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PMI Global 2008 – Australia – SDPM, Critical Chain and Portfolio Management

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  By petersmello | 08/02/2008 - 2:41 am | Eventos
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  • 1. The Application of Critical Chain and Portfolio Project Management at the Gas Pipeline Costruction of Urucu/Manaus (Petrobras) Russell D. Archibald Peter Berndt de Souza Mello Jefferson Guimarães Vladimir Liberzon quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 2. Presentation Outline quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 3. Introduction • Description of the Project – 670 km (402 mi) along the Amazon river – Capacity 4.7 million cubic meters of gas/day – Replace diesel and fuel oil for electric power production in the region – Enormous economic & environmental gains – 24 river crossings, torrential rains, remote location, difficult access, challenging schedule quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 4. Geographic Overview (Amazon, Brazil) http://maps.google.com/maps?hl=en&lr=&q=urucu+manaus+petrobras&ie=UTF8&ll=- 3.683373,-62.259521&spn=83.82272,221.132813&t=h&z=3&om=1 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 5. Introduction • Situation in 2006: – Many independent contractors – Heavy rains, difficult access, unforeseen problems caused serious schedule delays – Decision to apply advanced project management methods to recover to schedule as much as possible quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 6. Introduction • Advanced PM Methods Applied – Success Driven Project Management/SDPM • Proven Russian methods • Includes approaches that remind Critical Chain principles – Project Portfolio Management • Pipeline viewed as a portfolio of smaller projects for optimum resource allocation quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 7. SDPM Methodology quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 8. Success Driven Project Management (SDPM) • Planning Stage: – Simulate risks and calculate finish dates & costs with the required probabilities of their successful achievement – Set target dates, costs & other restrictions – Calculate success probabilities – Determine contingency reserves quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 9. Success Driven Project Management (SDPM) • Execution and Control: – Calculate current probabilities of achieving goals – Track success probability trends – Manage contingency reserves quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 10. Project Scheduling • Project planning is based on the project resource constrained scheduling and determining feasible activity total floats. • To calculate these floats all constraints (logic, resources, supplies, financing) must be considered in both forward & backward passes. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 11. Resource Critical Path • Activities with zero floats are called critical and their sequence in the project schedule is defined by ALL schedule constraints: logic, resource, finance, supply, calendar, & imposed dates. • This sequence is called Resource Critical Path. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 12. Resource Critical Path • When financing and supplies are not restricting factors then Resource Critical Path is the same as Critical Chain. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 13. Two steps of setting targets 1. System forecasts resulting required contingency reserves based on user defined acceptable probability of success to meet specific scope, schedule & cost targets. 2. System calculates the probability of meeting imposed targets (success probabilities). quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 14. Eight Processes of SDPM 1. Systematic scope definition (indentured structures) 2. Network planning 3. Resource Definition and Assignment: • Consumable, renewable, utilized & produced • Units, teams/crews, interchangeable units or crews • Resource productivities • Assigned to project activities quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 15. Eight Processes of SDPM 4. Activity durations calculated: scope or volume (quantity) of work ÷ assigned resource productivities 5. True (resource) critical path calculated: • Logical & schedule constraints • Resource, financial & supply limitations in both the forward and backward passes quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 16. Eight Processes of SDPM 6. Risk & uncertainties simulated: probability distribution for main project results (project & its main phases finish dates, costs, resource requirements). 7. Actuals reported & compared, contingency reserves tracked. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 17. Eight Processes of SDPM 8. Current probabilities of success calculated and trends determined for: • Schedules • Costs • Resources quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 18. Methods Unique to SDPM • Multiple project breakdown structures • Resource information & analysis • Activity duration calculation or estimation • Resource critical path, assignment floats, & resource contingency reserves • Risk simulation & success probability analysis • Success probability trends quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 19. Multiple project breakdown structures • We use multiple Work breakdown structures, Resource breakdown Structures, Cost breakdown structures. • Multiple WBS create very useful opportunity to get project reports that aggregate project data different ways. • Usually we use at least three Work Breakdown Structures in our projects: based on project deliverables, project processes and responsibilities. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 20. Multiple project breakdown structures • The use of multiple breakdown structures allows not only to obtain different project reports as seen from the different standpoints, but also to provide that the project model is truly comprehensive. • The use of Resource breakdown structures is especially important in multi-project management. • In this case the matrix organizational structure determines the necessity of obtaining the reports on both Project and Functional Resource Breakdown Structures. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 21. Resource Definition and Assignment • Resources are divided into two classes: – renewable (human resources and mechanisms) and – consumable (materials). • Besides the individual resources one may set resource crews (we call them multi-resources) and resource skills (roles). quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 22. Resource Definition and Assignment • Multi-resources are the settled groups of resources working together (e.g. a team, a crew, a car with a driver, etc.). • Resources sharing the same skills comprise Resource Assignment Skills. • Resources belonging to the same Skill are interchangeable though individuals in a Skill may have different productivities performing the same activities. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 23. Assignments • Assigning resources to activities implies the notion of a team – a group of resources working on an activity together. The team can include individual resources, multi-resources and skills. • If the activity‟s initial information is work volume (quantity of work to be done), one should set the productivity of at least one of assigned resources, to enable the calculation of the work duration. 23 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 24. Assignments • If more than one team is assigned then resources belonging with the different teams work on an activity independently of each other. • Such approach allows to simulate the shift work efficiently. • In some projects it is necessary to simulate not only material consumption but also production of resources and materials on activities and assignments. 24 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 25. Activities • In the majority of well-known PM software packages project activities are characterized by their duration. • Besides duration, it is frequently necessary to set the activity‟s physical volume (or quantity) of work. • Activity volume can be measured in meters, tons, planned work hours, percents or any other units. 25 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 26. Activities • Activity volume is often used as an initial activity information instead of duration. If assigned resource productivity is defined in volume units per hour then activity duration may be calculated during project scheduling. • Unlike activity duration activity volume does not depend on assigned resources. 26 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 27. Risk Simulation • Our experience of project planning shows that the probability of successful implementation of deterministic project schedules and budgets is very low. • Therefore project planning technology should always include risk simulation to produce reliable results. • Risk simulation may be based on Monte Carlo simulation or use three scenarios approach that will be described further. 27 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 28. Risk Simulation • Monte Carlo simulation is very time consuming and not practical for the large projects. • Current practice of its implementation mostly do not consider correlation between activity duration and cost estimates that exists if activities are performed by the same resources, do not consider risk events that may change a set of project activities. 28 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 29. Risk Simulation • Even if everything is properly simulated the number of necessary iterations is too high for receiving reliable results in the reasonable time. • A project planner may be happy with the probability estimates that has low accuracy but only if the error will be stable (high precision). If it may change from one calculation to another then these estimates can not be used as performance management tool. 29 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 30. Risk Simulation – three scenarios approach • A project planner obtains three estimates (optimistic, most probable and pessimistic) for all initial project data (duration, volumes, productivity, calendars, costs, etc.). • Risk events are selected and ranked using the usual approach to risk qualitative analysis. • Usually we recommend to include risk events with the probability exceeding 90% in the optimistic scenario, exceeding 50% in the most probable scenario, and all selected risks in the pessimistic scenario. 30 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 31. Risk Simulation – three scenarios approach • These data are used to calculate optimistic, most probable and pessimistic project schedules and budgets. • The most probable and pessimistic project scenarios may contain additional activities and costs due to corresponding risk events and may employ additional resources and different calendars than the optimistic project scenario. 31 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 32. Risk Simulation – three scenarios approach • As the result project planner obtains three expected finish dates, costs and material consumptions for all major milestone. • They are used to rebuild probability curves for the dates, costs and material requirements. • Defining desired probabilities of meeting project targets a project planner obtains desired finish dates, costs and material requirements for any project deliverable. 32 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 33. Success Probabilities • Negotiations may lead to setting other project targets. • If they are reasonable then they may be accepted. • Probabilities to meet approved project targets we call Success Probabilities. • Target dates do not belong to any schedule. Usually they are between most probable and pessimistic dates. 33 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 34. Baseline • A set of target dates and costs (analogue of milestone schedule) is the real project baseline. But baseline schedule does not exist! • A schedule that should be used for setting tasks for project implementers is optimistic. 34 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 35. Critical Schedule • Project planner obtains not only the set of target dates but also a critical schedule – a project schedule calculated backward from target dates. • Usually this schedule is based on most probable estimates of activity durations and the difference between current and critical dates shows current schedule contingency reserves (buffers). • At the next slide critical schedule is shown in light blue. 35 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 36. 36 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 37. Buffers • There are time, cost and material buffers that show contingency reserves not only for a project as a whole (analogue of Critical Chain project buffer) but also for any activity in the optimistic project schedule. • During project execution it is necessary to estimate if these buffers are properly utilized. 37 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 38. Success Probability Trends • The best way to measure project performance is to estimate what is going on with the project success probabilities. • If they rise it means that contingency reserves are spent slower than expected, if they drop it means that project performance is not as good as it was planned and corrective actions are needed. 38 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 39. 39 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 40. Success Probability Trends • Success probabilities may change due to: – Performance results – Scope changes – Cost changes – Risk changes – Resource changes • Thus success probability trends reflect not only project performance results but also what is going on around the project. 40 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 41. Success Probability Trends • We consider success probability trends as the really integrated project performance measurement tool. • Success probability trends may be used as the only information about project performance at the top management level – this information is sufficient for performance estimation and decision making. • We call the described methodology Success Driven Project Management. 