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1. Overview and Function of Project Controls




Project Controls personnel, work processes, and systems provide management with performance information required to effectively manage the project's budget, scope, schedule, and risk. Proper implementation of estimating, cost control, and planning/ scheduling principles enables coordinated development of work breakdown/coding structures, budgets, schedules, analysis, forecasts/ trends, and reports to support project management in achieving the project's cost and schedule objectives. Timely change management, analysis, and trending help identify deviations from plans so that management can make informed decisions on project performance and implement appropriate corrective actions.


To accomplish this, Project Controls utilizes five organizing principles to align skills and methodologies with project requirements, contract strategies and risk management.


1. Organizing and defining


• Identifying Contractual, Client, and Company requirements.

• Establishing the Work/ Cost Breakdown Structures.

• Establishing the Project Controls Execution Plan.


2. Planning and budgeting


• Establishing the project control levels and reporting plan.

• Developing and communicating the baseline costs/ schedules and their basis.


3. Monitoring execution status, performance measurement and reporting


• Accumulating and verifying actual commitments and expenditures.

• Performance Measurement - Identifying project status and progress measurement.

• Timely and accurate reporting/ communicating of status, changes, and trends.


4. Analysis, trending and forecasting


• Analyzing cost and schedule deviations, their causes and corrective actions.

• Identifying trends and forecast impacts.

• Contingency analysis and drawdown.


5. Change management


• Establishing and administering the Change Management Process.

• Controlling changes and adjustments to budgets and forecasts.


The above principles are further detailed below.



1.1. Organizing and Defining


The processes and methodologies employed here establish the basis of all future work and include:



1.1.1. Identification of Project Requirements


The Project Manager ensures accessibility of the contract to the Project Controls team to facilitate compliance of the Project Controls Execution Plan with the contract. This establishes contractual parameters for cost, schedule, and financial reporting and an understanding of contractual terms and conditions, client requirements and expectations, contract/ execution strategies and reporting/ invoicing requirements and their implications to the Project Execution Plan. A thorough understanding of the project requirements ensures that the Project Controls team addresses management's needs to control the work. Client requests for WBS or reporting requirements in conflict with COMPANY's normal execution methods and systems must be brought to management’s attention and any impacts must be assessed prior to agreement.



1.1.2. Subdivision of Work - Work Breakdown Structure (WBS)/ Cost Breakdown Structure (CBS)


The establishment of the project WBS subdivides the project into manageable/ measurable work segments where responsibility for execution can be assigned. It is often depicted as a hierarchical tree of deliverables and services. Where necessary, considerations for risk elements are incorporated. The WBS is the basis for quantification of project scope in the estimating and scheduling processes and is a key interface component of the Engineering, Construction, and Project Management deliverables, work processes, and systems. In conjunction with the WBS development, the CBS is developed to provide the levels of cost control deemed necessary to satisfy internal and external reporting requirements. Development of the WBS/ CBS and the effective communication of this coding structure to the project team are essential for effective management. The Project Manager and the Execution Management team review and approve the WBS/ CBS including the level of cost/ schedule control on the project.



1.1.3. Project Controls Execution Plan (PCEP)


Identifies the project specific plans to execute the project controls work processes, systems, and addresses the staffing/ training requirements of the project. The focus is on what we are planning to do, and how we plan on accomplishing it, rather than a proposal level recap of sound project controls practices. The Project Manager approves the Project Controls Execution Plan. The plan includes but is not limited to the following:


• Estimate Plan.

• Schedule Plan.

• Change Management Plan defining the change management process, forms, roles, and responsibilities including an explanation of the budget types.

• Project coding structures.

• Project Reporting Plan - Standard reports, distribution and distribution frequency.

• Project Controls Systems to be used and the plan to interface them with other systems and data sources.

• Cash Flow Plan.

• Risk Management/ Contingency Management Plan.

• Forecasting Plan including the quantity analysis effort.



1.2. Planning and Budgeting


Planning and budgeting begins with the implementation of the Project Controls Execution Plan. It includes the setup of the project controls systems at the appropriate level of control and the budget and schedule development and communication to the project team. This phase establishes the Cost & Scheduling baselines and ensures that project team execution is aligned with them.



