Preparation on managing iaj initiatives

Preparation on Managing IAJ
Initiatives
A perspective on Project, Program and Portfolio
Management
Mohammad Ichsan, Dipl.-Ing., M.T., DR (Cand)

Harapan yang tidak pernah pudar
… Memberikan kontribusi positif dan NYATA bagi
bangsa dan negara Indonesia tercinta melalui
pemikiran dan tindakan bersama dari para alumni
Jerman …

Workshop overview
• Provides a view of managing multiple (individual)
projects from perspective of organization
• Alignment between strategic objectives and
projects
• Balancing organization capabilities in delivering
projects (selection, re-prioritization, postpone,
termination and re-configuration)
• Gaining more values in managing program
• Effectively managing project initiatives

The challenges - Making strategy
work*)
“... The problem with poor performance typically is
not with planning (making the strategic plan) but
with doing (implementing the strategy). Making
strategy work is more difficult than strategy making.
Sound plans flounder or die because of lack of
execution know-how.
*) Taken from a book with the title
“Making Strategy Work” authored by
Lawrence G. Hrebiniak, an Emeritus
Professor in Strategic Management in
Wharton School of organization,
University of Pennsylvania

PROGRAM AND
PROJECT PORTFOLIO
MANAGEMENT

Organizational Context of Project
Portfolio Management
Vision
Mission
Organizational Strategy and Objectives
Portfolio Management Strategic Planning and
Management of Projects, Programs and
Operations
Management of On-Going
Operations (Recurring activities)
Producing Value
Management of Authorized
Programs and Projects
(projectized activities) Increasing
Value Production Capabilitiy
Project Management Institute (2013), Standard For Portfolio Management, 3rd Edition, Newton Square, p.8
Do the right
‘things’
Do the
‘things’ right

Re-alignment strategy
Portfolio Management Strategic Planning and
Management of Projects, Programs and
Operations
Management of On-Going
Operations (Recurring activities)
Producing Value
Management of Authorized
Programs and Projects
(projectized activities) Increasing
Value Production Capabilitiy
Vision
Mission
Organizational Strategy and Objectives
 Re-prioritization
 Balancing risk and rewards
 Cancel and reconfigure
Re-alignment

Simplified Strategy
Implementation Model
organization
uncertainties
Strategic
Orientation
Strategy Initiative
Implementation
Project
Performance
Organization
Performance
Project Portfolio Management (PPM) CapabilitiesPMO *)
*) Some of organizations are supported
by PMO in building and applying the
Project Portfolio Management
Capabilities
Balance Score Card
 Finance
 Customer
 People
 Process

Project Portfolio Management –
Definition and its interaction
Definition : A portfolio
refers to projects,
programs, sub-
portfolios, and
operations managed as
a group to achieve
strategic objectives

Tension in Portfolio Management
(Boppel, 2013)

Structure of Project/Program/Portfolio
Management in the organization1
Organization Strategy
Portfolio Planning
Program Management
Project Management
Operations
Strategic implementation
Benefits
Deliverables
Resources
1) Levin, G. 2013. Program Management, A
Life Cycle Approach, Taylor & Francis Group
StrategicfunctionTacticalfunction
Management
of single
project
Management
of multiple
projects
(program)
MacrolevelMicrolevel

How most alignment works
• Your capabilities in managing your single projects (micro level)
• Covers mostly project’s scope, time, cost and resources
• Project monitoring and controlling (tracking and forecasting)
• Project reporting
• Your capabilities in managing your multiple projects (macro level)
Project portfolio management
• Demand management
• Enterprise Resource Management
• Reporting

Project : delivering the (specific) output
Program : delivering the (specific) outcome/benefit (organization
strategy goal)
Portfolio : selection of key strategic project/program that support
organization strategy goal
Boost revenue
New product New Campaign
Optimizing
Distribution
Channel
Project 3Project 1
Program A
Project 2
How do project portfolio, program and projects works

1. Selecting the right project
 Project justification
 Explaining why we have to do those projects (what is the
rationale behind this project)
 How the project can support the organization objective
 Identifying what are
 Project outputs
 Project outcomes
 Project selection is normally based on a certain
organization drivers such
 Increasing revenue (Will the project result increase the
revenue)
 Increasing market share (Will the project result increase the
market share)
 Strategic reason (e.g Rebranding, Improvement Corporate
Image)

