overcoming the 5 most common pcm challenges

Overcoming the 5 Most Common PCM Challenges30 March 2016

© 2016 InEight Inc. All rights reserved.

Agenda

• Introductions

• Project challenges

• The 5 Most Common Project Cost Management challenges

• Solutions across the project lifecycle

Introductions

Speaker Introduction

John GarayVP, Product Marketing & Alliances• More than 20 years focused on project-driven companies• Roles across software companies

1992 2005 2008 2012 2013

InEight Introduction

InEight combines proven ability with a unified vision to help companies visualize, estimate, control and connect all aspects of their capital and maintenance projects, from the back office to the jobsite, across the project lifecycle.

• Helping project-driven companies since 1989• More than 20,000 active users in more than 500 companies across 33 countries

Sample Customers

Mining Oil & Gas UtilitiesInfrastructureBuilding

Project Challenges

Project Challenges

Of 250 large infrastructure

projects, 86% had cost overruns.

The average overrun was 28%.

- Flyvbjerg, et al.

“Failure to maintain quality costs the U.S. construction industry

over $15 billion a year in rework

expenses alone.” - Construction

Industry Institute (CII)

The 5 Most Common PCM Challenges

Methodology

1. 25+ years of providing solutions to project-driven companies

2. Engagement with more than 500 customers

3. Daily discussions with new companies

4. Consultation with InEight Industry Advisory Group (IAG) members:

The 5 Most Common PCM Challenges

1. Slow estimating

2. Disorganized bidding process

3. No ability to benchmark estimates

4. Hard to change systems

5. Limited visibility between office and jobsite

Poll #1: Your Top Challenge

Challenge #1:Slow Estimating

#1 Slow Estimating

What we hear:“Estimating a project is slow, in terms of both man hours and overall time. This impacts our ability to cost-effectively bid on more work.”

Causes include:• Old systems• Manual effort• Inefficient processes• Repeating same steps between bids

Issues include:• Bidding on fewer jobs• Win less work • Lower overall profits

#1 Slow Estimating Sample Case

It’s a competitive market out there! • Some jobs can attract 10 or more bids • Contractor margins can be only a few percentage points

To keep up, contractors simply need to bid more jobs.

However, many estimating teams are already putting in overtime to keep things going at current levels.

There has to be a better way!

Challenge #1:Slow Estimating

#1 Slow Estimating Solution

• Easily reproducible data• Norms databases • Material / Quantity takeoff• Scheduling integration

Easily Reproducible Data

Quickly copy, multiply and split data elements to reduce effort and organize jobs. Make a change and everything automatically goes with it:• Equipment• Manpower• Hours• Production• Materials

Norms Databases

Quickly build estimates based on standard cost libraries

• RSMeans – Construction cost data• Richardson Construction

Estimating Standards• Company-specific standards

Quantity Takeoff (QTO)

Leverage designs to quickly build more accurate estimates• RIB MC2 ICE data import• On Center On-Screen Takeoff

Associate and track items:• Labor• Material• Equipment assemblies• Design components

Linked at the CBS for consistencySeamless flow from takeoff to estimate

Develop quantity estimates

from design models

Associate and track design items, including labor, material, and equipment assemblies

Primavera P6 / Microsoft Project Integration

Integrate Estimate and Scheduling System• Define predecessor/successor logic in estimating and push changes to

schedule• Add new scope items in the schedule and automatically update the estimate• Auto calculate escalation by user-defined timing periods• Push percent complete from schedule to project control system

Poll #2: Your Scheduling System

Result: Efficiency and Accuracy

"…the Aiken team has tripled the amount of work they can bid…”

“We’ve been able to increase accuracy on our estimate to actuals and reduce

labor overruns by 15-20%.”

Win More Jobs at the Right Price

"…These tools have allowed us to not work the overtime we used to…”

Challenge #2:Disorganized Bidding Process

#2 Disorganized Bidding Process

What we hear:“We need to standardize our bidding process to ensure consistency and avoid missed items”

Causes include:• Disconnected systems• Point solutions• Lack of templates• Inconsistent coding

Issues include:• Slower estimating• Missed items• Inconsistencies across estimators• Redundant effort

#2 Disorganized Bidding Process Sample Case

[Don’t] “Go Your Own Way” - Fleetwood Mac

Regional contractor has expanded into three states. However, each office does estimating their own way.

As a result, estimators in each office often “re-invent the wheel” and do not have visibility into best practices or implement lessons learned in other regions.

