Project Execution From POME by Gautam Koppala VT

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Kanaka maha lakshmi Thalli
Be bold when you loose and be calm when you

win.
"Changing the Face" can change nothing.

POME’
POME’07
But "Facing the Change" can change everything.
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KANAKA MAHA LAKSHMI THALLI
THIS BOOK IS DEDICATED TO THE ALMIGHTY, WHO
ALWAYS SHOWERS HER BLESSINGS ON HER
CHILDREN.
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2007, POME, Gautam_Koppala, All Rights Reserved
PROJECTS AND OPERATIONS
MANAGEMENT EXPOSED
(POME)
Part “PROJECT EXECUTION”
A COLLECTION AMELIORATED BY
GAUTAM KOPPALA V.T.
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You are the only person who can revolutionise your life.
You are the only person who can influence your happiness,
your realisation and your success.
You are the only person who can help yourself.
Your life does not change, when your boss changes,
when your friends change, when your parents change,
when your partner changes, when your company changes.
Your life changes when YOU change,
when you go beyond your limiting beliefs,
when you realize that you are the only one responsible for your life.

Copyright © 2007 POME
All rights reserved. No part of this product may be reproduced or utilized in any form or by any means,
electronic or mechanical, including photocopy, recording, broadcasting, or by any information storage or
retrieval system, without permission in writing from the author Gautam Koppala.
All knowledge in POME book is service marks and/or trademarks of the author Gautam Koppala.
Except as otherwise specified, names, marks, logos and the like used in the educational/teaching
content of these materials are intended to be, and to the best of Licensor’s [Gautam Koppala’s]
knowledge and belief are, fictitious. None of the names, marks, or logos used herein is intended to
depict any past or present individual or entity, or any trademark, service mark, or other protectable
mark of any individual or entity. Any likeness, similarity or sameness between any name, mark, or logo
used herein by Licensor and the name, mark, or logo of any individual or entity, past or present, is
merely coincidental and unintentional. Any such names, marks, and logos used in the
educational/teaching content of these materials are used only to provide examples for purposes of
teaching the educational content of the materials, and are in no way intended to be used in any
trademark sense or manner.
The names of actual past or present individuals, entities, trademarks, service marks, logos and the like
(other than those of Licensor used in the educational/teaching content of these materials are used only
to provide examples (including in some instances actual case studies based upon factual events or
circumstances involving the individuals, entities, marks, or logos) for purposes of teaching the
educational content of the materials. Any such names, marks, and logos used in the
educational/teaching content of these materials are intended and used solely for the purpose of
providing examples and case studies, and are in no way intended to be used in any trademark sense or
manner.
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VITA: FROM THE AUTHOR:
Academically, I am a cum laude graduate with a Bachelor of Technology degree in Electrical and
Electronics Engineering (B-Tech E.E.E.) and a post graduate in Masters in Human Resources
Management (M.H.R.M.) and Masters of Foreign Trade (M.F.T.), all from India.
My engineering completed in a remote village in India, Srikakulam, and it’s been a long journey from
there, and journey still continues….I feel this book demonstrates my ability to maintain dedication,
motivation and enthusiasm for a project management over a long period of time. I believe that in
combination with my extensive broad-based operations work experience along with my drive,
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resourcefulness and determination would make this book, an excellent opportunity for any
juvenile/experienced one in Projects industry.
I started my career as a small time engineer and gradually still developing in the Operations Domain.
With over nine years of Professional Experience, am a well-rounded functional Manager with excellent,
documented record of accomplishment and success in the electronic Security and Building Systems
Technology Field.
The reason behind writing this book, is that when am new to this field, I don’t have any one to say, what
is all about the projects, what to do, and when to do? Hence, the detailed information that I gained
through the ages, thought to put in an orderly fashion, so that it would be vitally milked by future
successful managers, avoiding the time lags.
Highlights of my background include Supply chain, Commercial with a magnificent experience in Project
and Operations management, technically oriented towards Automation and Security Systems in
Industrial and Building sectors.
My success in the past has stemmed from my strong commitment and sense of professionalism. I keep
high standards for my work and am known for my persistent nature and ability to follow through.
If this book facilitates you in getting adjusted and grow in this domain. I would feel really successful.
GAUTAM KOPPALA VT
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POME Contents
Graceful Exits from Troubled Projects .................................................................................... 14
Project Methodology: ............................................................................................................. 19
Outsourced Project Work: Choice or Necessity? ..................................................................... 27
Time Sheets Monitoring: ........................................................................................................ 32
Issues Management ............................................................................................................... 35
Project Evaluation Templates (for Macro Projects): ............................................................... 40
Percentage of Completion ...................................................................................................... 59
Percentage Of Completion ( PoC) Vs. completed-contract Methods ....................................... 68
Estimating and Tracking Project Costs ................................................................................... 73
Fast Tracking: ........................................................................................................................ 83
Mechanics of Percentage-of-Completion Accounting .............................................................. 89
Confronting Unexpected Project Delays ................................................................................. 92
Project Queue Keep Customers Informed and Supportive...................................................... 98
Resource’s Bottleneck: ......................................................................................................... 111
Project Status Reporting ...................................................................................................... 116
Controlling/ Delivery ........................................................................................................... 117
Implementing/ Execeuting .................................................................................................. 117
Defining ............................................................................................................................... 117
Aims..................................................................................................................................... 117
Planning ............................................................................................................................... 117
Deciding ............................................................................................................................... 117
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12
GRACEFUL EXIT’S
FROM TROUBLED
PROJECT’S
13
Graceful Exits from Troubled Projects
Projects can fail for any number of reasons ... poor definition, poor planning, lack of commitment .... and
the list goes on. No matter the reason, when you find yourself in the midst of a troubled project, you
need a way out --- quickly, cleanly and with minimal damage.
But, before you rush to cancel any project, you need to be certain that cancellation is the best
and most viable option.
Assumption: To warrant a troubled project assessment, you should have clear and credible signs that a
project is in trouble - i.e. you are behind schedule, deliverables are not working out as planned, the
project team is not working well together. To conduct an effective review of the troubled project, the
following questions must be considered and addressed.
Why is the project failing?
As we have already noted, projects may be headed towards failure for any number or combination of
reasons. If you are to react properly, you must be able to readily identify those reasons as they apply to
a project at hand. The following list provides a few illustrations of the numerous potential problems...
• Poor Concept
• Poor Planning
• Lack of Resources
• Lack of Funding
• Overly Aggressive Schedules
• Technical Problems
• Vendor Failures
• Business Priorities Have Changed
• Lack of Skills
• Poorly Defined Scope, Deliverables or Objectives
• Insufficient Management Oversight
• Lack of Team Commitment
• Lack of Management Support
• Other .....
Can this project be saved by any of the following actions....
• Re-working project plans?
• Reducing project scope?
• Revised deliverables?
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• Staff changes?
• Changing management?
• Revised schedules?
• Adding more funds?
• Reorganizing the project team?
• Strengthening management oversight?
• Some other method.....?
Is cancellation possible?
It may be difficult, if not impossible, to cancel certain projects, no matter how troubled they may be.
These projects may just be too critical or too visible. In this instance, you will need to look towards
repair as a solution ....taking all possible steps to salvage the project in lieu of cancellation.
What are the benefits of cancellation?
When you cancel a project, you need to be sure that cancellation is the best course of action. Project
cancellation can yield many benefits, even though it signals the end of a previously chosen project
initiative. When a project is cancelled it can save money, time, and free up resources to work on more
important, potentially successful projects.
Do you have cancellation consensus?
Project managers rarely have the ability to cancel a project unilaterally, and even if they did, it would be
unwise to exercise that power without consultation and consensus. A cancelled project is not necessarily
a management failure, particularly when the cancellation is appropriate and timely. But it is important
to have the buy-in of all key project participants - sponsors, management, end-users and team
members.
What is the cancellation impact on the following....?
• Project Staff
• End-Users
• Contractual Obligations
• Regulatory Requirements
• IT Credibility
• Internal Politics
• Other Projects Underway
• Other Impact Considerations....?
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Will cancellation be temporary or permanent?
It may be possible to revive a troubled project at a later date, when timing and circumstance may yield
better results.
PLANNING THE CANCELLATION:
Should your assessment show that cancellation is the best, most appropriate course of action, that
cancellation should be conducted in a structured, orderly fashion.....
• Prepare a Project Cancellation Statement, explaining why, how and when the project is to be
cancelled.
• Consult with supporting departments as needed ....(i.e. Legal and Human Resources) to ensure
that your cancellation approach is appropriate.
• Obtain all necessary management approvals.
• Inform the project team and all major stakeholders.
• Formally announce the project cancellation as needed according to the nature and visibility of the
project at hand.
• Re-assign project team members to other projects or to return to regular work assignments.
• Release contractors and temporary staff as needed.
• Complete a post project review.
• Finalize project documentation and retain as needed for future projects, or for any potential
project revitalization.
Concluded Note:
It is important to remember that project cancellation and failure are not the same thing, why you may
sometimes need to cancel trouble projects, that very act of recognition can be a sign of management
strength and success.
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POME Prescribe:
G
Give more than you
planned to.
POME Prescribe
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PROJECT
METHODOLOGY
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Project Methodology:
Achieving project management excellence, or maturity, is more likely with a repetitive process that can
be used on each and every project. This repetitive process is referred to as the project management
methodology.
If possible, companies should maintain and support a single methodology for project management. Good
methodologies integrate other processes into the project management methodology, as shown in the
below Figure. Companies such as Nortel, Ericsson, and Johnson Controls Automotive have all five of
these processes integrated into their project management methodology.
Figure: Integrated processes for the twenty-first century.
During the 1990s, the following processes were integrated into a single methodology:
Project Management: The basic principles of planning, scheduling, and controlling work
Total Quality Management: The process of ensuring that the end result will meet the quality
expectations of the customer
Concurrent Engineering: The process of performing work in parallel rather than series in order to
compress the schedule without incurring serious risks
Scope Change Control: The process of controlling the configuration of the end result such that
value added is provided to the customer
Risk Management: The process of identifying, quantifying, and responding to the risks of the
project without any material impact on the project's objectives
In the coming years, companies can be expected to integrate more of their business processes in the
project management methodology. This is shown in the below Figure. Managing off of a single
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methodology lowers cost, reduces resource requirements for support, minimizes paperwork, and
eliminates duplicated efforts.
Figure: Integrated processes (past, present, and future).
The characteristics of a good methodology based upon integrated processes include:
A recommended level of detail
Use of templates
Standardized planning, scheduling, and cost control techniques
Standardized reporting format for both in-house and customer use
Flexibility for application to all projects
Flexibility for rapid improvements
Easy for the customer to understand and follow
Readily accepted and used throughout the entire company
Use of standardized life-cycle phases (which can overlap) and end of phase reviews
Based upon guidelines rather than policies and procedures
Based upon a good work ethic
Methodologies do not manage projects; people do. It is the corporate culture that executes the
methodology. Senior management must create a corporate culture that supports project management
and demonstrates faith in the methodology. If this is done successfully, then the following benefits can
be expected:
Faster "time to market" through better control of the project's scope
Lower overall project risk
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Better decision-making process
Greater customer satisfaction, which leads to increased business
More time available for value-added efforts, rather than internal politics and internal competition
One company found that its customers liked its methodology so much and that the projects were so
successful, that the relationship between the contractor and the customer improved to the point where
the customers began treating the contractor as a partner rather than as a supplier.
POME has established project and workforce management, project engineering and project controls as
core professional competency, which is needed to accomplish strategic business objectives and a
competitive advantage in our marketplace. These are combined into the Project Methodology (PM) to
provide the framework that will facilitate individual and corporate success in project execution. PM has
evolved over time taking the best of established procedures from past project efforts and experiences,
combining them with advanced concepts and state-of-the-art practices that retains our status of best-in-
class companies in project execution. The PM approach to project execution addresses the following
aspects:
• Developing and assigning professional project managers, engineers and project controls
specialists.
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• Establishing and using a consistent process and a common approach to project management,
engineering and controls for all project teams
• Addressing project engineering disciplines including hardware and site services, systems
engineering, process control applications including batch and advanced applications, safety
system engineering, operator effectiveness, asset effectiveness, plant business process
effectiveness expanding as needed to cover Company's portfolio
• Clear identification of resulting deliverables and the stakeholders' roles and responsibilities
• Providing analysis of data, production of information, standard reporting and accurate prediction
of project cost, schedule and performance
• Providing effective tools, techniques, training, performance measures and continuous
improvement
• Aligning project management services to provide oversight and ongoing support for project
managers and maintenance of the PM methodology
PM is a major part of the overall methodology responsible for the analysis of data, production of
information and the accurate prediction of project cost, schedule and performance. Project Controls
assists project management with the establishment and controlled adjustment to the project baselines.
Project Controls is the interface to Accounting Finance to ensure the project is following correct
accounting procedures. The Accounting Procedures and basics are illustrated in Accounting Chapters.
Have a grip on it. Project Managers strength is in grasping the commercial aspects rather than any
others.
PM Process Maps
The overall project delivery process is defined by phases, supporting processes and interfaces as shown
below. The project delivery process is commonly described by a high level, 4-Phase model of Concept,
Planning, Implementation and Closeout. The term Leadership Team is used to include the Project
Manager plus the Leads assigned from Project Controls and Project Engineering who each have a role in
the overall management and control of the project. These activities are shown in yellow. The technical
effort to be supported by Engineering Disciplines that provide refined tools, best practices, examples and
a community that owns and maintains this discipline specific content. The overall project delivery
process is shown below:
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POME Prescribe:
About Across Borders - It's a global world!
Whether working with offshore teams or just a diverse group at home, today's project environment is
multicultural. Be open to and aware of your project stakeholders' cultures. Not only should we respect our
colleagues' cultures, but we should understand and EXPERIENCE them. Go out for Dim sum with the team or
learn a new phrase in another language. (allpm.com)
Cross-cultural global relations:
a) Plan extra time to model requirements when working cross-culturally.
While modeling is an excellent tool for overcoming some cross-cultural communication issues, multi-cultural
project management may still take extra time to get the requirements and ensure that important facts are
captured.
b) It is important to plan more time for capturing requirements when working in multi-cultural environments.
c) Meeting in Person to Develop Relationships Saves Time and Money in the Long Run. In some cultures
tasks are completed based on established relationships and, ultimately, trust, rather than simply being driven by
schedules. Attempting to forge ahead with tasks before spending social time with clients can well lead to
incomplete requirements. While it may not be standard practice all over the world, when PMs are working in
some other cultures taking the time to meet face-to-face can save time and money for your project and
organization.
POME Prescribe

