Project Management

What Seems Like a Complicated Problem, Can be a Very Simple Solution

I recently had a meeting with a group of project managers and engineers at a mid-size oil & gas producer. For managing their construction projects, this team have an immediate need to improve efficiency, improve project cost reporting, and reduce the amount of manual movement of documents. Especially the high number of documents shared through emails. Throughout the meeting, the four guys were passionately articulating their many diverse challenges they have day-to-day and month-to-month. Each time one piped up to speak about his own version of the ideal solution they needed, another would chime in with a slightly different take on his version of utopia.  They went back and forth just unleashing their troubles and desires for a better system. My role in meetings like this is often to listen and facilitate. And, ultimately, to distill their needs down to a straightforward plan that would improve how they operate, and simplify their lives. Although they brought up many examples and frustrations - the underlying cause of what was truly troubling them was not that complicated. In their case, the challenges they articulated in our meeting could be broken into three broad categories: Field tracking of: labor hours, materials received & used, and daily log information Project Cost Reporting related to the above tracking captured. Reporting that’s easily accessible by multiple users through a common ‘cloud’ interface Document Workflow management and multi-user collaboration & approvals around documents Their perception was that their struggles are quite involved and complicated, but in reality, a very simple solution would eliminate a large percentage of their current pain. This perception is common amongst groups like this, because their daily work-lives are over-complicated by the many manual steps they have

Good Cost Code Planning can Save You from a Project Disaster

A few weeks ago, a peer of mine and I had a working lunch with another colleague. A highly experienced cost engineer professional, well-versed in the challenges of project cost control, and well-respected in her industry. With the three of us all having our feet in the project cost management world – our colleague from a practical perspective and we from the technology perspective – the discussion inevitably turned to the challenges of effective project cost control.  For us on the “solutions” side, we wanted to hear her take on the golden question - “What is essential for managing and controlling project costs effectively?  Is it accurate estimating?  Is it complete and timely capture of actual cost data?  What about proactive change management?  And what about the effective use of earned value management in project controls?” Now, obviously all of these are vital to controlling construction project costs and providing insight into just how well a project is really performing; so we were very interested in her perspective.  So, imagine our surprise when our esteemed colleague put down her fork, turned to us and said, with absolute conviction – “It starts with the project cost codes.” Cost codes are essential to providing the correct aggregation of actual project cost information to its correct place in the budget; which then provides project management and cost engineers with accurate budget vs. actual reporting required to run a project to a successful conclusion.  Makes total sense.  And with the provision of codes just about everywhere in most construction project management software solutions, using cost codes effectively in a project shouldn’t be much of an issue.  Right? But, as she went on to elaborate, it became

Do Bigger Projects mean Disconnected Teams?

It’s always very interesting to me how much difference there is between how organizations structure the management of major projects.  Naturally, the bigger the project, the more bodies they’ll need for project controls, construction project management, procurement, etc. Adding more people of course, adds more complexity (to anything). When you add more people, those people need to be organized into groups and disciplines; each requiring key inputs and outputs and deliverables. In defining this organizational structure; I’ve found that there is a tendency for major to mega projects to disconnect these groups into individual silos. Working in silos, they coexist with each other, but with minimum interaction. No-one wants this to happen, of course, and any person would tell you that healthy communication is vital for streamlined success. As a company that builds construction project management software to handle the intricacies of keeping construction projects in a happy place, we often find that the additional role we take on (besides providing technology) is to also provide tools for improving the interactions and cooperation between the various groups charged with project cost management. These groups can be: Project Controls, Procurement, Engineering, Project Management, Accounting, IT etc. If we can create an environment where, for example, the Project Controls group have a solid level of co-habitation and healthy collaboration with the Buyers in the Procurement department, we’ll see that as a mini win. Even if that cohabitation is in a digital sense. I can safely call that a win because we hear the periodic grumblings from people in all groups about the challenges they face in managing complex projects.  Looked at objectively, the underpinnings of many of their challenges are rooted in the fact that they live in

