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HOW TO PLAN A BATTLE SHIP
Using ‘Earned Value Management’ and ‘Milestone
based planning’ to manage the production of
complex products
About Damen Shipyards
• Damen is an international shipyard group;
• Turnover 2012: € 1.7 billion
• More than 8,000 employees
• 38 shipyards worldwide, 150 vessels a year
Petje op / Petje af
Joint Support Ship (JSS)
Patrol Vessel (PS)
Sigma frigates
Project (planning) driven organization
JSS general
• 11 000 ton steel
• > 100 Engineers, 445 000 Engineering hours
• Engineering and production at different locations
• Use of subcontractors
Planning / logistics
• Thousands of activities in planning
• Thousands of relations in planning
• Thousands of components on board
• Hundreds of people involved
FROM…
… TO
The Ostrich Project Management Method
The need for proactive project control
Project Life Cycle
Possibility
to take action
Cost
of taking action
Timely escalation
Link planning and cost control
Prevent surprises
20% delay / inefficiency
during Engineering
40% delay / inefficiency
during Production
115 000 hours budget
23 000 hours inefficiency
315 000 hours budget
126 000 hours inefficiency
70 Euro / hr
1 610 000 Euro
50 Euro / hr
6 300 000 Euro
7 910 000 Euro
+ 33%
The need for proactive project control
Earned Value Management
“ A project management technique for measuring project
performance in an objective manner.
EVM has the ability to combine measurements of scope,
schedule, and costs in a single integrated system ”.
SPI = Schedule
Performance Index.
CPI = Cost
Performance Index
Earned Value Management – the basics
• Planned value = Planned % progress multiplied by the budget
• Earned value = Actual % progress multiplied by the budget
• Actual = Actual costs
• CPI = Cost Performance Index = Earned value / Actual costs
CPI indicates how efficient hours are spend on a project
CPI < 1 : Project is over budget,
CPI = 1 : Project is on budget
CPI > 1 : Project is under budget
• SPI = Schedule Performance Index = Earned value / Planned value
SPI indicates to what extend the project is following the planning
SPI < 1 : Project is running late,
SPI = 1 : Project is on schedule,
SPI > 1 : Project is ahead of schedule
Earned Value Management – the basics
EVM – Example 1:
What would you do?
• Project is inefficient
• Improve efficiency
• Project is on schedule
• Check / change operational planning
now
inefficiency
Planned Value (PV): 42000
Earned Value (EV): 41700
Actual hours (AH): 50500
Cost Performance Index (CPI):
41700 / 50500 = 0,83
Cost Performance:
41700 – 50500 = -8800
Schedule Performance Index (SPI):
41700 / 42000 = 0,99
Schedule Performance:
41700 – 42000 = -300
EVM - Example 2:
What would you do?
Planned hours
Earned hours
Actual hours
Time
planned finish
ho
urs
• Project is efficient
• Project is behind schedule
• Check / change operational planning
• Increase capacity
now
Delay
Planned Value (PV): 42000
Earned Value (EV): 35000
Actual hours (AH): 34800
Cost Performance Index (CPI):
35000 / 34800 = 1,00
Cost Performance:
35000 – 34800 = -200
Schedule Performance Index (SPI):
35000 / 42000 = 0,83
Schedule Performance:
35000 – 42000 = -7000
EVM - Example 3:
What would you do?
Planned hours
Earned hours
Actual hours
Time
planned finish
ho
urs
• Project is inefficient
• Project is behind schedule
• Check / change planning
Delay inefficiency
now
• Or.......
