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1 Project Management Mission Oriented, Customer Focused.

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1 1 Project Management Mission Oriented, Customer Focused

2 2 Corporate Mission Information Security and Training maintains a mission oriented team of talented professionals providing world class, customer focused support to the U.S. Government Interagency Team.

3 3 What is a PM 1.The Manager of a Program or Project 2.Responsible for Project Performance 3.Primary Customer Interface for effort 4.Leader of personnel 5.Accountable for ultimate success 6.Responsible for Resources, Risks, Schedule, cost, process and quality 7.Establishes and achieves performance metric 8.Owner of the business

4 4 Roles and Responsibilities Project Managers – Maintain Burn Plans – Stay Abreast of Growth Ops – Coordinate New Business – Manages Contract Performance Business Area Managers – Bid Opportunities Properly – Manage O/H effectively – Audit Burn Plans – Monitors/Audits Contract Performance Business Developers – Maintain valid strategic BD Plans – Identifies and Captures New Business – Coordinates directly with all Managers – Maintain Corporate Growth Plans Business Management – Actively Participate in Bids – Compile and Maintains Data – Status Plan – Advise/Counsel Managers on O/H – Provides independent Contract Review Executive Management – Manages to established Division/Group Metrics – Directs overall strategy for growth – Maintains Profit and Loss – Ultimate Responsible for overall Performance Manage To Metrics Accurate Burn Plans Keep Contracts Sold Labor Rates Growth #s - Existing Clients Provide O/H Inputs New Customer Numbers Opportunity ROI Combined B&P Estimates Organize/Validate All Budgets Prepare then Status Plans O/H, Profit, Revenue History Validate Approve Budgets Application of Strategic Hires Overall Accountability Annual Budget Plan Annual Budget Plan Responsibility Quality

5 5 Business Area Mgr Resources Acquisition Life Cycle MarketDevelopRFP ROM Budget ROM BOE Refined Budget Tentative BOE Initial Burn Plan EPR Package ExecutionCloseAward Budget Finalize WBS Verify BOE Validate Baseline Final Burn Plan Create IWA Monitor Budget Monitor WBS Validate BOE Status Baseline Maintain Burn Update IWA Budget BOE Baseline Burn Plan EPR Pckg Operations Manager Administration Business Developer ContractsSubcontracts Finance Marketing MgrBD MgrCapture MgrProject Manager Selection Feedback Lessons Learned

6 6 Typical Company Organization Business ManagementBusiness Operations Business Development Program Management CEO/President Human Resources Administration Recruiting Benefits Compensation Employee Relations Public Relations Corporate Legal Performance Reviews Finance/CPA Cost Accounting Accounts Receivable Accounts Payable Time Collection Report Generation Contracts Subcontracts

7 7 Company Resource Associations Program Manager Contracts Finance Program Control Business Area Manager Primary Contract Interface Legal representative Monitors Compliance Administers Contract Processes Time Cards Provides Actuals Monitors the money Produces independent data Monitors Baselines Tracks Earned Value Provides objective status Models alternatives Provides Qualified Resources Enforces Metrics Achievement Receives and reviews timely Ensures compliance to policies Represents Company to Customer Plans and Executes Project Identifies Resource Needs Manages Requirements Gathers and provides true status Documents and Manages Risk Communicates progress and status Human Resources Compliance Compensation/Benefits Performance Reviews Recruiting/Sourcing Relations

8 8 Contracts/PM Interaction Everything associated with / affecting contractual instrument Everything associated with / affecting contractual instrument is worked by Contracts Dept. is worked by Contracts Dept. Contracts Dept. supports formal procurement contracts Contracts Dept. supports formal procurement contracts Contracts Dept. responsible for subcontract issuance and mods Contracts Dept. responsible for subcontract issuance and mods PM is responsible for execution & subcontract management. PM is responsible for execution & subcontract management. PM must support the Contracts Department PM must support the Contracts Department cannot * Program Managers cannot contractually obligate the company

9 9 Company Government Interfaces ACO (Administrating Contract Officer) PCO (Procuring Contract Officer) COTR (Contracting Officers Technical Representative) Company accounting / contractsCompany PM Post award administration Administer changes Compliance Negotiates Obligates the Government (signs) Technical direction Technical directives - Inspection - Acceptance Delegates duties after award

