Earned Value Based Project Controls for Industrial Projects - Roland Horat
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This is one of many excellent presentations given over the last three years of the eVa in the UK series. They can also be found in the archive at: http://evaintheuk.org/archive along with back-copy ...

This is one of many excellent presentations given over the last three years of the eVa in the UK series. They can also be found in the archive at: http://evaintheuk.org/archive along with back-copy video footage in http://evaintheuk/pmchannel
EVA19, the long established Earned Value conference, has this year described its theme as looking at a project management ‘ABC’ – Agile, Benefits and Complex.
The four day event, which returns to the Armourers Hall, runs from the 19th to 22nd of May with the flagship conference being held on 20th and 21st May and workshops before and after.
The conference will look at how this ‘ABC’ can be made to work within a portfolio and how agile fits into major and minor projects. It will investigate how to manage the relationship between portfolio benefits and project budgets, and whether complex projects even exist.
Conference organiser and APM chairman, Steve Wake says:
“Currently there is little evidence that this ‘ABC’ is being effectively deployed and managed. This conference aims to address that concern through EVA’s trademark blend of learning and professional development. Case studies and unusual presentations, delivered by top-notch speakers and experienced practitioners, will again engage and entertain the audience.
We’ve used string quartets to illustrate points in the past and this year we will be using a Blues band for the first time.”
Speakers across the two days include many familiar faces from the APM events programme including; Adrian Pyne of the APM ProgM SIG ‘Changing the project wasteland with a portfolio culture that works,’ APM Honorary Fellow Tim Banfield Director at the Major Projects Authority and Stephen Jones, Sellafield and Planning Monitoring and Control Specific Interest Group (PMC SIG) and Carolyn Limbert of the APM PMC SIG to talk about agile, benefits and complex.
Peter Taylor, the Lazy Project Manager will be presenting on “The project manager who smiled” and the ever popular Stephen Carver will present the leadership lessons that can be learnt from Alfred the Great.
In addition, there will be speakers from AIRBUS, TfL, Bloodhound, Heathrow T2 and London Tideway Tunnels.
The conference will be supplemented by a number of workshops being held at the Chartered Institute of Arbitrators, Bloomsbury Square on Monday 19th and Thursday 22nd May 2014.
'eVa in the UK' http://evaintheuk.org is building a reputation, brand and a learning legacy for the Project Management Profession. The event series is now in its nineteenth year. It is almost as if it all kicked-off when Steve Wake was in short trousers and knights roamed the land on their chargers!
#eva19 is an excellent example of Listening, Learning and Leading #apmLLL in action, and great opportunity for professional development.

I would encourage anyone who is interested in 'Building a better Project Manager,' to take a look at the web site, and book your place and get involved.

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Earned Value Based Project Controls for Industrial Projects - Roland Horat Presentation Transcript

  • 1. Earned Value Based Earned Value Based  Project Controls for Industrial ProjectsProject Controls for Industrial Projects YOUR PRESENTERYOUR PRESENTER Roland Horat Roland Horat  Managing Director and Director Business, GlobalManaging Director and Director Business, Global Supertech Project Management (Australia)Supertech Project Management (Australia) The presentation covers the practical aspects of setting up and managing an earned  value based project control system.  Reference is made to: the common WBS for  Estimating and cost control, the methods of capturing actuals and measuring  precent complete, using metrics and indicators to predict the estimate to complete,  streamlining claims and payments, cash flow and integration of accounting  practices.  © Supertech Project Management
  • 2. About Supertech:About Supertech: We  are an international company with offices in the UK, USA andWe  are an international company with offices in the UK, USA and Australia.  We specialise in the implementation of  Australia.  We specialise in the implementation of   Earned Value  based project controls and reporting systems.   OuEarned Value  based project controls and reporting systems.   Our clients come from a range of industries  and r clients come from a range of industries  and  include:include: Water Supply Water Supply  InfrastructureInfrastructureOil and Gas  Oil and Gas  MiningMining Industrial Industrial  Commercial Commercial  BuildingBuilding Our implementations are based on our inOur implementations are based on our in‐‐house developed  EVEngine Project Control and Cost Engineering shouse developed  EVEngine Project Control and Cost Engineering software , oftware ,  a Microsoft Excel Adda Microsoft Excel Add‐‐in  product. in  product.  Rail InfrastructureRail Infrastructure © Supertech Project Management
