Project Controlling: Definition, Methods and Key Figures

Categories: General|Published On: 2. October 2024|By Beate Schulte|

As part of project management, project controlling is indispensable for realizing projects on schedule and in line with highest quality standards. But what exactly does project controlling mean? What tasks are involved and what methods are available?

What advantages does project controlling offer? Project controlling has numerous advantages. This includes ensuring that projects remain within the planned time and budget frame and that quality standards are adhered to. It enables problems to be identified and corrected at an early stage. It also improves transparency and communication within the project team and supports sound decision-making through continuous monitoring and analysis of project data.

Below we explain everything you need to know about project controlling. Let’s start with a definition of project controlling and what the most important tasks of controllers are.

What is project controlling?
What project controlling methods are there?
Which key figures are relevant in project controlling?
Which factors influence the success of project controlling?
Conclusion
FAQ

What is Project Controlling?

Project controlling is a central discipline in project management which is focused on the monitoring and controlling of projects. It includes the systematic planning, controlling, and management of resources, costs, schedules, and results. The origin of the term can be traced back to the 1960s, when modern project management gained importance as an independent discipline.

Controlling in project management is crucial for success, as it ensures that projects are completed on time and within budget and that they meet the defined quality standards. By closely monitoring and analyzing project data, potential problems can be identified at an early stage and countermeasures can be taken.

Below we explain everything you need to know about project controlling. Let’s start with a definition of project controlling and what the most important tasks of controllers are.

What Are the Tasks of Project Controlling?

Project controlling can be compared to a large orchestra in which the people in charge control the interaction of all project components. The project controlling tasks are varied and ensure that all aspects — from planning and resource allocation to cost control — work together seamlessly.

Controllers monitor progress, analyze deviations and coordinate adjustments, to conclude the project smoothly and successfully. Like a conductor, they hold all the strings in their hands and ensure that the project develops its full potential.

The following tasks are part of project implementation and are subject to controlling by the controler:

Objective definition: Definition of clear, measurable roject objectives in terms of costs and quality. It is usually carried out in consultation with the management on the basis of the company’s project portfolio.
Project planning: Creation of detailed plans for resources, schedules and budgets.
Resource management: Planning and controlling of the required resources such as personnel, machines, and materials.
Cost control: Monitoring and control of project costs via planned-actual comparisons and budget tracking.
Time management: Creating and overseeing schedules to ensure the project is completed on time.
Quality management: Ensuring that the project objectives meet the required quality standards.
Risk management: Identification, analysis, and monitoring of risks as well as the development of risk mitigation measures.
Reporting: Regular reporting on project status, progress, and problems to stakeholders.
Deviation analysis: Analysis of discrepancies between planned and actual values and taking corrective measures.
Milestone tracking: Management and evaluation of key project milestones to ensure progress.
Communication management: Ensuring efficient communication within the project team and with external stakeholders.
Change management: Manage and document project changes to ensure that all adjustments are properly approved and implemented.
Documentation and archivation: Creation and maintenance of project documentation and ensuring proper archiving for future reference.
Lessons learned: Analysis and documentation of experiences and findings from the course of the project to improve future projects.

Controlling is indispensable in project management for scenarios or projects that are highly complex and require considerable resources. Typical examples include major construction projects such as bridges, high-rise buildings and infrastructure projects, where precise controlling is required to effectively manage costs, schedules and resources. By implementing a project management software, Max Frank corporate group, a company operating in the reinforced concrete construction sector, has established a transparent budget process for all of their investment projects.

Controlling also plays an important role in IT implementation projects, such as the introduction of new ERP systems or comprehensive software solutions, in order to avoid budget overruns and reduce delays.

Research and development projects, especially in the pharmaceutical industry, require close monitoring in order to avoid long development times and high costs. Project controlling is also indispensable in the production of new commodities to adhere to adhere to tight time and cost schedules and to ensure timely market launches.

How Do Project Controlling Processes Work?

Project controlling comprises several steps that are structured in accordance with DIN 69901. This is a series of standards for project management which is particularly common in Germany. It provides a basis for the planning, controlling, and monitoring of projects.

DIN 69901–5:2009–1 describes specific project controlling methods and processes. These standards are often used in companies to guarantee a standardized approach to project management.

