Video - InEight Control - Control Overview

TRANSCRIPT

InEight Control is the module where your project budget is tracked and maintained.

The Cost Breakdown Structure, or CBS, is the hierarchical structure used to organize your budget. Each line is referred to as a cost item. And lower level items roll up to the summary level items. Within InEight Control, we utilize a concept of three distinct budgets, which enables variance analysis, comprehensive change tracking, and the most accurate forecasting.

We refer to these as the Original Budget, or OB, the Current Budget or CB, and the Current Estimate, or CE.

The Original Budget is locked at the beginning of a project and serves as your baseline for comparison as the project progresses.

Original Budget values will never change once they're locked. As you can see, the Original Budget has been set so values are read only.

For a contractor, the Original Budget is typically associated with the signed contract value.

For an owner, this may be the final investment proposal or an initial approved budget established during the project feasibility phase.

The Current Budget is the project's operational budget and equals the Original Budget plus or minus all approved changes.

A controlled approval process is utilized to limit who can make the changes to the Current Budget. The change register maintains a record of all pending, approved, or rejected changes with details regarding who initiated the change, when it was initiated, and what was changed.

A change summary by cost item can also be viewed at the line item level. The Current Estimate is the most flexible set of fields and is designed to reflect the most up-to-date estimate of quantities, cost, and, when required, man hours to complete a scope of work. This is critical for changes that occur over the course of a project that do not result in a change to the project budget.

For example, a contractor who enters into a lump sum, design build, or EPC contract, is responsible for quantity growth or reduction, which will not be compensated by the owner. As engineering progresses, quantities must be updated to drive accurate forecasting, but often don't result in a change order or any additional budget. The current estimate fields allow users to continuously estimate the project without affecting the accuracy of the budget values used to determine gains versus losses.

Although some current estimate fields may be used in forecasting calculations, the project forecast and Current Estimate are not the same. Unlike the Current Estimate, which employs only estimated quantities and estimated unit rates, your forecast will consider progress to date and actual cost to date to derive a total forecasted cost at completion. It's important to understand that the connection between the two is centered around the Quantity field, which is the same for forecast and Current Estimate.

Next, we'll discuss variance analysis, which is also performed within the InEight Control module. InEight Control employs the fundamentals of earned value management to provide rich variance analysis of project cost and man hours. The basic calculation for earned value, which is budget times percent complete, is used throughout the Control module to provide insight on project performance well before activities are complete.

We've already discussed how budgets are maintained within Control.

Now, we need the other piece of the equation, the percent complete.

This comes from capturing actual quantities to date.

Completed quantities can be entered directly into InEight Control, imported from external files, or automatically pulled from our purposely built quantity tracking module of InEight Plan. It's a best practice for quantities used in earned value management to be measurable units, such as cubic yards of concrete.

If not possible, quantities may also be represented by a percent complete of one lump sum for a single cost item. In order to analyze performance on a specific cost item, InEight Control uses the term gain/loss rather than variance. For example, your CB total cost G/L to date shows if you're gaining or losing money on a specific cost item by comparing the earned cost to date from the earned value calculation, versus the actual cost to date of that line item.

Additional fields allow you to compare your forecasted gain/loss loss at completion based on forecast versus budget.

As actuals are posted InEight Control, variances are automatically updated based on the latest data. So you're always able to view up-to-date cost versus budget information and quickly identify areas of potential risk. The fundamentals of earned value management that have been baked into InEight Control to provide this timely variance analysis, also promote more accurate forecasting.

Forecasting with InEight Control can range from a highly automated process which uses automatic forecast calculations to a completely user-controlled manual process. Each cost item can be forecasted differently, and multiple versions of a project forecast can be maintained, shared, and compared all within InEight Control.

Somewhat unique to InEight are our automated forecasting options. InEight has four automated forecast methods, three of which are calculated based on the actual cost to date of that item plus the remaining quantity to be completed times of forecasted unit rate. The forecasted unit rate is what changes based on which of the three options you select.

Current Budget runs the remaining work at the current budget unit rate. Current Estimate runs the remaining work at the current estimate unit rate. And average performance runs the remaining work at the average unit rate of work performed to date on that line item.

The last automated forecasting method is committed cost.

This option calculates your forecasted final cost by adding the total cost to date plus your open committed cost.

You should only use the committed cost forecast method for cost items that are associated to a purchase order or to InEight Contract, since open commitments are typically driven by your ERP system. These automated forecasting methods continuously update as new cost to date is incurred and progress is reported. This means that you no longer must wait until the month end to discover performance issues impacting your total project forecasts. This also eliminates the ability to underforecast and makes claiming actual progress imperative.

Forecast methods can be changed on a cost item by cost item level, over the course of a project, and users always have the flexibility to manually enter values for the forecasted cost remaining, forecasted cost of completion, remaining unit rate, or remaining man hours. If a user hard enters a value, the forecast method will change to manual, and that forecast will no longer be updated when actual cost to date or actual progress is updated.

Through InEight Control, you have the tools in hand to manage your budget, analyze variance, and forecast your project.