Project management is an art, and those who learn to master the subtle tools of communication, collaboration, and stakeholder engagement can only get things done and achieve the desired outcomes. In pursuit of achieving the desired outcomes, situations often go out of hand of the project manager, creating chaos and uncertainty for the project. Given this, the project manager strives to plan the project outcomes by creating a scope baseline and decomposing user requirements and specifications into manageable work components. This alone may not be enough. A level below this is that the project manager associates a control account in PMP with the work activities to establish a mechanism for monitoring project progress and controlling variations. Today's article lets us understand the purpose of such project placeholders and how they help the project manager come out of critical project situations.
Before getting into who creates control accounts, let us first understand what a control account is in project management, the process in which it is created, and how the process functions. A control account is a placeholder work breakdown structure (WBS) component used as a point of control costing or accounting. Such WBS components or control accounts PMP become the control points for all the work packages underneath them in the project. Since all of this decomposition of tasks to formulate the WBS happens in the “Create WBS” process of project management, the control accounts are also defined as a part of this process. Hence, the creator of the WBS, i.e., the project manager, the sponsor, and the project team, defines the control accounts in the project.
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The purpose of a control accounts pdf, as defined by PMBOK, specifies that a control account pmp is chartered as a management control point at which the project constraints are integrated and project performance is measured. For a project manager looking to set up sound project management processes, it fulfills the following purposes:
Imagine you shop monthly for groceries at a hypermarket, and even before you get there, you plan a specific category of items and allocate a budget according to your needs. A control account in PMP fulfills this very purpose, i.e., planning and managing expense categories, tracking variances, and implementing the required reconciliations to rectify accounts for errors. Take up courses on Project Management to build a foundational understanding of the PMP certification and project management practices.
A control account in PMP, abbreviated as CA, helps build a strategic structure by creating a point of intersection for the project constraints, i.e., scope, time, and cost, to come together. The control accounts are positioned in the WBS at points that help fulfill project measurement and define criteria for tracking the constraints. They help reconcile gaps or loopholes at the intersection points to minimize variances and enable strategic alignment. It is very important to note that a control account can have multiple work packages under it, while a work package will be under one and only one control account. This helps create a structure where items are monitored from the bottom of the project, building activity and assignment-based control processes.
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A control account plan (CAP) is similar to a project plan but only at a WBS component level, i.e., it is a subdivision of the project constraints - scope, schedule, and cost at a control account level. A control account plan helps roll items from a lower level to the plan level and vice-versa. Understanding the work breakdown structure and its components is key to where to position control account placeholders to create the proper framework to monitor and control project processes and progress.
A control account plan may have one or more deliverables associated with it, but in terms of timing, it must have at least that much length to measure and review the trend of the control account outcomes. It is generally advised to avoid short-length timings on plans to track control account PMI since the measurability becomes tepid. However, the right length or timing of measurement may depend on the type of project, organization governance framework, project length, etc.
Control accounts are implemented with the idea of answering the million-dollar project management question, i.e., how to measure control accounts?
To measure control accounts, also known as cost accounts, it is essential to first identify them correctly, i.e., associate them with a unique identifier. Once the identifiers are added, control accounts can be measured at a project plan level, an individual assignment level, or control account plan level as per the organizational requirements/regulatory framework.
Cost accounts are also used to tie back assignment accountability to the performing or catering team and can be used to assess and improve their performance.
To define the proper measurement logic for the control accounts, it is important to correctly position them in the WBS hierarchy at a level higher than individual tasks or activities and above the items' lowest decomposition level.
In my experience, control account PMP can be used as a strong project management measure to tie commitment to the participating team or organization and set a good example of accounting control. Some key project scenarios that outline control account plan examples include:
Besides these, control accounts may be built to maintain and manage organizational payrolls, fixed assets, etc., per the organization’s needs and accounting practices.
Control account PMP is an important project management tool instituted in creating the WBS process to build alignment and create a hierarchical structure of deliverables that can be tracked and managed through the project lifecycle. Integrating control accounts in the WBS can strengthen the project governance model by creating subsets of project elements that can be managed with a unified focus. Control accounts help create points of intersection to eliminate possibilities of risks and gauge the performance of planned activities and the overall project.
Instituting control account systems at a WBS level also facilitates analysis of chargebacks to the project accounts and reconciliation of any missing/differential entries as per the accounting practices. To conclude, control accounts are a powerful mechanism by which project managers strive to bring accountability and transparency and facilitate utilizing organizational resources to fulfill project needs and assess progress from time to time.
As control accounts are identified and added to the WBS process’s creation, key inputs include data from the project management plan, project documents, environmental enterprise factors (EEFs), and organizational process assets (OPAs). With these inputs together based on the principles of decomposition and availing expert judgment, the control accounts are ingrained for the project.
WBS provides the overall hierarchy and structure utilizing which the control accounts are created and placed to monitor the cost and assess the performance of a symbolic work element. WBS is the umbrella under which cost or control accounts are created and maintained. Control accounts are like a subset of activities on a WBS, with their scope, schedule, and budget to be monitored and controlled.
The three types of project management control accounts follow accounting principles to substantiate data sanctity and fair accounting practices. Apart from the commonly known accounts receivables (AR) and accounts payables (AP), the other 3 types of control accounts are - payroll accounts, inventory accounts, and fixed assets accounts.
Control accounts help project managers track costs and add earning rules to be applied for earned value analysis. They offer chargeback mechanisms for project-level tasks, activities, and resources to assess progress and track performance while reducing the PM’s efforts in managing finer project details. Besides this, control accounts help confirm reconciliation mechanisms for differences in the account balances as per periods.
