Framework: An Integrated Approach to Portfolio, Program and Project
|[AACE HOME] -- [TCM HOME] -- [BUY THE TCM FRAMEWORK] --[DOWNLOAD PDF VERSION]|
[TOC] [PREVIOUS] [NEXT]
IV. TOTAL COST MANAGEMENT ENABLING PROCESSES - CHAPTER 11 - ENABLING PROCESSES
11.3 Information Management
TCM is an integrative process in which the practices and methods all rely on the creation, collection, communication, understanding, analysis, and/or use of data, information, and knowledge. This is evident in each TCM process map in which the arrows represent rudimentary flows of information between process steps (see Chapter 2). In applying TCM, cost engineers not only use information (e.g., process steps of estimating, scheduling, etc.), but facilitate its flow (i.e., communication) in respect to cost management. This section of the Framework provides a few basic information management principles that will help cost engineers understand the nature of information and how it is managed.
Specifics of information technology (IT) are not described in this section given its rapid evolution. IT evolution continues to alter the concepts of time, location, and resource management for TCM and other business processes. Not only is more information available faster, but also IT increasingly allows work to be done at any time, in any location where someone with the skills, knowledge, and resources is available. It is also fostering the integration of work processes as common information can be more readily shared and accessed. A penalty is that the amount of information is growing so rapidly that it has become more challenging to find the information needed and to ascertain its quality.
The information management process includes the gathering and processing of cost related data, the conversion of this to information, and finally, the presentation and delivery of this information within the enterprise and those it interacts with so that they can obtain useful knowledge about the cost behavior of the enterprise and its business environment. Information management is concerned with ensuring that this process takes place economically, efficiently, and effectively with the objective of obtaining the maximum cost knowledge yield for asset and project data inputs.
.1 Data, Information, and Knowledge
Data are the raw material of information management. Data include text, numbers, images, and so on that are generally not organized in a way to make them useful. For example, data about project cost expenditures are not very useful for project control until they have been assessed to identify variances from plan and whether the variances represent trends for which knowledge about causes and potential corrective actions can be obtained.
Information is data that has been processed and presented in a way that makes it useful; that is, it enables knowledge to be obtained. In the previous example, the recognition of performance variances and trends is useful information to a cost engineer.
Knowledge is learning from information about the past, present, and possible future. It confirms that past activities have or have not resulted in desired outcomes. It enables people to start altering their behavior to optimize future results (i.e., continuous improvement), or to speculate in the possible ways inputs may be related to outputs for the processes they are interested in. In the previous example, the cost engineer can use the trend and related information to identify corrective actions and possible future risks of those actions; these are obtained from personal knowledge and experience and/or the knowledge base of the enterprise.
.2 Data and Database Management
Knowledge management is composed of two separate but related areas: data management and information control or database management. Data management is concerned with the safe and effective storage of the enterprises information assets, including raw data, processed information, and knowledge (e.g., lessons learned). These assets may be generically referred to as a database. Data management can be considered the first tier or back room operation of knowledge management concerned with data back-up, making sure data are not captured twice, configuration management (see Section 6.2), data quality, and so on. Data management also includes maintaining and controlling an inventory of the various data elements (i.e., a single type of data such as a project start date or a monetary expenditure) used by the enterprise; this inventory is sometimes referred to as a data dictionary. Cost engineers may be involved in data management in areas such as creating codes or charts of accounts (see Section 7.3) that form a data dictionary.
Information control or database management is concerned with the way data are formed into information (i.e., collated and organized into databases) and made available to the enterprise. Database management personnel work closely with information system designers and users to determine the best ways to store, access, and maintain the databases that support information systems. Information security is a growing concern. The TCM strategic asset management and project control processes each include database management sub-processes. Cost engineers may be directly responsible for some database management (e.g., a specialized database that supports a cost estimating system). In other cases, cost engineers must understand the database supporting their work, such as an enterprise resource planning (ERP) system database supporting project control or a business intelligence (BI) system supporting asset management.
.3 Information Systems
Information systems are the mechanisms or tools by which knowledge is delivered to the enterprise and those it interacts with. They include hardware and software information technology (IT), which may include not only computers, but also telecommunication hardware, the Internet, or even a cork bulletin board. Information systems also include specific methodologies to build, select, and deliver IT solutions.
