How to Get Real-Time Financial Transparency When Delivering Real Estate Projects?

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For real estate investors and developers, project financial performance reporting goes beyond managing the project budget, commitments, changes and actual costs. They require managing the income or revenue generated from selling, leasing or any other source of income that is needed to calculate the Return on Investment (ROI). Further, they need their project management team to be aware of what has been sold or leased to ensure that those assets are delivered in accordance to the contract terms and conditions signed with the tenant. In addition, they need to have details of the funding available to finance the project and how much funds are still available to finance the remaining project’s scope of work.

Why a Project Management Information System (PMIS) Is Needed?

Project Management Information System (PMIS) like PMWeb comes ready with out-of-the-box modules needed by the real estate investor to achieve all of those reporting requirements in addition to the many other every day processes needed to manage the project. PMWeb allows creating the project budget which could be generated from PMWeb cost estimating module or just added or pasted from MS XLS. The budget request module allows managing all budget transfers, omissions and additions to maintain the project budget. The revenue module allows capturing the details of all sales, leases and income contracts as well as capturing all changes to those contracts, invoices issued and actual payments received against invoices. The commitment module is used to capture all expenses contracts including design, project management, professional services, construction contracts and subcontracts, material supply purchase orders, marketing and any other internal or external contracts. For all those expenses contracts, PMWeb will also capture potential change orders as well as pending, approved and disputed change orders. PMWeb will also capture the actual cost incurred against expenses contracts as well as other miscellaneous invoices and cost of own company resources, labor and non-labor charged against the project using timesheets. PMWeb will also capture the details of actual payments made against approved actual cost invoices. Finally, PMWeb funding module allows capturing details of all available project funding, funding requests and authorized funds released for the project. All those financial transactions are recorded in a cost ledger to allow creating the project financial performance cost worksheet that will provide a single version of the truth of the project financial status.

Setting the Financial Performance Platform

Before proceeding with managing the project financial performance, the organization needs to define and standardize the project cost breakdown structure, financial periods and whether multiple currencies will be allowed in managing the project’s financial transactions or not. Those are also required to enable the organization to reconcile PMWeb financial transactions with the organization’s ERP or accounting system should there be a need to do so.

Usually, there will be a single cost breakdown structure (CBS) or cost account numbers that is used by the organization in reporting their projects’ financial performance across their project investments portfolio. It will consist of multiple levels to detail the level of control that the organization wants to exert in managing their investments and other financial transactions.

In addition, the organization needs to define the project financial periods also known as accounting periods which are an established range of time in which accounting functions are performed, aggregated and analyzed including a calendar year or fiscal year. The accounting period is useful in investing because potential shareholders analyze the company’s performance through its financial statements that are based on a fixed accounting period.

Should the organization want to allow the use of multi-currency in the different project financial transactions, then this option needs to be activated. PMWeb allows multi-currency at line item level for each financial record. The exchange rates can be fixed or linked to a currency exchange portal where the organization can select the frequency for updating the exchange rates.

Setting and Managing the Project Budget

The project budget is the investment that the organization has approved for the project investment. It is usually managed during the design development stages and new versions might be created but there should be only one approved budget version and all other past versions need to be withdrawn. During the early project life cycle stages, it is recommended to link each budget line item to the corresponding project schedule activity. This will enable the organization to have a projection of the budget spending that is mapped to the project financial periods. PMWeb allows selecting different projection curves, linear, bell shaped, front and back loaded, to distribute the allocated budget for each line item.

When the project is confirmed as a go for execution and the start date is fixed, it is recommended to manually distribute the budget of each line item to each financial period to reflect the anticipated planned budget spending. Of course, the distribution curves continue to be available if needed.

After this stage, all changes and adjustments to the approved project budget needs to be managed using the budget request module. Through that module, budget transfers from one cost account to another whether they are for the same project or to other projects, increasing the budget or reducing the budget will be performed. The transfers will be specific to each cost center as well as financial period. The budget adjustment request module will usually have a pre-defined workflow with the different possible conditions and rules to ensure that the right review and approval levels are carried out.

Managing the Project Revenue

PMWeb revenue module will be used to capture the details of each asset that will be either sold or leased. It will be a contract agreement between the investor organization, who is the seller and the buyer. The contract agreement could be a for a single or group of apartments, villas, warehouses, commercial spaces among others. For each contract, line items will be added to match the payment terms of the contract agreement. The organization can pre-define those payment terms in PMWeb to enable selecting and dragging the relevant terms to each contract instead of manually adding them. Each payment line item needs to be linked to its relevant financial period.

Some of the tenants might require changes or modifications to what was included in the original sale or long-lease agreement for which a change order will be created. The change order will detail the cost of all those new requirements which will result in a revised contract agreement. A workflow can be set to the change document to ensure the required approvals and sharing of the change details is transmitted to the right project team members.

When the dates for the payments, as per the approved contract, are due, an invoice will be issued. The invoice will reflect what was already paid in the previous invoices and the balance due. Again, a workflow can be assigned to the invoice to ensure the required reviews and approvals are secured before having the approved invoice.

Managing the Project Commitments

The real estate investor will award commitment contracts for executing the project scope of work. Those could be contracts for marketing, design, project management services, site supervision, construction, material supply among others. The commitment contracts could also include internal company contracts. For example, assume the real estate investor has a department for marketing, the organization could have a contract with the marketing department for delivering this scope of work. Similar approach could have been done for the PMO, real estate development department among others. The commitment contracts usually have terms and conditions that relate to retention, advance payment, advance payment recovery, tax, tax withheld, VAT among others.

One of the good practices that is being adopted in most capital projects today, is to require the contractor to provide the anticipated payment schedule for the work included in their contract agreement. This is more specific to what is known for many as the “cost loaded schedule”. Unlike the cost loaded schedule where the distribution for payments is projected over the activity duration using one of the available projection curves, PMWeb allows the organization to exactly specify the amount of anticipated cost that will be invoiced for each financial period. This will help the real estate investor to better anticipate the payments to be made to better manage the project cashflow and funding requirements.

Similar to all contracts, changes could happen. Those could be as a result of new scope of work, unforeseen site conditions, new laws and compliance requirements, non-availability of specified materials, weather conditions among many others. One of the recommended practices is to capture all potential changes that might impact the project’s final cost at completion as soon as they are identified by the contractors and other project team members.

This will allow the project management team to review those potential changes and decide if they represent actual changes to the project scope of work or needs to be rejected. If those potential change orders have some kind of merit, the project management team will initiate the change management process using the change request template. The reviews and approvals needed for a change request might require going into different iterations which will be identified in the workflow steps and actions. The workflow will also include conditions to enforce the approval authorities level which is usually linked to the change request value. Adding the approved change request values to the original commitment contract value will provide the revised contract value while adding all pending potential change orders and change requests as well as disputed change requests to the revised contract value will calculate the projected commitment contract value.

Actual Cost

The actual cost reporting will include the approved progress invoices for all commitment contracts, miscellaneous invoices and the cost of the real estate investor own resources, labor and non-labor in managing the project delivery. At the end of each progress period, all consultants, contractors and suppliers need to submit their invoice for the work completed during the past financial period. The percent complete assessment for the completed work can be manually added or imported from the project schedule if the contract line items are associated with schedule activities. In addition, PMWeb provide the option to use the actual quantities of work completed if this will be the method to be used to assess the monthly progress invoice.

In addition to progress invoices against commitment contracts, the real estate investor would need to capture all miscellaneous invoices that could be needed to pay for the land purchase and fees, local authorities’ permits, site offices and supplies among others.

The real estate investor will usually have his own resources involved in managing the project delivery. Those are the resources that are not part of the internal company contracts explained above as otherwise the real estate investor will end charging the cost of those resources twice. For those resources, labor and non-labor, the real estate investor will have a charge rate for each resource that is inclusive of resource direct and indirect cost. Usually there will be rates for work performed during regular working hours, weekends and holidays. On weekly basis, timesheets will be completed for all those resources reporting the actual hours spent by each resource and against which task. The hours spent could be reported as regular, weekend or holidays as this will impact the actual cost charged against the project for those resource hours.

Some real estate investors might have the requirement to import the actual cost of their corporate involvement in the project delivery from the head office ERP or accounting system. PMWeb integration module and API integration module provides those organization with different options to import and export cost data to and from PMWeb. The integration module provides easy way to build the integration while the API integration provides more advanced integration but requires system integration knowledge to build it.

Managing Project Funding

The real estate investor needs to keep track of all possible sources for project funding. Those could be internal funding, private funding, funding by banks, public funding among others. For each funding source, the real estate investor can detail what project investments will be funded by that source and the amount of funding available for each project. The funding source could be available to projects, programs or for the complete project investments portfolio for the real estate developer.

Should there be a need for funding the project, a funding request needs to be formally submitted listing the amount of funds needed and from which fund source. A workflow will be usually added to the funding request to ensure that all necessary reviews and approvals are in place.

When the funding request is approved, funds will be released using the funding authorization template. The funding authorization would require detailing the authorized funds along with the source of those funds. A workflow will be usually added to the funding authorization to ensure that all necessary reviews and approvals for releasing the funds had been secured.

