1/10/2023

Project Controls - In a
Capital Project
Management
Environment.

KEN E. WALL
KEW CONSULTING INC.
 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

Table of Contents

INTRODUCTION ............................................................................................................................................ 2
Project Definition ......................................................................................................................................... 3
Project Management.................................................................................................................................... 4
Project Controls ............................................................................................................................................ 6
1. Project Control Roles - Estimating ....................................................................................................... 8
2. Project Control Roles – Planning ....................................................................................................... 11
3. Project Control Roles – Scheduling .................................................................................................... 14
4. Project Control Roles – Cost Management ....................................................................................... 17
5. Project Control Roles – Risk Management ........................................................................................ 19
6. Project Control Roles – Project Change Management ...................................................................... 22
7. Project Control Roles – Progress and Performance Monitoring & Reporting .................................. 24
Project Control Roles – Summary .............................................................................................................. 29

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INTRODUCTION
The following document provides a general outline of the various roles and responsibilities of a
Project Controls organization and the functions required to apply effective Project Management
controls, during the implementation of capital projects and/or portfolios.

Project Controls, in a capital project environment, relies on the principles and processes of the
Association for Advancement of Cost Engineering (AACE) and the Project Management Institute (PMI) to
ensure anticipated corporate business goals and objectives are achieved/maximized.

Implementation of Project Controls in a capital project will provide the principles, processes,
and procedures to ensure project execution compliance with the approved business justification and the
associated estimated scope, schedule, and cost budgets, during all stages of a capital project, from
inception thru to and including close-out of the project/s.

In this document the Project Control’s functions include:

 Estimating
 Planning
 Scheduling
 Cost Management
 Change Management
 Risk Management
 Project Change Management
 Progress and Performance Monitoring & Reporting

On recent projects and corporate portfolios, this writer has experienced not only a significant lack of
knowledge of a Project Controls team, but a use of only some of the individual functions, rather than the
integration of all the Project Control’s functions. This sometimes creates conflicting reporting which in
turn creates a lack of confidence in the Project Controls role. While in an operating environment
creating specific departments, such as a planning or estimating departments, may be a corporate
requirement. On large scale capital projects, with corporate and project management support, the total
integration of all project controls functions, is mandatory and ensures all project team members
understand and utilize the Project Control’s functions to ensure a successful project where everybody is
on the same page in achieving the approved business goals and objectives.

This document, along with a supporting PowerPoint presentation, hopes to clarify, for companies
and project management teams executing capital projects, the role of a Project Controls team within a
capital project, and the integration required with all the various departments, disciplines, processes, and
procedures of the entire Project team. This raises another important point. Utilizing established Project
Control’s expertise, processes and recommendations, the Project Controls team facilitates the input and
output of the project’s progress and performance statistics but, it is only effective when all project team
members are accountable and responsible for the success of the project, as was defined within the
guidelines of the approved corporate business plan.

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Project Definition

*A project is a temporary endeavour, undertaken to create a unique product, service or result

and originates as an opportunity to meet strategic business plans, goals, and objectives.

Projects have a definite beginning and a definite end.

Projects produce unique deliverables.

When a corporation, or business, perceives an opportunity to further diversify or enhance

business goals, it will create a business team to analyze the possible scope, timeline, and budget
required to maximize the potential profitability of this new venture, to the organization. Most
corporations have several potential business opportunities, each of which is assessed for the most
beneficial and successful venture. Once the most beneficially positive ventures are determined, the
formal process of developing a business plan and obtaining corporate approvals to proceed is
implemented. Please note, at the initial stage, the level of detail available is minimal. Corporate
approval, at this inception stage, would facilitate development of preliminary “Order of Magnitude”
scope, specifics, timelines, and budgets to support or reject the further advancement of any venture.

This process continues throughout various stages of the project, as the level of scope, associated
schedule and cost impacts are further defined, and corporate impact assessments are developed.
Project advancement or cancellation (go/no go) are determined during each stage.

Projects are not only assessed for their technical benefit. Stage approvals require the technical,
financial and timeline goals and objectives to be achieved. Otherwise, the business plan and the project
are unsuccessful and do not meet the required business goals and objectives.

*Project Management Institute (PMI) - PMBOK Guide

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Project Management

Project management is the application of knowledge, skills, tools, and techniques to develop
activities, to meet business and project goals and objectives.

*Project management is accomplished through the application and integration of the project
management processes of initiating, planning, executing, monitoring, controlling, and closing.

Managing a project includes:

 Identifying requirements aligned with the corporate business plan.

 Establishing clear and achievable objectives
 Balancing the competing demands for scope (including quality), time and cost.
 Adapting the specifications, plans and approach to the different concerns and expectations of
the various stakeholders.

During the various stages of a project the deliverables, above, are consistent. The progressive
elaboration level of detail available during each stage provides the data/information required for
further go or no-go decisions.

