After we sign the project contract, we start doing the job. While project is in progress, we need to forecast final cost of the project.
DEVELOPMENT OF FEASIBLE ALTERNATIVES
In order to be able to forecast the final cost, there are some factors to be considered, i.e. Plan value, Earn Value, actual cost, Cost performance Index, and Schedule Performance Index. We will develop final forecast cost by considering above variable.
DEVELOPMENT OF OUTCOMES FOR EACH ALTERNATIVE
As plan value directly related to progress, the breakdown of the plan value, earn value, an actual cost, CPI, and SPI is referring to progress breakdown structure, i.e. Product Breakdown Structure (PBS) of Norzok Z-014.
Level 1- Budget Value of Project
Figure 1. Level 1. Contract Value
Level 2- Budget for Each Facility
Overall Budget Value will be based on Facilities (Level 2, PBS View) and will be broken down in to “Well Cluster and Central Processing”, “Utilities Facility”.
Figure 2. Level 2. Product Breakdown / Facilities
Level 3- Activities weighting factor
Level 3 budget will be broken down in to phase level which Project Management, Engineering, Procurement, and Construction.
Figure 3. Level 3 Phasing of Project
Level 4- Activities weighting factor
Level 4 budget will be broken down in to activities level where the progress will be inputted directly.
Figure 4. Level 4 Project Activities
SELECTION OF CRITERIA
There are some criterion to be an acceptable progress measurement. Some of them are:
ü Earn Value calculation is generated to sufficient detail.
ü CPI & SPI cover all the progress element
ü The equation used to estimate final cost is following:
ANALYSIS FOR THE ALTERNATIVES
As we can see in the table 1 above, we find that the overall variance using equation 1. Comes to -25.7% (saving) while using equation 2. +43.7% (overrun). This tells us that choosing the wrong equation will drive us to big different final cost estimate.
On table 2, we can see that that Facility of “Well Cluster and Central Processing” are overrun 15.75% by using equation 1, and 177% by using equation 2 while for utilities facility will be saving -56.84% and -56.53% using equation 1 and equation 2 respectively.
If we go deeper to lower level, we can see that some of the activities and some of them are overrun. In this case, we need to be focus on the item that tend to overrun and delay where CPI <1,0 and SPI < 1.0 to mitigate the project.
For deeper analysis, it need more analysis which one is the best formula to which CPI & SPI.
SELECTION ON THE PREFERRED ALTERNATIVES
The preferred alternatives has been broken down in Figure 6.
PERFORMANCE MONITORING AND POST EVALUATION RESULT
If we analysis to Level 4, we can find which activities is tend to overrun and behind schedule. We need to monitor this closely and make significant mitigation i.e. increase effectiveness to recover the CPI.
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