Project Control

Abstract

The project is a temporary one-time undertaking, that has a definable goal, interrelated and dependent activities tasks and is finite in duration. In some point, all the projects are unique, they provide a unique product, service or information. Every project operates under some constrains such as time, cost and quality. Every Project has 5 basic phases according to PMI [1]. Initiation, Planning, Execution, Monitoring and Control and Close of the Project. In this article, the Project Monitoring and Control will be examined. The goal of project control is detecting potential problems or opportunities during project execution, by measuring the deviations from the baseline schedule. The project managers will compare project status and continue to the actual plan, as resources perform the scheduled work. In addition, during Project Control, project managers may have to adjust schedules or do what is needed to keep the project on track. In case of having differences between that execution and the planning phase, this does not mean necessarily the project plan needs to be changed, however these differences should be reviewed and determined if any action is necessary. Project control is considered very important because it may determine the success of the project by the stakeholders. Project success is relevant to project cost, completion date, customer expectations, performance, quality, etc.

The Role of Project Controller

According to PMI the definition of the project management is “the application of knowledge, skills, tools and techniques to a broad range of activities in order to meet the requirements of a particular project." The process of directing and controlling a project from start to finish may be further divided into 5 basic phases:

1. Conception and Initiation
2. Definition & Planning
3. Launch or Execution
4. Monitor & Control
5. Project Close

The project control, is the 4th phase “Monitor & Control”. Even if the word “control” gives the impression that the project control is only involving the 4th phase of a project, the reality Is different. The Project Control team involves from the initiation stage until the closeout of the project in order to ensure a successful control of the project. Project controllers are involvement from the initiation stage is due to the fact that is the one who will make an estimation of the overall budget as well as the delivery schedule of the project. As soon as the the planning of the project starts, the Project Controller helps with the planning of the cost and the schedule. In addition, the Project Controls team has a significant involvement throughout the entire project lifecycle. Even though Project Controller seems to be very similar to Project Manager, actually there are t differences between those two. For example one of the biggest challenges of a Project Manager is to create a harmony between the four main constrains in a project “Scope, Cost, Time, Quality”. Project controller helps the Project Manager in the management of the time and the cost of the project.

Cost Management and Cost Control

Cost management is a part of the project control and involves not only managing the budget, but also planning, and preparing for potential risks. Risks can set projects back and sometimes even require unexpected expenses. Preparation for these setbacks can save time and money. Cost management involves overall planning, co-ordination, and control and reporting of all cost-related aspects from “project initiation” to “operation and maintenance”.

The Cost Control, regardless of the size of the company is equally important. However, smaller companies tend to have tighter monetary controls, mainly due to the risk of failure. Larger companies may have the luxury to spread project losses over several projects, but the small companies may have few projects. Cost control is not only "monitoring" of costs and recording huge amount of data, but also analyzing of the data in order to take corrective action before it is too late.

The Cost Controllers may use the following methods/functions for more efficient work:

1. Use cost management software for more precise and reliable estimations
2. Making Monthly KPI (key performance indicators) reporting
3. Ensure alignment with scheduling (current budget hours used)
4. Monitoring the project progress, manpower and productivity by discipline
5. Ensure alignment with scheduling (use working hours according to the plan)
6. Coordinate with Contractor’s project controls team to ensure accuracy and timeliness of contractor’s project controls deliverables.

Time Management

An accurate time estimation is essential for a successful project completion. Reasons of right time management is that the time estimates and drive the deadlines of delivery and planning of the project. If the time estimation will not be accurate enough, then will impact another people’s assessment of reliability of the company. Moreover, the time estimation many times determines the pricing of contracts, if there will be delays in the project delivery may be a financial penalty from the customer (depending on the contract).

• Some of the tactics that project controllers use for time managements are:
• Create baseline schedules
• Provide input to the project progress report
• Create schedule ‘what-if scenarios’ for strategic planning by project management
• Assist with notification of schedules delay to clients
• Create progress measurement graphs (S-Curves) to track the current status of the project

How to understand when project controller is needed?

According to (Meredith and Mantel, 2006), there are three main indicators, “Performance”, “Time”, “Cost”. The primitive indicators are:

• More resources or less resources haven been used than planned
• Activities are taking long than planned
• Cost of activity (or of project to date) is higher than expected

They called primitive because they may be biased and it is not consider that progress may be overestimated or underestimated due to execution of unscheduled work done, or execution of more work of low value and less work of high value

Resources and Elements of project Control

The 4M management method is a key method in this case and is the use of management engineering methods. 4M is the ISO quality management system in one of the elements. The 4 M’s stands for:

• Money
• Machinery
• Manpower
• Materials

The Manpower or “Human Resources Control” is responsible for hiring staff with needed skills as well as assign staff with specific skills to specific activities, but also to lay-off any underperforming staff. However, any move should be examined carefully before will be implemented. The Machinery or “Physical Asset Control” is about decommissioning any underperforming equipment and instead bring in equipment with appropriate capabilities. In both of the cases any equipment decision may involve economic analysis and extra cost. The Money or “Financial Resource Control” is about determine the amount of money that should be spent and how/where should be spent, in this case the Project Manager is assisted by Project Accountant and Project Finance Manager. Regarding Materials new sources of superior Materials should be seek.

Desired characteristics of a project control mechanism

Project control should fulfil some desire characteristics such as:

• Flexible: it should be able to react to changes in system performance
• Cost-effective: Value of PC should exceed cost of project control
• Useful: Must really satisfy the needs of project, not the whims of the PM
• Timely: Be able to react quickly before the problem overwhelms the project
• Simple: Easy to understand and operate
• Adjustable: Capable of being adjusted to reflect changing priorities
• Documented: so that training in the future to be possible

Key Performance Indicators in Project Control

Project managers will use key performance indicators (KPIs) to determine if the project is on track. A PM will typically pick two to five of these KPIs to measure project performance:

1. Project Objectives: Be aware if a project is on schedule and budget is an indication if the project will meet stakeholder objectives.
2. Effort and Cost Tracking: The Project Manager will explore for the effort and cost of resources to see if the budget is on track. This type of tracking informs if a #project will meet its completion date based on current performance.
3. Project Performance: This monitors changes in the project. It takes into consideration the amount and types of issues that arise and how quickly they are addressed.

These can occur from unforeseen hurdles and scope changes.