The Project Management Process - Week 9 Performance Management

Project Management 9. Performance Management

Week 9

Performance management

Once you have selected a project

And planned it

And planned it

And hired the team

And planned it

And hired the team

And started the work

And planned it

And hired the team

And started the work

How do you stay on track?

How do you even know if you are progressing to plan?

Gray & Larson, 2006, Ch 13.

What is a Project Monitoring System

Examples of Progress Reports

What is the Project Control Process and why is it useful?

How do I Monitor Time Performance

The shortcomings of monitoring Systems

Earned Value Management – a silver bullet?

Integrated Cost/Schedule System

Project Baselines

What is a Project Monitoring System?

It involves determining what data to collect, how, when an who will collect the data; analysis of the data; and reporting progress

Monitoring System Gather Analyse Report

You need to know what information is needed to satisfy you and your stakeholders.

Think about the Information System Structure

What data are collected?

current status of project (schedule and cost) remaining cost to compete project date that project will be complete potential problems to be addressed now out-of-control activities requiring intervention Cost and/or schedule overruns & their reasons Forecasting overruns at time of completion What data are collected?

Collecting data and analysis

who will collect project data?

how will data be collected?

when will the data be collected?

who will compile and analyze the data?

who will receive the reports?

how will the reports be transmitted?

when will the reports be distributed?

Photo by germanium

Project Baselines

Progress Report Format

Progress since last report

Current status of project

Schedule

Cost

Scope

Problems and issues since last report

Actions and resolution of earlier problems

New variances and problems identified

Corrective action planned

How long should a project status report be?

1 page

office.microsoft.com/en-us/templates/TC011417231033.aspx http://saulcarliner.home.att.net/idbusiness/statusreport.htm http://www.projectperfect.com.au/info_status_report.php More info www.ic.arizona.edu/~profcomm/writing/samples/stat_samp_s1.htm www.projectconnections.com/knowhow/subsets/sample-templates/StatusReports.doc

Project Baselines

Project Control Process

The process of comparing actual performance against plan to identify deviations, evaluate courses of action, and take appropriate corrective action

Pensiero

Project Control Steps

Set and baseline a plan Measuring progress and performance Comparing the plan to the facts Taking Action

Project Baselines

Monitoring Time Performance

Tools used to catch negative variances from plan and communicate project schedule status:

Tracking and baseline Gantt charts

show expected, actual, and trend data for event duration performance

Figure 13.1 Baseline Gantt Chart (Gray & Larson, 2006, p414) Time A Gantt Chart

Tracking and baseline Gantt charts

show expected, actual, and trend data for event duration performance

Control charts

plot the difference in scheduled time on the critical path with the actual point on the critical path

Figure 13.2 Project Schedule Control Chart (Gray & Larson, 2006, p415) A Control Chart

Project Baselines

Monitoring Systems Disparities Picture by Pensiero

Time-Phase Baseline Plan

Picture by Pensiero

Corrects the failure of most monitoring systems to connect a project’s actual performance to its schedule and forecast budget

Picture by Pensiero

Systems that measure only cost variances do not identify resource and project cost problems associated with falling behind or progressing ahead of schedule

Picture by Pensiero

Earned Value Cost/Schedule System

An integrated project management system based on the earned value concept that uses a time-phased budget baseline to compare actual and planned schedule and costs

Picture by airgap

Project Baselines

Earned Value Management

What is Earned Value Management (EVM)?

A project performance measurement technique that integrates scope, time, and cost data.

Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals.

You must enter actual information periodically to use EVM.

Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals.

You must enter actual information periodically to use EVM.

Terms to learn PV AC EV Planned Value Actual Cost Earned Value CV Cost Variance SV Schedule Variance CPI Cost Performance Indicator SPI Schedule Performance Indicator

(Also called the budget)

This is that portion of the approved total cost estimate planned to be spent on an activity during a given period

PV Planned Value

The total of direct and indirect costs incurred in finishing work on an activity during a given period

AC Actual Cost

An estimate of the value of the physical work actually completed

EV Earned Value

Earned value minus the actual cost. Shows the difference between the estimated cost of an activity and the actual cost of that activity

TABLE 13.1 CV Cost Variance

Earned value minus the planned value. Shows the difference between the schedule completion of an activity and the actual completion of that activity

TABLE 13.1 SV Schedule Variance

The ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project.

If the CPI is equal to 1 or 100% then the planned and actual costs are equal, or the costs are as budgeted.

If the CPI is less than 1 or less than 100%, the project is over budget.

If the CPI is greater than 1 or more than 100%, the project is under budget

CPI Cost Performance Indicator

The ratio of earned value to planned value and can be used to estimate the projected time to complete the project.

Similar to the CPI, an SPI of 1 or 100% means the project is on schedule.

If the SPI is greater than 1 or 100% then the project is ahead of schedule.

If the SPI is less than 1 or 100%, the project is behind schedule

SPI Schedule Performance Indicator

Quick EVM quiz

What can we say if CPI > 1

TABLE 13.1

Quick EVM quiz

What can we say if CPI > 1

If the CPI is greater than 1 or more than 100%, the project is under budget

Quick EVM quiz

What is EV minus AC?

Quick EVM quiz

What is EV minus AC?

EV – AC = SV

Earned Value (what was done)

Minus

Actual Cost (what has been paid)

=

Schedule Variance

Scenario Example

“ Purchasing & Installing Web Server”

Duration 1 week,

Budget $10,000.

Scenario Example

“ Purchasing & Installing Web Server”

Duration 1 week, Budget $10,000.

PV – Planned Value – for that activity for that week = $10,000

AC – Actual Cost – suppose it actually took 2 weeks and cost $20,000. Assume $15,000 were incurred in week 1, and $5,000 in week 2. These costs are the actual costs for that activity each week

EV – Earned Value – earned value after one week is $7,500. (10,000 * 75%)

Example: CP829_Lecture_Week9_EarnedValue.xls

Scenario Example

Earned Value Chart for Project after 5-Months

Max Wideman

Rules for Earned Value Numbers

Negative numbers for cost and schedule variance indicate problems in those areas

The project is costing more than planned or taking longer than planned

CPI and SPI less than 100% indicate problems

Table 13.3 Interpretation of Indexes (Gray & Larson, 2006, p429)

An alternative Source: http://www.mountaingoatsoftware.com/release_burndown

Week 2 lecture

So, what do you do when your plan changes?

There are methods used to revise estimates of future project costs

EVM allows experts in the field to change original baseline durations and costs because new information tells them the original estimates are not accurate

EVM uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable

Project Baselines

Developing an Integrated Cost/Schedule System

Compute Calculate Collect Schedule Resource plan WBS Budget Plan Monitor

Define the work using a WBS

Scope

Work packages

Deliverables

Organization units

Resources

Budgets

Develop work and resource schedules

Schedule resource to activities

Time-phase work packages into a network

Photo by shimonkey

Develop a time-phased budget using work packages included in an activity. Accumulate budgets (PV)

At the work package level, collect the actual costs for the work performed (AC) Multiply percent complete times original budget (EV) Compute the schedule variance (EV-PV) and the cost variance (EV-AC)

Figure 13.3 Project Management Information Systems Overview (Gray & Larson, 2006, p419) Integrated Cost/ Schedules