Planned Value (PV): 42000
Earned Value (EV): 35000
Actual hours (AH): 41800
Cost Performance Index (CPI):
35000 / 41800 = 0,84
Cost Performance:
35000 – 41800 = -6800
Schedule Performance Index (SPI):
35000 / 42000 = 0,83
Schedule Performance:
35000 – 42000 = -7000
Schedule Variance
in time
Budget overrun
Delay in delivery
Cost forecasting using EVM
EAC
Estimate at completion (EAC)
Diagrams
0
3000
6000
9000
12000
15000
18000
feb-12 mrt-12 apr-12 mei-12 jun-12 jul-12 aug-12 sep-12 okt-12 nov-12 dec-12 jan-13
<--- Period--->
Ho
urs
Earned Value Planned Value Actual
Budget (BAC): 20400
Planned Value (PV): 12300
Earned Value (EV): 12700
Actual Hours (AH): 15400
Cost Performance Index (CPI):
12700 / 15400 = 0,82
Cost Performance
12700 – 15400 = -2700
EAC:
20400 / 0,82 = 24738
Variance At Completion (VAC)
20400-24738 = -4338
Cost forecasting: example
EAC = Budget / CPI
EAC = Budget / CPI / SPI
EAC = AH + Budget - Earned
Link to cost control
1. Budget (hours) in Primavera = Budget (hours) cost control
2. Estimate at completion (EAC) in Primavera only
3. Forecast (hours) = Forecast (hours) cost control
BudgetBudget
Forecast
time
hours
Forecasting vs. budget
Prerequisites for effective
Earned Value Management
• Budgets are basis for planning
• Budgets are fixed from start of project
• Planning includes entire project scope
- Contingencies
- Subcontractors
• Usable Work Breakdown Structure
• Detailed progress information
Master
Planning
Operational planning
(primavera)
1. Planning creation
Update planning
2. Maintenance
Actual progress from process
Cost Control
Operational reports
(planning layouts)
Project status reports
3. Reporting
Planning framework
20
MONTHWEEK 01 02 03 04 05 05 06 07 08 09 9 10 11 12 13 14SUNDAY 6 13 20 27 3 10 17 24 3 10 17 24 31MONDAY 7 14 21 28 4 11 18 25 4 11 18 25TUESDAY 1 8 15 22 29 5 12 19 26 5 12 19 26WEDNESDAY 2 9 16 23 30 6 13 20 27 6 13 20 27THURSDAY 3 10 17 24 31 7 14 21 28 7 14 21 28FRIDAY 4 11 18 25 1 8 15 22 1 8 15 22 29SATURDAY 5 12 19 26 2 9 16 23 2 9 16 23 30
01 02 03
MONTHWEEK 14 15 16 17 18 18 19 20 21 22 22 23 24 25 26 27SUNDAY 7 14 21 28 5 12 19 26 2 9 16 23 30MONDAY 1 8 15 22 29 6 13 20 27 3 10 17 24TUESDAY 2 9 16 23 30 7 14 21 28 4 11 18 25WEDNESDAY 3 10 17 24 1 8 15 22 29 5 12 19 26THURSDAY 4 11 18 25 2 9 16 23 30 6 13 20 27FRIDAY 5 12 19 26 3 10 17 24 31 7 14 21 28SATURDAY 6 13 20 27 4 11 18 25 1 8 15 22 29
04 05 06
MONTHWEEK 27 28 29 30 31 31 32 33 34 35 37 38 39 40SUNDAY 7 14 21 28 4 11 18 25 1 8 15 22 29MONDAY 1 8 15 22 29 5 12 19 26 2 9 16 23 30TUESDAY 2 9 16 23 30 6 13 20 27 3 10 17 24WEDNESDAY 3 10 17 24 31 7 14 21 28 4 11 18 25THURSDAY 4 11 18 25 1 8 15 22 29 5 12 19 26FRIDAY 5 12 19 26 2 9 16 23 30 6 13 20 27SATURDAY 6 13 20 27 3 10 17 24 31 7 14 21 28
07 08 09
MONTHWEEK 40 41 42 43 44 44 45 46 47 48 49 50 51 52 53SUNDAY 6 13 20 27 3 10 17 24 1 8 15 22 30MONDAY 7 14 21 28 4 11 18 25 2 9 16 23 31TUESDAY 1 8 15 22 29 5 12 19 26 3 10 17 24WEDNESDAY 2 9 16 23 30 6 13 20 27 4 11 18 25THURSDAY 3 10 17 24 31 7 14 21 28 5 12 19 26FRIDAY 4 11 18 25 1 8 15 22 29 6 13 20 28SATURDAY 5 12 19 26 2 9 16 23 30 7 14 21 29
10 11 12
OCTOBER NOVEMBER DECEMBER
JULY AUGUST SEPTEMBER36
JANUARI FEBRUARI MARCH
JUNE APRIL MAY
Progress update cycle
Unexpected costs for your project
Planned value curve for DSNSEarned value curve for DSNS, project seems to be somewhat on scheduleActual cost curve for DSNS, project seems to be somewhat inefficientActual cost curve after project is earned 100%. There are still a lot of actual costs. Apparently, the project was not yet ready.