This results in more effort and a higher probability of missing items.

Challenge #2:Disorganized Bidding Process

#2 Disorganized Bidding Process Solution

• Unify estimating platform

• Standardize coding structures across systems

• Embrace benchmarking

• Deploy common reports and management dashboards


Unify estimating platformConsolidate separate efforts into a common system to fully leverage best practices and improve visibility across the project portfolio

Unified Estimating

Estimating


Standardize coding structures across systemsSimplify data flow between systems with common structures:• CBS• WBS• Resources• Production rates • Labor, Equipment, and Material (LEM)• Address book

Estimating Scheduling

Accounting

Project CostManagement


Embrace benchmarking

Compare current estimate to:

• Previous estimates

• As-Built actuals


Deploy common reports and management dashboards

• Leverage common data structures

• Understand best practices across the company


Benefits

• Faster estimating leads to more bids and more work

• Create more accurate estimates by benchmarking against similar jobs

• Common coding structures facilitate data flow and enable consistent reporting

Result: Accuracy and Confidence

“The precision we get provides the confidence we need. In today’s competitive market, there’s no

room for errors in our estimates.”

Project Confidence

“[We have] revamped our estimating process by converting it from a mechanical practice

into a scientific method.”

Challenge #3:No Ability to Benchmark Estimates

#3 No Ability to Benchmark EstimatesWhat we hear:“We have no way of knowing if we are getting OUR best estimate”

Causes include:• Lack of tracking across the project lifecycle• No accounting integration• No standard unit of measure • No structured benchmarking process• No capture of best practices

Issues include:• Slower estimating• Inaccurate estimates• Less confidence• Inconsistencies• Duplicative effort

#3 No Ability to Benchmark Estimates Sample Case

What to measure?

Managers need performance visibility to identify problems sooner and make changes that keep everything moving forward.

Also need to understand relative performance to know where to focus for significant improvement.

Finally, understanding past performance can play an important role in developing estimates for the next job. Companies need to consistently capture as-built data in order to continuously improve estimate accuracy.

Challenge #3:No Ability to Benchmark Estimates

#3 No Ability to Benchmark Estimates Solution

• Define base unit of measure

• Standardize coding structures down to a third level of detail

• Embrace benchmarking

• Develop a learning organization

Standardize Measurement First

Labor Materials

Equipment Schedule

ft3

m3

yd3MH

Linear Feet

Board Feet

Metric Tons

Weeks

Months

Man-hours

Time

Cost

Resources

Consumables

Subs

Price VariabilityRegional Attributes

EQUIPMENTMANAGEMENT

SCHEDULINGAPPLICATION

PROCUREMENTAPPLICATION

RESOURCEAPPLICATION

ESTIMATINGAPPLICATION

COSTCONTROLING

Labor Materials

Equipment Schedule

Common Denominator

ft3

m3

yd3MH

Linear Feet

Board Feet

Metric Tons

Weeks

Months

Man-hours

Time

Cost

Resources

Consumables

Subs

Price VariabilityRegional Attributes

EQUIPMENTMANAGEMENT

SCHEDULINGAPPLICATION

PROCUREMENTAPPLICATION

RESOURCEAPPLICATION

ESTIMATINGAPPLICATION

COSTCONTROLING

QUANTITY

Why NOT cost?

• Regional variation

• Material price fluctuations

• Inflation over time

QUANTITY

PRESENTPAST

QU

AN

TITY

XZ

X

Y

Z

Y

Z

Z

Y

COMPANYSTANDARD

ZX

X

Y

Y

Z

X

X

Y

XZ

X

Y

Z

Y

Z

Z

Y

Z

X

Y

Y

Z

X

X

Y

Benchmarking

Z

QUANTITY

Benchmarking Performance

2389Bridge12A Pylons




0.780PerformIndex

0.920PerformIndex

1.340PerformIndex

1.890PerformIndex

1.890PerformIndex

BENCHMARK

0.780PerformIndex


QUANTITY

Performance




PerformanceIndices

BENCHMARK

ConstructionExcellence12A Pylons

Best Practices

PERFORMANCE

Embrace Benchmarking

Once a common unity of measure is define, can then easily compare across regions and timeframes• Previous estimates• As-Built actuals

Benefits

• Quicker and more accurate estimates

• Greater confidence in estimates

• Continuous improvement

Benefits

Result: Continuous Improvement

Leverage Best Practices

“[We now have] an enterprise solution platform for all of our business units that standardizes our estimation

and controls processes.…”

Challenge #4:Hard to Change Systems

#4 Hard to Change Systems

What we hear:“We don’t want to change (from Microsoft Excel) because we have our special sauce and processes and we’ll lose them!”