At the inception stage, senior corporate staffing levels will perform the go/no-go analysis. In
subsequent stages, the corporation still has final approval, but should ensure the staffing levels
include the required large scale project management skill sets, to not only analyze the stage output,
but also should have the ability to formulate an execution strategy to justify the project receiving
approval to the next stage. If not already included, after the inception stage, Project Controls
representation should be involved in the analysis/recommendations process.

*Project Management Institute (PMI) - PMBOK Guide

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In the graph below, the new build phase section represents the typical stages of a capital
project. Each stage must be controlled, monitored, and analyzed to determine whether the
corporate goals and objectives are being realized and whether the output is sufficient to achieve a
go/no-go decision into the next stage. While the Operating and Decommissioning phases are outside
of a Project’s parameters, the success of the capital projects have a direct effect on the planning of
corporate Operations and Decommissioning methods.

An example of the various life cycle phases:

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Project Controls
A combined effort of the Cost Engineering and Project Management professions, focused
primarily on effectively managing large scale/mega projects.

A “project management” process for controlling the investment of resources in an asset, where
investments are made through the execution of a project. Project control includes the general steps of:

 Project planning, including establishing project scope, cost, and schedule control baselines
 Measuring project performance
 Comparing measurement against the business and project plans
 Recommending corrective, mitigating, or improvement action as may be determined through
forecast projections and further planning activity.
 Communicating project status to all project team members and stakeholders.
 Providing final forecast projections at completion (FFC) in comparison to all Scope, Schedule,
and Cost baselines.

Effective application of professional and technical expertise to plan, monitor and control resources,
costs, profitability, and risks in alignment with business goals and objectives.

*A systematic approach to managing scope, cost and time throughout the life cycle and stages of a
project, through the application of project control principles, proven methodologies, and the latest
technologies, as a function of the project management processes.

Asks the questions “Are we doing what we planned (scope), in the estimated time frame (schedule)
at the estimated price (cost)?”

Project Controls processes need to be integral to each stage of a project. The Project Controls
team needs to have the technical and business skills to assess the various outputs of each stage and
understand the future technical, financial, timeline and constructability impacts prior to proceeding into
the next stage.

During each project stages from inception through close-out, the Project Controls role is
primarily a Plan-Do-Check-Assess cycle:

PLAN
(Plan Activities)

ASSESS PDCA DO
(evaluate measures, Cycle (Perform Activities)
act upon variances)

CHECK
(measure performance
of activities)

*Association for the Advancement of Cost Engineering International (AACE International)

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Within some industries, performing projects, there is the thought “Project Controls is only
required on large scale mega projects”. While large/mega scale projects, apply tools and processes
substantially more onerous, requiring different skills than small scale projects, the principles remain the
same: “Are we doing what we planned, in the estimated time frame at the estimated price?”. Project
Managers and/or Project Engineers on smaller projects need to monitor the scope, schedule, and cost
baselines, using different tools to answer this question.

For Project Controls to answer these questions, not only should all the Project Controls
functions be integrated internally, but the Project Controls processes and procedures must also
integrate and align with all multi discipline processes and procedures required to manage the corporate
and departmental functions on a project. The Project Control role is to ensure the entire project team is
striving to achieve the same goals and objectives as defined by the business plan or assess the impact of
a deviation to the business plan, prior to implementation.

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Project Control performs varied roles on a project and interfaces with all project divisions,
departments, stakeholders, and groups. The main functions within project control are:

1) Estimating

2) Planning

3) Scheduling

4) Cost Management

5) Risk Management

6) Project Change Management

7) Progress and Performance Monitoring & Reporting

1. Project Control Roles - Estimating

Estimates are predictions of quantities, unit-pricing, timing, and cost of resources required by
the scope of an asset investment option, activity, or project which

 Addresses risks and uncertainties.

 Is used primarily as inputs for budgeting, cost or value analysis, decision making in
business, asset, and project planning, or for project scope, cost, and schedule control
processes.
 Is determined using experienced standards and expertise and then projecting the future
cost of resources, methods, and management.
 Requires a level of scope definition and applicable scheduled time frame.
 Determines the Final Forecast at Completion (FFC) of a project.

The classification of an estimate and the methodology used for estimating depends on the level
of scope definition and execution strategy available at the time of the estimate and determines the level
of accuracy and preparation effort required.

Example of estimating standard classifications:

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Estimate classifications may vary within industries and/or organizations but the purpose is
universal. The level of project definition and assessed impacts will determine a go or no-go decision for
the project.

One of the main components of a project estimate is the amount of contingency required to
continue the project, which is driven by the level of detail available. As the project progresses the level
of detail increases and the amount of contingency required decreases, as shown below.

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The contingency on a project only disappears completely upon project completion. Even the
close-out stage may require contingency draw down, dependent on the level of close-out scope known.

