EVM & Project Controls Applied to Manufacturing
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1 EVM & Project Controls Applied to Manufacturing PGCS Canberra 6-7 May 2015 David Fox General Manager L&A Pressure Welding Pty Ltd
2 Contents 1) Background Business & research context 2) Research Fitting EVM & the findings 3) Influence Lessons & value 4) Application Challenges & further work
3 1 Background Research snapshot Business application / scale Projects details
4 Type of research Industry origin Investigate EVM in an SME manufacturing case Why was the research done? Enhance project management knowledge Add value to a traditional product The objectives of the research? Establish a project mgt. system - project control Improve project communication time focused Thesis Title (ME Res) EVM Applied to an Engineered-to-Order Multiple Project Environment ( )
5 What is being manufactured? Customised pressure equipment (a product) Application focus Medium size pressure vessels Units that make up a larger system
6 Project type / scale High compliance; design & manufacture Average unit value ~$150K Average duration ~ 26 weeks SME Environment Employees 32 Project portfolio ~ 30 Manufacturing projects ~ 16 A large project for L&A was generally considered a small project in literature terms
7 Constraints Activities Product specifications design & QA standards procurement space manufacture resources Testing / QC pressure vessel
8 cut shell plate roll shell make ends weld together painting delivery
9 2 Research Framework getting started Configuration application details Outputs EVM s response
10 EVM Application Lesson Good business systems - key to EVM
11 Research EVM theory project literature earned schedule Business processes resources scheduling customised spread sheet project dash board Understand the processes & functions
12 Adopting a spread sheet method Tailor EVM inputs for business case Manipulation of EVM calculations Control outputs & their presentation Using EVM outside the scheduling Preserve the project culture for research Run EVM in background to validate outputs Identify system components that added value
13
14 Adjust quantity to capture product activities Needs to reflect organisation s cost structure Map budget with product & estimating
15 WBS Work Breakdown Structure Plan project around key manufacturing tasks High level of detail in WBS: Improves planning process Complicates EVM application
16 Materials & Services Reflect groups defined by the budget Material plate ($MA), ends ($MB), Services painting ($SA), transport ($SB), Labour Break Down Engineering deliverables drawings ($LA) Manufacturing milestones roll shell ($LB), QA / QC milestones testing ($LD) Balance EVM effort vs. benefit
17 Activities Week 1 Week 2 Week 3 Week 4 Engineering labour $LA Materials material $MA material $MB Assign budget values to scheduled time period Manufacture labour $LB labour $LC QA / QC labour $LD Painting Delivery services $SA services $SB Time period to suit the projects duration
18 Activities Week 1 Week 2 Week 3 Week 4 Week 5 Engineering Materials Manufacture QA / QC Paint Deliver Planned Value labour $LA material $MA planned values planned time material $MB labour $LB labour $LC labour $LD planned values actual time services $SA services $SB $LA + $MA $MB + $LB $LC + $LD $SA + $SB Apply effort to capture time/progress See Appendix A for expanded sample $SB 1 week late Earned Value $LA $MA + $MB $LB + $LC $LD + $SA $SB
19 EVM S Curves Planned Value PV Earned Value EV Actual Cost AC Earned Schedule (ES) SVt Curve Robust time based measure Can be overlayed on S curve Used as a visual progress status measure
20 PV EV AC LH Axis SVt RH Axis
21 Weekly Noisy but responsive curve Requires high level of effort to maintain Fortnightly Curve maintains good sensitivity to change Easier to manage updates Monthly Smooth curve, good visual communicator Time scale did not fit well with short projects
22 EVM & ES Curves Monthly Weekly
23 Methods Used earned schedule measures (IEACt) Formulas - Henderson 2004 Likpe et al 2009 Checked 2011 PMI EVM Standard on release Outcomes Schedule orientated measures perform better Adding SVt x -1 to planned duration was effective Weekly frequency very sensitive, monthly better
24 Actual duration, 18 Planned duration 16 fortnights See Appendix B for formulas applied
25 IEACt Curves Monthly Weekly
26 3 Influences & Lessons Observations applying EVM Scheduling product geometry Data streams portfolio, capacity & profile
