Project Profitability

How Long Does it Take You to Put Together a Status Report?

One of the most challenging aspects of successful project management is the ability to collect a vast amount of project data into one place for easy reporting. If you’re like most organizations however, when you get asked for a status report, you can’t just click a button and a report pops up that’s nicely formatted, with current and accurate information, ready to send to your boss or your client. No way. If you’re like most organizations, when you get asked for a status report, you kick into “Report Gear” and start gathering information so you can build your report. You need to request the latest actual costs, you need the latest vendor invoices, you need to make sure you have all the current change orders up-to-date, you need your progress forecasts entered, and on and on.  You need to start sending emails and making phone calls and trolling through spreadsheets – to pull together all the details you need to get that report ready. Any of that sound familiar? For a project manager, reports can take hours, if not days, to prepare. A guy I spoke with a couple weeks ago explained it like this, “It’s like using a shovel and wheelbarrow to excavate a trench,” he said, “You’ll get it done eventually. But that would be ridiculous.  Why would a company provide me with primitive tools like a spreadsheet to do complex work when there are better tools out there? Why am I using a wheelbarrow when I can use a digger and a dump truck?” Clearly, enabling a project manager to pump out reliable and accurate reports in a matter of seconds rather than hours makes good business sense.  The squandered hours

Top 3 Labor KPI Metrics for Services Organizations

What’s Up with Labor Utilization? Utilization is a critical metric to assess just how you’re doing as an organization – and a great way to benchmark yourself against your corporate objectives and your peers. If you’re a Services organization, you definitely want to know what’s “up” with utilization.  To be more specific – how is your staff being utilized?  How “billable” are your personnel? And of the billable hours that your people are putting in – are you managing to capture enough of those hours in billing, without excessive discounting or “removal” of hours? Let’s take a look at some of the metrics Services organizations need to be aware of. Resource Utilization Pretty much all Services organizations are aware of this key metric.  Of the total hours worked by your staff, how many of those hours are being used to generate revenue, or on tasks that are considered to be critical to generating revenue?  Say Anne is working a 50 hour work week, had an 8 hour sick day and 7 hours in non-billable, or idle, time.  Anne’s total time spent on “revenue-generating” tasks was 35 hours – her resource utilization is 70%.  If your corporate objective is to keep billable staff at 75% utilized on activities contributing to revenue – Anne is below the threshold.  Perhaps time to take a closer look at the 7 hours of idle time and find opportunities to turn those hours into revenue, or at the least, into hours that contribute to generating revenue. Next, let’s look at Billable Utilization as an additional way to view billable time. Billable Utilization A close relation to Resource Utilization, Billable Utilization looks at how “billable” staff is,

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

The WIP Report – It’s CFO Candy

Why the WIP Report is so Important In addition to effectively managing the costs and schedule of your project, it’s critical to stay on top of your Work in Progress or WIP.  WIP is critical to monitor. You, your CFO and your investors need to know just how profitable your project is, how much of the project has been funded by your customer, and how much has been financed by you.  Combining WIP information with project profitability and performance metrics, will give you a complete picture of the financial health of your project or your program.   Work in Progress looks at the following key metrics on either a single project or a portfolio of projects currently underway: Total estimated cost Total estimated revenue Total estimated profitability The revenue earned to date Estimated cost to complete Estimated remaining revenue The costs spent on the project(s) to date All billings that have been completed for the project(s) and billable remaining   Regularly reviewing your Work In Progress allows you to quickly identify any under or over billings that may be taking place in your project.  If your project has been financed by the bank or an underwriter – or when your CFO needs information on your project for his financial forecast – your WIP Report is going to be a critical report in your arsenal of effective project management tools. If you can produce a detailed WIP report and send that to your CFO on a regular basis, you'll make their life way easier - it's like filling their candy jar.   The WIP report in 4castplus combines the above mentioned metrics along with much more to give you a complete picture of your organization’s work

Anticipation and the Project Bottom Line

Projecting the Final Results The big question everyone – including all project managers and stakeholders – wants to know is, “How long and how much.” That’s a reasonable and typical question; and it’s a question that resonates for the project as a whole, as well as every piece and subsection within a project. When it comes to actually using the information collected when adopting Earned Value Management, you need to know the full value of that information. And a big part of the value of that is in getting a handle on what the final numbers will be - and then communicating that information to other project stakeholders.   Earned Value and Cost Performance Index When we discuss things like Earned Value (EV) and Cost Performance Index (CPI), while these are important indicators as to the current health of the project, they additionally serve as stepping stones to get to the bottom line numbers. The ultimate bottom line numbers are: Estimate At Complete and Variance.   Anticipate Estimate At Complete is essentially the projected final cost. It’s ultimately what everyone wants to know, and it’s really what makes news. Whether you’re talking about the project as a whole or any section within the project, everyone wants to know, “What’s the final cost looking like?” Forecasting the results of a project not only enables a project team on any construction project to communicate project outcomes, it delivers the power to anticipate. Being able to anticipate what’s going to happen is the ultimate control weapon. It’s why we all check the weather before we leave the house in the morning – we want to be prepared. The second key Bottom Line indicator is Variance. Variance is one

Big Projects use Cost Controls – Why don’t You?

The use of project cost controls solutions is becoming pretty widespread these days amongst bigger construction organizations that execute on capital projects. For any big, billion dollar project (or any number near that), it’s understood that proper planning, cost controls and detailed progress reporting will be followed on that size of project. They have to. There’s just too much risk otherwise. Even 10 years ago, however, it wasn’t necessarily the case. There have been many bad years and a poor track record from the “project cost overrun” point of view in the world of big projects. So bad that people have got quite used to hearing about the colossal project cost overruns – you know the ones, the $3-billion project that ballooned into an $8-billion dollar project like it’s just a part of life. People have got so used to it that they’re often amazed to hear about these big projects that are actually running on budget and on schedule. The reality is, however, that projects which do actually run on budget are becoming more common. The big disasters still happen from time to time, but it’s becoming more and more infrequent. And that’s largely a result of: better planning, better controls, better information and better tools to get all that with. For a $1-billion project to go over-budget by even a modest 10% – that’s an enormous amount of money. Even for big companies & governments. They simply can’t afford to NOT use a cost controls solution. Unfortunately, this adoption of cost controls hasn’t trickled down to the typical mid-sized organization.  For this tier of company – the ones that are running $10-million to $100-million projects – they still mostly use spreadsheets and paper-based

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