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The Predictable Future

The Predictable Future. Ron Babich, Vice President Hard Dollar Corporation. Hard Dollar Corporate Objectives. Leading PCM solution 100% customer success The “Southwest Airlines” of software employers Fast Growing. HD CUSTOMERS BY INDUSTRY.

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The Predictable Future

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  1. The Predictable Future Ron Babich, Vice President Hard Dollar Corporation

  2. Hard Dollar Corporate Objectives • Leading PCM solution • 100% customer success • The “Southwest Airlines” of software employers • Fast Growing HD CUSTOMERS BY INDUSTRY

  3. No offense Future Man but do you have all your marbles? “Future Man” Predicts…

  4. Uni Unified Visibility - Control Planning/Design Estimating Scheduling Progress Finance

  5. The Reality…Now • Direct Causes of Failure • Errors or oversights in the planning and preparation phase • Indirect Causes of Technical Failure • Inadequate execution of operation and maintenance http://www.exprobase.com/Default.aspx?page=181#LinkImprovements

  6. Unified Visibility - Control Planning/Design • Numerous Take Off Systems • Spreadsheet Output • Lack of Change Support in Real Time

  7. Unified Visibility - Control Estimate • Centralized History • Lack of Detail • Integration to Schedule • “Norms” Data • Dependency on Spreadsheet

  8. Unified Visibility - Control Schedule • % Complete – Lack of Quantity Information • Disconnected from Progress and Estimating Tools • CPI not included • Scheduled work varies from how the work was estimated

  9. Unified Visibility - Control Progress • Disconnect from Finance • Level of Detail not Matched with Plan and Reported in Finance • Discipline of Collection • % Complete Guess vs. Actual Quantities

  10. Unified Visibility - Control Finance • Manual Reconciliation to Estimate Origin • Level of Detail not Matched with Plan • Cash Flow Calculations • Resource Ties • Accrued Earned Calculations

  11. The Future is…Predictable? • Is it possible to manage the unplanned? • Use historical data for agile planning? • Use ‘What if?’ scenarios on the fly?

  12. The Future Lies in History

  13. Where did the Number come from? Proprietary & Confidential

  14. Common Failures by Stages • Setting goals • Unclear description of STO goals • Planning • Procedures not easy to follow or up-to-date • Tools are incorrectly specified • Improper technical skills requirements • Unclear or incomplete work orders http://www.exprobase.com/Default.aspx?page=181#LinkImprovements

  15. Common Failures by Stages Execution • Inadequate failure diagnosis • Failures not detected during testing or inspection • Bad on-site load measurement • Inadequate quality control of executed work • Delayed installation of component • Installation of wrong or damaged components • Ignored maintenance http://www.exprobase.com/Default.aspx?page=181#LinkImprovements

  16. Common Failures by Stages Reporting • Bad cause description Data Analyses • Inadequate utilization of company internal data • Inadequate exchange of reliability data between operating companies Improvements • No improvements suggested at all • Insufficient quality on suggestions http://www.exprobase.com/Default.aspx?page=181#LinkImprovements

  17. Predicting the Present • Global spending in 2011 on oil & gas STO services • will total $13.17bn. Source: visiongain $676 Million+ at Risk

  18. Audited Spreadsheet Errors • Audits done shows that nearly 90% of the spreadsheets contained serious errors • The average cell error rates (the ratio of cells with errors to all cells with formulas) is 5.2% Source http://www.strategy-at-risk.com/2009/03/03/the-risk-of-spreadsheet-errors/

  19. This Formula Has Legs E = 1 – (1 – e) n

  20. Dilution in the Culture “Evidence shows that most downstream and midstream operators…leave 3% to 5% of potential cost-reduction savings on the table annually because addressing them requires a change in organizational behavior and business culture.” Source: Alex Buehler, The Marshall-Teichert Group, Minneapolis, Minn. November 2010 edition of OIL & GAS FINANCIAL JOURNAL

  21. Is Software Used to Schedule the Project? Case Study on STO on 44 Projects

  22. Is Pre-task Planning a Regular Part of Project Planning? Case Study on STO

  23. Where do the Workers Come From?

  24. Duration of Project

  25. Industry Experts Know… • An acceptable range of error for a detailed work order scope is of about 10% • When work orders are "guesstimated" without any detail, the degree of error is very high. The error range could span from 25% up to 60% and more.

  26. Cascading KPIs “How can we get by with one less water hauling truck this week?” or… …“How can we provide enough information about a maintenance need to ensure the instrumentation technician arrives onsite with the correct parts and tools?”” Source: Alex Buehler, The Marshall-Teichert Group, Minneapolis, Minn. November 2010 edition of OIL & GAS FINANCIAL JOURNAL

  27. Characteristics of Credible Cost Planning Clear Identification of Task Provision for Program Uncertainties Broad Participation in Preparation Recognition of Inflation Availability of Valid Data Recognition of Excluded Costs Standardized Structure For Estimate Independent Review Of Estimates

  28. 1. Plan • Layout project needs with the Cost Breakdown Schedule (CBS) • Create task templates, norms, standardized coding, and work packages Plan

  29. Rate Storage Store Re-Usable Updated Rates

  30. Assembly Storage Standardize Crew Make Up And other Assembly Like Resources

  31. Norms Database Storage Build Best Practice History to Draw Durations

  32. Planning Allow for Flexibility in Scope

  33. 2. Schedule • Create cost and resource loaded schedules • Dynamically link with Oracle’s Primavera (P6) or Microsoft Project Plan Schedule

  34. Estimating

  35. Scheduling What If Scenarios, Changes, Resource-Productivity Consequences

  36. 3. Execute • Track the actual data vs. projected data • Use actual performance factors to drive accurate forecasts • Cost visibility from start to finish • Automated change tracking • Team collaboration and updates Plan Schedule Execute

  37. 4. Complete & Analyze • Analyze trends and get alerts to successfully resolve issues • Access web-based HD Projectfacts for instant reports • Save full historical data for future use Plan Schedule Execute Complete & Analyze

  38. Spreadsheet Virus

  39. A Formula for Bad PI / Pie • Audits done shows that nearly 90% of the spreadsheets contained serious errors • Even experienced users succeed in only finding 54% on average • Results show that 94% of spreadsheets have errors and that the average cell error rates (the ratio of cells with errors to all cells with formulas) is 5.2% Source: http://www.strategy-at-risk.com/2009/03/03/the-risk-of-spreadsheet-errors/

  40. A Small Error

  41. A Small Error

  42. Avoiding Mistakes

  43. Ron Babich, Vice President Hard Dollar Corporation Ron.Babich@HardDollar.com

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