Why Earned Value Method Is Important for Capital Projects’ Investors?

Capital projects investors are always keen on ensuring that their approved project budget, which represents the approved investment, is always respected and the project actual cost should never exceed this budget, otherwise the project’s return on investment (ROI) will be negatively affected. The Earned Value Method (EVM) is one of the proven project management techniques used for monitoring and controlling the project performance budget as well as provide a trusted technique to forecast the expected cost at completion.

The concept of EVM is based on managing four variables, the project approved budget, the actual project cost for completed scope of work to date, the earned budget performance for completed scope of work to date and the expected additional cost for completing the balance of the project’s scope of work.

Using project management information systems (PMIS) like PMWeb provides the organizations with a single integrated platform not only to monitor, evaluate and report the project’s earned value performance but to ensure that the right data for the EVM is captured in the right format, right time by the right team member. Unlike traditional earned value analysis used by contractors which is mainly driven by the cost-loaded project execution schedule, the earned value analysis for a project investor requires capturing the budget, actual cost and cost to complete data using specific project management processes. Those include project budget and budget adjustments, progress invoices, miscellaneous invoices, timesheets, potential change orders, change orders and claims.

All those project management processes will be formalized using PMWeb. There will be an input form that will capture the needed data along with the supportive documents and records. This form will use a workflow to formalize the process for submitting, reviewing, approving and sharing the content. The workflow will take into consideration the level of approval authorities when it comes to financial transactions. This real-time captured data will then become available for the needed earned value analysis.

Managing the Project Budget

The project approved budget is based on the direct and indirect cost estimate for the approved project’s scope of work. The approved budget, also known as Budget at Completion (BAC), needs to be aligned with the project’s execution schedule to provide the planned budget value for each project period. This is also known as the planned value (PV). Linear, front-loaded, back-loaded, bell and other types of distribution curves are usually use to help in matching the way those funds will be spent.

To be able to effectively manage the project budget performance, the budget needs to be decomposed to the level where better monitor and control can be achieved. The Work Breakdown Structure (WBS) is a proven project management technique that helps in subdividing the project scope of work into smaller, more manageable components. This will enable the organization to estimate the direct and indirect costs needed to execute each one of those components. For projects that involve scope of work for which the budget cost is based on currency other than the project’s currency, PMWeb allows multi-currency at line item level. In addition, those WBS levels will be the same levels used to capture the actual project’s cost and earned performance.

It is important that project budget is updated to reflect the current status of the project. It is important to differentiate between in scope and out of scope changes. The in-scope changes are those changes that although could affect the project’s actual cost but they should not change the current approved budget as those are changes that are increasing or decreasing the project’s original scope of work. Those could be changes that could be attributed to design issues, unforeseen conditions among others. On the other hand, out of scope changes are changes that could increase or decrease the current approved project’s scope of work. For example, it could include adding additional rooms, upgrading the facility, changing originally specified materials among others. It is usually assumed that out of scope changes could also have an impact on the project’s operations revenue. All those budget changes need to be formally managed using what is known as budget requests.

Managing the Project Actual Cost

The project actual cost (AC) is the actual cost paid by the organization for the approved completed project’s scope of work. Actual cost is usually captured from the monthly progress invoices issued against each awarded contract for the outsourced project’s scope of work. Those contracts could be for professional services, design and supervision services, construction works, material supplies among others.

The actual cost for the approved completed project’s scope of work will also include the actual cost for approved change orders whether those changes were for in-scope or out-of-scope work. Those change orders could also have an impact on the project’s completion date and the actual cost could include compensation for the contract prolongation.

In addition, actual cost could be for miscellaneous invoices that are not part of an awarded contract. In addition, actual cost could be for the organization’s own resources spent on managing the project’s delivery which are usually captured using timesheets.

Managing the Project Earned Value

The earned value (EV) for each WBS level or project component is the current budget value for that level multiplied by the approved percent complete for the same level. The percent complete is usually the approved percent complete reported in the current project schedule for the same WBS level. PMWeb will import the updated project schedule at the end of each progress period to capture the percent complete as reported in the approved updated project schedule.

Of course, PMWeb also provides the option of creating and maintaining the project schedule within PMWeb itself and without the need to import the updated schedule at the end of each progress period from either Oracle Primavera P6 or MS Project. This will be achieved using PMWeb scheduling module.

Estimated Additional Cost

The organization needs to capture all additional cost the could affect the completion of each WBS level or project component. Those additional costs could be as a result of potential change orders that the contractors, suppliers, vendors and other project organizations have submitted to the project owner or his/her authorized representative.

Additional cost could be also attributed to pending or disputed change orders as well as claims submitted by the contractors, suppliers, vendors and other project organizations. In addition, the project owner or his/her authorized representative could also include allowances for additional costs that they anticipate could be impact the project’s cost to complete. Those could include allowance for inflation and other possible sources for additional cost. PMWeb custom form builder will be used to create those additional forms to capture those additional cost types which are not available by default in PMWeb.

The sum of those additional costs and the balance committed cost that are part of each awarded contract will represent the estimated cost to complete each WBS level or project component (ETC). The sum of this ETC and AC to date will be the estimated cost at completion (EAC) for the relevant WBS level or project component.

The Earned Value Metrics Calculations

The first metric that earned value provides is the schedule variance (SV) metrics which is a metric that details if the actual budget spending (EV) is aligned with planned budget spending (PV). A negative value will indicate a delay in spending the allocated budget which is not favorable. Another related metric is the schedule performance index (SPI) which reflects the efficiency in spending the allocated budget as of today.

The third metric is the cost variance (CV) which is the variance between the earned budget value (EV) for completed works and the actual cost for completing the same works (AC). A negative value indicates that the cost for completing the relevant WBS level or project component exceeds its value which is not favorable. Another related metric is the cost performance index (CPI) which reflects the efficiency in maintaining the project’s value.

The last metric is the variance at completion (VAC) which is the difference between the current approved budget (BAC) and the forecasted estimated cost at completion (EAC). A negative value indicates that the project’s actual cost will exceed the approved project budget which will have direct impact on the project’s return on investment (ROI).

Reporting the Project’s Earned Value Performance

The captured project’s performance data can be designed in different form and format to fulfill the organization’s reporting requirement. Nevertheless, the one that is used most is a report that details the earned value method key values for each period which include the approved budget at completion (BAC), planned budget value for the current period (PV), earned value for completed works (EV), total actual cost to date (AC), estimated cost to complete the balance of the works (ETC) and project estimate at completion (EAC). In addition, the report will display the variances at each period those being the schedule variance (SV), cost variance (CV) and the estimated cost variance at completion (VAC). Further, the report will display the schedule performance index (SPI) and cost performance index (CPI) for the same periods. The report will also display the variances and performance indices trend charts.

In addition, the organization could have a report to monitor, evaluate and report on the variances and indices across the organization’s complete projects portfolio or selected projects that could be part of a program or any other attribute like location, type, sponsor among others. The organization might display the earned value as a scorecard or link it to a map that will display the location of the selected projects as well as the performance indices. The size of the bubble on the map could be used to reflect the project’s approved current budget.

Can Project Management Procedures Manual Help in Reducing the High Risk of Projects’ Failure?

Organizations who are keen on delivering their projects successfully, understand that one of the key requirements for achieving this is having standard project management procedures to be followed by the project delivery team. The procedures which need to be aligned with project management and engineering and construction projects delivery best practices will be also need to be aligned with the contract agreements that govern the formal relation between the different parties of the contract. Those parties could be the project owner, project management consultant, engineering consultant, supervision consultant, contractors among others.

The project management procedures manual will identify the many processes that need to be executed during the project life cycle and how to enforce the best practices of governance, transparency and accountability in delivering those processes. For each process, the manual will detail the document templates to be used, the workflow steps to be followed in executing the process, the reports to be generated to maintain register of transactions, the key performance indicators (KPI) used to measure the process performance among others.

What Processes to Manage?

Assuming that the project management procedures manual will be developed by the project management consultant (PMC) who have been appointed by the project owner to manage the project’s delivery, the manual should cover the processes for the complete project life cycle including design, procurement and construction phases and stages.

To ensure that all processes are covered, it is highly recommended to use the Work Breakdown Structure (WBS) approach for identifying all those processes. This approach will also enable the PMC to determine the project control level. The chart below explains how this approach is used to identify change order processes which are a must on every project.