Putting All the Pieces Together

The different processes detailed above are usually done by different project team members from the different entities involved in delivering the project. Those processes have different type of financial records and data that will affect the project’s financial performance. PMWeb cost ledger provides an automated single repository that will capture the details for all those transactions. The user can drilldown to the source of the reported financial transaction by just clicking on the record itself.

The financial transactions will become the real-time data source for creating the project cost worksheets. The real estate developer can have unlimited number of cost worksheets created for which each could have different type of financial values displayed. For example, a cost worksheet can be created to compare project budget with income revenue. In addition, each cost worksheet could have calculated fields based on the data captured from the different financial records.

The cost worksheet will provide the real estate investor with real time visualization of how the project investment is performing. The reported data are based on the actual financial transactions carried out on the project. The cost worksheet reader can drilldown to the data source by just clicking on any cell itself when there is a need to have more details on the reported value.

The real estate investor can produce different variety of tabular and graphical reports from the cost worksheet. Those reports can be for a specific project investment or for a portfolio projects investment. The report can be for all cost accounts or cost breakdown structure (CBS) centers or for selected centers. The report can display the cost data at detailed or summary level and can group cost data by project, program or portfolio.

Project Financial Performance Report for Executives

For executives and other stakeholders who are not involved in everyday projects financial transactions as well as those who are keen in having a bird eye view on how the project investments are performing, the data captured in PMWeb can be extracted, transferred and loaded into a business intelligence and data visualization tool like MS Power BI, Tableau, Qlik, iDashbaords among others. This will provide those stakeholders with real-time interactive dashboards that are based on trust worthy data source. In addition, those applications allow the user to associate, blend and visualize data from multiple data sources such as ERP, accounting, CRM and other type of applications with PMWeb data source. This will provide the reader with a more comprehensive status of their project investments performance.

Digital Transformation for Formal Communications in Engineering and Construction Projects

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Formal communications in engineering and construction projects are a must requirement to comply with the contractual obligations set in the contract agreements between the different parties of the contract. Formal communications usually take the shape of document templates, letters and even emails if permitted under the contract. With the growing trend of construction claims and disputes, the volume of formal communications is becoming extensive and the need to effectively managing them becoming a must. Organizations who understand the great benefits that digital transformation will bring to their projects delivery, formal project communications is one of the areas that need to be covered.

Project Management Information Systems (PMIS) like PMWeb is used by organizations who seeking successfully digital transformation for their projects delivery. PMWeb can drastically improve the management of formal communications in engineering and construction projects by automating project communication processes under one single web-enabled platform. This will enable the organization to effectively issue, respond, track, search, locate, analyze and report on all types of project communications.

Document Templates

Engineering and construction projects are very much acquainted to use document templates as a method for formal project communication. Those are used for submittals, transmittals, daily reports, safety incidents, request for information (RFI), permits, authorities no object certificates, request for inspection, non-conformance report, snag list, potential change orders, change orders, progress invoices, material delivery among many others. The Construction Specification Institute (CSI), American Institute of Architects (AIA) and many other professional institutions as well as organizations have most of those document templates pre-defined. Of course, those document templates would need to be modified to suite the requirements of the projects they are used on.

PMWeb comes ready with most of those document templates as well as the PMWeb form builder is used to create the additional document templates that PMWeb does not readily have. Each document template usually has two parts, the header and the detail. The header section is usually used to capture details of the project, contract, date, phase, category, WBS Level, priority, status, document reference number, among others. Whereas the detail section will include the particulars of each document template. For example, a RFI will include the query raised by the issuer, if there is a proposed solution, the response from the consultant or the party assigned to respond, if the response is in-scope or out-of-scope of the contract, if the response could have a cost impact and if the response could have schedule impact along with which activity it will first impact.

Most of the standard content for the fields at both header and detail section of each document template will be usually selected from pre-defined list of values or calendar dates. For example, the CSI Category values will be picked from the CSI Master Format values list which will be defined by the user. PMWeb allows importing those lists’ values in bulk using MS XLS. On the other hand, for fields like WBS and Schedule Activity there is an option to populate the data when the project schedule is imported to PMWeb from Oracle Primavera P6 or MS Project.

In addition, it is very common that each document template would have documents attached to it. Those could include drawings, specifications, contract agreements, bill of quantity, insurance and performance bonds policies, catalogues and manuals, pictures, videos as well as copies of other project communications like authorities’ approvals. Using PMWeb document management repository, all those documents will be uploaded in their designated file folder along with their metadata attributes.

Those documents can then be attached to the relevant document template. In addition, the user can link other PMWeb document templates to a specific document template should those document templates have reference or relation to this document template. Further, hyperlinks to websites or online documents can be created. For project related emails which have been imported into PMWeb, those will also become available to be linked to the document template.

Document templates used for formal communication would usually have a workflow for submitting, reviewing, sharing an approving or rejecting the communication. The workflow steps are usually defined in the project management plan. Those workflows should be aligned with the contract agreements used on the project to govern the relation between the contracting parties. The workflow should also take into account the approval authorities level set for financial amounts as well as the values of some of the attributes that are part of the document template. Those could include for example, specification, phase, priority among others. The value of those attributes could impact on who will be involved in the workflow review and approval steps.

Using PMWeb to automate the workflow will ensure that each document template is received by its intended recipient as per the established workflow. The workflow will establish the time allotted for each step as well as the escalation rules should the review period exceed the allotted duration. In addition, comments from the different workflow reviewers will be captured to maintain an audit trail of those comments and remarks

The data captured in those document templates will enable the organization to have real-time reports on all project communications. Those reports can be limited to the transactions associated with a single project multiple projects. For example, the Request for Information (RFI) log will list the different RFI transactions that were issued on the project along with their current status.

Using interactive business intelligence and data visualization tools like MS Power BI, provides the organization with real-time access to data analytics to analyze project communications performance trends, correlations, growth and exceptions.

Letters or Correspondence

During the engineering and construction project life cycle, there are many letters that are issued as part of the project’s formal communication. Those could be letter of intent, letter of award, termination letter as well as many others type of letters that are used to confirm the occurrence of an event or incident that might have an impact the project’s scope, cost or schedule. In addition, there are many other letters that although are needed but might not have impact on the project scope, cost or schedule.

For letters that could have contractual or legal implications as well as letters that are commonly issued on a project, an application like PMWeb can help in creating reusable letter templates that will not only expedite the issuance of such letters but also ensure the legal or contractual content being correctly communicated.

Of course, and similar to document templates, documents can be attached to the letter as well as links to other PMWeb records and emails can be created. Also, workflow can be assigned to the letter although this might not be needed. Nevertheless, there could be a need to email the letter to individuals who might be authorized PMWeb users or not. For this purpose, PMWeb notification will be used to email the letter. PMWeb will keep record of all those sent emails at the Notification tab of the correspondence module as well as all other PMWeb document templates, whether they were default or custom created.

Emails

There is growing trend to use emails for quick communications between the project team members. Some of those communications could be considered formal communications if they included certain instructions. PMWeb allows the organization to import those emails by setting a unique email address for each project for which any email communication need to be carbon copied (CC) to this email address, for example file@ProjectX100.com. Those imported emails can then become available to be linked to any project document template or letter in PMWeb.

Searching and Locating Project Communications

Capturing project communications in PMWeb allows project team members to search and locate communication records that include the key words to be searched for. Record search can be done across all projects or a single project, limit selection by document template type and record status. The identified records can be selected and saved in an issue file to allow the project team member to review those records and decide if they are relevant to what is being sought.

Putting it All Together

Since all project communications whether they are using PMWeb default document templates or those created using custom form builder, letters and emails along with all documents uploaded on PMWeb document management repository are stored on a single database, the project team can create a wide variety of reports and dashboards. Those could be tabular logs, graphical reports and dashboards. Regardless of the form or format of the report or dashboard, they all use the same data source. This enforce single version of the truth reporting on all project communications.

How Can Project Owners Encourage Project Fraud on Their Projects?

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When projects’ owners, both in the public and private sector, fail to impose the right policies and procedures to deter fraud on their projects, they are indirectly encouraging those involved in their projects to commit actions that would lead to project fraud. Actions that would lead to increase the chances of project failure by increasing the project cost, delaying the project completion, reducing the project quality, failing to meet stakeholders’ objectives among others.

The tendency to commit a fraud is very much part of every business and projects are no different specially when there is lack of governance and control. Actually, there are more chances to commit a fraud on a project than operational frauds where usually corporate policies and procedures are well enforced and internal or external audit is an on-going requirement.

Actions that could be labelled as “Project Fraud” are many but some of the most common actions include the following:

·        Unsubstantiated project decisions

·        Under-reported estimates of project cost

·        Over-reported estimates of project benefits

·        Unbalanced bids

·        Over-reported schedule performance to hide project delays

·        Wrong forecasting for cost to complete the remaining project scope

·        Unsubstantiated change orders

·        Over-estimated change orders

·        Over-reported quality progress

·        Acceptance of lower-quality deliverables that cannot be used as originally thought

·        Delayed and/or improper approvals

·        Conflict of interest and kickbacks

·        Negligence in protecting client’s interest

·        Non-compliance with the contract’s terms and conditions

·        Creating unnecessary threats by failing to comply with best practices

·        Failing to report threats before they harm the project

·        Failing to report opportunities that could have benefited the project

·        Lost or misplaced project documents

·        Appointing unqualified project team members

·        Intended wrong actions or decisions

So how can project owners stop project fraud and discourage doing the actions that could lead to project fraud?

