Project control, performance evaluation and

closeout Steinar Kristoffersen

15.04.2015 1

New case: KE Company AS Subsea installation and remote operation og diving vehicles, requires

Cranes

Winches

Skids

https://www.youtube.com/watch?feature=player_embedded&v=7GrOAshUM2M

Continue with case-based lecturing

15.04.2015 2

Project control

15.04.2015 3

4

SDLC: 5 phases for project management

DEVELOPMENT MAINTENANCE DESIGN, PLANNING

FEASIBILITY

Organization

Estimation

Planning

Finance

Evaluation

Monitoring & Control

Correcting the course

Changes & Claims

Quality & Reviews, & Audits

CLOSEOUT

Is everything proceeding as we expected?

5

How do we know where we are?

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Cost break-down

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Sales order

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Budget

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BS

Innkjøp 9.980.000

Innleige 1.600.000

Egne timer 3.300.000

Oppstart (usikkerhet) 300.000

Total kost 15.180.000

Salgspris 13.612.500

Resultatgrad -11,5%

AH

Innkjøp 19.500.000

Innleige 3.330.000

Egne timer 9.150.000

Oppstart 460.000

Total kost 32.440.000

Salgspris 24.684.000

Resultatgrad -32,5%

15/04/2015 WORLD CLASS - through people, technology and dedication.

Page 9

Andel

Innkjøp 61%

Innleige 10%

Egne timer 29%

Andel

Innkjøp 66%

Innleige 11,5%

Egne timer 22,5%

AND execution

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Periodization (per month)

Categorization (by type)

By «budgeted» Cost

Value

Time remaining

By «completed» Ditto

We need to break it down

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Some examples of «actual cost»

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Technical

Fitting/Warehouse

subcon

P. AH (18756 hrs, -32,5 “profit%”)

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0"

200"

400"

600"

800"

1000"

1200"

1400"

1600"jan"

feb"

mar"

apr"

may"

jun"

jul"

aug"

sep"

oct"

nov"

dec"

jan"

2013" 2014"

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)"

Project"subcon"

Op"Kval"

Technical

Tech sub

Fitting

Project BS (8173,03, -11,5 „profit“)

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0"

50"

100"

150"

200"

250"

300"

350"

400"

450"

500"

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"

Technical

Tech sub

Project CR (Dec: 1442 hours)

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No planned contribution (value)?

No completion %?

No remaining time estimates?

We cannot tell if we are doing allright, can we?

But if the plan had

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0"

100"

200"

300"

400"

500"

600"

700"

aug" sep" oct" nov" dec" jan" feb"

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"

Purchasing"

IT"

Project"

Technical"subcontracJ ng"

Technical"

SCM"

Admin"

OSS"Molde"

Af"t"er"sa"l"es"and"se"rvi"ce"

Finance"

CR: (+3 m: 2783 hrs (3 m = 2x))

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CR: (+8 m: 4943 hrs) – learn from history?

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Absolute hours

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Increased cost vs. front-end loading

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Normalized hours – we cannot tell the diff?

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And for the four “starting block” alternatives?

What was the result in the end??

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Cost breakdown

week 49 Sales order

Original

budget Exec so far

Discount 0 -396 167 0 300000

Logistics 0 546 261 685000

Hours 1 989 000 156 381 417 000 3 213 132

Parts 10 050 000 13 443 526 6 030 500 7 234 888

Sum 12 039 000 13 750 001 7 132 500 10 748 020

DiffMin% 69 % 93 % 0 % 51 %

DiffMax% -12 % 0 % -48 % -22 %

Resultatgrad 12,44 % 0,00 % 48,13 % 21,83 %

Closeout

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24

SDLC: 5 phases for project management

DEVELOPMENT MAINTENANCE DESIGN, PLANNING

FEASIBILITY

Organization

Estimation

Planning

Finance

Evaluation

Monitoring & Control

Course corrections!!!

Changes & Claims

Quality & Reviews, & Audits

CLOSEOUT

Performance evaluation connects control to

closeout!

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Main Focus on Reports: Performance

Main performance criteria of interest, “in hindsight”: Scope

Time

Money

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?

Quality

Productivity

Safety

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Time and excess hours depend

within projects, but not the same

way across projects

How are we doing? No, really?

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Not

too

bad!

Not so

good!

More on Performance Metrics Categories Performance

measurements

Targets Units of

measurement

Scope Amount of work accomplished Amount of work to be

accomplished

M, M2, M3, 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

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”?)

Reporting challenges

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).

Reporting focus

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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

Kinds of Reports (more pps)

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

Schedule review

Schedule of value and certificate of payment

Request for extra works

Change orders

Design/quality implications

Contract Reports

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Example 1 of project status report

Example 2 of project status report

Example of performance report

Example 1 of progress report

Example 2 of progress report

Example of final report (,…)

40

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

Content of closeout

Comprises the last series of “todos” associated with a project

Deliverables

Payment

Quality

But for sustainability: learning from the project!

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?!”

Organization of closeout

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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

People issues in closeout

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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

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”

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

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

Quality assurance and Continuous process

improvement

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