:AACE CERTIFICATION 2009-2010:

Just find not an easy to start on paper framework/or structure. I just start to compose my paper body and slowing down when reach structuring the flow on the content. So I think I need to concept the frame/structure of my paper body OR probably flow of logic on why, what, and how.

My previous title was “Project management earns value observing from Syariah law.

To start my observation on syariah and align it with the EV theory, I start my reading trough any article which related to syariah financing. My though said at that time; I can start the introduction of paper body by “WHY” I am interesting to PM-EV and syariah. Then found that I would say is that because the rapid growth of syariah financing bank in the last decade to fund a major capital project; and then even non-Islamic country like UK, china, even US start to build their Syariah finance infrastructure. Hmmm,..It could be a good start for my “WHY”.

Then I start to think the body of my paper resources (the WHAT and HOW). After reading several articles I thought that I should not further emerged into financial syariah and its finance’s structures. But I just need to absorb the basic/spirit OR paradigm on how differentiating syariah and conventional financing; which I end up to area set of syariah’s prohibitions (1):
1. Transaction in un-ethical goods and services
2. Earning return from a loan contract (Riba/Interest/Usury)
3. Compensation based restructuring of debts;
4. Excessive uncertainty in contracts (Gharar)
5. Gambling and change-based games (Qimar)
6. Trading in debt contracts at discount, and;
7. Forward foreign exchanges transaction.

To start my observation on how to align this with PM-EV; then I come out with email to mentor a couple month ago (Nov 27, 2009) asking on what the different between PM-EV with conventional PM. the answer that PM-EV the different to conventional PM is only capability to have “real-time” measurement so it could give us “early warning” on how healthy our project is.

To close the loop, I am focusing on the important of PROMPT payment seeing from syariah. By ability of EV to measure the “EARN” then there is no reason to delay on payment. Once, because the obligation has delivered then is ask by syariah to prompt payment the work “before the sweat is drying off”. Also, in addition, prompt payment will prevent factoring invoice practice.

So my paper final paper tittle will be more narrowing to “PROJECT MANAGEMENT: EARN VALUE AND PROMPT PAYMENT PRACTICES OBSERVED FROM VIEW OF ISLAMIC SYARIAH LAW.
The framing will be; start by introduction on WHY I choose this topic; which I would start on boom of syariah funding in the prject funding. Then continue with introduction to syariah financing and its instrument (e.g. sukuk).
Then I will continue the WHAT by start discussion on syariah prohibiting; and then start the HOW by the reason base on my personal observation, the compatible of EV to syariah compliment project management; and use the prompt payment as a case of dicussion.
Finally close with hypothesis (at the conclusion) that is an opportunity to be fully syariah comply IF any project funded by syariah instrument also run the execution by PM EV.

I hope above frame logically OK, and acceptable for 2500 paper. Please comment then I will continue to build the 1st draft.

B.R, Farid

PS: I probably slow in progressing my paper since I only could work on it in Sat and Sun every week, share with my family time since in the other day I will be full time (even more) to my new job;...adapting to new system.

Cited (1) (4). “Managing financial risks of sukuk structure”, A dissertation of Master of Science, Ali Arsalan Tariq, Loughborough University, UK.

What I'm doing this week,

I knew that last week is bad week for me. Healthy is not good, No progress on paper work. After chating with you instructor, I motivate myself to put your picture in front of my computer to warning me every day to focus my energy to do the paper. So this week, I set the goal to do it 2 hours & 300 words per day. I can do it for 4 days, let's say quite good. Now I have some progress. You may think why it's so hard for me, YES it's hard for me than reading the book and do exercise. I have little chance to writing the research document for my entire life but now it become familiar to me.

This week I have some progress, I almost finish abstract and introduction but still need some review again because when I wrote abstract in the begining, wording and my thought may not be the same line with current one.

I have decided to continue previous topic with your suggestion, to Develop historical database and apply cost estimation technique which I chose Learning curve and Unit technique to be compared.

Why I chose Learning Curve for this study, because this technique use the historical data to predict the future cost. And it because the work that I select (BSC Expansion) is should have increased efficiency in manhour when repeat the work. As we in network roll out industry, the more efficiency we can do the more that we can get competitiveness over other suppliers or even small subcontractors.

With the comparison of two techniques above (Learning Curve and Unit) so I can evaluate which technique is appropriate for this kind of cost. Then I can make recommendation to my organization.

This topic is the exact problem in my organizaiton because currently we try to feedback plan & actual peformance data to estimation team which should be good but it 's not proper keep data and not really bring it into consideration when do new project planning. So I think and hope that I can do it as example to gain understanding concept and real develop to be useful.

As I promise, I will submit my lastest version of my paper to you within this weekend.
Don't expect too much from me, I try my best now.

Dear all,
I am trying the new method for me to write the blog from my gadget handheld in order not always attached to my computers whether in my house nor my office, which I have been doing for these 4 months.

For last couples of weeks I have been stressed out because I have no long holiday like common people have during change year event. I only have holiday during red date that shown in common calendar. Even my HR manager remind me to get some loose attitude and not working all the time. While it is hard for me to do when I know there is my responsible for me to take care my running projects. Especially during holiday is the perfect time to make project arrangement while most of teachers and students are not in here.

I am not whining or complaining, I am just sharing the situation that I have not more or less.

But lesson learnt that I want to share is, the preliminary project schedule is always open to change. Why? Because when we design and plan the schedule, commonly we divide the weight percentage equally to every week within the time frame not based on WBS or in proper cycle within their step by step dependencies. This is not real while it is ideally will be good, but still is not real.

For me a good project schedule is workable from that we can arrange the resource that we need, human, tools and even construction budget to spent every month.

