Secret Best Practices of Top Projects – Key Takeaway #2 “Forecast Completion”

So much of historical project performance management has been focused on what has already happened.

In fact, historical data used to be the only way you could get insight as to how your capital project was performing. Anyone who has been in the engineering and construction industry for a while can quickly tell you about the painful process of waiting for an accounting period to close in order to see how much money was spent on your project. In most cases, we were looking at data from February in a project status meeting that was being held in late March.

This delay in obtaining project status in a timely manner allowed issues in the field to become urgent problems and make a cost impact or delay the project – typically during the time you were waiting on data. It is this very challenge that gave rise to an entire category of applications called “Cost Management” or “Project Accounting”.

The best cost management feature in construction project management software does something no accounting system can do. It tracks and controls risks that could impact project cost as soon as it becomes known. For example, a risk or RFI can be flagged as having a potential cost impact and can be correlated to a potential change order or a contingency fund. When this information is shared in real-time to project stakeholders, they can see what is happening now and where your project will be in the future.

Schedule management features within construction project management software have always worked this way. They defined a sequence of activities, managed the work status, and could immediately see if productivity was falling behind. In CPM scheduling, there is a practice called the “2-week look ahead” that allows teams to focus on what is happening now and what will happen in the future. However, as projects became more complex, owners began to see schedule activities that were 25% complete but was 100% spent on budget. What’s going on here?

Best in class owners of capital programs are keenly aware of this dichotomy. They realize that when you look only at schedule or cost performance in isolation, you are only seeing part of the picture. Both cost and schedule can be used to paint a picture of excellent performance on their own. If we are honest with ourselves, we have all shared this moment.

• Boss – “How is the project going?”
• You – “Great! We are under budget!”
• Boss – “That is good to hear!”

Later That Same Day……..

• You – “How is the project going?”
• General Contractor – “Not great. We are a couple of weeks behind and haven’t made our big concrete pour yet.”
• You – “#%$&”

It was all accurate. However, if you use only cost, you can unintentionally mislead others about the true status of your project. If you use only project schedule, you can have an opposite impact causing everyone to plunge into “firefighting mode”. However, when you put them together, you get reality. Project forecasts need to be based on reality in order to be valuable.

In my last blog, I discussed the first key takeaway for the Secret Best Practices of Top Projects which was to “Be Proactive”. There I shared the KPIs that leading owners use to create effective forecasts. You’ll find that many of the KPIs rely upon integrated cost and schedule. If there is only 1 thing you do to leverage the habit of “Forecasting Completion” do this – consider integrating your cost and schedule in a construction project management software. It is the basis of great forecasts and will help you focus on the finish line.