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paper text:
¿ DO CONSTRUCTION COMPANIES IN NICARAGUA NEED A PMO? ID NUMBER: 412161 TECHNICAL
PAPERS July 12, 2020 TABLE OF CONTENT ABSTRACT
............................................................................................................................... 4 INTRODUCTION
...................................................................................................................... 5 CONSTRUCTION PROJECTS
..................................................................................................... 6 SUCCESSFUL CONSTRUCTION
PROJECTS ................................................................................ 7 MY EXPERIENCE IN PLANNING,
CONTROL AND PROJECT MANAGEMENT IN THE COUNTRY OF NICARAGUA
.................................................................................................. 8 STATISTICS PROJECTS HAVE WORKED
................................................................................ 9 USE OF GOOD PRACTICES AT PROJECT
MANAGEMENT ................................................... 11 USE BUILDING INFORMATION MODELLING
..................................................................... 11 USE OF INTEGRATED MANAGEMENT SYSTEMS
............................................................... 11 ORGANIZATIONAL KNOWLEDGE REPOSITORY
................................................................. 12 ADOPTION OF MANAGEMENT METHODOLOGIES
........................................................... 12 NEED FOR THE PROJECT MANAGEMENT OFFICE
................................................................. 13 BENEFITS OF THE PROJECT MANAGEMENT OFFICE
......................................................... 14 WHAT FUNCTIONS COULD THE PMO HAVE IN THE
CONSTRUCTION COMPANY? ........... 14 A PMO STRUCTURE PROPOSAL FOR A CONSTRUCTION
COMPANY ................................. 15 CONCLUSION
........................................................................................................................ 18
REFERENCES.......................................................................................................................... 19
BIBLIOGRAPHY ...................................................................................................................... 20 LIST OF
TABLES TABLE 1 PROBLEMS FACED IN PROJECTS WITH AND WITHOUT PMO ...................................
9 TABLE 2 CHECK LIST FOLLOW 39R-06: PROJECT PLANNING ................................................ 10 LIST
OF FIGURES FIGURE 1 STAGES OF PROJECT DEVELOPMENT OF CONSTRUCTION PROJECTS
.................... 7 FIGURE 2 NEED FOR A PROJECT MANAGEMENT OFFICE
..................................................... 13 FIGURE 3 ORGANIZATION OF A CONSTRUCTION COMPANY
WITH PMO AND PROJECTS ... 15 FIGURE 4 INTEGRATION OF A PMO TO A CONSTRUCTION
COMPANY (PROPOSAL) ........... 16 ABSTRACT Intensified competition in the construction industry could
jeopardize the company's long-term sustainability. Today's construction companies, with few margins of
maneuver to do business, need to be more efficient in managing scarce resources both financially, human
and equipment, relentlessly seeking sources of competitive advantages. In search of differentiation, industry
players as far as possible have adopted so- called good project management practices while lacking
effectiveness. Among the most accepted approaches to construction are the standards following, Total Cost
Management Framework (AACE),

Project management body of knowledge (PMI), Guidelines for Project 12

Management

(ISO 21500), Building Information Modeling (BIM), Application of Manufacturing Processes to Construction
(LEAN), among others. These approaches do not greatly address all the dimensions of construction
projects. They expose good practices from the perspective of process-based project management, without
expose the organizational and project structure necessary for their successful execution of projects;
neglecting important aspects that are complemented by integrated management systems, in this case
quality, environment, occupational health and safety and community relations. Which leads to the next key
question ¿How to implement the so-called good practices of project management and improve the
performance and profitability of a construction company? A logical answer is To Implement a Project
Management Office (PMO). However, there is some resistance from the senior management of construction
companies in institutionalizing so-called PMO because they fail to visualize the value they generate, viewing
them as an expense not as an investment. This paper is intended to provide a simple answer to the question
¿Do construction companies in Nicaragua need a PMO? INTRODUCTION Projects are becoming more
complex every day. Communication and understanding of actors' interests is more critical. Timing and
budget are becoming tighter. Potential risks are higher. Quality, environmental and occupational health and
safety standards are more restrictive for construction execution. The projects constructability represents
many challenges, making it necessary to use three-dimensional modeling and the use of computer tools for
visualization and animation. Therefore, any construction company that aspires to continue in the market and
wants better performance than the average competition, requires adopting good practices of project
management, implementing the integrated management systems and building information modeling. It's not
a luxury or an action to be fashionable. This is not a luxury or a trend, but of a long-term survival issue in
global markets. It's differentiation or dying. It is to create continuous improvement in order to impact the
profitability of projects towards investors. Companies are structured according to their core business, in case
of the construction industry, they are structured mostly by departments such as: engineering, procurement,
finance and accounting, logistics, marketing, human resources and finally, a unit of projects. Let's take a
moment and analyze. There are many engineering and administration disciplines that involve in the correct
execution of projects. But, ¿how do we integrate all of them into the company? Who have the responsibility
of the Integration of the all knowledge in the organization ¿Is responsibility of the senior management or
board of directors? ¿How do we replicate project management knowledge to everyone in the organization,
newcomers, and external consultants? ¿Should there be a department for that purpose? This paper expose
from a friendly perspective how the institutionalization of a Project Management Office can add value
construction company and therefore answer the question ¿Do construction companies in Nicaragua need a
PMO? CONSTRUCTION PROJECTS Construction projects includes a variety of types, objectives, and
solutions. Depending on the project objective, many solutions may be available. The solution will depend
based on legal due diligence, financial evaluation and environmental impact assessments. Construction
projects usually classified using different approaches, such as type of installation: eg. buildings,
infrastructure, industrial projects and by specialty; eg. Oil, Gas and Real Estate. The project delivery method
for a construction project according to

