Project control, performance evaluation and closeout
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1 Project control, performance evaluation and closeout Steinar Kristoffersen
2 Continue with case-based lecturing New case: KE Company AS Subsea installation and remote operation og diving vehicles, requires Cranes Winches Skids bedded&v=7groashum2m
3 Project control
4 SDLC: 5 phases for project management FEASIBILITY DESIGN, PLANNING DEVELOPMENT CLOSEOUT MAINTENANCE Finance Evaluation Organization Estimation Planning Monitoring & Control Correcting the course Changes & Claims Quality & Reviews, & Audits 4
5 Is everything proceeding as we expected? 5
6 How do we know where we are?
7 Cost break-down
8 Sales order
9 Budget AH Innkjøp Innleige Egne timer Oppstart Total kost Salgspris Resultatgrad -32,5% BS Innkjøp Innleige Egne timer Oppstart (usikkerhet) Total kost Salgspris Resultatgrad -11,5% Andel Innkjøp 61% Innleige 10% Egne timer 29% Andel Innkjøp 66% Innleige 11,5% Egne timer 22,5% Page 9 15/04/2015 WORLD CLASS - through people, technology and dedication
10 AND execution
11 We need to break it down Periodization (per month) Categorization (by type) By «budgeted» Cost Value Time remaining By «completed» Ditto
12 Some examples of «actual cost»
13 P. AH (18756 hrs, -32,5 profit% ) Fitting/Warehouse subcon Technical
14 jan" feb" mar" apr" may" jun" jul" aug" sep" oct" nov" dec" jan" Project BS (8173,03, -11,5 profit ) 1600" 1400" 1200" 1000" 800" 600" 400" Tech sub Fitting Fi"t"t"ing/Wa"rehouse"A" subcon" War"ehouse"(Lager")" Ki"t"t"ing"(Kl"a"rgj"e"r"ing)" Fi"t"t"ing"(Mont"er"ing)" 200" 0" Technical Project"subcon" Op"Kval" 2013" 2014"
15 Project CR (Dec: 1442 hours) 500" 450" 400" 350" 300" 250" 200" 150" 100" 50" 0" Tech sub Technical aug" sep" oct" nov" dec" jan" 2013" 2014" Fi"t"t"ing/Wa"rehouse";" subcon" War"ehouse"(Lager")" Ki"t"t"ing"(Kl"a"rgj"e"r"ing)" Fi"t"t"ing"(Mont"er"ing)" Project"subcon" Op"Kval"
16 But if the plan had No planned contribution (value)? No completion %? No remaining time estimates? We cannot tell if we are doing allright, can we?
17 CR: (+3 m: 2783 hrs (3 m = 2x)) 700" 600" Fi"t"t"ing/Wa"rehouse"?"subcon" War"ehouse"(Lager")" 500" 400" 300" Ki"t"t"ing"(Kl"a"rgj"e"r"ing)" Fi"t"t"ing"(Mont"er"ing)" Project"subcon" Op"Kval" Purchasing" IT" Project" Technical"subcontracJ ng" Technical" 200" 100" SCM" Admin" OSS"Molde" Af"t"er"sa"l"es"and"se"rvi"ce" Finance" 0" aug" sep" oct" nov" dec" jan" feb" 2013" 2014"
18 CR: (+8 m: 4943 hrs) learn from history?
19 Absolute hours
20 Increased cost vs. front-end loading
21 Normalized hours we cannot tell the diff?
22 What was the result in the end?? Cost breakdown week 49 Sales order Original budget And for the four starting block alternatives? Exec so far Discount Logistics Hours Parts Sum DiffMin% 69 % 93 % 0 % 51 % DiffMax% -12 % 0 % -48 % -22 % Resultatgrad 12,44 % 0,00 % 48,13 % 21,83 %
23 Closeout
24 SDLC: 5 phases for project management FEASIBILITY DESIGN, PLANNING DEVELOPMENT CLOSEOUT MAINTENANCE Finance Evaluation Organization Estimation Planning Monitoring & Control Course corrections!!! Changes & Claims Quality & Reviews, & Audits 24
25 Performance evaluation connects control to closeout!
26 Main Focus on Reports: Performance Main performance criteria of interest, in hindsight : Scope Time Money Quality Productivity Safety Good idea to prepare the KPIs (Key Performance Indicators) in preparation for project monitoring before project closeout! Must facilitate the project control process as well as the reporting functions of project monitoring Why?
