, outlining relevant staff, including specialists, covering objectives, work breakdown, costs, timescales, monitoring, standards, and controls—making sure any objectives are SMART ones.
Specific…clear meaning
Measurable…know when its achieved
Achievable…so it can be successful
Realistic... relating to personal, team, or corporate goals
Time based…we know the timescales and they are relevant to the activity
2. Discussing, amending and agreeing the project management plan with the overall sponsor and key stakeholders.
3. Agreeing and briefing the project team on roles and responsibilities.
4. Identifying risks and potential risks and ways to manage these.
Risks
Complacency is dangerous. If something can go wrong, it will go wrong, so risk analysis and good planning are vital to avoid problems. Likewise it is wise to double the time estimated for critical tasks due to unforeseen issues, such as delays in building work. Projects are more likely to fail because activities were not planned than they were planned badly. Everything needs to be double checked: there is the example of different teams in the NASA space agency using Imperial and metric measurement and not realizing until too late that components would not fit.
Implementing the Plan
When all the planning and consultation has been thoroughly carried out, then it is time to implement the project plan; stages in this include:
1. Implementing and supervising the project plan, using management tools and techniques to monitor and review progress.
2. Communicating regularly with project sponsor, stakeholders, and team, including any specialist staff or outside contractors.
3. Identifying any necessary changes, which may need the sponsor’s agreement, in writing.
4. Supporting your team and achieving the project objectives.
There are some problems which are typical to project management. These include:
• Scope creep. It is sensible to recognize that people will want you to add new things to the project after the plan has been made. It is essential to check with the overall sponsor that this is agreed and that there are adequate resources available before proceeding.
• Poor organization of resources. Where team members work in different locations, communication problems can arise. There is no substitute for face-to-face meetings as they should avoid misunderstandings; this is especially critical at the start of a project.
• Lack of role definition for team members. The lack of definition can lead to duplication of work or tasks not being tackled at all. It is crucial to define clearly who does what and who is responsible; so minutes must be kept and circulated quickly; preferably an online group should be set up where written documents can be accessed.
• Dependency on one person. Staff will go sick or leave. It is desirable that team members can cover for others to ensure that the project is not dependent on one person.
• Unclear objectives. Unclear objectives can lead to confusion. It is essential to ensure you have agreed objectives with the sponsor of the project. If there are any material changes to the plan, you should ensure that these are agreed and the specification is altered. You can always change a plan but you must ensure that there is one.
• Senior managers leading the project team and pushing their own ideas too hard, meaning that innovation is restricted and everyone involved is too deferential to give feedback or point out any problems with the manager’s ideas (see the following case study).
In the 2016 U.S. presidential election, Hillary Clinton rigidly followed an outmoded election strategy. She also stayed distant from her advisers, protected by confidantes, and marginalized those out of favor. This resulted in a ramshackle campaign apparatus and so she lost the election.
“Inside Hillary Clinton’s Doomed Campaign;”
—(Allen and Parnes 2017)
Other Issues
Other issues which can affect project management include:
• Incomplete planning; to ensure against this, it is essential to consult all relevant stakeholders and make sure that every part of a plan should be written down to avoid argument.
• Project funding; it is important to know who holds the purse strings as there will always be a trade-off between time and cost.
• The goal posts move; governments change, budgets are cut and projects get changed; but at some point you have to freeze the specification; the further a project progresses, the more expensive any changes are.
Project Planning Using IT
There are several project planning programs, the best known of which is Microsoft Project, though there are also open source versions. These all include a project scheduling program, with start and finish dates, summary elements of a project; the most common schedule program is a GANNT Chart, a bar chart that illustrates a project schedule. However these are quite complex, many staff do not know how to use them and training them up will probably take too long.
It is likely that most nonprofit organization based projects will be on a small scale and so will be more manageable, able to use simpler software, namely spreadsheets, to map out tasks, responsibilities, and time scales.
Contract Management
The hard work starts when any contract has been won. The manager must make absolutely sure the whole team fully understands all the contract requirements in detail, clarifying anything that is unclear or contentious with the contract awarding body. Next they must draw up a work plan that ensures that the service provider fulfills the terms of the contract, that the provider meets output targets, and that the team are keeping accurate records and producing reports on progress. Getting the whole team galvanized and motivated to reach targets is essential; it may require a great deal of networking and local marketing to publicize a new service, to recruit and to retain sufficient clients that meet the criteria or deliver enough programs, all to the requisite standards.