The first step that a project owner should do is to have a clear policy on project fraud. For example, Zero-Tolerance on Project Fraud. The next step is having a detailed project management standard operating procedures manual that will detail the processes, responsibilities, accountabilities and authorities for performing those procedures.

To project management procedures manual should first identify the organization that will become responsible for managing the organization’s portfolio of projects. This could be the projects department, project management unit or project management office (PMO). The organization chart, roles and responsibilities and job description needs to be documented as they will become an integral part of the standard operating procedures manual.

This will be followed by determining the project life cycle stages that will explain how projects will be executed. The project life cycle will also detail the stage gates, or project approval gateways, that the project owner will use to determine if the project should proceed to next project life cycle stage or not.

The next step is to detail the project management procedures that will be needed to manage the delivery of the project. The level of detail of those processes will depend on the level of control that the project owner wants to exert on the project but they would usually include the following processes:

·        Project Due diligence;

·        Project Approval;

·        Formulating of a Client Brief & Approval;

·        Prequalification of Consultants;

·        Appointing Consultants;

·        Budgeting and Budget Approval;

·        Managing the Design Process and Approvals;

·        Managing Design Changes and Approvals;

·        Payment Applications and Approvals;

·        Prequalification of Contractors and Suppliers;

·        Bid Packages Preparation and Approvals;

·        Managing the Procurement Process of Contractors and Suppliers;

·        Formulating Agreements and Contract Authorization;

·        Project Commencement and Contractor’s Mobilization;

·        Construction/Supply Contract Changes and Approvals;

·        Delays, Time Extensions and Application of Penalties/ Liquidated Damages;

·        Submittals and Approvals;

·        Project Taking Over and Approvals;

·        Project Close out and Approvals;

·        Risks and Issues Management; and Others.

The details of those processes will be captured in what is known as the standard operating procedures manual which will provide the guidance on how to perform those processes for those who will become involved in the project delivery. The manual will also detail the steps for executing each process, roles and responsibilities, document templates, tabular and graphical log reports and the process key performance indicators (KPIs). Many organizations opt to develop this manual as per the ISO requirements to attain the appropriate ISO certification on those manuals.

The problem for many organizations who are serious about curbing project fraud and who have invested in developing comprehensive project management procedures manuals is the lack of having the right project management information system (PMIS) to enable the automation of those processes and make the information from the captured data available for the project team members to have the insight to do better and faster informed decisions.

The automation of project management processes requires first having the different document templates identified in the procedures manual to be available online for the right project team member to complete and initiate the process. This will also require enabling attaching all supportive documents to the document template. Having the document templates online helps in curbing actions that could lead to project fraud as not only it enforces the project team to provide the needed data in complete and correct manner, but also captures the details of who provided this information and when. In addition, it captures the actions of all other project team members who will be involved in the process of reviewing, sharing and approving the process. Most project management information systems (PMIS) also include Audit Trail as one of the default features where it tracks the actions taken by all those who have accessed the PMIS.

It should be of no surprise when one finds that many project team members would object on having a project management information system implemented on their projects. Excuses like effort and skills needed to input data, cost associated with having such a system, unwilling of contractors and consultants to provide data among others are quite common. Nevertheless, it is no different than saying that all the benefits we are getting today from automating the different government, banking and other processes are not true and we had better times when all of those processes where manual processes. The ugly truth is that those project team members want everything but transparency and governance on what they should be performing on daily basis.

Using an integrated project management information system (PMIS) like PMWeb does not limit project fraud actions to data capturing only but also limits the actions that could occur when there is a requirement to integrate projects data that are stored at different locations. When an organization is faced with what is known as “Data Silos”, one should expect project fraud actions to occur when this data integration needs to be done manually.

Financial ambiguity is one of the very common project fraud actions that occur on projects when the project commercial and financial data are not captured in an integrated format. For example, it is very common to have the project cost estimate, project budget, project bids, project awarded contracts, proposed, pending, approved and disputed change orders, progress invoices, actual payments, funding authorizations, funding release among others are stored in separate data silos. What even makes it worse, is that a project financial status cannot be viewed in isolation from other project management processes like risk management among others.

A PMIS like PMWeb provides the platform to capture all project’s data on a single web-enabled platform to enable anywhere anytime access for the authorized project team members. This will not only eliminate the “Data Silos” syndrome but will also enable creating the status and performance dashboards to provide a real-time single version of the truth of the project financial status. The dashboard will provide the needed measures and key performance indicators (KPIs) to provide an objective analysis of how the project is performing from the financial aspect. The same approach needs to be done to measure and report the project performance as it relates to schedule, deliverables, quality, safety, documents approvals among many others.

A PMIS will also help the project manager and other executives to have a real-time single version of the truth on how the project, program or portfolio of projects status and performance. This will help in curbing project fraud actions that could result when this information is manipulated, not complete or delayed. Those executives will now have the confidence when it comes to making decisions as they are now assured of the quality of the information and data provided to them. This will assure that all made decisions are substantiated with the needed project records and documents.

In addition, a PMIS will help those executives on reporting on the status of the made decisions by maintain a real-time log of those decisions and associated actions. The log will report the status of those decisions and their impact on the project objectives. One of the proven project management processes used to manage decisions is what is known as “Issue Management”.

So for project owners who are serious about discouraging fraud on their projects, there should be a commitment from top for this to happen. This needs to be translated to a clear policy on “Zero-Tolerance” when it comes to project fraud as well as have the right project organization setup and project management procedures that will enforce the implementation of this policy. This should be coupled with an integrated project management information system that will help in promoting transparency, governance and real-time single version of the truth reporting and visualization of the projects performance.

Quantifying the Benefits of Digital Transformation in Managing Capital Projects Delivery

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For some organizations, investing in digital transformation when it comes for managing their capital projects delivery might require quantifying the benefits of this investment although for many, those benefits are so obvious. Actually, one should be surprised on why the engineering and construction are so much lagging behind compared to other industries when it comes to adopting technology to improve the delivery of their projects. Especially when it is known that Projects carry the risk of high cost of failure. What is even more surprising is that when this technology adoption is mainly focusing on managing everyday events and activities of projects for which executive leadership should be endorsing rather than objecting.

Categorizing Benefits

Since the focus will be limited to the benefits that digital transformation will be bring for managing capital projects delivery, the analysis will only focus on the benefits of automating the different processes that are needed to manage a capital project. The analysis will detail the benefits that this automation will bring for the organization when they are able to capture their projects BIG DATA for which they can analyze, visualize, support better and faster informed decisions and build their knowledge base.

Savings That Are Attributed to Improved Data Capturing

Regardless of the size, type, location or the organization role in delivering the project, on the average a project would have between 50 to 200 formal communication records per month. Those include correspondence, meeting minutes, transmittals, site inspection, daily reports, non-conformance reports, issues, safety incidents, submittals, permits, potential change orders, change orders, progress invoices among many others. Most of those forms are either created as hardcopy, MS XLS, MS Word or PDF file format. The completed forms are usually manually distributed, or sent via email as an attachment as per the pre-defined project’s responsibility assignment matrix (RAM) which details who should be receiving the document. The recipient of the project communication will usually decide if other reviewers need to be also involved in the review process based on his/her knowledge or understanding of the approval authorities level and the roles of those reviewers. Some organizations might also consider using collaboration applications to pre-define the workflows to distribute the PDF version of the document, nevertheless this will fall short in identifying possible variances in the workflow routing usually driven by the content and values of the record attributes which are embedded in the document itself.

Improved efficiency and quality of captured data

PMWeb have all those forms available online that can be accessed by the authorized project team members from the different organizations involved in delivering the project. Access can be limited to specific fields within a form. For fields that have pre-determined values, lists can be made created to pick those values. The default PMWeb forms comes ready with the some of the best practices in capturing project records such as WBS level, Schedule Activity, Specification Reference, Location of Works, Priority, Phase, Category among many others.

Knowing that it is almost impossible to have all needed input forms readily available by any software vendor, PMWeb custom form builder provides an easy to use solution for creating new data capturing forms in any desired form or format. The form can be English or any other language, Latin or Non-Latin like Arabic. Since PMWeb is a zero-foot-print application, it means that all those forms, whether default or custom created, will be accessible from any mobile device using the web-browser. This eliminates the need to have different applications to capture different types of project documents that are not supported by a given application.

In addition, all supportive documents that are referenced in the project communication can be uploaded into PMWeb document management repository and then attached to record. Of course, if there is no need to upload to the repository, then they can it cab uploaded directly. All those documents can be viewed and red-lined using PMWeb redlining tool as well as Bluebeam Revu for those who are looking for advanced redlining and document collaboration features.

Further, all relevant other PMWeb records can be linked to the project communication to provide immediate access to all those referenced communications. If the option of importing emails into PMWeb is activated, then all referenced email communications can be also linked to this project communication.

