Does your Project Management really help you control your costs?

Many organisations will have project management processes in place that keeps tracks the costs incurred for in flight projects. Perhaps starting with external costs incurred with 3rd parties, adding contactor expenditure, then factoring the cost of employee efforts, and finally allocating some degree of overheads such as shared services. A picture of expenditure to-date on a project, almost real time.

But, if that analysis already throws up a red flag on the project for cost overrun, then that warning has come too late. Less likely to halt a project when the monies are already spent.

So, to get sight of future overrun, forecasting is required where labour and non labour resource management are part of the forecast. So, lots of Excel spreadsheet might suddenly appear. Each proclaiming the future but probably no consideration for the other projects, and their respective skill set demands. All too often, individual forecasts can be assembled, valid at a point in time, but keeping them accurate ongoing, in a visible manner, seems to quickly become unmanageable.

Resource management often marks the moment when new appropriate tooling is required. Structured enough to provide a universal framework, and flexible enough to adjust to a changing world, (don't we know it). You can try to build something, and make quick initial progress, but that runs the risk of being a never ending, and/or endlessly supported, project in itself. It's an unwelcome diversion from the task at hand.

So now the PPM tools make an entrance. But "just" enabling these toolsets may not be quite enough. It may take a little time to build the internal culture required for full resource management to really work. As it is likely to require more structured control of resources. It may feel to some that this control is :-

• Not Agile

• Obstructing the company can-do values

• Itself a administrative overhead

• PMO Empire building

So from a change management perspective, at this moment the organisation might be wise to sanity check why precisely it wishes to embark on this journey. Whilst such forecasting will serve not only the Projects, but the Programs, Portfolios, and the organisation as a whole, but, the business justification for this shift should be made clear to all involved.

The current PPM toolsets on the market can support such forecasting and resulting extended cost management entirely effectively, but the organisation must have the reason and the will to do it.

The configuration of PPM forecasting and resource management will have to be tailored to how the organisation wishes to operate, whether person, team or skill centric, but as resources are limited, then regardless of the configuration, explicit resource assignments are required to take resource capacity into account. Resource team leaders play this role.

So, once the culture is in place and resource forecasting has been implemented, based on a foundation of resources, estimation, and well defined projects, then the cost management is hugely enhanced. It is then able to give valuable foresight into future cost overruns, and almost as useful, projects appearing under forecasted, as compared to agreed budgets.

Once resource management is running smoothly, it also provides the basis upon which to consider future resourcing and what-if style scenarios against capacity. For the first time the portfolio manager can discuss forever high project demands against skill capacity and resourcing levels supported by quantified detail and summary information.

Historically, only the domain of global organisations, the current PPM toolsets are now effective across a far wider range of organisations and can deliver on stronger cost controls and resource management.

Julian Banasiewicz

www.gabluca.com