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Before It's a Project, is It a Model Project?

Before It's a Project, is It a Model Project?

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Project managers now have a PMI Best Practices enabled solution that enables them to simulate scenarios and mitigate risk associated with major decisions throughout the Project Life Cycle.

Value of Project Management Simulation includes: Reduce project duration up to 50 percent using PMI Best Practices based scenarios; Reduce personnel costs up to 20 percent; Increase the quality of major decisions, lowering risk, and adding earned value; Enhance project management training and expertise, Seamless scenario model update to Project Management Software (Tasks & Resources); and Facilitate Virtual/Divers Geographic Project Teams.
Project managers now have a PMI Best Practices enabled solution that enables them to simulate scenarios and mitigate risk associated with major decisions throughout the Project Life Cycle.

Value of Project Management Simulation includes: Reduce project duration up to 50 percent using PMI Best Practices based scenarios; Reduce personnel costs up to 20 percent; Increase the quality of major decisions, lowering risk, and adding earned value; Enhance project management training and expertise, Seamless scenario model update to Project Management Software (Tasks & Resources); and Facilitate Virtual/Divers Geographic Project Teams.

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Strategic

Decision

Sciences

Presentation to the Project Management Institute Clear Lake/Galveston Chapter March 23, 2006

Before it s a Project, Is it a Model Project?

Dr. Scott M. Shemwell

A Solution to enable Complex Decision Making

Complex Decision Making provides Project Managers with a means to ...

positively impact the bottom line through timely, informed decisions on project options, Complex Decision Making enables management, PMO personnel, to know before you go...with business goal alignment, by providing a common decision process, better capital allocation, focus on risk outliers, working vocabulary, and a more experienced team.
Strategic Decision Sciences

Distinctive Value Proposition (DVP)
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Only Available Viable Solution to Lean Energy Management
l PMI

Upstream Energy Example

Best Practices

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Directly measurable Strategically important to customers
Source: Strategic Decision Sciences

Deployments

Companies utilizing Simulation Solutions: BP, Chevron, Exxon, Shell, ConocoPhillips, Occidental Supply Chain Management, Downstream, Large Capital Projects

Strategic Decision Sciences

Lean Energy Processes & Analytics

Source: Oil & Gas Journal

Upstream Energy - Technical Issues
100 s of Computer-Based Systems 100,000 s of Measurements 100,000,000 s of Records Different types of data relational and time series
Preparation & Deployment Management Approval Drilling Operations Real Time Support & Reporting Reservoir Analysis

Planning & Scheduling

Strategic Decision Strategic Decision Sciences Sciences

Technique Improvements Post Analysis Lab Work

Impact of a Disaster on Operational Decision-Making
Decision Cycle Time Degradation
Normal Operating State

Ability to Impact Business

Information Field Operations Flow

Office

Feedback

Information Field Operations Flow

Office

Feedback

Reduced Capability

Flexibility / Responsiveness
Source: Strategic Decision Sciences

Recovery: Return to Normal Operational Decision-Making
Decision Cycle Time Recovery
Normal Operating State

Ability to Impact Business

Information Field Operations Flow

Office

Feedback

Field Operations

Information Flow

Office

Feedback

Reduced Capability

Flexibility / Responsiveness
Source: Strategic Decision Sciences

Case Study: Refinery Simulation Remediation Solution
Percentage of reduction in man-hours and project duration
0.0%

Percentage of reduction

-2.0% -4.0% -6.0% -8.0% -10.0% -12.0% -14.0% Project Duration Man-Hours Scenario 1 0.0% 0.0% Scenario 2 -3.4% -1.4% Scenario 3 -7.7% -3.6% Scenario 4 -12.0% -5.5% Project Duration Man-Hours

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Refinery Fabrication & Module assembly

Time & Money

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l

Fabrication of 100,000 dia. Inches of pipe spools & assembly of 244 pipe-rack modules
Drafting hours: 10,000 / Fabrication hours:120,000 / Module assembly hours: 500,000

