Mattern SouthAmerica Top10CostControlsChallenges

Top 10 Challenges to Effective Cost Controls
Jorge Rossini, Latin America Director, CIMA Travis Mattern, Senior Sales Engineer, EcoSys
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Copyright 2012 EcoSys Management LLC All Rights Reserved. Confidential and Proprietary Information.
Agenda
EcoSys Company Background Fundamental Cost Control Questions Top 10 Cost Control Challenges Case Study Recap / Q&A
EcoSys Company Background

Founded in 2000 Enterprise Project Controls Software Experts
Designers & Developers of original Primavera P6 and EcoSys EPC
Professional Services
Enterprise Consulting Expertise: Project Portfolio & Cost Management Best Practices Global Primavera Implementation and Systems Integration Leader
250 Customers in Global 1000 and Public Sector
Representative Customers
Enterprise Planning & Controls Platform
CapitalPlanning ProjectCostControls EarnedValueManagement
Core EPC Solutions
ProgressMeasurement Estimating ResourceStaffing PortfolioManagement Shutdown,Turnaround,andOutageManagement
Bridging Planning & Execution
Fundamental Cost Controls Questions

What is the current budget and forecast? How and why has my budget and forecast changed? How much funding is available? What are our contract commitments? How much has been spent? How are we trending? Do schedules correlate with costs? How can we recover/improve performance? Are we in compliance with the rules? (Contractual? Regulatory? Legal?)
Top 10 Challenges
EcoSys has met with cost controls professionals throughout the industry to identify their biggest cost controls challenges.
Here are the Top 10 Challenges we see
Top 10 Challenges
Perceived as cost accounting
How to overcome this challenge? Educate your organization regarding the risks of poor project performance 3 primary objectives for project cost control:
Improve project predictability Control and reduce costs Improve project controls efficiency
How to meet these objectives?

Use the power of technology to focus on forward looking activities to improve project predictability
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How to overcome this challenge?

Backward Looking Commitments Actuals Planning Forward Looking Estimating Risk Change Control Forecasting
Value adding activities Biggest impact to project performance Require integrated project controls system and processes
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Top 10 Challenges
Budgeting and forecasting effectively

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How to overcome this challenge? Establish standards and consistency Budgeting

Time-phase or manage in lump sums Integrate data or manage in web-based spreadsheets
Forecasting
Leverage critical data: actuals, commitments, progress Provide forecasting flexibility
Calculated forecasts Imported forecasts Flexibility to override imported and calculated amounts Vary forecasting methods at different levels of the WBS
Unlimited budget/forecast versions for comparison, trending, auditing

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Example: Calculated Forecast
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Example: Imported Forecast
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Top 10 Challenges
Getting progress data from multiple subcontractors

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How to overcome this challenge? Leverage multiple methods of capturing progress data Import from scheduling systems Direct entry of completion percentages Calculate progress using more complex methods Multiple progress methods and sources of data within the same project
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Example: Progress Data in EPC
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Top 10 Challenges
Integrating schedule and cost

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How to overcome this challenge? Integrate scheduling data into EPC

Primavera P6 Microsoft Project Other scheduling systems
What data to integrate?

WBS Resources Schedule dates Progress data Forecast data
Powerful tools to align schedule and cost

Support for separate WBS structures Apply rates to schedule data to calculate cost
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Combine work (WBS), cost (CBS) and organization (OBS) reporting structures together for Budgeting & Forecasting
OBS Project 100 WBS A WBS B OBS X OBS X1 OBS X2 OBS X3
Level 1
Level 2
WBS A1
WBS A2
WBS B1
CBS 1
CBS 10 CBS 11 CBS 20
e.g.100.X.X1.B.B1.10.Civil
project obs wbs cbs resource
CBS-0 CBS 2
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Top 10 Challenges
Aligning data between multiple source systems

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Powerful integration platform Web Services

Standard Industry Formats SOAP XML, REST XML, REST JSON
Flat files
Format Flexibility Excel, XML, delimited flat files, etc.
Direct integration with global partners
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Top 10 Challenges
Time and effort involved with reporting

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Do all roads lead to Excel?
Schedule Data Here Cost Data Here
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Eliminate Excel errors and inefficiencies Manual data imports/exports/consolidation Human error Physical limitations Version control Constrained views Lack of standardization Lack of auditability
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Top 10 Challenges
Managing the Customer Relationship

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Internal/external reports auto-generated from the same data and reporting platform Reporting format flexibility
Tabular Reports Form Reports Graphical Charts Excel Template Reports Automated and User-Initiated Report Batches Configurable Role-based Dashboards Report Configuration (non-technical) Report Outputs (Excel, PPT, PDF etc..)
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Example: Comparisons by Alliance Partner
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Top 10 Challenges
Accuracy of reports
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Automate data loads from external systems

