1. Problem Recognition, Definition and Evaluation
In period 2008-2012, we build 26 vessels in 9 shipyards. The progress per 22nd September as below :
Delivered : 15 units. 2 units on schedule, 13 units late
Under construction : 11 units. 1 unit ahead schedule, 10 units behind schedule
Figure 1 : Shipbuilding Progress per September 2012
Based on the data, our projects almost are disaster. BOD do not happy with this condition and need explanation about the key problems and next action. We have 1 week only to presented the key problem and how to prevented in the next project. Before we make it clear, the next project will be pending (next bid arranged next month)
2. Develop of the Feasible Alternatives
We collect information from the shipyards by asking them to mention 3 big issues for each vessel. Herewith the problem compiled for each vessel :
Figure 2 : 3 big issues for each vessel
3. Develop the outcomes for each alternative
From 23 late vessels, we summarize the big issues as below :
a. Refund Guarantee : 2 shipyards need more time to get the bank trust, this issue impact to 3 vessels.
b. Bad Weather : 2 shipyards report bad weather stop their production (no mitigate), impact to 6 vessels
c. Unrealistic Schedule : 1 shipyard propose unrealistic schedule and impact to 3 vessels
d. Waiting graving dock : there are some shipyards build our vessels in the same graving dock, when the first vessel delay, it impact to the next vessel’s schedule. It happen in 3 shipyards and impact to 5 vessels
e. Cash Flow Problem : 3 shipyards have financial problem and impact to 10 vessels
f. Bad Communication : 1 shipyard complain the bad communication between owner and shipyard. It impact to 3 vessels
g. Late Approval Drawing : 3 shipyards complain some late approval drawing from the owner impact to 5 vessels
h. New Regulation : 1 shipyard delaying the delivery to comply the new regulation about Volatile Organic Compound and it impact to 2 vessels
i. Many change order : 5 shipyards state that many change order from owner impact to 10 vessels
j. Fatal Accident : 2 shipyards report fatal accident make them stop their production for police investigation. It impact to 2 vessels
k. Late Equipment : 7 shipyard report late delivery of equipment and impact to 16 vessels
l. Labor Strikes : 1 shipyard report labor strikes stop their production and impact to 3 vessels
m. Document & Certificate Process : 1 shipyard has some problem when processing the vessel document & certificate because of no experience and impact to 1 vessel
4. Selection of the acceptable criteria.
There are so many issues and we prioritize it based on philosophy “small effort big impact” which consist of 3 criteria :
1. Quantity, solve the biggest problem first
2. Difficulties, solve the easiest problem first
3. Time, choose the fastest solution first
In this step we use quantity as the acceptable criteria, because of measure difficulties level and compare time need other tools and spent time. (great topic for other blog posting!)
Just remind to focus to the main objection, we should find what action can be done to prevented the problem happen in the next project, not to solve in existing project (great topic too for other blog posting)
5. Analysis and comparison of the alternatives
Based on quantity, the problems may be prioritized use Pareto Analysis. We already list the problems and state the time period. So the next step is compare the relative frequency of each problem as below :
Figure 3 : Compare the Relative Frequency of Each Problem
Next step, we list the problem into Pareto chart as below
Figure 4 : Pareto Chart
6. Select the preferred alternative
Based on our limited time, we compile the big 3 problem and arrange the action as below :
a. Late delivery of equipment
- Review the proposed schedule from bid participant, is it makes sense and consider the maker’s delivery track record?
- Review the maker list based on maker’s delivery time
b. Cash flow problem
- Study the other scheme of payment and compare the predicted cash flow of each scheme
c. Many change order
- Update information about new regulation & operational
- Revise the technical specification based on latest regulation and operational
- Arrange the new technical outline presentation in pre bid meeting
7. Performance Monitoring & Post Evaluation of Result
By monthly progress report of the project, we can monitor the effectiveness of the action. For suggestion, it is better if in the next time we compare the key problem based on the delay days which they contributed. And monitor the schedule slip specifically for each problem.
Reference
i. Monitoring The Progress of Shipbuilding Programmes, Retrieved from: http://www.rand.org/content/dam/rand/pubs/monographs/2005/RAND_MG235.pdf
ii. Impact Analysis : Identifying the Full Consequences of Change, retrieved from:
iii. Pareto Analysis : Using the 80:20 Rule to Prioritize, retrieved from: http://www.mindtools.com/pages/article/newTED_01.htm
WOW!!!! AWESOME!!! Really impressive case study, Pak Indra. Love it!!!!
ReplyDeleteWhat you might want to consider doing (starting now) is to look not only at the FREQUENCY, but the IMPACT. Using the concept of "Expected Monetary Value" (EMV) but applying it to time, you could multiply the FREQUENCY by the Amount of Time Delayed and using those figures for your Pareto Analysis, that would give you a much better indication of which are the most important problems to prioritize fixing.
As for the top problems, I honestly think you could apply much of what you have learned thus far in this course to help fix the problems. Specifically:
1) Late Delivery of Equipment- This is an ideal place to experiment with incentive based contracts, IF it is legal.
2) Cash Flow Problems- Once again, Earned Value Management, with payments every two weeks instead of every 45 to 60 days will go a LONG way towards ensuring that your contractors perform better- remember "Doggy Biscuit"? Very Pavlovian, but contractors put their best resources and best service towards the clients who pay their bills promptly.
3) Many Change Orders- This problem too can be solved by adopting a STANDARDIZED WBS and then building the contracts and payment around that STANDARDIZED WBS.
I just put together a 3 day course on Advanced Cost Engineering and one day was dedicated to incentive contracting. The leading causes of CLAIMS/DISPUTES in SE Asia are:
1) Failure to make prompt payment/compensation
2) Unrealistic Risk Transfer to Contractors
3) Conflicting Party Interests
4) Unrealistic Completion Dates at time of tender
5) Incomplete Design or Owner Requirements
http://www.echarris.com/pdf/ECH_Global_Construction_Disputes_Report_2012.pdf
Very interesting to read and not all that difficult to START to solve.
Great opportunity to apply what you are learning about.
Keep up the outstanding work, Pak Indra!!
BR,
Dr. PDG, Jakarta