Overcoming the 5 Most Common PCM Challenges
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The document discusses the five most common project cost management challenges faced by companies: slow estimating, disorganized bidding processes, lack of ability to benchmark estimates, difficulty in changing systems, and disconnection between office and jobsite. It outlines the causes of these challenges and offers solutions such as standardized processes, integration of systems, and better visibility through technology. The summary also emphasizes the importance of data accuracy and efficiency in project management, highlighting the potential benefits of using integrated project cost management systems.
![#2 Disorganized Bidding Process Sample Case
[Don’t] “Go Your Own Way”
- Fleetwood Mac
Regional contractor has expanded into three states. However, each office does
estimating their own way.
As a result, estimators in each office often “re-invent the wheel” and do not have
visibility into best practices or implement lessons learned in other regions.
This results in more effort and a higher probability of missing items.](https://image.slidesharecdn.com/ineight5pcmchallenges-29mar16-160427174738/85/Overcoming-the-5-Most-Common-PCM-Challenges-26-320.jpg)
![Result: Accuracy and Confidence
“The precision we get provides the confidence we
need. In today’s competitive market, there’s no
room for errors in our estimates.”
Project Confidence
“[We have] revamped our estimating process
by converting it from a mechanical practice
into a scientific method.”](https://image.slidesharecdn.com/ineight5pcmchallenges-29mar16-160427174738/85/Overcoming-the-5-Most-Common-PCM-Challenges-34-320.jpg)
![Result: Continuous Improvement
Leverage Best Practices
“[We now have] an enterprise solution platform for all
of our business units that standardizes our estimation
and controls processes.…”](https://image.slidesharecdn.com/ineight5pcmchallenges-29mar16-160427174738/85/Overcoming-the-5-Most-Common-PCM-Challenges-47-320.jpg)
![Result: Jobsite Visibility
“…[We] make better project execution decisions because
we’re working from the most accurate and up-to-date
information from the project site”
Better Decisions](https://image.slidesharecdn.com/ineight5pcmchallenges-29mar16-160427174738/85/Overcoming-the-5-Most-Common-PCM-Challenges-79-320.jpg)
Overcoming the 5 Most Common PCM Challenges
- 1. Overcoming the 5 Most Common PCM Challenges 30 March 2016 © 2016 InEight Inc. All rights reserved.
- 2. Agenda • Introductions • Project challenges • The 5 Most Common Project Cost Management challenges • Solutions across the project lifecycle
- 4. Speaker Introduction John Garay VP, Product Marketing & Alliances • More than 20 years focused on project-driven companies • Roles across software companies 1992 2005 2008 2012 2013
- 5. InEight Introduction InEight combines proven ability with a unified vision to help companies visualize, estimate, control and connect all aspects of their capital and maintenance projects, from the back office to the jobsite, across the project lifecycle. • Helping project-driven companies since 1989 • More than 20,000 active users in more than 500 companies across 33 countries
- 6. Sample Customers Mining Oil & Gas UtilitiesInfrastructureBuilding
- 8. Project Challenges Of 250 large infrastructure projects, 86% had cost overruns. The average overrun was 28%. - Flyvbjerg, et al. “Failure to maintain quality costs the U.S. construction industry over $15 billion a year in rework expenses alone.” - Construction Industry Institute (CII)
- 9. The 5 Most Common PCM Challenges
- 10. Methodology 1. 25+ years of providing solutions to project-driven companies 2. Engagement with more than 500 customers 3. Daily discussions with new companies 4. Consultation with InEight Industry Advisory Group (IAG) members:
- 11. The 5 Most Common PCM Challenges 1. Slow estimating 2. Disorganized bidding process 3. No ability to benchmark estimates 4. Hard to change systems 5. Limited visibility between office and jobsite
- 12. Poll #1: Your Top Challenge
- 14. #1 Slow Estimating What we hear: “Estimating a project is slow, in terms of both man hours and overall time. This impacts our ability to cost-effectively bid on more work.” Causes include: • Old systems • Manual effort • Inefficient processes • Repeating same steps between bids Issues include: • Bidding on fewer jobs • Win less work • Lower overall profits
- 15. #1 Slow Estimating Sample Case It’s a competitive market out there! • Some jobs can attract 10 or more bids • Contractor margins can be only a few percentage points To keep up, contractors simply need to bid more jobs. However, many estimating teams are already putting in overtime to keep things going at current levels. There has to be a better way!
