All projects start with the development of a project budgetBut, preparing a project budget is only half the effort.What differentiates project data from operations data is that projects have a start and end date.So, integrating cost and schedule data is a necessity in any project.It represents the project execution plan in monetary terms.Going through the process of time-phasing a project budget helps you determineThe feasibility of the project execution planIt helps you predict the chance of project successIt also helps you address resource funding requirements… when are funds required for the project.A time-phased budget also represents the Performance Measurement Baseline of the project against which we will measure cost and schedule performanceAnd therefore prevent surprises. So, the budgeting process is not complete unless we determine how and when we plan to execute the project work.
In our experience that are 2 typical methods used for developing a PMB or time phased budget.The first method involves cost loading schedule activitiesThe second method involves developing a Time Phased BudgetPRISM G2 provides features that will allow you to use either method.Let’s look at how each is handled by PRISM G2.
While the process of getting a cost loaded schedule into PRISM G2 is very efficient, there are issues that need to be addressed before the data is imported in PRISM.It’s difficult to develop a cost loaded schedule in P6 or MSP.There’s the problem with mixed granularity between the estimate and schedule data. E.g. the estimate data may be prepared at one level of detail that doesn’t easily correspond to the activities that are at another level of detail. The ideal situation is a matching of one estimate cost to one schedule activity, but this is rarely the cast.Also, it’s a very time-consuming process to setup a cost loaded schedule… on large project, it typically takes weeks to develop.It’s also a very time-consuming process to maintain a cost loaded schedule.How are indirect costs, e.gfrieght cost and taxes, etc… handled using a schedule?How are cost changes to either scope of forecast handled using a schedule?How do we manage contingency using a schedule?All these issues require “creative work-around” in order to use a tool designed to manage time, into a tool designed to manage costs.So, when you look at the overall setup costs involved in developing a cost loaded schedule, these setup costs far exceed the benefits derived from that effort.
So, regardless of which method you wish to use in developing a PMB, PRISM G2 can handle either method.But, in our experience, the advantages of using a Time-Phased Budget provide marked improvements over using a cost loaded schedule.These advantage include..
Acumen: Proven Project Analytics Passion and dedication to helping to improve the World Renowned practice of CPM scheduling Risk Assessment & analysis Workshops • 2o Year+ PPM legacy across multiple industries Oracle Accredited Training • Oracle, Deltek & Microsoft partner • Based in Austin, Texas Acumen Fuse • Global presence5/8/2012 3
Acumen DNA acumen s1 > s5 acumen DNA • Schedule Basis • Reflects latest scope/contractor updates Schedule is King… S1 • Critiqued Schedule Metrics: “Analytics leverage • Structurally sound, no contingency, S2 sound logic data in a particular functional process (or application) to enable • Risk-Adjusted Schedule • Estimate uncertainty, risk events context-specific insight that is S3 actionable” • Optimized Target Scenarios • Reduced hot spots, higher confidence S4 • Team Validated Scenario • Buy-in on mitigation plans S55/8/2012 4
CPM Building Blocks Project Defines start or finish of the job Encapsulates the defined work Scheduling tools are Activities Defines duration for a given scope of an excellent means work of modeling these Logic Links Defines sequence of work moving parts. Calendars Defines when an activity/resource can work But… Constraints Defines date overrides They do little for Resources Defines who/what is available to making sure the execute work building blocks are Resource Links the “executors” to their work Assignment used correctly….5/8/2012 13
Sound Logic • Use of FS, FF, SF, SS links • SS links don’t account for durations • Lags hide schedule detail • Leads cause reverse dates redundant • Circular logic between projects A • Out of sequence updates • Open start/finish: hidden open ends B • Logic Density™ • Logic Hotspot™ C • Redundancy Index™ New: Driving Logic analysis5/8/2012 14
Float Analysis • Average Float • Maximum Float • Float ratio (# of days float per day of work) • Float Map™5/8/2012 15
Scorecarding 1 6 • Metrics are useful but don’t give overall picture • Scorecarding: group individual metrics into single score • Schedule Quality Index™ • Scores can be either: – Activity based: number of activities that fail a test (less detailed, higher scores) – Metric based: number of metrics that fail a test (more detailed, lower scores) • Weight importance of metrics May 8,5/8/2012 16
Value of Time-phased Budget • A time-phased representation of the project execution plan to determine: ‒ The feasibility of the plan ‒ The ability to predict project success ‒ Address resource funding requirements • A time-phased budget represents a Performance Measurement Baseline (PMB) • A tool to measure cost and schedule performance against the plan …. and prevent surprises! 8 May 2012 25/8/2012 21
Performance Measurement Baseline • Two typical methods used in developing a PMB 1. Cost loading schedule activities 2. Developing a “Time-phased Budget” 8 May 2012 25/8/2012 22
Cost / Schedule Integration Method 1 – Cost Loading a Schedule 8 May 2012 25/8/2012 23
Issues with Cost Loading a Schedule • Difficult to match up based on granularity of estimate vs. schedule • It is a very time-consuming process to setup ‒ Project must start with a schedule before budget can be established • It is a very time-consuming process to maintain • Difficult to manage intangibles – such as indirect costs • Difficult to manage cost changes • Difficult to manage contingency The costs exceed the benefits 8 May 2012 25/8/2012 24
Cost / Schedule Integration Method 2 – Developing a “Time Phased Budget” 8 May 2012 25/8/2012 25
Time-phased Budgets Advantages Improvements Over Cost Loaded Schedules Removes estimate/schedule granularity issues Quick and efficient setup Much easier to maintain Manage performance on Approved and Control Budgets Efficient use of distribution curves for spreading costs Addresses issue on how indirect costs are spread Addresses issue on spreading of contingency Easier to manage changes in scope and forecast Efficient and Effective PMB Development 8 May 2012 25/8/2012 26
Metrics for Execution Baseline Compliance™ • Traditional measures include: – Earned value: heavy time investment to implement – Earned schedule: similar to EV – Percent complete: what does this really tell us? – Ahead/behind baseline: too granular a scale… • Baseline Compliance™ – Used to determine how close a schedule is planned and executed against it’s baseline – Measure of well the plan is being executed – More than just date comparison – Looks at period-compliance5/8/2012 31
Compliance Scenarios Feb March April BaselineExcellent Scenario 1: Started Early, Finished Early Scenario 2: Started Early, Finished On-Time Scenario 3: Started On- Time, Finished On-Time Scenario 4: Started On- Time, Finished Late Poor Scenario 5: Started Late, Finished Late5/8/2012 32
Compliance Metrics Group Metric Jan-11 Feb-11 Mar-11 Apr-11 May-11 TOTAL Baseline Scheduled/Baselined to Start 4 1 4 0 1 10 Scheduled/Baselined to Finish 2 1 4 0 3 10 Updated Start/ed 2 4 1 2 1 10 Schedule Finish/ed 1 3 1 3 2 10 Statistics Start/ed on Time 2 0 0 0 1 3 Start/ed Early 0 0 2 0 0 2 Start/ed Late 2 1 2 0 0 5 Finish/ed on Time 1 1 1 0 2 5 Finish/ed Early 0 0 1 0 1 2 Finish/ed Late 1 0 2 0 0 3 Start/ed on Time, Finish/ed Late 0 0 1 0 0 0 Compliance Start Variance 2 1 4 0 0 7 Cum Start Variance 2 3 7 7 7 Start Compliance 50% 0% 0% N/A 100% 30% Finish Variance 1 0 3 0 1 5 Cum Finish Variance 1 1 4 4 5 Finish Compliance 50% 100% 25% N/A 67% 50%5/8/2012 33