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E
Enjoy life today—
yesterday is gone,
tomorrow may
never come.
POME Prescribe

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OUTSOURCED
PROJECT WORK:
CHOICE OR
NECESSITY?
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Outsourced Project Work: Choice or Necessity?
Projects may be outsourced for any number of reasons, either by choice or necessity. But one thing is
clear – outsourcing does not equal simplicity. While outsourcing may eliminate certain in-house
headaches, the added outsourcing overhead creates a new layer of complexity and responsibility for the
internal project manager. Just consider these examples:
When you outsource a project (in part, or as a whole), you will have to.....
• Make the outsourcing decision.
• Find the right contractor/consultant.
• Negotiate and manage proposals, bids and contracts.
• Rely on an external operation where you have little influence.
• Clearly define the "vision thing" (you won’t have the luxury of internal familiarity and "cultural"
assumption).
• Manage an administrative overhead for accounts payable purposes.
• Educate the contractor/consultant on internal procedures, goals and operational requirements..
• Track project progress without direct authority, relying on project staff that may not be "visible"
to you.
• Manage internal morale and lack of "in-house ownership" issues.
• Plan for knowledge transfer to maintain deliverables on an operational basis.
As this list illustrates, the outsourced project presents a litany of unique challenges, which must be
recognized and addressed to ensure successful results. As with most management decisions,
"outsourcing" viability can best be determined through a structured process for analysis and planning.
The Outsourcing Decision
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Many projects are outsourced for a variety of reasons – sometimes out of choice, and sometimes, out of
necessity. When outsourcing is a matter of necessity, the reasons will usually be obvious and clear-cut:
• Lack of "in-house" time due to other projects and workload demands.
• Higher "in-house" costs due to learning curves and conflicting workplace priorities.
• Lack of required internal skills, resources and experience.
• Political considerations (i.e. the sensitive nature of a project).
When project outsourcing is a matter of choice, the decision comes down to a balancing of costs and
benefits. This cost/benefit analysis can be summarized via the following series of defining questions:
• Will outsourcing help you to deliver the project on a faster timetable, and is a faster "time to
market" an imperative for this project?
• Will outsourcing help you to deliver the project at lower costs, and is "lowest cost" a primary goal
for this project?
• Will outsourcing help you to deliver better results (improved deliverables)?
• Will outsourcing help you to realize short term productivity benefits?
• Will outsourcing help you to realize long term productivity benefits?
• What are the risks and drawbacks of outsourcing?
• How do the risks of outsourced project delivery compare with the risks of "in-house" project
delivery?
As these questions are applied and considered in the outsourcing decision process, project
characteristics must also be examined. Certain types of projects will be more suited to outsourcing than
others. While individual circumstances will vary, the following elements can be used as analytical
benchmarks:
• Expertise. What is the level of expertise required to complete the project. In-house staff may
lack the necessary skills for a high-tech projects.
• Novelty. What is the level of innovation required to complete this project? In-house staff may be
needed for highly unique projects, leaving more routine projects to outsourced providers.
• Organizational Reach. How deep is the "organizational reach" of this project? Projects having
an extensive impact on internal operations may be too complex for outsourcing in the entirety.
• Dependencies: What is the level of dependency on, and connection with, other projects? Linked
projects may not be well suited to individualized outsourcing.
Outsourcing Options
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Considering the issues, characteristics and internal influences, outsourcing does not have to be an all or
nothing proposition. Outsourcing can be used as an operational alternative, or it can be used a strategic
tool for project delivery. For example, you may choose to outsource an entire project (management and
all), and just maintain an "in-house" coordination responsibility. Or, you can choose to outsource specific
project elements, by deliverable or phase, based on needs, benefits, costs and timing.
To facilitate this decision-making process, projects can be viewed as a series of operational components:
• The Vision Thing (Strategies and Tactics)
• Day to Day Management (Issues Tracking and Resolution, Baselines, Resource Management)
• Planning (Scheduling, Tasks and Resource Allocation)
• Deliverables Design and Development
• Testing (Deliverables Verification)
• Documentation (Project Documents and Technical Documents)
• Administration (Logistics, Purchasing, Paperwork)
• Implementation (Installation, Support and Ownership Transition)
Each of these components must be examined to determine outsourcing viability:
1. Can this component be outsourced?
2. Should this component be outsourced?
3. How will any partially outsourced components be integrated into the project as a whole?
Outsourcing for Success
Outsourcing success is not guaranteed when the initial outsourcing decision is made. Management
standards and best practices must be applied to the outsourced project with the same degree of
enthusiasm as the traditional in-house project. The following guidelines provide you with a best practices
snapshot for the outsourced project:
• Make fully informed outsourcing decisions, analyzing needs, costs and benefits.
• Consider the outsourcing intangibles (employee morale and pride of ownership).
• Clearly define all project goals, requirements and deliverables.
• Choose the right outsourcing partner considering project needs, experience, and capabilities.
• Document all expectations and obligations in formal contracts and Statement of Work documents.
• Identify all likely risks and develop project contingency plans should outsourcing problems arise.
• Keep project changes to a minimum. Continual changes can wreck havoc on an outsourced
project where "requirements" are defined as part of a contractual obligation.
• Schedule and hold regular status meetings with contractors and consultants. Make sure that
weekly status reports are included in all contracts and agreements. If the project work is being
done off-site, schedule regular visits to contractor locations if at all possible.
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• Keep in-house staff informed of all outsourcing issues that may impact internal project work.
• Be sure to conduct an in-house review of all outsourced projects to identify success points,
problems and to learn from the experience.
In summary, outsourcing is a tool for project delivery, and as with any other tool, its use must be
carefully weighed, planned and managed for success
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TIME
SHEETS
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Time Sheets Monitoring:
The following format methodology has been enclosed. Rules related to the time reporting (by means of
man-hours to be charged to projects) are an important precondition for proper Project Controlling. This
is used for monitoring the Productivity and the usage of the individual resources. This is a base for
cost and Productivity variances analysis. Internal cost of deputation shall, therefore, be calculated and
charged to the order, based on defined cost structuring and monthly time sheets prepared by the
engineers, in line with the rates circular. These should be authorized by the Project Manager / Group
Leader. The cost estimation must be guided by Time Plan Catalogue, previous experience / repeat jobs
taken note of.
The monthly time sheets filling in & monitoring by group leaders will assist in streamlining the cost
estimation/actual cost during offer stage & also order stage.
The engineer should keep a track of the time spent for the various activities on a day to day basis and
fill up the same from these records while filling up the time sheet. The extra hours are also to be filled in
as per their classification for effective monitoring.
Normally, time sheets been filled and sent through PMIS or some other ERP.
Start with the recording of everyone’s time.
Time recording also has the advantage that it applies to everyone in the organization, from the CEO
down to the shop floor assistant. If the president does it, then why shouldn’t I?
Now time recording also isn’t all that simple, because there should be some uniformity in what people
record time against. Anecdote: “I’m building a cathedral” vs. “I’m hauling bricks”. Recording time
therefore requires a central definition of what people can record time against: approved projects, or
tactical aims, or whatever, to say what they have been busy with.
Time Sheets Sample Format:
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POME Prescribe:
D
Don’t give up and don’t
give in.
POME Prescribe
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ISSUE’S
MANAGEMENT
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Issues Management
Issues happen. As any project proceeds, questions and problems arise, and if the course or
outcome of the project hangs in the balance, then an "issue" is born.
Project Partnering Framework
Looking at this definition, it appears as if project issues and risks are one and the same. Although the
distinctions may be subtle in nature, issues differ from risks in terms of predictability and management
approach. The fact that issues will arise is predictable, but the specific substance of any given issue is
not. Risks are predictable circumstances, those which should be identified before a project begins. As
such, long term strategies can be developed to avoid said risks, allowing for the application of defined
management solutions should the risk be realized.
On the other hand, issues can pop up at any time during a project, and must be dealt with quickly,
without the benefit of pre-defined solutions. Typically, project issues involve the project deliverable
itself, in the form of unexpected technical problems, incompatibilities, bugs or other conflicts. However,
during the course of a project, it is likely that other issues will also arise, relating to project schedules,
resources, materials, finances, or other unexpected changes in the project environment.
Just because you can't predict issues, doesn't mean you shouldn't be prepared to handle issues once
they arrive. Every project should begin with a defined process for issues management.
An effective issues management process should cover the following bases:
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• Goals: what are you trying to accomplish with the process? In all likelihood, your issues process
should be designed to ensure that all issues are identified and resolved in a timely fashion,
keeping all parties informed as needed to get the job done.
• Capabilities: what tools will be used to raise, resolve, and track issues as they arise and as they
are closed?
• Origination: how will issues be raised to the project manager?
• Evaluation: how will issues be reviewed and assigned?
• Tracking: how will issues be monitored and tracked for timely resolution?
• Escalation: how will issues be escalated in the event they cannot be resolved and closed?
All of these requirements should be reflected in your issues management mechanism, consisting of the
tools and procedures by which issues are raised, resolved and managed. Your issues management
mechanism will have two elements .... a physical element (software, online form, paper form) and a
logical element (management strategies and procedures).
Physical Issue Management Mechanisms:
Whether you track project issues on a piece of paper, or in a database system, you will need to collect
and track the following types of information:
Issue Type: to categorize issues for easier assignment and tracking. Issue categories may vary be
project type, but can usually include the following:
• Technical: an issue relating to the technical aspects of the project process or deliverable.
• Financial: an issue relating to project funding, spending or budget.
• Resource: an issue relating to project resources (equipment or people).
• Schedule: an issue involving the project timeline.
• Other: a unique issue specific to the project at hand.
Issue Description: to identify the specific nature and impact of the issue (what is the issue all about
and how does it impact the project in terms of deliverables, schedule, costs, scope or other parameter?).
Issue Originator: who first raised the issue?
Issue Date: the date the issue was raised.
Issue Owner: who is responsible for issue resolution?
Issue Identifier: a unique code or number to track issue status.
Issue Status: to track issue status:
• Open: Issue resolution has not yet begun.
• In Progress: Issue resolution is underway.
• Closed: The issue has been resolved.
• Escalated: The issue has been escalated for further management action.
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Issue Priority: to ensure that issues are dealt with appropriately considering impact and
consequences:
• High Priority: Issues having a major impact on the project, requiring immediate attention.
• Medium: Issues have a moderate impact on the project, requiring attention in the near future.
• Low: Issues having an insignificant impact on the project, requiring attention at some future date
if time permits, or not at all.
Target Completion Date: to establish a timeframe for resolution.
Resolution Description: to identify the steps taken to address and resolve the issue.
Once an issue is raised and documented, resource assignments must be made. Depending on the
nature of the issue, any project team member or resource may be involved. For example, an
unexpected bug in a piece of software will likely be assigned to a technical team member, who may be
called upon to resolve the problem, or who may have to track the problem with a vendor. On the other
hand, an issue of an administrative nature (i.e. the lack of available facilities for staging new equipment)
may be assigned to a facilities manager, who may otherwise have limited involvement in other aspects
of the project.
A key challenge in issues management is knowing how to make effective issues assignments. Since
most issues must be resolved quickly, with little fanfare, it is important to assign issues to those who
can hit the ground running whenever possible.
Another key challenge in the issues process is to track issue status, from the point at which issues are
first raised and assigned, through to resolution. Depending upon the complexity and visibility of any
given project, you may need to hold ongoing issues meetings.. Issues meetings can bring an important
perspective to the project process, providing the opportunity for the entire team to consider issues, plan
actions and take a "big picture" perspective. These meetings can take place as needed, on a daily,
weekly or monthly basis, to ensure that issues are properly tracked and managed.
Concluded Note:
As you work to resolve issues, you need to look at solutions that can solve the problem, with the least
impact on the project schedule, budget and scope. When handled quickly, issues offer the opportunity to
refine and improve project results. In addition, any organized issues management record will likely
provide valuable insights and experiences for your next project.
POME Prescribe
37
C
Consider things from
every angle.
POME Prescribe
38
PROJECT
EVALUATION (FOR
MACRO
PROJECTS)
39
Project Evaluation Templates (for Macro Projects):
Initiating,
Planning,
Executing,
Controlling
Evaluate Key Aspects
of Project
Transition Project to
Operations Project Evaluation
Document Lessons
Learned
Closing
Purpose of the Project Evaluation Templates
The purpose of the Project Evaluation templates is to evaluate the project, transition the project to
operations, provide a basis for feedback to the project team and management, to document the lessons
learned to improve the process and future project potential.
Document Change Activity
The following is a record of the changes that have occurred on this document from the time of its
original approval
# Change Description Author Date
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This template contains suggested POME language and assumes that the project will make appropriate
additions, deletions, and changes for their specific needs.
DEGREE OF ATTAINMENT OF BUSINESS OBJECTIVES
Document how the project performed against each objective established in the Product Description and
Integrated Project Plan.
<Objective description 1>
Degree of attainment of objective
Success Factors
Nature and causes of variances
<Objective description n>
Degree of attainment of objective
Success Factors
Nature and causes of variances
DEGREE OF ATTAINMENT OF BUDGET OBJECTIVES
State the Planned Cost and Funding for the project, as approved in the Integrated Project Plan. State
the Actual Cost and Funding at completion. Document and explain all cost and funding variances,
including approved changes to the cost baseline.
41
Expenditures ($000)
Planned Actual Variance Explanation
Internal Staff Labor
Service
Software Tools
Hardware
Materials and
Supplies
Facilities
Telecommunication
s
Training
Contingency (Risk)
Total
Funding Source ($000)
Planned Actual Variance Explanation
General Fund
Non-General Fund
Central
Other
Total
DEGREE OF ADHERENCE TO SCHEDULE
Compare the approved schedule baseline against the actual completion dates. Document and explain
any schedule variances, including approved changes to the schedule baseline.
42
DEGREE OF SATISFACTION OF USER REQUIREMENTS
Document any changes to the Requirements and their impact on Performance, Cost, Quality or
Schedule Baselines.
DEGREE OF REALIZATION OF ANTICIPATED BENEFITS
Document the primary benefits obtained by the project.
DEGREE OF PRODUCTIVITY - EXPERIENCED
Indicate the productivity level of the project and factors that caused increased performance, as well as,
decreased performance.
DEGREE OF DELIVERY – PROJECT DELIVERABLES
List the major Project Deliverables and the date each was accepted by the user. Identify any
contingencies or conditions related to the acceptance.
Deliverable Date Contingencies or Conditions
Accepted
1.
2.
3.
TRANSITION TO SERVICES AND MAINTENANCE
43
Describe the plan for services and maintenance of the product, good, or service delivered by the project
below. In addition, state the projected annual cost to operate and maintain the product, good, or
service. If the operation and maintenance plan is not in place, what is the target date for the plan and
what is the impact of not having operations and maintenance for the product, good, or services in place.
Sample Format of Projects Hanidng over from Projects to Services:
44
Gautam Koppala ORG
Project Name:
JOB HANDOVER TO FACILITIES/ SERVICES GROUP
TO: Service Manager DATE:
CC(on e-mail): AMS Head, Operations Head FROM(name): Gautam Koppala
JOB NUMBER CUSTOMER
Operations must prepare the following documents for handing over the job to Facilities/ Services. This
document and Project handover to Customer Form to be sent to Service Support/ Facility Manager for
Records and Installed Base Updation
S.N. DOCUMENTS LIST Attached Y/N Remarks/ Give reason if any

