Secure Energy’s Engineering & Construction Division chooses 4castplus for Cost Controls, Change Management and Estimating on Capital Projects
The Engineering and Construction (Eng-Co) group is a strategic arm of Secure Energy’s Processing, Recovery and Disposal division (PRD) which builds and operates Full Service Terminals, Stand-Alone Water Disposal Facilities and Landfills serving the Oil & Gas industry with the safe treatment and disposal of their oilfield by-products. The Eng-Co group is made up of a team of engineers and project managers that manage the safe and timely construction & operation of all of Secure’s capital assets. They have a large annual portfolio budget of capital spend that goes into both new construction as well as maintenance of existing assets.
After several years of fast-paced growth, the Eng-Co group were facing the challenge of a proliferation of spreadsheets needed to manage the day-to-day operational requirements of their portfolio of projects. In early 2013, the division made a strategic decision to use Microsoft Project, along with the Microsoft Dynamics AX Project Management Extensions, as the solution suite for their project managers. After about a year of implementation however, they discovered that they still required far too many spreadsheets, word docs, emails and manual movement of data to manage, forecast and report on their projects. They hadn’t achieved the efficiency and information visibility they needed to do an effective job of controlling project spend; and weren’t able to provide senior management with their desired dashboards & KPIs. “While it’s true that AX provides places to store project information,” notes John Flaherty, Systems Specialist, “it is not a ‘project management’ tool. The guys [project managers] still had to supplement it with a lot of spreadsheets to get their job done and provide reporting. Of course, we knew about solutions like 4castplus from the beginning; but we wanted to first see how far we could get with AX before bringing on any additional software into the mix – if we needed it at all. As it turns out, we really did need it.”
Change Management, Requests For Quote and detailed Estimating were other areas that had been managed using spreadsheets and manual methods; and were a high-priority for improvement. They knew that they needed to consolidate all this and more together into a single system to better arm their team with the right tools.
The team at 4castplus were invited to present to the Eng-Co division in July, 2014.
They determined that it had the right mix of features, ease-of-use and integration capabilities to meet their goals. By mid-September, a deal was struck and they began working on an ambitious schedule to get the division operational by early December.
2.1 Phase I
The goal of the phase one implementation was for 4castplus to be the central operational tool that connected to both AX and MS Project, and provide additional key features and reporting. It was to deliver eight critical functions:
- Import daily data feeds from Dynamics AX for procurement and actual costs into 4castplus
- Provide full change management capabilities – including Budget Transfers, Change Trends, Contingency Drawdowns and approvals
- Provide detail estimating by WBS, cost code and resources – and create a budget from that estimate that can be imported into AX
- Import WBS and schedule; and then synchronize schedule with MS Project at regular intervals
- Provide progress measurements and Earned Value Management reporting
- Provide ability to forecast trends, remaining quantities & costs
- Deliver a full suite of reporting tools & charts including timeline charts for forecast spend analysis both at a project and program level
- Be a collaborative tool where the whole team worked together and avoided manual re-keying of data
2.1.1 Consolidating Data for Interactive Reporting
By consolidating schedule, budget, procurement, daily actual costs and accruals – and then enable powerful interactive & drilldown reporting – 4castplus provides a critical dashboard of real-time information for project managers to get what they need in a fraction of the time. This was one of the initial goals. “We have a large portfolio of projects to manage every year,” asserts Alan Cain, General Manager, Project Management, “and without 4castplus to give us the tools to get visibility into daily project details, we were managing those projects largely in the dark.”
2.1.2 Change Management
The Eng-Co team had been managing Change events manually. Dynamics AX doesn’t have the concept of a baseline budget or a change order, so when a budget modification was submitted (via a change request in a word document), the AX budget was simply modified – no historical audit trail of the changes were recorded along the way from the baseline. 4castplus now provides the team with rich change management capability that shows all change events and detail reporting of all changes, including budget details, funding source, cause, affected cost codes, etc. Project managers create Change Orders (for scope changes), Budget Transfers and Change Forecasts (for trends) – and submit the change to the finance department for approval and supplemental AFE (if required). They have visibility into pending, approved, rejected changes and timeline reports that show the different phases of the budget over time – baseline, current/control, pending and forecast.
2.1.3 Synchronize MS Project Schedule with 4castplus
In playing the role of the tool that consolidates data from multiple places, 4castplus has to be very flexible in its ability to import, codify and report data. One of the challenges with merging data from both an accounting system and a scheduling tool, is that the two groups have a very different set of priorities for that data. The finance group has setup a standard set of cost codes they need to run their business by; however, the project managers in the Eng-Co group have a much more granular, detailed set of requirements in which to view that data. The finance group has established broad budgetary categories that are perfectly sufficient for their needs, but project management needs to see things to a far more detailed level. Playing the intermediary between the two, the 4castplus work breakdown structure and cost codes have had to show tremendous flexibility to achieve the needs of all three systems integrated together.
