SESSION S7: PROJEClT CONTROL FOR ENGINEERING

7.1 TEE NEED FOR ENGINEERIN G PROJECT CONTROL

One of the most important challenges facing engineering and construction management today is the prevention of cost and
schedule overruns of the type that have plagued major projects so often in the past. The multiple parties involved in a project
(owner, engineer, construction manager, contractors, and subcontractors), the complexities inherent in a project, the pressure
* of time, increasing regulatory requirements, inflating costsof material and labor, and the un&xtaintiea of nature combine to
make engineered construction a management nightmare. Obviously, a project must have a formal project control systemif
there is to be successand that systemmust include the engineering effort.
Project control is concerned with resource quantities, time and costs. Planning and controlling of resources is generally ac-
complished within the cost control systemalthough that systemshould be linked to the schedule. All resources,whether they
be personnel, material, equipment, supplies or services,are quantifiable and can be converted to a dollar amount. During the
planning of a project, quantity and dollar budgets for these are established. During the controlling operation, actual quantity
and dollar performance and rates of utilization are compared with planned performance.
Time and work progress are managed through the schedule. During the planning operation, engineering work tasks are
scheduled to fit project requirements and a systemfor measuring progress of each task is established. During the controlling
operation, status is reported against that system.
, The benefits of an effectiye project control systemare many. It documents the project plan and actual performance. It iden-
tifies problem areas and unfavorable trends. It is a communication tool. It allows project managers and other project par-
ticipants to “keep a handle” on the work It feeds the historical databaseso future planning of comparable work can be more
accurate. Overall, it is a major factor in the successof the project at hand and planning of future projects.

The project control function is the “eyesand ears” of management at all levels and the source of project statusinformation for
the client. It is also an information center for every professional on the staff. Accordingly, it should be organizationally placed
so that it responds directly to the project manager. It must not be treated as another accounting function, nor should its ac-
tivity be decentralized among the functional groups. And, it must be recognized as an integral part of management, not as a
Police Force! Management must assessthe information provided, then take the necessarysteps to implement any action
needed.

Engineering project control, to be effective, must begin during initial planning and budgeting of the work It will continue
during conceptual and detailed engineering phases.
Control of engineering activity is generally more difficult than control of construction activity becauseengineering tasks are
more difficult to quantify and track between start and completion, tasksare more parallel and overlapping, and the respon-
sibility for a given design is often shared among various disciplines. The challenge is particularly great on those projects
where engineering overlaps procurement and construction. But, engineering work can be controlled. Succeedingdiscussion
, provides details of a systemfor this control.

j.2 THE NATURE OF ENGINEERING WORK

There are two groups who use the products of engineering; (1) The suppliers of installed equipment, modules, and construc-
tion materials, and (2) the constructor(s). The vendors require the specifications and drawings which define what they are to
engineer and/or fabricate for delivery to the project. The constructors require the detailed drawings, specifications,and proce-
dure manuals to construct/erect component of the facility. In both cases,a “package” of engineering deliverables is required
and the vendor or constructor cannot effectively proceed until all items are available. Work packaging for engineering is built
around these packagesof deliverables.
 -s-----J
Fire 1. E-P-C schedule Intematiun fur Prucess Svstem
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 S7 - Prqitct Cm&d For JZ&nce*
r
.
Fiiure 2. Cost and Work Breakdawn Structure
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Figure 1 provides a visual representation of the above. On it, ProcesssystemA, composed of two vessels(Vl and V2) plus in-
terconnecting piping, is to be installed. To complete the installation, there must be packagesof engineering deliverables avail-
able for each vessel and the piping Backing up in the flow diagmm, the various engineering activities required to make it all
possible are shown Early in the processthere must be criteria to guide processdesign. Then, there must be individual vessel
criteria to guide vessel design, etc.

In performing its work, the engineering group is generally organized around engineering disciplines (civil, architectural, struc-
tural, mechanical, electrical, etc.) or specialty services (model shop, procurement, environmental studies, economic studies,
etc.). These are the production units of the organization. Supporting them are such functions asword processing, computer
services,accounting, personnel, etc.

As is evident from previous discussion,there are activities of direct work in engineering and each of these have a cost. Other
activities are support in nature, both direct and indirect, that are only cost items Contract progress is tracked againstwork ac-
tivitie$ costsare tracked against both activities and other items. Thus, the project control systemmust be designed to control
both work and cost.