Improved speed in distributing and sharing captured data

Predefined workflows will submit the document to the intended reviewer in the right sequence. Audit trail of all workflow steps and comments are automatically captured. PMWeb allows delegating and replacing reviewers when they are on vacation or not assigned to the project anymore. Workflow steps can include conditions for multiple reviewers such as all must approve or anyone can approve. The workflow also includes the conditions when the submission is rejected or returned.

Eliminate the High Cost of Lack of Governance Associated with Non-Abiding with Set Approval Authorities Levels

PMWeb workflow allows adding conditions depending on the document attributes which could be financial value or any other attribute. This will enforce the workflow to branch to comply with the preset approval authorities’ levels.

Savings That Are Attributed to Improved Data Analytics

MS XLS logs are usually created for each type of project communication. For example, those could RFI log, Changes Log, NCR Log, Risk Register, Issues Log, Submittal Log, Transmittal Log among others. For each log, columns will be created to capture the specific date fields of each form. Those logs will be eventually used to analyze the data captured from the different project communications as detailed above. The content of those logs is usually limited to the main attributes of those project communications, otherwise it will take very long time to capture all details plus the increased chance to make entry mistakes. Of course, those logs are one direction only which means that the viewer cannot drilldown to the data source and have to trust what is been reported in the MS XLS log.

Eliminate the effort, redundancy, mistakes and delay associated with extracting, loading, associating, reviewing. verifying, blending, analyzing and presenting the captured data

PMWeb BI reports, tabular and graphical are created once when PMWeb is implemented. The content of those reports will be always displaying the real-time data captured in the project communication unless the report includes a filter to set the reporting time periods. The data in those reports can be grouped, sorted and filtered in any desired format. In addition, Key Performance Indicators (KPIs) and other metrics Calculations will become part of the designed report. In other words, those tabular and graphical reports will become immediately available for all project management processes managed in PMWeb and for which access can be given to the authorized users.

In addition, interactive business intelligence and analysis tools like MS Power BI, Tableau, Qlik and others can have access to PMWeb database to provide the needed analysis. Those applications also allow associating and blending the captured PMWeb data with other applications to provide advanced business analysis. The use of such tools is growing as they provide the business user with the ability to run his/her analysis on the same real-time PMWeb database used by others.

Savings That Are Attributed to Improved Data Visualization

Reporting the projects status and performance for the different stakeholders who are either involved or affected by the project delivery is a must and not a choice. Those stakeholders would usually have different reporting needs depending on their level or involvement and the role they play in delivering the project. The multiple MS XLS logs created earlier need to be combined to create the tables needed for the dashboards. Those dashboards are usually done using MS XLS as well as data visualization tools like MS Power BI, Qlik among others. Those dashboards, and similar to the MS XLS logs created earlier are one direction only as the viewer cannot drilldown to the data source.

Eliminate the effort and delay of presenting the data in the desired format

PMWeb BI reports are used to create multi-level dashboards in the desired layout and format. The content of those reports will be based on the real-time data captured in the project communication to eliminate any delay or data manipulation. Those dashboards can be created to meet the reporting requirement of every project stakeholder. For example, there could be a projects portfolio dashboard, program or strategic initiative dashboard, project dashboard or specific management area like cost, risk, procurement, documents, schedule among others even specific to a project life cycle stage like Selection, Design, Procurement, Construction and Defects Liability. PMWeb BI Reporting also allows the stakeholder to drilldown form one dashboard to another depending on his/her reporting requirement.

Build Credibility with Stakeholders with Improved Transparency

All of the BI reports and dashboards created within PMWeb are based on the real-time project management processes captured in PMWeb. In addition, it can include data imported to PMWeb from Oracle Primavera P6 or MS Project where PMWeb has a built-in interface for both. The stakeholder can drilldown to the data source where they can view the project record along with all attachments, links to the other PMWeb records and imported emails and workflow details. This requires having the right permissions.

Savings That Are Attributed to Improved Decision Making

To certain extent, the success and failure of a project depends on the quality of made decisions and the timely execution of actions defined to implement taken decisions. The decision maker will usually depend on his/her team to provide the documents and records needed to support the decision to be made. This requires searching the project files for those records and documents which is not only time-consuming but might be incomplete. When the decision is made, regardless how good it is, the decision maker needs to ensure that the project team assigned to implement the decision are effectively collaborating to implement their assigned actions. The decision maker needs to depend on the document controller to maintain the MS XLS log used to keep track the taken decisions. Due to the confidential data that some decisions could entail, the decision maker might decide to maintain the MS XLS on their own.

Eliminate the High-Cost of misinformed Decisions

The decision maker can have access to all PMWeb records. The search option allows searching and locating all project records that could be relevant to certain topic. Records can be related to relevant records to allow tracing all related communications for a specific topic before taking a decision. There is no lag in providing the latest data and information to the decision maker.

Eliminate the High Cost of non-Implemented Decisions

PMWeb Action Management allows capturing all decisions along with the specific tasks assigned to each project team member to perform and when. In addition, the assigned project team will be invited to collaborate on the decision to report the progress and actions taken to implement the decision. Similar to other PMWeb records, the project team member can attach all supportive documents as well as create links to other related PMWeb records and imported email.

Eliminate the High Cost of Manual Tracking the Status of Executed Decisions

PMWeb Decisions Report will be based on the real-time data of the status of every decision made and update provided by the project team members. Business Analysis visualizations cab be added to the report to improve the reporting analysis. Similar to all other PMWeb logs and dashboards, the decision maker can drilldown to each specific decision and review the particulars of that decision.

Savings That Are Attributed to Improved Knowledge Management

Only data captured electronically like the one in MS XLS logs can be made available for knowledge management. This data might not be complete and might not have the right attributes to better categorize and classify the gained knowledge. In addition, data captured in MS XLS for each project will be in different silos that is not easy to relate and consolidate. This will even become worse when the organization has many projects for which we will have data islands each contain data silos. This could be make the captured knowledge of very little value and use specially as it will not be easy to query, update, maintain and share as well as not much trusted.

Eliminate the High Cost of Wasted Valuable Knowledge Gained from Projects Execution

All real-time data captured for the different project management processes in PMWeb including the lessons learned process will become available for knowledge management. BI Reports can be designed to better organize and present the gained knowledge. In addition, PMWeb custom forms can be used to create lesson learned template to proactively capture the gained knowledge. Project team members and other users can access the data captured in PMWeb by using query language, structured or non-structured to support their decision-making process. They can also request for BI Reports to present the data they need to make a decision in the desired form and format.

Conclusion

No one can doubt the benefits and savings that digital transformation can bring for delivering capital projects. To quantify the value of the many benefits of this digital transformation, for which some where listed above, depends on the organization who understands the positive impact of this change. Having said so, change is never easy even if it will bring a lot of benefits whether those are financial benefits or benefits the will enforce governance.  Nowadays and more than ever, organizations have the obligation to be transparent and curb actions or lack of actions that encourage project fraud.

How To Assess and Report The Efficiency of Professional Services Resources on Capital Projects?

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Organizations involved in delivering capital projects are always keen on ensuring that their estimated effort and cost for managing those projects are inline to what was originally estimated. Regardless of the role of organization whether it is the project owner, project management consultant, engineering consultant, contractor or any other entity, the need to find out if the actual cost of professional resources employed to deliver their assigned scope of work was in accordance to what was originally planned or not.

What Resources to be Managed

One of the functions of a Project Management Information System (PMIS) like PMWeb is to provide executive management with this information. The first step should be defining the resources, labor and non-labor resources that the organization will be interested to manage. For Labor resources, they will include all roles that are usually part of each capital project delivery. As for non-labor, those could include site offices, staff cars, CAD stations among others. PMWeb allows capturing all possible details of each labor resource including date of hire, contacts, default working hours among many others.

For non-labor resources, again PMWeb allows capturing all possible details for those details including the GIS location should there be a need to track the locations of those resources. Of course, the default attachment tab allows uploading all catalogues, brochures, certificates among others.

PMWeb allows defining the cost rates for those resources. The rates could vary between regular, overtime, premium and other type of possible resource charges. The rates will be assigned for type of resource classification defined by the organization.

What Cost Centers Resources Will Be Charged Against

One of the key objectives of managing the professional resources cost is to determine their impact on the project’s performance budget. Therefore, it is highly recommended to define the cost breakdown structures that will be assigned to those resources which could vary depending on the type of work performed by the resource as well as the project life cycle stage where this work performed. The multi-level cost breakdown structure (CBS) will be part of the project overall CBS and it should be aligned to the CBS used by the organization on other applications.

Determining the Resources Required to Deliver The Capital Project

The project schedule will be used to define the project life cycle stages and the tasks that details what activities the professional services team will be assigned to deliver. The level of details of those tasks depends on the level of control that the organization wants to exert on managing those professional services resources. PMWeb scheduling module will be used to create this work plan.

The organization can also assign the resources required for each task. Those assignments will not be used to manage the resources but just to provide an overall understanding of what resources are needed for each task. The assigned resources will include both labor and non-labor resources.

Mapping the Line of Authorities

The organization chart for managing the capital project could vary depending on the project life cycle stage. There could be an organization chart for the initiation stage, design stage which could also change between the concept and schematic phases and the detailed design development phases, procurement, construction and defects liability stage. PMWeb Organization Chart module will be used to define the organization chart for each stage showing the line of authorities for the needed resources for each stage.