Project Contingency is estimated based on the level of scope definition and risk assessment
available. It should not be used for additional or new scope. These types of additional or new scope
changes need to be assessed through the formal Project Change Management process, with one of the
questions being “How will these changes be funded by corporate?”

One answer might be, new scope changes will be funded through a “Management Reserve”
process which is not estimated or controlled by the project and is completely outside of and different
from a “Project Contingency” plan.

For effective scope, schedule, and cost FFC, estimates throughout all stages of a project requires
input and review from the project’s various departments, and where possible, should be quantitative vs
lump sum order of magnitude (OOM) pricing (An estimate of 1 lot = $xx is not a control estimate). As the
improvement in scope definition accuracy increases so should the available measurable quantities in the
estimate. During the define and execution stages of a project every effort should be made to ensure the
detailed estimates have adequate control monitoring points (measurable quantified deliverables). This is
not only beneficial to measuring the accuracy of the project progress and performance but provides a
more accurate basis for forecasting the final estimated outcome of the project (FFC) in conjunction with
the various project accountabilities and responsibilities.

Throughout the project stages, stewarding against the project estimate is not only a Project
Control’s role. Ensuring project execution and completion aligns with approved business plan and
project estimates is the responsibility of all project members, with Project Controls being the
coordinators/facilitators.

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2. Project Control Roles – Planning

Project planning is “What” project scope will be performed and “How” will it be executed to
meet the projects goals and objectives? The purpose of project planning is to establish an acceptable
course of action (plan) to execute a project in an effective manner through the review of project scope
and objectives. The terminology “planning” is very frequently incorrectly used to imply a detailed
resource loaded schedule. Project planning includes the identification of disciplines/departments, the
processes, procedures, and interfaces required to manage the project.

The “Project Plan” determines a project's objectives with identification of the activities to be
performed, methods and resources to be used, to accomplish the tasks, assignments of responsibility
and accountability, and establishment of a project wide integrated plan to achieve completion as
required by the approved business plan.

Project planning should not be interpreted as corporate asset or policy planning. There may be
interface requirements to corporate asset or policy planning, but project planning solely addresses the
execution of the project.

Project Planning involves:

 Reviewing the estimated scope of work, stakeholder requirements, division of responsibility,

project objectives and constraints to develop the strategy for effective project delivery.
 Identifying major activities to be performed and the preferred sequence in which they are to
be accomplished.
 Developing an integrated plan to effectively execute the scope of work and meet project
objectives, by identifying cost/schedule areas for the further definition of the scope of work.
 Coordinating with the various department’s senior project management team to ensure
coordination and interfacing of all project processes and procedures.
 Communicating with the project team to retrieve input and report output of the “Project
Plan” progress status.

The planning objectives, at the beginning of each project stage, is to define, integrate and coordinate all
subsidiary plans and components including:

 Project scope management plan

 Schedule management plan
 Cost management plan
 Quality management plan
 Process improvement plan
 Staffing management plan
 Communications management plan
 Risk management plan
 Supply Chain/Procurement management plan

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Some deliverables from the planning stages include:

 Work Breakdown Structure (WBS)

 Milestone list
 Resource calendar
 Schedule baseline
 Cost baseline
 Quality baseline
 Risk register

The various plans are updated and revised through the Integrated Project Change Management process
during and after each project stage and provides documentation to define how the project is executed,
monitored, controlled, and closed.

Effective project planning requires the input and output of all project team disciplines. Of critical
importance in the integration of all processes and procedures, ensuring the entire project team is “on
the same page”.

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Project Planning Responsibilities/Processes

Example from PMI - PMBOK Guide.

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3. Project Control Roles – Scheduling

Project Scheduling is “Who” will perform the activities and “When” will the activities occur to meet the
project’s business plan?

The scheduling function consists of:

 Establishment of a Project Work Breakdown Structure (WBS) to assign accountabilities and

responsibilities for monitoring, controlling, and reporting the status of the progress measurable
work scope required during each stage of the project.
 The assignment of detailed activities, with desired start and finish times, within the overall time
cycle required for completion, aligned with the current project stage, estimate and plans.
 Process of converting a general or outline plan for a project, into a time-staged schedule, based
on logic, interfaces, available resources and time constraints.
 Project Control’s primary role is to Forecast (estimate) the final timing of the project and/or
components, highlighting areas of concern, and providing possible enhancement or corrective
actions, in comparison to the approved project schedule baselines.
 Project status communication to/from all project stakeholders, at the various reporting/control
hierarchy levels of the project Work Breakdown Structure (WBS).

Schedule Development

During each stage of the project, the schedule process is established including the entire estimated
project scope of work, stakeholder requirements, schedule hierarchy, division of responsibility, schedule
reviews, approval requirements, and distribution.

During the initial stages of a project a master project schedule is developed, identifying major
milestones to achieve the project completion date/s. As the project progresses additional detailed
activities are developed, in conjunction with the relevant project scope holder, aligned with the master
project schedule.

