Article # 371 How Can Technology Support Commercial Managers in Monitoring, Controlling and Reporting Adjustments Made to Post-Tender Budget?

In accordance with the Royal Institute of Chartered Surveyors (RICS), Post-Tender Budget also known as Budget to Build or Project Budget is an evolution of the project’s cost estimate, updated to reflect information not available when the estimate was first produced; an estimated plan of the cost to complete the project following the contract award, based on actual costs incurred, plus the project team’s planned procurement and delivery methods.

To achieve this, the post-tender budget should be continually updated until project completion. This update or budgeting could be done on monthly basis or every quarter depending on each project requirement. This will cover adjustments for tender addendums, contract variations, procurement strategy, update to project’s deliverables or outputs, update to labor and equipment resource rates, update to material cost rates, changes to prelims and site overhead strategy, risk mitigation, value engineering proposals, opportunity recognition among others.

Similar to any other commercial process to be managed when delivering capital construction projects, budget adjustments should be implemented in a governed process that ensures transparency and accountability. For each adjustment proposed and approved, all data relevant to the adjustment needs to be communicated along with all supportive documents including links to other related project management processes and email communications. In addition, each budget adjustment needs to be formally submitted for review and approval in accordance to what has been set in the commercial management plan. This will not only ensures that all needed reviews and approvals had been secured but also ensures that the set approval authority levels had been respected. Only then, the monitoring, controlling and reporting of those adjustments would achieve its desired objectives for real-time single version of the truth reporting.

Using a Project Management Information System (PMIS) like PMWeb will provide the commercial management team with a single 100% web-enabled platform to manage all procurement and commercial processes across the completed capital construction projects’’ portfolio. This will include the budget adjustments which will be used PMWeb ready-to-use module for budget requests. It is critical all details associated with each adjustment including the reason, type, scope of work among others. In addition, a detailed breakdown of the adjustment, whether those were additions or omissions, need also to be captured. The adjustments will be assigned to their relevant cost breakdown structure (CBS) or cost account. Adjustments can be done in any currency if needed as well as a budget adjustments could cover adjustments to different projects if this permitted.

One of the critical requirements when creating the project budget or adding budget adjustments, is to identify when each adjustment item is planned to be spent. Although PMWeb allows assigning each adjustment line item to its relevant project schedule activity which was imported into PMWeb, nevertheless, PMWeb provides the option to distribute the planned spending of each adjustment by defining the start and end date along with the spending projection curve. Of course, there is also the option to manually distribute the adjustments over the project periods. Those projections will be the basis for updating each project’s budget planned spending (PV) cashflow.

The budget adjustment form tab allows attaching all supportive documents to the required budgeting. Although documents can be directly uploaded and attached to the form, nevertheless, as a best practice this requires uploading and storing those documents into PMWeb document management repository. PMWeb allows creating file folders and subfolders to upload those documents in an organized and controlled manner. Access permission rights can be set to each folder or subfolder to restrict viewing or editing those documents. In addition, PMWeb allows linking relevant transactions to each record whether those transactions were other PMWeb records or imported emails.

Enforcing accountability when it comes to performing the budget readjustment processed is a must and requires assigning a workflow for executing the process in alignment with the requirements defined in the commercial management plan. The workflow will map the submit, review and approval tasks for budget readjustment process detailing the responsibility for each task, allotted time, actions available task, sequence for performing the tasks and alerts rules. In addition, the PMWeb workflow allows to add conditions to enforce the approval authority levels which is a must requirement when it comes to performing the different commercial management process. Those workflows can be specific to each project, program or common to all projects managed in PMWeb.

In addition to the many ready to use budget adjustments forms and reports that are available in PMWeb, there is no limit to the number of forms and reports that can be created to report on the project rebudgeting any desired form or format. One of the ready to use reports is the Budget Request Analysis report which details how each budget adjustment has impacted the approved budget baseline. The report consolidates those adjustment values by the cost breakdown structure (CBS) level.

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In addition to the many ready to use budget adjustments forms and reports, there is no limit the number of forms and reports that can be created to report on the project budgeting. One of the ready to use reports is the Budget Request Analysis report which details how each budget adjustment has impacted the approved budget baseline. The report consolidates those adjustment values by the cost breakdown structure (CBS) level.

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About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services and project management information system to over than 400 projects with a total value in excess of US$ 400 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment, Hospitality 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 40 years he has lectured at more than 400 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has written more than 400 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He was 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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