10 10 Typical Product Project Relationships ID Programmers Graphics CORE Production Quality Editing ID Programmers Graphics CORE Project Manager SME Technical Manager Delivery Order 1 Delivery Order 2 To succeed we must view contracts from the world of the Project Manager

11 11 PM Performance Expectations 1.Know what was bid Read and understand the SOW Understand the risk Know the contract value and basis of estimate 2.Know where you are (Operational Awareness) Prepare and follow a baseline and project plan Manage the risks Know the cost and schedule Establish Milestones Identify and Manage resources 3.Represent the company Communicate with the customer Establish and manage expectations Provide timely and objective status Know your limitations Know when to escalate to management Lead personnel As the Manager for a work effort you are the authority and ultimately responsible for successful execution.

12 12 fail How to fail as a PM 1.Do not plan the work before you start or allow charges 2.Fail to record & communicate performance milestones 3.Do not read and understand SOW/Requirements 4.Believe your customer knows whats right 5.Do not document your concerns early --risk 6.Do not establish status meetings and PMRs 7.Believe the problem will go away with time 8.Do not manage and communicate metrics 9.Neglect to provide regimented status 10.Do not properly document acceptance 11.Do not track action items and closure 12.Make excuses for productivity

13 13 Profit – After G&A Tax – After Costs RemovedOverhead – Cost of Labor – Fringe Benefits – Lease – Other: Travel, MaterialsRevenue – Growth – Stability – Backlog Financial Performance Measures 10% Minimum 80% Site* 50% Customer* 20% Growth Metrics * O/H Rates are Examples Only

14 14 Typical PM Profitability Project <10% Profit on notice – Project Mgr documents return to green plan – Weekly meetings with key personnel to status – Public presentation to executive management – Team placed under close observation Projects <7% Profit on probation – Project Mgr documents crash plan to recover – Project Mgr presents critical path, risks & mitigations – Weekly meetings with ALL team personnel – Mandatory Overtime Instituted Projects <5% Profit unacceptable – Program Manager provides accountable leadership to project – Executive Mgmt/Program Management rebaselines project – Critical path documented and options analyzed for efficiency – R-examination of all Team Resources, Utilization, Metrics, Progress – Mandatory Overtime

15 15 Functional Philosophy Planning -Bids -Planning -WBS -BOEs -Budgeting -Forecasting -Lessons Learned Execution Mgmt -Requirements Mgmt -Customer Mgmt -Earned Value Mgmt -Resource Planning -Schedule Mgmt -Subcontracts -Status and reporting Production -Process Control -Adherence to Schedules -Quality Assurance -Systems Approach to Mgmt -Configuration Management -Adherence to budgets -Forecasting of resources -Productivity/Utilization Business Development -Strategic Plans - Customer Liaison -Past Performance - Capture Mgmt -Market Approach - Teaming/Partners -Technology Trends - Strategic Hires Operations Mgmt -Pricing/Bids- Financial Status -Budgets- Profit Realization -Planning- Financial Baselines -Maintaining annual and strategic plans -Subcontracts Complete Working Now

16 16 Operational Goals Deliver!!! Milestones and Metrics established and tracked Improve Communication at all levels Enforce Operational Process Continue to refine Technical Approach Clearly define all roles/responsibilities Customer Satisfaction Compliance

17 17 Earned Value Measurement The Basics

18 18 Managing Cost 101 Plan and Propose Work Effectively Establish Productive Work Plan Document and Manage Risk Manage requirements early in the project Manage performance with Earned Value Enhance Hiring Practices – Productive People Outsource where Sensible (CLOCs) Leverage full depth IST Resources Perform Make-Buy to reduce risk Monitor and Manage Dept. Resource Plans No-Bid High Risk Opportunities Overhead Conscious – Quality FY Budget Inputs

19 19 Establishing Labor Pools Quality, Production, Technical Management New Business Business Program Management Management AdministrativeRecruiting IT Support DO 01 DO 02 DO 03 DO 04 DO 05 DO 06 DO 07 Project Mgr 80% 5%3% Corporate Level Bid & Proposals R&D BD Investments Project Mgr Dept.Focus BUFocus