In association with the relevant scope holder, develop detailed schedules and tasks, by WBS, and assign
resources (costs, labor, material, and equipment) to each activity to determine progress in comparison
the project baseline and completion date/s.

While Project Controls are the coordinators/facilitators of the schedule process, obtaining project scope
holder, and project team schedule review and approval, prior to distribution, is essential. Project
Controls does not have a schedule! The schedule belongs to the entire project team and its accuracy is
dependent on the teams input and output.

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Schedule Management & Control

Some of the main functions of schedule management include:

 Establishing a regular basis for updating the project schedule to ensure the timely reporting of
schedule information.
 Recording, assessing, and forecasting the effects of project schedule changes, including changing
resource requirements. Note: project scope changes can only be included upon approvals via
the Project Change Management process.
 Assessing actual progress versus planned progress to determine trends and variances. This
requires progress schedules only include activities contributing to the physical of the project.
While engineering progress activities need to be included, staffing resources should not be
included in the progress schedule. For resource leveling purposes, a separate schedule could be
utilized.
 Analyzing schedule trends, determining, and including risks and developing options for
corrective action.
 Revising the project plan and project schedule (re-plan and/or re-baseline) as defined by the
project change management process. Schedule slippage, outside of approved scope changes,
does not constitute a re-baseline of the project schedule. Dependent on the nature of schedule
slippage, agreement with all invested parties could trigger a revised target schedule, but not a
re-baseline. The project schedule baseline needs to remain intact for schedule forecasting and
historical monitoring purposes and can only be modified via approved scope changes through
the project change management process.
 Projecting the final project completion date/s (forecasting - FFC).

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Scheduling – Hierarchy Example:

Through natural project progressive elaboration, the levels of detail activities though each stage
increase, along with the project team accountabilities and responsibilities. The schedule hierarchy
ensures all project stakeholders and team members are included in the progress reporting process, to
present an accurate representation of not only the most recent status, but more important, the
project/stage outcome at completion (FFC).

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4. Project Control Roles – Cost Management

*Cost Management is the effective application of professional and technical expertise to plan and
control resources, costs, profitability, and risk.

It is a systematic approach to managing cost throughout the life cycle of any enterprise, program,
facility, project, product, or service, through the application of cost engineering and cost management
principles, proven methodologies, and the latest technology in support of the project plan.

*(Association for the Advancement of Cost Engineering International (AACE International))

Note: Project Cost Management/Control is not “Financial or Cost Accounting”.

Cost Management utilizes the approved project business plan, project department plans, scope, cost
and schedule estimates, and the associated cost flows to provide baselines for monitoring and control of
project costs. Cost Control monitors and controls the “elements” of cost to determine the current and
Forecast Final at Completion (FFC) impact of cost. The primary focus is the quantitative design
associated with the purchase, and installation components, in comparison to the approved project
estimate, with the estimated final costs (FFC) being an estimated result. Hence, the cost management
team requires a strong technical background, to effectively monitor the project scope and progress
performance.

For control and monitoring purposes, the various scope, cost, and schedule estimates are converted to a
project budget, and the project budget is subsequently used as a cost baseline for project
management/project team progress monitoring, reporting, and forecasting.

Using the approved project estimates, schedules, and authorization matrix, information on project
resources (material quantities, capital cost equipment, construction equipment utilization, labour inputs
and unit pricing) within each Work Breakdown Structure (WBS) account, creates the structure of the
project budget. With this information, actual progress of materials, equipment and labour usage are
compared to the expected requirements, to derive incurred (value of work performed) cost amounts
and deviations to generate an estimated final cost (FFC) of the project.

In Cost management, Cost Control’s primary role is to Forecast (estimate) the final cost of the project
(FFC), highlighting areas of concern, in comparison to the approved project scope, time and cost
baselines. This is achieved by:

 Being an integral component of any/all project processes, which could commit and/or Incur
costs to the project. Analysis of potential and experienced (actual) scope, time and cost and
cost flow trends is performed, in comparison to approved project budgets.
 Communicating and reviewing the status of the project budget(s) with the applicable Project
Manager, Scope Holders and/or Budget holders. While Cost Control’s role is to coordinate and
communicate cost status, the entire project team is accountable and responsible for the impact
to the approved budget/s.