- 17. #1 Slow Estimating Solution • Easily reproducible data • Norms databases • Material / Quantity takeoff • Scheduling integration
- 18. Easily Reproducible Data Quickly copy, multiply and split data elements to reduce effort and organize jobs. Make a change and everything automatically goes with it: • Equipment • Manpower • Hours • Production • Materials
- 19. Norms Databases Quickly build estimates based on standard cost libraries • RSMeans – Construction cost data • Richardson Construction Estimating Standards • Company-specific standards
- 20. Quantity Takeoff (QTO) Leverage designs to quickly build more accurate estimates • RIB MC2 ICE data import • On Center On-Screen Takeoff Associate and track items: • Labor • Material • Equipment assemblies • Design components Linked at the CBS for consistency Seamless flow from takeoff to estimate Develop quantity estimates from design models Associate and track design items, including labor, material, and equipment assemblies
- 21. Primavera P6 / Microsoft Project Integration Integrate Estimate and Scheduling System • Define predecessor/successor logic in estimating and push changes to schedule • Add new scope items in the schedule and automatically update the estimate • Auto calculate escalation by user-defined timing periods • Push percent complete from schedule to project control system
- 22. Poll #2: Your Scheduling System
- 23. Result: Efficiency and Accuracy "…the Aiken team has tripled the amount of work they can bid…” “We’ve been able to increase accuracy on our estimate to actuals and reduce labor overruns by 15-20%.” Win More Jobs at the Right Price "…These tools have allowed us to not work the overtime we used to…”
- 24. Challenge #2: Disorganized Bidding Process
- 25. #2 Disorganized Bidding Process What we hear: “We need to standardize our bidding process to ensure consistency and avoid missed items” Causes include: • Disconnected systems • Point solutions • Lack of templates • Inconsistent coding Issues include: • Slower estimating • Missed items • Inconsistencies across estimators • Redundant effort
- 26. #2 Disorganized Bidding Process Sample Case [Don’t] “Go Your Own Way” - Fleetwood Mac Regional contractor has expanded into three states. However, each office does estimating their own way. As a result, estimators in each office often “re-invent the wheel” and do not have visibility into best practices or implement lessons learned in other regions. This results in more effort and a higher probability of missing items.
- 27. Challenge #2: Disorganized Bidding Process
- 28. #2 Disorganized Bidding Process Solution • Unify estimating platform • Standardize coding structures across systems • Embrace benchmarking • Deploy common reports and management dashboards
- 29. #2 Disorganized Bidding Process Solution Unify estimating platform Consolidate separate efforts into a common system to fully leverage best practices and improve visibility across the project portfolio Unified Estimating
- 30. Estimating #2 Disorganized Bidding Process Solution Standardize coding structures across systems Simplify data flow between systems with common structures: • CBS • WBS • Resources • Production rates • Labor, Equipment, and Material (LEM) • Address book Estimating Scheduling Accounting Project Cost Management
- 31. #2 Disorganized Bidding Process Solution Embrace benchmarking Compare current estimate to: • Previous estimates • As-Built actuals
- 32. #2 Disorganized Bidding Process Solution Deploy common reports and management dashboards • Leverage common data structures • Understand best practices across the company
- 33. #2 Disorganized Bidding Process Solution Benefits • Faster estimating leads to more bids and more work • Create more accurate estimates by benchmarking against similar jobs • Common coding structures facilitate data flow and enable consistent reporting
- 34. Result: Accuracy and Confidence “The precision we get provides the confidence we need. In today’s competitive market, there’s no room for errors in our estimates.” Project Confidence “[We have] revamped our estimating process by converting it from a mechanical practice into a scientific method.”