Drilling - The Business

Dynamic market conditions, rig availability & materials HP/HT well technology Deep-water environmental impact SCM coordination and logistic support, helicopters, boats Need for improved productivity Skilled workforce Regulatory pressures environmental, compliance Aging assets have driven a reliability and safety focus Health, safety, and environmental concerns require accountability
Strategic Decision Strategic Decision Sciences Sciences

Aging workforce have led to a movement to capture knowledge & business practices

what customers have told us

Complete information requires access to multiple systems Access to existing applications difficult and time consuming Information not always in context or within the required timeframe Business implication of data is not always clear Users are often left with only a partial picture of situations, resulting in decisions based upon incomplete information Decisions pushed up in the organization result in a sluggish, untimely response When faced with making decisions on unexpected events, need better understanding of impacts

Strategic Decision Strategic Decision Sciences Sciences

The Solution:

modeling to gain insight Design Construct Completion People Processes Technology
Optimization Loop 1

Facilities Supply Chain

Optimization Loop 2

Strategic Decision Strategic Decision Sciences Sciences

Discovery of Emergent Properties

What are the benefits
Optimal Solution
Without simulation, even the best conceptual models can only be tested and improved by relying on learning feedback...is very slow and often rendered ineffective by dynamic complexity Sterman (2000)

Visualization of processes & outcomes for a multi-discipline team to review - Beforehand Common vocabulary for multi-discipline teams Resulting in real-time synergistic decisions to Complex Problems

Cause

Effect with iterations

Strategic Decision Strategic Decision Sciences Sciences

Quantifying the benefit

Demonstrated an Internal Rate of Return

400%*

Documented ROI Reduction in operating expenses Increase in utilization Increase in operational availability Increase in productivity

8% 9% 2.5% 11%

An independent ROI analysis of an actual implementation: It was obvious that the unification of an empowered, engaged workforce and highly capable set of realtime informationbased, decisionsupport tools can deliver impressive business results

Strategic Decision Strategic Decision Sciences Sciences

The results of an independent ROI study conducted on an Drilling implementation

How to use Simulation -

Models must be necessary & sufficient representations Chicken/Egg Build and assembly modules to accommodate Hard Understand Quantitative and Soft Qualitative concepts & variables problem before Comprehensive testing of results to gain insights simulating or simulating problem to 6.Actions to improve 5.Feasible, understand It? desirable 1.Problem changes... unstructured

Strategic Decision Strategic Decision Sciences Sciences

2.Problem expressed

3.Root definitions 4.Conceptual models

What is Simulation?
Model of a precise set of mathematical relationships
Drilling Risk Assessment Process Model
Data from Other Group Models - Demo Only
Project Scope Statement Organizational Process Assets Project Resources Availability Project Resources Capabilities External Factors Project Management Plan Quality Quality of Horizon Maps Human Resources HR Availability HR Capability Confidence in the Model Cost of Additional Data Quality of Drilling Assumptions

Quality of Earth Model

Type of Well Number of Offset Wells HES

Confidence in the Final Model
Form Initial T eam Number of Other Basin Wells Project Risk Quality of Other Data Quality of Engineering Model Value Proposition Fit for Purpose Option B Quality of Preliminary Model Final D- RAT Confidence of Program

Drilling Option A

Service Company Input

Contingenciies

Option C

Initiation Phase
Project Risk Module Data Validation Module
Low Confidence Confidence in the Model Service Company Input Company A

Planning Phase
Service Company Module Type of Well Module
Shallow Type of Well Validate Drilling Assumptions Refine G&G Assumptions Intermediate Meets Cost Criteria Option C

Drillimg Options Module
Option B Drilling Option A

Strategic Decision Strategic Decision Sciences Sciences

Project Risk Project Schedule

Medium Confidence

High Confidence

Confidence Selection

Company C

Company B

Well Selector

HTHP

Confirm Engineering Assumptons

Drilling Practices

Copyright 2005 Strategic Decision Sciences LLC. All Rights Reserved.

