Change Management for Entry Level Cost Control Professionals Greg - - PowerPoint PPT Presentation

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Change Management for Entry Level Cost Control Professionals Greg - - PowerPoint PPT Presentation

Feb 22, 2024 152 likes •559 views

Change Management for Entry Level Cost Control Professionals Greg Whiteside, CCE, EIT Greg Whiteside Biography University: Texas A&M University Degree: Bachelor of Science, Mechanical Engineering Years of Experience: 4 years

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SLIDE 1

Change Management for Entry‐Level Cost Control Professionals

Greg Whiteside, CCE, EIT

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SLIDE 2

2

Greg Whiteside Biography

University:

– Texas A&M University

Degree:

– Bachelor of Science, Mechanical Engineering

Years of Experience:

– 4 years of experience

Professional Field:

– Energy and Chemicals

Something you do not know about me:

– Play guitar to accompany my dad on blues harp (http://www.youtube.com/watch?v=myuHpwWCHTY)

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SLIDE 3

Introduction

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Presentation Outline

Basics:

  • Cost Controller’s Role
  • Project Lifecycle
  • WBS Setup
  • Cost Reporting
  • Progress & Performance
  • Purchase Orders

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Change Management:

  • Cost Control Plan
  • Project Changes
  • Documenting Changes
  • Change Order Revisions
  • Understanding Changes
  • Factors Driving Change
  • Client vs Contractor View

Point

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SLIDE 5

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Basics: Cost Controller’s Role

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SLIDE 6
  • Manage project funds
  • Plan budget breakdown
  • Establish reporting requirements
  • Understand how costs are collected
  • Track costs against budget – “Own” the budget
  • Role relating to other financial groups

– Estimating (future) – Accounting (past) – Cost Control (present)

  • Change management

Basics: Cost Controller’s Role

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Estimated – Budgeted – Committed – Expended – Invoiced – Paid

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SLIDE 7

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Basics: Project Life Cycle

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SLIDE 8

Basics: Project Life Cycle

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FEL 1 Define Concept FEL 2 Optimize FEL 3 Finalize Execute Operate

  • Factored estimate
  • Select 1 or 2

concepts to

  • ptimize
  • Optimize

concepts

  • Set scope
  • Set up WBS
  • Prepare for

execution

  • Develop full

estimate

  • Cost control

plan

  • Procure long

lead items

  • Set up

contracts

  • Change

management

  • Project

closeout

  • Final

invoices

  • Stage gated approach used by many large oil companies
  • FEL – Front End Loading, term introduced by DuPont in 1980’s
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SLIDE 9

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Basics: WBS Setup

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  • Original Budget

– Guidelines

  • Estimate
  • Approved funding

– Changes – Control Budget (snapshot)

  • Breakdown

– Level of detail – Home office/Construction – Direct/Indirect – Labor/Materials

Basics: WBS Setup

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Project Definition Home Office Manag ement Engin eering Construction Lab

  • r

CS valv es 4” valv es Globe Butt erfly Gate 6” valv es Glob e Butt erfly Gate 8” valv es Glob e Butt erfly Gate SS valv es 4” valv es Glob e Butt erfly Gate 6” valv es Glob e Butt erfly Gate 8” valv es Glob e Butt erfly Gate Mat erial s CS valv es 4” valv es Glob e Butt erfly Gate 6” valv es Glob e Butt erfly Gate 8” valv es Glob e Butt erfly Gate SS valv es 4” valv es Glob e Butt erfly Gate 6” valv es Glob e Butt erfly Gate 8” valv es Glob e Butt erfly Gate

Basics: WBS Setup

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Project Definition Home Office Construction

Basics: WBS Setup

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SLIDE 13

Project Definition Home Office Management PM CM Engineering Civil Mechanical Electrical Construction Labor Civil Mechanical Electrical Materials Pipe Valves Tanks DCS

Basics: WBS Setup

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SLIDE 14

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Basics: Cost Reporting

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SLIDE 15
  • Understand how costs are collected

– Timesheets – Material goods receipt

  • Track costs against budget
  • Financial state of the project

Basics: Cost Reporting

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SLIDE 16

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Basics: Progress & Performance

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SLIDE 17
  • Progress

– Definition – Activities and rules of credit – Partial progress

  • Performance

– Definition – Good/bad

Basics: Progress & Performance

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SLIDE 18

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Basics: Purchase Orders

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  • Contract: Commits funds to a contractor
  • Further breakdown of work
  • Example

Basics: Purchase Orders

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Contractor A Material Labor

Change!

