Implementation of project management principles in Spanish residential developments.

ABSTRACT. Urban development of land and subsequent residential development of buildings are closely related to construction industry. Within the industry, project management is widely applied in Anglo-Saxon countries. Nevertheless, the results obtained from the literature review conducted did not find how project management is taken into consideration in land and property management. Furthermore, this project management approach is seldom implemented in the Spanish construction industry, even in the private sector. The traditional rigidity and protectionism of the industry, along with the peculiarities of the Spanish Building Law, create a scenario where innovation is difficult to attain. Although, there is a promising future for small to medium sized project management firms to provide a very wide range of services to private clients. This paper shows how the implementation of project management principles can be attempted for residential developments in the Mediterranean Coast of Spain. An inductive approach is used as methodology. After explaining the real state process for the Spanish market, a basic outline for the implementation of project management is proposed. Project and client risk assessment, preliminary questionnaires, stages and steps, company organisation related to professional expertise, procurement strategies and contractual relationships are displayed. Finally, the model is tested by two characteristic case studies.

KEYWORDS: Project; Property; Management; Tourism; Construction

SANTRAUKA

PROJEKTU VALDYMO PRINCIPU TAIKYMAS ISPANIJOS GYVENAMUJU TERITORIJU PLETRAI

Eugenio PELLICER, Richard VICTORY

Urbanistines pletros ir su ja susijusios gyvenamuju pastatu pletros rysiai su statybos pramone yra glaudus. Anglosaksiskosios salys sioje pramones sakoje daznai ima valdyti projektus. Taciau apzvelgus literatura, nepaaiskejo, kaip projektu valdymas taikomas valdyti zemei ir nuosavybei. Be to, projektu valdymas--retas dalykas Ispanijos statybos pramoneje, netgi privaciame sektoriuje. Tradicinis pramones sakos nelankstumas ir protekcionizmas, kaip ir Ispanijos statybos istatymai, sukuria situacija, kad inovacijos igyvendinamos sunkiai. Zadama, kad mazos ir vidutines projektu valdymo imones gales ateityje teikti ivairiausiu paslaugu privatiems klientams. Siame straipsnyje kalbama, kaip pameginti idiegti projektu valdymo principus Ispanijos Vidurzemio juros pakrantes gyvenamuju teritoriju pletrai. Pasirinkta indukcine metodika. Paaiskinus Ispanijos nekilnojamojo turto rinkos procesa, siulomas bazinis planas, kaip diegti projektu valdyma. Ivertinama projekto ir kliento rizika, pateikiamos preliminarios anketos, etapai ir zingsniai, aptariamas su profesine patirtimi susijes imones organizavimas, pirkimu strategijos ir sutarciu valdomi santykiai. Galiausiai modelis patikrinamas dviem budingais atvejo tyrimais.

1. INTRODUCTION

1.1. Project management background

A project is a temporary endeavour undertaken to create a unique product or service (Project Management Institute, 1987). Project management or the management of projects, as defined by Morris (1994), "is a set of management practices and ideas hung around the way projects evolve as they go through their life cycle". The term "project management" first appeared in the mid twentieth century and it reflected a longer history of efforts in trying to rationalise discontinuous production practices that went back to Henry Gantt and Henri Fayol. The former created the bar chart at the beginning of the twentieth century (Gantt, 1903; Clark, 1925); Fayol (1916) established the five functions of management: to plan, to organise, to command, to coordinate and to control.

The mid-fifties saw the combination of technology and lessons learnt. The PERT/CPM techniques were developed in parallel, through the late fifties (Morris, 1994). CPM was developed in 1956 by Du Pont de Nemours, with the assistance of computer experts from Univac, for construction and maintenance of manufacturing plants. PERT was developed a year later by the US Navy jointly with the management consultants Booz, Allen & Hamilton and the Lockheed Corporation for the Polaris ballistic missile program.

In 1959, the first article on project management was published in a prestigious management journal (Gaddis, 1959). The product breakdown structure was first implemented by the Department of Defence and NASA to improve systems acquisitions in 1962 (Morris, 1994). Later on, the earned value approach was established to control the physical and financial progress of a project (Department of Defence, 1966). By the mid-sixties, the advances made in computer technology gave way to the matrix organisation concept (Mee, 1964; Knight, 1976). During these years, management was accepted as a science (Hopp, 2004; Chopra et al., 2004) and operations research as a profession (Churchman, 1970; Miser, 2001). They made the learning and implementation processes advance at alarming rates; experiences and lessons learnt from all sectors of industries were channelled into academic institutions, allowing for results to be available for all (Wren, 1994).