- 35. Challenge #3: No Ability to Benchmark Estimates
- 36. #3 No Ability to Benchmark Estimates What we hear: “We have no way of knowing if we are getting OUR best estimate” Causes include: • Lack of tracking across the project lifecycle • No accounting integration • No standard unit of measure • No structured benchmarking process • No capture of best practices Issues include: • Slower estimating • Inaccurate estimates • Less confidence • Inconsistencies • Duplicative effort
- 37. #3 No Ability to Benchmark Estimates Sample Case What to measure? Managers need performance visibility to identify problems sooner and make changes that keep everything moving forward. Also need to understand relative performance to know where to focus for significant improvement. Finally, understanding past performance can play an important role in developing estimates for the next job. Companies need to consistently capture as-built data in order to continuously improve estimate accuracy.
- 38. Challenge #3: No Ability to Benchmark Estimates
- 39. #3 No Ability to Benchmark Estimates Solution • Define base unit of measure • Standardize coding structures down to a third level of detail • Embrace benchmarking • Develop a learning organization
- 40. Standardize Measurement First Labor Materials Equipment Schedule ft3 m3 yd3 MH Linear Feet Board Feet Metric Tons Weeks Months Man-hours Time Cost Resources Consumables Subs Price Variability Regional Attributes EQUIPMENT MANAGEMENT SCHEDULING APPLICATION PROCUREMENT APPLICATION RESOURCE APPLICATION ESTIMATING APPLICATION COST CONTROLING
- 41. Labor Materials Equipment Schedule Common Denominator ft3 m3 yd3 MH Linear Feet Board Feet Metric Tons Weeks Months Man-hours Time Cost Resources Consumables Subs Price Variability Regional Attributes EQUIPMENT MANAGEMENT SCHEDULING APPLICATION PROCUREMENT APPLICATION RESOURCE APPLICATION ESTIMATING APPLICATION COST CONTROLING QUANTITY Why NOT cost? • Regional variation • Material price fluctuations • Inflation over time
- 45. Embrace Benchmarking Once a common unity of measure is define, can then easily compare across regions and timeframes • Previous estimates • As-Built actuals
- 46. Benefits • Quicker and more accurate estimates • Greater confidence in estimates • Continuous improvement Benefits
- 47. Result: Continuous Improvement Leverage Best Practices “[We now have] an enterprise solution platform for all of our business units that standardizes our estimation and controls processes.…”
- 48. Challenge #4: Hard to Change Systems
- 49. #4 Hard to Change Systems What we hear: “We don’t want to change (from Microsoft Excel) because we have our special sauce and processes and we’ll lose them!” Causes include: • Reliance on other project-related systems • Custom estimate calculations around key efforts • Organizational inertia Issues include: • Slow estimating • Inconsistent estimates • Lack of performance visibility • Lack of scalability
- 50. #4 Hard to Change Systems Sample Case Breaking up is hard to do Based upon years of experience, a mining contractor has developed custom productivity calculations around key project steps. However, these calculations are in spreadsheets. In addition, this contractor also relies on a variety of other project-related systems for accounting, scheduling, document management, and payroll processing. Moving away from these systems would be extremely disruptive.
