Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 1

Controlling Project Costs

Jon Grunzweig

Vision Business Systems

Leading IT to Business Excellence

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 2

Ever Happen?

• Great project plan, good resources, design

• Before you know it…..

– Delivery date slipping

– Going over budget

• Project keeps going along

– Start ignoring the budget, so far overspent

– Timeline goes into oblivion…

Shuttle Route

Endeavor’s Last Mission

• Great preparation

Things happen….

• $$

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 3

Credibility Issues….

Blame game starts……

Which leads to…….

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 4

Why ?

• Many moving parts (very few fixed parts)

• Circumstances occur different

• Things left out / Estimates incomplete

• Poor cooperation within business, people

• Events and changes

• Issues with service providers

• Outside uncontrolled events

• Unknowns….

Most Projects

• Predictability

• Been done, or very similar (not one of a kind)

• Experienced resources

• Therefore:

– Should be on time and on schedule (or very near)

What’s the disconnect?

• Good plan, design, resources, project mgt

but……..

• Poor alignment of Accountability Cycle

• Poor hours accountability

• Elements unplanned for

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 5

Our focus today….

• Alignment of Accountability Cycle

• Accountability of hours

• Areas short-changed in estimates

Foundation for Control

Technology Vision and Strategy

Methodologies & Processes:

Design, Project, Change Control

Contract & Vendor Management

Governance & Project Management

Project Planning & Agreements

Project Execution Cycle

Spend & Execution Cycles

Spend Authority Cycle

Budgets

Proposals

SOWs

Execution Cycle

Project Plans

Timesheets/ Billing

Status Reporting

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 6

Accountability Cycle

Methodology

Proposals

SOW’s

Project Plan / Est

Time Sheets

Billing

Status Reporting

Accountability Alignment

Prop SOW Plan Time Invoice Status

Total 120 120 120 90 70 130

Task 1 40 40 40 30 20 35

Task 2 80 80 80 60 50 95

Accountability Hours

A B C

Plan Actual

Remain

A-B

Total 120 90 30

Task 1 Rsc 1 40 30 10

Task 2 Rsc 2 80 60 20

How Much --->

<--

--- W

hat

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 7

Accountability Hours – Plan

A B C

Plan Actual

Remain

(Plan -

Act)

Total 120 90 30

Task 1 Rsc 1 40 30 10

Task 2 Rsc 2 80 60 20

How Much --->

<--

--- W

hat

Accountability Hours – Actual

A B C

Plan Actual

Remain

(Plan -

Act)

Total 120 90 30

Task 1 Rsc 1 40 30 10

Task 2 Rsc 2 80 60 20

How Much --->

<--

--- W

hat

Accountability Hours - ETC

A B C D

Plan Actual

Remain

(Plan -

Act) ETC

Total 120 90 30 40

Task 1 Rsc 1 40 30 10 5

Task 2 Rsc 2 80 60 20 35

How Much --->

<--

--- W

hat

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 8

Accountability Hours – Proj Total

A B C D E F G

Plan Actual

Remain

A-B ETC

Proj

Total

B+D

Var

A-E Billing

Total 120 90 30 40 130 (10) 70

Task 1 Rsc 1 40 30 10 5 35 5 20

Task 2 Rsc 2 80 60 20 35 95 (15) 50

How Much --->

<--

--- W

hat

Accountability Hours - Summary

A B C D E F G

Plan Actual

Remain

A-B ETC

Proj

Total

B+D

Var

A-E Billing

Total 120 90 30 40 130 (10) 70

Task 1 Rsc 1 40 30 10 5 35 5 20

Task 2 Rsc 2 80 60 20 35 95 (15) 50

How Much --->

<--

--- W

hat

Accountability Hours - Keys

• Must do it timely (daily or weekly)

– With additional early warning protocol

• Accountability at the resource level

• Accountability of the group

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 9

Problems with Estimates

• More than initial coding or configuration

• Testing � Unit, integration, system, regression

• Rework � It will occur

• Deployment (prepare, deploy, verify)

• Post live support (immediate)

Summary - Key Elements

• Appropriate Project Plan

– Watch out for common items left out

– Resources own estimates & updates

• Accountability Cycle lines up

• Solid relationship with vendors

• Timely reporting (within 1-2 days of cutoff)

• Stick to methodologies/processes

• Plan for contingencies and issues

• Measure your success rate

If control costs…..

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 10

Footnotes

• Types of Projects: ERP vs. Development

• Not Covered: All other types of issues

• Hard Costs (hardware, equipment, etc.)

• Challenges

– Putting time in without regard to estimate

– Getting systems, processes aligned

Questions / Discussion

?

Controlling Project Costs

SoTecConference 2012

10/26/2012

Jon Grunzweig 11

Controlling Project Costs

Jon Grunzweig

Thank You!