Managing multiple projects

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Managing Multiple Projects including the basics for project management + 9 PMBOK knowledge areas

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Managing multiple projects

  1. 1. Dr. Karim El-Dash 1 TRAINING PROGRAM MANAGING MULTIPLE PROJECTS PRESENTED BY: KARIM EL‐DASH; PHD; PMP; CCE; AVS; ACIArb March 2012 
  2. 2. Dr. Karim El-Dash 2 Contents PROJECT MANAGEMENT .................................................................................................................................... 5  PROJECT MANAGEMENT OFFICE ........................................................................................................................ 6  ROLE OF A PROJECT MANAGER .......................................................................................................................... 6  PROJECT LIFE‐CYCLE ........................................................................................................................................... 8  PROJECT SELECTION .......................................................................................................................................... 10  ESTIMATE CLASSIFICATIONS .............................................................................................................................. 10  PHYSICAL DIMENSIONS METHOD ................................................................................................................................... 11  COMPOUND‐AMOUNT FACTOR ..................................................................................................................................... 12  COMPOUND‐AMOUNT FACTOR: .................................................................................................................................... 13  INTERNAL RATE OF RETURN .......................................................................................................................................... 15  THREE‐POINT ESTIMATES ............................................................................................................................................. 18  ORGANIZATIONAL PROJECT MANAGEMENT MATURITY MODEL ........................................................................... 20  CAPABILITY MATURITY MODEL INTEGRATED ......................................................................................................... 22  PROJECT CHARTER ............................................................................................................................................ 24  COLLECT PROJECT REQUIREMENTS .................................................................................................................................. 24  DEFINE PROJECT SCOPE ................................................................................................................................................ 24  CREATE PROJECT WBS ................................................................................................................................................. 25  DEFINE ACTIVITIES ....................................................................................................................................................... 26  SEQUENCE ACTIVITIES .................................................................................................................................................. 29  ESTIMATE ACTIVITY RESOURCES ..................................................................................................................................... 31  ESTIMATE ACTIVITY DURATION ...................................................................................................................................... 32  DEVELOP SCHEDULE .................................................................................................................................................... 35  ESTIMATE COST .......................................................................................................................................................... 42  CONTROL COST ................................................................................................................................................. 47  PROJECT QUALITY MANAGEMENT ..................................................................................................................... 57  COST‐BENEFIT ANALYSIS ............................................................................................................................................... 59  COST OF QUALITY ........................................................................................................................................................ 59  OPTIMUM QUALITY COST MODEL .................................................................................................................................. 65  CONTROL CHARTS ....................................................................................................................................................... 67  BENCHMARKING ......................................................................................................................................................... 72  DESIGN OF EXPERIMENTS .............................................................................................................................................. 75  STATISTICAL SAMPLING ................................................................................................................................................ 77  FLOWCHARTING .......................................................................................................................................................... 78  PROPRIETARY QUALITY MANAGEMENT METHODOLOGIES ..................................................................................................... 81  SIX SIGMA ................................................................................................................................................................. 81  LEAN SIX SIGMA ......................................................................................................................................................... 83  TOTAL QUALITY MANAGEMENT ..................................................................................................................................... 84  QUALITY FUNCTION DEPLOYMENT ........................................................................................................................ 88  PROCESS IMPROVEMENT PLAN ...................................................................................................................................... 91 
  3. 3. Dr. Karim El-Dash 3 QUALITY ASSURANCE ................................................................................................................................................... 93  QUALITY AUDITS ......................................................................................................................................................... 94  QUALITY CONTROL ...................................................................................................................................................... 96  HISTOGRAM ............................................................................................................................................................... 98  CREATING A HISTOGRAM .............................................................................................................................................. 98  RUN CHART ............................................................................................................................................................. 105  SCATTER DIAGRAM .................................................................................................................................................... 109  INSPECTION.............................................................................................................................................................. 113  PROJECT HUMAN RESOURCE MANAGEMENT .................................................................................................. 115  DEVELOP HR PLAN .................................................................................................................................................... 115  ACQUIRE PROJECT TEAM ............................................................................................................................................ 129  DEVELOP PROJECT TEAM ............................................................................................................................................ 129  LEADERS AGAINST MANAGERS ..................................................................................................................................... 133  MANAGE PROJECT TEAM ............................................................................................................................................ 141  PROJECT COMMUNICATION MANAGEMENT ................................................................................................... 148  IDENTIFY STAKEHOLDERS ............................................................................................................................................ 148  PLAN COMMUNICATION ............................................................................................................................................. 151  COMMUNICATION TECHNOLOGY .................................................................................................................................. 154  COMMUNICATION MODELS ......................................................................................................................................... 155  COMMUNICATION METHODS ....................................................................................................................................... 156  MANAGE STAKEHOLDER EXPECTATIONS ........................................................................................................................ 161  PROJECT RISK MANAGEMENT ......................................................................................................................... 166  PLAN RISK MANAGEMENT .......................................................................................................................................... 166  IDENTIFY RISK ........................................................................................................................................................... 172  PERFORM QUALITATIVE RISK MANAGEMENT .................................................................................................................. 180  PERFORM QUANTITATIVE RISK MANAGEMENT ............................................................................................................... 185  PLAN RISK RESPONSES ............................................................................................................................................... 190  MONITOR & CONTROL RISKS ...................................................................................................................................... 197  PROJECT PROCUREMENT MANAGEMENT ........................................................................................................ 198  PLAN PROCUREMENTS ................................................................................................................................................ 198  CONTRACT PROCUREMENTS ........................................................................................................................................ 212  CLOSE PROCUREMENTS .............................................................................................................................................. 219  MANAGING MULTIPLE PROJECTS .................................................................................................................... 220  OVERVIEW ............................................................................................................................................................ 220  PMO AND ORGANIZATIONAL STRUCTURE ........................................................................................................... 238  CUSTOMER MANAGEMENT ................................................................................................................................. 252  COMMUNICATION MANAGEMENT ...................................................................................................................... 253  PROJECT OFFICE MANAGEMENT .......................................................................................................................... 256  KNOWLEDGE MANAGEMENT ............................................................................................................................... 262  PROJECT MANAGEMENT TRAINING ..................................................................................................................... 269  PROJECT RESOURCE MANAGEMENT .................................................................................................................... 271 
  4. 4. Dr. Karim El-Dash 4 PROJECT SELECTION ............................................................................................................................................. 275  PROGRAM MONITORING AND CONTROL ............................................................................................................. 287  PROJECT AUDIT .................................................................................................................................................... 296 
  5. 5. Dr. Karim El-Dash 5 PROJECT MANAGEMENT  Project management is the discipline of planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives.  It is often closely related to and sometimes adjunct with program management.  A project is a temporary endeavor, having a defined beginning and end (usually constrained by date, but can be by funding or deliverables), undertaken to meet particular goals and objectives, usually to bring about beneficial change or added value.  The primary challenge of project management is to achieve all of the project goals and objectives while honoring the predetermined project constraints.  Typical constraints are scope, time, and budget. The secondary—and more striving —challenge is to optimize the allocation and integration of inputs necessary to meet pre-defined objectives.
  6. 6. Dr. Karim El-Dash 6 Project Management Office  The Project Management Office (PMO) in a business or professional enterprise is the department or group that defines and maintains the standards of process, generally related to project management, within the organization.  The PMO is the source of documentation, guidance and metrics on the practice of project management and execution.  A PMO can be one of three types from an organizational exposure perspective: 1. enterprise PMO, 2. organizational (departmental) PMO, or 3. special–purpose PMO. Role of a Project Manager These three main responsibilities of a project manager are: 1. planning, 2. organizing, and 3. controlling. Performing these responsibilities requires many skills. Some of these necessary skills will be outlined. 1. Planning  The planning function includes defining the project objective and developing a plan to accomplish the objective.  Working with the sponsor is beneficial in many ways. For example, the sponsor is the person responsible for the resultant project and thus has a stake in the success of the project.  The project manager must also develop a plan to accomplish the objective.  The project manager should include project team members in this phase.