Tools & Technique –
Prioritization*)
Project Management Institute (2013) Standard for Portfolio Management 3rd Edition, p. 68

Prioritization*)
Typical categories
 Increased profitability
 Risk reduction
 Efficiency improvement
 Regulatory/compliance
 Market share increase
 Process improvement
 Continuous improvement
 Foundational (investment
that build infrastructure to
grow)
 Business imperatives (eg.
Internal toolkit, IT
compatibility)

Prioritization*)

The optimal number of projects and their combined strategic value, based on the Strategic Impact Matrix and
cost constraint, is illustrated by the Efficient Frontier. In this example, achieving 100% strategic value — that is,
undertaking all proposed projects — would violate the cost constraint by $70,000.
Project managers can create their own cost constraints by which to
determine the portfolio mix. In this case, projects are moved in and
out of the portfolio as project managers change budget values.
Projects are prioritized based
on results from the Strategic
Impact Matrix.
Prioritization Using PM Software-MSP
Online 2016

Critical factors in management –
Domain based - People
People
Process
Tools
 Roles and
responsibility in
project portfolio
management
 Knowledge and skills
(qualification)
 Organization
capabilities (ability of
the organization to
perform the PPM)

Roles and responsibility to apply
PPM
Project Management Institute (2013) A Guide to Project Management Body of Knowledge, 5th Edition, p. 31

Knowledge and skills
• Knowing the gap between what the organization
need for PPM and what they have
• People and organization development through
continuous learning (training, mentoring, coaching,
consulting, etc.)
• Establishing knowledge center for the respected
individual to learn (e.g standard books, knowledge
management portal, etc)
• Further qualification : Global certification such
PMP, PfMP and PgMP from Project Management
Institute (www.pmi.org)

Domain based - People
People
Process
Tools
 Governance to control the application of PPM
 Process to connect execution of an organization’s projects to the fulfillment of its
strategies (selection, prioritization, balancing risk and opportunity,
reconfiguration etc.)
 Process to ensure the involvement of all layer of stakeholders, so that they
understand how effective portfolio management can impact (ideally, in a positive
way) their function

PPM - Governance control
• Have to be strictly applied. Avoiding the
‘incremental’ ad-hoc projects
• Objective performance measurement in driving
• Re-prioritization project
• Balancing risk and reward
• Postpone and cancel
• Reconfiguration
• Timely decision based on objective measurement

2. Project Re-prioritization
 organization uncertainties drive the dynamics of
the organization environment
 Changing organization environment will lead to re-
formulating the strategy and change the strategic
objective
 Changing the strategy and strategic objective will
lead to change the priority of the to-be selected
project or selected (in-flight) project
 All changes have to be communicated clearly and
timely

Example of Re-Prioritization
Priority Project
1 Project A
2 Project B
3 Project C
4 Project D
Priority Project
1 Project A
2 Project D
3 Project F
4 Project E
Selected Project Selected Project
Re-prioritized
Non-selected Project
Priority Project
1 Project E
2 Project F
Non-selected Project
Priority Project
1 Project C
2 Project B

Prioritization Using PM Software-MSP
Online 2016
The optimal number of projects and their combined strategic value, based on the Strategic Impact Matrix and
cost constraint, is illustrated by the Efficient Frontier. In this example, achieving 100% strategic value — that is,
undertaking all proposed projects — would violate the cost constraint by $70,000.
Project managers can create their own cost constraints by which to
determine the portfolio mix. In this case, projects are moved in and
out of the portfolio as project managers change budget values.
Projects are prioritized based
on results from the Strategic
Impact Matrix.

3. Balancing Risk and Rewards
 Works like re-prioritization with reference of risk
and rewards (applied in selection and
implementation phase)
 Projects deal with uncertainties, hence they are
related with risk/opportunity (reward)
 Risk and reward may change
 The projects are managed using reference of risk
and rewards
 Sometimes we need to speed up (re-prioritized)
more rewarding projects, but sometimes with to
slow down (even postpone) the risky projects

4. Cancel and reconfiguring in-
flight projects
 Applied only for projects in implementation
 The organization environment is so dynamic that
may change quickly
 New product development is a target for this
condition
 Sometimes we need to chase up the time to market
(Speed Up the project)
 Sometimes we need to have better product from our
competitor which launch their product earlier than us
(reconfigure the project/product)
 Sometimes we need to cancel the project to avoid
incremental risk impact of the project

