“If you can’t measure it, you can’t manage it.” – Peter Drucker
Capital projects support the goals of an organization, but they also pose significant risk. To ensure project success, goals must be established as early as possible for scope, schedule, budget, and quality. Defining roles and responsibilities of the project team as well as a communication plan will also contribute to the success of the project. A comprehensive project definition, codified in a project charter will keep the project team aligned with the organizations goals.
There are well-established project management methods to manage project scope and quality, while a comprehensive approach to project controls provides management and control of the budget, cost, schedule and project status information. Risk is managed and mitigated using the information and analysis provided by the project controls team.
So, what are the characteristics of a solid project controls strategy?
We believe that a realistic budget is the cornerstone of any project controls strategy. This starts with defining the project scope in enough detail to establish a comprehensive budget including construction costs; design services; project management services; commissioning; furniture, fixtures & equipment; specialty systems; testing; legal; financing; escalation and contingency. After the budget is set, with the basis of estimate and budget assumptions documented, cost management begins. The project cost status report will include a detailed summary of the forecasted cost at completion and cash flow.
Time is a critical issue that can impact project cost. The project schedule should identify all of the tasks, milestones and critical path work items for the project. It should provide sufficient information to coordinate the activities of all project phases, with special focus on the dependencies between work items. Initiating the project with an unrealistic construction schedule can dramatically affect project cost and overall success. Once the project contractor is on board, details of their construction schedule are reviewed and incorporated into the project schedule.
Cotter works with the project team to identify the potential project risks. A risk register documents the risks while providing the probability of occurrence and potential impact. Allowances for risk are included in cost and schedule forecasts. Routine analysis of risk items continues while monitoring the results of corrective action plans. Risk issues are discussed at weekly project meetings. Initially research and analysis are performed to ensure that the issue and its potential impact are properly understood. This supports the project team and client in carrying the proper amount of contingency for open issues. Once issues are defined, attention is then turned to following through with corrective action plans. Issue resolution may result in change orders, schedule revisions, resequencing of work, or other mitigation measures. If a critical item surfaces, a working group is organized to work on the issue until the project is back on track.
PROJECT MANAGEMENT INFORMATION SYSTEMS
Information management is a critical component of an effective project controls strategy. Capital projects generate large amounts of specialized documents that must be careful conveyed to the appropriate persons and stored for access and legal documentation. Creating an environment where everyone is working off the same informational database with standard definitions and processes yields tremendous benefits. There are web based project management (WBPM) systems available in the market that support efficiency and quality in data collection, analysis, and reporting. The latest systems enable WBPM integration with cost and scheduling programs.
STRATEGY & EXECUTION
A comprehensive project controls strategy is critical to delivering successful projects. After years of experience in managing projects across multiple industries and client types, Cotter recognizes considerable payback from key practices.
- Establishing and managing project controls tools, systems, policies and procedures early to support decisions made during the planning and design phases where 90% of final project cost and schedule is determined before construction starts.
- Including dedicated project controls professionals on the project team. Sound processes, procedures, systems, and reporting are essential, but experienced professionals need to ensure that discipline is maintained in data collection, analysis, and reporting.
- Maintaining consistency in controls management throughout the project. Changes in process, procedure, reports, and systems can distort project status. Cotter conducts periodic audits of each project by our senior staff to ensure quality and consistency of the project controls.
- Being honest about level of project controls required and the cost of services. Trade-offs are inevitable, but expectations and development of the appropriate controls should be thoughtful and established as early as possible.
Project success is defined by completion on-time and on-budget to meet the scope, plans and specifications. An effective system of project controls not only provides key cost and schedule information, but also provides the basis for effective communication and timely decision making. When project team members are confident in project status and project stakeholders get accurate, timely, consistent answers to their questions, it is a good sign that the project controls are effective.