41 quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 42. Common Features: SDPM & Critical Chain • Resource critical path is the same as Critical Chain if to add financial and supply constraints. • CC “project buffer” is analogous to SDPM project “contingency time reserve”. • Both approaches recommend to use tight duration estimates to set targets for work performers and collect all reserves in one project buffer. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 43. Differences between SDPM and CCPM CCPM SDPM Critical Chain never changes, it is Resource Critical Path can change many protected by feeding buffers that may times during project execution. Project postpone planned dates of CC activities can have many Resource Critical Paths. but will keep its stability. One should always avoid multi-tasking In most cases it is right but sometimes switching from one task to another and then returning back may be useful. The software optimizes resource usage. There is single project drum resource Critical resources may be different at each project life cycle phase. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 44. Differences between SDPM and CCPM CCPM SDPM Critical Chain Methodology suggests SDPM suggests certain quantitative only qualitative methods. methods for finding RCP, calculation of project buffers, etc. Critical Chain Methodology does not SDPM includes not only schedule but consider costs. also cost management. Buffer penetration is estimated SDPM includes buffer penetration qualitatively (red, yellow, green zones). analysis and performance measurement technique (success probability trends). quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 45. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 46. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 47. A New Project Management Information System • Initial planning started in 2004 with a segmented view of the project, with several separated set of schedules for different regions (geographic division) and different areas (scope, costs, logistics and supplies). quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 48. A New Project Management Information System • A new Project Management Information System was put in production from October 2006 to February of 2007. A common repository and new WBS integrated over ten separated schedules quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 49. Setting New Project Goals • Initial estimates created for the project were based on productivity achieved in other pipeline construction projects in many parts of Brazil. This forecast was too high due to the reduced ability of the teams to work under continuous tropical rain. – As an example, some drained areas of the construction in the first semester of any given year would simply be found to be under 12 meters of water in the following semester. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 50. Setting New Project Goals • The lack of a model that would take into account risks and uncertainties had produced a schedule that soon proved to be completely unrealistic. – By the time the SDPM team was set to create a new integrated schedule, the construction had reached 50% of the original planned time with a Schedule Performance Index (SPI) under 15% quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 51. Setting New Project Goals • Through the simulation of work performance, schedule and resource constraints, the SDPM team has helped Petrobras to set new goals with the contractors. – For some critical phases, resources were increased by 50% and now the project has surpassed 7,000 workers, against an original mobilization of 5,000 people. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 52. WBS – Project Details • For the true adoption of SDPM project schedules shall be resource loaded. • As original planning was not detailed to the resource level, the SDPM Team put together several weekly plans into a larger schedule, creating a bottom-up WBS. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 53. WBS – Project Details • The resulting integration of several weekly plans made it possible to measure trends and to create new resource-loaded schedules with incremented level of details. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 54. Typical Fragnets Library • By adjusting the necessary resources in the lowest level of the WBS SDPM Team then created a library of typical fragnets that was used to build a model for the larger project. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 55. A Bit of History • Although the first stages of the project are dated in 2004, real project activities started only in July 2006, after the military engineering brigade had opened the first roads through the jungle and established camping sites for storing many tons of pipe. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 56. Resource Usage Optimization • Success Driven Project Management helped to identify what phases of the project should be delayed to make critical resources available to more critical phases. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 57. Resource Usage Optimization • Example: Transferring resources from the opening of new construction road to the transportation of the pipes will delay the first phase of the project, but will speed up the second phase. The challenge is to optimize resource assignments for increasing global results. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 58. Resource Usage Optimization • When such logistics are carefully planned we have an increase in general productivity, as we can see in the following figures. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 59. Resource Usage Optimization • In the example, while the “green team” kept working 720 hours, the “red team” had an increase in 25% in its productivity and the “blue team” reached 65%. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 60. 800 m per • Before SDPM day Implementation • After SDPM 1150 m per day Implementation quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 61. quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 62. References quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 63. A Few Useful Links • http://www2.petrobras.com.br/ingles/index.asp • http://x25.com.br/ • http://www.spiderproject.ru/aboutus_e.php • Vladimir Liberzon and Russell D. Archibald, “From Russia with Love: Truly Integrated Project Scope, Schedule, Resource and Risk Information,” PMI World Congress- The Hague, May 24-26, 2003; download at http://www.russarchibald.com/ [go to „author>recent papers‟] quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only
  • 64. Contact Information Russell Archibald Principal – Archibald Associates, USA russell_archibald@yahoo.com Peter Berndt de Souza Mello Director – X25 Treinamento e Consultoria, Brazil peter.mello@x25.com.br Jefferson Guimarães Senior Project Engineer – Concremat/Petrobras, Brazil jefferson.guimaraes@correntecritica.com Vladimir Liberzon General Director – Spider Project Team, Russia spider@mail.cnt.ru quot;PMIquot; is a registered trade and service mark of the Project Management Institute, Inc. © 2008 Permission is granted to PMI for Congress attendee use only