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.

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.

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

Project Baselines

Week 4 lecture

a Baseline is an anchor point for measuring performance
Photo by _Robert C_ @ flickr

a planned cost and expected schedule against which actual cost and schedule are measured
Gold by Куртис Перри

a basis for cash flows and awarding progress payments
Photo by quaziefoto @ flickr

a summation of time-phased budgets (cost accounts as summed work packages) along a project timeline
Picture by Network Osaka @ flickr

What Costs Are Included in Baselines?
Labor
Equipment
Materials
Project direct overhead costs (DOC)

Figure 13.14 Scope Changes to a Baseline (Gray & Larson, 2006, p436)

Project Baselines

Review
Project monitoring system include; data collection; analysis and reporting.
Project control steps include; baseline plan, progress measurement, comparing actual against projected plan, and actions.
Performance can be monitored using tools such as; tracking Gantts, control charts, baseline plans and earned value management.
Earned value management (EVM) is a technique which incorporated scope, time and cost data to determine the health of the project.
Integrated Cost/Schedule systems are developed creating; WBS, work/resource schedules, budget, and EVM.
Project baselines are an anchor point for measuring performance.

References
Horodyski, K. (1995). Managing and developing teams . Footscray, Vic.: Open Training Services.
Greenberg, J. & Baron, R. (1993). Behavior in organizations (4 th ed.). Syd., NSW: Allyn and Bacon.
Robbins, S., et al. (1998). Organisational behaviour (2nd ed.). Sydney: Prentice-Hall

BetterProjects.net
Awesome title page picture by
Derek Farr ( DetroitDerek )

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The Project Management Process - Week 9 Performance Management

by Craig Brown on Sep 24, 2008

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