The process begins with the definition of objectives in which the controllers define clear, measurable objectives in terms of time, costs, and quality. These objectives form the basis for the entire course of the project.
This is followed by the planning stage in which a detailed project plan is created. This plan includes the allocation of resources, the definition of schedules and the setting of milestones to measure progress.
During the implementation of the project data is collected. This involves continuously collecting relevant project data such as actual data from time recording on completed tasks and activities in order to document the current progress.
Subsequently, a planned-actual comparison is carried out in which these current data are compared with the planned values on a regular basis to see whether the project develops according to plan.
This is followed by the deviation analysis in which the causes of deviations are analyzed. The aim is to understand the effects of the discrepancies and to plan appropriate corrective measures.
Finally, project managers develop and implement concrete countermeasures to correct negative deviations and bring the project back on track.

This iterative cycle is repeated during the entire course of the project to ensure that the project objectives are met and that continuous improvements are made where necessary.

What Project Controlling Methods Are There?

There are a variety of methods for project controlling that can be helpful in various ways depending on the project requirements and area of application. The most important of these include status reports, milestones and milestone trend analyses, target/actual analyses, earned value analyses, risk management, and opportunity assessment. Below you will find an overview of the most important methods at a glance.

Overview of project controlling methods and their use

Method	Short description	Examples of areas of use	Advantages
Work Breakdown Structure (WBS)	Hierarchical subdivision of a complex project into smaller subtasks	Construction projects for subdivision into construction phases or software projects with their development cycles	Clarity through clear structuring, control through detailed monitoring, improved communication through simpler coordination
Status reports	Tracking the progress of the project, identifying deviations	R&D, mechanical engineering or IT projects to track the progress of a project, e.g. on a weekly or monthly basis	Creating transparency and facilitating decision-making
Milestones	Setting time-bound, specific interim targets	Project types in which the projects are structured in rough phases, e.g. in automotive or mechanical engineering projects	Early identification of problems, better overview of project progress
Quality Gates	Checkpoints in the course of the project; bridge between portfolio and project management	Drug development, where quality gates are defined between the preclinical and clinical phases	More effective quality assurance, easier detection of discrepancies between planning and current progress
Planned-Actual Comparison	Comparison of planned and actual project costs	Research and development projects to track additional costs incurred	Precise tracking of cost development, budget control
Earned Value Analyse	Extended target/actual analysis taking into account the estimated percentage of completion	In the aerospace industry, to manage highly complex projects	Early detection of cost deviations, particularly realistic assessment of residual and total costs
Risks and opportunities	Categorization of risks and opportunities and analysis of the impact on the project	Product launches to identify potential problems and opportunities	Overview of possible challenges and potential before the completion of a project
Final reports	Summary of milestones, problems and applied solutions	When building a production plant, where construction costs and completion dates are documented	Final overview of the course of the project, transparency of implementation

The decision for an appropriate method depends on the individual requirements of the project. Project managers use the methods to identify deviations from the defined objectivesthrough continuous data collection and comparisons of the planned and actually achieved stages. We describe the individual methods in a little more detail below.

Work Breakdown Structure (WBS)

This method divides a project hierarchically into smaller, more manageable subtasks. The plan provides a visual representation of the project structure and helps to clearly define the scope of the project. The WBS works by dividing the project into work packages for a more detailed planning and targeted resource assignments. It is created in the planning phase and used throughout the entire project.

The essential advantages include Clarity through clear structuring, facilitated communication within the team and the possibility of a comprehensive overview and control of the project. The method shows its potential in construction projects, for example, where construction phases and tasks are structured, and in software development, where development cycles and features are planned.

Status Reports

Status reports serve for regular monitoring and communication of the project progress. They show the fixed data on costs, effort, deadlines and other relevant factors of a project and give the project manager a visual assessment of these aspects. The regular creation of status reports generates transparency and facilitates decision-making.

By facilitating the creation and management of status reports, powerful project management tools such as the PLANTA software support you in your day-to-day work. They can be created at the push of a button based on the actual values and exported to PowerPoint presentations, for example, with individual templates available.

The baseline function enables comparison reports and is also a part of many status reports. Deviations from the fixed status are visualized using traffic light displays, for example. The project trend is also displayed and allows for a continuous overview and adjustment.

