1.1 Obtain a clear summary of the project's overall cost status and financial position.

1. Actual cost incurred to date with the current estimate. Check that actual cost data is up to date. Some company systems can be slow in allocating costs to a specific project.
2. Change order status. The value of changes agreed and any that are in dispute with the client. What is happening with the disputed changes?
3. Cost trends and variances, with explanations. It is rare that there are no changes, so be suspicious if everything is stated as being on plan.
4. Forecast cost to complete compared with plan. This requires careful scrutiny since project managers are optimistic. They tend to show the forecast to complete as the original budget minus the actual costs. For example: is the forecast of productivity or monthly progress figures to complete the work consistent with the experience to date? If not, are they justified? Figure I.E.1 looks a reasonable forecast until you see the history in Figure I.E.2. This is taken from an actual project, and it was my intention to delete forecast f/c 1 since I thought that it might lack credibility. Forecast 1 demonstrates three things: (i) the optimism of project managers mentioned above; (ii) the importance of the launch phase (see Part IV Section A – Figure IV.A.1). and (iii) once the rate of progress is established, it is very difficult to change it. In this instance, the manager of projects might have accepted f/c 1 on the basis that the project may not have started well, but now that the team has got its act together, progress would take off. However, the rate of progress has not changed, and at f/c 2, the manager of projects must ask, “Tell me what dramatic action are you going to take or what special team building are you going to implement in order to change the rate of progress?” Forecasts 3 and 4 should not be believed, and the forecast project completion can be determined by extrapolating the actual curve.
5. Contingencies—their status and drawdown plan. There needs to be a defined and documented basis for retaining contingencies and then releasing surplus contingencies to profit.
6. Funded liabilities status (liquidated damages, warranties, plant performance guarantees, and so on). These liabilities can be substantial and can make the difference between a significant profit or a significant loss. They should receive plenty of management attention, especially in the final stages of a project.

Figure I.E.1

Figure I.E.2

1.2 Bonds:

Bonds status, (see Part V Section P, Surety Bonds). Identify the type of bonds that are current. The amount of exposure must be stated together with their expiry dates. However, remember that in some countries, bonds never die.

1.3 Performance incentives status:

Consider the potential for a bonus for achieving targets, as well as the penalties that could be incurred by missing defined objectives. What are the plans for achieving each objective. Are the right team members aware of these objectives?

1.4 Overall payment status:

1. Invoices status; are invoices being submitted on time?
2. What is the amount due for payment, and what is overdue and why? What is the project team doing to expedite the payment from the client?
3. Payment milestones status.
4. If payments are fixed in multiple currencies, how does this compare with the actual mix of currencies in the project cost estimate.

1.5 Profit and cash flow status:

1. Margin or gross margin (overhead and profit) forecast compared with the plan.
2. Cash flow status – if it is negative, when does the project become cash neutral and cash positive?
3. Foreign exchange – Has foreign currency been bought forward? What are the project exchange rates, and what is the variance with actual rates?

2.1

What is the status of client‐supplied information that will be relied upon for project execution.

2.2 Changes to scope:

1. Changes identified or requested
2. Changes submitted awaiting approval
3. Changes approved or rejected
4. Cost exposure if work on change orders has commenced ahead of approval. This is a no‐no, and the project manager is likely to be reprimanded. Nevertheless, some clients do enforce this in contracts. This situation has to be even more actively managed by the project manager and the implications reported in the monthly report.

3.1 Overall project percent complete:

1. Actual percent against plan and compared to the last forecast. This can include performance against early start, late start, contract plan, and internal target plan, depending on company practice.
2. Job to date and incremental monthly progress
3. Main reasons for variance against plan and trends
4. Forecast completion curves and dates

3.2 Resources and Staffing (Home Office and Site):

1. Status of staffing compared to plan
2. Future requirement
3. Critical needs

3.3 Technical or engineering status and issues:

1. Key milestones, for example, hazard and operability (HAZOP) review or model reviews
2. Key design parameters, for example, weights and quantities
3. Status of design documentation issued for construction or fabrication
4. Vendor data requirements and status

3.4 Procurement status and issues:

1. Purchase order status (enquired, committed, delivery status, closed out)
2. Equipment delivery status
3. Bulk material delivery status
4. Costs status and trends against budget

3.5 Construction or fabrication status and issues:

1. Construction and other permits status
2. Direct hire progress, productivity, and cost
3. Subcontractors progress, productivity, and cost
4. Subcontractors claims status
5. Cost status and trends against budget
6. Quality control statistics – weld reject rates and so on
7. Labour availability, training, and so on

3.6 Commissioning and plant operations status and issues:

1. Availability of commissioning personnel
2. Number of commissioning/start packs prepared or completed

8.1

There frequently are requirements to provide high level project summaries (commonly called dashboards), which are used at the corporate executive and board meeting level. Often it is just a sheet or two of key project data. These must be provided in a timely, complete, and accurate manner.

8.2

It is good practice for significant projects (and some ‘randomly’ chosen others) to have a formal review with a presentation by the project manager and their team. This should take place after about the first six months and then approximately a year later. This can become a significant workload problem for the manager of projects. Delegating this process to the chief executive for major projects helps and smartens up the team. It also becomes a useful mechanism for evaluating the capability of the project manager and their team. Difficult questions that are answered with: “I don't know but will find out and let you know” will be appreciated more than ‘waffling’.

9.1

A quarterly project managers' meeting is a useful process for exchanging information, raising internal functional management relationships or conflicts and discussing problems. It also enables the project managers to learn from each other.

9.2

A monthly, bi‐monthly, project status description memo (one or two brief paragraphs), covering all projects, helps project managers understand what is going on other projects. In this way they can identify if they are facing similar problems someone else is experiencing and vice versa.

10.1

When evaluating a project manager's performance, the project data and performance is only part (albeit a significant part) of the story, and other factors should also be considered.

10.2 Consider how the project manager interacts with company corporate management.

1. Is the project manager transparent in reporting concerns, issues, and problems? Do they have a tendency to hide project problems and then surprise internal company management or the client when they can no longer hide the problem? It is not uncommon for senior company management to first hear of a problem from the client rather than its own team, which is never a good situation.
2. What feedback do you get from a client or your own staff regarding a project manager? Note that complaints about a project manager may not be a bad thing. It may indicate the project manager is doing a good job in protecting the project, so judge the feedback carefully.
3. How does the project manager support other company objectives with their project? Do they support or resist company training requirements, developing people, and providing them with new opportunities? Do they help develop new tools or office capabilities? Ideally, no project should be used as a testing ground for a multiple of new company developments and objectives at the same time. Equally, no project manager should isolate their project from the other needs of the company.
4. What are the project manager's leadership and people management skills like?

11.1

The manager of projects often acts as a corporate sponsor for a project. They interact with a client opposite number at an executive level above the respective project managers.

11.2

There should be quarterly sponsors' meetings to review high‐level project status, overall business issues and objectives, and so on. The meeting should provide a level of resolution for problems, which could not be reasonably resolved at the project level. Both sets of representatives should be fully briefed and familiar with the current significant issues on the project.

11.3

Issues which can have a significant impact on the outcome of the project or impact the client or contractor's business interests should always be made known to the sponsors.

11.4

The manager of projects role needs to be recognised as one of the key relationship management roles between contractor and client.