item is NOT attached
Customer P.O. with all subsequent

1 amendments, add-on orders, Spare Orders,

Operation Contract/services
Project Close-out form with all attachments :

2 Duly signed by client/consultants and

concerned Proj. Engr/Manager.
45

Billing BreakUp Cum BOQ with complete part
3
nos. for Main, Add ON and Spares orders.

Copy of complete set of Engineering
4
Documentation, 'As Built' drawings.

Operations Manuals / Maintenance
5 Manuals/catalogs/specs of various field

instruments as submitted to customer.
Complete System Software and Application

6 Software on CD /Drivers/Any other & ALL

PASSWORDS
List of spares available at site &

7 Recommended list of spares, if any given to
the customer
Statutory Approvals (such as NOC< Fire

8
Officer's approvals etc.) ,if any.
All important communications (e-mail/letter

9 copies to/from customer) during project

execution
Verbal / unrecorded commitments or understanding with customer/ consultants or any other important info. which may be
useful for AMS to provide better service to customer/including any scope for add-on etc.
46

Is Handover to customer done with a snag No Is there an internal snag list? No
list?
Date committed by PM to clear the snag list Date committed to clear internal snag
list
Has one set of this document & Project close- YES RSM must confirm this from SSM Sharjah before signing this Handover
out form duly signed by customer given to document.
Service/ Facility Support Manager for records
(Signature ) (Signature) Date of Hand
Project Manager Regional Service/ Facilty Manager ( RSM) Over agreed

by PM and
RSM
47

SERVICE AND MAINTENANCE PLAN:
Define what will be maintained, who will be responsible for maintaining, how changes will be made to
the application, how regular upgrades to infrastructure, software, utilities, and hardware will be
prioritized, what business unit is responsible and any other service agreements. You may want to define
what are “functionality enhancements”, “Operations enhancements”, “Defect enhancements” and
“Emergency Fixes” and how these requests will be prioritized in the future.
Operations and Maintenance Cost
Expenditures ($000)
Yr1 Yr2 Yr3 Yr4 Yr5+ Explanation
Internal Staff Labor
Services
Software Tools/
others
Hardware
Materials and
Supplies
Facilities
Telecommunication
s
Training
Contingency (Risk)
Total
Funding Source ($000)
48
Yr1 Yr2 Yr3 Yr4 Yr5+ Explanation
General Fund
Non-General Fund
Federal
Other
Total
RELEASE OF PROJECT RESOURCES
List the Resources used by the project. Identify to whom each resource was transferred and when it
was transferred. Account for all project resources utilized by the project.
Resource
(Describe or name the resource Person or Organization Who
used) Received Resource Turnover Date
Project Team
Customer Support
Facilities
49
Equipment
Software Tools/ Others
Other
TRANSITION OF PROJECT DOCUMENTATION
Identify all project documentation materials stored in the project library or other repository. Identify the
type of media used and the disposition of the project documentation (see Communications Plan).
Report(s
) and
Docume Storage
nt(s) Media Used Location Disposition
50
LESSONS LEARNED
Identify primary Lessons Learned. Lessons Learned should be stated in terms of Problems (or issues)
and Corrective Actions taken. Site any references that provide additional detail. References may
include project reports, plans, issue logs, change management documents, or Lesson-learned checklist.
Statement of Lesson References Corrective Actions
1.
2.
3.
4.
51
Project Closeout Transition Checklist
Complete the Status and Comments column. In the Status column indicate: Yes, if the item has been
addressed and completed; No, if item has not been addressed, or is incomplete; N/A, if the item is not
applicable to this project. Provide comments or describe the plan to resolve the item in the last
column.
52
Item Status Comments/
Plan to Resolve
1 Have all the product or service deliverables

been accepted by the customer?
1.1 Are there contingencies or conditions related

to the acceptance? If so, describe in the
Comments.
2 Has the project been evaluated against each

objective established in the product
description and Integrated Project Plan?
3 Has the actual cost of the project been tallied

and compared to the approved budget?
3.1 Have all approved changes to the cost baseline

been identified and their impact on the project
documented?
4 Have the actual milestone completion dates

been compared to the approved schedule?
4.1 Have all approved changes to the schedule

baseline been identified and their impact on
the project documented?
53

Plan to Resolve
5 Have all approved changes to the project

requirement been identified and their impact
on the performance, cost, and schedule
baselines documented?
6 Has operations management formally accepted

responsibility for operating and maintaining
the product(s) or service(s) delivered by the
project?
6.1 Has the documentation relating to operation

and maintenance of the product(s) or
service(s) been delivered to, and accepted by,
operations management?
6.2 Has training and knowledge transfer of the

operations organization been completed?
6.3 Has the projected annual cost to operate and

maintain the product(s) or service(s) been
approved and funded? If not, note and
explain who is responsible to resolve.
7 Have the resources used by the project been

reassigned to other units or projects?
54

Plan to Resolve
8 Has the project documentation been archived

or otherwise disposed as described in the
project communication plan?
9 Have the lessons learned been filed with the

