Scenario: Conflict Between a Commercial Manager and a Planning Manager on Updating the Project’s Progress, and the Role of the Project Manager

Background:

In a large-scale project, updating the project’s progress accurately and consistently is critical for decision-making. The Commercial Manager focuses on financial progress (how much work has been invoiced and paid) to manage cash flow and revenue forecasts. Meanwhile, the Planning Manager emphasizes physical progress (actual work completed on-site) to ensure the project stays on schedule. Conflicting views on how progress should be reported and updated lead to discrepancies, delays, and confusion.

The Players:

1. Commercial Manager: Tracks progress based on invoiced or billable milestones, linking updates to financial metrics such as cash flow and revenue. May overstate progress to meet financial targets or ensure timely payments, even if actual work lags.
2. Planning Manager: Tracks progress based on the percentage of work physically completed compared to the schedule. Refuses to align with financial milestones if they don’t reflect the actual on-site progress, emphasizing accurate updates to prevent schedule risks.
3. Project Manager (High Maturity Required): Mediates between the Commercial and Planning Managers to establish an aligned, transparent, and reliable progress reporting system. Ensures that updates reflect both financial and physical realities to avoid project mismanagement.

Conflict:

• Commercial Manager’s Perspective: Pushes for progress updates tied to invoicing milestones to maintain steady cash flow and meet financial reporting requirements. May report a higher progress percentage based on financial agreements, even if actual on-site work is incomplete.
• Planning Manager’s Perspective: Insists on updates reflecting physical progress as it impacts the project schedule and resource planning. Refuses to adjust progress percentages based on financial milestones, arguing it creates schedule inaccuracies and risks.

Neither party fully considers the importance of aligning progress metrics to reflect both physical and financial realities:

• The Commercial Manager risks inflating progress, undermining schedule tracking accuracy.
• The Planning Manager risks delaying financial updates, impacting cash flow and client relationships.

Result Without Intervention: Negative Outcomes

1. Discrepancies in Reporting: Progress updates become inconsistent between financial and schedule reports, confusing stakeholders.
2. Cash Flow and Schedule Risks: Financial misalignment disrupts cash flow, while schedule inaccuracies lead to resource mismanagement and delays.
3. Team Friction: Ongoing disagreements erode trust and collaboration between the Commercial and Planning Managers.

The Role of a Mature Project Manager

A highly mature PM is essential to resolve the conflict and ensure progress updates reflect an integrated view of financial and physical realities.

1. Facilitating Communication:

• Brings the Commercial and Planning Managers together to discuss the importance of aligned progress reporting.
• Creates a shared understanding of how financial and physical progress metrics impact overall project performance.

2. Integrating Metrics:

• Implements an Earned Value Management (EVM) approach to align financial and physical progress: Earned Value (EV): Reflects the physical work completed. Planned Value (PV): Tracks the work planned to be completed by a specific time. Actual Cost (AC): Monitors financial expenditure against the progress.

3. Establishing Clear Policies:

• Defines a unified process for updating progress: Physical progress is updated based on site inspections and work completion. Financial progress is updated based on invoiced milestones, ensuring alignment with physical realities.

4. Ensuring Regular Reviews:

• Conducts progress review meetings where discrepancies between financial and physical updates are discussed and resolved collaboratively.
• Monitors risks to ensure updates reflect true project status without delays or misalignment.

5. Driving Collaboration:

• Encourages both managers to see the value in aligning their metrics: The Planning Manager adjusts timelines to accommodate financial realities where feasible. The Commercial Manager ensures invoicing milestones reflect actual progress.

Final Outcome with High PM Maturity:

• Aligned Progress Updates: Reports provide a unified view of financial and physical progress, improving decision-making.
• Improved Cash Flow and Scheduling: Accurate progress updates support better resource planning and timely payments.
• Enhanced Collaboration: Trust and teamwork between the Commercial and Planning Managers lead to smoother operations.
• Project Success: Stakeholders receive transparent, consistent progress updates, reducing risks and delays.

Conclusion:

A mature Project Manager ensures progress updates reflect both physical work completed and financial milestones, integrating metrics for transparency and reliability. By fostering collaboration and aligning priorities, the PM prevents reporting discrepancies and ensures the project remains on track. Without a high-maturity PM, the conflict would lead to misalignment, stakeholder confusion, and project delays.

Questions for PM Audience on Conflict Between Project Commercial Manager and Cost Control Manager:

• Understanding the Conflict:

A- How would you address a situation where the Project Commercial Manager prioritizes revenue and client satisfaction, while the Cost Control Manager focuses strictly on budget adherence?

B- What potential risks arise when these conflicting priorities are not resolved?

• Balancing Priorities:

A- What strategies would you use to balance the need for maximizing revenue with the necessity of maintaining strict cost control?

B- How do you determine which priority takes precedence when both client relationships and budget discipline are critical?

• Facilitating Communication:

A- How would you facilitate discussions between the Commercial and Cost Control Managers to align their objectives?

B- What techniques do you use to mediate disagreements and ensure both parties feel heard and valued?

• Establishing Processes:

A- What processes or frameworks would you implement to ensure that revenue-focused decisions consider budget constraints and vice versa?

B- Would you establish a formal change control process? If so, how would it balance revenue opportunities with cost implications?

• Leveraging Data and Tools:

A- What tools or methodologies do you use to evaluate the impact of proposed changes on both the project’s budget and revenue?

B- How do you ensure that decisions are backed by data and not driven solely by individual priorities?

• Risk Management:

A- How would you identify and mitigate risks associated with over-prioritizing either revenue or cost control?

B- What steps would you take to prevent client dissatisfaction while also avoiding budget overruns?

• Collaboration and Ownership:

A- How would you encourage the Commercial and Cost Control Managers to collaborate rather than compete in their priorities?

B- Who should have the final decision-making authority in cases where the two managers cannot agree, and why?

• Best Practices and Lessons Learned:

A- Can you share an example from your experience where you had to mediate a conflict between financial priorities and budget constraints?

B- What approach worked best? What best practices have you implemented to align commercial and cost control objectives effectively?

• Stakeholder Management:

A- How would you communicate the resolutions of these conflicts to stakeholders to ensure transparency and maintain trust?

B- What measures would you take to manage client expectations while preserving project profitability?

• Measuring Success:

A- What indicators or metrics do you track to determine the success of your approach in resolving conflicts between revenue maximization and budget control?

B- How do you ensure that the project achieves both financial and budgetary goals without compromising quality or timeline?

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