27 Time and excess hours depend within projects, but not the same way across projects
28 How are we doing? No, really? Not too bad! Not so good!
29 More on Performance Metrics Categories Performance measurements Targets Units of measurement Scope Amount of work accomplished Amount of work to be accomplished M, M 2, M 3, Tons, $ Time Completion dates Milestones, Deadline Day, Week, Month Money Cost, Cash flow Budget, Profit, Cash flow $, Net Present Value (NPV) Quality Quality achieved (Appearance, Durability, Strength, Suitability) Target quality level (Appearance, Durability, Strength, Suitability) Number of defects, Value of defects, Number of change orders Safety Actual accidents and injuries, delays and economic damages occurred Goaled accidents and injuries level Person, $, Day, Week, Month Productivity Actual productivity Planned productivity Work unit/worker/time
30 Reporting challenges Often delayed Continuous improvement critical everywhere Effectiveness of feedback for real-time systems particularly important Selective reporting widely used: Best result baselining ( cherry picking ) Some reports contain only problems encountered during external stages, with consultants, etc. ( blaming game?)
31 Reporting focus Need frequent reporting for Important items (e.g. high cost) Uncertainty (Unfamiliar procedure, ) and variance Critical and long lead material and services Scope ( creep or bloat ) management and change orders Keep track, maintain consistency, and compare for closeout! In order to learn a little (before it is too late)
32 Kinds of Reports (more pps) Internal reports Cost control report ( the profit ) Risks/opportunities report (for negotiation) Example of better design less steel no cost reduction Example of risk-sharing models in software development (API) External reports (turn page for more details),, and the little print of the contracts
33 Internal Reporting Monthly Cost Control Report Describe project cost at current date: Budget cost Actual cost Accounted cost Cash out Estimates to completion Variances and indexes Revised schedule Revenues Control Summary (issued invoices) Risk/Opportunity plan Reports on planned activities and anticipated threats/opportunities during the following reporting period
34 Contract Reports Schedule review Schedule of value and certificate of payment Request for extra works Change orders Design/quality implications
35 Example 1 of project status report
36 Example 2 of project status report
37 Example of performance report
38 Example 1 of progress report
39 Example 2 of progress report
40 Example of final report (, ) 40
41 Simplify reporting Financial and time indicators are necessary but not sufficient to alert to problems Earned value Efficiency Motivation of team For serious problems and normal reporting, is is very serious by the time it is noticed in the formal reports Rapid qualitative judgment is often much more effective than late and heavyweight quantitative reporting
42 Content of closeout Comprises the last series of todos associated with a project Deliverables Payment Quality But for sustainability: learning from the project!
43 Organization of closeout Essentially is a mini-project in itself, sometimes benefiting from a close out manager, indeed Customer Controller Taxation, provides better motivation! Requires careful planning and logistical management Build on previous reporting! Track down all the paperwork, use of archives often sloppy! Where are the stuff we bought?! 43
44 People issues in closeout May require special attention to emotional issues of the personnel in the project Presents learning opportunities for the organization through the project final review and report Closeout also find new assignments and represents the next step For ideas and intellectual property For funding initiatives
45 Close-out formal activities 1. Project commissioning Documentation for a purpose Indexing (SFI) Distribution Training Testing Formal check-out 2. Project termination of all accounts 3. Project feedback, collect from stakeholders
46 1. Project Commissioning Closing the contract: All claims met? (owner, customer, controller and supplier) As-built drawings, certificates, paperwork Bank guarantees closed and of evidence final payment Cover credit, suppliers loans and effort if needed Maintenance and insurances A strategy for operations Final completion review, closing the closeout
47 2. Project Termination Operations Re-assign people to some new project Human resources department involved Equipment serviced and re-allocated (not left on the deck ) Logistics, installations and temporary facilities (software licenses!) Book-keeping and accounting
48 3. Project Feedback Knowledge management systems Standard WBS (list of work packages), revised and commented Estimates (unit costs), constant factors and formulas adjusted Duration of activities, productivity rates ditto Process improvement, design impleications, improved methods and new tools Final review meeting: Lessons learnt, subjective experiences
49 And then the champagne 49
50 Quality assurance and Continuous process improvement
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