  • 3. The establishment of a The establishment of a Common Common Work Breakdown Structure WBS that defines:Work Breakdown Structure WBS that defines: 1.1. The level at which the estimate for the project is established, The level at which the estimate for the project is established,  (By Facility, by Element of Cost  (By Facility, by Element of Cost   Labour, Material, Equipment, Consumables, Construction Support ELabour, Material, Equipment, Consumables, Construction Support Equipment, Overhead, Profit).  quipment, Overhead, Profit).   This typically would be at Outline Level 4 (Variable depending oThis typically would be at Outline Level 4 (Variable depending on the complexity of the project) n the complexity of the project)  2.2. The level at which, on approval of the cost estimate, the projecThe level at which, on approval of the cost estimate, the project is to be cost managed and t is to be cost managed and  controlled.  Typically this is at Level 3 (Variable depending oncontrolled.  Typically this is at Level 3 (Variable depending on the complexity of the project) for  the complexity of the project) for   Government Agency work. This level also applies to industrial prGovernment Agency work. This level also applies to industrial projects managed under ojects managed under  Engineering, Procurement  and Contract Management  (EPCM) and isEngineering, Procurement  and Contract Management  (EPCM) and is controlled using controlled using  Cost/Contract Account (CA) groupings (Not WBS) represented by trCost/Contract Account (CA) groupings (Not WBS) represented by trade work packages such as ade work packages such as  earthworks, civil , structural, mechanical and plate work,  pipiearthworks, civil , structural, mechanical and plate work,  piping, instrumentation and control.ng, instrumentation and control. 3.3. The level at which the project schedule is developed and maintaiThe level at which the project schedule is developed and maintained  for the purposes of:ned  for the purposes of: a)a) Modelling  resource usage and cash flow during the estimating phModelling  resource usage and cash flow during the estimating phase to help establish the ase to help establish the  projectproject’’s overhead including cost of finance, s overhead including cost of finance,  b)b) Establishing the contracting strategy for the project, andEstablishing the contracting strategy for the project, and c)c) During execution phase, track and forecast actual and work to coDuring execution phase, track and forecast actual and work to completion against the mpletion against the  contract control baseline. contract control baseline.  PrePre‐‐requisites for a Successful EVPM Project Control System Implemenrequisites for a Successful EVPM Project Control System Implementation:tation: © Supertech Project Management
  • 4. Case Study to illustrate  Schedule and Estimate Relationship Case Study to illustrate  Schedule and Estimate Relationship  Municipal Sewer Infrastructure Project  comprising the construction of  3 KM  of 3.5 meter diameter  sewer mains,  inspection and maintenance manholes  with  collecting branch sewers .   The main sewer being constructed using a  Tunnel Boring Machine (TBM) .  EAC = $57,000,000. © Supertech Project Management
  • 5. The Estimate  The Estimate  ‐‐ Using a Municipal Sewer Infrastructure Project  as the case study  the table illustrates a typical  Level 4 Detail, Level 3 Summary Estimate by Facility by Units of Quantity, Labour, Material, Plant and Subcontractor   Costs using “Expert Estimator” estimating software.   © Supertech Project Management
  • 6. The Schedule Corresponding  Level 3  Estimate Summary The Schedule Corresponding  Level 3  Estimate Summary ‐‐ using Microsoft Project Planning  Software. Note: Level 4 schedule detail does not always correspond  with the Level 4 estimate . © Supertech Project Management
  • 7. Using Project Controls Practice  During the Bid Phase of the ProUsing Project Controls Practice  During the Bid Phase of the Project To:ject To: 1. Model the Initial Project  Cash Position to determine allowance for finance based on the commercial cash  position.  2. Determine the time phased requirements for labour, plant and equipment . 3. Determine the target production required to meet the contract schedule . 4. Resulting analysis can be used to revise the schedule timeline and price to mitigate exposure to risk. 1.1. Scheduling DataScheduling Data 2.  Estimate Data2.  Estimate Data 3.  Expected Payment             3.  Expected Payment              ConditionsConditions Special purpose reports and Special purpose reports and  graphical data for determining graphical data for determining  the Project Financial Position the Project Financial Position  due to the contract payment due to the contract payment  schedule conditions.schedule conditions. © Supertech Project Management
  • 8. The resulting cash flow based the commercial  contract schedule of payment conditions. © Supertech Project Management Cost due to the purchase of one TBM and  Ancillary Equipment including Pipe on 60 day  payment condition
  • 9. Compare the EVPM calculated  to the Commercial Cash Flow Compare the EVPM calculated  to the Commercial Cash Flow  © Supertech Project Management A big difference between $5.6 Million and  $0.3 Million  Negative Cash Flow  adding to  the project overhead and contractors price. The solution to the Contractor’s cash flow problem: 1.Negotiate an upfront payment with the client to cover the  costs of  the TBM and Pipe Supply. 2.Negotiate more favourable overall payment terms to  reduce the cost of finance and for the contractor to remain at  the very least cash neutral EVPM Based Cash Flow Commercial Cash Flow
  • 10. © Supertech Project Management Use the EVPM based  Labour Histogram to determine  time phased lUse the EVPM based  Labour Histogram to determine  time phased labour requirements and  the appropriate site abour requirements and  the appropriate site  facilities and supporting infrastructure  for the labour.  This facilities and supporting infrastructure  for the labour.  This could effect overheads and the final tender price.could effect overheads and the final tender price.
