Project Planning

I Have Mastered the Art of Talking to Myself Without Moving My Lips

Hey, don’t laugh, it’s a key skill. The only creepy thing about it is I can look at someone right in the eye and be muttering to myself at the same time. And even though I have at least another 40 years before I’m at that station in life where muttering is just something you do,  I’m getting an early start because I’ve discovered that it has high value.  I’m not the first to discover this, as it turns out. Experiments have been done to prove that regularly talking to yourself is a positive thing: http://newsfeed.time.com/2012/04/25/talking-to-yourself-may-actually-be-a-good-idea/. All the scientific research aside, the value I get from my outward-inner-dialogue is the art of practicing my next line.  That’s because I so often find myself in boardroom meetings with very passionate people.  Which is probably not that uncommon.  What’s also not uncommon, is that the people in the room don’t all share the same views. They can be passionately expressing opposing views with each other while earnestly trying their best to do what’s best for their company.  I, on the other hand, am an outsider invited in – and I’m equally passionate about trying to mediate them towards achieving the ideal solution to some often delicate challenges. The muttering comes in handy because I can try-out ideas out loud, so to speak, before I actually say them. It’s funny how things can sound so different in your head, compared to how they sound when they’re actually spoken. Or mumbled. About a week ago I was a participant in a very heated debate on a company’s policy towards the layout of their standard work breakdown structure for their projects going forward. They were growing

Ever Feel like You’re Buried by Content?

How on earth do we manage to make sense of the chaotic volumes of information that gets thrown at us every day? If you’re anything like me, in any 24-hour period you can get hundreds of emails, documents, txts, tweets and messages filling your inbox and various other mediums. It’s impossible to believe we can do a decent job of cataloging and organizing it all in order to get back to it later. I don’t have any stats on this, but I bet that over 90% of people use Outlook as an information management system – supported by hundreds of folders located somewhere on a company shared drive. And to some degree that works ok. There does come a point, however, when that system simply breaks down. I talk to a lot of people who plan, manage and procure construction projects, and easily one of the biggest struggles they fight to endure is how to tackle the barbaric amounts of information they need to stay on top of. Contracts, drawings, change orders, vendor invoices, daily site reports, budgets, status reports and on and on it goes. Each document and email thread can contain important information that’s critical to a project’s smooth and healthy progress. At some point, engineering and construction companies need to upgrade the systems they use for managing all that project-related content. It’s like when you used to have no kids, and now you have three kids: you have to face the reality that you need to upgrade your two-seater car to something that can haul around the whole family.  I specifically wrote project-related content as opposed to enterprise content. There’s a very big difference. The difference is: Project

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

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

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

Practical Progress Reporting

  Here in the real world of Contract Employees it is very common to arrive on a project when it is part-way through.  For those with experience in Planning and Scheduling, you’ll identify with my statement that getting the best out of your software is part art, part science.  It sucks to pick up on someone else’s planning work and try to figure out their mental processes to fully understand how their schedule operates.  But that’s a blog for another time. For this blog – There I was, new on the project, still feeling my way around the schedules and the people, and one of our main contractors presented me with an MS Project schedule that was worth less than toilet paper.   I’d had no time to familiarise myself with the history of the project, no real chance to understand the personalities I was dealing with, but enough time to know that my predecessor had left a mess and it was now MY job to clean it up and make it work. There was just not enough time available for me to ease into the system, and the shutdown was fast approaching, so I had to wade into the team members with my steel-toe boots and hope for the best.  I called a meeting to lay out my expectations, needs and boundaries regarding the planning and scheduling for the rest of the project.  The people I brought into this meeting were: Our construction manager Our 2 lead superintendants The construction managers of our main contractors The planners of our main contractors Our Client’s construction manager Our Client’s project manager Our Client’s planner Before calling the meeting, I briefly discussed my intention with my construction manager

Got projects going over budget?

