W6_Ocharlie_WBS and OMNICLASS

Problem definition

The project WBS presents one directional view for project. The 3D model and OMNICLASS present multi-view of project. How do the multi-view improve throughput in fabrication yard.

Feasible alternatives

The Project work breakdown structure presents uni-direction orientation to projects.

3D work breakdown structure presents multi-dimension view to projects 

Develop the outcome of each alternative

The project work breakdown structure can be product oriented , discipline oriented , or organisation oriented.  Shown in W2_Ocharlie_WBS blog posting.. 

OMNICLASS is a standard for organising all construction information. It consists of 15 tables which can be grouped into the three primary categories of Iso 12006-2: organisation of information about construction works-Part 2: framework for classification of information:

Organising Construction results Tables 11 – 22 which classifies asset by function, forms and space.

Organising Construction resources Tables 23, 33, 34, 35, 36, & 41 classify all resources, materials and products.

Classifying Construction processes Tables 31 & 32 which classifies the phases and services in the project life cycle.

Selection of criteria

Jean-Yves Moine developed a theory which classifies WBS in 3D model fig.1;

 

 

fig. 1 3D model WBS by Jean-Yves

 

 

Jean-Yves opines that activity (ABS) yields products (PBS) and is done somewhere (GBS). 

He developed the equation

WBS = GBS x PBS x ABS

WBS is a crossing between the 3 breakdown structures. 

Inside the WBS cube are little cubes which are one time schedule tasks. These little cubes are controlled by the resources (tools), discipline (trade) and their properties,

Analysis of alternatives

The 3D WBS theory identifies 3 main dimensions that identify the work: the zones (GBS), the Products (PBS) and the activity (ABS). Other dimensions of the work are the organisation roles, the discipline and tools.

The three major groupings of the OMNICLASS 15 tables can be modelized along Jean-Yves 3D model.

The GBS can be modelized by construction result (tables 11-22)

The PBS can be modelized by construction resources (tables 23, 33, 34, 35, 36 & 41

The ABS can be modelized by construction process (tables 31 & 32)

Inside the WBS cube are the one time schedule tasks which are coloured by the organisation roles. Each of these cubes has properties

Selection of preferred alternative

In the fabrication yard, the facilities are established in a location which is given, the phases don`t apply since fabrication activities involve short duration works. The critical dimension is the organisation of resource grouping.

Each little cube in the WBS cube is a task which has properties (table 49)-stainless steel, carbon steel, GRE, CuNifer, is dependent on material (table 41) availability, can be performed with right tool (table 35) and by trade/discipline (table 33) fig. 2

Fig. 2 OMNICLASS and 3D model by Jean-Yves

 

This presents a multi-dimension view of the activities and aids scheduling, planning, and the management of workflow to optimize throughput.

Performance monitoring and evaluation

With the multi dimension approach, jobs are prioritised considering resources, trade and delivery date.    

References

Jean-Yves Moine (2012). 3D WBS model. (online). Available at http:3D-wbs.blogspot.fr {last Accessed 14/12/2012}

OmniClass a strategy for classifying the built environment (Ed 1), 2006-03-28 Release).

Retrieved from http:www.omniclass.org/

Humphreys, G. C. (2011). Definition of Scope, Work Breakdown Structure (WBS) and Dictionary, Project Management Using Earned Value (2^nd ed.), (PP. 45-58) CA, Humphreys & Associates Inc.

Hollman, J.K. (Ed}. (2012). ,  Plan Project Scope and Execution Strategy development, Total Cost Management Framework. (PP. 147-150) WV, AACE International 

 

W9._Norbert Eze_ Selecting Suppliers by Using Non-compensatory Models

W9._Norbert Eze_ Selecting Suppliers by Using Non-compensatory Models

By norberteze on December 29, 2012

I.      PROBLEM RECOGNITION, DEFINITION AND EVALUATION

A supply chain manager of NETCO has instructed me to carry out selection of a best supplier to purchase some materials from. Supplier selection method I am going to adapt to is multiattribute decision-making problem. Table..1 shows the desired attributes to assist me in the alternatives evaluation of the suppliers. The following tools below I will be used to achieve the best choice of suppliers from four alternatives….suppliers A, B, C and D.:

      i.        Dominance

     ii.        Satisficing

    iii.        Disjunctive resolution

   iv.        Lexicography.