39R-06: Project Planning – As Applied in Engineering and Construction 8

for Capital Projects (AACE International,
2011) includes the following: • Design-bid-build • At risk construction management •

Multi-prime contracting • Design-build • EPC (Engineering- 6

Procurement-Construction) • Design-build-operate • Integrated project
delivery (IPD) The details of the

life cycle of a construction project from conceptualization towards completion can vary widely depending on
factors; such as, type of construction project, method of project delivery, type of contract between the owner
and the contractor depending on the balance between the strengths of the administration, constructive
strategy, profitability and risk, financial capacity and types of project deliverables. Construction projects fit
into the generic life cycle structure with start to finish relationship. For my particular projects, I have defined
the following life cycle, which is an adaptation of the one proposed by the

Code of Practice for Project Management for Construction and 11

Development.

Figure 1 Stages of project development of construction projects Source: self-made SUCCESSFUL

CONSTRUCTION PROJECTS

A project is considered successful when it is completed on time, budgets 4

and accomplishment of the

required scope. Successful projects will then be a function of the structure of the project, life cycle,
complexity, size, type of delivery, objectives, delivery method, among others. But the most important factors
are as follows: • Project teams, their experiences, commitment, knowledge. • Senior management, who
provide the resources for the projects, financial support, define the work standards and management
systems of the company. For successful projects it is required a set of technical and administrative
knowledge; as well as, the use of good practices of project management, use of construction information
modeling and, use of integrated management systems and adopt custom methodologies based on
complexity and size of the projects to be developed. My experience in planning, control and project
management in the country of Nicaragua I have worked with small and large, private investors and
government companies; among my experiences, I highlight the construction management of a pair of
hydroelectric plants and the only project of distribution lines in Nicaragua with a submarine cable. In the
projects that I have participated I have faced great difficulties related to: • Good practices. I worked without
adopting any standard, without schedules nor budget, with poor quality plans, without evaluating project
risks, with poor contracts, among others. • Engineering problems. I worked with designs with interference
and constructability issues, we had a lot of rework because there was not clarity between the different
engineering disciplines in the designs issued for construction. • Management systems. I worked without
processes, procedures, formats, instructive, policies. We worked reactively. We did not have well-structured
plans for quality, occupational safety, and the environment. • Work methodologies. I worked without a
methodology. Like all companies that arm and disarm as they develop projects. Each Project Manager led
his project the different way. In my particular case, I worked for a few years on a basis of the project
contract, with a work breakdown structure, schedule and budget and I have had to move ahead with these
instruments during those years. I thought I was doing things right. • Information repository. I worked without
existing information in the company of any kind; how I would have liked a report of lessons learned of similar
project to make my management easier. Now I manage my projects differently, I have work standards, my
own mini- management system and methodology for construction projects; I made these the best possible
way. I try to use the computer tools in my favor (different software); fifteen years have passed already since
my first project. Now let’s talk about the concepts that influence successful projects. Statistics projects have
worked Base on my experience with government projects, I can affirm that these projects had good results;
but they also had a support department that could be considered as a PMO. In projects developed by private
investors, I found that there are many bad practices and deficiency in the use of computer tools, as well as
quality, environment and occupational safety, which lead to additional costs, delays and a customer
dissatisfied. A common point of private projects is that they did not have a Project Management Office; and I
would like to mention a checklist of different situations that occurred in the projects. Id Problems faced in
projects* 1** 2** 3** 4** 5** 6** Government/Private Government Private Investors Year 2008 2010 2014
2015 2016 2018 1 Contractual mismanagement X X X 2 Scope corruption X 3 Overrun cost

