Saturday, November 28, 2009
Blog#8 - Farid (7.6-1) Plan for risk management – lesson learn
The 8th Week blogs I have interest to share my experience related to the TCM framework – 7.6-1 Risk Management- Plan the risk for management. One of my projects is Structural Asset integrity. I have feel that this project is a good example on how if we not correctly implementing plan Risk Management.
Risk management is applicable to all enterprise and all asset or project life cycles(1).I would say FEL-1, 2,3 execution, operation and decomisioning is a whole project life cycles. I was introduce to asset integrity project in the middle of FEL-3 phase. The FEL-2 feasibility study phase was manage by the sponsor (management) via a team, and I would say it prepare in rush without involving the project manager.
This situation start when the project was triged by serious accident in the processing plant when 150T silo @ 4th floor building, flooded with flux silica for converting process was immediately fallen to ground and destroy all equipments in the lower level. Luckily no people were working around the area at that time. From technical investigation conclude that the silo main steel structural member fail due to uncontrolled corrosion attack and take off almost whole of steel thickness.
In order the have a quick mitigation plan, the management initiate to compose a team, consist of junior engineer and some senior manager to investigate overall processing plant building condition due to corrosion attack and demanding report in a short timeframe. The report is a feasibility study as a base for the FEL-3. This pressure to the team makes the level of feasibility study is not delivering clear and sufficient scope and assessement for FEL-3 and execution requirement; wich potentially not achiving the objective of the project.
Above problem can be observed from a number point of view as per TCM framework. But on this opportunity I would observed from 7.6-1 Plan for risk management-TCM frame. At this stage the scope of risk management should establish (e.g. objective, method, measure, assumption etc). The scope should align with the strategic asset requirement and project implementation basis (1).
The FEL-2 described above was insufficiently developed by the team; the reviewed aspect such as method, assumption and measure established, is not comprehensive to cover all aspect of the risks, in order establishing the scope of risk. One of the problem at that time is shortage of specialist/senior engineer to do the assessment to obtain proposed risk factor, and mitigation to the problem while management keep pushing for result, so no time for outsourcing in rush.
The very early step of the assessment is to asses the process buildings in the processing plant base on level of business impact if we loosing the services due to collapses/catastrophic. Then the risk factor from an internal develop matrix are selected, also event probability in order to have risk score to every individual building. In the TCM framework mention, diversity on the risk management team is strongly encouraged, with participation by stakeholder and end user; and somehow experience and judgment are essential to the effective risk management(1).
But in this case, as mention above, the required condition is not established since most of team is have not enough experience on this problem, so it look producing the simplified feasibility study.
In the other side, to consider strategic asset objective as an input of “Plan for risk management” is required too. By reviewing strategic asset will show us projection of asset investment strategy in the planning horizon. The missing link in in this case, the team, was not taking into account of asset strategy framework when developing scope alternative. They are not involved the planning horizon from on the asset manager for the future plant expansion.
What happen now when project execute? now some selected - refurbished building, is not in-services anymore. Not because it collapse, but because not far from the refurbishment schedule of the buildings by this project, there is another project execute to modified the process flow then dismantling all set of equipments (e.g. piping, pump,conveyor etc) from the refurbished buildings; and moves it into new plant facility. So, the refurbished building now stand still but for nothing, just empty building with small process inside. How much capital spends for the refurbishment to an asset is not bring back the value since insufficient preparation on risk planning and decision making.
I think this is a good lesson learn for my future project regard to “plan for risk management” in addition to decisionmaking. It give me a lesson how important to established sufficient scope of risk (e.g. objective, method, assumption etc) along project lifecycle stage, with consider strategic asset requirement and project implementation basis.
B/R, Farid Maloni
1), TCM framework, p.160, chapter 7.6 Risk Management
Risk management is applicable to all enterprise and all asset or project life cycles(1).I would say FEL-1, 2,3 execution, operation and decomisioning is a whole project life cycles. I was introduce to asset integrity project in the middle of FEL-3 phase. The FEL-2 feasibility study phase was manage by the sponsor (management) via a team, and I would say it prepare in rush without involving the project manager.
This situation start when the project was triged by serious accident in the processing plant when 150T silo @ 4th floor building, flooded with flux silica for converting process was immediately fallen to ground and destroy all equipments in the lower level. Luckily no people were working around the area at that time. From technical investigation conclude that the silo main steel structural member fail due to uncontrolled corrosion attack and take off almost whole of steel thickness.
In order the have a quick mitigation plan, the management initiate to compose a team, consist of junior engineer and some senior manager to investigate overall processing plant building condition due to corrosion attack and demanding report in a short timeframe. The report is a feasibility study as a base for the FEL-3. This pressure to the team makes the level of feasibility study is not delivering clear and sufficient scope and assessement for FEL-3 and execution requirement; wich potentially not achiving the objective of the project.
Above problem can be observed from a number point of view as per TCM framework. But on this opportunity I would observed from 7.6-1 Plan for risk management-TCM frame. At this stage the scope of risk management should establish (e.g. objective, method, measure, assumption etc). The scope should align with the strategic asset requirement and project implementation basis (1).
The FEL-2 described above was insufficiently developed by the team; the reviewed aspect such as method, assumption and measure established, is not comprehensive to cover all aspect of the risks, in order establishing the scope of risk. One of the problem at that time is shortage of specialist/senior engineer to do the assessment to obtain proposed risk factor, and mitigation to the problem while management keep pushing for result, so no time for outsourcing in rush.
The very early step of the assessment is to asses the process buildings in the processing plant base on level of business impact if we loosing the services due to collapses/catastrophic. Then the risk factor from an internal develop matrix are selected, also event probability in order to have risk score to every individual building. In the TCM framework mention, diversity on the risk management team is strongly encouraged, with participation by stakeholder and end user; and somehow experience and judgment are essential to the effective risk management(1).
But in this case, as mention above, the required condition is not established since most of team is have not enough experience on this problem, so it look producing the simplified feasibility study.
In the other side, to consider strategic asset objective as an input of “Plan for risk management” is required too. By reviewing strategic asset will show us projection of asset investment strategy in the planning horizon. The missing link in in this case, the team, was not taking into account of asset strategy framework when developing scope alternative. They are not involved the planning horizon from on the asset manager for the future plant expansion.
What happen now when project execute? now some selected - refurbished building, is not in-services anymore. Not because it collapse, but because not far from the refurbishment schedule of the buildings by this project, there is another project execute to modified the process flow then dismantling all set of equipments (e.g. piping, pump,conveyor etc) from the refurbished buildings; and moves it into new plant facility. So, the refurbished building now stand still but for nothing, just empty building with small process inside. How much capital spends for the refurbishment to an asset is not bring back the value since insufficient preparation on risk planning and decision making.
I think this is a good lesson learn for my future project regard to “plan for risk management” in addition to decisionmaking. It give me a lesson how important to established sufficient scope of risk (e.g. objective, method, assumption etc) along project lifecycle stage, with consider strategic asset requirement and project implementation basis.
B/R, Farid Maloni
1), TCM framework, p.160, chapter 7.6 Risk Management
Nui – 8th blog
What I’m learning this week
Progress and Performance Measurement
Reference from TCM Framework; This week on mapping project, I have been working on Progress and Performance Measurement process. This process is start with setting up the measurement process and system. In Initiate Progress and Performance Measurement, project control will responsible for interfacing with design management, material management and other processes to ensure that measurement is initiated in an appropriate and timely manner. Cited from TCM Framework under 9.2 Progress and Performance measurement page 190.
As my study to this program, project control is a bit new role for my working experience. Because in my workplace, we have 2 roles that can be equal to this role. First one is project controller who will take responsible on project financial part and mostly focus in numerical and accounting purpose. But the second role is Project Support, as my role now, who will responsible for project performance measurement and also financial part as well.
In Ericsson, we have same KPI to measure for all projects in our Project Office. This means we gain some completion of “Plan for Progress and Performance Measurement”.
The next part, “Initiate Progress and Performance Measurement”, I as my current role is comparable to Project Control, usually I play not fully active to this process. I think that project manager should be the one who responsible of this part because project manager has directly interface with owner and our subcontractor and control everything in the project.
If we look at the measurement process, definitely we have but I did not emphasize to project manager every time that new project coming up. But project support is responsible to ensure the measurement has been set up properly by starting discussion with project manager and project controller. Then we are setting in the system (project revenue/cost structure, project progress system).
I would summarize that “Initiate Progress and Performance Measurement” process, is still mainly responsible by project support while project manager will also take responsible for the interface part to the owner. However, this might applicable from project to project for instance that project is very large volume and project manager does not able to control by themselves they might require project support to handle all his part by they give only requirement and approval.
However, I take this into my consideration about my job. As I mention above, I have not explain the measurement process to all new projects this would not create awareness to all project manager how importance of the measurement process. I did not play active role or even lead project to initiate process in timely manner. These should be change!
Beyond above from the transformer project, I also think about the project control task should be able to coach project manager or alert them before problem coming up which I suppose to do as simulation in Transformer team. If I have further exploration of project control responsible I will re-emphasize here to remind myself to further development as well.
Week #8, Chrisma, Resource Planning or Planning Resource
This week I started to gathered all recorded project cost from these couples of years I am having to work in my organization. This also for my paper to cost factor ratio for education facilities development. I do not know whether this recorded data is applicable for other nation or any other educational organization that wish to enhance and develop their facilities. It would require some other data from other places.
I am also start to stepping much deeper to AACE organization by joining and start to applying to become its member. Lots of good reference for me to read on, especially about cost factor estimate. But none is talking about cost factor estimate and its correlation to number of students, type of class, lab classes or just normal classes. I do not know whether my paper is publishable or not. But I know for sure that this cost factor estimate will be a valuable information for those who would propose a development school facilities to his or her Board Of Patron.
Reading the AACE journal, is just like another day in Mahakam class again. Yes, it is so tempting to understand and going through from the author perspective is just like going in side of submarine, you will ever know what is in side the deep ocean until you see it. Understands that there are so many good PM out there that want to share their secret recipe makes me eager to share my secret recipe also (if there any... :)) Project Management is all about communications, links and delegations. That is what I understand 3 months ago. I am also wonders from one discussion in LinkedIn that a PM is not supposed to know all detail but PM should know the process and flow chart from the project.
You may says that this week I was drowning in references finding mode, so many questions buzzing in my heads, that I could read upon and implement directly to my daily work. That is why my dear assignments PM, I may not achieved sufficient progress. But I could assure you, that inside of has something grows and want to makes change.
But from as far as I know, there are no paper that stated how to collect valuable data, what part is important beside cost, additional costs and capacity (according to LANG factor). For third world country, dollar value and dollar inflation are playing a significant role in predicting to a risk within a project. Therefore, I am alsos input this information for future reference. I am considering to have a booklog for each projects in order to understand what PM do and donts in certain special occasion that what happen in the past. Just like watching "Law and Order" series, the lawyer usually take others experience as his based point of view.
In my running project, the contractor was unable to keep up my requirements to fulfil my specified needs, such planning and scheduling, delegating, working in phase and systematic, and lots more. After I am analyse, it all happen because they did not have a resource planning. They did not understands what should they provide in order to accomplish the project. They do not have OBS, and my presume they even do not understand what is OBS means....
What comes to worst is they put planning resource only to their CEO, the owner which is shows that there are not delegation is running in that company and no PM that capable to do so. One in the AACE journal is discussing about low cost contractor and bid value, that I need to read ASAP.
For TRANSFORMER team, keep up the good work, it is all comes to iron triangle, "scope, budget and schedule" to DELIVER in quality.
I am also start to stepping much deeper to AACE organization by joining and start to applying to become its member. Lots of good reference for me to read on, especially about cost factor estimate. But none is talking about cost factor estimate and its correlation to number of students, type of class, lab classes or just normal classes. I do not know whether my paper is publishable or not. But I know for sure that this cost factor estimate will be a valuable information for those who would propose a development school facilities to his or her Board Of Patron.
