Project control, performance evaluation and closeout

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Project control,

performance evaluation and

closeout

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New case: KE Company AS

Subsea installation and remote operation og diving vehicles, requires

Cranes Winches Skids

https://www.youtube.com/watch?feature=player_em

bedded&v=7GrOAshUM2M

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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

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Is everything proceeding as we

expected?

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Budget

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% Andel Innkjøp 61% Innleige 10% Andel Innkjøp 66% Innleige 11,5%

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Periodization (per month)

Categorization (by type)

By «budgeted»

Cost Value

Time remaining

By «completed»

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Technical

Fitting/Warehouse subcon

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0" 200" 400" 600" 800" 1000" 1200" 1400" 1600" ja n " fe b " m ar " ap r" m ay " ju n " ju l" au g" se p " o ct " n o v" d ec " ja n " 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"

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

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No planned contribution (value)?

No completion %?

No remaining time estimates?

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

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100" 200" 300" 400" 500" 600" 700" 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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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??

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 %

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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

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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

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How are we doing? No, really?

Not too bad! Not so good!

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More on Performance Metrics

Categories Performance measurements

Targets Units of

measurement Scope Amount of work accomplished Amount of work to be

accomplished

M, M2_{, 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

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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”?)

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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

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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

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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

Risk/Opportunity plan

Reports on planned activities and anticipated threats/opportunities during the following reporting period

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Schedule review

Schedule of value and certificate of payment

Request for extra works

Change orders

Design/quality implications

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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

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Content of closeout

Comprises the last series of “todos” associated with a

project

Deliverables Payment Quality

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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!

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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

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Close-out formal activities

1. Project commissioning

• Documentation for a purpose • Indexing (SFI)

• Distribution • Training • Testing

• Formal check-out

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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

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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!)

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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