Milestones

Milestones are significant events and intermediate goals in the course of a project which mark important progress points. This method works by setting specific, time-bound goals that need to be achieved before the project can progress. Milestones are defined at the start of a project and used during planning and implementation.

The milestone method comes with improved control and a clear overview of the project progress as well as early identification of problems. Milestones are used in IT infrastructure projects, for example, where the installation of a system is considered a milestone.

Quality Gates

Quality Gates are check points in the course of a project which mark important progress points similar to milestones. However, they are more specific and act as a kind of bridge between portfolio management and project management. They allow you to make the project implementation phase more transparent through time-bound section controls.

Quality gates are used to ensure that certain quality criteria and requirements are met before the project moves on to the next phase. They offer improved quality assurance and help to identify at an early stage whether there are deviations from the initial plan.

One use case of this project controlling method is the development of a new drug, where a quality gate after the preclinical test phase ensures that all the necessary data and safety assessments have been completed before clinical trials begin.

Planned-Actual Comparison

The planned-actual analysis is a proven method for cost controlling. It compares the planned costs (target costs) with the costs actually incurred (actual costs) at a specific point in time. This allows for a precise tracking of the cost development and helps to keep the budget under control.

The simple application and clear visualization of deviations are among the strengths of this method. The direct comparison allows project managers to react quickly and make adjustments in order to ensure adherence to the budget.

Such an analysis can be used for any project type. Unexpected costs for logistics, technology or personnel can arise at any time, making the target/actual analysis indispensable if you want to act in a budget-oriented manner.

Earned Value Analysis

Earned value analysis (EVA), also known as performance value analysis, is a project controlling tool that goes beyond the traditional planned-actual analysis. EVA offers realistic estimates of remaining and total costs, by including the estimated degree of completionin the calculation. This allows persons involved in the project to identify cost deviations at an early stage.

This method enables a in-depth progress assessment for projects by describing the current date and cost situation by means of key figures. Important key values are planned costs, actual costs, and earned value. Prerequisites for the use of EVA include the presentation of dependencies, the prioritization of tasks and the effort estimation of activities.

The EVA is often used for large-scale and complex projects, to ensure a precise cost and performance monitoring – e.g. in numerous R&D projects, e.g. in the aviation and aerospace industry, to manage and control projects such as the construction of satellites or airplanes.

Risks and Opportunities

This method contains the identification and analysis of potential risks and opportunities and their impact on the project. The resulting damage and gross profit values are displayed and the individual risks and opportunities are listed with their respective measures. The matrix diagram presents a central tool for visualization.

The diagram categorizes risks and opportunities based on their damage extent or gross profit levelas well as their probability of occurrence. These categories are divided into high, medium, and low. Risks with a high probability and high damage potential are particularly emphasized and require specific risk mitigation measures. Opportunities with a high degree of success and high probability are also prioritized.

This tool can be useful, for example, when launching a new product in the consumer goods industry. Risks such as supply chain disruptions or market acceptance problems as well as opportunities such as market leadership or cost reductions can be assessed here.

Final Reports

Final reports can be created once the actual end of a project has been reached. They provide a comprehensive overview of the final dates, budgets, and costs of a project and must be approved by the person responsible for the project. Once frozen, these reports can no longer be changed.

The creation of a final report starts with gathering all relevant data and analyzing the course of the project. The report contains a summary of the milestones achieved, the difficulties encountered and the solutions applied. In addition, the final financial expenditure and the time required compared to the original plans are presented.

The final report serves several purposes: It offers a detailed documentation of the project success, helps to identify best practices and provides valuable input for future projects. It also supports transparency vis-à-vis decision makers.

Such reports are used, for example, when building a new production plant, where the final construction costs, the completion date and compliance with quality standards are documented.

What Key Figures Are Relevant in Project Controlling?

In their day-to-day work, project controllers deal with particular key figures and values which help them to monitor the progress and efficiency of projects. Important key figures in project controlling include the project duration, costs, expenditure, degree of completion, project turnover and project result.

In addition, planned costs, actual costs and earned value are indispensable for recognizing disparities at an early stage. These values help project managers to evaluate the project status, identify problems and take measures in good time to achieve the project objectives.