Reading the AACE journal, is just like another day in Mahakam class again. Yes, it is so tempting to understand and going through from the author perspective is just like going in side of submarine, you will ever know what is in side the deep ocean until you see it. Understands that there are so many good PM out there that want to share their secret recipe makes me eager to share my secret recipe also (if there any... :)) Project Management is all about communications, links and delegations. That is what I understand 3 months ago. I am also wonders from one discussion in LinkedIn that a PM is not supposed to know all detail but PM should know the process and flow chart from the project.
You may says that this week I was drowning in references finding mode, so many questions buzzing in my heads, that I could read upon and implement directly to my daily work. That is why my dear assignments PM, I may not achieved sufficient progress. But I could assure you, that inside of has something grows and want to makes change.
But from as far as I know, there are no paper that stated how to collect valuable data, what part is important beside cost, additional costs and capacity (according to LANG factor). For third world country, dollar value and dollar inflation are playing a significant role in predicting to a risk within a project. Therefore, I am alsos input this information for future reference. I am considering to have a booklog for each projects in order to understand what PM do and donts in certain special occasion that what happen in the past. Just like watching "Law and Order" series, the lawyer usually take others experience as his based point of view.
In my running project, the contractor was unable to keep up my requirements to fulfil my specified needs, such planning and scheduling, delegating, working in phase and systematic, and lots more. After I am analyse, it all happen because they did not have a resource planning. They did not understands what should they provide in order to accomplish the project. They do not have OBS, and my presume they even do not understand what is OBS means....
What comes to worst is they put planning resource only to their CEO, the owner which is shows that there are not delegation is running in that company and no PM that capable to do so. One in the AACE journal is discussing about low cost contractor and bid value, that I need to read ASAP.
For TRANSFORMER team, keep up the good work, it is all comes to iron triangle, "scope, budget and schedule" to DELIVER in quality.
Labels: aace, Chrisma Wibowo, weekly blog in english
Friday, November 27, 2009
Apply Risk Mitigation Plan Into Technical Risk Assessment
Weekly Blog#08 - Andy
Risk Template – Risk Management of Mine Road Development Project
Working on how to apply mitigation plan of the technical risk early this week, bring me to go back and review the technical assessment of mine road development project that was previously developed to have better judgment on how to quantify the risk both severity and probability. I just realize that I have put an assumption to include mitigation plan already in the analysis and result the risk has been quantified at the lower level as it should be. Also I think 50 % probability of risk which previously applied is still too low to represent the possibility of risk for the project that has sensitivity to be interfered by change on mine plan as the road project is just located in mine active area.
As the difficulty in completing the risk table is the determining of probability of risk, It is important to put a definition of the risk probability to have better and consistently judgment to apply on the quantification of risk. The probability is usually expresses as whether an event may occur or not or as likelihood of various alternative possible event. While as I still don’t have some references I just adopted PT Inco Safety risk matrix on probability definition which I believe the definition is quite generic which could be applied on any risk assessment matrix. Others definition of parameters (performance, cost and schedule) use reference from Humphrey’s Book chapter 3 page 74 except for the schedule is modified to reflect six months duration of the project.
As the difficulty in completing the risk table is the determining of probability of risk, It is important to put a definition of the risk probability to have better and consistently judgment to apply on the quantification of risk. The probability is usually expresses as whether an event may occur or not or as likelihood of various alternative possible event. While as I still don’t have some references I just adopted PT Inco Safety risk matrix on probability definition which I believe the definition is quite generic which could be applied on any risk assessment matrix. Others definition of parameters (performance, cost and schedule) use reference from Humphrey’s Book chapter 3 page 74 except for the schedule is modified to reflect six months duration of the project.
Definition of Technical Risk Matrix Used for Mine Development Project
The revised the technical score risk matrix shows that the most of the risks distribute at moderate to high risk level as result of the uncertainty risk of changed on mine plan will affect the high score of risk probability. As the risk score matrix result, risk management plan will be applied in which risk has range between moderate to high risk level. The risk management plan shall accommodate special attention and close government monitoring can probably overcome the difficulties. Otherwise, low risk will be required an normal effort only. As the level of categorized risks have been defined and screened in which risks require to have high visibility, the risk management continue to develop the mitigate impact plan to eliminate the risk which is considered threat response strategy such avoid, transfer, mitigation or accept. As unexpected geological condition associated with changed on mining plan result uncertainty of the mine development project in the mine active area, which cause the uncertainty of risk will be kept to be existed in the project. However, the mitigation plan could address to eliminate the probability of risk by developing preventive plan and minimize the exposure of risk (severity). For that purpose, I develop customized Risk Template to summarize identification of the risk, outline of steps and considerations that have been found effective to prevent, anticipate or minimize the risk.
Risk Template – Risk Management of Mine Road Development ProjectThe most of mitigation plan are defined as preventive action plan to reduce the probability of risk such developing better planning control, optimize mine planning, quality control plan, effective work methodology, geotechnical assessment and traffic management plan. Detail topography survey is required to provide data more accurate to eliminate the severity risk level of volume material more than estimated. As the highest risk is potentially accident on fatality using local contractor small fleet surround PT Inco heavy equipments in the active mine pit area, traffic management will be inadequate to mitigate the risk become an acceptance risk. Therefore some options are defined to seek a possibility on using heavy equipments to construct the road in manner that the risk is mitigate into acceptance risk , i.e. :
- Contract out to national contractor. This option is unlikely due to it will be costly to mobilize heavy equipments from out site just for 6 months duration of contract. Also it will be raised social issues as the work is not given to the local contractor who has experience and capability in similar work on site.
- Direct award to the local contractor who has heavy equipment on site as there is a local contractor have own heavy equipments on site. This options will not provide competitive bids and potentially get expensive bidding by single contractor as well as raise social issue.
- Contract out to local contractor for activities have low risk such loading, dozing, compacting, base construction and allocate PT Inco heavy equipments for the hauling activities (dump trucks) as this only activity generate high score risk of fatality. Otherwise, there is estimated 75,000 BCM ore with stripping ratio overburden : ore = 3 : 1 where is located in the road section therefore allocate PT Inco heavy equipments for 3- 4 months duration to construct the road shall not affect on significant lost of mine production. I think this is preference option.
Blog#6 from Lau
Learnings
I first come across the terms IRR, WACC (MARR equivalent), ROR, NPV (PW equivalent) and etc in a training I attended 3 years ago on “Financial Justification for Projects”. That was a short training that covers various methods, overview or high level understanding to justify a project and the ROR. The outcome from the training was that I did not learn much but only some of the terminologies from the training as what I mentioned above. As compare to today, together with TRANSFORMERS and also with the intense involvement in the solving the problems/questions in Engineering Economy as project deliverables, I am getting to know more about financial justification for projects. In fact engineering economy has a greater and broader coverage as it is not only on financial or capital investment perspective of a project and also other intangible factors in decision making.
For the last 3 weeks, I was working on understanding cash flow, FW, CW, AW and PW, IRR, MARR, effective interest rate and etc which are from Chapter 4,5 and 6 Engineering Economy. Even though these are nothing new, for me all these have in fact opening up my eye sight and a new learning horizon to me which in turn helping me in making decision in my day to day activities disregards if the activities are personal or work related matters.
As for work related matters, the evaluation methods outlined in these 3 chapters are helpful in both internal and external projects. For e.g. evaluations on products and services that meet the equivalent technical requirements, evaluation method on initial investment cost as well as annual maintenance cost for the number of useful life of the product will then be determined and considered in the evaluation.
Financial justification or engineering economy valuation of alternatives can also serves as a tool or competition differentiator or a selling point to sell products and services to customer that helps the customer to evaluate various needs within customer’s organization that helping them to achieve strategic objectives and also allow them to see the net benefit of project by buying the products and services that we are selling in a measurable terms at project level as well as company level. Underlying requirement to be able to help the customer to make the right decision is to be able to understand their pain points and needs to improve business and operations efficiency.
Teaming
I have revisited Thomas-Kilmann conflict mode instrument that we have gone through in our training, as part of my research for material for my paper. The Thomas-Kilmann Conflict Mode Instrument (TKI) is the world's best-selling instrument for understanding how different conflict-handling styles affect personal and group dynamics and for learning how to select the most appropriate style for a given situation. The TKI assessment is a key tool for managers, team leaders, and human resource experts to safely open a productive dialogue about conflict.
[Reference: http://www.i-leadonline.com/tkiinfo.asp ]
This instrument is designed to measure a person's behavior in conflict situations. "Conflict situations" are those in which the concerns of two people appear to be incompatible. In such situations, we can describe an individual's behavior along two basic dimensions: (1) assertiveness, the extent to which the person attempts to satisfy his own concerns, and (2) cooperativeness, the extent to which the person attempts to satisfy the other person's concerns.
[Reference: http://www.kilmann.com/conflict.html ]
These two basic dimensions of behavior define five different modes for responding to conflict situations:
- Competing
- Accommodating
- Avoiding
- Collaborating
- Compromising
TKI is view as a tool to resolve conflict between 2 individuals, according to the behavior demonstrated by the individual; however this is also an indicator the leadership style that the person can perform best. I vaguely can remember who are those categorized in other behavior modes however participants (Nui, Thao and Pak Gatot) with Competing Mode during the training has demonstrated their leadership style throughout the progress the delivery process of our project as assertive as defined by TKI - Competing means "standing up for your rights," defending a position which you believe is correct, or simply trying to win, win for the team.
TRANSFORMERS have the blend of all the behaviors as defined by TKI whereby situational leadership style can best be demonstrated. Disregards of the Program Manager and Project Managers that we have nominated, selected or volunteered as the lead for the program, there will be player or team member emerged as leader automatically based on the behavior according to the situation or the teaming stage as defined by Tuckman’s team development model took place. TRANSFORMERS is a good team setup that the team members can learn from each other in term of PM knowledge from diverse industries, technical knowledge and best practices from different industries, countries, cultures, up-bringing and also leadership style that best fit to the situation or different stage of the teaming.
I first come across the terms IRR, WACC (MARR equivalent), ROR, NPV (PW equivalent) and etc in a training I attended 3 years ago on “Financial Justification for Projects”. That was a short training that covers various methods, overview or high level understanding to justify a project and the ROR. The outcome from the training was that I did not learn much but only some of the terminologies from the training as what I mentioned above. As compare to today, together with TRANSFORMERS and also with the intense involvement in the solving the problems/questions in Engineering Economy as project deliverables, I am getting to know more about financial justification for projects. In fact engineering economy has a greater and broader coverage as it is not only on financial or capital investment perspective of a project and also other intangible factors in decision making.
For the last 3 weeks, I was working on understanding cash flow, FW, CW, AW and PW, IRR, MARR, effective interest rate and etc which are from Chapter 4,5 and 6 Engineering Economy. Even though these are nothing new, for me all these have in fact opening up my eye sight and a new learning horizon to me which in turn helping me in making decision in my day to day activities disregards if the activities are personal or work related matters.
As for work related matters, the evaluation methods outlined in these 3 chapters are helpful in both internal and external projects. For e.g. evaluations on products and services that meet the equivalent technical requirements, evaluation method on initial investment cost as well as annual maintenance cost for the number of useful life of the product will then be determined and considered in the evaluation.
Financial justification or engineering economy valuation of alternatives can also serves as a tool or competition differentiator or a selling point to sell products and services to customer that helps the customer to evaluate various needs within customer’s organization that helping them to achieve strategic objectives and also allow them to see the net benefit of project by buying the products and services that we are selling in a measurable terms at project level as well as company level. Underlying requirement to be able to help the customer to make the right decision is to be able to understand their pain points and needs to improve business and operations efficiency.
Teaming
I have revisited Thomas-Kilmann conflict mode instrument that we have gone through in our training, as part of my research for material for my paper. The Thomas-Kilmann Conflict Mode Instrument (TKI) is the world's best-selling instrument for understanding how different conflict-handling styles affect personal and group dynamics and for learning how to select the most appropriate style for a given situation. The TKI assessment is a key tool for managers, team leaders, and human resource experts to safely open a productive dialogue about conflict.
