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Financially Focused Project MGMT Slides
Financially Focused Project MGMT Slides
Tom Cappels
Web Added Value
J. Ross Publishing
Some businesses
must keep quality in
the forefront of their
minds.
- Albert Einstein
Pharmaceuticals
IN-HOUSE
IN-HOUSE
OPERATIONS
SCIENTISTS/
ENGINEERS
CUSTOMERS
SUPPLIER
OPERATIONS
SCIENTISTS/
ENGINEERS/
FINANCE
CUSTOMERS
SUPPLIER
OPERATIONS
Financially Focused
Project Management
THE
Financially Focused
MIND-SET
PRO-ACTIVE
10
FFPM Tools
Project
Identification
Cost Analysis
- Pricing / Estimating
- Probabilities
- Decision tree
- Efficient
- Easy
- Effective
Basic
Financial
Concepts
Project Analysis
- Experts
- Thorough
Follow-up Plan
- Actual cost vs analysis
- Discontinue/reduce costs
- Ensure project successful
11
Financially Focused
Project Management
PROJECT
IDENTIFIER
COORDINATOR
FINANCIAL
POV
MEETING
EXPERTS
FOCUS GROUP
OTHER
RECOMMENDATION
ACTIONS
COSTS
PLAN
CLOSURE
SUPPORT
12
Identifier
Notice
Coordinator
Improvement
Cost
Analysis
Support
Follow-up
Plan
Finance
Closure
Notice
Identifying a Project
* Environments
- Customer/Warranty service
- Inspection & manufacturing
- Board of Directors
* Market Research
- Focus Groups
- Questionnaires
* Start with:
THE
Project Recommendation
14
Manag
er
Project
Identifier
Manager
Finance
Meeting
Project
Recommendation
Cost
Analysis
Process
Product
Support
Follow-up
Plan/Closure
Notice
15
Project Recommendation
Name:
#:
Date:
P
R
roject
Dept:
Ext:
ECOMMENDATION
Concern:
Project:
CACN attached
16
Process
Improvement/Corrective Action
Cost Analysis
Name:
Dept:
New
PIR #:
Old
Labor
Labor
Non-labor
Non-labor
Sub-total
Sub-total
Date:
Ext.:
Savings
Implementation
Sub-total
Sub-total
Total
17
CA #:
Dept:
P
I
F
P
Date:
rocess
mprovement
Ext:
OLLOW-UP
LAN
Follow-up #1:
Date:
Date:
Cost
Cost Analysis:
Analysis:
Proceed w/CAFP
Ext:
Ext:
Modify CA
Issue CACN
Follow-up #2:
Date:
Cost Analysis:
Proceed w/CAFP
Ext:
Modify CA
Issue CACN
Follow-up #3:
Date:
Cost Analysis:
Proceed w/CAFP
Ext:
Modify CA
Issue CACN
18
Dept:
CA #:
Date:
Ext:
C
A
C
N
ORRECTIVE
CTION
LOSURE
OTICE
Narrative:
Page __ of __
19
Basic Finance 1A
20
Annual
Operating
Budget
Various
Companies
Products
and
Services
Departments /
Business Units
Financial
Forecasts
Customers
CORPORATE PROFIT
Debt Service
Capital Assets
Dividends
Shareholder Equity
21
UA
22
Accounting Classifications
Costs
Direct
Labor
Nonlabor
Indirect
(overhead)
Labor
Nonlabor
23
Forecasting Personnel
Statistically average
Direct employee
Criteria
Yield/Realization
Hours/day
-0.7
7.3
-0.5
0.1
24
Management Customer
Employee
$90.7
6
$90.7
6
$25.1
5
25
Econometrics
Measure of Inflation
16.2% CPI
Consumers
Price Index
Personal
12.9% PCE Consumption
Expenditure
Index
1
t s
d
3
r
d
17.6% PPI
Producer
Price Index
9.7% GNP
Gross
National
Product
Weighted
? Company Average
Composite
Index
26
Contract hours/day
ST + OT available/day
690 hours/day
6.9 hours/day
= Required direct
employees/day
27
+2.5%
Base
-2.5%
JAN FEB
DEC
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
28
Overhead - Composition
Rates per Direct Labor Hour
Indirect labor - Nurses, receptionists,
secretaries, administration
$.20
Fringe Benefits
$.16
$.34
$.22
$.24
Total
$1.16
29
Example
Example:
=
$3
$2
Patient 1
Patient 2
$16 Expense
$8 Direct Labor
$1
Patient 3
= 200%
$16
$8
$2
Patient 4
Patient 1 = $2 x 200% = $4
