To reduce the likelihood of a major capital project growing uncontrollably, it is critical to make sure that everyone understands what the project is intended to deliver.
For example, what the project will provide, how long it will take and what it is expected to cost. Decisions of this kind should be co-ordinated by the project sponsor with the purchasing manager.
Depending on the nature of the project, it is often also necessary to involve another department manager as the IT systems administrator.
As the municipality or private sector company moves toward the decision to proceed, the project sponsor should take responsibility for the initial draft of the project charter.
Project managers generally differentiate between the project charter (the general objective) and the project scope (the more specific targets of the project). The initial project charter could be a simple statement, such as “build a new 10,000-square-foot library in the east end of the city.”
The scope simply supports the goals defined in the charter while providing more details, not the least of which would be the specific location, the number of floors, the other features that the building is intended to possess, the general range of services to be made available at the site, the commencement date and completion date for the project, etc.
However, the scope does not entail settling upon the design or the architectural and engineering plans.
The construction of a major capital project should be viewed as a transitional measure, which allows a municipality to meet some currently underserved need or to anticipate and meet some future need. The project charter records the objectives of the transaction.
For example, for a major IT initiative, the initial project charter would set out:
- What the project is intended to achieve, in respect of business outcome and benefits, if it is to be regarded as a success.
- How the collective project team will work together to deliver these outcomes.
- The potential impact of change on municipal programs that will be brought about by the project. The goal being to link the project to desired business outcomes rather than to specific methods of accomplishing those outcomes.
- Providing a viable mechanism to ensure that a focus on these outcomes is sustained throughout the project lifecycle.
There is no magic to delivering major capital projects “successfully,” but there is common sense recognized guidelines based on proven management principles that can ensure the decision to proceed with a major capital project is made on a sound business basis.
It can also ensure the major capital project itself has more than a reasonable chance of being delivered on time and on budget, and of satisfying the organization’s function requirements.
At the highest most abstract level there are in reality only two “best practices” for carrying out a major capital project:
- Selecting the right project for the development, and
- managing that project from conception through to implementation in a sound business-like manner.
The question of whether the right project has been selected is one that should not be lightly overlooked. Indeed, the selection of the right project is a critical concern, because few municipal capital facilities are able to operate on a self-sustaining basis.
At the municipal level, major capital projects frequently relate to such items as highway construction, new public housing projects, new library facilities, the creation of a light rail or subway system and other transportation services, the construction of a new city hall, opera halls, performing arts centre, or art gallery.
It is often not appreciated that municipal expenditures on such capital items invariably involve long-term commitments of operating support.
Few of these projects lead to the generation of net income. Across the country, municipally-owned facilities often can remain open only through the provision of tax subsidies.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
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