Top 10 Challenges

Report
Top 10 Challenges
to Effective Cost Controls
Jorge Rossini, Latin America Director, CIMA
Travis Mattern, Senior Sales Engineer, EcoSys
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Agenda
• EcoSys Company Background
• Fundamental Cost Control Questions
• Top 10 Cost Control Challenges
• Case Study
• Recap / Q&A
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EcoSys Company Background
Founded in 2000
Enterprise Project Controls Software Experts
Designers & Developers of original Primavera P6 and EcoSys EPC
Professional Services
Enterprise Consulting Expertise: Project Portfolio & Cost Management Best Practices
Global Primavera Implementation and Systems Integration Leader
250 Customers in Global 1000 and Public Sector
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Representative Customers
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Enterprise Planning & Controls Platform
Capital Planning
Project Cost Controls
Earned Value Management
Core EPC
Solutions
Progress Measurement
Estimating
Resource Staffing
Portfolio Management
Shutdown, Turnaround, and Outage Management
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Bridging Planning & Execution
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Fundamental Cost Controls Questions
• What is the current budget and forecast?
• How and why has my budget and forecast changed?
• How much funding is available?
• What are our contract commitments?
• How much has been spent?
• How are we trending?
• Do schedules correlate with costs?
• How can we recover/improve performance?
• Are we in compliance with the rules?
(Contractual? Regulatory? Legal?)
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Top 10 Challenges
EcoSys has met with cost controls professionals throughout the
industry to identify their biggest cost controls challenges.
Here are the Top 10 Challenges we see…
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Top 10 Challenges
Perceived as cost
accounting
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How to overcome this challenge?
• Educate your organization regarding the risks of poor
project performance
• 3 primary objectives for project cost control:
– Improve project predictability
– Control and reduce costs
– Improve project controls efficiency
• How to meet these objectives?
– Use the power of technology to focus on forward looking
activities to improve project predictability
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How to overcome this challenge?
Forward Looking
Backward Looking
Commitments
Actuals
Planning
Estimating
Risk
Change
Control
Forecasting
• Value adding activities
• Biggest impact to project performance
• Require integrated project controls system and
processes
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Top 10 Challenges
Budgeting and
forecasting
effectively
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How to overcome this challenge?
• Establish standards and consistency
• Budgeting
– Time-phase or manage in lump sums
– Integrate data or manage in web-based spreadsheets
• Forecasting
– Leverage critical data: actuals, commitments, progress
– Provide forecasting flexibility
•
•
•
•
Calculated forecasts
Imported forecasts
Flexibility to override imported and calculated amounts
Vary forecasting methods at different levels of the WBS
• Unlimited budget/forecast versions for comparison,
trending, auditing
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Example: Calculated Forecast
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Example: Imported Forecast
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Top 10 Challenges
Getting progress
data from multiple
subcontractors
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How to overcome this challenge?
Leverage multiple methods of capturing progress data
• Import from scheduling systems
• Direct entry of completion percentages
• Calculate progress using more complex methods
• Multiple progress methods and sources of data within
the same project
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Example: Progress Data in EPC
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Top 10 Challenges
Integrating
schedule and cost
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How to overcome this challenge?
• Integrate scheduling data into EPC
– Primavera P6
– Microsoft Project
– Other scheduling systems
• What data to integrate?
–
–
–
–
–
WBS
Resources
Schedule dates
Progress data
Forecast data
• Powerful tools to align schedule and cost
– Support for separate WBS structures
– Apply rates to schedule data to calculate cost
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How to overcome this challenge?
Combine work (WBS), cost (CBS) and organization (OBS)
reporting structures together for Budgeting & Forecasting
OBS
Project
100
WBS A
Level 1
Level 2
WBS A1
WBS A2
OBS X
WBS B
OBS X1
project obs
wbs
OBS X3
WBS B1
CBS 1
e.g. 100.X.X1.B.B1.10.Civil
OBS X2
CBS-0
cbs resource
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CBS 2
CBS 10
CBS 11
CBS 20
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Top 10 Challenges
Aligning data
between multiple
source systems
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How to overcome this challenge?
Powerful integration platform
• Web Services
Standard Industry Formats – SOAP XML, REST XML, REST JSON
• Flat files
Format Flexibility – Excel, XML, delimited flat files, etc.
• Direct integration with global partners
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Top 10 Challenges
Time and effort
involved with
reporting
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Do all roads lead to Excel?