27 Budget Detail is linked to processes & product content Good alignment helped fit EVM to the project Time Phase Budget (TPB) Keep it simple enough detail to get a result Material & services align the with budget Labour activities visual milestones Tracking Capturing progress at time critical to output Simple labour EV measure start, middle, end
28 Repeated project recoveries prompted scheduling structure investigations
29 Schedule structure Accuracy is essential for EVM to perform well Need to understand product & build sequence Product geometry impacted on application Parallel Form Serial Form Related Terms in Literature Schedule network Activity criticality Schedule topology Critical path
30 Curve Data Sensitivity of curve allocation & phasing values Assigning & phasing materials apply caution Frequency internal / external objectives Curve Response Performs well during manufacturing cycle Earned schedule method improved EVM use Project s front end Needed critical path
31 Extending EVM Data Feeds Using hours in a period as an operations tool Sum the labour effort across the portfolio Project burn rate indicator (taken from agile mgt.) Capture the weekly time effort on every project to deliver portfolio capacity data Dataset outputs Organisation profile Capacity forecast Product profile
32 Project & Booked Hours History Project & Booked Hours History Open Projects Open Projects Projects in Production Projects in Production Booked Hours Booked Hours Hours per week Reduced Capacity Projects in Progress & Active Projects in Progress & Active Portfolio Hrs Booked to Jobs per Week Hrs Booked to Jobs per Week Active Projects Mar '12 Mar Mar '12 '12 Mar Apr '12 '12 Apr May '12 '12 May/June '12 '12 May/June June '12 '12 June July '12 '12 July/Aug '12 '12 July/Aug Aug '12 '12 Aug Sept '12 '12 Sept Oct '12 '12 Oct Oct '12 '12 Oct Nov '12 '12 Nov Dec '12 '12 Dec Dec '12 '12 Dec Jan '12 '13 Jan Feb '13 '13 Feb/Mar '13 '13 Feb/Mar Mar '13 '13 Mar Apr '13 '13 Apr/May '13 '13 Apr/May May '13 '13 May June '13 '13 June July '13 '13 July July '13 '13 July Aug '13 '13 Aug Sept '13 '13 Sept Sept '13 '13 Sept Oct '13 '13 Oct Nov '13 '13 Nov Nov '13 '13 Nov Dec '13 '13 Dec Jan '13 '14 Jan Jan '14 '14 Jan Feb '14 '14 Feb Mar '14 '14 Mar Apr '14 '14 Apr Apr '14 '14 Apr May '14 '14 May June '14 '14 June June '14 '14 June July '14 '14 July Aug '14 '14 Aug Aug '14 '14 Aug Sept '14 '14 Sept Oct '14 '14 Oct Oct '14 '14 Oct Nov '14 '14 Nov Dec '14 '14 Dec Dec / Jan '14 '15 Dec / Jan Jan '15 '15 Jan Feb '15 '15 Feb Mar '15 '15 Mar Mar '15 '15 Mar Apr '15 '15 Apr '15 Month & Year Month & Year
33 L&A Shopload Estimate as of Month Beginning L&A Shopload Estimate as of Month Beginning Loading based on: Loading workers based at 8 hrs on: / day 2018 days workers / month at 8 hrs / day 20 days / month Booked / Planned Booked / Planned Capacity Ratio Capacity Ratio 180.0% 180.0% 160.0% 160.0% 140.0% 140.0% Man-Hour Man-Hour % 94% 85% 85% 98% 98% Model minimum labour capacity for 100% 120.0% 120.0% 100.0% 100.0% 80.0% 80.0% 60.0% 60.0% Capacity (%) Capacity (%) % 12% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Month & Year Month & Year 40.0% 40.0% 20.0% 20.0% 0.0% 0.0%
34 Project A - Labour Profile Project A - Labour Profile Cumulative hours booked Cumulative hours booked Jan-12 Jan-12 Cumulative Cumulative Weekly Weekly design & materials Feb-12 Feb-12 Mar-12 Mar-12 Apr-12 Apr-12 May-12 May-12 Jun-12 Jun-12 fabrication window Burn Rate period Jul-12 Jul-12 Aug-12 Aug-12 Sep-12 Sep-12 Oct-12 Oct-12 Packing Nov-12 Nov-12 Dec-12 Dec Weekly hours booked Weekly hours booked Reporting Date Reporting Date
35 Man-Hour Man-Hour L&A Shopload Estimate as of Month Beginning L&A Shopload Estimate as of Month Beginning Last 12mth of workshop labour data Project lead time over booked forecast is okay Booked / Planned Booked / Planned Project A - mth load data Project A - mth load data Workshop - mth capacity data Workshop - mth capacity data Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Month & Year Month & Year Product profile Project labour vs current capacity poses an issue Workshop Hours Workshop Hours
36 4 Application Challenges & Future Establishing EVM Challenges Benefits Rigor & dynamics EVM s future at L&A Portfolio & risk
37 Foundation Data feed systems project & business cases Implementation platform integrated or separate Budget & scheduling rules of measure Alignment can be really hard to establish
