Project Controls : What is it and why is it important ?

Definition of Project Controls :

There are many definitions of Project Controls used across industries and indeed across
companies within industries. For the purposes of this portal, the field of project controls is
defined as follows:
Project controls are the data gathering, management and analytical processes used to predict,
understand and constructively influence the time and cost outcomes of a project or program;
through the communication of information in formats that assist effective management and
decision making. This definition encompasses all stages of a project or programs lifecycle
from the initial estimating needed to size a proposed project, through to reflective learning
(lessons learned) and the forensic analysis needed to understand the causes of failure (and
develop claims).
Consequently, the project controls discipline can be seen as encompassing:
Project strategy, undertaking planning and methods studies to help the PM optimise future
outcomes;
Scheduling including development, updating and maintenance;
Cost estimation, cost engineering/control and value engineering;
Risk management, including maintaining the risk register and risk analysis/assessment;
Earned Value Management and Earned Schedule, including WBS, OBS and other breakdown
structures,
Document control;
Forensic Assessment for required diagnosis of schedule and cost
Supplier performance measurement / oversight (but excluding contract administration);
The elements of a project management methodology that integrate these disciplines both
within the controls domain and with other project management functions;
Put simply, Project Controls encompass the people, processes and tools used to plan, manage
and mitigate cost and schedule issues and any risk events that may impact a project. In
other words, Project control is essentially equivalent to the project management process
stripped of its facilitating sub-processes for safety, quality, organizational, behavioral, and
communications management.
Importance of Project Controls :
The successful performance of a project depends on appropriate planning. The PMBOK Guide
defines the use of 21 processes that relate to planning out of the 39 processes for project
management, (Globerson & Zwikeal 2002). The execution of a project is based on a robust
project plan and can only be achieved through an effective schedule control methodology. The
development of a suitable Project Control system is an important part of the project
management effort (Shtub, Bard & Globerson 2005). Furthermore, it is widely recognised that
planning and monitoring plays a major role as the cause of project failures. Despite the
continuous evolution in the project management field, it appears evident that the traditional
approach still shows a lack of utilisation of Project Controls and there have been a number of
articles published to support the importance of control in the achievement of project

objectives. It has been proved time and again that Project performance can be improved if
dedicated Project Controls systems are in place. An IBC 2000 Project Control Best Practice
Study carried out by IPA identified that good Project Control practices reduce execution
schedule slip by 15%. Project Controls cost range from 0.5% to 3% of total project, (including
cost accounting), therefore, to break even, Project Control needs to improve cost
effectiveness by around 2%. A sample study carried out by the IBC Cost Engineering
Committee (CEC) in 1999, showed cost improvements for the projects in the study, was more
than 10%. It is noted also that NPV (Net Project Value) also benefits from schedule
improvements. Success factors are based on good Project Control practices, which result in
good cost and schedule outcomes.
"The fact that one failed project can potentially wipe out an entire years profit helps put the
value of Project Controls into perspective."

Defining project controls

Several months ago at the Project Governance and Controls Symposium in Canberra I was
asked to define project controls. The Australian Institute of Project Management (AIPM) has
a project controls Special Interest Group (SIG), the Project Management Institute (PMI) has
a couple of Communities of Practice (COP) focused on aspects of controls. PMOs do
controls and everyone talks about the importance of controls. Where there is no real
agreement though is in agreeing exactly what is included in project controls and how
controls relate to other disciplines such as project governance.
The term control or controls is used widely and there are at least three distinctly different
uses:

Control systems

Management directing and controlling work (PMIs monitoring and controlling)

Project controls discipline

Control systems measure progress versus the plan and then, through an adjustment,
correct any observed deviations. The steering mechanism in your car, when connected to
your eyes is a control system. Your eyes and brain assess the current trajectory of the car
and compare this to the desired trajectory and by adjusting the steering wheel, you alter the
progress of the car.