[Reference: http://www.i-leadonline.com/tkiinfo.asp ]
This instrument is designed to measure a person's behavior in conflict situations. "Conflict situations" are those in which the concerns of two people appear to be incompatible. In such situations, we can describe an individual's behavior along two basic dimensions: (1) assertiveness, the extent to which the person attempts to satisfy his own concerns, and (2) cooperativeness, the extent to which the person attempts to satisfy the other person's concerns.
[Reference: http://www.kilmann.com/conflict.html ]
These two basic dimensions of behavior define five different modes for responding to conflict situations:
- Competing
- Accommodating
- Avoiding
- Collaborating
- Compromising
TKI is view as a tool to resolve conflict between 2 individuals, according to the behavior demonstrated by the individual; however this is also an indicator the leadership style that the person can perform best. I vaguely can remember who are those categorized in other behavior modes however participants (Nui, Thao and Pak Gatot) with Competing Mode during the training has demonstrated their leadership style throughout the progress the delivery process of our project as assertive as defined by TKI - Competing means "standing up for your rights," defending a position which you believe is correct, or simply trying to win, win for the team.
TRANSFORMERS have the blend of all the behaviors as defined by TKI whereby situational leadership style can best be demonstrated. Disregards of the Program Manager and Project Managers that we have nominated, selected or volunteered as the lead for the program, there will be player or team member emerged as leader automatically based on the behavior according to the situation or the teaming stage as defined by Tuckman’s team development model took place. TRANSFORMERS is a good team setup that the team members can learn from each other in term of PM knowledge from diverse industries, technical knowledge and best practices from different industries, countries, cultures, up-bringing and also leadership style that best fit to the situation or different stage of the teaming.
Thursday, November 26, 2009
Asril's Blog Week #8
Change Management
In this week blog report, I’d like to continue comparing the real work which is practically implemented at PT Inco organization with the theoretical approach in the AACE course especially with Total Cost Management Framework. This week topic is Change Management , Total Cost Management Framework Chapter 6 – Strategic Asset Performance Assessment sub chapter 6.2 Asset Change Management against PT Inco Standard Procedure 10 (SP10) and specific to Project Engineering Business Process, Inception Phase, Preparation of Business Case.
In this week blog report, I’d like to continue comparing the real work which is practically implemented at PT Inco organization with the theoretical approach in the AACE course especially with Total Cost Management Framework. This week topic is Change Management , Total Cost Management Framework Chapter 6 – Strategic Asset Performance Assessment sub chapter 6.2 Asset Change Management against PT Inco Standard Procedure 10 (SP10) and specific to Project Engineering Business Process, Inception Phase, Preparation of Business Case.
Figure 1: PT Inco Project Inception Phase Business Process1
In PT Inco Project Management Inception Phase, Project sponsor and owner (in the AACE course called Program Manager) have to initiate the capital project through feasibility study in order to align with corporate business strategy. In the feasibility process, one of the major processes is for the sponsor/owner to identify the requirement of change management to the project proposed. Project Sponsor/ Owner with their skills and knowledge with help from other parties have to determine the level of change management required starting from replacement in kind till the process engineering requirement. The Change Management Procedure shall follow the seven step process provided in figure 2.
Figure 2: PT Inco Change Management Procedure2
The major inputs to the change management process are the objective of the capital project, plant historical information i.e. existing setting parameter, location, historical information, legal requirement and previous assessment conducted.
The process goal of PT Inco change management is to ensure that all change to the equipment, plant, processes or system at PT Inco are reviewed and implemented by authorized and competent person in a safe manner and then properly communicated to all of those affected by the change. The change management process will ensure all hazard associated with the change are identified, assessed, recorded and controlled. The management of change is a critical process to ensure that changes do not result in deviations that leas the operations outside the establish operating limits, take necessary actions to minimize the risk and establish an inspection of follow-up system and ensuring that all necessary safety, health and environmental concern generated by the change review are addressed prior the authorization and implementation3.
Change Management documentation is recorded in the CM001-Change Management Request Form as figure 3 below, where the major outputs are the scope requirement, alternative action, control requirement and change request to the responsible department.
Figure 3: PT Inco CM001-Change Management Request Form4
It’s obvious that PT Inco Change Management process is only focus onto the impact of the change to the hazard associated to the change whether potential hazard to the human equipment, process or system. Even though change will impact to the investment decision making but the change management in place is not as comprehensive as theoretical Asset Change Management in the Total Cost Management Framework chapter 6.2.
In the Total Cost Management Framework Chapter 6.2, Asset Change Management is describing the comprehensive change requirement to the asset starting from planning through the end product i.e. corrective actions, requirement scope change and corrective actions alternative. Asset change management refers to the process of managing ANY CHANGE to documented information defining the scope of an asset or basis of measuring and assessing its performance over its life cycle. The process goal is to ensure that no change is made to the physical asset or its function until the requirement assessment and asset planning processes define, document and decide on the change and of course by the authorized personnel.
Figure 4: Process Map for Asset Change Management5
Person accountable for asset change management I believe is the Asset Manager who looks after the entire asset under his/her accountability. The process of asset change management inputs are mostly requirement documents, asset planning basis, investment decision basis, other change request, asset performance, correction action alternatives and historical requirement. The change management output generally the performance variances causes, requirement change scope, corrective actions, information fro forensic performance assessment and historical information.
In general, asset change management in Total Cost Management Framework is the process of identification, definition, categorizing, recording, tracking, analyzing and disposition on the scope of the asset in strategic asset management. They are focus not only in the one topic of the change but comprehensive of managing any changes to the asset.
I can see 2 things here of the comparison between PT Inco Change Management and Total Cost Management Framework Asset Change Management Process. First, both process basically focus to the asset, however PT Inco only focus onto the hazard impact due to change of the process or system meanwhile Total Cost Management Framework process focus onto any changes to the asset. The main process is quite typical, starting from the asset or change planning through tools and technique of the change management till change documentation. Since Total Cost Management Framework is a comprehensive process of asset change management then it may worthwhile to be adopted into the existing PT Inco change management process.
Secondly, I’m still not quite sure who suppose to be accountable to the change management process. In PT Inco, its sponsor/owner accountability which is in the course called program manager, who look after day to day operation. However, in the TCM, looks like the Asset Manager will be accountable for the asset change management which is in this case, PT Inco Asset Manager is the corporate level, who looks after the entire Valeinco asset and organization. I need to dig this one more deeply to make it clear who accountable for what.
Sorowako, November 26th, 2009
1 PT Inco Project Engineering Business Process, Inception Phase Page 6 of 20, Author. Muhammad Asril
2 PT Inco Change Management Procedure SP10 version 1.1 EHS Standard Procedure Page 8 of 23
3 PT Inco Change Management Procedure SP10 version 1.1. EHS Standard Procedure Page 2 of 23
4 PT Inco Change Management Request Form CM-001 Page 1 of 5
5 Process Map for Asset Change Management, Total Cost Management Framework, Chapter 6.1 Asset Change Management Page 100
In PT Inco Project Management Inception Phase, Project sponsor and owner (in the AACE course called Program Manager) have to initiate the capital project through feasibility study in order to align with corporate business strategy. In the feasibility process, one of the major processes is for the sponsor/owner to identify the requirement of change management to the project proposed. Project Sponsor/ Owner with their skills and knowledge with help from other parties have to determine the level of change management required starting from replacement in kind till the process engineering requirement. The Change Management Procedure shall follow the seven step process provided in figure 2.
Figure 2: PT Inco Change Management Procedure2
The major inputs to the change management process are the objective of the capital project, plant historical information i.e. existing setting parameter, location, historical information, legal requirement and previous assessment conducted.
The process goal of PT Inco change management is to ensure that all change to the equipment, plant, processes or system at PT Inco are reviewed and implemented by authorized and competent person in a safe manner and then properly communicated to all of those affected by the change. The change management process will ensure all hazard associated with the change are identified, assessed, recorded and controlled. The management of change is a critical process to ensure that changes do not result in deviations that leas the operations outside the establish operating limits, take necessary actions to minimize the risk and establish an inspection of follow-up system and ensuring that all necessary safety, health and environmental concern generated by the change review are addressed prior the authorization and implementation3.
Change Management documentation is recorded in the CM001-Change Management Request Form as figure 3 below, where the major outputs are the scope requirement, alternative action, control requirement and change request to the responsible department.
Figure 3: PT Inco CM001-Change Management Request Form4
It’s obvious that PT Inco Change Management process is only focus onto the impact of the change to the hazard associated to the change whether potential hazard to the human equipment, process or system. Even though change will impact to the investment decision making but the change management in place is not as comprehensive as theoretical Asset Change Management in the Total Cost Management Framework chapter 6.2.
In the Total Cost Management Framework Chapter 6.2, Asset Change Management is describing the comprehensive change requirement to the asset starting from planning through the end product i.e. corrective actions, requirement scope change and corrective actions alternative. Asset change management refers to the process of managing ANY CHANGE to documented information defining the scope of an asset or basis of measuring and assessing its performance over its life cycle. The process goal is to ensure that no change is made to the physical asset or its function until the requirement assessment and asset planning processes define, document and decide on the change and of course by the authorized personnel.
Figure 4: Process Map for Asset Change Management5
Person accountable for asset change management I believe is the Asset Manager who looks after the entire asset under his/her accountability. The process of asset change management inputs are mostly requirement documents, asset planning basis, investment decision basis, other change request, asset performance, correction action alternatives and historical requirement. The change management output generally the performance variances causes, requirement change scope, corrective actions, information fro forensic performance assessment and historical information.
In general, asset change management in Total Cost Management Framework is the process of identification, definition, categorizing, recording, tracking, analyzing and disposition on the scope of the asset in strategic asset management. They are focus not only in the one topic of the change but comprehensive of managing any changes to the asset.
I can see 2 things here of the comparison between PT Inco Change Management and Total Cost Management Framework Asset Change Management Process. First, both process basically focus to the asset, however PT Inco only focus onto the hazard impact due to change of the process or system meanwhile Total Cost Management Framework process focus onto any changes to the asset. The main process is quite typical, starting from the asset or change planning through tools and technique of the change management till change documentation. Since Total Cost Management Framework is a comprehensive process of asset change management then it may worthwhile to be adopted into the existing PT Inco change management process.
Secondly, I’m still not quite sure who suppose to be accountable to the change management process. In PT Inco, its sponsor/owner accountability which is in the course called program manager, who look after day to day operation. However, in the TCM, looks like the Asset Manager will be accountable for the asset change management which is in this case, PT Inco Asset Manager is the corporate level, who looks after the entire Valeinco asset and organization. I need to dig this one more deeply to make it clear who accountable for what.
Sorowako, November 26th, 2009
1 PT Inco Project Engineering Business Process, Inception Phase Page 6 of 20, Author. Muhammad Asril
2 PT Inco Change Management Procedure SP10 version 1.1 EHS Standard Procedure Page 8 of 23
3 PT Inco Change Management Procedure SP10 version 1.1. EHS Standard Procedure Page 2 of 23
4 PT Inco Change Management Request Form CM-001 Page 1 of 5
5 Process Map for Asset Change Management, Total Cost Management Framework, Chapter 6.1 Asset Change Management Page 100
Saturday, November 21, 2009
Blog#7 - Farid Maloni - a plan for better TRANSFORMER's SPI?
Hi All,
Here we are in Week#7, need more extra effort; think hard to bring back our commitment to our client from hell.
In this opportunity I want to share comment on the team situation and my suggestion personal opinion/or suggestion on how to bring us back on track. I interest in to write on this since reading feedback from client today commenting on our SPI trending become far away.
Before I start, I need to note here that I am not trying to teach anybody, this is just my exercise on “how to bring this situation back on track”.
Looking Transformer gauges (cited from week-6, transformer report, sent by Asril, Saturday Nov 14, 09)
SPI = 0.58 (behind schedule)
CPI = 1.33 (under budget)
TCPI = 1.28 (need more 28% productivity).
