July 7th, 2011

At the June 28 installment of the Houston Breakfast Seminar series, EcoSys led a discussion on Change Management Best Practices to a gathering of cost controls experts. Chris Caddell of Turner & Townsend co-presented with EcoSys Managing Director, Javier Sloninsky. The following excerpts some of the central change management concepts presented during the session:

Overview

Change Management is one of the most important components of Project Controls, driving budget control, cost forecasting, contract management, and contingency management. Change Management applies to every level of the project, from the owner to the engineering firms to the contractors to the lowest supplier. Every organization needs to understand how Change Management can impact project success, how to design an efficient process, and how to implement it to maximize its value. Once a baseline is established, it provides a systematic process for evaluating potential changes, tracking their status, and incorporating approved changes into the project. Change Management can help effectively control scope, cost, and schedule, improving the project’s probability for success.

The Value of Change Management

The AACEI Total Cost Management Framework defines Change Management as the process of managing any change to the scope of work and/or any deviation, performance trend, or change to an approved or baseline project control plan.

Change over the course of a project is inevitable. However, with an effective CM process in place, changes themselves can be minimized along with the impacts they cause to cost, schedule and errors. Key stakeholders are able to create a proactive response to change and maintain visibility into project performance. The process also creates a feedback loop to facilitate continuous learning to improve future project planning and execution.

Effective change management provides a structured, well-defined process. It allows decisions to be made by the right people. As such, the process flows internally within an organization as well as to external stakeholders including specialists (e.g. design/engineering firms), contractors, and suppliers.

Implementing Change Management Systems

Several core steps must be taken to implement a system:

  • Define types of changes, from scope/design changes to variance/deviations that may occur
  • Define approval stages
  • Perform what-if analysis on pending change including Time phasing, Types of costs
  • Set rules/overrides based on when to update forecasts or budgets based on approval stages
  • Maintain traceability of change items throughout project lifecycle

Automating Change Management

Using systems to drive change management enforces procedures and enables the accounting of the change to be automated, eliminating the manual updates to budgets and forecasts that is often required.

To achieve automation, change management should be fully integrated into the cost management lifecycle and the systems an organization uses to manage the individual stages (planning, budgeting & forecasting, commitments, change control, closeouts, reporting). This requires that the systems themselves be integrated to bring together cost and schedule data. Flexibility is important however. Systems should allow for treating various change processes differently:

  • Internal vs. external / Cost vs. Revenue
  • Identified and escalated by Issue and Risk Management
  • Automated through deviations and/or trends
  • Account for different approval approaches

Through this integration, your change management tool must then provide automated data in the form of reports, registers and dashboards. This will save time in the compiling of this data, and free resources to analyzing the sources of change. Additionally, the system must provide for a full audit trail, so that changes can be tracked and understood. Through these improvements to the change management process and system for following it, greater visibility into project performance and confidence in the information available data will be realized.

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