Can Project Management Information Systems (PMIS) Stop Project Fraud?

The recent drop in oil prices is creating great pressure on project owners in both public and private sectors in Saudi Arabia, UAE and other Gulf countries, to come up with measures to improve efficiency and stopping waste when it comes to delivering projects. Measures that will the focus on optimizing the selection of projects as well as measures to improve the delivery of the selected projects.

Those measures should not be limited to improving the project management practices and developing better project managers and team members but should also focus on how to curb actions that are intended to harm a project. Those are the actions as are usually labelled as “Project Fraud” actions which could include but not limited to:

  • 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

Fraud is very much a part of every business and projects are no different specially when there is lack of governance and control. Actually, there are more chances in project fraud than other type of frauds where usually corporate policies and procedures are well enforced and internal or external audit is a requirement.

So how can Project Management Information System (PMIS) help project owners in stopping project fraud?

First, let us define what is a PMIS? It is solution that will enable project centric organizations to manage their portfolio of projects and programs following best practices and recognized standards in project management. A PMIS provides a collaboration platform that enables all project stakeholders and team members to access needed projects data in a secure and authorized format. The PMIS should be web-enabled to allow authorized access anytime, anywhere using any device. A PMIS should have reporting and dashboard capabilities to enable data sharing and visualization. A PMIS should allow storing all types of project documents and records. A PMIS should be configurable to allow meeting the specific project management requirements of the project stakeholders. Finally, a PMIS should comply with the local requirements and regulations of where it will be used.

Accordingly, the PMIS will be used to help organizations to stop “Project Fraud” through the implementation of the following functions and features that any capable PMIS solution should provide as a minimum:

  1. Enforcing an effective and efficient implementation of the different project management procedures that need to adopted on a project.
  2. Enforcing a reliable performance and financial reporting
  3. Enforcing an effective early warning system of all delayed actions and approvals
  4. Enforcing a formal audit of ISO quality best practices
  5. Enforcing a legally-correct project communication
  6. Enforcing a formal appraisal of companies and project management team members
  7. Enforcing a robust document management system

Enforcing an effective and efficient implementation of the different proArticleClaim3ject management procedures

One of the key functions of a Project Management Information System (PMIS) is the ability to map the different project management processes that need to be implemented on a project. This will require either using the standard pre-defined project management forms or customize new forms to capture the needed project information. The quantity of Forms also known as Document Templates that are used on a project can vary depending on the level of governance and control to be exerted on the project. For example,

  1. Request for Information
  2. Meeting Minutes
  3. Daily Report
  4. Snag List
  5. Non Compliance Request
  6. Site Work Instruction
  7. Transmittal
  8. Material Approval Request
  9. Confirmation of Verbal Instruction
  10. Accident Report
  11. Site Inspection Form
  12. Permit
  13. No Objection Certificate
  14. Approved Project Budget
  15. Proposed Change Order
  16. Change Order
  17. Progress Invoice
  18. Risk Record
  19. Issue Form
  20. Lessons Learned
  21. Project Charter
  22. Deliverable Acceptance
  23. Stage Gate Review
  24. Lessons Learned

For each one of the project management document templates, there will be a workflow to detail the steps and the sequence for submitting, reviewing and approving the content of the document template. For some document template, there could be multiple workflow options the depend on specific attributes of the document template such as type of change, amount of change, project system type among many others. The PMIS should enable developing those workflows incorporating all different variables.

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Enforcing a Reliable performance and financial reporting

No organization should allow the “watermelon” syndrome to be the basis for their performance and financial reporting. Organizations who are still dependent on having their team to capture and report project performance and financial reporting using MS Excel or other solutions that depend on data fed by individuals must accept the fact that is being reported on is what others want them to visualize which could be far from the truth.

A Project Management Information System (PMIS) will enforce reliable performance reporting as the content for those reports will be extracted from the data captured in the document templates through the pre-defined workflows. In other words, the reports are based on 100% true, correct and updated data that was not influenced by any team member.

The PMIS can use to develop:

  1. Tabular and Graphical reports that will enable grouping, sorting, filtering and summarizing captured data in the desired format. For example, those could include RFI Log, Change Orders Log, Risk Register, Issues Log among others.
  2. Project Management Discipline Dashboards that will enable grouping data from different interrelated data tables to provide the knowledge needed to better manage this discipline. For example, those could include Cost Management, Risk Management, Document Management, Schedule Management among others.
  3. Project Dashboard that will enable having a single version of the truth of the overall project’s performance based on knowledge captured in the Project Management Discipline Dashboard.
  4. Program, Portfolio and/or Enterprise Dashboards that will enable having an overall view of how a specific program of projects or a portfolio of projects are performing.