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 In conjunction with the Project Manager, Scope Holders and/or Budget holders, estimate final
quantities, hours, durations etc. to determine the final cost of remaining work (Estimate to
complete - ETC). The ETC when included with the incurred costs, forms a basis for the estimated
final project cost (FFC).
 Utilizing the Project Change Management and Risk Management registers, identify experienced
and potential Scope Changes, Trends, and potential Risk items.
 Monitoring Funding (AFE) and Contingency allocations and recommending future requirements.
Project Contingency should not be considered as a resource for funding new/additional scope,
projects, or management reserve. The project contingency is an allowance calculated based on
the level of scope development during the various stages and progress of the project.
 Analyzing and comparing the Forecast Final at Completion (FFC) costs of the project, including
approved and potential project scope changes identified in the project Change and Risk
Management processes, in comparison to approved project budget/s.
 Value of work performed (Incurred) cost reconciliation to corporate and financial cost
accounting processes is periodically performed. Utilizing only cost accounting/financial data to
estimate incurred costs and perform project cost control should never be a project practice. The
financial accounting data is historical, may not contain the most recent work performed and
may not contain the quantitative data for comparison to the planned project scope.
 Cost management baselines can only be adjusted based on the approved scope/quantitative
variances identified via the Project Change Management process. Adjusting the baseline using
experienced overrun or underrun costs must not be a corporate practice. This practice artificially
creates an atmosphere where cost overruns are acceptable, creating an incorrect always “on
budget” environment, and limits the ability to identify and implement corrective actions and
correctly project the final forecast cost at completion (FFC).

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5. Project Control Roles – Risk Management

The objectives of Project Risk Management are to increase the probability and impact of positive events
and decrease the probability and impact of events adverse to the projects approved business plan.

Risk Management includes:

 Risk Management Planning – As a function of the project planning process, identifies how to
approach, plan, and execute the risk management process and activities for a project.
 Risk Identification – Determining which risks might have a positive or negative affect on the
project and documenting their characteristics. Periodic and regular update group meetings with
the appropriate project stakeholders are required, to provide status updates and identification
of further known and/or potential risk items. Initial risk workshops and sessions tend to
generate a significant number of risks.
 Qualitative Risk Analysis – Prioritizing risks for subsequent further analysis or action by assessing
and combining the probability of occurrence and impact with a focus on the more significant
risks.
 Quantitative Risk Analysis – Numerically analyzing the effect of risks on overall project
objectives. Aligned with the Qualitative risks, also focuses on the more significant risks.
 Risk Response Planning – Developing options and actions to enhance opportunities and to
reduce threats to project objectives.
 Risk Monitoring and Control – Tracking identified risks, monitoring residual risks, identifying new
risks, executing risk response plans, evaluating, and communicating their effectiveness
throughout the project life cycle.

The Risk Management process application interfaces in alignment with other project processes (Scope
Development, cost estimating, cost management, planning and scheduling development, resource, and
supply chain planning etc.) to ensure potential risk impacts are included in the project scope, schedule
and cost baselines and forecast projections.

Risk Management is applicable to all asset or project life cycle stages and requires the involvement of all
members of the project team, with participation by any/all stakeholders and end users.

Risk Management identifies Opportunities and Vulnerabilities throughout the entire life of the project.

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Typical Risk Model:

STEP 1: Risk Planning Risk and STEP 2: Risk Identification

Uncertainty Mgmt
Guidlines

Develop Project Risk Policy and Risk List of Risk

Risk Qualitative Risk
Strategic Risk Matrix Events
Identification Analysis
Mgmt Plan

Organizational
Training &
Awareness
STEP 3: Risk Analysis

STEP 4: Risk Response Planning Estimated

Risked Cost and Quantitative Risk List and Prioritize Liklihood, Impact,
Risk Response Strategy Risk
Schedule Analysis of Top / Top / Key Risks Urgency &
Development Prioritization
Distributions Key Risks Manageability

Risk Approved
Risk Response Best
Response Select Best Risk
Implementation Implementation
Option Option Response
Analysis Approach
Analysis Strategy

STEP 5: Risk Monitoring & Control

Monthly Status Implement Risk

Feedback to Other Revised Top 10 Risk Monitoring
Reports Response Plan
Process Steps Risk List And Reporting

To aid in identifying the most critical Qualitative and Quantitative risks, development of a Risk Matrix is
necessary to identify the potential consequence severity to the project and probability of occurrence.
The project should focus primarily on any catastrophic and/or critical risks by implementing corrective
actions or including any project scope, schedule, and cost impacts in projections at completion (FFC).
Constant monitoring of risks ensures less critical risks are less likely to escalate or upon escalation, will
also be included in the final forecast at completion (FFC) project projections.

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Sample Risk Matrix:

Project Execution Risk and Uncertainty Ranking Matrix Revision B1 - 2-Nov-07

PROBABILITY OF OCCURRENCE (LIKELIHOOD)

POTENTIAL CONSEQUENCE ON PROJECT OBJECTIVE Rare Unlikely Possible Probable Very Likely
(the most severe likelihood of consequence on objectives is the deciding factor) < 1% chance 1 to 10% chance 10 - 50% chance 50 to 90% chance >90% chance
Severity 1 2 3 4 5
Level
Rare or Extremely
(see Note 1) Unlikely or remote, but
Product Quality Improbable - A freak
could occur in the lifetime
Could happen when
Highly likely to occur at Almost inevitable that this
People Environmental combination of factors additional factors are
Capital Cost First Power Target Date (Availability, Reliability, Reputation / Image would be required for
of this Project. Rare
present, but otherwise
least once over the life of event will occur (i.e. a
(OHS) (Physical) occurrence for hydro- the Project. given).
Performance) event to occur. Has never
electric projects.
unlikely to occur.
happened in this industry.

