Performance and project management

With 160 employees and annual averages of 300 remodeling projects and more than $50 million in revenue, Airoom Architects & Builders in Lincolnwood, Ill., operates on a grander scale than most remodelers. But Airoom's strategic approach to improving performance management can act as a template for any company.

March 31, 2004

LIRemodel improves cash flow with scheduling, extranet
Paragon General Contractors manages client performance, too

With 160 employees and annual averages of 300 remodeling projects and more than $50 million in revenue, Airoom Architects & Builders in Lincolnwood, Ill., operates on a grander scale than most remodelers. But Airoom's strategic approach to improving performance management can act as a template for any company.

The basic steps: Identify performance indicators critical to company success. Track and measure those indicators, and communicate the results across the company. Analyze the data to find weaknesses. Finally, develop and implement plans to improve work processes and systems in those weak spots.

When director of operations Dave Taraboletti joined Airoom in 2002, owner Mike Klein charged him with providing easy access to information for everyone in the company, clients and approved partners. "The concept was to put all the information no more than two clicks away whether people were in the office, working from home or any other place where they may have Internet access," Taraboletti says.

Growing a nonexistent information technology department to its current level of five people, three of whom developed the program, Airoom rolled out its internally created, enterprisewide system in less than nine months.

Called AFD, the proprietary intranet portal — consisting mainly of a Microsoft SQL Server database, the Microsoft Office Enterprise Project Management Solution, Timberline accounting software, an assortment of Microsoft Excel spreadsheets and various programs that help load information onto the Web — has been in place for one year. "We have reduced project time by about 15% and paid off the investment cost through savings within one year of deployment," Taraboletti says.

AFD provides employees with shared company information as well as individual personal pages from which each worker can manage contacts, leads, sales, purchase orders, schedules, contracts and more. "And we can tap into Sidwell [], municipality databases, Yahoo maps, MapQuest, aerial photos online and other existing collections of data on the Web," adds Airoom IT/IS manager Aasif Bagdadi, who headed the technology integration.

AFD also has become an essential part of Airoom's quality-management program, which tracks processes to identify potential areas for quality improvement. AFD helps by serving as a centralized, automated means of tracking performance indicators, generating reports and communicating company goals. In addition to four global metrics — planned versus actual project time lines, customer satisfaction ratings, profitability and quality (determined by a formula that includes number of issues and time to resolve them) — employees can view measures of both their individual performance and their projects.

Project scorecards track individual or team performance on a single project or group of projects. The scorecard rates customer satisfaction through recurring, proactive phone calls to gauge the "pulse and temperature of clients" during and after projects, Taraboletti says. Also rated are adherence to schedule, performance against schedule, actual profitability versus projections, adherence to internal processes, etc. Scoring is weighted based on project size and complexity, number of trades involved, dollar amount, known lead times of municipalities and other issues that can be tracked quantitatively.

Such detailed tracking allows Airoom to make company profitability a greater factor in more employees' compensation packages and to link production employees' compensation to on-time project delivery, with a bonus for early completion. AFD even alerts staff when a project is going off schedule.

To determine which information should be shared and how best to present it, Taraboletti and Bagdadi employed a business methodology developed by IBM in the early 1980s called JAD — Joint Application Design/Development/Deployment. "You gather together the best members of each work discipline and through a collaborative upfront effort determine best practices, and then the same team acts as evangelists in their respective departments to help train the rest of the company," Taraboletti says.

JAD also helps streamline processes in general. "When we looked at processes such as design, project development and construction procedures, we found areas where we could eliminate steps," Taraboletti says.

In addition to streamlining its remodeling process, Airoom increased the power of the information gathered for each project. "What was labeled as information for one report, we can now provide 70 variations of that report, including graphical analysis and trends tracking," Bagdadi says. "Also, our sales team now goes very prepared for the first meeting, with more information about the municipality and other significant factors. That helps them adjust project scope to avoid changes, which have a significant impact on schedules."

The AFD system saves more time by automatically alerting the next department that a project is ready for it. When a manager checks off that a project has moved through his or her department, an e-mail automatically sent to the next department indicates that the project is in the next stage. "For example, when the job is sold and a review has been completed, the manager of architecture will receive an e-mail and can assign it to an architect by putting it into that architect's electronic job folder," Bagdadi says. "We have significantly cut down on handoff time."

