01. Mattern SouthAmerica Top10CostControlsChallenges

Copyright 2012 EcoSys Management LLC All Rights Reserved. Confidential and Proprietary Information.

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Top 10 Challengesto Effective Cost Controls

Jorge Rossini, Latin America Director, CIMATravis Mattern, Senior Sales Engineer, EcoSys


• EcoSys Company Background

• Fundamental Cost Control Questions

• Top 10 Cost Control Challenges

• Case Study• Recap / Q&A

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Agenda

Copyright 2012 EcoSys Management LLC All Rights Reserved. Confidential and Proprietary Information. 3

Founded in 2000

Enterprise Project Controls Software ExpertsDesigners & Developers of original Primavera P6 and EcoSys EPC

Professional ServicesEnterprise Consulting Expertise: Project Portfolio & Cost Management Best Practices

Global Primavera Implementation and Systems Integration Leader

250 Customers in Global 1000 and Public Sector

EcoSys Company Background


Representative Customers


Capital Planning

Project Cost Controls

Earned Value Management

Progress Measurement

Estimating

Resource Staffing

Portfolio Management

Shutdown, Turnaround, and Outage Management

Core EPCSolutions

Enterprise Planning & Controls Platform


Bridging Planning & Execution


Fundamental Cost Controls Questions

• What is the current budget and forecast? • How and why has my budget and forecast changed? • How much funding is available? • What are our contract commitments? • How much has been spent? • How are we trending?• Do schedules correlate with costs?• How can we recover/improve performance?• Are we in compliance with the rules?

(Contractual? Regulatory? Legal?)

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EcoSys has met with cost controls professionals throughout the industry to identify their biggest cost controls challenges.

Top 10 Challenges

Here are the Top 10 Challenges we see…


Perceived as cost accounting


Top 10 Challenges

Copyright 2012 EcoSys Management LLC All Rights Reserved. Confidential and Proprietary Information.Copyright 2012 EcoSys Management LLC All Rights Reserved. Confidential and Proprietary Information. 10

How to overcome this challenge?

• Educate your organization regarding the risks of poor project performance

• 3 primary objectives for project cost control:– Improve project predictability– Control and reduce costs– Improve project controls efficiency

• How to meet these objectives?– Use the power of technology to focus on forward looking

activities to improve project predictability



Planning Estimating Risk Change Control ForecastingCommitments Actuals

• Value adding activities• Biggest impact to project performance• Require integrated project controls system and

processes

Backward Looking Forward Looking


Budgeting and forecasting effectively


Top 10 Challenges


• Establish standards and consistency• Budgeting

– Time-phase or manage in lump sums– Integrate data or manage in web-based spreadsheets

• Forecasting– Leverage critical data: actuals, commitments, progress– Provide forecasting flexibility

• Calculated forecasts• Imported forecasts• Flexibility to override imported and calculated amounts• Vary forecasting methods at different levels of the WBS

• Unlimited budget/forecast versions for comparison, trending, auditing



Example: Calculated Forecast


Example: Imported Forecast


Getting progress data from multiple subcontractors


Top 10 Challenges


Leverage multiple methods of capturing progress data• Import from scheduling systems• Direct entry of completion percentages• Calculate progress using more complex methods• Multiple progress methods and sources of data within

the same project



Example: Progress Data in EPC


Integrating schedule and cost


Top 10 Challenges


• Integrate scheduling data into EPC– Primavera P6– Microsoft Project– Other scheduling systems

• What data to integrate?– WBS– Resources– Schedule dates– Progress data– Forecast data

• Powerful tools to align schedule and cost– Support for separate WBS structures– Apply rates to schedule data to calculate cost



CBS-0CBS 1

CBS 10

CBS 11

CBS 2 CBS 20

2121

Level 2

Level 1

Project 100

WBS A

WBS A1 WBS A2

WBS B

WBS B1

Combine work (WBS), cost (CBS) and organization (OBS) reporting structures together for Budgeting & Forecasting

e.g. 100.X.X1.B.B1.10.Civil

project wbs cbs

OBS

OBS X1 OBS X2 OBS X3

OBS X

obs resource



Aligning data between multiple source systems


Top 10 Challenges


Powerful integration platform• Web Services

Standard Industry Formats – SOAP XML, REST XML, REST JSON

• Flat filesFormat Flexibility – Excel, XML, delimited flat files, etc.