The above tools are tools that make up Non Compensatory models. Non-compensatory models are models used often to mostly helpful in eliminating inferior alternatives from the analysis. It is refer non-compensatory because trade-offs among attributes are permissible. Comparisons of alternatives must be judged on an attribute-by-attribute basis.

II.    DEVELOPMENT OF FEASIBILITY ALTERNATIVES

Summary of information of feasibility alternatives are shown in the table below. The attributes are equally shown in Table..1. with their scores

Applying Dominance Tools:

Dominance is a useful screening method for eliminating inferior alternatives from the analysis. Usually it is will not be possible to select the best alternative based on dominance alone. Below table is analysis carried on dominance basis. Check for Dominance among alternatives is shown on the table Table..2. Pair-wise comparison of each supplier with set attributes was inspected and Supplier B dominated.

Applying Dominance method, in Table…2 proved clearly that Supplier B dominates Supplier A based on the quality of products. Supplier A will be dropped for consideration

Applying Satisficing Tools:

Satisficing, sometimes referred to as the method of feasible ranges, requires the establishment of minimum or maximum acceptable values (the standard) for each attribute. Alternative having one or more attributes values that fall outside the acceptable limits are excluded from further consideration. See table…3 by bounding the permissible values of attributes from two sides (or from one) information processing requirements are substantially reduced, masking the evaluation problem more manageable. From the table we can deduce that the analysis is not producing satisficing result since all the alternatives are unacceptable but Supplier B is more preferable since capacity is almost lowest in strength.

Applying Disjunctive Resolution:

The disjunctive method is similar to satisficing in that it relies on computing the attributes of each alternative to the standard. If an alternative has just one attribute that meets or exceeds the standard, that alternative is kept. In satisficing, all attributes must meet or exceed the standard in order for an alternative to be kept in the feasible set. See table…4 Ordinal Ranking of Suppliers Attributes. The easiest way to obtain a consisttent ordinal ranking is to make paired comparison between each possible attribute combination. By ranking each attribute can be to the number of times it appears on the right-hand side of the comparison. The ranking in table...4 is Quality>experiences>Reputation>Capacity>Skill.

.

Lexicography

The tools ensure that the model is particularly suitable for decision situations in which a single attribute is judged to be more important than all other attributes. Lexicography requires that the importance of each attribute be specified to determine the order in which attributes are to be considered. See table..5 Evaluation using application of Lexicography is super because it select the final best choice.

  

III.   DEVELOPMENT OF OUTCOMES FOR EACH ALTERNATIVE

·      Applying Dominance method, in Table…2 proved clearly that Supplier B dominates Supplier A and others based on the quality of products. Supplier A will be dropped for consideration even other suppliers. With dominance it possible to select the best supplier from.

·     The outcome using Feasible Ranges for Satisfcing, proved that comparisons of attributes values for each suppliers against the feasible range reveals that Supplier C and D cannot be selected because they are below the threshold of Experience, Quality and so on.

·     Ordinal ranking of supplier attributes range Supplier C as zero because the management skill of Supplier C is weighing lowest.

·      Lexicography has proven that Supplier B > Supplier C > Supplier A > Supplier D. Supplier with Quality is the best of all.

IV.  SELECTION OF A CRITERION (OR CRITERIA)

The use of Lexicography model was adopted in Tab. 5 to get to the highest ranked attribute (resulting to Supplier B selection).

      Similarly from tab. 2, checking for Dominance, Supplier B dominated all.

     So the application of Dominance and Lexicography models gave me the same results admirable result.

V.    ANALYSIS AND COMPARISON OF THE ALTERNATIVES

Lexicography model gave me the best alternative because the attributes were ranked in order of importance.

VI.  SELECTION OF PREFERRED ALTERNATIVE

As already explained above the Supplier B has the highest ranked value and dominated all the other alternatives, so it is the preferred alternative for this case study.

VII. PERFORMANCE MONITORING AND POST-EVALUATION OF RESULT

The application of Lexicography and Dominance model is a really a good performance monitoring tool in the sense that they ranked all the alternatives in their order of importance.