Project Management Office? Projects
Department?
55

Approvals
Position/Title Signature/Printed Name/Title Date
Project Manager
Project Sponsor
Maintenance /Service
Manager/ Agency
Management
POME LIGHTER VEI%:
56
POME Prescribe
B
Believe in yourself.
POME Prescribe
57
PERCENTAGE OF
COMPLETION
(POC)
58
Percentage of Completion
For a bookstore it is easy to tell when a customer has taken possession of the merchandise, thus
qualifying the transaction as a sale. However, consider long-term projects such as large construction
projects. Is it right to wait until the last brick is laid before recognizing the sale? Remember, according
to the matching principle revenues and their associated expenses should be recognized in the same
accounting period. The contractor has expenses throughout the course of the project. Should these
expenses be held off the books until the project is completed as well?
For such projects, the matching principle is essentially turned around and the expenses are used to
estimate the associated revenues. This process is called the percentage of completion (PoC) method.
Prior to the projects start the contractor estimates the costs at each stage of the project. As time
passes and the stages are completed, the contractor recognizes an estimate of the revenue that has
been earned based on the percentage of the estimated costs that have already been incurred.
There are two potential issues for investors in companies that use the percentage of completion
method. Both arise from the fact that the contractor is recognizing revenue on the basis of estimated
expenses. Of course, actual expenses may be higher or lower than the estimate, even if the contractor
is as scrupulous as possible.
If expenses turn out to be higher than estimated, the past expenses recognized will be too low. As
soon as the contractor realizes there is a cost overrun he must recognize all of the understated past
expense in the current reporting period. This can cause significant earnings shortfalls relative to
expectations. It is very difficult for investors to anticipate such events, so instead many investors
simply discount the price they are willing to pay for a company that extensively uses the PoC method.
Then there is the possibility that the contractor is not entirely scrupulous. In addition to the difficulty in
estimating costs at the project’s outset, at any stage along the way it can be difficult to determine
exactly how much of the project is complete. If the contractor wants to boost revenue in the current
accounting period he could make an aggressive estimate as to how much of the work is complete,
shifting revenue that should be recognized later into the current period. Investors may be able to spot
this type of activity by monitoring the unbilled receivables account for sudden spikes.
How to Use Percentage-of-Completion Accounting
Jones Builders just obtained a contract for $500,000 to build a home for Mr. & Mrs. Smith. Jones
estimates his total cost on the job to be $400,000. During the first month of the job, the following
transactions occur:
1. Cash of $10,000 is paid for permits, fees and other startup costs.
2. An invoice is received from the excavation subcontractor for $10,000.
3. The first progress billing is prepared for $60,000.
59
If the above transactions were the only ones Jones Builders had for the month, its income statements
under each accounting method would look like this:
Completed % of
Cash Accrual
Contract Completion
Revenue $0 $60,000 $0 $25,000
Costs 10,000 20,000 0 20,000
Gross Profit $(10,000) $40,000 $0 $5,000
Under the accrual method, revenue earned equals the amount invoiced on the first progress billing
($60,000). Revenue under the percentage-of-completion method was computed as follows:
1. Calculate what percentage of the job is complete.
2. Calculate the amount of revenue to be earned.
Costs to date / total estimated costs = % complete
$20,000 / $400,000 = 5% complete
Contract amount x % complete = revenue earned
$500,000 x 5% = $25,000
By examining the four income statements, you see that the percentage-of-completion method best
reflects the company's revenue, costs and gross profit for the period. If the president of Jones Builders
received an accrual-basis statement, he might think the company is really prospering (the job is only
5% complete, and the company already made $40,000).
However, this statement does not give a true picture of the company's profitability as of the end of the
month. Because the job was only 5% complete, only 5% ($5,000) of the total projected gross profit
($100,000) has been earned.
However, the costs and revenues calculated in this method are at best still estimates of the job's true
outcome. For this reason, care should be taken when determining job progress.
Few corporate utilizes a standard process making changes to the conventional POC for all project
estimates at completion or ITC (Indicated Total Cost).
Percentage of Completion(POC) Process and is designed to:
• be a Global Process for all of projects, leaned by POME.
• establish a Standard Terminology for the POC process
60
The POC Process is designed to meet the management and internal control requirements for the level
of approval of changes in a project POC cost based on the financial impact to the approved cost and
revenue budget (control budget) of the project. The process requires that the Project POC be derived
from cost and schedule analysis per the Project Management and Project Controls methods and
standards in order to represent the most likely cost outcome of the project (excluding the benefit of
pending change orders until they are booked, unless required by contract to be paid if incurred) and
identify variations as quickly as possible. The process also requires that all Project POCs be
systematically reviewed through the Monthly, Executive and Gating Review processes.
PoC Policy:
POME’s PoC requires that all projects meeting the criteria for input into the Project Balanced Scorecard
(PBS). For projects meeting this criteria, no POC cost adjustment may be base lined in the local
project accounting system prior to obtaining all of the required approvals of the POC cost adjustment.
In addition, every project POC cost budget must be validated each month by the Project Manager in
the PBS and the review dates for Monthly, Executive and Gating Reviews must be updated in the PBS.
Projects falling below the criteria for input into the PBS are still required to follow the guidelines in this
policy with respect to determination, review and approval of PoCs.
The Project Manager is responsible for the validity of their project PoC cost budget, ensuring that every
PoC adjustment to their project has the required approvals prior to base lining in the local accounting
system, and that their project is systematically reviewed in the three project review processes
(Monthly, Executive or Gating).
All project PoC adjustments require the following analysis to be completed before approval:
• Detail hours and cost by major Estimate To Complete(ETC) task
• Documented mitigation actions taken and/or planned with responsibility and due dates identified
• Detail of hours and cost change by major PoC task, including reasons for change categorized as
follows:
Contract T&C's
Customer
61
Estimate
Customer Expectations
Proposal
Hardware/Software
Quality/re-work
Schedule
Scope
Sub Contractors or 3rd party
Technology
Process Description:
The Project Manager is responsible for initiating and ensuring completion of the PoC process. Upon
completion of the PBS inputs the required documents are to be submitted to the Project Controls
Management for their required functional review and approval.
This approval is to verify that the standard methods and tools were effectively used to derive the POC
adjustment. Upon approval the PoC adjustment is forwarded to Company Management for their
required business review and approvals. The Business Reviewers must determine the ultimate
financial treatment of PoC adjustments from tasking project teams with recovery targets and
representing the potential risk in quarterly representation letters to taking the adjustment to the P&L.
Should any approver find sufficient reason not to approve the POC cost adjustment it is to be returned
to the originator for re-work and re-submittal or to be filed in the project archive as rejected if it
cannot be re-worked. Once the PoC adjustment has final approval it is to be submitted to the local
Financial Analyst/Accountant for entry into the local project accounting system and re-base lining of
the project budget.
Project Reviews:
Project Management is responsible to ensure that project reviews are occurring on a systematic basis,
regardless of whether an adjustment is deemed currently necessary. At least 3 levels of review must
take place. The first, monthly reviews are to include management up through the Regional Project
Leader level. The second, gating reviews, are conducted when large projects in contract value reach
pre-defined stages of project execution. This process is maintained by Project Controls. Participation
requirements for gating reviews are documented. The third, quarterly reviews, are conducted based on
62
the selection of the Pole Finance Manager in coordination with the Pole Project Director and Pole
Project Control Manager. Criteria are documented but flexibility exists to select additional projects
based on the request of the regional or global management teams.
PoC Adjustment Sample Approval Matrix:
Current quarter POC adjustment impact (+/-) Very Large Medium Small
Large Projects Projects Projects
Projects
President X
CFO X
Global Operations VP/GM X
Contracts VP X
Regional VP/GM X
Regional General Manager X
Pole Contracts Director X
Pole Project Director X
Regional Project Leader X
Program Manager/PMC Manager X
Project Manager X
Pole Engineering Director X
Pole Finance Director X
Regional Finance Manager X
Local Financial Analyst X
Global Project Finance Director X
Pole Project Finance Manager X
Global Project Controls Director X
Pole Project Controls Manager X
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Project Controls Lead X
The expectation is that the individual approving these adjustments must attend an appropriate project
review (monthly, gating, quarterly) and has reviewed the POC change approval form. In addition, the
following specific functional roles and responsibilities must be in operation during the review:
Project Management
Concurrence with the project Revenue, Margin and Percentage of Completion (PoC) confidence of +/-
X%( X stands for the projects acceptable deviation)and that the business strategy and project
management methodology being employed on the project ensure effective project management.
Project Controls
64
Concurrence with the project PoC confidence of +/- X% and that the project control processes and
tools being employed on the project effectively track project performance, facilitate project control and
accurately forecast the project estimate to complete.
Finance
Concurrence that the PoC presented is reasonable considering all known items. Also responsible for
the determination of how to account for any PoC adjustment in the financials within approved policy.
Reviewed all items included on Project Balanced Scorecard as well as addressed relevant items from
Finance Project Review Checklist.
Engineering Management
Concurrence with the technical state of the project and that the technical aspects of the project are
appropriately accounted for in the project PoC.
Regional Management
To assess the full range business impact of PoC adjustments and forecasts and work with Finance and
Project Management to determine how to they are reflected in the regional business forecast.
Contracts
To ensure the PoC reflects the requirements of the contractual terms and conditions, as well as
optimize the Projects position under the agreement for issues such as schedule delays and change
orders.
Compliance Reporting:
PoCh month, Project Controls shall be publishing an POC Scorecard that must include the following
metrics:
Average PoC Adjustment and Standard Deviation Monthly
% of Projects with PoC Validated by Project Management and Project Controls Monthly
% of Plan vs. Actual of Projects with scheduled Executive Reviews Quarterly
% of Plan vs. Actual of Projects with scheduled Gating Reviews Quarterly
In addition, Project Controls must maintain documentation of PoC approvals including the required
analysis and review participation/signatures. In addition, action logs must be prepared, published and
followed-up.
65
Checks and Balances:
The POC and Project Review Processes are designed to ensure that effective business checks and
balances are institutionalized within the implied Projects. The Project Management function is
responsible for delivering the project safely, on time, within budget, and per client requirements. The
Project Controls function is responsible for ensuring that the project planning, tracking and forecasting
is being done in compliance with the Project Controls standards and tools. The Project Finance
function is responsible for ensuring that the financial representation of the project is in accordance
with Project Financial Terms and Corporate Policies.
POC Audit:
To ensure there are no systemic failures in the execution of the POC Policy that would expose Projects
to material financial risk, the Project Finance function must conduct both scheduled and random audits
of projects on a global basis. In addition to the primary objective, these audits must reinforce the
checks and balances in the organization, and identify opportunities to continuously improve the POC
process and the execution of projects.
POME Prescribe:
A
Avoid negative sources,
people, places, things
and habits.
POME Prescribe
66
PERCENTAGE O F
COMPLETION ( PoC)
VS. CONTRACT
COMPLETION
METHO DS
67
Percentage Of Completion ( PoC) Vs. completed-contract Methods
In the context of private construction firms, particular problems arise in the treatment of
uncompleted contracts in financial reports. Under the "completed-contract" method, income is
only reported for completed projects. Work on projects underway is only reported on the
balance sheet, representing an asset if contract billings exceed costs or a liability if costs exceed
billings. When a project is completed, the total net profit (or loss) is reported in the final period
as income. Under the "percentage-of-completion" method, actual costs are reported on the
income statement plus a proportion of all project revenues (or billings) equal to the proportion
of work completed during the period. The proportion of work completed is computed as the ratio
of costs incurred to date and the total estimated cost of the project. Thus, if twenty percent of a
project was completed in a particular period at a direct cost of $180,000 and on a project with
expected revenues of $1,000,000, then the contract revenues earned would be calculated as
$1,000,000(0.2) = $200,000. This figure represents a profit and contribution to overhead of
$200,000 - $180,000 = $20,000 for the period. Note that billings and actual receipts might be
68
in excess or less than the calculated revenues of $200,000. On the balance sheet of an
organization using the percentage-of-completion method, an asset is usually reported to reflect
billings and the estimated or calculated earnings in excess of actual billings.
As another example of the difference in the "percentage-of-completion" and the "completed-
contract" methods, consider a three year project to construct a plant with the following cash
flow for a contractor:
Year Contract Expenses Payments Received
1 $700,000 $900,000
2 180,000 250,000
3 320,000 150,000
Total $1,200,000 $1,300,000
The supervising architect determines that 60% of the facility is complete in year 1 and 75% in
year 2. Under the "percentage-of-completion" method, the net income in year 1 is $780,000
(60% of $1,300,000) less the $700,000 in expenses or $80,000. Under the "completed-
contract" method, the entire profit of $100,000 would be reported in year 3.
The "percentage-of-completion" method of reporting period earnings has the advantage of
representing the actual estimated earnings in each period. As a result, the income stream and
resulting profits are less susceptible to precipitate swings on the completion of a project as can
occur with the "completed contract method" of calculating income. However, the "percentage-
of-completion" has the disadvantage of relying upon estimates which can be manipulated to
obscure the actual position of a company or which are difficult to reproduce by outside
observers. There are also subtleties such as the deferral of all calculated income from a project
until a minimum threshold of the project is completed. As a result, interpretation of the income
statement and balance sheet of a private organization is not always straightforward. Finally,
there are tax disadvantages from using the "percentage-of-completion" method since corporate
taxes on expected profits may become due during the project rather than being deferred until
the project completion. As an example of tax implications of the two reporting methods, a study
of forty-seven construction firms conducted by the General Accounting Office found that $280
million in taxes were deferred from 1980 to 1984 through use of the "completed-contract"
method.
It should be apparent that the "percentage-of-completion" accounting provides only a rough
estimate of the actual profit or status of a project. Also, the "completed contract" method of
accounting is entirely retrospective and provides no guidance for management. This is only one
example of the types of allocations that are introduced to correspond to generally accepted
accounting practices, yet may not further the cause of good project management. Another
69
common example is the use of equipment depreciation schedules to allocate equipment
purchase costs. Allocations of costs or revenues to particular periods within a project may cause
severe changes in particular indicators, but have no real meaning for good management or
profit over the entire course of a project. As Johnson and Kaplan argue:
Today's management accounting information, driven by the procedures and cycle of the
organization's financial reporting system, is too late, too aggregated and too distorted to be
relevant for managers' planning and control decisions....
Management accounting reports are of little help to operating managers as they attempt to
reduce costs and improve productivity. Frequently, the reports decrease productivity because
they require operating managers to spend time attempting to understand and explain reported
variances that have little to do with the economic and technological reality of their operations...
The management accounting system also fails to provide accurate product costs. Cost are
distributed to products by simplistic and arbitrary measures, usually direct labor based, that do
not represent the demands made by each product on the firm's resources.
Example: Calculating net profit
As an example of the calculation of net profit, suppose that a company began six jobs in a year,
completing three jobs and having three jobs still underway at the end of the year. Details of the six
jobs are shown in Table below. What would be the company's net profit under, first, the "percentage-
of-completion" and, second, the "completed contract method" accounting conventions?
TABLE 12-7 Example of Financial Records of Projects
Net Profit on Completed Contracts (Amounts in thousands of dollars)
Job 1 $1,436
Job 2 356
Job 3 - 738
Total Net Profit on Completed Jobs $1,054
Status of Jobs Underway Job 4 Job 5 Job 6
Original Contract Price $4,200 $3,800 $5,630
Contract Changes (Change Orders, etc.) 400 600 - 300
Total Cost to Date 3,600 1,710 620
Payments Received or Due to Date 3,520 1,830 340
Estimated Cost to Complete 500 2,300 5,000
As shown in Table above, a net profit of $1,054,000 was earned on the three completed jobs.
Under the "completed contract" method, this total would be total profit. Under the percentage-
70
of completion method, the year's expected profit on the projects underway would be added to
this amount. For job 4, the expected profits are calculated as follows:
Current contract price = Original contract price + Contract Changes
= 4,200 + 400 = 4,600
Credit or debit to date = Total costs to date - Payments received or due to date
= 3,600 - 3,520 = - 80
Contract value of uncompleted = Current contract price - Payments received or due
work = 4,600 - 3,520 = 1,080
Credit or debit to come = Contract value of uncompleted work - Estimated Cost to
Complete
= 1,080 - 500 = 580
Estimated final gross profit = Credit or debit to date + Credit or debit to come
= - 80. + 580. = 500
Estimated total project costs = Contract price - Gross profit
= 4,600 - 500 = 4,100
Estimated Profit to date = Estimated final gross profit x Proportion of work complete
= 500. (3600/4100)) = 439
Similar calculations for the other jobs underway indicate estimated profits to date of $166,000
for Job 5 and -$32,000 for Job 6. As a result, the net profit using the "percentage-of-
completion" method would be $1,627,000 for the year. Note that this figure would be altered in
the event of multi-year projects in which net profits on projects completed or underway in this
year were claimed in earlier periods
.
71
72
ESTIMATING AND
TRACKING
PROJECT COSTS
Estimating and Tracking Project Costs
73
During the execution of a project, procedures for project control, Percentage of Completion and
record keeping become indispensable tools to managers and other participants in the Project
Management process. These tools serve the dual purpose of recording the financial transactions
that occur as well as giving managers an indication of the progress and problems associated
