Breaking evm

Construction Leaders
Formula to Simplify EVM

Presented by:
Ron Babich, PMP

2/14/2014

© MobileLogix / DispatchLogix 2014

CEO / Co-Founder
MobileLogix/DispatchLogix

1

About Us
• Ron Babich, CEO MobileLogix
Goodrich

Shell

Bloomberg

Hatch

Uhaul

BP

Time

Stantec

PetsMart

Willbros

Darden Restaurants

FMI

• 100% SAAS, Mobile Field Software

Tribune

Wild Well

HP

FCI

• Over 211 Capital, Maintenance, STO projects

Mitsubishi

Universal

Coca-Cola

Barrick

Kohler

CH2MHill

US Airways

TransCanada

Payless

Johnson Controls

Transfield

HD Supply

State Farm

Kinross

• HQ Phoenix, AZ – Global Partner Support
• GE Capital, Sage, Telesoft, Hard Dollar/Kiewit, RIB

• Finalist in Innovation Southwest
Most Innovative Product Award

2/14/2014

© MobileLogix / DispatchLogix

2

EVM Paradigm
Highest Risk
Execution

Report
Financials

Plan

Cash Flow

Estimate

Forecast

Schedule

Resources
Lowest Visibility

2/14/2014


3

Tough to Train? Cooperate?

Owners

EPCM’s

Contractors

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4

Revolution in EVM Reporting
Opportunity to Leverage Consumer Training

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5

Critical Field Data

Quantity
Time to Report

Man Hours

6 to 8 Weeks

Equip
Hours
%
Complete

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6

Critical Field Data

Quantity

Planned

Man Hours

Actual

Equip
Hours

Forecast

Hour by Hour

%
Complete

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7

Manage by Exception

Balance $35.00 Below Standard

Instant Notification of Bank Balance
Reaches Below Minimum Expectation
Value ($ Spouse Grocery / Hair )

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8

In the know on data…

Lost Lead Position
Outbid by Ebayer007theTerrible
on Collectors edition of Star Wars Episode 5 Storm Trooper set
Value $25, (Darth Vader +/- $30)

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9

Important Notifications

Networking Notification
Mothers high score notification,
and reminder to join her adventure in Candy Crush
Value ($0, Negative)

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10

Value to Visibility

$2,500,000
$2,000,000
Monthly
Updates

$1,500,000
Instant
Updates

$1,000,000
$500,000
$Ebay

2/14/2014

Bank

Project


11

Continued Stone Age…

2/14/2014


12

Pressure from Consumer Products / Youth
Outside (Them…also Us)

Inside (US)

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13

What has created the opportunity?

Size Retainable
Data Storage

2/14/2014

Bandwidth
Data Delivery

Mobile
Data Accessibility


Application
Collaboration
(API/Warehouse)

14

Storage

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15

Bandwidth

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16

Mobility

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17

Migration to Data Understanding

How we choose to view
Data has officially changed…

2/14/2014


18

Mobility Training

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19

Anatomy of Breaking EVM Simple

Good News

2/14/2014

Bad News


20

Best Part, more good news…

Legacy systems will do the trick….mostly

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21

No Magic Potion, No Tricks Smart Collaboration

Owners

EPCM’s

Contractors

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22

Why Should We Do Anything Different?

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23

Its Ok not to Innovate…

Quick quiz:
Name a leading company today that was just
as dominant 25 years ago.

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24

Failure to Innovate Technology

Yesterday

Today

Blockbuster (Distribution)

Netflix – Mail, Internet

Dell (PC)

Tablet, Asian PC, End to End Service

Microsoft (Software)

Web TV, Smartphones, Tablet PC

Motorola (Cell Phone)

Smartphones, Email, Data Focus

Sears (Catalog/Tower)

Insurance, Financial Services, Web Strategy

Sony (Walkman, Devices)

Device Brains vs. Circuitry

Sun Microsystems (Dominant Enterprise)

Less Costly Servers, Oracle

Toys R Us

Online Stores, Better Service

Yahoo

Free Services

Where are you today?

2/14/2014

Where will you be tomorrow?
Where will the new force be tomorrow?


