In April 2021, the Ministry of Statistics and Programme Implementation, which monitors infrastructure projects in our country, reported that out of 1,737 projects worth Rs 150 crore and above, 470 projects had reported cost overruns, 525 were delayed. Thus, the total project overrun amounted to nearly 20%. At the same time, the average delay was a whopping 46 months. While some of these delays could be attributed to the prevailing pandemic, most of these are from pre-pandemic time. Also, the report observed that the overruns will be even higher since realistic forecasts are yet to come out on many of these projects.
What could be the factors for such enormous time and cost overruns?
These could be related to setting up ambitious baselines for the projects. But, most likely, it is due to a lack of effective project monitoring. Both, in terms of time as well as cost. Project Monitoring is a process that is practised randomly by many project owners and sponsors. While most think that they are doing enough, but in reality, it’s more like mere status reporting and firefighting rather than an organized, comprehensive approach to get an early warning system.
Project Monitoring: Best Practices
Project monitoring is not merely a comparison of actual spending vs budget, nor it’s a simple comparison of substantial per cent completion against planned percentage. The process has to be designed in a way that encompasses all aspects of the project performance metrics. If one looks at only cost or rate, they are only looking through a very narrow window and can easily be misled.
A typical monitoring process does not end at reporting the delays and deviations. The process must include a mechanism for formulating and implementing the remedial actions and devise a system to follow up the effectiveness of these corrective actions. It’s akin to a physician’s manual for treating a patient until they are up and running.
The process should aim for 360֯ view of the project throughout the life cycle of the project. It may sound daunting, but if approached in an organized fashion, it will play like a symphony and can provide all the early warnings regarding the project’s physical and financial health.
The process for physical health monitoring and financial health monitoring should be based on this basic philosophy. The process will have to be designed to look into the status comprehensively and analyze the data meaningfully. That and that alone will help the project managers to control the projects effectively.
Project Monitoring: Physical Health Check
For monitoring the physical health of a project, it’s essential to look at each indicator. The progress numbers do tell the quick status, but they never tell the whole story. Monitoring requires an in-depth analysis of various aspects and their interplay. It’s like doing cause-and-effect research. Every number tells a story one must listen to each of these.
For accomplishing this, the reporting system has to be robust. Then, comes the critical phase of analyzing the data integrated and establishing the prevailing situation’s root cause. Then only a meaningful plan of action to arrest any negative deviation is possible.
A typical monitoring process should include the following steps.
Project Monitoring: Financial Health Check
To meet the business objectives of any project, it’s imperative to keep the cost of the project strictly under the budget. However, it needs to be recognized that there will be deviations against several budget items as the project progresses. Hence, a robust system should be put in place to monitor the cost and budget of the project continuously. The design should not only be taking care of cost forecasting; it should also take care of cost phasing in line with the project’s progress. This will ensure that there is no shortage of funds nor there are any parked excess funds.
While the data for analysis and forecasting is captured continuously, cost forecasting and re-phasing should be carried out at predefined frequencies.
Ideally, the project contingencies should suffice for the budget growth. And an ideal model should look like the following.
Project Monitoring: Tricks of the Trade
Often it is observed that owner (client) organizations do not develop their Master Implementation Plan (Integrated Project Network Schedule) & corresponding progress measurement system as no government officers want to be monitored, unfortunately. As a result, the major project phases such as Land Acquisition, Design & Tendering phases go unmonitored. When Construction contractors are onboarded, then only everybody starts project progress monitoring. As the earlier stages (Land Acquisition / Design / Tendering) go unmonitored, maximum delays are observed. If the owner (client) organizations start preparing and monitoring their schedule, the delays can be arrested to a large extent. The best trick of the trade for effective monitoring is if our Ministers / Secretaries / Top management of owner organizations would start asking statistical Analysis of Plan Vs Act Vs Forecast for % Progress, Drawings Status, Tendering Status, Construction Quantities, Manpower, Machinery etc. which is purely dependent on the Organizational Project Management Maturity of the respective owner organizations, then the Cost / Time overrun can indeed be reduced to a great extent.
The amount of data, which gets generated during the lifecycle of the project, is enormous. Therefore, it needs to be analyzed with a clear focus, and the findings should be presented in a manner that provides an accurate representation of the project health.
For schedule monitoring, it’s most important not to focus just on a single indicator. One must look at the project through multiple lenses to provide a 360֯ view of the project health. While reporting the findings, one must be precise, accurate and always remain audience-specific. The reports for working engineers will vastly vary from the information which needs to be provided to top management or the project sponsors. While working on the action plans to recover any delays, one should remain focused on the objective. Indulging in blame games and lengthy post mortem should strictly be avoided.
For Cost monitoring, first and foremost is that Money Spent is not equal to Money Earned. Unfortunately, many organizations follow this, which leads to a grave situation in terms of time and cost overruns even before they realize it. Therefore, it’s best to use the Earned Value Management (EVM) system and watch the Cost Performance Index (CPI).
Project Monitoring: Roles and Responsibilities
Project monitoring has to be operated as a well-organized process rather than working with random snapshots. Therefore, the role of the entire project team and various stakeholders is vital to the success of this process.
The top management should inculcate a culture that the monitoring process is for the benefit of the project and not hold any person responsible for any delays. The project team needs to report the actual status of the activities at any point in time. They might be too occupied to carry out their work and should seek the help of the planning and monitoring teams to prioritize their work.
The dedicated project planning monitoring team gathers all the data from various sources and analyzes the data to establish the prevailing deviations and likely deviations in future. Subsequently, the team will fathom the root cause of the delays and overruns. Once the root causes are established, the team will prepare the action plans to arrest the delays and overruns in consultation with the execution team.
The top management and the project sponsors should focus on the milestones and specifically seek the areas that need their attention and support. By doing so, they can create a healthy project environment to give confidence to the project team that they are always standing with them in any need of the hour. This will help in excluding the tendency to provide false reports and will assist in delivering the actual status of the project and any areas of concern.
Project Monitoring: Closing Note
Barring the few exceptions due to natural calamities or unforeseen events, all projects can be executed to maintain the schedule, cost, quality, and safety. However, once the realistic baselines have been established, they need a robust and comprehensive project monitoring process.
Protecton BTG has been instrumental in setting up these systems at India’s first bullet train project MAHSR and is currently in active discussion with other important infrastructural projects for providing MIP services and implementation/operations of SMART PMS.