38 Using EVM System rigidity dealing with change Ownership nesting with functions, needs to help Acceptance Simple in parts the ensemble is complicated Polarised views seek benefits then market it Application can seem locked-up the idealistic island of order may suddenly turn into an iron cage (Malgrati & Damiani cited in Williams 2003, p.21)
39 Sit down with it Seek out an alignment that works for the organisation Learn to play - outside the prescription
40 EVM s thirst for data & order Information focus on performance Budget setup audits the estimate Measuring requires effort early in planning Project Mgt / Operational Systems Budget & early effort supports design & buying Incoming data (rigid element) feeds operations Data history supports tendering / portfolio mgt
41 EVM data currently used as support role Projects links these domains Operations Controls Filtering point for rigor vs. dynamics Production Agility Systems Portfolio Project Mgt. Project Engineering Detail
42 Operations Portfolio mgt. Tenders & Risk Mapping capacity / effort efficiency Use EVM at portfolio Interrupted work Project modelling Effort & duration delivery risk mgt. Project revenue / employee (KPI) Project Data Hub Product cost prediction identify error trends Site energy consumption for labour effort applied Increase application Integrate forecasting Pooling reserve $ Product build history & product profiles
43 David Fox L&A Pressure Welding Pty Ltd, Sydney Work: Mobile: Personal:
44 Nozzles Heads / Ends Legs Shell
45 Authorised Project Budget Reserves & Business Cost Total budget
46 Dates for TPB Engineering Calculations Week 1 Drafting Week 2 Acceptance Week 6 Material Delivery Heads Week 4 Shell Week 3 Nozzles -Week 3 Legs Week 5 Build & Test (Finish dates) Shell Week 4 End Week 4 Nozzles Week 6 Closing end Week 6 Legs Week 7 Testing Week 8 Paint & Dispatch To painter Week 8 Paint Week 10 To site Week 10
47 Time Phase Budget - Sample Project Project Weeks Activities from WBS for Row for Activities Engineering $3,000 Calculations $1,500 $1,5000 Drafting $500 $500 Acceptance $1,000 $1,000 Material Delivery $70,000 Build & Test % of Build & Test - Shell, end, nozzle $23,000 allowance Heads $30,000 $30,000 Shell $20,000 $20,000 Nozzle $12,000 $12,000 Legs $8,000 $8,000 Roll shell & weld (25%) $5,000 $750 $5,750 Fit end & weld (15%) $3,450 $3,450 Fit nozzles & weld (30%) PV values are $6,000 Material $900 Delivery Heads Week 4 $6,900 added to EV when PV s from authorised budget are assigned a time interval according to the schedule: Engineering Acceptance Week $25, Fit closing end & weld (20%) $4,600 $4,600 Fit leg & weld (10%) $2,300 $2,300 they occur Testing Actual values; cost $2,500 $2,500 Paint & Dispatch $9,000 and when they Delivery to Painter $1,000 $1,000 Paint occur are added $5,000 $1,000 $6,000 Delivery to Site $2,000 $2,000 Fortnightly Planned Value (PV) $0 $1,500 $500 $37,000 $34,200 $14,000 $6,500 $2,300 $3,500 $5,000 $3,000 TPB BAC $107,500 Performance Measurement Baseline (PMB) $0 $1,500 $2,000 $39,000 $73,200 $87,200 $93,700 $96,000 $99,500 $104,500 $107,500 Project BAC $107,500 Actual Labour Cost $0 $0 $0 $3,000 $5,750 $7,525 $4,100 $3,200 $1,100 $0 $0 $24,675Total Labour Actual Material Cost $0 $0 $1,200 $18,500 $36,000 $9,500 $0 $1,200 $3,600 $0 $8,000 $78,000Total Mat Earned Value (EV) $0 $0 $1,500 $23,500 $47,750 $14,450 $3,900 $4,000 $3,400 $1,000 $8,000 $107,500Total EV Reporting date for the period $102,675Total Cost 6
48 Cumulative Performance Tracking Tools Project Weeks Planned Value (PV) $0 $1,500 $2,000 $39,000 $73,200 $87,200 $93,700 $96,000 $99,500 $104,500 $107,500 Earned Value (EV) $0 $0 $1,500 $25,000 $72,750 $87,200 $91,100 $95,100 $98,500 $99,500 $107,500 Actual Value (AC) $0 $0 $1,200 $22,700 $64,450 $81,475 $85,575 $89,975 $94,675 $94,675 $102,675 Earned Value & Earned Schedule Performance Measurements Measurement Tools Project Weeks Cost Variance (CV = EV - AC) $0 $0 $300 $2,300 $8,300 $5,725 $5,525 $5,125 $3,825 $4,825 $4,825 Schedule Variance (SV = EV - PV) $0 -$1,500 -$500 -$14,000 -$450 $0 -$2,600 -$900 -$1,000 -$5,000 $0 Earned Schedule Actual Time (AT) Whole Time Increment of PMB (C = AT for EV >= PV) Numerator portion of PMB increment earned (I N = (EV AT - PV C ) Denominator portion of PMB increment earned I D = (PV C+1 - PV C ) Earned Schedule (ES = C + I N /I D ) Schedule Variance (time) (SV (t) = ES - AT) Schedule Performance Index (time), (SPI (t) = ES/AT) $0 $0 $0 $23,000 $33,750 $0 $3,900 $1,400 $2,500 $0 $0 $1,500 $1,500 $500 $37,000 $34,200 $6,500 $6,500 $2,300 $3,500 $5,000 -$107,
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