Patient 2 = $3 x 200% = $6
Patient 3 = $1 x 200% = $2
Patient 4 = $2 x 200% = $4
$8
$16
30
Cycle of Financial
Activities
Accounts
Payable
Cost
Accounting
Financial
Management
Reporting
Generatio
n of
Profits
Financial
Forecasting
Accounts
Receivable
31
Equity
De b t
Liabilities
Equit
y
Assets
32
Primary Services
Accounting Information
Balance Sheet / Statement
Work in process
Financial accounting
Cost Accounting
Accounts payable
property accounting
payroll
33
Primary Services
Project Pricing and Cost Control
Estimating
Negotiating
Cost Control
34
Primary Services
Financial Forecasting, analysis,
O/H, ADC, fixed asset budgeting
Financial forecast
management budget
overhead, negotiations and budgeting
ADC negotiations and budgeting
fixed asset budgeting
35
Primary Services
Internal Accounting Controls
safeguard assets
Reliable financial records
Financial information provided to:
Company/sector management
Government agencies
Business Units
36
Plant Protection
(indirect)
Plant Services
Indirect management
functions
Facilities / Occupancy
costs
Legal counsel
37
Pricing
* In-medical facility
Direct Labor
Dollars
Overhead
Profit
Profit
= Price
* Suppliers
Suppliers Selling
Price
Overhead
= Price
38
COST ANALYSIS
Cost/Benefit
Estimating:
Raw resources: Hours for labor
Raw resource: dollars for nonloabor
Rates for overhead / labor / allocated costs
Percentages for probabilities
Decision Tree
39
COST ESTIMATING
Labor:
5 hours a week for 100 weeks = 500 hours
$70/hour this year
$73.50/hour next year
Nonlabor
Supplier quote
LABOR + NONLABOR =
40
SAVINGS ESTIMATING
Failure costs:
Cost per average failure (rework, replacement, lawsuit)
Anticipated improvement in failure rate
Project failures: varying scenarios
Previous cost
41
42
FFPM: PROCESS
IMPROVEMENT
RECOMMENDATION
Name:
Dept:
PIR #:
Date:
Ext.:
43
COST/BENEFIT TRADE-OFF
PICA-type analysis
Pricing/proposal methodology:
Raw resources (hours/dollars)
Rates
44
45
Focus on Financial
Ramifications!
46
Penguin-in-a-Helmet
47
Penguin-in-a-Helmet:
Financial Focus
Follow-up Plan
Eliminate Supplier
Representative
Revert to Sampling
48
49
50
THE
SECRETS
OF
BEHAVIOR
51
Survival/
Reproduction
Fun
Belonging/
Love
Power
Freedom
52
Taxation
Auditors: Full-time jobs
Legal aspects
53
Partnering / alliances
First impressions
Respecting customers & their property
Listening skills
Questioning skills
Meeting customers' needs
Empathy vs sympathy
Interpersonal skills
Communication skills
Bring out your best
Who pays the bills?
54
Initiating the
Proposal
Three Types of Proposals
Follow-on contracts
New business
Unsolicited
55
Proposal Preparation
Flow
Requirements
Meeting:
Resp. orgns
Contracts
Accounting
Program office
Schedule / proposal
Focus on ground rules, premises, and
schedule!
56
57
INTERNAL CUSTOMERS
There is only so much budget...
EVERYTHING (?) is getting cut...
The times they are a changin...
Obsolescence..
Attract talented IS professionals...
Is it really needed?
Lets find out what happens without it!
58
59
COST/BENEFIT TRADE-OFF
PICA-type analysis
Pricing/proposal methodology:
Raw resources (hours/dollars)
Rates
60
BUSINESS BENEFITS
61
Accounting
OBJECTIVES
Bring A2K into production - turn over to2000
Service Center control by 3-2-99
Upgrade A2K to a standard CA-Masterpiece platform
Phase out current data archiving / data warehousing systems. Common environment.
