10 Reasons Why Your Projects Aren’t Improving

With today’s increasingly tight budgets, organizations need greater visibility into project and program performance in order to ensure that funds are being well spent. As a result, Project Controllers need to deliver timely and accurate information to pro-actively shape business decisions.

EcoSys regularly meets with project controls professionals across a variety of industries and the cost controls challenges that we discuss are common and pervasive. These challenges emerge from various sources ranging from organizational readiness to the design of processes and systems. Let’s take a look at our view of the top 10:

Number 10: Cost accounting, not cost analysis

A growing frustration among project controls professionals stems from being perceived as cost “accountants”, finding that a great deal of their job consists of reconciling and ensuring that recorded data is accurate. Project controls should about be creating scenarios, planning and analyzing the data of a project, not counting costs. In essence, looking forward; not looking back.

Number 9: Budgeting and forecasting effectively

Most organizations do not have a consistent method for cost controls. This is not just a systems problem, but includes a lack of standards: do we have a standard for creating budgets? Updating forecasts? Do we execute these tasks consistently across the organization for similar projects? Are there standard benchmarks and measures for determining success? Generally, the answer is no.

Number 8: Getting progress data from multiple (sub)contractors

Attempting to pull together an integrated master schedule from many different contractors and/or subcontractors is a problematic task, especially on larger projects with involving potentially hundreds of different parties. Even gathering progress data, and ensuring accurate sign-offs from subcontractors can be difficult. The cumbersome nature of obtaining this data, compounded with inaccurate or irregular information, obstructs good reporting or analysis of a project.

Number 7: Integrating schedule and cost

Schedulers tend to work in terms of work breakdown structures (WBS) and activities, while cost analysts and finance use cost codes, transactions, and fiscal periods. Each side typically has different managers who are reviewing their data and schedules. Scheduling and cost are also often using different tools to report their data. Therefore, pulling information from both sides to provide a clear view of project performance has been a huge challenge.

Number 6: Aligning data between multiple source systems

In addition to schedule and costs aspects of a project, projects have to align data from different sources such as a time sheet system, asset management systems, procurement systems, etc. Many organizations ultimately use Excel spreadsheets to attempt to reconcile the data pulled from various locations. However, due to the complex nature of some projects, the result is often wrought with mismatched data and inconsistencies.

Number 5: Time and effort involved with reporting

An even bigger problem than pulling information from different sources is the time it takes to gather the information for reporting. The typical solution for gathering this information is a manual process, which is tedious, time consuming and prone to error. A cost engineer’s time is better spent analyzing reports rather than building them.

Number 4: Managing the customer relationship

Clients will often want to see cost and performance measurements in a manner that your organization does not currently provide. For contractors, these customers are project owners, but even internal customers such as executives or other stakeholder’s can add to this burden with ad hoc requests. We often see organizations focus much of their time and effort generating reports for the customer in the format they have requested. This diverts efforts from actually improving project performance, which would be the greater client “reward.”

Number 3: Accuracy of reports

Once the data has been collected and the format has been established for a report, you need to ensure that the report is accurate and understandable. For example, a summary report should be able to provide accurate details in WBS or costs and provide a level of clarity on the project.

Number 2: Insufficient resources for controls

There seems to be an ever greater demand for cost reporting, better planning and scenario analysis. In more complex environments, massive amounts of collaboration between different project stakeholders are necessary for success. This places a great deal of pressure on the limited project delivery resources of the organization. The challenge becomes having sufficient resources to provide detailed, accurate reporting in a timely fashion.

Number 1: Controlling changes

Managing changes within a project can be the most difficult aspect of cost management. While a budget may be set for a project, there will inevitably be a variation or scope change. Various questions arise due to changes: How did the variable affect the budget and the forecast? Were all changes accurately reported on? Does the current budget and forecast reflect the change? Compounded with other challenges (insufficient resources, disconnected data and systems, manual compilation of data), a mismanaged change can severely impact the accuracy of reporting and jeopardize the potential success of a project.

These challenges can seem like major obstacles standing between you and project success. Luckily there is a solution…technology. Modern Enterprise Project Controls solutions can help you overcome these challenges, providing a single source of truth to help keep your project on budget and on schedule.

Learn more by watching this webinar on Enterprise Project Controls, or connect with an expert to see how Enterprise Project Controls can benefit your company.

Project Cost Control a Rising Concern for Oil and Gas Megaprojects

Project Controls Imperititive for complex and often overbudget megaprojects

Project complexity is growing. It’s a truth we’ve seen across a multitude of industries as projects become more ambitious, take on new technological challenges, and command stratospheric budgets (where a $10 billion capital expense is no longer surprising and can be dwarfed multiple times over by the world’s very largest endeavors).

A recent Wall Street Journal article entitled, “Big oil companies struggle to justify soaring project costs,” corroborates this growing complexity and cites the difficulty in containing costs with megaprojects that span years and face ongoing market changes. Factors that are driving complexity and cost are diverse, but can include items like:

  • Exchange rate fluctuations as projects utilize multiple currencies which can also be distinct from reporting and home currencies.
  • Underlying economic conditions affecting the viability of projects – from commodity price volatility to changing regulatory requirements
  • Rising labor costs as competition rises for a limited skillset and increasing productivity becomes essential
  • The need for collaboration on projects amongst competitors, as multiple players join forces and pool resources to embark on these gargantuan projects.

The result is seen in megaproject costs soaring 50% to even 300% of original budget. The article quotes Gary Fischer who leads Chevron’s 120-person cost controls and contract management group. These projects “are very fragile and totally unforgiving” indicating why the department has tripled in size in its efforts to complete megaprojects on time and on budget.

Why undertake “Elephant Projects” of this size and scope then, you may ask? It’s a key part of the growth strategy of many of the oil majors looking to boost production to replace aging fields. It’s a calculated risk, however, given the long lead times between capital expenses and when the revenue begins to flow.

Major oil companies, once seemingly impervious to project cost overruns which had paled in comparison to revenues the projects produce, are now directly impacted by the sheer cost of megaprojects and their negative impact on near-term profits.

To combat the megaproject complexity, organizations are implementing procedures and systems that offset the risks of overruns and combat the factors noted above. The intent is to add visibility into project performance and allow for greater agility to address issues that lead to overruns before they grow into billions in added expenses.


EcoSys EPC for Oil & Gas


1 2