Development of Construction Project Control Procedures

 

 

Importance of Project Controls

 

In a 2018 survey, 88% of respondents said they perceive project controls to be important or critical to the success of enterprise projects. 

The report also confirms the correlation between project controls and success: those that perceived controls as ‘critical’ were twice as likely to meet all project objectives. Those who perceived project controls as ‘not important at all’ were more than 3 times more likely to fail. 

These results emphasize the significance of controls, especially considering the number of major deviations from initial project estimates in the past. 

Project professionals know that, whether it’s a large-scale construction project or the launch of a new website for a small business, there will always be unexpected delays, additional costs, or unexpected circumstances. But without project controls to anticipate and resolve these issues, costs and delays can spiral into huge expenses and affect other areas of the business. 

 

Benefits of Project Controls

 

In megaprojects, the various moving parts can make it difficult to stay aligned with the initial plans. However, close monitoring, analysis, and regulation can keep this in check. Projects of all sizes, not just large projects, experience significant benefits when controls are properly executed. 

The following are some of the key benefits of project controls:

  • Reduced project costs through ability to make timely decisions using KPIs

  • Increased project predictability for cost and completion date

  • Increased visibility into the financial health of the project at all stages

  • Ability to mitigate project scope creep

  • Meaningful benchmarking data for future projects via well-structured projects

  • Increased margins when working in a fixed-price environment

  • Improved reputation for properly managing and controlling projects

  • Competitive advantage over organizations with less mature project management capabilities

  • Increased job satisfaction for project team members

 

Despite best efforts and intentions, many organizations find that large-scale projects miss their targets for a number of reasons: optimism bias, manual estimation errors, insufficient historical data, scope creep, and many other factors. 

When it comes to large-scale capital projects, 98% of projects incur cost overruns or delays. On average, cost increases are estimated at 80% of the original value, and timelines are often delayed by 20 months or more. 

Project controls are processes for gathering and analyzing project data to keep costs and schedules on track. The functions of project controls include initiating, planning, monitoring and controlling, communicating, and closing out project costs and schedule. Ultimately, project controls are iterative processes for measuring project status, forecasting likely outcomes based on those measurements, and then improving project performance if those projected outcomes are unacceptable.

 

Activities under the umbrella of project controls may include: 

  • Aligning projects with portfolio/organization goals and objectives

  • Developing a work-breakdown structure (WBS)

  • Collaborating on initial project schedules 

  • Developing a risk management plan

  • Project budgeting and forecasting

  • Monitoring project costs

  • Feedback and reporting 

 

While a project may deal with many parameters, such as quality, scope, etc., the discipline of project controls focuses on the cost and schedule factors, continuously monitoring for any risk to them. 

Hierarchically, project controls nest under project management. A project controller could be reporting to a project manager on a specific project or an entire portfolio of projects. Project controls are integral to successful project management, as it alerts project stakeholders to potential trouble areas and allows them to course correct, if needed. 

For project controls to succeed, they cannot be applied in spurts or in a vacuum. Rather, project controls activities must run through the complete project life cycle—from the initiation phase until closure—to monitor and control the various factors that impact cost and schedule. 

Interweaving project controls with the rest of project management provides timely insights that empower project stakeholders to make the right decisions at the right time.

 

Processes That Define Project Controls

 

The strengths of project controls lie in their data-focused approach and attention to detail. A project manager does not simply want to know that there is a cost overrun, but rather wants to know the root causes, the precise numbers, and how it can be fixed. This is where a fully integrated project controls solution can help with efficiency in getting answers quickly, and  visibility into performance that can reduce project costs. 

1-    Project Planning

Planning is one of the important steps in which controllers and project managers work together. Whether it’s creating project plans, schedules, work-breakdown structures, or cost estimates, planning gives everyone a baseline to work with throughout the project.

2-    Budgeting

Integrating the budgeting process into project activities is essential to calculate costs accurately and to understand when and why variances occur. By time-phasing budgets and refining the numbers, a transparent model is available for senior managers and team members alike to serve as both a benchmark throughout the project and understand vitally important cash flows. 

 

3-    Risk Management 

Project controls provide a meticulous approach to managing risk. By preemptively identifying risks, monitoring risk continuously, and developing contingency plans to address and mitigate issues, it becomes possible to reduce impact on budget and schedule. It also helps prevent some risks from happening in the future.

