W2_GGS_Water Project vs OmniClass WBS

Problem Statement

There are three key criteria that are generally believed as the indicator for a successful project. They are on goal, on budget and on schedule. To have a successful project, the Project Manager and project team have to focus on integrating the planning of those aspects. How to have a successful project or how to avoid the project from not achieving the main objectives: on goals, on budget and on schedule? The same question falls to a community development water supply project in a mining company in Sulawesi, where access to deliver materials, equipment and people is challenging.

Feasible Alternative

“Devil” lies in the details – this is a most appropriate term to express the root cause of why in many cases, a project has failed to achieve goals, budget and schedule. Project details have been started missing from the project plan preparation, when the Project Manager tends to manage the project in the high level and forget the importance of detailing the project structures down to activities and resources level. The detail mentioned here is commonly named as a Work Breakdown Structure (WBS).

In order to have a valid assessment of the water supply project WBS, it is chosen to benchmark it with one of the recognized and proven WBS standards, named OmniClass.

OmniClass Construction Classification system is a new classification system for the construction industry. It is designed to provide a standardize basis for classifying information created and used by the North American architectural, engineering and construction industry. OmniClass consist of 15 tables, each of which represents a different facet of construction information.

Project and OmniClass WBS Comparison

To narrow the benchmarking, let us take example from the real stage of the project and show how the WBS has been structured  compares with how OmniClass would do. It has been selected to choose the work preparation phase and project closure phase as the examples. These are selected since in a practical, these are the two phases where a Project Manager sometimes does not spend enough time in detailing. As the water project is now in construction preparation phase, Table 22 – Work Result of the OmniClass is the most appropriate standard to represent the OmniClass approach. A work result represents a completed entity that exists after all required materials, human or machine effort, and processes have been provided to achieve a completed condition. 

Table 1 Work Preparation & Project Closure WBS – Project versus OmniClass

Analysis and Result

Based on table comparison above, it is obvious that the water supply project has missed some important WBS deliverables in the work preparation phase. The details those would be recommended by the OmniClass Table 22 as shown above are very important to be in the plan in order to have a smooth start of the project.

Same thing with the project closure phase, a stage where the project starts to produce. In this stage, the project stakeholders’ focus has sometimes been shifted to the project product and not realizing that the project closure is also important to ensure the project record or documentation and sustainability in the future. OmniClass once again has shown some important details that will help the project manager/team to well preparing the project closure .

Conclusion

From the two examples above – OmniClass Table 22 Work Result has provided some valuable and more detail WBS compare to what the water supply project had been structured. The details will truly help the Project Manager to start developing more detail WBS for the project to further level of details – work package, activity and resources level. When all these details are available, a more manageable and realistic project schedule can be developed. Then, the same WBS can be also used to structure the project budget using WinEst – RSMeans or any others cost estimating data base.

In the other words, the same WBS can be used to build and manage project budget and schedule at the same time. It is now can be firmly concluded that the more detail the WBS, the likelihood of the project to achieve goals, budget and schedule is higher.

Reference

CSI OmniClass (2010), OmniClass Table 22 – Work Results. Retrieved from www.omniclass.org

 

 

 

 

 

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W2.0-MV-Bad Estimates

Problem Recognition and Definition.

Accurate project estimation can make or break a deal, having the right methodology in performing accurate estimation is the key in securing a successful project and implementation.

Unfortunately there are 4 command challenges faced by all industries in getting the right estimates.   

Feasible Alternatives

The four command barriers are:

  • Lack of Scope Definition
  • Poor Communication
  • Unrealistic client expectation
  • Optimistic  team Member  

Assessment and analysis

In this section I will give a brief description of the cause and corrective measures for the above four challenges.

Lack of Scope Definition.

Major cause of none clarity in scope definition is due to Work Breakdown Structure (WBS) was not done, in providing input for an accurate estimation.

Once the WBS is clearly defines it will outline all the major deliverables in details, all parties will have clarity and know the unknown factors.

 

 Figure 1: The path to good estimates and schedules is first developing the project scope

Poor Communication

Most often estimators tend to develop their answer to a problem without getting the complete information. This will lead to answers like we assume or it is given this is what required, which will have negative impact in the project execution if the assuming are in correct.

To avoid any assumptions we should always clarify any uncertainties and have clear scope definition without any ambiguity.

Joseph A. Lukas, PMP®, PE, CCE  have provide an excellent example in his paper Bad Estimates Just don’t happen with his how many jellybean in the jar.   

Unrealistic Client Expectation

It is equally important to manage the client expectation as in managing a project well. It is said the expectation of the client is the same weather a project scope is 0% or 100% well define.

 

 Figure 2: Estimate accuracy is dependent on the amount of project definition

Optimistic Team Members.

