Michael S. Wilson

About Michael S. Wilson

Michael S. Wilson (Msc, PMP) is a Projects Controls specialist that has been delivering projects large and small for over 18 years. He's a strong believer in the power of information, communication and risk management as primary influencers determining a successful project. He's worked in Construction, IT and Utilities and is always full of ideas and creative solutions to some often tricky problems.

Procurement is the Lifeblood of your Project

For any major project, it’s likely that every single dollar spent on that project will have gone through the procurement department. Think about it … the entire project essentially lives in a big stack of purchase orders – contracts that define the supply and services, terms and conditions, and other instructions for vendors.  There’s a lot riding on the successful execution and timing of those contracts. Without a smooth and efficient procurement team – and the right tools – to manage the timely delivery of the volumes of materials and services required; a project could be doomed. Effectively strangled by the overwhelming amount of data and logistics faced by big-project procurement.   Many organizations try to manage the logistics risks by inserting dependencies, milestones and critical-path items into the schedule. But schedules are largely theoretical. If you don’t have visibility and deep reach into how your vendors are performing, you won’t have the key information to modify that schedule (and project budget) to reflect newly forecasted delivery dates that result from delays in supply or service. The information that goes into, and comes out of, procurement is vital to project success. The rest of the project team needs to have continuous detailed reporting on the status of all vendor deliverables. The whole team needs to be in sync with what’s happening beyond their walls and beyond the jobsite. Delays and failures most often occur long before the scheduled delivery date. Delays in fabrication, shipping, customs, or pending labor issues are just a few examples of the types of upstream challenges that can lead to major setbacks in productivity. Just being at the jobsite isn’t going to give you information like that. The

By |October 31st, 2013|Categories: Procurement|1 Comment

Respect for the Expeditors

Hands up if you don't know what an Expeditor is Oh don't worry - you're not alone if you're not too sure what an expeditor is or does. The expeditor is just that quintessential guy-behind-the-guy that plays a pivotal role in successful project execution. That's all. The management of critical path items in large construction projects usually involves the coordination of multiple events coming together at exactly the right time. In order for work to be completed smoothly, you need the crews, equipment, materials, drawings, instructions, etc. to all be there at-the-ready, with all preconditions and preparations met, at precisely the right time. For most organizations, the responsibility for the logistics in making sure this all happens without a snag, is perceived as the job of the Project Manager. While true, the project manager is the face of project coordination, there’s a lot going on behind the scenes that enable the project manager to achieve the success they’re looking for. The often-forgotten-about-guy that plays a fundamental role in construction logistics, is the procurement Expeditor. In procurement management, the expeditor is the person who rides the backs of the suppliers and contractors to organize the forecasted delivery dates of equipment, materials and contracted work. He or she spends hours communicating with vendors, and monitoring the incremental progress and milestones made by, for example, fabricators. They feed those delivery forecasts and logistics details to the project manager so that they can then have accurate timing information. It’s most often the case that original delivery dates set by suppliers are delayed for one reason or another. It might be that the fabricator was bang-on-time, but the equipment got caught up in customs. Or there was a mining

By |September 30th, 2013|Categories: Procurement|1 Comment

How do you Figure out a Realistic Cost to Complete?

Project Owners spend an extraordinary amount of time trying to get an accurate reading on all the costs to complete for a project.  On big projects, it’s hard enough determining what’s been spent to date, nevermind remaining. Gathering the right information to calculate forecasted spend can be tricky to do and requires good tools & processes to piece together a realistic estimate of projected costs. With hundreds of suppliers and contractors busily doing work and delivering materials every day, it’s a big task for Owners to keep track of how exactly things are progressing. Understanding “progress” is key. Without information on progress to date, you can’t figure out amounts remaining. Most decent project managers (especially on the owner side) understand this very well. As a result, they spend a good part of their day making a lot of phone calls &  email requests to vendors - along with regular site visits - to get an idea of how much has been completed and how much is left to do on every project activity. They’ll then punch in numbers to manually calculate those remaining amounts to produce a status report. In addition to all that, they also rely on vendor invoices. They’ll subtract invoices from the budget, and voila, all in, that’s their gauge on the cost to complete. Off goes the report to internal stakeholders. It’s not very accurate, but it’s what they have to deal with. Considering it’s such an important piece of information, it’s amazing that such a loose, time-consuming and manual system is still used. Especially one that’s full of guesswork and potential for errors.  It can be even more effort if the project manager is

Statistics show 88% of Spreadsheets have errors. Do yours?

