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Controlling project costs

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  • 1. Controlling Project Costs 10/26/2012SoTecConference 2012 Controlling Project Costs Jon Grunzweig Vision Business Systems Leading IT to Business ExcellenceJon Grunzweig 1
  • 2. Controlling Project Costs 10/26/2012SoTecConference 2012 Ever Happen? • Great project plan, good resources, design • Before you know it….. – Delivery date slipping – Going over budget • Project keeps going along – Start ignoring the budget, so far overspent – Timeline goes into oblivion… Shuttle Route Endeavor’s Last Mission • Great preparation Things happen…. • $$Jon Grunzweig 2
  • 3. Controlling Project Costs 10/26/2012SoTecConference 2012 Credibility Issues…. Blame game starts…… Which leads to…….Jon Grunzweig 3
  • 4. Controlling Project Costs 10/26/2012SoTecConference 2012 Why ? • Many moving parts (very few fixed parts) • Circumstances occur different • Things left out / Estimates incomplete • Poor cooperation within business, people • Events and changes • Issues with service providers • Outside uncontrolled events • Unknowns…. Most Projects • Predictability • Been done, or very similar (not one of a kind) • Experienced resources • Therefore: – Should be on time and on schedule (or very near) What’s the disconnect? • Good plan, design, resources, project mgt but…….. • Poor alignment of Accountability Cycle • Poor hours accountability • Elements unplanned forJon Grunzweig 4
  • 5. Controlling Project Costs 10/26/2012SoTecConference 2012 Our focus today…. • Alignment of Accountability Cycle • Accountability of hours • Areas short-changed in estimates Foundation for Control Project Execution Cycle Project Planning & Agreements Governance & Project Management Contract & Vendor Management Methodologies & Processes: Design, Project, Change Control Technology Vision and Strategy Spend & Execution Cycles Spend Execution Authority Cycle Cycle Project Budgets Plans Timesheets/ Proposals Billing Status SOWs ReportingJon Grunzweig 5
  • 6. Controlling Project Costs 10/26/2012SoTecConference 2012 Accountability Cycle Methodology Status Proposals Reporting Billing SOW’s Project Plan / Time Sheets Est Accountability Alignment Prop SOW Plan Time Invoice Status Total 120 120 120 90 70 130 Task 1 40 40 40 30 20 35 Task 2 80 80 80 60 50 95 Accountability Hours How Much ---> A B C Remain Plan Actual A-B Total 120 90 30 <----- What Task 1 Rsc 1 40 30 10 Task 2 Rsc 2 80 60 20Jon Grunzweig 6
  • 7. Controlling Project Costs 10/26/2012SoTecConference 2012 Accountability Hours – Plan How Much ---> A B C Remain (Plan - Plan Actual Act) Total 120 90 30 <----- What Task 1 Rsc 1 40 30 10 Task 2 Rsc 2 80 60 20 Accountability Hours – Actual How Much ---> A B C Remain (Plan - Plan Actual Act) Total 120 90 30 <----- What Task 1 Rsc 1 40 30 10 Task 2 Rsc 2 80 60 20 Accountability Hours - ETC How Much ---> A B C D Remain (Plan - Plan Actual Act) ETC Total 120 90 30 40 <----- What Task 1 Rsc 1 40 30 10 5 Task 2 Rsc 2 80 60 20 35Jon Grunzweig 7
  • 8. Controlling Project Costs 10/26/2012SoTecConference 2012 Accountability Hours – Proj Total How Much ---> A B C E D F G Proj Remain Total Var Plan Actual A-B ETC B+D A-E Billing Total 120 90 30 40 130 (10) 70 <----- What Task 1 Rsc 1 40 30 10 5 35 5 20 Task 2 Rsc 2 80 60 20 35 95 (15) 50 Accountability Hours - Summary How Much ---> A B C E D F G Proj Remain Total Var Plan Actual A-B ETC B+D A-E Billing Total 120 90 30 40 130 (10) 70 <----- What Task 1 Rsc 1 40 30 10 5 35 5 20 Task 2 Rsc 2 80 60 20 35 95 (15) 50 Accountability Hours - Keys • Must do it timely (daily or weekly) – With additional early warning protocol • Accountability at the resource level • Accountability of the groupJon Grunzweig 8
  • 9. Controlling Project Costs 10/26/2012SoTecConference 2012 Problems with Estimates • More than initial coding or configuration • Testing Unit, integration, system, regression • Rework It will occur • Deployment (prepare, deploy, verify) • Post live support (immediate) Summary - Key Elements • Appropriate Project Plan – Watch out for common items left out – Resources own estimates & updates • Accountability Cycle lines up • Solid relationship with vendors • Timely reporting (within 1-2 days of cutoff) • Stick to methodologies/processes • Plan for contingencies and issues • Measure your success rate If control costs…..Jon Grunzweig 9
  • 10. Controlling Project Costs 10/26/2012SoTecConference 2012 Footnotes • Types of Projects: ERP vs. Development • Not Covered: All other types of issues • Hard Costs (hardware, equipment, etc.) • Challenges – Putting time in without regard to estimate – Getting systems, processes aligned Questions / Discussion ?Jon Grunzweig 10
  • 11. Controlling Project Costs 10/26/2012SoTecConference 2012 Controlling Project Costs Jon Grunzweig Thank You!Jon Grunzweig 11

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