CSC‐1582 The Project Controls Manager’s Survival Guidebook
Les McMullan (FAACE)aace International
BIO of Les McMullan
• Les McMullan, GM Project Controls, Project Delivery & Implementation, Rio Tinto
• Past President of the Montreal aace Section & current Board member
• Fellow, AACE International 2012 (FAACE)• Education: Graduate McGill University, Montreal• Guest lecturer at Montreal Universities• Worked both for EPCM firms and Owner• > 35 years project experience in project controls• Something You Don’t Know About Me: I like to sing and play guitar with friends; enjoy Irish & Celtic music
2
PCM Survival Guide ‐ AGENDA
• Why a Guidebook?• The Project Environment• The Role of PCM• The Mission
– The adventure begins!• PCM Survival Guide Tips
– What you need to know!• PCM Resources
– Help is on the way.• Conclusions
3
Why a PCM Survival Guidebook?
• Little literature about the role• Many learn “on the job”• Turnover in PCMs evident• People skills often overlooked• Focus on the technical skills only• Projects fail due to inexperience• Resources for PCMs needed• Qualified PCMs in short supply
4
PCM SURVIVAL GUIDEBOOK
The Project Environment
• “It’s a jungle out there”• Changing project landscape *
– Projects are complex, EPC and EPCM, alliances, etc.– Mega projects are the norm– Often remote locations with multiple offices and sites– Virtual teams – Attempts to transfer risk– Lack of qualified PC resources
• Some not be ready for the PCM role• Many dangers and pitfalls• In a changing market it is survival of the fittest
– You need the PCM Survival Guide!
5
* Ref: CII Study IR244-2
THE PROJECT CONTROLS MANAGER’S ROLE
6
Some Definitions
• Project Controls:– “includes the people, processes and tools for the planning and execution of all phases, including, but not limited to Estimating, Cost Control, Planning, Scheduling, Change Management, Progressing and Forecasting”…. CII
– Brings a business sense in time and money– Preserves business case and shareholder value
• The Project Controls Manager:– “Orchestrates the combined functions that enable managers in their own firm and the Owner’s, to anticipate necessary changes to keep the project on schedule and within budget”…. aace International.
7
• Right hand to the project manager– “the eyes and ears of management”
• Manage and lead the project controls team• To enable team members to best do their jobs• Primary contact on cost and schedule• Liaison with client/other stakeholders• Interface with project counterparts• Oversight on reporting and trends• Identify risks and opportunities• Promote best practices
The Role of the Project Controls Manager
8
9FI
Profile of a PCM/Leader
1. Excellent technical understanding
2. Proven communication skills
3. Able to deliver the news, deal with criticism
4. Having integrity, lead by example
9
The PCM Role : the Big Picture
• The PCM must see the overview• Getting into the weeds will leave you grounded• Be able to spot trends, trouble spots• Provide an overall check and balance• Keep the team focused on the items needing attention
10
• The top 4 characteristics of leaders from a survey:– Honesty, being forward looking, inspiring, competent
• Leader needs to be:– Action oriented, have vision, actions and priorities
• Avoid taking on all the issues (monkeys*) on your back that should be manageable by senior staff
• If you want to survive…. learn to delegate• Don’t become the bottleneck!• Focus on team development and guidance• Collaborate; keep staff well informed• Give credit and celebrate successes
Leadership & Management Styles
11
* Ref: The One Minute Manager
Accountability
• Transparency and accountability to:• Project Manager• Business Management• Corporate Finance• Functional Management• The Owner• Peer reviews• QA audits• SOX audits
12
THE ADVENTURE BEGINS
13
The Mission
Your new job title: Senior Project Controls Manager Project: Mega project; new technology project Location: Remote location, overseas. Your mission: to head up a large team of project controls professionals of varying backgrounds and cultures
Phase: Project at NTP; baselines established, cost and schedule optimized, contingency reduced
Base: Home Office, site to mobilize later Situation: PCM for study left; you are asked to take over Client: Known to be very hands on; aversion to change approval.
14
How many red flags do you see above?