Inputs to Model

Soft/Hard

Scenario Control Panel - Drilling Risk Assessment Model Stage One -- Preliminary Drilling Risk Assessment
Outside Issues
Organizational Process Assets

2) Logic
Service Companies
Company A
6 9Large

From Other Processes
Project Scope Statement

Earth Model
Number of Offset Wells

Low Impact

0.2

0.4

0.6

High Impact

0.8

1.0

0.2 0.4 Poorly Defined

0.6

0.8 1.0 Well Defined

Small

3

Low

3

6 Average

9 High

External Factors

Project Resources Availability

Quality of Horizon Maps

Company B

0.2 Low Impact

0.4

0.6

0.8 1.0 High Impact

Low

0.2

0.4 0.6 Average

0.8

1.0 High

Low

3

6 Average

9High

Low

3

6 Average

9 High

Project Resources Capabilities

Company C

Selection Criteria
Well Type Shallow Intermediate HTHP Low
0.2 0.4 0.6 Average 0.8 1.0 High

Engineering Model
Number of Other Basin Wells Low
3 6 Average 9 High

Project Management Plan Quality Small Low
0.2 0.4 0.6 Average 0.8 1.0 High 3 6 9

Confidence in Model Low Medium High

Large

Project Schedule

Quality of Other Data
1.0 1.1 1.3 1.4 1.5 On Schedule 1.2 Degree Early or Late

Low

3

6 Average

9High

Stage Two -- Final Drilling Risk Assessment

3) Subjective
Assumptions Human Resources
HR Availability Quality of Drilling Assumptions Low
3 6 Average 9 High

Options
Option A

Refine G&G Assumptions

Validate Drilling Assumptions

1) Process

Low

3

6 Average

9

High

Contingenciies

HR Capability

Low

0.2

0.4 Meet

0.6

0. 8

1.0 Exceed

Low

0.2

0.6

1.0 Meet

1.4

1.8 Exceed

Meets Cost Criteria None
3 6 9 Many

Drilling Practices

Low

3

6 Average

9High

Cost of Additional Data Confidence in Drilling Option Low
3 6 9 High

Low

0.2

0.6 1. Meet0

1.4

1.8 Exceed

Poor

0.2

0.4 Good0.6

0.8 1. 0 Excellent

Confirm Engineering Assumptons

Strategic Decision Sciences
HES Low
3 6 9 High

Low

3

6

9 High

Low

0.2

0.6

1. Meet 0

1.4

1.8 Exceed

Other Option Summary Profiles
Option B Option C

0.2 Low Quality

0.4

0.6

0.8 1.0 High Quality

0.2 Low Quality

0.4

0.6

0.8 1.0 High Quality

Copyright 2005 Strategic Decision Sciences LLC. All Rights Reserved.

Output of Model - Sensitivity Scenarios

Scenario Output - Drilling Risk Assessment Model

Quality of Preliminary Risk Assessment

Final Risk Assessment Value Proposition

Confidence in Final Risk Model

Scenario Output - Drilling Risk Assessment Model Assessment Model Scenario Output - Drilling Risk

Scenario Output - Drilling Risk AssessmentFinal Risk Final - Drilling Riskin Final Scenario in Model Quality of Final Risk ConfidenceOutput Quality of Confidence Assessment Model Preliminary Risk Assessment Risk Risk Model Preliminary Value Assessment Value Risk Model Assessment Proposition Assessment Proposition Best Drilling Option Preferred Service Project Risk Company
Ranking

Ranking

Quality of Preliminary Risk Assessment

Final Risk Assessment Value Drilling Option A Proposition Option B
Option C

Quality of Confidence in Final Preliminary Risk Risk Model Assessment A Company
Company B Company C

Final Risk Assessment Value Proposition

Confidence in Final Risk Model

Best Drilling Option

Preferred Service Best Drilling Option Company
Ranking Ranking

Project Risk Preferred Service Company

Project Risk

Ranking

Copyright 2005 Strategic Decision Sciences LLC. All Rights Reserved.

Ranking

Drilling Option A

Option Option B Best Drilling Option B Preferred Service CompanyDrilling Option Best BProject Risk Option C Option C Company Company C

Drilling Option A Company A

Company A

Company B

Preferred Service

Project Risk

Company Company C

Ranking

Ranking

Option B Option C

Company A Company B

Ranking

Drilling Option A

Ranking

Drilling Option A Option B Option C

Company A Company B Company C

Strategic Decision Strategic Decision Sciences Sciences

Company C Copyright 2005 Strategic Decision Sciences LLC. 2005 Strategic Decision Sciences LLC. All Rights Reserved. Copyright All Rights Reserved.