25

Destiny to Change…

2/14/2014


26

Why the effort…

Fighting Status Quo
•

Increasing Profitability

•

Improving Project Delivery Time

•

Creating Marketplace Distinctive Competency

•

Establishing Long Term Collaboration Standards

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27

Leveraging New Technology
Causes Internal Anxiety

Reaction to Surrounding Technology

Internal Effect

Duration
Results

Process Enhance, Technology Plan/Embrace

High
Stress, Focus
Effort

Increased,
Exponential
Results

Sustain Current Behaviors, Maintain Status Quo Technology, Disparate Silo’s

Low Stress,
Reduced Effort

Maintained,
Reduced
Results


28

Traditional Systems of Record –
What are we up against???
Estimate

Schedule

2 Year Project Average
Controls/Execution/Progress

2/14/2014

23,000 Activities


Finance Actuals

29

Expansion of Size

Average Project Data
Scope/Schedule/Cost

50 Gig

1 Complex 3D Model

300 Gig

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30

Data Growth Leaders in
Construction

Average Organization

50 X Times by 2020
Structural Leads: Building, Bridges

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31

Data Multiplication

Data Rate Almost X 2 Each Year

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32

Construction Industry Response…

Revenue of $250 million

1.6% IT

Revenue of $10 billion

1.1%

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33

Lowest in adaptation…

IT SPEND AS PERCENTAGE OF REVENUE
INDUSTRY

ANNUAL REVENUE
APPROXIMATELY $250
MILLION

ANNUAL REVENUE
APPROXIMATELY $10
BILLION

BANKING

7.3%

6.2%

CONSTRUCTION &
MATERIALS

1.6%

1.1%

EDUCATION

5.6%

3.3%

FEDERAL GOVERNMEnT

10.8%

7.9%

STATE AND LOCAL
GOVERNMENT

4.6%

1.8%

SOFTWARE AND INTERNET

8.4%

5.4%

INSURANCE

5.3%

2.9%

HEALTH CARE

3.5%

3.3%

MEDIA

5.4%

3.2%

PHARMACEUTICALS

3.0%

2.6%

PROFESSIONAL SERVICES

5.6%

3.4%

RETAIL AND WHOLESALE

1.9%

0.9%

TELECOMMUNICATIONS

4.9%

3.8%

TRANSPORTATION

3.5%

2.3%

UTILITIES

4.2%

1.7%

ACROSS ALL 15 INDUSTRIES

5.04%

3.16%

2/14/2014


34

Look for Gains…

70% of US Productivity
Originates from….

IT / Data Manage/Understand
Forrester 2014

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35

Highest Rewards…

Front End Planning
Highest ROI….

Historic, Virtual

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36

Lessons from Projects

Common Faulty Logic
Multinational Crews

Massive Project Scales
Estimated Turnaround Time = 3 Hours

Actual Historic Turnaround Time = 3 Weeks

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37

1 of 1000 Reasons

Omission of History/Benchmarks
Missing Scope Items

Identified Late in Project

10%-15%+ Project Impact

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38

1 of 1000 Reasons

Delivery of Steel to Site
Over-Complex Schedules

Logic Ties don’t work
Faucets on 23rd Floor
Delay Concrete on 5th Floor

2/14/2014


39

1 of 1000 Reasons - Pro

Use of Collaboration Data – Single Project
• 80% Reduction in Design Time
• 98% Reduction in Number of Field Travel Days

• Less Field Rework for Craft
Source: KPMG

2/14/2014


40

Planning Overcomes Barriers

Barriers:
• Code Variations

• Lack of Infrastructure Jigs and
Templates

Leading Companies Make it:
• Repeatable
• Scalable
2/14/2014


41

Lessons from Manufacturing Shipbuilding
Example:

Product Database:

• Plant zones for mechanical systems
or public zones for lobbies

• Products
• Production
• Reconfigurable for each project

• Built in Manufacturing Type Facility
to be shipped to jobsite for
installation

• Standard Modules
• Sub-Assemblies
• Grouped by Families

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42

1 of 1000 Reasons

Dive into a Schedules WBS
Associate Costs…

Size of Data Out of Control

1 WBS / PHASE CODE

2/14/2014


Associate Costs to:

3 Day Schedule of Crane
5 Day Schedule of it’s Crew
7 Day Schedule of Materials

43

What is Earned Value Management?
• Earned Value Management (EVM)
• Is a project management process that combines schedule performance and cost
performance
• Answers the question, “What did we get for the money we spent?”
• Has been used since the 1960s by the Department of Defense
• Is a central part of CERT and C/SCSC (Cost/Schedule Control Systems Criteria)
• Revised and adopted as ANSI/EIA 748

What is Earned Value Management?

The Essence of Earned Value Management (EVM)

Budget
x % Complete
= Earned Value

EVM Scenario: Railroad Track

Contract says:

4 miles
4 weeks; $4 million


After 3 weeks of work, only
$2 million has been spent.

