Using SimVision for Organization Development. 1. Solving Organization Development Problems with SimVision

Transcription

1 Using SimVision for Organization Development 1. Solving Organization Development Problems with SimVision

2 Contents Introduction to SimVision and its Application to Organization Design Exercise: Solving Project Design Problems Using SimVision Step 1: Understanding the ASIC Program Objectives Defining the Business Objectives Case Background SimVision Approach Step 2: Validating the ASIC Baseline Case Examining the Baseline Case Examining the Tree Pane Examining the Model Pane Creating the Second Project Setting the Program Probabilities Understanding Probabilities Simulating and Analyzing the Baseline Analyzing the Project Gantt Charts Analyzing Task Schedule Growth Analyzing Position Backlog What to do Next Step 3: Simulating and Analyzing the Refined ASIC Model Examining the Refined Model Examining the Program Examining the ASIC Hardware Project Examining the ASIC Software Project Adding Ghost Milestones and Tasks Adding a Ghost Milestone Adding Ghost Tasks Adding Categories Analyzing the Simulation Data Analyzing the Project Gantt Charts Analyzing Schedule Growth Analyzing Person Backlog in the Hardware Project Understanding the Logic Design Team s Backlog Analyzing Person Backlog in the Software Project Drawing Conclusions from the Simulation Data What to Do Next Step 4: Exploring Alternative Scenarios Intervention 1: Helping the PM Positions Creating the Second Case Adding Resources to the Project Manager Positions Analyzing the Simulation Data Intervention 2: Reducing the Full Chip Synth Task Schedule Growth Filtering Simulation Data by Category Drawing Conclusions What to Do Next Step 5: Analyzing Return on Investment Examining the ASIC Financial Data Examining the Cost and Revenue Data Drawing Conclusions from Cost and Revenue Data Examining the ROI Project Drawing Conclusions from the ROI Project Analyzing the Financial Simulation Data

3 Analyzing the Program Finance Chart Analyzing the Hardware Project Finance Chart Analyzing the Software Project s Finance Chart Analyzing the ROI Project s Finance Chart Tracking Penalties Viewing Program Financial Statistics Background Reading

4 Introduction to SimVision and its Application to Organization Design SimVision provides a powerful approach to using models of projects and work processes to solve organization design problems. Unlike traditional methods of tracking projects, SimVision models the work, team behaviors, and capabilities communication, decision-making, skills, and experience and accurately predicts how, where, and why coordination and quality are likely to break down, identifying the hidden risks and costly failure points in projects. The extensive analysis and results outputs from SimVision identify schedule, cost, and quality risks inherent in a structure, culture, or work flow and associated with specific tasks, projects, workers, and teams. SimVision quantitatively predicts the expected performance of an organization on a specific project or across a portfolio of multiple projects. The SimVision analysis engine produces detailed data and reporting of the likely outcomes, while its multi-case analysis capabilities allow many variations of work process and team designs to be quickly evaluated and optimized for maximum business success. Organizations using SimVision are able to understand in detail the relationships between their work processes, their organization, and the people required to execute the plan. The fundamental theoretical underpinnings for SimVision owe much to Dr. James March for contingency theory and Jay Galbraith for information processing theory. Since real world projects are executed by people that are inherently unpredictable, one can only make predictions about aggregate behavior that is, statistical probabilities for groups or classes of individuals, based on behavioral theories. The actual variables we correlate are related to time (work volume, processing speed) and attention (work, coordination, exception handling, decision making). In technical terms, SimVision can be described as an agent-based simulation model. Many such models have been constructed and are in use as powerful research tools in the fields of Physics, Biology, Complexity Science, Genetics, etc. Agent-based simulation relies on many micro components within a complex myriad of interactions and interdependency that lead to emergent aggregate outcomes. Such models yield penetrating insights into complex systems that are impossible to attain through deterministic analysis. The great drawback for almost all agent-based simulation models is that they require large numbers of highly educated theoreticians to maintain and operate them. As its growing utilization in the industrial environment has shown, SimVision is one of a very few such models that is ready for prime time. A well-developed intuitive graphic user interface allows you with only modest training to quickly construct real world scenarios. Simulation results are presented through a comprehensive suite of charts, graphs, and statistics that illuminate project results and empower informed planning. With this improved understanding, epm customers have found that applying the predictive power of SimVision to their project and portfolio planning results in substantial competitive advantage. SimVision is a registered trademark of epm, LLC. 1-4

5 Exercise: Solving Project Design Problems Using SimVision In this class, you start using SimVision right away to solve some real-world problems in a project model. You ll examine and make interventions in the model of an ASIC development project. The project is to accelerate the design and manufacturing of a new application-specific integrated circuit chip. The chip needs to be available in time for an important trade show. You examine how the model uses real business objectives represented by milestones, real tasks, positions, and so on, to simulate the real-life project. You then analyze the simulation results and identify interventions you can make to the model to bring you closer to the client s objective of shipping the chip in time for their deadline. Step 1: Understanding the ASIC Program Objectives Becoming familiar with the business objectives and case history will help you to understand the SimVision approach to the project design. Defining the Business Objectives The business objectives of the ASIC program are twofold: Program duration to accelerate the design and manufacturing of a new chip to meet a 7-month instead of the usual 13-month deadline. (The program begins at the end of October 2005 and is required to finish by May 31st 2006.) Task risk filtering by functional group to view at-risk tasks for each of the three functional groups in the program: Design, Engineering, and QA. Case Background In early October 2005, a leading application-specific integrated circuit (ASIC) designer was asked to design and manufacture a chip set for a new personal digital assistant (PDA) product that a mobile telephone manufacturer was trying to develop on an unusually tight schedule. The ASIC developer (epm s client) was very experienced with this type of project, but needed to dramatically accelerate its normal 13-month design and production process in order to unveil the new product containing this chip set at a trade show in early June of the following year just 7 months from the project start date of October 30th. The developer also wished to better understand risk factors across its three functional departments: Design, Engineering, and QA. The ASIC program divides staff and workload between two projects, Hardware and Software. The developer wanted to use SimVision to filter the simulation data so as to view risk by functional department. SimVision Approach To meet the client s goals, you will use SimVision to do the following: Examine the pre-built Baseline, or initial, case of the ASIC Hardware project to understand the structure and flow of the model. Dummy in the ASIC Software project to complete the program Baseline. Simulate the Baseline case and analyze the simulation data. Examine the pre-built model that has more detail, and add further refinements to this model. Simulate and analyze the fully refined model, examining the simulation data for risk and ways the risk can be mitigated to meet the client s deadline. Make iterative interventions in the model to meet the client s goals. 1-5

6 Step 2: Validating the ASIC Baseline Case First, you open the Baseline, or initial, case of the ASIC program model. Your initial goal in this class is to see if the simulated end date for the project matches the planned end date of 5/31/2006. In this section, you will: Examine the Hardware project to understand its structure. Dummy in the Software project with a single task that matches the duration of the entire program. Set program probabilities of noise, errors, and other real-world distractions Simulate the Baseline case and analyze the simulation data to check simulated program duration and risk. Examining the Baseline Case First, launch SimVision and open the ASIC model. To launch SimVision and open the ASIC model 1 On the Start menu, click Programs>ePM> SimVision, or double-click the SimVision icon on your desktop. The SimVision workspace opens, with the default program, project, and milestones displayed in the Model pane. 2 On the File menu, click Open. 3 Open the file ASIC Baseline.vpm in the SimVision Course Models folder. The ASIC model opens. You can see the program elements in the Model pane. 1-6

7 Tree pane Properties pane Model pane ASIC program elements Start and Finish milestones and Hardware project The program is a container for one or more projects. Each project has its own tab below the Model pane (the yellow tabs). In this case, there is just one project: ASIC Hardware. Select the Finish milestone. In the Properties pane, you can see that the Planned (end) Date is 5/31/