Having read on above “control gauges”, especially the CPI’s color which is turn in to “green”. For our situation the “green” on CPI doesn’t mean good condition (since green always sign for “still OK”).
Contrary with the SPI 0.58 shown we are in the hard situation. We are not delivering the progress what we suppose to deliver as per time frame, why?? The answer is in the CPI = 1.33. We are "under budget” is not because we performing well or make absolutely efficient method to complete the work, but simply because we are not expensing the man-hours which we have budgeted/commited for. In the other word we're not enough performing the work. It is also supporting by TCPI, says “we need more 28% effort” to achieve expectation.
In the bottom line, I believe all of us can interpret and understand this situation.
So the question, do we still on our commitment (we put signature on agreement)?? I am wondering “yes” answer from all of us.
I refer back to the individual progress report and actual hour spent to every project we committed to: paper, questions and mapping also control. Theses all projects have weight contribution to the CPI, SPI, TCPI gauges.
Seeing the majority are delivering as per commitment and some on us need “more more” extra work. But I don’t think this is just straight forward. Need some tactic on it. Here is my analyzing to every of our project.
Paper (to whom take an CCE)
Attached “view” from weekly report paper milestones. My opinion, it is a must to put extra work on this (128% productivity), but the tactic is can be anything. PM need to count the “earning” to date versus the plan (regarding good CPI/SPI). Where "milestone" should we be today/or next week? “Finalize the Introduction and report progress”? or Finalize the Abstract and report progress?. In my day today work managing project, I always ask my contractor to put in their report " a next week plan", then ask them stick on it.
I can understand weekly progress on paper will not consistenly linear, especially for people like me with minimum experience on writing paper. The progress will be like an exponential rather than linier graph. But how we can get good CPI/SPI while we cannot progress consistently/linear in paper, despite of we surely will finish the paper for CCE?
[Cited from: weekly report template, transformer AACE class]
CMIIW, as far I remember, when we set up budget for papers, we are assuming all participants will go for CCE/C. So the commitment budget is consist of man-hours of doing the papers times all participant (15 personnel).
So my suggestion for paper problem no.1, we need to progress consistently as per planned milestone above order to give reading of CPI/SPI OR, (put bit of tactic here) if we cannot perform consistently, so we need to compensate the paper with other project progress. (e.g. make question or mapping ahead plan). For problem no.2, you need honestly ask probably some of us make his/her mind not taking CCE, so if it is, we can reduce our cumm. budgeted paper plan [BUT, need very good reason for our client from hell]
Question
Same as paper, PM need to count the “earning” to date versus the plan; and told the team which chapter for EE and HU need to accomplish to date in order to catch SPI. We cannot hang on float anymore “cause we negative float” no more bullet in the pocket.
I personally found it is hard for me, especially for Engineering Economic (EE) questions, the higher the chapter, the difficult the problems. Humphrey (HU) is easier to finish ‘cause the answer mostly straight from the book. BUT, our problem regarding SPI, we cannot report HU separate from EE.
To report HU separately is easier rather than to wait progress in EE. If we can revise the template and report HU and EE separately, I think we can have better SPI. Especially who have better progress in HU rather than EE. So that is my suggestion to EE, beside need to put extra-extra effort; sleep late every day for EE ;-) (Add on 28% productivity).
Mapping
In my opinion Mapping is also a place for us to catch up for SPI, as per HU above. We can progress better on mapping, and then report the progress. PM still need to count the “earning” to date versus the plan; and told the team which process need to accomplish “more” to date, in order to catch SPI. Put extra 28% productivity by complete week-12 work ahead?
Control
Control is the best achiever. As long as “control” consistently reporting, they should be OK. Keep up the good work.
B/R, Farid
Here we are in Week#7, need more extra effort; think hard to bring back our commitment to our client from hell.
In this opportunity I want to share comment on the team situation and my suggestion personal opinion/or suggestion on how to bring us back on track. I interest in to write on this since reading feedback from client today commenting on our SPI trending become far away.
Before I start, I need to note here that I am not trying to teach anybody, this is just my exercise on “how to bring this situation back on track”.
Looking Transformer gauges (cited from week-6, transformer report, sent by Asril, Saturday Nov 14, 09)
SPI = 0.58 (behind schedule)
CPI = 1.33 (under budget)
TCPI = 1.28 (need more 28% productivity).
Having read on above “control gauges”, especially the CPI’s color which is turn in to “green”. For our situation the “green” on CPI doesn’t mean good condition (since green always sign for “still OK”).
Contrary with the SPI 0.58 shown we are in the hard situation. We are not delivering the progress what we suppose to deliver as per time frame, why?? The answer is in the CPI = 1.33. We are "under budget” is not because we performing well or make absolutely efficient method to complete the work, but simply because we are not expensing the man-hours which we have budgeted/commited for. In the other word we're not enough performing the work. It is also supporting by TCPI, says “we need more 28% effort” to achieve expectation.
In the bottom line, I believe all of us can interpret and understand this situation.
So the question, do we still on our commitment (we put signature on agreement)?? I am wondering “yes” answer from all of us.
I refer back to the individual progress report and actual hour spent to every project we committed to: paper, questions and mapping also control. Theses all projects have weight contribution to the CPI, SPI, TCPI gauges.
Seeing the majority are delivering as per commitment and some on us need “more more” extra work. But I don’t think this is just straight forward. Need some tactic on it. Here is my analyzing to every of our project.
Paper (to whom take an CCE)
Attached “view” from weekly report paper milestones. My opinion, it is a must to put extra work on this (128% productivity), but the tactic is can be anything. PM need to count the “earning” to date versus the plan (regarding good CPI/SPI). Where "milestone" should we be today/or next week? “Finalize the Introduction and report progress”? or Finalize the Abstract and report progress?. In my day today work managing project, I always ask my contractor to put in their report " a next week plan", then ask them stick on it.
I can understand weekly progress on paper will not consistenly linear, especially for people like me with minimum experience on writing paper. The progress will be like an exponential rather than linier graph. But how we can get good CPI/SPI while we cannot progress consistently/linear in paper, despite of we surely will finish the paper for CCE?
[Cited from: weekly report template, transformer AACE class]
CMIIW, as far I remember, when we set up budget for papers, we are assuming all participants will go for CCE/C. So the commitment budget is consist of man-hours of doing the papers times all participant (15 personnel).
So my suggestion for paper problem no.1, we need to progress consistently as per planned milestone above order to give reading of CPI/SPI OR, (put bit of tactic here) if we cannot perform consistently, so we need to compensate the paper with other project progress. (e.g. make question or mapping ahead plan). For problem no.2, you need honestly ask probably some of us make his/her mind not taking CCE, so if it is, we can reduce our cumm. budgeted paper plan [BUT, need very good reason for our client from hell]
Question
Same as paper, PM need to count the “earning” to date versus the plan; and told the team which chapter for EE and HU need to accomplish to date in order to catch SPI. We cannot hang on float anymore “cause we negative float” no more bullet in the pocket.
I personally found it is hard for me, especially for Engineering Economic (EE) questions, the higher the chapter, the difficult the problems. Humphrey (HU) is easier to finish ‘cause the answer mostly straight from the book. BUT, our problem regarding SPI, we cannot report HU separate from EE.
To report HU separately is easier rather than to wait progress in EE. If we can revise the template and report HU and EE separately, I think we can have better SPI. Especially who have better progress in HU rather than EE. So that is my suggestion to EE, beside need to put extra-extra effort; sleep late every day for EE ;-) (Add on 28% productivity).
Mapping
In my opinion Mapping is also a place for us to catch up for SPI, as per HU above. We can progress better on mapping, and then report the progress. PM still need to count the “earning” to date versus the plan; and told the team which process need to accomplish “more” to date, in order to catch SPI. Put extra 28% productivity by complete week-12 work ahead?
Control
Control is the best achiever. As long as “control” consistently reporting, they should be OK. Keep up the good work.
B/R, Farid
Thao’s blog week#.6
What is the key to failure of Transformer Team?
Getting stuck with what to write this week in blog, I decide to write what I think it’s a key to failure in AACE program for Transformer team and of course what’s the key to success. It’s just a personal point of view from what I’m experiencing with AACE program so far. My apologies if it hurts anyone: D
Let’s get start with the key to FAILURE first.
If we keep going on this way, we’ll failed in getting the team success
• Broken chain
We have decided that we set up a strong link with a big chain through the team connecting team members from different regions, different countries. However, so far no chain set up yet.
One of effort to make the team work or a chain is “peer review”. In a peer, each team member can cross check and exchange their work from one to another. Is that enough for a chain without any supervision if there’s any broken link? Does other peer know what’s going on with your peer? And how good is the quality of your works? God knows.
What is happening with all our projects is just getting the progress reported from each team member? Is there any link among team members on how the homework going on? What’s its quality? Or we just trust each other and hope to get good results at the end of this project. What we are ‘so-called” a team now doesn’t present its full functionality. What we’re performing now is just an individual effort but gather together in the same place.
It seems that we’re forgetting one of the key deliverables of this AACE project is how to get a team success not just an individual success. How can we get a high credit if the team deliverables are so poor like they are now?
ValeInco guys are doing good job but how to get these good guys contribute more to the team success? Where is the key link of the whole chain? How to save a weak link in a chain? All we need is a good project manager who can be a middle man to connect all stakeholders on the same line and get the project run on track.
• Poor Management efforts
Thanks to our dedicated Program Mangers/Project Managers who is devoted your time on the weekly reports, weekly analysis, and the encouraging emails. Nothing is called an action to get the team on board from our dear Management team so far.
A few emails from management team sent to ask for an action from anyone. If it’s in our real-life project, the project manager would not keep silent for days when we don’t complete our tasks as scheduled. So what’s missing here from Transformer’s managers? From my point of view it’s lack of forcing. Some of team members wouldn’t stay aside for such a long time if there was a strong message from managers with a clear instruction and deadline at the first stage. What’s the manager should do if his/her team members fail to meet the commitments many times? A very clear answer is in the project’s policy signed off my all team members!
Task delegation is not taken its advantage in our Transformers’ management style. If he/she is busy why shouldn’t he/she delegate tasks to other potential team member? That would be better than any excuses for late/missing/absence. In addition, delegating tasks is one of key skills to make the managers come closer to his/her team members as well as put motivation and challenges to the team members who are delegated.
• No quality check on the project works
Our project has finished 25% of its part but all is just through a paper report. No quality checks if each of task has been completed well. No one evaluates the quality of work done.
In real life, do you find any project that is supervised through a paper report on the progress weekly without any quality check? Luckily, it seems that our Client from Hell is just focusing on the progress he don’t care much about the quality of works done at present. Hmm, thanks to his kindness :D
Getting stuck with what to write this week in blog, I decide to write what I think it’s a key to failure in AACE program for Transformer team and of course what’s the key to success. It’s just a personal point of view from what I’m experiencing with AACE program so far. My apologies if it hurts anyone: D
Let’s get start with the key to FAILURE first.
If we keep going on this way, we’ll failed in getting the team success
• Broken chain
We have decided that we set up a strong link with a big chain through the team connecting team members from different regions, different countries. However, so far no chain set up yet.
One of effort to make the team work or a chain is “peer review”. In a peer, each team member can cross check and exchange their work from one to another. Is that enough for a chain without any supervision if there’s any broken link? Does other peer know what’s going on with your peer? And how good is the quality of your works? God knows.
What is happening with all our projects is just getting the progress reported from each team member? Is there any link among team members on how the homework going on? What’s its quality? Or we just trust each other and hope to get good results at the end of this project. What we are ‘so-called” a team now doesn’t present its full functionality. What we’re performing now is just an individual effort but gather together in the same place.
It seems that we’re forgetting one of the key deliverables of this AACE project is how to get a team success not just an individual success. How can we get a high credit if the team deliverables are so poor like they are now?