Key figures in project controlling:

Project runtime: This key figure measures the duration from the start to the end of the project. It is required to ensure that the project is completed within the planned time frame. It is measured in days, weeks or months from the official start date to the end date.
Costs: Refers to all financial expenses of a project. Monitoring costs is essential in order to avoid exceeding the defined budget. Costs are usually recorded in currency units such as Euros or Dollars and regularly compared with the planned expenditure.
Effort: The effort measures the entire working time spent on a project. This key figure is important for evaluating the productivity of the project team. The effort is measured in hours, days, or person months.
Degree of completion: This key figure represents the proportion of tasks already completed in relation to the total task. It is required in order to keep an eye on the progress of the project. The degree of completion is specified as a percentage value and can be measured using methods such as the 0/100 method or the milestone method.
Project turnover: This key figure captures the revenues generated by the project. The project turnover is necessary for the evaluation of the financial success of a project. It is measured in currency units and compared with the planned revenues.
Project result: The project result shows the success or failure of a project by comparing the results achieved with the planned objectives. This key figure is decisive for the evaluation of project performance and is measured in qualitative and quantitative values.
Planned costs: These are the estimated total costs of a project, based on the project planning. The key figure helps to ensure full budget control. Planned costs are usually compared with the actual costs on a regular basis.
Actual costs: This value describes all costs actually incurred during the course of the project and is used to identify deviations from the budget. The actual costs are compared with the planned costs.
Earned Value (EV): This value expresses the actual progress of a project in relation to the budget. The EV is compared with the planned and actual costs.
SPI/CPI trend: The Schedule Performance Index (SPI) and the Cost Performance Index (CPI) show the time efficiency and cost efficiency of a project. They are part of the earned value analysis (EVA) and are used to evaluate progress in terms of time and money.
SV/CV trend: The Schedule Variance (SV) and the Cost Variance (CV) are also part of the EVA and measure whether the schedule and budget are adhered to. These project controlling key figures are important for identifying delays and cost overruns.

Calculation of the Schedule Performance Index’: SPI = EV / PV

The SPI is a key figure which shows how fast the project team has worked so far. For this purpose, the degree of completion (= earned value, EV) is assessed and compared with the planned project costs (= planned value, PV) as of the reporting date. If the SPI is exactly at 1, the performance on the key date is exactly that which was initially planned. If the value is greater than 1, the work was accomplished faster. An SPI under 1 means a delay.

Calculation of the Cost Performance Index’: CPI = EV / AC

The CPI indicates how cost-effectively the project has been implemented to date. EV means Earned Value and AC means Actual Cost. These two values are also compared with one another. CPI = 1 means that the amount of money spent on the project progress so far is exactly that which was initially planned. If the CPI is less than 1, the previous service is more expensive and if the CPI is more than 1, it is cheaper.

With the help of such calculations, problems in cost and time efficiency can be identified at an early stage. The project manager can then take measures, such as reallocating resources or deploying additional manpower, to keep the project on track.

How Does Project Management Software Support Project Controlling?

PM tools such as the PLANTA project management software facilitate the controlling process with the help of a number of specialized functions and tools. The most important functions of PLANTA Project for project controlling include resource planning, risk management, cost planning, as well as the integration of time recording and financial key figures.

PLANTA supports methods like traffic light controlling by providing visual representations of the project status. Colored traffic lights show at a glance whether projects are on target (green), deviate slightly (yellow) or are critical (red). This visualization helps project managers to react quickly to problems.

The EVA is also supported by PLANTA. The software provides graphical analyses for planned, actual, and achieved values, based on status reports and baselines. These analyses allow for a detailed progress evaluation and trend analysis.

PLANTA also offers functions such as resource simulation and prioritization to avoid bottlenecks and optimize project implementation. PLANTA Project ensures comprehensive and transparent project control by integrating all relevant data and providing meaningful reports and analyses at the push of a button.

Which Factors Influence the Success of Project Controlling?

The success in project controlling is influenced by a number of internal and external factors. They determine how effectively a project can be supervised and managed in order to achieve the set goals.

Risk management is an integral part of project controlling, aiming at controlling these factors. Risk management in project management includes the identification, analysis, and reduction of potential risks.

Internal Factors

A central internal factor is communication. An effective exchange of information between project participants and centralized data storage of all relevant project information ensure that everyone is up to date and avoid misunderstanding. Regular meetings and reports are of pivotal importance. A good flow of communication ensures that all decision-makers are always informed, while the team’s expertise ensures that the methods used are effective and problems are solved efficiently.