  7. 7. Dr. Karim El-Dash 7 2. Organizing  The organizing function involves identifying and securing necessary resources, determining tasks that must be completed, assigning the tasks, delegating authority, and motivating team members to work together on the project.  The project manager must then determine what tasks must be completed.  Once this has been done, the tasks should be assigned to project team members or subcontractors.  The project manager may also delegate authority to certain team members to oversee task completion via supervision of those assigned the tasks.  Finally, the project manager must motivate members of the project team to work together in order to complete the goal.  Conflicts may arise and often will occur when individuals working together come from departments with different goals. 3. Controlling  The controlling function involves tracking progress and comparing it with planned progress.  Progress reports should be used to measure performance, as well as identify areas for improvement. Skills Effective project managers must possess a variety of skills in addition to general management skills. These skills include, but are not limited to:  Analytical thinking: the ability to understand overall visions, as well as minute details  Leadership: the ability to inspire team members to execute the plan and successfully complete the project  Communication: the ability to communicate clearly, effectively, and regularly
  8. 8. Dr. Karim El-Dash 8  Interpersonal: the ability to develop a relationship with each team member in order to know what motivates them, how they think things are going, what concerns they have, and how they feel about things  Problem-Solving: the ability to anticipate problems, recognize them when they arise, and solve them quickly and efficiently  Human resources: the ability to interview and choose team members with the proper skills and knowledge Project Life-Cycle  A collection of generally sequential, non- overlapping product phases whose names and numbers are determined by the executing and control needs of the organization. The last product life cycle phase for a product is generally the product’s deterioration and death. Generally, a project life cycle is contained within one or more product life cycles.  The project life cycle defines the beginning and the end of a project and various milestones within it.  During the life cycle of a project there will be accomplishments made at each phase. The completion of these accomplishments results in the creation of a ‘‘deliverable,’’ a tangible, verifiable product of the work being done on the project.  These may be products that are delivered external to the project or something needed for other project work to take place, which are considered to be ‘‘internal deliverables.’’
  9. 9. Dr. Karim El-Dash 9  In a project’s initial phase, cost and staffing levels are low. At this phase there is the greatest chance that the project will never be completed. Project life-cycle Influence-time relationship in projects
  10. 10. Dr. Karim El-Dash 10 PROJECT SELECTION ESTIMATE CLASSIFICATIONS Estimate classifications are commonly used to indicate the overall maturity and quality for the various types of estimates that may be prepared; and most organizations will use some form of classification system to identify and categorize the various types of project estimates that they may prepare during the life cycle of a project. Unfortunately, there is often a lack of consistency and understanding of the terminology used to classify estimates, both across industries as well as within single companies or organizations. AACE identifies five classes of estimates. A Class 5 Estimate is associated with the lowest level of project definition, and a Class 1 Estimate is associated with the highest level of project definition. The following table shows the five classes of estimate. Cost estimate classification
  11. 11. Dr. Karim El-Dash 11 PHYSICAL DIMENSIONS METHOD The method uses the physical dimensions (length, area, volume, etc.) of the item being estimated as the driving factor. For example, a building estimate may be based on square meters or cubic meters of the building; whereas pipelines, roadways, or railroads may be based on a linear basis. This method depends on historical information from comparable facilities. Consider the need to estimate the cost of a 3,600-m2 warehouse. A recently completed warehouse of 2,900 m2 in a nearby location was recently completed for KD 623,500, thus costing KD 215/m2 . The completed warehouse utilized a 4.25-m wall height, thus containing 12,325 m3 and resulting in a cost of $50.59/m3 on a volume basis ($623,500/12,325 m3 ). In determining the cost for the new warehouse, we can estimate the new 3,600 m2 warehouse using the m2 basis at $774,000 ($215/m2 x 3,600m2 ). However, the new warehouse will differ from the one just completed by having 5.5-m-high walls; so we may decide that estimating on a volume basis may provide a better indication of costs. The volume of the new warehouse will be 19,800 m3 (3,600 m2 x 5.5m), and the new estimate will be $1,002,000 (rounded to the nearest $1,000). Pricing also includes adjustments to costs for specific project conditions. Depending on the specific cost information used in preparing the estimate, material costs may need to be adjusted for location, materials of construction, or to account for differences between the item being installed and the item you may have an available cost for. Labor hours may require productivity adjustments for a variety of conditions such as weather, amount of overtime, interferences from production, material logistics, congestion, the experience of the labor crews, the level of contamination control, etc. Labor rates may also need to be adjusted for location, crew mix, open shop versus union issues, and specific benefit and burden requirements.
  12. 12. Dr. Karim El-Dash 12 Example 1: Use the provided time index table to estimate the cost of a building that contains 4,500 m2 of floor area. The building is to be built two years from now. A building that contains 6,800 m2 of floor area in a similar location had a cost of KD 1,321,800 two years ago. Solution: Cost = Historical cost X size adjustment factor X Time adjustment factor Historical cost = KD 1,321,800 Size adjustment factor = 4,500/6,800 = 0.662 Time adjustment factor = (1+i)n where; i = inflation annual rate n = number of years in difference From historical data in table: Time factor = 126/110 = (1+i)3 i = 0.046 = 4.6% Time adjustment factor = (1+0.046)4 = 1.198 Estimated cost = KD 1,321,800 X 0.662 X 1.198 = KD 1,048,287 COMPOUND-AMOUNT FACTOR Given a present sum P invested for N interest periods at interest rate i, what sum will have accumulated at the end of the N periods? You probably noticed right away that this description matches the case we first encountered in describing compound interest. To solve for F (the future sum); we use: F = P (1 + i)N Based on this equation a present value of $20,000 at interest rate of 12% may be evaluated after 15 years by substitution in the equation as follows: Year Index 3 years ago 110 2 years ago 120 1 year ago 128 Current year 126
  13. 13. Dr. Karim El-Dash 13 F = 20,000 (1 + 0.12)15 = $ 109,471 Because of its origin in the compound-interest calculation, the factor (1 + i) N is known as the compound-amount factor. Like the concept of equivalence, this factor is one of the foundations of engineering economic analysis. Given this factor, all other important interest formulas can be derived. To specify how the interest tables are to be used, we may also express that factor in a functional notation as (F/P, i, N), which is read as "Find F, given P, i, and N." This factor is known as the single-payment compound- amount factor. When we incorporate the table factor into the formula, the formula is expressed as follows: F = P (1+i)N = P(F/P, i, N) Thus, where we had F = $20,000(1.12)15 , we can now write F = $20,000(F/P, 12%, 15). The table factor tells us to use the 12%-interest table and find the factor in the F/P column for N = 15. Because using the interest tables is often the easiest way to solve an equation, this factor notation is included for each of the formulas derived in the upcoming sections. COMPOUND-AMOUNT FACTOR: Find F, Given A, i, and W Suppose we are interested in the future amount F of a fund to which we contribute A dollars each period and on which we earn interest at a rate of i per period. The contributions are made at the end of each of the N periods. If an amount A is invested at the end of each period for N periods, the total amount F that can be withdrawn at the end of N periods will be the sum of the compound amounts of the individual deposits. This could be calculated as per: ),,/( 1)1( NiAFA i i AF N        
  14. 14. Dr. Karim El-Dash 14 The following table shows the different statuses for discrete compounding formulas with discrete payments.
  15. 15. Dr. Karim El-Dash 15 Example 2: A feasibility study is being prepared for a project with KD 2,400,000 initial cost and KD 360,000 equivalent uniform annual running cost. What is the required net annual income to satisfy MARR of 15% return, assuming the life-cycle of the project is 20 years? Solution: Assume the required annual income is Y: Present value of accumulated annual income at discount rate 15% = Present value of accumulated expenses at discount rate 15% Y(P/A, 15%, 20) = 2,400,000 + 360,000 ((P/A, 15%, 20) 6.2593 Y = 2,400,000 + 360,000 * 6.2593 6.2593 Y = 4,653,348 Y = 743,429 KD/year INTERNAL RATE OF RETURN The internal rate of return (IRR) is the most difficult equation to calculate all the cash flow techniques. It is a complicated formula and should be performed on a financial calculator or computer. IRR can be figured manually, but it’s a trial-and-error approach to get to the answer. Technically speaking, IRR is the discount rate when the present value of the cash inflows equals the original investment. When choosing between projects or when choosing alternative methods of doing the project, projects with higher IRR values are generally considered better than projects with low IRR values.
  16. 16. Dr. Karim El-Dash 16 Example 3: Compare the IRR for the shown data of projects A and B. Using PW values. Assume that all expenses are incurred at the end of the year. Assume discount rate; i=5%. Project A Project B Cash Flow Cash Flow Year 1 (20,000) (10,000) Year 2 (1,000) (4,000) Year 3 5,000 3,000 Year 4 20,000 15,000 Solution: Assume IRR=5% for both projects: Project A Project B PV@5% PV@5% Year 1 (20,000) (10,000) Year 2 (952) (3,810) Year 3 4,535 2,721 Year 4 17,277 12,958 860 1,869 IRR > 5% for both projects
  17. 17. Dr. Karim El-Dash 17 Try IRR = 8% Project A Project B PV@8% PV@8% Year 1 (20,000) (10,000) Year 2 (926) (3,704) Year 3 4,287 2,572 Year 4 15,877 11,907 (763) 776 IRR for Project A is less than 8% IRR for Project B is more than 8% By several trials it is found to have IRR for project A 6.5% and IRR for project B is 10.4%.
