Project Control Fundamentals | Don't miss these 7 techniques

Summary

This video script by Vijay, founder of projectsmind.com, highlights the critical role of project controls in ensuring project success. It explains the difference between project management and project controls, emphasizing the latter's focus on monitoring cost and schedule risks. The script outlines seven key techniques for effective project control, including work breakdown structures and gate reviews, to guide project managers in making informed decisions and achieving project objectives on time and within budget.

Takeaways

• 📉 High Failure Rates: 98% of EPC projects face cost overruns or delays, with an average cost increase of 80% and delays of 20 months or more.
• 🛠️ Importance of Project Controls: Good project controls are crucial for delivering projects on time and within budget, and are often overlooked in project planning.
• 📈 Project Controls Definition: Project controls involve the processes and tools for monitoring and controlling project lifecycle phases, including estimating, cost and schedule management, and risk management.
• 🔍 Continuous Monitoring: Project controls are iterative, focusing on measuring project status and forecasting outcomes to improve performance based on data measurements.
• 📚 PMBOK and APM Definitions: According to PMBOK, project controls involve data collection and analysis to predict and influence project outcomes, while APM defines it as measuring performance against the plan to correct variances.
• 💰 Cost Control by AACE: AACE emphasizes cost control as monitoring expenditures and performance against project progress to measure variance from budgets and achieve minimum costs.
• 🔑 Key Project Control Functions: Project controls provide the right information at the right time for project managers to make informed decisions, focusing on resource, information, and financial flows.
• 🔄 Distinction from Project Management: Project controls are a subset of project management with a focus on cost and schedule, while project management oversees a broader range of processes.
• 📊 Data-Driven Approach: The strength of project controls lies in its detailed data analysis, providing precise insights into cost overruns and necessary corrective actions.
• 👥 Project Controller's Role: The project controller operates under a matrix structure, advising the project manager on cost and schedule risks and providing key performance indicators.
• 🛑 Early Warning System: Project controls serve as an early warning system for potential issues, allowing for timely course corrections and risk mitigation.

Q & A

Why do many projects miss their targets despite best efforts and intentions?

Many projects miss their targets due to factors like cost overruns, delays, and insufficient project controls. According to a study by McKinsey group, 98% of EPC projects incur cost overruns or delays, with the final project cost increasing by an average of 80% and timelines often delayed by 20 months or more.

What is the main reason behind project delays and budget overruns?

The main reason behind project delays and budget overruns is the lack of effective project controls, which include monitoring and managing costs and schedules.

What is the difference between a failed project and one delivered on time and within budget?

The difference lies in good project controls. Projects that are delivered on time and within budget typically have robust project controls in place, ensuring effective management of costs and schedules.

What is project control?

Project control is a process that encompasses resources, procedures, and tools for monitoring and controlling all phases of the project lifecycle. It involves estimating, cost and schedule management, risk management, change management, earned value progressing, and forecasting.

How does the Project Management Body of Knowledge define project control?

The Project Management Body of Knowledge defines project control as data collection, management, and analysis processes used to predict and constructively influence the time and cost results of a project by communicating information in formats that support effective management and decision-making.

What are the three key differences between project management and project control?

The three key differences are: 1) Project control is a subset of project management focused on monitoring and controlling cost and schedule. 2) The Project Manager owns the project and directs the team, while the Project Controller advises on cost and schedule risks and mitigation plans. 3) The Project Controller provides key performance indicators and reports, which the Project Manager uses to make decisions.

What are the main areas covered by project controls?

The main areas covered by project controls include planning, risk management, cost management, scope and change management, earned value management, performance management, stakeholder management, and reporting.

Why is project control considered the backbone of project management?

Project control is considered the backbone of project management because it helps define key performance indicators, measure performance outcomes, provide early warnings of risks, and ensure effective decision-making based on accurate and timely data.

What are some simple yet powerful techniques for managing and controlling a project?

Some powerful techniques include work breakdown structure, project baselines, project status meetings, project gate reviews, tracking milestones, formal sign-offs, and the V method for validation and verification.

How does project control contribute to the success of a project?

