PM Session 7
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The document discusses project management control and earned value analysis. It explains that earned value analysis integrates schedule performance, cost performance, and work accomplished to determine if a project is progressing as planned. Key metrics like SPI, CPI, and CSI are used to calculate variances and assess the overall health and predicted outcomes of a project.
PM Session 7
- 1. Project Management Session 7 Project Management Control
- 2. Preamble
- 3. How do I manage the following: The overall health of the project; Scope; Acquisition of goods and services; Value.
- 4. Project planning: Milestones Schedule; Human resources; Budget; Responsibilities; Contingencies. Ownership: Stakeholder input; Conditions for satisfaction; Stakeholders feel their interest accommodated. Project Health
- 5. Expertise: Have expertise; Members understand their responsibilities; Adequate training for team members; Top level support: Project sponsor share responsibility; TOR agreed; Sponsor and management support when required; Communication. Resources: Available HR; Technology available; Task management effective. Project Health
- 6. Justifiable case: Project fully costed and budgeted; Also agreed with sponsor; ROI clear and acceptable; Metrics in place and methods to measure; Adequate funding; Specification: Objectives clear; Strategic and business alignment; Enthusiasm; Adequate documentation – reports; budget; spec’s; deviations; delegations. Project Health
- 7. How do I manage the following: The overall health of the project; Scope; Acquisition of goods and services; Value.
- 9. There are three basic causes for change in projects: 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; 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; Change in the environment in which the project is being conducted. Scope Management
- 10. Scope is defined at various levels: Project charter; Breakdown of deliverables, tasks etc (this is were the Work Breakdown Structure is important); The baseline plan and the budget also part of the scope. Underlying the issue of scope management is change control : Formal system of change control; Impact of changes should be motivated; Where it affects scope, client signoff should be sought and relevant documents updated. Scope management
- 11. Scope related dilemmas: Scope creep: Changes that are changing the base plan. Inevitable but the project manager needs to keep these changes “manageable” ; Hope creep: 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; Effort creep: Similar to hope creep. Activity that does not produce results; Feature creep: Adding features rather than sticking to the original agreement about deliverables. Scope management
- 12. How do I manage the following: The overall health of the project; Scope; Acquisition of goods and services; Value.
- 13. PMBOK “the processes required to acquire goods and services’; 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…. Procurement
- 14. Procurement
- 15. How do I manage the following: The overall health of the project; Scope; Acquisition of goods and services; Value.
- 16. Context 70% of projects are: Over budget Behind schedule 52% of all projects finish at 189% of their initial budget And some, after huge investments of time and money, are simply never comple Source: The Standish Group
- 17. What is Earned Value? Earned Value is an approach for understanding and assessing what a project is achieving with budgeted money.
- 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. 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. 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. Important Terms BCWS - Budgeted Cost of Work Scheduled: Planned cost of the total amount of work scheduled to be performed by the milestone date; ACWP - Actual Cost of Work Performed: Cost incurred to accomplish the work t hat has been done to date; BCWP - Budgeted Cost of Work Performed: The planned (not actual) cost to complete the work that has been done .
- 22. Example
- 23. Example SV - Schedule Variance: (BCWP-BCWS): A comparison of amount of work performed during a given period of time to what was scheduled to be performed. A negative variance means the project is behind schedule
- 24. Example
- 25. Example CV - Cost Variance: (BCWP-ACWP) A comparison of the budgeted cost of work performed with actual cost. A negative variance means the project is over budget.
- 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. Earned Value? BCWP - Budgeted Cost of Work Performed: The planned (not actual) cost to complete the work that has been done .
- 28. In Simple Terms… Actual Cost (26) Budget Plan (21) Earned Value (16) Time Now Schedule variance
- 29. In Simple Terms… Actual Cost (26) Budget Plan (21) Earned Value (16) Time Now Cost Variance
- 30. In Simple Terms… Actual Cost (26) Budget Plan (21) Earned Value (16) Time Now Time variance
- 31. Important Metrics… SPI: Schedule Performance Index: SPI=BCWP/BCWS SPI<1 means project is behind schedule CPI: Cost Performance Index: CPI= BCWP/ACWP CPI<1 means project is over budget CSI: Cost Schedule Index ( CSI=CPI x SPI): The further CSI is from 1.0, the less likely project recovery becomes.
- 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. Making Projections… Once a project is 10% complete, the overrun at completion will not be less than the current overrun; Once a project is 20% complete, the CPI should not vary from its current value by more than 10%. The CPI and SPI are statistically accurate indicators of final cost results. Source: Defense Acquisition University
- 34. Summary… Know where you are in terms of the Schedule; Know where you are in terms of the Budget; Know where you are in terms of Work Accomplished.
- 35. Summary… Earned Value Analysis integrates all three: It compares the planned work with what has actually been completed , to determine if cost, schedule and work accomplished are progressing as planned.