Simplified process – Project Portfolio
Management
Initiative 1
Initiative 2
Initiative 3
Initiative n
Selectionprocess
Initiative 1
Initiative 3
Ad-hoc
initiative
Initiative 1
Ad-hoc
initiative
Project/Program
implementation
Initiative 3
Program A
Initiative 1
Ad-hoc
initiative
Project
Output
Benefitrealization
Project
Outcome
Feedback
Feedback
Feedback
Feedback
Feedback
UncertaintiesUncertainties

Propose matrix – Business Impact and
Implementation Effort (as an example)
BusinessImpact
BigMediumSmall
BigMediumSmall
Implementation effort
Project A
Project B
Project D
Project E
Project F
Note:
 The diameter size indicates
the project budget
 The priority is given based on
the matrix
Priority 1 Priority 2
Priority 4
Priority 8
Priority 9

Things to be taken into
consideration
 Strong governance in project selection
 Project selection shall go through project selection
steering committee
 Project selection committee may have veto right to
select/de-select the projects (but please avoid such veto
right if possible)
 Ad-hoc is possible but in very limited pre-defined
condition
 Allocate effort to the selected projects and ad-hoc
projects, for example:
 80% for formal selected projects
 20% for ad-hoc selected projects

Balancing risk and reward
 To maintain the balance between the effort and the
fulfilling the business strategic objectives, you may
need to :
 (Re) Allocating the resources to your projects
 (Re) Prioritizing the resources
 Postpone/Cancel/Reconfigure your projects
 Notes: without a proper PM tools (software) you
will be having difficulties in quantifying the (re-
allocated) risk and reward of the projects

Measuring Project Performance
 Suggested techniques : Earned Value Management
 Variance analysis : Schedule Variance (SV) or Cost
Variance (CV)
 Forecasting technique :
 Budget at Completion (BAC)
 Estimate at Completion (EAC)
 Estimate to Complete (ETC)
 Note : Without a proper Project Management Tools
(Software), it is difficult to measure the project
performance

Assessing the project
output/outcome
• Check how you define the project success
• Typically the success criteria of project are
distinguished as follows
• Project Management Success : Fulfillment of 3 (triple)
constraints – on scope, on budget and on schedule
• Project success : Fulfillment of the project objectives
• Software development : The software can be used by the
customer as per their requirement
• Construction of a house : The house is built based on the
specification

Example of Benefit Realization
 A new help desk system.
 Output : The new help desk system in place (on time/on
budget/on scope)
 Outcome: The result of the change derived from using
the outputs. Example: First line support can answer
more of the requests without escalation.
 Benefit: The measurable improvement resulting from an
outcome – Incremental customer, due to improvement
of customer care handling system

Domain based - Tools
People
Process
Tools
 Availability of PM
Tools & Technique
(e.g)Software)
 Calculate
 Report
 Communicate
 Advise

Domain based - Process
People
Process
Tools
 Governance to control the application of PPM
 Process to connect execution of an organization’s projects to the fulfillment of its
strategies (selection, prioritization, balancing risk and opportunity,
reconfiguration etc.)
 Process to ensure the involvement of all layer of stakeholders, so that they
understand how effective portfolio management can impact (ideally, in a positive
way) their function

How we do that
• Considering the
relative strategic
benefit in
portfolio level,
averaged project
performance
can be used.
• Using weighting
criteria for
example
• CPI has
weighting of
80%
• SPI has
weighting of
20%
Note : CI = Consolidated Index
Using
AHP Normalized
score

Sample of project portfolio
dashboard (Bible, 2012)

Project Performance Rating Scale Model –
Expert Choice Periscope Software (Bible,
2012)

Periodic Measurement of Portfolio
Performance (Bible, 2012)

Key highlight
• The project portfolio performance monitoring can be
done using a consolidated project performance
monitoring system
• Consolidated data entry through automated process is
highly advised
• Earned Value Management can be used as quantitative
analysis and calculation (any other ‘agreed’ indicators
can be added if required)
• Setting up consensus of putting performance
‘threshold’ of project and portfolio performance
• There are PM tools software available in the market
that can be used for monitoring purpose

Definition and characteristics of project
Temporary endeavor undertaken to create a unique product,
service or result (PMI, 2013)
A project:
• Has a unique purpose
• Is temporary
• Is developed using progressive elaboration
• Requires resources, often from various areas
• Should have a primary customer or sponsor
• The project sponsor usually provides the direction and funding for
the project
• Involves uncertainty

