Phase III Execution Phase IV Monitoring and Control

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Phase III: Execution Phase IV: Monitoring and Control Earned Value Analysis Burns: Chapter 8:

Phase III: Execution Phase IV: Monitoring and Control Earned Value Analysis Burns: Chapter 8: pages 10 -13 Burns: Chapter 12: the entire chapter Schwalbe: Chapter 7

Next Student Chapter PMI: April 25, Rm NW 212, 7 pm v Speaker is

Next Student Chapter PMI: April 25, Rm NW 212, 7 pm v Speaker is Sandy Williams v She is a former project and program manager with U. S. West v She will talk about her CMMI implementation experience v Her talk will be 45 min

Recitation v What does RAM stand for in the context of HR Management? v

Recitation v What does RAM stand for in the context of HR Management? v What was the name of the guy who categorized all job satisfaction factors into two categories? v What were those two categories?

Recitation v What are two of the four Myers/Briggs dimensions? v What are the

Recitation v What are two of the four Myers/Briggs dimensions? v What are the other two? v To what Myers/Briggs category do most IT professionals belong? v Who is the motivation guru? v What are his five levels? v Who gave us Theory X and Theory Y? ?

Mid-semester Report v A mid-semester report of not less than 8 nor more than

Mid-semester Report v A mid-semester report of not less than 8 nor more than 9 double-spaced pages, plus references will be due April 18, 2017. This report will require that you conduct a literature review (library and Internet) on a particular subject and report all that you can find on that subject in the current professional and pedagogical literature. The mid-semester report is to be done individually, not in teams. What you will be doing is collecting information on how firms accomplish the process of your choice (best practices). You can do this by using the Internet and by talking with firms that you are interviewing.

The Mid-semester Report v Is there to give you an opportunity to display your

The Mid-semester Report v Is there to give you an opportunity to display your individual writing professionalism v So do your best writing—both substance and style v Cogent, v Decide v Don’t v Pick convincing thoughts organized into paragraphs what your purpose is? Stick to that purpose. ramble a ‘hot, new’ topic related to one or more of the 44 PMBOK processes

Mid-semester Report, Continued v. I am looking for ‘best practices’ for doing one or

Mid-semester Report, Continued v. I am looking for ‘best practices’ for doing one or more processes. (There is very little content in PMBOK on practices for doing processes. ) v The practice describes how the process is accomplished. v Small firms may be looking for practices to accomplish several of the 44 processes at once, for less cost and less time

The Project Control Process v Control v The process of comparing actual performance against

The Project Control Process v Control v The process of comparing actual performance against plan to identify deviations, evaluate courses of action, and take appropriate corrective action. v Project 1. 2. 3. 4. Control Steps Setting a baseline plan. Measuring progress and performance. Comparing plan against actual. Taking action. v Tools v v Tracking and baseline Gantt charts Control charts

What is a baseline? v It makes the plan difficult to change v It

What is a baseline? v It makes the plan difficult to change v It is rather like writing the plan (schedule and cost) on the backside of Moses’ tablets v Its an anchor point for measuring performance against plan v Planned cost v Planned schedule v Planned scope

Baseline and Tracking Gantt Charts

Baseline and Tracking Gantt Charts

Project Schedule Control Chart

Project Schedule Control Chart

Important Concepts during Execution v Leadership v Communication v Focus v Tracking

Important Concepts during Execution v Leadership v Communication v Focus v Tracking

Questions v Would you use a Cost Reimbursement contract in a situation where the

Questions v Would you use a Cost Reimbursement contract in a situation where the requirements are well known, nonvolatile and the project has been done many times before? v Would you use a Fixed Price contract in a situation where the user does not know exactly what he wants? v If the material requirements are certain, but the time and effort entailed and requirements are uncertain, what type of contract would you use?

Freeze Requirements? ? ? v What are the PROS? v What are the CONS?

Freeze Requirements? ? ? v What are the PROS? v What are the CONS?

