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  • 1.  Establishing a proper integrated project control system

    Posted 10-07-2017 06:39 AM

    Hi all and happy to be with you on board!

    We are working on a PMO setup for a set of mega projects. We are building an integrated project management and control system. The general approach is to break up the project into manageable WBS items and each WBS activity will be our reference to assign tasks, monitor progress, allocate resources, costs... etc. Now for creating the WBS, we have two approaches, the first to build the WBS structured towards serving the project planning and the second to create it to be structured towards cost estimation/control. Obviously, the structure in both approaches is different and probably WBS for cost control will be more detailed. If we use planning WBS, we will need to make some manual work to allocate cost items from BOQ. On the other hand, if we use the estimating WBS, we are causing the planner to be involved in unnecessary details that will disturb his schedule. Can I know your suggestions about best WBS structure for project controls?
    Note: There is a group of experts working on this issue, but for me I need to know this information for our brainstorming session by next week.

    Thank you
    YAHYA



    ------------------------------
    Yahya Al-Khatib CEP PSP
    Senior PMO planner
    ------------------------------


  • 2.  RE: Establishing a proper integrated project control system

    Posted 10-08-2017 08:39 AM
    Hi Yahya

    My suggestion is to use the cost estimation/control. Because it's easier to control costs in the future.




    ------Original Message------

    Hi all and happy to be with you on board!

    We are working on a PMO setup for a set of mega projects. We are building an integrated project management and control system. The general approach is to break up the project into manageable WBS items and each WBS activity will be our reference to assign tasks, monitor progress, allocate resources, costs... etc. Now for creating the WBS, we have two approaches, the first to build the WBS structured towards serving the project planning and the second to create it to be structured towards cost estimation/control. Obviously, the structure in both approaches is different and probably WBS for cost control will be more detailed. If we use planning WBS, we will need to make some manual work to allocate cost items from BOQ. On the other hand, if we use the estimating WBS, we are causing the planner to be involved in unnecessary details that will disturb his schedule. Can I know your suggestions about best WBS structure for project controls?
    Note: There is a group of experts working on this issue, but for me I need to know this information for our brainstorming session by next week.

    Thank you
    YAHYA



    ------------------------------
    Yahya Al-Khatib CEP PSP
    Senior PMO planner
    ------------------------------


  • 3.  RE: Establishing a proper integrated project control system

    Posted 10-09-2017 08:52 AM

    Yahya:

     

    I would submit that these two WBS products should not be different; if you use a work-package-oriented WBS, the work packages should be a place where scope of work as represented by budget and schedule should accumulate.  Below the work package level, you can have activities, and you can use activity-based costing if desired.  But aligning costs to the way the project will be procured makes everyone's life easier, and that aligns with the schedule.  If a trade contractor, such as hard tile, does not capture the entire flooring section, the level above hard tile can roll up all tile/flooring.  Then estimate buy-out package for both hard tile and schedule responsibility for hard tile will be aligned at the same work package.

     

    And, if you need more detail in cost than schedule, you continue to break the work packages into more and more detail.  So if your work package is CIP concrete, as you break it into components, like formwork, rebar, concrete that work form the schedule activities, you can still elaborate further to do as detailed line item takeoff data for estimating as you desire.

     

    If you plan to provide an integrated cost-schedule risk management effort, different WBS will likely not work very well either. 

     

    Chris Carson, FRICS, FAACE, FGPC, CCM, PMP, PSP, CEP, DRMP | Director of Program & Project Controls | chris.carson@arcadis.com

    Arcadis | Arcadis U.S., Inc.

    295 Bendix Road, Suite 240 | Virginia Beach, VA | 23452 | USA

    M. +1 757 342 5524

     

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    ------Original Message------

    Hi Yahya

    My suggestion is to use the cost estimation/control. Because it's easier to control costs in the future.






  • 4.  RE: Establishing a proper integrated project control system

    Posted 10-09-2017 10:12 AM
    ​

    Many thanks Christopher for your advice,

    You have answered all my thought and explained exactly what I need to know. One more input I need to add about the project is that the contract is awarded to the contractor on cost plus basis. I refer back to your point that activity based costing will be more difficult and time consuming and that it is easier to structure the costs as they are procured.

    Based on the new given about the nature of the cost plus contract, can we say that activity based costing is now a must. Note that the contractor is fighting ABC costing approach especially for the complications in invoicing.


    Regards



    ------------------------------
    Yahya Al-Khatib CEP PSP

    ------------------------------

    Original Message


  • 5.  RE: Establishing a proper integrated project control system

    Posted 10-12-2017 06:00 AM
    Yahya:

    Yes, I think in the case of cost reimbursable contracting, they will need to use activity-based costing, but part of the reason they are resisting may be that they don't have the costs developed down to that level yet.  I would guess that this is EPC or design-build and the contractor is taking the Owner's limited scope design documents and developing the full design so they would like to wait until their design is complete before trying to elaborate costs to that level.  In that case, they could establish the costs at the work package level initially, and as they finalize the design, as they break down the work package into smaller activity level scope items, costs could be assigned to the activities at that time.

    The risk is that their final activity based costs might not accrue to the work package summary totals, but that is something that you need to monitor anyway.  That is part of ensuring that they "design-to-cost", by first choosing the primary cost drivers and monitoring those continuously and secondly by performing a detailed cost estimate and schedule at each stage in your stage-gate process.  Done correctly and well, that should limit scope creep and arbitrary enhancements of the design.

    Chris


    ------------------------------
    Christopher "Chris" Carson CEP DRMP PSP FAACE
    Director of Program & Project Controls
    ARCADIS
    Virginia Bch VA
    1 (757) 342-5524
    ------------------------------

    Original Message


  • 6.  RE: Establishing a proper integrated project control system

    Posted 10-08-2017 11:44 AM
    Hi Yahya,

    The work breakdown structure has to be developed from the project scope and deliverables. It is the backbone that maps all project components together and the first and most important step towards having proper controls on the project. Not only for project controls use, but for engineering, project management and construction use.

    The project scope & deliverables are the same for engineering, construction, estimating, scheduling ...etc .Therefore, the WBS should be the same across all project disciplines. (i.e: same coding, same structure, same deliverables).

    The project WBS structure should be a tree that rolls up & down according to the specific  requirements of  the discipline; if planning requires a more detailed or a different level of detail than estimating; they need to have that flexibility built in the WBS,  so they can go down to the level of detail that allows the proper control the schedule. However; they need to maintain the ability to roll-up to a control level that estimate cost can still be mapped against schedule data to produce a cost loaded schedule for example. The same applies for all project disciplines.

    The best (if not the only) way to unify the WBS structure is to develop it from the project scope. I cannot emphasize enough on how important this is. 

    Regards,






    ------------------------------
    Ghaith Al-Hiyari PMP CCP
    Project Controls Lead
    SNC-Lavalin
    Toronto ON, Canada
    ------------------------------



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