PM Session 7

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PM Session 7

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PM Session 7

  1. 1. Project Management Session 7 Project Management Control
  2. 2. Preamble
  3. 3. <ul><li>How do I manage the following: </li></ul><ul><ul><li>The overall health of the project; </li></ul></ul><ul><ul><li>Scope; </li></ul></ul><ul><ul><li>Acquisition of goods and services; </li></ul></ul><ul><ul><li>Value. </li></ul></ul>
  4. 4. <ul><li>Project planning: </li></ul><ul><ul><li>Milestones </li></ul></ul><ul><ul><li>Schedule; </li></ul></ul><ul><ul><li>Human resources; </li></ul></ul><ul><ul><li>Budget; </li></ul></ul><ul><ul><li>Responsibilities; </li></ul></ul><ul><ul><li>Contingencies. </li></ul></ul><ul><li>Ownership: </li></ul><ul><ul><li>Stakeholder input; </li></ul></ul><ul><ul><li>Conditions for satisfaction; </li></ul></ul><ul><ul><li>Stakeholders feel their interest accommodated. </li></ul></ul>Project Health
  5. 5. <ul><li>Expertise: </li></ul><ul><ul><li>Have expertise; </li></ul></ul><ul><ul><li>Members understand their responsibilities; </li></ul></ul><ul><ul><li>Adequate training for team members; </li></ul></ul><ul><li>Top level support: </li></ul><ul><ul><li>Project sponsor share responsibility; </li></ul></ul><ul><ul><li>TOR agreed; </li></ul></ul><ul><ul><li>Sponsor and management support when required; </li></ul></ul><ul><ul><li>Communication. </li></ul></ul><ul><li>Resources: </li></ul><ul><ul><li>Available HR; </li></ul></ul><ul><ul><li>Technology available; </li></ul></ul><ul><ul><li>Task management effective. </li></ul></ul>Project Health
  6. 6. <ul><li>Justifiable case: </li></ul><ul><ul><li>Project fully costed and budgeted; </li></ul></ul><ul><ul><li>Also agreed with sponsor; </li></ul></ul><ul><ul><li>ROI clear and acceptable; </li></ul></ul><ul><ul><li>Metrics in place and methods to measure; </li></ul></ul><ul><ul><li>Adequate funding; </li></ul></ul><ul><li>Specification: </li></ul><ul><ul><li>Objectives clear; </li></ul></ul><ul><ul><li>Strategic and business alignment; </li></ul></ul><ul><ul><li>Enthusiasm; </li></ul></ul><ul><ul><li>Adequate documentation – reports; budget; spec’s; deviations; delegations. </li></ul></ul>Project Health
  7. 7. <ul><li>How do I manage the following: </li></ul><ul><ul><li>The overall health of the project; </li></ul></ul><ul><ul><li>Scope; </li></ul></ul><ul><ul><li>Acquisition of goods and services; </li></ul></ul><ul><ul><li>Value. </li></ul></ul>
  8. 8. Scope Management
  9. 9. <ul><li>There are three basic causes for change in projects: </li></ul><ul><ul><li>Planners erred in their initial assessment about how to achieve a given end or erred in their choice of the proper goal for the project; </li></ul></ul><ul><ul><li>The client/user or project team learns more about the nature of the project deliverable or about the setting in which it is to be used; </li></ul></ul><ul><ul><li>Change in the environment in which the project is being conducted. </li></ul></ul>Scope Management
  10. 10. <ul><li>Scope is defined at various levels: </li></ul><ul><ul><li>Project charter; </li></ul></ul><ul><ul><li>Breakdown of deliverables, tasks etc (this is were the Work Breakdown Structure is important); </li></ul></ul><ul><ul><li>The baseline plan and the budget also part of the scope. </li></ul></ul><ul><li>Underlying the issue of scope management is change control : </li></ul><ul><ul><li>Formal system of change control; </li></ul></ul><ul><ul><li>Impact of changes should be motivated; </li></ul></ul><ul><ul><li>Where it affects scope, client signoff should be sought and relevant documents updated. </li></ul></ul>Scope management
  11. 11. <ul><li>Scope related dilemmas: </li></ul><ul><ul><li>Scope creep: </li></ul></ul><ul><ul><ul><li>Changes that are changing the base plan. Inevitable but the project manager needs to keep these changes “manageable” ; </li></ul></ul></ul><ul><ul><li>Hope creep: </li></ul></ul><ul><ul><ul><li>Falling behind schedule, with the hope that one could catch up. The project manager needs to be very careful as this can have severe consequences for the project; </li></ul></ul></ul><ul><ul><li>Effort creep: </li></ul></ul><ul><ul><ul><li>Similar to hope creep. Activity that does not produce results; </li></ul></ul></ul><ul><ul><li>Feature creep: </li></ul></ul><ul><ul><ul><li>Adding features rather than sticking to the original agreement about deliverables. </li></ul></ul></ul>Scope management
  12. 12. <ul><li>How do I manage the following: </li></ul><ul><ul><li>The overall health of the project; </li></ul></ul><ul><ul><li>Scope; </li></ul></ul><ul><ul><li>Acquisition of goods and services; </li></ul></ul><ul><ul><li>Value. </li></ul></ul>