The 4castplus MS Project Live Link tool also plays a pivotal role in enabling the Eng-Co project managers to achieve an ongoing bi-directional synchronization between Project and 4castplus.
2.1.4 Estimating and Budgeting
Creating the initial estimate and budget for projects had previously been done using lump-sum amounts based on Dynamics AX cost code categories. With 4castplus, the Eng-Co team can now drill down into a resource estimate at a much more granular level of the work breakdown structure. Using estimated quantities of materials, labor and equipment, they can build, track, report and forecast using the physical elements that are being purchased and consumed on the project. This gives them much richer information for managing costs, productivity and forecasted amounts. It also builds a database of historical benchmark data for future project estimating accuracy.
The Phase II rollout will enable the Eng-Co group to re-baseline the budget at class level stages of the project: i.e. FEED/FEL, Construction, etc.
2.1.5 Progressing and Earned Value Reporting
Prior to rolling out 4castplus, the Eng-Co team had limited ability to enter and track project progress measurements to calculate EVM metrics. EVM provides key performance indicators for project managers to gain an accurate reading on their project’s health. It’s important for progressing to be done on regular intervals so as to visualize historical and future trends based on past performance. The S-Curve report, for example, compares planned, actual and physical progress over a timeline – and then forecasts the estimate-to-complete. This, along with a variety of other EVM reports available, show if, when, and where the project is not performing to plan. The system also offers many drilldown reports to investigate why things are performing the way they are – giving project managers key information to apply corrective action.
“One of my main goals with this,” emphasizes Cain, “was to give us early warnings on problem areas. It’s near impossible to correct something that happened in the past. Knowing early-on is vital to getting it back on track without it impacting anything.”
One of the most important characteristics of a good project manager is his/her ability to anticipate. When you have a good handle on the many moving parts of a project, you also have a good sense of the areas that are going well and the areas that are struggling. Using a collection of spreadsheets to gather forecast details to report on anticipated trends & results is a very time-intensive process. The Eng-Co team has long been well-aware of the power of forecasting; and with 4castplus, they now have a platform that makes it easy to enter forecast trends and projected remaining quantities to calculate out a subjective view of where the project is heading.
2.1.7 Project Reporting and Dashboards
For reporting, the Eng-Co project managers had been relying on weekly spreadsheet-based reports from Dynamics AX. From there, they would essentially build their own suite of further reports and analytics in spreadsheets. While this was helpful, it did not provide the type of real-time reporting, dashboards, drilldowns and timeline charts that project managers need for staying on top of large, complex projects.
Out of the box, 4castplus reports are highly interactive and quick to access. Users can run reports at a project, program and divisional level – then drilldown further and further to a very granular, transactional level. With the data updates being imported daily from AX, project managers now have a real-time view so that they can take action fast. There is also a custom report builder in 4castplus with which users can template tailored reports. This gives the team the ultimate in flexibility and power.
2.1.8 Standardized processes
Having a very experienced team of top-notch project managers and engineers is key for successful projects. Nevertheless, there needs to be standards to achieve consistent, repeatable results – and so that everyone can work as a team. “We needed to standardize a lot of things,” points out Cain, “Like, how we estimate, how we do our progress measurements, a standard Work Breakdown Structure, the format of our reports, the EVM calculations we use, etc. That’s not to say the guys can’t have autonomy and they’re own style – but there are certain things we need to establish as a team. 4castplus gave us a perfect platform to do that, and implementing it has forced us into making those decisions.”
Establishing standards within 4castplus will also help the more senior team-members oversee the more junior members with the peace of mind that there are controls and expectations in place.
2.1.9 Timeline to Go-Live
As happens in any implementation, a number of snags were experienced along the way, but the two groups worked well together to resolve them quickly and efficiently. “We had an aggressive timeline to get 4castplus implemented in time for our 2015 program year,” said Samir Bhasin, Project Controls Lead, “The team at 4castplus were easy to work with, they were responsive and they took our urgency very seriously. They were committed to make sure we met that target.”
2.1.10 All Projects or Just the Big Ones?
The PRD division has a mix of large projects – where they’re building new facilities – and smaller projects, which are more operations & asset-management in nature. It was initially felt that it only made sense to use 4castplus for the large projects, and that it would be overkill for the smaller projects; so they’d continue to run those in spreadsheets. After more careful consideration, they’ve concluded that 4castplus brings a lot of value to the smaller projects as well; and the additional plus of having the whole portfolio in the same system will deliver much richer divisional reporting.
Phase two planning is targeted at meeting further objectives such as:
- Management of Requests for Quote
- Re-Baselining projects at key thresholds
- Supplimental AFE management
More on Secure Energy Services
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