  18. 18. Dr. Karim El-Dash 18 THREE-POINT ESTIMATES Three-point estimates, use three estimates that are averaged to come up with a final estimate. The three estimates are the most likely, optimistic, and pessimistic. You’ll want to rely on experienced people to give you these estimates. The most likely estimate assumes there are no disasters and the activity can be completed as planned. The optimistic estimate is the fastest time frame in which your resource can complete the activity. And the pessimistic estimate assumes the worst happens and it takes much longer than planned to get the activity completed. You’d average these three estimates to come up with an overall estimate. In this approach the mean and standard deviation are calculated as per the following equations: 6 4 cpessimistilikelymostXoptimistic Mean   6 deviationStandard optimisticcpessimisti  
  19. 19. Dr. Karim El-Dash 19 Example 4: It is required to estimate the cost of a parking deck with capacity of 550 cars. The following table shows the cost of eight decks with different capacities adjusted for time and location. Using the three-point-estimate method, find the expected cost of the parking deck. Deck Cost KD No. of cars Unit cost KD/car 1 141,200 150 2 372,250 250 3 266,500 260 4 476,480 320 5 474,600 350 6 804,080 460 Solution: Calculate unit cost/car for each deck: Deck Cost KD No. of cars Unit cost KD/car 1 141,200 150 1,358 2 372,250 250 1,489 3 266,500 260 1,025 4 476,480 320 1,489 5 474,600 350 1,356 6 804,080 460 1,748 Average unit cost /car = 6 748,1356,1489,1025,1489,1358,1  =1410.8 KD/car Minimum (optimistic) unit cost /car = 1,025 KD/car Maximum (pessimistic) unit cost/car = 1,748 KD/car Expected mean value = 6 748,18.410,1*4025,1  = 1,402.7 KD/car Total estimated cost of the deck = 1402 * 550 = 771,100 KD
  20. 20. Dr. Karim El-Dash 20 ORGANIZATIONAL PROJECT MANAGEMENT MATURITY MODEL The Organizational Project Management Maturity Model or OPM3 is a globally recognized best-practice standard for assessing and developing capabilities in Portfolio Management, Program Management, and Project Management. It was published by the company Project Management Institute Incorporated (PMI). OPM3 provides a method for organizations to understand their Organizational Project Management processes and measure their capabilities in preparation for improvement. OPM3 then helps organizations develop the roadmap that the company will follow to improve performance. OPM3 covers the domains of Organizational Project Management, the systematic management of projects, programs, and portfolios in alignment with the achievement of strategic goals. Organizational Project Management; the three domains are Project Management, Program
  21. 21. Dr. Karim El-Dash 21 Management and Portfolio Management. OPM3 uniquely integrates these domains into one maturity model. OPM3 offers the key to Organizational Project Management (OPM) with three interlocking elements:  Knowledge - Learn about hundreds of Organizational Project Management (OPM) best practices.  Assessment - Evaluate an organization’s current capabilities and identify areas in need of improvement.  Improvement - Use the completed assessment to map out the steps needed to achieve performance improvement goals. As with other PMI Inc. standards, OPM3’s intent is not to be prescriptive by telling the user what improvements to make or how to make them. Rather, OPM3 provides guidelines regarding the kinds of things an organization may do in order to achieve excellence in Organizational Project Management.
  22. 22. Dr. Karim El-Dash 22 CAPABILITY MATURITY MODEL INTEGRATED Capability Maturity Model Integration (CMMI) is a process improvement approach that helps organizations improve their performance. CMMI can be used to guide process improvement across a project, a division, or an entire organization. CMMI in software engineering and organizational development is a trademarked process improvement approach that provides organizations with the essential elements for effective process improvement. According to the Software Engineering Institute (SEI, 2008), CMMI helps "integrate traditionally separate organizational functions, set process improvement goals and priorities, provide guidance for quality processes, and provide a point of reference for appraising current processes."
  23. 23. Dr. Karim El-Dash 23 CMMI currently addresses three areas of interest:  Product and service development — CMMI for Development (CMMI- DEV),  Service establishment, management, and delivery — CMMI for Services (CMMI-SVC), and  Product and service acquisition — CMMI for Acquisition (CMMI- ACQ). CMMI was developed by a group of experts from industry, government, and the Software Engineering Institute (SEI) at Carnegie Mellon University. CMMI models provide guidance for developing or improving processes that meet the business goals of an organization. A CMMI model may also be used as a framework for appraising the process maturity of the organization. CMMI originated in software engineering but has been highly generalized over the years to embrace other areas of interest, such as the development of hardware products, the delivery of all kinds of services, and the acquisition of products and services. The word "software" does not appear in definitions of CMMI. This generalization of improvement concepts makes CMMI extremely abstract.
  24. 24. Dr. Karim El-Dash 24 PROJECT CHARTER The project charter is the written acknowledgment that the project exists. The project charter names the project manager and gives that person the authority to assign organizational resources to the project. COLLECT PROJECT REQUIREMENTS Requirements describe the characteristics of the project deliverables. They might also describe functionality that the deliverable must have or specific conditions the deliverable must meet in order to satisfy the objective of the project. According to the PMBOK Guide, requirements are conditions that must be met or criteria that the product or service of the project must possess in order to satisfy the project documents, a contract, a standard, or a specification. Requirements quantify and prioritize the wants, needs, and expectations of the project sponsor and stakeholders. Requirements might include elements such as dimensions, ease of use, color, specific ingredients, and so on. DEFINE PROJECT SCOPE Project Scope Management encompasses both product scope and project scope. Product scope concerns the characteristics of the product, service, or result of the project. It’s measured against the product requirements to determine successful completion or fulfillment. The application area usually dictates the process tools and techniques you’ll use to define and manage product scope. Project scope involves managing the work of the project and only the work of the project. Project scope is measured against the project management plan, the project scope statement, the work breakdown structure (WBS), and the WBS dictionary.
  25. 25. Dr. Karim El-Dash 25 To ensure a successful project, both product and project scope must be well integrated. This implies that Project Scope Management is well integrated with the other Knowledge Area processes. Scope Planning, Scope Definition, Create WBS, Scope Verification, and Scope Control involve the following:  Detailing the requirements of the product of the project  Verifying those details using measurement techniques  Creating a project scope management plan  Creating a WBS  Controlling changes to these processes CREATE PROJECT WBS The PMBOK Guide describes a WBS as “a deliverable-oriented hierarchical decomposition of the work to be executed by the project team, to accomplish the project objectives and create the required deliverables. The
  26. 26. Dr. Karim El-Dash 26 WBS defines the total scope of the project.” Simply put, a WBS is a deliverable-oriented hierarchy that defines and organizes the work of the project and only the work of the project. Like the scope statement, the WBS serves as a foundational agreement among the stakeholders and project team members regarding project scope. The WBS will be used throughout many of the remaining Planning processes and is an important part of project planning. The project charter and project scope statement outline the project goals and major deliverables. The project scope statement further refines these deliverables into an exhaustive list and documents the requirements of the deliverables. Project management team uses that comprehensive list of deliverables produced in the project scope statement to build the framework of the WBS. DEFINE ACTIVITIES Activity Definition and Activity Sequencing are separate processes, each with their own inputs, tools and techniques, and outputs. In practice, especially for small- to medium-sized projects, the planner can combine these processes into one process or step. The Activity Definition process is a further breakdown of the work package elements of the WBS. It documents the specific activities needed to fulfill the deliverables detailed on the WBS. This process might be performed by the project manager, or when the WBS is broken down to the subproject level, this process (and all the Activity-related processes that follow) might be assigned to a subproject manager.  Decomposition Decomposition is the process of breaking the work packages into smaller, more manageable units of work called schedule activities. These are not deliverables but the individual units of work that must be completed to fulfill the deliverables. Activity lists (which are one of
  27. 27. Dr. Karim El-Dash 27 the outputs of this process) from prior projects can be used as templates in this process.  Rolling Wave Planning Rolling wave planning is the process of planning for a project in waves as the project becomes clearer and unfolds. It is important in such projects to at least highlight in the initial plan the key milestones for the project. Rolling Wave Planning acknowledges the fact that we can see more clearly what is in close proximity, but looking further ahead our vision becomes less clear. Rolling Wave Planning is a multi-step, intermittent process like waves - because we cannot provide the details very far out in our planning. Depending upon the project - its length and complexity - we may be able to plan as much as a few weeks or even a few months in advance with a fair amount of clarity. This involves creating a detailed, well-defined Work Breakdown Structure (WBS) for that period of clarity, but just highlighting the milestone for the rest of the project.
  28. 28. Dr. Karim El-Dash 28  Activity Attributes Activity attributes typically refers to the specific components that make up an activity. These can include descriptive factors of the activity at the onset, or can also refer specific characteristics that may become relevant at a later phase of an activity. Activity attributes can be sorted, organized, and/or summarized according to some specific categories. Some types of activity attributes can include those related to time needed to complete specific components, costs related to completion of an activity or of some specific components, activity codes, responsible persons and/or persons involved in the activity, specific locations in which the activity may be taking place, and/or other miscellaneous categories into which these attributes can be conveniently and appropriately organized. Activity attributes can also include discussion of specific constraints that may make completion more difficult.  Milestones A milestone is the end of a stage that marks the completion of a work package or phase, typically marked by a high level event such as completion, endorsement or signing of a deliverable, document or a high level review meeting. In addition to signaling the completion of a key deliverable, a milestone may also signify an important decision or the derivation of a critical piece of information, which outlines or affects the future of a project. In this sense, a milestone not only signifies distance traveled (key stages in a project) but also indicates direction of travel since key decisions made at milestones may alter the route through the project plan.
