The core philosophy of the LandDev system is to help developers be pro-active and Manage by Exception. The use of a variance system is key to this second objective. In order to manage by exception a clearly defined plan must exist with policies and procedures that work to ‘compel events to conform to the plan’. When events refuse to co-operate, a variance system is needed.
Variance’s really come in two forms: Time and Money. Money variances in LandDev start out as a ‘Variance Request’. Work flow management is the key to this process. An Excel spreadsheet is generated that allows for the entry of the Variance Request. Time variances are entered into the Builder Portal.
A typical starting place for a variance request is in the field when the project manager notices a problem that represents an exception to the plan. This could be rain that will halt the project for several days. It could be rock that has to be removed and will affect both the schedule and the cost. The Work flow management system knows who has to receive this Variance Request. This has been established in the definition of the reporting hierarchy of the company. Levels of approval authority are also established. For example:
- Joe is the project manager (can approve up to $100 and 1 day delay)
- John is the construction manager that Joe reports to (can approve up $1000 and 3 days delay)
- Bill is the COO of the company (can approve up to $10,000 and 6 days delay)
- Tom is the owner (must approve any variance over $10,000 or over 6 days)
This structure can change at any time by simple edits to the database. In reality there may be many project managers and the reporting structure can be as complex or as simple as is required, there are no limits to the scalability of the LandDev system. The dollar approval limits can be ‘accumulative’. For example, if a series of small dollar variance requests have been approved by the line manager, a time may come where the total of all variances approved to date (for a single Job/Activity) exceeds the limit of that managers authorization. The next variance request that comes in will be sent up the management chain even if that single variance is within this manager’s approval range. This accumulative method is optional.
This Variance tracking system offers reports and ways of looking at data historically to learn from past mistakes in a highly quantifiable way. Knowing the actual cost of a certain kind of problem allows business leaders to make more informed judgment calls on future projects. For example, how much money should be spent on due-diligence and pre-engineering on new projects? Having easy access to quantified information can help a manager make the best decision.
In addition the workflow allows for very fast reaction times for the entire team on problems as they are occurring, not weeks later. Project managers get the opportunity to involved upper management in problems in an automatic standardized way that is very predictable to whole team. This allows each problem to tackled by the appropriate sized team to help ensure the best solution to the problem is found in the cost effective way.