X X X X X X 4 Delays in completed the delivery X X X X X X 5 Poor planning X 1

XXX

6 Poor monitoring and control

X X X X 7 Poor selection of suppliers X X X 4

8 Non-conformity rework X X 9 Multiple change orders X X 10 Customer dissatisfaction

X X X X 11 Many risks not taken in account X X X X 3

12 Not hire the necessary staff X X X 13 Problems with safety, health and environment X X X Table 1
Problems faced in projects with and without PMO * Marked with X the problems faced ** Projects names: 1.
Rural electrification project in isolated areas program (PERZA); 2 mini hydro projects. 2. Small hydroelectric
power plants projects program (PCH); 4 mini hydro projects. 3. Rural electrification projects (ACN); 300 rural
electrification projects in 14.4kV. 4. Electrical interconnection Ometepe island (ACN); submarine cable of
10km. 5. Substation La Dalia and expansion of the San Ramón substation (ACN); 6. 8 Agosto and El
Carmen Hydroelectric Power Plants Projects (HORIZON); 30Mw hydro projects. Source: self-made These
problems faced in private projects negatively affected in the cost in the order of 20 to 45% and produced
delays in the order of 30% of time. Now that I´ve learned about the recommended practices of AACE
International, I understand why I faced so many problems in private projects. Taking as reference the PR:
39R-06: Project Planning, the key reason for extra cost and schedule delays was the lack of planning prior
to the development of projects. Id Check List follow the 39R-06: Project Planning* 1** 2** 3** 4** 5** 6**
Government/Private Government Private Investors Year 2008 2010 2014 2015 2016 2018 1 Executive
summary
 XXXXX2 3

Scope of work

X X X X X 3 Project objectives, goals & strategy X X 4 Contract requirements X 1

XXX

5 Safety, health, environmental & security

X X X X 6 Quality assurance / quality control X X X 3

7 Execution approach, work plan

X X X X X X 8 Change control X X 9 Risk management X X 10 Internal (project) 1

requirements X X X

11 Public & community relations

X X X 12 Organization, roles & responsibilities X X X X X X 13 5

Communications& reporting X X 14 Documentation requirements X X X X X X

Table 2 Check List follow 39R-06: Project Planning * Marked with X the good practices used. ** The project
names do not change with respect to Table 1. Source: self-made Looking back on projects already
completed. I find the greatest need to have project management offices. Let's review in general terms the
factors that must be taken in account while developing successful projects. Use of good practices at project
management Using good practices in project management is the most effective way to avoid the project
failures. These contribute to avoid duplication of mistakes made in the past and as for the optimal use of the
company's resources. The list of publications that tries to standardize best practices is huge. The following is
a representative short list: •

Total Cost Management Framework; AACEI • Skills and Knowledge of 2

Cost

Engineering; AACEI • PMBOK Construction Extension; PMI Use Building Information Modelling The Building
Information Modeling (BIM) for construction project management is becoming a standard. BIM is a work
methodology that has been developed since the 90s, integrates an intelligent three-dimensional models and
databases. This methodology allows detecting problems and inconsistencies in projects and correcting them
before they occur at the execution phase, while avoiding costs and delays and modifications to the
contractual scope. BIM generates plus value for organizations. Nowadays, it would be very difficult to
manage the complexity of the projects without using BIM. Use of integrated management systems The
Integrated Management Systems (IMS) are fundamental for the construction projects execution; they
provide the standards, processes and procedures from the perspective of senior management. The IMS
integrates the management systems for quality, environment, safety and health at work. As shown below,
details of the standards (ISO) respectively: •

