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1. Project Cost Management: A Simplified Approach
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Project Cost Management: A Simplified Approach
Mangesh More, L&T Infotech Ltd
Kriti Gaurav, L&T Infotech Ltd
ABSTRACT
TARGET AUDIENCE
Project Organizations, Project Individuals, Project Managers.
EXECUTIVE SUMMARY
Projects-based organizations excel at selecting and planning capital projects, but they struggle to
streamline the finances that support these investments. Senior executives cite predicting the long term
costs (47%), assessing their return on investment (ROI; 37%) and effectively managing cash flow over
the lifecycle of a project (37%) as their greatest challenges in delivering capital projects
Integrating Financial Systems and Primavera Unifier can help achieve cost visibility and control of all
cost aspects of a capital programs. Using this approach, organization can track and manage budgets,
commitments, spends, and forecasts.
This paper will focus on challenges faced by Project based organizations in current global marketplace.
Solutions based on Oracle Primavera applications and deployment methodologies to overcome these
challenges will be elaborated. Effective deployments of these solutions will help organization use its
project resources effectively, track what project teams are focusing on, prioritize those efforts and
manage the tasks in alignment with the overall business strategy.
Managers will be able to collaborate in a fully informed way with any and all of the participants, clients,
sponsors, contractors, consultants and others who can make a difference to the project delivery. Overall
this will help organizations to adapt to changing business environments and manage projects profitably.

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BACKGROUND
In a perfect world every project would be "on time and within budget." But reality (especially the proven
statistics) tells a very different story. It's not uncommon for projects to fail. Since funds are limited for a
project, handling multiple projects at a single time is not very easy. Following are the list of critical factors
that cause cost overruns:
1. Inaccurate estimation
2. Changes in project scope
3. Lack of cost planning/monitoring during pre-and-post contract stages.
4. Adjustment of prime cost and provisional sums.
5. Re measurement of provisional works.
6. Lack of cost reports during construction stage.
7. Delays in issuing information to the contractor and vice versa.
8. Contractual claims, such as, extension of time with cost claims.
9. Wrong decision by the supervising team in dealing with the contractor's queries in delays.
10. Delays in costing variations and additional works.
11. Omissions and errors in the bills of quantities.
These factors have substantial impact on overall project cost and improvements within these areas can
significantly help to monitor the progress of project’s performance and to anticipate and address
deviations from proposed budgets and schedules. Managements end up buying multiple systems to
resolve these issues nut monitoring these systems can be very tedious. Given the strategic impact that
projects have on business, organizations must follow effective PM processes and automate their process
to measure progress, values, and risks, and confirm that the right projects can be delivered in alignment
with organizational strategy. They must make quantum shifts from their existing framework to be able to
deliver projects within cost and within schedule.
As organizations look to improve the efficiency of their operations, they are turning to technology for a
solution. Oracle PPM applications integrated with L&T Infotech’s methodology can help organization
achieve project level maturity and execute profitable projects in alignment with their business strategy.
Proposed solution is in line with PMI guidelines for maximum benefit.

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OUR APPROACH
Multiple IT systems are used for different phases of project lifecycle right from project initiation to
project closure phase. Why not have a collaborated system where in details of a project right from
bidding phase can be viewed by every interdependent department or teams. There is need for a
collaborative environment wherein best practices needs to be followed, fragmented systems need to be
integrated and trends to be analyzed, forecasted and to be planned accordingly. It will help
organization to manage their resources effectively, plan ahead and execute project in time and on
budget.
Our solution aims at integrating ERP, Unifier and EPPM to facilitate the sharing of accurate and
timely customer data throughout the organization and to automate end-to-end business processes
which dramatically improves productivity by reducing duplication of data entry tasks, empowering
stakeholders with the right information at the right time, streamlining business processes through
automated workflow, and improving organizational task management.
Functions typically supported by an ERP include manufacturing, shipping, logistics, invoicing,
financial accounting, sales, marketing, billing, production, inventory management, human resource
management, and quality control. Project management module of an ERP does not cover in depth
aspects of scheduling and planning. Primavera has been used for project planning and scheduling &
risk management. This also suffers with limitations of inventory visibility and managing contracts.
Primavera Unifier is used for business process automation, contract management and cost
management. Detailed scheduling cannot be done in unifier. We can easily identify aspects of the three
fragmented systems for managing projects.
Managing these systems at a time and handling multiple projects can be very tedious. By integrating
these systems, project manager can gain visibility into projects at a single view and need not to scroll
every system for project details. Cost & schedule management can be done by integrating EPPM, ERP
& Unifier. The specified critical factors which causes cost overrun can be addressed using the
integration. Based on our study of these systems, we have designed a business flow.