The list below is an example of the project management processes that a PMC needs to implement during the project delivery life cycle. Of course, the list of processes can be expanded to include other processes that are specific to the project to be managed or the approach followed by the organization in managing projects delivery.

Who Will be Involved in Executing the Processes?

Projects in general and engineering and construction projects in particular involve many organizations in delivering the project. Those could be the project owner, project management consultant, engineering consultant, supervision consultant, contractors among others. Similar to the project management processes, the Organization Breakdown Structure (OBS) will be used to detail the specific project team members who will be involved in delivering the different project management processes.

The Responsibility Assignment Matrix (RAM)

Integrating the WBS for the project management procedures and the OBS for the project team members will produce what is known as the Responsibility Assignment Matrix (RAM). The RAM is used to clearly define the responsibilities of the project Team Members in performing those processes, lines of authority and flow of approvals and information among the Team Members. The RAM or as generically known as RACI chart identifies for each project management process the team member responsible for their performance, review, comments and who to be informed.

The specific role types needed to execute each project management process could vary depending on what is the organization is used to have as well as what could be best understood by the project team members. Regardless of the roles types used, there should be clear definition of what each role should entail. The example below, details the roles associated with the RACI chart.

Responsible: Those who do the work to achieve the task. There is at least one role with a participation type of responsible, although others can be delegated to assist in the work required.

Accountable (also Approver or final approving authority): The one ultimately answerable for the correct and thorough completion of the deliverable or task, and the one who delegates the work to those responsible. In other words, an accountable must sign off (approve) work that responsible provides. There must be only one accountable specified for each task or deliverable.

Consulted (sometimes Consultant or counsel): Those whose opinions are sought, typically subject matter experts; and with whom there is two-way communication.

Informed (also Informee): Those who are kept up-to-date on progress, often only on completion of the task or deliverable; and with whom there is just one-way communication.

The chart below is an example of how a project RAM will look like. The WBS and OBS levels of details depend on the governance, transparency and accountability level the organization wants to enforce on their projects delivery.

The Document Template

For each project management process, there should be a document template that details the data that needs to be captured for each process. This data could be filled by different project team members depending on their specific roles as defined in the RAM. The document template will also include all the approvals needed to perform the process as well as the list of documents and other project records that need to be attached to the document template. The document template will be usually customized to reflect the organization branding requirements such as logo, colors, fonts among others.

The USA Construction Specification Institute (CSI), American Institute of Architects (AIA) and other professional organizations have developed document templates that are aligned with the best practices for delivering engineering and construction projects. Those can be used as a guidance for developing the organization’s own document templates that also need to take into consideration the conditions of contracts that are used to identify the contractual obligations and responsibilities of those involved in delivering the project.

The Project Management Process Workflow

Using the RAM roles and the document template, the organization needs to map the steps for submitting, reviewing, approving and sharing the data captured for each project management process. The workflow for each process will map the sequence for performing those steps along with the conditions that could affect the authority for approving the process like for example change orders, or even the team members who will be involved in the review process like for example submittals for mechanical works compared to those of electrical works. It therefore no wonder that the project management procedures manual could have thousands of workflow scenarios depending on the data recorded in the relevant document template.

Project Management Processes Logs and Registers

The details of each project management process transaction need to be captured in a register or log for the project team members to have understanding of the status of those transactions in terms of approved, pending or newly submitted. The chart below shows as an example the Request for Interpretation (RFI) document template and the log for all RFI transactions that have occurred on the project. The layout of the report depends on the document template fields and what are needed to share the information on how a specific process is performing. The report will also display the key performance indicators (KPI) associated with the project management process. Those could include number of days delayed, status, value, severity among others.

How Can Technology Help in Maximizing the Value of Project Management Procedures?

Project Management Information Systems (PMIS) like PMWeb can help organizations in automating their project management processes and maximize the value from the data captured through the different project management processes. PMWeb comes ready with most of the input forms needed to manage the project management processes. In addition, PMWeb custom form builder allows creating unlimited number of additional input forms to capture the details of newly created project management processes. PMWeb allows setting role-based access rights to limit access for those forms as well as specific fields within the form itself.

In addition, it allows the form user to attach all supportive documents, link emails and link other project management records to the selected form. Those documents are usually uploaded and stored on PMWeb document management repository. The document management repository allows creating folders and sub-folders to match the organization’s project filing structure. PMWeb administrator can also limit access to those document folders to only authorized project team members.

Each input form could be assigned with the workflow that maps the process for submitting, reviewing, approving and sharing the project management process. The workflow will usually include branches and conditions to match the authorities and approval levels associated with each process. The workflow could include multiple reviewers for specific steps with the condition that all must approve or only one can approve. Comments made at each step will be captured to keep track of the workflow team input. PMWeb allows creating notifications and reports to identify those who are delaying the review and approval of a document as per the workflow steps duration and actions.

The organization can design the output form in any desired form and format not only to match the organization’s branding in terms of logo and colors but also to match the output requirement for each specific project. This is very possible as each project could involve different organizations in the project delivery for which it might impact the layout of the output form.

Real-time reports and logs will become automatically available for the project team members to help them to report on and analyze the performance of each project management process. Being an enterprise solution, PMWeb allows visualizing those reports for a single project as well as a portfolio of projects which could be needed to benchmark, compare the performance or even leverage the knowledge gained from one project with another.

Nevertheless, what is more interesting is that using PMWeb the organization can produce reports and dashboards that combine data from different but interrelated processes. For example, to have a better understanding on the project’s cost status, the organization might need a single dashboard that reports on the project cost estimate, budget, budget adjustments, awarded contracts, potential change orders, approved change orders, disputed change orders and claims, progress invoices for completed work in place, actual payments made for approved progress invoices, forecast to complete the balance of the project scope among others.

For those who are keen on having a single version of the truth on how the overall project is performing, then a project dashboard will be needed. This dashboard could be designed to capture details from the cost management, schedule update, quality, safety, risk, communication and other processes that are critical for monitoring and evaluating the project’s performance. The project dashboard could be linked to progress photographs and site cameras to provide live report on the project’s site performance.

As mentioned earlier, being an enterprise solution, the organization can also monitor, evaluate and report the performance across a portfolio of projects. Usually, there will be specific key performance indicators that each project’s performance will be assessed against. Those usually are KPIs that relate to schedule, cost, quality and safety performance of each project. The enterprise dashboard could also include a map to display the location of each project being reported on.

In conclusion, if you are an organization who is involved in delivering projects, and in particular engineering and construction projects, the absence of a documented comprehensive project management procedures manual will drastically increase the likelihood of incurring the risks of lack of governance, transparency and accountability. The project management procedures manual, accompanied with the organization’s leadership support, will enforce adopting the best practices in managing projects thus reducing the high risk of projects failure. The Project Management Institute (PMI) has reported that organizations on average, risk $122 million in losses for every $1 billion spent on delivering projects.

The recent development in digital transformation as it relates to managing projects’ delivery, will massively increase the value of having documented project management procedures. The benefits are generated from ensuring that the right projects’ data are captured in the right format, by the right team members at the right time. This will enforce the best practices of governance, transparency and accountability. In addition, this BIG DATA will not only ensure real-time monitoring, evaluation and reporting of projects performance but will provide unmatched insight for the knowledge gained and lessons learnt in delivering those processes. This will provide the wisdom to enable decision makers and other executives to make better and faster informed decisions.

How Can a Contractor Have a Real-Time Visualization of Projects’ Profitability?

One of the advantages of having a Project Management Information System (PMIS) like PMWeb is the ability to capture all of the projects’ cost and financial data on a single platform in a real-time format. For a Contractor who is delivering an engineering and construction project, this could mean a lot when it comes to critical decisions that not only could impact the project but the organization as an overall. This cost and financial data can be also integrated or associated with other data sources to provide the additional information that the Contractor might require to have a single version of the truth real-time visualization of projects’ profitability.

To achieve this, PMWeb PMIS will be used to capture the needed budget, budget adjustments, commitments, change orders, progress invoices, miscellaneous costs, cost of contractors’ resources, contract, contract changes and requisitions. The cost data will be captured against the cost breakdown structure (CBS) cost accounts and for each financial period during the complete project duration. Both, the cost breakdown structure and financial periods should be identical to the other accounting, human resources and ERP applications that contractor uses to capture cost data to enable to integrate or associate data from different sources when needed.

