Creating the project structure and opening the project

The project structure is a structure which tells how the project is structured in the case company’s internal systems. With a carefully created project structure, the case company ensures that every participating unit is treated fairly and within the limits of the law. The main purpose of the project structure is to divide costs and profits appropriately to differ-ent units and functions. Project structure helps to monitor project by project parts. This means that every business line, business unit and technology unit have their own budg-ets, estimates and costs. These figures are monitored in every unit with the help of the WBS structure. As mentioned earlier, the project structure is made based on the MUP pricing summary and cost estimations of technology units. However, they don’t usually provide enough information to easily create the project structure.

Project structure gets more complex if the project is delivered from more than one legal company. Because the ERP system doesn’t offer transparency between legal compa-nies, pass through parts must be created. The complexity of the project might increase significantly if the contract structure differs from the usual structure. The contract can, for example, be established with legal company A, even if deliveries are done mainly from legal company B. Depending on contract structure, transfer pricing may be the way to transfer money to the right entities inside the case company. This, in turn, makes one complexity more to project structure. All in all, based on interviews, creating the project structure seems to be difficult and require communication among stakeholders, espe-cially in complex mega projects.

The mega controller is responsible for creating the project structure. This phase requires a lot of understanding about the case company’s way of working and different structures that occur in the case company. One of the mega controllers said in the interview that creating of project structure took three weeks altogether. She said that calculations of MUP pricing summary didn’t serve her needs. One of the sales directors was very sur-prised by that. According to him, the MUP pricing summary template is similar for every mega project and it provides direct costs, contingencies, warranties, and profits sepa-rately for every technology. According to interviews with mega controllers, MUP pricing summary doesn’t include information such as division to legal companies, pass through parts or information about transfer pricing. This information mega controller must gather from somewhere else. Process of creating the project structure is illustrated in Figure 15.

Figure 15. Simplified process of creating the project structure of mega project Creating of project structure hasn’t been as straightforward as it could be. As mentioned, one mega project took three weeks before it was opened to the ERP system. Many stakeholders need the project to the ERP system as soon as possible. Without project structure in the ERP system, allocation of purchases, employee’s work hours etc. cannot be put to the ERP system. Also, many stakeholders want to see the project structure in the ERP system to understand how the project is divided between units. Thus, it is im-portant that the project structure is ready as quickly as possible after contract signing.

However, the project structure is not the only thing that can restrict the project’s opening to the ERP system. Often the project cannot be added to orders received before down payment is received. Hence, it cannot be added to the ERP system either before down payment.

Creation of project structure usually starts when the contract is signed. It could be pre-pared earlier, but the contract structure can change until the signing, which could affect to project structure as well. There is also always a possibility that the case company never signs the contract.

It is difficult to illustrate the project structure creation process because it is not docu-mented, and the case company doesn’t have a clear process to it. Especially responsi-bilities of mega controller and project controllers are unclear. Interviewed project control-ler said that he didn’t get very clear tasks to do in the process. He hoped that the mega controller would give more exact instructions so that the responsibilities of every stake-holder were clear.

However, the process starts by meeting of mega controller and project controllers.

Agenda of this meeting is to plan the next steps in project structure creation. Basically, the mega controller tells how the structure is defined in a broad level and project control-lers define the structure of their part of the project in more detail. Controlcontrol-lers need to first enquire from project or sales managers what is included to the project because the scope might have been still changed just before contract signing. Cost estimators have already divided cost estimates based on units, but cost estimations usually lack something rele-vant. Thus, controllers need to investigate missing issues. According to a mega controller and a project controller, they need to find out where certain purchases are planned to make from, how onshore and offshore portions are divided and how pass through parts are constructed.

When the plan of the project structure is ready in Excel, it can be opened in the ERP system. Project controllers are responsible for this opening in practice. However, the mega controller must ensure that every unit of the project reports orders received at the same time.

The creation of the project structure was the biggest challenge for one of the interviewed mega controllers. The main challenges were caused because of the following reasons:

• MUP pricing summary didn’t provide enough information for project structure

• Contract structure was exceptional

• Roles and responsibilities in creating project structure weren’t clear to all partici-pants

• The project was the first mega project for the mega controller