It’s true that this isn’t a very clear explanation. Since this happens in our business from time to time (and I’m also in the Project Management end of an engineering / construction company), perhaps I can summarize your problem. If not, please point out the errors in my assumptions and statements.
You are responsible for overall execution of a project which will involve engineering, procurement, delivery and erection of materials and other components. The project was estimated (and engineering, procurement and execution scope detailed) “by others”, one of which party was deficient (or missing, as you state) in its own execution, leaving you holding the bag with insufficient budget (and maybe insufficient schedule, as well) to complete the site erection portion of the project as planned. So your margin is shot, profit on the job is iffy, and the schedule effects have not yet been recognized.
Is that an accurate assessment so far?
What needs to happen now is to obtain the missing inputs: What will the missing civil engineering (and execution) portion of the project cost in terms of dollars and schedule days? This part of the project needs to be estimated – as it apparently was not prior to the sale – and fully brought to light within your own organization. There has to be a complete understanding and acknowledgement of the shortfall as it relates to this project, and what it will cost to complete the project as envisioned when the shortfall is acknowledged. For one thing, this gets it “off your plate” so that your modified budget is recognized as insufficient to meet the completion and margin objectives. You need to make sure that management recognizes that you’ve been dealt a bad hand here, so that even though the project is now a loser (and may, in fact, cost more to complete than it will earn the company, and not just “come in at lower profit than expected”), so that when the project finally finishes at a potential loss, at least it may also be recognized that “it’s not your fault”. (That won’t keep the project from being a stinker; these things are always tough to work on or be associated with. You’ll be amazed how few friends you have in the company when the losses finally start to be recognized in terms of reduced cash flow, lawsuits generated from all angles, potential liquidated damages, demands for schedule recovery and expedited shipment – well, maybe less of that if you’re waiting on the civils, I guess – costing additional overtime, etc.) Yeah. Been there; done that.
After that happens, the company needs to take steps to correct the estimating and sales process to ensure that this doesn’t happen on the next project, or any other. (We’ve gone to a series of Gate Reviews, where all company departments have to review the project from top to bottom at various stages in its life cycle and demonstrate and sign off that “we’re prepared” to execute within the project schedule and budget parameters to meet all upcoming objectives. We also do a formal “project handover” from Proposal / Sales to Project Management, at which critical questions about the customer specification, our engineering and procurement plans, transportation and site erection and commissioning are asked and answered to everyone’s satisfaction before the project is “accepted” – whether they like it or not – by Project Management.) That’s “management overall”.
Your own task will be to attempt to re-do the budget and schedule despite the recognized discrepancy. You need to keep your management apprised of the ongoing risk to the budget (and schedule) as the project develops, and continue to seek ways to mitigate the damage caused by the missing scope estimate.
Finally, you should review the contract and specification very closely to see if any of your costs are recoverable. For example, were things presented and accepted in the spec that are not true on the ground? You may be entitled to a claim on the customer if so. Were other entities involved, that is, other suppliers or consortium partners, for example, who were responsible for reporting site conditions or civil engineering requirements and costs? You may be able to claim against them.
The biggest part of your job from now until the end of the project will be to save and collect every nickel that you can, to claim every reasonable schedule delay and force majeur event that you can to recover schedule days, to work closely with your site erection team to mitigate the costs and delays that they will incur – and perhaps offer monetary inducements and incentives to the contractor at the site to reduce costs and schedule delays – and attempt to salvage your wrecked budget.
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