Comparison : Project vs. Operation
Projects Operations
▪ Temporary
▪ Unique
▪ Embrace progressive elaboration
▪ Ongoing
▪ Repetitive

Definition of Project Management
▪ The application of
▪ Knowledge (The theoretical or practical understanding of a subject)
▪ Skills (The ability to do something well; expertise)
▪ Tools (A device or implement, especially one held in the hand, used to
carry out a particular function)
▪ Techniques (A way of carrying out a particular task, especially the
execution or performance of an artistic work or a scientific
procedure)
to project activities to meet the project requirement

 Definition – Series of phases that a project passes through from initiation to its
closure.
 It is generally sequential.
Project Lifecycle
*) Typical Cost and Staffing Levels Across a Generic Project Life Cycle Structure,
PMBoK 6th Edition, p. 30
 The earlier the phase, the bigger the risk
and uncertainties
 The earlier the phase, the smaller the cost
of change

Project Life Cycle
Predictive Life Cycle : (Full Plan Driven)
Termination
Concept and
Proposal
Development
Implementation
Verification
52
Final PhaseIntermediate PhasesInitial Phase
In System Development Life Cycle (SDLC),
it is called Waterfall

Iterative & Incremental Life Cycle
53
Construct Design
IdentifyEvaluate
Test
Evaluatio
n
Evaluatio
n
Risk
Analysis Business
Requirement
s
System
Requirement
s
Subsystem
Requirement
s
Unit
Requirements
Conceptual
Design
Logical
Design
Physical
Design
Final
Design
Proof of
Concept
First
Build
Second
Build
Final
Build
Deploy Operations and
Production
Support

• A group of methodologies
• Based on Iterative/Incremental
• Break up tasks
small timeboxes (1-4 weeks)
• Each iteration: Full devel cycle: Planning,
Requirements, Design, Coding, Testing
• Customer Representative: Appointed by
stakeholders. Answers Questions
• Adaptive, not Plan-driven
54
Agile Life Cycle

Project constraints
• Constraints : A limitation or restriction
Project
Scope
Time
Cost
Quality
Risk
Resource
Balancing competing
demands
Point of discussion:
1. What happen if one
of the constraints
shifted?
2. Can you give an
example to it?

Project Management Process Groups
Source : Project Management Institute.(2012). A guide to the project management body of
knowledge (PMBOK guide) 5th Edition, p.54
Project Manager’s Area of Responsibility
Initiating
Planning
Executing
Monitoring and
controlling
Closing
Note:
Project process groups are not project
life cycle
These five process groups have clear dependencies and are typically
performed in each project in highly interact with one another

Definition: The process groups
Processes that performed to define a new project or new phase of an existing project by
obtaining authorization to start the project of phaseInitiating
Planning
Executing
Monitoring and
controlling
Closing
Processes required to establish the scope of the project, refine the objectives and define the
course of action required to attain the objectives that the project was undertaken to achieve
Processes performed to complete the work define in the project management plan to
satisfy the project specification
Processes required to track, review and regulate the progress and performance of the
project; identify any areas in which changes to the plan are required and initate the
corresponding changes
Processes performed to conclude all activities across all Project Management Process
Groups to formally complete the project, phase or contractual obligation

Project knowledge areas
Project Integration Management
Project Scope Management
Project Time Management
Project Cost Management
Project Quality Management
Core knowledge areas
Project HR Management
Project Comm. Management
Project Risk Management
Project Procurement Management
Project Stakeholder Management
Facilitated knowledge areas

 Definition : the document issued by the project initiator or
sponsor that formally authorizes the existence of a project and
provides the project manager with the authority to apply
organizational resources to project activities
 Contains of
 Project purpose (why the project is initiated)
 Measurable project objective (e.g to build 100 houses in 1 year)
 Measurable project success (e.g. within scope, time, cost and quality)
 High level requirement
 Assumption and constraints
 High level project description
 Initial project stakeholder list
Project Charter

Project Governance
60
Project Success:
 Must be measured in terms of completing the project with in constraints scope,
time, cost, quality, resources and risks (It is better to use SMART way : Specific,
Measurable, Achievable, Realistic, Time Related)
 Benefit realization for the project undertaken (Outcome of the project shall also
be measured)
 Success should be referred to the last baseline approved
 Project Manager responsible & accountable for setting realistic & achievable
boundaries for the project and to accomplish the project within the approved
baseline.

