What Multi-Project Management Really Involves
Picture a contractor running twelve projects across three cities, an engineering firm handling twenty design and supervision contracts, or a maintenance company servicing dozens of contracts at once. Each project on its own may be under control, with a manager who knows it inside out. The trouble starts when you look at the portfolio as a whole. The same crane is needed at two sites next week. The best engineer is split across four jobs. Procurement buys the same materials for different projects on separate orders. Finance cannot say how much cash will be needed next month because every project reports differently and at different times.
Multi-project management means running those projects as one portfolio: budgets and costs in a common structure, shared resources allocated by clear decision, performance measured the same way everywhere, and a consolidated cash forecast you can plan on. The ERP is the natural home for this, because project costs originate in purchasing, inventory, payroll and subcontracting, all of which are already transactions in the system.
This guide covers how to structure projects in the system, how to track budget, commitments and forecast, how to read portfolio performance with earned value, how to allocate shared resources, how to handle progress billing, retention and cash, and what is specific to Saudi labour rules, with worked numbers throughout.
Recurring Problems in Multi-Project Portfolios
- Resource clashes. Limited equipment and specialist crews are wanted on several sites at once, and the decision goes to whoever shouts loudest.
- Late discovery of overruns. Costs only appear when supplier invoices arrive, by which time the overrun is a fact.
- Reports you cannot compare. One project measures progress by cost spent, another by engineer's estimate, a third by certified billing.
- Unallocated shared costs. Technical management, shared equipment and the central store sit in a general account, so projects look more profitable than they are.
- Cash surprises. A project is profitable on paper, but certificates are late, retention piles up and the company funds the work from its own capital.
Structuring Projects in the ERP
Start by standardising the structure. Each project breaks into phases or work packages, and every cost is posted to project, phase and cost element. Cost elements must be identical across projects so they can be compared and consolidated:
| Cost element | ERP source | Note |
|---|---|---|
| Direct labour | Attendance, timesheets, payroll | Fully loaded hourly cost including allowances and GOSI |
| Materials | Stock issues or direct-to-site purchases | Issue stock to the project, not to the warehouse |
| Equipment | Owned-equipment usage logs or hire invoices | Daily or hourly internal rate for owned plant |
| Subcontractors | Subcontracts and their payment certificates | Posted after measured quantities are approved |
| Site expenses | Accommodation, transport, utilities, permits | Charged directly to the project |
| Allocated overheads | Technical management, central store | Allocated on a stated basis, such as a share of direct cost |
The golden rule: no cost transaction is accepted without a project, phase and cost element, or an explicit overhead classification. Make the field optional and reports fill up with costs that belong nowhere.
Budget, Commitments, Forecast: Four Numbers per Line
The classic mistake is comparing budget only with actual spend. An approved purchase order whose invoice has not arrived is a commitment that will become cost. More important still is the estimate to complete. A hypothetical materials line on one project:
| Item | SAR |
|---|---|
| Approved materials budget | 2,000,000 |
| Actual posted to date | 900,000 |
| Open commitments (POs not yet invoiced) | 650,000 |
| Budget remaining | 450,000 |
| Estimate to complete beyond commitments | 600,000 |
| Forecast at completion | 2,150,000 |
| Forecast overrun | 150,000 |
Looking at actuals alone, management sees 45% of budget spent with SAR 1.1 million left. The real picture is a 7.5% overrun on the line. Finding it now, while an alternative supplier or a specification change with the client is still possible, is worth far more than finding it in six months. Link the budget to purchasing and the system can block or escalate any new order beyond the remaining amount. More on project budgeting.
Reading the Portfolio With Earned Value
Earned value management ties cost, progress and schedule together using three figures: planned value (PV), the budgeted cost of work scheduled to date; earned value (EV), the budgeted cost of work actually done; and actual cost (AC). From these, the cost performance index CPI = EV / AC and the schedule performance index SPI = EV / PV. Anything below 1 is worse than plan.