with a project. The problems of project control are aptly summed up in an old definition of a
project as "any collection of vaguely related activities that are ninety percent complete, over
budget and late." The task of project control systems is to give a fair indication of the existence
and the extent of such problems.
In this chapter, we consider the problems associated with resource utilization, accounting,
monitoring and control during a project. In this discussion, we emphasize the project
management uses of accounting information. Interpretation of project accounts is generally not
straightforward until a project is completed, and then it is too late to influence project
management. Even after completion of a project, the accounting results may be confusing.
Hence, managers need to know how to interpret accounting information for the purpose of
project management. In the process of considering management problems, however, we shall
discuss some of the common accounting systems and conventions, although our purpose is not
to provide a comprehensive survey of accounting procedures.
The Cost Control Problem
The limited objective of project control deserves emphasis. Project Cost control procedures are
primarily intended to identify deviations from the project plan rather than to suggest possible
areas for cost savings. This characteristic reflects the advanced stage at which project control
becomes important. The time at which major cost savings can be achieved is during planning
and design for the project. During the actual project execution, changes are likely to delay the
project and lead to inordinate cost increases. As a result, the focus of project control is on
fulfilling the original design plans or indicating deviations from these plans, rather than on
searching for significant improvements and cost savings.
Finally, the issues associated with integration of information will require some discussion.
Project management activities and functional concerns are intimately linked, yet the techniques
used in many instances do not facilitate comprehensive or integrated consideration of project
activities. For example, schedule information and cost accounts are usually kept separately. As
a result, project managers themselves must synthesize a comprehensive view from the different
reports on the project plus their own field observations. In particular, managers are often forced
to infer the cost impacts of schedule changes, rather than being provided with aids for this
process. Communication or integration of various types of information can serve a number of
useful purposes, although it does require special attention in the establishment of project
control procedures.
74
The management of project costs can be the most complicated, political, (and tedious) element of the
project management process. But, costs have to be controlled, for the sake of IT credibility, and the
overall fate of current and future projects. There are three primary steps to project cost estimating:
• To identify project cost factors.
• To estimate cost values and create a budget.
• To track costs and monitor variances.
Step #1 Identifying Cost Factors:
While cost factors will vary based on project characteristics and business circumstances, in general,
project costs can be viewed from four basic perspectives:
Resource Costs: the costs involved in staffing a project, which can include:
• Salary
• Benefits
• Outsourcing Contracts
• Temporary Staffing
• Overtime
Asset Costs: the costs of asset acquisition, usually involving tangible assets that are used to create or
implement project deliverables, which can include:
• Hardware
• Software
• Peripherals
• Infrastructure
• Telecommunications Equipment
• Installation Tools
Overhead Costs: the costs involved in maintaining the project environment, enabling project
completion, which can include:
• Office Supplies
• Premises (rent, utilities)
• Support Services
Project Specific Costs: costs of project execution, consumed in the completion of the project, which
can include:
• Travel
• Meals
• Meeting Costs
• Print Production & Photocopying
Step #2 Cost Estimates and Budgets:
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Project budgets quantify the expected costs associated with a project, and these budgets must be
based on a reasonable, realistic estimate of likely project costs and expenses. The estimation of
project costs is part science, and part logic, common sense and experience.
In fact, past projects can be the most valuable indicator of current project expenses. As project costs
are estimated, the following factors should be considered:
• The specific cost factors involved depending on the needs of the project.
• The costs of similar projects in the past.
• The opinions and feedback of project participants. When estimating costs, it is important to get
a broad spectrum of information, experience and opinion.
As you estimate costs, different tactics and formulas can be applied:
Since project cost estimates are just that .... estimates ...., it is unlikely that related project budget,
resulting from these estimates, can be etched in stone. Projects have a pulse, and the circumstances
and conditions under which projects occur can, and do change, impacting costs and expenses. To deal
with this uncertainty, project managers often apply a "contingency factor" when preparing a project
budget. This contingency factor normally consists of a 5 - 10% boost of anticipated project expenses
in order to uncover inexperience, as well as the "unknown" or the "unexpected".
Depending on the degree of internal experience with a given type of project, contingency reserves may
or may not be necessary. In addition, there is a philosophy that says that contingency reserves are
dangerous, leading to unwarranted project spending.
Contingency Pros:
• The extra funds are in hand when needed, without seeking further approval.
• Considering that project circumstances can change so frequently, contingencies readily
acknowledge this fact, facilitating project completion.
Contingency Cons:
• Contingency reserves make it easier to gloss over project costs, making budgets less precise.
• Contingency reserves encourage cost overruns, by granting easy access to additional funding
without a thorough consideration of alternatives..
Considering the duality of the contingency reserve issue, the prudent course of action may be the
creation of a contingency/change control budget, which can be tapped only when specific
circumstances are met. In this fashion, project estimates are left whole, without any "fudge" factor,
but contingencies are sufficiently addressed in order to facilitate project execution and completion.
Step #3 Tracking Costs and Cost Variances:
Once the project budget is created and approved, and the project is underway, costs and expenses
must be tracked to ensure that budget utilization matches project progress (are you spending what
you expected to spend based on how the project is proceeding?).
Budget variances can be tracked on a monthly basis, for a targeted project picture, as well as on the
basis of the project as a whole, for a global perspective.
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Calculating a Monthly Variance:
Monthly Budgeted Expenses - Actual Expenses = Variance
Variance Amount/Monthly Budget x 100 = Variance Percentage
Calculating a Total Project Variance:
Project Budgeted Expenses - Actual Expenses = Variance
Variance Amount/Project Budget x 100 = Variance Percentage
Once you identify any budget variances, you can look to the explanations.... is the variance positive or
negative and what does it all mean?
A positive variance: indicates that you are under budget, but appearances to the contrary not
withstanding, this is not necessarily a good thing. When project expenses are less than expected, this
may be a sign that the project is not proceeding according to plan, and may be behind schedule. In
addition, a positive variance may be a sign of ineffective estimating. On the other hand, this under
budget condition may be the result of legitimate changes, discounts, or cost saving measures.
A negative variance: indicates that the project is over budget. Depending upon whether the
negative variance is at a monthly or overall project level, this variance may be the result of serious
project problems, such as excessive changes, schedule delays or ineffective budgeting. If the negative
variance is on a monthly level, but the overall project is on track, there may not be an immediate
cause for concern.
Project Accounting Terms Brief
Contract Value: Agreed price agreed between Seller & Customer on the Contract.
Revenue: Percentage of work done (cost x EBF), basis for PoC.
Gross Margin: Contract Value – Contract Cost
Deviation: Difference in the delivered & booked Gross Margin (BGM)
EBF (Earned Billed factor): Contract value ÷ Contract Cost.
Unbilled: ITD Revenue – ITD Invoicing. (Unbilled is the first thing to be observed in
PoC Report), (ITD is Inception to date)
Aged Unbilled: Aged unbilled means any unbilled which stays for more then 365 days (As per the
accounting policy one have to provide for it)
Working Capital: Cash required to run a project.
Working Capital = unbilled + Account receivables – Account payable + Inventory – Advance
Project Cost: Seller’s Cost for a particular project (must be tracked through the
expenditure report in PoC)
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AFDA (Allow for Doubtful account): When AR( Accounts Receivables) passes certain months( for
eg.6 months) from the due date of then, it becomes AFDA.
Account Receivables: means current and aged/overdue receivables.
Account Payables: Is the amount which is payable to the Suppliers/Subcontractors
Backlog: Contract Value – ITD Revenue (ITD is Inception to date)
(YTD is Year to date)
Inventory: The material that we have in stores but is not charged/accounted for
any projects.
Receivables Balance: It is that amount which is invoiced to the client but is not
collected.
CTP: Contribution to Profit
CTP = Gross Margin – Selling & General Administrative Cost (SGA)
ROI: Return on Income
Operating Income ÷ working capital.
Project Manager’s Accounting Performance Matrix
Revenue (Actual v/s Forecast)
Invoice (Actual v/s Forecast)
Variation (Actual v/s Forecast)
Disputed Accounts
Aged Unbilled
AFDA
Gross Margin Deviation
Man Hours Utilization 90%
Base Reports for the Project Managers
PoC (Percentage Of Completion )
Man Hour Utilization
Gross Margin Deviation
Orders Booking
Aged Unbilled
AFDA
Billing Reconciliation
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Account Receivables
Each of the estimating methods used by the Project Manager described above require current
information on the state of work accomplishment for particular activities. There are several possible
methods to develop such estimates, including:
• Units of Work Completed
For easily measured quantities the actual proportion of completed work amounts can be
measured. For example, the linear feet of piping installed can be compared to the required
amount of piping to estimate the percentage of piping work completed.
• Incremental Milestones
Particular activities can be sub-divided or "decomposed" into a series of milestones, and the
milestones can be used to indicate the percentage of work complete based on historical
averages. For example, the work effort involved with installation of standard piping might be
divided into four milestones:
o Spool in place: 20% of work and 20% of cumulative work.
o Ends welded: 40% of work and 60% of cumulative work.
o Hangars and Trim Complete: 30% of work and 90% of cumulative work.
o Hydrotested and Complete: 10% of work and 100% of cumulative work.
Thus, a pipe section for which the ends have been welded would be reported as 60%
complete.
• Opinion
Subjective judgments of the percentage complete can be prepared by inspectors, supervisors or
project managers themselves. Clearly, this estimated technique can be biased by optimism,
pessimism or inaccurate observations. Knowledgeable estimaters and adequate field
observations are required to obtain sufficient accuracy with this method.
• Cost Ratio
The cost incurred to date can also be used to estimate the work progress. For example, if an
activity was budgeted to cost $20,000 and the cost incurred at a particular date was $10,000,
then the estimated percentage complete under the cost ratio method would be 10,000/20,000
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= 0.5 or fifty percent. This method provides no independent information on the actual
percentage complete or any possible errors in the activity budget: the cost forecast will always
be the budgeted amount. Consequently, managers must use the estimated costs to complete
an activity derived from the cost ratio method with extreme caution.
Systematic application of these different estimating methods to the various project activities enables
calculation of the percentage complete and Project Budhet or the productivity estimates used in
preparing job status reports.
In some cases, automated data acquisition for work accomplishments might be instituted. For
example, transponders might be moved to the new work limits after each day's activity and the new
locations automatically computed and compared with project plans. These measurements of actual
progress should be stored in a central database and then processed for updating the project schedule.
Example: Estimated Total Cost to Complete an Activity
Suppose that we wish to estimate the total cost to complete piping construction activities on a project.
The piping construction involves 1,000 linear feet of piping which has been divided into 50 sections for
management convenience. At this time, 400 linear feet of piping has been installed at a cost of
$40,000 and 500 man-hours of labor. The original budget estimate was $90,000 with a productivity of
one foot per man-hour, a unit cost of $60 per man hour and a total material cost of $ 30,000. Firm
commitments of material delivery for the $30,000 estimated cost have been received.
The first task is to estimate the proportion of work completed. Two estimates are readily
available. First, 400 linear feet of pipe is in place out of a total of 1000 linear feet, so the
proportion of work completed is 400/1000 = 0.4 or 40%. This is the "units of work
completed" estimation method. Second, the cost ratio method would estimate the work
complete as the cost-to-date divided by the cost estimate or $40,000/$ 90,000 = 0.44 or
44%. Third, the "incremental milestones" method would be applied by examining each
pipe section and estimating a percentage complete and then aggregating to determine
the total percentage complete. For example, suppose the following quantities of piping
fell into four categories of completeness:
complete (100%) 380 ft
hangars and trim complete (90%) 20 ft
ends welded (60%) 5 ft
spool in place (20%) 0 ft
Then using the incremental milestones shown above, the estimate of completed work
would be 380 + (20)(0.9) + (5)(0.6) + 0 = 401 ft and the proportion complete would be
401 ft/1,000 ft = 0.401 or 40% after rounding.
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Once an estimate of work completed is available, then the estimated cost to complete the
activity can be calculated. First, a simple linear extrapolation of cost results in an
estimate of $40,000/0.4 = $100,000. for the piping construction using the 40% estimate
of work completed. This estimate projects a cost overrun of 100,000 - 90,000 = $10,000.
Second, a linear extrapolation of productivity results in an estimate of (1000 ft.)(500
hrs/400 ft.)($60/hr) + 30,000 = $105,000. for completion of the piping construction.
This estimate suggests a variance of 105,000 - 90,000 = $15,000 above the activity
estimate. In making this estimate, labor and material costs entered separately, whereas
the two were implicitly combined in the simple linear cost forecast above. The source of
the variance can also be identified in this calculation: compared to the original estimate,
the labor productivity is 1.25 hours per foot or 25% higher than the original estimate.
Example: Estimated Total Cost for Completion
The forecasting procedures described above assumed linear extrapolations of future costs, based
either on the complete experience on the activity or the recent experience. For activities with good
historical records, it can be the case that a typically non-linear profile of cost expenditures and
completion proportions can be estimated. Figure below illustrates one possible non-linear relationships
derived from experience in some particular activity. The progress on a new job can be compared to
this historical record. For example, point A in Figure below suggests a higher expenditure than is
normal for the completion proportion. This point represents 40% of work completed with an
expenditure of 60% of the budget. Since the historical record suggests only 50% of the budget should
be expended at time of 40% completion, a 60 - 50 = 10% overrun in cost is expected even if work
efficiency can be increased to historical averages. If comparable cost overruns continue to accumulate,
then the cost-to-complete will be even higher.
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Figure Illustration of Proportion Completion versus Expenditure for an Activity
Concluded Note:
As you can see, project estimating and budget control is more than a process of numbers. As the
project budget is tracked, the results of the tracking process can be used to monitor project success,
and to highlight potential problem areas for further analysis and possible corrective action
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FAST TRACKING
Fast Tracking:
Fast tracking is a management technique used to ensure that projects are completed within the
shortest time possible. When projects are fast-tracked, it usually indicates that tasks have been
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arranged to take advantage of non-dependent activities that can occur simultaneously, thus shortening
the overall project timeline. But, there is more to fast-tracking than the sequencing of tasks and
activities.
Is fast-tracking appropriate for you and your current project?
Before you can safely fast-track a project, you must first address a few assumptions...
1. You must have a realistic schedule, with all tasks and activities properly identified.
2. You must be aware of all task dependencies (knowing which tasks must end before others can
begin).
3. You must have a solid grasp on project requirements, objectives and priorities.
4. You must have a good relationship with your end-users and management.
5. You must have a good process for tracking progress and managing risks and problems.
Once you can meet all these assumptions, you will then have to address your needs.... why do you
need to fast-track the project?
Fast-tracking can be appropriate under a number of circumstances and conditions. It is important to
note that fast-tracking has its risks ... most notably; a project that is on the fast track can be harder to
manage because of all the simultaneous activity. In addition, if and when problems occur, the
negative impact can be more serious considering the extent of activity underway. So, fast-tracking
should be carefully considered.
When is fast-tracking appropriate?
• The project has to be completed within the shortest time possible to meet required business
needs and objectives.
• The project has to be completed sooner than expected due to changing circumstances.
• The project is behind schedule and the remaining tasks have to be streamlined to make up for
lost time.
• The project is in trouble, and fast-tracking is needed to minimize further losses and damage.
When faced with the need to fast-track a project, the first thought may be to add resources, or even
more likely, to put in more work hours. But these options are not always productive or viable.
The application of additional staff resources, which may not even be a possibility, is often not a
solution. Under some project circumstances, no matter how many resources you add, certain tasks
can only be completed by a finite number of resources. Additional resources may only cause
confusion, and in fact, may impede, rather that promote progress.
Overtime is also a tricky proposition. While additional work hours may shorten an otherwise lagging
schedule, excessive overtime may backfire if staff burn-out sets in.
Considering these issues, fast-tracking may be best used as a strategic weapon, where you first look
to the project schedule and then the project itself to ensure that all efficiencies are being met.
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The Fast-Track Process
Step One: Understand your Goals & Capabilities
• Why do you need to fast-track?
• Are you looking for project efficiencies or to solve problems?
• Do you have the skills and resources needed to properly manage this project once it is on the
fast-track.
Step Two: Examine the Project Schedule
• Identify hard dependencies (those tasks which have a "finish - start" relationship that cannot be
changed).
• Identify soft dependencies (those tasks which can possibly be modified to remove
dependencies)
• Identify concurrent tasks (tasks having no dependencies and can occur simultaneously). This is
the key to fast tracking.
Step Three: Re-work the Project Timeline
• Having identified concurrent tasks, create a schedule that allows these tasks to be completed in
the shortest time possible.
• Break down soft dependencies into task sub-sets, removing dependencies to shorten the
project timeline.
• Focus on the remaining hard dependencies, assigning rotating staff, working in shifts, to allow
more time to be spent on each task, thus shortening the overall timeline.