So, the earned value curve should look more like this.Besides, the planned value curve should represent a realistic planning.
Monitoring unexpected costs
Detailed activities that represent the normal work to be done for Basic Engineering (already present in planning)
Detailed activities that represent the normal work to be done for Detailed Engineering (already present in planning)
One or a few activites that represent all other activities (e.g. changes, open remarks, etc.)
One or a few activites that represent all other activities (e.g. changes, open remarks, etc.)
The same for all main processes23
Example 1
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
18,0%
Example:
Budget = 3000 hours
Actual = 1000 hours
Now
Earned = 70,8 % * 3000 = 2124 hoursCPI = 2124 / 1000 = 2,12ETC = (3000 – 2124) / 2,12 = 413 hours
24
Example 2
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
18,0%
Example:
Budget = 3000 hours
Actual = 1500 hours
Now
Earned = 90,8 % * 3000 = 2724 hoursCPI = 2724 / 1500 = 1,82ETC = (3000 – 2724) / 1,82 = 152 hours
25
3-03-2011 2626
Basic Eng
Detailed Eng
Project Control
Production Support
Planning / Logistics /
Purchasing
Vlissingen
Module 5
Work Preparation
Steel Cutting
Piping Fabrication
Block Fabrication
Hull Construction
Outfitting
Testing
Galati
Module 3
Work Preparation
Steel Cutting
Piping Fabrication
Block Fabrication
Hull Construction
Outfitting
Testing
Surabaya
Module 1
Work Preparation
Module 2
Module 3
Module 4
Module 6
ProductionENG
Project
Steel Cutting
Piping Fabrication
Block Fabrication
Hull Construction
Outfitting
Testing
Module 1
Module 2
Module 4
Module 6
ENG Platform
MEGA
E-supplier
HVAC supplier
Location activitiesLocation activitiesLocation activities
Site Team Site Team
Setting to Work
Site team
Basic Eng
Detailed Eng
Project Control
Production Support
ENG CS
DSNS
Extern
Engineering Purchasing Production
Project C
Project B
Project A
Led by project
leaders
Cost Control
Provide capacity
and functional
expertise
COO, CFO & CEO
Position and role of planning
27
Planning
Role of planner
Milestones are critical for successful project control
(Main) Milestones
Control Points
Activity D phase 2.1
Activity E phase 2.1
Activity F phase 2.1
Activity G phase 2.1
Activity H phase 2.1
Activity I phase 2.1
Activity J phase 2.1
Activity K phase 2.1
Activity L phase 2.1
Activity … ect. phase 2.1
End of phase 2.1
Activity C phase 2.1
Activity B phase 2.1
Activity A phase 2.1phase 1
Engineering
Procurement
Production
Integrated Logistics Support
Combat Systems
phase 2 phase 3 phase 4 phase 5 phase 6
1.1 1.2 1.3 2.1 2.2 2.3 3.1 3.2 3.3 4.1 4.2 4.3 5.1 5.2 5.3 6.1 6.2 6.3
Sub-phases
Engineering of structural drawing
Timely Escalation on critical processes!
Earned Value Management
as key enabler for project control
• Ideal project management method to control large complex projects
• EVM links planning and Cost Control
• Monitor project status concerning both schedule and costs
• Cost forecasting for your project.
• Escalate quickly
• Prevent surprises
EyeOn bv
Croylaan 14
5735 PC Aarle -Rixtel
Tel.: +31 492 38 88 50
mail@eyeon.nl
www.eyeon.nl
EyeOn Amsterdam
Herengracht 124-128
1015 BT Amsterdam
Tel.: +31 492 38 88 50
mail@eyeon.nl
www.eyeon.nl
EyeOn BVBA Belgium
Drie Eikenstraat 661
B-2650 Edegem
Tel.: +32 38 26 93 46
mail@eyeon.eu
www.eyeon.eu
EyeOn Dinalog
Princenhagelaan 13
4813 DA Breda
Tel.: +31 492 38 88 50
mail@eyeon.nl
www.eyeon.nl
Paul Husslage
paul.Husslage@eyeon.nl
+31 6 83 69 33 80
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