Using Excel for Project Cost Management?

Our clients are often stepping up from Excel to BOEMax, our proposal management software because BOEMax provides a better, faster, and easier way to produce a reliable data-driven cost estimate. Helping them implement BOEMax to support their proposal process, we frequently discover they are using Excel to manage their project cost data for the execution phase with varying degrees of success.

The common explanation is they don’t want to invest in complex software designed to support government contractual requirements for an earned value management system (EVMS). The typical scenario is they have a large portfolio of smaller projects, usually $20M or less, often firm fixed price contracts. The few contracts with EVMS requirements usually get more management oversight. However, those smaller projects without EVMS requirements may have a greater combined impact on the company’s bottom line. Management needs equal visibility and control for those projects.

Excel Limitations

Excel is a powerful and flexible tool that can be used for a variety of purposes including managing time-phased cost data for a project’s execution phase. The downside? There is no consistency in approach, even when there are attempts to do so.

Excel doesn’t have the built-in functionality to help create and manage project time-phased cost data such as the budget, actual costs, and estimate to complete along with calendars, rates, and resource structures. A power user must create the project unique set of spreadsheets, formulas, and macros. There is no integration with a scheduling tool. The project manager often lacks a complete set of data to help them make proactive decisions.

What’s lacking is a central database for the cost data that could be used for a variety of project control purposes. For example, upper-level management often needs reliable project estimate at completion data to do financial analysis and assess the return on investment (ROI) for a portfolio of projects. Are they making or losing money on those firm fixed price contracts? They also need to routinely assess the likely resource demand for existing projects and what is in the proposal pipeline to proactively manage resource requirements. What adjustments do they need to make to ensure they have the right resources available at the right time? 

A Better Way

ProjStream’s BOEMax and MaxTeam were designed to support the entire proposal and project control process regardless of the size, complexity, or type of contract.  Like BOEMax, MaxTeam provides a central database all project control teams can use to maintain the complete set of time phased cost data.  Users have an easy to use Excel-like grid view with a built-in hierarchical structure for the project’s WBS to enter and manage the time phased cost data.  With a central database, management can easily access the quality source data they need for financial analysis and resource management.

With MaxTeam the project control teams can:

    • Leverage the proposal cost estimate data as the basis for the budget plan after contract award.  This reduces the time required for the project startup phase and increases the quality of the budget plan.  Simply copy the project from BOEMax and save it in MaxTeam.  The project control team has the complete project structure already built out including the calendar, rates, resources, and time phased cost data along with the basis of estimate rationale.  They can update the WBS as needed, add other user defined codes and fields, modify the basis of estimate details, update the task durations and resource requirements, and quickly produce the time phased budget.  

    • Determine the appropriate project control practices needed to manage a project.  With MaxTeam, the project manager can match their management requirements with what functions they use in the tool.  For example, for a short, low risk project, the project manager may want to track and manage the project’s time phased budget, actual costs, and estimate to complete data.  For a higher risk project where the project manager wants visibility into project progress, the project control team can define accomplishment criteria and assign work package earned value management techniques so they can also calculate earned value data.  For a time and materials project, the project manager may want to focus on managing tasks and ensuring they have the right mix of skilled resources.  Or, they can implement the bill of material functionality for a project with a high dollar value of material requirements.

    • Integrate with schedule tools.  Depending on the type of project and project duration, the project manager has the option of creating a schedule driven time phased budget plan or estimate to complete data from the resource loaded activities.  This ensures the schedule and cost data are always in alignment.  This helps to increase the quality of the budget, estimate to complete, and estimate at completion.  The current schedule data provides the basis to forecast the project’s completion date.

    • Implement a workflow process to manage changes to the budget plan.  For more complex or higher risk projects, the project manager can use the built-in workflow functions to ensure changes are tracked and implemented as approved. 

    • Produce data views and reports at the project or enterprise level.  A central database makes this easy to do.  There is complete top down and bottom up data traceability with reliable source data to produce a variety of reports.  For example, the project manager can:

      • Assess whether actual costs are running higher or lower than anticipated and determine a likely estimate at completion.  They may want to compare planned versus expended for the different categories of labor, travel, material, or other direct costs.  They may want to compare the project’s current burn rate to the project’s funding profile.  This helps them identify areas of concern and informs their decision-making process to ensure the project meets schedule and budget objectives.

      • Look for data anomalies such as actual costs outside the project’s period of performance or improper use of charge numbers. 

      • Maintain a bill of material and schedule so they can execute and manage material purchases.  They may want to calculate price and usage variances to identify issues and make adjustments in suppliers, approach, or revisit make or buy decisions.

  • Corporate management can also take advantage of a central database with proposal and current project time phased cost data.  For example, they can: 

    • Use the source estimate to complete an estimate at completion data for their financial ROI analysis such as profit and loss assessments.  They can do an independent assessment of the project manager’s estimate at completion.  How reasonable is that estimate?  They can produce a range of estimates at completion taking into account in other business factors such as a change in their business base, acquisitions, or corporate reorganization.  Is the company at risk of losing money on a portfolio of projects?  What can management do to minimize the loss or increase a return on investment?

    • Create a combined corporate view of resource requirements for projects currently in progress or just getting started, and contracts the company is likely to win.  This is dependent on the accuracy of the resource planning at the project level.  Quality budget and estimate to complete data help management to effectively manage the company’s resources.

    Why Make the Change to MaxTeam?

    MaxTeam was designed to help project managers and project control teams easily maintain a complete set of time phased cost data for the life of the project. The project manager determines the functions they want to use to fit the characteristics of the project and what data they need for visibility and control. With a central database and functions designed to support the project control process, project managers and corporate management have reliable source data for project performance analysis and proactive decision making.

    Call or schedule a demo today to see how MaxTeam can simplify and improve your project control process.

Topics: project lifecycle, data traceability, project control process, MaxTeam

Author: ProjStream