I’m sure some of you have heard the question, as I have, “Why do I need project controls? I have a finance and accounting group, so I know what I’m spending on a regular basis.” I participated in that exact conversation with a client recently, and unfortunately, the encounter wasn’t successful.
Project Controls is one of the most critical roles of any successful construction project. Many believe a Project Controls person is simply a finance, scheduling, and reporting person who is good with Excel. I have found that educating our clients on what Project Controls really encompasses is important at the beginning of a project so that expectations are agreed and met throughout the project.
“Project Controls is a process that encompasses the resources, procedures, and tools for the planning, monitoring, and controlling of all phases of the capital project lifecycle. This includes estimating, cost and schedule management, risk management, change management, earned value progressing, and forecasting.” As defined by CII (Construction Industry Institute) Here.
Back to my experience with a particular client. This client had grown significantly over the last few years and, instead of winning projects in the hundreds of thousands, they were winning projects in the millions. They needed help with their new scale. They hired me to help them with a particularly complex project that was already in execution phase with limited cost tracking, no schedule management, and no change management in place except for the occasional “drug deal” through the business development group. (“drug deal” is a slang term for a sales deal that is off-contract and has no input from the project team) Those deals were insufficient to offset the negative impacts from a high number of disruptions, due to unfocused direction, leveled at my client by the owner. When I developed the Measured Mile Analysis the owner and my client were both shocked and upset at the gravity and costs (~$3M) associated with the claim. Again, the project had been underway for over a year and the headcount was roughly 100 managers, technicians and helpers. In my investigation on the disruptive behavior, I found over 2,000 emails that provided clear direction from “responsible” project owner managers moving crews from planned working locations to other locations without previous discussion, planning, or determination of the impacts. The facility was vast, and the movements impacted crews of 15 to 20 workers with all associated equipment and materials to be relocated to the new work location. The usual time for the move ranged from 3.5 hours to 8 hours and to further complicate things the owner established a permit requirement, without notice or discussion, that further exacerbated things. There was no control. Leadership within my client’s company refused to share information or take the data produced even when it clearly indicated that the loss for their company was going to be substantial and potentially unrecoverable. There was a lot of reluctance to “face-down” the project owner and refute the owner’s attempts to ignore or put-off the claims that were clearly indicated with supporting correspondence. The frustration at every level of the project was very high and the disbelief exhibited by the client only complicated the process of recovery and the establishment of the correct forecasted completion costs. Unfortunately, the frustration resulted in a parting of ways between the client and I. I learned recently that a few months after my departure, all of the cost impacts I had forecasted were, in fact, occurring. The client lost their CFO and COO and the CEO took over the reins of the company to try and right the ship after the laws of diminishing returns were already in effect. The project budget was approximately $20M. After all was said and done, with an original estimated margin of 40%, the project overran substantially and was a staggering loss for them.
Looking back, I can’t help but wonder what the outcome could have been if the client had allowed the introduction and supported the high-quality project controls group with supporting tools, processes and resources. Keep in mind that project controls represents 3% to 5% of the project budget. So, with an investment of $600K to $1M the client would have been able to see the cost and schedule impacts, communicated those impacts with accurate and timely data, and made decisions that would have resulted in a profitable and successful outcome for the project. They would be able to save the relationship with the project owner and gain additional business from the owner going forward. If companies will include the very necessary budget for a high-quality project controls team within their original estimates, they would be more profitable, not