The Project Schedule and Progress Percent Complete

It is crucial that the Contractor has a single approved integrated project schedule that covers the complete project scope of work. This project schedule is usually the schedule used by the cost estimating team to estimate the project cost. This schedule will be the schedule that the Contractor will submit to the Project Owner or the authorized representative for approval. In most projects today, the integrated project schedule need to be cost loaded with the income contract values which is the contract agreement between the Project Owner and the Contractor. The schedule will be also loaded with the labor and non-labor resources needed to deliver the project’s scope of work. During the project’s delivery, the monthly progress percent complete will be the percent complete used to assess the Contractor’s monthly requisition for work in place, subcontractors and suppliers monthly progress invoice for work in place and the earned value of the project’s current approved budget.

PMWeb will import the project schedule to enable assigning the different budget, commitment and contract line items to the appropriate project’ schedule task as well as assign the actual resources hours captured in the timesheet and daily report modules. It should be the same approved project schedule to be used across all of PMWeb modules.

Managing the Project Performance Budget

Using the final approved cost estimate captured in PMWeb and for which it was the basis for the Contractor to be awarded the construction contract, the project budget will be generated to the desired level of detail where the budget will be controlled.

Each budget line item will be linked to the associated project schedule activity to determine the start and finish dates for spending the budget amount. PMWeb allows to Contractor to create the budget spending projection for each line item using the most appropriate distribution curve or any other user defined projection. This is will be needed for cash flow analysis to determine the needed funding for the project.

Any adjustments to the approved project budget whether it is for increasing or decreasing the approved budget amount or to transfer budget amounts from one cost center to another or from one project to another, the budget request form will be used. All supportive documents need to be attached to the budget request which are usually stored in PMWeb document management repository. The approval for budget requests will be in accordance for the predefined workflow steps assigned for this module. The workflow could include conditions to ensure that the required authorities and approval levels are respected.

The budget earned value for completed works will be based on the percent complete of the associated project schedule activity. The earned value will take into consideration the approved budget adjustments to the original budget, that is the revised budget. At the end of each progress period, the estimate to complete for each budget line item number will equal the projected budget at completion which is revised budget plus all pending budget adjustments minus the earned value attained for that same progress period.

Managing the Project Cost

The same approved cost estimate will be used to generate the procurement packages for the scope of work that will be outsourced by the Contractor to subcontractors, suppliers, vendors and others. PMWeb online bidding module is usually used to get the prices from those organizations to enable the Contractor to analyze the received bids and select the preferred subcontractors, suppliers and vendors.

A commitment will be created for each successful bidder which will include the agreed prices for the outsourced scope of work. The commitment agreement will include the payment terms and conditions for the approved work in place. Some Contractors might also consider having commitment contracts for their own internal business units like plant, ready-mix and others who will be involved in the project delivery.

PMWeb also allows the Contractor to project the commitments on when each line will be due for payment. This will be needed to plan for the payments due for the subcontractors and suppliers. PMWeb allows the user to distribute the commitment amount for each line item in any desired format by using the predefined distribution curves or creating customized distribution curves.

All changes to commitment agreements whether they are potential or anticipated changes, approved, pending or disputed changes will be captured in PMWeb. All supportive documents need to be attached to the change order as well as related records and emails need to be linked to the change order. The status for the change order will be changed depending on the actions taken in the workflow assigned to the change order form. A change order could have an impact on the commitment agreement value as well as performance period. It should be noted that all commitment changes need to be reflected in the project budget. Approved changed will be accounted for in the approved budget requests whereas all potential, pending and disputed changes will be accounted for in the pending budget requests.

At the end of each financial period or progress period, a progress invoice will be submitted for the approved work in place. The percent complete for each line will be the percent complete value for the associated project schedule activity. The approved progress invoice represents the actual cost incurred by the Contractor for the works completed under each commitment agreement.

For other actual cost incurred that are not part of a commitment contract, those will be captured using PMWeb miscellaneous invoices module. The details of all such expenses will be captured in the invoice form along with all supportive documents. Again, the workflow will be used to formalize the submission, review and approval of those invoices.

The cost of Contractor’s own resources, management, labor and non-labor will be captured from PMWeb timesheet module. Those are the resources that are not part of any commitment contract or miscellaneous invoices. Usually, each crew supervisor will capture the details of all labor, and if needed equipment resources, spent on the project. The pay type for reported resource hours against each schedule activity and cost breakdown structure could be regular, overtime or premium. This will help in determining the actual cost for the reported resource hours. Timesheets would usually have workflows to formalize the approval of the reported hours.

The sum of period’s work in place, miscellaneous invoices and cost of resources will represent the total actual cost incurred by the project at the end of each financial period. The estimated cost at completion will equal the sum of the actual cost to date and the estimate to complete calculated earlier in the budget section.

Managing Project Income

The contract agreement between the Project Owner and the Contractor represents the revenue or income that the contractor will earn from completing the project’s scope of work in accordance the project’s specifications, drawings and other contract documents. PMWeb contract module will capture the details of each Bill of Quantity (BoQ) line item along with the associated project schedule activity. The contract terms and conditions will also be part of this contract agreement.

All change orders regardless if they are approved, pending or disputed will be captured in the change order module. It is important to attach all documents as well as PMWeb records and imported emails that are needed to support change order submission in particular if a change could be a disputed change and part of the project’s claim submission. Workflow can be added to formalize the internal review and approval of the change order.

Monthly requisitions for work in place will be captured using PMWeb requisition module. For each line item, the same percent complete used to calculate the budget earned value and commitment progress invoice for work in place will be used to calculate the income value for the work in place for the current progress period.

Assessing the Project’s Profitability

The project’s profitability will be assessed using three different metrics. The target profit metric is based on the variance between the original awarded income contract value and approved budget to deliver the project, the current profit/loss status as of today metric is the variance between the income contract amount invoiced to data and the actual cost incurred to date, and the third metric will be the projected profit/loss at project’s completion which is the difference between projected income contract at completion (revised contract plus all pending and disputed change orders) and the forecast cost at completion.

Assessing the Resources Efficiency

One of the variable cost elements that the Contractor must measure is the efficiency of the resources used in delivering the project scope of work. The PMWeb timesheet module was used to capture the hours and associated cost for the resources deployed at the project site on weekly basis. Nevertheless, this does not show the actual hours worked by those resources in delivering the project scope of work. Those are the hours that are captured in the daily report against the project schedule activities. PMWeb daily report module will be the form used to capture those resource hours. The details of the resources’ efficiency is part of the profitability report shown above.

Third Party Data Sources

Although PMWeb has all the modules to analyze the project’s profitability, nevertheless, some Contractors might opt to use their existing enterprise applications to capture some of those costs. For example, some Contractors might have their own Human Resources and Time Attendance applications to capture the actual cost of labor resources charged to the project. Further, they might also use they ERP or accounting application to capture the actual cost of plants and equipment resources. In addition, some contractors might decide to manage commitments, approved change orders and progress invoice for work in place using their ERP application. Regardless of what application to be used, all those application must have at least the following data fields in common: Project ID, Cost Breakdown Structure (CBS) account number and financial periods. This will enable the Contractor to use data visualization tools like MS Power BI to extract, load, transfer, associate and blend this multi-source data to create the same project profitability reports.

Conclusion

Contractors who are keen on monitoring, evaluating and reporting their projects profitability need to have a real-time project management information solution like PMWeb to help capturing the actual data that could impact the project cost as soon as they occur. Even if there is a demand for having the cost control to be done at the corporate office, a PMIS will ease the reconciliation process and immediately identify variances should they exist. The particulars of anticipated, pending and disputed commitment and contract change orders are usually mainly available at the project site, failing to report their details in a timely manner could mislead executive management on the true financial status of the project. Since a PMIS like PMWeb helps in capturing all projects records and communications, the Contractor have access to valuable data that can explain the reasons behind profitability variances and other financial trends.

Is it not time to revamp your project controls?

I have to admit that my first exposure to professional project control practices happened in 1984 when Turner International was appointed as the Project Manager Consultant on the Amiri Diwan project in Kuwait. Those were the first days of CMCS where we were awarded the project controls services for the different contractors appointed to deliver this massive project. The project controls scope of work was to create and maintain the detailed resource-loaded project execution schedule using Primavera Project Planner (P3), create and maintain the submittal (E1) and procurement (E2) schedules using Lotus 123 spreadsheet, create the cost loaded activities table using Lotus 123 which will be used to support the monthly work in place invoice, and prepare the two-week look ahead schedule along with progress narrative report and issues log to be presented during the weekly progress review meeting. As for the many other project communications including RFI, NCR, SWI, transmittals, Daily reports, meeting minutes, inspection requests, correspondence, snag lists, change requests, change orders, progress invoices among others were done manually and stored in the project’s filing room.