Formal Appointment of The Required Resources

The next step is to book and assign the resources needed for each project management task within each phase as defined in the project schedule. Of course, there is also an option to book the resources for each type of PMWeb process, for example Budget or Budget adjustments. Nevertheless, this is not recommended as can prove to be very complicated to manage. For each task, PMWeb resource requirement will allow defining the resources, labor and non-labor, along with the start and finish dates for each resource and the number of hours needed per day. Those hours can be assigned as regular, overtime or premium type of hours. This will become the basis for calculating the estimated cost of resources.

Capturing Actual Resource Hours

During the project execution, the actual resource hours spent against each project management task within each stage will be captured using PMWeb timesheet module. Actual reported hours can be reported as regular hours, overtime, premium or any other type of defined hours category. This is important as the actual cost of those consumed resources will be determined using the rate for each type of hour charge. The CBS level for each resource charge should be also selected. Similar to all other PMWeb modules, a workflow can be assigned to the timesheet to formalize the submit, review and approve steps.

Reporting the Estimated and Actual Resources Cost

PMWeb cost ledger will automatically capture the estimated cost of booked resources done using the resource requirement module and the actual cost of spent resources using the timesheet module. This cost data will become available for the cost worksheet module where the organization can define a worksheet that details the estimated, actual and actual cost of resources employed on the project. PMWeb cost worksheet allows defining formulas to do the needed variances and key performance metrics.

The organization can define unlimited number of cost worksheets to display the project cost information in any desired format. The cost worksheet could be for a single project or multiple projects. The cost worksheet can be exported in MS XLS format to enable the organization to further analyze and report on the captured resources data.

Assessing the Performance of Booked Resources

PMWeb provides the organization with the option to score each booked resources’ assignment. The scoring could be related to the quality of work delivered by the assigned resources for the scope of work assigned, meeting the target completion date, estimated hours versus actual hours, among others. The scoring is very diverse and could be based on Yes/No, values, dates, selection from pre-defined list of values among others. In addition, each score could have a weight value to enable having an overall weighted performance score.

The same scoring is also available for the organization chart, nevertheless, the scoring criteria and values could differ or could be the same. It all depends on how the organization wants to score the actual performance of the assigned professional services resources. The scoring list of questions and weights could be pre-defined to become standard that the organization can use across all projects they are managing or involved with.

If the organization is interested in appraising the performance of each specific labor resource, then PMWeb custom form builder can be used to create the resource appraisal template. The template will list the score points available for each appraisal question. The weight factor for each appraisal question can be also be part of the custom form.

The data captured in the custom form and similar to the data captured in all other PMWeb forms will become available for the organization to report on and analyze the results. For example, the report below details how each resource has scored against the appraisal questions with color indicators for those who have achieved good or bad results.

Reporting the Resources Performance

The trust-worthy data captured from the different forms used in planning and managing the labor and non-labor resources assigned to deliver the professional services that are part of the organization scope of work, will become available for creating the needed performance analysis reports and dashboards. Those reports and dashboards will provide the organization with immediate alert of undesired performance trends as it relates to planned productivity rates and budget cost.

Why Digital Transformation for Capital Projects is a Must and not a Choice?

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No one can deny that capital projects are the least in adopting digital transformation compared to other industries and practices. This lack of digital transformation is not only wasting the opportunities that organizations could have from improved efficiency in doing everyday project related processes but increasing the high-cost risks associated with lack of transparency and accountability, access to reliable and timely projects’ big data, faulty projects performance reporting, make misinformed decisions and repeated mistakes.

Digital transformation for capital projects delivery should at least address the following areas:

Project Management Information System. This is an integrated platform like PMWeb where the organization will use to automate all project management process, analyze the performance of those processes, share projects performance details with the stakeholders, support the project-related decision-making process and capture the reuse the knowledge gained from performing the project management processes.

Planning and Scheduling. Applications like Oracle Primavera P6 will be used to develop and maintain the project’s implementation schedule. This can also be improved by using Oracle Primavera Risk Analysis to identify the impact of risks on project’s confidence level in meeting the target milestone dates.

Cost Estimating. Applications like Nomitech CostOS will be used to develop the project cost estimate regardless of the level of detail. Cost estimates will be linked to cost database that can be specific to the organization or use third party cost database application.

Building Information Modelling (BIM). Applications like Autodesk Revit will be used to develop the project design scope of work and drawings. The BIM 3D data can be integrated with the project schedule to create the 4D and cost estimate to create the 5D. BIM 3D data can be also integrated with the PMIS when issuing RFIs, Submittals, Change Orders among other project communications.

Digital Signature. Applications like DocuSign will be used to digitally sign project documents to enable using them in formal communications instead of having hard copy of project communications.

Internet of Things (IoT). RIFD sensors which will be used to capture labor and equipment movements and details, tagged to procured material and equipment assets, gas and temperature sensors, air wind and other type of sensors.

Video Recording. Drones and fixed site cameras are used to capture details of projects’ performance, site security and site conditions. The captured videos and still pictures can be further used to for quantity takeoff, site analysis among others.

In this article, we will only focus on the Project Management Information System (PMIS) and how an application like PMWeb can help those involved in delivering capital projects to drastically improve their current practices that lack this digital transformation. The assessment will focus on the five-areas that digital transformation will add value to the capital projects delivery. Those are data capturing, data analysis, data visualization, decision making and knowledge management.

Data Capturing

PMWeb PMIS allows the organization to automate the processes needed to manage the project’s delivery. Those could be processes that relate to project scope, schedule, quality, human resources, communications, risks, procurement, stakeholder, health and safety, financial, claims, sustainability among others. For each process, there will be an input form to capture the right data along with all supportive documents. Although PMWeb comes ready with most forms, nevertheless the custom form builder allows creating any needed additional forms in any desired language. Each form will be assigned a workflow to map the resources who are assigned to submit, review and approve the process in accordance with the set roles authorities’ levels. For example, a change order that exceeds certain amount might requires additional approval level.

Data Analysis

The real-time data captured by the PMWeb forms will become available for the authorized project team members to review and analyze to identify performance trends, data correlations, transactions growth and transactions exceptions. The data can be visualized in tabular or graphical format to improve the analysis and communicating the results of the analysis. The analysis is also used to forecast the impact on at completion project objectives based on actual performance achieved to date.

Data Visualization

One of the key objectives to achieve project success is engaging the right stakeholders in the project delivery. Those stakeholders are keen on being informed of the single version of the truth of the capital projects delivery status. The need of what to visualize vary depending on the stakeholder role, interest and influence on the project. Therefore, dashboards are the best method to communicate projects’ performance status with stakeholders. Dashboards could be designed to report on projects’ portfolio performance, program or strategic initiative performance or just a single project performance. For some stakeholders, their interest might be limited to the project’s financial performance or other specific aspect of a project.

Decision Making

Having the insight to make better and faster informed decisions could be to a large extent what will make a project delivery to succeed or fail. The real-time data analysis provides the decision maker with the needed information needed to make the best decisions as well as assess the impact that this decision could have on the project’s objectives. In addition, an application like PMWeb provides the decision maker with process to capture those decisions and the actions identified to implement the taken decision. The action management process provides the platform for those assigned resources to collaborate and communicate the status of their actions until all have been executed. This will enable the decision to have real-time tacker of all decisions made and their status.

Knowledge Management

It has always been said that 70% of knowledge management is achieved when it is recorded. Having a PMIS like PMWeb, the content of all project management processes captured become immediate knowledge. In addition, by enforcing lessons learned process, the knowledge gained by the project team members can captured and shared with the project delivery team. Many organizations would have the contribution of lessons learned as an integral component of project team members performance appraisal.

Conclusion

Organizations who have started adopting digital transformation on their capital projects delivery understand more than any other organizations the value of this decision. The risk of incurring the high cost in terms of inefficiency in managing project processes, misplaced project records and documents, project fraud and unauthorized actions, disengagement of stakeholders, wrong decisions, lack of accountability and collaboration, wasted knowledge among many others could be drastically reduced when proper digital transformation is implemented.

It is well understood that for some organizations, digital transformation could be an investment that might not be considered as a priority, nevertheless if the massive savings of digital transformation is taken into account, then the digital transformation decision could have the return of investment (ROI) that far exceeds any other investment that the organization might be considered. Actually, it is an investment that could be for itself in few months compared to others.

Managing Capital Projects Life Cycle Stages: The Project Defects Liability Period Stage

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The defects liability period is a set period of time after the construction project has been completed during which a contractor has the right to return to the site to remedy defects. A typical defects liability period lasts for 12 months. During this period, it is actually the contractor’s responsibility to identify and rectify defects, not the project owner, so if the project owner does bring defects to the contractor’s notice, they should make clear that this is not a comprehensive list of all defects. The contractor needs to rectify all reported defect and make them good within a reasonable time.

Construction Closeout Checklist

It is a must to obtain stakeholder, or end users, acceptance of the project result. This means that the stakeholder agrees that the quality specifications of the project parameters have been met. In order to make this go smoothly, the stakeholder and project manager must have a well-documented criteria of performance in place from the beginning of the project. This can be achieved by having pre-defined project close-out document templates for each deliverable type. PMWeb custom form builder will be used to create Handover of Closeout Items document template. There will be different templates for each deliverable type. For example, there will be document template for Operations and Maintenance Manuals, Testing and Commissioning, Training Manuals, Master Keys, Spaces, Equipment, Spare Parts, Warranties, Completed Final Snag List, As-Built Drawings among others.