The Future of SAGD

How can we Make SAGD more Profitable and Sustainable? Large SAGD projects in the Alberta Oil Sands have suffered an unfortunate reputation for cost overruns, delays and productivity issues over the past ten years.  These results have thrown the whole industry into question as to whether SAGD is a viable and investible solution for extracting bitumen from this oil-rich area of the country. Despite the criticisms and skittish investment community however; these challenges have invited a tremendous amount of analysis and an industry-wide awareness of the need to innovate new technology to prove it as a viable and sustainable solution. In this article, I’ll have a look at some of the lessons learned in recent years and a number of recommendations as to how we can apply better techniques and technology to make it a practical, sustainable alternative that we can all feel proud to be a part of.     SAGD stands for Steam Assisted Gravity Drainage and it is a common and growing technology in Alberta and worldwide to extract heavy oil that is deep below the earth’s surface. Invented in the 1970s, SAGD is relatively new to the oil industry, and has only been utilized in large-scale commercial projects over the last 15 to 20 years. This slow adoption rate was due to a number of barriers that SAGD projects presented.  It was not until horizontal drilling techniques were perfected, for example – and the price of oil was high enough – for SAGD to become a feasible option for oil producers.  Nevertheless, even with these barriers lifted, oil producers continue to struggle to try to make SAGD a practical solution going forward. The sheer size of these projects poses a broad

Are we nearing the end of Cost Reimbursable?

Get Ready for Convertible Price Projects   When we see quotes like this from the Globe and Mail, “Investors are increasingly applying pressure on oil companies to trim their investments in oil sands projects,” it becomes clear that a change in how we do business in Alberta is on the horizon.  If the investment community is losing faith in our ability to extract oil at a reasonable and predictable cost, our industry is in serious jeopardy. There is a shift underway. Cost overruns on construction projects aren’t uncommon of course, and the oil and gas industry in Alberta has not been an exception. It has in fact shown to have one of the worst records for budget overruns of any energy geography in the world. There are a number of underlying challenges that have contributed to this unfortunate track record; but one of the primary culprits has to do with the predominantly cost-reimbursable contract culture that exists in Alberta. This culture creates a challenging environment for projects to stay on budget. The nature of these contracts suggests that there is compensation for all costs incurred plus a rate uplift, with little to no risk absorbed by the contractor for when projects are extended or when they aren’t executed at maximum efficiency.   When the cost-risk is so lopsided like that, the owners face having to bear all the added cost of any inefficiencies, productivity issues and errors that occur with any contractor or engineering firm on the project. There can be dozens of contractors and engineering firms (EPCM) on a project, and with the way contracts are currently structured, everyone just passes their problems up the food chain (even the best, most efficient contractors).  Nobody’s

People Hate Change – 6 Tips for Making it Easier

  People Hate Change? People generally like the idea of change, but they really hate the effort that goes along with it. The idea of change brings with it feelings of hope, opportunity and the promise that things can get better. But sometimes it can be hard work and require a lot of perseverance. The challenge to any organization is to get good at change – because as your company grows, change is going to have to happen, whether you like it or not.  You might as well get used to it, and get good at it.     I’m probably like most people in that sometimes I can be good with change and sometimes I’m pretty crap at it. I recently, for example, had to get a new laptop. I was avoiding making the change for a long time because: I was dreading having to reload applications and transfer all the data from my old laptop I hate shopping So, I suffered with my ancient laptop (4-yrs old) as it gradually fell apart.  I could visualize that day in the future when I had that shiny new machine that was fast and clean, but I just couldn’t bring myself to go through the hassle of making the transition. The defining moment came when the cooling system broke down and it overheated. Disaster.  After that, I could only run it for ½ hour at a time before having to shut it off for 20 minutes while it cooled down. You could say I left it a bit too long. It started seriously affecting my work and life.   Most organizations behave pretty similarly. They know they need to upgrade their technology, systems and processes, but

Time Phased Budgeting For Cash Flow Visibility and Risk Management

Why would I need to time-phase my project budget? The challenge with any project budget that doesn’t utilize the advantages of time-phasing, is that the project manager won’t know exactly when money is anticipated to be spent on the project. And neither will the CFO. Time-phased budgeting allows project managers to allocate costs for project activities over the anticipated timeline in which those expenditures are planned to take place. Not just by using any old guess as to when things might happen – or by using some uniform, evenly distributed pattern – but by actually using real contractual agreements as to when items are planned to be paid for.  By doing this, the project manager is then armed with an accurate timeline that predicts project spend patterns. Time-phased budgeting does more than just uniting the project schedule with the project budget. Of course, uniting the two is the first step in a time-phased approach to project budgeting. Without first merging the two, budget and schedule have no interconnection, and are left to float along independently. By subsequently time-phasing a project budget, you’re then armed with extended capacity to further refine exactly when, during the anticipated schedule, certain expenditures will take place. This delivers a more accurate representation of cash outflow so that appropriate project financial planning can be undertaken. You’re also much better able to monitor budget vs. actual costs as the project progresses so as to gain clear insight into potential cost overruns (or, under-runs) and other cost controls capabilities. It may not be immediately obvious why all this matters, but to get a good reading on that, it really boils down to two things: Managing project Cash Flow Powerful

