Part 7 - Challenges, the Laws of Physics, Project/Construction Management and Reality

 

Analytics at the Expenses of PM Overhead

Project Management Offices (PMO) establish and uniformly apply Key Performance Indicators (KPIs) for program and project managers to monitor performance on projects and programs of projects (Mega projects).   Typical KPIs on projects are Schedule Performance Index (SPI), Cost Performance Index (CPI) and Planned EVM verse Actual EVM.    Other KPIs for monitoring project cost and schedule goals can include forecasts of future efforts expressed in ratios including remaining duration, remaining EVM, Estimate To Complete, and pending project/contract changes.     

For projects that are not performing as expected, PMOs may need to conduct management reviews and implement additional monitoring measures to mitigate poor performance to cost and schedule.   As a result, more granular KPIs (Sub-KPIs) are created for work directly related to the performance of individual contributors with significant roles and responsibilities where the service quality was identified as a root cause affecting project performance. 

The purpose of the Sub-KPIs is to monitor, measure, assess and act on performance attributes and make decisions on critical activities in order to assure progress to meet project schedule milestones.  The goal is to improve processes and procedures, and to reduce schedule activity durations, which are identified as risk threats to critical project dates.   Each of the Sub-KPIs will capture historical data that will be used for identifying and resolving problems and for increasing confidence in future project decisions.  

This new level of monitoring will focus on analytics that PMO executives should establish through a defined breakdown structure of KPIs, which include metrics for activities that are driving durations of processes and procedures essential to quality performance to goals.    

Examples of Sub-KPIs include:

• Days for processing Contract Change Orders (CO)
• Days and manhours for reviewing Contractor Submittals
• Days and manhours for responding to Contractor RFIs
• Days for processing Project Changes (PC)
• Percentage CO Change Amount from Original Contract Award Amount
• Percentage PC Change Amount from the Original Project Budget.

In the example, the Sub-KPIs are all related to schedule progress as prioritized by the PMO.   A high percentage are outside the project teams control, and under the direct responsibility of the PMO’s management and the contracting office, which is usually an existing organizational asset within the Owner’s business structure.   As a result, monitoring of the related Sub-KPIs should have executive level buy-in and commitment that provides the PMO with the authority to improve processes and procedures.  

Creating new Sub-KPIs will require enhancement to existing reporting to incorporate color coded graphics such as dashboards, heat maps, histograms, and bar graphs, which provide conspicuous visual recognition of critical metrics for managing efforts across the project.   The color coding may indicate Red – Outside Tolerances - Action Required, Yellow – Near Tolerance Thresholds - Action Under Review, and Green – Within Tolerances - No Action  Required.   

Depending on the project domain, other Sub-KPIs may be created for monitoring and improving performance to intermediate milestones and EVM targets.    For rail-transit projects, there may be significant access restraints, production time limits, and promised on-site services by Owner to contractor.    In this case, Sub-KPIs might include ratios for:  1) Actual access days to site and planned access days.   2) Actual contact hours and planned production hours.   3) Actual crew days for work and planned crew days to support contractor.   4) Accrued liquidated damages and contract amount.   5) Accrued incentive payments verse contract budget.

Reality A

In theory, KPIs and Sub-KPIs increase management quality and improves project performance at the expense of added management overhead cost and staff levels.   However, each PMO needs to assess the benefits from the added managerial effort for implementing and monitoring the KPIs and Sub-KPIs.

Reality B

The number of KPIs will proportionally increase costs for Project Controls, management overhead and for added project analysts that are required for the collecting data, reporting data, explaining metric variances and implementing corrective actions.    

Reality C

At the expenses of other progress/performance report attributes and content, readers may overly focus on the red metrics while ignoring non-red items.  This may cause missed opportunities on schedule risk events that may actually be more significant to schedule performance and be more easily resolved to mitigate or avoid the events.

Reality D

Performance monitoring of Sub-KPIs without an improvement in schedule durations may indicate processes are not aligned with project expectations despite recognition of the impact to progress.    Executive management needs to ensure that the metrics identified as contributing to schedule risks can be mitigated.  Otherwise, the risks are just be accepted threats that need to be built into the schedule.