So did project controls improve after three decades?

Regretfully, and after more than 30 years of offering those project control which have seen major developments in affordable computing power and mobility, internet connectivity, integrated web-enabled applications, massive development in business intelligence and data visualization coupled with lower profit margins, highly contractual and legal projects delivery, more educated and certified projects managers, increased stakeholders involvement among others we find that the same old project controls practices continue to be used. Maybe the only differences are that now Primavera P6 is in use instead of P3, MS Excel instead of Lotus 123, MS Word instead of Word Perfect and MS Outlook which although it might had made communication become faster but with far less control. The issues of lack of transparency on capturing right data, poor accountability on responsibility on when to capture data, delayed information sharing, multiple data silos, non-existence of timely single version of the truth reporting among others continue to be the challenges that face the project control team.

Understanding Project Delivery Processes

Similar to any other business, projects delivery business depends on executing processes that could involve the different project entities. Those processes are needed to fulfil the contractual obligations as set in the contract agreements, specifications and other contract documents. The responsibility assignment matrix (RAM) is usually used to list all of these processes along with the role of the different project entities in delivering those processes. Those responsibilities are usually “P” for Performance, “S” for Support and Assist, “R” for Review and Comments, “A” for Approval and “K” for To be informed.

For each process, there will be a document template that will be used to capture the process data. For example, there could be document templates for RFI, Meeting Minutes, Non-Compliance Notice, Site Work Instruction, Site Inspection, Daily Report, Transmittal, Safety Incident, Change Order Request, Change Order, Progress Invoice, Notice To Proceed among many others. In addition, each process will have a register or log to report on the different transactions for each project process. For example, the Submittal Log, RFI Log, Change Orders Register, Progress Invoices Register, Non-Compliance Reports Log, Safety Incident Log among others.

How Can PMIS Improve Project Controls?

A Project Management Information System like PMWeb will help organization in enforcing transparency and accountability in managing those project management processes as well as provide real-time monitoring and evaluation on the performance of those processes and the impact they might have on the overall project’s success measures being on time and within budget delivery for delivering the project’s scope of work at the specified quality standards.

For each process in the responsibility assignment matrix, there will be an input form to capture the needed data. In PMWeb, most of the input forms needed in delivering engineering and construction projects comes ready by default while additional input forms can be created using the PMWeb form builder. Those forms can be in any form or format and can be in English or any other language, Latin or non-Latin. For each input form, PMWeb provides the option to attach supportive documents that are usually uploaded on PMWeb document management repository or any other location as well as link other PMWeb records that could be related to form or email communications that were imported into PMWeb incoming mailbox. The form will be submitted using the user defined workflow that will match the different actions stated in the responsibility assignment matrix. In addition, PMWeb workflow allows adding conditions and branches to enforce the authorities’ approval levels and other conditions that could affect on who should be involved in the review and approval process.

PMWeb report writer can then be used to design the output form and reports for each project management process in the desired form and format using the color branding and logos to be displayed. Nevertheless, the great benefit of having the project management processes data captured in the right format, by the right project team member at the right time is the business intelligence and knowledge that will provide to the project team members in the needed from and format. For example, The Request for Information (RFI) data captured in PMWeb can be analyzed by the reason for issuing the RFI, whether the RFI has impact on the project’s scope, cost and/or schedule, location of the RFI among others. The analysis can also be extended to the complete projects portfolio that the organization is managing. This could provide great knowledge when it comes to comparing trends and reasons for issuing RFIs. The same is applicable to all other project management processes.

Since PMWeb PMIS has all the project management processes on the same platform across the complete projects portfolio of the organization, a performance report can be created to monitor and evaluate the performance of all processes or at least related processes. The report reader can be designed to provide drilldown to get more details on the reported performance metric. For example, from the Change Event (CE) Summary, the reader can drilldown to the change events log. The same is applicable for RFI log, submittal register among others.

In conclusion, it makes one wonder that after more than three decades of growing demand for improving efficiency, enforcing transparency and accountability, adopting professional project management practices and engaging stakeholders in an industry that is faced with lower profit margins, increased contractual and legal disputes and more risks to fail but with more affordable computing power, internet connectivity, integrated web-enabled applications, massive development in business intelligence and data visualization, more educated and certified projects managers that are computer savvy among others we find that the same old project controls practices continue to be what most organizations use.

Maybe you have the answer because I do not.

Can You Afford Not to Have the Information You Need to Manage Your Projects?

Organizations who are involved in delivering projects, and in particular engineering and construction projects continue to have the challenge of wasted everyday data from the different project management processes including but not limited to meeting minutes, RFI, submittals, daily reports, safety incidents, correspondence, request for inspections, snag lists, project schedule updates, potential change orders, change orders, progress invoices, timesheets, site incidents, emails, permits, risk registers, issues among many others. This is largely attributed to the manual or semi-manual processes of using paper-based document templates for which some of its content will be loaded into MS Excel spreadsheets for which not only it has the high risk of having wrong and old data stored in multiple silos as well as the wasted effort in inputting, validating and configuring the data but also the high risk of lack of transparency and accountability for who have provided the data.

The Knowledge Pyramid

Organizations who are keen on getting the maximum value of their everyday projects data need to digitally transform their current project management processes to enforce the best practices of capturing the right project’s data in the right format by the right team member at the right time. This will provide the organization with the real-time time information that will provide them with single version of the truth knowledge to have the wisdom to make better and faster informed decisions. The knowledge pyramid also known as the wisdom hierarchy explains the structural relationships between data, information, knowledge, and wisdom that those organization must adopt.

PMWeb Project Management Information System provides projects’ centric organizations with a single platform to digital transform the project management processes while fulfilling the needs of the knowledge pyramid. From one aspect, PMWeb will be the information management system that will focus on collecting, processing, disseminating, storing, displaying and protecting everyday projects’ data as well as the knowledge management system that will focus on creating, organizing, applying and transferring knowledge to the project team members and other stakeholders.

Data Capturing

PMWeb comes ready with most of the document templates needed to manage a project and in particular engineering and construction projects. In addition, the PMWeb custom form builder allows the organization to create additional document templates that PMWeb did not have. Those forms can be in any language to fulfill the contractual needs of the project being managed.

Supportive documents for each document template which are usually stored in PMWeb document management repository can be attached to the PMWeb record. In addition, PMWeb allows linking other PMWeb records that could be relevant to this particular record as well as email communications that will be imported to PMWeb email inbox repository.

The document template along with the attached supportive documents and records will then be formally submitted to be reviewed and approved using PMWeb workflow. The workflow could include branches and conditions to incorporate the approval levels and other authorities in the workflow steps. Project team members who are part of a workflow will receive email notifications when they have a workflow step to respond to.

This project management processes automation will ensure that the right projects data will be captured in the right format by the right project team member at the right time. The captured data for the complete project life cycle stages, for all projects regardless of their status will be stored on a single database to provide the needed real-time information.

Information

The captured data needs to be structured and presented in any desired format to provide the real-time information needed by the project team. Tabular logs and registers as well as graphical reports need to be designed in the needed form and format for each project management process. Those reports could include RFI Log, Submittal Log, Change Order Register, Risk Register, Issues Log, Awarded Contracts Register, Earned Value Chart, Pending Meeting Business Items, Project Directory, Insurance and Bonds Register, Non-Conformance Report Log, Request for Inspection Log among many others.

Knowledge

The reported information for each project management process will be used to analyze trends in transactions growth, response time, frequency of reasons and other attributes that are relevant for each process. For example, the change order analysis report will be used to identify the reasons why change orders were issued and the impact they had on the project’s cost and schedule. Other business intelligence reports can be similarly created for Request for Information, Safety Incidents, Issues raised, NCR issued Quality of Completed Works among others.

Wisdom

Dashboards can be created to analyze the knowledge gained from the different project management processes that are interrelated to each other. For example, the cost management dashboard will integrate and relate the data captured from the project budget, budget adjustments, awarded contracts, potential change orders, approved, pending and disputed change orders, progress invoices for work in place, other progress invoices, actual payments made against approved progress invoices and maybe other cost related data to provide the decision maker with a complete understanding of the project’s cost performance. This dashboard will provide the decision maker with the insight to make better faster and better-informed decisions that could impact the project cost.

