The fallacy: project coordination makes the project more expensive

The unnecessary costs - project coordination

Project coordination generates unnecessary costs. Is that true? Why do you need a project coordinator at all? The construction project is expensive enough as it is. And moreover: This task is surely being handled by the architects.

Everyone involved in the project coordination of construction projects has had to deal with these or similar questions. Apart from the fact that the tasks of project coordination and planning offices are not at all comparable in terms of content (see blog "Tasks of a project manager, project leader and project coordinator"), this article takes a closer look at the issue of project coordination costs. In particular, the main question: Does external project coordination make the project more expensive?

No project without project management

It is actually clear that no project - and certainly no complex project - can do without professional project management. This is essential and nobody questions it. In the article “Tasks of project management, project leadership and project coordination”, we have already discussed the special feature that, according to the German definition, project coordination is nothing other than the delegation of some of the tasks that the project management of the company willing to invest would have to perform itself to an external project coordinator. Both project management (internal) and project coordination (external) therefore work together on the same package of tasks - without this becoming more or less as a result of the division. This division takes place for purely practical reasons. The internal project manager is often a senior member of management and does not really have the personnel and technical capacity to manage a complex construction project on the side.  This is why an external service provider is used for this task.

But where does the assumption that this will make the project more expensive come from? - This is often due to the cost allocation. Internal management expenses “disappear” in the general business costs. They are rarely allocated to the project budget. If external project coordination is commissioned, these costs are included in the construction budget and are therefore visible.

The curse of the first number or incomplete controlling

Repeatedly you can hear it again and again: “The costs of the construction project are escalating”. The deadlines too.

The company willing to invest immediately thinks of the architect at the start of the project and forces him to provide an initial cost estimation. Nothing is more memorable than this estimated number.

Is this number reliable? - No, in 90% of all cases it is not. This is not due to a lack of estimating skills on the part of the architectural or TGA planning office. The estimation is based on what is known at time X and the knowledge is significantly influenced by the scope of the planning task known up to that point. However, the budget framework of a project must be much broader than the construction and thus the planning task dictates.

Experienced project coordinators will analyze the project status in detail at the beginning and in particular assess how reliable the company's specification is for the planning task of the planning team. In most cases, this resilience is not given. And very often, once the project has been analyzed, the homework is initially handed back to the client. This also includes issues that were not even on the screen of the previously inexperienced client (e.g. the preparation of risk analyses for new production steps). To summarize: The results of these homework must first be delivered before you are in a position to provide an initial estimate of the project costs.

Even if we all don't like to hear it, it takes a while to set up a complete project controlling system. This involves analyzing all cost groups, from the land and development issues to the actual construction work and equipment issues. For the last topic, the client must decide in detail which process equipment should become part of the project budget.

A project coordinator will systematically go through the topics and, depending on the result, generate estimated costs from empirical values, which then represent a reliable figure. Only in this way the project can be provided with complete expected costs.

An use case – how it should not be done

The company's vision is set. A planning office is commissioned and the work begins. In the course of HOAI service phases 1 and 2, the planning office endeavors to collect the basics and generate preliminary drafts. But it encounters objections in the form of unanswered questions. The client wants to answer these, but is unable to do so. Why? He has forgotten to deal intensively enough with the company's future issues. A vision can not be a planning requirement. The entire process and workflow must be verified for future suitability before the investment decision is made. How will technological processes change over the next 20 years? What space and personnel requirements will result? What requirements will this place on the supply media? What IT structure or IT supply security must be guaranteed in the future? And so on.

The planning team needs to know all this before they get started. That is actually crystal clear. Nevertheless, in more than 50% of projects, the processes do not run in this order. The phase before planning begins degenerates into a zero solution. The problem is that all these questions that were carelessly pushed aside will come up again during the course of the project. If the client does not bother to answer them until the planning phase, in the worst case scenario: the project will be delayed and become more expensive for this reason alone.

Experienced project coordinators will insist that the client does their homework, namely to create reliable planning requirements. The reliability of the planning specifications is an essential prerequisite for a smooth planning process.

In plain language: professional external project coordination virtually eliminates costly and time-consuming delays. Its use avoids unnecessary costs due to an incorrectly chosen procedure.

Conclusion

These are just three selected thoughts and contexts which, in our opinion, are already convincing in their conclusiveness that it is a fallacy to claim that project coordination would make the project more expensive:

• As an external consultant, project coordination takes on the tasks that should have been undertaken by the project management anyway. Admittedly, it will address issues that no one had thought of, but which must be dealt with.
• Project coordination will work massively towards cost certainty. With proper project management work, projects can be completed within budget and on time.
• Project coordinaiton will virtually prevent unnecessary costs from arising.

With just these few arguments, it should quickly become clear that project coordination is money well spent.