1.2.1. Levels of Control


Level of control is defined as the selection of appropriate WBS/ CBS levels for storing budgets, recording commitments and expenditures, identifying schedule activities, progress measurement, and assigning discipline or craft responsibility. Risk management may also dictate certain levels of detail in order to gain visibility of specific risk elements. Reporting requirements also impact selected levels of control. It is important to select appropriate levels of control in order to correctly configure the Project Controls Systems and avoid duplication of detail stored in other systems. The Cost, Schedule and Progress Measurement systems and work process are typically at different multiple levels of detail and in accordance with WBS Structure.



1.2.2. Developing and Communicating the Project Baseline


Using scope documents, plans and code structures, the estimating process quantifies project resource requirements and costs in accordance with the project WBS/ CBS structure. Once approved, estimate data is loaded into the detail project schedule and along with resource leveling methodologies, allows review of discipline/craft resource availability. The result is a time-phased, resource loaded project schedule based on activity sequence relationships, estimated activity durations, and planned resource requirements, which establishes the planned progress curves. The estimate data is also input in the cost and progress measurement systems. Reconciliation of the data across these systems provides alignment in measuring deviations to the work plans and budgets, as well as consistent reporting.


The Project Manager ensures that an estimating led "turnover" review of the project’s Control Estimate is initiated and for ensuring the project team understands the elements of the estimate, its basis, assumptions, and qualifications. The effective communication of project baseline to the project team and their understanding of the basis, assumptions and risk are essential for effective project control. The Control Estimate establishes the budget baseline for performance measurement and Change Management processes. The Change Management process relies on each project team member understanding project scope and their deliverables in order to recognize deviations to the execution plan and baseline, and communicate them to management.


The organizing, defining, planning and budgeting processes are critical for effective project execution. They require teamwork, and need to be accomplished quickly following project kickoff. The ability to define the specific deliverables and set the project up correctly and get the project team into the execution phase with minimal changes later is crucial to project success.



1.3. Monitoring, Performance Measurement and Reporting


During execution, the following processes occur simultaneously and in conjunction with managing change, analysis and forecasting.



1.3.1. Commitment and Expenditure Accumulation


The project CBS structures at the appropriate level of control are used to validate commitments and expenditures (labor, paid invoices, etc.) against budgeted costs in the project Cost System. Verification of cost and revenue transactions are reconciled with Financial and Time Entry systems to ensure an accurate and complete basis for subsequent reporting and performance evaluations. Procurement commitments are also verified against procurement system documentation. The Cost Specialist verifies and assures that project costs and revenues are being reported accurately, completely and against the correct project coding.



1.3.2. Project Status and Progress


Physical accomplishments for all tasks/ work packages are statused by milestone, and linked by coding to a higher level control package, where the budgets are maintained. Status and progress are normally recorded at the lowest level of detail and summarized to the budget level where earned value is determined for each WBS/ CBS budget element of measurable work.



1.3.3. Reporting and Communication of Project Status


Reporting requirements (specific reports, their timing/ frequency, the reporting periods, and distribution) are established in the Project Controls Execution Plan. Status, progress and accumulated commitments and expenditures all adhere to the selected reporting periods. This provides for a consistent set of data from which to evaluate performance. It is important that selected reporting periods are agreed to by all project participants, so that consistency can be achieved, across Procurement, Financial, and Project Controls functions. Any deviations in cutoff dates such as field payroll cut-off requirements should be identified.


The Project Manager must approve the monthly Project Status Review Report (PSR) used to communicate project, status, and issues to Senior Management. These reports support and ensure formal assessment/ review of the project financial status, forecasting, and profit recognition.



1.4. Analysis, Trending and Forecasting



1.4.1. Analysis


Project Controls personnel analyze project performance by comparing plans and budgets against current status and actual commitments and expenditures. The goal is to identify deviations, their causes, and potential impacts and communicate them to project management for corrective action.



1.4.2. Forecasting and Trending


Forecasting and trending efforts are vital to keeping project management informed of the project’s health. They provide management with accurate assessments based on performance to date, the work left to be performed and the associated resource requirements. Forecasting and trending results should be validated against historical data from similar projects to ensure accuracy within acceptable limits.