8 Examining the Tree Pane The Tree pane shows a tree view of the program. This view helps to explain the hierarchy of objects in a program. Click the plus signs beside each item to expand it. You may need to drag the splitter bar at the top of the Properties pane downward to see all the Tree pane items. drag splitter bar down to view expanded Tree pane contents The Tree pane shows: A program contains one or more cases, or instances of the model. Here, the ASIC program only has a Baseline case. Later, you will create more cases. program name Baseline case of ASIC program program s single project, ASIC Hardware project s tasks project s positions project s one meeting project s milestones program s milestones organizations folder (no orgs yet) Within each case is an instance of the program s projects. Here, there is one project, ASIC Hardware. Within each project is a set of tasks, positions, meetings, and milestones. Each program has a set of milestones. The ASIC program just has the two default milestones, Start and Finish. 1-8

9 Each program can have one or more organizations. These contain department and persons that staff that projects. The Baseline case has no organizations yet. Typically, Baseline cases are not staffed. You will see the model staffed later in the class. Examining the Model Pane The Model pane shows a graphical representation of the program and its projects. The Model pane has tabs for the program and each of its projects. The program tab shows the program s milestones (here, Start and Finish) and projects (here, ASIC Hardware). Next, you look at the ASIC Hardware project to understand its structure and elements. To view the ASIC Hardware project 1 At the bottom of the Model pane, click the ASIC Hardware project s tab. 2 On the View menu, click Zoom to Fit so you can see the whole model. The project model displays, zoomed to fit inside the Model pane. positions and meetings successor links between milestones and tasks meeting attendance links supervision links between positions assignment links between positions and tasks milestones and tasks comms link rework link In the project model, you can see: Five blue milestones: These represent key dates in the project. Nine yellow tasks, linked to each other and to the milestones. The links are called successor links, and signify the order of the tasks and milestones. Six green positions, each of which can represent one or more FTEs (full-time equivalents). You can assign persons to positions (staffing), or you can leave the unstaffed positions representing a number of FTEs. 1-9

10 The positions are linked to each other with supervision links. These links signify information flow between positions. They do not represent the rank of individuals within the organization. Positions are linked to tasks with blue assignment links, signifying which position is responsible for which tasks. A position can be responsible for multiple tasks, but each task can have only one position primarily responsible for it. One pink meeting: Positions are assigned to the meeting with grey dashed meeting participant links. Four red dashed Rework links between pairs of tasks: Rework means redoing a task that has failed. A rework link is similar to a successor link because it connects a predecessor task (called the driver task) with a successor task (called the dependent task). However, a rework link also indicates that the dependent task depends on the success of the driver task, and that the project s success is also in some way dependent on this. If the predecessor, or driver task fails, some rework time has to be added to all dependent tasks linked to the driver task by rework links. Rework links are therefore directional, which means it s very important which task is the driver and which the dependent task. Three green dashed Communications links between task pairs: When you add a communications link between two tasks, you are specifying that there is significant interdependence between the decisions that are made during both tasks. A communications link indicates that the positions responsible for these tasks must communicate with each other to ensure that the choices made for each task are compatible. The position responsible for each task sends information to the other position occasionally during the task. Communications links are non directional, because communication occurs for both tasks. Therefore, it doesn t matter which task the link originates at. Creating the Second Project Before you simulate the Baseline case, you need to create the second project. You don t add much detail to this project, you just dummy it in so that both projects in the program are represented in the initial simulation. The second project is called ASIC Software. You will create and rename a new project, link it to the program Start and Finish milestones with Project Successor links, and add a single named task that lasts the entire predicted duration of the project, which is 7 months. You will also set the planned project end date to 05/31/2006. To add a new project to a program 1 In the Model pane, click the ASIC program tab. You should see the program s Start and Finish milestones and the existing project, ASIC Hardware. 2 On the Program Shapes toolbar, click Project. 3 Click in the Model pane below the ASIC Hardware project. 1-10

11 A new project appears, called Project1. A new tab also appears for the project, and the Tree pane displays the new project in the Projects folder for the ASIC Baseline.vpm program. (Note: The ASIC Hardware project has been contracted in the following illustration.) 4 Double-click the project and rename it ASIC Software. new renamed project in Tree pane To link the project to the program s Start and Finish milestones 1 Right-click the ASIC Software project. 2 On the right-click menu, click New Successor From. 3 In the New Successor From dialog box, select the Start milestone and click OK. A project successor link is added from the Start milestone to the ASIC Software project. 4 Right-click ASIC Software again and click New Successor To. 5 In the New Successor To dialog box, select the Finish milestone and click OK. A project successor link is added from the ASIC Software project to the Finish milestone. You now add a single 7-month-long task to the ASIC Software project, so that the simulator calculates the project length as 7 months, which is the planned length. To create the task in the new project 1 In the Model pane, click the ASIC Software tab to see the new project. 1-11

12 You see the project s default elements: the title, Start and Finish milestones, position, task, and meeting. The blue horizontal lines are for visual delineation of the model s elements. You can leave them as is. 2 Double-click the default task, Task1, and rename it SW Design Coordination. 3 Select the task so its properties display in the Properties pane. 4 Under Units for the Work Volume property, select Months. 5 Change the Value of the Work Volume property to 7. 6 Click Save. The final step in dummying in the Software project is to set the project s planned end date to match that of the program, 05/31/2006. You do this so that you can see the planned end date in the correct place in the project s Gantt chart. To set the project s planned end date 1 In the Model pane, click the ASIC Software project s Finish milestone. 2 In the Properties pane, set the milestone s Planned Date value to 05/31/ Click Save. Now that the ASIC program has two projects, it s time to set the program probabilities. 1-12

13 Setting the Program Probabilities You will now model the program probabilities of errors, rework, noise, and other distractions. Understanding Probabilities Projects do not typically consist of a set of independent tasks that are completed perfectly first time. Many tasks require some rework, and related or interdependent tasks require communication between the workers performing them. In addition, every project suffers some level of noise and distraction, whether it is due to errors, impromptu meetings, or staff discussing last night s game in the hallways. Probability rates specify the likelihood of these delays and distractions. The rework and communications links in the projects generate the rework and communications that the probabilities predict. There are four probability rates: Information Exchange Probability Measures the level of communication in the project between positions who are responsible for tasks linked by communications links. This probability is typically set in the range 0.2 to 0.5 low if the project involves a high level of routine jobs performed by skilled workers, and high if the project involves many highly interdependent tasks that are being performed by less skilled or very busy workers. You will set the probability to 0.5. Noise Probability Measures the effect of interruptions in the ordinary working day that take time away from doing the project tasks. In any real organization, noise can include distractions like a salesperson calling to sell insurance or a request for help from a peer. The probability of noise is generally in the range 0.01 (low) to 0.10 (significant, but common). You will set the noise probability to 0.1. Functional Error Probability The probability that a task will fail and require rework. Functional errors are errors that are localized to a task and cause rework only in that task by the responsible position. Such errors might be discovered by a self-check procedure, a peer review, or a supervisor s review. When a functional error is detected, an exception is sent to the responsible position. The responsible position can choose to rework, do a quick fix or, or ignore the exception. This probability is typically set in the range 0.05 to 0.10 low if the project involves relatively well-understood technology and standard work processes, and high if the project involves unproven technology or innovative work processes. You will set it to 0.1. Project Error Probability The probability that a task will fail and generate rework for itself and all failure-dependent tasks, which are tasks connected to it by rework links. This probability is typically set in the range 0.05 to 0.10 (significant but common) low if the project involves relatively standard tasks and routine work processes, and high for nonstandard tasks and innovative work processes. You will set a project error probability of 0.1. When a project error is detected, an exception is sent to the position responsible for the failed task. As for functional exceptions, the responsible position can rework, quick-fix, or ignore. To set program probabilities 1 Under the Model pane, select the Program tab. 2 In the Properties pane, change the value of the Info Exchange Prob property to Change the other three probabilities property values to Click Save. 1-13

