August 6, 2022 | Articles
In Mexico, competition is increasing in the arena of project monitoring (PMO) services. Uncertainty in delivering successful projects makes the country a fertile place for the growth of this unique service, where banks, investor groups and private developers constitute the most frequent clients seeking these services. Accordingly, with reduced capital to go around and a highly competitive atmosphere, low prices often win the day for firms providing PMO services. Yet, because of the critical role of PMO to the success of projects, potential investors must be wary of low-cost offerings.
The unique role of the PMO provider is related to the situation. PMO firms observe and report on the development and construction of a project. The role is typically focused on the appropriate use of investment money as defined by the investing party. All stakeholders of a given project benefit from such services. An initial due-diligence study, when conducted, offers the client important information for getting a project off the ground, such as possible risks and technical opinions. The project monitor provides observations throughout the construction stage that help the client’s risk, schedule, budget, and pay application analysis. The PMO also assess successes during the project close-out and commissioning. In many ways, the project monitor resembles the project manager. Their differentiation lies primarily with their proximity to the project. The project manager is closely involved with the day-to-day activities on a project. The monitor visits the project typically once per month and evaluates and advises as an independent third party, thereby providing an objective view. This offers a distinctly impartial vantage point to best serve the interests of any investor or owner. This role is especially beneficial to investors who are less concerned with the technical elements than they are about the potential financial outcomes of their projects. The cost of hiring a project monitor is significantly lower than that of a dedicated project manager; however, the PMO could never replace the project manager.
Mexico’s job prospects include many that are financed by banks; these banks are interested in a monitor capable of advising them on their projects. Some firms operate exclusively in this space and have little to no corporate overhead because they are one-person operations. In order to stand out and win work, they offer their services at extremely low prices. Low cost in this domain, as elsewhere, can be an indicator of limited services. But even highly qualified firms are forced to cut costs in order to win available work.
A strategy that Hill International has successfully used is assigning a single project monitoring team for various projects. Hill Project Administrator Alyn Rivera shares: “I’m a part of Hill’s team on 12 PMO assignments that we won in Mexico during 2019. To reduce our price, and thus win new work, we assigned each team member to more than one project. By carefully scheduling resources across multiple assignments we optimize the team through economies of scale. This new approach results in the same level of service at a lower cost to clients.”
Clients, such as Banorte, Wartsila, and Sabadell have expressed satisfaction with the quality of Hill’s monitoring services. This is not just due to the strategic assignment of personnel, but also the provision of technical experts who bring a financial sensibility that other PMO firms cannot offer. “Other firms may have excellent technical know-how,” says Alyn, “but Hill offers a perspective that is founded in our deep understanding of the local financial environment that banks and financial professionals expect and require.”
Client satisfaction has already paid dividends. “Making clients happy is our best reward,” Alyn goes on, “but it’s also good for business.” Many of the PMO contracts that Hill won in 2019 were with repeat clients. This attests to the value clients place on the specific project monitoring experience as well as the strong relationships Hill has developed with them. Sabadell, for instance, specifically cited the financial awareness of Hill’s professionals as a key part of their satisfaction and decision to continue working with Hill. “Understanding your clients is key,” Alyn concludes.
A unique aspect of Hill’s PMO work in Mexico is the amount of current jobs in the energy market. “Hill will continue to develop expertise with energy projects in Mexico to pursue future opportunities” says Senior Vice President and Southeast Regional Manager Luis Lugo Jr. “We have been able to win several PMO contracts for energy projects and expect that we will be able to leverage that valuable experience in the future to win additional work.”
Hill’s current PMO work includes both upstream generation and downstream transmission of energy. “The transmission work was difficult because our team didn’t have specific technical experience in that field at first,” says Alyn. “But over time we’ve cultivated expertise on the technical side of these particular projects.” Hill’s local teams often draw upon the company’s global talent pool to support their entry into new sectors.
According to Luis: “New investors in the energy space require modern, hydrocarbon-tolerable infrastructure for transporting oil and gas across the country. This market will likely create an influx of energy jobs that require project monitors. It also presents some potential for economic growth throughout Mexico—it’s exciting to be a part of the initial steps in this process.”
In fact, one of Hill’s PMO jobs involves exactly that sort of work which Luis predicts will flourish in the current Mexican investment climate. For the developer, SSA Mexico, Hill is currently providing project monitoring services on the Tuxpan Port Phase II project. This project involves the construction of a distribution terminal for hydrocarbons at the Tuxpan Port, an important port for distributing oil and other goods from the Gulf throughout the rest of the country.
An Optimistic Outlook
With a strategic and cost-effective method of delivering quality PMO services, well cultivated relationships with Mexican banks and developers, and industry-specific experience in current and growing markets, Hill’s project monitoring team looks forward to carrying their PMO work through 2020 and beyond. “It is always satisfying to help investors overcome their project concerns by providing project monitoring and clarity for them,” Luis goes on. “No matter which way the economic trends push, investors can trust that they will have timely and accurate inputs and advice on their projects in order to properly steer them with the help of Hill International’s experienced and passionate project monitoring teams.”
To speak with Luis Lugo Jr. about Hill’s PMO services, reach out to [email protected] or call Hill’s Miami office at (305) 468-4900.
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