The methods and tools of project management evolved and changed throughout the years (Morris, 1994). Many authors contributed to this development: Cleland and King (1968), Archibald (1976), Stuckenbruck (1981), Kerzner (1989), Turner (1993), Morris (1994), Turner (2006) and Winch (2006), among others. Some milestones in the rise of project management included: the establishment of the International Project Management Association in 1965 and the Project Management Institute in 1969 (Morris, 1994), the concept of Total Quality Management (Deming, 1986), the first edition of the PMBok (Project Management Institute, 1987) and the standard ISO 10006-1997 on guidelines to quality in project management (International Organisation for Standardisation, 1997).

Project management applied to construction attracted the interest of numerous experts that reflected their contributions and proposals in many books and papers, from Barrie and Paulson (1978) to Fewings (2005). In the modern construction industry, an important factor of change is the attention being paid to the clients and their needs, which is forcing the industry into rethinking the whole procurement and contracting side of the construction process (Latham, 1994; Egan, 1998). Both authors had a huge impact and influence in United Kingdom. In fact it was from these reports that traditional contracting came under threat by other contracting and procurement routes. Within the private sector, many varied innovative forms of procurement routes and contractual relations have been used: management contracting, design and build, contracting management, build-own-operate-transfer and project management; all of them are widely explained and analysed in many books (e.g. Ashworth, 1998; Murdoch et al., 2000; Winch, 2002) and papers (e.g. Watkinson, 1992; Love et al., 1998; Love, 2002; Blayse & Manley, 2004). The successful contracts completed using these types of procurement and contract routes are proof of the popularity of these methods. In the public sector, changes brought about by the introduction of the Public Private Partnership and the Private Finance Initiative in 1997 paved the way for alternative procurement routes other than traditional contracting. Project management and related procurement and contractual systems are gaining momentum as projects become more technically complex (Winch, 2002).

Urban development of land and subsequent property development of buildings are very closely related to construction industry; in fact, legalised land is needed to construct the building. In these fields, the literature review conducted, and related to project management, gets few relevant results. Ashworth (1998), for example, uses the expression "develop and construct" to define the process of purchasing land, obtaining planning approvals, designing, building and selling or renting. Chakrabarty (1998 and 2001) describes an integrated urban management model based on management science and systems theory. Partial approaches have been proposed for particular cases (e.g. Garba & Al-Mubaiyedh, 1999; Lum et al., 2004); all of them are centred in land management without taking into consideration project management principles.

1.2. Project management in the Spanish construction industry

In Spain, the concept of project management was gradually implemented in the energy industry. However, it is practically nonexistent in the public sector (mainly construction) and slowly, but painfully, it is trying to introduce itself into the private sector (AEDIP, 2006). A survey carried out in 2000, among 39 Spanish consulting engineering firms, proved that, regarding to the use of procurement and contracting methods, the percentage of application of project management was less than 2% (Pellicer, 2001). No further studies have been done since then, even though it seems that the current situation is improving a little bit (AEDIP, 2006). In 2004, the Spanish Ministry of Federal Income recognized the need to embrace this kind of procurement system by the public sector (Ministerio de Hacienda, 2004). Nevertheless, it has not been implemented in the law yet.

The existing set-up within the industry is too rigid and inflexible; there are a lot of bureaucratic and legislative complexities too; state law, banks, professional bodies, insurance companies, main contractors and limited contractual relationships cause a closed shop atmosphere where protectionism does not allow very much for innovative management techniques (Ferry, 1991; Garrido-Herndndez, 2002; Ministerio de Hacienda, 2004; SEOPAN, 2006). Furthermore, the educational system is closely linked to the professional bodies (Ferry, 1991; Martinez-Val, 1996).

Within the building sector, including the private residential sector, there is another obstacle in the way of project management implementation: the strict regulation imposed by the Spanish Building Law (Ministerio de Fomento, 1999). This law specifically identifies the agents that are wholly and solely responsible for administration and execution of projects. It does not recognise the authority of a project manager. The Spanish Building Law specifically states that only architects and quantity surveyors can carry out administration and management of building projects. Project management requires more skills than simply an understanding of the technical issues associated with the design and construction of buildings. It must ensure successful achievements of the project aims and client objectives through the management of the contributions from consultants, lawyers, estate agents and contractors. Architects and quantity surveyors are more at ease with the traditional procurement and contractual routes (Garrido-Hernandez, 2002).

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