Massive Effect
(e.g. Persistent severe environmental
damage or severe nuisance extending over System requirement is not achieved,
International Impact - International
a large area. Loss of commercial, safety objectives are not achieveable.
Catastrophic 5 Potential to cause Multiple Fatalities
recreational use or nature conservancy
> $100M > 20% slippage (~ 1 year)
System or element is effectively
publicity, significant impact on market Moderate Serious Critical Critical Critical
resulting in major financial implications to
share or investor validation.
useless.
the Project. Direct impact on public with
prosecution possible.)

Major Effect
(e.g. Severe environmental damage. The Decrease in system performance National Impact - National or regional
Potential to cause Single Fatality or company is required to take extensive
Major 4 Permanent Disability measures to restore the damaged
$10 to $100M 5 to 20% slippage (3 to 12 months) substantially affects performance publicity, transitory impact on market Acceptable Moderate Serious Critical Critical
environment. Regulatory restriction or
objectives. share or investor validation.
enforcement action probable).

Localized Effect
Decrease in systerm performance
Potential to cause Loss Time Injury / (e.g. Limited discharges affecting the local Considerable Impact - Local media
Moderate 3 Illness
area and damaging the environment. $1 to $10M > 5% slippage (1 to 3 months) eliminates all design and operating
coverage, Community Complaint
Acceptable Acceptable Moderate Serious Serious
Repeated breaches of statutory / regulatory margins.
limit, or many complaints).

Minor Effect
Potential to cause minor harm (e.g. (e.g. Sufficiently large contamination or Decrease in systerm performance, Limited Impact - Little or no local media
Minor 2 Restricted Work Case)
discharge to damage environment, but no $100k to $1M 1 week to 1 month
however still above requirement. coverage. Some local public concern.
Acceptable Acceptable Acceptable Moderate Serious
lasting effect. Single breach of statuatory or
prescribed limited, or single complaint).

Slight Effect
Slight or Low Impact - Public
Potential to cause slight harm (e.g. (e.g. Non-reportable spill or release Potential degradation of element
Insignificant 1 First Aid and/or Medical Aid)
contained within the immediate work area, < $100k Insignificant < 1 week critical path
performance, system level not affected.
awareness may exist, but there is not a Acceptable Acceptable Acceptable Acceptable Moderate
negligible financial consequences, no public concern.
lasting effect).

No effect.
No potential to cause harm (e.g. No No effect on element or system
Intangible 0 Injury / Illness or Near Miss)
(e.g. No environmental damage. No No impact. No impact.
performance.
No public awareness. No impact. Acceptable Acceptable Acceptable Acceptable Acceptable
financial consequences).

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 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

6. Project Control Roles – Project Change Management

An internal process for managing any change to the approved project scope of work or any deviation,
performance trend, resulting in a change to an approved project scope, quality, time (schedule) or cost
including:

 Identification - Scope of the change, justification, and benefit analysis to the project business
objectives.
 Definition – Quantified deliverables with estimated cost and schedule impacts
 Categorization – Change to project baseline/s or anticipated trends etc.
 Tracking – Register and monitor change towards obtaining pre-implementation decisions.
 Analyzing – Assessing the impacts to approved scope, time and/or cost baselines and forecasts.
 Disposition – Obtain approvals / disapprovals through the implementation of a Change Control
Board (CCB).
 Reporting – Communicating status and impacts to all project stakeholders and affected scope
and/or budget holders including the go/no-go decision towards implementation.

Note: Is not a Contract Change Management process.

Why have Project Change Management?

 One constant in all projects – “there will be changes”.

 Required to ensure that the project includes all the work required and only the work required to
complete a project successfully.
 Obtains project approvals or rejections, prior to implementation or notification/award to
contractors.
 Provides an “early warning” so that timely decisions can be achieved with adverse impacts on
the project minimized or eliminated and positive impacts maximized.
 Balances the competing demands for quality, scope, time, and cost.
 Provides a basis to adjust project scope, schedule, and cost baselines. Note: Only approved
project scope changes can adjust project baselines. Schedule delays or cost overruns do not
constitute baseline changes. Not only does this practice incorrectly support always being on
schedule or on budget but impacts the ability to correctly forecast the final project outcomes
(FFC).
 Provides a communication inlet/outlet for all project stakeholders.
 Project Change Management must supersede the implementation of scope modifications. Could
be the basis of but are not Commercial/Contract Change Orders/Notices (CCNs), which are a
component of the Supply Chain Management plan.

