Making a way to digital future: Integrated systems in project controls

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03^rdFebruary

Challenges and need of an integrated system

In project execution, this is no more evident when the management team attempts to execute large, multi-faceted projects in the same way as we successfully executed smaller projects. Often, it is executed approximately with the same number of ‘experienced’ people and with the same number of tools and resources. The often-hailed words “We have done it before and we will do it again” are mostly heard at the start of the project.

However, the results speak for themselves, wherein larger projects, project managers, project engineers and project controls personnel simply cannot handle the amount of data being thrown at them from various quarters. This then leads to ‘rolling-up’ of data and loss of data clarity.

Inevitably the project controls team become a project reporting function, rather than delivering on its primary mandate to assist project management in project forecasting. Instead of providing look-a-heads at timely intervals, they instead report on events that have already happened, thereby crippling the management team of its most valuable planning resource.

Automated, integrated software tools that utilize the full power of modern-day computing help management teams in successfully building ever bigger and more complex projects successfully. These software solutions do exist currently and this blog attempts to exhort the benefits of using these tailored software solutions to deliver project objectives.

Integrated systems in project controls

The use of a software tool facilitates the integration of data within the various modules of cost engineering, namely cost estimating, project controls (cost control, progress measurement, change management, forecasting) and benchmarking. This provides for data integrity as the data is entered once using a database. The same data is then cycled through the various modules depending on the phase of the project.

Purchase orders account payable and receivable, procurement systems, progress data, might come from multiple systems within the company such as finance, project management or ERP systems. Aligning data, when they come from different resources can be tricky. Project controls software, usually already allows for data integration with ERP systems and can be also customized for each customer’s proprietary tools. This, therefore, allows for the integration of the output of those systems within one tool, saving valuable time and coordinating data.

Benefits of having an integrated software solution

1. Process Standardization:

One of the main benefits of using software-based tools is process standardization. For people to be able to find answers quickly and easily, project control personnel must know where to look. In today’s fast-paced and quick changing world, company personnel move from role to role and from company to company multiple times within their career.

Therefore, these custom solutions do not lend themselves to long term use. Typically, they get parked when someone new comes on board, does not understand the developed solution and inevitably, develops their own custom solutions, thereby perpetuating the issue. These efforts use up valuable work hours that could have instead been put to better use in analyzing the resulting data. Using an integrated project controls software tool can help to:

• Standardize work processes
• Customize it to individual company requirements.
• Organize big data.
• Save finalized documents at a centralized location and more.

When the project data is saved in this manner, it is possible to create templates with company-specific data, including the usage of cost breakdown structures (CBS), work breakdown structures (WBS) and contract breakdown structures (CTBS). Such structure helps facilitate alignment of cost data for the various departments within the company for their specific needs. This can then be easily reused by any new project. That can also facilitate easy access to any (new) team member and assist collaboration by sharing documents, timelines and status updates.

2. Cost Estimating:

Cost estimation in project management is the process of forecasting the cost and other resources needed to complete a project within a defined scope. Cost estimation accounts for each element required for the project and calculates a total amount that determines a project’s budget.

In the early stages of the project, various methods are applied to developing estimates based on available data. This includes capacity factoring, equipment factoring and parametric estimating.

In most cases, this exercise is completed early in the project lifecycle, the approved for expenditure (AFE) funds obtained and all that data promptly filed away and forgotten.

The project then moves on to its execution phase and the best path forward is chosen, neglecting in most cases the differences between that path of execution and the path envisioned while creating the budget, that is the estimate.

If instead an integrated software tool is used, and it encompasses all the units of project controls, it would not be possible to ignore the execution changes after the budget is baselined from the estimate data. This is because as the data is the same, the inherent software structure forces any changes to be flushed out and be clearly differentiated from the baseline. Figure 1 below shows a typical visual representation of a cost summary chart in an integrated pc software solution that was used to create an estimate.

Another key deliverable from the estimate is the creation of a spend profile. This allows the organization to track its cash position relative to its commitments. If an Excel® template is used to create the estimate, the spend profile would have to be manually created. In the case of a software solution, the spend profile is created automatically once the required information is added. Figure 2 provides a typical cashflow analysis provided by a software solution.

This, therefore, creates a clean transition from the estimating exercise to the creation of the budget and performance measurement baselines. The next phase of the project, the execution phase can then be measured against this baseline to determine the effectiveness.

3. Progress Measurement:

Progress measurement can be done in many ways and many different levels of complexity. This is evident by the various types of spreadsheets that have been created for that one purpose, that is to measure the activity progress against the base and forecast the result.

However, to get to this result, using a software tool provides the most consistent measured results. The inherent structure within the tool would not allow for specific customization. The structure would be pre-determined and be consistently applied across all similar scale projects.

4. Change Management:

Changes occur in every project due to internal or external factors, and they can be of different statuses (anticipated, pending, approved, rejected, etc.). Change management in companies can be done via formal management of change (MoC) trend process or various other less formal processes. However, the basic tenet of this process is to highlight any change from the Baseline in terms of execution, schedule or cost changes by any member of the project team to be approved by the project sponsors before it goes into practice.

In whichever form changes are issued, they should be categorized and registered. The impact analysis should also be performed and finally, if approved, the change should be implemented, and the cost reflected in the EAC.

Recording changes in a dedicated project cost management software tool ease the process of change management, recording of the change and associated cost impact, approvals workflow and thereby increases the effectiveness of project controls.

5. Benchmarking:

Benchmarking is an integral facet of the cost engineering process whereby the actuals at the end of a project is gathered in the same manner as the initial estimate so that both can be compared on an apple to apple basis.

This valuable data, if collected properly can provide invaluable insight into how the project was executed. If the project met all its objectives, an analysis or lessons learned report during closeout can provide a great overview of how the project successes could be replicated on future projects.

However, to do this, data integrity and all performance results need to be collected in a similar manner for the comparison to be done effectively. If shortcuts are utilized during construction due to time constraints, this is when the effects of shortcuts would be felt.

*This article is based on the AACE International technical paper ‘Integrated Software Based Project Controls on Major Capital Projects’ written by Abhoy Ganguli.

About Cleopatra Enterprise

Cleopatra Enterprise is the innovative and industry-leading Project Cost Management Software for industries such as oil & gas, chemical, mining, pharmaceutical, infrastructure, and construction industries. With a mission to help companies complete projects within time and budget, Cleopatra integrates cost estimating, scheduling, cost control, and project benchmarking.

For more than 20 years, Cleopatra Enterprise has been used by more than 500 industry-leading companies in 75 countries to control technical projects and turnarounds and improve project performance. If you'd like to talk to an expert about our software Cleopatra Enterprise, please request a demo now.