Sound good?
Let’s do an EVM analysis.


EVM analysis says:

1 mile
Only 25% complete. Project IN TROUBLE.


EVM:
Budget
x % Complete
= Earned Value

RR Project:
$4 million
x 25%
= $1 million EV

But $2 million already spent in 3 weeks.
At this rate, project will cost $8 million
and take 12 weeks to complete.

Simplified Collaboration

Scope

Collaborate

Cost

Schedule

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50

Benefits of Collaboration
8 Steps to Best Practice

Clear Identification of Task

Provision for Program
Uncertainties

Broad Participation in Preparation

Recognition of Inflation

Availability of Valid Data

Recognition of Excluded Costs

Standardized Structure
For Estimate

Independent Review
Of Estimates

2/14/2014


Clean it Up

51

Measure Twice

Cost Element
Valid and Applicable

Labor Includes Time
Phase Break Down

Calculations
on each element are correct

Program is Accurate Total
Of Sub-Elements

Escalation was applied
Over time

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52

Single Zen = Not in this lifetime…or the next
Split by - Technology / Disciplines

Estimating
Timberline
HCSS
Maxwell
Hard Dollar
Cleopatra
MC2
Others…

Schedule
P6
MS Project

Fact vs. Fiction
2/14/2014

Field
Spreadsheets

ERP
Timberline
Dexter Chaney
Viewpoint
JD Edwards
SAP
Explorer
Others…

Tools / Platform Dilemma

Lesson: Prepare to Integrate!!!

53

Practical Approach to
“Connect the Dots” – Collaborate

Estimate

Controls

Schedule

ERP

2/14/2014


54

Practical Approach to
“Connect the Dots” – Collaborate

Estimate

Controls

Schedule

ERP

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55

Pick a Problem - Match Game
Forget about Technology – What do we need??

Cash Flow

Forecast
Progress

Profit

Benchmark
History

Resources
Time (Start / Finish)

Got to be all or
Nothing

Scope (WBS/Activity/Phase)
Activity Factor (Time/Quantity/Fixed)
Historic (Past, Original, Current Approved, Current Commits)
Actual Costs / Accruals
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56


Estimating
Resources (Factored)
History (Past, Original, Current Approved, Current Commits)

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57


Schedule

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58


ERP

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59


Field
Spreadsheet
Paper Time

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60

Build a Project

Forecast

Estimating

Progress
Measure/Collect
Finance
Schedule

Report

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61

Crossroads – Resource Driver Variance
Project Phase 1

Cost Model

Utilize Cost Model
Resource Activity Driver

Schedule

Duration
Driven
Progress %

Duration
Driven
Quantity
Driven
Fixed Cost
Driven
2/14/2014

Fix: Cash Flow,
Resource Graph,
Forecast


62

Project Phase 1

Cost Model

Utilize Cost Model
Resource Activity Driver

Schedule

Duration
Driven
Progress %

Duration
Driven
Quantity
Driven
Fixed Cost
Driven
2/14/2014

Fix: Cash Flow,
Resource Graph,
Forecast


63

Project Step 2

Cost Model

Time Phase
Cost Model

Schedule

Duration
Driven
Progress %

Start / Finish

Fix: Cash
Flow, Resource
Graph, Forecast, A
ccrual

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64

Project Step 3

Cost Model

Resource/Cost Load
Schedule

Schedule

Activities
Steps

Resources

Activities
Activity
Factors
2/14/2014

Fix: Cash
Flow, Resource
Graph, Forecast, A
ccrual


65

Project Step 3
Create “Repeatable”
Cost/Phase/GL
Codes:Execution

Fix: Cash
Flow, Resource
Graph, Forecast, A
ccrual

2/14/2014


ERP

% Complete

Cost/Phase/GL

Schedule

Reconcile to
Cost Model

Quantity

Field Data

Cost/Phase/GL

Activity Factor
Work Package

“Earned Actual”

Build Accrual
66

Project Step 3

Field Data

Drive % Complete
From Factor Driven
Field Data Collection

Quantities

Pass Values to
Schedule/ERP

Duration
2/14/2014

Fix: Cash
Flow, Resource
Graph, Forecast, A
ccrual


ERP

% Complete

Reconcile to
Cost Model

Quantity

Man/Equip
Hours

Schedule

Cost/Phase/GL

Activity Factor
Work Package

“Earned Actual”

Build Accrual
67

Heavy Lifting vs. Making Simple

Quick Fix
• CPI - Cost Performance Index is .8333
• MHE – Man Hour Production 30% Less than Expected on Crew Performance
• SPI – Schedule Performance Index= $116,000 / $125,000 = 0.93
• Cash Flow does not reflect impact of actual vs. planned performance
• Current Schedule Does not reflect when we will finish based on production
• Average time to receive performance indicators, 32 days after root cause

2/14/2014


68

How much is to much?