14 Simulating and Analyzing the Baseline Simulating the program is as easy as pressing a button. When you simulate, it doesn t matter whether you have the program or project tab selected in the Model pane. The simulator displays data for the program first by default. Note: Your simulation results may vary by a few days from those shown here. A few days variance in a program of this length is normal. To simulate the Baseline case 1 On the Results menu, click Run Simulation. The simulator runs its default 25 trials and the Post Simulation Warnings dialog box displays two warnings about the probability of errors in the SW Design Coordination task. 2 Click Continue. 1-14

15 When the simulation is complete, the Chart Window appears, showing the Program Gantt chart. Chart Window s Program s charts Program s Gantt Tree pane with ASIC listed in Chart Bar chart displays by program selected default Notice the ASIC Hardware project in the Gantt chart has a minus sign (-) beside it. This means that the project is expanded. You can view the program s Gantt chart data more clearly by collapsing this project. 3 To collapse the ASIC Hardware project, double-click its minus sign. The minus sign changes to a plus sign and the project collapses. 1-15

16 4 To view the simulated end date, move the horizontal scrollbar to the right until the data columns are as shown in the following illustration. You can see that the simulated program end date is 07/03/06, which is about 5 weeks later than the planned end date of 05/31/06. 5 View the Gantt chart s graph data by clicking Show Data on the Controls menu to turn the data columns off. Start date (10/30/2005) Simulated (black diamond) and planned (green diamond) program end dates You need to make some intervention to bring the end date in by 5 weeks to meet the client s schedule goal. Analyzing the Project Gantt Charts Next, view the Gantt charts for the two projects. The Gantt chart for a project shows the project s tasks and milestones. To view the ASIC Hardware project s Gantt chart 1 In the Tree pane of the Chart Window, select the ASIC Hardware project. 2 Click the Gantt chart icon. The project Gantt chart appears, showing the same start and end dates as the program s. 3 To view just the chart s graph data, click Show Data on the Controls menu to turn it off. 1-16

17 The graphical data displays simulated task durations and milestone dates. Planned milestone dates display as green diamonds and simulated milestone dates as black diamonds. Simulated task durations display as bars colored blue (non-critical path) or red (critical path). Blue vertical lines signify a meeting. project s start date is late October 2005 project s weekly meeting project s planned and simulated end dates are close together You can see that the simulated end date for the Hardware project is very close to the planned date, so it is obviously the Software project that is causing most of the delay. You can also see that most of the tasks are on the critical path. If a critical-path task is extended or delayed, the project schedule suffers. View the exact task and milestone dates by turning on Show Data again and dragging the horizontal scrollbar to the left until the chart looks as shown here: The Hardware project is project to end on 06/07/06, only a week later than the planned date. Next, view the ASIC Software project s Gantt chart. 1-17

18 To view the ASIC Software project s Gantt chart 1 In the Tree pane of the Chart Window, select the ASIC Software project. 2 Click the Gantt chart icon. The project Gantt chart appears. 3 Move the horizontal scrollbar to the left until you see the data columns as shown next. 4 The simulated end date is 07/03/06, about 5 weeks later than the planned end date of the program. 5 Turn off the data columns by clicking Show Data on the Controls menu. The single 7-month task is illustrated by the single red bar. Two other ways you can validate the Baseline case of the model are to check the Schedule Growth chart for tasks that exceed their planned duration and the Position Backlog chart for positions that are severely backlogged at any point during the program. Analyzing Task Schedule Growth First, display the Schedule Growth chart for the ASIC Hardware project. To view the Schedule Growth chart for the ASIC Hardware project 1 In the Tree Pane, select the ASIC Hardware project. 2 Click the Schedule Growth chart icon. The ASIC Hardware project s Schedule Growth chart displays tasks at greatest risk of lasting longer than their planned duration. 1-18

19 The Sim Gates task shows the greatest risk to the schedule, with a capability of pushing the schedule out by 9 days. Analyzing Position Backlog Next, you check if there are positions that are severely backlogged during the project. Backlog actually means the number of days of work in a position s in-tray. The optimal backlog is thus one day, which means the position is fully busy but is not behind in its work. However, this rarely happens in the real world. Usually, positions have several days of work accumulated. Sometimes, a position has so much work accumulated that it poses a risk to the schedule and project quality. In general, a backlog of 2-4 days for a position will not pose any threat to the project. Higher backlogs need attention. If a position s predicted backlog is close to zero for a period, it can probably be given responsibility for more work in that period. Reducing position backlog is another way to shorten project duration. To check position backlog Click the Position Backlog chart icon. 1-19

20 The Position Backlog chart shows the five most backlogged positions in the project. The highest backlog is for the HW Project Manager position, but even this only spikes a little above 4 days. Because a backlog of 2-4 days is acceptable, none of these backlogs are critical. What to do Next You now have a validated Baseline case for your program. Now you are ready to examine and work on a more refined version of the ASIC program model. Step 3: Simulating and Analyzing the Refined ASIC Model In this step, you examine a more refined version of the ASIC model and add a couple of features. Then you simulate the refined model and analyze the simulation data, looking for ways you could intervene to meet the client s deadline. You will: Open and examine the refined ASIC model. Add a ghost milestone and ghost tasks. Add categories. Simulate and analyze the simulation data. Examining the Refined Model The refined ASIC program has two fully modeled projects, ASIC Hardware and ASIC Software. The projects have meetings, rework and communications links, and they are fully staffed. 1-20

21 To open the refined ASIC program 1 On the File menu, click Open Workspace. 2 Open the file ASIC Refined.vpm in the SimVision Course Models folder. The model opens, showing the Program tab with the two projects and two organizations. organizations linked to projects by organization assignment links program s milestones and projects Examining the Program On the Program pane, notice that there are now two organizations, Hardware and Software, and that they are linked to their respective projects by pink organization assignment links. When an organization is linked to a specific project, that means the organization s persons are available to staff only that project. If an organization is not linked to any project, its staff is available to all projects in the program. In the ASIC program, it makes sense to link the organizations to their respective projects. This simplifies staffing because there are fewer person to choose from when staffing positions. Examining the ASIC Hardware Project Next, look at the ASIC Hardware project. To view the ASIC Hardware project 1 Click the ASIC Hardware tab at the bottom of the model pane. 2 On the View menu, click Zoom to Fit. The model displays, zoomed to fit within the model pane. 1-21

22 In this refined model of the project, you can see the following features: Meeting The meeting is represented by the pink object at the top left of the model. It is joined with grey dashed meeting participant links to three of the positions. Meeting participant links connect the meeting with the positions attending the meeting. Rework Links Rework links are the red dashed links between task pairs. Rework means redoing a task that has failed. A rework link is similar to a successor link because it connects a predecessor task (called the driver task) with a successor task (called the dependent task). However, a rework link also indicates that the dependent task depends on the success of the driver task, and that the project s success is also in some way dependent on this. If the predecessor, or driver task fails, some rework time has to be added to all dependent tasks linked to the driver task by rework links. Rework links are therefore directional, which means it s very important which task is the driver and which the dependent task. Communications Links Communications links are the green dashed links between task pairs. When you add a communications link between two tasks, you are specifying that there is significant interdependence between the decisions that are made during both tasks. A communications link indicates that the positions responsible for these tasks must communicate with each other to ensure that the choices made for each task are compatible. The position responsible for each task sends information to the other position occasionally during the task. Communications links are non directional, because communication occurs for both tasks. Therefore, it doesn t matter which task the link originates at. Staffing To see staffing, you must select a position and click its Staffing property in the Properties pane. Do this for the HW Project Manager position. You see the Staffing dialog box, which lists the person staffing the position, Ethan Holt. 1-22