Step Four: Examine Alternatives
• Can additional resources be added, and to which project tasks can those resources best be
applied?
• Can additional work hours (overtime) be authorized, and how should those additional hours be
applied?
• Can the scope of the project be changed to shorten the project schedule?
• Can deliverables functionality be reduced to shorten the project schedule?
• Can the project be outsourced in order to shorten the project schedule?
Step Five: Weigh Alternatives
As you examine and consider these fast-track alternatives, you need to weigh each alternative
against....
• Time: How much time do you need to save?
• Gain: What benefits will be realized from fast-tracking?
• Costs: What costs will be incurred from fast-tracking?
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• Impact: What will the impact be on staff, and on other projects already underway?
Step 6: Seek Consensus
Before you fast-track a project, you should ensure that your analysis is complete, and that you have
the buy-in of those who would be impacted by the fast-track decision, including staff and end-users.
You may need to fast-track without total agreement, but cooperation will be greatly enhanced if all
points of view are considered.
Step 7: Monitor Progress and Track Problems
Once in fast-track mode, effective issues tracking and problem management becomes essential. By
definition, a fast-track project will be proceeding at an aggressive pace, and there will be significant
activity going on at once. The luxury of finishing one task and then moving on the next will be gone,
so the ability to track multiple tasks and manage issues and problems will be critical to success.
Concluded Note:
In all likelihood, every project customer wants their project completed as quickly as possible. In and
of itself, this is not a reason to fast-track. Depending upon the type of project, the experience of the
project team and the results desired, fast-tracking may not be an option. Sometimes a project must
proceed along a timeline that cannot be shortened, despite the best intentions. However, when used
with discretion and efficiency, fast-tracking can be a productive means for responding to changing
business needs and project circumstances.
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POME Prescribe:
The most used four-
four-letter
word...........
"LOVE"
Value it.
87
MECHANICS OF
PERCENTAGE OF
COMPLETION (PoC)
ACCOUNTING
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Mechanics of Percentage-of-Completion Accounting:
In the simplest sense, a ratio of the percentage of completion is determined and applied to the
expected gross profit on the contract to determine the gross profit and revenue to be
recognized in the financial statements.
Two typical methods of measuring the percentage of completion are:
• The cost-ratio method, which uses the ratio of actual contract costs incurred during the
reporting period to total estimated contract costs.
• The effort-expended method, which uses the ratio of some measure of the work input during
the reporting period, such as labor hours, machine hours or material quantities, to the total units
of that measure of work required to complete the contract. This method assumes that profits on
the contract are derived from the contractor's efforts rather than from the acquisition of materials
or other tangible items.
Many other techniques will be found in practice, including combinations of the above, or the application
of these methods to different phases and cost codes of the same contract.
For a remodeled, the most important subsidiary ledger is job cost, which accumulates the costs for
each job. The sum of the costs entered in this ledger must agree with the general ledger for a variety
of reasons:
• When jobs cross year-ends, the job-cost subsidiary ledger survives the closing of the books for
the year and is the only record covering the entire life of the job.
• It is the only reliable way of actually keeping track of cost on a job because it is controlled by
the general ledger's balancing system (part of internal control).
Under the percentage-of-completion method, all cost and progress billing against a contract are
accumulated in revenue and cost accounts of the general ledger and the job-cost ledger until the
period in which the contract is completed, at which time the costs and billings are transferred to
income and expense accounts and the job's subsidiary record is closed out.
At the end of the accounting period, an adjusting journal entry must be prepared to adjust the revenue
recognized on jobs that are in progress based upon the estimated percentage of job completion as of
that date. That journal entry is reversed on the first day of the next reporting period.
In computing percentage of completion, only four items need to be pulled from your job-cost
accounting records.
• Cost to date = total costs incurred on the job from inception through the end of the accounting
period.
• Billings to date = total billings (draws) taken on the job from inception through the end of the
accounting period.
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• Current contract = original contract plus change orders executed through the end of the
accounting period.
• Total estimated costs = current estimate of total anticipated costs on the job. This estimate
should be updated to account for any projected budget overruns or under runs as well as include
estimated costs on all change orders included within the current contract amount.
POME Prescribe:
About What You Eat
Remember GIGO? Garbage in, Garbage out: Eat low-energy fast food and be prepared for irritability, mood
swings, and blood sugar swings. Eat healthy, wholesome and nutritious meals to bring out the best in you.
The fastest spreading six-
six-letter
word...
"RUMOUR"
Ignore it.
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CONFRONTING
UNEXPECTED
PROJECT DELAY’S
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Confronting Unexpected Project Delays
All projects, regardless of size, scope or complexity, are burdened by deadlines and uncertainty. This
phenomenon is best expressed in two well known, time tested adages --- the laws of Parkinson and
Murphy.
Parkinson's Law, speaking to project deadlines, tells us that "work expands to fill the space
allotted".
Murphy's Law, speaking to uncertainty, tells us that "whatever can go wrong will, and most
likely at the worst possible time".
This is the reality faced by all project managers. No matter how much time you have for a project, it
will likely be consumed, and no matter how well you plan, you must always find a way to handle the
unexpected. Such is the nature of projects and the purpose of project management.
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Scheduling and project planning is an activity that continues throughout the lifetime of a project. As
changes or discrepancies between the plan and the realization occur, the project schedule and cost
estimates should be modified and new schedules devised. Too often, the schedule is devised once by a
planner in the central office, and then revisions or modifications are done incompletely or only
sporadically. The result is the lack of effective project monitoring and the possibility of eventual chaos
on the project site.
On "fast track" projects, initial construction activities are begun even before the facility design is
finalized. In this case, special attention must be placed on the coordinated scheduling of design and
construction activities. Even in projects for which the design is finalized before construction begins,
change orders representing changes in the "final" design are often issued to incorporate changes
desired by the owner.
Periodic updating of future activity durations and budgets is especially important to avoid excessive
optimism in projects experiencing problems. If one type of activity experiences delays on a project,
then related activities are also likely to be delayed unless managerial changes are made. Construction
projects normally involve numerous activities which are closely related due to the use of similar
materials, equipment, workers or site characteristics. Expected cost changes should also be
propagated thoughout a project plan. In essence, duration and cost estimates for future activities
should be revised in light of the actual experience on the job. Without this updating, project schedules
slip more and more as time progresses. To perform this type of updating, project managers need
access to original estimates and estimating assumptions.
Unfortunately, most project cost control and scheduling systems do not provide many aids for such
updating. What is required is a means of identifying discrepancies, diagnosing the cause, forecasting
the effect, and propagating this effect to all related activities. While these steps can be undertaken
manually, computers aids to support interactive updating or even automatic updating would be helpful.
Beyond the direct updating of activity durations and cost estimates, project managers should have
mechanisms available for evaluating any type of schedule change. Updating activity duration
estimations, changing scheduled start times, modifying the estimates of resources required for each
activity, and even changing the project network logic (by inserting new activities or other changes)
should all be easily accomplished. In effect, scheduling aids should be directly available to project
managers. Fortunately, local computers are commonly available on site for this purpose.
Whether mandated or self imposed, deadlines bring clarity to a project. For the customer, deadlines
set expectations for product delivery. For the project team member, deadlines set expectations for
work effort and performance. For the project manager, deadlines create a time bound framework for
management, providing working goals, benchmarks and milestones. But, deadlines are not goals in
and of themselves. The value of a project is determined by the business need, and it is the project
value that should drive the project.
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So, is it the worst of all situations if a deadline is missed and the project is delayed? Not necessarily.
The impact of a missed deadline and delayed project will vary based on many factors. In some cases,
delays can be fatal to a project. But, in most cases, missed deadlines and delays can be managed and
mitigated, allowing the project to continue, even if in an altered state. The key, as usual, is advance
preparation.
Advance preparation for unexpected events sounds like a contradiction of terms. After all, how can
you prepare for the unexpected? Well, it all depends on how you define 'unexpected'. In project
management terms, delays are not unexpected in and of themselves. In fact, delays are quite
common in projects. The 'unexpected' nature of any project delay relates not to possibility, but to
source, probability and timing. Certain types of delays are highly predictable (i.e. late delivery from
outside sources), and can be factored into the schedule before project work begins. Other delays can
be foreseen, but cannot reasonably be factored into the schedule in advance. If every possible delay
was factored in to a planned schedule, planning would take too long, projects would be deemed too
lengthy and costly, and would never be approved.
Predictable delays (those deemed likely by circumstance and experience) can be factored into the
project via a documented risk management plan. When the risk management plan is prepared, risks
are identified and evaluated to determine the source of likely project delays, and contingent responses
are developed. If the predicted delays do come to fruition, the risk management plan provides a
ready-to-use course of action.
An unexpected delay is one that was not predicted as a likely event, and is therefore not included in
the schedule or risk management plan. To better handle unexpected delays, four essential factors
must be in place:
Be Aware. Every project has it's own rhythm and flow. Using your knowledge of project goals,
priorities, and project team dynamics, you can pick up on the warning signs of pending delays, and
you will be in a better position to make the tough decisions.
Schedule Wisely. Unexpected delays can be minimized through realistic scheduling. Every project
should begin with a reasoned, workable project schedule with identified dependencies, benchmarks,
milestones and a manageable critical path.
Follow a Process. Every project should be managed with established, tested procedures for timely,
meaningful status reporting. Status reports, whether formal or informal, provide key information to
identify missed deadlines and potential project delays.
Communicate. Communication is a key element of project success, essential for managing customer
expectations and related conflicts. When facing project delays, every project manager must be able to
communicate effectively with customers, relying on strong relationships to work through related issues
and problems to salvage the project.
Once you suspect that a project deadline will be missed, and the project may be delayed, it is time to
take action. The following five step plan takes you through a complete process for managing
unexpected project delays:
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Five Step Management Plan.....
• Acknowledge the missed deadline and resulting delay as soon as possible. When
project problems first appear, you must act quickly to avoid project delays whenever possible.
But, once a deadline can't be met, and the delay seems inevitable, you must also act quickly to
manage the consequences. Accept the facts, accept the responsibility, avoid blame, and get
ready to respond.
• Gather the right resources. In order to properly manage a project delay, you must to bring
all the necessary resources together in order to analyze the problem and make appropriate
decisions. Depending on the project and the nature of the delay, these resources can include
project team members, specialists, vendors, customers and other key decision makers.
• Consider the consequences. Delays and missed deadlines can be accepted as long as the
value of the project exceeds the consequences of the delay. When evaluating consequences,
the current project must be considered, as well as any other projects sharing the same
resources. Depending upon the nature of the project and the timing of the delay, varied
consequences will result. In all likelihood, delays will impact project costs, resource availability,
organizational prestige, customer relationships, legal requirements, and business
requirements. On the other hand, delays also present opportunities for project refinement, to
re-think decisions that may have led to problems, take advantage of changing business
circumstances, and possibly improve project deliverables. These positive consequences must
be identified along with the negatives, to create a full picture of the delay, and to minimize
negative impact, while maximizing opportunity.
• Identify and evaluate the alternatives. Once consequences are fully analyzed, alternative
remedies must be examined and vetted. Depending upon needs and circumstances, multiple
solutions are possible, including extending project deadlines, modifying deliverables, retaining
additional resources, or changing project scope.
• Communicate, negotiate and decide. Once alternative remedies have been identified,
acceptance and approval must be obtained from all key project stakeholders. In order to
ensure informed consent, a complete and revised project plan must be developed, incorporating
the delayed timeline and all related contingencies. In addition, the delay must be explained
and justified as needed, specifying causes, repercussions, and benefits. Whenever a delay is
requested, it is important that the approving stakeholders maintain (or regain) confidence in
the project and the project team. Problems should not be sugar coated. It is best to admit to
any errors in judgment or planning to show that lessons have been learned, corrective action
has been taken, and the project is still viable.
Concluded Note:
Every project manager strives for control over uncertainty. Control is achieved in degrees - through
effective planning, realistic scheduling, and meaningful risk management. And, while it may seem
that unexpected delays are indicative of a project that is 'out of control', that is not always the case.
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Yes, missed deadlines and project delays are often caused by poor performance, poor planning, or a
lack of proper management. But, as projects play out, changing circumstances can also easily lead to
project delays. In the end, project completion is the goal, and control can be regained with a
balanced, flexible approach, designed to resolve problems, and get the project back on track.
POME Prescribe:
five--letter
The most pleasing five
word.......
"SMILE"
Keep it.
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PROJECT QUEUE:
KEEP
CUSTOMERS
INFORMED
AND SUPPORTIVE
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Project Queue Keep Customers Informed and Supportive
There is typically no shortage of project work for the average Projects organization. Other than
ongoing systems management, support and administrative operations, much of what goes on in
Operations is treated as project work. While duration, complexity and degree of end-user interest may
vary, eventually, each project will compete for its share of attention.....thus presenting the Project
manager with a scheduling dilemma, and a public relations nightmare.
To mitigate this situation, effective and proactive communication is vital, and, the Project Queue can
be a useful tool in that communications process.
Consider the benefits of a project queue....
• The project queue establishes a track record for projects planned, completed and underway.
• The project queue documents key assumptions and expected deliverables for all projects.
• The project queue demonstrates the extent to which team is involved in key business
initiatives.
• The project queue illustrates its attention to business objectives in planning and choosing
projects.
But, also weigh the risks......
A project queue may raise questions and conflicts about chosen projects, expectations and priorities.
However, this is not necessarily as bad as it sounds; if project scope and objectives have not been
properly structured and defined, it is better to find out sooner, rather than later.
Consider the content….
Whether your queue is on paper, distributed via e-mail or created on the company intranet, there are
a three steps to meaningful content:
• Be brief and to the point
• Emphasize project results and benefits
• Include the basics .....
WHO: who is the project for, and who is involved in planning and execution?
WHAT: what is the project about, including scope & objective?
WHERE: where will the project take place?
WHEN: when will the project start and end?
WHY: the reasons and benefits to be realized?
Suggested Topics and Sections for the Project Queue….
Project Demographics
List the name of the project & any related subprojects, project location, Project Manager name and
contact information (phone number, location, e-mail).
Project Sponsor & Customer
List the names and contact information for project sponsors, vendors and customers.
98
Project Description
Describe major project goals, objectives and scope of work - be as concise as possible.
Key Assumptions
State key assumptions forming the basis for successful project completion.
Project Timing & Milestones
Identify starting and ending dates for major deliverables and milestones.
Status
State current project status, and include descriptions of next steps and phases.
Also needed to include the technical status in break up wise and also over all status with dependencies
with time lag and lead subjections.
References
To keep the queue brief and to the point, include references to documents and files providing more
detailed project information.
Produce the result.....
Since the Project Queue is used to publicize current and future projects, carefully consider the method
of production and distribution. Choose the method that will both draw the most attention and also
increase the likelihood that the queue will actually be read. You will also need to plan distribution
frequency and schedule content updates. Depending on the nature of your projects, you may choose
to produce monthly or quarterly queue updates, with more frequent updates for critical projects.
In addition, be sure to allocate sufficient time and resources for queue preparation, but remember to
keep it simple. To that end, establish a standard format, and choose a readily accessible system for
production and distribution, one that allows for easy edits and updates. Time devoted to queue
preparation should be focused and limited.
Once you weigh the value, prepare your content, and determine the method and frequency of
distribution......get ready to queue it up!
99
Subject Customer Acceptance
Purpose To obtain final customer acceptance of the completed works
If the customer has been involved in the test & commissioning activities, this process should
be a simple formality, if not then the customer will need to be offered the completed
Scope system, or parts thereof, for inspection, test and/or trial. Any matters arising that either
prevent acceptance, or cause acceptance to be issued on a conditional basis, must be
captured as part of the Defect and/or Change Control Registers.
100
STEP WHO NOTES
Site Verification Plan, Commissioning Records, Defects Register template,
INPUT -
Design Change Register
Release System for Customer Trails
When the system, or parts thereof, are considered practically
