Project Partners Blog

There is no cookie-cutter definition of an engineering-construction (E&C) company other than they are all project-oriented businesses who perform construction-related work for a client (often referred to as the owner – the entity paying for the work and for whom the work is performed). There are those who perform design-only work (engineering), construction-only work, or design-build work (a combination of both).

Engineering companies are essentially professional services organizations who specialize in providing engineering-design solutions to clients – often in specialized fields.

Construction companies can generally be classified as either (a) contractors who perform all or most of the work themselves, or (b) subcontractors, who perform specialized work such as electrical, mechanical, or masonry tasks. General contractors (GCs) are contractors who perform many different types of work (even engineering services), often manage overall aspects of large (sometimes global) projects – referred to as construction-management (CM), and usually have access to large bonding resources.

Special cases are owner-CM, or owner-performed work. In the former, an owner (such as a large natural resources company, a government entity, or a specialty retailer) may act as a GC who subcontracts most or all of the work on a project to others, but manages the overall work themselves (CM). In the latter case, owners may have the people and equipment resources to actually perform some of the work rather than contracting it to others.

This article is a discussion of solutions for general contractors who use Oracle Project Management and Project Partners User Interface Applications in the execution of design-build projects. Future papers will focus on the other members of the E&C family.

Managing design projects is challenging, but design-build projects are especially so because of the combination of requirements to fulfill all phases of the project work. Managing large design-build projects requires tools used in both professional services organizations (PSOs) as well as the construction industry. The design phase of the project requires all the functionality of PSOs: such as budgeting – typically by job-based resource and planning fully burdened amounts by time period over the life of all engineering activities and forecasting; which also requires planning by job-specific resource, the requirement to compare actuals and budget, and to enter Estimate-to-Complete amounts – typically revenue, over the remaining time-periods of the design phase.

Engineering work can be intensive in that more often than not, issues are discovered that require a different approach from that which was originally conceived by the client. New forecasts must be created to incorporate these changes and often result in changes to the project workplan and financial plan. The ability to make these changes real-time; quickly and easily is required. Design review meetings, taking place both onsite and offsite require the need to make changes from anywhere.

Project Partners User Interface Applications (UI-Apps) are the perfect solution to meet the specific requirements of a design-build type project. An Excel front-end, completely integrated with Oracle Project Management, gives users the ability to budget and forecast using a familiar tool – even if not connected to Oracle.

Planning for the construction phase of the project presents different challenges. Both work plans and financial plans must be created and synchronized. Oracle Project Management allows for this, however, updates to a detailed plan (either work or financial) is tedious and time consuming for casual users such as project managers. The HTML flow of Oracle Project Management is too complex without sufficient clarity as to actually where one is in the flow of the project plan. The addition of UI-Apps allows project managers to work in one worksheet with only the functions relevant to the way they do business and provides nomenclature relevant to the way the organization does business.

In support of these construction industry requirements, UI-Apps provides the following options for financial plan preparation:

Workplan Management (WBS, task structure, dates and resources) – Workplans can be created from scratch using UI-Apps, started from a workplan created in Oracle by another user, or created in another tool before transferring to Oracle. All options allow workplan modification in Oracle based upon the user submitting the plan.

Lump Sum Budgets and Forecasts (at-completion vs. time phased) – Construction projects are typically planned with lump sum amounts, however the option for time-phased planning is also available.

Cost Buildup (for both budgets and forecasts) – Rather than using fully burdened cost rates for a particular resource from Oracle rate tables – as is done in professional services, construction activity burdened costs can be built up from raw cost based upon resource by using break-even multipliers which are factors derived from experience in a particular marketplace – varying based upon the type of work being performed as well as the resource to which is being applied. UI-Apps allows a choice of corporate multiplier values to be set as a starting point when planning, and allows user overrides. Additionally, all kinds of resources can be planned for using this approach: job, named person, equipment, materials, etc.

Margin Percent – Revenue budgets and forecasts in PSOs are usually derived from standard (or negotiated) bill rates applied to planned labor hours. In the construction industry, however, revenue is often backed into by using a margin percent to assure the built-up cost has been covered. Additionally, the actual margin percent for resources on a particular task, or phase/type of work may be adjusted downward or upward, based upon the estimator’s perception of the feasibility of achieving the full margin for that task. The overall project margin, however, must still be achieved. UI-Apps gives the user the ability to tweak revenue margin for each resource on each task (if so desired), while showing in real-time the overall project margin.

Forecasting At-Completion – Financial forecasts, like budgets, for construction projects are usually performed on an at-completion (EAC) basis. As projects evolve, several factors can be taken into consideration when creating periodic forecasts:

Review the actual cost and revenue amounts to-date for each task comparing with budgeted amounts

Estimate the EAC cost of the project

Estimate the EAC revenue

Enter physical % complete for tasks

Enter progress status for tasks

Optionally modify the workplan as project conditions change

UI-Apps provides the ability to derive a project forecast by entering either Estimate-to-Complete (ETC) amounts, which when added to the inception-to-date actuals will yield EAC, or to directly enter EAC amounts. These amounts are held in a new forecast plan.

Additionally, since UI-Apps allows for workplan integration, project managers can update physical percent complete and progress status for each task. The task rows displayed in the UI-Apps Forecast Worksheet apply to both workplan and financial plan lines. This option allows for modification of the workplan when it is necessary to change resources on originally planned tasks, or to add entirely new tasks to the workplan due to change in project scope or approach, or to simply rearrange tasks by indenting or outdenting them.

All workplan attributes such as planned/schedule dates, task status, task type, work type, or work quantity are seamlessly updateable via UI-Apps as necessary.

Of course, key to creating accurate construction forecasts is to have reliable input from on-site inspections. UI-Apps’ disconnected operation allows cost engineers to collect accurate progress information while on the job site and capture it right in the forecast worksheet where it can be saved and later reviewed with the project manager as part of the forecast preparation. After final review, with one click, the week’s forecast is uploaded and submitted into the corporate workflow for approval. And in the event of a particularly large project (4,000+ tasks), UI-Apps allows the option of plan submission to occur as a background process rather than real-time thereby assuring optimal performance.

In addition, UI-Apps has built-in role or responsibility based security along with data locking and software versioning capabilities to make sure project managers are always working on the latest plan, with the latest code and not overwriting other plan changes. The option to download the project plan for review or update insures data consistency throughout the organization.

The combination of UI-Apps and Oracle Project Management makes the project planning process of a design-build project easy and simple but what happens when it’s time to invoice for these different types of work performed? Invoicing for work performed in the design phase is often different from the construction phase. Design billings are produced regularly based on hours billed, and construction billings may begin with an advance payment, and continue either regularly or at prescribed dates. Since both phases of the project will overlap, multiple invoices will be generated for the client.

To meet the complex invoicing demands, Project Partners has designed a solution called Project Partners Invoicing – a flexible invoice consolidation and custom invoice formatting solution to address issues associated with multiple and complex invoices for one client.

Although design-build projects can present many challenges, UI-Apps alone or together with Project Partners Invoicing offers solutions to meet these complex needs. Project managers can move away from tedious data entry and get back to what they do best – managing projects.

Visit the Project Partners website or look for other blogs on UI-Apps, Invoice Consolidation and Invoice Formatting or to learn more about these solutions.