ISO 9001: 2015 / Quality Management System • ISO 14001: 2015 / 7

Environmental Management System • ISO 45001: 2017 / System of
Management Systems for Safety

and Health at Work Integrated management systems establish policies and objectives in order to satisfy
various stakeholders during project execution and are compulsory for construction projects. Organizational
knowledge repository The organization's knowledge repository includes the company's procedures and
policies, lessons learned, and historical information regarding the construction company. Among the
historical records you will find: completed schedules, unit price analysis, budgets, work and resource
breakdown structures, reports and formats among others. The need for a Project Management Office is born
here, in such a way that this information record is protected and available to all newcomers to the
organization. Adoption of management methodologies

Depending on the delivery method selected for the 9

project

(Design-bid-build, Design-bid-build, 9

EPC and / or other), a methodology for project execution must be adopted. The methodology will refer to the
set of structured processes used to achieve the objectives that govern the construction project. The
methodologies are tailored to the companies in question and are a function of their degree of the complexity
and size of the projects they develop. Each construction company must have its own defined methodology.
AACEI has published a series called International Recommended Practices that could be useful for
developing their own methodologies, these are Recommended Practices for planning, management, cost
control and engineering project management activities, I can be mentioned for a representative example: •

11R-88 Required skills and knowledge of a cost 2

engineer •

14R-90 Responsibility and required skills for a project planning and 2

scheduling professional • 39R-06 Project

planning Every construction company must adopt good practices (standards) for its internal management
and project management processes. In order to develop successful construction projects, it is necessary
take into account the following aspects: • Use of good practices of project management • Use construction
information modeling • Implement integrated management systems (ISO family) • Create own methodologies
to manage construction projects. NEED FOR THE PROJECT MANAGEMENT OFFICE The construction
company have different disciplines, such as engineering and administration, which entails an organization of
people by departments (purchasing, sales, logistics, human resources, administration, and projects).
Additionally, there are structures for each project undertaken within the company; independent of the
company. Within the company there are also structures that involve the implementation of the Construction
Information Modeling and Integrated Management Systems methodology. IMS BIM PROJECTS PMO Figure
2 Need for a Project Management Office Source: self-made The question that arises is: What department
will integrate this methodology? The senior management and the direct board have their work in other
functions; therefore, the need for a Project Management Office arises, which will be governed in construction
companies (see Figure 2). The PMO is an organizational structure that gives a framework of governance for
the project management and, helps the exchange of resources, methodologies, tools and techniques. Lead
the adoption of good practices

of project management within the organization. Benefits of the project 13

management

office The most important benefit of the PMO is the link between corporate governance (overall strategy and
objectives) and

project management (individual project success and results) through 10

effective portfolio management.