  13. 13. <ul><li>PMBOK “the processes required to acquire goods and services’; </li></ul><ul><li>Procurement schedule (as such) should only be considered after the network diagram and schedule bar chart has been finalized but before the resource histograms and cash flow statements – thus what, when before how much and how much when…. </li></ul>Procurement
  14. 14. Procurement
  15. 15. <ul><li>How do I manage the following: </li></ul><ul><ul><li>The overall health of the project; </li></ul></ul><ul><ul><li>Scope; </li></ul></ul><ul><ul><li>Acquisition of goods and services; </li></ul></ul><ul><ul><li>Value. </li></ul></ul>
  16. 16. Context <ul><li>70% of projects are: </li></ul><ul><ul><li>Over budget </li></ul></ul><ul><ul><li>Behind schedule </li></ul></ul><ul><li>52% of all projects finish at 189% of their initial budget </li></ul><ul><li>And some, after huge investments of time and money, are simply never comple </li></ul><ul><li>Source: The Standish Group </li></ul>
  17. 17. What is Earned Value? Earned Value is an approach for understanding and assessing what a project is achieving with budgeted money.
  18. 18. What Do You Need for EVA? 100 40 60 15 25 30 30 3. Allocate Budgets 1. Define the Work 2. Schedule the Work R PM Baseline Contract Budget Base Time
  19. 19. Managing Without EVA Example you budget 100 hours to assemble bridge Pillars and at the end of the period you have achieved the 100 hours Wow we are on budget ! R 0 R 100 hours @ R 300 100 hours @ R 300 Variance Actual Budget
  20. 20. Managing Without EVA Does this mean we have achieved 100 hours worth of work ? Actual cost is not an indication of progress, - Only an indicator of hours/money spent.
  21. 21. Important Terms <ul><li>BCWS - Budgeted Cost of Work Scheduled: </li></ul><ul><ul><li>Planned cost of the total amount of work scheduled to be performed by the milestone date; </li></ul></ul><ul><li>ACWP - Actual Cost of Work Performed: </li></ul><ul><ul><li>Cost incurred to accomplish the work t hat has been done to date; </li></ul></ul><ul><li>BCWP - Budgeted Cost of Work Performed: </li></ul><ul><ul><li>The planned (not actual) cost to complete the work that has been done . </li></ul></ul>
  22. 22. Example
  23. 23. Example <ul><li>SV - Schedule Variance: (BCWP-BCWS): </li></ul><ul><ul><li>A comparison of amount of work performed during a given period of time to what was scheduled to be performed. </li></ul></ul><ul><ul><li>A negative variance means the project is behind schedule </li></ul></ul>
  24. 24. Example
  25. 25. Example <ul><li>CV - Cost Variance: </li></ul><ul><li>(BCWP-ACWP) </li></ul><ul><ul><li>A comparison of the budgeted cost of work performed with actual cost. </li></ul></ul><ul><ul><li>A negative variance means the project is over budget. </li></ul></ul>
  26. 26. Example Schedule Variance = BCWP-BCWS: $49,000 - 55,000 SV = - $ 6,000 Cost Variance = BCWP-ACWP: $49,000 56,000 CV = - $7,000
  27. 27. Earned Value? <ul><li>BCWP - Budgeted Cost of Work Performed: </li></ul><ul><ul><li>The planned (not actual) cost to complete the work that has been done . </li></ul></ul>
  28. 28. In Simple Terms… Actual Cost (26) Budget Plan (21) Earned Value (16) Time Now Schedule variance
  29. 29. In Simple Terms… Actual Cost (26) Budget Plan (21) Earned Value (16) Time Now Cost Variance
  30. 30. In Simple Terms… Actual Cost (26) Budget Plan (21) Earned Value (16) Time Now Time variance
  31. 31. Important Metrics… <ul><li>SPI: Schedule Performance Index: SPI=BCWP/BCWS SPI<1 means project is behind schedule </li></ul><ul><li>CPI: Cost Performance Index: CPI= BCWP/ACWP CPI<1 means project is over budget </li></ul><ul><li>CSI: Cost Schedule Index ( CSI=CPI x SPI): </li></ul><ul><ul><li>The further CSI is from 1.0, the less likely project recovery becomes. </li></ul></ul>
  32. 32. Important Metrics… SPI: BCWP/BCWS: 49,000/55,000 = 0.891 CPI: BCWP/ACWP: 49,000/56000 = 0.875 CSI: SPI x CPI: .891 x .875 = 0.780
  33. 33. Making Projections… <ul><li>Once a project is 10% complete, the </li></ul><ul><li>overrun at completion will not be less </li></ul><ul><li>than the current overrun; </li></ul><ul><li>Once a project is 20% complete, </li></ul><ul><li>the CPI should not vary from its current </li></ul><ul><li>value by more </li></ul><ul><li>than 10%. </li></ul><ul><li>The CPI and SPI are statistically accurate indicators of final cost results. </li></ul><ul><li>Source: Defense Acquisition University </li></ul>
  34. 34. Summary… <ul><li>Know where you are in terms of the Schedule; </li></ul><ul><li>Know where you are in terms of the Budget; </li></ul><ul><li>Know where you are in terms of Work Accomplished. </li></ul>
  35. 35. Summary… <ul><li>Earned Value Analysis integrates all three: </li></ul><ul><li>It compares the planned work with what has actually been completed , to determine if cost, schedule and work accomplished are progressing as planned. </li></ul>

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