Projects are temporary endeavors, and as a result, Buyer's hire consultants and contractors (aka Sellers) to execute the work. Intuitively, Buyer's should be the Owner, Operator and Maintainer (Owner.) But in cases where the work is extremely large and complex, involves government agencies or it requires special expertise, the Buyer may not be the Owner.
It is becoming more common in the rail transit industry for major capital projects to be managed by Buyers that are not the Owner. This requires a cultural shift between the Owner’s experience and expertise to the Buyer. As a result, the Owner is giving up control to the Buyer with the expectation the Buyer understands the Owner means, methods and business functions and products. Despite the Buyer’s experience in delivering projects, the Owner needs to perform diligent oversight and to assure participation by key staff, who will inherit the project deliverables for operation and maintenance.
Usually, non-Owner Buyers deliver projects using the most innovation and leading-edge tools, techniques and methods for executing the work. Some Buyers can over-emphasize performance metrics beyond scope, schedule and budget, and branding management success in numerous charts, graphs, road maps and press releases. This will complicate the Project Management Plan (PMP), and it requires that the Buyer's management team be ready for the extra effort to create and maintain deliverables, and to assure the Owner remains updated and engaged throughout the work.
To bridge the gap, the Buyer will need to assure staffing levels, processes, documentation, and access to project information are applied to engage the Owner. This article discusses some of the critical interfaces between the Buyer and the Owner with an emphasis on Owner’s in the rail transit industry.
Rail transit companies are highly regulated by government and the organizations are highly regimented due to labor-union contracts. But they also tend to be a close net group of employees who are proud of their work in providing transport services to customers who rely on it for their own livelihoods. Many larger companies have dedicated staff and management assets that enable self-management of capital projects involving design and construction of facilities, fixed systems and rolling stock necessary for sustaining and expanding the business.
Buyer's Alignment with the Owner's Operations and Best Practices
Owner's often recognize limitations of their organization to handle projects for improving or expanding operations based on established business plans. As a result, expertise is contracted to supplement the Owner's planning, initiating, execution and monitoring and closing projects. However, the Buyer needs to review the Owner's past contracting and project management experience with projects.
The Buyer's objective is to avoid the negative past experience and to repeat and amplify the positive past experience and practices. To accomplish this, the Buyer should acknowledge the Owner’s best practices, and explain to the Owner how and what will be integrated into the project.
For rail transit companies, getting buy-in requires the Buyer clearly tailoring the project management plan to the Owner’s organizational structure, business operations and existing procedures and standards.
Assignment of Dedicated Personnel from Owner
Most project teams have dedicated personnel assigned to the project throughout the life cycle. While far easier on projects managed by the Owner, contracts and projects managed by a different Buyer creates a gap in the strategy, tactics, and means and methods of management. While the Buyer may have a robust Project Management Plan (PMP), the interface with the Owner needs a special section. As a result, the Owner will need to dedicate its most experienced staff that are familiar with the management of projects and with the authority to make decisions throughout design, construction, commissioning and closeout.
The Owner’s project participants should have a broad breath of project experience and depth of knowledge in requirements and management of capital projects.
For rail transit companies, this includes participants representing track, power, signal and communications, facilities and stations, and rolling assets, such as passenger cars and operational equipment and vehicles.
Owner Access to PM and Document Control System
Project management has been made more effective from the use of tools that emulate the proven paper processes used decades ago. While the tools reduced the staff of expeditors in the project controls group, it was replaced by all participants having access and training to use the tools. Owner participants need access the project scope, Seller's contract, and all of the Seller's submittals and deliverables, such as shop drawings, materials and product data, system O&Ms, schedules and progress reports. This also means assuring compatibility of Buyer’s project management hardware and software with pre-existing operating systems used by Owner’s employees throughout the organization to perform a broad range of integrated business functions.
If the tools have license restrictions, the Buyer's project management staffing will need to take the effort to convert files and provide links and pdf documentation to the Owner's participants. As a result, a simple make-buy analysis may show the price of the license(s) may be far less than the extra administrative handling of the documentation separate from the project tools.
For rail transit companies, this involves integrating the project’s management system with the Owner’s computerized systems, which are used across the business assets for operation and maintenance of the project work.
Giving Owner's Personnel Authority for Decisions
The Buyer's PMP will describe the roles, responsibilities and authority of the project participants, including the Owner, for making decisions. The PMP should define the process and criteria for documenting decisions as well as leadership’s mitigation of competing interests of managerial silos/departments. As a result, the Buyer's PMP will need to be aligned with the Owner's existing processes and documents used for managing capital projects in an operations-based organization.
Owner’s personnel will need to commit to make decisions by balancing the Buyer’s project requirements and the Seller’s contract requirements following a prescribed order of precedence that avoid risks to business operations.
For rail transit companies, this includes decisions on scope and operational interfaces for safety/security, right-of-way engineering, and rolling stock.
Control of the Project Environment
Buyer’s contract(s) with Sellers specifies conditions for performing work on the Owner’s property. These requirements are normally not negotiable. However, Owners recognizes the need to be flexible in accomplishing Seller’s work. As a result, the Buyer’s stringent control of the Seller’s work needs to be balanced with the Owner’s ability to adjust operations to accommodate the Seller’s plans.
This means the Buyer and Owner will agree on compromises and/or accommodations to the Seller that are highly confident in allowing the work to be accomplished to meet the goals and milestones committed to the public by the Buyer.
For rail transit companies, this also includes outreach to communities and political influencers with interests in and/or funding for improvements adjacent to the right of way and stations, including green space and gardens, residential housing and commercial development.
Buyer Leadership Response to Seller’s and Owner’s Concerns
The Project Management Plan is an essential framework for executing and monitoring performance on the project. Normally, a Buyer is the Owner aligned with plans for managing the Seller’s execution of the contract work. When this arrangement involves expertise to supplement the Owner, the Buyer needs to gain the confidence of the Owner by demonstrating its understanding of the Owner’s business. All too often, the Buyer trumpets its expertise over the Owner’s experience, knowledge and capability for managing projects.
This is a cultural dilemma between Buyers and Owners that is compounded by differing management tactics and strategies, social and economic objectives, funding partners, statutory requirements, and local government and community stakeholders. The PMP must include an oversight board to address managerial differences, dispute resolution and decision making.
For rail transit companies, this should include leadership from the Owner and Buyer with select representation from funding partners, local government, and as needed, subject matter experts.
TIP: Buyer’s need to acknowledge, review and integrate the Owner’s existing project management and contracting experience and best practices into the project’s execution plans.
TIP: Buyer’s with expertise in other industries provides cross pollination opportunities for managing projects. But what works in one industry [real estate development] may not work in other industries [government funded railroad agencies.]
TIP: Buyer’s need to be knowledgeable with the history of the Owner’s industry and the effort needed for compliance with government statutory requirements.
TIP: Government agencies routinely review Owner’s funding requests and assess their past experience and performance on projects with priority given for ability to fully expend grants amounts. Under-spending grant amounts are not favorable since the remaining amounts means the government needs to find a grantee to use it or lose it within the funding period. Over-spending grant amounts is less unfavorable, but it means the Owner needs to self-help to make up the shortfall in funding.