1.4.3. Management Notification


Significant impacts identified by the analysis, trending and forecasting are processed by the Change Management Team and communicated to both Project Management and Project Controls Department Management during the monthly Project Status Report.



1.5 Change Management


It is the Project Manager’s responsibility to implement and ensure execution of the project's Change Management process of timely identification, communication, screening/ control, authorization, and implementation of changes and providing early warning of potential trends. The timely quantification of the impact of change and the inclusion in the Project Controls systems is necessary to provide management with accurate project status and cost/ revenue forecasts upon which to make management decisions. All changes must have management approval before release to budgets, schedules, and progress measurement systems.


On lump sum projects work should not begin on any change order without client approval of the change; specific exceptions require the approval of the Project Manager. If the Client or JV partners are unresponsive in the approval or recognition of changes, it is the Project Managers responsibility to request Operations Management support and to ensure that the project team continues submitting the changes.



1.6 Systems


1.6.1 Databases


A cost database can be used to maintain multiple budgets, commitments, expenditures, earned value progress, and forecast information at a project defined Cost Breakdown Structure (CBS) in terms of quantities, work-hours, and costs.



1.6.2 Primavera P6/ Microsoft Project/ Deltek Open Plan/ Other


Scheduling should be via the use of a Critical Path Method (CPM) scheduling program (as opposed to a simple Gantt chart). Furthermore the actual schedule should then take advantage of this and be developed in a robust manner and complete logic (all activities having relationships). The particular choice of scheduling software should be tailored to the project, Company and Client’s needs, bearing in mind that each scheduling software while similar it has distinctive advantages and disadvantages. Sometimes the choice of the scheduling tool will be dictated contractually.



1.7. Project Controls Team


The Project Controls team will vary depending on the size and complexity of the project, risk assessment, and client specific requirements.


Project Controls Manager - On major/ complex projects, the Project Controls Manager leads and coordinates the Project Controls activities. Responsibility includes ensuring the correct application and operation of controls systems in accordance with the Project Controls Execution Plan, as well as initiating the organizing and planning/ budgeting activities at project kick-off. The Project Controls Manager reports to the Project Manager, and is supported by the controls staff.


In the event the size of the project does not justify the assignment of a Project Controls Manager, then these responsibilities will be shared by assigned Schedulers and Cost Specialists. Leadership is expected to be provided by the senior of these two individuals.


Project Scheduler - Establishes and operates the project scheduling, and progress measurement systems in accordance with the Project Controls Execution Plan and selected work processes. Responsibilities include participation in organizing and defining efforts, as well as change management, analysis and forecasting. The primary focus is on planning and coordination of project activities, performance, and progress measurement.


Project Cost Specialist - Establishes and executes the Cost Control Execution Plan including the change management, forecasting and reporting processes, and systems. Responsibilities include validation, monitoring, analysis and forecasting/ trending of work-hours, expenditures, commitments, and performance against the baseline plan and current forecast. The Cost Specialist is responsible for maintaining budget/ forecast integrity and reconciliation of the Cost System with the Time Entry and Financial systems as necessary to ensure the integrity of the Cost System and reports.


Project Estimator – As required for specific projects either on a full time or a part time basis for estimate development and/or oversight and estimation of scope changes. Responsibilities include assisting the Project Controls Team with quantity, workhour and cost summarization for estimates and changes and for risk development and assessment.


Field Control Specialist - Field Control Specialists carry similar responsibility as those defined above, but primary focus is the support of the construction effort and site manager. Once the project moves to the field, the Field Cost and Scheduling Specialists are responsible for the control activities at the site. They will report to either the Site Controls Manager or the Technical Services Manager. They will also report to the Home Office PCM as relates to controls methods, procedures, and status reporting.


Site Quantity Surveyor - The Quantity Surveyor has responsibility to manage and execute the quantity reporting and progress measurement function for the construction phase of a project. Additionally, drawing take-offs and loading of take-off quantities, quantity trending, variancing and quantity forecasting are elements of the Quantity Survey function.



Link to Section 1. Overview and Function of Project Controls

Link to Section 2. Project Cost Control

Link to Section 3. Project Planning and Schedule Control

Link to Section 4. Risk/ Contingency Management

Link to Section 5. Project Performance Measurement


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