Construction project management software

Linking Budget and Schedule – it’s a Challenging Task

One of the first principles of project controls is that the project budget has to be time-phased over the duration of the project. Here’s why: It’s not enough to simply know the total budget for a project – it’s critical to also know when that budget is planned to be spent. In other words, each quantity of material, labor hour or subcontractor service that’s planned for the project, is planned to occur at a particular time on the project. Some of these budget items happen over a time-span – like a service – and some happen at a point-in-time – like the delivery of some material. Together, all of these budget elements result in a budget timeline. That timeline is typically represented by a curve that plays-out over the life of the project. See the chart to the right. Click to Enlarge. S-Curve chart showing Budget over timeline along with Actuals, Earned Value and Estimate to Complete. There is more than one way to time-phase a budget of course.  Nevertheless, what project controllers most often do to put their budget on a timeline, is establish a healthy connection between the project budget and project schedule. In theory, this should be a fairly straightforward exercise since both budget and schedule have a work breakdown structure (WBS) in common.  As you’ve probably guessed however, theory is just theory and in reality it’s not that simple. Schedulers have a very distinct view of a project’s WBS as compared to estimators or cost engineers. Schedulers view the project from the perspective of activities, duration, milestones, dependencies and critical path. Their version of a WBS includes things like milestone tasks, progressing tasks and events. Things that

What’s the Difference Between a Change Order, Change Forecast and Budget Transfer?

Changes are inevitable on projects. No project manager in their right mind moves forward with a project not expecting changes to happen - fluctuations in scope, cost, schedule and activity can happen almost daily.  In this article, I want to tackle a segment of change management that I often come across in conversations. Which is: the different types & states of Change Events that can be registered on a project; and some of the nuances of each. The three main project change events are: Change Order.  Used to register a change in project scope Change Forecast. Used to identify any project trends Budget Transfer. Use to move funds & resources within the project without modifying the budget It’s important to understand the difference so as to know in which cases you’d use each type of change event. Change Order There can be many reasons to initiate a Change Order, but they typically represent an underlying change in scope or unanticipated cost that has occurred on the project. As a result, change orders will always result in a modification to the project budget. They can be initiated by an outside request – such as an RFI from a customer or other stakeholder - or they can originate from an internal source, supplemental information, design change, or just be a result of a mistake.  In any case, something’s happened that’s going to require a change in budget (usually additional funds are requested), and potentially a change in schedule. If it’s an increase in budget, the initiator of the change needs to specify a funding source. The funding source could be a supplemental AFE, Purchase Order, etc.; or it could come from the Contingency Reserve (if there is

EVM Explained: Variance

“If you keep going at this speed, you’re going to be late!” That’s my simplistic real-life analogy of earned value management. It’s a simple bit of math that we all do in our heads anytime we’re trying to get somewhere or finish something.  If you gave yourself an hour to get there and after a half-hour you’re still less than half-way, you’re going to be late.  It’s that simple. As simple as it is, it requires us to know quite a bit of information about the current situation in order to calculate late vs. on-time.  Just like EVM, you need to know 3 key elements to make the calculation: Your speed Remaining distance to go Remaining time left Cost Variance If you know those 3 values, you can not only calculate whether or not you’re going to be late, but you’ll also know how late.  In earned value management, the “how late” answer would be called Variance. Whether we’re talking about time, cost or hours, variance is determined by knowing three things about your project: Your budget How much of that budget you’ve spent so far (actual) How much work has been completed (as a percent) To save you from having to read it here, you can have a look at this site to get the details on the math for calculating variance (and any other earned value metrics). Depending on your preference, variance can be expressed as a whole number or as a percent. Most people tend to speak about variance in percent terms since it gives you a sense of the magnitude.  For example, “we’re 17% over budget.”  It’s key to point out that that would be a

Rules of Engagement: Collaboration is Key

Tell me you haven’t heard this one before: “Our teams need to collaborate!” And then everyone in the room nods their heads in approval. But what does collaboration really mean on the construction project, and how do companies structure their personnel, teams, vendors and clients into a truly collaborative project working environment? It’s a question that bears a lot of consideration since the roles and disciplines that are at play on any project are diverse and highly specialized – each with its own dialect, toolset, and key deliverables. Each sees the world in their own way; but are nevertheless completely dependent on each other to achieve a successful project outcome. Project management must do more than simply coexist with procurement and project controls – and vice versa. They all have a vital role to play. They have key information inputs and outputs that can make or break a construction project. They need a very high bandwidth of collaboration to get things done. Some organizations opt for grouping specializations together in their own silos; thinking that like-minds will work effectively together. Project Schedulers can be in an entirely different building than the procurement team or the cost engineers. The communication mechanisms used between them will be emails and spreadsheets passed back and forth with an expectation that the other side will understand the significance of the details contained. Although this is not ideal, this isn’t that uncommon since projects can be global, teams can be virtual, and the knowledgebase so specialized in each discipline. It would be nice if all disciplines of a construction project team could sit in the same room and live & breathe each other’s world – but that’s

New Report Finds Project Profitability and Replacement of Manual Methods as Top Reasons For Project Management Software Buying Decisions

After interviewing thousands of buyers looking for Project Management software, Software Advice has compiled an insightful report that sheds light on key factors buyers are using in their purchasing decisions Key Findings Include: Nearly half of the buyers are looking to replace Manual Methods with dedicated software 100% of buyers expressed a preference for Cloud-Based Deployment Project Profitability was cited as a primary driver for searching for software solutions 90% of buyers were looking for an Integrated Suite that pulled together multi-discipline and multi-functional capabilities into a common platform or solution. If you’re currently in the market for purchasing project management, timesheet & billing, procurement or project controls software, how does your criteria compare with the findings in this report? Have a look through the presentation below for more information. Project Management BuyerView 2014 from Software Advice