Estimation prepared by overly optimistic team members, who tend to overlook the finer details which will add to the project cost in a huge way.

Every detail has to be carefully evaluated and realistic approaches need to be applied.

Results and Explanation

To reduce the risk of inaccurate project estimation the following 6 steps was suggested

1)      Have a complete WBS in place

2)      Use risk analysis tools to determine potential estimates

3)      Don’t be overly optimistic by others influence

4)      Never estimate alone, have multiple opinions

5)      Watch the level of precision to match the scope definition.

6)      Document you assumptions and Exclusions

Conclusion

As per my opinion the four areas mention above are most commonly overlook due to is not tangible, unless someone have the experience to look into details.  Most often the stake holders over look this matters as there are no cost or risk attached until it crops up at a later stage.  This inaccuracy can be easily overcome by implementing the 6 steps mentions above.

Reference 

  1. Joseph A. Lukas, PMP®, PE, CCE, (January 2006) Bad Estimates Just Don’t Happen. Retrieved from http://www.pmcentersusa.com/KnowledgeCenter/WhitePapers/BadEstimatesJustDontHappen.aspx

W3_Rifai_Force Field Analysis for Option No. 2

1.      Problem recognition, definition and evaluation.

As discussed at previous blog, I have four options to be selected as paper topic. The first option is analyzed and described at blog W2. This is the second topic to be analysis.

Problem definition: Select paper topics

2.      Development of the feasible alternatives

The four topics are:

Topic 1:

Project delay due to resource is taken for other emergency operation work (many breakdowns at operation site, and always ask for urgent help).

Possible Solution: Use Triage to prioritize the work.

Topic 2:

Project over budget and/or delay due to under estimate on cost and schedule.

Possible Solution:  Create better contingency include Risk Management Plan and buffer.

Topic 3:

Regular long shutdown at Furnace area has fluctuation shutdown duration. Always take longer than plan. How we can make sure contractor working as the plan or finish earlier? The key here is the time.

Possible Solution: Use incentive type of contract.

Topic 4:

There is always change of scope from sponsor (Scope change many times).
Impact of change order to efficiency of project and there is hidden cost in every change.

Possible Solution: Use Standard WBS Check List.

For this blog, I will analyze the second topic.

Feasible Alternative: one of four possible topics

 3.      Development of the outcomes

Same with previous option, this second option is analyzed using Force Field Analysis that was developed by Kurt Lewin (1951). This is one of powerful tools for Decision Making. It will show the different forces for the issue and from where we have a starting point how to increase the possibility of the success of the issue we analyzed.  

4.      Selection of a criterion (or criteria)

After analyze all options, I will take the topic that have highest positive score and has less effort in reduce the restrain force. It will be at blog W6.

5.      Analysis for second options

For these second options, I will see on two sides:

  1. Can I produce the paper using this topic?
  2. If the topic is finish, what is my possibility to apply at my company?

 The result of this analysis as below table:

 Option 2 also shows the gain to success for working on this problem statement.

Main restrain is about confidential data to develop the paper using real data and time constraint when the formula is applied.

Major gain is there is another paper with similar topic already written for this. And the benefit for the company is to have better cost estimation.

6.      Selection of the preferred alternative

Will be on blog W6

7.      Performance monitoring and post-evaluation of results

Will be on blog W6

References:

  1. Jongen, T, “The Art of Triage”, Retrieved from http://www.wapna.org.au/The%20Art%20of%20Triage.pdf 
  2. Manktelow, J, “Force Field Analysis”, Retrieved from http://www.mindtools.com/pages/article/newTED_06.htm
  3. Brassard, M and Ritter, D (2010), The Memory Jogger (2nd Edition),Canada, GOAL/QPC

W4_RW_Project Team Buy in to Cost Contingency (Delphi and PERT Calculation)

Problem Statement

From my previous blog posting dated 27 Jan 2012, the core problem is that we would like to solve is the project team buys in to cost contingency produced by project cost control/analyst.

The sub problem statement: How to calculate cost contingency using Delphi Technique and PERT.

Feasible Alternatives

  1. Delphi Technique: is a method for structuring a group communication and individual expert judgment to get a consensus opinion to one or many problems.
  2. PERT: Program Evaluation and Review Technique, is a statistical tools used in project management to define the probability to a certain estimate.

Delphi Technique and  PERT Calculation

The calculation simulation is using the real data from an anonymous project.

An XYZ project is ongoing project, project control/analyst has current data and current forecast final cost in table 1 below. We need to know what the appropriate cost contingency is require on the top of his forecast.

Table 1. Cost Element and current forecast final cost.

Delphi Technique: It is a group effort of an expert and experience person to a certain problem or project and will asked their best individual opinion to a certain case with three (3) estimate i.e (optimistic, most likely and pessimistic) or (min, most likely, max).