Capturing Project Assets

Project owners who will be responsible for maintaining and operating the completed project’s assets need to maintain a detailed register of all those assets where they can capture all defects requests either identified by the contractor or raised by the users of those assets. PMWeb assets breakdown structure helps the organization to capture the details of all those assets. The assets catalogues, operation and maintenance manuals among other related documents can be uploaded into PMWeb document management repository and attached to the asset.

Spare Parts Inventory

Most construction contracts require the contractor deliver spare parts for the equipment and other assets that were delivered as part of the contract. Project owners might take delivery of those spare parts and store in their warehouses or keep them as the vendor or supplier own warehouses. Regardless which warehouse those spare parts will stored at, the project owner needs to maintain a register of those spare parts. PMWeb inventory module allows the project owner to capture the details of all those spare parts and their locations.

Defects Requests

To ensure that all reported defects are captured and actioned by the contractor without delay, the project owner must impose a process for submitting those requests and ensuring that the contractor is made aware of those requests so he can rectify at the earlier. PMWeb defects request module will be used by the project owner team and other authorized users to report those defects requests. It is recommended to attach pictures of the reported defect to provide the contractor with better understanding of what needs to be rectified.

Work Orders

Work Orders will provide the details of the work done by the contractor to rectify the reported defect. The work order will be generated from the defect requests submitted by the project owner. When the rectification is completed by the contractor, the workflow associated with the work order will ensure that the work order is received by the project owner to review and approve.

Asset Performance Reporting

The data captured in the asset definition, spare parts at the inventory location, defects work requests and defects work orders among others will become available to the organization to report on it in any desired format. The report displayed below is an example of an asset report that can provide executives at the organization with details on the asset performance.

Capturing Lessons Learned

Capturing lessons learned and knowledge gained should never be limited to a specific project life cycle stage. Organizations who are keen on becoming a learning organization where continuous development is a must and not a choice, they need to formally implement the capturing of lessons learned process. A lesson learned form will be created using PMWeb custom form builder where each project team can share his or her knowledge using this template. The form will have attributes for those lessons learned to improve categorizing and reporting this shared knowledge. The workflow assigned to the lesson learned from will ensure formal reviews of this contributed knowledge before making it available for the organization’s team members.

Reporting on Lessons Learned

The data captured in the lessons learned will become available for the organization to report on it in a format that will make it easy for the users to locate the needed knowledge. In addition, other reports can be created to assess the contribution provided by the different project team members to appraise those who are more active than others in sharing knowledge. Of course, this will take into consideration the quality of shared lessons learned.

Sustainability Report

Today there is growing trend among public sector organizations as well as large private sector organization on reporting on their projects contribution the United Nations Development Program (UNDP) Sustainability Development Goals (SDG). Those organizations need to report on how their projects have contributed to the three perspectives of those goals: Environment, Society and Economy. To achieve this, the organization needs to identify the planned contribution that the project will have for the SDG 17 goals when completed. This will be monitored and assessed during the project execution until final delivery. Using PMWeb custom form builder, the Sustainable Project Management report will be created to capture this information every quarter.

The sustainability assessment data from all projects that are being delivered by the organization will them become available to be reported on. The dashboard displayed below is an example of how an organization is using the sustainability performance data to report the contribution of their projects portfolio toward achieving the UNDP Sustainability development goals (SDG). The dashboad shows the contribution against Environment, Society and Economy perspectives and an overall SDG performance.

Managing Capital Projects Life Cycle Stages: The Project Construction Stage

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The project construction stage is the stage where the final products of the project will be produced for the project owner to use after the project handover to generate the targeted revenue to justify the project investment. It is the stage where the bulk of the project investment will be spent and will carry the highest risks that could cause delayed project completion, budget overrun, failing to meet quality standards among others. The construction stage would usually include an engineering consultant to supervise the project execution, a project management consultant to manage the project delivery including the contractual and commercial aspects, and of course the contractor(s) along with their subcontractors, nominated subcontractors, suppliers among others.

Letter of Award

The letter of award is the formal letter that the project owner will issue to the successful contractor confirming the award of the project. This will enable both parties of the contract to finalize the requirements for signing the contract agreement including providing the performance bond, insurance documents among others. Similar to other standard letters, PMWeb correspondence module will be used to issue this letter of award which is usually created as one of the templates that can be used when needed.

Contract Award

PMWeb will be used to capture the details of the awarded contract including the terms and conditions as it relate to retention on completed works, material on site, advance payment recovery, VAT, Tax Withheld, Zakat among others. The contract will include the bill of quantity line items with the quantity, unit of measure and unit rate.

Using PMWeb report writer module, the organization can create the complete contract agreement template for which the particulars will be captured from contract form. This will ensure that the formal agreement signed with the contractor reflects the terms and conditions and other particulars that have been already added to PMWeb contract module.

To ensure that planned invoicing by the contractor is aligned with the approved planned budget spending, it is highly recommended that anticipated commitment spending be defined for the contract line items. The distribution for each project period could be based on the many default distribution profiles or it can be created manually. Some organizations opt to create this distribution using the project scheduling software which could be either Oracle Primavera P6 or MS Project.

Performance Bonds and Insurances

The organization needs to keep track of time-sensitive documents such as advance payment guarantees, performance bonds, insurance and warranties issued against each contract. PMWeb will be used to have a real-time report to provide alerts when any of those time-sensitive documents expiry date hits a pre-defined threshold.

Change Management

Changes in a capital project could occur because of many reasons and causes. To list a few, changes could result from intent of documents not “reasonably inferable” and corrections required, unknown conditions necessitate changes, project 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, specified product inappropriate, adjust contract sum for difference in actual cost versus allowance, estimated quantity of work for unit prices changes, revision of unattainable requirement among others.

Project owners use PMWeb to enforce contractors and other entities involved in delivering the project to formally submit all potential changes as soon as they are recognized. This by no mean indicates the project owner acceptance of those changes but it is critical to start the process on how to stop this potential change order to become an actual change if it is not a requirement for delivering the project. Even if it is a requirement, the objective is how to implement this change with the least impact on the project approved budget and target completion date. PMWeb potential change order module helps to enforce the early warning notification.

For those potential change orders that have merit and could result in a change order, the project owner needs to create a change event that will capture the impact of this change on both, the approved project budget as well as the awarded project contract.

For those change orders that are either approved, disputed or under negotiation, PMWeb change order will be used to capture their details. Those details will include the cost breakdown as well as the additional delay days associated with this change. In addition, all documents that are related to the change order need to be attached as well as other related PMWeb records like RFI, Daily Reports, etc. as well as email communications need to be linked to the change order. Similar to other project records that require formal submission, review and approval, PMWeb workflow will be used to map those workflows to enforce the needed accountability.

This will enable the organization to keep track of all changes including details on their status, type, reason, amount, impact on project schedule and other needed information. In addition, the organization can have a report that will report on change orders across their complete projects portfolio. This will provide the organization with unmatched knowledge on the reasons of changes and what actions need to be done to reduce the occurrence of change orders on their projects specially changes that were due to errors, mistakes and negligence.

Progress Invoices and Actual Cost

At the end of each month, the contractor needs to submit the progress invoice application for the completed works on site as well as for material delivered to the construction site. The contractor will certify that work covered by application conforms with the contract documents and that previous amounts paid have been properly applied to discharge contractor’s obligations on project. The engineering consultant appointed by the project owner needs to review the application and confirms to the best of his knowledge, work covered by application in conformance with contract documents. PMWeb progress invoice module will be used to capture the details of those invoices along with the approvals for invoiced work.

The actual cost incurred by the organization in delivering the project investment is not limited to the progress invoices issued against the awarded contracts but it could also include miscellaneous invoices and reimbursable expenses incurred by the engineering consultant and project management consultant. Those invoices and similar to all other cost related records in PMWeb can be in any currency. PMWeb currency exchange module will convert those amounts, if required, to the standard currency used on the project.

For project owners who are interested in capturing the cost of their own resources spent on managing the project’s delivery, they will use PMWeb timesheet module to capture the manhours of those team members. PMWeb allows the organization to define the cost rate for each resource including the rate for regular hours, overtime hours, prime hours among others. Similar to other PMWeb records, a workflow can be assigned to the timesheet to formalize the submit, review and approve process.

Earned Value Analysis

The data captured from progress invoices, miscellaneous invoices, reimbursable expenses and cost of resources as per the timesheets can be aggregated in a single report to provides transparency against the actual cost incurred to date on the project. This will also enable doing the earned value analysis by comparing the planned budget spending (PV), earned value for completed works (EV) and the actual cost (AC). The earned value metrics including Schedule Variance (SV), Cost Variance (CV), Schedule Performance Index (SPI), Cost Performance Index (CPI) and Variance at Completion (VAC).

Funding Management

Most project owners, regardless if they were private sector or public sector, will be seeking funding for their project investments. Project funding could be through raising debt or through government funding. PMWeb will be used to capture all available funding sources, funding requests and funding authorizations.