Freeze those requirements!! v Late-project creeping requirements are the most common source of cost

Freeze those requirements!! v Late-project creeping requirements are the most common source of cost and schedule overruns v Late-project creeping requirements are a major factor in project cancellations

Rather than freezing, use some kind of change control system v Allows for some

Rather than freezing, use some kind of change control system v Allows for some changes to happen, depending upon contractual considerations v Allows for the system to reject some proposed changes v Use of a CCB is considered a modern BEST PRACTICE

Forces pushing for late-project requirements change Competition intros new version of competitive product with

Forces pushing for late-project requirements change Competition intros new version of competitive product with unanticipated KILLER features v New work is undiscovered late in the project v A “Wouldn’t It be Great if…” scenario happens v End-users want changes because they now know more about their requirements than they did 18 months ago v Developers want changes because they have a great emotional and intellectual investment in all of the system’s details v

Processes utilized in Phase III of the lifecycle Integration knowledge management: v Monitor and

Processes utilized in Phase III of the lifecycle Integration knowledge management: v Monitor and Control Project Work v Perform Integrated Change Control v Scope knowledge management: v Control Scope v Time knowledge management: v Control Schedule v Cost knowledge management: v Control cost v Quality knowledge management: v Perform Quality Control v

Processes utilized in Phase III, Continued Communication management: v Distribute Information v Report Performance

Processes utilized in Phase III, Continued Communication management: v Distribute Information v Report Performance v Risk management: v Monitor and Control Risks v v Procurement management: v Administer Procurements

Controlling Changes to the Project Schedule v Perform reality checks on schedules v Allow

Controlling Changes to the Project Schedule v Perform reality checks on schedules v Allow for contingencies? ? v Don’t plan for everyone to work at 100% capacity all the time v Hold progress meetings with stakeholders and be clear and honest in communicating schedule issues

Execution v Focus and leadership are keys to success in execution v Poor execution

Execution v Focus and leadership are keys to success in execution v Poor execution leads to losses in the business world just as it does in sports

Factors Leading to Poor Execution v Multitasking by team members (not project manager)—doing several

Factors Leading to Poor Execution v Multitasking by team members (not project manager)—doing several things at once v Procrastination (student syndrome)—putting things off until the last minute v Others we will discuss later

Multitasking A finishes B finishes

Multitasking A finishes B finishes

Cost Control v Project cost control includes v monitoring cost performance v ensuring that

Cost Control v Project cost control includes v monitoring cost performance v ensuring that only appropriate project changes are included in a revised cost baseline v informing project stakeholders of authorized changes to the project that will affect costs v Earned value analysis is an important tool for cost control

Earned Value Analysis (EVA) v EVA is a project performance measurement technique that integrates

Earned Value Analysis (EVA) v EVA is a project performance measurement technique that integrates scope, time, and cost data v Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals with EVA v You must enter actual information periodically to use EVA.

Glossary of Terms EV Earned value for a task is simply the percent complete

Glossary of Terms EV Earned value for a task is simply the percent complete times its original budget. Stated differently, EV is the percent of the original budget that has been earned by actual work completed. PV The planned time-phased baseline of the value of the work scheduled. An approved cost estimate of the resources scheduled in a time-phased cumulative baseline [BCWS—budgeted cost of the work scheduled]. AC Actual cost of the work completed. The sum of the costs incurred in accomplishing work. [ACWP —actual cost of the work performed]. CV Cost variance is the difference between the earned value and the actual costs for the work completed to date where CV = EV – AC. SV Schedule variance is the difference between the earned value and the baseline to date where SV = EV – PV. BAC Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts. TAC The duration of the critical path EAC Estimated cost At project Completion. ETAC Estimated Duration At project Completion (updated TAC) VAC Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion.

