Electrical Financial Project Analysis

Electrical Financial Project Analysis

DOI: 10.4018/978-1-4666-2839-7.ch009

Abstract

A comprehensive contemplation of the essential goals in an organization is essential to evaluate the capital integration problem. The development of cost tracking methods derived as a direct result of the study. The manager’s deficiency in visible dashboards of the project cost and schedule data require immediate attention. The financial details includes the previous year’s results, the median cost, the year-to-date average cost, the long-term average cost, the upper control limit, the lower control limit, the year-to-date cost, the last-year-to-date cost, the variance from last-year-to-date cost, the year-to-date budget, and the variance from the budget. The implementation of the Project Management Financial & Scheduling Optimization Tool in capital planning is required to control the individual project budget and corresponding schedule. The guidelines included checkpoint methodology, responsibility metrics, historical actual spend data, forecasting logic, and process management flow diagramming.
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Introduction

A detailed understanding of the fundamental business requirements for an organization is required to assess the capital-intense system integration problem. The thorough evaluation of cost overruns within the project management organization based on an annual $730M capital budget within the Asset Management Department was consumed with “out-of-scope” projects well behind schedule. Several resources were displaced in various regions across the three state footprints with no systematic procedure in place to control the cost overruns. The project manager’s ad hoc procedures lacked consistency within the organization. The implementation of the Project Management Financial & Scheduling Optimization Tool in capital planning is required to control the individual project budget and corresponding schedule. The guidelines included checkpoint methodology, responsibility metrics, historical actual spend data, forecasting logic, and process management flow diagramming. Project managers not only must rely heavily upon the traditional on-time, on-budget, and on-quality performance measures, but also with the added on-strategy dimension central to managing project success and to alleviate leadership challenges. Many leadership tasks relate to developing a vision of the project outcome that is practical, yet capable of mobilizing and motivating team members to accomplish the project’s goals and objectives. The leadership vision engages stakeholders who are not actively involved in the project; it also motivates them to sustain their support over the project’s timeline. The solution-building negotiation approach to defining the scope of a project, and then clearly communicating this to the project team and other stakeholders defines a strategy for realizing the vision, and translating the strategies into operational plans and results. The core problem was the scarcity of instability of strategy to properly develop and express project vision connected through measurement to tangible business outcomes. The organization linked planned outcomes to their corporate strategy using a measurement framework, referred to as performance management, and is common within corporations (Thomas, 1975).

The implementation of these formal stringent guidelines provided clear project vision as well as comprehensible goals and objectives. It also actively involved the executives and sponsors in the project. The alignment of the project manager’s resources via systematic tracking, contingency fund management, construction overheads, mitigation strategies, and project status communication produced profound results in the overall operating budget. Additionally, the project manager ensures that the accounting and planning departments are provided with accurate equipment data, costs, and plant-in-service dates. The implemented procedures imposed strict guidelines for the project manager to follow that included a final technical report (significant results, discussion of objectives and deliverables, examples of progress), a financial report (final invoices, cash flow), and resource performance evaluations (technical difficulties, feedback reports, activity verification, lessons-learned). Moreover, the financial and scheduling optimization tool allowed the project manager to utilize essential monitoring and control techniques during transformer installation. After an annual review of the process, the results produced an astounding fifty-five percent reduction in cost overruns in the transformer installation portfolio. The project managers were performing within the guidelines and saving precious budgeted dollars in the company. The Financial & Scheduling Optimization Tool provided a systematic approach to project management and aligned the company’s objectives with the on-budget, on-quality, on-schedule, and on-strategy philosophy.

Synopsis

The Financial & Scheduling tool is designed to assist the project lead with effectively managing the master schedule, the monthly budget, and the overall project strategy. The six sigma-based effort produced business successes in:

  • Cost reductions

  • Productivity Improvements

  • Cycle-time reductions

  • Service improvements

The tool is an interactive, time-based system (and includes “what-if” analysis) designed from a project manager’s perspective. The effort produced consistent monthly forecasting accuracy (80%~95% range) and included the following:

  • 1.

    Improved transformer installation turn-around time

  • 2.

    Improved material integration (46.5 days) and construction processes (25.5 days)

  • 3.

    Reduced costs by $41k on an overall, per project basis

  • 4.

    Utilized Analysis of the Variances methodology

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