References:

1.     Purdue OWL APA style. (2011). APA formatting and style guide, pg (10). Retrieved from http://owl.english.purdue.edu/owl/resource/560/19

2.      Sullivan, W. G., Wicks, E.M., & Koelling, C.P. (2012). Engineering economy, (15th ed.)  (Chapter 1) (pp. 23-37)  (Chapter 14) (pp. 573-583)

3.      Howard Technology Middle East (2012). Operating Cost Estimating and Financial Analysis, ( 2012) (Selection 7) (pp. 1-7)

4.      AACE International. (2012). Skill & Knowledge of Cost Engineering, (5th ed.)  (Selection 5) (Chapter 23) (pp. 23.1-23.10) (Chapter 24) (pp. 24.1-24.5)

W9_Reginald Nwachukwu_Risk Analysis of Preferred Business Alternative

 

1. Problem Definition and Opportunity Statement:

Referencing W7_Reginald Nwachukwu_Analysis of Business Plans Using ROI ROS & B.E. Analysis and W8_Reginald Nwachukwu_Economic and Financial Modeling of Alternative Business Plans; it is desired to investigate the Project Risk of 3D Modeling Training Center Project Using the impact of NPV on cash inflows. The risk analysis is examine how the uncertaintity in the estimated cash flow of the project changes when 'What-If ' questions are asked ? Example, what happens to revenue if only 13 people were trained throughout the 2nd year of project life ? Below is the project data used for risk analysis. 

Figure 1-1 Project data used for risk analysis

 

2. Development of Feasible Alternatives:

The following are feasible alternatives used to analysed the effects of risk of estimated cash flow and results obtained from their analysis are used to evaluate the impact of risk:

(a.) Sensitivity Analysis

(b.) Scenario Analysis

(c.) Monte Carlo Method

(d) Decision Analysis

Only, Sensitivity and Scenario analytical methods are applied here for brevity.

3. Development of Outcome for Each Alternative:

The outcome for each alternative is to plot the Sensitivity and Scenario Graphs which measures the "steepness" or "flatness" of the straightlines of each "What-If" variable been considered.

A steeper line show much variability with respect to NPV, whereas flatten straightline shows little or no variability with NPV.  

4. Selection of Acceptable Criteria:

The criteria used to select the preferred method of project risk analysis is the technique that provides insight on how changes on the estimated cash inflow can affect the NPV of the project. 

5. Analysis and Comparison:

Analysis are performed on the estimated cash inflows using Sensitivity and the Scenario Analytical tools as show below viz:

 

 

 

6. Selection of Preferred Alternative:

The Sensitivity Analytical Method is the preferred alternative for project risk anysis since it examines the impact of what-if variables on the Net Present Value (NPV or NPW) of the estimated cash flow; whereas the Scenario analysis looks at NPV within the range where risk can be anticipated.

 

7. Performance Reporting and Evaluations of  Results:

Performance and reporting of the project estimated cash inflow  will be monitored using results obtained from the sensitivity analysis.

 

References:

Park C.S (2005) Fundamental of Engineering Economy Lecture No.29 Retrieved from

http://faculty.kfupm.edu.sa/SE/atique/SE307_Engineering_Economics/Lecture-No29.ppt

Kvlahos Kiriakos (2000) Financial Modeling and Risk Analysis Retrieved from

http://faculty.london.edu/kvlahos/dra/ppp/Risk-Analysis.ppt

 

Giammalvo, P. (2012). Integrated Portfolio (Asset), Program (Operations) and Project Management (Cost Engineering)   Day #2  pp.49-57).An AACE Methodology Course 2012 Lagos, Nigeria: Lonadek

 

Ezeh J.C. & G.N. Ezeh (2000) Fundamental of Engineering Economy (pp.14-21)MC Computers Press Owerri 

W5_IBRAHEEM_PREFERRED SAVING PLAN

1.0 Problem definition:  Preferred saving plan.

Home ownership is an important achievement for every family. A salary earner in the civil service with a monthly salary of NGN 350,000 per annum intends to establish a saving plan towards home ownership estimated at NGN3, 000,000 of today money.

2.0 Development of feasible alternative:

15years to retirement and considering the following alternatives:

1. Saving plan over 14years, 25% of salary after tax with 8% interest rate per annum on deposit
2. Saving plan over 10years, 35% of salary after tax with 13% interest rate per annum on deposit

The two alternatives will be scrutinized and real value of dollar at the end of period of analysis will be ascertained. Justification will be made on which savings plan best suit the objective based on CPI (Using Nigeria as a case study)

Following parameter can be deduced from chart below as it applies to Nigerian economy:

Fig 1.0

  

Consumer price index= (Index) _k - (Index) _k-1      Eqn. 1

{(CPI) ₂₀₁₂-(CPI) ₂₀₁₁}/ (CPI) _2011. Substituting figures from fig 1.0 above

(12.3-11.8)/ 11.8 = 8.47%

3.0 Develop the outcome for each alternative:

The two scenarios will be subjected to numerical analysis using spreadsheet method.