7.3 THECOSTANDWOKKB RJ3AKDowNsTB~cTuREs

The Cost Breakdown Structure (CBS) for the project includes every element of cost for the project. In effect, it is a summaryof
the budget by category. The total of all categories equals the total project budget. Figure 2 is a visual representation of the
CBS for an example project.

The Work Breakdown S;ructure (WBS) for the project relates only the the engineering work products that the project manager
choosesto status as a basis for progress reporting. Drawings are traditionally statused. Designing, specification writing, study
preparation, model construction, an equipment/material procurement involve deliverables so ate other logical choices. The
more of these taskschosen for control, the more positive and informative wii be the control system. A contractor may include
selected indirect activity, such as supervision, .project controls, etc. in an engineering progress control system. However, in-
direct functions do not directly contribute to deliverables and inclusion of them will distort progress on deliverables.

On Figure 2, the shaded portions are the budgets for those elements of the CBS which will comprise the WBS for this example
project In this example, only designs& drawings, specificationsand procurement transactions have been chosen for work con-
trol. The activities accounted for within these budgets are essentiallythe greatest level of detail in the WBS. Thus, the WBS is
incorporated within the CBS. Actually, the complete WBS for the project will have the total facility to be designed as the ul-
timate summary level. The facility is then divided into well-defined areas,systemsand structures which, in turn, can be further
subdivided into welldefined sub-areas,subsystems,and substructuresto form a hierarchical WBS describing the total facility to
be constructed. The WBS is continued beyond that point to identify deliverables needed for construction of a facility or the
manufacture of engineered equipment for installation in such a facility. A work package is any one set of these deliverables
which are targeted on a given procurement or construction needdate. Figure 3 is a visuai representation of this.

7.4 DELIVEMBLES CONTROL

Once the scope of a project has been reasonably defined, an engineering organization is able to estimate the distribution of en-
gineering effort among the various disciplines in terms of deliverables. Deliverable registers are then established for each
category of deliverable (drawings, specifications, etc.). The coding system for these registers may be sequential within
deliverable categories. For example:

AD-XxXx Architectural drawings

As-XxXx Architectural specifications

Some companies are experimenting with the use of barcoding of drawings. Bar codesare essentiallysequential numbers which
are used to accessa data set from which any amount of information can be retrieved, much as the bar codeson a grocery item
generate full descriptions and price of the item from the computer database.

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 Control O . Engineering Construction
0
Scheciule Work Package ‘O Work Package ’ .

1
All Included Deliverables

Register
Drawing Schedule
Control Work Package Matrix
System
Register
Schedule
Work Package Matrix

Next, the deliverables must be related to the work packagesneeded by the vendors and constructors. The first step in this
processis to identi@ where, on the Control Schedule, engineering work packageswill be required Then, the content of each
package must be determined Most packagescontain multiple deliverables (Figure 3). Also, it will be found that some
deliverables will be used in only one work package;others will find use in more than one.

Control of work is best based on control of budgeted work-hours for individual work tasks. As part of this control, there must
be some method for evaluating percent complete of each task Methods available are summa&& in the Appendix

Further, becausea deliverable may find application in more than one work package,it is not appropriate to include the work
packageidentifier as part of the deliverable’s coding. The relationship between dehverables and work packagesis established
through another data set in the computer.

7.5 EXAMPLE

A simple example involving the design activities associatedwith an add-on to a processplant will help illustrate the system
described. This add-on work involves several construction areasand several systemswithin these areas. Figure 4 provides the
WBS coding structure for the project and Figure 5 outlines a portion of the WBS to further each component at each level.

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 xxx.xx.xxx.xxx

I AREA ID A i-SYSTEM ID I

&lJn?4. wB!3codiaeslrncture

For example, the work packageassociatedwith the design of the Cooling Tower Pumpswould be coded as follows:

100.05.005.100

In this case, the Project number is 100, the pumps are physicallylocated in the Cooling Tower Area (code 05), these pumps
are part of the Cooling Water System(code 005), and the Cooling Tower Pumps component number is 100.