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 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

Project Change Management terminology and impacts:

PROJECT CHANGE NOTICES

BASELINE GROWTH

Terminology - Scope - Non-Scope

- MOC - Trend
- Variation - Growth
- Budget - Forecast
- PCN - DAN

Impact Approval adjusts scope, cost Supports project cost &/or

&/or schedule baseline schedule Final Forecast at
Completion (FFC) projections

Stewardship: Design Basis (DB), Estimate Basis Cost & Schedule Estimate /
Memorandum (EBM) and Project Forecasts
Execution Plan (PEP) - Gate
Scope, Cost & Schedule Estimate

Component Quantitative scope, basis & Unit pricing, durations, actual

execution strategy performance

There are many different terminologies within various industries for a Project Change Management
process as shown above, but the Project Controls function remains the same. This table identifies the
impact of scope vs non-scope change management.

 Approved Scope changes adjust baselines (positive or negative) and the project outcome (FFC).
The Design Basis (DB), Estimate Basis Memorandum (EBM) and Project Execution Plan (PEP) -
Gate Scope, Cost & Schedule Estimates will need to be adjusted accordingly.
 Non-Scope changes only adjust the schedule and cost projections of the project outcome (FFC).
Cost & Schedule Estimates will need to be adjusted accordingly as overruns or underruns and
analyzed for corrective actions or continuous impacts.

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 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

7. Project Control Roles – Progress and Performance Monitoring & Reporting

Project Controls is responsible for coordinating reporting project status updates, in comparison to
approved project baselines. These updates reflect:

 The project original Approved Project Baselines.

 Current Approved Baseline (including only approved project scope changes).
 Achieved progress and performance, based on an Earned Value Methodology (EVM) for
activities contributing to the progress of the project.
 Forecast or estimate scope, schedule, and all-inclusive cost projections, based on current trends.

The purpose of Progress & Performance monitoring is primarily to:

 Communicate the status of the project to all project stakeholders.

 Manage the work.
 Early warning by Identifying areas of concern, providing scope and/or budget holders with the
information required to focus on vulnerabilities or opportunities, so the work can be managed
to satisfy or exceed the project goals and objectives.
 Provide visibility to areas that are exceeding project goals and objectives to determine if the
work processes can be applied to benefit other areas of the project.
 Provide a Final Forecast at Completion (FFC) basis.
 Answer questions like:
– How are we progressing compared to our plan (scope, schedule, and cost)?
– Will we complete the project on time and on budget?
– OK, I think I have a problem, but can somebody tell me where it is?
– Recognizing the problem, how do we fix it and create a recovery plan (mitigation)?
– It looks like we will finish ahead of schedule and under budget. How big is my bonus?

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 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

Earned Value (EV):

The Earned Value (EV) approach provides several tools to help project managers meet or exceed Scope,
Cost and Schedule goals and objectives.

Earned Value (EV) techniques:

• Provides accurate and current information about scope, schedule, and cost status to determine
project progress, performance factors, efficiency factors and forecast at completion (FFC) data.
• Integrates Scope, Budget, Schedule, Physical Progress, and Incurred Durations and/or Costs.
• Performance is based on Work Accomplished (Value of Work Performed), vs money or only
hours spent.
• Prevents surprises by providing early detection of Scope, Schedule, Cost, and Final Forecast at
Completion (FFC) variances.
• Compares project quantities, durations, and costs summaries/activities/tasks, in reporting
periods for:
– The value of work planned (original and re-baseline)
– The value of work accomplished (Earned Value)
– The value incurred (spent) for the work accomplished.

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 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

The progress curve below is too often referred to as the “Conventional” method to demonstrate
progress and performance:

"Conventional" Performance Widgets Project

Progress & Performance
Bars
Curves

220 1,300

1,200
200

1,100
180 Budget at Completion (BAC)
1,000

160
Original Plan Target 900
Completion
140 Date
800
Incremental Qty.

Cumulative Qty.
120 700

ActuaL Qtys 600

100

500
80

400
60
300

40
200

20
100

0 0

Period 05

Plan Hrs Pd Actual Hrs Pd Act Hrs C Orig Plan

Target Hours : Period 01 Period 02 Period 03 Period 04 Period 05 Period 06 Period 07 Period 08 Period 09 Period 10 Period 11 Period 12 Period 13 Period 14 Period 15

Orig Plan Hrs C 1,000 50 125 225 350 500 650 800 900 975 1,000
Act Hrs C 40 110 210 330 480
Plan Hrs Pd 50 75 100 125 150 150 150 100 75 25
Actual Hrs Pd 40 70 100 120 150 0 0 0 0 0

The project baseline is:

• 1,000 Widgets
• 1,000 hours estimated and planned.
• 10 period duration estimated.
• Current perceived progress – 480 cumulative hours spent in comparison to the cumulative 500
hours planned. Looks like completion will be in 10-periods. Project progress and performance
looks good!!
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 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

Using the same baseline and an earned value method:

Widgets Project
"Earned Value" Performance Progress & Performance
Bars Curves

220 1,600

1,500
200
1,400

180 1,300
Current Plan
1,200
160
Original Plan 1,100
FFC Completion
140
1,000
Incremental Qty.