Consolidated Financial Reporting

To achieve the desired financial transparency and single version of the truth reporting on the project’s financial status, the organization needs to have a single report that will display all cost and financial transactions that could have affected the project budget, contracts, change orders, progress invoices, funding among other. Usually this report will take the format of a spreadsheet where the rows will represent the cost breakdown structure (CBS) levels while the columns will be for the different type of financial records as well as columns with calculated fields from the captured financial records. There could be different spreadsheets calculated to represent the needed information in the desired layout. PMWeb cost worksheet module will be used to present this information.

Reporting Milestones Performance

One of the requirements for each project is for the contractor to submit the detailed project schedule which details the mobilization, submittal, procurement, construction, commissioning and handover as well as project management activities needed to deliver the project’s scope of work. The project schedule should incorporate the milestone dates that are part of each contract agreement. As this schedule, when approved as the baseline schedule, will become the basis for reporting the project’s performance and assessing the impact of changes and other delay events on the project’s milestone completion dates, a formal review and analysis need to be performed before approving the schedule. PMWeb custom form builder can be used to create a detailed schedule review and analysis template to ensure comprehensive and formal approval of the schedule.

Another template can be created to review and analyze the monthly schedule update submission to ensure that the current schedule is achievable and reflect the true status of the project. Again, PMWeb custom form builder will be used to create the Monthly Milestone Report where the assigned to project team member needs to provide the current milestone actual or forecast date along with the reason for any schedule variance. The report will be attached with the updated schedule reports which could include the Critical Path Report, Delayed Activities Report, 6-Week Lookahead report, Milestone Report among others.

The data captured in the Project Milestone form at the end of each progress period will be used to provide a status report that will detail the milestones performance trend and they are on time, ahead or behind schedule. The report will also detail the delays encountered by those milestones if any. The report will include a visualization to classify the project entity that was responsible for the reported delays. Of course, the report could have been designed in different form and format to display additional information if needed.

With the growing trend of delay, disruption and constructive acceleration claims, the project owner needs to take a formal approach in capturing the particulars of those delays and the analysis that was carried out to determine if the delay was excusable or not, and whether the contractor will be entitled for any costs associated with the excusable delay. Another custom form can be created in PMWeb to capture the delay analysis as well as all project documents and records that are related to this delay analysis. This will enable the organization to have a report to provide immediate visibility on all Extension of Time (EOT) requests and their status.

Maintaining Contract Documents

The construction documents that were part of the contract documents when the project was formally awarded to the contractor need to be maintained. All revisions to those documents need to be documented and made available to project team to ensure that the latest version of each document is what is being used. PMWeb drawings module will be used to capture all those construction documents and the issued version for each document.

BIM Models

For projects that have selected the Building Information Modeling (BIM) for developing the project design, the entities involved in delivery the project would need access to those BIM models to select the BIM objects that could be part of a Request for Information, Change Order, Submittal and any other project management process being implemented on the project. PMWeb BIM model viewer allows the user to select those BIM objects, take a snapshot of those selected objects and then attach to the desired PMWeb record.

Project Request for Information (RFI)

RFIs are initiated by the contractor, asking for interpretation of item in contract documents. The need for interpretation is needed when work not sufficiently described or reasonably inferable from contract documents or for changed or unforeseen conditions. PMWeb RFI module will be used to capture, manage and report on all RFIs submitted during the construction period.

Project Submittal Management

Submittals are a very important process of every capital project as it helps to demonstrate the contractor’s understanding of contract documents and how the contractor intends to execute project requirements by identifying products selected from acceptable products in specifications, detailing how items constructed and interface with adjacent construction and Certifying that products meet or exceed specified requirements. PMWeb submittal items will be used to manage all types of project submittals. For each submittal, shop drawings, catalogues, manuals, certificates among others will be attached to the submittal. The workflow will be used to formalize the submission, review and approval for each submittal. Conditions will be added to the workflow to ensure that the right submittal review team is involved in the workflow process depending on the submittal attributes.

This will enable the organization to have a complete real-time visibility of all submittals made and their status. The submittal log report lists all submittals that the contractor needs to submit for approval. The log will detail the submittal particulars as well as the date that the submittal needs to be approved. This date will be picked from the project schedule where it is important to include each submittal item as an activity in the project schedule which in turn will be assigned to the submittal item in PMWeb.

Of course, graphical reports and dashboards can be created to provide an overall status summary of the submittal process. For example, the dashboard shown below has each submittal type shown as a donut chart for which it shows submittal still not made, submittal made and approved, submittal need to be resubmitted and rejected submittals.

Site Inspection Requests

Contractors will be required to submit a formal request for the engineering consultant to inspect the completed works on site. The content of the site inspection can be designed to meet the requirements of each engineering consultant using PMWeb custom form builder. If the form is accessed using a smart phone like iPad, when the user clicks on attachment, PMWeb will give the option to take a picture or video. Similar to other PMWeb forms, a workflow can be assigned to the site inspection to formalize the submit, review and approve the inspection.

Non-Conformance Report

A Non-Conformance Report is a document that keeps track of deviation and work that fails to meet standards and specifications. The common situations that will require the issuance of an NCR include Work that was not built as indicated in the approved Issued for Construction Drawings, work that fails to meet specified tolerances as established in the project specifications, work that is being performed using non-approved methods or standards. when the testing and inspection plan is not followed as agreed, when testing results demonstrate that the product does not meet established and approved standards, when a material is used and has not been approved as a substitute (equal or similar), when design is not accurate and does not represent actual field conditions and when the approved procedure was not followed, and quality defects have been identified by the project team.

PMWeb custom form builder will be used to design the NCR in any desired format as shown above. Capturing the NCRs and corrective actions will enable the organization to maintain a report listing the status of all NCRs including pending and closed ones. The report could include visuals to provide quick visualization of the volume of NCRs issued to date and those that are still pending rectification.

Capturing Daily Events

Daily report is an important project formal communication that a contractor must submit on daily basis to report on was achieved during that date, resources, labor and equipment, employed on the project, weather conditions, progress photographs and other important incidents occurred on that particular day. PMWeb daily report module will be used to capture those details.

Safety Incidents

The contractor is responsible for conducting investigations of safety accidents and the engineering consultant or the project management consultant will witness the accident but should not investigate and will only record facts as observed. PMWeb Safety incident form will be used to capture the details of all those accidents.

In addition, PMWeb custom form builder can be used to create additional forms that could be needed for a comprehensive HSE process. For example, the custom form builder can be used to create safety and environment checklists as well as hot permits, confined space permits and other type of permits that could be needed when constructing a project. Capturing the data from this different forms, will enable the organization, to have a comprehensive HSE dashboard that provides analysis of the project’s HSE performance.

Snag List

When the contractor completes the project scope of work, snag list or punch list is an important process used to enable the project owner to issue the Substantial Completion Certificate. The contractor will prepare the Punch List which will list incomplete items or items in need of remedial work and submit to the engineering consultant who will review and add any other items after inspection. This punch list will be attached to certificate of substantial completion which will include time limit to perform the outstanding work. PMWeb punch list module will be used to create the list. The location breakdown structure helps the contractor and consultant to clearly locate and describe items of work to be corrected along with the responsibility for correcting and when.

Substantial Completion Certificate

Substantial Completion Certificate is a document verified by the engineering consultant, or project owner that the project is substantially complete and is approved for payment by the general contractor on the date of final payment. Substantial completion is in essence means that the project owner can use the building as intended. It usually indicates that only minor, punch list type work remains. The date of substantial completion triggers the releasing half of the retention, ending the contractor’s liability for liquidated damages and signifying the beginning of the defects liability period. Similar to all other letter templates, PMWeb correspondence module will be used to create those templates and use them as needed.

Managing Capital Projects Life Cycle Stages: The Project Procurement Stage

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One of the most common approaches in constructing engineering and construction projects is the design-bid-construct approach where the project owners will invite qualified contractor to bid on the project’s scope of work as defined in the construction documents. The project owner might also consider fast track the project delivery by dividing the project’s scope of work into bid packages where different contractors could be qualified to bid on one or more than bid package.

Companies Directory

Organizations need to maintain a single directory of all entities that they have either worked with in the past or might consider working with them in the future. Those entities include consultants, project management firms, contractors, suppliers, vendors as well as government entities and local authorities where permits and approvals are needed to be issued. PMWeb company directory provides a single repository for capturing those companies’ details. The captured data includes details on the entity staff and resources as well as their contacts. In addition, it includes details on their insurance documents, registrations, ISO certifications and other time-sensitive documents.

Prequalification

Nevertheless, companies who were qualified to participate on the organization’s projects might now not have the financial and technical capabilities to participate in future projects that the organization might offer. In addition, there are many contractors, suppliers and vendors that are new to the organization and need to submit their qualifications to be reviewed and assessed before they are invited to bid. PMWeb prequalification module provides the organization with a platform to design their prequalification requirement to capture the needed data to be provided by those entities who want to do business with the organization. The prequalification template also provides hyperlinks to government entities that the entity who are submitting the prequalification might need to register with like for example the Civil Defense, Municipality among others.