The control document establishing assumptionsand budgeted parameters for the Cooling Tower Pumps design work package
is shown in Figure 6. As can be seen from this document, the work packagehas a start date of 1 April 1989and a projected
finish date of 16 April 1989. It provides baseline information for control of the package. Supplementary data setswould main-
tain statusof individual deliverables.

The project is controlled at Level 3 (see Figure 5). As the project progresses,the baseline budgets (summation of all task
budgets) are periodically compared with the actual progress of the work Work packagecontrol documents provide planned,
actual and forecast data. Analysis of the data acquired from the work package document enables management to evaluate
progress of the work in a timely manner. Based on the analyzeddata, management can pinpoint control accountswhich are
over the baseline budget and decide on a course of action to take.

Level 0 i PROCESS FACILITY ADD-ON PROJECT 1

1 100 I
,~.
I
[ t I Ia 1
PROCESS PROCESS- EXISTING CONTROL .COOLING INTERC’NG
Level 1 AREA AREA FqClLlTlEs TWR. AREA FACILITIES
01 02 03 “%” ‘OS . 06

! I I I i
INSTRUMENT LOW HIGH POWER COOLING
Level 2 AIR PRESSURE PRESSURE 13.8KVA WATER
SYSTEM STEAM STEAM SYSTEM SYSTEM
‘ 001 002 003 . 004 . 005
I

Level 3

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 ENGINEERING WORK PACKAGE COLLECTION SHEET

Work Package Number: 100.05.005.100

Work Package Description: Cooling Tower Pumps

Date Issued: March lo,1989

Scheduled Start Date: April 1.1989

Scheduled Finish Date: April 16,1989

COST PER PLANNED

TASK5 REQUIRED PLANNED WORK-HOUR COST
WORK-HOURS
6) 6)

Drawings 5 250 15.00 3750.00

Specifications 2 20 15.00 . 300.00

Studies 1 40 20.00 800.00

Flow Diagrams 1 30 15.00 450.00

Gotal Budgeted Work-Hours = 340

Total Budgeted Cost = S5300.00

Fkme 6. Eneineerine Work Packaee Cokctiin Sheet

7.6 SCHEDULES

There are different levels and types of scheduleappropriate for control of engineering work The most detailed schedulecon-
trol occursin the controlling of individual engineering deliverables. At that level, barchart schedulesor tabular listings may be
appropriate, but for effective schedulecontrol the roll-up of such tasksmust be related to_activitiesin a CPM formatted project
control schedule.

On E-P-C projects, the control schedule should be in network formata and interrelate with the procurement and construction
schedules-- engineering work packagecompletion usually constrains the start or continuation of a procurement or construc-
tion activity on E-P-C projects (Figure 1). Thus, need dates for dependent work packagesbecome milestone dateson the en-
gineering portion of the control schedule. On E-P-C projects it is absolutely essential that a logic trail be established,amongall
activities contributing to project completion. The trail is best established if network relationships are created among all ac-
tivities. This philosophy must be balanced against haying too much detail on the control schedule since it must be simple
enough to permit human review and analysis. The solution is to keep the project’s control schedule at a network summary level
and to treat its engineering, procurement and construction activities as hammockssupported by individual detailed schedules
(Figure 1). When this is done and the total systemis integrated, it will be possible to trace the effects of any changesand devia-
tions throughout the project. As noted previously, engineeringwork packagesare the activities on the control scheduleand, as
such,are the hammocks for more detailed subnetswhich trace both sequential and parallel stepsin accomplishing the activities
included within the work package.

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Schedule control and updating will take several forms. Approved changeswill be the basis for changing the control schedule.
Recognizing that actual performance will seldom mirror the control schedule,controllers will also maintain a working schedule
which documents performance -to date and plans work from that point. Short-term, detailed scheduling will be used for plan-
ning work for the near-term future (30-90~days). Throughout the project, the control schedulewill serve as the target, and as
such,must be the basis for all reporting of scheduleconditions, progress,etc.