• Team: well seasoned, know the terrain• Maps, GPS: PEP, SoW, WBS, cost and schedule baselines, contractual documents
• Tools & Equipment: Management Systems, procedures, project toolkit, roadmaps
• Survival gear: Early warning systems, risk management, trending, lessons learned
• Antidotes: Best practices, communication, management control loop
The Adventure Begins: What you need
15
The Team ‐ Organization
Estimating Project Control Implementing Guides
Cost Control
Project Manager
Project Controls Manager
Planning & Scheduling
Risk Management
Project Controls Corporate Mgr
Other Services
Owner Project Team
Controls Manager
Owner Core Functional
Management
Owner
Site Controls
16
• Team selection: PCM’s most important decision
• Leads well experienced are the pillars
• Must know the terrain• Skills assessment• The generation gap• Achieve proper mix• Global Teams: communication• Managing Virtual teams• Make training a priority
The Team
Owner
Consultant
No Surprises
17
• Managing interpersonal issues• Communication issues• Managers who may not fully understand or appreciate the role or benefit of project controls
• Perceptions of project controls• International teams – cultural differences• Overseas and isolated• Expat hiring and conditions• Teambuilding requirements
The Team: The Human Factor
18
The Team: Perceptions of Project Controls
“To see ourselves as others see us” – Robert Burns
Engineering
Not this……
But this… a team
19
The Team ‐ Collaboration
•Equipment lists•Bulk material & quantities•Engineering deliverables•Design change notices•Earned value by deliverable•Eng. change notices
ENGINEERING
•Scope of work•PEP/ WBS/packages•Project baseline budget•Project CPM schedule•Risk management•Finance & accounting data•Resource plan & loading•Change management system•PM systems•Owner data
PROJECT MANAGEMENT•Contractor detailed schedules•Contractor resource loading•Quantities Installed & hours•Field change notices•Earned value & productivity•Const. indirect costs•Manpower forecasts•Contract admin. reports•Pre-comm. & comm. systems
CONSTRUCTION
•Bid evaluations•Recommend. & approvals•Purchase orders•Change notices•Contract terms and conditions•Contract price breakdowns•Negotiations
PROCUREMENT
Project Controls
Progress & Cost ReportsTrends & ForecastsSchedules & UpdatesVariance AnalysisReview MeetingsRisk Register
“No controls with out authority”20
Maps, GPS: Key Documents for the PCM
• Project Execution Plan– Organization, project strategy, functional plans, means and methods of execution
• Scope of Work (SoW)– Detailed description of the scope of work by facility supported by engineering
documentation. The master scope document reference for change management• Work Breakdown Structure (WBS)
– Facility numbers breaking down the project into physical elements; followed by standard discipline and commodity codes: the common project language
• Commitment Packages & Package Dictionary– Description of the content, interfaces and milestones of all the procurement and
contract packages listed in the PEP and as defined by the procurement strategy• Baselines
– The cost and schedule baseline documents for project execution developed during the definition stage (FS) and converted into detailed control documents
• Project Controls Plan– The detailed plan that determines the controls organization, tools, procedures,
processes and interfaces• Master Contract
– The documents that determine the rules of engagement with the primary contractor and/or joint venture partners regarding scope, milestones, management of change, payments and all other interactions.