 

4-    Change Management

When a project deviates from its original estimates, it’s often not due to a single factor, but due to the cumulative effect of several factors that tend to go unnoticed. This is why change management is critical. By tracking changes and understanding their impact, while following a clear process for evaluation, approval, and accountability, projects can remain on their charted trajectory.

 

5-    Forecasting

By increasing the accuracy of estimates-at-complete, project controllers and managers can gain a lot more insight into the current drivers of cost and schedule overruns. Good progress measurement is a critical input to the forecasting process.  It serves as the comparison against actual and committed costs that enable project controllers to extrapolate a forecast using a combination of standard forecasting methods and formulas. Regular, timely updates aid the project controller by enabling faster response and corrective action to when a project begins to get off track.

 

6-    Performance Management

Defining and using key performance indicators (KPIs) to monitor project health and forecast trends is crucial to take corrective actions. Organizations that use performance information to manage projects, like the calculations used in Earned Value Management, achieve a 68% success rate, compared to a 7% success rate for projects that don’t leverage this data. 

 

7-    Project Administration

This process involves establishing processes and systems that can help team members communicate and collaborate with each other. The goal is to track status updates, capture meeting minutes and lessons learned, and manage workflows seamlessly so teams can focus on actual execution rather than routine tasks. 

 

Project Controls vs. Project Management

 

The overlap in function between these two disciplines can at times make it difficult to differentiate between them. Many organizations assign the role of a project controller to one of the project managers, making this even more confusing. However, it’s important to discern the differences between these two in order to fully appreciate the role of project controls. 

 

1-    Project Management

Project management is a holistic function that involves managing people, processes, and deliverables in a project through various sub-functions. It focuses on quality and scope, in addition to cost and schedule. 

The objective of project management is more exhaustive in that it aims to successfully complete a project given the resources available. 

 

2-    Project Controls

Project controls are a sub-function and focus on just two parameters: cost and schedule. People management and quality control, for example, does not fall under the purview of project controls.

The main objective of project controls is to minimize the variance in costs and schedule from what was originally planned. 

Controls acts as a safety harness to project management. Sometimes project managers can focus almost solely on delivery, which leaves less room to examine costs, deviation from the project plan, and other variables involved. Project controls introduce a necessary reality check for project managers, giving a more data-grounded view of how the project resources and objectives are trending over time.

At its core, project controls are part of a monitoring function that analyzes scenarios and provides recommendations. A project controller reports on cost and schedule and advises the project team of potential issues. The actual execution of these recommendations is not done by the controller, but rather by the project managers.

Even though controls is a sub-function of project management, project controllers interact with more than just the project managers that they report to. 

 

A few team members that controllers interact with are:

  • Project manager

  • Finance team

  • Vendors

  • Construction manager

  • Procurement team lead

  • Technical team lead

 

Reports that Al Wafrah provides:

 

1. Cost Report

One of the most frequently used tools for communication, a status report should include all metrics regarding project costs. Examples of metrics on cost include actual budget consumed so far, committed expenditures—such as contracts signed with vendors for work yet to be completed—and ratios of actual versus planned work as of a given date. A staple of the project controller’s cost report is the S-Curve, visually tracking total expenditures to date.

 

2. Change Management Register

Scope creep is a common challenge for most project managers. A change management register keeps track of change in scope from the initial statement of work or estimate. It identifies how much extra cost the project has to incur and how much the project may be delayed due to the addition in scope. 

This information helps project teams prepare for the impact and communicate that impact to customers, whether internal or external. Sometimes, those customers may be willing to cut back on their requests when they understand the implications. It also provides a formal way to get all parties to review and sign-off on the changes.

 

3. Risk Register

A risk register is a document that manages risks and records contingency costs associated with known risks.

It works as a RAID (risk, action, issues, decision) log and is created at the beginning of a project, documenting risks, assumptions, issues, and dependencies. As a project progresses, the risk factors can change, and these changes are tracked in the risk register.

In large teams, a risk register provides visibility to everyone about the top concern areas. It lends clarity to stakeholders by addressing what-if scenarios and correlating these scenarios to their risk quotient. It also builds more predictability into projects, as team members can review past occurrences of these changes or risks to anticipate how it may affect this project. 

 

4. Progress Report

A monthly/or weekly report that reflects the progress of works associated with project construction photos along with the HSE report and safety incidents.