Causes include:• Reliance on other project-related systems• Custom estimate calculations around key efforts• Organizational inertia

Issues include:• Slow estimating• Inconsistent estimates• Lack of performance visibility• Lack of scalability

#4 Hard to Change Systems Sample Case

Breaking up is hard to do

Based upon years of experience, a mining contractor has developed custom productivity calculations around key project steps.

However, these calculations are in spreadsheets.

In addition, this contractor also relies on a variety of other project-related systems for accounting, scheduling, document management, and payroll processing. Moving away from these systems would be extremely disruptive.

Challenge #4:Hard to Change Systems

#4 Hard to Change Systems Solution

• Leverage (don’t replace) Microsoft Excel

• Accounting / ERP integration

• Scheduling integration

Leverage Microsoft Excel

Keep your secret sauce!

Leverage bi-directional integration with Microsoft Excel to embed complex custom calculations, with the resulting quantity or rate linked into the estimate

Accounting / ERP Integration

• Quickly transfer estimates to your accounting / ERP system• Ensure consistency for tracking project actuals• Enter data once, in one place, increasing productivity and reducing risk • Increase confidence of all stakeholders with more accurate project numbers• Reduce project surprises through better performance visibility• Increase accuracy of future estimates by using as-built actuals from financial systems

Poll #3: Your accounting/ERP system

Primavera P6 / Microsoft Project Integration

Integrate estimate and scheduling systems• Define predecessor/successor logic in estimating and push changes to schedule• Add new scope items in the schedule and automatically update the estimate• Auto calculate escalation by user-defined timing periods• Push percent complete from schedule to project control system

#4 Hard to Change Systems Solution

Benefits

• Migrate to modern project cost management system with minimal disruption

• Benefit from a unified estimating platform

• Leverage all the latest features

• Build an integrated project controls solution

Result: Integrated Systems

“We identified the link of cost and schedule as the next significant step in

achieving stronger project controls.”

Stronger Project Controls

“…the integration with accounting was exactly what

we needed.”

“..live integration with Microsoft Project and Primavera P6 allows us to easily run ‘what-if’ scenarios across the

estimate and schedule for multi-year projects.”

Challenge #5:Disconnect Between Office and Jobsite

#5 Disconnect Between Office and Jobsite

What we hear:“What’s going on in the field doesn’t match the plan!• Crews are not doing the most critical tasks• We only learn of problems well after they happen”

Causes include:• Slow and inaccurate paper processes• Point timesheet solutions that lack integration

Issues include:• Project delays• Cost overruns• Inefficiencies• Project surprises

Disconnect between office and jobsiteWhat’s going on in the field doesn’t match the plan!

Lack of visibility can lead to surprises

#5 Disconnect Between Office and Jobsite Sample Case

“No Battle Plan Survives Contact With the Enemy” - Prussian military strategist Helmuth von Moltke

What happens on the computer screen often does not match actual jobsite activity as initial plans quickly give way to the reality of the field.

Managers and superintendents need to ensure foremen and their crews are working on the right things, and that quantity completion and timesheet hours are tracked easily, accurately and efficiently.


John Smith, Superintendent

Responsibility: • Manage all day to day project activities

Problems: • Lack of visibility into jobsite activity• Misalignment between office and field• Hidden inefficiencies

Superintendent


Frank Williams, Foreman

Responsibility: • Assign daily tasks to crew• Document what has been

completed

Problems: • Inefficient paper-based timesheets• Documenting jobsite issues

Foreman

The Disconnect

ForemanSuperintendent

Time Tracking

The Paper Problem

Quantity Tracking

Claiming Codes

The Paper Problem

Current Solutions

Historical Data Research

The Paper Problem

Challenge #5:Disconnect Between Office and Jobsite

#5 Disconnect Between Office and Jobsite Solution

Project Cost Management system that extends to the jobsite• Daily work planning• Timesheet reporting• Material quantity claiming

Ruggedized and “intrinsically safe” tablets

Management dashboards and reports

Daily Work Planning

• Create a daily plan for each foreman and their crew• Select specific tasks and assign a goal for completion that day• View real-time metrics on the plan vs. budget for tasks

Office to Jobsite Communication

• Daily plans created in the office are transferred to the foreman’s tablet• Tasks, people, equipment and goals are visible to the foreman• Detailed notes alert the field team to any necessary information

Timesheet Reporting

• Complete electronic time card with resource hours and task quantities

• Document changes or issues that impacted the days work

• Gain real-time feedback on the success of your day

• Sign out employees at the end of each shift to submit data back to the office

Quantity Reporting

• Report daily productivity• Understand areas that need focus• Drive quantity claiming

Process Flow

Estimators and project planners create the WBS structure and budget for the project.