A hypothetical portfolio of three projects, in SAR millions:
| Project | Budget | PV | EV | AC | CPI | SPI | Forecast at completion |
|---|---|---|---|---|---|---|---|
| Office building | 10.0 | 6.0 | 5.4 | 6.0 | 0.90 | 0.90 | 11.1 |
| Warehouse | 4.0 | 2.0 | 2.2 | 2.1 | 1.05 | 1.10 | 3.8 |
| Infrastructure works | 6.0 | 3.0 | 2.4 | 2.3 | 1.04 | 0.80 | 5.8 |
| Portfolio | 20.0 | 11.0 | 10.0 | 10.4 | 0.96 | 0.91 | 20.8 |
Forecast at completion uses the simple formula budget / CPI. The reading: the office building is the problem on both cost and schedule and could overrun by about SAR 1.1 million at current performance. Infrastructure is tight on cost but clearly behind schedule, probably short of resources, and perhaps the job whose crews were pulled to the office building. The warehouse is ahead on both. Overall the portfolio is about 9% behind and 4% over. That single table turns a management meeting from status narration into specific decisions.
The precondition is a consistent progress measure, such as engineer-approved measured quantities priced at budget rates. Measuring progress by cost spent forces CPI to 1 and hides the problem entirely.
Allocating Shared Resources
A hypothetical clash: the company has one tower crane available. The office building wants it for three weeks of slab pours; the warehouse wants it for two weeks to erect steelwork; both in the same window. Without a shared view, whoever calls first wins. With a shared resource schedule, management sees both requests and their consequences. Delaying the warehouse two weeks will not move its handover because it is ahead of plan, while delaying the already late office building increases exposure to delay penalties. The decision becomes obvious and defensible.
The same applies to engineers and specialist crews. Timesheets by project do two jobs: they charge labour to the right project, and they show utilisation per team. A team at 120% for a month is a warning of fatigue and mistakes ahead; a team at 50% is unrecovered cost.
Progress Billing, Revenue and Retention
Construction work is usually billed through periodic payment certificates based on approved progress, net of retention and advance payment recovery. Hypothetically: a SAR 5,000,000 contract before VAT, with a 10% advance recovered at the same rate from each certificate and 10% retention released after handover and the defects period. The first certificate at 30% progress:
- Value of work done: SAR 1,500,000.
- Less 10% retention: SAR 150,000.
- Less 10% advance recovery: SAR 150,000.
- Net due before VAT: SAR 1,200,000.
Retention across a portfolio can add up to large sums that never show in the bank balance, so the system should track it per project with release dates. On VAT, tax is due at the earliest of supply, invoice issue or payment received, so an advance payment is taxable when received; for government contracts since November 2021, the trigger is the earlier of the payment order or receipt of consideration. The VAT treatment of retention depends on contract wording and is worth confirming with an adviser.
For accounting, construction revenue is often recognised over time using a measure of progress under IFRS 15 where the criteria are met, not on certificates billed. The difference between revenue recognised and billed appears as a contract asset or liability, which is what work-in-progress reporting tracks. See work in progress.
Change Orders: Where Margin Leaks Quietly
Clients ask for changes mid-project: an extra floor, a different finish, a relocated electrical room. Site teams often carry them out on verbal instruction before the change order is formally approved. Months later the company finds it has performed substantial work that was never billed or added to budget, so it looks like a cost overrun rather than revenue due. Hypothetically, a SAR 10 million project with five changes costing SAR 420,000, of which only two worth SAR 180,000 are approved: the remaining SAR 240,000 sits in cost with no matching revenue, knocking about 2.4 points off reported margin, and some of it may be lost at final account without documentation. Give every change order a record with a number, status and estimated value, post its costs to a separate work package, and show unapproved executed changes per project on the portfolio dashboard.
