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ERP gap in project management

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The success of many businesses depends on their ability to bring projects in on time, on budget and to specifications, but their information management tools are often obstacles to successful outcomes, says THABO NDLELA.

The success of mining, oil and gas organisations depends on their ability to bring projects in on time, on budget and to specifications. While resources companies rely on project delivery for revenue growth, their information management tools are often obstacles to successful outcomes.

Whether the project involves exploration, drilling, engineering or construction, its delivery is based upon a collection of processes. The tools used to manage these processes are usually functionally driven.

Each business function is supported by a different application, resulting in project information being stored in numerous locations. Process and collaboration are inconsistent and not easily transferable from project to project.

It can be difficult for project managers or stakeholders in the resources industries to get a full picture of the project which in turn can drive up costs and cause delays. Project managers too often have to rely on email, phone or word of mouth to find out potential issues that can affect project delivery. They almost certainly face challenges capturing and managing project costs in their enterprise resource planning (ERP) software.

Disconnected finance, engineering and delivery systems stand in the way of gaining real-time visibility of budgeted versus actual costs. A solution to this problem is usually near the top of the list of things resource companies are looking for.

Less visible challenges

Challenges with project visibility and cost capture, though, are just the tip of the iceberg. Project managers also face a number of other less visible challenges.

For example, resources companies have stringent Occupational Health and Safety (OH&S) policies and procedures – many of them company or site specific.

These are constantly being refined and improved and information systems play a crucial role in supporting them.

However, engineering, procurement and construction firms contracted to deliver projects for resources companies often find it challenging to demonstrate OH&S compliance by working with a different set of policies. Again, the lack of integrated information systems is a contributing factor.

Data relevant to OH&S is often stored across various systems within the organisation, such as human resources and project management software. The result is that mobilising for new projects, demonstrating OH&S compliance or getting through an audit takes longer, is more costly and may not ultimately be as successful as it would be using an integrated approach.

Another less visible challenge is the handover of asset information. As companies face pressure to maximise returns, technology is playing a key role and powerful enterprise asset management (EAM) software has become a requirement rather than a luxury.

EAM often encompasses only the analysis and work management practices necessary for preventive maintenance. Much of a capital asset’s lifecycle, however, involves projects executed by outside parties.

Assets are usually engineered and constructed by outside parties and outside contractors perform upgrades or extensions to it. Poorly integrated or separate information systems used by these various parties often result in lost opportunities to maximise the value of projects by capturing asset information at the source and passing it down the line to asset managers.

Relying on project manager heroics

Too often, companies rely on the heroics of their project managers to pull together project delivery. The practices that make up good project management, such as leadership, planning, risk or change management as well as communication, are vital pieces of the puzzle. Real-time visibility and reporting, however, are just as important but unfortunately they are often a missing piece.

In today’s risk adverse and competitive environments, technology plays an important role in supporting and fostering best project management practices. The logical solution is to select and implement enterprise software designed for the project environment, with project management functionality that shares data, in a natural, event-driven way, with the rest of an enterprise suite.

At the very least, the enterprise software used in a project environment should allow for comprehensive roll-up of project costs. Project-based ERP systems can also enable on-demand forecasting, monthly reviews and simulation to accurately visualise and capture cost trends on projects.

Other important features of project-based ERP solutions include:

· Tracking of front-end costs: including engineering, the creation of documents and other time-driven costs that typically would be considered indirect or overhead:

¬∑ Full project enterprise planning: ensuring the functionality is connected into the application’s planning engine, so production items show up on the project plan:

· Standard plan: One goal of implementing management by project, is to allow detailed management and analyse parts of the business as de facto projects. But even with those projects, some parts should be allowed to be shared commonly across multiple projects. Standard plan capabilities allow for example items such as fasteners to become common to multiple projects:

· Re-use: Organisations may enter into contracts with customers when the final specification is incomplete. To reduce risk providing the ability to copy from a template of a similar project is essential:

· Swap (borrow and pay-back): The ability to change resource items from one project to another to maximise resource availability and at the same time reduce costs of holding items that are not required as originally planned due to changing priorities:

· Contractor support: For a company that outsources work to a contractor or subcontractor, it is far more efficient to work with an integrated system which records and can report on OH&S information, insurance data, training programs and specific contractor and owner/client documents: and

· Asset management portal: Software tools should be able to communicate with and engage outside parties, for example by giving them full access to a portal containing the state of assets. With a user-friendly and flexible enterprise software, contractors can work on the same database that will follow the asset through its lifecycle.

In evaluating project-based enterprise solutions, bear in mind that there is a tremendous value difference between ERP with native project management and point-to-point integration with external project management software. Some ERP vendors may claim to offer the former but actually offer the latter. So it pays to ensure that data flows freely between project management and the rest of the application set.

Visibility removes elements of risk

For project-driven organisations in the mining and oil & gas sectors, visibility is the critical element that ties together planning and execution. Integrated project-based ERP solutions bring that support to the project lifecycle, removing elements of risk by getting key project stakeholders on the same page.

For example Kangra Coal, a South African coal mining company, will implement IFS Applications to replace a mixture of manually-based legacy systems with a single tool for managing maintenance and logistics to maximise the efficiency of its operations.

Other benefits offered by integrated project-based ERP solutions include:

· Reduce administration costs: providing a single view of the organisation across all departments so synchronisation and duplication issues are reduced:

· Faster allocation of resources: resources can be pooled centrally, making them easier to search for and find:

· Help with business compliance: help companies meet compliance obligations by automating key processes and quickly creating standard reports:

· Standard integration with key third-party systems: a deep base of project and customer information can be created that makes for stronger customer information gathering, accounting and strategic planning:

· Effectively supported OH&S policy: reduces accidents, which have a direct impact on the efficiency of an organisation, and is vital to attract and retain the best people: and

· Hand-off of asset information: represents an opportunity to eliminate costly mistakes and non-value-added work to lower total asset cost, reduce downtime and maximise return.

* Thabo Ndlela, Director at IFS Africa

* Follow Gadget on Twitter on @GadgetZA

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