It is essential to understand surprises in Project Forecast results. While the causes for such surprises are often attributed by the Project team to external factors, quite regularly, internal control issues contribute to unexpected variances. Our new White Paper 2014-15 ‘How to Run Forensic Analysis of Project Cost Control’ describes the basis of a framework to implement a structured approach to forensic analysis of Project Cost Control (a more detailed development and relevant checklists are available in our Practical Cost Control Handbook).

The framework we propose follows the “Key Navigation Questions” (ref White Paper 2014-14 ‘Why the Four Key Navigation Questions Are So Essential for Project
Management’):

• Level 1 – Do we know where we are? Does Cost Control reflect accurately Committed and Actual costs?
• Level 2 – Do we know where are we heading based on the latest knowledge if we continue
  according to the current trends? Does Cost Control produce a Forecast for the project completion that is relevant and resilient?
• Level 3 – Can we figure out what needs to be done to come back on track? – is Cost Control (and Project Controls) able to run scenario analysis, root cause analysis?

In our consulting experience about half of the organizations will fail in a way in the level 1 checks, and most of the other organizations will fail some level 2 checks. The full detail of this framework, together with relevant checklists, is available in Chapter 10 of our Practical Cost Control Handbook.

Cost Control forensics sometimes requires significant persistence to really understand the underlying issues. Organizational psychology needs to be assessed for potential for denial and self-delusion. It can be difficult to review independently the Cost Control of a Project in particular when the organization is in self-denial. High level management support is essential in these instances for successful reviews to unfold.

If the Cost Control process has been implemented poorly it can be a major endeavor to reconstitute the actual spent and forecast of a project, and it can have a significant impact on the organization’s financial results. The confidence of the market in the ability of company management to control its operations could also be jeopardized, with direct implications for the share price. It is thus essential to implement these reviews early and decisively, with reviews undertaken by personnel experienced in Project Controls knowing the particular business and that act independently of the Project.

Read our new White Paper 2014-15 ‘How to Run Forensic Analysis of Project Cost Control’  on what it takes to run forensics of Project Cost Control!