Author: Carola Moresche | Last update: Tuesday, February 20, 2024 | Reading time: 4 min.
Maintaining a complete overview of all project expenses and revenues is one of the key aspects in successful project controlling. InLoox project management software helps you with this complex and detail focused task. In order to establish company wide cost controls in an efficient and timely manner, it is crucial to base project related decisions on most up-to-date key project data.
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Project controlling stands for ensuring the achievement of project goals through: Target/actual comparison, determining deviations, evaluating the consequences and proposing corrective measures, participating in the planning of measures and monitoring their implementation. Project controlling is one of the most important tasks in project management, but one that is most often underestimated. In the context of project management, the term "controlling" is understood to mean "steering" rather than "monitoring". Although control is part of project controlling, such as monitoring the progress of the project or the project budget, the scope of responsibilities covers far more aspects.
Project controlling is therefore not an alternative to project management, but an essential part of project management, playing an extremely important role in the success of the project.
Project controlling plays an important role in all project phases, i.e. the entire project life cycle. Despite detailed planning, many projects often fail in the implementation phase because problems and delays are recognized too late and the project can no longer be saved. This means that monitoring the costs and progress of the project is essential at every stage.
Many projects fail completely or are completed far too late, resulting in significantly higher costs than estimated. The causes of failure can be due to external factors that can only be controlled to a limited extent, but often the origin can be found internally:
Project controlling can help increase the success rate of projects. This is because project controlling monitors all processes, checks them and, if necessary, intervenes to control them. This not only provides an overview of the entire project, but also an insight into the individual areas. This enables project managers to identify risks at an early stage and react in good time, i.e. either eliminate them completely or at least mitigate them so that the project schedule can be adhered to.
The main aim of project controlling is to keep the planned and actual project progress in line. This means that the costs, expenses, deadlines and results (see specifications) agreed with the client are adhered to as far as possible.
The project plan is the most important project controlling instrument, because without a project plan there is no way of comparing target and actual data.
Project managers are often also project controllers, but even if the two roles are held by different people, they still work closely together. Project controllers rely on information from project managers so that they can monitor the progress of the project.
If the project management does not take on the role of project controller, the task often falls to project employees who perform the controlling tasks. Project controllers check the progress of the project, compare target and actual data, identify risks and the consequences of delays. All with the aim of bringing the project to a successful conclusion.
If you do not have enough capacity to fill the role of project controller with your own employees, you can of course also commission an external service provider. The advantage of this can often be that someone from outside has a completely different view of the project and may recognize problems that the team has never noticed because it is too involved ("operational blindness").
Project controlling, as defined by the Project Management Institute (PMI), falls primarily within the "Project Monitoring and Control" phase of a project's life cycle. This phase is crucial for ensuring that a project stays on track and adheres to its planned schedule, budget, and scope. Here are the key tasks involved in project controlling according to PMI standards:
These tasks are essential for identifying any issues that could impact the project's success and for implementing corrective actions to keep the project aligned with its objectives, schedule, and budget. Project controlling is an ongoing process that requires constant attention and adjustment throughout the project lifecycle.
Successful project controlling is evaluated according to various key performance indicators:
A project plan enables project managers to keep track of all project activities (activities, milestones, tasks), as well as their lead times and completion dates. Project managers can monitor and control project costs and resource utilization.
The advantage of a project plan is that changes can be quickly identified at a glance. This is because dependencies and relationships between tasks can be displayed in a project plan so that delays and deviations from the plan are immediately visible. As soon as a work package is behind schedule, the entire project shifts (see also: critical path).
It is advisable to define deadlines and interim targets for important tasks and activities in the project plan as milestones. This has the advantage that you have to adhere to certain deadlines and thus avoid only recognizing a delay at the very end of the project and then no longer being able to react.
With a milestone trend analysis, you can see whether you have met all milestones (deadlines) in the project or not.
Everyone knows the traffic light with its three colors: red, yellow, green. In project controlling, the traffic light method is often used to show the status of a process or project. The general definition of the colors is as follows:
GREEN Everything is going according to plan, if things continue like this, we will complete the project on time or even earlier than planned.
YELLOW There are a few delays and deviations from the plan are possible if no action is taken now.
RED The project is in jeopardy and is unlikely to be completed on time or at all.
Everyone understands the traffic light system, but it has the disadvantage that the distinction between the colors is often not clear, as different people can assess a situation differently. It is therefore important that the meaning of the three traffic light colors is clearly defined - if necessary with practical example situations. Everyone in the organization, or at least in the respective project teams, should have the same understanding of the colors.
Earned value analysis is a method for measuring the progress or success of a project. The planned expenses/costs are compared with the actual expenses/costs in a certain period of time. The planned and cost variances can then be displayed visually in a diagram.
