Regardless if a project owner decides to outsource the project management of his capital construction project delivery, use in-house project management resources, or a combination of both, the project owner still needs to monitor, evaluate and report on the efficiency of the cost of managing the project delivery.
The Project Management Index (PMI) key performance indicator measures the ability to control the Project Management Team costs while executing the Project. The figure reflects the Project Management Team costs as a percentage of the current project forecast at completion cost. Of course, the best-case percentage is a function of project size, technical difficulty, and execution strategy. Nevertheless, in general, a lower percentage indicates the Project Team performed their functions more efficiently.
The Project Management Team costs include the cost of in-house project management resources regular, overtime and weekend man-days charged against the project, all business travel, and other types of direct and indirect expenses like local transportation, lodging, per diem, and others, the total amount invoiced against the project management consultancy contract agreement and other expenses associated with managing the project delivery.
On the other hand, the Current Project Cost at Completion includes the value of all awarded contract agreements required for the project delivery plus all approved change orders and other pending change orders and claims that have high potential to be approved.
To have a meaningful, trustworthy, traceable, and auditable Project Management Index (PMI), the project owner must ensure that all needed business processes required to capture the data for calculating the PMI are formally implemented on the project. Those business processes need to be digitally enabled to ensure that the needed data across the complete projects’ portfolio are readily available to be reported on without the risk of being manipulated, delayed, or wrongly reported.
For the Project Management Team costs, the business processes for timesheets, PMC contracts, change orders and interim progress invoices, and miscellaneous expenses need to be captured. Whereas for the Current Project Cost at Completion, the business processes for awarded contract agreements, change orders, potential change orders and interim progress invoices, and miscellaneous expenses need to be also captured.
Most if not all of those business processes need to be formally submitted, reviewed, and approved as per the project’s responsibility assignment matrix (RAM). In addition, each business process should be attached with the required documents to support what is being shared and reported on.
Using a Project Management Information System (PMIS) like PMWeb the Project Management Index (PMI) and all business processes needed to provide the needed data will be managed, monitored, evaluated, and reported on across the complete projects’ portfolio that the project owner has. To start with, the PMWeb commitment module will be used to capture all awarded contract agreements including those for the project management consultant, in-house project management contract if this was treated as a separate business unit or a profit center, design and supervision consultants, construction contracts, material supply contracts, and others.
The commitment change order module will be used to capture all approved and pending change orders that could increase or decrease the values of all awarded contract agreements. Approved change orders will be the basis for calculating the revised contract agreement values.
PMWeb potential change order module will be used to capture potential changes, early warning notifications, or claims along with pending change orders, This is needed to come with a realistic Current Project Cost at Completion value. This forecast cost will include all actual commitment and non-commitment expenses incurred to date plus the remaining value of each awarded contract agreement and the value of all potential change orders or claims along with pending change orders.
PMWeb progress invoices module will be used to capture the interim payment certificate amount invoiced against the Project Management Consultancy contract agreement as well as all other awarded contract agreements. This will represent the actual cost incurred by the project owner for completed and approve services and work performed against those contracts including the project management consultancy contract.
PMWeb timesheet module will be used to capture the actual resource hours spent by the in-house project management team. Those hours could be regular pay hours, overtime, weekend, and other types of spent work hours. The timesheet can be also used to capture the actual hours of equipment resources.
The PMWeb miscellaneous invoices module will be used to capture other non-commitment expenses like business travel, transportation, lodging, per diem, and other types of expenses that are not part of an awarded commitment contract. Those expenses are needed for the Project Management Team costs and the Current Project Cost at Completion.
Similar to all types of business processes created using PMWeb, all these business processes can be also be attached with their supporting documents. Those could include drawings, specifications, equipment catalogs, pictures among others. In addition, links to PMWeb records for all types of business processes managed in PMWeb can be also added.
It is highly recommended that all supportive documents, regardless of their type or source, get uploaded and stored on the PMWeb document management repository. PMWeb allows creating folders and subfolders to match the physical filing structure used to store hard copies of those documents. For example, there could be folders for each contract agreement awarded on the project with sub-folders for change orders, interim payment certificates, and others. This will enable assigned access permission rights for each folder or sub-folder.
As with any other commercial or contract-related business process, there is the requirement to formally submit, review and approve the above-listed business processes. Accordingly, a workflow will be used to formalize the submission, review, and approval tasks. The assigned workflow will map the submit, review and approve tasks, roles or roles assigned to each task, task duration, task type, and actions available for the task. In addition, PMWeb allows the setting condition to the workflow tasks to enforce the approval authority levels set by the organization if this was a requirement.
About the Author
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 systems to over 200 projects with a total value over the US $100 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 on topics relating to Project Management, Strategic Project Management, and Project Management Personal Skills. Over the past 40 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 300 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 Association for the Advancement of Cost Engineering (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.