Earned Value analysis--EVA v Earned value = Budgeted Cost of Work Performed (BCWP) v

Earned Value analysis--EVA v Earned value = Budgeted Cost of Work Performed (BCWP) v Planned value = Budgeted Cost of Work Scheduled (BCWS), and v Actual Cost = Actual Cost of Work Performed (ACWP) v When you complete an activity, you earn the budgeted value of that activity

Earned Value Analysis Terms Budgeted cost of work performed (BCWP), also called earned value,

Earned Value Analysis Terms Budgeted cost of work performed (BCWP), also called earned value, is the percentage of work actually completed multiplied by the budget for the activity v Budgeted cost of work scheduled (BCWS), also called planned value, is that portion of the approved total cost estimate planned to be spent on an activity during a given period v Actual cost of work performed (ACWP), also called actual cost, are the total direct and indirect costs incurred in accomplishing work on an activity during a given period v

Schedule Variance (SV) v Defined as the difference between the budgeted cost of work

Schedule Variance (SV) v Defined as the difference between the budgeted cost of work performed and the budgeted cost of work scheduled v = BCWP – BCWS = EV - PV v Indicates the deviation between the work content performed and the work content scheduled for the control period

Cost Variance (CV) v Defined as the difference between the budgeted cost of work

Cost Variance (CV) v Defined as the difference between the budgeted cost of work performed and the actual cost of work performed v = BCWP – ACWP = EV - AC v A positive CV indicates a lower actual cost than budgeted for the control period, while a negative CV indicates a cost overrun

Schedule Performance Index (SPI) v Defined as the ratio BCWP/BCWS = EV/PV v A

Schedule Performance Index (SPI) v Defined as the ratio BCWP/BCWS = EV/PV v A value close to 1 indicates an activity that is on schedule v Values greater than 1 suggest the activity is ahead of schedule v Values less than 1 indicate a schedule overrun

Cost Performance Index (CPI) v Defined as the ratio BCWP/ACWP = EV/AC v A

Cost Performance Index (CPI) v Defined as the ratio BCWP/ACWP = EV/AC v A value close to 1 indicates an activity that is on budget v Values greater than 1 suggest the activity is below budget v Values less than 1 indicate a budget overrun

Rules of Thumb for EVA Numbers v Negative numbers for cost and schedule variance

Rules of Thumb for EVA Numbers v Negative numbers for cost and schedule variance indicate problems in those areas. The project is costing more than planned or taking longer than planned v CPI and SPI less than 1 indicate problems

Earned Value Calculations for a One-Year Project After Five Months

Earned Value Calculations for a One-Year Project After Five Months

In the Figure above Budget at Completion = BAC = original budget at the

In the Figure above Budget at Completion = BAC = original budget at the planned completion date v Time at Completion = TAC = original completion time v In the figure above, $100, 000 in month 12 v Estimate at completion = EAC = BAC/CPI v Estimate at completion = $100, 000/. 83 = $120, 455 v Estimated time to complete = ETAC = TAC/SPI v Estimated time to complete = 12/. 96 = 12. 55 mos. v

Why Earned Value Analysis? ? v You can’t tell what your true cost variance

Why Earned Value Analysis? ? v You can’t tell what your true cost variance is because you don’t know where you are relative to schedule v Suppose you are behind schedule but also you have spent less than what the schedule has called for. Are you really under budget?

Updating cost estimates v BAC = Budget at completion = total budget of the

Updating cost estimates v BAC = Budget at completion = total budget of the project activities based on the original project plan v Assuming the original budget (the BAC) was $200, 000 and the CPI is 1. 12, what is EAC? v EAC = BAC / CPI = $200, 000 / 1. 12 v $178, 571

Updating schedule estimates v TAC = Time at completion = total time required to

Updating schedule estimates v TAC = Time at completion = total time required to complete the schedule, as determined by the CP v ETAC = Estimated (revised) time to complete v Assuming the TAC was 12 months and the SPI =. 77, what is the ETAC? v ETAC = TAC / SPI = 12 /. 77 v 15. 6 months v Project will be delayed almost 4 months

Updating, Cont’d v EAC = updated estimate of the total project cost = BAC/CPI

Updating, Cont’d v EAC = updated estimate of the total project cost = BAC/CPI = BAC/CI v ETAC = updated estimate of the total project duration = TAC/SPI = TAC/SI

Earned Value Chart for Project After Five Months

Earned Value Chart for Project After Five Months

Cost/Schedule Graph

Cost/Schedule Graph

Earned-Value Review Exercise

Earned-Value Review Exercise

PV=Planned Value=BCWS = Budgeted Cost of Work Performed v If the task stop date

PV=Planned Value=BCWS = Budgeted Cost of Work Performed v If the task stop date is past, the planned value for that task is equal to the budget for the task v If the task start date is in the future, the planned value for that task is equal to 0 v if the current date is between the start and stop date of a particular task, then you must determine how many days of effort should have already been completed and multiply by the expenditures/day

Planned Value = PV v If the current date is between the start and

Planned Value = PV v If the current date is between the start and stop date of a particular task, then you must determine how many days of effort should have already been completed and multiply that number of days by the budgeted cost/day (expenditures/day).