You can use a target/actual comparison to compare planned and actual values. For example, you can keep an eye on the planned and actual costs and expenses by comparing the estimated effort required to complete tasks with the time recording of the allocated resources.
Risk management is also an important part of project controlling, as projects are subject to constant change and unexpected events. With methods such as FMEA (Failure Mode and Effects Analysis), you can not only identify risks, but also recognize and prevent potential errors in the process in good time.
There are different project controlling tasks depending on the project phase. Ultimately, the aim in each phase is to achieve the project objectives.
The project management handbook describes project controlling as an infinite control loop or cycle. This makes it clear that project controlling is not a one-off activity, but that you have to go through this cycle constantly in order to really keep control of the project.
Project controlling is important for the success of a project, so it's important to do it right. Here are some prerequisites for successful project controlling:
Constant repetition: In the previous point, we described project controlling as a cycle that you should go through in each project phase, several times if necessary. It is not enough to define the objectives once at the beginning and then only check whether they have been achieved at the end.
Efficient goal setting: Only if you set clear goals do you know what you are working towards. Use the SMART method, for example, to set clear goals. A good goal should therefore fulfill the following criteria:
Record data and key figures: Only if you record data and key figures will you have comparative values with which to evaluate the success of the project. You can make comparisons on the basis of the recorded data and make timely adjustments in the event of deviations.
Open communication & error culture: Only if everyone involved in the project communicates honestly and openly can you manage a project correctly and make the right decisions based on true data. If employees have to fear negative consequences if mistakes are made, future mistakes will no longer be communicated openly. As a result, errors are only recognized far too late and it is no longer possible to take countermeasures in good time. As a result, the impact of the error is much greater than if it had been rectified in time.
Do not rely on what is already known: You should learn from mistakes, but just because a solution has worked in the past doesn't mean it will work for future problems. Each situation should always be examined individually and individual measures should be implemented - because even if the situations look similar, the factors, both internal and external, can differ greatly from one another.
InLoox helps you establish the project cost transparency that's necessary to quickly react to changing project requirements. Analyze project related real-time key figures, deadlines and milestones and receive an overview of all relevant budget positions and expenses at any given time in the project plan. Additionally, you can create and access powerful project reports. InLoox makes even multi-project controlling simple and efficient with the comprehensive budget analysis tool accross multiple projects. This is why InLoox is also the ideal alternative to Microsoft Project.
The InLoox budgeting feature automatically generates plan/actual comparisons for expenses and revenues in your projects. This makes continuous monitoring and controlling of project key data extremely easy and comfortable. With our project management software you can achieve successful project delivery on time and within a given budget. Thanks to the integration with Microsoft Outlook, all project related appointments, deadlines and milestones are available in your Outlook calendar and task list. Using one central platform makes continuous tracking and managing of essential project information extremely comfortable. Say goodbye to time consuming juggling of multiple software programs and redundant administration effort. InLoox does all the syncing for you to help you get more done in less time.
Image: Budget overview in InLoox for Outlook
Do you always know the most up-to-date financial information of your projects? Often times, related labor, communication, travel costs and other expenses are only partially billed to the relevant project. Not with InLoox PM: The software is designed in a way that makes the project the "container" for all cost categories. In a first step, define budgets and cost centers in order to provide plan values for departments, teams and employers. With InLoox you can calculate project costs on a freely customizable scale. Analyze total project costs or create a detailed point of cost list that features every single production materials - it's all up to you.
The InLoox project controlling feature provides the basis for an accounting friendly data structure. If you prefer doing the final project accounting directly in InLoox, that's possible too. Our software's simple invoice management feature facilitates continuous accounting of one or several projects, in parts and total. After you're done with creation of project related invoices, you can simply export them as PDF or HTML files for further reference. Generating an overview of all project relevant invoices and exporting the list in a Microsoft Excel file is just easy.
Image: Target/actual comparison of costs and expenses in InLoox for Outlook
Gain real project advantage, working with most up-to-date key figures and project information. With the most current project information at your hands, you gain knowlege and time benefits in any aspect of project controlling. Additionally, critical project information is organized in a compact structure, making it extremely transparent and a solid base for project analysis and comprehensive project reporting. This makes InLoox an ideal tool for project analysis and early-warning system.
Determine company wide project management standards with one easy-to-use software solution - and every department and teams involved will reap the benefits from the unified system. It is very important to account for existing corporate structures, processes and procedures. Thanks to InLoox's perfect integration with Microsoft Outlook and its compatibility with other programs based on the Microsoft technology like Microsoft Exchange Server and Mircosoft Share Point, the software can much easier be established as the new project controlling standard than any other solution in the market.
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