Project Controlling: Should it Really Focus Mainly on Project Costs?
If you’ve ever worked in a large construction or IT company, odds are you’re very familiar with project controlling. Project Controls is typically a department in charge of the people, the processes and the tools that the organization uses to plan projects. The department’s main responsibility is to mitigate costs and risky events or scheduling issues that could jeopardize the outcome of the project.
In other words, project controlling is very similar to project management if you take out the facilitation and communication attributions from the latter. Plus, Project Controls typically deals with more than one project at once and tries to find a standardized model that ensures the success of all the company’s projects.
According to one study, Project Controls can reduce the execution schedule slip by as much as 15%. At the same time, however, the mere implementation of project controlling can cost up to 3% of the total project.
Project Controlling Is an Excellent Way to Keep Budgets under Control
In my experience, most companies who practice project controlling are focused solely on costs. Of course, no one can argue that keeping costs under control is one of the top priorities of any company, irrespective of size and project prioritizing strategy.
Couple that with the fact that most project controllers have a financial background and you’ll see where the focus on costs comes. The CFO is often involved in project controlling. This makes perfect sense, as it is a great way to make sure projects remain perfectly aligned to the business and financial scope.
Your typical budget control report will give ample space to cost. From forecasts, human resources costs, and materials costs to maintenance budget, everything will be presented in minute details. Again, that makes perfect sense.
But what about the time constraints?
The Case for the Importance of Scheduling and Time Constraints in Project Controlling
It’s not a secret that less than one third of projects are completed on time AND on budget. What troubles this seasoned project controller and project manager is the fact that so many people place an equal importance on scheduling and budgeting issues.
Here are just three of the reasons why I think scheduling and time management is at least as important as budgeting:
1. Earned value can only be derived from both budget and schedule
When you sit down to analyze the variances of your project, you need to take into account both scheduling and budgeting in order to come up with your earned value. In other words, you can’t say that you’ve made sufficient progress just because you are within budget.
It’s understandable why, in companies where project controlling falls mainly in the hands of financially-oriented people, such distinctions may seem of lesser importance.
But this doesn’t mean that they are.
2. Any deviation from the plan will appear in the schedule before it does in the financial reports
Yes, you can make financial forecasts and add up expenses. But the latter can only be done post-factum. This is why I argue that scheduling should be allocated the same amount of effort as financing.
In fact, if a deviation is caught in time, it can save you a lot of expenses. You can swoop in with corrective measures and neutralize the deviation before it becomes a financial burden.
However, that’s only if you place enough importance on scheduling issues.
3. Time IS money
I know, I know, you’ve heard this one a million times. But it’s a cliché because it’s true. And, in project management and project controlling, it’s the norm.
Bear with me.
When a project goes over time, the added expenses don’t just come from paying the human resources for their extra time. Or from office space, consumable and so on.
They mainly come because of your delayed time-to-market. And today, most industries are sensitive to that, not just the tech one, as you may believe.
Granted, things in technology move incredibly fast. If you sneezed at the wrong time and stopped to catch your breath, the competition may have already launched a product that similar to yours and you would have lost a good chunk of your market share.
But the same (money loss) can happen in other industries. Take telcos and utility companies for instance. When you delay the launch of a wind turbine, a new meter or a new service, you’re not just paying the project team extra cash. You’re also losing the money you could have billed your clients if they had access to your new service or product.
Why Are Scheduling Issues Treated as Second-Rate Citizens?
As it happens with most project management or controlling shortcomings, this is also stems from the combination of a strict budget and poor communication. In a large-scale project, the project team has to be in constant contact with stakeholders, clients, upper management and other departments.
Everyone needs to pitch in.
But how do you keep everyone on the same page without spending a fortune on project management software?
This is the question that prompted the launch of October Software, the solution that me and my team have come up with to help project managers keep everyone in the loop and the project within budget. Having worked as a project manager and project controller for more than a decade, these issues really gnawed at me. I wished I had a solution for them. And then I realized: I could create the solution on my own.
Briefly put, our solution is a tool for Oracle Primavera and MS Project users. It helps project managers share their project plans and other documents with all the interested parties. Of course, everything (from integration to reporting) is done seamlessly and with very little effort from the user’s part.
The best part? It comes at a fraction of the cost of your typical project management software. You can try it out for free here for 30 days. If you do, I’d love to know your opinion, so come back and drop me a line.