“To Detail or not Detail?
That is the Question.

Whether tis nobler in the mind to
sling through piles of data or take
arms against it”
Lesser Known
Barry Shakespeare

Building Perfection in Progress

Create Model for Project Reconciliation against ERP

1.

Eliminate Internal Speculation – Determine Consistent Method of Measurement (Qty/%)

2.

Report on Summary – Record , Capture Detail

3.

Open progress to vendor input on measurements

4.

Leverage the schedule for true EVM performance (SPI, CPI)

5.

Standardize WBS for consistent current and historical measurement

Progress

Now vs. Later

End of Project

Real Progress = Actual Hours/Total

Late to modify Performance

Progress by Hours…

Manual
Progress
Phase
Hours/Cost

Hours Spent

Principles Applied

•
•
•
•
•
•

Budget
Time
Receipts
Progress
Actual Cost
Reconciliation

Common Touch Points - Budget

• Master Data (ERP->Cost Model System)
• Job/CR/WO/PO numbers
• Cost Codes
• Cost Types

• Structure, $, Quantities, Dates (Cost Model System->ERP)
•
•
•
•
•
•

Original Budget
Budget Revisions
Change Requests
Work Orders
Purchase Orders
Forecasts

Common Touch Points – Time
Entry

• Master Data (ERP<->FIELD SYSTEM)
• Job Steps, Job Types, Pay Types
• Employees
• Equipment
• Date, Account Code, Resource ID, Hrs, Notes, Weather
(FIELD SYSTEM->JDE)

Common Touch Points – Purchase
Order

• PO, Line Item, Qty Received, Estimated Value, Date
Received (FIELD SYSTEM --> ERP)

Common Touch Points
Progress Entry

• Date, % Complete, Quantity Complete, Foreman
(FIELD System->ERP or ERP->FIELD System)
• **Also Drives Primavera % Complete Calculation

Common Touch Points

• Reconciling G/L to Job Cost ERP <<->> FIELD System
• Accrual of Estimated Actual
• Quantity/Cost/Man Hours/Equip Hours
• Payroll
• Asset Management
• Procurement Management
• Subcontract Management

Keys to Success

•
•
•
•
•
•
•

Initiate at the Cost Model Estimate Level (Calculation of Production)
Time Phase Costs
Cost Phase Scheduling Activities
Cautious Burden in the Field – Leverage Existing Process
Extend Collaboration (Vendor, Owner, EPCM, Contractor)
Leverage Existing Technology (Last 2 Years = API, Size, Bandwidth)
Core Process, Top Down Strategy

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79

15%-30% Results Outcome

 Cost Estimate to Measure Original Plan
 Strong leadership demands EVM
 Stakeholders make it clear on accountability

 Management open to mitigating risk on results
 EVM at the program level

Core
EVM

 EVM planned detail
 Use past performance

 Integrate: Cost, Schedule and Performance
 Visual Planning, Execution

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80

End Result - Project Reconciliation – Holistic
ERP
Vendor POs
Cost Management
Customer, Opportuni
ty, or Project
Information

Materials Master & Pricing
Vendor Master

Estimate

Quote Mgmt

Project Number
Contracts & Change
Orders

CRM
Estimate Pricing

Field Data
MobileLogix
Control Tower
Takeoff
BIM

Pay Items

Actuals Tracking

Project Status
WBS Structure & Dates

Material Qtys

Budget Values (original budget, curr. budget, curr. est.)

