ARES PRISM | WHITE PAPER

White Paper: The Five Pillars of Project Controls

ABSTRACT
This white paper explores the fundamental elements required to deliver a mature, effective and robust project controls capability.
The aim of every project controls team should be the delivery of actionable information, at the right time, in the appropriate format
and correctly contextualized. This information is the basis for decision making and is critical for all types of projects regardless of
size and complexity.

Agility in collecting, collating and analyzing the various and disparate information streams depends upon a technologically sound
approach to delivering the project controls capability. For information to flow freely and without manual intervention, a holistic
approach to the deployment of tools and solutions is needed. It must look for single points of data origination and multiple
opportunities to federate that data to other locations in the workflow.

This paper acknowledges that other capabilities, such as risk, play a significant role in the delivery of a project. However, it will not
be discussed in the context of this paper.

INTRODUCTION
The objective of project controls is to ensure that the most applicable capability is in place (by way of procedures, systems, and
competent people) that will allow the real-time project status of the plan, schedule, and costs to be available to the project team.
Using this real-time status, the project controls team will support project management in identifying actions that enhance the
probability of the project being delivered safely and efficiently within approved schedules and budgets.

While there is still debate over the formal definition of project controls, it is generally agreed that the following form the core
elements necessary to deliver a project on-time, to the approved budget, with the appropriate features and functionality.

WBS Generation and Management

Managing the generation and governance of the Work Breakdown Structure (WBS) for each project is fundamental
to the consistent and successful delivery of projects. As an organization sets out to mature its approach to project
management and project controls, there is the realization that the WBS is an asset and needs to be treated as such.

Estimation
The estimation process must be transparent, robust and fit for purposes across the entire lifecycle of the project.
Many applications exist to support the estimation process. The flexibility and fidelity of modern toolsets allow the
organization to work towards common estimation approaches, share and apply universal norms, and agree on the
basis of estimates.

Schedule
The generation of the project schedule needs to follow the WBS asset rules but must not be overly constrained. This
can be achieved by understanding the appropriate level of the WBS structure required to provide the correct granularity
in resource and activity definition to support accounting, reporting, and governance.

Cost Management
Cost management is fundamental to controlling the project once underway. It is within this capability that cost and
schedule naturally come together to generate time-phased project information. Working at the prescribed granularity
that supports data exchange with ERP, the cost and schedule information are merged into control accounts that enable
the organization to control the expenditure of resources against an agreed baseline. If change management is also
incorporated into the cost management functionality, then cost management can become the project’s single point of
truth taking account of both changes to the project scope and the actual resource usage.

Change Management
Once the project has started, the only constant is change. If an organization fails to effectively manage changes
then they are unlikely to complete the project according to the initially forecasted parameters. Successful change
management is key to good project governance. The keeping of accurate, clear and auditable records of change that
drive the current approved budget should be embedded into the organization as early as possible.

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 Work
Cost Change
Breakdown Estimation Schedule
Management Management
Structure

Structure
Management Management
Breakdown Estimation Schedule

WBS GENERATION AND MANAGEMENT

“The WBS ensures clear definition and communication of project scope, while at the same time it performs a critical role as a
monitoring and controlling tool.” (Brotherton et al., 2008). The generation of the WBS, in many organizations, can bring significant
challenges related to keeping all parties involved in using the current released version of the WBS within their cost, schedule or
project monitoring activities.

Typically, the planning team controls the granularity and development of the WBS, shaping the detail to suit the activities needed
to deliver the project. However, this often leads to difficulties in other facets of the organization. For instance, the cost estimation
team may not follow the same level of detail as the planners when undertaking their costing tasks.

Delays in sharing the latest version and changes to the layout of the WBS can also cause additional non-added value work. For
instance, tasks may need to be redone, or valuable information may be lost due to deleted modified activities. Therefore, it is best
to develop and maintain the WBS in a controlled environment that supports all users across the organization.

Project lifecycle management software like ARES PRISM can deliver WBS data management that supports the secure, timely
federation of any changes within the WBS to all the relevant parts of the business. The organization selects the most appropriate
level at which a standard view of the WBS needs to be controlled, leaving individual departments with the freedom to deliver their
contribution to the business below this control level.

ESTIMATION
A survey conducted on information technology projects revealed more than 83% fail to meet their economic goals. Two of the
major culprits cited for project problems are erroneous cost estimates and overlooking key project costs.” (Pinto & Venkataraman,
2011). It is therefore clear that accurate cost and schedule estimation should not be forgotten when managing a project.

The estimation landscape within an organization can be sophisticated and multi-dimensional and may demand more than one
solution to be deployed across the business to support all its needs. However, if the individual elements of the toolset are not
sympathetic to the other aspects of project estimation, the challenge will be to reconcile an initial baseline for project value and
maintain the integrity of the forecast as the project moves forward.

