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Controlling Project Costs Through Interactive Planning

If time is money, keeping a project on budget requires utilizing the project's estimate, schedule, cost forecasting, and earned value systems interactively.

Mark A. Borodynko, Senior Director of Project Controls,  Skanska USA (Nov 07)
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Principle 3 - Stop "Silo Thinking"
We need to graduate from our specialized silo thinking into a more of a proactive community approach. What you do on the project directly affects the community or, in this case, the project, both in time and money. This is always most evident at the start of a project. In the beginning, everyone has their own plans for how and when things need to get done. Most of the plans are genuine and meaningful. However, it reminds me of someone dropping a quill full of arrows onto the ground that are going in many different directions. A project needs to have all these arrows, or plans, identified and positioned so that they are all headed in the same direction. I recommend doing this early in the project with the key members of the team, in what I call an "interactive planning session."

This planning session will identify the owner's critical milestones and the dates that they need to be completed. It will establish the necessary tasks that need to be accomplished in order to support these key milestones and will form the baseline for the entire project's master schedule. The major tasks are identified interactively by having the team place their key tasks on one comprehensive timeline. These key tasks cover all phases of the project and include: preliminary engineering; various bid packages for detailed engineering; purchase and delivery of major equipment and procurement of long lead material such as structural steel; funding requirements of the owner; permitting and environmental requirements; major subcontract procurement strategy; demolition, if required; major construction activities; major tie-ins; and commissioning/validation, depending on the project. This intense effort identifies problems early and gives the team an opportunity to get realigned, if necessary. It turns individual plans into the project master plan and shows the interdependence of each task to the other.

Ensuring that projects stay on budget does not happen by looking at what is spent or invoiced to date. The answer lies with changing our current thinking. A project's budget rests upon a three-legged stool - each individual leg consists of the estimate, cost engineering/earned value, and planning/scheduling systems. But all three need to be working together to support the budget. If one is missing, then the budget is in jeopardy. Therefore, a team needs to ensure they embrace and incorporate the project controls mission statement into its culture and "utilize an integrated application of estimating, cost engineering/earned value, and planning/scheduling with the correct level of software in support of project management."

Then the project must go the extra mile and truly transform itself into a team effort. This team can change the fulcrum of the project. With a team attitude, defenses come down and team members can look for problems to solve, which in turn lets the team run more efficiently and effectively towards the goal of an on-time and on-budget project. Through interactive planning, and the team working together toward one goal, there is an increased awareness that what an individual team member does has a direct effect on other team members and their downstream tasks.

This integration of project controls tools applied by the project control professionals, combined with an early paradigm shift, will ensure projects are completed on time and within budget. You may even end up with some contingency.

Mark A. Borodynko is the senior director of project controls for Skanska USA, located in Blue Bell, Pennsylvania. He has 35 years of project controls experience in the engineering, construction management, and validation of projects. His expertise covers the pharmaceutical, biotech, healthcare, petrochemical, defense, and power industries. Mr. Borodynko can be reached at (267) 470-1033.
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