• Direct integration with global partners



Time and effortinvolved with reporting


Top 10 Challenges


Cost DataHere

ScheduleDataHere

Do all roads lead to Excel?

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Eliminate Excel errors and inefficiencies• Manual data imports/exports/consolidation• Human error• Physical limitations• Version control• Constrained views• Lack of standardization• Lack of auditability

26Copyright 2012 EcoSys Management LLC All Rights Reserved. Confidential and Proprietary Information. 26



Managing the Customer Relationship


Top 10 Challenges


• Internal/external reports auto-generated from the same data and reporting platform

• Reporting format flexibility– Tabular Reports– Form Reports– Graphical Charts– Excel Template Reports– Automated and User-Initiated Report Batches– Configurable Role-based Dashboards– Report Configuration (non-technical)– Report Outputs (Excel, PPT, PDF etc..)



Example: Comparisons by Alliance Partner


Accuracy of reports


Top 10 Challenges


• Automate data loads from external systems– Prevent errors associated with manual data entry and

consolidation

• Store transaction level detail for all categories of data

• Targeted dashboards for all stakeholders– Drill-down to transaction level detail – Establish trust in the data– Quick identification of project performance problems



Example: Drill-down to investigate

Click on poor productivity metric to

drill-down


Example: Drill-down to investigate

Drill-down shows resource level detail of

actual and earned hours


Insufficient controls resources


Top 10 Challenges


Time Analysis: Before EPC

35

20%

16%

13%12%

30%

6%2% 1%

Fixing Oracle Issues

Correcting Labor Coding

Collating Internal &External ReportsManual Downloading

Monitoring & Controlling Costs

Change Management

Forecasting & Trending

Analyzing Budgets & ActualsCost Analysts Spent

61% of Time on “Wasteful” Activities


65%25%

5%5%

Analyzing Data

Forecasting &Trending

Running ReportsTroubleshooting

Cost Analyst Target Utilization Provides Much

Greater Value

Time Analysis: After EPC


Controlling Changes


Top 10 Challenges


• Integrated change process– Change registers, change logs, workflow

• Link changes to risks and issues• Define detailed cost/revenue allocations

– Early in the process for change visibility– Auto-update budgets and/or forecasts after approval

• Integration with document management, accounting and contract management systems



Example: Change Order Register


Case Study: Tahoe Resources

Company Background• Founded in 2009 and focused on becoming a leading producer of

precious metals.• Flagship Escobal silver mine project is responsible for creating 500

jobs in Southeast Guatemala.Challenges• Required a system to support cost control best practices “out of the

box,” but with the flexibility to meet unique requirements.• Sought a single system to support budgeting, change management,

commitments tracking, reconciliation of actuals, performance measurement, forecasting, as well as integrated reporting.

• Needed to aggregate its own internal commitments and transactions with those initiated externally by its EPCM consultant.

• Support for multiple currencies.


Case Study: Tahoe Resources

EcoSys EPC Solution• Central repository all project controls data• Exchange budget and actuals data with Microsoft Dynamics• Detailed budget tracking for Annual and Life Total bases• Budget change management process with an auditable workflow• Manage all commitments and reconcile against actual costs• Model forecasts based upon multiple approaches including direct, time-phased

estimates or earned value methodology• Allow for planning, forecasting and recording actuals in multiple currencies, as

well as adjusting for exchange fluctuations• Extensive built-in reporting capabilities (e.g. monthly cost performance,

change order logs, 12-month rolling cash flow forecast, earned value by area)• Allow end-users to create new reports as needed


Achieving effective cost-controls is a challenge…1. Controlling changes2. Insufficient controls resources3. Accuracy of reports4. Managing the customer relationship5. Time and effort involved with reporting6. Aligning data between multiple source systems7. Integrating schedule and cost8. Getting progress data from multiple subcontractors9. Budgeting and forecasting effectively10.Perceived as cost accounting

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Recap


Overcoming these challenges is not possible without an integrated project controls system• Visibility• Efficiency and Accuracy• Process Standardization• Improved Financial Performance

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EcoSys EPC


The Right Tool for the Job

If attempting to overcome these challenges without a tool designed for this purpose, things will:• Break• Be harder in the long


Questions?

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Thank you!

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01. Mattern SouthAmerica Top10CostControlsChallenges

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