Project reporting: Streamlined internal communication

Project reporting gets more complex for large infrastructure projects, but once its format is ironed out and systematised to minimise manual intervention, it can be a very effective tool in achieving effective and timely completion. Raajeev B Batra and Puneet Narang describe how.

It is not without reason that India still doesn’t have a very encouraging track record when it comes to successfully executing large infrastructure projects, despite having emerged as one of the fastest growing economies in the world. While issues like land availability and regulatory approvals have often the forefront causes for project failures, poor risk management, scope creeps, ineffective project controls and contract administration and inexperienced project teams are also contributors for poor project performance. Another important contributing factor is ineffective project reporting system.

Given the size, scale, and complexity of many large projects, organisations can no longer afford to prepare and produce project reports in a reactive manner. Governing boards, shareholders and regulators are establishing high standards for project performance in order to help ensure that projects are delivered on time, within budget, and to the expectations established by the project’s stakeholders. Unfortunately, the vast amount of data available to be reported and the complexity of software systems used for project reporting have left many project management, engineering, and construction departments
with few options other than to develop ad hoc tools that require manual reconciliation and duplicate data entry. This is often referred to as “project management by spreadsheet”.

Project reporting: Enabler of success

A smooth flow of information between all the stakeholders is a pre-requisite for effective monitoring and control functions. Similarly, the visibility of interdependent workflows between all the stakeholders across the value chain only helps in the decision-making process. Decision-makers and stakeholders depend heavily on project teams for all the project related information. This is reflected in PMI-KPMG Study on Drivers for Success in Infrastructure Projects 2010, which indicated that an overwhelming, or the lack of it. This raises some fundamental questions: Are the decision-makers getting the right information at the right time in the right format? How accurate is the information? Is there any formal reporting framework in place with regards to frequency, timing and roadmap for project review meetings?

An effective project reporting system should be an enabler by streamlining the communication channels between stakeholders in the value chain from the owners, contractors and sub-contractors, material vendors, financiers and the execution team in general. Large projects lead to a vast amount of raw data being generated from various workflows during the project life cycle. A reporting system should not only facilitate speedy conversion of such raw data into useful information, but also trigger real-time dissemination of such information to the relevant stakeholders. The function of reporting systems has thus evolved from merely aiding in creation of reports to strengthening management processes thereby facilitating stakeholders in making informed decisions.

Components of project reporting system

Large projects require not only a team of experienced professionals, but also a set of extensive resources, tools and systems. Major projects have large volume of data sources and need a project management infrastructure capable of supporting the extensive, regulatory, financial and other stakeholder reporting requirements. Outlined below are some of the important components of project reporting system.

1. Transparency and Accuracy: This is the first major component of any project reporting system. Senior management, board members, the audit committee, regulators, and other stakeholders demand accurate and transparent project information for making informed decisions and ensuring compliance with the central and state regulators.

There are several key elements to review when assessing/evaluating the transparency and accuracy of a project reporting system:

• Ability to drill down by layer: It is important for the reporting system to be able to drill down to the source data by layer. There are multiple opportunities for erroneous data to creep into project status reports if sub-contractors and sub-consultants generate the information and pass it along to contractors, architects and engineers, and finally to the construction manager. Use of different project account codes, exporting data from different job cost reporting systems and any ambiguity about the scope of items included in each cost category are some of the reasons for errors in the reports
• Level of redundant input: Many project reporting systems include redundant information or the same data reported by different sources. This often creates confusion and can lead to duplicate entries or misreporting of key data.
• Amount of manual adjustments: Manual adjustments are often necessary in order to produce reports that accurately reflect the current project status or situation. However, the volume of manual adjustments required to produce accurate project reports is often a red flag that indicates that a project reporting system requires further evaluation and remediation in order to determine the root cause or causes contributing to the high number of adjustments.
• Relative size of variances: Project reporting results will often have variances from what the contract reports and from the project owner’s accounting system. However, generally large variances of total project costs are often red flags that indicate that the project reporting system requires further evaluation and remediation.
• Number of discrepancies: Most major construction projects produce reports that communicate different information and provide different levels of detail. Discrepancies among reports are also red flags that indicate the project reporting system requires further evaluation and remediation.