Information systems increasingly consist of two components. One is the traditional system to process daily transactions, and the other is called data warehousing. Data warehousing stores data that were gathered from multiple databases, analyzes it, and produces reports for multiple knowledge purposes. For example, the project control systems of various projects may collect the actual cost for a particular item for control purposes; a data warehouse would allow the cross-project price trends for this item to be analyzed and reported for purposes other than project control.
There are information systems applicable for all the steps in the TCM process whether accounting, estimating, scheduling, decision making, and so on. Some systems support day-to-day business operations and others are more specialized systems such a specialized cost analysis model. Each TCM process map has a step for development and maintenance of methods and tools and often these are IT tools of some sort. However, IT is just a tool; for the most part it does not, by itself, perform the TCM processes. In general, relying on IT tools in TCM without the support of cost engineering expertise is detrimental to successful TCM implementation. The misuse of scheduling software by inexperienced personnel is a particular source of problems.
Cost engineers may be directly responsible for building, selecting, or delivering information systems in respect to cost management. For example, the asset planning, investment decision making, and performance analysis processes rely heavily on cost and economic models, which must often be created or customized by cost engineers for a particular application. In other cases, cost engineers must understand the system supporting their work (e.g., an ERP or BI system).
When evaluating requirements, planning, and making decisions for information system investments, it is important for cost engineers to recognize that knowledge gained from the system is the benefitnot the quantity of data acquired, processed, and handled. Many large IT investments are considered failures by the users because the system provides them with lots of data, but no more knowledge than they had originally using a simple spreadsheet based on some basic inputs.
Another common error in implementing information systems is to assume that these tools are a canned product (usable and effective right out of the box); this is rarely true. Information systems should be implemented and managed like any other project of the enterprise. Because information systems often affect many stakeholders and their needs, and are integrated to one degree or another, projects to implement them are often among the most challenging and the most likely to fail. Another common error is to fail to consider the service and maintenance of the information system. Again, the system should be managed like any other asset of the enterprise and all of its life cycle costs must be considered.
Information systems are tools used by individuals to perform tasks. That means potential social and personal impacts must be considered during the planning and implementation of any information system. Many information system projects fail because they were developed for purely technical reasons with no consideration of the social impacts on the system users.
Communication systems are a subset of information systems, but an area of concern for cost engineers because of their role as translators and communicators in TCM. They may translate customer needs to requirements, requirements to technical scope, technical scope to cost plans, cost plans to measures, and measures to knowledge about the scope that can be acted upon. The translation is generally hindered by noise in the form of uncertainty and statistics. At each translation, cost engineers must communicate their knowledge to the asset and project team to answer their questions: What does this mean? What should be done? What will the likely result be? Cost engineers are also observers and inquirers and must ask their own questions: What are your needs? What progress have you made? What corrective actions do you suggest? For TCM to be successful, information systems must facilitate this communication, and cost engineers must make sure that knowledge is communicated effectively. Each communication raises questions about the best approach, for example: Do we use text, tables, or charts? Do we issue hard copy or online reports? Do we call or e-mail? Do we display ranges or point values? Good communication can make the difference between asset and project performance success or failure no matter how good the planning, measuring, and assessment are.
11.3.2 Key Concepts for Information Management
The preceding discussions touched on a few principles and considerations regarding information management for the TCM process. A key point to remember is that information and information systems are assets of the enterprise to be managed like any other. Cost engineers are not only involved in helping manage IT projects and using IT tools, but may also be responsible for developing and managing specialized databases and information systems related to cost management.
The following concepts and terminology described in this section are particularly important to understanding information management in relation to TCM:
.1 Data, Information, and Knowledge. (Section 188.8.131.52).
.2 Databases and Database Management. (Sections 6.3, 10.4, and 184.108.40.206).
.3 Information Technology (IT) and Systems. (Section 220.127.116.11).
Further Readings and Sources
The references on information management are too numerous to mention and are particularly prone to becoming outdated. The most relevant sources are the most current; e.g., AACE International Transactions, AACEs Cost Engineering journal, and so on.
[TOC] [PREVIOUS] [NEXT]
2008 By AACE® International www.aacei.org