Act I: Don't Worry, Be Happy

The Players: Susan, the project manager; Joe, the big boss

4:50 PM, November 13, 1989. Susan just received the project monthly financial report from the accountants. A quick look shows that the budget is $23.5 million and expenditures (paid to date) are just $2.3 million. "Not bad," Susan thinks. She has to present the financial report to the big boss, Joe, at 8:00 AM the next day. It should go well.

7:56 AM, November 14, 1989. The time, the date have come. Susan calls Joe and makes her report: $23.5 million budget and $2.3 million spent to date. The big boss is happy. Susan is happy.

And so it goes. The big boss and Susan remain happy, month after month, report after report-until "it" happens, that is.

4:45 PM, November 24, 1990. Just a little over a year into the project the financial show $23.5 million budget and $24.2 million spent. Seeing that the project is months away from completion, Susan is not happy.

8:15 AM, November 25, 1990. Susan calls the big boss and explains the situation. Joe is not a happy big boss. The conversation goes on for over an hour. "What to do?" The project must be completed for the client. Maybe next month's financial picture will be brighter.

Figure 1: Financial Report

4:50 PM, December 30, 1990. The financial report shows $23.5 million in the budget and $25 million expended (Figure 1). The project continues onward for six more months with similar monthly financial results. Susan is not a happy project manager; Joe, the big boss, has had better times.

Fast-forward five years to 1995. Joe, the big boss, is no longer a big boss with the company. He is now with another firm. Susan has not only left the company, she has left the "capital expenditure/built environment business" entirely. Susan's parting comment was: "I am not a 'bean counter.' I am a capital expenditure manager, a project manager of big projects."

Act II: Get That Dog Back in Here!

The Players: Peter, the project manager; George, the big boss

7:30 AM, June 21, 1990. Peter has just received his project consolidated cost report (CCR) from the project controls group. He must report the project financial report to George, the big boss, the next morning. Peter's review normally takes a few hours. His staff members have made themselves available for discussion. A budget increase of $1.5 million had been approved by the client for added work. The project's revised budget is $35.6 million. Total committed monies are $23.4 million and anticipated future commitments are $14.9 million. The anticipated final cost (i.e., the cost when all bills are paid) is over budget by $2.7 million. This is not good.

7:30 AM, June 22, 1990. Peter calls several of his senior staff together for a meeting. They decide to change the roofing specifications and details, put a hold on the air-conditioning at a building wing, modify the planting schedules, and change the rear non-exposed wall to a synthetic wall surfacing in lieu of brick and block. The end result: anticipated final cost at $34.9 million, or $700,000 below the budget amount.

Peter calls George, explains the financial issues, makes a pitch for a solution, and gets the standard "I'll get back to you" comment from the big boss. The big boss calls the client and explains the financial issues. The client says "Great. It's best to know that there is a potential problem months before it becomes a real problem." The client is happy, George is a hero, and Peter gets one more good mark in his file. A great solution and result for all stockholders.

And so it goes. The project (with modifications) moves forward. Monthly consolidated cost reports show it coming in below budget.

Figure 2: Consolidated Cost Report

January 15, 1992. The final accounting is completed on. The end result is a project under budget by $750,000 (Figure 2).

Fast forward six years to 1996. George, the big boss, is now a bigger boss. Peter has been promoted to the big boss position and both Peter and George have stayed with the company. At a recent holiday party, several staff members and a project manager or two got to discussing management style and George's way of doing things. They also commented on Peter's management methodology.

While opening their yearly bonus checks (checks have come every year during the George/Peter "watch") and giving run-downs on the extremely interesting, complicated and fun projects they are involved in, a general comment was made about Peter and George.

Seems like Peter and George are perceived as "bean counters" and not real "capital expenditure, built environment, construction types," however. One project manager said it all:"Wow. Look at this bonus check. They get better and better every year. This would be a great place to work if we could only get rid of those monthly consolidated cost reports and get those project controls guys off our backs."

Epilogue: It's Not for Me to Say

11:10 AM, January 23, 2002. What happened to Susan and big boss, Joe over the last six years or so? Susan left the industry and took a job with some company on the west coast, having something to do with windows and gates. Her boss goes by the name of Bill something or other.

Joe moved on to be a consultant in the engineering industry and works for some big name company based out of New York City. He consults on multimillion-dollar projects and has a standard approach to budget control. He attends job site meetings and asks only a few major questions: "Where is the general contractor's (GC's) application for payment? Where is the GC change order log? Where is the architect and engineer's (A&E's) monthly billing? Where is the A&E's request for added compensation logs?"

Joe has his own method of constructing a consolidated cost report, and it works. He figures that design and construction is 83 percent of program costs, and that if he can control that 83 percent, with a little luck he can control the entire project or program.

So much for cost and budget control and project manager career building. The George, Susan, Joe and Peter schedule control systems are even more interesting. But, these systems are subject matter for another day. When I last got together with Pete and George, we all questioned how the company could have ever succeeded with Joe and Susan at the helm. PMs are responsible for managing the full range of scope, schedule and budget; good ones do this by periodic review of progress and cost status and frequent independent updates of the cost to complete. Finally, it's not whether we pay the successful ones bonuses to do this, but how much should they get.