An effective project controls system does more than inform project stakeholders of delays, cost overruns, risks or technical issues. Beyond these functions, a successful project controls system enables trending analysis and forecasting to predict issues while there is still time to fix them.
What is a project controls system? A cost and schedule-based approach consisting of the people, processes and tools that helps identify and communicate the metrics of project performance. While project management systems may include cost, schedule, risk, resource, quality or scope management, a project controls system focuses on cost and schedule performance. The project controls system should provide cost and schedule information that informs project management, who can then make decisions regarding the project’s direction.
Implementing an entire project controls system at once is a daunting task. If an organization can first establish the five pillars of a project controls system, it will lay the groundwork for a reliable system that can be expanded as project maturity grows. The five pillars are as follows:
- Work Breakdown Structure (WBS) – A well-developed WBS should include all work scope. If used as a guide for developing the integrated master schedule (IMS), the project team ensures all scope is captured in the schedule.
- Accurate Time-Phased Budget Aligned to the Integrated Master Schedule (IMS) – A resource-loaded schedule is the best way to align project budget to the time phasing of activities. If this is not possible, cost and schedule planners should work closely to align the budget. Doing so improves the ability to measure performance during the execution of the project.
- Project Accounting and Accruals Aligned with Project Performance – The system must support the capture of direct and indirect costs at a level of the WBS appropriate for the work. Additionally, cost should align with the capture of performance. If invoices from subcontractors or suppliers are delayed, accruals or estimated actuals should be used to align with performance.
- Accurate & Objective Monthly Status – Progress completing project tasks must be tracked in an objective manner at a level of detail that is meaningful to the project.
- Change Control – The system must track changes to the original plan, including changes to the cost, schedule and technical deliverables.
If these pillars are implemented, the project controls system will address the common pitfalls of project management, such as misalignment of cost and schedule, insufficient or inaccurate cost and performance data, and technical scope creep. The system will:
- Ensure Proper Execution: Provide integrated management of program planning and execution. This will allow the program to accomplish its technical objectives within its cost and schedule parameters, while reducing or eliminating cost overruns.
- Encourage Proactivity: Enable the project management team to make proactive operational and administrative decisions based on forward-looking reporting rather than making reactive decisions after an issue has occurred.
- Reduce Risk: Significantly reduce the risks of technical performance deficiencies and cost and schedule variances by avoiding issues with cash flow, customer satisfaction ratings and project margins.
- Tackling these common pitfalls ensures that the system provides actionable, reliable trending and forecast data that the project team can use to finish projects on time and within budget.
Warren Averett is an independent member of the BDO Alliance USA. This article was borrowed with permission from BDO USA, LLP.