Project financial control is often complex, multi-dimensional and prone to the unexpected, then why do project controllers rely so heavily on two-dimensional spreadsheets for their multi-dimensional requirements, and what happens when we need to change this?
Project financial control
I have spent many years managing the financial and commercial aspects of long term multi-billion dollar projects for global stocks. During that time my central tool of choice was mostly Microsoft Excel, fed by accounting ledgers and manual input and presented via Microsoft Powerpoint.
Time and technology have progressed since then and now with IFS, we have an integrated ERP and project accounting control suite with dashboards and Business intelligence connections to the present. This integration is excellent at reducing process time, removing error-prone connections and spreadsheets and providing drill-downs for audit and investigation.
But is this enough for the canny controller wishing to view past and present projects to gain insight through analytical intelligence?
A manual number crunch
On two occasions in my career and in two different companies and industries, I was asked to provide empirically backed intelligence on the performance of my project: against other projects as a benchmark; and within the project to establish forecast accuracy over time.
With two to three years of data spanning eight to twelve projects each with monthly forecasts across 20-36 cost breakdown components (CBS), I set about the task in Excel.
On the face of it, the tasks were straight forward and I was able to provide graphical views showing CBS performance against the average, mean, best and worst-case benchmarks and also the progress of forecasts per CBS over a 24 months period.
However, it was too simplistic to provide valid insight as it did not take into account multi-dimensional aspects such as contract change orders, the movement from provision to cost, the change in commercial risk, weather variables, macroeconomic factors, etc.
The fact was I had exhausted my Excel skills and what was required was a multidimensional view of the data requiring more computing power than I had to crunch the numbers. I had officially outgrown Excel.
AI a fresh new chapter
I am excited, therefore, to be working on a research opportunity with one of our global construction customers into the use of artificial intelligence (AI) to provide the number-crunching horsepower to provide insight into data such as that which I had been asked for several years ago.
As an add-in to our integrated project accounting suite, we are looking to enable an AI-based forecasting tool to sit alongside more traditional methods within the ERP and provide another view on project forecasts at a CBS level.
With an AI-based forecasting tool in operation, the purpose is not to replace traditional forecasts (at least not in the short term) but to provide additional assurance of current methods so as to improve the accuracy of projections at all stages of the project.
The benefits of improved forecast accuracy include more focussed risk management, improved pricing, and less turbulent results for reporting. It may also provide further insight with benchmarking analysis tied into the multi-dimensional views prevalent in long term complex projects.
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