Monday 19 June 2023

Analyzing Different Project Management Models in Group Construction Enterprises


Construction Enterprises


With the continuous improvement and deepening of project management, different management models have different defects, especially in group construction enterprises. The choice of project management mode directly determines whether the project management institution is set up refined.


In recent years, with the increasingly fierce competition in the construction market, the Group's construction enterprises have gradually fallen into the confusion of "it is difficult to win the bid, and it is even more difficult to make a profit after winning the bid" while striving to expand the scale of operation. The main reason for the difficulty of profitability is that the project cost cannot be controlled, which directly leads to the deterioration of the output value profit margin, the lack of liquidity, and the strange phenomenon of "no life can not live, it is difficult to make a profit if there is a life", and the survival of the enterprise is difficult. Although there are many measures, there are more and more loss-making projects, and it is difficult to solve the problem as a whole and fundamentally. This has to cause business managers to think. This article only talks about the impact of project management mode on project management.

1. Traditional three-level management mode

Through years of exploration of project management mode, USA's construction enterprises have experienced the changes from planned economy to market economy, extensive management to refined management. The application of project cost plan management in construction and production has been strengthened, such as quota issuance, target responsibility cost management, comprehensive budget management, etc.

Especially since the implementation of the Project Law, the Group's construction enterprises have adopted the three-level project management model (three-level management of the head office, subsidiaries and engineering teams), clarified the responsibilities of management at all levels in project management, strengthened the management of construction, quality, safety and capital, and made a lot of contributions to improving the economic benefits of the project. However, the three-level project management model has certain deficiencies, which restricts the further improvement of project economic benefits. The main manifestations are:

1.1 Subsidiaries fight separately, and it is difficult to exert the overall effect of group operations. After the group construction enterprise wins the bid for the project, it generally assigns the construction task to each subsidiary in sections, and each subsidiary only organizes human, material and financial resources for construction according to the construction and production tasks it undertakes, which is bound to cause repeated investment of manpower and material resources, low utilization rate, and it is difficult to allocate to each other, resulting in the group's combat resources cannot be shared and economic benefits are lost.

1.2 Project management responsibilities cannot be clearly defined, and the three levels of management are responsible for each other. A large number of group construction enterprises were originally state-owned construction enterprises, and although they were transformed into companies, their assets were mainly state-owned assets. As a result of the duplication of institutions, the three levels of management pass responsibility to each other when they perform their respective responsibilities or when management is out of control. As a result, the responsibility for problems is not clear, and in the end, no one bears their due responsibility, resulting in low economic efficiency and loss of state-owned assets.

1.3 The knowledge and understanding of management models and related policies are different, and on-site management is varied. Due to the differences in managers' knowledge and understanding of management models and related policies, they each implement different on-site management methods (for example, in the use of the operation layer, some use employees, some use shelf teams, and some even use the reorganized civilian labor team; Equipment rental is either monthly, some on a shift, etc.). Cost control methods and efforts vary, and the same project profitability varies. When conducting cost analysis, managers can find many different objective reasons that cannot be truly compared.

2. Centralized secondary project management

With the continuous summary of project management experience, many enterprises have realized that there are obvious problems in three-level project management, and constantly reform the project management model, remove the first-level management organization of the engineering team, and then develop to the point that while removing the first-level management organization of the engineering team, the project department established by the participating subsidiaries has been centrally managed, strengthening the construction organization, bulk materials and machinery and equipment leasing for group bidding, centralized scheduling of funds and other management methods, that is, the implementation of centralized second-level project management. This management model is a reform of the traditional three-level project management model.

2.1 Advantages of centralized secondary project management

2.1.1 The unified construction organization and arrangement have certain powers in resource allocation and allocation, which greatly improves the group's combat capability and reduces the waste of resources.

2.1.2 Conduct bidding and procurement of bulk materials and equipment leasing, give full play to the advantages of group purchase, and reduce material procurement costs and equipment leasing unit prices.

2.1.3 Guiding the unit price of labor costs, especially the unit price of labor subcontracting, effectively controls the cost of work.

2.1.4 Rationally allocate economic resources and apply effective economic resources to the places where the project is most needed.