I know that but the contractor who worked for this project in my organisation did not know that. So what happen actual on site is, from the schedule their work progress is WAY OFF the schedule, but if you see actual on site and sees from item of work remain is getting less. So actually they are not OFF from schedule, even my boss said "you work too fast".

Luckily, in this project we have 2 phases, we divide in 2 in order to balance our finance school year budget in to 2 years. Because they work fast, we already put the next year work into now, so again, this is will level the schedule back to normal speed.

And during these 6 months ahead, I also occupied with another 3 more projects that have a short of period of time. Others said "poor me, because I only has 3 back up resources for these projects" but for me, it is a can do projects because I know my resources skill matrix and we working as a team. Within this year only, my team has manage school projects worth of $7,5 million beside other operational and maintenance projects.

For TRANSFORMER TEAM, I have rolled out my propose working plan which is to stretch questions and mapping schedule into June and change weekly report to monthly report IF team agrees to have exam on June or July 2010.

And the paper assignment will be our main target that need to be finish within this March 2010. So we would not be bother Dr PDG concentration for his new student class group.

And Project Managers need to change their baseline schedule to more realistic target, after that I will submit change order to the client, just like the my reality working procedure.

Have a nice weekend everybody. Remember, Work hard.... Play hard

Sent from my BlackBerry® smartphone from Sinyal Bagus XL, Nyambung Teruuusss...!

Engineering Work Breakdown Structure (WBS)

We just recently have the approval for the annual capital budget 2010 from the corporate and starting to develop project execution for all of sustaining projects. One of the major projects, Electric Furnace rebuilds being developed and EPCM contract has been awarded to the foreign contractor. They recently develop the Work Breakdown Structure (WBS) on each major activity i.e. engineering, procurement, construction and commissioning. I found the interesting thing that leads me to write it down to this blog.

The engineering consultant who win this job develop the engineering Work Breakdown Structure (WBS) and seems to me they are developing it with cost-element orientation instead of product-oriented or phase oriented. The Work Breakdown Structure organized around element of cost. Summarizing status of the key area of the engineering design would become difficult or impossible because date would be added from numerous elements of cost legs to obtain a total status for a subject of engineering design.

When I open Humphreys & Associates chapter 2, Work Breakdown Structure page 39, its give a clear view and guidance how the best way to develop Work Breakdown Structure for engineering design. Since the engineering design has a multiple phases, it’s necessary to structure the Work Breakdown Structure by phase. This allows the Work Breakdown Structure to be properly oriented for all phases. The following example illustrates how an engineering Work Breakdown Structure would look according to the Humphreys theory.

I’m still read this chapter and discuss with the consultant on how to develop the best Work Breakdown Structure implemented for this project. I would write in the next blog what is the final result that we agreed and open for comments.


Sorowako January 15th, 2010.

Cited:
Humpreys & Associates, Chapter 2, Definition of Scope (Work Breakdown Structure) Page 29-43

1. Identifying the critical activities and the risks
2. Determining the ranges and probability density functions
3. Contingency determination and probability overrun - using Monte Carlo simulation

Identifying the critical activities
The root cause analysis and the cost risk score on previous week blog#6 and blog#7 present that the major cost driver of risk category is the lower productivity of equipments which are caused some circumstances such lower physical availability of equipments, ineffective constructability, long haul distance, site complexity , rain season, etc. The variability of equipment productivity result uncertainty or risk condition that drive the overall of project activities cost have a risk to overrun. As the equipment productivity is the parameter used to calculate all activities costing and simulate a risk variable to determine a contingency of project cost.

Determining the ranges and probability density functions
Historical data of equipments productivity that have been worked in the active pit adjacent the project work area since October 2009 to December 2009 is used to determine the ranges and probability density function (distribution) of productivity parameter. The data distribution as shown Figure below shows that probability density decrease is quite symmetrically as a value move the mean where the means is equals to the median. Thus, the normal distribution standard is used as probability density function to run on the simulation.

Contingency determination and probability overrun – by Monte Carlo Simulation
A cumulative probability distribution is more commonly known as an S curve which is usually derived from a simulation such as Monte Carlo can be particularly useful in portraying the uncertainty implications of various cost estimate. While the uncertainty is described in a probability distribution modeled and the generation of statistics requires a random sampling of all possible values. The general approach to simulation using Monte Carlo method is [1] :

1. Develop a cost estimate model based on work break down structure
2. Select the group for analysis as cost variables
3. Identify uncertainty includes select the probability distributions
4. Analyze the model with simulation
5. Generate reports and analyze information

In Figure above can see the known risks of probability of project cost is range from $1.0855 M at 5 % probability of under run to $ 1.2658 M at 5% probability of overrun. The characteristic of S curve show that the gradient of slope is more gradual shape when approach more than 90 % probability, which means that increasing a certainty level up to 100 % probability would give more increasing on project cost estimated which might be not worth as preference option.
However, there is no specific guideline is considered a best practice to determine a defensible level of contingency reserves as the selection of desired probability actually depends upon the risk attitude of management. A 50% probability might be have equal probability of overrun and under run, also a risk neutral approach to overbalance the corporate capital portfolio that some projects might be overrun while others will under run. Moreover, the contingency reserves are necessary to cover increased cost resulting from uncertainty mining plan in the pit area which affect the project scope and parameter assumption, geotechnical risk, increasing fuel cost and equipment maintenance cost, low production working during rain season, and inaccurate topography data. Refer to the Corporate policy that 10 % is allowance limit for overrun and considering to make a provision for risks unknown as stated above at the time but likely appears as the project progress, a 90% probability is proposed as a desirable level of contingency reserves.

[1] Risk Management, Chapter 31, page 31.6-31.7, Allen C. Hamilton, CCE, Skill & Knowledge of Cost Engineering, 5th Edition Revised, AACE International.