What is Project control?
Project control is one of the essential functions of the project management process. The control assesses the implementation of the project against predefined criteria and standards.
The purpose of project control
The primary purpose of project control is to ensure compliance with the principles of sound financial management - economy, efficiency, and effectiveness. The principle of the economy means that funds should be used for activities that are carried out on time, in the right quantity, and at the best price. Efficiency deals with the best balance between the resources used and the results achieved, and efficiency with the achievement of specific project goals and outcomes.
For this purpose, a system of financial management and control is established, which allows: clear definition, differentiation, and separation of functions and tasks between the different entities responsible for project management and implementation, establishing procedures and rules for financial management and control.
How the project financial management and control system is created?
The project financial management and control system is created with three main goals:
- identify current deviations and anticipate future deviations from actual development and project plans;
- identify the causes of these deviations;
- support management decisions and corrective actions aimed at directing the project in the desired direction.
There are two types of control in project management
There are two types of control in the theory and practice of project management: ex-ante control and ex-post control. The ex-ante control of projects is the control over the legality of all documents and actions related to a financial activity.
The ex-post controls assess legitimacy, cost-effectiveness, and cost-effectiveness. Similar to monitoring the implementation of the project, an organizational structure, methods, written policies, and procedures for financial management and control are established.
The purpose of the financial management and control systems is close to the purpose of the monitoring systems - maintaining timely and reliable information that is used for decision-making and the preparation of reports and reports. Unlike monitoring, project control focuses on its effective financial management and is performed at regular intervals.
What project financial management and control system includes?
The project financial management and control system includes:
- control indicators/criteria;
- frequency of inspections;
- units and specialists performing control;
- forms for providing control results;
- types of controls.
Important indicators for controlling the planning and implementation of the project are the deadlines for implementation, the budget, and individual economic indicators. The choice of performance criteria depends on the relevant objective, and the rank of management to whom the results of the control will be reported.
Once the performance criteria have been selected, the necessary information for each of them must be determined. The collection and analysis of project implementation data so far form the basis of the control function. The actual progress of project activities and resources used should be monitored on an ongoing basis.
The information obtained is compared with all project parameters, and it is important to take into account the interconnection between them. The information collected is analyzed and, if any, deviations are proposed, corrective actions are proposed, with appropriate action being taken to control changes implemented.
Traditional forms of project control
Traditional forms of project control are physical execution control (program control) and financial (ordinary) control. Control of the physical implementation of the project is based on a comparison between the project plan and the actual implementation.
Data on the actual progress of the project are collected periodically (every month) or continuously (after an activity is completed or reached a stage) and are used as an element of the control system. By comparing the original plan with the current project plan, the deviations that are used as a starting point for corrective actions are identified. The main elements of the performance control process are the set of project documents - general financial and accounting documentation, performance reports, technical documentation (tender documentation, contracts, etc.).
Comparing the actual costs of the project activities with the planned budget
The financial control of the project is carried out by comparing the actual costs of the project activities with the planned budget. Control limits are set to determine the degree of deviation. For deviations higher than the predetermined value, alternatives to corrective action are analyzed.
The control exercised through the financial statements for the implementation of the project (real control) is based on the notion of management through exceptions, where the real deviations from the plans direct the management to a specific problem that needs attention.
Another type of financial control is traffic control, which is based on projections of future costs. The real costs of project activities are extrapolated to the future with the intention of detecting deviations before they occur. Estimates of future deviations are an element of preventative activities designed to minimize future problems. Traffic control is important because information on the real cost may not reveal irregularities. Still, the movement of data over the last few control periods may prove likely to cause future problems.
Ways of presenting the results of the project control
There are various ways of presenting the results of the project control. These may include checks on the general financial and technical documentation of the project, as well as on-the-spot checks of the financial and accounting documents stored in an information-based system, of the project contracts, etc. There are also widespread written forms of providing control results - physical performance reports, financial statements, cost estimates, reports containing conclusions, recommendations and follow-up.
Comments from the BVOP™ community on "Project control"
Project control assesses project implementation against criteria and standards. It aims to ensure compliance with sound financial management principles, such as economy, efficiency, and effectiveness, through a system of financial management and control.
Project financial management and control system aim to identify deviations, cause them, and support decisions.
Project management involves two types of control: ex-ante control and ex-post control. Ex-ante control is legality, while ex-post controls assess legitimacy, cost-effectiveness, and cost-effectiveness. Financial management and control systems are established to maintain timely and reliable information.
The project financial management and control system includes control indicators/criteria, frequency of inspections, units and specialists performing control, forms for providing control results, and types of controls. Performance criteria are selected based on objectives and rank of management, and data is collected and analyzed to identify deviations and corrective actions.
Project control is based on physical execution and financial control, with data collected periodically or continuously to identify deviations. The main elements of performance control are project documents, financial and accounting documentation, performance reports, and technical documentation.
Financial control of the project involves comparing actual costs to the planned budget, setting control limits, and analyzing deviations. Real control is based on management through exceptions, while traffic control is based on projections of future costs to detect deviations before they occur.
Project control results can be presented in various forms, such as physical performance reports, financial statements, cost estimates, and conclusions.
Comments on “What are Project control, Project Controller and Project controls?”
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