The organization can define their own prequalification scoring requirement where different prequalification items can be defined along with the scoring points and the weight they have from the overall qualification score. This will enable the organization project team member to adopt a comprehensive prequalification process but yet objective when it comes to assessing the capabilities of those entities. The prequalification module uses the same company code used in PMWeb company directory to highlight if the company is already qualified to be invited to bid or not.

Contract Agreements

The organization must ensure that they have the right contract agreements to enforce the terms and conditions required to transfer the risks to the third party or the buyer. The buyer could be the consultant, contractor, subcontractor, vendor, supplier among others. PMWeb allows the organization to maintain a repository of all type of contract agreements that the organization is currently using or planning to use on future projects. For each contract agreement, the organization can capture the details of all clauses along with the notes to be considered against each clause. Additional attributes for category and type can be used to identify the risk owner of those clauses. Using the attachment option, the contract agreement document can be uploaded and attached to the reviewed contract agreement.

Procurement Strategy

Using the same PMWeb cost estimate module which was the basis for establishing the project’s performance budget, the organization will identify the procurement strategy for delivering the project scope of work. The organization can have a single contract for delivery the project’s construction scope of work or divide into bid packages to fast track the project’s delivery. For each package, the relevant cost estimate line items will be selected. In addition, the organization can select the companies who will be invited to bid on the bid package scope of work.

Invitation To Bid

Depending on the organization’s procurement policy, they might decide to advertise for bids or send invitation to bid letters to those companies who are qualified to bid. PMWeb correspondence module will be used to issue those invitation letters which are usually pre-defined as letter templates that can be used when needed.

Using the PMWeb Notification tab, those invitation letters can be sent via email from within PMWeb itself. The advantage of doing so is that those invitations sent will be posted on the notification tab to provide the organization with record on when those invitations were send and to who.

Online Bidding

The invitation to bid letter will provide the bidders with the link to PMWeb online bidding module where on the specified bid submission dates, those contractors need to go online and submit their bids detail. The online bidding module includes tables for acknowledging the bid submission.

Evaluating Bids

The submitted bids will become automatically available in PMWeb procurement module. This will enable the organization to compare the submitted bids with the approved project cost estimate. This bid line items comparison is crucial for the organization to identify unbalanced bids including bids that are front loaded.

The bids data submitted by the contractors will become the basis for performing the commercial analysis for the submitted bids. In addition, the organization can capture the technical details of each bidder including bid bonds submission, past experience, registrations, and other items needed to do the technical assessment of each bidder. Similar to the commercial evaluation report, the organization will have the technical evaluation report.

Letter Of Intent

Based on the technical and commercial assessment of the submitted bids, the organization will select the successful bidder. This announcement is usually made by issuing a letter of intent to the selected bidder for which the organization conveys their intent to sign an agreement with them. The letter of intent is non-binding commitment to sign the contract agreement. PMWeb correspondence will be used to issue the Letter Of Intent for which the organization will usually have a standard letter template to be used.

Similar to other project life cycle stages, the project team needs to adopt the stage gate best practice to formally confirm that the SMART deliverables of the procurement stage had been formally submitted, reviewed and approved.

Managing Capital Projects Life Cycle Stages: The Project Design Stage

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For capital projects, the design stage is crucial for the project success as the different end user requirements are captured to be developed into design drawings, specifications, contract agreement and bill of quantities for which the qualified contractors can bid on to execute the project’s scope of work. It is during this stage where the project realistic completion date can be established as well as the project investment budget can be finalized. In addition, the risks identification and mitigation actions will be performed during the design stage to ensure not only enough contingency been allowed in the project’ completion date and budget but to ensure that the contract agreement terms and conditions incorporated the clauses to transfer the risks to the successful contractor.

Performance Schedule

Using the WBS levels developed earlier, the project management team needs to develop the project delivery schedule which in a way reflects the strategy that the organization wants to execute in achieving the final project product that will generate the target revenue to attain the desired return on investment. During the design stage, the project schedule will be continuously detailed and updated to reflect the project scope development and additional information that will become available for the project management team.

Although it is very common to user Oracle Primavera P6 for developing the project schedule, nevertheless, it is very important to capture the schedule data into the PMIS as it needs to be extracted with the other project management aspects administered and managed using the PMIS. Therefore, the project schedule data will be imported into PMWeb to become available to other project management processes.

Project Performance Budget

By nature, every capital project is an investment. It is very critical that new cost estimates are developed at the end of each phase of the design stage. For example, cost estimates need to be done the concept, schematic, 30% design development, 60% design development, 100% design development and construction documents phases. Each cost estimate version should be formally reviewed and approved.

The approved cost estimate will be the basis for generating the project budget. The budget will include provisions for contingency, management reserve, funding among others. Similar to the cost estimate, a performance budget should be generated at the end of each design phase which needs to be formally reviewed and approved. One of the key requirements for the performance budget is to develop planned spending for the approved budget where each budget cost center will be linked to the project schedule to identify the start and finish dates of those items.

When the budget is approved, any adjustments or transfers must be done through a formal process known as the budget requests. Through this process, any increase or decrease to the approved budget needs to be detailed and formally submitted for review and approval. This also applies for budget transfers where funds will be moved between cost centers but without increasing or decreasing the approved project budget. As an example, this could be to transfer funds from contingency to concrete works.

The integration of project schedule and project budget will enable the project team to report on the project schedule and budget performance. The reports can be designed in the format that the organization along with the project team can best use to ensure that there will be no delays to the project target completion date and no increase to the approved project budget.

Project Document Management

During the design stage, there will be a lot of documents that will be generated to detail the project scope of work that will be made available for qualified contractors to bid on. In addition, there will be a lot of documents that relate to the meetings, permits and other communications that took place between the different project stakeholders to define and approve the project scope of work. PMWeb document management repository will be used to create the folders and subfolders to upload and store those electronic documents.

For the uploaded documents, attributes and other important details of each document can be added. Uploaded documents can be viewed online as well as marked with comments. PMWeb will allow the user to search for uploaded documents including the content of those documents if they were readable. In addition, the option of checking out and checking in documents is important to maintain track of all document versions.

Communication Management

Project communication is not limited to the design stage but actually it starts from the first day a project idea is incepted. Nevertheless, what makes communication unique and of great importance on a project, is that most communications are formal communications between the different parties of the entities that will be involved in delivering the project. There is predefined type of formal communications that are common to the engineering and construction such as Transmittals, Meeting Minutes, Request for Information, Correspondence among many others. One of the best practices in project management, is to have what is known as Responsibility Assignment Matrix (RAM) to list those communications and what entities will be responsible for submitting, reviewing, approving and sharing those project communications.

This will enable the project team to define the workflow steps that need to be followed by the different project entities to ensure successful yet contractually binding collaboration. Those workflows will include conditions to ensure that level of authorities to approve communications is part of the automated workflow.

By automating project communications, the project team member as well as other entities involved in delivering the project will have real-time report of all actions that are due for them as well as the status of those project communications. The report can be designed to identify delayed project communications are red while those that are critical by not delayed as Cayan and non-critical non-delayed communication as Green. The report can also include visuals to group communications by status, type and the issuer.

Risk Management

By nature, risks are part of every project delivery as it is about to delivering products in the future based on what is known today. Therefore, the project team need to make many assumptions to allow for those unknowns. The best practice of Risk Breakdown Structure helps the organization in enforcing a formal process for identifying project risks which could be due for many causes. For each risk, the project team member needs to identify the likelihood and impact that this risk could have on the project’s completion date and approved budget if it actually happens. This will help the organization to identify possible response actions to reduce the exposure of this risk. Those response actions include avoiding the causes of the risk, treating the impact of the risk and transferring the risk to a third party which could be the contractor for example. Managing project’s risk is an ongoing process and will continue until the project is completed.

Stakeholder Management

Managing the stakeholders who could directly or indirectly influence the project’s successful delivery is very critical. The project team needs to identify those stakeholders and get them engaged in the project’s delivery in a positive way. This would require sharing important project information that matters most to those stakeholders in the form and format that is best suited to them. Those could be in the format of logs identifying actions needed from their end or dashboards that detail the performance information that they want to be made aware of.

Design Deliverables

The project owner needs to ensure that the engineering consultant is delivering the design stage scope of work as planned. PMWeb design deliverables module will be used to capture the details of all design deliverables as per the design services agreement scope of work and the status of those deliverables. The design phase performance report will provide details on the status of those deliverables and their percent complete and if they have any impact on the design stage milestone dates.

Value Engineering

With the growing demand to improve the value of capital projects investment, the best practices of value engineering become a must to be part of any project delivery. The engineering consultant along with the project owner’s project management team need to formally implement the value engineering workshops to identify ideas that could improve the overall project life cycle cost. Those would result in VE proposals for which the advantages and disadvantages of each needs to be analyzed before deciding on either accepting or rejecting the VE proposals. PMWeb custom form builder will be used to capture all VE ideas and their evaluation as well as VE proposals with their advantages and disadvantages. This will not only ensure that VE best practices are formally implemented but will capture the VE knowledge across all projects delivered by the organization and make this knowledge available for future project investments.

Similar to other project life cycle stages, the project team needs to adopt the stage gate best practice to formally confirm that the SMART deliverables of each phase within the design stage had been formally submitted, reviewed and approved.