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Project Controls

In order to define project control we should realize what we are controlling in projects.  There are many aspects of projects that need to be monitored and controlled by the project team; although, there are three constraints in every project that need to be monitored and controlled closely:

  1. Cost
  2. Schedule
  3. Scope

This is referred to as the ‘Project Management Triangle’ – also called Triple Constraint or the Iron Triangle (Figure 1).  All projects need to be performed and delivered under certain constraints.  Traditionally, these constraints have been; Cost, Schedule, and Scope.

Project Management Triangle
Figure 1

 

The Cost constraint refers to the budgeted amount available for the project.  The Schedule constraint refers to the amount of time available to complete a project.  The Scope constraint refers to what must be done to produce the project’s end result.  These three constraints are often competing: increased scope typically means increased time and increased cost, a tight time constraint could mean increased costs and reduced scope, and a tight budget could mean increased time and reduced scope.

Although Quality is not an official part of the project management triangle, it is the goal for all deliverables.  Quality is implied, by virtue of the project management triangle, since a change to any side of the triangle affects it.  Frequently, project managers believe ‘high quality comes with high cost’, which to some extent is true. By using low quality resources to accomplish project deadlines does not ensure success of the overall project.

Project Controls are the data gathering, management and analytical processes used to predict, understand and constructively influence the time and cost outcomes of a project or program; through the communication of information in formats that assist effective management and decision-making.

This definition encompasses all stages of a project or program’s lifecycle from the initial estimating needed to ‘size’ a proposed project, through to reflective learning (lessons learned) and the forensic analysis needed to understand the causes of failure (and develop claims).

Project Controls encompasses the people, processes and tools used to plan, manage and mitigate cost and schedule issues and any risk events that may impact a project.  In other words, Project Controls is essentially equivalent to the project management process stripped of its facilitating sub-processes for safety, quality, organizational, behavioral, and communications management.

Project Controls and Project Management

Project controls and project management are not interchangeable.  Project controls is a function of project management.

The three main differences between Project Controls and Project Management are:

  1. Project Controls is a subset of Project Management with the primary focus of managing the cost and schedule,
  2. Project Manager is directing the work while the Project Controller advises the Project Manager and the team of possible cost and/or schedule issues, and
  3. Project Controller generates the project’s cost/schedule information while the Project Manager digests the information to make decisions for the project.

Project management is the use of knowledge, skills, tools and techniques to achieve specific objectives within agreed upon parameters in which there is a defined deliverable project.  There are five basic elements of project management:

  1. Initiate
  2. Plan
  3. Execute
  4. Monitor & Control
  5. Close

According to the Project Management Body of Knowledge (PMBOK® Guide), project management knowledge draws on ten areas, two of which (cost and time) fit within Project Controls:

  1. Integration
  2. Scope
  3. Time
  4. Cost
  5. Quality
  6. Procurement
  7. Human Resources
  8. Communications
  9. Risk Management
  10. Stakeholder Management

Project Controls: What is it?

So what is Project Controls? Project controls are processes, tools, and skills used to analyze a project’s data to help keep the project on budget and on schedule.  Project controllers report their findings regarding budget, schedule, progress, and performance to project manager.  Project controls are charged with answering (and controlling areas around) two key project questions throughout the project’s lifecycle:

  1. Cost:  How much is the project costing and will it be completed on budget?
  2. Schedule:  How long will the project take to complete, where is the project performance relative to schedule, and will the project be completed on time?

At first glance it may appear that Project Controls falls within the fourth process (monitoring and controlling) of project.  However, to be most effective project controls needs to be involved in all aspects of project management.  Project controls focuses on controlling the project costs and schedule, and those are estimated and determined at the initiation phase of a project. And all phases of the project deal with its costs and timing.  Project Controls can use project performance data to forecast schedule and costs – allowing the project manager to take corrective actions to keep the project on track.

Throughout the lifecycle of the project, project controls professionals oversee and control the costs and schedules.  They report and advise the project management team of any budget or schedule deviations to the project.

Why is Project Controls Important?

The successful performance of a project depends on appropriate planning.  The execution of a project is based on a robust project plan, accomplished through an effective schedule control methodology.  The development of an appropriate Project Control system is an important part of project management effort.

Despite the continuous evolution in the project management field, it appears evident that the traditional approach lacks the application of Project Controls.  There have been a number of articles published to support the importance of control in the achievement of project objectives.  Time and time again it has been proven that project performance can be improved if dedicated Project Controls’ systems are in place.  An IBC 2000 Project Control Best Practice Study carried out by IPA identified that good Project Control practices reduce execution schedule slip by 15%.  Project Controls’ cost range from 0.5% to 3% of the total project (including cost accounting), therefore, to break even, Project Control needs to improve cost effectiveness by around 2%.  A sample study carried out by the IBC Cost Engineering Committee (CEC) in 1999, showed cost improvements for the projects in the study, was more than 10%.  It is noted also that NPV (Net Project Value) also benefits from schedule improvements.  Success factors are based on good Project Control practices, which result in good cost and schedule outcomes.

The fact that one failed project can potentially wipe out an entire year’s profit helps put the value of Project Controls into perspective.

Why Are The Components of Project Controls?

Depending upon how Project Controls are viewed will influence what is considered as the component.  In this article, it is assumed that Project Controls are concerned with; estimating initial baseline performance metrics, determining the current status of the project, estimating future potential of the project, identifying any variances (baseline to current position and baseline to potential future position), and considering appropriate action to be taken to recover any positive variance.  Here variance refers to actual differences identified in project control documents and also the potential variations possible from project threats, issues and opportunities.  On this basis the component elements of Project Controls are about measuring and monitoring controlling variables, these are principally time and cost aspects:

  • Planning and Scheduling
  • Risk Management (includes identification & assessment)
  • Cost estimating and management
  • Scope and Change Management
  • Earned Value Management
  • Document Control
  • Supplier Performance
  • Maintaining the project baseline
  • Reporting
  • BIM and Information Management

This is not a comprehensive list of all attributes of Project Controls, but it includes the key important ones.

Project Structure from a Project Controls Perspective.

At the core of a project that successfully delivered a required benefit, will be an agreed project schedule that follows a few basic rules in its development, that also benefitted from a robust and complete Project Management Plan.  Amongst other important elements contained within the Project Management Plan would be a description of the project scope, the Work Breakdown Structure (WBS) and the Organizational Breakdown Structure (OBS).  The WBS ties together the scope, schedule and costs of the project.  It is output orientated and breaks down the project scope into deliverable items.  It should be developed in parallel with benefit identification so that deliverable items can be mapped to required benefits.  The WBS structure would normally follow the project budget structure and provide a framework for project reporting, it should be detailed to the lowest level of deliverable items.  The OBS defines the organizational structure and the roles required within the project team to enable successful delivery.  From the OBS it should be possible to identify specific accountability and responsibilities for delivery within the team.  It enables resource requirement and management.  Once the WBS and OBS are defined it allows a Responsibility Matrix to be developed that aligns people against deliverable items of the project scope, their accountability and levels of responsibility.  It generates the basis of the project’s control and assurance frame-work – including Control Accounts and Control Account Managers (CAM).  The project will have identified a Cost Breakdown Structure (CBS) from the scope, WBS and OBS. It informs further project breakdown at increased levels of detail, reporting and budgeting requirements.