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Bus 758 unit_4_-_project_budgeting_and_schedules_7.13.12

Bus 758 unit_4_-_project_budgeting_and_schedules_7.13.12






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    Bus 758 unit_4_-_project_budgeting_and_schedules_7.13.12 Bus 758 unit_4_-_project_budgeting_and_schedules_7.13.12 Presentation Transcript

    • Project BudgetingResource-constrained ProjectSchedulingPROJECT PLANNINGAND BUDGETING
    • PROJECT BUDGETINGProject management researchers have found that themajority of projects being carried out are under-resourcedby 20 to 30 percent. Why does this happen? Two of theprimary causes are budgeting pressures and poorestimates.
    •  Widely divergent bids Senior management budget adjustments Negotiating with players for their required budget The need for some tasks isn’t known until you get tothem or don’t work the way you planned Getting in too big of a hurry and therefore forgettingsomethingCAUSES OF BUDGETING PRESSURES
    •  Inexperienced guessers Lack of continuitybetween pre-award andpost-award stages training inestimation, tightmethods andprocedures forestimates. Include project teammembers in contractnegotiations, includenegotiators on theproject teamCAUSES OF AND SOLUTIONS FORESTIMATION PROBLEMS
    •  Bad technical guesses Project changes due tochanges in internal andexternal environments Psychological factors-unbridled enthusiasm Don’t assumeeverything will workperfectly the first time Risk assessment and astrong changemanagement process inplace Place skeptics on thecost estimating teamCAUSES OF AND SOLUTIONS FORESTIMATION PROBLEMS
    •  Why are there problems? Maintain good relationships between the projectteam and the customer What type of contract? Alternatives to firm fixedprice?HOW TO DEAL WITH POOR ESTIMATES
    •  WBS, SOW and project schedule are the startingpoints Other sources of budget information includefunctional staff, vendors, suppliers, purchasing,senior managers, other project managers, and somepricing guidesBUILDING A BUDGET
    •  Bottom-up: use WBS to roll up costs to the top Top-down (parametric): identify parameters(constants) and base project costs on these Life Cycle Costing: installation, training,repairs(maintenance), backup systems, salaries andmaterials to run the system Once it’s approved, you have to live with it – get asmuch signing authority as you canAPPROACHES TO BUDGETING
    •  Resource leveling (smoothing) is done by delayingactivities not on the critical path so that resourcescan be devoted to critical path activities. Resource leveling often requires forethought by theproject manager to avoid cost and scheduleimplications later.RESOURCE-CONSTRAINED PROJECTSCHEDULING
    •  Resource-limited scheduling is a method for projectscheduling when the resource allocation for theproject is fixed Resource-limited scheduling allocates resources onthe basis of which activity has the least slack,however, delaying non-critical activities could movethem up the priority ladder and lengthen the projectscheduleRESOURCE-CONSTRAINED PROJECTSCHEDULING
    •  Each activity has two pairs of duration and costestimates: normal and crash An activity’s duration can be incrementallyaccelerated from its normal time to crash time byapplying more resources. Increased costs will beassociated with the expedited activity An activity cannot be completed in less than itscrash time, no matter how many more resources areappliedDETERMINING TIME-COST TRADEOFFS
    •  The resources necessary to reduce an activity’sestimated duration from its normal time to its crashtime will be available when needed Each activity has its own cost per time period foraccelerating the activity’s duration from normal tocrash time: Crash Cost-Normal Cost/ Normal Time-Crash TimeDETERMINING TIME-COST TRADEOFFS
    •  To determine shortest completion time, you mustlook to crash activities on the critical path first Each iteration of reduced project duration requiresrecalculation of the critical path Crashing activities not on the critical path will notshorten project durationDETERMINING TIME-COST TRADEOFFS
    •  Baseline – what was approved Actual work performed – included actual cost ofwork vs. budgeted cost of work Actual budget consumed – includes actual budgetused vs. allocated budget to this date Future schedule based upon work completed to datePROJECT PLANS IN PLACE FOR THEKICKOFF
    •  From existing data: Time sheets Budgets Previous schedules Post mortems (lessons learned files) New measures: Interviews/questionnaires Direct measuresMEASURES TO TRACK PROJECT SUCCESS