Article #243 How Can Investors in Capital Projects have a Real-Time Single Version of the Truth Solution to Monitor, Evaluate and Report the Financial Performance of their Investments Portfolio?

For entities who have selected to invest in capital projects, and in particular after the Convid-19 pandemic, understand the high risks that those investments might encounter as well as the low return of investments they have to survive with. Although it is understood that executing a capital project would require monitoring, evaluating and reporting the engineering and construction management aspects of a project but for an investor, monitoring, evaluating and reporting the anticipated investment revenue is as critical as well.

To achieve this, the investor needs to manage the anticipated investment revenues as a project. The overall investment will be a program of the different interrelated but unique projects that need to be managed and completed successfully. Some of those projects will be the engineering and construction projects which could include commercial and residential buildings, shopping malls, schools, warehouses among others. The revenue projects, which are managed by the sales team, could be the different opportunities to be pursued to generate the anticipated revenue. The revenue will be the projects for sale, lease and management agreements with hotel operators, public sector entities, regional and international corporations such as banks, logistics and warehousing, supermarkets, movie-theater operators, retailers among others.

Using a Project Management Information System (PMIS) like PMWeb, there a no restriction on the number of programs and the number of projects that an investor could have. Using PMWeb to manage, monitor, evaluate and report the execution projects had been extensively covered in earlier articles. On the other hand, this article will only focus on monitoring, evaluating and reporting the performance of revenue generating projects.

To start with, PMWeb program module will be used to capture the different investment opportunities that the investor has where each program presents a single investment. Each program will include the different expense and revenue generating projects that are part of the investment opportunity. The expense projects are the traditional engineering and construction projects needed to deliver the assets of the investment. On the other hand, the revenue generating projects will be the agreements to manage, sell and/or lease the assets of the investment. Each target tenant, operator or buyer of the assets pursued by the investor, will be added as a revenue generating project. It should be noted that some of those projects might be pursued while others might be terminated if the target tenant, operator or buyer is not interested in the capital project investment. Each revenue project will include the milestone schedule, anticipated revenue budget and any associated adjustments, risks, communications, secured tenancy and sale contracts and changes to those contracts, actual revenue earned from the signed contracts among others.

PMWeb scheduling module will be used to create the milestone schedule that each Property Executive needs to adhere to when it comes to signing the target tenants or buyers. This enable managing, monitoring, evaluating and reporting the schedule performance. The level of schedule details should be aligned with the desired level of control. Activities in the revenue project can be linked to activities in the execution project in case there is a dependency between those activities. The project schedule needs to be updated on regular basis for which the baseline and periodical updates will be saved to enable reporting on them when needed.

The anticipated target revenue for the assets to be leased or sold will be captured in PMWeb budget module. The budget for the revenue project will be unit based where the budget line items will detail the components of the assets to be leased or sold. Those items will be measured in terms of areas, units among others were the revenue for each unit will be captured, for example US$ per Square Meter or Foot, Hotel Rooms among others. Since PMWeb allows multi-currency per line item, the revenue per item could be in US$, Euro, Yen, Saudi Riyal, UAE Dirhams or any other currency. The exchange rates can be set to be static or dynamic by extracting the rates from a currency exchange website. This option is very critical for organizations who invest in different countries or have clients from other countries.

In addition, PMWeb budget module allows establishing the expected revenue collection dates for each budget line item. The revenue for each line item will be assigned to the different periods to simulate the realistic dates for collecting the revenue for which part of will be during the project’s execution while others could be during the project’s operation which are much longer than the project’s execution period.

For all adjustments that might affect the approved baseline budget, those will be captured using PMWeb budget request module. Sum of those adjustments might be considered as “Original” budget while others will be “Revised” budget. The Original budget are those budget adjustments that were not initially included in the baseline budget for whatever reasons, where the “Revised” budget as those budget adjustments that could increase or decrease the approved baseline budget. Further, budget adjustments could be used to transfer budget from line item to another. For example, transfer the budget for space to be leased to space to be sold and so. Transfers can be also done across projects, or prospect clients if needed.

Similar to engineering and construction projects, revenue generating projects have their type of risks. PMWeb custom form builder will be used to create the risk register checklist for which it will list all possible risks under each category. The sales project manager needs to review the checklist to identify the impact and likelihood of each risk, response strategy category, details if the mitigation events to be taken and the post-mitigation risk impact and likelihood values. The input of the risk register checklist will be the basis for monitoring, evaluating and reporting project’s risks.