Similar dashboards can be created for project’s schedule, risk and issues, health, safety and environment, resources utilization, procurement of contracts, quality assurance and control, sustainability among others. All of this knowledge can be aggregated in a single project dashboard to provide project’s stakeholders with a single version of the truth on how the project is performing.

Since most organizations would have different projects to deliver, the single version of the truth project performance and status reporting can be extended to report on the complete portfolio of projects or any selected group of projects or a program of projects.

In summary, power used to be expressed through the control of things, but now it’s expressed through the control of information. Projects centric organizations who continue to waste everyday projects information are not only losing the power to be in control but also wasting great knowledge that will improve their projects delivery.

Can You Afford Not to Manage Your Project’s Stakeholders?

Stakeholder management is a critical component for the successful delivery of any project. A stakeholder could be any individual, group or organization that can affect, be affected by, or perceive itself to be affected by a project. Effective Stakeholder Management creates positive relationships with stakeholders through the appropriate management of their expectations and agreed objectives.

To achieve this, the project management team needs to ensure that stakeholders are effectively involved in project decisions and execution throughout the lifecycle of the project, to gain support for the project and anticipate resistance, conflict, or competing objectives among the project’s stakeholders. This will require the team perform the following processes:

Identify Stakeholders – identify by name and title the people, groups, and organizations that have significant influence on project direction and its success or who are significantly impacted by the project.

Plan Stakeholder Management – identify and develop appropriate strategies and tactics for effectively engaging stakeholders in a manner appropriate to the stakeholders’ interest and involvement in the project.

Manage Stakeholder Engagement – outlines the process of communicating and working with stakeholders to meet their needs and expectations, and to address issues as they occur.

Monitor and Control Stakeholder Engagement – describes the methods that will be used to monitor and control stakeholder engagement and alert the project team if problems are surfacing.

Project Management Information Systems (PMIS) like PMWeb will enable the organization to formalize the different processes needed to manage the project’s stakeholders across the complete portfolio of projects. The knowledge that will become available from the information captured from the stakeholders’ data will provide the organization with the insight to make better and faster informed decisions when it comes to managing stakeholders.

Identify Stakeholders

In order to manage stakeholders, the project team first needs to clearly identify and assess all potential stakeholders. The PMWeb company directory module will be used to maintain a single stakeholder repository where the details of all potential stakeholders that the organization could be interacting with on their current projects, past projects and planned projects.

Some questions that are relevant for deciding who should be considered a stakeholder for the project or not include:

1.      Will the person or their organization be directly or indirectly affected by this project?

2.      Does the person or their organization hold a position from which they can influence the project?

3.      Does the person have an impact on the project’s resources (material, personnel, funding)?

4.      Does the person or their organization have any special skills or capabilities the project will require?

5.      Does the person potentially benefit from the project or are they in a position to resist this change?

6.      At what point does the person have the greatest impact on the project?

Plan Stakeholder Management

For each identified stakeholder, a stakeholder analysis will be carried out for which the relevant information (interests, involvement, interdependencies, influence, and potential impact on project success) are gathered, documented and analyzed. The Stakeholder Analysis Matrix document template will be used to list the stakeholders that could influence or impact a project. The document template which is created in PMWeb using the custom form builder details current level of influence and impact of each stakeholder and the desired level of influence and impact of the stakeholder. Each will be scored on a scale of 5 where for influence 1 is for low influence while 5 is high influence. On the other hand, a score for 1 for impact means negative impact while 5 is positive impact.

In addition, the form will detail what is important to the stakeholder, how could the stakeholder contribute to the project, how could the stakeholder block the project, strategy for engaging the stakeholder and which company and team member will be responsible for managing this stakeholder. This document template will be updated when new stakeholders get identified or when the captured details get updated.

The data captured in the Stakeholder Analysis Matrix document template will be used to create the Stakeholder Assessment Matrix report where it will display the current stakeholder level of interest in the project and the desired level of interest in the project. The matrix will have four quadrants, Detractors (low influence and negative impact) which is colored in Green, Blockers (high influence and negative impact) colored in Amber, Supporters (low influence and positive impact) colored in Yellow and Champions (high influence and positive impact) which is colored in Red. The matrix will display each stakeholder as a bubble where the size of the bubble details the interest level (by multiplying influence level with impact level). The Y-Axis will be level of influence while X-Axis will be level of impact.

Manage Stakeholder Engagement

Stakeholder Engagement Management is the process of communicating and working with stakeholders to meet their needs and expectations, and to address issues as they occur. Stakeholder Engagement Management is the process to systematically foster appropriate stakeholder engagement in project activities throughout the life of the project. The key benefit of this process is that it allows the Project Manager to increase support and minimize resistance from stakeholders, significantly increasing the chances to achieve project success.

To effectively manage stakeholder engagement, the Project Manager will utilize the Communication Matrix and strategies identified above to communicate project related information to key stakeholders in a proactive and timely manner. Leveraging the information provided in the Communication Matrix, the project will have the ability to increase support and minimize stakeholder resistance throughout the life of the project. Managing stakeholder engagement helps to increase the probability of project success by ensuring that stakeholders clearly understand the project goals, objectives, benefits, and risks.

PMWeb enables the project team to create the different reports and dashboards listed in the communicate matrix that are needed to be shared with the project stakeholders. The information communicated in those reports and dashboards are based on the data captured from the different project management processes that PMWeb was used to automate. An example of the tabular report that could be required by stakeholders is a log of all project issues that might impact the successful delivery of the project. Of course, similar to the projects issues report, other reports can be generated to address other specific project information such as deliverables log, change orders register, safety incidents among many others.

The information captured from the different project management processes will also become the basis for calculating the Key Performance Indicators (KPIs) to report on the projects’ critical success factors. Traditionally, projects’ KPIs will report on projects’ schedule, cost, quality and safety performance. Nevertheless, there are emerging projects’ KPIs that will report on risk, disputes, sustainability, stakeholder satisfaction among others. Those KPIs are usually grouped into a single page dashboard to provide the stakeholder with a single version of the truth of what is being reported. For example, a stakeholder who is interested in the project’s financial status might require a dashboard that has details on the approved project budget, budget adjustments, awarded contracts, approved, pending and disputed change orders, progress invoices for approved work in place and other related financial data. The same applies for other stakeholders that might need details on the project schedule, risk and issues, quality, safety among others.

On the other hands, there are other stakeholders who might be interested in having a dashboard that provides a single version of the truth about the overall project’s performance. This could include financial, schedule, risk, issues, quality, safety among others. Sometimes there could be more than one project dashboard layout depending on the stakeholder requirements.

In addition, there could be stakeholders who are interested in having a single version of the truth for the complete projects portfolio executed by the organization or maybe projects that are part of specific program or strategic initiative. Again, the layout of this enterprise dashboard can be designed in any form and format.

Monitor and Control Stakeholder Engagement

Monitor and control Stakeholder Engagement is the process of monitoring overall project stakeholder relationships and adjusting strategies and plans for engaging stakeholders. The project team needs to continue to be actively listening and soliciting input and feedback from stakeholders to make sure communications are being effective, well received and understood, and also to capture important information to help make adjustments to ensure communications needs are met and to respond to problem areas.

The project management team should take all necessary measures to reduce the likelihood of having the Stakeholder Expectation Gap. A risk that is caused when the stakeholder expected value of what the project will deliver exceeds the value that the project will actually deliver. Successful stakeholder engagement will drastically reduce the likelihood of this risk and on the contrary will increase the chances of having satisfied stakeholders.

The project team needs to keep updating the stakeholder directory, stakeholder analysis matrix and project communication matrix to reflect all updates and changes to those documents. This could also require developing new communication reports and dashboards to meet the growing requirements of the projects stakeholders.

In addition, the project team needs to watch for stakeholders who avoids direct contact, being defensive, raising their tone of voice or giving a vague response. The project team needs to document such incidents using PMWeb Action Management module. For each noticed unfavorable reaction or response, the project team who issued the action request will state the needed action, who will be involved in taking the needed actions to rectify this issue and by when and link the action to the relevant documents and records that relate to this unfavorable reaction or response.

