Stage 3: Execution and Control

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Stage 3 Execution and Control

• Earned Value Analysis
• MS Project and EVA
• More on Goldratt

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This is the third stage

• Of the.
• What were the first two stages?

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What were the deliverables of the first stage?

• Project manager selected
• Requirements document
• Project charter
• Project team selected
• Signature signoffs by the stakeholders

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What were the deliverables of the second stage?

• Project plan
• Project budget
• The whole point of the plan and budget is to
  GUIDE EXECUTION
• Signature signoffs by the stakeholders attached
  to the project plan and budget

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Now what happens? THIRD STAGE BEGINS!!

• Project ramps up (begins)
• Project executes in conformance to plan and
  budget
• Execution is tracked relative to plan

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Goldratts rules regarding execution

• The project manager must stay focused
• On what?
• What about safety?
• How does Goldratt maintain a static critical
  path?
• Communicate and Inform

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Freeze Requirements???

• What are the PROS?
• What are the CONS?

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Freeze those requirements!!

• Late-project creeping requirements are the most
  common source of cost and schedule overruns
• Late-project creeping requirements are a major
  factor in project cancellations

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Rather than freezing, use some kind of change
control system

• Allows for some changes to happen, depending upon
  contractual considerations
• Allows for the system to reject some proposed
  changes
• Use of a CCB is considered a modern BEST PRACTICE

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Forces pushing for late-project requirements
change

• Competition intros new version of competitive
  product with unanticipated KILLER features
• New work is undiscovered late in the project
• A Wouldnt It be Great if scenario happens
• End-users want changes because they now know more
  about their requirements than they did 18 months
  ago
• Developers want changes because they have a great
  emotional and intellectual investment in all of
  the systems details

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Knowledge Areas and Processes used in Stage III

• Integration management
• Project plan execution integrated change control
• Scope management
• Scope change control
• Time management
• Schedule control
• Cost management
• Cost control
• Quality management
• Quality control

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Processes utilized in Stage III, Continued

• Communication management
• Information distribution, Performance reporting
• Risk management
• Risk monitoring and control
• Procurement management
• Contract administration

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Controlling Changes to the Project Schedule

• Perform reality checks on schedules
• Allow for contingencies
• Dont plan for everyone to work at 100 capacity
  all the time
• Hold progress meetings with stakeholders and be
  clear and honest in communicating schedule issues

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Cost Control

• Project cost control includes
• monitoring cost performance
• ensuring that only appropriate project changes
  are included in a revised cost baseline
• informing project stakeholders of authorized
  changes to the project that will affect costs
• Earned value analysis is an important tool for
  cost control

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Earned Value analysis--EV

• Budgeted Cost of Work Performed (BCWP)
• Also uses Budgeted Cost of Work Scheduled (BCWS),
  and
• Actual Cost of Work Performed (ACWP)
• When you complete an activity, you earn the
  budgeted value of that activity

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Why Earned Value Analysis??

• You cant tell what your true cost variance is
  because you dont know where you are relative to
  schedule
• Suppose you are behind schedule but also you have
  spent less than what the schedule has called for.
  Are you really under budget?

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An Example
Budget
Overrun???
Actual
Budget
TIME
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Budgeted Cost of Work Performed (BCWP) Earned
Value

• Defined as the monetary value of the work
  actually accomplished within the control period.

ACTIVITY
BCWP
1 12,000
2 30,000 3 16,000
58,.000
CUMULATIVE
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BCWP

• Suppose 100,000 has been budgeted for a task and
  the task is 50 complete
• Then its earned value is 50,000

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Budgeted Cost of Work Scheduled (BCWS) Planned
Value

• Defined as the value of the work scheduled to be
  accomplished in a given period of time

ACTIVITY BCWS
1 12,000 2 30,000 3 33,000
75,000
CUMULATIVE
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BCWS

• What is the BCWS of a 10,000 task whose start
  date is still in the future?
• What is the BCWS of a 10,000 task whose stop
  date is in the past?
• What is the BCWS of a 10,000 task whose duration
  is 10 days and five days have already passed?

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BCWS, Contd

• The BCWS of a 10,000 task whose start date is in
  the future is 0 (goose egg)

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BCWS, Contd

• The BCWS of a 10,000 task whose stop date is in
  the past is 10,000

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BCWS, Contd

• The BCWS of a 10,000 task whose duration is 10
  days and five days have already passed is 5,000.

