PM Network - February 2015

GUEST COLUMN / PROJECT PERSPECTIVES

So often, project controls professionals receive executives’ full attention one time and one time only—right after painful and embarrassing cost or schedule overruns have come to light.

It makes little difference that project controls leadership may have been passionately advocating for months for the resources and authority to roll out effective planning, controls processes and software systems. The executives tend to scrutinize right when project controls are failing to fulfill their promise.

So how can project leadership take advantage of these moments to sell to executives the power of project controls and differentiate them from the back-office, after-the-fact reports coming from finance? In a word: forecasting.

BACK TO THE FU TURE

Project management personnel can take a lesson from the leading engineering, procurement and construction (EPC) contractor firms. Their businesses have long depended on how effectively they control cost and schedule and how well they forecast. These industry leaders have developed repeatable, standard rules for reporting progress by discipline and by task. Then, based upon that past performance, they can effectively forecast the projects’ estimates at completion.

Throughout these projects, they are comparing work completed to work planned, as of a given date. If this sounds familiar, it’s because that’s a definition of earned value. EPCs may call it progress measurement, productivity reporting or tracking “earned over burned,” but in essence they are applying the principles of earned value management (EVM).

And here’s the remarkable, sit-up-and-take-notice observation about EVM: Empirical studies have shown when EVM is effectively deployed on a project, the project’s cost performance trend is known to stabilize once a project is 20 percent complete and probably won’t change by more than plus or minus 10 percent by the time it’s done.

Leading contractors and owners/operators in every
industry are effectively applying EVM principles to
projects of all sizes and disciplines, by standardizing
the right level of EVM planning and rigor to the project
types. Then they are letting their software systems fore-
cast cost and schedule based upon the early EVM results
from these projects. As they execute more projects,
their ability to fine-tune their methods for progressing
and forecasting increases. Easy-to-use project controls
software dashboards are giving management, and even
the C-suite, the ability to identify trends early. It also
allows them to drill down deeply into the project data,
within seconds, to identify problem areas and learn
what the team’s corrective action plans entail.
If the organization can repeatedly predict, just 20
percent of the way into a project, when the project will
finish and for how much money, this is value that the C-
suite will pay for. In my observation, as enterprise soft-
ware systems have begun to efficiently deliver reliable
project data to their fingertips, executives have taken
note. They have begun to regard these as strategic plan-
ning and controls systems, delivering timely, predictive
data they can’t get from any other corporate system.
Selling Executives on the
Predictive Powers of EVM

CHRIS TEN BERGERUD, CO;FOUNDER, COO, ECOS YS, DENVER, COLORADO, USA

Christen Bergerud, co-founder and COO of EcoSys, helps organizations use project controls software to measure and improve project performance. He can be reached at info@ecosys.net.