For Large, Complex Initiatives, Program Management Is Hard to Beat
A program management (PgM) approach isn’t appropriate for most projects. But when the conditions are right, it’s almost always a good idea to utilize it.
PgM is a project delivery model designed primarily for large capital programs encompassing multiple, interrelated projects, linked to common strategic objectives. Electric utilities, for example, commonly take a PgM approach when building systemwide redundancy into their vast transmission systems. Programs like these tend to be massive. Budgets of $500 million or more are common, with schedules that stretch out two years and beyond.
With a PgM approach, a utility typically contracts directly with individual companies for everything from routing and system planning to permitting and construction management. The utility also contracts directly with the program manager, which manages all contractors, schedules and budgets on its behalf.
In addition to large power transmission and distribution programs, PgM also can be a good fit for large infrastructure repair and construction projects in other industries. Water and wastewater, aviation and transportation all have the large-scale, often linear, multisite or multilocation work that can benefit from this approach.
PgM is the preferred approach on these projects for many reasons, beginning with the fact that few organizations employ project management staff with the deep experience needed to manage programs of such size and scope. A PgM approach allows a project owner to bring in professionals with the skillsets and experience needed, flexing up or down to meet project demands while maintaining overall control of the program.
- Better budget and schedule control — Unlike other contractual approaches such as engineer-procure-construct (EPC), the owner typically carries all or most of the risk on projects that employ a PgM approach. So the owner definitely doesn’t want to be kept out of the loop. Instead, the owner wants current — and preferably real-time — insights on how the project is going.
PgM firms attempt to satisfy this need in different ways. They can use a contract management system — a control suite in the cloud — to track scheduling, budget and other project metrics, allowing the owner and subcontractors to access and interact with critical information at any point in the process.
Because a change in one contract can have a ripple effect on others, this level of transparency and collaboration is critical. Otherwise, seams are created between projects, and as program manager, you end up managing the seams.
- Accountability — Organizations that depend on ratepayers to reimburse the cost of upgrades have another concern. They must be able to prove they are being prudent with their funds. Many are required to incorporate program data in their public reporting.
A good program manager has the tools to provide others — including outside auditors — this transparency.
- Staffing flexibility — PgM staffing needs on large-scale construction programs fluctuate throughout the life of the project. An effective program manager can bring on resources as they are needed — and send them back home when they are not.
- PgM training — Large construction programs have a defined scope and a clear ending. As these programs wind down, however, some owners find that their capital spending needs continue. In some cases, they look to outside firms to provide training in how to set up a PgM office so that future programs can be managed in-house.
A PgM approach can be a tremendous source of peace of mind for organizations undertaking large, complex construction programs. When you add in technology that promotes collaboration and delivers transparency to all, it’s hard to beat.