More and more companies are demanding greater visibility into construction project performance. Simply put, companies want to know that funds are being well spent and that their projects are going to run to plan. As a result, increased demands are being made on project controllers to deliver timely and accurate cost and revenue forecasts to help shape business decisions. But hey, you know all about this, don’t you?
Maybe you’ll silently nod your head ‘yes’ as you read through these top 5 challenges to effective cost controls. Some may vocally agree in frustration, but the good news is, there is a solution.
5. Effective budgeting and forecasting over a timeline
Do you know where your project’s going or are you feeling your way around in the dark? Knowing where a project is at is important, but knowing where it’s going is just as important. To know where your project is going requires that your budgets and forecasts are time-phased over the duration of the project. This key concept is critical for KPIs such as planned value, SPI, and cash flow forecasts. Not only that, but it’s vital to be able to view budget vs. actual at anytime during the project’s life. The thing is, it’s time-consuming and difficult to map your budget over a timeline with just a spreadsheet – or even with a tool like P6 or your accounting system.
- Establish project controls standards around time-phasing budgets; in addition to processes around regular, incremental project forecasts.
- Invest in a solution like 4castplus, where budget and schedule are intrinsically tied together so that, whether you like it or not, budget is always time-phased.
- Invest in a system like 4castplus that naturally calculates key project controls KPIs that are timeline driven like SPI, Planned Value, ETC, EAC, and more.
4. Frictionless and accurate method for calculating progress
Do you know “where things are at” on your projects at any given time? Well you should. After all, progress and performance measurements are two of the primary components required for effective project cost controls. If there were only one thing to do on a project, obtaining accurate progress data would be easy. When there are thousands of things to do, and you’re pulling data from many different sources, it can become a problematic task. Most project controls professionals are naturally adverse to the idea of simply entering a value for Percent Complete: rather, it requires a well thought-through formula for each activity on the project in order to have confidence in its accuracy. Without an accurate value for percent complete, most project and Earned Value Management (EVM) KPIs are meaningless. The typical barrier to getting accurate percent complete, is that it takes far too much effort without a system to do the grunt work and heavy lifting. And clearly, you want to remove as much subjectivity from the formula as possible.
- Streamline the process of measuring progress on projects, while maintaining the credibility and accuracy of the progress values.
- Invest in a solution that is designed to allow for multiple progress methods and sources of data within the same project, including: Rules of Credit, Weighted Steps, Key Quantities, Value of Work Done, Schedule and Bare Entry.
- Invest in a solution that allows you to automate progress entry and calculation of percent complete. Automating progress entry reduces friction, improves accuracy, and standardizes your progress measurement methodology.
3. Managing and controlling project changes
How easy is it for you to differentiate your baseline budget timeline from your current budget timeline? Can you easily visualize how the approved and pending change orders are going to affect your project’s cash flow, and metrics like ETC and EAC? How are the underlying schedule changes going to influence your spend forecasts?
Clearly change orders are not just disruptive to a project manager’s job – they can introduce a multitude of complexities in budgeting, forecasting and reporting that can have project controls stuck in spreadsheets for days.
- Establish reporting standards around how to report on baseline, current and pending budgets – and how they’re reported over a timeline curve.
- Establish processes where you’re measuring progress and forecasting on regular, incremental points during the project’s life.
- Invest in a dedicated project cost management solution that has built-in logic to manage the complexities of change orders and their effects on budget and timeline. In doing so, the job of the project controller is significantly streamlined.
2. Reporting inaccuracies
Reporting? Shh… don’t say the “R” word. Many of you probably cringe when you think of the time and effort you have put into gathering data for reporting purposes, to then build timely and accurate reports. Often, the typical solution is a manual one when it comes to building these error-free reports, which are pulled from various sources and then consolidated. This is not only time-consuming, but tedious and prone to errors. In fact, statistics show 88% of spreadsheets have errors.
At some point in your career, you have likely experienced the frustration of reporting errors. While some errors can be minor, many errors are much greater in magnitude, which can lead to executives making key decisions based on bad math. Why is this happening? Many companies are still trying to manage large projects with multiple spreadsheets. Often times, people are spending more time managing spreadsheets than they spend managing their projects.
- Invest in a solution that provides robust, flexible and customizable reporting in a single click, like 4castplus.
- Consider pre-built reports, as well as customizable dashboards and executive dashboards that key project leaders can access. Did we mention… 4castplus can do this?
- Invest in a solution that offers one-touch data, where the need for re-keying data is all but gone because every piece of information is connected to everything else. A solution like 4castplus offers this vital capability and more
1. Inefficient systems and processes
Is it time for a change? Despite the major advancements in project cost management technology, many businesses fail to adopt modern project cost management tools that can help them be more profitable, competitive and successful. In fact, companies often fail to act on updating systems for the fear of the potential disruption it may cause – regardless of the enormous value it would bring. Countless companies are drowning in spreadsheets – even those that use P6 and their accounting system for project management and controls. Not only is this an inefficient, time-consuming and inaccurate solution; it does little in the form of controlling project costs.
- Re-evaluate your need for an integrated software solution
- Draw up a series of questions to ask potential vendors when considering a new software solution
- Invest in a software solution that takes on the heavy lifting, like 4castplus, which provides a collaborative solution that can help project managers measure a project’s health, eliminates silos and increases visibility, provides real-time data, gets rid of unnecessary spreadsheets and gives you confidence in the data that is coming in.
Gain greater visibility into your construction project performance with 4castplus.