Project engineers create crew plans by assigning foremen, employees, and equipment to tasks, validating expected results against the budget.

Foremen receive their daily crew plans and make adjustments if necessary based on jobsite conditions and resource availability.

At the end of the shift (or throughout the day), foremen record quantities completed, hours worked, and notes, then submit for approval.

Project engineers and company managers review and approve the executed crew plans submitted from the field.

Results are imported into the ERP system to drive payroll, and project managers can update their projects with the latest as-built hours and quantities to get updated earned values.

Ruggedized and Intrinsically-Safe Tablets

Apple Android WindowsConsumerBuilt for home and office use

RuggedizedBuilt to handle the more demandingjobsite environment

Intrinsically Safe(Zone 1 Division 1)Specifically designedand certified to operatesafely in hazardousenvironments

Management Dashboards and Reports

Dashboards Reports

#5 Disconnect Between Office and Jobsite Solution

• Eliminate manual paper processes for greater efficiency and accuracy

• Align jobsite work with the plan to optimize project execution

• Capture timesheets hours and flow them directly into payroll

• Save time each timesheet cycle (~10 minutes)

• Capture quantities performed to drive billing and improve cash flow

• Maximize equipment uptime with tablets designed for tough project conditions

• Make better decisions based upon current information

Result: Jobsite Visibility

“…[We] make better project execution decisions because we’re working from the most accurate and up-to-date

information from the project site”

Better Decisions

Summary

The 5 Most Common PCM Challenges and Solutions

1. Slow estimating: Reproducible data, norms, QTO/MTO, scheduling

2. Disorganized bidding process: Unified platform, coding, benchmarking, reporting

3. No ability to benchmark estimates – Quantities, coding, benchmarking, learning

4. Hard to change systems: Leverage Excel, accounting, scheduling

5. Limited visibility between office and jobsite: Extended solution, ruggedized tablets, reporting

InEight Solutions Across the Project Lifecycle

Integrated Project Lifecycle

• Bi-directional integration with Primavera P6 schedules enables time-phased estimates and schedule analysis

• Integrations available across leading project accounting and ERP platforms

• Create quantity-based estimates and budgets• Change order costing• Benchmarking

• Short interval planning, claiming and commissioning

• Plan progress and quantities consumed

• Equipment inspection and maintenance

• Establish resource plans in preparation for interval planning

• Quantity-based planning and execution• Quantity-based measurement and reporting

• Comprehensive 4D,5D, and nD visual reporting• All as-built details captured in single viewer• Owner benefits from unified visual model with

complete as-built details and documentation

Visualize, estimate, control and connect all aspects of capital and maintenance projects, from the back office to the jobsite, across the project lifecycle

• Enterprise reports and dashboards across the project lifecycle

• Various design models leveraged to create unified model

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=vF6h2F5lH0tdqM&tbnid=HtXKCzG7KP_MmM:&ved=0CAUQjRw&url=http://www.webactionhero.com/smart-reporting&ei=1DMWUoXbB6SGjALwi4Bo&bvm=bv.51156542,d.cGE&psig=AFQjCNFdqjfpZ501jp7Ir0e_OGWYGXOTGQ&ust=1377273169370474

HD Estimation and Control Solutions

Trusted for More than 25 Years1. Benchmarking2. Standardization3. Support for Norms databases4. Multiple estimating approaches5. Project controls integration6. Bi-directional schedule integration7. Cost versus owner price visibility8. Alternate scenarios9. Actively developed10. Open and unified platform11. Field mobility12. Cross-project reporting dashboards

Next Steps

1. Respond to the email poll

2. Visit us next week at the 2016 Fiatech Technology Conference & Showcase - April 4-6, 2016 in Austin, Texas

3. Contact us for more [email protected](800) 637-7496(480) 776-2900www.ineight.com

mailto:[email protected]

http://www.ineight.com/

Thank you!

overcoming the 5 most common pcm challenges

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