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AboutRead In 5 Minutes
The Essential Role of Project Controls in Construction
Project controls is a critical function in any major project. It’s all about reducing the financial and schedule risks associated with complex construction projects. Without a project controls team and system, owners and contractors are taking an expensive gamble, risking their project going off track and far over budget.
Why Project Controls Are Essential for Modern Construction Success
Decades ago, it was accepted that a construction project was something that happened exclusively at a jobsite; and if there were crews out there digging and pouring and welding and piling – then progress was being made.
Looking back at the numerous failed projects that went significantly over budget, it’s clear the industry needed to learn from past mistakes. Studies show that “close to 80% of large-to-mega projects fail to meet planned objectives.” Which is defined by projects completing at 20% or higher over budget and/or schedule. Many factors influence a project’s success, but one of the biggest contributors to failure is the lack of information and visibility, preventing project managers from making timely decisions and taking early corrective action.
But has the industry really learned? Some certainly have, but only a modest percentage. To put it quite bluntly, any company with any brains has, or is now, adopting project controls systems, professionals and practices to ensure that they execute their projects to plan. They have learned that a project isn’t something that just happens out there in the field. Companies are increasingly relying on technology to capture every project detail within their systems, allowing them to leverage powerful analysis and reporting tools that provide immediate alerts when something goes off track. As a result, their businesses are thriving.
Remarkably, however, there are still many companies that execute on large or major projects (either as a contractor, owner or EPC) that haven’t yet onboarded a system for managing their projects and programs. We’ve kept an informal list over the years, of the reasons (or excuses) companies give for hesitating, delaying or denying the need for a system. Here are just a few:
- It’s too expensive
- We’re not ready
- I don’t even know what that is
- We use P6 and our accounting system, so we’re good
1. It’s Too Expensive
Firstly, project controls systems are not expensive when compared the total cost of any large project. Pocket change. Rounding error. Cutting costs on the assurance that project controls systems bring, is simply not a reasonable position. To control and diminish the financial risk of a project should be a no-brainer. It’s like insurance on your house. Companies expose themselves to all kinds of risk – there’s no need to risk project success.
2. We’re Not Ready
It’s very common for organizations to feel as though they don’t have the in-house experience, workforce or culture to onboard a sophisticated construction project system. This is a completely understandable reason to hesitate in adopting a system. You need the right people and processes in place for a system to make sense. However, for any organization to grow, remain competitive and relevant, they need to adapt and allocate space for the resources and expertise they need for that growth. We all go through transformations in life where we need to learn new things. We need to train and build up our experience to get to the next level. Businesses are clearly no different.
3. I Don't Know What Project Controls Are
There are still many project-driven companies out there that don’t know that project controls are even a thing. They’ll often confuse it with project management or assume their project managers are performing the financial & schedule functions that project controls are experts at. Project managers are the ones that are the face of the project – communicating with crews, subcontractors, customers, and other stakeholders – overseeing that the deliverables are being met.
Project controls, on the other hand, are the back-office number gurus (a bit like accountants) that are analyzing the data. They’re looking at dollars and hours and progress and putting in forecasts and comparing budgeted values against actual values and spotting anomalies where areas might be at risk. They’re answering stakeholders’ questions like “Are we on budget?”, “Are we on schedule?” “What’s my spend forecast for the next 6 months?” While project managers are busy making sure everything gets done, and the client is happy; project controls are making sure the numbers add up – and if they don’t, raise a big red flag.
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4. We Use P6 & Our Accounting System, So Why Do We Need Project Controls?
It is quite simply delusional to believe that P6 and/or an ERP can function in a project cost management or project controls capacity. Neither is designed for the good governance and derisking of project financials. There’s no question that P6 is a great tool capable of amazing things, but it is a scheduling tool. It can model very complex projects – their resources, time-phasing, etc. – but it does not provide the full complement of project data (such as actual costs, actual hours, etc.) needed for project controls analysis. Similarly, the ERP is not a project tool. It’s a corporate accounting system. The system of record. Even if you’ve bought the “project extensions” for your ERP, it is still not a project-driven system. When we come across companies that have adopted this strategy, they still have a vast array of spreadsheets to make up for the many gaps that P6 and accounting just can’t do. They are still living with the risky exposure to projects going sideways, and wind up investing a lot of unnecessary manual effort and money just getting the reporting they need.
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4castplus has been specifically designed to manage the heavy demands of construction projects. With powerful features and intelligent workflows, your teams will have greater visibility and control. Let 4castplus streamline the execution of your key projects and move your organization to the next level Contact us to learn more.
