IT Project Management


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IT Project Management

  1. 1. Integrating Earned Value into the Management of Software Development Projects Dan Brandon, Christian Brothers University
  2. 2. <ul><li>Presented at Information Resources Management Association (IRMA) Annual International Meeting, June 1999, Hersey, PA, USA; Reprinted in “Managing Information Technology Resources in Organizations in the Next Millennium (ISBN: 1-878289-51-9) </li></ul>
  3. 3. Project Management & IT Management <ul><li>“ IT managers careers will rise and fall based on their ability to deliver high quality projects on time.” </li></ul><ul><ul><li>J . I. Cash, Harvard Business School </li></ul></ul><ul><li>Only 27% of software development projects succeed; another 33% are over budget (average cost overrun is 189%) and/or late and/or scaled back </li></ul><ul><ul><li>Standish Group </li></ul></ul>
  4. 4. Project Management Areas <ul><li>Project Feasibility/Justification </li></ul><ul><li>Project Organization </li></ul><ul><li>Project Planning & Scheduling </li></ul><ul><li>Project Staffing </li></ul><ul><li>Project Tracking </li></ul>
  5. 5. Typical Project Scheduling (i.e. MS Project) <ul><li>Indicate project start date (and any individual task start dates that cannot float) </li></ul><ul><li>Indicate tasks (WBS) and their resource requirements (how much of whose time) </li></ul><ul><li>Indicate Task Interdependencies </li></ul><ul><li>Indicate Milestones </li></ul><ul><li>Indicate resource availability; do resource “leveling” </li></ul><ul><li>Produce “baseline” schedule </li></ul>
  6. 6. Typical Top Level Software WBS <ul><li>Requirements Definition </li></ul><ul><li>Overall Design </li></ul><ul><li>Detail Project Plan </li></ul><ul><li>External Design </li></ul><ul><li>Detail Design </li></ul><ul><li>Implementation </li></ul><ul><li>Integration </li></ul><ul><li>Internal Documentation </li></ul><ul><li>Training </li></ul><ul><li>Installation </li></ul>
  7. 7. Example Second Level WBS [Figure 1 in Paper] <ul><li>Requirements Definition </li></ul><ul><li>External Requirements </li></ul><ul><li>Standards Requirements </li></ul><ul><li>Performance Requirements </li></ul><ul><li>Interface Requirements </li></ul><ul><li>Overall Design </li></ul><ul><li>External Design </li></ul><ul><li>Internal Design </li></ul>
  8. 8. Project Cost Plan <ul><li>Using a spreadsheet program or using a project scheduling program, </li></ul><ul><li>Develop a cost plan which indicates: </li></ul><ul><ul><li>the cost for each task </li></ul></ul><ul><ul><li>when the cost is planned to be incurred </li></ul></ul><ul><li>Software development is mostly labor cost </li></ul><ul><li>Figure 2 (shows top level cost Plan) </li></ul><ul><li>Figure 3 is a graphical representation </li></ul>
  9. 9. <ul><li>Jan Feb Mar Apr </li></ul><ul><li>Requirements Definition 10 5 </li></ul><ul><li>Overall Design 5 5 </li></ul><ul><li>Project Plan 5 5 </li></ul><ul><li>External Documentation 5 </li></ul><ul><li> Partial View of Plan </li></ul><ul><li>Monthly Cost 10 10 10 10 </li></ul><ul><li>Cumulative 10 20 30 40 </li></ul>
  10. 11. Project Tracking <ul><li>“ Well done is better than well said.” </li></ul><ul><ul><li>Benjamin Franklin (1706 - 1790) </li></ul></ul>
  11. 12. Cost & Schedule Tracking <ul><li>Traditional </li></ul><ul><ul><li>Gantt Chart </li></ul></ul><ul><ul><li>Cost versus Budget </li></ul></ul><ul><li>Earned Value (Cost/Schedule Control Systems Criteria [C/SCSC] ) </li></ul>
  12. 13. Typical Approach <ul><li>Present reports to management: </li></ul><ul><ul><li>Cost versus Budget (Planned Cost) </li></ul></ul><ul><ul><ul><li>Figure 4 </li></ul></ul></ul><ul><ul><li>Gantt Chart of Progress </li></ul></ul><ul><ul><ul><li>Figure 5 </li></ul></ul></ul><ul><li>The example here is for project work thru July </li></ul>
  13. 14. Blue = Plan, Yellow = Actual