complete and able to be used for the intended purpose, the
Project
customer should be notified in writing, with an offer to witness /
Manager /
1 accept the system, or part thereof.
Project
Engineer If there are known defects or outstanding works at this time that
are likely to influence the customer's acceptance or rejection of
the offer to witness & accept the system, these should be
identified (refer to Defect & Outstanding Works Register)
Project
2 Agree Operational Trials / Acceptance Test Requirements
Manager /
101
Project & Criteria
Engineer Where practicable, try to gain customer approval based upon
attendance at or supply of prior test & commissioning results /
records.
In the case of large or complex system/s, detailed acceptance
test requirements and criteria should have been documented
and agreed in advance in the Site Verification Plan. If not, then
this will need to be completed. A schedule may be required to
co-ordinate activities if many parties are involved over an
extended period of time.
Prepare for Operational Trials / Acceptance Tests
• Ensure roles & responsibilities are communicated clearly
Project • Authorised operators & verifiers have adequate system access -
3
Engineer particularly if operational trials are to be conducted by persons other
than Company
• Documentation is prepared ready to record test outcomes
Conduct Operational Trials & Acceptance Tests
• Ensure results & outcomes are captured adequately; to enable
validation against the appropriate acceptance criteria
• Where necessary, mark up as-built records to capture any adjustments
Project
or fine tuning made during the trials / tests. This may include changes
4 Engineer /
to:
Customer
• Functional Specification
• Software Configuration Manual
• Detailed design schedules
• Detailed design drawings
Software backup / save
Project
• If any changes were made to configurable software settings and/or
5 Engineer /
parameters during the trials / tests then a software backup must be
Technician
taken
• If the trials / tests occur over an extended period of time then multiple
102
periodic backups may be necessary to minimise risk
Document Defects or Changes
• If defects are identified during the Customer Acceptance process,
ensure these are captured in the Defect & Outstanding Works Register
Project for appropriate action
6
Engineer • If changes are requested during the Customer Acceptance process, or
the customer identifies "defects" which may require a design change to
be implemented, ensure these are captured in the Change Control
Regsiter.
Customer Acceptance, Software backup, Software Revision Register, As-Built
OUTPUT -
mark up documents, Defects Register, Design Change Register
Subject Customer Satisfaction Survey
Purpose To provide a framework for the effective management of customer relationships.
103
1 Customer Introduce appropriate Customer
Representative, Satisfaction Measurement form for
Key Account the following areas to the Customer
Manager/Project at the Kick Off meeting or other
Manager appropriate time.
• Projects
• Service
Determine whether the Customer is
willing to participate in a survey
conducted by the Company Customer
Advocate.
If the customer is willing to
participate in the customer survey,
an on-site audit should be scheduled
to coincide (at least once per annum)
with the customer survey. The on-
site audit will be initiated as part of
the customer survey follow up
process.
• Customer Selection Criteria for inclusion in
survey process
2 Customer, The Customer should complete a
Customer Kick Off sheet. This will establish the
Representative, level of importance for each item
Key Account throughout the project or service
Manager agreement and the frequency of the
survey.
Once the Customer completes the
form, the Customer or
the Representative should send it to
the Customer Advocate, via e-mail,
fax or internal mail.
104
3 Customer, Customer Advocate will contact
Customer nominated Customer and conduct
Advocate survey by phone or e-mail, based on
the survey frequency agreed to by
the Customer. The Customer
Advocate will e-mail results to the
nominated Customer Representative
or Key Account Manager.
The Customer Advocate will
distribute survey summaries to all
locations and publish the
consolidated results on the Intranet.
4 Customer, The nominated Customer
Customer Representative or Key Account
Representative Manager should review the survey
and Key Account results with appropriate people and
Manager. the Customer. Corrective action
should be generated as required. At
the time of review, an on-site audit
should be initiated so as to ensure
that at least once per annum the on-
site audit process is used in
conjunction with the customer survey
follow-up process.
5 Customer Periodically (at least annually) or
Advocate, following the completion of a project,
Customer, Key review customer satisfaction
Account Manager information and trends with
and Senior Management and Customers as
Managers required.
Review measurement ratings for
105
ongoing importance and
appropriateness
Subject Complaint Handling
Purpose To provide a framework for handling of customer complaints
Scope Applicable to all customer complaints received throughout the business
106
Step Who Steps/Notes
1 Complaint • Identify yourself, listen, record details and determine what
Recipient the customer wants.
107
(Originator) • Confirm the details received.
• Empathize with the customer in a courteous manner
• Do not attempt to lay blame or be defensive
• In as many cases as possible, all verbal complaints should be
processed immediately.
• At a minimum, customers receive a preliminary reply at once,
final decisions are made within two weeks.
• In the case of written complaints, customers should receive a
preliminary reply within two days, and a final reply on the
matter within two weeks.
2 Complaint • If the complaint is simple and can be processed immediately,
Recipient raise an OFI and nominate yourself as the Owner.
• If the complaint is complex, assign a team leader, account
(Originator)
manager or the Customer Advocate as the Owner to help you
resolve the issue.
• If the complaint is a process issue, raise a Corrective Action
OFI or CAR to address the root cause.
3 Owner / Originator • Investigates the complaint
• In conjunction with the Originator, formulates a solution
considering
o warranty/contractual obligations
o customer's expectations
o cost/benefit of alternative solutions
o the comprehensiveness and fairness of the solution
o ability to perform the solution.
4 Owner / Originator • The Owner explains the course of action available to the
customer
• Originator/Owner ensure that the customer is informed the
complaint is receiving attention, without creating false
expectations.
5 Owner / • Advise the customer of steps taken
108
Originator • Check the customer is satisfied with the proposed action and,
if not, advise alternative courses of action.
• Provide acknowledgement e.g. a thank-you letter, a
telephone call.
6 Owner • Close the OFI or CAR
7 Originator • Follow up as appropriate and monitor to ensure that the
customer remains satisfied and receives feedback.
POME Lighter Vein:
Know Your Customers:
A disappointed salesman of Coca Cola returns from his Middle East assignment.
A friend asked, "Why weren't you successful with the Arabs?"
The salesman explained
"When I got posted in the Middle East, I was very confident that I would make a good sales pitch as
Cola is virtually unknown there. But, I had a problem I didn't know to speak Arabic. So, I planned to
convey the message through three posters...
First poster: A man lying in the hot desert sand...totally exhausted and fainting.
Second poster: The man is drinking our Cola.
Third poster: Our man is now totally refreshed.
109
And Then these posters were pasted all over the place
"Then that should have worked!" said the friend.
"The hell it should had!? said the salesman. didn't realize that Arabs read from right to left"
110
RESOURCE’S
BOTTLENECK
Resource’s Bottleneck:
Resource constraints can have a serious impact on your project schedule. Optimally, POME
recommends project schedules should be designed to maximize concurrent tasks and minimize serial
111
tasks. That is the goal. Of course, with goals come challenges and limitations. In the case of project
scheduling, the key challenge is to maintain schedule optimization in the face of resource
dependencies and constraints.
Resource leveling is an approach to project scheduling whereby task start and end dates are
determined by the availability of internal and external resources. There are two sides to this process.
The technical side of resource leveling is the formulaic manipulation of the project schedule to avoid
resource over allocation. Over allocation occurs when one or more resources are assigned to more
work than they can complete in their available work hours. Resource leveling will resolve over
allocations by moving task start and end dates, or extending task durations in order to suit resource
availability.
Except for the simplest projects, resource leveling is far too complicated for manual processing, and is
best aided by computer software. Leveling formulas must be able to examine the entire schedule from
multiple perspectives, considering task relationships and dependencies, dynamically setting start and
end dates according to identified resource levels.
But no software can handle the strategic elements of resource leveling.
A project manager needs to insure that resources required for and/or shared by numerous
activities are adequate. Problems in this area can be indicated in part by the existence of
queues of resource demands during operations. A queue can be a waiting line for service.
In general, there is a trade-off between waiting times and utilization of resources. Utilization is
the proportion of time a particular resource is in productive use. Higher amounts of resource
utilization will be beneficial as long as it does not impose undue costs on the entire operation.
For example, a welding inspector might have one hundred percent utilization, but workers
throughout the jobsite might be wasting inordinate time waiting for inspections. Providing
additional inspectors may be cost effective, even if they are not utilized at all times.
Strategic resource leveling begins before the first task is even 'put to paper'. In the technical sense,
resource leveling is a tool, working the numbers to physically create a realistic, workable schedule.
But, there has to be a strategic basis for these scheduling decisions.
In all likelihood, the basis for resource leveling will be set during the project initiation phase, when key
project variables are defined, and project management strategies are established. At this point, you
will have to answer the following questions:
• What types of resources will be needed to complete this project?
• Will you have unlimited access to these required resources (in terms of numbers, hours and
skill sets)?
• If your access is not unlimited, how will you manage the project schedule considering these
resource limitations and constraints?
Unless you are very, very lucky, project resources are rarely unlimited. In most cases, project
managers have to compete for resources, and eventually compromise on one or more project elements
112
in response to resource constraints. The question is how? And, as usual, you will be in a stronger
position if you lay the proper strategic foundation during the project initiation phase. Left unmanaged,
resource constraints can threaten project success. You have to plan appropriately to ensure that
constraints are properly defined, communicated and mitigated. Above all, you have to have
stakeholder buy-in to any mitigating solutions. This planning process can be summed up in four steps:
1. Create a realistic estimate of your project resource needs. Project resource needs are defined
by several factors. How many resources will you need to complete this project by the requested due
date? How many work hours will be required? What types of skills are required? How will these
resources be acquired? What will they cost and can you afford them?
2. Identify your project resource gap (the variance between required resources vs. available
resources) according to resource numbers, skills and work hours.
3. Consider the possibilities for managing the resource gap. Depending upon individual
circumstances, you can take one or more approaches to resource gap management, including adding
more resources, changing the project or elongating the schedule.
4. Negotiate for your best position. In order to negotiate, you must have a firm grasp on internal
project and organizational dynamics. How important is this project to your organization? How does
your project rank in value compared to other projects? What are your scheduling flexibilities and how
will you convince stakeholders that any resource related scheduling adjustments will not diminish
overall project value?
Negotiation is the key element of this process. In most cases, resource leveling will extend the
duration of your project. If you have to extend the project schedule, you must have the support of
your project sponsors and customers. As you approach your negotiations for resources, you need to
communicate the consequences of resource constraints. If the project completion date is fixed in
stone, you will need to negotiate for additional resources, or make your case to modify the project in
some way to enable completion with available resources.
Assuming resource leveling is required, you will also need to identify your scheduling flexibilities. This
is the point at which the strategic and technical elements of resource leveling come together.
Resource leveling is a complex process, even with the aid of software tools. Most software packages
provide for varied settings for resource leveling, to allow customized leveling parameters based on
individual project needs. Before you level resources, you need to have a full understanding of how
your software works, and how individualized settings will influence leveling results. And you must
select and apply those settings in light of project goals, scheduling needs and related resource
constraints. You have to make it work.
Concluded Note:
In summary, in order to properly manage project resource gaps, you must get an early start, long
before project work begins. This will give you a tremendous advantage, as you be able to fully
consider, vet and communicate all viable alternatives. And, when the time comes to prepare your
113
schedule, and to make the tough decisions, you will be armed with the information you need, ready to
use the tools you have.
POME Prescribe:
The hardest working seven-
seven-
letter word..
"SUCCESS"
Achieve it.
114
PROJECT STATUS
REPORTING
115
Project Status Reporting
Project managers walk a fine line when it comes to requesting (and actually getting) status reports
from staff members. On one hand, status reporting procedures should not be too cumbersome or
intrusive. Project staff may come to resent the attention, and the perceived lack of trust and
confidence. However, no project manager can afford to be caught unaware by performance or
scheduling problems. He or she must rely on the team to provide timely, effective and realistic
feedback. And the quality and quantity of that feedback cannot be left to chance.
While status reporting requirements may vary by project complexity, duration and scope, regular
reporting routines should always be established. These routines should be set as soon as the project
starts, should always be enforced consistently, and should include the following:
Communication Guidelines:
The specification of meeting methods and protocols, including the usage of group meetings, "one on
one's", phone conferences, email, memos, forms or project management software.
Content Guidelines:
The specification of the format and content of status reporting, including information to be included in
reports and standardized agenda formats for meetings.
Scheduling Guidelines:
Determination of the expected frequency, timing and duration for meetings, phone conferences and
the submission of status reports. While flexibility must be considered, these guidelines can help staff
members better allocate their time, and will help the project manager schedule sufficient time for
status review, analysis and feedback.
Feedback Guidelines:
Status reporting should be a two way street. Staff status reports should be acknowledged, and
feedback should always be provided whenever appropriate. In addition, a regular routine for
management reporting should be established to keep team members advised on the status of global
project issues.
Consolidation Guidelines:
Depending on the size and organization of the project team, status report consolidation may be
necessary and appropriate. For example, individual status reports may have to be viewed as a whole
if progress statistics are to have any real meaning.
Emergency Escalation Guidelines:
If an important deadline is missed on Tuesday, that news should not be held for the Friday status
report. Policies and guidelines should be established for emergency communication and problem
escalation.
No matter what format and process is chosen for status reporting, it will never be an exact science.
Since projects are completed by people, behavioral factors must always be considered. Although well
intentioned, team members may sometimes be reluctant to give totally accurate feedback. After all,
no one likes to deliver bad news. Project staff may honestly feel that problems can be solved, or that
116
individual delays can be overcome (without management intervention). It may just seem easier that
way.
To combat this situation, a project manager needs to not only set the rules for status reporting, but
also set the stage for honest and realistic reporting through the following three steps ...
• Combine reporting methods for an effective blend of meetings and written status reports. Staff
members may be even more reluctant to deliver bad news in a meeting, and a written report,
even a brief one, can provide a much needed "heads-up" to a project manager.
• Remember that formal status reporting is not a replacement for personal communication.
Informal discussions and impromptu brainstorming should always be encouraged. Important
information can sometimes be uncovered at the most unexpected times.
• Pave the way for open communication. Be sure to include standardized questions in your status
report format, designed to get to the heart of the matter in status reporting - is the work on or
off track? Consider the following example:
Select the statement that best describes the current status of assigned tasks?
a. I am exactly where expected
b. I am slightly behind, but can make up the time by ___________ (fill in the blank)
c. I am ahead of schedule
d. I am behind schedule and need help
This direct approach can facilitate the delivery of bad news, in sufficient time for corrective action.
And this, after all, is the ultimate goal of status reporting.
Site Status Sample:
117
Weekly Status Report:
Project Name:
Team Member Name:
Date:
Work completed this week:
Work to complete next week:
What’s going well and why:
What’s not going well and why:
118
Suggestions/Issues:
Project changes
Subject Installation Review
To periodically review the progress of the installation works to minimise risk of rework and
Purpose
delivering non-conforming products and solutions
The frequency and scope of installation reviews shall be determined in response to the level
Scope
of risk
STEP WHO STEP NOTES
Site Verification Plan, Risk Plan, Installation Schedule, Defect register, 'For
INPUT -
Construction' documents, Change Control register
Determine scope & frequency of installation reviews
Review the Site Verification Plan to ensure that the frequency
and scope of installation reviews is an adequate response to the
Project
1 actual level of risk of defects or rework occuring during the
Engineer
installation process, including administrative rework arising
through lack of adequate record keeping during the installation
process.
Communicate the Installation Review plan
Communicate & agree the installation review plan with all
relevant stakeholders, including:
Project
2
Engineer • Scope & timing of proposed installation reviews
• Records to be used / produced
• Roles & responsibilities
3 Project Conduct installation reviews
119
Engineer / Conduct inspections /reviews of the works on a work package-
Technician by-package basis. The objective of the reviews shall be to
minimise risk of defects and rework by:
• Ensuring compliance with the 'for construction' documentation (e.g.
as referenced in the Document Register)
• Ensuring changes are implemented in a controlled manner (e.g. as
referenced in the Change Control Register)
• Ensuring any necessary refinement or alteration of the 'for
construction' documentation is captured on as-built mark-ups.
• Ensuring required installation records are maintained up-to-date (e.g.
as referenced in the Site Verification Plan)
• Ensuring prior defect remedial actions have been implemented (as
refernced in the Defect & Outstanding Works Register)
Defects, non-conformances and suggestions for improvement
should be recorded in a Defect & Outstanding Works
Register together with proposed rectification or remedial
measures and agreed owners.
Follow up rectification measures
Filter / sort the defect & outstanding works register by action
Project owner and confirm the agreed actions by sending a copy of the
4
Engineer actions to each action owner. Follow up the action owners
where necessary to ensure a timely resolution of all action
items.
OUTPUT - Installation review records / mark ups, Defect Register
120
“There is only one person
who is capable to set limits
to your growth:
It is YOU, ONLY YOU.”
121