Project control contributes to the success of a project by ensuring accurate forecasting, effective resource allocation, timely identification and resolution of issues, and maintaining consistent high-quality data and reports. This helps in making informed decisions and implementing corrective measures to improve time, cost, and quality performance.

Outlines

00:00

📊 Project Control Essentials: Overcoming EPC Challenges

This paragraph highlights the staggering statistics from a McKinsey study, revealing that 98% of Engineering, Procurement, and Construction (EPC) projects face cost overruns or delays, with an average final cost increase of 80% over the original estimate and timelines often delayed by 20 months or more. It emphasizes the importance of project controls in ensuring projects are delivered on time and within budget. The speaker, Vijay, introduces himself and his platform, projectsmind.com, and outlines the purpose of the video: to teach viewers seven techniques for effective project control. Project controls are defined as a process involving resources, procedures, and tools to monitor and control all phases of a project lifecycle, including risk management, change management, and earned value analysis. It distinguishes project controls from project management, explaining that while project management oversees the overall project, project controls focus on cost and schedule monitoring and risk mitigation.

05:04

🛠️ The Role of Project Controls in Project Management

This paragraph delves into the relationship between project management and project controls, clarifying that they are not the same but rather complementary. Project controls are a subset of project management, with a specific focus on monitoring and controlling project costs and schedules. It explains the dual reporting structure of a project controller, who advises the project manager on cost and schedule risks and reports to both the project manager and higher authorities like the project director or sponsor. The paragraph underscores the importance of integrating project controls throughout the entire project lifecycle and the necessity of engaging project controls professionals early in the project to develop a comprehensive project control plan. It outlines the main areas where project controls are applied, such as planning, risk management, cost management, and stakeholder management, and discusses the benefits of having a separate project control function, including early warning of risks, increased predictability, and support for informed decision-making.

10:08

🚀 Seven Powerful Project Control Techniques

The final paragraph introduces seven project control techniques that can be implemented to manage and control a project effectively. It starts by advocating the use of a Work Breakdown Structure (WBS) for easier progress verification and issue detection. Establishing project baselines for cost and schedule is highlighted as a fundamental control principle. Consistent project status meetings and gate reviews are presented as essential for accountability, communication, and quality assurance. Tracking milestones and using formal sign-offs are emphasized for maintaining alignment and minimizing disputes. Lastly, the 'V method' is introduced as a validation and verification approach for every deliverable. The paragraph concludes by acknowledging the project team as the unsung heroes behind project success and promoting projectsmind.com as a resource for free project management education, inviting viewers to subscribe for more content.

Keywords

💡EPC Projects

EPC stands for Engineering, Procurement, and Construction. These types of projects are comprehensive and involve the entire lifecycle of a project from design to completion. In the video, it is mentioned that 98% of EPC projects face cost overruns or delays, highlighting the importance of effective project controls in managing such large-scale projects.

💡Cost Overruns

Cost overruns refer to situations where the actual costs of a project exceed the initially budgeted amount. The video emphasizes that, on average, final project costs increase by 80% of the original value, indicating a significant issue in project cost management that project controls aim to address.

💡Project Controls

Project controls encompass the processes and tools used to monitor and manage various aspects of a project to ensure it stays within budget and on schedule. The video's theme revolves around the importance of project controls in avoiding cost overruns and delays, and ensuring projects are delivered successfully.

💡Risk Management

Risk management is a key component of project controls, which involves identifying potential risks that could impact a project and developing strategies to mitigate these risks. The video mentions that project controls help in continuous identification and monitoring of risks, such as cost and schedule slippages.

💡Earned Value Management

Earned value management is a project controls technique that measures project progress in terms of budgeted amounts earned for work completed. The video script refers to this as a method for forecasting project outcomes and improving performance, which is crucial for keeping a project on track financially.

💡Key Performance Indicators (KPIs)

KPIs are quantifiable measures used to track the performance of a project against its objectives. In the context of the video, KPIs help project managers make informed decisions by providing data on project performance, which is a fundamental aspect of project controls.

💡Project Management

Project management is the process of planning, organizing, and controlling resources to achieve specific project goals. The video distinguishes project management from project controls, noting that while both are essential, project controls specifically focus on monitoring cost and schedule aspects.