ValeInco guys are doing good job but how to get these good guys contribute more to the team success? Where is the key link of the whole chain? How to save a weak link in a chain? All we need is a good project manager who can be a middle man to connect all stakeholders on the same line and get the project run on track.
• Poor Management efforts
Thanks to our dedicated Program Mangers/Project Managers who is devoted your time on the weekly reports, weekly analysis, and the encouraging emails. Nothing is called an action to get the team on board from our dear Management team so far.
A few emails from management team sent to ask for an action from anyone. If it’s in our real-life project, the project manager would not keep silent for days when we don’t complete our tasks as scheduled. So what’s missing here from Transformer’s managers? From my point of view it’s lack of forcing. Some of team members wouldn’t stay aside for such a long time if there was a strong message from managers with a clear instruction and deadline at the first stage. What’s the manager should do if his/her team members fail to meet the commitments many times? A very clear answer is in the project’s policy signed off my all team members!
Task delegation is not taken its advantage in our Transformers’ management style. If he/she is busy why shouldn’t he/she delegate tasks to other potential team member? That would be better than any excuses for late/missing/absence. In addition, delegating tasks is one of key skills to make the managers come closer to his/her team members as well as put motivation and challenges to the team members who are delegated.
• No quality check on the project works
Our project has finished 25% of its part but all is just through a paper report. No quality checks if each of task has been completed well. No one evaluates the quality of work done.
In real life, do you find any project that is supervised through a paper report on the progress weekly without any quality check? Luckily, it seems that our Client from Hell is just focusing on the progress he don’t care much about the quality of works done at present. Hmm, thanks to his kindness :D
-- To be continued --
Nui – 7th blog
Apply to real life: (Continue from Last week)
From the knowledge from Engineering Economy Chapter 4 and 5,
I use IRR formula from Microsoft Excel to compare between alternative
1. Alternative 1:
Investment in Insurance Company, the good proposal of this insurance is at the 8th year, I can deposit premium and draw back it immediately so this will be advantage for me to pay nothing but can get tax refund of the premium for the rest of insurance year. The last insurance year, the insurance company has given the fixed amount. Below is calculation of insurance alternative with different premium amount and top-up alternative;
2. Alternative 2:
Investment in LTF with condition of holding LTF for 5 calendar years.
For instance, I buy LTF 25,000 THB at the end of year 0 then I can refund tax 20% = 5,000 THB lately by the end of year 1. After of 5 calendar years holding, I can re-sell LTF at the same price at the end of year 4 (Assumption: Buy at end of year 0 and re-sell the beginning of year 5 or equivalent to the end of year 4). Below is my calculation in Microsoft Excel. In order to simulate my investment the same as alternative 1, I will invest LTF for 11 years, with total investment return by 15th year.
The result is No matter how much I invest and how many year I have invest, the result still be the same IRR = 5.40%
Alternative 1, investment in insurance company provides IRR rate range between 4.71% - 5.51%, it is base on amount of money put in insurance company and require to deposit at least 8xpremium amount at least 7 years. The more I put the more I can get the return. This calculation does not include death benefit that I won’t expect to get it.
From the knowledge from Engineering Economy Chapter 4 and 5,
I use IRR formula from Microsoft Excel to compare between alternative
1. Alternative 1:
Investment in Insurance Company, the good proposal of this insurance is at the 8th year, I can deposit premium and draw back it immediately so this will be advantage for me to pay nothing but can get tax refund of the premium for the rest of insurance year. The last insurance year, the insurance company has given the fixed amount. Below is calculation of insurance alternative with different premium amount and top-up alternative;
- Alternative 1.1 (Premium = 25,000 THB and Tax Refund 20% = 5,000 THB)
Pay premium 25,000 THB every year and next premium year can get tax refund 5,000 THB and at the end of 8th year I can draw back my premium (same as not pay anything but can refund tax 5,000 THB every year).
The result is IRR = 4.71
- Alternative 1.2 (Premium = 50,000 THB and Tax Refund 20% = 10,000 THB)
Same as alternative 1.1 but increase premium amount from 25,000 THB to 50,000 THB
The result is IRR = 4.91%
- Alternative 1.3 (Premium = 25,000 THB, Top-up = 25,000 THB and Tax Refund 20% = 10,000 THB)
This alternative base on alternative 1.1 but I pay top-up as premium amount 25,000 THB so the cash out flow is 50,000 THB every year. But at the end of 8th year, I can draw back only premium 25,000 THB not for top-up.
The result is IRR = 5.51%
2. Alternative 2:Investment in LTF with condition of holding LTF for 5 calendar years.
For instance, I buy LTF 25,000 THB at the end of year 0 then I can refund tax 20% = 5,000 THB lately by the end of year 1. After of 5 calendar years holding, I can re-sell LTF at the same price at the end of year 4 (Assumption: Buy at end of year 0 and re-sell the beginning of year 5 or equivalent to the end of year 4). Below is my calculation in Microsoft Excel. In order to simulate my investment the same as alternative 1, I will invest LTF for 11 years, with total investment return by 15th year.
The result is No matter how much I invest and how many year I have invest, the result still be the same IRR = 5.40%
3. Alternative 3: Investment in Bank at 2.75%
Since this already is rate per year so IRR is the same = 2.75%.
4. From above Investment Alternative,
Summary IRR;
Alternative 1, investment in insurance company provides IRR rate range between 4.71% - 5.51%, it is base on amount of money put in insurance company and require to deposit at least 8xpremium amount at least 7 years. The more I put the more I can get the return. This calculation does not include death benefit that I won’t expect to get it.Alternative 2, Investment in LTF provides constant IRR rate at 5.40%. This is require to hold LTF at least 4 years. But it could be more benefit if I can sell LTF at higher price than I buy.
Alternative 3, Deposit in Bank as current interest rate at 2.75%. This is returned the lowest rate as it is the lowest risk from various alternatives.
So I suggest myself to invest in alternative 2 which can provide IRR rate at 5.40%. It is not the highest rate as calculation but the investment per year can be vary as my investment money each year is the remaining from my routine bank deposit. And for the future, I should deposit in bank less and invest more in LTF in order to get higher rate of return.
Blog#5 from Lau
Tuckman's team-development model
While researching for information for my paper, I come across many articles that talk about leadership and team work in the internet. Teaming is not something new and there are many school of thoughts discuss about it with different model but with a purpose by having team that is working to achieve a common goal successfully.
By researching on articles, I found some papers related particularly to team building training material on team development for a regional telco’ hotline service team. In the document, the very first question asked was “Why we do work in teams?” some of the answers are as follow and is very relevant in the context of our team:
- It is the only way anything gets accomplished with any quality and efficiency
- Distribution of work or reduced workload
- Problem solving and decision making
- Management and control of work
- Information processing
- Information and idea collection, stimulate new ideas
- Co-ordination and liaison, to focus on what I’m good at while learning new skills
- Increasing commitment and involvement
- It facilitates solutions when things don’t go as planned
- Negotiation and conflict resolution
- Encourages learning from one another
http://www.teambuilders.com/index.php/learn/importance_of_teamwork/
Having said with the benefit of teamwork, there are still much to do to build a team - TRANSFORMERS that can work effectively and achieves common goals as stated in the governance agreement more efficiently.
The Forming – Storming – Norming – Performing is a model of team development, first proposed by Bruce Tuckman in 1965, who maintained that these phases are all necessary and inevitable in order for the team to grow, to face up to challenges, to tackle problems, to find solutions, to plan work, and to deliver results
There are characteristics of the team and team members that can clearly be identified which stage that the team/team members are in. As for “TRANSFORMERS”, we have met at the beginning of the course where the team learns about the challenges, and then agrees on goals and begins to tackle the tasks. The forming stage of any team is important because in this stage the members of the team get to know one another, exchange some personal information, and make new friends. This is also a good opportunity to see how each member of the team works as an individual and how they respond to pressure.
http://en.wikipedia.org/wiki/Forming-storming-norming-performing
The team, TRANSFORMERS, has gone through 7 weeks of the journey since the beginning. There are several instances that crisis occurred that need certain leadership style to fix the issues. At present moment, the team has moved on from forming stage, and moving forward slowly to storming and norming stage. With the weekly report received as of week 7, almost 80% of the team members responded and reported the status of their work progress. The participation in reporting has improved as compared to last 2 weeks even though there is no progress in their weekly activities. This is the sign of team at the transitional stage between storming and norming whereby process, rules and regulations are being adhered to. There are areas that team members are quite productive, but there are also areas that need to put in extra effort.
Apart form the 80% team actively participated in the process to proceed further, there are still works to be done on the remaining 20% of the team member in which the Program Manager, Chris, has chosen to exercise the right given to him as PM to vote out underperformance team member in accordance to the team government agreement. There were objections coming from team members to vote out certain members before issuance of warning was given. Emergence of leaders in their own areas of expertise can now be seen with the response from the team. These leaders can now serve as second tier leaders apart from the appointed/volunteered PM to perform Transformational Leadership as well as Task-Oriented Leadership as to support the underperforming team members with the condition that those under performing team members willing to start to show their commitment and committed to self-help.
At this point, TRANSFORMERS’ team members can be categorized with following categorization:
While researching for information for my paper, I come across many articles that talk about leadership and team work in the internet. Teaming is not something new and there are many school of thoughts discuss about it with different model but with a purpose by having team that is working to achieve a common goal successfully.
By researching on articles, I found some papers related particularly to team building training material on team development for a regional telco’ hotline service team. In the document, the very first question asked was “Why we do work in teams?” some of the answers are as follow and is very relevant in the context of our team:
- It is the only way anything gets accomplished with any quality and efficiency
- Distribution of work or reduced workload
- Problem solving and decision making
- Management and control of work
- Information processing
- Information and idea collection, stimulate new ideas
- Co-ordination and liaison, to focus on what I’m good at while learning new skills
- Increasing commitment and involvement
- It facilitates solutions when things don’t go as planned
- Negotiation and conflict resolution
- Encourages learning from one another
http://www.teambuilders.com/index.php/learn/importance_of_teamwork/
Having said with the benefit of teamwork, there are still much to do to build a team - TRANSFORMERS that can work effectively and achieves common goals as stated in the governance agreement more efficiently.
The Forming – Storming – Norming – Performing is a model of team development, first proposed by Bruce Tuckman in 1965, who maintained that these phases are all necessary and inevitable in order for the team to grow, to face up to challenges, to tackle problems, to find solutions, to plan work, and to deliver results
There are characteristics of the team and team members that can clearly be identified which stage that the team/team members are in. As for “TRANSFORMERS”, we have met at the beginning of the course where the team learns about the challenges, and then agrees on goals and begins to tackle the tasks. The forming stage of any team is important because in this stage the members of the team get to know one another, exchange some personal information, and make new friends. This is also a good opportunity to see how each member of the team works as an individual and how they respond to pressure.
http://en.wikipedia.org/wiki/Forming-storming-norming-performing
The team, TRANSFORMERS, has gone through 7 weeks of the journey since the beginning. There are several instances that crisis occurred that need certain leadership style to fix the issues. At present moment, the team has moved on from forming stage, and moving forward slowly to storming and norming stage. With the weekly report received as of week 7, almost 80% of the team members responded and reported the status of their work progress. The participation in reporting has improved as compared to last 2 weeks even though there is no progress in their weekly activities. This is the sign of team at the transitional stage between storming and norming whereby process, rules and regulations are being adhered to. There are areas that team members are quite productive, but there are also areas that need to put in extra effort.
Apart form the 80% team actively participated in the process to proceed further, there are still works to be done on the remaining 20% of the team member in which the Program Manager, Chris, has chosen to exercise the right given to him as PM to vote out underperformance team member in accordance to the team government agreement. There were objections coming from team members to vote out certain members before issuance of warning was given. Emergence of leaders in their own areas of expertise can now be seen with the response from the team. These leaders can now serve as second tier leaders apart from the appointed/volunteered PM to perform Transformational Leadership as well as Task-Oriented Leadership as to support the underperforming team members with the condition that those under performing team members willing to start to show their commitment and committed to self-help.