The project team member can also invite other project team members to the issued action document to provide their input on how it will best to address this unfavorable reaction or response. Those could be different than those who were assigned with specific actions to rectify the issue.

The Action Management Report will be maintained by the project team to monitor and control the stakeholder engagement and management and to ensure that there are no pending actions that could negatively impact the relation with the different project stakeholders. The layout, format and performance indicators can be adjusted the reflect the organization’s own reporting needs.

Can You Afford Not to Manage Your Project Resources?

Those involved in delivering projects, and in particular engineering and construction projects, understand the importance of managing project’s resources and analyze their impact on the project’s approved budget. Resources, labor and non-labor, when they are estimated to deliver the project scope of work, many assumptions have to be made. Assumptions that could affect the productivity rates of those, site conditions, resources availability, resources cost among many others. Those estimate resources hours will be usually loaded on the detailed project’s execution schedule to determine when those resources will be deployed and the needed resources to deliver the project scope as detailed in the construction schedule activities.

Nevertheless, the major challenge that faces the management of the project resources is how to capture the actual hours spent against the project schedule activities and how to establish a governed process for analyzing and reporting this performance.

Using a Project Management Information System (PMIS) like PMWeb will be used to achieve this starting with capturing the details of the labor and non-labor resources that the organization will deploy for delivering the project scope of work. Some of those resources could be project specific while others could be resources that the organization will use on their other projects.

Some of those resources could be outsourced resources and that is why it is essential to capture the details of those resources and assign them to their appropriate owner or company. Again, it is a recommended practice to maintain a single repository of all resources, labor and non-labor, the organization is currently using on their projects or where used on past projects.

Resources could have different cost rates depending on when that resource will be used. As a minimum, there are three rates, the regular rate which is the rate using for hours spent during the workday hours, the overtime rate which is used for hours spent after working hours and the premium rates which is used for hours spent over weekends and holidays. All labor resources need to have rates to reflect those three options. For equipment resources, some organizations could have different rates for working and idle equipment resources.

Since there should be a common interface between how actual resources hours will be captured and reported and how the planned hours loaded on the project schedule activities, those activities need to be imported to PMWeb. Those activities will become then available for the different PMWeb records including the Time Sheet and Daily Report modules which will be used to manage the project’s resources.

To ensure that the resources performance reporting will be aligned between PMWeb PMIS, the planning and scheduling software which could be Oracle Primavera P6, the organization’s ERP or financial system, the three applications must have the same financial periods that will be used for closing the transactions for each period and prepare the needed performance analysis report.

Now the organization is ready to capture the actual resource hours that will be spent on the project. In engineering and construction projects, and in particular from the Contractor’s perspective, there will be two modules. The Time Sheet which will be an internal document for which each crew member needs to capture the actual resource hours, labor and non-labor, spent on the project on weekly basis. For each resource, the captured hours need to be associated with the project schedule task that it relates to in addition. In addition, it is important to report how many of those hours where regular, overtime and premium hours.

To enforce governance, the completed timesheet will be submitted at the end of each week for formal review and approval. The PMWeb workflow will be used to map the workflow steps for submission, review and approval. The workflow could include conditions and branches to map the different scenarios that might impact the approval of the timesheet. Triggers for those conditions can be the default timesheet attributes or user defined fields.

This real-time data captured in the timesheet module will enable the organization to produce a variety of reports to analyze this information. For example, the report below shows the details of hours captured for one of the resources, labor, during each week against each activity of the project schedule. The actual hours include regular, overtime and premium hours. The bar chart is a summary of this data showing for each activity total actual and planned hours. The report includes filters to select specific project, specific resource and even specific activity or group of activities.

The same captured data will become the basis for the resources performance analysis dashboard. The dashboard will display for each selected resource the actual resource hours by type, actual resource cost by type, total planned hours versus total actual hours spent by the resource and total planned cost versus total actual cost incurred by the resource. The dashboard also detail the actual and planned hours spent by period or month as well as planned cost and actual resources cost for the same periods.

The resource analysis should never be limited to what has actually happened but should extend to include the forecast or the prediction on how those resources will perform for the remainder of the project duration. The Earned Value Method (EVM) is the only proven method to do this analysis where using the project schedule calculated Earned Value (EV) for each activity, will enable the organization to calculate the Schedule Variance (SV) and Cost Variance (CV) as well as the Schedule Performance Index (SPI) and Cost Performance Index (CPI). The organization can also determine if the SPI and CPI indices can be used to calculate the Performance Factor Index (PFI) to adjust the Estimate To Complete (ETC) the remaining scope of work. This will provide the value for the Estimate At Completion (EAC) and Variance at Completion (VAC) for each project period.  The dashboard below details the earned value metrics for the resources performance analysis.

The value that PMWeb brings for the Contractor who is keen on analyzing the performance of their resources goes beyond the data captured in the Time Sheet module. Contractors are required contractually to submit their daily report which details the site condition, activities performed, resources used, progress pictures among others to the project owner or the authorized representative. PMWeb Daily Report module allows the Contractor to capture the details of the work done by each resource on each specific today that could exceed what was captured on the timesheet. Nevertheless, what is important is that the daily report is a formal project communication unlike the timesheet which is an internal company organization. This means the data captured in the daily report can be used by the contractor to justify the request for change orders, disruption, acceleration and other types of contract adjustments.

The data captured in the daily reports, timesheets and project schedule activities can be aggregated in a single report that will help the contractor to find out if there were any events that have occurred and captured in the daily report that could have impacted the actual hours spent on any specific date. The report below shows the actual daily resource hours spent from the timesheet module which is color coded by the type of hours spent, that is regular, overtime or premium. The tabular section details how those resources hours were spent on any specific day using the Daily Report module. The report will describe what the resources have performed on that date and if there were problems reported. The report could have different type of filters to expedite the data analysis.

In conclusion, there are many business intelligence and data visualizations applications that organizations can have access to analyze the performance of their project. Nevertheless, the major challenge that faces those organizations is to what extent they can trust the everyday projects data that they need to have to make this analysis to provide them with the insight to make better and faster informed decisions. Without having an integrated project management information system like PMWeb, organizations will continue having the high risk of not getting the right data that is captured in the right format by the right team member at the right time.

Can You Afford Not To Manage Change Orders On Your Projects?

For those involved in delivering engineering and construction projects, one would rarely expect having a project without changes. Those changes could result due to many reasons including but not limited to intent of documents not “reasonably inferable” and corrections required, unknown conditions necessitate changes, owner’s requirements change, changes in code or changes in interpretation of code. specified product no longer available, consider new product because of cost savings or other benefits and specified product inappropriate.

That is why it is a must requirement to have a project change control system that defines the processes by which the awarded contracts can be modified. The process will define the document templates, workflows, required documentation, tracking reports, key performance indicators and approval levels necessary for authorizing changes to the project. Using Project Management Information System (PMIS) like PMWeb will bring transparency, accountability and improved efficiency to the change management system.

In engineering and construction projects, there are usually two change processes that needs to managed. The first is the Potential Change Orders, sometimes also known as Anticipated Variation Orders, that will be raised by the contractor directly. Those are changes that could entail both additional cost and additional time. The contractor needs to provide all supportive documents and links to project’s records which are relevant to the potential change order. The authorized project owner representative will review those potential change orders and advise if the contractor’s request is approved or rejected.

If the Potential Change Order is approved, then the second change process may commence. This will be the Change Order process which will be issued by the authorized project owner representative to the contractor. The change order could be issued in response to the change that was part of a potential change order or issued as a result of additional work that the project owner has requested. The change order could have cost and time impact and will adjust the awarded contract when it is approved.

As stated earlier, both potential change orders and change orders need to include all supportive documents that are relevant to the submitted change. Those supportive documents which could include drawings, specifications, pictures among many others will be stored in PMWeb document management repository. It is a recommended practice to create a folder called Change Orders and then have subfolder for each potential change order and change order. Under each subfolder, all documents that are relevant to that change shall be uploaded even if the same document was already uploaded under another folder.

In addition to attaching those relevant documents, the potential change order or change order could be related to other project communications like daily reports, meeting minutes, correspondence, submittals, RFIs, request for inspection, permit, occurrence report among many others. Those records need to be linked to the relevant potential change order or change order record.

PMWeb also allows linking project’s email communications to the potential change order or change order. This will require creating a project email address for which all email communications need to carbon copied to this email address. PMWeb will then allow setting the email import for which all project’s email communications copied to that email address. This will then allow linking those to the relevant change event.