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Figure 1 ERP-Unifier-P6 Integration
Once a project is approved, schedules, created in primavera, can be linked to a central resource pool
(ERP or HRMS) through primavera ERP integration. All resource (labor, non-labor) can be imported
in primavera EPPM and then master schedule can be created. A good scheduling process will ensure
that the work breakdown is comprehensive and responds to the customer requirement, scheduled task
durations and predecessors are as accurate as possible, key linkages are made, and people and
resources once assigned, understand interdependencies and are available and committed to the
program when they are needed. Primavera makes it easier to accomplish the scheduling process by
capturing important planning and scheduling data and making it available to a wide cross section of
people, and facilitating presentations and progress tracking. Work and task planning can be structured
in Primavera so that earned value (schedule and cost variance) can be assessed at milestones, built into
the task definition and schedule. Work and task planning should be reviewed in terms of potential
failures, such as risks, and high-risk tasks are presented in a Primavera’ s risk matrix that helps to build
contingency plan build right into the project schedule.
Contractors should be chosen through competitive bidding through Primavera Unifier. User can have
bid comparison, negotiate and select vendors thought primavera unifier. These vendor details can be
sent to ERP into their vendor master. Cost, schedule, and technical performance measures (TPM) will
be increasingly linked to the contractor’s portfolio. Unifier can be used to manage multiple vendors.
Through Unifier, contractors will have full visibility to the project plan and schedule so that they can
see the “big picture” and integrate activities related to their roles and tasks. As a result, data and
information from suppliers will be framed in the whole project. Access can be provided to different

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stakeholders including contractors to update and review their progress and payments. Schedules,
budgets and costs can be aligned via direct integration between Primavera P6 Enterprise Project
Portfolio Management and Primavera Unifier. Purchase orders from ERP can be sent to unifier so
that contractor can easily access and start planning accordingly. Contractors can raise payment
requisitions through unifier which will reduce the downtime for payments.
Workflow approvals in Unifier will help in finalize and mutually agree to the project aspects or any
changes in project scope, cost can easily be managed through change management in Unifier. This will
help to monitor any changes made in project. This change request can then be sent for approval in
ERP.
Primavera can be used only for scheduling and planning. Work actually done on a project is tracked
when %complete data is entered in primavera , the project manager and finance departments can
collect actual work done from updated schedule from Unifier. This will help save a lot of time.
Cost based reports and cost based dashboards can be generated in unifier for easy cost monitoring and
forecasting.
Figure 2 Configurable Cost Sheet
Cost Sheet Showing Project Budget Data Against
Individual Cost Code

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Figure 3: Configurable Cash Control Dashboards
The document manager in unifier provides repository for all project-related documents. It is similar to
a Windows File system with folders, subfolders, and documents. Any type of document can be stored
in the DM. Documents can be uploaded directly into or published to the DM by attaching documents
to a BP record. The Company-level Document Manager serves as a repository for general documents
and templates.

