Technology may have enormous potential, but engineering and construction companies – and owners – cannot neglect the fundamentals of good project management.
Underperformance is a constant thorn in the side of owners. The results of this year’s survey highlight three reasons why project management controls are not producing the desired cost, schedule and quality targets:
Three reasons why project controls aren’t working:
It is surprising how frequently experienced project teams ignore the warning signs of incomplete planning, and move forward with execution in spite of serious problems and unresolved issues. For this reason, it’s vital for owners and engineering and construction companies to keep investing in project controls and technology. This should help to ensure that underlying controls are soundly and consistently administered, and that project information systems and tools provide management with the information they need.
If management is not made aware of project issues until they become catastrophic, the chances of rescuing a project and avoiding failure are slim-to-zero.
Management need to be made aware of project issues on a real-time – or as close to real-time – basis as possible Earned Value Management (EVM) is arguably the only industry recognized and consistent approach to measure cost and schedule performance. By measuring scope, time and costs within a single integrated system, EVM can give accurate forecasts of project performance problems.
The engineering and construction sector has enthusiastically adopted this approach, but its use is variable. Amongst the firms taking part in the survey, 41 percent don’t use EVM at all. There is also a big difference in usage between owners and engineering and construction companies, with the latter far more likely to embrace EVM.
Only 27 percent believe that their controls are truly consistent globally, although a larger proportion feel there is consistency within regions and lines of business. This patchwork picture provides another explanation for project performance: firms’ overall controls are only as strong as their weakest controls or their weakest business unit. Until they can achieve high standards in controls across the enterprise, large firms are likely to keep on suffering from failed or poorly performing projects.
It’s always a challenge to track and report on projects and give stakeholders the information they need. One of the major obstacles is a lack of integration, either of project management and financial reporting systems, or between owner and contractor/subcontractor reporting systems. Failure to consistently apply metrics can increase the risk of underperformance.
Across many project areas, both owners and engineering and construction companies say they’re consistently reporting key performance metrics for cost, risk, safety, procurement and schedule. But the biggest gap appears to be in the reporting of quality. Most capital projects have limited flexibility in quality, so unreported or unknown quality issues can damage future cost and schedule targets.
Only half of the respondents claim to report errors and omissions, and just one-third say they track turnover plans for commissioning. Without a comprehensive and consistent view of project reporting, both owners and contractors are likely to continue to struggle with performance issues. Reporting of quality is not only valuable for tracking quality; it’s also another great metric for assessing and evaluating the likelihood of claims, and the potential for future cost and schedule overruns.
To view the full survey findings, download the complete report.