HOW TO PLAN A BATTLE SHIP Using Earned Value Management and - - PowerPoint PPT Presentation

1

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

• f 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

hours

• 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

hours

• 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

3000 6000 9000 1 2000 1 5000 1 8000 feb-1 2 mrt-1 2 apr-1 2 mei-1 2 jun-1 2 jul-1 2 aug-1 2 sep-1 2

• kt-1

2 nov-1 2 dec-1 2 jan-1 3

<--- Period--->

Hours

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

Budget Budget 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

MONTH WEEK 01 02 03 04 05 05 06 07 08 09 9 10 11 12 13 14 SUNDAY 6 13 20 27 3 10 17 24 3 10 17 24 31 MONDAY 7 14 21 28 4 11 18 25 4 11 18 25 TUESDAY 1 8 15 22 29 5 12 19 26 5 12 19 26 WEDNESDAY 2 9 16 23 30 6 13 20 27 6 13 20 27 THURSDAY 3 10 17 24 31 7 14 21 28 7 14 21 28 FRIDAY 4 11 18 25 1 8 15 22 1 8 15 22 29 SATURDAY 5 12 19 26 2 9 16 23 2 9 16 23 30 01 02 03 MONTH WEEK 14 15 16 17 18 18 19 20 21 22 22 23 24 25 26 27 SUNDAY 7 14 21 28 5 12 19 26 2 9 16 23 30 MONDAY 1 8 15 22 29 6 13 20 27 3 10 17 24 TUESDAY 2 9 16 23 30 7 14 21 28 4 11 18 25 WEDNESDAY 3 10 17 24 1 8 15 22 29 5 12 19 26 THURSDAY 4 11 18 25 2 9 16 23 30 6 13 20 27 FRIDAY 5 12 19 26 3 10 17 24 31 7 14 21 28 SATURDAY 6 13 20 27 4 11 18 25 1 8 15 22 29 04 05 06 MONTH WEEK 27 28 29 30 31 31 32 33 34 35 37 38 39 40 SUNDAY 7 14 21 28 4 11 18 25 1 8 15 22 29 MONDAY 1 8 15 22 29 5 12 19 26 2 9 16 23 30 TUESDAY 2 9 16 23 30 6 13 20 27 3 10 17 24 WEDNESDAY 3 10 17 24 31 7 14 21 28 4 11 18 25 THURSDAY 4 11 18 25 1 8 15 22 29 5 12 19 26 FRIDAY 5 12 19 26 2 9 16 23 30 6 13 20 27 SATURDAY 6 13 20 27 3 10 17 24 31 7 14 21 28 07 08 09 MONTH WEEK 40 41 42 43 44 44 45 46 47 48 49 50 51 52 53 SUNDAY 6 13 20 27 3 10 17 24 1 8 15 22 30 MONDAY 7 14 21 28 4 11 18 25 2 9 16 23 31 TUESDAY 1 8 15 22 29 5 12 19 26 3 10 17 24 WEDNESDAY 2 9 16 23 30 6 13 20 27 4 11 18 25 THURSDAY 3 10 17 24 31 7 14 21 28 5 12 19 26 FRIDAY 4 11 18 25 1 8 15 22 29 6 13 20 28 SATURDAY 5 12 19 26 2 9 16 23 30 7 14 21 29 10 11 12 OCTOBER NOVEMBER DECEMBER JULY AUGUST SEPTEMBER 36 JANUARI FEBRUARI MARCH JUNE APRIL MAY

Progress update cycle

Unexpected costs for your project

Planned value curve for DSNS Earned value curve for DSNS, project seems to be somewhat on schedule Actual cost curve for DSNS, project seems to be somewhat inefficient Actual 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,

• pen remarks, etc.)

One or a few activites that represent all other activities (e.g. changes,

• pen remarks, etc.)

The same for all main processes

23

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 hours CPI = 2124 / 1000 = 2,12 ETC = (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 hours CPI = 2724 / 1500 = 1,82 ETC = (3000 – 2724) / 1,82 = 152 hours

25

3-03-2011 26

26

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 Production ENG 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 activities Location activities Location 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 2.1 phase 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