Contract Cash Flow & Performance Analysis. PERCEPTION Helping The Shipyard Stay On Budget

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1 Contract Cash Flow & Performance Analysis PERCEPTION Helping The Shipyard Stay On Budget 1

2 Shipyards that know their true costs are more likely to be profitable and are in a better position to challenge their competition. They can focus their efforts and resources on those areas that can benefit the most from productive change. A shipyard would never know this unless it had a means for measuring benefits and their relative impact upon profits. 2

3 World-class shipyards have a strong focus on maximizing the efficiency of their manufacturing and assembly processes. They strive to perform work at the most productive stages of construction, eliminate wasted time, and simplify shipyard production processes. These shipyards execute effective production plans and work hard to successfully stay on budget and on schedule. They know where they are and where they are going. 3

4 Critical to the success of any project is the management of project resources. Ultimately, the resource that matters most is money. PERCEPTION tasks and forecasts money resources at all levels of a project work breakdown structure. The system produces reports that clearly identify project status and trends in straight-forward, no nonsense money terms. Turn VISABILITY into ACTION 4

5 PERCEPTION summarizes performance at all levels of a project. The following presentations describe those that are critical to the management of any project. 1. Tracking progress and estimates at completion: these reports track budget (BAC), earned value (BCWP), actual costs (ACWP), budgeted cost of work scheduled (BCWS), and estimate at completion (EAC), as well as cost/schedule variances, trends, and management reserves (MR). 2. Measuring and summarizing work order performance in terms of costs and schedules. The system can focus on any selection of work orders for in-depth analysis of detail performance. 3. Measuring and summarizing work center performance in terms of costs and schedules. The system can focus on any selection of work orders for in-depth analysis of production process performance. 4. Measuring and summarizing cash flow requirements. The system tracks cash flow requirements for labor, material & overhead. The system details commitments, receipts, and usage of direct purchase material, subcontract work, owner-furnished material and general stock. 5

6 Tracking Actual Costs PERCEPTION tracks project cash flows of actual costs broken down for labor, material & overhead. 6

7 Tracking Actual Costs $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 Actual Labor Cost Actual Labor + Overhead Actual Overhead Cost Material Cost Received Material Cost Used Total ACWP (Labor+Material+Overhead) $1,500,000 $1,000,000 $500,000 $- 12/10/02 01/29/03 03/20/03 05/09/03 06/28/03 08/17/03 10/06/03 7

8 Tracking Cash Budgets & Estimates At Completion PERCEPTION tracks project cash flows of actual costs (labor, material & overhead) against budgets (BAC), management reserves( (MR) and estimates at completion (EAC). The system employs a number of methods for determining EACs, most of which are based directly upon actual accumulating cost performance of a project and their trends towards completion. 8

9 Dollars Total Cash Budget Versus EAC (Labor, Material & Overhead) $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 Total BAC + Reserves $4,000,000 Total EAC Total Budget $3,000,000 Total ACWP Total BCWP $2,000,000 Extended Total BAC Extended EAC $1,000,000 Extended Total ACWP-Cubic Total BCWS $- 09/01/02 12/10/02 03/20/03 06/28/03 10/06/03 01/14/04 04/23/04 08/01/04 11/09/04 9

10 Tracking Earned Values Costs $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 Labor Cost BCWP Material Cost Used Material BCWP Material Cost Received Total BCWP (Labor+Material+Overhead) $1,500,000 $1,000,000 $500,000 $- 12/10/02 01/29/03 03/20/03 05/09/03 06/28/03 08/17/03 10/06/03 10

11 Tracking Cash Flow Schedules PERCEPTION measures and tracks cash flow schedules (budgeted cost of work scheduled, or BCWS) broken down for labor, material & overhead. 11

12 Tracking Cash Flow Schedules $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 Labor BCWS Material BCWS Overhead BCWS Total BCWS $2,000,000 $1,500,000 $1,000,000 $500,000 $- 12/10/02 01/29/03 03/20/03 05/09/03 06/28/03 08/17/03 10/06/03 12

13 Tracking Cash Flow Requirements PERCEPTION measures and tracks cash flow requirements on an incremental basis broken down for labor, material & overhead. 13

14 12/23/2002 1/6/2003 1/20/2003 2/3/2003 2/17/2003 3/3/2003 3/17/2003 3/31/2003 4/14/2003 4/28/2003 5/12/2003 5/26/2003 6/9/2003 6/23/2003 7/7/2003 7/21/2003 8/4/2003 8/18/2003 9/1/2003 Cash Flow Per Week Tracking Cash Flow Requirements Per Week $1,400,000 $1,200,000 $1,000,000 $800,000 Total BCWP/Week Total BCWS/Week Total ACWP/Week $600,000 $400,000 $200,000 $- 14

15 Tracking Material Costs PERCEPTION tracks material and subcontract costs and relating them to budgets, management reserves, and estimates at completion. PERCEPTION tracks material values at all stages of material control: purchased, received, used in production, and invoiced by vendors. 15

16 16

17 Tracking Earned Value Costs PERCEPTION measures and tracks earned value (budgeted cost of work performed, or BCWP) costs broken down for labor, material & overhead. 17

18 $509,880 $3,894,392 $4,699,017 $4,333,679 $7,130,501 $6,741,695 $7,640,381 Total Cost Performance (Labor, Material & Overhead) $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Total MR Total BAC Total BAC + MR Total BCWS Total BCWP Total ACWP Total EAC(SPAR) 18

19 Percent of Total Budget Total Cost Performance (Labor, Material & Overhead) 120.0% 100.0% 100.0% 107.2% 94.5% 80.0% 60.0% 65.9% 54.6% 60.8% 40.0% 20.0% 7.2% 0.0% Total MR Total BAC Total BAC + MR Total BCWS Total BCWP Total ACWP Total EAC(SPAR) 19

20 Percent Total Budget & Management Reserve Total Cost Performance (Labor, Material & Overhead) 120.0% 100.0% 93.3% 100.0% 88.2% 80.0% 60.0% 61.5% 51.0% 56.7% 40.0% 20.0% 6.7% 0.0% Total MR Total BAC Total BAC + MR Total BCWS Total BCWP Total ACWP Total EAC(SPAR) 20

21 Overall Performance Index (Labor, Material & Overhead) 100.0% 90.0% 80.0% 89.9% 82.9% 74.5% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Cost Perf. Index - CPI Schedule Perf. Index - SPI Combined CPI x SPI - SCI 21

22 $6,741,695 $7,934,820 $8,238,405 $8,678,857 $7,898,444 Comparing Total EAC Methods (Labor, Material & Overhead) $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Total EAC(SPAR) Total EAC(CPI) Total EAC(SPI) Total EAC(SCI) Total EAC(Average) 22

23 Percent of Total Budget Comparing Total EAC Methods (Labor, Material & Overhead) 140.0% 120.0% 100.0% 100.0% 107.2% 94.5% 111.3% 115.5% 121.7% 110.8% 80.0% 60.0% 40.0% 20.0% 7.2% 0.0% Total MR Total BAC Total BAC + MR Total EAC(SPAR) Total EAC(CPI) Total EAC(SPI) Total EAC(SCI) 23

24 SPAR Associates, Inc. Over 40 Years Providing Shipyard management software Software development services Training & maintenance support Planning & scheduling services Cost estimating services Management consulting 24

25 Over 40 Years Serving the Shipbuilding & Repair Industry 25

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