21
Maps, GPS: Project Controls PlanMaps, GPS: Project Controls Plan
• The process of determining and defining the project control work processes to be used in executing the project scope of work– Organization– Deliverables– Tools– Interfaces– Responsibility matrix– Procedures– Meetings
“ He who fails to plan, plans to fail” – Sir Winston Churchill
22
Tagged Equipment & Bulks
Commodity Codes
Costs Reconciled
Estimates
Schedules
Tools: PM Systems on the Digital Project
Project management
System
Deliverables
Estimating
Timeline
Progress
Cost
Materials
Portfolio Management Executive Information Systems
Owner Corporate Legacy System
CAE and 3D CAD systems
Estimating Software
Planning Software
Resources
23
Tools: Total Cost Management Framework
Portfolio of Enterprise Assets
STRATEGICASSET
PLANNING(3)
PROJECTSIMPLEMENTATION
(4)
STRATEGICASSET
PERFORMANCEMEASUREMENT
(5)
STRATEGICASSET
PERFORMANCEASSESSMENT
(6)
StrategicAsset
ManagementProcess
(2.3)
PROJECTPLANNING
(7)
PROJECTACTIVITY
IMPLEMENTATION(8)
PROJECTPERFORMANCEMEASUREMENT
(9)
PROJECTPERFORMANCEASSESSMENT
(10)
ProjectControlProcess
(2.4)
Portfolio of Projects
Plan
Do
Check
Assess
Plan
Do
Check
Assess
Doing the Right Project
Doing the Project Right
Strategic Asset Management Process Project Control Process
Project Shaping
24
Tools: Common Toolkit
• Corporate project controls policies• Standard procedures & guidance• Project framework• Common WBS and commodity codes• Integrated suite of software tools• Portfolio & drill down reporting• Key performance indexes and dashboards• Training programs• Lessons learned database
25
Survival Gear & Processes: Successful Launch
• Projects need successful launch at execution• Lead personnel on board, no empty boxes in the organization chart
• Full suite of procedures & processes ready• Estimates & schedules converted to baseline documents
• Get help as required in the front‐end• Setting up PM systems always takes longer• Ensure training programs in place for staff• Projects that stumble at the start are often in a catch‐up mode or off balance
26
Survival Gear & Processes: Meetings
• There must be standard meetings– Schedule reviews– Trend Meetings– Risk review Meetings– Progress Reviews
• Lean Approach– Meeting with the team– Control charts– KPIs– Efficient reviews
27
Survival Gear & Processes: Reporting for Control
• Maintain integrity of the WBS and coding structures• Use dashboard approach – executive template• Portfolio management and drill down capability• Frequent reporting can lead to greater control• Identify trends; reports should be trigger points• Exception reporting & variance analysis• Avoid the reporting trap; focus on the results
28
Antidotes: The Project Controls Process
Scope of Work
Commitment Packages
Budget Schedule
Monitoring
Trending/ Forecasting
Management Reporting
Action/Mitigation
29
Antidotes: Communication
Project Controls
Engineering
Owner Management
Team
Procurement Construction
ContractorsVendors
Business Unit
Operations
POV/Comm
EPCM
Other Stakeholders
30
Owner
PCM Survival Tips – The PC Trifecta
Change Management Earned Value Forecasting
Most firms often find these are areas to work on
31
PCM Survival Tips: Change Management
• Inadequate management of change often cited as a reason for poor project performance
• Roles and responsibilities need to be clearly defined• Scope creep and engineering design has the greatest impact and is to be closely monitored
• Some suffer from the “iceberg effect” • Sources and types of changes must be identified• Death by 1,000 cuts• Secondary change magnifies impact• Schedule impacts often under‐evaluated
32
PCM Survival Tips: Earned Value
• A practical and consistent earned value system is required to measure the project progress
• Templates are established for the measurement of engineering deliverables; drawings, specs, 3D models
• Procurement progress is measured from vendor design, through material delivery, fabrication and delivery
• Construction may be measured by contract and activity with templates, quantities and physical progressing
• Avoid the saw tooth affect on project progress
33
PCM Survival Tips: Forecasting
• Control costs before they occur • Forecasting provides advance intelligence to control and/or avoid cost and schedule variance
• Trending is the backbone of the forecasting system• Do not take the trend system for granted and continually test the integrity of the process
• Identifying scope changes from trends is essential aspect of the process and ties back to MOC
• Use the pareto principle• Plan a rolling forecast
34
PCM Survival Tips: Mega Projects
• Much anecdotal evidence exists across industries• Projects are huge and require massive coordination• Projects may seem on track on the surface • Flaws can become evident thru pressures of execution• Because of the size, ripple effects have major impact• Top causes for deviation tend to be common• Very susceptible to the market • PCMs need to be aware of the causes*• If causes seen early, can be managed
35
* Many are mentioned in this presentation and paper. See paper references for more.