2.1.5 The whole project implements unified target responsibility cost management, changes the past practice of decomposing according to the budget unit price, clarifies the cost responsibilities of the management (bureau project department) and the operation layer (subsidiary project department), and makes the operation level cost closer to reality.

Third, the idea of the project direct management model

In view of the problems existing in the existing management model, in order to strengthen project management, effectively control costs and expenses, and ensure that project accounting truly reflects the actual situation of consumption, some enterprises have begun to explore the project direct management model.

3.1 Advantages of project direct management mode

3.1.1 Unify the construction organization, effectively allocate and integrate resources, and maximize the efficiency of resource utilization. Reasonable allocation of resources is a prerequisite for strengthening project management, and the project manager department has the right and responsibility to make full use of various resources such as people, property and materials in the pipe section according to the overall construction organization planning and objectives of the project department, so as to make the best use of people's talents and materials. Effectively improve the efficiency of the use of machinery and equipment, increase the turnover of materials, and reduce unnecessary repeated purchases and idleness. Project Manager Alliance article, deep dive.

3.1.2 It is conducive to the implementation of target responsibility cost management within the scope of the project, and the improvement of the incentive mechanism with clear responsibility assessment and rewards and punishments. With unified project management, it is conducive to the implementation of target responsibility cost management according to unified fee standards, prevent cost control disconnection, and evaluate and reward and punish relevant management personnel according to the management system. Although the project department managers come from different units, there is only one community of interests, which cannot represent their respective units, and can only work towards common goals and strive to achieve project management goals.

3.1.3 Promote project management and exchange of science and technology. The head office and its subsidiaries have their own strengths in management level and science and technology, have different management experience and scientific and technological achievements, after the implementation of the project direct management mode, management and technical personnel from different units can communicate with each other and improve the level of project management.

3.2 Urgent issues to be addressed

In order to implement the project direct management model, set up a partnership-type project manager department, mobilize the enthusiasm of subsidiaries to participate in project construction and management, and prevent the head office and subsidiaries from competing for tasks, the following problems must also be solved:

3.2.1 Input of economic resources

Since the partnership project department is a temporary institution with no production resources, after the project wins the bid, the head office will have a qualified subsidiary according to the needs of the project's production and operation, and contribute equal amounts (or in the agreed proportion) to establish a partnership project manager department, and its economic resources are divided into monetary resources, materials and equipment resources.

(1) Monetary resources: After the establishment of the partnership-type project manager department, according to the contract performance and construction organization arrangement, determine the funds required for the start of the project (including the purchase cost of newly purchased equipment), and the equal amount (or agreed proportion) will be jointly funded by the head office and the subsidiary to be contracted.

(2) Material resources: In order to make full use of the existing material resources of the head office and subsidiaries, it can be negotiated and agreed with the project department and transferred to the project manager department according to its market value, and its value can be offset by the capital contribution.

(3) Equipment resources: For the machinery and equipment transferred with the consent of the project department, the present value of the total lease fee is calculated to offset the capital amount according to the market rental price of the equipment and the construction period required for the project, and the lease fee is amortized during the project construction process. For equipment that withdraws early, the corresponding subsidiary shall make up the difference in time, and the ownership of the equipment shall still belong to the original unit.

3.2.2 Allocation, assessment and placement of human resources

The management personnel required by the project department shall be jointly recommended by the head office and subsidiaries according to the plan, and hired on the basis of merit after assessment and review. Personnel relations are transferred to the head office, and personnel appointment and removal rights are assigned to the project department. In order to encourage all units to recommend crack soldiers and strong generals and prevent "unburdening" recommendations, a series of reward and constraint mechanisms can be established. 


For example, human resources can account for a certain percentage of their capital contribution, and the proportion of their capital contribution will be deducted according to the level of their position for those who cannot be competently returned, until the proportion of human resources contribution is deducted. The assessment of project management personnel shall be carried out by the regulatory authority and the project department at the two levels, the project leader shall be assessed by the regulatory authority, and the general management personnel of the project shall be assessed by the project department, and those who pass the assessment shall continue to be retained, otherwise they shall be returned to the original unit. 


After the completion of the project, the management personnel can give priority to the recommendation to the newly started project, and the remaining personnel can return to the original unit, and the unit will properly arrange the work. For outstanding personnel, the project department may give a one-time special reward and recommend that relevant units give promotion.

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