  29. 29. Dr. Karim El-Dash 29 SEQUENCE ACTIVITIES  Logical Relationships Each activity has a start and a finish. A single logic relationship describes the interdependency of starts and finishes between two activities. There are four possible relationships between an activity’s start and finish, and those of other activities. The most commonly used relationship between two activities is finish- to-start (FS), wherein the first activity must finish before the second activity can start. A second type is finish-to-finish (FF), where two activities must complete at the same time. The third type is start-to- start (SS), where two activities start at the same time (regardless of their finish dates). The fourth is start-to-finish (SF), where an activity must start before a second activity can finish. Activities can be linked with hard logic (i.e., sequence of each activity is predetermined, such as footing A before footing B), or soft logic wherein related activities may be combined and accomplished in a different order as determined at the time of execution. There are also physical hard logic relationships where soft logic does not normally apply, such as footing formwork must be in place before concrete can be placed.  Leads and Lags Lag time can be applied to all four relationship types. Lags are timing applied to logic; they consume time, but are not activities per se. For example, lags can be used to define that footing formwork needs to remain in place until concrete is properly cured. Lead time is overlap between tasks that have a dependency. For example, if a task can start when its predecessor is half finished, you can specify a finish-to- start dependency with a lead time of 50 percent for the successor task. You enter lead time as a negative value.
  30. 30. Dr. Karim El-Dash 30  Schedule Network The project schedule is a fairly broad and all encompassing concept that while seemingly easy to grasp, must truly be mastered in order for all members of the project staff, from the project management team all the way up to the project management team leader to effectively manage the project in a capable manner from start to finish. The project schedule typically will include all elements of the project from the pre-planning stages of the project through all ongoing project processes that may take place during the active project period, to any and all project related process that may occur at the c o n c l u s i on and or closing stages of the project. The project schedule network diagram typically refers to a particular input/output mechanism that represents a particular schematic display of any and all logical relationships that may exist between the existing project schedule activities. The project schedule network diagram when properly laid out is always laid in a left to right display to properly reflect the chronology of all project work.
  31. 31. Dr. Karim El-Dash 31 ESTIMATE ACTIVITY RESOURCES  Resource breakdown structure Resource Breakdown Structure (RBS) is a standardized list of personnel, material, equipment resources related by function and arranged in a hierarchical structure. The Resource Breakdown Structure standardizes the departments resources to facilitate planning and controlling of project work. It defines assignable resources such as personnel, from a functional point of view; it identifies "who" is doing the work. The total resources define the Top Level, and each subsequent level is a subset of the resource category (or level) above it. Each descending (lower) level represents an increasingly detailed description of the resource until small enough to be used in conjunction with the Work Breakdown Structure (WBS) to allow the work to be planned, monitored and controlled.  Bottom-up Estimate Bottom-up estimating is an extremely helpful technique in project management as it allows for the ability to get a more refined estimate of a particular component of work. In bottom-up estimating, each task is broken down into smaller components. Then, individual estimates are developed to determine what specifically is needed to meet the requirements of each of these smaller components of the work. The Project Materials Equipments Manpower Subcontracto Concrete Steel Wood Ceramic Foundation Second floor First floor
  32. 32. Dr. Karim El-Dash 32 estimates for the smaller individual components are then aggregated to develop a larger estimate for the entire task as a whole. In doing this, the estimate for the task as a whole is typically far more accurate, as it allows for careful consideration of each of the smaller parts of the task and then combining these carefully considered estimates rather than merely making one large estimate which typically will not as thoroughly consider all of the individual components of a task. ESTIMATE ACTIVITY DURATION  Analogous Estimating Analogous Estimating is an estimating technique with the following characteristics: o Estimates are based on past projects (historical information). o It is less accurate when compared to bottom-up estimation. o It is a top-down approach. o It takes less time when compared to bottom-up estimation. o It is a form of an expert judgment.  Parametric Estimating A parametric cost model is an extremely useful tool for preparing early conceptual estimates when there is little technical data or engineering deliverables to provide a basis for using more detailed estimating methods. A parametric model is a mathematical representation of cost relationships that provide a logical and predictable correlation between the physical or functional characteristics of a plant (or process system) and its resultant cost. A parametric estimate comprises cost estimating relationships and other parametric estimating functions that provide logical and repeatable relationships between independent variables, such as
  33. 33. Dr. Karim El-Dash 33 design parameters or physical characteristics and the dependent variable, cost. Capacity factor and equipment factor estimates are simple examples of parametric estimates; however sophisticated parametric models typically involve several independent variables or cost drivers. Yet similar to those estimating methods, parametric estimating is reliant on the collection and analysis of previous project cost data in order to develop the cost estimating relationships (CER’s).  Three-Point-Estimating The Three Point Estimation technique is based on statistical methods, and in particular, the Normal distribution. In Three Point Estimation we produce three figures for every estimate: a = the best case estimate m = the most likely estimate b = the worst case estimate These values are used to calculate an E value for the estimate and a Standard Deviation (SD) where: 6 4 bma E   6 ab SD   E is a weighted average which takes into account both the most optimistic and pessimistic estimates provided and SD measures the variability or uncertainty in the estimate.
  34. 34. Dr. Karim El-Dash 34 To produce projects estimate the Project Manager: 1. Decomposes the project into a list of estimable tasks, i.e. a Work Breakdown Structure 2. Estimates each the E value and SD for each task. 3. Calculates the E value for the total project work as:  E(Tasks)E(Project) 4. Calculates the SD value for the total project work as:  2 SD(Tasks))SD(Project We then use the E and SD values to convert the project estimates to Confidence Levels as follows:  Confidence Level in E value is approximately 50%  Confidence Level in E value + SD is approximately 68%  Confidence Level in E value + 2 * SD is approximately 95%  Confidence Level in E value + 3 * SD is approximately 99.7%
  35. 35. Dr. Karim El-Dash 35  Reserve Analysis In terms of the project management scope of work and work flow, the concept of reserve analysis actually refers to a specific technique that of often implemented by the project management team and or the project management team leader or leaders for the purposes of helping to better maintain and manage the projects that they may have under their guise at that respective time. Specifically, the technique of reserve analysis is a particular analytical technique that is used by the project management team and or the project management team leader for the purposes of making a complete and thorough determination of what the entirety of the specific and exact features and or in many cases relationships of all of the individual project related components that currently exist as part of the previously determined project management plan. The purpose of the execution and implementation of a reserve analysis is for the purpose of establishing and determining an estimated reserve that can be used for the purposes of establishing schedule duration, any and all estimated costs, the budget, as well as the complete funds assigned or allocated to the project. DEVELOP SCHEDULE  Critical Path Method The critical path method (CPM) is a scheduling technique using arrow, precedence, or PERT diagramming methods to determine the length of a project and to identify the activities and constraints on the critical path. The critical path method enables a scheduler to do the following: • Determine the shortest time in which a program or project can be completed. • Identify those activities that are critical and that cannot be slipped or delayed. • Show the potential slippage or delay (known as float) available for activities that are not critical.
