Shipyard MRO Performance Breakthrough!

Faster Work Completion, Shorter Projects, Fewer Man-Hrs., Less Stress

This was the surprising request by the U.S. government ship owner to a Maintenance, Repair and Overhaul (MRO) shipyard, after they successfully halved the project time to overhaul one ship.

Here’s how it happened.

The Problem: In 2012 Dave, VP of Operations at a ship repair yard in Hampton Roads, Va. asked Steve, a local performance excellence consultant, to help solve a tough problem – poor budget and schedule performance on projects to overhaul U.S. Navy combat ships[1].

Routine overhauls of a particular ship class were contracted to take 26 weeks and accomplish about 10,000 standard overhaul tasks. Results from previous years showed an upward trend in the actual length of these projects, which were now exceeding 52 weeks and costing nearly 200% of budgeted man-hours. This was due to many factors.  One was the declining condition of these aging ships.  Another was the increasingly burdensome monitoring and reporting requirements imposed by the customer to try to improve control and performance.

Dave needed to dramatically improve project budget and schedule performance on overhauls, to remain competitive. Recent budget cuts and home-port changes for some ships was resulting in decreased demand for the services of the six ship repair yards in Hampton Roads. Some were probably not going to survive. Dave needed dramatically better cost and schedule performance, without violating customer requirements or increasing resource costs.

The Solution: First, Steve led a shipyard team of planners, schedulers and production leaders through several days of critical thinking analysis[2] to answer three key questions:

1. “What needs to change?” (The current state problem)
2. “What to change to?” (The future state solution direction)
3. “How to cause the change?” (an action plan for the change)

Steve used the critical thinking process for strategic, operational and improvement planning that is described in the business novel Necessary but Not Sufficient[3]. The team emerged with an action plan to quickly deploy many of the principles of a new Project Management method[4] called TOCPM or CCPM, as described in the book Critical Chain[5].

The team boldly decided to apply these project management changes to an overhaul contract already underway, 25% complete and at risk of failing budget and schedule commitments.

Some of the changes deployed by the team under this improvement plan are shown in this START / STOP / CONTINUE list:

These and other changes associated with TOCPM consistently enable higher velocity, lower cost project execution, even in the presence of typical degrading influences like:

• VARIABILITY, everywhere during project execution
• INTERDEPENDENCE between projects, tasks & resources
• BEHAVIOR, inconsistent with project & organization goals

The Results: Only eight weeks after starting this effort, the rate of work completed per week rose quickly from 100 TASKS to an amazing 375 TASKS!  The graph at the beginning of this article illustrates this work performance change. At the same time, charged labor hours per week for the project dropped about 36% (about 100 EM) due to reduced overtime needed to “stay on the plan”. Total project time dropped by 50%, from 52 weeks down to 26 weeks to accomplish full work scope, creating the opportunity to accomplish an additional $15M of work needed by the customer.

Perhaps the greatest change was the shift in the work “climate”.  Normal operations for project teams at this company were “seven-twelve hour days per week”, with a high rate of turn-over and stress related illness and injury.  By the middle of this project, five-eight hour days were the norm for most team members, with overtime far less common and stress levels significantly lower.

~ 400% increase in work completion rate,

~ 50% decrease in project cycle-time,

~40% decrease in labor hours,

less stressful work environment

NOTE:  To learn more about these methods, read the cited references or visit Dr. Kelvyn Youngman’s excellent TOC website at www.dbrmfg.co.nz.

 [1] The names are fictitious, except that Steve is Steve Holcomb, the case study author

[2] Theory of Constraints Thinking Processes (TOC TP)

[3] Eliyahu M. Goldratt, Eli Schragenheim and Carol Ptak, North River Press, 2000

[4] Theory of Constraints Project Management (TOCPM) or Critical Chain Project Management (CCPM)

[5] Eliyahu M. Goldratt, The North River Press, 2002