23 required and staffing FTE values match, indicating position is fully staffed Ethan Holt staffs the HW Project Manager position list of staff available to this project Ethan Holt staffs the HW Project Manager position 100%, which means that 100% of Ethan Holt s FTEs are staffed to this position (persons can have FTE values greater than 1). The #Matching column indicates which persons have the skills required by the tasks assigned to the selected position. For example, the HW Project Manager is assigned to two tasks: HW Design Coordination and Chip Spec. These tasks require the skills SC Design Management and Application Requirements, respectively. If you look in the Skills column for Ethan Holt, you will see that as well as the Generic skill, which every position has by default, he has the two required skills. This is why his #Matching column shows 2 matching skills. No other persons have these skills, so all the other #Matching values are 0. The #Matching column helps you to staff positions with the appropriately skilled persons. If a person does not have the required skills at the required levels (Low, Medium, or High), a skill mismatch results. Skill mismatches can cause significant project delay and risk. Examining the ASIC Software Project Next, look at the ASIC Software project by clicking its tab at the bottom of the Model pane and clicking Zoom to Fit on the View menu. 1-23

24 In the project model, you can see all the elements that were in the Baseline case, plus a meeting and rework and communications links, just like in the ASIC Hardware project. If you select a position and click its Staffing property, you will see that the project is also staffed. You will now add further refinements to the model. Adding Ghost Milestones and Tasks Ghost milestones and tasks allow you to model connections between projects by mimicking milestones and tasks from one project in another. Suppose a task in one project cannot occur until a milestone in another project is complete. You can model this constraint by placing a ghost of the milestone in the project that contains the constrained task. For example, the Develop SW Spec task in the ASIC Software project cannot occur until the HW Spec Complete milestone in the ASIC Hardware project is reached. To model this, you add a ghost milestone called Ghost HW Spec Complete to the ASIC Software project and link it to the Develop SW Spec task with a successor link. You then connect the ghost milestone to its reference milestone, which is the HW Spec Complete milestone in the hardware project that it represents in the software project. The advantage of ghost milestones and tasks is that they can be linked to multiple other milestones and tasks. For example, if there were three tasks in the software project that could not begin until the hardware spec was complete, you would link the ghost milestone to all three of these tasks. Adding a Ghost Milestone You now add the ghost HW Spec Complete milestone to the ASIC Software project and link it to the Develop SW Spec task with a successor link. 1-24

25 To add a ghost milestone 1 With the ASIC Software project still displayed, on the Project Shapes toolbar, click Ghost Milestone. 2 Place a ghost milestone near the Develop SW Spec task. 3 Double-click the ghost milestone and rename it HW Spec Complete. 4 Right-click the ghost milestone and select New Successor To. 5 In the New Successor To dialog box, select Develop SW Spec and click OK. The ghost milestone is linked to the Develop SW Spec task with a successor link. The link s arrow is at the task. successor link joins ghost milestone with Develop SW Spec task 6 Select the HW Spec Complete milestone. The milestone s properties appear in the Properties pane. 7 Click Change Ref beside the Ref Milestone property. The Choose Reference Object dialog box lists the other projects in the program. In this case, there is only the ASIC Hardware project. 8 Click the plus sign beside ASIC Hardware to list the milestones in the ASIC Hardware project. 9 Select the HW Spec Complete milestone to make this the reference milestone, and click OK. 10 Click Save. Adding Ghost Tasks You now add two ghost tasks to the program: one to each project. The Integrate Systems task in the software project needs to be completed successfully before the Full Chip Synth task in the hardware project can be completed successfully. If rework occurs in the Integrate Systems task, that rework will affect the chip synthesis. To model this, you need to link the two tasks with a rework link for which the Integrate Systems task is the driver task and the Full Chip Synth task is the dependent task. Since the tasks are in different projects, you can model their dependency by adding a ghost task to the software project called Ghost Full Chip Synth. You then link the Integrate Systems task to this ghost task with a rework link that 1-25

26 originates at Integrate Systems, and specify Full Chip Synth as the reference task for the ghost task. To add the Ghost Full Chip Synth task 1 Still in the ASIC Software Project, click Ghost Task on the Project Shapes toolbar. 2 Place a ghost task below the Integrate Systems task. 3 Double-click the ghost task and rename it Ghost Full Chip Synth. 4 Right-click the ghost task and click New Rework From. 5 In the New Rework From dialog box, select Integrate Systems and click OK. A rework link joins the Integrate Systems task with the ghost task. The arrow is at the ghost task. 6 Select the Ghost Full Chip Synth task. The task s properties appear in the Properties pane. 7 Click Change Ref beside the Ref Task property. The Choose Reference Object dialog box lists the ASIC Hardware project. 8 Click the plus sign beside ASIC Hardware to list the tasks in the ASIC Hardware project. 9 Select Full Chip Synth to make this the reference task, and click OK. 10 Click Save. The second ghost task you add is to model communication requirements between the coordination tasks in the two projects. The project managers need to communicate about their respective design coordination tasks. To model this, the HW Design Coordination and SW Design Coordination tasks need to be joined by a communications link. Since the tasks are in different projects, you link a ghost task with a communications link to the design coordination task in the hardware project that mimics the coordination task in the software project. 1-26

27 To add the Ghost SW Design Coordination task 1 At the bottom of the Model pane, click the tab for the ASIC Hardware project. 2 On the Project Shapes toolbar, click Ghost Task. 3 Place a ghost task under the HW Design Coordination task. 4 Rename the ghost task Ghost SW Design Coordination, and resize the task by dragging a corner until the name fits. 5 Right-click the ghost task and click New Communications With. 6 In the New Communications With dialog box, select HW Design Coordination and click OK. A communications link joins the task with the ghost task. 7 Select the Ghost SW Design Coordination task. The task s properties appear in the Properties pane. 8 Click Change Ref beside the Ref Task property. The Choose Reference Object dialog box lists the ASIC Software project. 9 Click the plus sign beside ASIC Software to list the tasks in the ASIC Software project. 10 Select SW Design Coordination to make this the reference task, and click OK. 11 Click Save. Adding Categories The client has requested that some resource tracking be done by functional department. Specifically, there are three functional groups of people working on the ASIC program: design, engineering, and quality assurance. The client would like to be able to view task risk by functional department so as to know, for example, which design tasks are at risk or which engineering ones. To achieve this goal, you can create categories for each functional group and assign these categories to the project task. A category is simply a property that can be assigned to an object and then tracked in the simulation. For example, in this section you create categories called Design, Engineering, and QA and assign one of these categories to each task in the projects. When you run a simulation, you can then track task risk by category in the Schedule Growth charts for each project. 1-27

28 To add categories to the program 1 On the Model menu, click Categories. 2 In the Category List dialog box, click Add. 3 In the new line that appears, type Design under Category. 4 Click Add again and add a category called Engineering. 5 Add a category called QA and click OK. The program now has three categories in its master category list. Next, you assign categories to each task in the program. You can do this all in one place using Table View, instead of having to select and change the category of each task individually. To assign categories to tasks using Table View 1 With the Hardware project still displayed, click Table View on the View menu. Table View displays, showing the tasks in the ASIC Hardware project. 2 Drag the horizontal cursor all the way to the right so you can see the Categories column. 3 Click the lock beside the category for the HW Design Coordination task. The open lock signifies that the task is assigned a category that might override the project s category. Since there are only task categories in this program, the override is of no concern. 4 Click the Edit button beside the Categories property. 5 In the Categories dialog box, select the Design category and click OK. The HW Design Coordination task has now been assigned a category of Design. 1-28