2. Clearly defined objectives and purpose: With the advent of sophisticated and complex software programs and the ability to share and report large volumes of data on a real-time basis, there are almost limitless project reporting capabilities at an organisation’s disposal. However, this can often overwhelm someone who is not intimately familiar with the project if the data is not presented in an organised and meaningful way. There are several key elements to review when assessing the objectives and purpose of a construction project reporting system:

• Usefulness in decision making: Effective project reporting systems facilitate effective management decision making, because they provide management with accurate and meaningful information.
• Usefulness and ease of comprehension: An effective project reporting system should be able to synthesise large volumes of data in simple and meaningful dashboards, snapshot reports, and summary reports. It should also facilitate knowledge sharing by providing information in simple, easy-to- understand formats.
• Ability to satisfy regulatory requirements: The ability to provide quick and comprehensive support for necessary regulatory proceedings in a timely and efficient manner is an important element of any construction project reporting system.
• Level of security and data integrity: Large construction projects store project data in multiple formats and electronic systems with each format having unique characteristics and levels of sensitivity and securityprivacy requirements.

A rating of “not effective” or “not very effective” for the project report on any of the above parameters would indicate that the project reporting system requires further evaluation and remediation to determine the root cause of management’s concerns.

3. Effective project reports: The final component of effective project reporting system is the layout, timing, level of details and distribution of project reports. A complex reporting system with elaborate reports and graphs does not necessarily mean that the project reporting system is effective and meets the needs of management and other stakeholders. Following are some of the elements to assess the effectiveness of project reports:

(i) Types and format: Report layout impacts the ability to communicate the underlying information effectively and is often as important as the information being reported. The progress reports should provide insights on the progress of the various project activities in terms of outputs, results and impacts. It should also apprise the respective stakeholders of any actual or potential problems and deviations from the approved work plan or budget. Following are some of such summary reports:
• Project dashboard: A good project dashboard should be able to highlight important project indicators with regards to timelines and budget and point out deviations from the original schedule/budget. If a project dashboard takes more than a few minutes to comprehend or requires a lot of explanation and other supporting information, it has not served its purpose to provide quick, meaningful, and actionable information to management and other key stakeholders.
• Summary management report: Summary project management reports can be very useful to project support personnel, public relations personnel, outside stakeholders, and management personnel that need to be highly informed about the project. Most summary management reports are prepared on a bi-weekly or monthly basis and include quick summaries or snapshots of all major project categories such as safety, budget and cost information, work progress, schedule, risks/issues, quality, contract status, and other key information deemed important by the project team. The challenge with monthly reports is to spend less time and effort preparing the report, so the reporting process does not detract from other important project management activities.
• Summary cost report: Preparing summary cost reports is one of the most challenging project reporting activities for most large construction projects. This is due to the challenge of reconciling and summarising data from several sources and presenting accurate financial information in a well organised and consistent manner. Payment information and procurement/contract information often reside in separate systems, and budget information, if not approved at a detailed level, may require redistribution over many cost categories. The inability to produce summary cost reports in a consistent manner is an indication that an organisation’s project reporting system requires further evaluation and remediation.
• Risk report: Formalised risk reporting has been around for a while, but it has recently emerged as a standard and valuable tool in identifying, analysing, tracking, and responding to project risks. Risk reporting may take the form of a simple risk register updated on a routine basis or a combination of risk dashboards, risk analysis, and meeting minutes discussing risk trends and other important risk management information.
• Milestone schedule and three-week look-ahead schedules: Understanding and quickly disseminating a detailed project schedule for a major infrastructure project is a challenging process, as it may have thousands of activities and require hundreds of pages to print. Project supervisors should identify variances to key milestones and provide three- week look-ahead schedules at a minimum. The milestone report should provide a quick summary of project status and the three-week look-ahead should provide a snapshot of the upcoming project activities.
(ii) Timing and frequency: The timing and frequency of project reports should correspond with the dates required by management and stakeholders. If the project management team reports to senior management at periodic intervals, producing a dashboard reports and a project status report immediately before the scheduled meeting will avoid the team prepare adhoc reports or interim updates.
(iii) Distribution: Determining which stakeholder needs what reports is often a matter of debate amongst team members. Some team members want information to be closely controlled and distributed on an as-needed basis only, while others prefer to distribute project reports on much wider scale to facilitate knowledge sharing and collaboration and to avoid numerous information queries. No matter what the situation, all construction projects should have an established communication plan that includes distribution matrix for all project reporting documents. The lack of clearly defined project reporting distribution requirements is a red flag that the project reporting system requires evaluation and remediation.

Summary

Project reporting systems will play a vital role in strengthening the planning and control functions. The project organisations with access to accurate, real-time information will be in a better position to deal with the issues and challenges that they face and accordingly make informed decisions to enable timely completion of the projects and create value for the stakeholders.

The authors are with KPMG India. Batra (left) is Executive Director and Narang is Associate Director.