  36. 36. Dr. Karim El-Dash 36 The critical path method (CPM) was designed for, and is useful on, projects where the duration of each activity can be estimated with reasonable certainty; it predicts how long an endeavor will take to complete. It also identifies the activities that control the overall length of the project. CPM is widely used in the process industries, construction, single industrial projects, prototype development, and for controlling plant outages and shutdowns.  Critical Chain Method Critical Chain Method (CCM) is a method of planning and managing projects that puts the main emphasis on the resources required to execute project tasks. It was developed by Eliyahu M. Goldratt. This is in contrast to the more traditional Critical Path and PERT methods, which emphasize task order and rigid scheduling. A Critical Chain project network will tend to keep the resources levelly loaded, but will require them to be flexible in their start times and to quickly switch between tasks and task chains to keep the whole project on schedule. The critical chain is the sequence of both precedence and resource dependent terminal elements that prevents a project from being completed in a shorter time, given finite resources. If resources are always available in unlimited quantities, then a project's critical chain is identical to its critical path. Critical chain is used as an alternative to critical path analysis. The main features that distinguish the critical chain from the critical path are: 1. The use of (often implicit) resource dependencies. Implicit means that they are not included in the project network but have to be identified by looking at the resource requirements. 2. Lack of search for an optimum solution. This means that a "good enough" solution is enough because:
  37. 37. Dr. Karim El-Dash 37 a) As far as is known, there is no analytical method of finding an absolute optimum (i.e. having the overall shortest critical chain). b) The inherent uncertainty in estimates is much greater than the difference between the optimum and near-optimum ("good enough" solutions). 3. The identification and insertion of buffers: o project buffer o feeding buffers o resource buffers. (Most of time it is observed that companies are reluctant to give more resources) Monitoring project progress and health by monitoring the consumption rate of the buffers rather than individual task performance to schedule. CCM aggregates the large amounts of safety time added to many subprojects in project buffers to protect due-date performance, and to avoid wasting this safety time through bad multitasking, student syndrome, Parkinson's Law and poorly synchronized integration. Critical chain method uses buffer management instead of earned value management to assess the performance of a project. Some project managers feel that the earned value management technique is misleading, because it does not distinguish progress on the project constraint (i.e. on the critical chain) from progress on non-constraints (i.e. on other paths). Event chain methodology can be used to determine a size of project, feeding, and resource buffers.  Resource Leveling Resource leveling is a project management process used to examine a project for an unbalanced use of resources over time, and for resolving over-allocations or conflicts. When performing project planning activities, the manager will attempt to schedule certain tasks simultaneously. When more resources such as machines or people are needed than are available, or perhaps a specific person is needed in both tasks, the tasks will have to be
  38. 38. Dr. Karim El-Dash 38 rescheduled concurrently or even sequentially to manage the constraint. Project planning resource leveling is the process of resolving these conflicts. It can also be used to balance the workload of primary resources over the course of the project, usually at the expense of one of the traditional triple constraints (time, cost, scope). When using specially designed project software, leveling typically means resolving conflicts or over allocations in the project plan by allowing the software to calculate delays and update tasks automatically. Project management software leveling requires delaying tasks until resources are available. In either definition, leveling could result in a later project finish date if the tasks affected are in the critical path. Resource Leveling is also useful in the world of maintenance management. Many organizations have maintenance backlogs. These backlogs consist of work orders. In a "planned state" these work orders have estimates such as 2 electricians for 8 hours. These work orders have other attributes such as report date, priority, asset operational requirements, and safety concerns. These same organizations have a need to create weekly schedules. Resource- leveling can take the "work demand" and balance it against the resource pool availability for the given week. The goal is to create this weekly schedule in advance of performing the work. Without resource-leveling the organization (planner, scheduler, supervisor) is most likely performing subjective selection. For the most part, when it comes to maintenance scheduling, there are very few logic ties and therefore no need to calculate critical path and total float.  Crashing Crashing is a process of expediting project schedule by compressing the total or partial project duration. It is helpful when managers want to avoid incoming bad weather season or to compensate for prior delay. However, the downside is that more resources are needed to speed-up a part of a project, even if resources may be withdrawn
  39. 39. Dr. Karim El-Dash 39 from one facet of the project and used to speed-up the section that is lagging behind. Moreover, that may also depend on what slack is available in a non-critical activity, thus resources can be reassigned to critical project activity. Hence, extreme care should be taken to make sure that appropriate activities are being crashed and that diverted resources are not causing needless risk and project scope integrity.  Fast Tracking Fast tracking is a technique that is often implemented in crisis and/or crunch times so to speak as it involves in taking a specific schedule activity and/or work breakdown event that has been previously scheduled and/or is underway and expediting it in some way or another. Fast tracking is referred to as a project schedule compression technique of sorts in that its intent is to take an entire schedule of a project and attempting to compress it into a smaller period of time by conducting some events either quicker or by doing some events that were intended to be done in a more spaced out manner but rather doing some of them simultaneously. The network logic has essentially been changed allowing for some items that would otherwise have been done in a sequence are instead overlapped as such.  Bar Chart (Gantt Chart) A Gantt chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the start and finish dates of the terminal activity and summary elements of a project. Terminal activity and summary activities comprise the work breakdown structure of the project. Some Gantt charts also show the dependency (i.e. precedence network) relationships between activities. Gantt charts can be used to show current schedule status using percent-complete shadings and a vertical "TODAY" line.
  40. 40. Dr. Karim El-Dash 40 Although now regarded as a common charting technique, Gantt charts were considered revolutionary when they were introduced. In recognition of Henry Gantt's contributions, the Henry Laurence Gantt Medal is awarded for distinguished achievement in management and in community service. Schedule Baseline The schedule baseline is the final approved version of the project schedule with baseline start and baseline finish dates and resource assignments. The PMBOK Guide notes that this baseline is derived from a schedule network analysis of the schedule model. In practice, for small- to medium-sized projects, you can easily complete Activity Definition, Activity Sequencing, Activity Resource Estimating, Activity Duration Estimating, and Schedule Development at the same time with the aid of good project management software. It is easy to produce Gantt charts, critical path, resource allocation, activity dependencies, what-if analysis, and various reports after plugging your scheduling information in to most project management software tools. Regardless of the methods, be certain to obtain sign-off of the project schedule and provide stakeholders and project sponsor with regular updates. And keep the schedule handy—there will likely be changes and modifications as you go. Also, make certain to save a schedule baseline for comparative purposes. Once you get into the Executing and Monitoring and
  41. 41. Dr. Karim El-Dash 41 Controlling processes, you’ll be able to compare what you planned to do against what actually happened. Schedule Baseline
  42. 42. Dr. Karim El-Dash 42 ESTIMATE COST  Analogous Estimating Analogous Estimating, is one form of expert judgment and it also known as Top-down Estimating. This technique is used to determine the duration of the project. After finalizing the high level scope/requirement, the PM will refer & compare the previously completed project’s similar activities with the current activities and determine the duration. This estimation technique will be applied to determine the duration when the detailed information about the project is not available, usually during the early stages of the project. This technique will look the scope/requirement as a whole single unit to estimate. This estimate will give a ball-park idea about the estimation and will have bigger variance. Eg : To estimate the time required to complete the project of upgrading XYZ application’s database version to a higher version, is to compare similar past projects and estimate the duration. This is done irrespective of the complexity, size and other factors.  Parametric Estimating Parametric estimating is one of the tools and technique of processes like Activity Duration Estimating, Cost Estimating, Cost Budgeting. Parametric estimating is a quantitatively based estimating method that multiplies the quantity of work by the rate. This estimate is by multiplying a known element like the quantity of materials needed by the time it takes to install or complete one unit of materials. The result is a total estimate for the activity. In this case, 10 servers multiplied by 16 hours per server gives you a 160- hour total duration estimate.
  43. 43. Dr. Karim El-Dash 43  Three-Point-Estimating The three-point estimation technique is based on statistical methods, and in particular, the normal distribution. Three-point estimation is the preferred estimation technique for information systems (IS) projects. In the three-point estimation there are three figures produced for every estimate: a = the best-case estimate m = the most likely estimate b = the worst-case estimate These values are used to calculate an E value for the estimate and a standard deviation (SD) where: E = (a + 4m + b) / 6 SD = (b − a)/6 E is a weighted average which takes into account both the most optimistic and most pessimistic estimates provided. SD measures the variability or uncertainty in the estimate. In Project Evaluation and Review Techniques (PERT) the three values are used to fit a Beta distribution for Monte Carlo simulations. To produce a project estimate the project manager:  Decomposes the project into a list of estimable tasks, i.e. a work breakdown structure  Estimates each the E value and SD for each task.  Calculates the E value for the total project work as E (Project Work) = Σ E (Task)  Calculates the SD value for the total project work as SD (Project Work) = √Σ SD (Task)2 The E and SD values are then used to convert the project estimates to confidence levels as follows:  Confidence level in E value is approximately 50%  Confidence level in E value + SD is approximately 85%
  44. 44. Dr. Karim El-Dash 44  Confidence level in E value + 1.645 × SD is approximately 95%  Confidence level in E value + 2 × SD is approximately 98%  Confidence level in E value + 3 × SD is approximately 99.9% Information Systems uses the 95% confidence level, i.e. E Value + 1.645 × SD, for all project and task estimates. These confidence level estimates assume that the data from all of the tasks combine to be approximately normal. Typically, there would need to be 20–30 tasks for this to be reasonable, and each of the estimates E for the individual tasks would have to be unbiased.  Reserve Analysis Reserves or Contingency allowances are used to deal with uncertainty or “known-unknowns” and these are added to the cost estimates, thus sometimes overstating project costs. Options vary between grouping similar activities and assigning a single contingency reserve for that group to a zero duration activity. This activity may be placed across the network path for that group of schedule activities. As the schedule progresses, the reserve can be adjusted. Creating a buffer activity in the critical chain method at the end of the network path as the schedule progresses, allows the reserve to be adjusted. Reserve or contingency means adding a portion of cost/time to the activity to account for cost/time risk. You might choose to add a percentage of cost/time or a set number of work to the activity or the overall budget/schedule. For example, you know it will take $1000 to run new cable based on the quantitative estimate you came up with earlier. You also know that sometimes you hit problem areas when running the cable. To make sure you don’t impact the project budget, you build in a reserve of 10 percent of your original estimate to account for the
  45. 45. Dr. Karim El-Dash 45 problems you might encounter. This brings your activity duration estimate to $1100 hours for this activity.  Cost of Quality Cost of Quality (COQ) is a measurement used for assessing the waste or losses from some defined process (eg. machine, production line, plant, department, company, etc.). Recognizing the power and universal applicability of Cost of Quality (COQ), PQA has developed numerous proprietary Cost of Quality (COQ) systems for ensuring the effectiveness of Cost of Quality (COQ) implementations. The Cost of Quality (COQ) measurement can track changes over time for one particular process, or be used as a benchmark for comparison of two or more different processes (eg. two machines, different production lines, sister plants, two competitor companies, etc.).