It's about results. The Project Management Office allows objectives conversion into results. Project
Management is the bridge between strategy and success. What functions could the PMO have in the
construction company? How to view the project control office: • • As a structure that standardizes processes
and procedures. Provides training to the project’s teams in topics around with (methodologies, constructive
process, contract administration, reports of progress, among others). • Provides training to the project’s
teams in Building information modeling methodology, software for modeling (3D), scheduling (4D) and
costing (5D). • Implements the best practices in business management, quality, environment and
occupational safety for each project. • Helps to measure the success of the project through indicators
(scope, time, costs, quality, profitability, or others). A PMO structure proposal for a construction company In
construction projects, most owners work in matrix or composite arrangements, with designated project
management teams and roles for construction projects. The size of the team and the level of dedication of
the team members depend on the kind and size of the project, complexity, constraints of scope, cost and
schedule, and the strategic importance of the owner. As an illustration, note in the following structure how
projects fit within the organization illustration (see Figure 3). Contractors generally work with strong or
project-oriented matrix structures due to the nature of the construction industry. This means that the
structures are assembled and disassembled during the execution of the projects. This means that
knowledge is fenced with people every time a project ends, making it difficult for the team to work between
one project and another. CHAIRMAN GENERAL MANAGER QHSE MANAGER LEGAL ADVISER STAFF
COMMERCIAL MANAGEMENT LOGISTICS MANAGEMENT MARKETING AND ACQUISITION
PROMOTION TEAM TENDERS AND STORAGE AND COMPETITIONS MAINTENANCE EQUIPMENT
HSE MANAGEMENT SAFETY AND OCCUPATIONAL HEALTH SOCIAL ENVIRONMENTAL QUALITY
MANAGEMENT QC&QA ORGANIZATION AND METHODS MANAGEMENT OF ADMINISTRATION PMO
AND FINANCE HUMAN RESOURCES AND ADMINISTRATIVE ACCOUNTING AND FINANCE
TREASURY TEAM PROJECT PROJECT (ABC) TEAM OF WORK SUPERVISION COORDINATORS
HEAD OF SUPERVISION SPECIALISTS FIELD TECHNICIANS PROJECT (XYZ) Figure 3 Organization of
a construction company with PMO and Projects Source: self-made Page 15 | 21 Then, we will make some
improvements to the organization shown in Figure 3 and I will propose a structure for the implementation of
a project management office for a construction company (See Figure 4). Note this PMO including resources
to manage the factors that must be taken in account for successful projects analyzed before, in this structure
are included professional for the difference’s disciplines of engineering, Occupational safety and health,
environmental, Building information modeling methodology and project management. PMO PROJECT
MANAGEMENT OFFICE STAFF TECHNICAL OFFICE BIM PROJECT QUALITY HSEC ADMINISTRATION
Document BIM Project Project Administrative Controls Manager Manager Civil Works Environment Assistant
Civil Architecture Mechanics Occupational Resources Engineering Modeling Planner Safety and Humans
Health Mechanical Structural Schedule and Electric Services Engineering Modeling and budget Social and
community Generals MEP Electrical management Engineering 4D modeling Y Risks Organization 5D
budget and methods Electro- Mechanical 3D Visualization Procurement Engineering and Animation
Topography and Geomatics Geology Hydraulics Figure 4 Integration of a PMO to a construction company
(proposal) Source: self-made Now, we will make a couple of remarks of the proposed structure: • It is rather
robust. This means that it could be considered ideal if the company is large and would manage ten projects
in parallel. • There are departments that could have more or fewer people. This is a function of the size of
the organization and the number of projects in parallel. Page 16 | 21 • The PMO does not replace the
organizational structure for the execution of the projects on site. This is a functional unit at the staff level in
the organization that supports the Project Managers and the entire team of the different projects. It would be
very complicated and would entail a number of problems for a construction company to execute projects
without a PMO in order to control and manage so many aspects as the ones related below: • Planning and
project management. • Integrated management systems. • Construction information modeling. •
Engineering, purchasing and logistics development. The PMO helps to improve the rate of successful
projects undertaken within the organization, understood as successful: A project completed based on time,
budget and accomplishment of the required scope. CONCLUSION To give a simple answer to the two key
questions exposed in this paper, two conclusions are presented as follows: ¿Do construction companies in
Nicaragua need a PMO? Yes. The construction companies need to institutionalize the so-called Project
Management Offices. These shape the vision and mission of the organization. The PMO are a source of
competitive advantage over the different players in the construction industry in a world as globalized as
today. Without Project Management Offices, it would not be possible to harmonize the complexity that exists
between integrating project planning and management, integrated management systems, and modeling
construction information as a whole; in addition to, other departments of the company such as engineering,
purchasing, logistics, human resources, administration and finance, among others. ¿How to implement the
so-called good practices of project management and improve the performance and profitability of a
construction company? Unquestionably the only vehicle to implement good project management practices is
the project office. To have successful projects, construction companies must invest time and resources. It is
not enough to have an information repository and have all the standards and information of the projects in
this repository. Construction companies must create their own methodologies. They must develop their own
integrated management system for project management integrating aspects of

quality, environment, and occupational health and safety, and community 14

relations. The
only vehicle for the adoption of best project management practices is the creation and institutionalization of
project management offices and have the support of senior management. Project offices are becoming
increasingly important due to the need to maximize resources and maximize project performance.
REFERENCES • AACE International. (2011). 39R-06: Project Planning – As Applied in Engineering and
Construction for Capital Projects. 1265 Suncrest Towne Centre Drive, Morgantown, WV 26505-1876, USA:
AACE International. • AACE International. (2015). Total Cost Management Framework Second Edition. 1265
Suncrest Towne Centre Drive, Morgantown, WV 26505-1876, USA: AACE International. BIBLIOGRAPHY •
Skills & Knowledge of Cost Engineering, 6th Edition. • Total Cost Management Framework; AACEI; 2th
Edition. • 39R-06: Project Planning – As Applied in Engineering and Construction for Capital Projects Page 1
| 21 Page 2 | 21 Page 3 | 21 Page 4 | 21 Page 5 | 21 Page 6 | 21 Page 7 | 21 Page 8 | 21 Page 9 | 21 Page
10 | 21 Page 11 | 21 Page 12 | 21 Page 13 | 21 Page 14 | 21 Page 17 | 21 Page 18 | 21 Page 19 | 21 Page
20 | 21