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CASE STUDY:
We performed integration of SAP, EPPM& Unifier to review its usage as a unified system considering.
SAP and EPPM was integrated using primavera gateway. The following data were transferred (pl.
refer diagram 5).
SAP was integrated with primavera using primavera gateway. Following is the screenshots of some of
our works:
Figure 4: Resource from ERP (SAP) to P6

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Figure 5 project Creation: ERP to P6 and vice versa
Figure 6 PO Creation: ERP to Unifier
Unifier was integrated with SAP using web services.
Most of the organizations face difficulty in cost management, forecasting and change management.
But at the same time they have tools to deal as already discussed. We recommend using SAP ERP
solely for overall financial aspect, Unifier for cost management and primavera unifier for project
planning & scheduling. The diagram given below shows sample dataflow based on the integrated
environment. Unifier capital planning & cost control module can be used for cost planning & control.
Primavera EPPM needs only to be used for project planning & scheduling. Resources, roles & rates
can be sent to primavera through SAP central workforce. Primavera gateway currently does not have
calendar synchronization; we may expect it in the next version. However, calendar can be
synchronized using Inspire.
We propose a simple model: Plan in primavera, Control in unifier &manage your finances in SAP.
Integrating them into a unifier system, can be very helpful given the fact that it resolves the major
issues of project management.
The diagram below depicts the proposed dataflow.
The diagram shows project plan
from primavera was sent to SAP
.and material is procured in SAP
and sent to primavera as
resource assignment. The
Purchase requisition created in
SAP can be easily be seen in
Primavera as well.
The diagram shows PO from
ERP sent to unifier

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Business intelligence has long played an important role. Primavera analytics can be used with EPPM to
analyze what has happened & what is going to happen. One can generate custom reports and can
forecast the fate of the project at an early stage. What-If analysis can be done in a better way.
Dashboards can be customized as per required. Primavera tools also provide security as well as SSO
options. This can deal with data security. Performance metrics & KPI’s needs to be made planned &
measured against commitments. This allows the organization to measure performance and define the
critical areas.
Project’s performance can be viewed through dashboards& Scorecards. Dashboards can be used to
compare performance of their areas or projects, to budget plans, forecasts, or last period’s results. The
execution of strategic objectives can be monitored through scorecard approach. Primavera Analytics
can be used to identify pain areas, monitor and analyze KPI’s. Analytics can help to quickly identify
projects that are negatively affecting a portfolio and course corrects it. It provides deep visibility into
projects, resources, deadlines and budgets, past performance, current status, and future projections in
a single, dynamic view. Reports on project status (hours logged and remaining, percent complete,
tasks, etc.), standardized workload reports (team member availability on specific days) and total
trend reports (plots work completed and remaining over time) can be created.
To sum up, L&T recommends having a collaborative environment for easy and effective project
management. The following issue can be addressed using primavera family of products. These
solutions will also contribute to ROI, installations are very easy and integrated environment can be
achieved more efficiently.

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CONCLUSION
An integrated and simplified management system for Projects brings significant business benefits. The
organization that successfully assess & implement the integration environment discussed will be
aligned around strategic objectives, and will be effectively communicating to their people, whether the
communication is about shifts in strategy, project performance, or resource capacity/management.
The management can now have the ability to understand exactly what their organization has planned
to do, how well they are doing against plan, what they have spent to date, how much progress they
have made, what is running behind schedule, what needs to be reworked or rethought, what they
ought to pay for the work that has been completed, when to order critical materials for just-in-time
time delivery, and experience-based forecast of what it will take to finish each project and the ripple
effects of being late. With the right enterprise-wide processes in place and enforced, every project
team member can get an accurate, up to the minute picture of what they could do and what they
should do, allowing for informed decisions to assure successful on-time, under budget, high quality
results. With the actionable business intelligence inherent in an integrated system, senior managers can
look across all the projects within the enterprise, and literally see the future of that organization and its
ability to compete and to succeed.
Managers will be able to collaborate in a fully informed way with any and all of the participants,
clients, sponsors, contractors, consultants and others who can make a difference to the project
delivery.
The same project-based processes that used to be fragmented across disparate systems, now flows
smoothly, enabling people to do their jobs more efficiently that ultimately have an impact on project
delivery.