An estimation solution should also be able to integrate into the project controls environment, in order to facilitate a single point of
information origination and federation that can be coordinated with other project elements as required.

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 Primary Characteristic Secondary Characteristic
MATURITY LEVEL OF
EXPECTED
PROJECT DEFINITION END USAGE METHODOLOGY
ESTIMATE ACCURACY RANGE
DELIVERABLES Typical purpose of Typical estimating
CLASS Typical variation in low
Expressed as % of estimate method
and high ranges
complete definition
Capacity factored,
L: -20% to -50%
Class 5 0% to 2% Concept screening parametric models,
H: +30% to +100%
judgment, or analogy

Equipment factored or L: -15% to -30%

Class 4 1% to 15% Study or feasibility
parametric models H: +20% to +50%

Semi-detailed unit costs

Budget authorization L: -10% to -20%
Class 3 10% to 40% with assembly level line
or control H: +10% to +30%
item

Detailed unit cost with L: -5% to -15%

Class 2 30% to 75% Control or bid/tender
forced detailed take-off H: +5% to +20%

Check estimate or Detailed unit cost with L: -3% to -10%

Class 1 65% to 100%
bid/tender detailed take-off H: +3% to +15%

Figure 1: Cost Estimate Classification Matrix For Process Industries (AACE International, 2016).

Project aspects that need estimation support include but are not limited to:

• Initial Concept Costing

• Solution Development
• Detailed Design
• Mechanical Procurement
• Control Systems for Embedded Solutions (ASIC, FPGAs, etc.)
• Software
• Operation and Support
• Carbon and Recycling

Each of these areas can have diverse requirements that demand different estimation approaches but they must come together to
inform the whole project cost model.

TOP-DOWN MODELS
When working with a client and participating in the development of new concepts or evaluating significant changes to an existing
deliverable (particularly during the detailed design phase), it is incredibly useful to have a commercial-off-the-shelf parametric
solution that supports the estimation of complex items that have not previously been designed or deployed.

CAD TO COST
This can be achieved using 2D or 3D take-off for building, and built environment estimates that allows the population of an
estimate line on the “Bill of Quantities” table. This links the specific cost element to an element on the drawing. More mature
organizations in the built environment community are relating the take-off data directly to pre-defined parameterized models that
can generate estimating blocks using embedded knowledge. In the mechanical engineering environment, it is now possible to

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take a 3D component or assembly model and directly estimate the cost of the part from its features. This reduces the time taken
to generate a robust estimate from hours to minutes.

BOTTOM-UP MODELS
In most organizations there is a need for a flexible platform that enables the estimation team to quickly develop estimates
following the WBS, CBS or a combination of both. Typically, this capability is realized within Microsoft Excel if the organization
does not have a commercial platform. However, the use of Excel leads to fractured data sharing, uncontrolled algorithm assets
and a high propensity for errors to be missed even with a rigorous validation and verification process.

BENCHMARKING AND THE DEVELOPMENT OF NORMS

To speed up the estimation process and add data governance, it is common to establish estimating norms for specific tasks and
repeatable work items. These norms can be purchased from commercial organizations, created by the central estimation team or
outsourced to third parties.

Norms can also be collected and collated from the tools mentioned in the sections above. For example, we can use group
technologies and value engineering techniques to generate a set of norms by commodity group using the CAD driven models.

Where we have repeatable work items or repeatable processes not supported by the CAD to Cost Models, we can use
benchmarking techniques to derive norms from past projects. PRISM Estimating has a benchmarking capability that can, in a
single environment, display estimate-to-estimate and project-to-project comparisons that support the generation and maintenance
of norms across the whole project.

SCHEDULE
Companies typically use two solutions for the determination of schedule activities within a project.

During the business capture cycle, many companies will use Microsoft Project to develop high-level plans with a low-level
of resource and activity definition, sufficient to derive an end-to-end schedule but without the fidelity that would improve the
efficiency and ease of project management.

Post-award, the majority of companies favor Primavera P6 to develop a schedule of activities and resources against the approved
WBS. The use of uncertainty within schedule development supports the use of a three-point estimate within estimation platforms
(where applicable) and enables the organization to generate uncertainty-adjusted cost and schedule outcomes.

During the development of the schedule, depending on complexity, it can be useful to run a schedule analysis to verify integrity;
solutions like Deltek Acumen Fuse and Risk Hive can be used to deliver this assurance.

There are currently developments in the construction market that may play a role in the future of planning and scheduling at many
organizations, such as 5D modeling. This technique visualizes the construction of the asset through time, with cost and earned
value displayed as the CAD model. These advanced techniques all depend on the schedule, cost model and cost management
elements of the project controls capability being fully integrated.

