Supporting the Project Management Office in the AEC Industry

Thu 24 Aug 2023 posted by Project Partners


Welcome to the Project Partners’ on-demand webinar series on Oracle Cloud ERP’s benefits for the Engineering and Construction industry.

This industry is no stranger to challenges, whether it’s complex project management needs or stringent budget controls. Amidst these challenges lies an opportunity to revolutionize how projects are planned, executed, and managed. Oracle’s Cloud ERP empowers organizations to unlock efficiency and achieve unprecedented levels of success.

In this interview, our in-house experts, Bruce Maghan, VP of ERP/Project Solutions, and Neeraj Garg, Executive Consultant of Industry Solutions, explore enabling the PMO with Oracle Fusion Cloud ERP.

How does Oracle Cloud ERP enable the project management office in the E&C industry?

Neeraj: Oracle Cloud ERP, with its PPM functions, provides the core of the financial project management functionality that both project managers and the PMO need to manage and monitor project execution.

For example, the financial planning of projects, your budgets, your forecasts, your change orders, the PMO monitors and benchmarks against specific KPIs. These KPIs are driven primarily from data and functionality in Cloud ERP.

Can you explain the specific features and functionalities of Oracle Cloud ERP that support the PMO? Could you also provide some insights into how these tools contribute to the PMO’s effectiveness?

Neeraj: With the PPM module within Cloud ERP, when you are setting up a project, you start with the basics, which is setting a project.

First, you look at setting up your work breakdown structure and scheduling your project. The financial project plan feature in Cloud PPM enables you to define the work breakdown structure. It defines how you staff your breakdown structure or your tasks, with the right type of resources, put generic resources (like roles or materials), or even specific resources (like named person), whatever the case may be.

Now you take that as a first step and translate it into your project budget, which says, “So what is it that I’m planning to spend executing this project?” That cost portion then translates into, “What is it that I expect to get from a revenue perspective for a given project?” And that typically either derives from cost or your agreement with the customer in case it’s a fixed price or a lump sum project.

Then when you get into the execution function, the project managers submit a periodic forecast. This tells the PMO how the project is performing to date and, based on the performance to date, “Where does the project manager think the project will end up?” So along with that information and the progress that has been achieved on the project, it provides key KPIs for the PMO to monitor the project – not just as a single project, but also the portfolio of projects that the PMO manages.

So things like earned value, physical percent complete, financial percent complete, the cost versus revenue, the actual cost versus budget; these are all KPIs that the PMO manages too.

Can you elaborate on how connecting Oracle Cloud ERP with a PMIS can streamline the coordination, scheduling, and tracking of project tasks, resources, and milestones?

Bruce: By connecting your Oracle Cloud ERP with a PMIS system, the project managers can fully manage the project from the PMIS system while supporting the finance team’s needs via integrations. These integrations allow the ebb and flow of the project lifecycle to drive items such as forecasting, resource demand, deliverables, and milestones, thereby keeping your operations and finance teams in sync.

How does Oracle Cloud ERP handle the PMO’s financial management, ensuring accurate budgeting, forecasting, and cost control?

Neeraj: The PPM module within Cloud ERP provides flexibility in how you budget and forecast for your projects. This is where the value comes for the PMO, it allows the PMO to manage things more accurately.

Let’s start with the simple budgeting function. Oracle, with its planning resource list function and resource breakout structure-function, gives an organization the ability to determine how granular you want to be when planning your project. You could be planning down at a very detailed level by each individual who’s going to be working on your project or at a higher level by planning for simple things like labor and material and subcontractors and other categories.

You may want to do both depending on the type of project you’re executing. If it’s a very simple short project, you may want to plan at a high level. It’s a very long, complex, high-value project, you may want to do more detailed planning. All of these provide the accuracy that the PMO is looking for in how their projects are planned. Similarly, during execution, forecasting follows the same options that you use for budgeting. Therefore, forecasting also gives you the same level of granularity and the flexibility, both depending on the type of project you are executing and the type of work you’re doing.

Finally, from a cost control basis, you can do two different things with Oracle Cloud ERP. One is called transaction controls, which allows you to specify what types of costs can hit specific projects and tasks. The second is budgetary controls, which allow you to limit how much of a commitment you can charge to a given project or task based on your budget. Those two things provide a relatively significant granularity in control of what you want to achieve from a PMO perspective.

How can the interconnected financial execution and delivery tools impact decision-making and performance evaluation within the PMO?

Bruce: The interconnected financial execution tools, provide a complete, robust solution for the PMO. By leveraging a PMIS solution, the PMO can build detailed bottom-up budgets and forecasts based on resources down to the lowest task level. During the execution phase of the project, physical percentages of completion can be recorded against these tasks, which in turn can be leveraged to calculate your earned value performance. Your earned value performance is then leveraged in your forecast generation, which typically drives revenue recognition and billing for E&C firms. It provides a complete end-to-end look from an operation, performance, and financial performance perspective of the overall project.

Could you share any success stories or case studies of E&C companies implementing Oracle Cloud ERP with a PMIS to enable the PMO? What are the outcomes and business impacts experienced by these organizations?

Bruce: Many E&C firms have implemented a PMIS solution in conjunction with their ERP. Look at firms like SNC Lavalin, AECOM, Burns and MacDonell, etc. There the particular PMIS solutions have ranged from various products from Oracle’s Primavera Solutions or Ecosys and others.

These companies leverage the detailed execution management functionality in their PMIS tool to allow them to properly derive detailed forecasts to support their revenue recognition and billing efforts.

Stay tuned for our next episode in this series, where we’ll dive into improving and protecting your margins.