  46. 46. Dr. Karim El-Dash 46 Most COQ systems are defined by use of 4 categories of costs: COQ Category Typical Descriptions (may vary between different Organizations) Examples Internal Costs associated with internal losses (ie. within the process being analyzed) off-cuts, equipment breakdowns, spills, scrap, yield, productivity External Costs external the process being analyzed (ie. occur outside, not within). These costs are usually discovered by, or affect third parties (eg. customers). Some External costs may have originated from within, or been caused, created by, or made worse by the process being analyzed. They are defined as External because of where they were discovered, or who is primarily or initially affected. customer complaints, latent defects found by the customer, warranty Preventive Costs associated with the prevention of future losses: (eg. unplanned or undesired problems, losses, lost opportunities, breakdowns, work stoppages, waste, etc.) planning, mistake- proofing, scheduled maintenance, quality assurance Assessment Costs associated with measurement and assessment of the process. KPI's, inspection, quality check, dock audits, third party audits, measuring devices, reporting systems, data collection systems, forms  Vendor-Bid-Analysis In a competitive bid process, you can apply vendor bid analysis to determine how much a project should cost. Comparing bids can help you determine the most likely cost for each deliverable, which will allow for a more accurate project cost estimate.
  47. 47. Dr. Karim El-Dash 47 Control Cost Earned Value management Earned value management (EVM) is a project management technique for measuring project progress in an objective manner. EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system. When properly applied, EVM provides an early warning of performance problems. Additionally, EVM promises to improve the definition of project scope, prevent scope creep, communicate objective progress to stakeholders, and keep the project team focused on achieving progress. Essential features of any EVM implementation include 1. a project plan that identifies work to be accomplished, 2. a valuation of planned work, called Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS), and 3. pre-defined “earning rules” (also called metrics) to quantify the accomplishment of work, called Earned Value (EV) or Budgeted Cost of Work Performed (BCWP). EVM implementations for large or complex projects include many more features, such as indicators and forecasts of cost performance (over budget or under budget) and schedule performance (behind schedule or ahead of schedule). However, the most basic requirement of an EVM system is that it quantifies progress using PV and EV. Project tracking without EVM It is helpful to see an example of project tracking that does not include earned value performance management. Consider a project that has been planned in detail, including a time-phased spend plan for all elements of work. Figure 1 shows the cumulative budget for this project as a function of time (the blue line, labeled PV). It also shows the cumulative actual cost of the project (red line) through week 8. To those unfamiliar with EVM, it might appear that this project was over budget through week 4 and then under budget from week 6 through week 8. However, what is missing from this
  48. 48. Dr. Karim El-Dash 48 chart is any understanding of how much work has been accomplished during the project. If the project were actually completed at week 8, then the project would actually be well under budget and well ahead of schedule. If, on the other hand, the project is only 10% complete at week 8, the project is significantly over the budget and behind schedule. A method is needed to measure technical performance objectively and quantitatively, and that is what EVM accomplishes. Project tracking with EVM Consider the same project, except this time the project plan includes pre- defined methods of quantifying the accomplishment of work. At the end of each week, the project manager identifies every detailed element of work that has been completed, and sums the PV for each of these completed elements. Earned value may be accumulated monthly, weekly, or as progress is made. Earned value (EV) Figure 2 shows the EV curve (in green) along with the PV curve from Figure 1. The chart indicates that technical performance (i.e., progress) started more rapidly than planned, but slowed significantly and fell behind
  49. 49. Dr. Karim El-Dash 49 schedule at week 7 and 8. This chart illustrates the schedule performance aspect of EVM. It is complementary to critical path or critical chain schedule management. Figure 3 shows the same EV curve (green) with the actual cost data from Figure 1 (in red). It can be seen that the project was actually under budget, relative to the amount of work accomplished, since the start of the project. This is a much better conclusion than might be derived from Figure 1. Figure 4 shows all three curves together – which is a typical EVM line chart. The best way to read these three-line charts is to identify the EV curve first, then compare it to PV (for schedule performance) and AC (for
  50. 50. Dr. Karim El-Dash 50 cost performance). It can be seen from this illustration that a true understanding of cost performance and schedule performance relies first on measuring technical performance objectively. This is the foundational principle of EVM. Earned Value Management Principle The foundational principle of EVM, mentioned above, does not depend on the size or complexity of the project. However, the implementations of EVM can vary significantly depending on the circumstances. In many cases, organizations establish an all-or-nothing threshold; projects above the threshold require a full-featured (complex) EVM system and projects below the threshold are exempted. Another approach that is gaining favor is to scale EVM implementation according to the project at hand and skill level of the project team. Simple implementations There are many more small and simple projects than there are large and complex ones, yet historically only the largest and most complex have enjoyed the benefits of EVM. Still, lightweight implementations of EVM are achievable by any person who has basic spreadsheet skills. In fact, spreadsheet implementations are an excellent way to learn basic EVM skills.
  51. 51. Dr. Karim El-Dash 51 The first step is to define the work. This is typically done in a hierarchical arrangement called a work breakdown structure (WBS) although the simplest projects may use a simple list of tasks. In either case, it is important that the WBS or list be comprehensive. It is also important that the elements be mutually exclusive, so that work is easily categorized in one and only one element of work. The most detailed elements of a WBS hierarchy (or the items in a list) are called activities (or tasks). The second step is to assign a value, called planned value (PV), to each activity. For large projects, PV is almost always an allocation of the total project budget, and may be in units of currency (e.g., dollars or euros) or in labor hours, or both. However, in very simple projects, each activity may be assigned a weighted “point value" which might not be a budget number. Assigning weighted values and achieving consensus on all PV quantities yields an important benefit of EVM, because it exposes misunderstandings and miscommunications about the scope of the project, and resolving these differences should always occur as early as possible. Some terminal elements cannot be known (planned) in great detail in advance, and that is expected, because they can be further refined at a later time. The third step is to define “earning rules” for each activity. The simplest method is to apply just one earning rule, such as the 0/100 rule, to all activities. Using the 0/100 rule, no credit is earned for an element of work until it is finished. A related rule is called the 50/50 rule, which means 50% credit is earned when an element of work is started, and the remaining 50% is earned upon completion. Other fixed earning rules such as a 25/75 rule or 20/80 rule are gaining favor, because they assign more weight to finishing work than for starting it, but they also motivate the project team to identify when an element of work is started, which can improve awareness of work-in-progress. These simple earning rules work well for small or simple projects because generally each activity tends to be fairly short in duration. These initial three steps define the minimal amount of planning for simplified EVM. The final step is to execute the project according to the plan and measure progress. When activities are started or finished, EV is accumulated according to the earning rule. This is typically done at regular
  52. 52. Dr. Karim El-Dash 52 intervals (e.g., weekly or monthly), but there is no reason why EV cannot be accumulated in near real-time, when work elements are started/completed. In fact, waiting to update EV only once per month (simply because that is when cost data are available) only detracts from a primary benefit of using EVM, which is to create a technical performance scoreboard for the project team. In a lightweight implementation such as described here, the project manager has not accumulated cost nor defined a detailed project schedule network (i.e., using a critical path or critical chain methodology). While such omissions are inappropriate for managing large projects, they are a common and reasonable occurrence in many very small or simple projects. Any project can benefit from using EV alone as a real-time score of progress. One useful result of this very simple approach (without schedule models and actual cost accumulation) is to compare EV curves of similar projects, as illustrated in Figure 5. In this example, the progress of three residential construction projects are compared by aligning the starting dates. If these three home construction projects were measured with the same PV valuations, the relative schedule performance of the projects can be easily compared.