20 20 Cost Pools & Colors of Money G&A salaries G&A Facility Cost G&A benefits B&P IR&D General & Admin Buyer Salaries Sub-contract Management Material Handling OH Customer site Benefits Computers Facilities Management Direct Contract Salaries of Employees Charging to a Contract OH Contractor Site Facility Cost Benefits Computer Management 90% 60% 15% 3% * All % above are examples only

21 21 Contract Performers Subcontractor Subcontract Consultant Treated as subcontractor Consultant Agreement Contract Labor (On-Call) No Benefits Full Time Employee Full Benefits Must be 32 hours Per week or more Paid through accounts payable [No Burdenable Labor] Paid through payroll system [Burdenable Labor]

22 22 36.5% Example Company Site Rate80% Fringe Benefits34.0% Bonus2.5% Overhead Managerial Labor8.5% Benefits on OH Labor1.5% Rent12.0% Depreciation4.8% Travel2.6% Communications/Telecom3.6% Computer Expense2.9% Other (misc)7.6% 80.0% Typical Site O/H Cost Pool * O/H % rates are examples only

23 23 36.5% Example Customer Site Rate50% Fringe Benefits34.0% Bonus2.5% Overhead Managerial Labor8.5% Benefits on OH Labor1.5% Travel1.0% Other2.5% 50.0% Typical Customer O/H Cost Pool

24 24 EVM Terminology Contract Value (C/V) – Total Contract Worth (Labor+Travel+Material) Estimate to Complete (ETC) – Cost to complete the work effort Inception to Date (ITD) – How much is spent to date on the effort Estimate At Complete (EAC) – Total cost of effort when done profit Budget at Complete (BAC) – Funding left when finished (profit) ahead behind Variance – How much you are ahead or behind the budgeted plan or baseline Burn Rate – The monthly amount that the project is accumulating cost

25 25 How a Basic Labor Rate is Built Employee Salary=$50,000 Hourly Equivalent=$24.04 Contractor O/H (80%)=$19.23 G&A (15% of Cum)=$ 6.49 Total Burdened=$49.76 Profit (10%)=$4.97 Total Customer HR Sell=$54.73 $43.27

26 26 Creating Productive Labor Bids Scenario 1: Full Time Employee has 2 Weeks Vacation is 5 days sick Annual Hours 2080 Holiday Hours 80 Vacation Hours 80 Sick Time 40 Productive Hours 1880 Scenario 2: Full Time Employee has 3 Weeks Vacation takes no sick Annual Hours2080 Holiday Hours 80 Vacation Hours 120 Sick Time 20 Productive Hours 1860 Work Effort Value: $54.73 x 1880 = $102,892.40 Work Effort Value: $101,797.80 $54.73 x 1860 = $101,797.80 Paid Time Off (PTO)

27 27 Overhead Components Contract Revenue Direct Labor On Contractor Site Overhead Labor Indirect Labor Fringe Benefits on Indirect Labor Non-Labor Costs Rent Fringe on Direct Labor Company Allocation Telecom Recruiting Computers Relocation Sign on Bonus Combined OH / Direct Labor = Overhead Rate 80% is an Example O/H Target

28 28 Profit and Contract Type Cost Plus T&M FFP Labor Hours Fixed Price Goal = 10% on Contract Decisions: Hire to maximize profit? Hire to maximize customer satisfaction? Hire a key employee at a loss? Lose money on small T.O. to get foot in the door? Bid some labor categories at a loss? Goal = 15% Decisions: Minimize execution risk Management reserve Use Divisions OH rate Plan for follow on Yes, if necessary to win but must obtain overall profit. Cant affect profit much! Yes, but must stay profitable! Yes, Sometimes! Not Typical Culture!

29 29 Project Controls

30 30 Project Planning Phase Define theProject Plan theProject Schedule theProject IntegrateCost/Schedule System Subsystem System Subsystem System Subsystem $ LOAD Labor = O/H+G&A+Fee Travel = G&A + Fee Material = MH + Fee Subcontracts = MH + Fee LOAD Labor = O/H+G&A+Fee Travel = G&A + Fee Material = MH + Fee Subcontracts = MH + Fee PM Subcontractor Consultant Personnel office Personnel office