- 51. Challenge #4: Hard to Change Systems
- 52. #4 Hard to Change Systems Solution • Leverage (don’t replace) Microsoft Excel • Accounting / ERP integration • Scheduling integration
- 53. Leverage Microsoft Excel Keep your secret sauce! Leverage bi-directional integration with Microsoft Excel to embed complex custom calculations, with the resulting quantity or rate linked into the estimate
- 54. Accounting / ERP Integration • Quickly transfer estimates to your accounting / ERP system • Ensure consistency for tracking project actuals • Enter data once, in one place, increasing productivity and reducing risk • Increase confidence of all stakeholders with more accurate project numbers • Reduce project surprises through better performance visibility • Increase accuracy of future estimates by using as-built actuals from financial systems
- 55. Poll #3: Your accounting/ERP system
- 56. Primavera P6 / Microsoft Project Integration Integrate estimate and scheduling systems • Define predecessor/successor logic in estimating and push changes to schedule • Add new scope items in the schedule and automatically update the estimate • Auto calculate escalation by user-defined timing periods • Push percent complete from schedule to project control system
- 57. #4 Hard to Change Systems Solution Benefits • Migrate to modern project cost management system with minimal disruption • Benefit from a unified estimating platform • Leverage all the latest features • Build an integrated project controls solution
- 58. Result: Integrated Systems “We identified the link of cost and schedule as the next significant step in achieving stronger project controls.” Stronger Project Controls “…the integration with accounting was exactly what we needed.” “..live integration with Microsoft Project and Primavera P6 allows us to easily run ‘what-if’ scenarios across the estimate and schedule for multi-year projects.”
- 59. Challenge #5: Disconnect Between Office and Jobsite
- 60. #5 Disconnect Between Office and Jobsite What we hear: “What’s going on in the field doesn’t match the plan! • Crews are not doing the most critical tasks • We only learn of problems well after they happen” Causes include: • Slow and inaccurate paper processes • Point timesheet solutions that lack integration Issues include: • Project delays • Cost overruns • Inefficiencies • Project surprises
- 61. #5 Disconnect Between Office and Jobsite Sample Case “No Battle Plan Survives Contact With the Enemy” - Prussian military strategist Helmuth von Moltke What happens on the computer screen often does not match actual jobsite activity as initial plans quickly give way to the reality of the field. Managers and superintendents need to ensure foremen and their crews are working on the right things, and that quantity completion and timesheet hours are tracked easily, accurately and efficiently.
- 62. #5 Disconnect Between Office and Jobsite John Smith, Superintendent Responsibility: • Manage all day to day project activities Problems: • Lack of visibility into jobsite activity • Misalignment between office and field • Hidden inefficiencies
- 63. #5 Disconnect Between Office and Jobsite Frank Williams, Foreman Responsibility: • Assign daily tasks to crew • Document what has been completed Problems: • Inefficient paper-based timesheets • Documenting jobsite issues
- 64. The Disconnect
- 65. Time Tracking The Paper Problem
- 66. Quantity Tracking Claiming Codes The Paper Problem
- 68. Historical Data Research The Paper Problem
- 69. Challenge #5: Disconnect Between Office and Jobsite
- 70. #5 Disconnect Between Office and Jobsite Solution Project Cost Management system that extends to the jobsite • Daily work planning • Timesheet reporting • Material quantity claiming Ruggedized and “intrinsically safe” tablets Management dashboards and reports
- 71. Daily Work Planning • Create a daily plan for each foreman and their crew • Select specific tasks and assign a goal for completion that day • View real-time metrics on the plan vs. budget for tasks
- 72. Office to Jobsite Communication • Daily plans created in the office are transferred to the foreman’s tablet • Tasks, people, equipment and goals are visible to the foreman • Detailed notes alert the field team to any necessary information
- 73. Timesheet Reporting • Complete electronic time card with resource hours and task quantities • Document changes or issues that impacted the days work • Gain real-time feedback on the success of your day • Sign out employees at the end of each shift to submit data back to the office
- 74. Quantity Reporting • Report daily productivity • Understand areas that need focus • Drive quantity claiming
- 75. Process Flow Estimators and project planners create the WBS structure and budget for the project. Project engineers create crew plans by assigning foremen, employees, and equipment to tasks, validating expected results against the budget. Foremen receive their daily crew plans and make adjustments if necessary based on jobsite conditions and resource availability. At the end of the shift (or throughout the day), foremen record quantities completed, hours worked, and notes, then submit for approval. Project engineers and company managers review and approve the executed crew plans submitted from the field. Results are imported into the ERP system to drive payroll, and project managers can update their projects with the latest as-built hours and quantities to get updated earned values.