  53. 53. Dr. Karim El-Dash 53 Intermediate implementations In many projects, schedule performance (completing the work on time) is equal in importance to technical performance. For example, some new product development projects place a high premium on finishing quickly. It is not that cost is unimportant, but finishing the work later than a competitor may cost a great deal more in lost market share. It is likely that these kinds of projects will not use the lightweight version of EVM described in the previous section, because there is no planned timescale for measuring schedule performance. A second layer of EVM skill can be very helpful in managing the schedule performance of these “intermediate” projects. The project manager may employ a critical path or critical chain to build a project schedule model. As in the lightweight implementation, the project manager must define the work comprehensively, typically in a WBS hierarchy. He/she will construct a project schedule model that describes the precedence links between elements of work. This schedule model can then be used to develop the PV curve (or baseline), as shown in Figure 2'. It should be noted that measuring schedule performance using EVM does not replace the need to understand schedule performance versus the project's schedule model (precedence network). However, EVM schedule performance, as illustrated in Figure 2 provides an additional indicator — one that can be communicated in a single chart. Although it is theoretically possible that detailed schedule analysis will yield different conclusions than broad schedule analysis, in practice there tends to be a high correlation between the two. Although EVM schedule measurements are not necessarily conclusive, they provide useful diagnostic information. Although such intermediate implementations do not require units of currency (e.g., dollars), it is common practice to use budgeted dollars as the scale for PV and EV. It is also common practice to track labor hours in parallel with currency. The following EVM formulas are for schedule management, and do not require accumulation of actual cost (AC). This is important because it is common in small and intermediate size projects for true costs to be unknown or unavailable.
  54. 54. Dr. Karim El-Dash 54  Schedule variance (SV) EV-PV greater than 0 is good (ahead of schedule)  Schedule performance index (SPI) EV/PV greater than 1 is good (ahead of schedule) See also earned schedule for a description of known limitations in SV and SPI formulas and an emerging practice for correcting these limitations. Advanced implementations In addition to managing technical and schedule performance, large and complex projects require that cost performance be monitored and reviewed at regular intervals. To measure cost performance, planned value (or BCWS - Budgeted Cost of Work Scheduled) and earned value (or BCWP - Budgeted Cost of Work Performed) must be in units of currency (the same units that actual costs are measured.) In large implementations, the planned value curve is commonly called a Performance Measurement Baseline (PMB) and may be arranged in control accounts, summary-level planning packages, planning packages and work packages. In large projects, establishing control accounts is the primary method of delegating responsibility and authority to various parts of the performing organization. Control accounts are cells of a responsibility assignment (RACI) matrix, which is intersection of the project WBS and the organizational breakdown structure (OBS). Control accounts are assigned to Control Account Managers (CAMs). Large projects require more elaborate processes for controlling baseline revisions, more thorough integration with subcontractor EVM systems, and more elaborate management of procured materials. Additional acronyms and formulas include: Budget at completion (BAC): The total planned value (PV or BCWS) at the end of the project. If a project has a Management Reserve (MR), it is typically in addition to the BAC.
  55. 55. Dr. Karim El-Dash 55  Cost variance (CV) EV - AC, greater than 0 is good (under budget)  Cost Performance Index (CPI) EV/AC, greater than 1 is good (under budget) < 1 means that the cost of completing the work is higher than planned (bad) = 1 means that the cost of completing the work is right on plan (good) > 1 means that the cost of completing the work is less than planned (good or sometimes bad). Having a CPI that is very high (in some cases, very high is only 1.2) may mean that the plan was too conservative, and thus a very high number may in fact not be good, as the CPI is being measured against a poor baseline. Management or the customer may be upset with the planners as an overly conservative baseline ties up available funds for other purposes, and the baseline is also used for manpower planning. Estimate at completion (EAC) EAC is the manager's projection of total cost of the project at completion. ETC is the estimate to complete the project. To-complete performance index (TCPI) The To Complete Performance Index (TCPI) provides a projection of the anticipated performance required to achieve either the BAC or the EAC. TCPI indicates the future required cost efficiency needed to achieve a target BAC (Budget At Complete) or EAC (Estimate At Complete). Any
  56. 56. Dr. Karim El-Dash 56 significant difference between CPI, the cost performance to date, and the TCPI, the cost performance needed to meet the BAC or the EAC, should be accounted for by management in their forecast of the final cost. For the TCPI based on BAC (describing the performance required to meet the original BAC budgeted total): or for the TCPI based on EAC (describing the performance required to meet a new, revised budget total EAC): Independent estimate at completion (IEAC) The IEAC is a metric to project total cost using the performance to date to project overall performance. This can be compared to the EAC, which is the manager's projection.
  57. 57. Dr. Karim El-Dash 57 Project Quality Management Quality can be defined as meeting the customer's expectations or exceeding the customer expectations achieved by way of deliverables and/or activities performed to produce those deliverables. Project Quality Plan can be defined as a set of activities planned at the beginning of the project that helps achieve Quality in the Project being executed. The Purpose of the Project Quality Plan is to define these activities/tasks that intend to deliver products while focusing on achieving customer's quality expectations. These activities / tasks are defined on the basis of the quality standards set by the organization delivering the product. Project Quality Plan identifies which Quality Standards are relevant to the project and determines how they can be satisfied. It includes the implementation of Quality Events (peer reviews, checklist execution) by using various Quality Materials (templates, standards, checklists) available within the organization. The holding of the Quality Event is termed as Quality Control. As an output of the various activities, Quality Metrics or Measurements are captured which assist in continuous improvement of Quality thus adding to the inventory of Lessons Learned. Quality Assurance deals in preparation of the Quality Plan and formation of organization wide standards. Guidelines to write the Project Quality Plan Project Quality Plan should be written with the objective to provide project management with easy access to quality requirements and should have ready availability of the procedures and standards thus mentioned. The following list provides you the various Quality Elements that should be included in a detailed Project Quality Plan: Management Responsibility. Describes the quality responsibilities of all stakeholders.
  58. 58. Dr. Karim El-Dash 58 Documented Quality Management System. This refers to the existing Quality Procedures that have been standardized and used within the organization. Design Control. This specifies the procedures for Design Review, Sign- Off, Design Changes and Design Waivers of requirements. Document Control. This defines the process to control Project Documents at each Project Phase. Purchasing. This defines Quality Control and Quality Requirements for sub-contracting any part / whole part of the project. Inspection Testing. This details the plans for Acceptance Testing and Integration Testing. Nonconformance. This defines the procedures to handle any type of nonconformance work. The procedures include defining responsibilities, defining conditions and availability of required documentation in such cases. Corrective Actions. This describes the procedures for taking Corrective Actions for the problems encountered during project execution. Quality Records. This describes the procedures for maintaining the Quality Records (metrices, variance reports, executed checklists etc) during project execution as well as after the project completion. Quality Audits. An internal audit should be planned and implemented during each phase of the project. Training. This should specify any training requirements for the project team.
  59. 59. Dr. Karim El-Dash 59 COST-BENEFIT ANALYSIS In the case of quality management, cost of quality trade-offs should be considered from within cost-benefit analysis. The benefits of meeting quality requirements are as follows:  Stakeholder satisfaction is increased.  Costs are lower.  Productivity is higher.  There is less rework. COST OF QUALITY CATEGORIES OF QUALITY COSTS Many companies summarize these costs into four categories. Some practitioners also call these categories the “cost of quality.” These categories and examples of typical subcategories are discussed below. Internal Failure Costs. These are costs of deficiencies discovered before delivery which are associated with the failure (nonconformities) to meet explicit requirements or implicit needs of external or internal customers. Also included are avoidable process losses and inefficiencies that occur even when requirements and needs are met. These are costs that would disappear if no deficiencies existed.
  60. 60. Dr. Karim El-Dash 60 Failure to Meet Customer Requirements and Needs. Examples of subcategories are costs associated with:  Scrap: The labor, material, and (usually) overhead on defective product that cannot economically be repaired. The titles are numerous—scrap, spoilage, defectives, etc.  Rework: Correcting defectives in physical products or errors in service products.  Lost or missing information: Retrieving information that should have been supplied.  Failure analysis: Analyzing nonconforming goods or services to determine causes.  Scrap and rework—supplier: Scrap and rework due to nonconforming product received from suppliers. This also includes the costs to the buyer of resolving supplier quality problems.  One hundred percent sorting inspection: Finding defective units in product lots which c unacceptably high levels of defectives.  Reinspection, retest: Reinspection and retest of products that have undergone rework or other revision.  Changing processes: Modifying manufacturing or service processes to correct deficiencies.  Redesign: Changing designs to correct deficiencies.  Scrapping of obsolete product: Disposing of products that have been superseded.  Scrap in support operations: Defective items in indirect operations.  Rework in internal support operations: Correcting defective items in indirect operations.  Downgrading: The difference between the normal selling price and the reduced price due to quality reasons.
  61. 61. Dr. Karim El-Dash 61 Cost of Inefficient Processes. Examples of subcategories are  Variability of product characteristics: Losses that occur even with conforming product (e.g., overfill of packages due to variability of filling and measuring equipment).  Unplanned downtime of equipment: Loss of capacity of equipment due to failures.  Inventory shrinkage: Loss due to the difference between actual and recorded inventory amounts.  Variation of process characteristics from “best practice”: Losses due to cycle time and costs of processes as compared to best practices in providing the same output. The best-practice process may be internal or external to the organization.  Non-value-added activities: Redundant operations, sorting inspections, and other non-valueadded activities. A value-added activity increases the usefulness of a product to the customer; a non-value-added activity does not. (The concept is similar to the 1950s concept of value engineering and value analysis.) External Failure Costs These are costs associated with deficiencies that are found after product is received by the customer. Also included are lost opportunities for sales revenue. These costs also would disappear if there were no deficiencies. Failure to Meet Customer Requirements and Needs Examples of subcategories are:  Warranty charges: The costs involved in replacing or making repairs to products that are still within the warranty period.  Complaint adjustment: The costs of investigation and adjustment of justified complaints attributable to defective product or installation.