Simplified planning process
Create
project
charter
Scope
definition
Requirement
WBS
Develop
Schedule
Project Risk
Risk Analysis
Risk Response
Project HR
Staffing plan
Stakeholde
r analysis
Communic
ationplan
Schedule
Project
Quality
Acceptance
criteria
Specification
Project
procureme
nt
Project
Plan
Project
Cost
Project
Charter
Scope baseline
Schedule
Cost baseline
Project objective
Our goal is to create project plan
Done in MS Project
Done in MS Project
Done in MS Project
Done in MS Project
Done in MS
Project
1
2
3
4

Collect requirement
Input
1. Scope management
plan
2. Requirement
management plan
3. Stakeholder
management plan
4. Project charter
5. Stakeholder register
Tools & Techniques
1. Interviews
2. Focus groups
3. Facilitated
workshop
4. Group creativity
techniques
5. Group decision-
making techniques
6. Questionnaires and
surveys
7. Observations
8. Prototypes
9. Benchmarking
10. Context diagrams
11. Document analysis
Output
1. Requirement
documentation
2. Requirement
traceability matrix
• Definition : determining, documenting, managing stakeholder needs
and requirements to meet project objectives.

Group Creativity Techniques
• Brainstorming
• Nominal group technique – a technique that enhances
brainstorming with a voting process used to rank the most
useful ideas for further brainstorming or for prioritization
• Idea/mind mapping
• Affinity diagram
• Multi-criteria decision analysis – a technique that utilizes a
decision matrix to provide a systematic analytical approach for
establishing criteria, such as risk levels, uncertainty and
valuation to evaluate and rank many ideas

Create WBS
• The process of subdividing project deliverables and project work into
smaller, more manageable components
Input
1. Project management
plan
2. Project scope
statement
3. Requirement
documentation
4. Enterprise
environmental factors
5. Organization process
assets
Tools & Techniques
1. Decomposition
2. Expert judgment
Output
1. Scope baseline
2. Project
documents
updates

Define scope
• Process of developing a detailed description of the project and
product.
Input
1. Scope management
plan
2. Project charter
3. Requirement
documentation
4. Organizational
process assets
Tools & Techniques
1. Expert judgement
2. Product analysis
3. Alternatives
generation
4. Facilitated
workshops
Output
1. Project scope
statement
2. Project documents
updates
Contains of Scope Statement
▪ Product scope description
▪ Acceptance criteria
▪ Deliverable
▪ Project exclusion
▪ Constraints
▪ Assumption

Some explanations
• Decomposition : a technique used for dividing and
subdividing the project scope and project deliverables
into smaller, more manageable parts
• Work package : the work defined at the lowest level of
the WBS for which cost and duration can be estimated
and managed

Sample WBS (1 of 3)
Level 1
Level 2
Level 3
Level 4
Work package
Definition of Work Package :
The lowest level of WBS that
contains activities
Notes:
The more you decompose
the WBS, the more detail
the deliverables but the
more effort for you to
control your project

Sample WBS (2 of 3)
Level 1
Level 2
Level 3
Work package
Definition of Work Package :
The lowest level of WBS that
contains activities

Sample WBS (3 of 3)
Level 1
Level 2
Level 3
Work packageLevel 3
Definition of Work
Package :
The lowest level of
WBS that contains
activities

Creation of WBS in MS Project 2016 (1 of 2)
In order to show the WBS level, you to insert
the new column ‘WBS’, by right click one of
the column and choose the ‘WBS’)

The digits indicate the
level of WBS
Creation of WBS in MS Project 2016 (2 of 2)

Define Activities
• The process of identifying and documenting the specific actions to
be performed to produce the project deliverables.
Input
1. Schedule
management plan
2. Scope baseline
3. Enterprise
environmental
factors
4. Organizational
process assets
Tools & Techniques
1. Decomposition
2. Rolling wave
planning
3. Expert judgment
Output
1. Activity list
2. Activity
attributes
3. Milestone list

Sequence activities
▪ The process of identifying and documenting relationship among the
project activities.
Input
1. Schedule
management plan
2. Activity list
3. Activity attributes
4. Milestone list
5. Project scope
statement
6. Enterprise
environmental
factors
7. Organizational
process assets
Tools & Techniques
1. Precedence
diagramming
method (PDM) –
Activity on
Nodes
2. Dependency
determination
3. Leads and lags
Output
1. Project schedule
network diagram
updates

