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Office of Science Project Review NCSX August 15-17, 2007 Cost and Schedule Ron Strykowsky

Office of Science Project Review NCSX August 15-17, 2007 Cost and Schedule Ron Strykowsky. Topics. Cost, Schedule and Contingency Development Process Basis and Assumptions Contingency Cost Summary Schedule Summary Cost Profile Manpower. Process of Establishing a new Project EAC.

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Office of Science Project Review NCSX August 15-17, 2007 Cost and Schedule Ron Strykowsky

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  1. Office of Science Project Review NCSX August 15-17, 2007 Cost and Schedule Ron Strykowsky Office of Science Review August 15, 2007

  2. Topics • Cost, Schedule and Contingency Development Process • Basis and Assumptions • Contingency • Cost Summary • Schedule Summary • Cost Profile • Manpower Office of Science Review August 15, 2007

  3. Process of Establishing a new Project EAC • Developed Guidelines for Job Managers (realistic not best case) • Estimates Prepared • Independent Management Review (led by head of PPPL engineering)* • PU Estimating Workshop (May 1-4)* • Refined Estimating packages • Reformatted for consistency • Further Estimate review for completeness and realism • Estimate uncertainty and Risk* • Formally documented basis of estimate* • Updated overhead and labor rates • Prepared resource Loaded Schedule • Design evolution of critical scope (task forces) • Risk brainstorming meeting* • Contingency analysis process (probabilistic approach)* • Re-iterate Resource Loaded Schedule • June 4 PU Review* • Follow-up actions • Final Updates, Packaging, Documentation (signed WAF’s) • Statused through end of June (CPI = 1.2 and SPI = 1.03 for two months) • Office of Science Review August 15-17 *=NEW Office of Science Review August 15, 2007

  4. Refined Estimating packages (table 1 of 6) • Table 1 - Work Approval Form Package includes copy of the resource loaded schedule Office of Science Review August 15, 2007

  5. Refined Estimating packages (table 2 of 6) • Table 2 - Design Office of Science Review August 15, 2007

  6. Refined Estimating packages (table 3 of 6) Materials and Procurements Office of Science Review August 15, 2007

  7. Refined Estimating packages (table 4 of 6) Fabrication and Assembly Office of Science Review August 15, 2007

  8. Refined Estimating packages (table 5 of 6) Estimate Uncertainty and Risk Office of Science Review August 15, 2007

  9. Refined Estimating packages (table 6 of 6) Basis of estimate Office of Science Review August 15, 2007

  10. Key Planning Basis and Assumptions • ETC forward from May 1st, 2007 • Cost Incurred from April 1, 2003(MIE project inception) • MIE project scope only.(Excludes research preparations and conceptual design) • GPP and Infrastructure not part of MIE project.(Progress coordinated and tracked by Erik Perry) • BA constraints(FY07= $16.77FY08 = $15.9, FY09 = $18.56*) • Scope unchanged from current baseline • Institutional Overhead Rates • Standard work week 8hrs/day 5 days/ week (Exception coil winding, Field period assy (sta5 FPA#3), and Final Machine assy) • Holidays • Contingency Allocation by fiscal year(commensurate with risk & cost uncertainty) • Realistic task durations(anticipate manpower shortages & priorities) • Task durations - more detail on critical path and near term • * = assumed Office of Science Review August 15, 2007

  11. Cost Basis - Resource types and Rates • Resource Types, labor and overhead rates Non-Labor Resource Labor Skills (hourly rates) Overhead and escalation rates Office of Science Review August 15, 2007

  12. Contingency - Process • Structured process with support of consultant • Job Manager and Project Team input • Objective was to assess and analyze all areas of uncertainty and risk that might affect the cost and schedule estimates • Used Probabilistic Risk Analysis Techniques (Monte Carlo Analysis) • Recommend Contingency Allowances that provide 90% confidence level that proposed baseline will not be exceeded. • Project Manager Experience Office of Science Review August 15, 2007

  13. Contingency - Components Cost Schedule Estimate Uncertainty $ months + Risk $ months + Schedule (stretch-out) $ + Schedule Mitigation (i.e. 2nd shift) $ + Project Manager Experience $ Total $ Months Office of Science Review August 15, 2007

  14. Contingency – Estimate Uncertainty • Both cost estimates and schedule durations have inherent levels of uncertainty • Uncertainty is a direct result of degree of design maturity and the complexity of the elements involved – in effect, how much definition exists to provide a basis for the estimates • Uncertainty levels can be described in terms of ranges around the point estimates developed by Job Managers and the Project Management team • Used standard industry and DOE estimate classifications to describe individual job estimates • Used determination of design maturity and complexity to equate to estimate classification • Also solicited Job Manager opinions regarding expected range around estimates (+ or – some % of the estimate) Office of Science Review August 15, 2007

  15. Contingency – Estimate Uncertainty Basis for Estimate Ranges • Per AACEI Recommended Practice 18R-97, Cost Estimate Classification System – As Applied to Engineering, Procurement, and Construction in the Process Industries • Five classes of estimates with associated accuracy ranges, dependent on level of project development and definition and estimating techniques used • Equated the five estimate classes to a design maturity and complexity matrix for NCSX Estimate Uncertainty Matrix Office of Science Review August 15, 2007