Furthermore, the used project management methods are of importance. Another internal factor is resource planning. Careful planning and management of the required resources , such as personnel, materials, and finances, ensure that they are used in the most efficient way and that no bottlenecks occur.

External Factors

External factors that have an influence on the success of project controlling include market development. Changes in the market environment, such as new competitors or technological progress can have a substantial impact on the project.

Regulatory specifications and legal requirements are also important, since they have an influence on the project implementation and compliance risks must be avoided. Economic conditions, such as inflation or recession, can have a significant impact on project costs and schedules.

How Does Communication Work in Project Controlling?

Communication ensures the flow of information between project managers, project controllers, and other project members. Clear communication channels are established through regular meetings, status reports, and modern communication platforms like project management software. Project managers and project controllers use these tools to exchange up-to-date information and keep everyone involved up to date, especially in distributed project teams.

The implementation of a communication plan helps to standardize the frequency and type of communication. Close collaboration between the team members offers many advantages. It promotes a shared understanding of the project objectives, improves decision-making and facilitates the rapid identification and resolution of problems.

This leads to improved project control, as potential risks and emerging difficulties can be identified and dealt with at an early stage. This efficient communication ensures that everyone involved in the project is always informed and that the project team can work together optimally to successfully achieve the project goals.

How Do Project Controlling and Project Management Methods Harmonize?

Project controlling and project management methods like PMBOK Guide und PRINCE2 go hand in hand by offering structured approaches for the implementation of projects. They provide the members of a project team with specific recommendations for action — for every project phase.

The PMBOK Guide: (Project Management Body of Knowledge) by the Project Management Institute (PMI) include various areas of knowledge, e.g. cost and time management, which are directly applied in project controlling.
PRINCE2 (Projects In Controlled Environments): describes the meaning of clearly defined roles and responsibilities as well as regular checks of the project status. In PRINCE2, control mechanisms such as quality gates and milestone trend analyses are used to track progress and quality.

These project management strategies and methods structure processes in project controlling by providing standardized procedures for planning, monitoring, and reporting. By integrating these methods into project controlling, project managers can systematically identify problems and deviations from the plan and take timely action to achieve the project goals.

How Important is Resource planning in Project Controlling?

Resource planning ensures that all required resources such as personnel, materials and financial resources are used effectively and efficiently. It includes the identification, assignment, and monitoring of the resources throughout the entire project life cycle.

Careful and thorough resource planning helps to avoid bottlenecks and overload, allowing you to achieve the project objectives in tiem and within budget. The precise planning and control of the resources furthermore boosts productivity and reduces the risk of delays and cost overruns.

Conclusion on Project Controlling

Project controlling is a discipline in project management which allows for comprehensive and effective project management. By using structured methods such as status reports, milestone analyses and EVA, project controlling ensures that projects remain on time and within budget and meet quality standards.

Effective communication and careful resource planning are key factors for success in project controlling. Software solutions like PLANTA support this process through specialized functions which create transparency and enable precise control. Overall, project controlling makes a significant contribution to the efficient and successful completion of projects.

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FAQ

What is the difference between project controlling and project management?

Project management comprises the planning, control and implementation of projects in order to achieve defined goals. Project controlling on the other hand is focused on monitoring and controlling these processes to ensure that projects stay within time, budget, and quality.

How does project controlling differ in agile and traditional projects?

In traditional project controlling, the focus is on in-depth planning, strict control of schedules and budgets as well as fixed milestones. Agile projects on the other hand rely on flexible customization, continuous monitoring, and iterative reviews. Agile controlling methods emphasize regular feedback loops and dynamic adjustments in order to be able to react quickly to changes.

Which software solutions are particularly helpful in project controlling?

Software solutions with functions for detailed planning, resource management, cost control and progress monitoring – such as PLANTA Project are particularly helpful in project controlling. Such tools ensure effective project controlling and analysis.

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About the Author: Beate Schulte

Beate Schulte has more than 30 years of experience in project management and writes blog articles, white papers, practical reports etc. at PLANTA to inform about the possible uses of project management software and other pm topics. She is Head of Marketing at PLANTA.

This blog post has been translated by Julian Hammer