Very often there are delays in announcing the successful contractor, while very little additional time is granted for the service provider to gear up; invariably contractors are expected to be able to start delivery right away; the expectation is that your organization will have staff ready and able to begin work immediately; this may mean taking on temporary staff which can pose other problems.
Over performance on targets will not necessarily receive any additional payment, unless this has been agreed beforehand; however if a partner withdraws from a delivery consortium, their outputs can be redistributed to other partners.
Regular audits will be conducted by commissioners to check that the contracts are being properly carried out, that everything is happening to the right timescales and to the agreed quality standards. It may be that staff who are good at delivering the work are less good at completing the necessary paper work, particularly if clients or trainees are also reluctant to do this, because of poor literacy. One construction training project got over this issue by ensuring that literacy training was given to trainees at the same time as carrying out the necessary course paper work.
Some companies have been prosecuted for claiming outputs fraudulently, while numerous contractors have outputs rejected or funding deducted for incorrectly completed forms. It is worth delivering staff training on the subject of contract delivery and recording outputs, run by an outsider to back up the manager’s directions. It may also be sensible to introduce a system of internal audits to check that outputs are truly being met and that proper recording is being carried out. As one commentator said “This.. (is).. a risky bidding environment, but one that rewards bidders who have integrity, openness, and commitment.”
Case Studies
Green projects are expanding across the United States and UK meeting different challenges in urban and rural regions, but they are often too small to gain commercial bank support.
Sleat Community Trust (SCT), formed in 2004 on the Isle of Skye, Scotland, supports local economic, environmental and social development. Transport is essential in rural communities, public transport is restricted and the local gas station was threatened with closure, leaving the nearest one 16 miles away. In 2007, SCT purchased the gas station, setting up a shop, post office, tourist information facility, and garage business.
In 2009 at short notice the government decided to sell the local Tormore Forest, almost 1,000 acres, valued at £300,000. SCT had to draw up a business plan, demonstrate its quality standards and raise funds, including grants and donations from government agencies, trusts, individuals, and organizations, with loans of £194,000 from government agencies and Triodos, an ethical bank. Managing the mature forest sustainably is its main project; others include recycling, community broadband and bicycling.
A renewable energy subsidiary, established in 2007, supplies biomass fuel. The Trust is still not self-sustaining; a large part of its £230,000 income (2016) constituted grants, some for new projects. Seventy percent of the local population of 800 are trust members, trustees are unpaid, and there are four paid staff.
Green and Sustainable Projects
Designing and implementing green and sustainable practice is also crucial and the nonprofit sector has been at the forefront of developing alternative energy supplies. However green energy suppliers have expanded rapidly, particularly in the United States, where clean energy is now as big as the pharmaceutical industry.1
Second Chance
Second Chance, a social enterprise in Baltimore, was founded in 2001 to develop solutions to sustainable employment and environmental issues. In 2003, a training and employment program was created to address the pressing needs of Baltimore City residents who were facing multiple challenges to employment, good wages, and progressive skills.
Today, Second Chance trains and hires unemployed individuals in deconstruction, salvage, warehousing, retail, operations, transportation, and customer service. Second Chance works with local and regional architects, builders, developers, and property owners to identify residential and commercial buildings entering the demolition phase and remove all reusable elements through deconstruction for waste diversion and resale to consumers.
Second Chance has expanded its training program to Philadelphia and Washington, anticipating opening new retail locations there. It had income of $6,286,155 (2014), of which contracts from government agencies totaled $3,405,569. It employs 27 staff and its trustees are unpaid.
Summary of Advice to a New Project Leader
• Carry out “sufficient” background research before starting.
• Ensure the project objectives are clear and check exactly what outcomes are required.
• Keep everyone in the team informed, consult them and trust the skills of the team.
• Estimate the time scales and then increase them, allowing for contingencies (for example, holidays, supply shortages, decision-making delays).
• Sell the benefits of the project to anyone who can help.
• Always consider those stakeholders who will be most affected by the new project.
• Be resilient and do not give up.
• And keep your head, even if others are losing theirs…
References and Further Reading
Adirondack, S. 2015. Just About Managing. London, England: LVSC.
Allen, J., and Parnes, A. 2017. Inside Hillary Clinton’s Doomed Campaign. New York: Random House.
National Archives 2012. Public Services (Social Value) Act 2012.
http://legislation.gov.UK/ukpga/2012/3/enacted
Spicer, Andre 2013. Cass Business School; Financial Times.
http://www.ft.com/cms/s/0/0b4aaac8-3676-11e3-8ae3-00144feab7de.html
1 https://vox.com/energy-and-environment/2017/3/8/14847548/clean-energyindustry-booming