COST MANAGEMENT
One of the most critical capabilities of any project controls environment is cost management. Cost management solutions enable
the user to identify and relate the significant cost and schedule elements of the project and deliver a system of controls to monitor
and manage these elements. Global organizations across multiple industries have used ARES PRISM’s cost management module
as the heart of their project controls environment.

Within PRISM, organizations establish the control account structures that are required to post and receive data from the company’s
corporate systems that track time and spend (such as SAP). These control accounts form the basis for managing the project. The

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schedule activities and relevant supporting detail and the cost estimate (from one or more sources) are mapped into the control
accounts with the spend profile curve being applied to generate time-phased data.

With the baseline for cost and schedule established within PRISM, the project team can track progress against the cost and
schedule by importing actuals data from the corporate ERP system. Once actuals are populated, PRISM calculates key performance
indicators such as Cost Performance Index (CPI) and Schedule Performance Index (SPI) as well as Estimate at Completion (EAC)
and Estimate to Complete (ETC). PRISM also calculates the Budgeted Cost for Work Performed (BCWP) also called Earned Value
(EV).

Figure 2: PRISM Enterprise Dashboard Sample

PRISM delivers a single point of truth for the project team to manage the project and track changes to cost and schedule. Users
can monitor the current and predicted performance of the project and provide comprehensive reporting both from standard
PRISM reports and dashboards.

PRISM enables the user organization to manage a complete portfolio of projects and supports the development of an enterprise
approach resulting in the delivery of standardized reporting, interproject comparison and total visibility into the portfolio of projects.

CHANGE MANAGEMENT
In a recent review of major capital projects that
were running over budget, one of the common
causes identified was change management
(or lack thereof).

To be effective, a change management

process must be transparent, auditable,
provide complete traceability of the cause
of the change event and support the timely
review and approval (or challenge) to the
proposed change. Figure 3: Enterprise vs. Project

Some organizations have a fully electronic change management process. Others have paper-based change control. Both can be
managed within a project lifecycle management system like ARES PRISM. Changes that generate no change to cost or schedule
can be transacted through a simple approval structure enabling them to be approved locally within the project while emerging
requirements that impact the cost or schedule are directed to the appropriate internal engineering and client technical directorates.

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 Figure 4: The Hierarchy of Change

CONCLUSION
While project management is far too complicated to be the culmination of only five things, these pillars are at the center of
successfully planning for and managing a project. When work breakdown structure, estimation, schedule, cost, and change are
all managed effectively, it makes it easier for everything else to fall into place; and having a system that brings all of these pillars
into a central location further improves project management.

ARES PRISM software coordinates all aspects of the project to provide users with a single source of truth that can be used
for forecasting and decision making. When all areas of a project are aligned, it provides greater visibility into the data and gives
managers confidence in the numbers presented in reports.

Pulling these five pillars together to work in a single solution is the key to exceptional project management.

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Professor Andrew Langridge
Director of Business Development
ARES PRISM Europe
ABOUT THE AUTHOR
Andrew Langridge is the Director of Business Development for Europe at
ARES PRISM. In this role, he is responsible for delivering Estimation and
Project Controls solutions across a wide range of industries and applications.
Andrew started his career as an apprentice mechanical engineer working
in a bespoke machine tool company in London. After completing a 5-year
technical apprenticeship, he moved into advanced manufacturing supervision
and management roles. For the last 25 years, Andrew has been working in
the field of Estimation and Project Controls supporting the implementation of
best in class processes and solutions for organizations across many industries.
Andrew is a Royal Academy of Engineering Visiting Professor at the University
of Bath involved in developing thought leadership for the next generation of
solutions. He is also a Visiting Fellow at Cranfield University and a Fellow of the
Association of Cost Engineers.
ABOUT ARES PRISM
ARES PRISM is an enterprise project controls software that manages the
complete project lifecycle delivering dependable forecasts, cost control, and
performance measurement. Organizations around the world rely on PRISM
to manage projects, programs and portfolios of growing size and complexity
in a variety of industries. PRISM is a scalable, robust and intuitive system that
harnesses industry best practices and integrates all aspects of the project,
including cost and schedule, change management, estimating, earned value,
contracts & procurement, and field progressing. Achieve superior project
management with increased visibility and control, boosted accuracy and
efficiency, and improved financial performance.
REFERENCES
Brotherton, S., Fried, R., Norman, E. (2008). Work Breakdown Structures: The
Foundation For Project Management Excellence.
Hoboken, New Jersey. John Wiley & Sons, Inc.
Pinto, J., Venkataraman, R. (2011). Cost and Value Management in Projects.
Hoboken, New Jersey. John Wiley & Sons, Inc.
AACE International. (2016). Cost Estimate Classification System – As Applied
In Engineering. Procurement, And Construction For The Process Industries.
Morgantown, West Virginia. AACE International.
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