EPCMs Need to Up Their Game When it Comes to The Software They Use

EPCM organizations that are using just Timesheet & Billing software are finding themselves swamped in spreadsheets to cover the greater technology needs they face.  It used to be that all an EPCM needed for enterprise software was a decent-enough timesheet tool to track their billable hours; and an integrated billing tool to invoice their customers. Things have evolved however, and EPCM’s are now seen as the go-to company for project management, procurement, document management, project controls, etc.  These requirements obviously go well beyond what a timesheet tool can support.  So, confronted with a lack of available tools, project managers & engineers have resorted to building cobbled-together solutions in spreadsheets to cover the gaps. The many challenges with using spreadsheets for this are vast – and can cause issues from productivity loss, to errors, to a compromised service to customers.  I was in a meeting with a new client a few weeks ago.  During the meeting, one of the guys – who had obviously faced the pain of too many spreadsheets for too long – said to me, “I’ll be happy if I never have to see another spreadsheet for the rest of my life.” He was clearly motivated to up their technology game. And that’s just looking at it from the perspective of providing the right tools for their staff.  There is an additional growing pressure on EPCM’s to demonstrate good practices and tools before they can even bid on certain projects. Many clients aren’t willing to hand over critical pieces of their project to an EPCM that’s using hacked-together or home-grown solutions. Owners especially are looking under the covers now as part of their due-diligence to determine which engineering companies they’re prepared to work

How Do You Keep Track of Vendor Accruals?

You thought you had your project all wrapped up when, SURPRISE, vendor invoices just keep coming in.  Whoops, things didn’t go as well as you thought. The costs on your project keep soaring, and you have to keep updating your project reports to your superiors. How does this happen? This happens because vendors rarely invoice you at the time they completed the work, or delivered the materials.  The problem is, if you wait until vendors invoice you to show the cost on your project, then you’re in for a lot of surprises. Here’s a common scenario: Every day your Site Supervisor is asked to approve or sign-off on the work done that day by the various subcontractors on your project – or materials delivered by suppliers. All those approved daily field tickets make their way back to the subcontractor’s Accounts Receivable group; and they then batch them up for invoicing. You of course have a copy too, and it likely sits as a scanned document on a shared drive somewhere. However, this receipt-of-work-done typically isn’t used as a means to record the associated cost on your project. Most often, a project’s actual costs are driven by updates from accounting, or manually input into spreadsheets by a project manager when the vendor invoice is received.  The problem with this model, is that you might not receive that invoice for weeks if not months after the work was completed – so during that time, there’s a discrepancy between what’s showing on your project for actual cost, and what you are in fact liable to pay. This scenario can fill you with surprises since you’re really at the mercy of your vendors’ invoicing cycles.  Not all vendors are

How do you Manage Your Request For Quote Bid Evaluations?

When analyzing and evaluating the various proposals that you receive from vendors during an RFQ bidding process, what benchmarks do you use? Do you just compare price, or do you also have a list of criteria to compare the bids? Criteria such as: Compliance to Terms and Conditions, Shipping, Reliability, etc. How formal is this evaluation process in your organization? Are your RFQ evaluations – and decision around who is awarded the bid – subject to approval by your client? In 4castplus, the Bid Evaluation module allows users to define their own criteria; and go on to weight each criteria element according to its importance to the whole bid analysis. For example, if it’s a schedule-driven project where timing is critical, perhaps you’d weigh Delivery Date as having high importance. You can create as many or as few criteria as makes sense for each RFQ. Once you’ve received your proposals, you can then rank the defined criteria for each received proposal. 4castplus will calculate an overall Score based on your rankings and criteria weightings.  In addition to the criteria, you can also perform a side-by-side comparison of price for each line item on the RFQ. Not everyone needs software to help rank and evaluate bids like that. It’s often the case where it’s a straightforward process of eyeballing the bids and making a judgement call.  Nevertheless, many organizations that we work with have historically struggled with this area of bid management. Especially when any of the following are true: You’re providing procurement services on behalf of your client, and there is a requirement for bid-award oversight by the client The RFQ is connected to a critical path deliverable The RFQ has

Procurement on Construction Projects is, well, Different

To manage the complexity of procurement on large construction projects requires an exceptionally robust technology solution. Most commercial procurement software products are designed to handle general-purpose purchasing for a broad range of businesses and industry applications.  Procurement on construction projects however, is quite different. It’s not at all like buying pencils for the school board, or buying a fighter jet for the defense department. Construction project procurement has many characteristics that place heavy demands on the software that supports it. The differences fall into the following six categories. I’ll go on to discuss each of these in more detail further below: The need to handle High Volume Procurement The requirement to manage Long-Lead Items and Expediting Integration with Project-Level Cost Codes Tie-in with Project Controls The Need for Speed Multi-Discipline Collaboration In case you didn't notice, I've left out any of the hairy legal details that are unique to construction contracts. The contract management side is a whole other beast that is best tackled in another discussion. For this, I'm primarily focused on the procurement process.  I've also avoided the accounting side of the debate with respect to holdbacks, retainage, punch lists, etc. Again, this is an area more related to the contracts and accounting end of supply chain.  So anyway, here is a more detailed discussion around each of the above cornerstones of construction project procurement. High Volume Procurement Large construction projects face an enormous volume of materials, labor services and equipment that all needs to be contracted, procured and successfully delivered to multiple jobsites & warehouses on a very explicit schedule. The procurement teams on larger construction projects can face managing many thousands of concurrent contracts, hundreds of thousands of line-items and hundreds

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: 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