31 31 Know What We Bid Break Work Down (WBS) into logical segments Validate IMI Hours against analysis Enforce Technical Personnel Involvement If Sub Work, Request Plans and Basis Burn Plans created w/ Like Resources Unique resources clearly identified Risks Documented with Mitigations Formal Bid Sign-Off Accomplished Maintain artifacts in a project folder

32 32 Work Breakdown Structures Segmented & severable items of work when linked together create steps to completing a project. Each work section has a measurable item and artifact that proves the effort has been performed and completed. When associating a budget to an item of work within a WBS you can determine performance against the plan. WBS elements are loaded into the cost system and become the financial baseline for the project. Separate Work Packages are established for each segment of work to accumulate costs and understand progress. Project X Labor Planning Front End Analysis Design Production Artifacts Schedule WA Burn Plan Mgmt Plan Subcontract Plans Risk Plan Deliverables Communication ResourcesScope PM = 80 Hours TM = 80 Hours QA = 20 Hours Lead = 20 Hours 2 Weeks 200 Hours $13,000 Max. Complexity = 3 Subordinate Work Package 1 Subordinate Work Package 2 Subordinate Work Package 3 Subordinate Work Package 4 (Example)

33 33 Cost Accounting We Won! - REQUIRING approved budget baselines prior to opening work package: – Final Burn Plan w/ staffing & accurate rates – Work Authorization updated/complete – WBS and BOEs validated & archived – Financial Baseline reviewed & approved Project Mgr Program Mgr Operations Mgr Contracting Finance * This process provides a control by requiring completed planning documentation. Prepare Package PM Approvals Ops Validation Open Budgets Budget Turn-on Process

34 34 Whats a Work Authorization (WA) Authorization for someone to work your project. Must be Maintained by the Project Manager. Is communicated to the Time Card System Is auditable and MANDATORY. Utilized for every cost account whether direct or indirect to identify personnel authorized to work the project. Feeds the Burn Plans and is used by Program Administration to validate resources on projects.

35 35 Project Burn Plans What they are: – A baseline resource plan with hours and rates – An estimate and projection of work in financial view – A model to understand what ifs? – A tool for understanding profitability vs. cost – A way to assist business area managers with staffing What they are not: – A system for performance measurement (no metrics) – A guarantee of success – An event driven view of your project

36 36 Project/Job Status Reports (JSR) What they are: – Generated by Corporate Finance Monthly – Actuals generated on each cost account – Used to validate burn plans and verify costs – Provides objective evidence of financial position – Doesnt currently articulate performance

37 37 Internal Monthly Status Owner: BM Action: Create Status Input: JSRs Input: Modifications Input: Sub Invoices Output: Updated Burn Plan Output: Potential Problems Owner: PM Action: Update Projections Action: Validate Baseline Input: Updated Burn Plan Output: Validated Burn Plan Output: Recovery Plans Owner: BM Action: Summary Status Action: Issues/Resolutions Action: Incorporate O/H Input: Validated Burn Plans Input: Recovery Plan Words Output: SBU Status Report Output: Recovery Approaches Update Validate Summary Review Owner: BM/VP Action: Cost Review Action: PM Review Action: O/H Review Input: Final Burn Plans Input: Status Charts Output: Action Plans Output: CFO Data Output: Status to Plan Goal: Provide Validated Status All stakeholders w/ same story Controlled Awareness Progress against the FY plan 1 2 3 4 1 Week

38 38 Example Business Unit Summary J ASONDJFMAMJJ D001 $1,345,592 D001 $639,046 D004 $848,044 D005 $826,607 D006 $1,386,000 D003 $1,892,223 $267K Subs ASO 20102011 28 Feb 31 Dec behind sched 70% Spent 95% Complete Revised Plan 10% Spent 10% Complete % Complete 45% Spent 60% Complete Slow Start 15% Spent 10% Complete New Project 0% Complete Just Started New Sub Added 50% Spent CAI/TMI 23 Feb 19 Nov 19 May ND 30 May Jul 10/06 CAI TMI 11 Feb22 Jun17 Aug12 Oct

39 39 Maintaining Plan Required enforcement measures: – Planning Documents use to measure progress – New Hires must be qualified for positions – H/R Reqs must include cost accounts – Subcontract rates will be continuously validated – Baseline Changes require contract modifications – Work Authorizations Maintained – Changes impacting Corporate established targets require approval by management