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Actual Cost of Work Performed (ACWP)

• Defined as the cost actually incurred and
  recorded in accomplishing the work performed
  within the control period

ACTIVITY ACWP
1 15,000 2 30,000 3
29,000
74,000
CUMULATIVE
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Schedule Variance (SV)

• Defined as the difference between the budgeted
  cost of work performed and the budgeted cost of
  work scheduled
• BCWP - BCWS
• Indicates the deviation between the work content
  performed and the work content scheduled for the
  control period

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Cost Variance (CV)

• Defined as the difference between the budgeted
  cost of work performed and the actual cost of
  work performed
• BCWP - ACWP
• A positive CV indicates a lower actual cost than
  budgeted for the control period, while a negative
  CV indicates a cost overrun

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Its your turn

• For each of the activities in the examples above,
  calculate
• SCHEDULE VARIANCE
• COST VARIANCE
• Calculate cumulative schedule and cost variance

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Schedule Index (SI)

• Defined as the ratio BCWP/BCWS
• A value close to 1 indicates an activity that is
  on schedule
• Values greater than 1 suggest the activity is
  ahead of schedule
• Values less than 1 indicate a schedule overrun

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Cost Index (CI)

• Defined as the ratio BCWP/ACWP
• A value close to 1 indicates an activity that is
  on budget
• Values greater than 1 suggest the activity is
  below budget
• Values less than 1 indicate a budget overrun

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Answers to Schedule and Cost Variance

• Cumulative schedule variance -17,000
• Cumulative cost variance -16,000

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Answers to Schedule and Cost Index

• Cumulative schedule index .77
• Cumulative cost index .78

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Updating cost and schedule estimates

• BAC Budget at completion total budget of the
  project activities based on the original project
  plan

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Updating, Contd

• WR Work Remaining budgeted cost of the work
  not yet accomplished by the end of the reporting
  period
• WR BAC - BCWP
• ETC updated estimate of the cost of work
  remaining COST(WR)
• EAC updated estimate of the total project cost
  ACWP ETC

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Using MS Project for Earned Value Analysis

• Before entering any actual cost or schedule
  information
• YOU MUST FIRST SAVE YOUR PROJECT PLAN AS A
  BASELINE
• Then you enter your actual costs
• Then you enter your percentages complete
• Now MS Project will do earned value analysis

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To Enter Your Actual Costs into MS Project

•  1.      On the Tools menu, click Options, and
  then click the Calculation tab.2.      Clear the
  Actual costs are always calculated by Microsoft
  Project check box.3.      Click OK.4.      On
  the View Bar, click Task Usage.5.      On the
  View menu, point to Table, and then click
  tracking.

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More on Entering Your Actual Costs into MS Project

• 6.      Drag the divider bar to the right to view
  the Act. Cost field
• 7.      In the Act. Cost field, type the actual
  cost for the assignment for which you want to
  update costs. 

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Goldratts rules regarding execution

• The project manager must stay focused
• On what?
• What about safety?
• How does Goldratt maintain a static critical
  path?
• Communicate and Inform

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Safety

• The extra time a project professional puts into
  his or her time estimate to do a particular task
• It is customary to assign tasks to project
  personnel and then to ask them how long it will
  take them to do the task, knowing full well that
  they will then be required to finish their task
  within their estimated time

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Solutions

• Take the safety out of the individual tasks and
  put it at the end of the critical path in the
  time buffer, called a project buffer
• This means making the tasks roughly 50-60 as
  long as they would otherwise be.

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More solutions

• At the point where each feeding path intersects
  with the critical path, place another time
  buffer, called a feeding buffer. The feeding
  buffer protects the critical path from delays
  occurring in the corresponding non-critical
  paths.
• When resources are needed on the critical path,
  these resources are advised ahead of time exactly
  when they must make themselves available. When
  that time comes, they must drop everything else
  and do the required critical tasks.

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Measurement solutions

• Measure progress only on the critical path what
  percent of the critical path we have already
  completed, taken in relation to where we should
  be according to the plan. This is all we care
  about!!
• Have project leader measure progress on non
  critical paths in terms of unused buffer days

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Shrinking the task time Effects

• There is less procrastination
• There is much more focus
• There is less multitasking

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What are the ramifications of a delayed software
product, intended for commercial sale?

• Less market share
• Less profit maybe no profit
• Lower analyst profit expectations
• Declining share price
• Out of business?
• How many firms has Microsoft driven out of
  business?
• Ask Mitch Kapor (founder of Borland) what the
  implications of getting a product late to the
  marketplace are

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