In the high-stakes arena of major construction projects, the implementation of effective project controls is not just a best practice—it’s a necessity. These controls serve as the navigational tools that guide a project through the turbulent waters of financial and schedule risks, ensuring a safe journey toward successful completion. This blog post explores the multifaceted role of project controls, the indispensability of specialized software, the pillars of good project planning and design, and the significance of Earned Value Management (EVM) in achieving project excellence.
Foundations of Success: Project Planning and Design
Many project controls professionals will strongly contest that the success of industrial projects is fundamentally dependent on upfront planning. The project plan lays the groundwork for everything from budgeting, deliverables, costing, forecasting, change order management, and reporting. Effective project controls are built on the foundation of robust project planning and design. This involves creating a well-structured Work Breakdown Structure (WBS) and Cost Breakdown Structure (CBS), which are critical for accurate tracking and management of the project’s scope, schedule, and costs. The WBS provides a hierarchical decomposition of the project scope, breaking it down into manageable components, and facilitating better resource allocation and task management. Meanwhile, the CBS ensures that costs are systematically categorized, allowing for precise control and analysis.
In addition to the layout of the project’s structural elements, the next key planning component is the initial project estimate or budget. Construction project estimating can be a very involved process that requires an expert understanding of the scope, costs, resources, and overall capabilities of the organization and its team of subcontractors. A well-prepared project budget sets the financial baseline, against which all project expenditures are measured and managed. Once baselined, the project baseline budget is then locked at that point in time, so that only change orders can reflect modifications to the project scope, budget, resources, and schedule.
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Mitigating Financial and Schedule Risks
The primary objective of project controls is to constrain the chances of financial and schedule risks. Construction projects often involve intricate logistics and substantial budgets, making them susceptible to cost overruns and delays. Effective project controls enable continuous monitoring of these aspects, ensuring that the project stays on track. By identifying potential budget and schedule deviations early – through progress measurements, forecasts, and EVM reporting – project managers can take proactive measures to identify risks and take corrective action before these risks and issues become entrenched, thus safeguarding the project’s financial health and timely completion.
Elevating Real-Time Visibility for Proactive Management
One of the most critical aspects of project controls is the elevation of real-time visibility into the project’s progress, costs, activities, and deliverables. This real-time insight is invaluable for project teams, enabling them to make informed decisions quickly. When project managers have access to current data on project progress, resource allocation, and financial performance, they can identify issues promptly and implement corrective actions before these issues escalate.
Current, accurate, and complete project data is fundamental for making timely decisions, allowing project managers to respond quickly to changing conditions and emerging challenges. The ability to access and analyze this data promptly ensures that decision-making is based on the most recent and relevant information, leading to better outcomes and the successful delivery of the project.
The Need for Specialized Software Systems
The complexity of modeling, tracking, and reporting on large construction projects makes it impractical, if not impossible, to rely solely on traditional tools like spreadsheets. Specialized software systems for project cost controls, cost management, project management, forecasting, etc., are essential in handling the multifaceted nature of these projects. These systems offer sophisticated functionalities for detailed modeling, comprehensive reporting, and dynamic data analysis, far beyond what manual methods or spreadsheets can achieve. Systems also provide benchmarking tools and historical trends to help decision making and a project manager’s ability to determine current progress and forecast where the project is heading. Accurate progress measurements are essential for evaluating how the project is advancing in comparison to the planned schedule and budget.
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Change Order Management
Change orders are an inevitable reality in construction projects and managing them effectively is crucial for maintaining control over the project’s budget, schedule, and resourcing. Change orders can have a material impact on the project scope and resources and require rigorous oversight and workflows; as change orders can take on an entire life of their own. They may be disruptive in some cases, but they are a constant reality, so managing them carefully is an essential component of project controls practices. Good project controls management provides a framework for assessing the impact of these changes on the overall project.
Earned Value Management and Project Forecasting
Earned Value Management (EVM) is a critical aspect of project controls. EVM is a technique used to assess the project’s progress, combining measurements of project scope, schedule, and cost in a single integrated system. By analyzing these metrics, EVM provides a comprehensive view of the project’s health and performance, enabling managers to make informed decisions about resource allocation, potential adjustments, and future planning. Forecasting is a natural dovetail of progress measurements and EVM, offering a glimpse into the project’s future based on current trends and data. Advanced software systems will provide tools for automating the progressing, EVM, and forecasting calculations and reporting. Users are presented with options for how to configure the system to deliver the preferred methods for the data input to use in the progressing and forecasting algorithms.
The S-Curve, a graphical representation of project progress over time, is a powerful tool for visualizing this data and is an integrated component of EVM reporting. It helps in comparing planned versus actual versus progress and performance, highlighting areas that require attention and enabling better decision-making.