Cost Control , Project Control Get the Right Management infographic
Cost Control , Project Control Get the Right Management infographic

Although the benefits of effective Project Control, Cost Control and Cost Management systems are well known too often most companies rely on a hotchpotch of legacy systems with manual re-entry of data in different systems with excel being relied upon to cut-and-paste integrated reports together. The default position being that companies work around enterprises systems which few understand and are trapped by worries over massive and potentially ill-fated change initiatives.

In this article, we will talk about how to get the benefits of effective Cost Management of accurate job costing, integrated real-time cost & performance reporting, top-down Planning with the help of a Project Controls webinar held by DADA Enterprises.

Cost Control Management Webinar

The webinar began with covering the complexity of a typical Cost Management Model which includes periodic data from a variety of systems that needs to be integrated in real-time to provide a comprehensive and unified picture to senior management. From double timesheet approvals, accruals, retentions, early warnings notices, changes requests, quality inspections and EH&S observations ~ it’s a complicated and messy picture!

The common narrative is that overlapping systems and processes produce similar versions of the same report with different results. Creating status reports takes so much time and effort that “by the time they are produced they are already out of date”.

project controls and cost management webinarPain Points from Poor Cost Control



However, by integrating systems together better cost recovery, control, resource forecasting, asset management, and enhanced profitability are just a few of the benefits which can be achieved. Project Managers will then have clear budgets against which performance is measured against promoting a Performance reporting system, not a Financial accounting system.

The webinar broke down the components of Project Controls Scope using a fish-bone questionnaire which can be used by Project Controls specialists to develop a common understanding of basic terms. It is also important for cost control specialists. This sounds straight-forward but just a relatively simple concept such as “Actual Costs” can multiple interpretations from different project members on whether they should include: accruals; exchange rate fluctuations; or reflect External Charge-Out rates or the Internal Break-Even cost of the resources?

All of these differing perceptions require harmonization in a transparent and controlled manner. DADA introduced how it uses a Systems Blue Print to map the company’s processes which are then validated by a Playback session to senior stakeholders to give everyone an opportunity to understand how the processes and system will fit together before proceeding to the Build phase.

This gated approach covers a multitude of steps which are involved when integrating enterprise systems:

  1. Operating Model Principles
  2. High-Level ERP / EAM Process & Policy Requirements
  3. Detailed ERP Process Requirements / Ways of Working
  4. ERP / EAM Reporting Requirements
  5. ERP / EAM Data Requirements (including Volumes)
  6. All Non-Functional Requirements
  7. Implementation
  8. Security and Authorisations
  9. Training
  10. System Configuration / Set-Up

However, the ‘basic requirements’ of Blue-Print cover the:

  • What, Why: Work Breakdown Structure (WBS), Statement of Work (SOW)
  • Where: Organisational Breakdown Structure (OBS)
  • When: Calendars (Reporting, Financial)
  • Who: Resource Breakdown Structure (RBS)
  • How (much?): Rates, Resource Calculations

DADA then explained how a Control Account (CA) is the point of cost control where a chosen level of the WBS is assigned to person on the OBS. The performance of this Control Account can then be traced back to a Responsible Person and defined scope of work.

DADA then explained how this Control Account is the building block of a Performance Management System and reflected as a summary account in the General Ledger. Commonly this Control Account point is used as the reporting level where data is mapped and integrated between systems and so is crucially important to be defined at the right level. Too high and there’s not enough detail to know where problems lie. Too low and there’ll be data challenges in migrating the volume of data.

project controls and cost control webinar

Contract Budget Baseline Breakdown



The webinar then covered sample data integration systems designs and data mappings between ERP systems like between SAP, Oracle Primavera, Deltek Cobra, Nomitech Cost OS, and Primavera Unifier. Each system has advanced project control and cost control capabilities.

As part of these potential systems designs and implementation, DADA explained how P3M3 maturity audits can be used to drive systems design. P3M3 is a management maturity model that looks across an organization to assess the relationships between portfolios, programmes and projects and how it delivers them.

The P3M3 maturity model sub-models are:

  • Portfolio Management (PfM3)
  • Programme Management (PgM3)
  • Project Management (PjM3).

Each sub-model is further broken down into seven perspectives:

  1. Organizational governance
  2. Management control
  3. Benefits management
  4. Risk management
  5. Stakeholder management
  6. Finance management
  7. Resource management.

 

p3m3

P3M3 Structure



This P3M3 assessment of the process employed and the competencies of people, the tools deployed and the management information flows allows any systems implementation to be more mindful of their organisations’ strengths and weaknesses in delivering change.

The webinar concluded on what the steps to a successful transition are and a potential Change Management Governance Structure to oversee the transition and approve changes to the original Systems Blue Print through the Build phase.

Change itself is daunting to most organisations however the webinar provided examples of Post Go-live Support structures on how things can still be escalated and changed in Steady-State as well as examples of change management strategies.

Conclusion

In this article, we discussed the benefits of effective Cost Control and Cost Management with the help of a webinar. To explore the concepts of the webinar on your own visit their Knowledge Centre to access the templates and tools referenced within the webinar. You can contact DADA to repeat the webinar on a one-to-one basis to deal with your specific project systems integration and enterprise project delivery challenges taking advantage of their offer of a free P3M3 audit to deal with these issues from the start. And you can either use the report internally, with another consultancy or with them. If you want to add or share anything regarding cost control, cost management and P3M3 Structure, you can do so through the comments box below.

See Also

Project Cost Management

Primavera P6

11 COMMENTS

    • DADA’s next webinar will be on “Bring AI to transform In-House recruitment” ~
      Register at link below to join this 45-minute live, interactive webinar to learn about:
      a) Automate recruiting process from getting a job requisition approved to scheduling an interview to updating your HR/Payroll database
      b) Automate employee on-boarding from employee accepting an offer to getting them the right software and access to on-site orientation
      c) Automate Leave requests and Expense approval to updating centralised resource calendars to updating payroll systems
      d) Integrate your workflows to automate the updating of your In-House recruitment, HR and Finance systems (Oracle, SAP, ADP) and Document Libraries (e.g. Business DropBox)
      e) Use smart chatbots, driven by AI, to have a human-like conversation, without the need to have “actual” human answering frequently asked questions
      f) Hire “fit for the job” candidates with minimum “time to fill” window and get new employees to start adding real value from day one
      g) The components of a successful Change Management and Go-Live

      Link to register: https://www.eventbrite.com/e/how-ai-can-make-an-immediate-impact-to-automate-your-in-house-recruitment-processes-tickets-60840093357

  1. Dear Admin,
    Could you please write more articles related to P3M3 model. I think this is a PRINCE2 concept.
    Thank You

  2. As lean production system`s approach, every tools or method invented in manufacturing or other industries are based on reducing cost of the process as a priority, then increasing quality and completion of project in timely manner. Accordingly, same approach is seen again in Webinar and so in P3M3. The advantages of P3M3 in construction industry can be summarized in below from the perspective of Project Management.
    • Providing an objective assessment of strengths and weaknesses
    • Demonstrating service quality to support proposals to prospective clients
    • Providing validation of an organization’s maturity
    • Reducing costs and increasing benefits delivery in P3M.
    • Recognizing achievements from previous investment in capability improvement
    • Increasing quality in the projects and their deliveries
    However, the focal point in the use of P3M3 is that Industry Professionals must and should be informed about that Information & Communication Technologies of their organisation is the base for the maturity of P3M3 in the use of their organisation.

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