  • 11. © Supertech Project Management Case Study To Illustrate  Schedule and Baseline Control Budget RCase Study To Illustrate  Schedule and Baseline Control Budget Relationship elationship  Construction of sewer  emergency relief structure  BAC = $2,094,255
  • 12. © Supertech Project Management Schedule and Baseline Control Budget Control Documents:Schedule and Baseline Control Budget Control Documents: Estimate Summary Sheet, with the control budget line  items mapped to the  corresponding schedule activities. Corresponding Estimate  Schedule with set  Control Baseline Corresponding EVEngine Project Control Sheet   for making adjustments to  schedule based %C  to reflect Physical  %C based on Accrued Actuals  (AC) and the Estimate To Completion (ETC). 
  • 13. © Supertech Project Management Baseline Control Budget EVPM Data settings at the beginning (OctBaseline Control Budget EVPM Data settings at the beginning (October 2009) of the ober 2009) of the  project:project: Baseline  Data where the EAC  =  BAC For Cost and For Schedule. Baseline  Metrics, Indicators  and Predictors are set so: EAC  =  BAC, PV = EV = AC  Indicators are set to Zero
  • 14. © Supertech Project Management Baseline Control Budget EVPM Data settings at the beginning of tBaseline Control Budget EVPM Data settings at the beginning of the project:he project: Commercial Metrics are set  where the Profit P = the  Planned Profit PP. Commercial Metrics are set  where the Profit P = the  Planned Profit PP and Cost  Variance CV = 0
  • 15. Status of the Project in January 2010  A photographic record of Status of the Project in January 2010  A photographic record of progress progress  © Supertech Project Management
  • 16. Corresponding schedule status  to the photographic record.Corresponding schedule status  to the photographic record. Using the scheduling software we can undertake schedule variance analysis. © Supertech Project Management
  • 17. Using the Project Control SoftwareUsing the Project Control Software Collect EVPM data then calculate metrics, indicators and predictors to evaluate valuate performance  and undertake  contract administration .  1.1. Updated Updated  Scheduling DataScheduling Data 2.  Actual Costs as 2.  Actual Costs as  Accrued for the Accrued for the  reporting periodreporting period EVPM based performance EVPM based performance  reports comprising metrics, reports comprising metrics,  indicators and predictors.indicators and predictors. © Supertech Project Management Commercial  cash flow position Commercial  cash flow position  based on scheduled payments based on scheduled payments  and revenue.and revenue. Contract Administration with Contract Administration with  respect to the calculation of respect to the calculation of  Certificates of Claim  and Certificates of Claim  and  Payment.Payment. Cost Performance  Reporting  to Cost Performance  Reporting  to  Government Agency Government Agency  Requirements  (Format 1 to 5), Requirements  (Format 1 to 5),  Cost Engineering ReportsCost Engineering Reports
  • 18. © Supertech Project Management EVEngine Project Control Software adjustments to imported actualEVEngine Project Control Software adjustments to imported actuals and s and  estimates to complete for schedule of rates contracts estimates to complete for schedule of rates contracts  Post Accrued Actuals  (AC) and adjust as  required the  Estimate  to Completion (ETC).  Run EVPM Reports & Graphs for Metrics,  Indicators and Predictors. 