💡Project Controller

A project controller is a professional who specializes in project controls, advising the project manager on cost and schedule risks and mitigation plans. The video script explains the role of the project controller in providing key performance indicators and developing performance reports, which are critical for project management.

💡Work Breakdown Structure (WBS)

A work breakdown structure is a project controls technique that involves breaking down the project scope into smaller, manageable tasks. The video mentions WBS as a way to detect delayed or troubled tasks early, facilitating timely issue resolution.

💡Project Baselines

Project baselines are original or revised approved time and/or cost estimates against which project performance is measured. The video script discusses establishing project baselines as a fundamental control principle, allowing for performance measurement and reporting.

💡Stakeholder Management

Stakeholder management involves engaging with all parties who have an interest or are affected by the project. The video script highlights the importance of controlling stakeholder engagement as part of project controls to ensure alignment and satisfaction with project outcomes.

Highlights

98% of EPC projects incur cost overruns or delays according to a McKinsey study.

On average, EPC projects' final costs increase by 20 months or more over the original estimate.

Good project controls are key to delivering projects on time and within budget.

Project controls involve continuous identification and monitoring of cost and schedule risks.

Project controls encompass resources, procedures, and tools for project lifecycle monitoring.

Project control is an iterative process for measuring and improving project performance.

PMBoK defines project control as processes used to predict and influence project outcomes.

APM defines project control as the application of processes to measure performance against the plan.

AACE Practice Standard views cost control as monitoring expenditures and performance.

Project controls are a set of tools, processes, and skills for informed decision-making.

Project controls focus on the three flows of a project: resources, information, and finance.

Project management and project controls are different; the former is broader, the latter more focused on cost and schedule.

Project controllers provide key performance indicators and develop performance reports.

Project controls operate under a matrix function environment with dual reporting lines.

Project control activities must run through the entire project lifecycle for success.

Project control plan outlines the people, processes, and systems required for project integration.

Project controls include planning, risk management, cost management, and performance management.

Project controls provide early warning of schedule and cost risks and help in developing contingency plans.

Project controls offer increased predictability for project costs and schedules.

Seven project control techniques are introduced for effective project management.

Work breakdown structure is a technique for breaking down work into smaller, manageable tasks.

Project baselines are essential for measuring and maintaining project performance.

Regular status meetings and gate reviews are crucial for accountability and quality management.

Tracking milestones and formal sign-offs are important for risk management and stakeholder engagement.

The 'V method' is a validation and verification approach for project deliverables.

Project controls support the team in meeting project goals and are not an obstacle.

Projects Mind provides free access to world-class project management education.

Transcripts

Do you know despite best efforts and intentions, many projects miss their targets?

As per study conducted by Mckinsey group, 98% of EPC projects incur cost overruns or

delays.

On average, the final project cost increases at 80% of the original value, and timelines

are often delayed by 20 months or more.

That is huge!!!

Isn’t it?

So, why projects are delayed or budget overrun?

More importantly, what is the difference between a failed project and the one that is delivered

on time and within budget?

And answer lies in good project controls.

if you are struggling with managing cost and schedule of well-planned project?

Chances are that you may be ignoring project controls activities on your project.

Or even you might not have invested sufficient time and money at the beginning of a project

to develop a robust project controls plan.

but don’t worry, in this video, we will cover the concepts of project control and

teach you seven simple and powerful techniques to control your project…

Hi !! my name is Vijay and I am the founder of projects mind.com. and today we would learn

about project control...

So, what exactly project control is?

Well, if something bad is going to happen on a project, it’s most likely going to

impact project cost or schedule.

Project managers are well aware of this fact and spend much of their time planning in order

to avoid such negative risks and its potential impact.

However, project manager has bigger role to play for overall management of project activities

and ensure completion of work.

That is why, a dedicated function “Project control” is deployed for continuous identification

and monitoring of such risks like cost & schedule slippage.

Like the name implies, project controls are about controlling the project and safeguard

from exceeding budgets and timelines.

Project Controls is a process that encompasses the resources, procedures, and tools for monitoring,

and controlling all phases of the project lifecycle.

This includes estimating, cost and schedule management, risk management, change management,

earned value progressing, and forecasting.