7.7 PROGRESS WUREMENT

Percent complete is determined by the method chosen during the planning operation for the task in question (see Appendix).
Earned value techniques are used for summarizing overall work status on those tasksbeing tracked for progress. The earned
value of any one item being controlled is:

Earned work-hours = (Budgeted work-hours) x (% complete)

Note: Budgeted work-hours equal original budget plus approved changes

Overall percent complete of the project or any summarylevel of the WBS is found by this formula:
*
% Complete = Sum of earned work-hours of included tasks
Sum of budgeted work-hours of included tasks

Trends can be tracked through various indices. The Cost Performance Index (CPI) and the Schedule Performance Index (SPI)
are particularly useful for this purpose. The CPI provides a comparison of the number of work-hours being spent on work
tasksto the hours budgeted and is an indicator of cost performance on production work The formula is as follows:

CPI= Sum of earned work-hours of tasksincluded

Sum of actual work-hours of task included

The SPI relates the amount of work performed to the amount scheduled to a point in time. The formula is:

SPI = Sum of earned work-hours to date

Sum of scheduledwork-hours to date
Note: Scheduled work-hours used in this formula are summarizedfrom task schedules.

In both the CPI and SPI formulas, an index of 1.0 or greater is favorable. Trends can be noted by plotting both “this period”
ahd 5zunmlative” CPI and SPI values on a graph.

While the SPI for the total project or for a work packageis somewhat of an indicator of schedule performance, it tells only part
of the stoty. It only compares volume of work performed to -volume of work scheduled There can be an SPI in excessof 1.0
and still be a danger of not meeting milestones and final completion dates if managers are expending effort on non-critical ac-
tivity at the expenseof critical activity. The SPI does not show if work is being completed in the proper sequence. Thus, as part
of schedule control, controllers must regularly examine the schedulesof all included tasksin each work package so that any
behind-schedule items can be identified and corrective action taken to bring them back on schedule.

Chrerall cost performance on the project is tracked by comparing actual costs to those in the budgets of the CBS. Unfor-
tunately, there can be significant lap between incurrence of cost obligations and receipt of invoices or other cost notification
for many accounts so it is difficult to have a timely and responsive systeminvolving all accounts. Yet, it is possible to use an
earned value approach for cost control on all accounts if the owner or contractor so desires. Reference 3 provides more detail
on earned value applications.

The systemdescribed is intended to provide the project manager and other project participants with the information needed
for control of the project. Data generated from the systemis continually analyzedfor the purpose of identifying trouble spots

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d
or unfavorable trends. If the systemhasbeen properly designed,timely rem will be available so that corrective action can be
taken when and where needed.

7.8 PROCUREMENTACTMTY

There are two types of procurement activity associated with engineering The first type is the procurement of
equipment/materials to be engineered by others. With this type procurement, the design-engineets develop performance
specScations and other criteria for the item and provide these to the selectedvendor. The vendor designs the item to meet
these specified criteria and forwards the design documents to the engineer for review. Following drawing approval, the vendor
will fabricate and deliver the item. Some engineering activity may have to be held up until approved vendor documents are
available (e.g.--foundations and piping connections). Very often the timing for these vendor documents to support foti-on
engineering is more of a determinant for the schedule of early procurement train activities than the item’s need date for con-
I struction.
A second type of procurement is the more general type which results in the delivery of an off-theshelf piece of equipment or
commodity.
An engineering firm may have either or both types of procurement actions included in its contract. On an E-P-C auuract, it
would be normal for the firm to have both. Regardless of what agencyhas procurement responsibilities, it is essential that
, procurement be inchrded in the controlling systemfor the project. It is also essential that procurement activities constraining
engineering design (and vice-versa) be related to the activities which are axtstrained.
I

A given procurement action is a train of sequential activities (See Figure 1). Each of these activities must be inchuied in the
detailed schedule although the overall procurement of a component can be a single activity on the control schedule. For
i procurement tracking, each procurement train can be treated as a unit and tracked using the incremental milestone method.
Or, each train activity can be tracked separately using a method most appropriate to that activity (SeeAppendix).-

,
7.9 HISTORICAL DATA

Planning of future projects relies heavily on experience on past projects. Data setswithin the systemshould be designed to
summarizeand accumulate experience data in a format directly usable in future planning

7.10 coMPuTERsYsTEM SELEcTIoN

Establishing a capability for integrated project control is the major objective in the selection or design of the computerized
project control system.These features are desirable:
* The computer software should have both a scheduling module and database management capability.
Databasesshould be linkable.
* The schedule module must handle CPM network scheduling.
* The databasesshould be linkable to the schedulemodule.
* A graphics capability should be included which is capable of producing network logic diagrams,barcharts, his-
tograms, and graphs from systemdatabases.
* The systemshould be capable of generating userdesigned reports using data directly from any combination of
the data sets. The systemalso should be capable of performing calculations or summations from the data
* Databasesshould be structured so that it is not necessaryto enter a piece of data more than once.
* The systemshould provide the project controls capabilities described elsewhere in this document.

