Project Cost Optimization and Control using EP-dashboard

Emerald's proprietary EP-dashboard facilitates an analysis of multiple systems' data all the way down to the resource level - something that Primavera alone cannot do. 

Overtime vs. Regular hours.

Overtime hours typically cost between one and a half, to twice the cost of regular hours. An optimized project plan will schedule as much work at regular-time hours as possible; both day and night shifts may be scheduled on critical path activities, while non-critical work is typically assigned day shift only.  The objective is to keep overtime to an absolute minimum, without impacting the project schedule.

However, we frequently see cases where contractors submit invoices for three hours at regular time and seven hours at overtime - even though all ten hours were scheduled during regular time hours. Our EP-Dashboards can quickly flag such cases and reduce your costs.  The system works as follows:

• we create a benchmark of reasonable overtime that can be charged per shift, based on the assumption that it is infeasible for someone to work more than a defined number of hours in one day: i.e. for every ten regular labour hours, the benchmark allows a maximum of an additional five overtime hours, creating a ratio between overtime and regular hours of  5/10, or 0.5.
• Labour data is then pulled into the chart by resource, summarized by trade and then rolled up by contractor. Here's how it looks: (click on the image to enlarge); the actual hours in this example come directly from SAP.

Note the various trades in this sample turnaround project (executed by one of our major clients). Any values below the red benchmark line are acceptable. Those values above the benchmark line show at glance which trades have submitted more overtime hours than regular hours.

We can look at the rolled-up contractor information to identify which contractors are consistently submitting more overtime than regular hours - as shown in the dashboard screenshot on the right.

The next level of validation uses data from the access control system, which records precisely which contractor entered and exited the plant, and at which time of day. We can thereby calculate not only the exact number of hours on-site, but also the makeup of those hours between day shift and night shift.  This can then be compared against the submitted invoices or actuals.

Access Control Data (labour swipes at the gates)

Construction sites (and even head offices) commonly use an access control system, which records the time that each person enters and exits, along with the specific gate they come through (through the use of cards, tags or fobs). All too often, the timesheets submitted do not match the data from the access control system - and not in your favour: you will be overcharged, unless the timesheets are systematically validated against the access control system data. Without such a validation process, you essentially have no control over your actual cost.  This will lead to incorrect earned value analysis - and a lack of financial control of your project.

The following real-life examples demonstrate this problem.

We have plotted actual hours submitted by contractors against the total number of hours swiped at the gate. We roll up the data first by trade and then by contractor. Because the EP-dashboard can read at the resource level we can even drill the data right down to the individual resource.

Looking at performance by trade, we see the yellow bar, which represents swiped data, against stacked actual regular and overtime. On this project, contractors were not allowed to submit their actuals for short breaks, time to change and lunch, so one would expect the yellow cumulative line to be slightly higher than the Actual; we allowed for swiped time to exceed actual time by 10%. Looking at the charts, one can see clearly that most of the trades submitted their timesheets accurately. However, Trades INST and INSU did not.  Drilling down to the contractor and/or resource level reveals which dates created the discrepancy. 

Now let's look at the contractor rollup from their resources to understand where we need to concentrate next. The dashboard screenshot on the right represents the re-arranged data by contractor, which shows clearly that "Contractor Name 04" has submitted more total hours than were swiped at the gate.

Double clicking on the panel to expand the chart gives us the detail to analyze the contractor's actual hours against total hours recorded by the access control system - and the ammunition to take corrective action.

Because the EP-dashboard can collect and analyze data in real time, you obtain an immediate picture of your execution - and thereby achieve much closer control over your project.

The savings from such tighter control amounts to millions of dollars. On average, Emerald's validation system reduces contractor labour costs by 25%.

Moreover, you can reduce your total project cost further by targetting the project accruals. Feeding addtional data into the EP-dashboard, you can create robust S-curves to illustrate the trend in contractor costs - thereby providing another powerful validation tool.

Emerald can offer a multitude of poven techniques (implemented at our major Oil & Gas, Construction, Energy and Government clients worldwide) to optimize your project costs. For more information on EP-dashboard contact us directly and/or register for our regular free webinars.