  14. 16. <ul><li>From the information shown: </li></ul><ul><ul><li>Are we in good shape on this project (i.e. ahead of, or behind schedule) ? </li></ul></ul><ul><ul><li>When can we expect to finish this project ? </li></ul></ul><ul><ul><li>What will be our cost at completion ? </li></ul></ul><ul><li>Earned Value can answer these questions ! </li></ul>
  15. 17. Earned Value <ul><li>“ Never mistake motion for action.” </li></ul><ul><ul><li>Ernest Hemingway (1889 - 1961) </li></ul></ul>
  16. 18. <ul><li>“ One of the most underused cost management tools available for project managers is the earned value performance measurement concept” </li></ul><ul><li>Q. Fleming & M. Koppelman - Primavera Systems, Inc. </li></ul>
  17. 19. History of Earned Value <ul><li>Been around in several forms since 1950’s </li></ul><ul><li>DoD required many contracts (those where the government was at risk for cost overruns) to use Earned Value (originally PERT/COST) </li></ul><ul><li>Earned value was a key concept in the 1967 DoD (Dept. of Defense) policy to which contractors had to comply called Cost/Schedule Control System Criteria (C/SCSC) </li></ul><ul><li>Revised in recent years by DoD to avoid “over implementation” </li></ul>
  18. 20. <ul><li>Now working very well in DoD (particularly Air Force, Army, ...) </li></ul><ul><li>Large body of statistical data available </li></ul><ul><li>Has its own Internet site in DoD </li></ul><ul><li>However use in private industry is still low: </li></ul><ul><ul><li>No exposure to concepts </li></ul></ul><ul><ul><li>Don’t understand concepts </li></ul></ul><ul><ul><li>Don’t know how to effectively implement </li></ul></ul>
  19. 21. Earned Value <ul><li>A quantifiable way to express real cost and schedule variances </li></ul><ul><li>Work Plan - shows the budgeted cost associated with the project in time by task (work packet), rolled up to a particular level (the “reporting level”) of the WBS </li></ul><ul><li>Concepts: </li></ul><ul><ul><li>Budgeted cost of work scheduled </li></ul></ul><ul><ul><li>Actual cost of work performed </li></ul></ul><ul><ul><li>Budgeted cost of work performed (EV) </li></ul></ul>
  20. 22. Budgeted Cost of Work Scheduled <ul><li>A point on the planned cost (or budget) baseline representing the value of work planned (scheduled) as of a given point in time. </li></ul>
  21. 23. Actual Cost of Work Performed <ul><li>The total accrued resources spent on the project thusfar </li></ul>
  22. 24. Budgeted Cost of Work Performed <ul><li>Same as “ Earned Value ” </li></ul><ul><li>A point on the planned cost (budget) baseline representing the budgeted value for work completed as of a point in time. </li></ul><ul><li>Determined by looking at each task initiated, the planned cost for that task, and the amount of that task completed (% complete) -- Figure 5 in paper </li></ul>
  23. 25. External Documentation [Figure 5] <ul><li>Task Plan % C Value </li></ul><ul><li>Overall Control 2 100 2 </li></ul><ul><li>Tables 3 100 3 </li></ul><ul><li>Sorts, Selects, ... 1 0 0 </li></ul><ul><li>Forms 2 60 1.2 </li></ul><ul><li>Reports 2 65 1.3 </li></ul><ul><li>Totals 10 75 7.5 </li></ul>
  24. 26. EV Variances <ul><li>Cost Variance = ACWP - BCWP (EV) </li></ul><ul><ul><li>Note difference from simple budget variance: ( ACWP - BCWS) </li></ul></ul><ul><ul><li>Figure 6 in paper </li></ul></ul><ul><li>Schedule Variance = BCWS - BCWP </li></ul><ul><ul><li>Can be expressed in time or dollars </li></ul></ul><ul><ul><li>To convert to time use spending rate at the measured point in time </li></ul></ul>
  25. 28. <ul><li>We can clearly see from the graph that we are over cost not under cost: </li></ul><ul><ul><li>ACWP - BCWP is positive </li></ul></ul><ul><ul><li>Even though budget variance (ACWP - BCWS) is negative (under budget) !!! </li></ul></ul><ul><li>We can also se that we are behind schedule; we should have been at this point several weeks ago ! </li></ul><ul><li>Formulas here have sign reversed from PMI PMBOK versions </li></ul>