At this point, TRANSFORMERS’ team members can be categorized with following categorization:
1) Play to win
2) Playing not to lose
3) Play to lose
4) Not playing
Each and every player need to conduct a self check if we are still playing to win!!
There are obvious characteristics shown by a player who is “playing to win”. Quoting from an article by self improvement writer, Carolyn McCormick on Play To Win vs. Playing Not To Lose, which is worth to share with.
Here is how to Play To Win vs. Playing Not To Lose
Are you avoiding fear or avoiding risk? If you answered yes, then you are playing not to lose rather than playing to win. Henry David Thoreau wisely said, "Most people live lives of quiet desperation and go to the grave with the song still in them." It is human nature to feel safe in a certain comfort zone. We value life being predictable to a large degree. We value sameness, structure, stability and security. Too much of these qualities, however, and our lives become stagnant. By attempting to maintain our comfort zone to feel safe, we actually begin shrinking it. The same applies in business. Unless we step out of our comfort zone by taking risks, learning new things, trying new adventures, we will stagnate. Avoiding fear in our lives and business begins to shrink our comfort zone. Until we decide to stretch ourselves, our comfort zone will continue to shrink with time, resulting in failure and unhappiness in our lives. It is healthy and natural to coast at times. It is important to remember, however, when we coast we are always going downhill! Here is a hint: If we are not playing full out, then we are not playing to win, but rather playing not to lose. This week, ask yourself, "What risks am I avoiding in my life or business?"
Playing to Win Means NO EXCUSES! Playing to win means deciding you will attract and achieve exactly what you desire this year -- No matter what! It means choosing to create a life and business that is thriving this year. Playing to win means choosing to believe you can achieve more income this year; refusing to quit; refusing to think you are limited in anyway by external factors. Playing to win means you know this can be your best year yet -- and it's not too late to jump on it and achieve any big and exciting goals that you may have put on hold -- until now.
Playing to Win Means Becoming Comfortable with Uncertainty: For many people these are uncertain times. If we allow the external factors to decide our certainty, we feel powerless to control situations. We are like a boat being tossed about on the high seas without a rudder to guide us. When we shift our beliefs to say, "I am certain I can succeed no matter what because I know what my priorities are and I will pursue what I value most in life," we now have a rudder to steer our boat no matter what situations threaten to toss us around. We enjoy an internal certainty that cannot be rocked no matter what is happening in the outside world.
For definition on Transformational Leadership and Task-Oriented Leadership, please refer to this site: http://www.mindtools.com/pages/article/newLDR_84.htm
Friday, November 20, 2009
Learning on How to Quantify Risk Factor
Week#07 – Andy’s Blog
Seeking an idea how I could start to write on paper of topic risk management, I prefer to do some readings and exercises to apply some tools and technique as mentioned in the Humphrey’s book for my current project. First able, I would like to get the big picture of the risk management in regards how to do an assessment of technical risk, schedule risk and cost risk by some different tools. Further, I wish that I could work on the scope of topic in which way the research should be developed. The root cause analysis has brought me on risk identification and given well input on how to quantify the technical risks of Mine Development Project. The root cause analysis also assist to generate the classification of risks which will be required to quantify the risk factor base on category of risk as well as each individual risk activities. Another data also require to assist on developing risk quantification such schedule (Modified Bar/Milestone chart), costing (ABC cost) and historical information of contractor equipments performance and specification to measure the scale factor of risk against performance, schedule and cost.
Firstly, I spent much time to quantify the risk factor at each individual risks using Risk Scales Approach and Modified qualitative and quantitative risk approach. Otherwise, It mentioned in Humphrey that any approach must first identify the risk categories but I think it would be difficult to start straightly with quantifying the categorize of risk instead of each individual risk to ensure that all risks identified are calculated. So I work on quantifying 13 individual risks as generated from the Root Cause Analysis and measure the 3 impact factors of performance, cost and schedule against the risk scale . So it needs 13 times 3 or equal to 39 assessments to generate QRA for each individual risk activity. I do minor modification on the definition of risk scale of schedule to reflect impact of typical of the project with 6 months duration of construction work. I believe the definition Humphrey book is generated to measure the risk for large project or investments portfolio which has long duration of construction and it’s risk impact at least for 12 months period.
Working on technical assessment supports Humphrey's mentioned that “the difficulty in completing the risk table is the determining of probability of risk”. I believe that is argued able as the determining of the probability is come from the best judgment. As the road development is just located near mine active area which will potentially affect positive or negative on changing of assumption and parameters used whether location of disposal, quarry, total material movement , etc, so I select 50% probability of risk to be assumed to develop the risk scoring except the activities where clearly identified will be contributed more than 50 % of probability such safety risk using small fleet by local contractor around heavy equipments (as this project will be nominated to local contractor who experience with similar work), uncertainty of waste material to clean up quarry material due to unavailability data to estimate instead of best approximated based on visual checking by site visit. To ease on quantification of the risk, I propose that the definition severity risk is determined by the maximum severity possible occurrences. Further , the risk management will be applied to eliminate the impact of risk .
The quantification each individual risk result that some risks are assessed in the low risk level. Otherwise, if we combine the risks into one category will outcome that the categorized of risk is jumped from low level to moderate risk level. It means that categorized of the risk will represent a major impact of the risk which is interested and given better points of visibility to be managed instead of long legs of many individual risks which have low risk impact. The risks scale and it’s scoring are presented in the table and graphs below.
Table of Risk Scoring of Mine Road Development Project
Firstly, I spent much time to quantify the risk factor at each individual risks using Risk Scales Approach and Modified qualitative and quantitative risk approach. Otherwise, It mentioned in Humphrey that any approach must first identify the risk categories but I think it would be difficult to start straightly with quantifying the categorize of risk instead of each individual risk to ensure that all risks identified are calculated. So I work on quantifying 13 individual risks as generated from the Root Cause Analysis and measure the 3 impact factors of performance, cost and schedule against the risk scale . So it needs 13 times 3 or equal to 39 assessments to generate QRA for each individual risk activity. I do minor modification on the definition of risk scale of schedule to reflect impact of typical of the project with 6 months duration of construction work. I believe the definition Humphrey book is generated to measure the risk for large project or investments portfolio which has long duration of construction and it’s risk impact at least for 12 months period.
Working on technical assessment supports Humphrey's mentioned that “the difficulty in completing the risk table is the determining of probability of risk”. I believe that is argued able as the determining of the probability is come from the best judgment. As the road development is just located near mine active area which will potentially affect positive or negative on changing of assumption and parameters used whether location of disposal, quarry, total material movement , etc, so I select 50% probability of risk to be assumed to develop the risk scoring except the activities where clearly identified will be contributed more than 50 % of probability such safety risk using small fleet by local contractor around heavy equipments (as this project will be nominated to local contractor who experience with similar work), uncertainty of waste material to clean up quarry material due to unavailability data to estimate instead of best approximated based on visual checking by site visit. To ease on quantification of the risk, I propose that the definition severity risk is determined by the maximum severity possible occurrences. Further , the risk management will be applied to eliminate the impact of risk .
The quantification each individual risk result that some risks are assessed in the low risk level. Otherwise, if we combine the risks into one category will outcome that the categorized of risk is jumped from low level to moderate risk level. It means that categorized of the risk will represent a major impact of the risk which is interested and given better points of visibility to be managed instead of long legs of many individual risks which have low risk impact. The risks scale and it’s scoring are presented in the table and graphs below.
Table of Risk Scoring of Mine Road Development Project
Risk Scale Scoring Graph below show the scoring of the risks category. However, to define how level of risk is classified as low, moderate or high risk require to create a new definition of risk score level.
For that purpose, I have an idea to modify and combine both risk matrix method of Qualitative (narrative) and Quantitative Scoring matrix that shows another picture in which risk is located in the scale matrix and assist to identify and give high visibility to the high risk factors by developing a curve line (dash line) across from up to down of the matrix graph. The difference of this modified graph with the previous graph as per shown above is there are two risks are located in the different risk level low and moderate? I think it needs more discussion and analysis which could be addressed in the paper work.
Chrisma Book Log #7 out of 24 and more
Hi all, I am writing for the seventh week from total 24 week of the assignment projects. 30% baseline plan to be achieved for TRANSFORMER Team but we still by far to achieve that number. There are lots of story behind the scene that happen in this week, a lot experience that could be lesson learn for me as a person and for me as a TRANSFORMER Program Manager, a group of marvellous members that have outstanding achievements in their professional live.
According to TRANSFORMER team government agreement, if I purpose to create a decision I need to create a voting form in google docs that involve team members to give their opinion. Below is the first voting that I create to determine the rest team member opinion with the result.
This result shows that some of team members need reaction from board of management to have a decisive act for the current issue. After roll a discussion in emails, I has issued the first warning for the team members for them to back on track and remember for our team government agreement.
My Knowledge Implementations
This week I have assignments from my senior to do an estimate costing for Furniture Fixture and Equipments for my running projects as preparing for 2010/2011 finance year. I search around in Skill and Knowledge of Cost Engineering from AACE that I could do the capacity factor method.
From my understanding that, for furniture is also considering the capacity of the work relate to how much capacity of that room. Therefore I am using this formula to determine each room need how much money to produce fix furniture. I am also try to recorded from previous project that have similarity in order to see how much is the difference room per room. But the problem that I am facing at related to the formula in AACE book is the exponent "e" that I still need to figure. By the time I finish my report to my senior I am only considering room by room without any exponent to it. I hope by next financial year I should have know that my estimation is correct or not.
The IT works such wiring data cable, IT hardware equipments also I have to propose and estimate in order to achieve a number that can be suggest into Board Administration meeting, in here I am also doing the same formula to estimate correctly. My estimation is already class 3, because I do a record from contract amount of each project divide to space and rooms.
Another problem that I am facing for the running project is about devaluation of US dollar. We have been missing the quite big amount of money due to this issue. From the first contract sign to now, the dollar getting weak and weaker, I need to have risk matrix for the future project. I am planning to know more deep about this risk and how to solve it, because this is should have been a known risk, but how come my management did not catch and find out the solutions.
Program Manager @ TRANSFORMER
7 Week without any decent progress, no ideas from Project Managers to make a remedial plan, it seems that I would like to call for conference call for this team in order to brainstorming. The agenda would be "how to performing as a team". Double standard among team member should be erase and start to synchronize team spirit to achieve team's visions and missions and comply back to team government agreement.
When focusing to personal problem and priority are the challenges when starting a team work. We cannot avoid those risks that should have been a known risks as personal understanding. Therefore each person should have share their solution when dealing with those personal issue a.k.a personal known risk. And each person maybe have a different approach to overcome their problem (risk) but wise man said, it always good to listen to others.
I would have roll voting before set for any decision, as this is a team that I do not have any authority among each other. I could only call for each professional believe for team spirits.
Labels: aace, Chrisma Wibowo, international certification, weekly blog in english
Thursday, November 19, 2009
Asril's Blog Week #7
Project Scope Definition
In this week blog, I would like to make a comparison between Project Scope Development in the book theory and business process at PT Inco Project Engineering to develop what we called Project Scope Definition (PSD) for capital project.
PT Inco Project Engineering
At PT Inco Project Engineering, Project scope definition is establish through Project Scope Definition meeting which is setup after annual capital plan approved by the corporate and initiate by the Project Manager assigned on that particular project as per process flow diagram below.
Figure 1: PT Inco Project Scope Definition Process Flow1
The Project Scope Definition attendance is the Project Manager, Project Engineer, Project Sponsor on behalf of Project Owner, Operating & Maintenance Representative and other external resources as required. The meeting deliverable is a meeting document called ‘Project Scope Definition Minutes’ and the purpose of the document are to establish a uniform process for the preparation of a project scope capital project. The document is actually a letter of agreement between Project Manager and Project Sponsor/Owner about the project requirements2.
Project scope definition input is generally coming from project business case generated by project sponsor/owner, project basis i.e. fund, objectives, alternatives, production plan, financial evaluation and historical information.