In addition to the initial technology upgrades, Airoom planned a series of upgrades so the system continually will provide productivity improvements. One upgrade implemented during the first year of use was the creation of "wizards" that guide staff through the steps necessary to move a project to the next phase of the AFD system. PR


LIRemodel improves cash flow with scheduling, extranet

For Bob Kocis, owner of LIRemodel in Huntington, N.Y., performance management comes down to scheduling crews and ordering materials efficiently, ensuring regular cash flow and managing profit slippage. More than a year ago, his company created an extranet that, combined with Microsoft Outlook's calendar, has improved efficiency by 10% to 15%, which cut the average project schedule by four to five days, Kocis says.

Although not intended for construction project management, Outlook serves the purpose for Kocis, who uses the program's basic reporting and graphing capabilities instead of Gantt charts. LIRemodel annually produces 15 to 18 large jobs and 20 to 30 smaller projects with five full-time and 30 contract employees.

"I've played with Microsoft Project," Kocis says. "My jobs move so fast, I would almost need a full-time clerical assistant just managing the adjustments. At the volume I'm doing today, I'm not sure I can justify that."

Kocis' chief project manager, Bill Marchioli, maintains the schedule for weekly project manager meetings. Kocis says a firm understanding of work flow helps him control cash flow. "When I look at my cash flow, I can say, 'OK, we're going to get a Sheetrock start check on the Jones job, so let's have Sheetrock delivered Monday morning and get the crew over there to load it up. On Tuesday, the Sheetrockers will come and start rocking. On Thursday, we'll start to tape and spackle.' Friday, I can put my hand out to Mrs. Jones and say, 'OK, I'm entitled to my next $10,000 check.'"

The extranet lets Kocis track projects on various levels. Created by LIRemodel office manager Peter Orilia using MSN Groups software, the extranet cost approximately $1,000 in labor, Kocis says. It allows creation of project Web pages that facilitate transferring communications, purchase orders, digital progress photographs and other information to clients, designers, subcontractors and materials suppliers.

"The project managers use the extranet to get the subs an itemized scope of the job so they will know they've got five bedrooms, two baths and a kitchen," Kocis says. "They know how much raw materials they will need so that when the van shows up at 8 in the morning, they are prepared to work. Our subs congratulate us on our efficiency in getting that information to them so they don't have slippage when they send their crews to my jobs."

LIRemodel made sure its subs were ready for the extranet. Through an informal survey, "we found out that the key subs — not all of them, but the key subs — have Internet access and that they're finding out it's a lot easier than using the telephone," Kocis says.

"Once they saw the value, I could log on, give them a password and, boom, they check in and know their materials and other project details," Kocis says. Having the materials list in writing at a shared location limits costly side trips. "Here on Long Island, we have huge travel times," Kocis explains. "For someone to run to Home Depot for a $5 piece costs me a minimum of $60 — that's the labor to drive to and from, stand in line, find the part, pay for it and go back to the job site."

The extranet also improves cash flow by letting Kocis post digital images online to show off-site clients that LIRemodel has completed a project phase and is entitled to the next payment.

Hosted in-house, LIRemodel's extranet requires approximately two hours a week in maintenance by Orilia, says Kocis, in addition to the time that project managers need to update project information.

Paragon General Contractors manages client performance, too

Microsoft Project scheduling software helps Paragon General Contractors, a high-end remodeling and home building company in Point Richmond, Calif., hold homeowners, designers and subcontractors to deadlines.

Paragon president Bill Hamilton says the firm undertakes six to eight $1 million-plus projects at a time along with multiple projects from $5,000 to $1 million. The tech-savvy businesspeople who form his client base understand that the remodeling process is difficult to control but are concerned about price on their multimillion-dollar projects. So he arranged a fee structure driven by job duration, not a percentage of construction costs.

"Our clients could see that charging a percentage of total costs was not a motivation to save them money," Hamilton says. "So we devised an alternative structure where the ability of the owner, architect and consultants to make timely decisions drives our fee and keeps the project on schedule."

Paragon establishes a thorough critical-path schedule as well as a detailed hard bid for remodeling projects. "The schedule includes at least 10 to 15 decision milestones for everyone involved in the project," Hamilton says. Paragon then must get the owner and all other parties to buy off on the schedule and the decision-making process it establishes.

"It helps make the schedule equally important to the budget, as it should be," Hamilton says. If the project goes past 10 months because of circumstances beyond Paragon's control, the company negotiates additional fees beyond the fixed-price contract, relying on Microsoft Project's detailed documentation ability.

"This billing process has removed the concern that builders are not motivated to rein in budgets and save money," Hamilton says. "Designers and consultants realize they will be held to a higher standard of timely performance. It has been a huge benefit with professionally run subcontractors because it helps them be more efficient with their resources."

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