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Enforcing an effective early warning system of all delayed actions and approvalsKPI

Having the projects data captured in a Project Management Information System (PMIS) will enable developing alerts that will be triggered when performance for any specific project management process is unfavorable. The project owner need to identify the Key performance indicators (KPIs) that will be used to ensure that approvals and reviews are done in a timely manner to avoid causing delays that could result in claims for time extension, additional finance cost among others.

The Key performance indicators (KPIs) will usually have pre-set limits on when to trigger an alert. Those limits are usually set based on past experience as well as best practices and industry trends. Therefore, if the performance values reported by those KPIs are not correct or not valid because of the delay in reporting them, the decision made will not only be of no value but could even harm the project.

Enforcing a formal audit of quality best practices

There is a growing trend among many organizations to adopt ISO International Standards to ensure that products and services are safe, reliable and of good quality. They look into ISO International Standards as strategic tools that reduce costs by minimizing waste and errors, and increasing productivity. Some of those standards used by Project Owners include ISO 9000 – Quality management, ISO 14000 – Environmental management, ISO 31000 – Risk management, OHSAS 18001 – Occupational Health and safety Assessment Series and ISO 10006:2003 Quality management systems — Guidelines for quality management in projects.

One of our clients have the PMWeb Project Management Information System to create ISO compliance matrix where on monthly basis and for each ISO standard an audit will be performed. A pre-defined weight factor as assigned to each item in the ISO Audit Checklist. Based on the assessment done by the authorized project owner representative, the total ISO compliance score will be calculated which has a high value of 100%. The complete ISO audit will be submitted using the pre-defined workflow to be reviewed and approved. The Audit score will appear immediately on the ISO Audit Dashboard as well as the project dashboard. The PMIS ensure that all ISO Audit forms for all project periods and for all projects is captured on a single database repository.

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Enforcing a legally-correct project communication

One has to admit that Project Managers are not always the right individuals who might be entrusted in right legally-correct project communication. Projects and in particular those for engineering and construction depends on outsourcing the project execution to third parties such as consultants and contractors. This outsourcing is the approach that project owners use to transfer some of the project risks to those organizations. For each contract awarded, there are terms and conditions that both parties of the contract should abide with the full. Whether the conditions of contract are based on FIDIC, NEC3, AIA or any other form of contract, the conditions of contracts sets notification notices that parties of the contract should abide with. Those notifications are legal and need to comply with the specific clauses that they relate to.

To eliminate the risk of drafting or failing the draft the legally-correct notifications and communications, the project owner need to adopt the same best practice of document templates. Some of the project owners are retaining the services of qualified legal firms should they do not have this experience in-house to help in drafting letter templates that are aligned with the contract clauses. This will ensure that that the project manager will use the proper communications that will protect the interest of their organization.

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Enforcing a formal appraisal of companies and project management team members

Without formal appraisals of how companies and project team members are performing it will be hard to identify opportunities to improve as well as communicate the message that “High Performing Organizations” are the organizations want to continue to do business. The appraisal should be based on objective goals that can be measured such as compliance with quality standards, Health, Safety and Environment, Sustainability, being proactive in solving project issues among others.

Similar to other document templates, the PMWeb PMIS was used to develop a form for the appraisal of contractors and consultants as well as project team member. The form lists the different areas that an appraisal needs to be carried on. This form when completed will be formally submitted for review and approval. The frequency of this appraisal process vary depending on the organization’s policy but what is important that all appraisals for all stakeholders for all projects and for all periods are captured and stored on a single database repository. This will enable producing reports and dashboards that would report on this database in the desired format.

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Enforcing a robust document management system

During the project life cycle stages there are so many documents that get exchanged between the different project stakeholders. Those documents come in different formats. Some are scanned communications, others are electronic files of different file formats while others could be videos and videos. Those documents could be interrelated to each other, could be a different version of the same document or could be attached to document templates generated in the Project Management Information System (PMIS). Those documents need to be stored in a folder based structure that is identical to the physical filing system that a project has. The folder based structure not only helps in finding and reviewing related documents but also help in setting access rights to those folders.

Today, many project owners use PMWeb Project Management Information System (PMIS) as their projects filing and document management system. Many of those project owners also have their own corporate electronic document management systems (EDMS) nevertheless they do not want other stakeholders to access the corporate EDMS. They want to completely separate the projects document management repository from the corporate document management repository.

Having a complete storage of all project documents enable the project owner to search and locate any specific communication or document. It will enable the project owner to make better decisions as there is no missing documents that could affect the outcome of their decision.

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Therefore, if you are interested in putting an end to project fraud and have committed to develop the policies and procedures as well as develop the qualified project team to support this initiative, having an integrated Project Management Information System (PMIS) is a must and not a choice.

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