29 6 Assign categories to the other tasks in the project according to the table that follows this procedure. 7 Close Table View. 8 In the ASIC Software project, open Table View and assign categories to the tasks as shown in the table. 9 Close Table View. 10 Click Save. Assign the following categories to the tasks: Project Task Category Hardware HW Design Coordination Design Chip Spec Design Partition Chip & Floorplanning Design Write-Verify-Synth_B1RTL Engineering Assemble & Verify RTL Engineering Full Chip Synth Engineering Sim Gates Engineering Generate Test Vectors QA Eng. Layout & Phys. Ver. QA Software SW Design Coordination Design 1-29

30 Develop Software Spec Design Implement Data Model Engineering Implement UI Engineering Implement Analysis System Engineering Integrate Systems Engineering Systems Integration Test QA UI Stress Test QA Analysis Stress Test QA You have now refined the model fully. It s time to run a simulation and examine in detail the effect of the refinements on the simulation data. Analyzing the Simulation Data Run a simulation. There are now three sets of VFP warnings. The Develop SW Spec, SW Design Coordination, and implement UI tasks have reached the VFP limit for functional and project exceptions. Notice that two of these tasks are assigned to the SW Project Manager, indicating that this position is going to need some help when it comes time to make interventions. The Program Gantt chart shows a simulated program end date of 08/07/06, which is about a month later than the last simulation. The increase in program duration is a predictable result of adding the ghost tasks and milestone. (Assigning tasks to categories has no effect on the program schedule.) Next, you examine the Gantt, Schedule Growth, and Backlog charts to see which tasks and persons are responsible for the extra month in the simulated program duration. Analyzing the Project Gantt Charts The project Gantt charts show the date of each project milestone and the duration and criticality of tasks. Meetings are represented in the Gantt chart by blue vertical lines, as shown in the ASIC Hardware project s Gantt chart below. 1-30

31 From the bars representing the tasks, you can see that most of the tasks are sequential, meaning that one finishes before the next one starts. In some projects, you can bring in the schedule by making sequential tasks parallel. This is called fast-tracking, but it is only appropriate when the tasks can be done in parallel and the responsible positions are available. In the ASIC program, it happens that the tasks have to be sequential, so you need to examine other issues, such as task growth risk and person backlog, for ways to bring the schedule in. The longest critical-path tasks, as shown in the Gantt chart, are Sim Gates and Full Chip Synth. You can expect to see these tasks in the Schedule Growth chart, which highlights tasks at risk of taking longer than planned. The HW Design Coordination task is very long but it is not on the critical path, so even if it takes longer than planned, it will not affect the project schedule. Next, look at the ASIC Software project s Gantt chart by selecting the project in the Chart Window s Tree pane and clicking the Gantt chart icon. SW Design Coordination task The software project also has a weekly meeting, indicated by the vertical blue lines at the top of the chart. As you can see from the bars representing the tasks, most of the tasks are sequential. The simulated end date (black diamond) is in late July 2006, about 2 months after the planned end date (green diamond). The task to watch out for, as the simulation warnings specified, is the critical-path task SW Design Coordination. 1-31

32 Analyzing Schedule Growth To view the ASIC Hardware project s Schedule Growth chart, select the project in the Tree pane and click the Schedule Growth chart icon. The task showing the greatest risk of growth is HW Design Coordination, but as this is not on the critical path, you can ignore its growth risk. Full Chip Synth is at risk of growing by nearly 14 days. If you select this task in the project model, you can see in the Properties pane that it is a 100-day task, so 14 days of growth is more than 10% of the task s work volume and merits attention. The Sim Gates task is at risk of growing by 7.5 days, which is about the same amount of growth because it s a 50-day task. So make a note of these two tasks. Next, view the Schedule Growth chart for the ASIC Software project. 1-32

33 The SW Design Coordination task is at critical risk of taking a lot longer than planned 65 days of growth risk on a 100-day task. None of the other tasks are on the critical path, so they do not need attention at this time. Analyzing Person Backlog in the Hardware Project You can expect the Person Backlog chart for each project to show the highest backlog for persons who are responsible for the high-risk tasks that featured in the Schedule Growth charts. The following table shows the high-risk tasks you already identified, with their responsible positions and the staffing persons. Task Responsible Position Responsible Person(s) HW Design Coordination HW Project Manager Ethan Holt Full Chip Synth Logic Design Team Paul Voss Lily Carr Ahmed Medea Pat Kwong Sim Gates SW Design Coordination Foundry Test Engineer SW Project Manager Laura Jennings Ana Cadrie 1-33

34 To view the Hardware project s Person Growth chart 1 In the Chart Window s Tree pane, select the ASIC Hardware project. 2 Click the down-arrow in the Chart Bar to view more charts. 3 Click the Person Backlog chart icon. As expected, Ethan Holt, the project manager, shows high backlog throughout the middle part of the project when he is responsible for the HW Design Coordination task. His backlog is also due to the large number of communications links associated with this task. Even though the task is not on the critical path, the high person backlog has a negative effect on the project schedule, so it needs attention. You will soon discover that the other four persons showing backlog are all the members of the Logic Design Team, responsible for the Full Chip Synth task. Understanding the Logic Design Team s Backlog There are several reasons why a position or person can show backlog. They might be responsible for multiple tasks at the same time. Their tasks might generate a lot of rework or communication. Or they might be insufficiently skilled to carry out their tasks. Skill mismatches between a task s requirements and a position or person s skill set can cause considerable schedule growth and risk in a project. To understand why the Logic Design Team is backlogged and its task shows growth risk, you now check whether there are any skill mismatches between the task, position, and staffing persons. 1-34

35 To check for skill mismatches 1 Minimize the Chart Window. 2 On the ASIC Hardware project tab of the Model pane, select the Full Chip Synth task. 3 In the Properties pane, check the skill responsible for the task. You should see that it s DFT Engineering. 4 Select the Logic Design Team position. 5 In the Properties pane, click the Skill Set property s Edit button. 6 In the Skill Set dialog box, check that the position has the DFT Engineering skill assigned. You should see that it does. 7 Click OK in the Skill Set dialog box. 8 In the Properties pane, click the Staffing property s Edit button. In the Staffing dialog box, you see a list of the four persons staffing the Logic Design Team position. 9 Check in the Skills column of the Staffing dialog box that each of these persons has the DFT Engineering skill. You should see that Paul Voss and Lily Carr have it, but Ahmed Medea and Pat Kwong do not. 10 Click OK in the Staffing dialog box. Two of the position s four staffing persons are missing the skill required for the task. When a task is assigned to a position that is staffed by multiple persons, the task is performed by whichever person is free at the time. Thus, you cannot guarantee that the Full Chip Synth task will be performed by the staff with the appropriate skills. Your intervention could thus be to add this skill to the other two persons staffing the Logic Design Team position. Your recommendation to the client would be that these persons are trained in this skill before the project starts, or in down time before the task starts, or that the position be staffed with appropriately skilled persons. Analyzing Person Backlog in the Software Project Next, you look at person backlog in the other project, to see if the persons responsible for the high-risk SW Design Coordination and Implement Analysis System tasks are backlogged. To view the Software project s Person Backlog chart 1 In the Chart Window s Tree pane, select the ASIC Software project. 2 Click the down-arrow in the Chart Bar to view more charts. 3 Click the Person Backlog chart icon. 1-35