EV = Earned Value = BCWP = Budgeted Cost of Work Performed v Step

EV = Earned Value = BCWP = Budgeted Cost of Work Performed v Step 1: Calculate the BUDGET for the task as the expenditures/day time the duration in days v Step 2: Take the Percentage Complete times the BUDGET

EVA: What are the Inputs? v Actual Costs = AC v Percentages Complete v

EVA: What are the Inputs? v Actual Costs = AC v Percentages Complete v Budgeted Cost/day = expenditures/day v Duration of Tasks in Days

EVA: What are the Internal Calculations? v EV = Earned Value v PV =

EVA: What are the Internal Calculations? v EV = Earned Value v PV = Planned Value v CV = Cost Variance v SC = Schedule Variance v CPI = Cost Performance Index v SPI = Schedule Performance Index v All of these are calculated for each task and for the entire project

Negative Indicators of performance v SV < 0 indicates the project is behind schedule

Negative Indicators of performance v SV < 0 indicates the project is behind schedule v CV < 0 indicates the project is over budget v SPI < 1 indicates the project is behind schedule v CPI < 1 indicates the project is over budget

EVA: What are the Outputs? v BAC = Budget at Completion v EAC =

EVA: What are the Outputs? v BAC = Budget at Completion v EAC = Estimate at Completion = BAC/CPI v TAC = Time at Completion = Duration of the critical path v ETAC = Estimated Time at Completion = TAC/SPI

Lets look at some spreadsheet examples v Problems 15 and 18 at the end

Lets look at some spreadsheet examples v Problems 15 and 18 at the end of Burns Chapter 12

Using Software to Assist in Cost Management v Spreadsheets are a common tool for

Using Software to Assist in Cost Management v Spreadsheets are a common tool for resource planning, cost estimating, cost budgeting, and cost control v Many companies use more sophisticated and centralized financial applications software for cost information v Project management software has many costrelated features

Using MS Project for Execution & Control v First, make certain your project plan

Using MS Project for Execution & Control v First, make certain your project plan is complete and final v Second, save it as a baseline v Begin entering actual information v Actual costs v Percentage complete

Tracking: MS Project will track— v Task start dates v Task finish dates v

Tracking: MS Project will track— v Task start dates v Task finish dates v Task duration v Task cost work v Percentage of task that is complete

Getting Earned Value Data Visible v You can go to view and replace the

Getting Earned Value Data Visible v You can go to view and replace the entry table with the Earned Value table v Or, you can enter the earned value columns into your existing table through the Insert Column facility. v The columns are BCWP, BCWS, ACWP, CV, SC, SPI, CPI, etc. You can also request the Tracking Gantt Chart off the LHS side of MS Project

Entering actual Start & Finish dates for a task v On the view bar,

Entering actual Start & Finish dates for a task v On the view bar, click Gantt chart v In the task name field select the task to update v On the Tools menu, point to tracking and click Update Tasks v Under Actual, type the dates in the Start and Finish boxes

Indicating progress on a task as a percentage v In the task name field

Indicating progress on a task as a percentage v In the task name field of the Gantt Chart v Double click—this brings up the task information sheet v Select the general tab v In the percentage complete box type a whole number between 0 and 100

Entering actual costs for a resource assignment On the Tools menu, click options, then

Entering actual costs for a resource assignment On the Tools menu, click options, then click the calculation tab v Clear the Actual costs are always calculated by MS Project check box v Click OK v On the view bar, click Task usage v On the view menu, point to the Table, and click Tracking v Drag the divider bar to the right to view the Activity Cost field v In the activity cost field, type the actual cost for the assignment for which you want to update costs v

The End…. .

The End…. .