40 40 Example: 4 Part Chart Contract 80000 (Example) Cost Performance Cost Performance CV$802K CV%53% Schedule%36% CPIFutureFuture SPIFutureFuture TCPI(EAC)Future ITD (spent)428K ETC (remaining)98K 526K EAC (total)526K VAC (variance)277K Monthly Burn Rate33K Goal: Deliver within budget Major Schedule Variances: Issues: Contract Performance – Slow start may push delivery slips. Effort not local Requires local Lead and oversight. Task Lead/Management Changes have diluted history and financial information from past not clear. Action Plans: Aggressive r Mgmt involvement shifting some personnel to optimize performance. Continuous customer communication and involvement on site in Ft. Sill OK. Jan 20 Major Cost Variances: Top Risks: Contract Performance and delivery of courseware within current schedule. Cost Control for delivery without unanticipated cost growth Customer expectations managed to avoid schedule/cost growth. Action Plan: PM, TM and BM Involvement on site and with customer to establish new schedules, cost baseline and monitor major milestones on critical path.Jan 31 Period of performance extension implemented need to Complete Remaining Efforts quickly. May 05 Period of Performance: 6/19/10 – 8/18/11 Owner: Frank Luster STATUS

41 41 A word on budget planning

42 42 Successful Companies: Create a Legitimate Plan Maintain/Status the Plan Adapt/Evolve the Plan Project the Plan Forward Why do we need a budget * Without input from the bottom up, the plan becomes a corporate level vision only. Raises The Value of the Company Provides Stability & Focus Key Inputs Vision and Goals Historical Data Work Backlog BD Pipelines Marketplace Info Competition Investment/Resources

43 43 Whats a Profit Center Measured Business Area/Unit – Has Own Overhead Pool – Possesses Direct Bill Contracts – Has Revenue and Profit – Contributes M/H and G&A – May have leases – Has Prescribed Corporate Metrics *Generally a business unit is aligned to customer, geographic area, or business line. Revenue Overhead G&A M/H Profit Profit Center

44 44 Composite Overhead Example 01.100 01.02.100 – Virginia Beach 01.02.110 - Arlington 01.01.120 - Chesapeake 01.01.140 – Tampa Direct = 263K Costs = 212.22K IDSI Rate 80.69% YTD Avg= 80.7% 01.01.130 – Indiana Direct = 226.88K Costs = 121.07K Cust Rate 53.36% YTD Avg = 54.1% Direct 9.96K Costs 9.41K Direct 99.1K Costs 85.72K Direct 4.54K Costs 3.57K Direct 95.2K Costs 74.08K Direct 54.2K Costs 39.44K Total Company (1M) 94.50% 86.50% 78.60% 77.82% 72.76% 01.01.100 – Virginia Beach 01.01.110 - Arlington 01.01.120- Chesapeake 01.01.140 – Tampa 01.01.130 – Indiana Direct 8.27K Costs 5.13K Direct 10.52K Costs 5.83K Direct 179.53K Costs 95.60K Direct 16.32K Costs 7.92K Direct 12.24K Costs 6.59K 62.0% 55.4% 53.25% 48.54% 53.86% 110 Personnel 489.88K DL 333.29K O/H 823.17M Total 123.47K G&A 946.64K Burdened Monthly Revenue: $1.02M Monthly Profit (9%): $76.2K FY Projected: $12.3M FY Project Profit: 914K Profit down due to O/H Contractor Site Customer Site

45 45 ID/IQ Team Formation Assessment Phase Determine Capability Gaps Explore Outside Sources Assess Our Team Capability Establish Team Determine Approach Assemble Final Team Organization Phase Technical Response Submit Response Best Price Response Phase

46 46 Risk MMHHH LMMHH LLMMH LLLMM LLLLM RISK RATING High Certainty 5 Highly Likely 4 Unlikely 2 Remote 1 Likely 3 Consequence Minimal a Minor b Moderate c Significant d Severe e

47 47 The Way Ahead At IST we pride ourselves on customer satisfaction the first time, every time. When you partner with IST, we mesh your vision and supporting concepts with our innovative approaches to provide world class products and services. You communicate directly with our management team which translates to more customer satisfaction and value returned for your investment. We are ready to team with you now to provide leading edge solutions to your 21st Century challenges.

48 48 Mission Oriented Customer Focused

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