All communications and documents exchanged between the sales team and other members of the investment company, prospect and actual clients, authorities, banks among others will be captured in PMWeb document management repository. Folders will be created to organize and store those communications in their desired location. Access rights can be assigned to each folder to restrict access to authorized individuals. In addition, individuals can subscribe to each folder to receive notifications when new documents are uploaded, downloaded, updated with a new revision, relocated or deleted.

Workflow can be assigned to the uploaded documents to detail the sequence of tasks to be followed in reviewing, approving and sharing project documents. PMWeb conditional workflow allows selecting different workflow steps for the different document types. The workflows can be project or program specific or could be common to all projects managed by the organization. The workflow will automatically notify each revenue project team member with the workflow steps that needs to be actioned by him or her. Those notifications can be received via email and/or when the team member logs into PMWeb.

Of course, workflow can be assigned to other PMWeb records like the budget, revenue contract, changes to revenue contract, actual revenue earned among others. For records that have financial implications, the workflow could also include the assigned approval authority levels when it comes to taking actions on related transactions.

For completed revenue contracts for each project, PMWeb contract module will be used to capture the details of those contracts. The option for unit rate contracts will be selected to provide the quantity and unit price of all leased and sold assets. The revenue agreement should associate the revenue components with the same cost accounts levels used in creating the revenue budget. This is essential to compare the actual signed revenue agreements with the approved revenue budget baseline. It is very common that the revenue source for a specific cost account could be contributed by different sales or lease contracts. For example, the retail leased space could be the result of agreements between the investor and different retailers, and so on.

All changes to any lease or sale agreement will be captured in the contract change order module. Those will include all pending and approved changes which could result in increasing or decreasing the contract value. For each change order, all supportive documents including communications that lead to the change should be attached. Those documents will be usually uploaded and stored in PMWeb document management repository. In addition, it is recommended to have a workflow assigned to the change order module to ensure that all needed reviews and approvals are secured before issuing the final approval on the change request.

The actual income earned on the revenue contracts will be captured using PMWeb requisition module. Those requisitions will be issued on the dates agreed to make those payments which are part of each sale or lease agreement. For each requisition, PMWeb allows capturing the actual funds receipt details including amounts collected, date and other funds transfer details.

The details of the baseline budget, budget adjustments, total value of secured sales and lease contracts along with pending and approved changed and actual revenue received will be captured in PMWeb general ledger module. This will enable having a real-time revenue details for a single revenue project or all revenue projects for the same investment opportunity or program.

In addition, the cost worksheet could also include the planned, revised, projected and actual expenditures for the execution projects which are captured in PMWeb commitment, potential changes, change orders and progress invoices as well as miscellaneous invoices and other non-commitment costs. Further, it could also include the actual cost associated with the revenue projects if those were captured as timesheets, miscellaneous expenses or agreements with third party real-estate brokers among others. The cost worksheet can also capture all other expenses associated with the investment such as finance charges, overhead among if they were captured by PMWeb modules or imported into PMWeb by having an integration with the investor’s financial system. Different cost worksheet layouts can be created using the Define Worksheet module by either displaying the fields that capture those financial details or by creating aliases to calculate the values to be displayed.

The revenue projects data can be reported on in any desired format to provide the investor with a real-time single version of the truth on the performance of those projects. The revenue can be grouped by the asset category, tenant or client among many others. In addition, a data can be displayed in a tabular format to provide more details on the revenue projects. Of course, the data from the revenue projects can be reported on along with the data from the execution projects which will provide better understanding on the bottom line of that particular investment.

In addition, the same report can be used to report on a single investment or program or a portfolio or investments or programs. Similarly, the reported data can be limited to revenue projects or it can also include the data from the execution projects. It is all about what is the purpose of the report as the real-time trust worthy data is already captured in PMWeb.

About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with more than 35-year service record providing project management and controls services to over 100 projects with a total value in excess of US $5 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training and business development.

Bassam is a frequent speaker in topics relating to Project Management, Strategic Project Management and Project Management Personal Skills. Over the past 35 years he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has written more than 250 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE) and Green Project Management (GPM).

Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.


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