Project controls: An overview (1)

“If you cannot measure it, you cannot manage it” – Dan Goldin, NASA administrator, 1992-2001

“It is not the strongest or the most intelligent who will survive but those who can best manage change” – Charles Darwin

A vehicle is of no use without control mechanisms like the steering, wheels, brakes and the driver. As the Airborne Warning And Control Systems (AWACS) is used by the USAF as an advanced detection and early warning system to detect enemy aircraft, battleships and combat vehicles from long distances and perform command and control in an air engagement for attack and defensive purposes, so is project controls used as an early warning project/programme management detection system and process. During project execution, there is the need for monitoring and control. While project execution, monitoring and control processes take place in parallel, the monitoring process is to see how well the project is progressing and control is to make changes if any part of the project has deviated from approved plan. Monitoring and control are purely anticipatory and corrective processes and they greatly enhance the probability that a project will be successfully delivered.

Project controls defined

According to Gary C. Humphreys, “One of the basic requirements of an efficient and effective project management methodology is the ability to determine the true status of a project. Otherwise the development of a plan loses its value, since there is no way to accurately measure and assess how closely the plan is being followed or to monitor the results of corrective actions.”

For the purposes of this article, project controls definition will be limited to project strategy, cost control, cost engineering, cost management, planning, scheduling and risk management areas of a project’s lifecycle. Project controls is the collection of cost and schedule data and other relevant information used in the management, determination and methodical processing of data collected and are used in predicting if such project or programme is going to have budget overruns or not, and if there will be schedule slippages or not. The outcome of this process assists the project manager and the project team to be proactive and take corrective measures if the project is in trouble. The most commonly used methodology for this important aspect of project management is called Earned Value Management (EVM).

Project controls is a subset of project management that encompasses the human capital and resources, systems, tools, techniques and processes used to plan, manage, monitor, control and mitigate schedule, cost and risk issues that might want to pose serious threats to or derail an otherwise carefully planned project. The project controls function does not include the actual management of the project scope and other project management-related activities and knowledge areas such as communication, stakeholder, quality, human resource and procurement management. While not used during the project controls execution process, data and information got from project controls’ periodic performance measurement reports lots of times prove very useful to project managers and their team in managing effectively these project management knowledge areas.

Importance of project controls 

One of the major advantages of having a proper project controls system set up for a project is that you are able to know where you are at any point in time during execution in terms of the budget/cost, estimates and the schedule. With project controls you have a good and lucid visibility of the project cost and schedule trends and other project functions. With the proper project controls plan and systems in place, tracking of costs, man-hours, labour, productivity and materials against the budget and schedule will be easier. You are also able to come up with the financial scorecard of the entire project periodically showing authorisation for execution (AFE), approved changes, current budget, commitments, actual expenditures in the general ledger, (SAP or Oracle), Estimate to Completion (ETC), Variances, Estimate at Completion (EAC), contingency utilisation, risks, issues and changes.

Projects controls also supports the Purchase Orders (PO), established change management process and the HSSE (Health, Safety, Security and Environment) goals and objectives. It allows for the earliest possible forecasting of cost and prediction of the scheduled completion dates. Sound project controls and management cost about 2 percent to 5 percent of the entire capital outlay, but savings of about 10 percent in time and 15 percent to 20 percent in costs are achieved.

Project controls systems and integration   

The project controls system consists of so many different components which include Planning and Scheduling Systems (Oracle Primavera and Microsoft Project), Cost Management, Reporting and Forecasting Systems (Primavera Unifier, Prism, Ecosys, Epoch, Kildrummy, Deltek, Safran and Excel), Man-hours Tracking/Reporting Systems, Change Management Systems and Enterprise Resource and Planning (ERP) Systems (SAP Financials and Oracle).

For a project controls system to be very effective it has to be very well integrated. A fully integrated system is an environment where the Schedule Management Application such as the Primavera P6 and Microsoft Project, the Change Management System, Enterprise financial and cost applications like the Enterprise Resource Planning (ERP)/Financial systems and Time Keeping Systems are linked and integrated with the Cost Management Application. All data sources are routed through this application from where all required reports are produced.

Aside from a fully integrated system environment, we also have semi-integrated and non-integrated systems environments. A fully integrated project controls system enterprise solution is most desirable as it is the most robust and profitable in the long run.

The project controls process

Project controls is a process and has a management plan. A project is a temporary undertaking employed to create a unique product or service. It has a start and an end with a defined scope, budget and timeframe. Before the actual project management plan is put in place, value engineering and analysis must be performed to make sure that what is being developed has some functional relationship with the cost. High-level risk management and analyses are also done at this juncture of the process. In order to carry out proper monitoring and control, a project cost and schedule plan, execution and implementation strategy otherwise called the Project Controls Plan must be developed. This plan dictates how the health of the project is to be measured and who amongst project team members is authorised for collecting, viewing, deleting, changing and using any form of data and information from the project control systems.

During project planning, the Work Breakdown Structure (WBS) and the WBS dictionary must have been developed. The WBS is the decomposition of all the work in the scope into manageable work packages or tasks. The project control processes are iterative and concurrent, make use of the WBS and involve Schedule Planning and Development, Cost Estimating and Budget, Resource Planning and Procurement Planning. The Schedule, Cost and Resource Baselines as well as Contract requirements derived during the planning and execution processes are time-phased and are used to measure and determine performance when project controls plan processes are implemented. The project controls plan ensures that all the processes, elements and components used in performance measurements are well integrated. Control Accounts at certain levels of the Work Breakdown Structure are used for this integration.

Ayodele Akingbade