Table 2. Three point estimate.

In the table 2 above, the “3 points Estimate” were based on percentage and we could convert to the $ value number. Those numbers then as an input for calculation using PERT formula i.e.

Mean: (Min+(4 x Most likely)+Max) / 6 à We named this as “Expected Cost”
Variance : ((Max-Min)/6)^2

And we sum the 3 points estimates in $ as well as the Expected Cost and Variance.

Table 3

Once that calculation is finish then we set the total cost limit to generating the curve (table 4). We chose the certain % above the Expected Cost that will represent the total limit cost.

Table 4

After we got the total cost limit we use it for calculating the Z value or Z score with the equation:

From our data above we know that

X = Total cost limit

μ = Total Expected Cost, and

σ = standard deviation = √(variance)

So we could get the Z value that will be an input to generate % probability to exceed the expected cost and by using excel function

“ 1-NORMDIST([z value],0,1,TRUE)”

As you see in table 4 we could get the probability to exceed % complete, and then those number is plotted to the chart (chart 1).

Chart 1.

That chart represent the distribution of % probability to exceed the expected cost, this chart will be a tool for project controller/analyst and project manager who manage the contingency to determine the contingency amount.

Project Manager could then put the confident number of percentage probability to exceed the expected cost that he/she will to take or in other words determine the risk that is willing to take.

In this case the project manager agree to take a probability 9% to exceed the expected cost which the amount is $8,266,809 (see table 4), and it is $478,000 higher than the expected cost, this variance is a number that we consider as contingency.

Table 5

So now we know based on the team consensus the project cost contingency is $478,000 –OR- 6.14% of the current forecast to complete.

And now we have to endorse the project team to buy in the number and introduce also how to manage the contingency after this over the project.

Conclusion

Delphi Technique and PERT can be used to calculate cost contingency by involving project team member to give input in term of risk and opportunity in project. This number will be a team consensus which will be bought in by project team. This method also gives more awareness and team belonging to project cost.

References:

  1. Program Evaluation and Review Technique, retrieved from http://en.wikipedia.org/wiki/Program_Evaluation_and_Review_Technique
  2. Underhill, Nic (2004) The Delphi Technique. Retrived from http://www.britishcouncil.org/eltons-delphi_technique.pdf
  3. Randal B. Lorance, PE. (1992). Contingency Draw-down Using Risk Analysis. AACE Transactions
  4. Nassar, Dr. Khaled. Cost Contingency Analysis for Construction Projects Using Spreadsheets, Technical Article, Cost Engineering Vol. 44/No. 9 SEPTEMBER 2002

W2.0_Ary_Earned Value Measurement for Detail Engineering Activities

Problem Recognition and Definition

Gary C. Humphreys has defined the types of work measurement in application of earned value management. One of them, which numerously used in wide application, is discrete effort method [1], and the author’s would like to see if this method appropriate for application into detail engineering activities.

A complex detail engineering design work has been assigned to a team of engineers and measurement of accomplishment need to be defined in order to implement earned value management properly.

Possible Alternatives

There are seven sub methods of discrete effort in measuring work accomplishment as follow:

  • Incremental milestones
  • 50/50 methods
  • 0/100 methods
  • Equivalent units
  • Units complete
  • Percent complete
  • Combination of the above

  

Analysis

Analysis will be based typical work duration of the work package and the nature of work to be accomplished.

The best relationship which is the most appropriate with typical duration and the nature of engineering activities to be performed will be selected. Matrix diagram [2] will be used to show relationship between available alternatives and characteristic of work to be performed.

The following table shows comparison of discrete measurement method related to duration and nature of work.

 

Table 2.1 Discrete measurement methods

Result / Selected Alternative

A detailed engineering design has the following characteristics:

  • Specific milestone: preliminary / conceptual design, engineering calculation, detail design, detail scope of work, bill of material development, etc.
  • Specific deliverables: design brief, calculation sheet / report, drawings, work packages, etc.

The above two items have a strong relationship to the criteria of incremental milestone measurement method as shown in below table, therefore this method is selected to measure and tracking detail engineering stage of a project.

 

Table 2.2 Matrix relationship of detail engineering design and measurement alternatives

Post Evaluation

For a complex detail engineering design, major milestones can be developed from several activities or shorter milestones so in one month duration we can have minimum one milestone / sub milestone. Deliverable can also be divided into smaller pieces to meet the milestone / month criteria.

References:

  1. Humphreys, Gary C. (2011). Project Management Using Earned Value.Orange,CA: Humphrey & Associates, Inc.
  2. Brassard, M., & Ritter, D. (2010). The Memory JoggerTM.Salem: NH: Goal/QPC.