Alternative 1

Alternative 2

4.0 Selection of acceptable Criteria:

Acceptable criteria will be based on justification on which of the two alternatives brings appreciable reduction in amount of years and excess money absorbed in the economy due to inflation over prolonged period of time.

5.0 Analysis and Comparison of alternatives:

Subtracting value of actual dollars in the two scenarios i.e. NGN 9,363,533- NGN 6, 767,338= NGN2, 602,595. This indicated a monetary value loss to inflation over extra 4years on alternative 1.

6.0 Selection of preferred alternative:

The most preferred alternative is alternative 2. It may impose a present financial constraint but beneficial on the long run as a reduction on effect of inflation on savings.

7.0 Performance Monitoring & Post Evaluation of result:

Continual monitoring measures to be put in place to evaluate effect of rise and fall of inflation based on consumer performance index as year unfolds.

References:

Sullivan, W. G., Wicks, E.M., & Koelling, C.P. (2012). Engineering Economy (15^th ed.) (pp 366-382) New Jersey, NJ. Pearson Higher Education, Inc.

  

Purdue OWL APA style. (2011). APA formatting and style guide. Retrieved from http://owl.english.purdue.edu/owl/resource/560/19/

Trading Economic (2012): Nigeria Inflation Rate. Retrieved from http://www.tradingeconomics.com/nigeria/inflation-cpi

W5_HYCIENTH_Purchase of a Pumping Unit

1.  Problem Recognition, Definition and Evaluation

A firm is e evaluating the purchase of one of two pieces of crude pumping unit. Unit A has a purchase price of $10,000 with a four-year life and zero salvage value. Annual maintenance costs are $500 per year. Unit B has a purchase price of $20000 with a twelve-year life and $5,000 salvage value. In year 1, maintenance costs are zero. In Year 2 maintenance costs are $100 and increases by $100 per year thereafter. The firm’s cost of capital is 8 percent.

2.  Development of Feasible Alternatives

In selecting a crude pumping unit, factors that need to be considered are

1. The terrain the pumps will be working in (swamp, desert or hilly areas),

2. The volume of crude to be pumped,

3. Maintenance cost for the pumps – is it a steady cost increase or a gradient year to year increase,  and

4. Safety features/operating envelope defined by the firm as acceptable for insurance and legal reasons.

3.  Development of the outcomes for each alternative

 Assume both Unit A and Unit B both has same service conditions.

Unit A and B have a live span of 4 years and 12 years respectively. Selecting a common multiple, this in this case will be 12 years.

Present Worth, P =F (1+I)^-n

Where:

                  P = present value or present worth

                  F = future value or future worth

                  A= annual amount or annuity

n = number of compounding periods or asset life

                  I = interest rate

                 

4.  Selection of a Criteria

Since cost and not benefit is being analysed here, the unit with the lower Net Present Worth cost structure is preferable.

5.  Analysis and Comparison

NPW Unit A:

NPW         = $10,000 + $10,000(P/F,8%,4) + $10,000(P/F,8%,8) + $500(P/A,8%,12)

                  = $10,000 + $10,000(0.7350) + $10,000 (0.5403) + $500(7.536)

                  = $26,521

           

NPW Unit B:

NPW         = $20,000 + $10,000(P/G,8%,12) - $5000(P/F,8%,12) - $100

                  = $20,000 + $100(34.634) - $5000 (0.32971) - $100

                  = $21,347

6.  Selection of the Preferred Alternative

Since Unit B at @ $21,347 < $26,521 for Unit A, Unit B is the preferred option.

7.  Performance Monitoring & Post Evaluation of Results

The alternatives under consideration have different costs and benefits over the analysis period.

If the calculation involves benefits greater than costs, then Unit A with the higher benefit NPW would be preferred.

8.  Reference:

1.     Sullivan, W. G., Wicks, E.M., & Koelling, C.P. (2012). Engineering Economy (15th ed.), Chapter 14, New Jersey, NJ. Pearson Higher Education, Inc.

2.     Amos, J. S. et al. (2012). Skills &Knowledge of Cost Engineering (5th  ed), AACE International, Morgantown, USA.