36 Ana Cadrie, the project manager, shows the highest backlog in this project. She is responsible for the critically at-risk task SW Design Coordination. The other backlogs are all 4 days or less and can be ignored at this point. Drawing Conclusions from the Simulation Data From your analysis of the program and project simulation charts, you can draw the following conclusions: Problem Possible Solution SW and HW Project Managers have high backlog. Full Chip Synth task (Hardware Project) shows high growth risk Help the project manager positions, staffed by Ethan Holt and Ana Cadrie Help the Logic Design Team position staffed by Paul Voss, Lily Carr, Ahmed Medea, and Pat Kwong For this class, the main objective is to bring the project end date in to the end of May You will achieve this by making two interventions. They are: Add suitably qualified resources to each project manager position to help with their tasks and reduce their backlog. Fix the skill mismatches in the Logic Design Team to reduce growth risk in the Full Chip Synth task. 1-36

37 What to Do Next You have identified areas of risk in both projects and possible ways to reduce the risk and bring the schedule in. You now practice the interventions to meet the client s goals. You then carry out a financial analysis of the model. [CLASS BREAK: 15 MINUTES] 1-37

38 Step 4: Exploring Alternative Scenarios In this section, you make interventions in the model to try and bring the program end date in to the end of May You will do the following: Create a second case. Add resources to the project manager positions. Simulate and analyze the simulation data for the first intervention case. Create a third case. Fix the skill mismatches in the Logic Design Team position. Simulate and analyze the simulation data for this case. Filter the simulation data by category to show the client task risk across the three functional groups. Intervention 1: Helping the PM Positions As you discovered in the previous section, both project manager positions (staffed by Ethan Holt and Ana Cadrie) show high backlog at various times during their projects. You now create a new case for an intervention to reduce their backlog. Creating the Second Case You base the third case on the Baseline case. To create the second case 1 Close the Chart Window if it is still open. 2 On the Model menu, click New Case. If this option is unavailable, click in the Model pane to make sure the Baseline case is active and try again. The New Case dialog box appears. 3 Make sure the Baseline case is selected as shown above, so that the new case will be derived from that case. 4 In the Case Name box, type Reduce PM Backlog as a descriptive name for the change you make in this case. 5 In the Description box, type Add FTEs to each Project Manager position. This description only appears in the Case Comparison dialog box, but it can be useful for differentiating multiple cases of a model. 1-38

39 6 Click OK. The new case appears as a tab at the bottom of the Model pane, and its program elements appear identical to the Baseline case s. tab for new case Adding Resources to the Project Manager Positions You are recommending to the client that they hire three new persons, one to help the Hardware Project Manager with his design coordination task and two to help the Software Project Manager with her spec and design coordination tasks. To model this, you create new, appropriately skilled persons in each project and staff the project manager positions with them. The project manager positions are staffed, and the simulator takes into account only the FTE values of staffing persons and not of staffed positions, so you don t have to increase the position FTE values. However, it is good modeling practice to do this so that the position FTE value matches the combined FTE values of its staffing persons. To add an FTE to the Hardware Project Manager position 1 At the bottom of the Model pane, select the ASIC Hardware project for the Reduce PM Backlog case. 2 Click the HW Project Manager position. The position s properties appear in the Properties pane. 3 Change the value of the FTE property from 1 to 2. To add a new person and staff the Project Manager with it 1 Click the Hardware organization tab. 2 Click the Design department. The department s properties appear in the Properties pane. 3 Click the Person List property s Edit button. 4 In the Person List dialog box, click Add Person. 5 Name the person PM Asst. TBH (meaning the person is to be hired). 6 Click Edit under Skill Set. 7 In the Skill Set dialog box, give the new person the skills Application Requirements and SC Design Management, both at Medium level, and click OK. These are the skills that the Project Manager position requires. 8 Click the ASIC Hardware project tab. 9 Select the HW Project Manager position. 10 In the Properties pane, click the Staffing property s Edit button. 1-39

40 11 In the Staffing dialog box, scroll down through the list of persons and select the new PM Asst. TBH person. Notice that this person has the value 2 in the #Matching column, indicating that it has the 2 skills that match the task requirements of the position. 12 Click >>ADD. The new person is added to the list of persons staffing the HW Project Manager position. Notice that the Staffed FTEs value at the top left of the dialog box increases from 1.0 to 2.0, which matches the FTEs required by the position. 13 Click OK in the Staffing dialog box. In the ASIC Software project, you can take a shortcut by increasing the FTE value of the person already staffing the SW Project Manager position. Two more persons with the appropriate skills will have to be hired or found to staff the position, but this is a quick way to achieve the same effect in the simulation as adding new persons and staffing the position with them. To increase the FTE value of the SW Project Manager position 1 In the ASIC Software project, select the SW Project Manager position. 2 Change its FTE value from 1 to 3 in the Properties pane. 3 On the Software organization tab, click the Integration department. 4 Click the Person List property s Edit button. 5 In the Person List dialog box, change Ana Cadrie s FTE value from 1 to 3 and click OK. 6 Click Save. 7 Click Run Simulation. There are now only two warnings about the SW Design Coordination task. Analyzing the Simulation Data The simulated program end date is now June 9th, an improvement of 2 months from the last simulation, which showed an end date of August 7th. Note: Your simulation results may vary by a few days. A few days variance in a program of this length is normal. 1-40

41 Next, you check both projects Person Backlog charts. In the ASIC Hardware project s backlog chart, you should see that, for most of the project, Ethan Holt s backlog is always below 5.5 days. This is acceptable backlog. In the ASIC Software project s backlog chart, Ana Cadrie s highest backlog has been reduced from 29 days to a peak of 14 days during the middle of the project. This is still quite a backlogged person, but the schedule is much closer to target so the client can probably live with this backlog. Most of the other persons show less than 5 days of backlog for most of the project, so again, there is no cause for concern here. 1-41

42 Finally, check both projects Schedule Growth charts to examine the effect of your intervention on the design coordination tasks and the software spec task. You can compare the growth risk of the tasks in the Reduce PM Backlog case with that in the Baseline case to see the improvement. To view and compare task schedule growth between cases 1 In the Tree pane, select the ASIC Hardware project. 2 Click the Schedule Growth chart icon. 3 At the top of the Chart Window, select Baseline from the list of cases to compare the current case to. 1-42

43 The Baseline case data appear as hatched bars. You can see how much the growth risk has been reduced for the HW Design Coordination task. 4 Do the same in the Schedule Growth chart for the ASIC Software project. You should see a similar reduction in growth risk for the SW Design Coordination task. To see the reduction in risk for the Develop SW Spec task, you need to view the 10 most at-risk tasks by selecting Top 10 from the list at the top of the Chart Window. Next, you make a second intervention to bring the program end date in even further by fixing the skill mismatches in the Logic Design Team and reducing the growth risk of the Full Chip Synth task. Intervention 2: Reducing the Full Chip Synth Task Schedule Growth First, create a new case for the intervention, so you can compare simulation results with previous cases. To create the third case 1 Close the Chart Window if it is still open. 2 On the Model menu, click New Case. If this option is not available, click in the Model pane to make sure the Reduce PM Backlog case is active. 1-43

44 The New Case dialog box appears. 3 In the New Case dialog box, name the new case Reduce FCS Growth. 4 Give the case the following description: Add required skills to persons staffing Logic Design Team to reduce growth risk for the Full Chip Synth task. 5 Click OK. A new tab appears in the Model pane called Reduce FCS Growth. Next, you fix the skill mismatch by adding the required skill to two members of the Logic Design Team. To fix the skill mismatch 1 Click the Hardware organization tab of the Reduce FCS Growth case. 2 Click the Design department. 3 In the Properties pane, click the Person List property s Edit button. 4 In the Person List dialog box, click the Edit button under Skill Set for Ahmed Medea. 5 In the Skill Set dialog box, select the DFT Engineering skill and click OK. 6 In the Person List dialog box, click the Edit button under Skill Set for Pat Kwong. 7 Add the DFT Engineering skill to this person and click OK. 8 Click OK in the Person List dialog box. 9 Click Save. 10 Click Run Simulation. Notice there are no longer any warnings. 11 Look at the program s Gantt chart. 1-44