The best thing about Excel is that it’s so flexible. The worst thing about Excel is that it’s so flexible. With enough effort and programming, people can bend and twist Excel into doing almost anything. The challenge with that, as many people know, is that lurking inside every spreadsheet are errors that elude the creator. Some errors can be minor, but many errors are much greater in magnitude and can lead to executives making critical decisions based on bad math. Numerous studies on spreadsheet errors have been undertaken over the past 5 years which indicate that an alarming rate of errors exist in business-critical spreadsheets. Consider this blurb from the 2009 University of Hawaii paper on “What we know about spreadsheet errors”: In general, errors seem to occur in a few percent of all cells, meaning that for large spreadsheets, the issue is how many errors there are, not whether an error exists. These error rates, although troubling, are in line with those in programming and other human cognitive domains. In programming, we have learned to follow strict development disciplines to eliminate most errors. Surveys of spreadsheet developers indicate that spreadsheet creation, in contrast, is informal, and few organizations have comprehensive policies for spreadsheet development. Although prescriptive articles have focused on such disciplines as modularization and having assumptions sections, these may be far less important than other innovations, especially cell-by-cell code inspection after the development phase.   To put it another way, on average, a spreadsheet will contain 1 error for every 20 cells that contain data. Cell errors are bad enough. What about the errors that are introduced from copying data from one spreadsheet to the next? It’s pretty common to have multiple spreadsheets

What is SaaS and What’s in it for You?

Ever wondered what SaaS really means? SaaS means “Software as a Service” and is both a licensing model, as well as a software product delivery model. SaaS is not that new, but it is becoming more popular as cloud-based applications are flourishing. It might seem new to some, since it's a departure from the more traditional “On-Premise” software applications. So what is it then? Put simply, SaaS is a distribution method where software applications are made available over the web and cloud by a software vendor. All the infrastructure, equipment, maintenance and other IT-related costs are covered by the vendor as part of the SaaS license fee. Companies can free themselves from any software to install or hardware to buy or maintain – all they need is an internet connection, and the software is there all the time. In addition to the convenience of accessing the software application over the web and cloud, SaaS also differs in its pricing model. On-premise software is typically purchased through a Perpetual License, which means buyers own licenses of that version of the software. They also pay 20% to 30% per year in maintenance and support fees on top of the license purchase. SaaS, on the other hand, allows buyers to pay an annual or monthly subscription fee, which typically includes the software license, support, product upgrades and all other fees.  With SaaS pricing, the customer is not burdened with a heavy front-loaded cost.  With traditional On-Premise perpetual license, the buyer takes on a great deal of risk and has to cross their fingers that it’s all going to work. With the SaaS pricing model, the costs are spread out over time, and the vendor is more on the

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

Tips and Tricks on Unit Price Contracts

Unit Price or Re-measurement contracts are a common way for owners to define the structure of how a project is to be quoted by contractors. This is especially true when there is uncertainty on the part of the owner as to the total quantity of each item that will be required to complete the project. A big part of the owner’s motivation for structuring it this way, is that they’re looking for a means to compare rates from the different quotes tendered. Using this technique, they can have an undetermined project size yet still compare vendor bids. With unit-price or re-measurement projects, the owner will provide a Bill of quantities (BOQ) to which the contractor is to quote against on a price-per-unit basis.  A BOQ item is an item of work that is stated and measured based on some unit amount; where a “Unit” could be, for example, “feet of pipeline” or “cubic yards of dirt” moved.  An example of a BOQ item could be, “Install 8,750 feet of pipeline”. The entire project is made up of many of these BOQ items, each with its own units and quantities.  The owner is primarily interested in seeing the price-per-unit for each BOQ item, along with the total project tallied up for a complete quote. As mentioned above, the quantities of the work at tender stage are deemed to be approximate and the actual volumes will be measured and paid as the work proceeds. This way of quoting, measuring and operating a project, is considered to be fair to both owner and contractor, as both are absorbing an equal amount of risk. As long as the contractor is good at figuring out his

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

Why EVM Matters

Earned Value Management? When asked about where their project stands against initial budget and schedule, most project managers will have a pretty good idea. They’d be able to tell you something like, “We’re running quite close to budget”, or “We’re almost half done”. However, without the tools and tracking to provide sufficient substance to those statements, gut-feel assertions like that are often dangerous guesses that can lead to cost overruns and delays. Earned Value Management provides the tools and techniques to tell a project manager where he or she really stands in their project. It can not only report on how much over/under budget or ahead/behind schedule a project is; it can also inform a PM as to how a project is trending, so as to better predict schedule and cost remaining to complete their project.  This provides the project manager a solid grounding on current status along with a good estimate of projected final results & timing. Armed with better analysis tools like this, the cost savings to projects – along with the improved communication and control – are clear incentives to look at adopting EVM in almost any project organization. Earned value management is much simpler than it sounds. It is simple because it’s something that we all do in everyday life – we just don’t usually use an elaborate name for it like EVM. Put simply, EVM is the technical term used for the process of getting quick and accurate answers to the “Where Am I At” questions on any project (construction, IT, or other). And we’re all continuously trying to assess where we’re at in most everything we do: whether it’s managing a complex construction project, or simply planning a birthday