Project controls is iterative processes for measuring project status, forecasting the

likely outcomes based on project data measurements and improving project performance.

According to the Project Management Body of Knowledge, project control consists of data

collection management and analysis processes used to predict and constructively influence

the time and cost results of a project or programme by communicating information in

formats that support effective management and decision-making.

As per the Association for Project Management (APM), Project control is defined as “The

application of processes to measure project performance against the project plan, to enable

variances to be identified and corrected, so that project objectives are achieved.”

As per AACE Practice Standard, cost control is the application of procedures to monitor

expenditures and performance against the progress of projects or manufacturing operations; to

measure variance from authorized budgets and allow effective action to be taken to achieve

minimum costs.

So, basically project controls are a set of tools, processes and people skills that are

used together to help project managers have the right information, at the right time,

to make the right decision.

Project control is all about controllingly three flows of project.

That is flow of resources, flow of information, and financial flow.

It ensures projects overcome common obstacles like, inaccurate forecasting, manual data

input or storage errors, improper resource allocation, misplaced budget or schedule optimism,

lacking enough data to make informed decisions But, doesn’t it sound like regular project

management activities?

Is project management and project controls is same?

And if not, then What is the Difference Between Project Controls and Project Management?”

These questions might be echoing in your mind.

right?

Well in simple terms, project management is not project control.

There are several differences between project management and project control activities.

However, there are mainly three key differences between Project Management and Project Controls.

First, Project Control is a subset of Project Management process with the primary focus

of monitoring and control the project’s cost and schedule.

Second, Project Manager owns the project and directs the work of the project team while

the Project Controller advises the Project Manager and team for possible cost & schedule

risks and mitigation plans.

And third is the Project Controller provides the project’s key performance indicators

and develop performance report and while the Project Manager utilise the provided information

to makes project decisions.

While a project may deal with many parameters, such as quality, scope, etc., project controls

focus on the project cost and schedule and continuously monitor for any associated risk.

The strengths of project controls lie in their data-focused approach and attention to detail.

A project manager does not simply want to know that there is a cost overrun, but rather

wants to know the root causes, the precise numbers, and how it can be fixed.

This is where project controls help with efficiency in getting answers quickly, and visibility

into performance that can reduce project costs.

Simply put, project management ensures the successful completion of a number of different

processes, while project control makes sure those processes actually head in the right

direction.

It ensures projects are done correctly and even the “right” projects are chosen in

the first place.

So, if Project Management is not project control, then where does project controller fits in

Project management team?

In terms of organizational hierarchy, project controls operate under matrix function environment.

Project controller’s role has dual reporting one the dotted line manager that is Project

Manager and also project controller directly reports to project director or sponsor.

Depending on size and complexity of project, a project controller could be reporting to

a project manager on a specific project or an entire portfolio of projects.

Project control function is critical to success of any project, as it alerts project stakeholders

to potential trouble areas and allows them for course correction, if needed.

It monitors and control the various factors that impact cost and schedule.

For project controls to succeed, they cannot be applied in bits and pieces.

Rather, project controls activities must run through the complete project life cycle—from

the initiation phase until project closure.

Project control function works in matrix environment where project controller report formally to

more than one manager.

These reporting lines can take the form of what is known as a solid line or a dotted

line reporting relationship where project reports to PM as well as Project Director.

The project control plan should outline the people, project controls processes, and the

systems required to integrate the core elements of your project.

Who is going to do what?

How?

When are they going to do it?

And what platform are they going to use?

For this reason, project controls professionals should be engaged at the early stages to ensure

that the project control plan is developed in time for the project to transition into

the delivery phase.

This plan will then guide project management team.

This enables decision-makers to attempt to positively influence the time, cost, and quality

outcome of your project.

So, what are the activities comes under the umbrella of project controls?

Project Control applied to many aspects of project management.

However, the main areas are Planning, Risk management, Cost management, Scope and change

management, Earned Value Management, Performance management, Stakeholder management and Reporting.

Project controlling process group monitor and control project work, perform integrated

change control, validate scope to ensure the deliverable are acceptable and obtain formal

acceptance.

It also Control scope, schedule and costs.

