Re: Managing projects with subcontractors

Trevor,

Thanks for the response, but that's not really the question I need answered.
I understand the benefits of more granular insight into the sub's estimates
and resources, but that is a different discussion.

Ok, bear with me. Here is a gross simplification of my project:

Project Doohickey
1 PM LOE
2 Design
3 Integration
4 Shipping to customer site
5 Install and configure
6 System Testing
7 Final Acceptance Testing

For each of summary tasks 2 – 7, there are three subs plus internal
resources performing some portion of the work, and the subs have provided a
cost breakdown that shows the labor, materials, and ODCs for each task. For
example:

2 Design
2.1 Design Management (me)
2.2 Design of subsystem 1 (sub 1)
2.3 Design of subsystem 2 (sub 2)
2.4 Design of subsystem 3 (sub 3)
2.5 Design of subsystem 4 (internal resources)
3 Integration
3.1 Integration of subsystem 1 (sub 1)

Etc.

Before I get to the point of tracking progress, I need to get the project
set up properly.

Are there generally recommended techniques for planning and scheduling work
done by subs? By this I mean, how is it done using Project? I am not
looking for PMBOK tips, but rather insight into how to make the best use of
the tool (MSP).

Thanks,

Ted


"Trevor Rabey - Perfect Project Planning" wrote:

The less you know about a Task, or Tasks, the less control you will have
over it.

When you sub-contract a Task, or Tasks, which has both a labor and a
material component, and you have no idea what the split is costwise, and you
don't know how many people will work on it, and at what sort of assignment
units, and on which days, and how many Hours, you cannot expect to have much
control, and you can expect some surprises.

In construction, it is common practice to get a single price from a sub for
a big bundle of work (and materials) without any breakdown into what might
be numerous Tasks, each of which might occur at different stages during the
project and have predecessors and successors. For a simple example, say,
Supply and Fix Tiles Throughout The House, $100K.

The first thing to do is identify the separate Tasks and split up the $100K
between them.
You should be able to demand that the sub provides a split but if he won't
do it or can't, then you must make an estimate.
If necessary, 10 Tasks, $10K each.

You could ignore assigning Resources and just assign the $10K cost as a
Fixed Cost for each Task in the Cost Table.
If you had a different cost for each Task you can assign a different Fixed
Cost for each Task.

You could go one step further and (instead) assign Bob The Tiler to each
Task as a Material Resource and a Standard Rate of $10K.
If you had a different cost for each Task you might create a separate Bob
The Tiler for each one, eg:
Bob The Tiler 1, $50K
Bob The Tiler 2, $20K
Bob The Tiler 3, $8K
..etc
Bob The Tiler 10, $30K

You could go one step further, and create a Work Type Resource and a
Material Type Resource for each Task, eg:

Tiling Task 1
Bob The Tiler 1, $25000
Tiles 1, $25000

Tiling Task 2
Bob The Tiler 2, $10000
Tiles 2, $10000
..etc

Again , the sub should provide the split but often can't or won't.
In construction, it is a reasonable assumption that most Tasks have a 50/50
Work and Materials split, so you could make this assumption (or any other),
as above.

Everything still adds up to $100K total, but you now have the cost
distribution between the Tasks, and more important you have the cash flow
profile, or how the costs are distributed over the Duration of the project.
You also have a basis for agreeing with the sub on the progress payments
amounts.

Now, it is convenient but not essential to make the payments match the costs
estimates.
Tiling Task 1 costs $50000 but you could agree to pay $10K per Task, or any
mutually agreeable split.
This can be used to provide an incentive.
For example, you could over-reward for Tasks on the Critical Path.

You might make a progress payment for each Task, which simplfies things, or
you might group them up.
For example, you might pay for Tiling Tasks 1, 2 and 3 in a single payment.
You can create Milestone events to represent the payments, so the
Predecessors of Progress Payment 1 will be Tiling Tasks 1, 2 and 3.

You don't attach a Cost to these events because it is already calculated as
the cost of the Predecessor Tasks.
You should adopt a strict policy of only paying for 100% complete Tasks, not
a fraction of this one and a fraction of that one.

If you have a Tiling Task that has a Duration of 5 Days and an estimated or
assumed Cost of $10000, it is a reasonable assumption that the Work is $5000
and the Materials are $5000, and if Tilers cost about $25/Hour or
$1000/week, then you expect to see 5 Tilers, or the equivalent, working on
that Task. If a couple of days go by and you have only seen 2 guys, then
expect the Task to run late.

If you just do the minimum (which I don't think is enough), such as skip the
Work/Material split and just assign Fixed Cost, you will have less knowledge
and control, and will increase the risk that you will only find out what is
going on as a series of unpleasant suprises.

Hope this helps.
--
Trevor Rabey
0407213955
61 8 92727485
PERFECT PROJECT PLANNING
www.perfectproject.com.au

"tedbellinger" <Ted Bellinger@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote in message
news:16DE4402-2BBB-4B56-93EE-8F33E50813AA@xxxxxxxxxxxxxxxx
I am looking for tips on how best to set up and manage projects that
include
subcontractors. Typically these subcontracts are fixed price, with
progress
payments linked to milestones, and I need to be able to plan my oversight
work as well as manage task dependencies that impact the project schedule.
I
don't typically have any visibility of the sub's personnel resources nor
of
the sub's estimates of the hours required to do the work. I just know
that
they must perform certain tasks as part of their subcontract, and that
these
tasks must be completed for them to get the progress payment.

Are there common approaches to projects with subs? Are there things to
watch out for when setting up such a project? I suspect I am making my
project plans more complicated and less accurate than I could if I did it
right.

BTW, I am using Project Professional 2003.



.

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