  • 19. EVEngine Project Control Software Output EVEngine Project Control Software Output  EVPM Based Summary Metrics, Indicators and Predictors as at Jan 2010. © Supertech Project Management EVPM Based Metrics,  Indicators and  Predictors.  Commercial Based  Metrics and Indicators.  ES Based Metrics,  Indicators and  Predictors. 
  • 20. © Supertech Project Management EVEngine Project Control Software Output EVEngine Project Control Software Output  EVPM Based Summary Indicators as at Jan 2010.
  • 21. EVEngine Project Control Software Output EVEngine Project Control Software Output  Using EVPM to Undertake  Certificate of Payments and Claims © Supertech Project Management
  • 22. EVEngine Project Control Software Output EVEngine Project Control Software Output  Government Agency Report Contract Performance Report  Format 2 Government Agency Report Contract Performance Report  Format 3 © Supertech Project Management
  • 23. 1.1. PMI PMBOK PMI PMBOK ®® 2009 4th Edition 2009 4th Edition –– Project Management Body of Project Management Body of  KnowledgeKnowledge EVPM Governance, Standards and GuidelinesEVPM Governance, Standards and Guidelines 2.  PMI PMBOK 2.  PMI PMBOK ®® 2009 2nd Edition 2009 2nd Edition –– Earned Value GuidelinesEarned Value Guidelines © Supertech Project Management
  • 24. •• Mandatory for Professional  EVPM.Mandatory for Professional  EVPM. •• EIAEIA‐‐748748‐‐B replaces EIAB replaces EIA‐‐748748‐‐A (R2002).A (R2002). http://webstore.ansi.org/RecordDetail.aspxhttp://webstore.ansi.org/RecordDetail.aspx ?sku=ANSI%2fEIA?sku=ANSI%2fEIA‐‐748748‐‐BB 24 EVPM Governance, Standards and GuidelinesEVPM Governance, Standards and Guidelines Mandatory if working with US  DoDMandatory if working with US  DoD. wiki.nasa.gov/cm/wiki/...wiki///1000921mainwiki.nasa.gov/cm/wiki/...wiki///1000921main _DoD_5000_2R.pdf_DoD_5000_2R.pdf Many of the Google reference sites can no Many of the Google reference sites can no  longer be accessed.longer be accessed. © Supertech Project Management
  • 25. EVPM Governance, Standards and GuidelinesEVPM Governance, Standards and Guidelines Highly recommended.Highly recommended. Available fromAvailable from www.saiglobal.com/shop •• PMI:PMI: http://www.pmi.org/Pages/default.asphttp://www.pmi.org/Pages/default.asp xx •• College of Performance Management: College of Performance Management:  http://www.pmihttp://www.pmi‐‐ cpm.org/pages/home/index.htmlcpm.org/pages/home/index.html © Supertech Project Management
  • 26. Recommended EVPM Reference PublicationsRecommended EVPM Reference Publications Best Results is to obtain Professional Advice Form An ExperienceBest Results is to obtain Professional Advice Form An Experienced  Specialist Organization.d  Specialist Organization. •• Highly recommended book.Highly recommended book. •• Make sure you get Third Make sure you get Third  Edition.Edition. •• Available fromAvailable from WWW.PMI.ORGWWW.PMI.ORG OROR WWW.AMAZON.COMWWW.AMAZON.COM •• Highly recommended book.Highly recommended book. •• Available from Turpin Available from Turpin  Distribution Limited Distribution Limited  www.apm.org.uk/EarnedVwww.apm.org.uk/EarnedV alueManagement.aspalueManagement.asp •• Highly recommended book.Highly recommended book. •• Available from Supertech  Available from Supertech   Project Management Project Management  www.suptec.com.auwww.suptec.com.au © Supertech Project Management
  • 27. Earned Value Based Earned Value Based  Project Controls for Industrial ProjectsProject Controls for Industrial Projects QUESTIONS AND ANSWERS ?QUESTIONS AND ANSWERS ? ALL GRAPHS AND REPORTS PRODUCED USING SUPERTECHALL GRAPHS AND REPORTS PRODUCED USING SUPERTECH’’S EVENGINE MICROSOFT S EVENGINE MICROSOFT  EXCEL ADDEXCEL ADD‐‐IN EVPM PROJECT CONTROL SOFTWAREIN EVPM PROJECT CONTROL SOFTWARE © Supertech Project Management
  • 28. For  your complementary Earned Value Guide contact your nearest location.  To trial EVEngine  register at  http://evengine.net/