  16. Contingency – Estimate Uncertainty Estimate Uncertainty Matrix by WBS ETC and Estimate Range Office of Science Review August 15, 2007

  17. Contingency – Estimate Uncertainty Cost Estimate Uncertainty • Established estimate range for each job using the Estimate Uncertainty Matrix • Also had Job Managers describe expected accuracy (as + and – % of base estimate) - as a check on Matrix • Used Monte Carlo Analysis to determine overall project cost probability profile - both approaches yielded similar results (adopted standard approach as conservative. ~1-2% higher than job mgrs) • Each job estimate was treated as an independent variable • Triangular Distributions • Base Estimate as Most Likely Value • Low End of Range as Minimum Value • High End of Range as 80% confidence level* Result = $8,036k * 20% chance that cost could be even higher than uncertainty matrix Office of Science Review August 15, 2007

  18. Contingency – Estimate Uncertainty Schedule Duration Uncertainty • Established estimate range only for Critical and Near Critical Path activities using same approach as for cost • Used Monte Carlo Analysis to determine overall project schedule probability profile • Each critical path activity treated as independent variable • Triangular Distributions • Base Estimate as Most Likely Value • Low End of Range as Minimum Value • High End of Range as 90% confidence level (higher than for costs since schedule workarounds may be possible) • Did not add schedule cont. for some activities (those that could be worked on second shift) – BUT added cost allowance for shift supervision, support and shift differential costs (schedule mitigation cost) Result = 7.9 months Office of Science Review August 15, 2007

  19. Contingency – Risk Risk Assessment and Analysis • Identified risks • Job Manager and Project Team Input and Brainstorming • Assessed Risks • Likelihood of Occurrence • Cost and Schedule Impact Ranges • Ranked risks to focus management attention and mitigation actions (Risk mitigation actions included in baseline estimates) • Used Monte Carlo Analysis model to assess probable residual impacts (after mitigation) on cost and schedule baseline • Process will continue – identification of additional risks and management of identified risks. Result = $1,282k and 3.8 months Office of Science Review August 15, 2007

  20. Contingency – Cost of Schedule Contingency Risk Assessment and Analysis • Cost impact of schedule contingency • Oversight/management cost = $202k/mo. • Cost impact of schedule mitigation by use of second shift • During field period assembly for add’l supervision, metrology, support crews = $64k/mo. Result = $2,347 Result = $355k Office of Science Review August 15, 2007

  21. Contingency – Project Manager’s Increment Additional contingency added to attain 27% cost contingency based upon; • Recent Experience with WX-7 • Recent NCSX experience • Undefined risk • “Unknown unknowns” • Adopt schedule contingency of 11 months Office of Science Review August 15, 2007

  22. Contingency – Results Cost Schedule Estimate Uncertainty $8,036 (16%) 7.8 + Risk $1,282 (3%) 3.8 + Schedule (stretch-out) $2,347 (5%) - + Schedule Mitigation (i.e. 2nd shift) $ 355 (1%) - + Project Manager Experience $1,711 Proposed Baseline Contingency = $ 13,731 (27%) 11 Months Office of Science Review August 15, 2007

  23. Contingency – Results Allocated by WBS Office of Science Review August 15, 2007

  24. Scheduling - Process • Based on deliverables and/or tasks provided by the job managers • Varied from resource loaded schedules to deliverables and resource estimate only • Established tasks, internal milestones (PDR’s, FDR’s, contract awards) • Task durations based on realistic resource loadings, crew sizes, # shifts • Logically linked • Non-critical path tasks scheduled with BA constraints with free float to critical path • Schedule iterated based on • Ongoing design evolutions causing estimates to vary • Contingency quantification exercises • Resource leveling exercises (techs, key engrs) Office of Science Review August 15, 2007

  25. Results – Preliminary Cost Office of Science Review August 15, 2007

  26. Results – Cost Profile • Contingency scheduled consistent with risks and uncertainties • Plan consistent with Funding Office of Science Review August 15, 2007

  27. Results – Preliminary Schedule (Summary) Office of Science Review August 15, 2007

  28. Results – Milestones Office of Science Review August 15, 2007

  29. Results – Prelim. Resource Loaded Schedule EXAMPLE Office of Science Review August 15, 2007

  30. Results – Manpower • Manpower requirements being satisfied • Future needs achievable Office of Science Review August 15, 2007

  31. SUMMARY • Project has followed a disciplined path for updating its cost and schedule estimates highlighted by; • Formal & consistent basis of estimate • Independent reviews by PPPL engineering and PU • Focus on center of the error bars (realistic) estimates from job managers • Project has followed a methodical process for quantifying cost as well as schedule contingency. • Probabilistic contingency methodology for cost and schedule estimate uncertainty • Probabilistic contingency methodology for quantifying cost and schedule risk • Initiated a formal risk registry that will be integrated into our work planning process • Project has produced a proposed baseline cost estimate backed-up by a resource loaded schedule and detailed estimate basis. Office of Science Review August 15, 2007

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