Both potential change orders and change orders will have a pre-defined workflow steps to determine the roles, responsibilities and authorities in reviewing and approved those changes. Those will be part of the responsibility assignment matrix (RAM). PMWeb workflow will be used to map those steps and conditions that could be related to approval authority levels among others.

The real-time data for all captured potential change orders and change orders will become the source for monitoring, evaluating and reporting the status of changes that could impact the project’s approved commitment and completion date. The report layout can be designed in any desired format. For example, the project change order will usually include a log of change orders with donut or pie charts to show the change orders by reason, status and project or contract.

For senior executives who are responsible for managing programs, portfolio of projects or all projects across the enterprise would usually require less details on the reported change orders. Although the data to be reported on is the same, nevertheless the report or dashboard would be more at summary level. For example, the interactive dashboard below assumes an organization who have projects that are spread across the country and maybe other countries. This brings the requirement to view projects by location for which the bubble size is relevant to the change order value. The dashboard also has a summary log of change orders and a bar chart for change orders by reason for change and status of change order. When the executive stakeholder views this dashboard, clicking on any project on the map will filter the data in the other sections to reflect the change order data specific to the selected project.

Similar to all other project management processes that PMIS technology like PMWeb is used to enforce implementing their set procedures, organizations will benefit from capturing the right data, in the right format, by the right team member at the right time as well as benefit from having real-time single version of the truth on the performance and status of the managed process. Since a PMIS like PMWeb is designed to manage all project management processes across the complete projects portfolio of the organization, the additional benefit of having integrated project information is providing project team and other stakeholders with the insight to make better and faster informed decisions.

How Can Technology Support Effective Project Disclosure and Reporting?

Organizations who are keen on enforcing the best practice of projects governance understands that one of the requirements to achieve this governance is to fulfill the disclosure and reporting requirements on their projects performance. Those entities need to have timely, relevant and reliable reporting on their projects progress status, forecast to complete the remaining project scope, projects risk exposure, issues that could impact projects’ success and quantification of the realized benefits whether financial or in achieving their set objectives. Those entities need also to ensure the quality of the disclosed and reported projects information as well as fulfilling the requirements of the stakeholders who need to share this information with.

Without having a project management information system (PMIS) like PMWeb, fulfilling those requirements in a timely, relevant and reliable format would be almost impossible. PMWeb PMIS will ensure the quality of the disclosed and reported projects information as well as fulfilling the reporting requirements of the stakeholders who need this information.

Quality of the disclosed and reported projects information

Programs and Projects

PMWeb allows the organization to maintain all of their programs and projects on a single repository. Programs are the strategic initiatives that the organization has identified to achieve their strategic goals and ultimately their desired vision. Projects are the investments that the organizations have identified as needed to deliver the target benefits of each program. Some of those projects could be just an idea that still needs management approval, others could be projects in progress or completed, while others could be on hold or cancelled.

Project Life Cycle

Projects are implemented to transform ideas and needs to products and services that will generate the target benefits. Depending on the project type, size among others, organizations usually define the phases that a project need to go through from initiation to closeout. For example, engineering and construction projects life cycle include the phases of initiation, concept, schematic, design development, construction documents, tender, construction, defects liability and closeout. The output of each phase, which is also known as deliverables, need to be formally reviewed and approved before a phase is considered complete.

Organizations who are keen on enforcing project governance, will enforce the stage gate process. In addition to the formal acceptance of project deliverables, the organization would need to verify if the project is still aligned with their strategic objectives, if funding is still available for the project, if the latest risk assessment along with the anticipated ROI is still acceptable among others. PMWeb Stage Gate Scoring allows the organization to define detailed list of all those variables that could impact the organization’s Go/No Go decision.

Project Management Processes

Managing a project require implementing many processes to manage the project scope, schedule, cost and financials, quality, resources, communications, risks and issues, procurement of contracts, stakeholders, safety, environment among others. The project management procedures manual will detail those processes by defining the document template that will be used to capture the data for that process, defining those project team members will be involved in performing the process using the responsibility assignment matrix and the workflow to detail the steps and sequence for submitting, reviewing, sharing and approving the process.

PMWeb comes ready with the document templates needed for most project management processes like RFI, meeting minutes, daily reports, submittals, transmittals, snag list, safety incident, cost estimate, budget, budget adjustments, commitments, change orders, progress invoices, timesheets, risk register among many others.

In addition, PMWeb custom form builder is used to create the additional document templates that are not readily available in PMWeb. Those could be document templates to capture the Project Manager Progress Narrative, checklists as well as any other type of document template that could be specific for this particular organization.

PMWeb document management repository will be used to upload and store all documents that are usually needed to be attached for the document templates. For example, the change order document template might include the drawings, specification sections and site photos as attachments to explain the change order reasons and scope of work.

In addition, there could be a need to link other project records and communications to the record, in this case the change order. PMWeb allows linking other PMWeb records to the PMWeb record being reviewed. Those could be meeting minutes, request for information (RFI), daily reports, submittals, transmittals among other. In addition, it allows linking project email communications that were imported to PMWeb to the same record as well as create hyperlinks with records and websites on the web.

To ensure that the right data captured in the right document templates are submitted, reviewed shared and approved by the right project team member, a workflow needs to be created for each document template to map those workflow steps with the right sequence for performing them. PMWeb will enable creating those workflows which could include conditions to enforce the authorities and approval limits set for the project’s team members for each type of document template.

Fulfilling the reporting requirements of the stakeholders who need projects information

Identifying All Stakeholders

It is critical that organizations maintain a details list of all possible stakeholders that could influence or impact a project as well as those stakeholders that are responsible for delivering the project’s scope of work. Many of those stakeholders are common to many projects whether active or completed. PMWeb companies’ directory will be used to capture the details of all those stakeholders.

Stakeholder Analysis

For each specific project, the project team will perform the stakeholder analysis for each stakeholder who could have an impact or influence on the project. The assessment will identify the current impact and influence of each stakeholder and the desired impact and influence. The analysis will identify what is important to the stakeholder, how could the stakeholder contribute to the project, how could the stakeholder block the project, strategy for engaging the stakeholder and who from the project management team will be responsible for managing the stakeholder.

Tabular and Graphical Reports

Managing stakeholders requires sharing with them project information in their desired format and timing. The real-time data captured by PMWeb can be presented in tabular and graphical reports to share project information in the needed format. Tabular reports can be designed to show the needed fields, grouped and sorted by specific fields as well as limit the display to the filters set for each field.

As for graphical reports, data be displayed as histograms, line charts, pie charts among others. Those reports can be designed to present the selected fields and values in the desired graphical formats. One of those most common graphical reports is the Earned Value report which details planned, earned and actual progress for each period of the project’s duration.

Dashboards

The information captured from the different project management processes will become the basis for calculating the Key Performance Indicators (KPIs) to report on the projects’ critical success factors. Traditionally, projects’ KPIs will report on projects’ schedule, cost, quality and safety performance. Nevertheless, there are emerging projects’ KPIs that will report on risk, disputes, sustainability, stakeholder satisfaction among others. Those KPIs are usually grouped into a single page dashboard to provide the stakeholder with a single version of the truth of what is being reported. For example, a stakeholder who is interested in the project’s financial status might require a dashboard that has details on the approved project budget, budget adjustments, awarded contracts, approved, pending and disputed change orders, progress invoices for approved work in place and other related financial data. The same applies for other stakeholders that might need details on the project schedule, risk and issues, quality, safety among others.

On the other hands, there are other stakeholders who might be interested in having a dashboard that provides a single version of the truth about the overall project’s performance. This could include financial, schedule, risk, issues, quality, safety among others. Sometimes there could be more than one project dashboard layout depending on the stakeholder requirements and some could be even in different language like for example be in Arabic.

In addition, there could be stakeholder who are interested in having a single version of the truth for the complete projects portfolio executed by the organization or maybe projects that are part of specific program or strategic initiative. Again, the layout of this enterprise dashboard can be designed in any form and format.

Stakeholders who are at senior management levels, projects information represent part of the information that they need to know. They might have interest in the information available from their ERP and financial management system, HR and talent management system, spatial GIS management system, computerized maintenance management system, strategy performance management system and other systems. In addition, those stakeholders could be interested in visualizing this multi-data source information on their enterprise data visualization and business intelligence applications like Tableau, Qlik, MicroStrategy, MS Power BI among many others. Those applications allows the organizations to extract, transfer, load, associate, blend and visualize the information is their desired dashboard layout.