Every manager controls the workforce s/he is responsible for: by definition management
includes directing and controlling a workforce (for more on management see: Defining
Management).
Then there is the project controls discipline, which Im trying to define. My proposed
definition for project controls is:
Project controls are the data gathering, data management and analytical processes used to
predict, understand and constructively influence the time and cost outcomes of a project or
program; through the communication of information in formats that assist effective
management and decision making.
This definition encompasses all stages of a project or programs lifecycle from the initial
estimating needed to size a proposed project, through to the forensic analysis needed to
understand the causes of failure (and develop claims).
The functions undertaken by project controls professionals includes estimating future works,
determining the current status of work in progress, understanding the reasons for this status
and recommending appropriate actions or alternatives based on the observed status and
trends.
Within this framework, for a recommendation or prediction to be useful, the reliability of the
information upon which it is based needs to be understood, and additionally, any realistic
estimate or forecast must take into account uncertainty and the cost and time
consequences of identified risk events.
Consequently, the project controls discipline can be seen as encompassing:

Project strategy, planning and methods studies to optimise future outcomes

Scheduling, including development, updating and maintenance

Cost estimation, cost engineering/control and value engineering

Risk management

Earned Value Management and Earned Schedule, including WBS, OBS and other
breakdown structures

Document management

Supplier performance measurement/oversight (but excluding contract

administration),

The elements of a project management methodology that integrate these disciplines

both within the controls domain and with other project management functions; and

The ability to communicate effectively the information generated by these processes.

This proposed definition deliberately excludes the actual management of the work needed
to accomplish the project scope, including scope related disciplines, such as quality control
and administration, and general management disciplines such as team development,
stakeholder management and communication.

Quality control versus project control

Quality is an integral part of doing the work; quality is built into the fabric of a process in
exactly the same way team performance is. Given the basic assumption in the definition
above that project controls professionals are not involved with the direct management of the
work, they cannot be directly involved with the management of quality (quality is designed
in, not inspected in).
Even quality inspections (quality control and/or testing) are simply work items undertaken by
the project team to complete the required scope. The work is defined by activities in the
schedule and has associated costs, etc but is fundamentally the same as digging holes or
pouring concrete. Similarly, contract administration is an integral part of doing the work.
Administering a contractor is fundamentally the same as directing the work of employees in
a project team and is very much a function of management.
The consequences of the teams ability to achieve quality, administer contractors and
perform effectively, and any other aspect of actually doing the work will generate or
influence data that may be important in planning, monitoring and/or predicting project
outcomes and this aspect of observing the actual accomplishment of work is implicit in the
definition.
The surveillance aspects of time, cost and risk are intimately linked to how well the team
can accomplish the projects scope, to the required quality standards. And to close the loop,

the information generated by the project controls professionals based on their observations
is an important input to these and other management functions.
To summarise, the role of project controls is information generation, the role of
management is to make effective use of the information. Project controls professionals work
with the team and other stakeholders to plan the optimum way of accomplishing the work,
then measure the actual performance of the team against the agreed plan and use this data
to recommend future actions and predict outcomes. This means project controllers are the
experts who gather, manage and analyse data to generate useful information and insights
for others to use. And the primary users of the controls information are the project
management team and project governance and oversight entities within the organisation
such as PMOs and project control boards (PCBs).
Most authorities recognise that it is impossible to effectively manage or govern a project (or
program) in the absence of reliable information on the current status of work in progress,
and reliable predictions of future outcomes. This is supported by this proposed definition,
with the key delineator between controls and management being the recognition that it is
managements role to make use of the information and advice generated by the controls
professionals.
Once the definition of controls is resolved, the next step will be establishing a framework of
certifications and qualifications to benchmark professional knowledge and behaviours.
There is already good progress in this area with developments by AACEi, Planning Planet,
PMI and CIOB to name a few (see more on PMI and CIOB credentials).
Whats lacking in the general market is a general recognition that effective controls
professionals need domain knowledge as well as tools knowledge. Developing this
recognition is the next challenge. Your feedback and ideas are welcome!