The media regularly reports on major projects that spectacularly exceed their time and budget. The reason for such mishaps is often a lack of project controlling. Without meaningful key figures, the project management recognizes deviations too late and can no longer take countermeasures in good time.
It is important not to be intimidated by prominent project failures, but to learn from them. Companies should not make the same mistakes, but give their project controlling the attention it deserves. This also includes choosing the right tools.
Why is project controlling important?
When a project causes difficulties, it doesn’t happen out of the blue. There are always warning signs that indicate shortcomings long beforehand. Recognizing these signs and taking countermeasures in good time is the task of project controlling.
Project controlling ensures that all deadlines, budgets and performance targets are met. This is done in six steps in accordance with DIN 69901:
Project controlling according to DIN 69901: Systematically to
project success.
These steps form a project-accompanying control loop. They ensure that the project management recognizes deviations in good time and can initiate countermeasures. Without effective project controlling, errors only become apparent when deadlines or budgets are actually exceeded – sometimes only after the project has been completed.
Excel is sufficient for small projects
Small companies like to use Office programs such as Excel and Word for project controlling. This approach is inexpensive and effective for small projects. As long as the team size is kept within limits, a manageable number of hours are involved and few resources are used, there is no reason not to use an Excel spreadsheet. Entering all these things manually in a list and evaluating them with the help of predefined formulas hardly causes any effort in small projects.
However, as soon as the projects become larger, the situation changes. As complexity increases, the effort involved in manual project controlling becomes disproportionate to the transparency gained. The project management is already working to capacity with the collection of data and has no capacity to react to deviations in good time. By the time all the data is available and evaluated, it is often too late to take countermeasures.
Added to this is the problem of concurrent costing. In order to maintain cost transparency over the course of the project, the project management to compare the original calculation with the actual costs incurred. Project controlling can use this data to create a projection of the final costs and forecast whether the project will be profitable.
However, the colleagues need real-time data from the ERP system for this extrapolation. This is the only way they can create a precise calculation. Project controlling therefore has to gather all the information from the ERP solution and enter it manually in the correct field of the Excel sheet. In large projects, this is a time-consuming process that takes up a lot of the project team’s capacity.
Whether Excel is sufficient as controlling software depends on the size of the project. For small projects, manually maintained tables with stored formulas are usually sufficient. However, if the complexity increases, Excel reaches its limits. In this case, companies are better advised to use professional project controlling software.
If you are still using Excel for project controlling, you should consider transferring this task to the ERP system.
Standard software offers more options
In contrast to Excel, standard solutions are designed to support project controlling. This gives them a number of advantages in day-to-day business.
On the one hand, standard software has a significantly greater range of functions than an Excel spreadsheet. It does happen that a company creates Excel templates over the years that completely cover its needs. However, these tables are extremely complex and difficult to maintain. As soon as the organization’s requirements change (for example, if the product portfolio is expanded), the project management team has to adapt all the Excel files concerned. A standard solution, on the other hand, is further developed and maintained by the software provider.
Another advantage is the ability to connect standard software to other systems via interfaces. In this way, the tool can automatically pull and process data from external systems such as ERP or time recording. This saves time, as colleagues in project controlling no longer have to fill in table fields manually.
In addition, the ease of use of a standard solution is greater than that of an Excel sheet. This applies to both the maintenance and the evaluation of the table. Although Excel supports graphs and charts to visualize data, these do not come close to the dashboards of dedicated standard solutions. Excel charts are overlays of complex calculation formulas. This makes them quite static. Users cannot simply play with the settings to view a data set from different angles. Standard solutions offer more options here.
However, standard software is not the measure of all things. Despite all its strengths, it reaches its limits in large-scale projects. As soon as project controlling has to regularly access other systems and data sources, friction losses arise due to the complex interface structure. An integrated software system is therefore usually the more sensible alternative.
Project controlling in the ERP system
The task of project controlling is to monitor the progress of the project and identify deviations in good time. How effectively it can fulfil this task depends on how the data flow is organized within the company. Ideally, data should be available automatically and in real time where it is needed, without the need for coordination or aggregation. This is most likely to be achieved through the use of an integrated ERP system.
An ERP solution ensures that all areas of the company have access to a shared database and are natively connected with each other. This constellation has enormous advantages for project controlling, as data from the entire organization is available to it in real time, without frictional losses or process interruptions. For example, entries from working time recording are automatically posted in project management, evaluated in monetary terms and offset against the project budget. This automation relieves the project team and reduces incorrect entries.
In addition, the ongoing calculation is simpler because an ERP solution already has all the necessary data available: Working hours, resource consumption, project plan, budgets, etc. Offsetting all these factors against each other and adjusting the calculation accordingly is a logical next step. Some ERP systems can, for example, extrapolate the project costs and issue a warning if profitability is at risk.
Reporting also benefits from the comprehensive database of ERP software. On the one hand, more detailed analyses are possible, which evaluate a variety of different factors. On the other hand, ERP reporting can go into more detail and include contextual information. This is interesting, for example, when evaluating deviations or planning measures. In the event of delays, project controlling can evaluate the employee workload for the coming weeks or the status of parallel projects.
Summarized
Recognizing deviations from the project plan in good time and taking countermeasures is the key to successful, profitable projects. This requires transparency. Project management must know promptly if budgets, deadlines or performance targets are at risk. Otherwise they cannot initiate any countermeasures. Effective project controlling is therefore a must in the project business.
Choosing the right tool is crucial. Excel is usually perfectly adequate for small projects. However, as soon as the complexity increases, no project planner can avoid using dedicated project controlling software. There are standard solutions for this, which can also be used to manage larger projects efficiently. However, these tools require interfaces or manual effort for data transfer. An
Of course, project controlling is only a sub-function of modern ERP solutions. If you would like to know more about how your project management benefits from ERP, we recommend our Whitepaper