Cumula tive Qty.

900
120

800

100
700

600
80

500
60
400

40 300

200
20
100

0 0

Period 05

Plan Hrs Pd Actual Hrs Pd Curr Plan Hrs Pd Earn Hrs Pd FFC Earn Hrs Pd Act Hrs C Orig Plan Curr Plan Hrs C Earn Hrs C FFC "Earn" Hrs C FFC "Act" Hrs C

Target Hours : Period 01 Period 02 Period 03 Period 04 Period 05 Period 06 Period 07 Period 08 Period 09 Period 10 Period 11 Period 12 Period 13 Period 14 Period 15

Orig Plan Hrs C 1,000 50 125 225 350 500 650 800 900 975 1,000
Curr Plan Hrs C 1,200 50 150 250 375 575 725 925 1,025 1,075 1,125 1,175 1,200
Earn Hrs C 30 80 155 255 355
Act Hrs C 40 110 210 335 485
FFC "Earn" Hrs C 355 475 660 750 850 950 1,000 1,050 1,100 1,150 1,200
FFC "Act" Hrs C 1,521 485 618 824 930 1,055 1,188 1,255 1,321 1,388 1,455 1,521
Plan % 4.2% 12.5% 20.8% 31.3% 47.9% 60.4% 77.1% 85.4% 89.6% 93.8% 97.9% 100.0% 0.0% 0.0% 0.0%
Act % 2.5% 6.7% 12.9% 21.3% 29.6%
Fcst % 0.0% 0.0% 0.0% 0.0% 0.0% 39.6% 55.0% 62.5% 70.8% 79.2% 83.3% 87.5% 91.7% 95.8% 100.0%
Plan Hrs Pd 50 75 100 125 150 150 150 100 75 25
Curr Plan Hrs Pd 50 100 100 125 200 150 200 100 50 50 50 25 0 0 0
Earn Hrs Pd 30 50 75 100 100
FFC Earn Hrs Pd 120 185 90 100 100 50 50 50 50 50
Actual Hrs Pd 40 70 100 125 150

FFC Act Hrs Pd 133 206 106 125 133 67 67 67 67 67

Perf. Pd 0.75 0.71 0.75 0.80 0.67 0.90 0.90 0.85 0.80 0.75 0.75 0.75 0.75 0.75 0.75

Perf C 0.75 0.73 0.74 0.76 0.73 0.77 0.80 0.81 0.81 0.80 0.80 0.79 0.79 0.79 0.79

PC101
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 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

The project revised baselines and stats are:

• 1,200 Widgets (200 added via approved Project Change Management process).
• 1,200 hours estimated and planned which includes the approved change.
• 12 period duration estimated including new change.
• Current progress is:
– Physical progress is 29.6% complete vs a revised plan of 47.9%, 20.3% behind
schedule.
– 355 cumulative hours earned (1200 budget hrs x 29.6% complete) with 400
cumulative hours spent, based on time reporting system. This indicates a
productivity/efficiency issue, in comparison to the cumulative 500 hours
planned. The performance factor is calculated as 88% efficiency (355/400) or a
PF of 12% (400/355) greater than budget depending on the corporate method
of measurement.
– At the current progress rate (29.6% vs 47.9%), if not improved, the project will
take 15 periods to complete in comparison to the planned 12 periods.
– based on the current efficiency and schedule forecasts, a cost overrun is
possible based on 1,350 hours forecast at completion vs 1,200-hour baseline
(1200/0.88).
• At 29.6% complete there is still an opportunity to implement corrective action
minimizing or eliminating the schedule and cost overruns vs not realizing these overruns
until they occur as occurs in the “Conventional” method. Being unaware of these
statistics or ignoring an EV method makes the situation more critical and jeopardizes the
success of the project in comparison to the current approved business strategy.

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 Project Controls - In a Capital Project Management Environment.
KEW Consulting Inc. – Ken Wall

Project Control Roles – Summary

Implementing and utilizing the integrated functions of Project Controls on large scale capital
projects will provide all project stakeholders with a clearer picture of the project status, issues,
corrective actions, and outcome (Final Forecast at Completion - FFC). Regardless of the industry,
whether oil and gas, hydro-electric, software, pulp and paper, civil earthworks etc., a baseline is
established, and the Project Control’s processes monitor against the assumed baselines. With the
coordinated integration efforts of corporations, project management teams and project controls, early
identification of changes, issues and suggested corrective actions, approves the likelihood of projects
maintaining or exceeding their baselines and business goals. While there is no such thing as a project
being exactly “on schedule and on budget” these processes will minimize the positive or negative
variances to acceptable/ tolerable levels.

PC101
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