For organizations that have the requirement to report their projects performance to the public who are also projects stakeholders, the organization will usually create a website portal that will include the information that can be shared with the public. The website portal can be designed in the form and format that best suited for those stakeholders which could vary from one country to another as well as from one organizations to another. The ADAA or “Performance” website portal developed for public projects in Saudi Arabia is an example of such portals that can provide the public community with the updated projects’ performance information in an easy and interactive format.

In summary, a PMIS like PMWeb is crucial for organizations who are keen on disclosing and reporting their projects performance. PMWeb PMIS will ensure the quality of the disclosed and reported projects information as well as fulfilling the reporting requirements of the stakeholders who need this information.

Managing Design Stage Deliverables in Engineering and Construction Projects

Regardless of the project’s type, the construction of an engineering and construction project requires having drawings, specifications, bill of quantities, contract agreements, building permits, public authorities approval among many other documents developed and approved by the project owner. The level of details and completeness of those documents will have direct impact on the proposals received from contractors, Request for Information (RFI) that might be raised on those documents, Change Orders that could happen on the project which can result in disputes and claims other issues that could result in increasing the project, delays to the target completion date and other negative results that could contribute to project failure.

Adopting Project Management Practices

Similar to any other project, it is very critical to have the complete Work Breakdown Structure (WBS) defined for the design stage. This will include the stages of concept, schematic, design development which can be further broken down to 30%, 60%, 90% and 100% stages, and construction document. Then each stage will be broken down to building systems such as General, Specification, Site, Landscaping, Structural, Exterior Envelope, Building Interior, Elevators, HVAC among others. Then each building system will be further decomposed into the design deliverable packages.

The table below is an example of design phase deliverable packages for Pennsylvania State University (PennState) in the USA. Those deliverable packages are usually part of the contract agreement with the design consultant. The design stage schedule should detail and include the deliverable items that are part of each deliverable package, time needed to prepare and submit those deliverable items, resources needed to complete each deliverable item, sequence for completing those deliverable items and the dependency between those deliverable items, date constraints, allowance for holidays and off-periods and other details to have a complete and integrated design stage schedule. This schedule will be updated on weekly basis to reflect the status of those design deliverable items and their impact on the design stage milestone dates.

How Can PMIS Improve Managing Design Stage Deliverables

Project Management Information Systems (PMIS) like PMWeb will usually have a module for capturing all those design stage deliverable packages and items. In PMWeb, this module is called Drawings Sets although this can be changed to Design Stage Deliverables if needed. For each deliverable package, PMWeb will capture all details including Phase, Description, Deliverable Originator, Category, WBS level among others. Of course, there is no limit to the additional attributes that the organization might require adding for each deliverable package.

Each deliverable package could include many deliverable items which could be drawings, specifications, bill of quantity, contract agreement, permits, cost estimates among others. Those will be captured in PMWeb along the Project Schedule Activity ID that represents this deliverable item in the design schedule. The schedule activities will be imported from the design schedule into PMWeb. The percent complete for each deliverable needs to be added to reflect the current progress on each design deliverable item. In addition, for each deliverable item, PMWeb allows capturing all revisions and versions to the deliverable which could have resulted from submitting the deliverable item for approval or due to changes that are either part of the project scope or not. Of course, there is no limit to the additional attributes that the organization might require adding for each deliverable item.

For drawings, specifications, bill of quantities, authorities’ approvals among other documents those will be uploaded to PMWeb document management repository to get attached to the relevant deliverable item. It is a recommended practice to create folders and subfolders in the document management repository to match the project WBS levels. This will ease uploading those deliverables to their appropriate building system category, design phase and deliverable package.

When the deliverable item is ready to be submitted for review and approval, the workflow module will ensure that the deliverable item is automatically routed to the intended recipients in the right sequence as defined in PMWeb workflow. The workflow could include conditions and branches that will be automatically recognized depending on the attributes and details of the design deliverable items. Those branches are usually assigned to reflect responsibilities and authorities levels.

The design phases deliverable packages and items report will provide an overall real-time status of all those deliverables. In addition to the log of deliverable items that details the planned and actual dates, percent complete and status of those items, the report provides graphical analysis of deliverable items by design phase and building system category. Those charts will highlight those deliverable items that had been submitted and approved, submitted but still under review, rejected deliverables and those deliverable items that have not been submitted yet.

PMWeb from the Design Consultant Perspective

PMWeb PMIS will be also used to manage the level of effort needed for completing those deliverable items. The Timesheet module will be used by the design consultant to capture the actual manhours spent by each design team member as well as resources against each deliverable item. Those hours spent could be regular hours, overtime hours or weekend hours.

PMWeb resources repository will be used to define all those resources that could be involved in the design phase along with their cost for regular hours, overtime hours or weekend hours. It is highly recommended that the resources names used in PMWeb are identical to the resources names used in the project schedule software whether this was Oracle Primavera P6, MS Project or any other application.

The design consultant can use the captured data to assess their performance efficiency in completing the project design phase. The project schedule planned resources spending for each deliverable item which is an activity in the project schedule will be used to calculate the values for the Budget At Completion (BAC), Planned Value (PV) and Earned Value (EV) for each deliverable item. PMWeb will also aggregate the actual hours spent against the same deliverable item or activity which were captured in PMWeb timesheet module to calculate the Actual Hours and Actual Cost (AC) for each deliverable item. Those values will provide the input to calculate the earned value metrics for Schedule Variance (SV), Cost Variance (CV), Schedule Performance Index (SPI), Cost Performance Index (CPI), Estimate To Complete (ETC), Estimate At Completion (EAC) and Variance At Completion (VAC).

In addition, the design consultant can use the PMWeb Contract modules to capture the revenue earned from completing those deliverable items. The contract agreement between the Design Consultant and Project Owner which will be added to PMWeb, will detail the value for each deliverable item. The contract agreement will take into account the terms and conditions of the contract which could include provisions for retention, advance payment, advance payment recovery, VAT and other type of taxes that could affect the contract agreement.

On monthly basis, the design consultant will update the percent complete for each deliverable item as per the agreed value with the project owner to determine the amount due for the consultant. The progress invoice will be submitted to the project owner to get the payment for the approved deliverables.

The PMWeb contract module also allows capturing all change orders that could impact the contract value and/or duration. Similar to all other PMWeb modules, the change order module allows attaching all supportive documents as well as have a workflow to formally submit, review and approve the change order.

This contract revenue data can be used by the design consultant to determine the project’s profitability and how the actual performance by the design team could impact the target profit. The report can be designed to display the target profit based on the planned revenue and planned cost, current revenue based on the current estimate at completion and revised contract value and projected at completion which will be based the current estimate at completion and revised contract value plus all pending change orders.

PMWeb from the Project Owner Perspective

Should the Project Owner be the one who have the PMWeb and is interested in reporting the design deliverables performance from financial perspective, then instead of using the timesheet module to capture the actual cost, PMWeb commitment module will be used to capture the agreement detail between the Project Owner and the Design Consultant. Similar to the contract agreement explained above, the commitment will display the value for each deliverable item. It should be noted that the project could have more than one design consultant, a project management consultant and contractors for which the commitment module will be used to capture the performance details of each one of those contracts. All other PMWeb modules used by the Design Consultant will be also used by the Project Owner.

The progress invoice module will be used to capture the monthly performance of the design consultant for which the approved percent complete will be used to calculate the amount due for the consultant. In addition, the change order module will be used to capture all approved and pending change order details. Of course, the project owner will not use the PMWeb contract module as there is no need to capture the revenue. It should be noted that from a Project Owner perspective for lump sum contracts, the Actual Cost will be identical to the Earned Value as they both are based the approved progress percent complete multiplied by the planned contract value which is the budget at completion.

For the lump contracts, the Cost Variance will be mainly based on the change orders value, approved, pending and anticipated. Those change orders can be for additional scope of work (out of scope) or adjustments for the existing scope of work (in scope). Change orders could have both cost and schedule impact in terms of delays that could adjust the project’s planned completion date.

Similar to the other reports, the Project Owner design phase contract performance report will report on the performance for deliverable item including progress percent complete, invoiced amount, approved change orders, pending change orders and actual finish date. The report can also report on actual payment against approved progress invoices among others. The report will also report on the variances between the planned and the actual performance.