Too Big to Change The Cost Side of CCPM

Transcription

1 Too Big to Change The Cost Side of CCPM Presented By: CMS Montera Date: June 11,

2 Agenda CCPM solution CCPM benefits Corporate environment requirements Scheduling conflict Direction of the solution Change Management considerations 2

3 Who is CMS Montera? CMS Montera Provides Management Solutions and Software to Accelerate Projects and Optimize Operations 3

4 CCPM Solution Stagger the release of projects into execution in order to limit the number of active projects in the pipeline Buffer project plans in order to better protect against unknowns Prioritize task execution based on project completion vs. buffer consumption Stagger Buffer Prioritize 4

5 CCPM Solution Limits Work in Process Minimizes multitasking Improves visibility & synchronization Reduces lead time and increases throughput Need to create a project network to Schedule Tasks and then ensure resource availability to support timely execution 5

6 CCPM Solution typical results More Sales / Profit Lower Costs Happy Customers More Capacity 25 to 50% Faster > 90% On-Time 10 to 25% More Projects Most organization that decide to follow CCPM methodology can achieve these results 6

7 Business Environment Requirements Many larger, especially project based, organizations need to forecast revenue, perform financial analysis, and provide financial reporting recognize current and predict future revenue by tracking material arrival and labor utilization calculate profit margin (project & business) resource time tracking budget comparisons connecting arrival of materials to project tasks These activities require fairly precise resource schedule (at a point in time) In addition, most of these activities are already supported by multiple of software tools - primarily to support accounting 7

8 Business Environment Requirements In order to achieve business results possible with the use of CCPM methodology, these organizations are often forced to run two parallel systems: Critical Chain to get business results (task scheduling) Traditional PM approach to perform financial reporting (resource scheduling) 8

9 Scheduling Conflict Successful Project Based Business Effective Project Execution Accurate Financial Reporting & Forecasting Schedule Task Durations Schedule Resource Effort Detailed resource schedule is often in conflict with dynamic CCPM-based task schedule In traditional PM, task schedules subordinate to resource schedules CCPM is opposite resources need to subordinate to tasks. This creates 2 issues: 1. Impacts financial reporting (need resource effort and timing) 2. When resources are not available, task durations are too optimistic (create network gaps - especially on the longest 9 / most penetrating chain)

10 Scheduling Conflict erroneous assumption Successful Project Based Business Effective Project Execution Accurate Financial Reporting & Forecasting Schedule Tasks and Durations Schedule Resources and Effort Erroneous assumption We often believe that scheduling resources and effort is not necessary to successfully implement CCPM 10

11 Direction of the Solution Estimate task duration AND resource effort during project planning and execution Schedule tasks AND schedule resources but provide continuous impact on project / chain delay Show the impact of fixed resource dates on the project buffer (buffer penetration / Delay Days measure) Determine the impact of fixed resource dates on resource load / organizational capacity and associated delays Link task, resource AND effort to financial reporting and forecasting software tools 11

12 How to cause the change? A very effective change management tool is to remove the old system and process to prevent people from migrating back In our experience this is impractical since most of the tools are imperative to sustain the financial processes of the business (large organizations) In addition, there are many existing software tools to support these processes CCPM software often adds to the plethora of tools Therefore, the CCPM implementation and supporting software not only need to enable the CCPM process but also support and simplify the financial / cost side of the business to create buy-in and sustainability 12

13 How to create POOGI? In order to create a Continuous Improvement process and enable wider CCPM adoption by large organizations we need to create tools to: monitor buffer penetrations created by resource scheduling decisions provide financial reporting and analysis capability (i.e. performance to budget, CPI index, etc.) Recognize that Cost World Reporting is necessary and must be subordinated to the overall CCPM framework Unless you satisfy the Financial Reporting Need when implementing enterprise wide CCPM in large, publicly traded organizations they just might be Too Big to Change 13

14 Presenter Bios Duncan Patrick is the Executive VP with CMS Montera (CMS). CMS provides management solutions and software to accelerate projects and optimize operations. Prior to CMS, Duncan was a member of the senior leadership team of an industrial distributor, Ernst & Young management consultant, and Landman for Husky Oil. Duncan is a Certified Management Consultant registered in Ontario. He holds an MBA degree from the Richard Ivey School of Business, Western University and a Bachelor of Commerce degree (with distinction) from The University of Calgary. Duncan is certified by the TOCICO in all aspects of TOC. Jack Warchalowski is the President of CMS Montera. Prior to CMS, Jack was the head of operations for the High Tech manufacturer, Ernst & Young management consultant, and a project engineer with Babcock & Wilcox. Jack is a Certified Management Consultant and a Professional Engineer registered in Ontario. He holds an MBA degree from the Wilfrid Laurier University and a Bachelor of Applied Science in Mechanical Engineering from the University of Waterloo in Waterloo, Ontario. In addition, Jack is certified by the TOCICO in all aspects of TOC. 14