The project scope definition define project leadership team, project objectives, project requirements include process and what action that will taken, financial statement, preliminary schedule, major equipments, boundary limits, special requirements i.e Environmental, Safety & Health, Government regulation, deliverables expected from the project. All of those aspects are discussed and agreed in the meeting as to what project shall be executed. However, this document not mentioned about the execution strategy for how the work will be implemented. The primary output for Project Scope Definition is for the project team to be able to define Work Breakdown Structure (WBS) and detail cost estimate. The end product is the project documentation through Capital Appropriation Request (CAR) where this document has 2 primary objectives: (1) For the executive to review and approved all the project scopes and deliverables align with corporate strategy as the project plan and (2) Project Charter.
Total Cost Management Framework
Total Cost Management Framework combining the project scope and execution strategy development into one package of process development. The project scope and execution strategy development process translate the project implementation basis i.e. scope, objectives, constraint and assumption into controllable project scope definition and execution strategy. The project scope defines what the work is i.e. the work must be performed to deliver a product, services or result with specific features and function. The execution strategy establishes criteria for how the work will be implemented i.e. general approach through which the work will be performed3.
Process map for project scope and execution strategy development in Total Cost Management Framework is illustrated on the following figures.
Figure 2. Process Map for Project Scope and Execution Strategy Development4
Input to the project scope and execution strategy primarily project implementation basis include scope, objectives, constraint, assumption, authorizing fund and resources. The other inputs are the alternatives, change information, historical information and planning process plan. All of those inputs are executed through the project scope tools & techniques starting from plan scope and execution and breakdown scope.
The primary outputs of the project scope and execution strategy are the Work Breakdown Structure Development, Work Package, Organization Breakdown Structure and Execution Strategy and at the end is the documentation.
In general, project scope definition at PT Inco Project organization is very much similar with the project scope definition theory in the Total Cost Management Framework. There are some discrepancy but they are mostly due to differentiation on the definition but the main objectives are the same.
The main difference is only in the execution strategy of the project. The execution strategy is part of project scope development according to the Total Cost Management Framework meanwhile at PT Inco Project business process, the execution strategy is determined after CAR approval by the executive through Engineering Work Package (EWP). I think that I have to agree with TCF process that the execution strategy shall be developed upfront prior CAR approval. Execution strategy development after plan approved will have a very high risk on the accuracy of the cost and schedule and this case mostly happen in the capital project that we manage in the past.
I’ll then review again the current business process then do some changes into the project scope definition documents to include execution strategy into the project scope development stage.
Sorowako, November 19th, 2009
1 PT Inco Engineering, Business Process Flow Inception Phase chapter 5.1.1.3 page 2 or 15 Author by Muhammad Asril
2 PT Inco Engineering, Standard Operating Procedure for Project Scope Definiton, SOP #SES-ES-N-005.1 Page 4 of 22 Author by Gustaf Ganna Songgo
3 Total Cost Management Framework Chapter 7.1 Project Scope and Execution Strategy Development page 123
4 Total Cost Management Framework Chapter 7.1 Project Scope and Execution Strategy Development page 124
Saturday, November 14, 2009
The real world - Part 1. Setting the scene (Klaus)
In this week’s blog contribution (and intended to be continued in the following blogs), I would like to take an excurse into the challenges, learning and application of best practices on setting up and managing vaguely defined, unstructured ventures, which do not necessarily fit into the defined schemes of “classic” project management.
While this first blog out of the entire series does not necessarily reflect on any of the learning of neither our initial workshop nor the TCM framework provided by AACE it certainly does set the scene for the next postings, which will address in detail the areas covered in the AACE curriculum.
1. Setting the scene:
Taking part in the development of a groundbreaking concept of customer value and perception optimization at end-user level, we have started addressing and pre-defining behavior models based on the experience the subscriber has with the service provided through the operator.
While the concept seems to be clear and easy to understand and follow it becomes seemingly difficult to define a proper frame around the deliverables and the approach to deliver any kind of framework for such analyses and improvement. Being a highly innovative idea and depending on a shier undistinguishable amount of parameters, constraints and assumptions, we are very soon reaching the limits trying to apply a “classic” project management approach to provide a framework for this endeavor.
In reference to Gary Chin in his book “Agile Project Management” (Chin 2004) “someone might risk stifling innovation with (the allocation of) too much process. With too little process, someone might risk never getting the project completed. The mismatch occurs when you try to employ classic PM methods in an agile environment.”
Citing further: “While many companies have spent significant money and energy customizing common PM processes to their specific situations, they are still finding that it is more of an art than a science, where certain project managers thrive and others struggle. Building on classic PM methods can take you only so far in the uncertain environment that is so typical of projects pushing the boundaries of technological and business innovation. Agile PM will provide some new concepts and techniques that I have (referring to the author) seen to be effective in dynamic environments and that, hopefully, will help you advance your project management foundation in these challenging areas.”
Considering an agile environment or rather a soft systems environment (Checkland 2000), like in this case, being to driver for the innovation, we are currently looking into Agile Project Management, and as advised by Dr. Paul at a recent stage also considering an Integrated Project Delivery model (AIA 2009) as introduced by The American Institute of Architects, as being able to provide the “right framework” for our engagement.
Figure 1: The inquiring/learning cycle of SSM (Checkland 2000)
Checkland’s as well as AIA’s models of Soft Systems Methodology (Checkland 2000) and Integrated Project Delivery (AIA 2009) seem to provide the best standard concepts to the structural challenge at hand.
Still, they do not provide answer or guidance to the challenges of motivating and managing highly skilled and intellectual team members, which are crucial to successfully deliver such complicated concepts.
Further challenge at hand will be the contractual framework around such engagements, providing Quality Assurance and SOX compliance in a very volatile (agile) environment.
Both topics will be addressed in the following blogs.
Klaus
Cited references:
AIA, T. A. I. o. A. (2009). "Integrated Project Delivery: A Guide." Retrieved 14.11.2009, 2009, from http://www.aia.org/contractdocs/AIAS077630.
Checkland, P. (2000). "Soft Systems Methodology: A Thirty Year Retrospective." Systems Research and Behavioral Science Syst. Res. 17: S11–S58.
Chin, G. (2004). CHAPTER 1: DEFINING AGILE PROJECT MANAGEMENT. Agile Project Management, American Management Association International: 1-12.
Chapter 1 of the book "Agile Project Management" is presented. The chapter discusses the concepts and techniques provided by agile project management (PM) which are seen effective in dynamic environments. The primary reason expanding on classic PM methods that are considered not as effective in certain areas is explained. Also discussed are the characteristics of agile PM and the two types of project which are internal uncertainty and external uncertainty.
While this first blog out of the entire series does not necessarily reflect on any of the learning of neither our initial workshop nor the TCM framework provided by AACE it certainly does set the scene for the next postings, which will address in detail the areas covered in the AACE curriculum.
1. Setting the scene:
Taking part in the development of a groundbreaking concept of customer value and perception optimization at end-user level, we have started addressing and pre-defining behavior models based on the experience the subscriber has with the service provided through the operator.
While the concept seems to be clear and easy to understand and follow it becomes seemingly difficult to define a proper frame around the deliverables and the approach to deliver any kind of framework for such analyses and improvement. Being a highly innovative idea and depending on a shier undistinguishable amount of parameters, constraints and assumptions, we are very soon reaching the limits trying to apply a “classic” project management approach to provide a framework for this endeavor.
In reference to Gary Chin in his book “Agile Project Management” (Chin 2004) “someone might risk stifling innovation with (the allocation of) too much process. With too little process, someone might risk never getting the project completed. The mismatch occurs when you try to employ classic PM methods in an agile environment.”
Citing further: “While many companies have spent significant money and energy customizing common PM processes to their specific situations, they are still finding that it is more of an art than a science, where certain project managers thrive and others struggle. Building on classic PM methods can take you only so far in the uncertain environment that is so typical of projects pushing the boundaries of technological and business innovation. Agile PM will provide some new concepts and techniques that I have (referring to the author) seen to be effective in dynamic environments and that, hopefully, will help you advance your project management foundation in these challenging areas.”
Considering an agile environment or rather a soft systems environment (Checkland 2000), like in this case, being to driver for the innovation, we are currently looking into Agile Project Management, and as advised by Dr. Paul at a recent stage also considering an Integrated Project Delivery model (AIA 2009) as introduced by The American Institute of Architects, as being able to provide the “right framework” for our engagement.
Figure 1: The inquiring/learning cycle of SSM (Checkland 2000)
Checkland’s as well as AIA’s models of Soft Systems Methodology (Checkland 2000) and Integrated Project Delivery (AIA 2009) seem to provide the best standard concepts to the structural challenge at hand.
Still, they do not provide answer or guidance to the challenges of motivating and managing highly skilled and intellectual team members, which are crucial to successfully deliver such complicated concepts.
Further challenge at hand will be the contractual framework around such engagements, providing Quality Assurance and SOX compliance in a very volatile (agile) environment.
Both topics will be addressed in the following blogs.
Klaus
Cited references:
AIA, T. A. I. o. A. (2009). "Integrated Project Delivery: A Guide." Retrieved 14.11.2009, 2009, from http://www.aia.org/contractdocs/AIAS077630.
Checkland, P. (2000). "Soft Systems Methodology: A Thirty Year Retrospective." Systems Research and Behavioral Science Syst. Res. 17: S11–S58.
Chin, G. (2004). CHAPTER 1: DEFINING AGILE PROJECT MANAGEMENT. Agile Project Management, American Management Association International: 1-12.
Chapter 1 of the book "Agile Project Management" is presented. The chapter discusses the concepts and techniques provided by agile project management (PM) which are seen effective in dynamic environments. The primary reason expanding on classic PM methods that are considered not as effective in certain areas is explained. Also discussed are the characteristics of agile PM and the two types of project which are internal uncertainty and external uncertainty.
Blog#6 - Farid Maloni - Decision making information support
Hi All,
Here I am for my week#6 blogs. I want to share an issue where I faced of within this week in my daily work. Still about my current projects the structural refurbishment project.
I am now close to the completion of the project which I need to carefully monitor my EAC now. Probably some of you will think. Why do I aware to “carefully” monitor EAC just now? Is it monitored previously or not?. Or probably just realize that you will close to spending or over spending?.
Let me tell the whole story here. The capital spending in my company allows PM to spend project expenditure within 95-103% without preparing Project change request – PCR. Less or more that we need to raise PCR and get approval from management.
I do monitor my EAC in regular basis along reporting period. The EAC was calculating by actual project + the committed transaction. The committed transaction are come from contract value, purchase order, material issue requisition and seconded engineer invoices, consultant invoices, accommodation, etc.
Sometimes I review my project cost at EAC during reporting duration, I will figure out a “surprising” EAC value. Last 2 months I found the expenditure still OK (even tendency 90% budget); But at this monthly I see big changes which put me in worried ‘cause it close to approved value while I still small committed scope behind.
Try to find the problem with the project control, and we found that the actual and the committed value in our ERP is not “real time”. In the other word is not update as fast as my requirement for decision. This is an issue of DECISION MAKING INFORMATION SUPPORT- during project execution.
The refurbishment project is quite unique which I think it is more like an operation and maintenance work, it is really high level scope, and run the expenditure as per actual finding during execution. But the management want me to run it as a project; a clear scope, within time and budget. The scope of work is just selected list of equipments on the plant, but the actual repair works are measure on field by inspection. The simplied step by steps as follow:
1.Contractor prepare inspection access (scaffolding, propping etc)-for this activity contractor charges as al lump sump prices.
2.Perform inspection and identify defect with the engineer
3. Engineer prepare repair sketch with calculated estimate tonnage per repair point,
4. Contractor perform installation as per repair sketch
5. Engineering approve the QC and accept the work.
6. Payment claimed by contractor.
The agreed contract with the contractor is combination of lump sump (for step 1 above) and unit rates (for step 4). The Challenges for me as a PM, I will never know the quantity of actual repair work (tonnage) at every equipment until it’s inspected (as per step no.2).