• Know the difference between planning and scheduling• Always prepare a Basis of Schedule• Ensure proper schedule levels, logic and maintenance• Respect baseline protocol• Ensure that all phases are covered• Keep network to controllable level • Ensure schedules are resource loaded • Follow critical and near critical paths• Run schedule risk analysis • Ensure team participation and buy‐in• Use earned with clear rules of credit• Apply last planner© principles whenever possible• Be aware of construction contractor planning capabilities
PCM Survival Tips: Planning & Scheduling
36
• Understand estimate classes & input required• Establish WBS and use standard commodity codes• Know the estimate plan and work it!• Basis of Estimate is the key reference document
– Know how estimate was developed – quantities, allowances, design progress, accuracy, etc.
– Understand productivity, crew rates• Use estimate review checklist & process• Prepare well for the estimate review• Be familiar with key ratios & benchmarks• Estimators throughout execution is a must to save significant costs!
PCM Survival Tips: Estimating
37
PCM Survival Tips: Cost Control
• TCM: Control costs before they occur• Greatest cost impact is scoping and design: project front end• Understand basis of budget and packaging• Plan trending on a rolling basis:
– Trend meetings a MUST, not optional– Remember Pareto 20/80 rule– Scope = QUANTITIES = COST (and don't forget it)– Insist on proper variance analysis (by WBS and package) – Contingency: watch for back‐end!
• Ensure proper collection of benchmark data throughout the project
• Watch for change and secondary impact!• Avoid forensic cost control… after the fact• Cost report must be accurate & current;
Finger on the pulse of the project
38
• Inadequate stage‐gate process; conditional pass• Organization issues: no RACI; high turnover• Inexperienced team: Consultant/Owner• No integrated project management system• Design issues: P&IDs and plot plans not “frozen”• Scope creep; Late engineering changes• Major quantity fluctuations• Inadequate change management process• Project controls excluded in pre‐bid process• Delays in placement of long lead items• Protracted procurement cycle on packages • Procurement planning not prioritized or levelled• Lack of expediting & inspection/ not following subs• Delays in vendor drawings and knock‐on effect on engineering• Lack of materials management
PCM Survival Tips: Danger Zones
39
PCM Survival Tips: Danger Zones
• Milestone slippage ‐ lack of schedule accountability• Continuously missing targets with ineffective mitigation• System POV and commissioning added late in schedule,
requiring modifications to construction sequencing• Incomplete RFQ packages issued for bid = $$$$ Later• Key controls/risk meetings not attended by management• Churn in packages content & continual budget transfer• Impact of secondary change unaccounted for• Resource shortages – contractor supervision & craft workers• Growth on contracts affecting performance, schedule,
productivity and indirect costs• Risk register is static; not updated• Silo approach, poor communication & morale
40
PCM Resources
• Standard PM systems• Common tools• Procedures & guidance• Project training• Qualified PC team• Owner procedures• Internal quality assurance
• Certification programs• Recommended practices• Skills & knowledge guides• Technical meetings• Virtual libraries• Websites• AACE, PMI, CII & others
Internal Project Professional Associations
Internal Firm
• Social media• Academic programs• Peers and colleagues• PCM project experience• PCM leadership capability• PCM Survival Guidebook • Other published references
Other
• Corporate PC manager• Co. “Academy” courses• Policies & processes• Benchmarking data• Communities of practice• Project peer reviews • Lessons learned
41
• Community of Practices– Specialties (e.g. PCM Forums)
• Professional Associations– Certifications
• Company “college”• Company PC Annual Meetings• Functional manager
– Helpline• Project peers and managers• QA Reviews; Health Checks• Social Networks• Academic programs• Business & project management
PCM Resources Summarized
42
PCM Survival Guide ‐ Conclusions
If you want to thrive…• Careful team selection• Be a leader• Focus on best practices• Start with a Project Controls Plan• Toolkits in place; procedures & systems• Interface at all levels• Communicate well & often• See the BIG Picture• Implement proactive trending• Raise the flags early• Manage change relentlessly• Benefit from prior “Lessons learned”• Deal with the ostrich attitude• Mitigate, find solutions• Don’t hesitate to ask for help!• Be the navigator for Project Management
PCM SURVIVAL GUIDEBOOK
43
QUESTIONS/COMMENTS?(PLEASE USE MICROPHONE)
44