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

HOW TO PLAN A BATTLE SHIP Using ‘Earned Value Management’ and ‘Milestone based planning’ to manage the production of complex products 1

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 Sigma frigates Joint Support Ship (JSS) Patrol Vessel (PS)

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

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The Ostrich Project Management Method

The need for proactive project control Possibility Cost of taking action to take action Project Life Cycle Timely escalation Prevent surprises Link planning and cost control

The need for proactive project control 70 Euro / hr 115 000 hours budget 20% delay / inefficiency during Engineering 1 610 000 Euro 23 000 hours inefficiency 315 000 hours budget 50 Euro / hr 40% delay / inefficiency during Production 126 000 hours inefficiency 6 300 000 Euro 7 910 000 Euro + 33%

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 ”.

Earned Value Management – the basics 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

EVM – Example 1: What would you do? Planned Value (PV): 42000 Earned Value (EV): 41700 inefficiency Actual hours (AH): 50500 Cost Performance Index (CPI): 41700 / 50500 = 0,83 Cost Performance: 41700 – 50500 = -8800 now • Project is inefficient Schedule Performance Index (SPI): • Improve efficiency 41700 / 42000 = 0,99 • Project is on schedule Schedule Performance: • Check / change operational planning 41700 – 42000 = -300

EVM - Example 2: What would you do? hours Planned Value (PV): 42000 planned finish Earned Value (EV): 35000 Actual hours (AH): 34800 Planned hours Delay Earned hours Actual hours Schedule Performance Index (SPI): 35000 / 42000 = 0,83 Schedule Performance: 35000 – 42000 = -7000 now Time Cost Performance Index (CPI): • Project is efficient 35000 / 34800 = 1,00 • Project is behind schedule Cost Performance: • Check / change operational planning • Increase capacity 35000 – 34800 = -200

EVM - Example 3: What would you do? hours Planned Value (PV): 42000 planned finish Earned Value (EV): 35000 Actual hours (AH): 41800 Planned hours Delay inefficiency Earned hours Actual hours Cost Performance Index (CPI): 35000 / 41800 = 0,84 Cost Performance: now Time 35000 – 41800 = -6800 Schedule Performance Index (SPI): • Project is inefficient 35000 / 42000 = 0,83 • Project is behind schedule Schedule Performance: • Check / change planning 35000 – 42000 = -7000 • Or.......

Cost forecasting using EVM EAC Budget overrun Schedule Variance in time Delay in delivery

Cost forecasting: example EAC = AH + Budget - Earned EAC = Budget / CPI Estimate at completion (EAC) EAC = Budget / CPI / SPI Budget (BAC): 20400 Cost Performance Index (CPI): Planned Value (PV): 12300 12700 / 15400 = 0,82 Earned Value (EV): 12700 Cost Performance Actual Hours (AH): 15400 12700 – 15400 = -2700 Diagrams EAC: 20400 / 0,82 = 24738 1 8000 1 5000 1 2000 Hours 9000 6000 3000 Variance At Completion (VAC) 0 feb-1 2 mrt-1 2 apr-1 2 mei-1 2 jun-1 2 jul-1 2 aug-1 2 sep-1 2 okt-1 2 nov-1 2 dec-1 2 jan-1 3 <--- Period---> Earned Value Planned Value Actual 20400-24738 = -4338

Forecasting vs. budget 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 hours Budget Budget Forecast time

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

Planning framework 1. Planning creation Master Planning Actual progress from Operational planning process (primavera) 3. Reporting Project status reports 2. Maintenance Update planning Operational reports (planning layouts) Cost Control 20

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

Unexpected costs for your project Planned value curve for DSNS Earned value curve for DSNS, project seems to Actual cost curve for DSNS, project seems to be Actual cost curve after project is earned 100%. So, the earned value curve should look more like Besides, the planned value curve should be somewhat on schedule somewhat inefficient There are still a lot of actual costs. Apparently, this. represent a realistic planning. the project was not yet ready.

Monitoring unexpected costs Detailed activities that represent the normal work to be done for Basic Engineering (already present in planning) One or a few activites that represent all other activities (e.g. changes, open remarks, etc.) 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.) The same for all main processes 23

Example 1 Now 18,0% 16,0% 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% Example: Earned = 70,8 % * 3000 = 2124 hours CPI = 2124 / 1000 = 2,12 Budget = 3000 hours ETC = (3000 – 2124) / 2,12 = 413 hours Actual = 1000 hours 24

Example 2 Now 18,0% 16,0% 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% Example: Earned = 90,8 % * 3000 = 2724 hours CPI = 2724 / 1500 = 1,82 Budget = 3000 hours ETC = (3000 – 2724) / 1,82 = 152 hours Actual = 1500 hours 25