45 Success! The Program Gantt chart is now showing a simulated program end date just a day earlier than the planned end date of 05/31/06. Next, look at the hardware project s Schedule Growth task and compare it to the previous case to see the effect of fixing the skill mismatches in the Logic Design Team. You should see a reduction in the growth risk for the Full Chip Synth task. 1-45

46 As you can see, the Full Chip Synth task s growth risk has been reduced from over 13 days in the Reduce PM Backlog case to less than 2 days in the current case. This shows how effective your intervention was in reducing the risk of the task taking longer than planned. The reduction in risk also brought the simulated program end date in by two weeks. You have achieved the client s first goal, to meet a 7-month instead of the usual 13-month deadline for the manufacturing of the chip. Next, you achieve the client s second goal of filtering task growth risk by functional group. Filtering Simulation Data by Category When you added categories to the ASIC program for the Design, Engineering, and QA functional groups, you assigned these categories to the projects tasks. Assigning categories to tasks allows you to filter the task data, such as growth risk, in the simulation charts by category. You now look at the Schedule Growth chart for each project filtered by category. This data will show the client how risk is spread across the three functional groups. To view task growth risk filtered by category 1 In the ASIC Hardware project s Schedule Growth chart, select None from the case comparison list so that only risk for the current case displays. 2 On the Controls menu, click Category Filter. 1-46

47 The Filters dialog box appears, listing the categories you can filter by. These are the categories you added to the program. 3 Select Design and click OK. The Schedule Growth chart shows the risk associated with the Design group s tasks. These are the tasks to which you assigned the category Design. 4 Select Category from the filter list again, choose the Engineering category, deselect the Design category, and click OK. 1-47

48 The Schedule Growth chart shows risk associated with the Engineering group s tasks. You can display task risk for the QA group similarly, and filter the same information in the ASIC Software project by functional group also. This data achieves the client s second goal of viewing risk information filtered by functional group. Drawing Conclusions If you examine the project charts, you will see that there is still some task growth risk showing, and some position and person backlogs above 4 days registering for both projects. However, you have met the client s objective and you can make practical suggestions for interventions in this project model that will allow the client to ship on time. What to Do Next In the next section, you open a new model that contains everything you have already seen plus two cases that allow you to analyze the financial data and return on investment for the ASIC program. 1-48

49 Step 5: Analyzing Return on Investment In this section, you analyze a model of the ASIC program that includes a new case containing cost and revenue data. You will do the following: Examine the cost and revenue data in the ASIC Hardware project. Examine the cost and revenue data in the ASIC Software project. Examine the new ROI (Return on Investment) project. Analyze how the cost and revenue data is reflected in the program and project financial charts. Examining the ASIC Financial Data The model you open next has financial data added in a new case. You examine the how the application of costs and revenues to milestones and tasks translates into financial data you can analyze in the simulation charts. To open the ASIC Financials program 1 On the File menu, click Open Workspace. 2 Open the file ASIC Finance Portfolio.vpm in the SimVision Course Models folder. The model opens, showing the Program tab with the two projects and two organizations. Notice there is now a new case, Finance Portfolio. Examining the Cost and Revenue Data You now examine the cost and revenue data that has been added to tasks and milestones in the projects of the Finance Portfolio case. The most efficient way to view this data is with Table View, where you can see a spreadsheet-like summary of all task and milestone properties. To view the Hardware project s cost and revenue data 1 Under the Model pane, click the tab for the Finance Portfolio cases. 2 Under the Model pane, click the tab for the ASIC Hardware project. 3 On the View menu, click Table View. Table View opens, displaying the project s tasks. 1-49

50 4 Scroll to the right until you can see the Revenue Rate column, as shown. 5 Notice that the HW Design Coordination task produces revenue at the rate of $1,000 per day. 6 Notice that the Full Chip Synth task has a fixed revenue of $40,000. This revenue accrues when the task is completed, so you should notice a spike in revenues at the completion of this task in the program s finance charts. 7 At the bottom of the Table View window, click the Milestones tab. Table View displays the ASIC Hardware project s milestone properties. 8 Scroll to the right until you can see the Bonus Rate property, as shown. 9 Notice that the Ship Tapes to Foundry milestone accrues a bonus of $10,000 per day. This means that for every day those tapes are shipped ahead of schedule, the project is awarded $10, Notice that the HW Spec Complete milestone has a fixed revenue of $100,000. This means that when the spec is delivered, the program will accrue a one-time payment of $100,000. You should be able to see a spike in revenues on this date in the program s financial charts. You now view similar cost and revenue information in the ASIC Software project. To view the Software project s cost and revenue data 1 Without closing Table View, click the tab for the ASIC Software project under the Model pane. 1-50

51 Table View displays the ASIC Software project s tasks. 2 Scroll to the right until you can see the Cost Rate column, as shown. 3 Notice that three tasks have fixed costs associated with them: Implement Data Model, Implement UI, and Implement Analysis System. These costs could be incurred by materials, equipment, or other nonlabor costs. Labor costs are calculated as the salary of the responsible position/persons multiplied by the work volume of the task 4 Notice that two tasks have cost rates associated with them: UI Stress Test and Analysis Stress Test. This means that these tasks incur a daily cost of $1,000 and $1,500 respectively. Again, these are costs associated with equipment rental or other nonlabor costs. 5 At the bottom of the Table View window, click the Milestones tab. Table View displays the ASIC Software project s milestone properties. 6 Scroll to the right until you can see the Penalty Rate property, as shown. 7 Notice that the Ready for Systems Test milestone incurs a penalty of $1,000 per day. This means that for every day beyond its planned date this milestone slips, the program incurs a penalty of $1, Close Table View. Drawing Conclusions from Cost and Revenue Data The conclusion you can draw from the cost and revenue data you have seen is that the ASIC Hardware project is producing revenues and the ASIC Software project is incurring costs. You now examine the new ROI project that has been added to the program. 1-51

52 Examining the ROI Project When you first opened the ASIC Finance Portfolio model, you saw that a new project, ROI, had been added. The purpose of the new project is to model the return on investment for the program over the 30 months following delivery of the ASIC chip at the end of May You now examine the project and how it models this information. To examine the ROI project 1 Under the Model pane, click the tab for the ROI project. The project model displays. A position named Accounting is responsible for the Operating Revenues task, which models the revenue generated by the program as a whole. 1-52

53 2 Select the Operating Revenues task so its properties display in the Properties pane. 3 Notice that the task has a work volume (duration) of 30 months. This means the project can model the return on investment in the chip over this period. 4 Notice that the task has a fixed cost of $12,000. This is a one-time cost incurred by starting up the project. 5 Notice that the task has a revenue rate of $30,000 per week, which is the amount of money the shipping chip is generating over the 30 months. Drawing Conclusions from the ROI Project The ROI project incurs a one-time cost of $12,000 to start up, but it accrues revenues of $30,000 per week. With its single task, this project models the return on investment in the ASIC chip over the 30 months following its shipping. In the simulation charts, you will be able to see graphical representation of revenues and costs, allowing you to pinpoint the date on which the program breaks even, revenues begin to outweigh costs, and the venture starts to make money. Analyzing the Financial Simulation Data To analyze program financial data, you will first examine the Program Finance chart, which gives an overview of finances across all projects, and then the individual project finance charts. You will track the penalty associated with the Ready for Systems Test milestone in the ASIC Software project. Finally, you will examine program financial statistics and import them into a Microsoft Excel spreadsheet where you can manipulate them with Excel s functionality. Analyzing the Program Finance Chart The most high-level view you can get of the program s cost and revenue is in the Program Finance chart. To analyze the Program Finance Chart 1 With the Finance Portfolio case still selected, run a Simulation. 2 In the Chart Window, with the program selected, click the Finance Chart icon in the Chart Bar. 1-53

