1999 AACE INTERNATIONAL TRANSACTIONS

ENV.04 Multi-Project Costing and Reporting Techniques

Erin Bognar and Chris Schoenbauer
aiser-Hill Company, L.L.C. (Kaiser-Hill) has accepted the challenge of managing an environmental cleanup project that is multifaceted, with execution performance and responsibility assigned to multiple companies. Ensuring the successful integration and control of the Rocky Flats Environmental Technology Site (Rocky Flats or site) Closure Project is reliant on innovative costing and reporting techniques. The closure project consists of over 17,000 schedule activities and over 80,000 integrated resource records, each with a full basis of estimate. Kaiser-Hill manages and integrates five core subcontractors, who are tasked with the execution of these activities. All planning, scheduling, and budgeting (funding-constrained execution year budgets and out-year plans) reside in the closure project baseline (CPB) database. This baseline provides a single integrated reporting and planning system that supports the US Department of Energy (DOE) and community goals and objectives for the closure of Rocky Flats. Industry standard project control techniques establish the framework for the site scheduling, costing, and reporting systems. The site has advanced these techniques to facilitate multicompany business and project costing and reporting. All core subcontractors responsible for accomplishing the cleanup tasks use a central cost accounting, reporting, and project control system. This dynamic and flexible system allows Kaiser-Hill to respond to changing performance reporting requirements from our customer (DOE, Rocky Flats Field Office) and our core subcontractors while maintaining configuration control of the closure project baseline (CPB). This article describes the reporting systems and techniques implemented by Kaiser-Hill to manage the multicompany, multitask $7.3 billion dollar closure of Rocky Flats. SYSTEM SELECTION CRITERIA In selecting and implementing an integrated reporting system to manage the closure project, Kaiser-Hill established the following system criteria: total replacement of the legacy mainframe system; use of a modern client server approach; use of relational databases;

use of commercial off-the-shelf applications, where possible, to minimize cost; and year 2000 (Y2K) compliance.

The resulting system had to meet the above while maintaining focus on the end-users ability to get to data! INTEGRATED REPORTING SYSTEM Applying the above criteria, Kaiser-Hill selected/developed a control system that consists of five major systems or databases: a scope database, a baseline scheduling system, a basis of estimate database, a performance report database, and a work breakdown structure (WBS) database. When integrated with the sites accounting system, Kaiser-Hill has a reporting system (see figure 1), which supports the closure project mission, management, and customer/stakeholder needs. This suite of systems was developed and integrated in a near real-time basis with no impact to work in progress. The systems/databases are integrated and share data. They are designed to maintain the integrity of the baseline data that is under change control, while allowing flexibility for what-if analysis and work-around planning. Currently, the systems are being used to develop a what-if plan to accelerate closure from the year 2010 to 2006. WORK BREAKDOWN STRUCTURE The common thread used to integrate these systems/databases (scope, schedule, basis of estimate, performance reports, and the accounting system) is a configuration controlled work breakdown structure (WBS). The closure project WBS was completed in 1996 and defines the scope of the closure project consistent with the Rocky Flats Cleanup Agreement, until the scheduled completion in 2010. The WBS is expandable, as the scope is refined over the life of the project. DOE controls levels 1 to -5 of the WBS. The WBS controls the creation and status of charge numbers. The WBS coding structure is used as the link between the scope, schedule, and estimate tools. The WBS is maintained in a lookup table that links the WBS code to the:

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Figure 1Integrated Reporting System various project-reporting levels (project, subproject, cost account, and work package); various DOE financial-code reporting levels (budget and reporting, project reporting number (PRN), etc.); to the company responsible for managing the scope of work; and to the charge numbers used by the accounting system. gorization of hazards and risks, planned or implemented controls to mitigate and prevent hazards/risks, and the identification of the work performance feedback and improvement process that will be implemented during work execution. Subproject interface identification is essential to scope management. Although subproject interfaces are often identified as logic ties between activities on the project schedule, the need exists to identify these interfaces within the scope document. The closure project scope documents are used frequently by the general public, who may not have the technical expertise to understand interrelationships as defined on a detailed project schedule. Therefore, specific fields are provided within the scope database to capture the subproject internal interfaces, in addition to identification of external interfaces. Examples of two recent external interfaces affecting the closure project scope and completion are the delivery of a government furnished plutonium packaging system and the opening of the New Mexico Waste Isolation Pilot Project. The scope database is linked to the cost estimates in the basis of estimate software tool (BEST) database, the milestones in the baseline schedule system, and historical WBS cost data from the performance reports database via the WBS code. This link allows the production of closure project description documents that contain life-cycle scope schedule and cost information, which may be produced in any desired customer format. This scope database also produces the core baseline scope documents for the closure project. These documents, when approved, provide the contractual fiscal year statements of work between Kaiser-Hill and DOE (see figure 3). The data is also used as the basis for the Kaiser-Hill contracts with the five performing Kaiser-Hill Team companies. In addition, it is the source database for all government budget submissions, whatif exercises and special reports.

By using the WBS code in a reporting lookup table, Kaiser-Hill has maintained the ability to respond to changing regulatory and DOE financial and project reporting requirements without effecting the integrity of the WBS. By linking the WBS code to the company assigned to manage and/or perform the work, company-level performance measurement reporting capability is obtained. Scope Database The closure project scope is dynamic and subject to changes depending upon government and regulatory requirements. Kaiser-Hill is challenged with managing and communicating the closure project scope requirements, ensuring clear communication between the five companies that make up the core Kaiser-Hill Team. In order to manage and communicate the closure project scope, a scope management SQL-server database was developed. For each subproject (known as project baseline description, or (PBD) in Rocky Flats vernacular), cost account (known as a work authorization document), and work package within the closure project, the database clearly identifies the life-cycle scope, technical strategy, deliverables, and assumptions (see figures 2 and 3). A paramount concern is the identification and management of safety related concerns and issues and their potential effect to the closure project scope. As illustrated above, the database captures this information by requiring the identification and cate-

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Figure 2PBD (Subproject) Database Screen

Figure 3WAD (Cost Account) Screen

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1999 AACE INTERNATIONAL TRANSACTIONS sure project scheduling standard requires that all schedules be Baseline Schedule System developed using a uniform coding structure within Primavera. As seen in figure 1, Kaiser-Hill manages the closure project This ensures that company detail working schedules summarize by using an industry standard software application for schedulto the Kaiser-Hill project summary schedule. Compliance to ing (Primavera). Primavera software supports the multiproject the closure project scheduling standard is contractually required environment and facilitates the various levels of schedules of all companies. required to manage the project. The implementation of a clo-

Figure 4Schedule Example

Schedule dates from Primavera Database

Figure 5Basis of Estimate ENV.04.4

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Company Identifier: R= Rocky Mountain Remediation Services K= Kaiser-Hill

Figure 6Basis of Estimate Two primary schedules are maintained: a target schedule and an active schedule. The target schedule is the basis for all commitments, as stated in the scope database. It also contains all milestones used for contract performance measurement. This target schedule is under change control. The active schedule is used to report progress, and the data date is moved monthly (see figure 4). These two schedules are compared to each other in order to perform critical path analysis on milestone and project completions. Schedule resources (as required by the Primavera schedule software) are obtained from the basis of estimate database and time-phased (spread) by Primavera to create manpower profiles and fiscal year budgets. Summarizing the two primary schedules creates the KaiserHill executive-level summary schedule. The executive-level schedule status is obtained monthly from the active schedule. This summary schedule is used for presentation purposes to the US Congress, the DOE, and project stakeholders (the city of Broomfield, etc.). Basis of Estimate Database Since the closure project consists of many subprojects whose scope includes such diverse activities as building construction, building demolition, fire protection services, laundry services, waste processing, waste packaging and waste shipments, a customized activity-based estimating tool (BEST) was developed. The estimate for each activity on the schedule is linked to the scheduling system via the WBS code and activity identifier (see figure 5). This link allows the scheduler to access the resources for time phasing and provides the estimator with schedule information as the estimate is being developed. This activity-based estimating tool was developed in Microsoft Access and SQL Server and allows cost estimates to be developed easily for a variety of project types including construction, demolition, production, service, and distribution. Since the database is used for all estimate types, the cost estimate learning curve associated with a project team transitioning from a completed production subproject to a demolition subproject is minimized. A standardized estimating tool for all project types facilitated the implementation of an integrated reporting system, ensuring that all project teams developed their estimates using a common cost code structure. The common cost coding structure ensures that actual costs collected can be compared to the cost estimate. This common cost code structure not only includes industry standard estimating data elements (labor/nonlabor, hours, quantity, units, department codes, skill codes, etc.) but also identifies the performing company (see figure 6). Having this identifier in the cost estimate and in the financial system enables Kaiser-Hill to monitor a service contractor who provides services such as laundry and building maintenance. These costs are collected for performance measurement in the work package of the Kaiser-Hill team company benefiting from the work being performed. This venue of cost reporting provides another mechanism for Kaiser-Hill to evaluate the service contractors performance. In managing the closure project , Kaiser-Hill has retained accountability for allocating the union work force to the various core companies. The performing company identifier in the cost estimate facilitates the forecasting of union labor requirements by company and is crucial in the allocation process of these limited resources. Including the company identifier enables company-level resource forecasting, facilitates the development of