Precedence Diagramming Method (PDM)
A B
A
B
A
B
Finish to Start (FS)
Start to Start
(SS)
Finish to Finish
(FF)
A B
Start to Finish (SF)
Relationship between activities

Dependency determination
▪ Mandatory (Hard logic) – inherent to the work or
required by the contract
▪ Discretionary (Preferred, Preferential or Soft logic) –
The PM’s preferred way of doing things but not set and
can be changed if necessary.
▪ Internal/External dependency – based on needs of
in/ex-project party e.g supplier has a 4 week lead time
on hardware, or lead time in internal approval process

Leads and lags
Why we need leads and
lags?
• Duration optimization
• Cost optimization
• Resource optimization
2 Days
2 Days
2 Days
2 Days
Total duration?
Total duration?
1 day

Project Schedule Network Diagram
A
Start H
B
D
C
F
E
G Finish
5
7 6
6
4
8
3 7

Activity Resource Estimates
▪ The process of estimating type and quantities of material, human
resources, equipment or supplies required to perform each activities
Input
1. Schedule management plan
2. Activity list
4. Resource calendars
5. Risk Register
6. Activity cost estimates
7. Enterprise environmental factors
8. Organizational process assets
Tools & Techniques
1. Expert judgment
2. Alternative analysis
3. Published estimating
data
4. Bottom-up estimating
software
Output
1. Activity resource
requirements
2. Resource breakdown
structure
updates

Activity Duration Estimates
▪ The process of estimating the number of work periods needed to
complete individual activities with estimated resources
Input
1. Schedule management plan
2. Activity list
4. Activity resource requirement
5. Resource calendars
6. Project scope statement
7. Risk Register
8. Resource breakdown structure
9. Enterprise environmental factors
10. Organizational process assets
Tools & Techniques
1. Expert judgment
2. Analogous estimating
3. Parametric estimating
4. Three-point
estimating
5. Group decision
making techniques
6. Reserve analysis
Output
1. Activity duration
estimate
updates

Estimate activity resources and estimate
activity duration
• These 2 (two) aspects affecting each others.
• What matters actually the effort (mandays/manhour/manmonth) that is
required to do the activities
Efforts 6 mandays
Number of resources
(in person)
Duration (in days)
6 1
3 2
2 3
1 6
Notes:
• Decreased number of resources will increase duration to perform the
activities (with the same effort to perform the activity)
• As the project constraint is mostly in time (duration), it is advised that the
duration is first to be estimated, then the resources
Example

Schedule optimization
• Fast tracking:
• Making 2 (two) activities in parallel, which previously not
3 Days
2 Days
Total duration?
3 Days
Total duration?FS
2 Days
SS
Float (1 day)
• Crashing:
• Shorten the duration by adding more resources. Fix effort ( Activity A requires
16 mandays)
16 days 1 resource
8 days 2 resources

Some common estimation techniques
• Analogous Estimating
• Parametric Estimating
• Three Point Estimates
• Originating comes from PERT (Program Evaluation Review
Technique)
• Comprises of
• Pessimistic duration
• Most likely duration
• Optimistic duration
• Tringular distribution tE = (tO + tM + tP)/3
• Beta distribution tE = (tO + 4*tM + tP)/6

Schedule Development
Notes:
By going through the process in Project Time Management, you are developing your
schedule.
Gantt Chart

Estimate cost
▪ The process of developing an approximation of the monetary
resources needed to complete project activities.
Input
1. Cost management plan
2. Human resource
management plan
3. Scope baseline
4. Project schedule
5. Risk register
6. Enterprise environmental
factors
7. Organizational process
assets
Tools & Techniques
1. Expert judgment
2. Analogous estimating
3. Parametric estimating
4. Bottom-up estimating
5. Three-point estimating
6. Reserve analysis
7. Cost of quality
software
9. Vendor bid analysis
10. Group decision-making
techniques
Output
1. Activity cost
estimates
2. Basis of estimates
updates

Sample of Cost Aggregation (Bottom Up)
Project X
Deliverables
2
Deliverables
1
Deliverables
3
Deliverables
4
Level 1
Level 2
Work
Package 1
Work
Package 2
Work
Package 3
Level 3
$ 150
$ 200
$ 250
$ 600
Cost Aggregation :
Summarizing your cost from bottom to top