HR Master Data

Current Forecast

Progress
Measurement

Earned Values

Time Entry (hours & qtys)

(optional) Time Entry (hours & Qtys)

Equipment Rates &
Types

Project
Structure

Schedule
Dates

Document
Link

Mobile
Field Collection
MobileLogix

Document
Link

Actuals

Scheduling
(P6 & MSP)

Document Management - SharePoint

Send SAP Vendor and Material Data to Field System

Receive Budget Values from Cost Model into SAP WBS

SAP Actual Quantities and Dollars Compared to Original Budget

EVM to SAP (QTY/% Complete) % from Field Data System

Forecast Dollars & Quantities from
Field Data System to SAP

Field Data Pay Items to SAP for
AR & Revenue Recognition

Core Collaboration – Non-glamorous

Estimate / Planning

Field Execution

2/14/2014

AFE’s
Account Codes
Cost Codes
Cost

GL Code
Account Codes
Cost Codes
Work Package
Area
Discipline
Quantities (Unit)
Man / Equip Hr
%

GL Code
Account Codes
Cost Codes

Accounting

Account Codes
Cost Codes
Area
Discipline
Rules of Credit / %

Collaboration
External


88

Redefining Customer Service

Re-Define Customer Service
•

Expectations

Schedule Time

•

Visibility

Performance

•

Communication

Throughout Field Touch Points

Number 1 Field Complaint = “Where is my person?”

See Every Activity…
Answer: How the Project/Work is doing….
•

Project Status

Visibility:
•

Plan vs. Progress

•

% Complete/Qty Update

•

Cash Flow, Earned Value

•

Resource Planning

•

Exception Alerts

•

Expedite Invoicing

Web / IPAD Based “Control Tower” View
Todays Tasks within the Project
“Play of the Day”

Activity Assigned on
Resource Expertise

Launch New
Activity

Scheduled/Assigned
Activities

Add/Modify
Equipment

Vehicles/Equipment Requiring
Maintenance
Schedule
Sub/Crew

Material
Add/Search/Location

Transparent Field to Plan Comparison
Planned / Estimated

Execution / Controls

Owner / Reporting

Qty / % Complete

Cost / Productivity

Schedule of Activities
Work Package A
Work Package B
Work Package C

Planned vs. Actual
Performance Comparison

Transparent Field to Plan Comparison
Planned / Estimated

Schedule of Activities

Schedule ID

Schedule ID

Execution / Controls

Owner / Reporting

Cost Code / Account Code Rollup

ACTIVITY ID / WORK PACKAGE

ACTIVITY ID / WORK
PACKAGE

Owner Reports
Cost Overrun
Past Due Activities
Roll Up Cost Codes

Manage Vendors and Self Perform Work

View Today’s Assigned Jobs
“Play of the Day”
Including Resources, Material, Equipment.
Categorized by:
Sub Contractor’s
Self Perform Work

Assign Unscheduled Activities

View Unscheduled Activities
To Assign

Attach Images and Notes from Field

Insert User Based Reminder Notes for Daily / Weekly
Tasks

Activity Scheduler

Schedule Daily Activities
By Craft Expertise, Availability
For weekly planning

Joe’s crew is available and
Is qualified to perform
This weeks activities

Organize Work Types and
Categories

Work Types
By Classification Category
Water Treatment

Material / Inventory Reorder Alerts

Receive Inventory Reorder
Alerts On Material for
Operations, Construction, and Equipment

Vehicle Maintenance Management
Real time updates
visible in Control Tower
Vehicle / Equip
Assigned to Sub / Supervisor

Update / Alert
Vehicle / Equipment
Maint. Records In the Field

Past/Present View of All
Activities/Resources/Equipment/Vehicles
View Historic Activity/Resource
By Activity ID
View Current Location
of Sub/Self Perform

View Current Location
of Equipment / Vehicles

View Status of Jobs by Location

No Service Required
No App to Download
No Batteries to Charge
Native to Device

Field to Control Tower Workflow

Field Select Activity
Select In Progress
Select Complete
Time/GPS Reflected in Record

Updates from Field on All
Activities
Are displayed in
Control Tower Status

Safety Certification Reports /
Meetings
Daily Safety Walk Around Checklist

Safety Qualification
Meeting Requirements:
Pre Construction Meeting
Site Safety Orientation
Foreman’s Site Requirement Review
Foreman’s Meeting
Safety Review

Sub Contractor Insurance On File

Quick Start Set Up…
Leverage existing
• Configure All Master Data
• Employee Master
• Inventory Master
• Vendor Master
• Equipment Master
• Material Master

Connect master data with Event Monitor
for Master Data Updates

Anatomy of a Project
Vehicles

Project
Staff

Schedule

Job

Equipment

Job Skill

Job Type

Labor Rates

Work Package
Work Type
(Activity)

Material
Unit
Cost

Hours
Price

Serviceable
Assets
(Recurring)

Location

Contact:
Ron Babich

Co-Founder/CEO

Email:

ron@dispatchlogix.com

Telephone:

602-492-8940

THANK YOU
106

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