Copyright 2005 Strategic Decision Sciences LLC. All Rights Reserved.

Copyright 2005 Strategic Decision Sciences LLC. All Rights Reserved.

Causal Loop Diagram
Causal Loop Diagram
Project Procurement Management Develop Contracting Plan Develop Contract SOW Quality of Contracting Plan Develop Procurement Management Plan Contract Type Assessment

Vendor Response Bid Risk Profile

Bid Tabulation Project Management Plan Resource Plan Payments Selected Vendor

Contract Administration

Change Controls Auditing

Strategic Decision Strategic Decision Sciences Sciences

Reporting

Standards Based Methodology
PMI Body of Knowledge (PMBOK)

Strategic Decision Strategic Decision Sciences Sciences

Other Considerations:
Risk Breakdown Structure
Drilling Risk Breakdown Structure (RBS)
Risk Association

Cost 0.05 0.1 0.2 0.4 0.2 0.4 0.4 0.05 0.4 0.2 0.4 0.4 0.4 0.8 0.1 0.2 0.2 0.4 0.29

Impact Scale Time Scope 0.1 0.2 0.2 0.4 0.3 0.4 0.2 0.2 0.4 0.2 0.4 0.2 0.4 0.8 0.1 0.4 0.2 0.4 0.31 0.2 0.4 0.8 0.8 0.4 0.4 0.4 0.1 0.1 0.1 0.8 0.2 0.4 0.8 0.1 0.4 0.4 0.4 0.40

Quality 0.8 0.8 0.2 0.4 0.4 0.2 0.8 0.1 0.05 0.04 0.4 0.2 0.4 0.8 0.1 0.1 0.8 0.8 0.41

Impact Ave 0.2875 0.375 0.35 0.5 0.325 0.35 0.45 0.1125 0.2375 0.135 0.5 0.25 0.4 0.8 0.1 0.275 0.4 0.5 0.35

Technical Requirements Technology Complexity & Interfaces Performances and Reliability Quality External Subcontractors & Suppliers Regulatory Rig Availability Customer Weather Organizational Project Dependencies Resources AFE Approval Prioritization Project Management Estimating Planning Controlling Communication Average * Dummy Data Input

2 3 3 4 3 3 3 1 3 1 4 3 4 5 1 2 4 3 2.89

Strategic Decision Strategic Decision Sciences Sciences

RA Legend Very Low Low Moderate High Very High

1 2 3 4 5

Impact Legend Very Low 0.05 Low 0.1 Moderate 0.2 High 0.4 Very High 0.8

Where Risk Association Average is the Mean and Imjpact Ave (Average) is the Standard Deviation

Our Process

Vee Model

Understand stakeholder requirements. Develop Model Validation Plan (VP)

Demonstrate and Validate Model to VP

Develop Model Specification Expand Model Specification to Create Sector Specification Develop Sector VP Expand Sector Spec. to create Module Spec. Develop Module VP

Integrate Model and Perform Model Verification to Model VP Assemble Model Sectors and Perform Verification to Spec. and Sector VP

Test Module to Build-to Documentation and VP

Strategic Decision Strategic Decision Sciences Sciences

Code Module to Buildto-Documentation

Deliverables

Concept maps of key stakeholders Causal maps or influence diagrams An operating System Dynamics model Project: A list of policy-oriented action steps A strategy for immediate implementation

Strategic Decision Strategic Decision Sciences Sciences

How is Simulation Implemented -

Management

Back Office Systems

Field & External Information

Non-Interruptive

Add-on

Best Analysis Practice
Strategic Decision Strategic Decision Sciences Sciences

Strategy

Complex Decision Making (CDM)

Summary

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Simulation will transform PMP vocabulary Enabling Lean Project Management
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Do it on the computer before you cut steel Integrated with contemporary PM software solutions 3 5 years all will be PMP led? Within 3 years all large CAPEX projects will be simulated HP, BP Grandfather your PMP now!

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The future of project management?
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Strategic Decision Strategic Decision Sciences Sciences

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