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The capabilities of microcomputers have been improved to the extent that they can be used for stand-alone project control on
many projects. In choosing hardware and software for a micro system,users must insure that candidate systemscan handle
both the scheduling and databasemanagement requirements. Control of engineering is a complicated procedure so a database
management capability of considerable capacityis required.

7.11 SUMMARY AND CONCLUSIONS

Effective project control of engineering effort can be attained and modern techniques with supporting computer systemsare
available.

The project control systemmust be designed to control both cost and work The systemmust encompassplanning, scheduling,
monitoring, reporting and analysis, forecasting, and historical data collection. Subsystemswithin the total systemmust be
available to track procurement activity and to generate the maintain equipment lists, instrument lists, and other summariesas-
sociatedwith design engineering work The design of the systemshould be basedon the principle of integrated project control
and be flexible enough to handle large and small projects while also responding to special client needs.

The full professional staff of the engineering organization must be committed to and support project control and be trained in
the operation of the company’ssystem. If properly designed and supported, such a systemshould provide the control needsof
management while also providing essentialfeedback to individual professional personnel.

Establishment of an effective project control systemwill cost money and require the establishment of a formal project controls
organization. Research has shown that roughly 8% or more of the costsbudgeted for an engineering project should be allo-
cated for project control if it is to be effective. Yet, it is believed that the potential cost and time savings attributable to an ef-
fective project control systemfar outweigh the costof establishing and maintaining that system.

7.12 REFERENCES

(4 Proiect Control for Eneineerin~, Construction Industry Institute Publication G-2, Construction Industry In-
stitute, 32OgRed River Street, Austin, ‘IX 78705

(B) Work Packapine for Pro&t Control, Construction Industry Institute Publication 6-7, Construction Industry
Institute, 32OSRed River Street, Austin, TX 78705

(Cl Basic Skills and Knowledee of Cost Enpineering, American Association of Cost Engineers Special Publica-
tion, James M. Neil, Editor, 1988.

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 APPENDIXA

PROGRRSSME4SUREMRNT SYSTEMS

The determination of percentage completion on a single engineering activity can usually be handled under one of the following
four systems:

(A) Units cmu~leted. This method is suitable when the total scope of an activity consistsof a number of equal or nearly
equal parts and status is logically determined by counting parts completed and comparing that to the total number of
parts in the total activity. Ideally, each unit is of relatively short duration. While this method has considerable ap-
plication in the construction phase, it has limited use during engineering A possible application is in the writing of a
number of specifications of a given type where all specificationsare considered to have essentiallyequal weight.

Incremental Milestone. This method is appropriate for activities of significant duration which are composed of easily
recognized,sequential subactivities. Percentagecompletion values are established basedon the effort estimated to be
required at each milestone point relative to the total for the activity. This method is ideal for control of drawings and
can be used in procurement.

A typical example for drawing control is: s

Start drafting 0%
Drawn, not checked 20%
Complete for office check 35%
To Owner for approval 70%
First issue 95%
Final issue 1000/o

tw Start/Finish Percentages. This method is applicable to those activities which lack readily definable intermediate mile-
stones and/or the effort/time required is very difficult to estimate. For these tasks,controllers credit 20%-W% when
the activity is started and 100% when finished. The reason that a percentage is assignedfor starting is that this com-
pensatesfor the long period between start and finish when no credit is being given. This method is appropriate for
work such as planning, designing, manual writing, model building and studies. It can also be used for speciftcation
writing

6) Ratio or Judgment. This method is applicable to tasks,such as project management, constructability studies, project
controls, and comparable activity which involve a long period of time, have no particular end product, and are es-
timated and budgeted on a bulk allocation basis rather than on some measure of production. It can also be used on
many of those tasksfor which the Start/Finish method is appropriate. Percent complete at any point in time is found
by dividing hours (or dollars) spent to date by the current estimate of hours (or dollars) at completion.

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