Commercial Sector EVM Implementation in Europe at Fabricom

COMMERCIAL SECTOR EVM
IMPLEMENTATION IN EUROPE
C A S E S T U DY
Ing. Stephan Vandevoorde
Manager Airport Systems, CofelyFabricom
Director, EVM Europe Association
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Cofely Fabricom, a GDF SUEZ Company
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….active in most of today’s key sectors
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ENERGY
INDUSTRY
INFRA
STRUCTURE
TERTIARY
OIL, GAS
& POWER
High Voltage
E&I
High Voltage
Electricity
E&I
Distribution networks
P&M
Distribution networks
Communications &
Networks Integration
P&M
Power Plants
Process Solutions
Underground
Onshore & Offshore
Data Centers
Nuclear
Renewable
Maintenance &
Specialized Services
Rails, Roads,
Waterways, Ports,
Airports
Power Plants
Security
Tanks
Distribution
Waste to Energy
Bending & Prefab
Environment
Maintenance Services
Maintenance Services
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Maintenance services
Maintenance Services
… 2013 key figures
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Turnover 894 MEUR
Belgian Operations 88%
Workforce 5160
Belgian Operations
4558
International Operations 12%
International Operations 352
Central Services
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250
Background
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2002 – 2009: 3 major re-organisations
•
lot of people movements
•
loss of maturity
•
“troubled” projects
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Background
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How to define a project management training program?
Launch of a working group
Analysing project portfolio
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Project landscape
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Projects 2006 --> 2009
N= 1976 ( ca. 500 projects / year)
100%
80%
60%
40%
20%
Values in Millions
2,0
1,8
1,6
1,4
1,2
1,0
0,8
0,6
0,4
0,2
0,0
0%
Project landscape
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Avg. Nrs. Of
Projects / Year
Contribution to
Turn Over
Portfolio
Small / Medium
Sized Projects
Large / Complex
Projects
500
450
50
100%
90%
10%
100%
25%
75%
Small & Medium
Sized Projects
Large & Complex
Projects
ION Training Program
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Training
Program
Type
Small / Medium Projects
National Allignment
Large / Complex Projects
International Allignment
Reference
Basic P.M.
6 Days / 2 Modules
Advanced P.M.
11 Days / 3 Modules
Language
Dutch / French
English
EVM Related
Basic EVM
Advanced EVM
ION Certificates
M1 Hard Skills: 465
M2 Soft Skills: 499
M1 PM Awareness: 121
M2 Triple Constraint: 270
M3 Advanced PM: 252
EVM Roadmap
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Step 1: Introducing EVM Principles
Focus on cost control
Status: implemented
Step 2: Current Developments
Focus on time control / Earned Schedule
Status: being implemented on selected large / complex projects
Advanced applications: p-factor
Status: ad hoc applications
Step 1: Cost Focus - Implemented
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Extract ETC procedure
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P.M. provides on a regular way a ETC
ETC has to be:
“As good as possible” (direct influence on Profit / loss reports)
Periodically discussed with B.C. / P.M. / Steering Committee
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How we implement this
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P.M.
Input
% Compl
X
PV
X
X
ETC
Performance
Forecast
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X
X
X
B.C.
X
X
X
X
EAC
X
X
X
X
X
X
X
Director
X
xPI
Evaluate
Review
P.M.
EV
AC
Status
B.C.
Bi Monthly
Monthly
X
Based on D.O.D. evaluation rules
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Once a contract is more than 15-20% complete, the final overrun will be
worse than the present overrun (Christensen/Wilson 1992)
CVfinal – CV20% < 0
Once a contract is over 20% complete, the CPI does not change by more
than 10%, and in most cases it worsens (Christensen/Heise 1993)
| CPIfinal - CPI20% | ∗ 0,10
Calculate a range of outcomes:
CPI-based EAC is a floor to final cost (Christensen, 1996)
SCI-based EAC is often the most accurate estimate
(Fleming & Koppelman 2000, Humphreys & Associates 2002)
EACcpi < EAC < EACSCI
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Our experiences
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Once a contract is more than 15-20% complete, the final overrun will be worse
than the present overrun (Christensen/Wilson 1992)
Give attention to deatiled planning in early stages
Strict planning / control in the early stages is needed
Once a contract is over 20% complete, the CPI does not change by more than
10%, and in most cases it worsens (Christensen/Heise 1993)
CPI shows more variability during early & middle stage
Compare TCPI & CPI
Calculate a range of outcomes:
CPI -EAC is a lower bound, SPI - EAC is an upper bound
For critical projects, a cost simulation exercise is done
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Real life application – status month 5
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PROJECT INFO @ M5
Budget at Completion
BAC
Actual Cost
AC
from B.C.