Determine budget
▪ The process of aggregating the estimated cost of individual activities
or work packages to establish an authorized cost baseline.
Input
1. Cost management plan
2. Scope baseline
3. Activity cost estimates
4. Basis of estimates
5. Project schedule
6. Resource calendar
7. Enterprise environmental
factors
8. Organizational process
assets
Tools & Techniques
1. Cost aggregation
2. Reserve analysis
3. Expert judgment
4. Historical relationship
5. Funding limit
reconciliation
Output
1. Cost baseline
2. Project funding
requirements
3. Project document
updates

Outputs
1. Cost Baseline
The Cost Baseline is a time-phased budget at completion (BAC) that is used as a basis
against which to measure, monitor, and control overall cost performance on the
project
2. Project Funding Requirements
Funding requirements, total and periodic, are taken from the cost baseline and include
anticipated liabilities. Funding (or income generated by progress payments) occurs
incrementally, not continuously.

Controlling – What needs to be controlled
• Project scope management
• Validate scope and control scope
• Project time management
• Control schedule
• Project cost management
• Control cost

Project Tracking
• Once the project is baselined, it will be the basis for you
and your project team to be executed
• You can monitor your project by tracking the activities
• There are components to be shown in MS Project in
order to track your project:
• Plan Date (Start and Finish Date)
• Baseline Date (Baseline Start Date and Baseline Finish Date)
• Actual Date (Actual Start Date and Actual Finish Date)
Notes:
1. Start and Finish Date in MS Project is actually your dynamic
(forecast date)
2. Baseline Date is actually your plan date
3. Actual Date is used to stamp the date in which the activities
are performed (start and finish)

Project Tracking in MS Project
Notes:
In tracking your project, you only put the actual date (Start and
Finish Date), the rest Microsoft Project will calculate
automatically (including the % complete)

What is EVPM?
 EV measures progress to date and EVPM takes the next step to
forecast the end date and final costs,
 The focus of EVPM is to compare:
 How much work was planned to be completed,
 How much work has been completed,
 How much was the actual cost of the work performed,
Common tools and technique –
Earned Value Performance Measurement

What is EVPM ? Cont’d
 These parameters are then used to calculate:
 How far ahead or behind time the project is and
 How far above or below budget the project costs are,
 More importantly it may be used to provide metrics to evaluate:
 How far ahead or behind time the project will be at completion and
 How much more or less than budget the project will cost.

Basic Definitions
 Budgeted at Completion (BAC) is the Budget less Management Reserve and is
used for Earned Value calculations.
 Performance Measurement Baseline (PMB) is a time phased BAC.
 Planned Value (PV), or Budgeted Cost of Work Scheduled (BCWS) is the value of
planned work at a point in time derived from the PMB.
 Earned Value (EV), or Budgeted Cost of Work Performed (BCWP) is the value of
work completed at a point in time.
 Actual Costs (AC), or Actual Cost of Work Performed (ACWP) is the expenditure
at a point in time.
 Estimate to Complete (ETC), a revised estimate of the remaining work.

Project Performance Indicators
 Estimate at Completion (EAC) = AC +ETC.
 Variance at Completion (VAC) = BAC − EAC.
 Schedule Variance (SV) = EV – PV, or BCWP – BCWS
+ ahead of plan & - behind plan.
 Cost Variance (CV) = EV – AC, or BCWP – ACWP
+ below costs & - above cost
 Cost Performance Index (CPI) EV /AC. 1 indicates on plan, <1 indicates over spending and >1 indicates under
spending.
 Schedule Performance Index (SPI) EV/PV. 1 indicates to plan, <1 indicates behind plan and >1 ahead of plan.
 NOTE: CPI & SPI allows projects of different values to be compared.

Earned Value – Example
Exercise
1. Please calculate the Cost Variance and Schedule Variance
2. Please analyze the performance of your project

Project Reporting – Planned Value (BCWS)
Notes:
The terminology of Earned Value, the plan cost is Planned Value
(PV), however MS Project still use the old terminolory as
Budgeted Cost Work Schedule (BCWS)
The line graph in
accumulated view is
often called S-Curve

Earned Value Reporting in Simulated Delay
Scenario
Status line

Earned Value Reporting in Simulated Delay
Scenario
SV negative – Project is delayed
because as of now the project
has not been completed
SPI below 1 – Project is delayed
because as of now the project
has not been completed
CV positive – Project cost has not
moved since the delay is
recovered
CPI above 1 – Project cost has not
moved since the delay is
recovered

Preparation on managing iaj initiatives

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