So almost every day I will face up with milestone of DECISION MAKING within “proceed or not proceed the repair” every time I reported for a defect.
Before asking the contractor to preceed with the works, I need to consider a number of list, e.g. is my current material inventory is available? Is my contract committed value is still available for remain work? Is the EAC, actual and committed show in ERP is the last update? etc which I fully rely on the reliability if information shown in my ERP for my “decision making”.
Un-updated information in ERP will let me decide not exactly right on this kind of project.
Seeking the answer by the book, TCM Framework, page 58, and try to read carefully. I see that this book mostly talks at high level decision making: is investment decision making (probably about FEL 1 or 2).
IMHO, I see that the flow process of investment decision making in Figure 3.3.-1 could be applicable to the project execution phase too specially project control activity. The step of develop decision model, quantify value & risk, evaluate and recommended action is iteratively happen in daily basis of my project.
Every time I reported for the repairs with an estimated value of tonnage will charge waiting for my apporoval for go or not go, I following the logic exactly as per map at TCM,p.58, process of invesment decision making, in tactical room.
I need to decide on the repairs, unwittingly I do this process several times, but unfortunatly I found the “input” (information support) is not "real time" or updated. So even the flow process it right, but without good support from information database, the quality of decision will not precisely right.
What I would suggest to my in-direct report, that our ERP need enhancement to support the good project execution. Some of transaction shown in the screen with about 2 months delay, which is need to improve. Some transaction could probably add more than what is exactly appears (system error). Some information need to propose automatically uploaded without need of human interference etc.
A lot of work need to do then to improve our system, but here I just want to underlined that the existence of “reliable information support to decision making” is must in order to run project as per agreed scope, cost and time.
Here I am for my week#6 blogs. I want to share an issue where I faced of within this week in my daily work. Still about my current projects the structural refurbishment project.
I am now close to the completion of the project which I need to carefully monitor my EAC now. Probably some of you will think. Why do I aware to “carefully” monitor EAC just now? Is it monitored previously or not?. Or probably just realize that you will close to spending or over spending?.
Let me tell the whole story here. The capital spending in my company allows PM to spend project expenditure within 95-103% without preparing Project change request – PCR. Less or more that we need to raise PCR and get approval from management.
I do monitor my EAC in regular basis along reporting period. The EAC was calculating by actual project + the committed transaction. The committed transaction are come from contract value, purchase order, material issue requisition and seconded engineer invoices, consultant invoices, accommodation, etc.
Sometimes I review my project cost at EAC during reporting duration, I will figure out a “surprising” EAC value. Last 2 months I found the expenditure still OK (even tendency 90% budget); But at this monthly I see big changes which put me in worried ‘cause it close to approved value while I still small committed scope behind.
Try to find the problem with the project control, and we found that the actual and the committed value in our ERP is not “real time”. In the other word is not update as fast as my requirement for decision. This is an issue of DECISION MAKING INFORMATION SUPPORT- during project execution.
The refurbishment project is quite unique which I think it is more like an operation and maintenance work, it is really high level scope, and run the expenditure as per actual finding during execution. But the management want me to run it as a project; a clear scope, within time and budget. The scope of work is just selected list of equipments on the plant, but the actual repair works are measure on field by inspection. The simplied step by steps as follow:
1.Contractor prepare inspection access (scaffolding, propping etc)-for this activity contractor charges as al lump sump prices.
2.Perform inspection and identify defect with the engineer
3. Engineer prepare repair sketch with calculated estimate tonnage per repair point,
4. Contractor perform installation as per repair sketch
5. Engineering approve the QC and accept the work.
6. Payment claimed by contractor.
The agreed contract with the contractor is combination of lump sump (for step 1 above) and unit rates (for step 4). The Challenges for me as a PM, I will never know the quantity of actual repair work (tonnage) at every equipment until it’s inspected (as per step no.2).
So almost every day I will face up with milestone of DECISION MAKING within “proceed or not proceed the repair” every time I reported for a defect.
Before asking the contractor to preceed with the works, I need to consider a number of list, e.g. is my current material inventory is available? Is my contract committed value is still available for remain work? Is the EAC, actual and committed show in ERP is the last update? etc which I fully rely on the reliability if information shown in my ERP for my “decision making”.
Un-updated information in ERP will let me decide not exactly right on this kind of project.
Seeking the answer by the book, TCM Framework, page 58, and try to read carefully. I see that this book mostly talks at high level decision making: is investment decision making (probably about FEL 1 or 2).
IMHO, I see that the flow process of investment decision making in Figure 3.3.-1 could be applicable to the project execution phase too specially project control activity. The step of develop decision model, quantify value & risk, evaluate and recommended action is iteratively happen in daily basis of my project.
Every time I reported for the repairs with an estimated value of tonnage will charge waiting for my apporoval for go or not go, I following the logic exactly as per map at TCM,p.58, process of invesment decision making, in tactical room.
I need to decide on the repairs, unwittingly I do this process several times, but unfortunatly I found the “input” (information support) is not "real time" or updated. So even the flow process it right, but without good support from information database, the quality of decision will not precisely right.
What I would suggest to my in-direct report, that our ERP need enhancement to support the good project execution. Some of transaction shown in the screen with about 2 months delay, which is need to improve. Some transaction could probably add more than what is exactly appears (system error). Some information need to propose automatically uploaded without need of human interference etc.
A lot of work need to do then to improve our system, but here I just want to underlined that the existence of “reliable information support to decision making” is must in order to run project as per agreed scope, cost and time.
Crashing or Fast Tracking? – Thao’s blog #.5
I've put more efforts on AACE works this week with thoughts in my mind that I crashed to catch up the schedule. However, when going back to the definition of “crashing” and “fast tracking” I am confused a bit. Am I crashing or fast tracking with AACE activities? What is the best option for me now?
So what does correctly define “crashing” and “fast tracking” in terms of project management concepts? “Crashing”1 is an “action to decrease the duration of an activity or project by increasing the expenditure of resources”. While “fast tracking”2 is “compressing the project schedule by doing some or all of certain activities in parallel that would normally be done in sequence,”. Back to my works on AACE this week to get it analyzed if it’s “crashing” or “fast tracking”. Here are my detailed activities
- On question project – week#.6:
+ I finished exercises in Engineer Economy for week 6 first, and then moved on the next exercises for week#.7
+ After the Engineer Economy exercises, I started with Humphrey’s. I did the same and finish exercises for week. #6 and partially for week#.7
- On Mapping project – week#.6: no activity but I plan to catch up on weekend time.
- On Paper project – week#.6: no activity but I plan to catch up on weekend time then I would be more focused on paper studying.
What I find when doing like this way is PRODUCTIVE.
I can finish my homework faster than ever before. Now I’m managing my own schedule by completing task by task instead of running gradually as per the project plan. Lesson learn for me is “change the way of working” when things doesn’t work as what you planned. Sometimes, we need to think out of the box to make changes. And it’s obviously meaningful in this case. A new way of working has brought me a clear result.
Going back to “crashing” and “fast tracking” techniques in project management I realized that I combined the two. I did put more efforts to reduce the activity duration by completing more exercises in a certain time to crash the schedule. I’m now ahead one week for question project. And by doing this, I’m fast tracking by putting more activities in two-week period instead of a day. Now I could save some resources to catching up the schedule for Mapping and Paper project next week.
As for me the key for our AACE recovery plan is to get the work done fastest when everyone seems so busy with other stuffs. Just now I understand more on the meaning of “work smarter not harder” that is everywhere in AACE Prep. Course slides. For sure, to prove my idea I need one week to see the result if I can actually catch up and recover myself to go ahead the schedule in AACE project. Let’s wait and see my result this time next week.
P/S: I’m waiting for you, my dear mates, to share your experience and know-how to deal with AACE works effectively and productively while you also have other important stuffs to accomplish. What is your key to succeed so far? Farid, Arsil, Andy, Nui, Lau….. I’m respecting and admiring you for what you’ve done so far, EXCELENT JOBs and you're the symbols for me to try and keep going on with AACE.
Bwt, I'mso sad when no reponse received for the questions I raised in the weekly blogs. No-one ever read except for our Doctor. ? You know what, I've read all of your posting it's really worth reading. I learn from you guys then and there. For me, I hope to receive comments as many as my personal blog, hehehehe :D .. It's wonderful if our AACE blog will be like any other blogspot forums :D,
Nice weekend to you all.
Sources:
1, 2: Wideman Comparative Dictionary of Project Management, Project Management Dictionary English – Indonesian Version, published by Generasi Info Media, Indonesia
Sources:
1, 2: Wideman Comparative Dictionary of Project Management, Project Management Dictionary English – Indonesian Version, published by Generasi Info Media, Indonesia
Asril's Blog Week #6
Learning on Portfolio Management
I am recently working with Corporate Business Development department who visit Sorowako site to give us an overview of the new Capital Project selection across Vale Inco organization called Capital Portfolio Management Process and gain more inputs on how the process going to be. This process is relatively new across the organization but in the past each site area has its own system and specifically at Sorowako site, we called it Risk Capital Ranking process. It’s a very good opportunity to setup a portfolio management system as well as learn Portfolio Management Process implementation in the real work compare with theory in the books. The discussion comes up with definition of Portfolio Management process as per corporate definition, how it works, how the process is, what the objective is & who will be the person accountable.
What is the portfolio management in theory? According to Ken Crow, DRM Associates-http://www.npd-solutions.com/portfolio.html, portfolio management is used to select a portfolio of new product development project to achieve the following goals:
- Maximize the profitability or value of the portfolio
- Provide balance (risk & reward)
- Support the strategy of the enterprise
In the meeting discussion, the conclusion is that the portfolio management in Valeinco is a typical process for the top management through portfolio view decide which projects must be accelerated, kept running and decelerated based on project profitability rating, risk and align with the corporate strategy. Project portfolio is the way to improve project selection according to the strategic plan and focusing on the global result. In the past, the strategic plan only on isolated projects resulting difficulties to the top management to decide the way to go.
Its obvious that the portfolio management theory are commonly used across all of the company around world, it doesn’t matter what the definition is, but the main objective is to have a common tools for decision making.
How the portfolio management works? The following chart explain briefly the process within the organization (The picture is not clear enough).
(Chart is used with Permission)
Portfolio management focus on the project life cycle and portfolio prioritization and keep day to day project management by respective project management area. Project generation is production site responsibility to identify the correct use investment with produce a project justification based on strategic plan align with corporate strategic imperatives. In the pipeline management stage, site management and corporate will determine the methodology to analyze each project and attribute a grade. The result of pipeline management is providing the ranking of the project forms by their groups as related to the portfolio as whole.
In the portfolio management level, the corporate collecting all the projects from all sites and compete and evaluate against others using portfolio tools and referring to the fund available. The outcome is the project selected that offer the higher profitability with risk consideration, align with corporate strategic and limitation on the availability of the capital fund.
The following chart is an example of project prioritization based on the strategic alignment versus return on investment. Project in the grey area is automatically prioritize to go ahead and project is the yellow or low priority areas needs to be further justified in order to remain funded or even automatically cancelled due to no risk or no benefit for doing it (the picture is not clear enough).
(Chart is used with permission)
In summary, portfolio management process is a very powerful tool for the top management to the goal and objective and makes any decision and not limited to the capital project by balance the company goals: risk vs. profitability, new products vs. improvements, strategy fit vs. reward, market vs. product line, long-term vs. short-term.
We are all agreed to implement portfolio management process for capital project selection at this stage and looking for possibility to implement is into all aspect of decision making. CCE training is a very good example on implementation of portfolio management process. In the future for the next participant from PT Inco, the decision to go or not go into this training shall be based on the profitability return by calculate the Return on Investment (RoTI) and align with department goal & objective. To make sure the Return on Investment is achieved as then postmortem review shall be implemented.
Sorowako, November 14th, 2009
Muhammad Asril
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