54 The Program Finance Chart is displayed. date on which revenues begin to outweigh costs and ASIC program starts to make money one-time $12,000 startup cost for ROI project in late May 2006 weekly revenue means green revenue line rises at a constant rate from the ROI project s start here You can make the following observations from this chart: The steep spike in the red line denoting cost represents the one-time $12,000 start-up cost at the beginning of the project, which is when the chip ships at the end of May 2006 (any cost incurred before that is incurred by the ASIC program before the chip ships). The steady rise in the green line denoting revenue represents the constant revenue of $30,000 per week for the duration of the 30-month ROI project. The point at which revenues (green) begin to outstrip costs (red) is around mid-april 2007 (roughly two-thirds of the way between 01/01/07 and 05/24/07). You can draw the following conclusions from your observations: There is no question that the financiers of the ASIC program are paying for the development of the chip. Once the one-time investment in the ROI project is made, revenues begin to take off. After almost a year, revenues outstrip costs and the venture begins to make money. Analyzing the Hardware Project Finance Chart First, analyze the ASIC Hardware project s finance chart. To view the ASIC Hardware Project Finance Chart 1 In the Chart Window, select the ASIC Hardware project. 2 In the Chart Bar, click the Finance Chart icon. 1-54

55 The Project Finance Chart is displayed. end of ASIC Hardware project, start of ROI project You can see that revenues for this project are slightly higher than costs for the duration of the program. Shortly after the end of the ASIC Hardware project in late May 2006, revenues and costs level off because there is no more activity in this project. The remained of the program involves only the ROI project, which lasts until the end of November months after the end of May Next, you break down the ASIC Hardware project s finance chart so you can see which tasks are costing and which are producing money. To view the tasks in the Project Finance Chart 1 On the Controls menu, click Members. 1-55

56 A line representing each task appears. They are all bunched together at the bottom of the chart because project cost and revenue are so much higher, so the chart needs to show up to $280, On the Controls menu, click Show Costs to turn off the project cost display. The red project cost line disappears. 3 On the Controls menu, click Show Revenues to turn off the project revenue display. 1-56

57 The green project revenue line disappears, leaving just the tasks that incur costs displayed, as you can see from the chart title. Task costs are displayed by default when you turn off project cost and revenue because the Member Cost and Member Revenue controls are mutually exclusive. Task costs are incurred by the salaries of the responsible positions or persons. 4 On the Controls menu, click Member Revenue. 1-57

58 Only tasks that produce revenue are displayed. The Member Cost menu item and button are now deselected and the chart title reflects that task revenues are on display. This chart clearly depicts the HW Design Coordination task s revenue rate of $1,000 per day over the duration of the ASIC Hardware project. After the end of the project, on 05/31/06, the task s revenue remains flat at zero. The chart also depicts the Full Chip Synth task s fixed revenue of $40,000, applied at the end of the task, some time in December To see the date of application more clearly, you can change the time period of the chart. To change the chart s time period 1 On the Controls menu, click Set Scales. 2 In the Set X and Y Scales dialog box, click User Defined under X Scale. 1-58

59 3 Click the down arrow at the right of the End Date. 4 Set the date to January 2006 by clicking the left arrow in the calendar. The chart time period changes to display from the project s start on 10/31/06 to January You can now clearly see that the Full Chip Synth task ends on 12/23/05, which is when the $40,000 bonus is applied. Analyzing the Software Project s Finance Chart Next, analyze the ASIC Software project s finance chart. To view the ASIC Software Project Finance Chart 1 In the Chart Window, select the ASIC Software project. 2 In the Chart Bar, click the Finance Chart icon. The Project Finance Chart is displayed. 1-59

60 The ASIC Software project shows markedly higher costs than revenues. This reflects the fixed costs and cost rates you already saw associated with its tasks, and the penalty applied to one of its milestones. Costs rise steadily from the beginning of the project on 10/31/05 until it ends in late May Like you saw in the Hardware project, both costs and revenues remain static after this point because the remainder of the program involves only the ROI project. If you look at the member tasks of the Software project, you can see which tasks incur costs and which produce revenues, just like you did for the Hardware project. Analyzing the ROI Project s Finance Chart Finally, analyze the ROI project s finance chart. To view the ROI Project Finance Chart 1 In the Chart Window, select the ROI project. 2 In the Chart Bar, click the Finance Chart icon. The Project Finance Chart is displayed. 1-60

61 This chart shows in isolation the financial effect that the ROI project has on the program. It s the same story you saw on the Program Financial Chart but without the data of the other two projects. Costs and revenues are zero until the project kicks in on 05/31/06. Then there is a onetime startup cost of $12,000, followed by flat costs of zero. Revenues start accruing at the rate of $30,000 per week and revenues outweigh costs around mid-april Tracking Penalties If you remember, the Ready for Systems Test milestone in the ASIC Software project incurs a $1,000 penalty for every day beyond its planned date that the milestone slips. You can see how this information affects program costs by viewing the Milestone Statistics chart for that milestone. To view milestone penalty data 1 In the Chart Window Tree pane, click the plus sign beside the ASIC Software project to expand the project. 2 Select the Ready for Systems Test milestone in the Tree pane. 3 In the Chart Bar, click the icon for the Milestone Stats chart. 1-61

62 The Milestone Statistics chart is displayed. milestone penalty of $1,000 per day shows as a negative revenue The penalty for this milestone shows up here as a negative milestone revenue. Since the penalty is $1,000 per day, the figure of $35,593 indicates that the milestone was reached more than 35 days late. This matches the simulated date of 4/24, which is 35 working days later than the planned date of 3/6. Days are rounded off to the nearest day, but penalty amounts are exact, hence the figure of $35,593. Weekends are not included because the program has a work week of 5 days set. You can see this in the program s properties. The Fixed Cost and Non Labor Cost values of $7,800 reflect the cost of the program up to the date of the milestone. Viewing Program Financial Statistics You can dig deeper into the specifics of the program s finances by viewing the Program Financial Statistics chart. This chart displays a spreadsheet-like view of net and cumulative costs and revenues for the program and each of its projects. One of the primary advantages of this chart is that you can cut and paste the data into a spreadsheet application such as Microsoft Excel TM. You can also filter the data by time, by object, and by data type. You now use this chart to see when the program started generating revenue by viewing just the cumulative net loss or gain of the program and its projects. 1-62

63 To view the Program Financial Statistics chart 1 In the Chart Window, select the ASIC program. 2 In the Chart Bar, click the Financial Statistics icon. The Program Financial Statistics chart is displayed, showing month-by-month program and project cost and revenue data. 3 To view just the cumulative net loss or gain for each project, select Cumulative Net from the data type list at the top of the chart. 1-63

64 The chart shows the following data for the program and each project. Revenues are in green and costs in red. 4 Move the horizontal scrollbar to the right, so you can see how each project fared financially over time. You can see that the ASIC Software project accrues costs throughout the program, and that the program begins to generate revenue in April 2007, when the color changes from red to green. Finally, you copy and paste this chart s data into a Microsoft Excel spreadsheet. To copy financial statistics into an Excel spreadsheet 1 From the data type list at the top of the chart, select All to view all the statistics again. 2 Right-click in the chart and click Copy. 3 Launch Excel. 4 Right-click in the top-left cell of an empty spreadsheet and click Paste. The Program Financial Statistics chart data is pasted into Excel, as shown next, and you can manipulate it using all of Excel s functionality. 1-64

65 Congratulations! You have achieved the goals of the ASIC program. Background Reading For the next class, read the following papers: Organization Design: An information Processing View, Jay R. Galbraith Organizations in Action, James D. Thompson 1-65