  26. 29. Extrapolations [Figure 8] <ul><li>Schedule: </li></ul><ul><ul><li>Schedule Efficiency Factor: </li></ul></ul><ul><ul><ul><li>EarnedValue/BCWS = 0.7 </li></ul></ul></ul><ul><ul><li>Schedule variance </li></ul></ul><ul><ul><ul><li>In either dollars (24) or calendar time (1.2) ! </li></ul></ul></ul><ul><ul><li>Estimated Time to Complete (16): </li></ul></ul><ul><ul><ul><li>PlanTime/ScheduleEfficiencyFactor </li></ul></ul></ul>
  27. 30. <ul><li>Cost: </li></ul><ul><ul><li>Cost Efficiency Factor: </li></ul></ul><ul><ul><ul><li>EarnedValue/ACWP = 0.9 </li></ul></ul></ul><ul><ul><li>Estimated Cost at Completion (EAC): </li></ul></ul><ul><ul><ul><li>PlanCost/CostEfficiencyFactor = 211 </li></ul></ul></ul>
  28. 31. Effective Use of Earned Value in IT <ul><li>Proper Task Level Specification </li></ul><ul><li>Meaningful Percent Complete Reporting </li></ul><ul><li>“ Non-Intrusive” Tracking Systems </li></ul><ul><li>Accurate and Timely Cost Data </li></ul><ul><li>Integration with SEI’s CMM </li></ul><ul><li>TQM vs Individual Performance Evaluation </li></ul>
  29. 32. Task Level <ul><li>General rule for application software development - smaller of </li></ul><ul><ul><li>one manweek’s effort </li></ul></ul><ul><ul><li>individual component (screen, report, memu,...) </li></ul></ul><ul><li>Important to match to accounting and/or timekeeping frequency !! </li></ul>
  30. 33. Percent Complete Reporting <ul><li>Keep it simple ! </li></ul><ul><li>Common method (weighted milestone): </li></ul><ul><ul><li>Not started zero </li></ul></ul><ul><ul><li>Working on it 50% </li></ul></ul><ul><ul><li>Finished 100% </li></ul></ul><ul><li>Trade off in ease of reporting versus accuracy of reporting </li></ul>
  31. 34. IT % Complete <ul><li>Have not begun work 0% </li></ul><ul><li>Working on packet 50% </li></ul><ul><li>Finished packet 75% </li></ul><ul><li>Packet Verified 100% </li></ul><ul><li>Figure 9 in paper suggest verification methods for typical IT packet types </li></ul>
  32. 35. Integration with SEI’s CMM <ul><li>Software Engineering Institute’s Capability Maturity Model (for software) </li></ul><ul><li>Level 2 (Repeatable) mainly concerns project management; key process areas: </li></ul><ul><ul><li>Software Project Planning </li></ul></ul><ul><ul><li>Software Project Tracking and Oversight </li></ul></ul><ul><ul><ul><li>“ The project’s software effort and cost are tracked, and corrective actions are taken as necessary.” </li></ul></ul></ul>
  33. 36. Tracking Systems <ul><li>Non intrusive </li></ul><ul><li>Gather only necessary information: </li></ul><ul><ul><li>time (manhours) </li></ul></ul><ul><ul><li>per cent complete by component </li></ul></ul><ul><li>By product of normal time & attendance system (i.e. timecards): </li></ul><ul><ul><li>person id (rbs) </li></ul></ul><ul><ul><li>task id (wbs) </li></ul></ul><ul><ul><li>% complete </li></ul></ul><ul><ul><li>manhours </li></ul></ul>
  34. 37. Timely and Accurate Cost Data <ul><li>Note that EV schedule variances do not need actual costs </li></ul><ul><li>Getting necessary and timely cost data from G/L, even at top level of WBS may not be possible </li></ul><ul><li>Need to “feedward” cost data based upon regular (i.e. weekly) time card and other input: </li></ul><ul><ul><li>Base Earned Value on hours instead of dollars </li></ul></ul><ul><ul><li>Or base cost on hours times a category “rate” for each type of employee (ie Programmer II); using actual rates is also possible but probably is both a maintenance problem and confidentially problem). </li></ul></ul>
  35. 38. TQM as Basis <ul><li>Employee acceptance problem </li></ul><ul><ul><li>“Extra paperwork” </li></ul></ul><ul><ul><li>“Effect on my performance evaluation” </li></ul></ul><ul><ul><li>“Cannot report accurately” - see % complete reporting methods </li></ul></ul><ul><li>Justify on TQM Basis (adopt as part of overall TQM program) </li></ul><ul><ul><li>Improve Task Estimation Process </li></ul></ul><ul><ul><li>Accuracy of estimating time/cost to complete </li></ul></ul>
  36. 39. <ul><li>“ If you can’t measure it, you can’t manage it”.........Peter Drucker (TQM Guru) </li></ul><ul><li>Project Management Institute - </li></ul>