Do you know the status of your project in terms of cost and schedule? Do you think with all of your hard work and your team members efforts, you would be able to finish your project on time? How about finishing on budget?
If your answer to any of these questions is NO, don’t feel bad. You are not alone. According to the Standish Group, 70% of projects are over budget and behind schedule! 52% of all projects finish at 189% of their original budget! And some, after huge investments of time and money, are simply not getting completed!
So, why can’t we finish our projects on time and within budget? Have we done whatever we’ve asked to do?
One of the reasons is that you don’t have an effective tool or system that could give you accurate and consistent project status information.
The key is applying Project Controls in your projects.
But what is Project Controls?
Project Controls is that element of a project that keeps it on-track, on-time and within budget.
Now let’s take a look at the role of project controls in successfully managing your projects.
Project controls provides accurate and timely information to project management team that will enable them to make informed decisions and take necessary actions to correct any possible adverse situations or trends. Project Controls also advises the client of the true status of the project.
Nowadays, with the evolution of project management, the need for an effective project control system is more evident. Many companies are still following the traditional methods of control, which show a lack of utilization of project controls.
It has been proved that the project performance is improved, if dedicated project control systems are in place. Number of published articles supports the importance of project controls in the achievement of project objectives. For example, an IBC 2000 Project Control Best Practice Study carried out by IPA identified that good Project Control practices reduce execution schedule slippage by 15%.
Another study carried out by the IBC Cost Engineering Committee in 1999, showed that good Project Control practices improved cost by more than 10%.
In fact, success factors are based on good Project Control practices, which result in good cost and schedule outcomes.
One important thing to remember is that project controls is not limited to controlling and monitoring during the project execution phase. An effective project controls process begins early in the project with planning and ends late in the project with post-implementation review. Project Controls is thoroughly involved in each step of the process. Project Controls contains 4 major areas:
- Planning/Scheduling
- Cost Management and Control
- Cost Estimating
- Cost and schedule risk analysis
What project controls covers in planning/scheduling field are:
- Initiation of a plan and development of a realistic schedule for the project,
- Timely and accurate monitoring, prediction, control and reporting of the work that was scheduled to be done, the work that is actually done in a reporting period and to date, and the Work required to be done for project completion.
- Last but not the least, early identification and management of ‘slippages’ to bring the schedule back on track.
As per AACE Practice Standard, cost control is the application of procedures to monitor expenditures and performance against progress of projects or manufacturing operations; to measure variance from authorized budgets and allow effective action to be taken to achieve minimum costs.
Through “cost control”, cost and budget are managed throughout the life of the project. Cost control provides:
- Timely and accurate monitoring, prediction and reporting of cost
- And early identification and management of potential variances from the budget
To have an effective cost control system, cost control and planning/scheduling functions need to be interlinked and managed together. The Project Controls Specialists who know both planning/scheduling and cost control functions are able to identify and manage potential variations from the budget and schedule by integrating the two and looking at the bigger picture.
Another aspect of project controls is Cost Estimating. Cost Estimating is a cornerstone of cost control and total cost management. Cost Estimating is the process used to predict the quantities, cost and/or the price of the resources required for executing the scope of a project.
As a prediction, cost estimates must address risks and uncertainties.
Estimates are used primarily as inputs for budgeting, cost or value analysis, decision making in business, asset and project planning, and for project cost and schedule control processes. Cost estimates are determined through experience as well as calculation and forecast of the future cost of resources, methods, and management within a scheduled time frame.
Another field of Project Controls is Cost and Schedule Risk Analysis. Cost and Schedule Risk Analysis assess the impact of risk on project’s schedule and cost. Some of the outcomes of a schedule risk analysis are:
- Completion dates forecasts
- Probability of meeting these dates
- And identification of most critical activities
The outcomes of a Cost Risk Analysis are:
- Identification of the most critical risks to project’s cost
- And determination of the required contingency needed in the cost estimate to achieve any desired level of confidence.
I hope that this post helped you have a good understanding of the important role of project controls and what it covers. You might be curious to know how you can employ Project Controls in your projects. No worries! I have developed a simple framework that provides you step-by-step guidance required to implement Project Controls. This framework is followed throughout my comprehensive Applied Project Control Training Program. If you get a good grasp of this framework, you will be able to logically follow and comprehend the content provided in the upcoming modules.
Learn more about our Applied Project Control Training.
About the Author, Shohreh Ghorbani
Shohreh is a licensed project management professional (PMP) recognized by Project Management Institute (PMI) and holds a Master of Science in Industrial Engineering.
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