- 76. Ruggedized and Intrinsically-Safe Tablets Apple Android WindowsConsumer Built for home and office use Ruggedized Built to handle the more demanding jobsite environment Intrinsically Safe (Zone 1 Division 1) Specifically designed and certified to operate safely in hazardous environments
- 77. Management Dashboards and Reports Dashboards Reports
- 78. #5 Disconnect Between Office and Jobsite Solution • Eliminate manual paper processes for greater efficiency and accuracy • Align jobsite work with the plan to optimize project execution • Capture timesheets hours and flow them directly into payroll • Save time each timesheet cycle (~10 minutes) • Capture quantities performed to drive billing and improve cash flow • Maximize equipment uptime with tablets designed for tough project conditions • Make better decisions based upon current information
- 79. Result: Jobsite Visibility “…[We] make better project execution decisions because we’re working from the most accurate and up-to-date information from the project site” Better Decisions
- 80. Summary
- 81. The 5 Most Common PCM Challenges and Solutions 1. Slow estimating: Reproducible data, norms, QTO/MTO, scheduling 2. Disorganized bidding process: Unified platform, coding, benchmarking, reporting 3. No ability to benchmark estimates – Quantities, coding, benchmarking, learning 4. Hard to change systems: Leverage Excel, accounting, scheduling 5. Limited visibility between office and jobsite: Extended solution, ruggedized tablets, reporting
- 82. InEight Solutions Across the Project Lifecycle
- 83. Integrated Project Lifecycle • Bi-directional integration with Primavera P6 schedules enables time-phased estimates and schedule analysis • Integrations available across leading project accounting and ERP platforms • Create quantity-based estimates and budgets • Change order costing • Benchmarking • Short interval planning, claiming and commissioning • Plan progress and quantities consumed • Equipment inspection and maintenance • Establish resource plans in preparation for interval planning • Quantity-based planning and execution • Quantity-based measurement and reporting • Comprehensive 4D,5D, and nD visual reporting • All as-built details captured in single viewer • Owner benefits from unified visual model with complete as-built details and documentation Visualize, estimate, control and connect all aspects of capital and maintenance projects, from the back office to the jobsite, across the project lifecycle • Enterprise reports and dashboards across the project lifecycle • Various design models leveraged to create unified model
- 84. HD Estimation and Control Solutions Trusted for More than 25 Years 1. Benchmarking 2. Standardization 3. Support for Norms databases 4. Multiple estimating approaches 5. Project controls integration 6. Bi-directional schedule integration 7. Cost versus owner price visibility 8. Alternate scenarios 9. Actively developed 10. Open and unified platform 11. Field mobility 12. Cross-project reporting dashboards
- 85. Next Steps 1. Respond to the email poll 2. Visit us next week at the 2016 Fiatech Technology Conference & Showcase - April 4-6, 2016 in Austin, Texas 3. Contact us for more details marketing@ineight.com (800) 637-7496 (480) 776-2900 www.ineight.com
- 86. Thank you!
Editor's Notes
- #13: Multiple choice - Slow estimating - Disorganized bidding process - No ability to benchmark estimates - Hard to change systems - Limited visibility between office and jobsite - Something else! - Unsure / Don’t know
- #15: When it comes down to it, the more jobs you bid = the more jobs you can win Of course, accuracy must be part of the mix. Really, want to win the most PROFITABLE jobs.
- #19: http://harddollar.com/rsmeans-cost-data/
- #20: http://harddollar.com/rsmeans-cost-data/
- #23: Multiple choice - Primavera P6 - Microsoft Project - Safran - ASTA PowerProject - Microsoft Excel - Back of envelope - Other system - Unsure / Don’t know
- #42: Of course, for most businesses, MONEY is one of the most-watched measures. In terms of projects, this is the COST of a project. However, this contractor, when they looked carefully, realized that COSTS were NOT the best unit of measure for understanding operational performance. Issues with using Cost include: - Regional variation - Material price fluctuations - Inflation over time - etc. Instead, QUANTITY is the best common denominator. Let’s discuss why…
- #43: Measuring by quantity enables benchmarking over time. The current estimate can be benchmarked by quantity performance across other projects…
- #44: Using a common language across our projects, short interval plans, and individual tasks, we can build performance indices and compare like tasks.