Prevent errors associated with manual data entry and consolidation
Store transaction level detail for all categories of data Targeted dashboards for all stakeholders
Drill-down to transaction level detail Establish trust in the data Quick identification of project performance problems
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Example: Drill-down to investigate
Click on poor productivity metric to drill-down
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Example: Drill-down to investigate
Drill-down shows resource level detail of actual and earned hours
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Top 10 Challenges
Insufficient controls resources

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Time Analysis: Before EPC

AnalyzingBudgets&Actuals Forecasting&Trending ChangeManagement
2% 1% 6% 20%
Cost Analysts Spent 61% of Time on Wasteful Activities
FixingOracleIssues
Monitoring& ControllingCosts
30% 16% 12%

ManualDownloading Correcting LaborCoding
13%
CollatingInternal& ExternalReports
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Time Analysis: After EPC

Cost Analyst Target Utilization Provides Much Greater Value
Troubleshooting RunningReports 5%
5%
Forecasting& Trending
25% 65%
AnalyzingData
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Top 10 Challenges
Controlling Changes
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How to overcome this challenge? Integrated change process Change registers, change logs, workflow Link changes to risks and issues Define detailed cost/revenue allocations Early in the process for change visibility Auto-update budgets and/or forecasts after approval Integration with document management, accounting and contract management systems
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Example: Change Order Register
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Case Study: Tahoe Resources

Company Background Founded in 2009 and focused on becoming a leading producer of precious metals. Flagship Escobal silver mine project is responsible for creating 500 jobs in Southeast Guatemala. Challenges Required a system to support cost control best practices out of the box, but with the flexibility to meet unique requirements. Sought a single system to support budgeting, change management, commitments tracking, reconciliation of actuals, performance measurement, forecasting, as well as integrated reporting. Needed to aggregate its own internal commitments and transactions with those initiated externally by its EPCM consultant. Support for multiple currencies.
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Case Study: Tahoe Resources

EcoSys EPC Solution
Central repository all project controls data Exchange budget and actuals data with Microsoft Dynamics Detailed budget tracking for Annual and Life Total bases Budget change management process with an auditable workflow Manage all commitments and reconcile against actual costs Model forecasts based upon multiple approaches including direct, time-phased estimates or earned value methodology Allow for planning, forecasting and recording actuals in multiple currencies, as well as adjusting for exchange fluctuations Extensive built-in reporting capabilities (e.g. monthly cost performance, change order logs, 12-month rolling cash flow forecast, earned value by area) Allow end-users to create new reports as needed
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Recap
Achieving effective cost-controls is a challenge 1. Controlling changes 2. Insufficient controls resources 3. Accuracy of reports 4. Managing the customer relationship 5. Time and effort involved with reporting 6. Aligning data between multiple source systems 7. Integrating schedule and cost 8. Getting progress data from multiple subcontractors 9. Budgeting and forecasting effectively 10. Perceived as cost accounting
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EcoSys EPC Overcoming these challenges is not possible without an integrated project controls system Visibility Efficiency and Accuracy Process Standardization Improved Financial Performance
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The Right Tool for the Job If attempting to overcome these challenges without a tool designed for this purpose, things will: Break Be harder in the long
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Questions?
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Thank you!
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Mattern SouthAmerica Top10CostControlsChallenges

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Top 10 Challenges to Effective Cost Controls

EcoSys Company Background

250 Customers in Global 1000 and Public Sector

Enterprise Planning & Controls Platform

CapitalPlanning ProjectCostControls EarnedValueManagement

Core EPC Solutions

ProgressMeasurement Estimating ResourceStaffing PortfolioManagement Shutdown,Turnaround,andOutageManagement

Bridging Planning & Execution

Fundamental Cost Controls Questions

Here are the Top 10 Challenges we see

Perceived as cost accounting

How to meet these objectives?

How to overcome this challenge?

Budgeting and forecasting effectively

How to overcome this challenge? Establish standards and consistency Budgeting

Unlimited budget/forecast versions for comparison, trending, auditing

Example: Calculated Forecast

Example: Imported Forecast

Getting progress data from multiple subcontractors

Example: Progress Data in EPC

Integrating schedule and cost

How to overcome this challenge? Integrate scheduling data into EPC

What data to integrate?

Powerful tools to align schedule and cost

How to overcome this challenge?

CBS 10 CBS 11 CBS 20

Aligning data between multiple source systems

How to overcome this challenge?

Powerful integration platform Web Services

Direct integration with global partners

Time and effort involved with reporting

Do all roads lead to Excel?

Schedule Data Here Cost Data Here

How to overcome this challenge?

Managing the Customer Relationship

How to overcome this challenge?

Example: Comparisons by Alliance Partner

How to overcome this challenge?

Automate data loads from external systems

Example: Drill-down to investigate

Click on poor productivity metric to drill-down

Example: Drill-down to investigate

Drill-down shows resource level detail of actual and earned hours

Insufficient controls resources

Time Analysis: Before EPC

Cost Analysts Spent 61% of Time on Wasteful Activities

30% 16% 12%

Time Analysis: After EPC

Example: Change Order Register

Case Study: Tahoe Resources

Case Study: Tahoe Resources

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