122
© 2007, POME, Gautam_Koppala, All Rights Reserved
WE CAME, WE SAW, WE
CO%QUERED, A%D WE
RULE
123
Any Questions?
Comments? For
better
improvement
Contact:
georgegautam@gmail.com
00918912550564
124
125
Heated gold becomes ornament. Beaten copper becomes
wires. Depleted
stone becomes statue. So the more pain you get in life you
become more valuable.
But year's later collection of

mistakes is called experience,
which leads to success.
126
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127

Project Execution From POME by Gautam Koppala VT

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1

Kanaka maha lakshmi Thalli

Be bold when you loose and be calm when you

"Changing the Face" can change nothing.

2007, POME, Gautam_Koppala, All Rights Reserved

2007, POME, Gautam_Koppala, All Rights Reserved

JOB HANDOVER TO FACILITIES/ SERVICES GROUP

TO: Service Manager DATE:

CC(on e-mail): AMS Head, Operations Head FROM(name): Gautam Koppala

JOB NUMBER CUSTOMER

S.N. DOCUMENTS LIST Attached Y/N Remarks/ Give reason if any

Customer P.O. with all subsequent

Project Close-out form with all attachments :

2007, POME, Gautam_Koppala, All Rights Reserved

Complete System Software and Application

List of spares available at site &

Statutory Approvals (such as NOC< Fire

All important communications (e-mail/letter

2007, POME, Gautam_Koppala, All Rights Reserved

(Signature ) (Signature) Date of Hand

Project Manager Regional Service/ Facilty Manager ( RSM) Over agreed

2007, POME, Gautam_Koppala, All Rights Reserved

1 Have all the product or service deliverables

1.1 Are there contingencies or conditions related

2 Has the project been evaluated against each

3 Has the actual cost of the project been tallied

3.1 Have all approved changes to the cost baseline

4 Have the actual milestone completion dates

4.1 Have all approved changes to the schedule

2007, POME, Gautam_Koppala, All Rights Reserved

5 Have all approved changes to the project

6 Has operations management formally accepted

6.1 Has the documentation relating to operation

6.2 Has training and knowledge transfer of the

6.3 Has the projected annual cost to operate and

7 Have the resources used by the project been

2007, POME, Gautam_Koppala, All Rights Reserved

8 Has the project documentation been archived

9 Have the lessons learned been filed with the

2007, POME, Gautam_Koppala, All Rights Reserved

It is YOU, ONLY YOU.”

2007, POME, Gautam_Koppala, All Rights Reserved

But year's later collection of

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