- #45: This ensures that we capture top performance practices. We then document those best practices in a learning repository and train employees using field proven best practices. This lets us build a continuous improving organization at all phases of operations.
- #54: Problem: High costs for consumables such as gasoline, explosives, tires, and electricity can wreak havoc on project profitability Solution: Model productivity and consumable rates at a high level of detail via custom calculations Problem: Inability to model and incorporate productivity advance rates, such as cycle of drilling, blasting, and mucking, into the estimate Solution: Drive estimates with seamless bi-directional integration with Microsoft Excel that enables complex custom calculations with the resulting quantity linked to a price
- #56: Multiple choice - Dexter + Chaney - Explorer - Foundation - Jonas - Oracle JD Edwards - Oracle Peoplesoft - Sage - SAP - Viewpoint - Other system - Unsure / Don’t know
- #66: However, at the end of the day, Time Tracking is done through the paper time card, disregarding the daily plan that came out that morning. A completed time card is often difficult to read as you can see with this example and is one of the key pieces that is passed around the office for tracking.
- #67: Quantity Tracking is also done on that paper time card using the claiming codes at the top of the page.
- #68: And what are some of the current solutions trying to make this process more efficient? Excel is a currently the number one option for customers today if they want to build work plans on their desktop. It is also the solution for quantity books in the office.
- #69: All of this makes for great historical data research out on the project, if you can find the right container and then find the right box.
- #72: Effective Daily Planning more specifically allows the electronic creation of that daily plan for the Foreman and their crew. Superintendents are able to select specific tasks to assign a goal for completion that day. Most importantly, they receive real-time metrics on their Plan vs. Budget for the tasks. In this case, you can see the upper task is looking to beat their budget, or make money, in this plan. However, the lower task is looking to lose money on this plan. Planning to lose money is not a good way to construction business and HD Field allows the Superintendent to know real-time when they are planning to lose money.
- #73: HD Field also provides more efficient Office to Field communication. Those daily plans from the office are quickly transferred to a tablet for the Foreman. Here you can see on the left a daily plan on the Superintendent's computer transferred over to a tablet on the right for the Foreman. The tasks, people, equipment, and goals are visible for the Foreman. Here we have circled the goals for how much time the Foreman should spend today on each tasks. Finally, detailed notes alert the field team to any necessary information. In the bottom right-hand corner of the Foreman's daily plan, you can see the necessary arrival of material at 9:00AM.
- #74: Finally, integrated Electronic Data Capture. The Foreman is now able to complete an electronic time card with the resource hours and the task quantities. They can document any changes or issues that impacted the days work, as here we have documented overnight rain leading to slower productivity than expected. The Foremen then gains real-time feedback on the success of their day based on the hours and quantities entered. Here you can see the rain affected our productivity for the day and we are going to lose a few man hours. Finally, the Foreman can sign out their employees verifying all time is correct and that they were not injured that day.
- #76: How does that look in an actual process flow? Estimators and project planners create the WBS structure and budget for the project in Hard Dollar Estimating. That structure is then submitted to HD Field Manager so that project engineers or superintendents can create crew plans with assigned employees, tasks, and equipment all while validating against the budget. The plans are then sent to HD Field Mobile where the Foreman can review their work and proceed throughout the day. At the end of the day the Foreman records their quantities completed, their hours worked, and notes to submit it all back to the office for approval. The project engineer or Superintendent picks up the plan in HD Field Manager where they can review and approve all hours and quantities for that day. Finally, the results import into the customer’s ERP system to drive payroll and/or project forecasting.
- #77: Ecom: World´s first Zone 1/21 & DIV 1 tablet computer based on Samsung GALAXY Tab Active