Reduce Errors by Forecasting Regularly

Running forecasts on your project is an extremely powerful way to get critical insight into your project’s current status and projected final results.  Forecasts, however, do a lot more than that; especially if you run forecasts on regular intervals. Regularly forecasting is a key strategy for the project manager in any construction project. There are several reasons for this. First of all, entering percent complete on the tasks in your project is prone to some subjectivity and error. Regardless of how you go about determining percent complete – whether it’s pre-defined earning rules,  best-guess approach or team-based assessment – it’s practically impossible to know exactly how far along any task is. There are a number of techniques for mitigating the errors in applying percent complete – and we’ll talk about more of these in other articles – but one of these techniques lies is the power of executing forecasts on a regular basis. In 4castplus, forecasts are easy to do and provide a quick, high-value snapshot of where things are at right now in your project. What you may not have realized is that 4castplus also keeps a copy of all the information in your project as it was in that forecast period. So taking that snapshot means that all that information is preserved for historical reporting. If you run forecasts on, for example, a weekly basis, 4castplus will enable you run reports on the history of how your project progressed over time, on a week-by-week basis. Have a look at the screenshot below (click on it for a full view). It shows a summary-detail report that’s interactive for the user to click-through the forecast periods in a project. The detail report below shows all

The Walk of Shame

About a year ago I bumped into a former work colleague who I hadn’t seen in about 6 years. It prompted us to go have lunch to get caught up on life, family, business and everything else. His name was Dan. And since leaving our former employer, he went on to become CFO at a large construction & manufacturing company.  It was quite fortuitous for us to have reconnected because he was having a lot of struggles with his company’s projects suffering disastrous cost overruns & delays. “I get so frustrated,” he said as he knifed his steak sandwich. “it’s like they [the project managers] deliberately leave it to the end to figure out where things are at with their projects.” He was referring to how information flows to his financial group about the status of the various projects on the go in his company. “What’s the point in that? Why can’t we have those conversations six months earlier?” He waved his hands dismissively in the air as though he was at a complete loss as to what to do. “I used to think they were avoiding me.” He continued. “I figured they knew all along that it was bad news, and they didn’t want to have to face telling me. But now I know that they simply have no idea what’s going on until pretty late in the project. Essentially, until all the invoices have come in. Then it’s like, they just add up all the invoices and figure out what we owe. Then they come tell me. Is that normal?” Sensing that he was waiting for an answer at this point, I told him that it really isn’t all that uncommon for projects to

Mike is an Excel Pro

When I first met Mike he was a senior project manager at a seismic services company that operates large 3D seismic shoots all over North America. Mike was an Excel pro. He planned & tracked those seismic shoots with pretty decent precision considering the size of the projects – and especially considering he did it using a collection of about 6 spreadsheets. Unfortunately for Mike however, he had no idea that he was spending about 30 extra hours every week just on spreadsheet management. In addition to the extra time, it also wasn’t clear to him that there was very little ROI on that effort since the solution that he’d built was achieving only minimal results. The challenge for Mike – and many others like him – was that he had invested so much time and personal emotional equity in the creation and management of his solution, that the idea of abandoning his dear spreadsheets for a better, more efficient solution was like asking him to drown babies. In our first meeting, he presented his solution to a boardroom full of his colleagues as well as a couple of us 4castplus guys. His presentation took just under an hour, and during that time, there were surprisingly few questions asked. It became clear why by the end: everyone in the room had a jaw-dropping stunned look on their face at the sheer complexity and enormity of his solution. He, on the other hand, was excited and quite proud of his major accomplishment and appeared to be expecting a round of applause.  It was practically impossible to truly understand his whole process. There were so many parts to it; and so much movement of data, and copying