Contractor A Contractor B Material

  • Outcome

– Lead time on long lead items retained – Work continued unhindered Labor

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SLIDE 20

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Basics: Summary

  • Cost Controller’s Role
  • Project Lifecycle
  • WBS Setup
  • Cost Reporting
  • Progress & Performance
  • Purchase Orders

Basics:

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SLIDE 21

Change Management

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Change Management:

  • Cost Control Plan
  • Project Changes
  • Documenting Changes
  • Change Order Revisions
  • Understanding Changes
  • Factors Driving Change
  • Client vs Contractor View

Point

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SLIDE 22

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Change Management: Cost Control Plan

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SLIDE 23
  • Outlines how the team will handle changes
  • Process
  • Key personnel
  • Change implementation
  • Change communication
  • Forms

– Change Form – Change Log

  • Sets the change management requirements

Cost Control Plan

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SLIDE 24

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Change Management: Project Changes

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  • Added work
  • Change in execution
  • Cost savings
  • Proper documentation
  • Early identification

Project Changes

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Actual quote: “We haven’t written the change order yet because we don’t know how much it’s going to cost.”

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SLIDE 26

Project Changes

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If a change is “hidden” until actual costs are determined, the project team has had no chance to avoid the outcome.

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  • “For Documentation Only” (FDO) Changes
  • Example

Project Changes

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+$

FDO Changes Rearrange Budget to Cover Project Ran Over

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Change Management: Documenting Changes

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  • Auditable
  • Proper forms
  • Proper authorization
  • Change Log

– Unique identifier – Short description – Originator (go‐to person) – Basic dates – Approval status – Cost impact

Documenting Changes

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Change Management: Change Order Revisions

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  • Changes change
  • Better information
  • New portions affected by change
  • Updated quotes/proposals
  • Change log will show latest revision
  • Trade‐off between timing, accuracy
  • “For Documentation Only” (FDO)

Change Order Revisions

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Change Management: Understanding Changes

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  • Understand original plan

– Scope – Budget – Schedule

  • Understand the change

– Incremental – New Cumulative – What was the value before the change/ after the change?

  • Communicate the change

– Project manager – Project team – Affected contractors / procurement

Understanding Changes

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Change Management: Factors Driving Change

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  • Scope

– Clarity – Disclaimers

  • Material quantity
  • Labor rate
  • Productivity

– Poor performance – Root cause

Factors Driving Change

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SLIDE 36

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Change Management: Client vs. Contractor View Point

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Client

  • Full project
  • Oversight
  • Revenue generation date

– Delay/overrun – Rate of return

Contractor

  • Selected Scope
  • Managing labor and

materials

  • Maximize profits

– Maximize – Breakeven – Payout damages

Client vs. Contractor View Point

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Presentation Outline

  • Cost Controller’s Role
  • Project Lifecycle
  • WBS Setup
  • Cost Reporting
  • Progress & Performance
  • Purchase Orders

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Change Management:

  • Cost Control Plan
  • Project Changes
  • Documenting Changes
  • Change Order Revisions
  • Understanding Changes
  • Factors Driving Change
  • Client vs Contractor View

Point Basics:

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SLIDE 39
  • Change management is a major part of the cost controller’s role.
  • Disciplined approach to change management

– Good planning – Early, easy identification of changes – Decisive action – Successful execution of changes

Conclusion

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Conclusion

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If a change is “hidden” until actual costs are determined, the project team has had no chance to avoid the outcome.