CONSEQUENCES IF NOT
DONE
Must maintain 35 legacy systems (with
faulty data)
A2K NOT on a platform sup- ported by
system manufacturer
Maintain multiple archiving and data
warehousing systems
BUSINESS BENEFITS
Accurate/timely finance info -reduced penalties
Reduce accounting process cycle times, monthly and
quarterly from 20 to 5 days
57 process changes save 32 EPs ($2.9M/yr)
Eliminate 35 legacy systems
Migrate from unstable systems to new flexible
client/server applications
62
Machining
Outsourcing
Project
63
Initiative Charter
Satisfy Sector requirements for machined components with the best value
to our customers through:
64
Schedule
1995
1996
O N
M A
1997
A
O N
M A
O N
MAJOR MILESTONES
MOI Business Plan Release
10/95
2/9/96
3/31/96
6/30/96
3/30/97
9/8/97
9/30/97
6/29/96
7/18/95
12/29/95
8/19/95
1/30/96
9/21/95
11/30/95
9/18/95
11/1/95
2/28/96
2/28/96
9/27/96
7/1/95
11/21/95
1/22/96
2/14/96
10/8/95
10/19/95
3/31/96
12/14/95
4/1/96
12/29/96
12/30/96
3/30/97
3/31/97
9/8/97
Close B/170
M
O N
M A
O N
M A
65
A
O N
Initiative Savings
Goals
Original
Current
$10,332,000
30,000
Support Services
48,000
Process Improvements
48,000
24,000
Material
48,000
Total
Projection
$10,530,000
$3,305,000
1997
1998
1999
Total
66
Savings Breakdowns
Sector Savings Summary By Site
Astro Turf
Other
Programs
1.1
1.8
2.7
Radio
Wave
3.7
10.5
11.0
Space
Age
LOPS
Astrowilliams
1.9
TADDY
67
Severance
10
Implementation
Planning
300
215
Implementation
Expense
?
1,179
Facilities Environmental
Remediation
68
Implementation Cost
Performance to Date
MOI Implementation Cost Performance
800
700
600
500
400
300
200
100
Jul96
Jun-96
May-96
Apr-96
Mar-96
Feb96
Jan96
Dec95
Nov95
Oct95
Sep.95
Aug.95
Jul.95
Mont
h
Cumulative Budget
Jul-95
Missiles & Space Budget
Missiles & Space Actual
10
10
Aug-95
25
20
Sep-95
45
46
Oct-95
65
82
Nov-95
100
140
Cumulative Actual
Dec-95
Jan-96
142
200
213
260
Feb-96
284
30505
Mar-96
Apr-96
May-96
Jun-96
Jul-96
375
105
430
130
485
585
640
200
300
69
BUSINESS
DEPUTY
32460
T. M. Cappels
SCHEDULES
30503
G. Horby
ESTIMATING
& PROPOSALS
29086
J. T. Martin
SYSTEMS
DESIGN
29269
J. A Stiller
BLANKET
CONTRACTING
25296
M. L. Surray
PRODUCT
PROCESSING
21769
R. R. Binapoli
PRODUCT
QUALITY SUPPORT
30580
D. G. Howack
FBM TRANSITION
PLANNING
68185
T. D. Shern
TECH REQMTS
& SUPPORT
X28886
Mike Grock
ESTIMATING &
PROPOSALS
X24831
J. V. Vibaly
QUALITY
SUPPORT
X30488
Phil Kosmen
70
ILLUSTRATION
* Management explains FFPM process
* Employee recognizes need for change
* Mandatory management
involvement
71
PROJECT
* Employee establishes goal
* Management input / recognition
* Productivity increases
72
CONCERN
* Employee receives recognition
* Management leads cost effective analysis
* Productivity increases
73
SUCCESS STORIES
* Concerns
- Common Minor Material
- Pool Burden Center Chart Enhancements
- Allocation of Thermal Barrier Prep Costs
74
SUCCESS STORIES
* Projects
- 12 month moving average for FPRAs
- Quarterly Generation of Reports
- CMM Chart Enhancements
75
COMPLETE
THE
CYCLE
Employee Participation
Suggestion Systems
Communications Events
Effective Meetings
Mission Statement
Brainstorming
Process Improvement
Process Management
ESOPs
76
FINANCIAL TRAINING
Decision
Maker
New
Project
FINANCIAL
POV
Analysis
ACTIONS
Costs/Savings
Follow-up &
Closure Plan
EXPERTS
SUPPORT
SUCCESSFUL PROJECTS!
78
Increase Profitability!!!
EASY PROCESS...
COST ANALYSIS...
MANAGEMENT DRIVEN...
Financially Focused
Project Management!79