Consolidated Portfolio Cash Flow
Each project has a cash curve: early outflows on mobilisation and materials, delayed inflows after certificates are approved, retention after handover. Adding those curves up in one monthly table shows when the company will need funding. A simplified hypothetical for the next three months:
| Month | Expected receipts | Expected payments | Net | Cumulative (opening 1.5M) |
|---|---|---|---|---|
| 1 | 2,400,000 | 2,900,000 | -500,000 | 1,000,000 |
| 2 | 1,800,000 | 3,100,000 | -1,300,000 | -300,000 |
| 3 | 3,600,000 | 2,700,000 | +900,000 | 600,000 |
Month two shows a shortfall. Knowing that today opens options: push a delayed certificate through approval, agree revised payment timing with a supplier, or arrange a short-term bank facility. Discovering it in month two leaves only expensive options.
Saudi-Specific Considerations
- Midday outdoor work ban. Work under direct sun is prohibited from 12:00 to 15:00 between 15 June and 15 September each year. Outdoor schedules need to reflect lower summer productivity.
- Ramadan hours. Working hours for Muslim employees are capped at six a day or 36 a week, which affects output and plans for that month.
- Overtime. An overtime hour is paid at the hourly wage plus 50% of the basic wage, so acceleration cost estimates must include it.
- Wage protection. The WPS file on Mudad must be uploaded within 30 days. Labour spread across sites needs accurate attendance per site so payroll and project costing both come out right.
Where the portfolio relies on subcontractors, managing their contracts, certificates and retention is a topic in its own right, covered in our guide to subcontractor management.
A Portfolio Risk Register
Some risks span projects: one rebar supplier serving four sites, a financially stretched subcontractor on three jobs, or several projects depending on one client who is slow to approve certificates. None of these looks large from inside a single project. A shared register, with probability, estimated financial impact, owner and action for each risk, linked to every affected project, reveals that a small risk on one job may be the biggest risk to the company. Review it in the same monthly portfolio meeting, not in a separate file nobody opens.
What the Portfolio Dashboard Should Show
- CPI, SPI and forecast at completion against budget for each project.
- Forecast margin against tender margin.
- Submitted but unapproved certificates, with ageing.
- Retention receivable and release dates.
- Consolidated cash flow for the next three months.
- Utilisation of shared equipment and crews.
For the management principles behind successful delivery more broadly, see keys to successful project management.
Common Mistakes
- Measuring progress by cost spent, so every project looks on track until the end.
- Ignoring open commitments and comparing budget only to posted invoices.
- Leaving shared costs unallocated, so the next tenders are priced on margins that never existed.
- Issuing stock without a project code, making projects look cheaper and the store look wasteful.
- Leaving retention out of cash planning, when it is often among a contractor's largest receivables.
How Tranquil Fits
Tranquil brings projects and contracting together with accounting, purchasing, inventory, HR and payroll in one cloud ERP. The projects module covers labour and parts costing per job, and the contracting solutions include cost and revenue estimation, daily activity management, material management, project budgeting, timesheet invoicing and work in progress. Explore our project management solution or contact us to discuss structuring your project portfolio.
Frequently Asked Questions
What is the difference between project and portfolio management?
Project management focuses on delivering one project to scope, time and cost. Portfolio management looks across all projects: shared resource allocation, priorities, consolidated cash flow and company-level risk.
How should progress be measured reliably?
Ideally by engineer-approved measured quantities or defined milestones per work package, priced at budget rates. Measuring by percentage of cost spent is easy but hides overruns.
How should overheads be allocated to projects?
On a stated, consistent basis such as a percentage of direct cost or of labour hours, applied monthly to every project. Consistency is what makes project margins comparable and useful for pricing tenders.
Is revenue recognised on payment certificates?
Not necessarily. Under IFRS 15, construction revenue is often recognised over time using a measure of progress when the criteria are met, which can differ from billing; the gap shows as a contract asset or liability.
How do we plan around the midday work ban?
Adjust outdoor working hours in the project calendar for 15 June to 15 September, assume lower productivity for outdoor activities, and schedule indoor work in the midday hours where possible.