You're Not Alone. Project cost overruns are common. Statistics will tell you that over 85% of projects go over budget. But Why? What are the mechanics behind project cost overruns and project schedule delays? Plenty of talented and experienced professionals engage in dialog about this very topic every day, and try to arrive at conclusions about how to stop projects from going over budget. In this article I’d like to shed some light on the underlying workings as to the root causes of cost overruns and schedule delays. In order to tackle the problem of how to eliminate overruns, it’s important to understand the main reasons why they happen. Obviously, there’s no one-sentence answer to these questions since every project is unique and the influences that trigger overruns can vary tremendously. Luckily, however, there’s been quite a bit of research and experimentation around this exact problem - since it is a pervasive issue that so many businesses, large and small, struggle with. As a result, there have emerged some key factors we can point to that are the major contributors to projects going over budget and suffering schedule delays. A lot of project managers and business owners have their own theories; and after a good deal of listening and reading, many will have you believe that it all comes down to one thing: Project Changes. Technically speaking project changes are arguably the biggest contributor to projects going over budget and blowing schedule deadlines, but for the purposes of this discussion, let’s leave Change and Change Management out of it. I’m saying that because I don’t believe changes are truly the root cause of cost overruns. I believe that if you approach a project anticipating that

Project Change: Strategies for Making the Best of it

A must-read article on the effects of change in projects by Arthur O’Leary called Coping with Changes during Construction takes a very savvy look at both the reasons changes happen, along with strategies around managing the risk. While O'Leary's focus is on construction projects, this advice and rules are equally valid for projects in any industry that have complexities such as: many moving parts, suppliers, subcontractors, customers, complex WBS, multiple resource types, etc. O’Leary states: “It is seldom that any construction contract can be pursued from start to finish without some changes having to be made. This is in spite of the best of intentions of all parties. Despite stories about fat contractor profits in changes during construction, in reality they are an onerous economic burden on all concerned. Contractors often have difficulty in breaking even on changes.”   So why is it that change has such a big effect on projects?  O’Leary goes on to discuss exactly that point: “Projects plagued by numerous changes can become mired in confusion if they are not administered in an orderly manner. Serious problems arise when multitudes of changes are in various stages of progress. Some in the stages of deciding what to do, redesign or engineering, pricing, reconsidering, negotiation of price, contention about responsibility, approval in part, final approval, or cancelation. Some changes will have a profound effect on scheduling while others will have unexpected effects on interfacing trades. Some parts of the work may have to be deferred while awaiting final decisions and ultimate approvals of proposed changes. In some cases the proposed changes, after careful consideration, are canceled, and the deferred work then becomes critical to the time schedule." "Often, controversy develops among owner, architect,

Ask the ‘Where Am I At’ questions

Wanting to know where things are at during all stages of a project is a healthy thing to do. Whether you’re the owner, operator or customer, there’s no question that every day of your project, you’ll want to know if things are moving along as expected.   And you’ll want to know details; because whether you’re running a $10 million or a $100 million project, going 10% over budget is a lot of money. So you’d better be asking a lot of questions. Where are we at with our suppliers? Where are we at with the Cement Crews? Where am I at with those materials commitments? Where am I at with Task XYZ? Where am I at with cash, did we get paid from our last 2 invoices In this post, I’d like to touch on the top 4 things you’ll need to have in place in order to have easy access to answers on the “Where am I at” questions that flow through the veins of the project manager or financial professional.   The first thing you need is a Reliable Estimate The first part of answering ‘where are things at’ is knowing where you expected you should be at - which is all about Estimating & Planning. You need to have spent sufficient upfront effort in detailing the component parts of the project to determine cost and complexity. (I hopefully don’t need to convince anyone of the need to plan out projects – but you’d be surprised).  What’s key to point out though, is the importance of being able to determine costs down to the resource level. This is absolutely vital to estimating accuracy. If you’re only estimating at the task, or phase level, you’re really only guessing

Kids Define Management, Planning, and Scheduling

Ty is a successful project manager by profession and volunteers as a youth community leader for most of his off-work hours. He decided to make a youth get-together once a week for his kids and their friends. The ultimate goal was to have the boys socialize among a group of kids of similar ages and challenges. Ty told the kids that they needed to brainstorm what to do every week to keep the get-together attractive and enjoyable for everyone. They agreed that they would have a weekly topic to be suggested, and its discussion to be moderated by one of them. The person that suggested a topic was to be prepared by reading and researching about the topic, which was then to be used to challenge the rest of the group. Another activity they agreed upon was to have a weekly lunch together in different places - some of which might even be out of town, in a park, or on a boat to break-up any kind of monotony. They decided also that the cost of every meeting should not exceed fifteen dollars per person.   Everyone agreed to these two activities. Then, Ty asked them to create a timetable which was to be used to assign which two of the kids would be responsible for the activities for each of the weeks. One would prepare a topic and the other would arrange for the lunch. They grabbed a calendar and started to put names with responsibilities for every Sunday.   In this simple situation, where is management, planning, and scheduling?   Here, Ty directs different resources (the kids) and harmonizes their interactions with him and with each other to accomplish the goal of socializing