  62. 62. Dr. Karim El-Dash 62  Returned material: The costs associated with receipt and replacement of defective product received from the field.  Allowances: The costs of concessions made to customers due to substandard products accepted by the customer as is or to conforming product that does not meet customer needs.  Penalties due to poor quality: This applies to goods or services delivered or to internal processes such as late payment of an invoice resulting in a lost discount for paying on time.  Rework on support operations: Correcting errors on billing and other external processes.  Revenue losses in support operations: An example is the failure to collect on receivables from some customers. Appraisal Costs These are the costs incurred to determine the degree of conformance to quality requirements. Examples are  Incoming inspection and test: Determining the quality of purchased product, whether by inspection on receipt, by inspection at the source, or by surveillance.  In-process inspection and test: In-process evaluation of conformance to requirements.  Final inspection and test: Evaluation of conformance to requirements for product acceptance.  Document review: Examination of paperwork to be sent to customer.  Balancing: Examination of various accounts to assure internal consistency.  Product quality audits: Performing quality audits on in-process or finished products.  Maintaining accuracy of test equipment: Keeping measuring instruments and equipment in calibration.  Inspection and test materials and services: Materials and supplies in inspection and test work (e.g., x-ray film) and services (e.g., electric power) where significant.
  63. 63. Dr. Karim El-Dash 63  Evaluation of stocks: Testing products in field storage or in stock to evaluate degradation. In collecting appraisal costs, what is decisive is the kind of work done and not the department name (the work may be done by chemists in the laboratory, by sorters in Operations, by testers in Inspection, or by an external firm engaged for the purpose of testing). Also note that industries use a variety of terms for “appraisal,” e.g., checking, balancing, reconciliation, review. Prevention Costs These are costs incurred to keep failure and appraisal costs to a minimum. Examples are:  Quality planning: This includes the broad array of activities which collectively create the overall quality plan and the numerous specialized plans. It includes also the preparation of procedures needed to communicate these plans to all concerned.  New-products review: Reliability engineering and other quality-related activities associated with the launching of new design.  Process planning: Process capability studies, inspection planning, and other activities associated with the manufacturing and service processes.  Process control: In-process inspection and test to determine the status of the process (rather than for product acceptance).  Quality audits: Evaluating the execution of activities in the overall quality plan.  Supplier quality evaluation: Evaluating supplier quality activities prior to supplier selection, auditing the activities during the contract, and associated effort with suppliers.  Training: Preparing and conducting quality-related training programs. As in the case of appraisal costs, some of this work may be done by personnel who are not on the payroll of the Quality department. The
  64. 64. Dr. Karim El-Dash 64 decisive criterion is again the type of work, not the name of the department performing the work. Note that prevention costs are costs of special planning, review, and analysis activities for quality. Prevention costs do not include basic activities such as product design, process design, process maintenance, and customer service.
  65. 65. Dr. Karim El-Dash 65 OPTIMUM QUALITY COST MODEL The model shows three curves: 1. The failure costs: These equal zero when the product is 100 percent good, and rise to infinity when the product is 100 percent defective. (Note that the vertical scale is cost per good unit of product. At 100 percent defective, the number of good units is zero, and hence the cost per good unit is infinity.) 2. The costs of appraisal plus prevention: These costs are zero at 100 percent defective, and rise as perfection is approached. 3. The sum of curves 1 and 2: This third curve is marked “total quality costs” and represents the total cost of quality per good unit of product. Cost of quality The previous figure suggests that the minimum level of total quality costs occurs when the quality of conformance is 100 percent, i.e., perfection. This has not always been the case. During most of the twentieth century the predominant role of (fallible) human beings limited the efforts to attain perfection at finite costs. Also, the inability to quantify the impact of quality
  66. 66. Dr. Karim El-Dash 66 failures on sales revenue resulted in underestimating the failure costs. The result was to view the optimum value of quality of conformance as less than 100 percent. Effect of identifying cost of quality  
  67. 67. Dr. Karim El-Dash 67 CONTROL CHARTS A control chart represents a picture of a process over time. To effectively use control charts, one must be able to interpret the picture. What is this control chart telling me about my process? Is this picture telling me that everything is all right and I can relax? Is this picture telling me that something is wrong and I should get up and find out what has happened? A control chart tells you if your process is in statistical control. The chart above is an example of a stable (in statistical control) process. This pattern is typical of processes that are stable. Three characteristics of a process that is in control are:  Most points are near the average  A few points are near the control limits  No points are beyond the control limits If a control chart does not look similar to the one above, there is probably a special cause present. Various tests for determining if a special cause is present are given below. Points Beyond the Control Limits A special cause is present in the process if any points fall above the upper control limit or below the lower control limit. Action should be taken to find the special cause and permanently remove it from the process. If there is a point beyond the control limits, there is no need
  68. 68. Dr. Karim El-Dash 68 to apply the other tests for out of control situations. Points on the control limits are not considered to be out of statistical control. Zone Tests: Setting the Zones and Zone A The zone tests are valuable tests for enhancing the ability of control charts to detect small shifts quickly. The first step in using these tests is to divide the control chart into zones. This is done by dividing the area between the average and the upper control limit into three equally spaced areas. This is then repeated for the area between the average and the lower control limit. The zones are called zones A, B, and C. There is a zone A for the top half of the chart and a zone A for the bottom half of the chart. The same is true for zones B and C. Control charts are based on 3 sigma limits of the variable being plotted. Thus, each zone is one standard deviation in width. For example, considering the top half of the chart, zone C is the region from the average to the average plus one standard deviation. Zone B is the region between the average plus one standard deviation and the average plus two standard deviations. Zone A is the region between the average plus two standard deviations and the average plus three standard deviations A special cause exists if two out of three consecutive points fall in zone A or beyond. The figure below shows an example of this test. The test is applied for the zone A above the average and then for the zone A below the average.
  69. 69. Dr. Karim El-Dash 69 This test, like those below, is applied to both halves of the chart. However, only one half is considered at a time. For example, if one point falls in the zone A above the average and the next point falls in zone A below the average, this is not two out of three consecutive points in zone A or beyond. The two points in zone A must be on the same side of the average. Zone Tests: Zones B and C A special cause exists if four out five consecutive points fall in zone B or beyond. The figure to the left shows an example of this test. This test is applied for zone B above the average and then for zone B below the average. A special cause exists if seven consecutive points fall in zone C or beyond. An example of this test is shown below. The test should be applied for the zone C above the average and then for the zone C below the average.
  70. 70. Dr. Karim El-Dash 70 Test for Stratification Stratification occurs if two or more processes (distributions) are being sampled systematically. For example, stratification can occur if samples are taken once a shift and a subgroup size of 3 is formed based on the results from three shifts. It is possible that the shifts are operating at a different average or variability. Stratification (a special cause) exists if fifteen or more consecutive points fall in zone C either above or below the average. Note that the points tend to hug the centerline. This test involves the use of the zones but is applied to the entire chart and not one-half of the chart at a time. Test for Mixtures A mixture exists when there is more than one process present but sampling is done for each process separately. For example, suppose you take three samples per shift and form a subgroup based on these three samples. If different shifts are operating at different averages, a mixture can occur. A mixture (a special cause) is present if eight or more consecutive points lie on both sides of the average with none of the points in zone C. The figure shows an example of this test. Note the absence of points in zone C. This test is applied to the entire chart. Rule of Seven Tests These tests are often taught initially to employees as the method for interpreting control charts (along with points beyond the limits). The tests
  71. 71. Dr. Karim El-Dash 71 state that an out of control situation is present if one of the following conditions is true: 1) Seven points in a row above the average, 2) Seven points in a row below the average, 3) Seven points in a row trending up, or 4) Seven points in a row trending down. These four conditions are shown in the figure above.
  72. 72. Dr. Karim El-Dash 72 BENCHMARKING A benchmark is a defined measure of productivity in comparison to something else. We can benchmark internally, seeking to maintain or improve performance, or we can try to find industry benchmarks, and compare ourselves to our competitors. Sometimes, industry associations can provide information in support of benchmarks that we should achieve. We should always evaluate them closely to be sure that the benchmark is appropriate and realistic in our work environment. For example, if we are using older equipment, we might not be able to achieve an industry average rate of production. Also, we should make sure that achieving that benchmark increases or at least maintains customer quality while lowering cost. There is no point achieving a benchmark if it means losing customers or losing dollars. Best Practices Information about solid, measurable benchmarks is hard to obtain and harder to fit into unique situation. Developing and using best practices is a powerful improvement method. A best practice is simply the best way to do a repeating process at your organization. Best practices:

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