Schedule
Data
Here
Cost Data
Here
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How to overcome this challenge?
Eliminate Excel errors and inefficiencies
•
Manual data imports/exports/consolidation
•
Human error
•
Physical limitations
•
Version control
•
Constrained views
•
Lack of standardization
•
Lack of auditability
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Top 10 Challenges
Managing the
Customer
Relationship
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How to overcome this challenge?
• Internal/external reports auto-generated from
the same data and reporting platform
• Reporting format flexibility
–
–
–
–
–
–
–
–
Tabular Reports
Form Reports
Graphical Charts
Excel Template Reports
Automated and User-Initiated Report Batches
Configurable Role-based Dashboards
Report Configuration (non-technical)
Report Outputs (Excel, PPT, PDF etc..)
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Example: Comparisons by Alliance Partner
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Top 10 Challenges
Accuracy of
reports
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How to overcome this challenge?
• Automate data loads from external systems
– Prevent errors associated with manual data entry and
consolidation
• Store transaction level detail for all categories of
data
• Targeted dashboards for all stakeholders
– Drill-down to transaction level detail
– Establish trust in the data
– Quick identification of project performance problems
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Example: Drill-down to investigate
Click on poor
productivity metric to
drill-down
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Example: Drill-down to investigate
Drill-down shows
resource level detail of
actual and earned hours
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Top 10 Challenges
Insufficient
controls resources
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Time Analysis: Before EPC
Cost Analysts Spent
61% of Time on
“Wasteful” Activities
Analyzing Budgets & Actuals
Forecasting & Trending
Change Management
2% 1%
6%
Fixing Oracle Issues
20%
Monitoring &
Controlling Costs
30%
16%
12%
Manual Downloading
Correcting
Labor Coding
13%
Collating Internal &
External Reports
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Time Analysis: After EPC
Troubleshooting
Running Reports
Forecasting &
Trending
5%
Cost Analyst Target
Utilization Provides Much
Greater Value
5%
25%
65%
Analyzing Data
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Top 10 Challenges
Controlling
Changes
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How to overcome this challenge?
• Integrated change process
– Change registers, change logs, workflow
• Link changes to risks and issues
• Define detailed cost/revenue allocations
– Early in the process for change visibility
– Auto-update budgets and/or forecasts after approval
• Integration with document management, accounting and
contract management systems
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Example: Change Order Register
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Case Study: Tahoe Resources
Company Background
• Founded in 2009 and focused on becoming a leading producer of
precious metals.
• Flagship Escobal silver mine project is responsible for creating 500
jobs in Southeast Guatemala.
Challenges
• Required a system to support cost control best practices “out of the
box,” but with the flexibility to meet unique requirements.
• Sought a single system to support budgeting, change management,
commitments tracking, reconciliation of actuals, performance
measurement, forecasting, as well as integrated reporting.
• Needed to aggregate its own internal commitments and transactions
with those initiated externally by its EPCM consultant.
• Support for multiple currencies.
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Case Study: Tahoe Resources
EcoSys EPC Solution
•
•
•
•
•
•
•
•
•
Central repository all project controls data
Exchange budget and actuals data with Microsoft Dynamics
Detailed budget tracking for Annual and Life Total bases
Budget change management process with an auditable workflow
Manage all commitments and reconcile against actual costs
Model forecasts based upon multiple approaches including direct, time-phased
estimates or earned value methodology
Allow for planning, forecasting and recording actuals in multiple currencies, as
well as adjusting for exchange fluctuations
Extensive built-in reporting capabilities (e.g. monthly cost performance,
change order logs, 12-month rolling cash flow forecast, earned value by area)
Allow end-users to create new reports as needed
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Recap
Achieving effective cost-controls is a challenge…
1. Controlling changes
2. Insufficient controls resources
3. Accuracy of reports
4. Managing the customer relationship
5. Time and effort involved with reporting
6. Aligning data between multiple source systems
7. Integrating schedule and cost
8. Getting progress data from multiple subcontractors
9. Budgeting and forecasting effectively
10. Perceived as cost accounting
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EcoSys EPC
Overcoming these challenges is not possible
without an integrated project controls system
• Visibility
• Efficiency and Accuracy
• Process Standardization
• Improved Financial Performance
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The Right Tool for the Job
If attempting to
overcome these
challenges without a
tool designed for this
purpose, things will:
• Break
• Be harder in the long
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Questions?
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Thank you!
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