Progress
% Compl from PM
Estimate to Complete
ETC
from PM
2.875
1.562
51%
1.458
STATUS
EV
% SPENT
Cost Variance
Cost Performance Index
Estimate at Completion
EV = %Compl x BAC
% Spent = AC / BAC
PERFORMANCE
CV
CV = EV - AC
CPI
CPI = EV / AC
FORECAST
EAC
EAC = AC + ETC
1.466
54%
-96
0,94
3.020
To be analysed
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Real life application – evaluation month 5
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FORECAST EVALUATION @ M5
Iteration 1: EAC = 3.020 (given by PM)
Rule 1: VAC > CV
overrun increases from 96 --> 145
Rule 2: TCPI < CPI
TCPI = 0,97 > CPI = 0,94
Rule 3: EACcpi < EACpm < EACsci
3.020 < 3.063 < 3.440
ok
not ok
not ok
Iteration 2: EAC = 3.150 (done by B.C.) (TFA = Total Funds Available = BAC + MR)
Rule 1: VAC > CV
overrun increases from 96 --> 275
ok
Rule 2: TCPI < CPI
TCPI = 0,89 < CPI = 0,94
ok but…
Rule 3: EACcpi < EACpm < EACsci
3.063 < 3.150 < 3.440
ok
Iteration 3: EAC = 3.200 (decided during review)
Rule 1: VAC > CV
overrun increases from 96 --> 325
Rule 2: TCPI < CPI
TCPI = 0,86 < CPI = 0,94
Rule 3: EACcpi < EACpm < EACsci
3.063 < 3.200 < 3.440
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ok
ok
ok
Real life application
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BAC
EACcpi
EACsci
REVIEW
COST RISK 70%
By P.M.
3.700
3.600
3.500
3.400
3.300
3.200
3.100
3.000
2.900
2.800
M1
M2
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M3
M4
M5
M6
M7
M8
M9
M10
M11
M12
EVM application results
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15%
10%
Reported Deviation
5%
0%
-5%
-10%
-15%
-20%
-25%
After - ION
Before - ION
-30%
-35%
0%
20%
40%
60%
Progress
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80%
100%
Findings
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ION trainings program increased project management
maturity level
Findings on project level:
Cost forecasts are more reliable and stable
Early visibility of potential cost overruns
P.M.’s tend to estimate too optimistic
A healthy baseline is needed, more effort needed during
planning phase
Findings on portfolio level:
Cashflow profile has been reversed into positive (over 3 years)
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Step 2: Focus on Time - selected
projects
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Projects landscape -time
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The need for ES
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Costs are better managed…and thus under control
But project delays are becoming an issue
Making a sound schedule is a difficult job
In most cases there is no dedicated “scheduler”
Updating schedules is very difficult
So we are currently implementing Earned Schedule for large /
complex projects
PGCS, Canberra 2014
The need for ES
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Chapter 3
Describes 3 real life cases
Discusses the use of ES versus EV methods
ES indicators / forecasts are reliable
A healthy baseline is needed
ES to be used in conjunction with a schedule
PGCS, Canberra 2014
There is more with ES
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What really happens
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ES provides schedule information
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Schedule adherence = p-factor
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Effective earned value
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Effective earned value
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Final notes
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EVM / ES:
Training / assistance is needed requires an investment
R.O.I. :
More accurate and reliable cost / duration forecasts
Better cashflow management
Project orientated organisation may be makes it easier
Give attention during bplanning phase: a sound baseline is needed
ES Extensions:
Use of P-Factor leads to more accurate / stable EAC predictions
Looks very promising
PGCS, Canberra 2014
Thanks
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QUESTIONS?
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