Project Controlling

Table of Contents

1. Why Project Controlling?

2. Basics of Project Controlling

3. Objectives and Tasks of Project Controlling

4. Concepts, Methods and Instruments of Project Controlling

5. Project Structure and Project Process Organization Overview
5.1 Project Definition
5.2 Project Conceptual Design
5.2.1 Project Organization Structure
5.2.2 Objective Planning
5.2.3 Phase and Process model
5.2.4 Preliminary Study
5.3 Project Planning
5.3.1 Project Structure Plan
5.3.2 Project Process and Project Resource Planning
5.3.3 Cost Planning
5.4 Project Information Technology
5.5 Project Control and Governance

6. Resume

Source

1. Why Project Controlling?

There is only one common statement concerning all projects: they never go as planned!

Projects are accomplished to introduce an advantageous change in any kind of field. These fields can range from construction, research, policy to even private areas like a wedding. However, no matter in which field the project takes place it cannot take all variables, risks and possible changes into consideration. But, while accomplishing a project, it is very important to its success, to identify and analyze divergences and their causes in time to act effectively against it. Nevertheless, it also has to be mentioned that variances of plans do not merely have negative aspects; they are often catalysts or triggers for valuable learning processes.

Although the word controlling sounds like control with a bitter aftertaste, project controlling goes far beyond this. It is a continuing process which accompanies, manages and monitors a project during its total term. Project controlling establishes corrective actions which base on the running analyses. It is also involved in the final decision of an abandonment of a project or its acceleration. To cut a long story short, project controlling is responsible for keeping the project on the right track and to achieve the objectives of the project. In addition, the following quotation suits perfectly to project controlling:

“If you don’t know where you are going, you’re probably not going to get there” (Forrest Gump) Project Controlling

2. Basics of Project Controlling

Project controlling is tightly connected to project management. In fact, project controlling is crucial for the success of project management. But before entering into the world of project controlling, a common understanding needs to be established by the explanation of the terms project and project management. This will finally help to distinguish project controlling from the term project management.

Basically, a project is a unique scheme of accomplishing a task. The literature presents many definitions for these terms. Within this assignment, both the standard definition and a more practical approach were chosen for clarification:

Project

According to DIN 69900 (Deutsches Institut f i r Normung e.V., German Institute for Standardization) and DIN 69901 respectively, a project is characterized by its uniqueness, explicit objective as well as limits in time, financial and personal resources.

The definition gives a succinct description and a general conclusion of a project. In principle, projects are characterized by a unique process, a certain degree of complexity, risk of failure, risk of innovation, limited capacity of resources and interdisciplinary skills of the members. The planning, coordinating, organizing, controlling, leading and decision making―or in one word―managing of these characteristics is defined as project management.

Project Management

The Project Management Institute (PMI) describes project management as followed: “Project Management is the application of knowledge, skills, tools and techniques to project activities to meet project requirements”.

Indeed, due to accomplish a project successfully, project management is necessary. In DIN 69901, project management is defined as the entirety of leading tasks, organization, techniques and instruments for the realization of a project. (Translated, Deutsches Institut für Normung e.V., 1998)

After clarifying the terms of project and project management, it is easier to understand the purpose of project controlling.

Project Controlling

The role of project controlling is the support of project management in supervising and governing the project. Although project controlling is sometimes underestimated, it is significant for the success of a project. Project controlling has to design and coordinate the project structure and its process organization and workflow respectively. This is carried out by applying specific concepts, methods and instruments of project controlling. In this sense, project controlling is mainly seen as a subsystem of project management. (Schlagheck B., 2000)

Project Controlling

According to Gray and Larson (2000), the quality and the ultimate success of a project is consuetudinary determined as the match and/or achievement of the client’s or management’s expectations in reference to the project’s costs (budget), time (schedule), and performance (subject). These three constraints are illustrated in the golden triangle (refer to figure 1).

If one part of the triangle is changed, it will have effects on all the others. The constraints are interdependent to each other. In other definitions, the performance might be exchanged with the term scope. But since the assignment focuses on project controlling, the measurement of performance is the more suitable constraint.

illustration not visible in this excerpt

Figure 1: The Golden Quality Triangle of Project Management (Source: own design)

Out of these definitions, you can conclude that projects need to be accomplished in a quick, cost-effective and flexible way. The collaboration of the above mentioned components and constraints is of high importance. The uniqueness of a planned project is characterized by enhanced uncertainty and its resulting risks. Consequently, the better these components collaborate and are controlled the smaller is the resulting risk. Decisive parameters for a project are cost and time as well as performance and quality. The following factors have significant influence on the parameters and finally on the project itself:

- Objectives and requirements on the parameters
- Project complexity
- Environmental dynamics
- Human capital and resources
- Uncertainty, insecurity and risk factors which occur accomplishing a project

On the one hand, transparency of developing and progressing project parameters needs to be established by the project controlling. On the other hand, according to Schlagheck (2000), project controlling has to induce possible regulating actions. Finally, project controlling assesses changes on the basis of parameters to keep the project on the right track. How this works, will be shown in the next chapter.

Project Controlling

3. Objectives and Tasks of Project Controlling

The objective of project controlling is the efficient support of project management within the project governance. Consequently, project controlling has the responsibility to design and coordinate the project structure and process organization. It also creates transparency among the project parameters. (Riedl, J. E., 1990)

For target-oriented governance of a project, the given value―also called target value―has to be opposed to the actual value. In case of any disparities of the project parameters, regulating actions have to be recommended to the management. In the following step, coordination, accompanying and control of these regulating actions have to be realized. According to Schlagheck (2000), the basic element of project controlling is the configuration of a project information technology which enables successful project governance. In other words, project controlling is responsible for the establishment of a way to communicate disparities of parameters and to keep information continuously up-to-date.

The tasks of project controlling are basically the following: on the one hand, the creation and support of an infrastructure for the supply of the right information; on the other hand, the establishment of methods to accomplish an appropriate project structure, project workflow organization and project control and governance. One task might be, for instance, the development of a project information technology based on an intranet or the determination of a project key performance index system (KPI).

Furthermore, tasks ]are the coordination and accompanying of the project structure and workflow organization hence the coordination and accomplishment of the project control and governance. Elementary sub-steps, however, are the divergence analyses and the generation of proposals for potential project regulations.

The fulfillment and implementation of these tasks will be introduced in the following abstract by the concepts, methods and instruments of project controlling.

[...]