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
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Project control
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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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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 (,…)
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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
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
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And then the champagne
Quality assurance and Continuous process
improvement
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