Project Control makes sure the project delivers what is defined, as per the scope and meet

acceptance criteria.

Also, project control ensures that the project deliverables are properly tested & validated

and control communication.

Project control manage risks, act on current risks, identify new risks and abandon outdated

risks.

It continuously tracks the project progress and develop project forecasts.

Project control keep tab on Procurement activities and control stakeholder engagement.

Ok, you may wonder what are advantages of having a separate project control function

in project management team.

Well, many of things must be obvious to you but let me give you little bit more detail.

So, in one line, Project control function is the backbone of project management.

Project controls assist in defining key performance indicator, measuring performance outcomes,

and establishing measures of success.

Project controls provide a meticulous approach to managing project risks.

It provides early warning of schedule & cost risks.

It proactively identify & monitor risks, and developing contingency plans to mitigate issues.

It also helps prevent some risks from happening in the future.

With the help of project control, the total costs of a project can be kept low by effective

decision-making based, for example, on Key Performance Indicators (KPIs).

Project Control provides increased predictability for costs, schedule and better insights into

the financial health of a project.

Once project plan is finalised, it is the role of the project controls professional

to collect and analyse the project performance data for identification of any possible cost

or schedule risk.

With consistent high-quality data and reports flowing out of each function, management can

begin to understand how the project is performing and feel comfortable about the basis of their

decisions on sound information.

This leads to decisive actions and implement corrective measure to improve its time, cost,

and quality performance.

As projects continue to grow and become more complex, it is important to understand what

factors impacting the project planned progress and what is the extent of impact.

When the time comes to take decisive actions to correct deviations, you will have the confidence

necessary to base your decisions on this data.

This will lead to a more successful project aimed at achieving its time, cost, and quality

objectives.

Project controls help to guide the project manager on making informed and effective decisions.

Without a proper project control, most projects have either inconsistent and/or inaccurate

flow of information.

Remember! project control for supporting project, not an obstacle.

It is not something like ten commandments written on wall which cannot be changed.

It’s main aim to support the team to meet project goal.

What are the Project Control Techniques?

There are several techniques for control a project, however following seven techniques

can be easily implemented on project.

These are simple yet very powerful techniques to manage and control a project.

Work breakdown structure - It is always advisable to break the scope of work into smaller package

of tasks for easy verification of progress.

From project control perspective, it is much easier to detect a delayed or troubled task

by looking at WBS.

Also, it helps in easy identification of tasks which are impacted due the delays.

The early identification of issues ensures the timely resolution of issue with minimum

cost.

Project Baselines - A fundamental control principle is to first establish a cost & schedule

baseline.

Then, measure and report the project performance against the baseline and maintain it.

Project Status meetings - Consistent and regular status meetings helps to keep everyone accountable,

and held responsible for work assignments.

Also, status meetings are powerful tools for improving project communications and managing

expectations.

Project Gate Reviews - Gate reviews are a key technique for ensuring quality and managing

expectations on project deliverables.

Basically, it provides opportunity for team to review the required deliverables of the

completing phase is achieved before moving to next phase of project.

Tracking Milestones —Use of pre-defined milestones and checkpoints ensure a better

project control and early warning of risks.

These markers are important points to stop, report progress, review key issues, confirm

that everyone is still on-board, and verify that the project should proceed with its mission.

Formal sign-offs— Formal sign-offs are a key aspect of change control management.

The formal record of review and acceptance of a given deliverable helps to keep expectations

aligned and minimize potential disputes.

Most importantly, the use of a formal signoff acts as an extra incentive to make sure the

appropriate stakeholders are actively engaged in the work of the project and thereby satisfied.

V method— The "V method" is a term used for a common validation and verification approach

that ensures that there is validation and verification step for every deliverable and

interim deliverable created.

The left side of "V" notes each targeted deliverable and the right side of the "V" lists the verification

method to be used for each deliverable directly across.

With all these techniques and more, if necessary, it is very important to put the correct amount

of emphasis on project control, it can be the difference between success and failure

of any project.

Behind every successful or unsuccessful project – there’s are the unsung heroes: "The

project team", who kept everything and everyone on track to ensure the achievement of the

desired result...

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