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Figure 7Samples of Risk Codes company-specific statements of work, and enables companylevel performance reporting. Each basis of estimate is evaluated and assigned risk factors for scope, schedule, and cost to monitor the quality and uncertainty of the estimate. This information is used to evaluate and quantify the risks associated with each subproject. Management can then focus attention on risk issues that require mitigation. Examples of several of the risk codes captured in the basis of estimate database are indicated in figure 7. Performance Reports Kaiser-Hills performance reports mirror industry standard methodology for cost and schedule evaluation and reporting. These reports integrate the budget spreads (or budgeted cost of work scheduled) from the Primavera target schedule, the progress (or budgeted cost of work performed) for the Primavera active schedule and the actual costs of the work performed from the accounting system. Project labor cost data is updated weekly in the system; official performance measurement reports are updated monthly. Electronic performance reports are available for all levels of the project, for DOE, for the functional organizations, and for the individual companies. Accounting System In managing the closure project, Kaiser-Hill uses an industry-recognized leader in software applications for financial management (Peoplesoft). The Peoplesoft financial software supports multicompany financial reporting and multiproject cost collection and reporting. Kaiser-Hill manages the site application used by both Kaiser-Hill and the five primary contractors. The financial system provides cost information to the project control system for performance reporting and analysis. ENSURING EASE OF USE The key success criterion for any integrated reporting system is its ease of use. All elements of the integrated reporting system (scope, schedule, cost estimating, performance reports, or financial details) can be accessed via one application. The systems users are not just limited to Kaiser-Hill and its core companies but include the DOE and special agencies, at DOEs request. Today the system has approximately 300 users with access to information controlled via the WBS and the sites responsibility assignment matrix. Reports are standardized so that all levels of project managers (project, subproject, cost account, and work package) receive similar reports. Reports (performance, cost estimate, statements of work, schedules, etc.) are provided online via the reporting system and can be printed or migrated to Microsoft Excel at the discretion of the user. The reporting system windows are customized to the user-level (project manager, subproject manager, cost account manager, work package manager, functional manager, company-level, DOE, etc.). Users can access the reporting system onsite, 24-hours a day, from any terminal connection to the site client-server system. n integrated reporting system provides the contractor with the ability to respond to the annual government budget submissions, what-if requests, and special report requests while minimizing the effect to the sites project managers. Investment in customizing and integrating industry standard reporting systems to meet the demands of a multiproject, multicompany environment has paid off; specifically this integrated reporting tool has shortened learning curves, provided a multicompany standard for project costing and reporting, minimized the reporting demands on the project manager, received stakeholder and customer acceptance, and is easy to understand and use.

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1999 AACE INTERNATIONAL TRANSACTIONS Erin Bognar Kaiser-Hill Company, L.L.C. Project Controls Division PO Box 464 Golden, CO 80402 Phone: 303-966-7526 or 303-966-8091 Fax: 303-966-6335 Chris Schoenbauer Kaiser-Hill Company, L.L.C. Project Controls Division PO Box 464 Golden, CO 80402 Phone: 303-966-7526 or 303-966-8091 Fax: 303-966-6335

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