Stage III: Project Execution and Control

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Stage III Project Execution and Control

• Earned Value Analysis
• B Chapter 8 pages 10-13
• B Chapter 12 the entire chapter

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Recitation

• What does RAM stand for in the context of HR
  Management?
• What was the name of the guy who categorized all
  job satisfaction factors into two categories?
• What were those two categories?

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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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Processes utilized 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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Execution

• Focus and leadership are keys to success in
  execution
• Poor execution leads to losses in the business
  world just as it does in sports

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Factors leading to poor Execution

• Multitaskingdoing several things at once
• Procrastination (student syndrome)putting things
  off until the last minute
• Others we will discuss later

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Multitasking
Task A
Task B
Task C
Task D
A finishes
A
B
C
D
A
B
C
D
A
B
C
D
A
B
C
D
A finishes
B finishes
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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 (EVA)

• EVA is a project performance measurement
  technique that integrates scope, time, and cost
  data
• Given a baseline (original plan plus approved
  changes), you can determine how well the project
  is meeting its goals with EVA
• You must enter actual information periodically to
  use EVA. Figure 6-1 shows a sample form for
  collecting information

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Figure 6-1. Cost Control Input Form for Business
Systems Replacement Project
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Earned Value Analysis Terms

• Budgeted cost of work performed (BCWP), also
  called earned value, is the percentage of work
  actually completed multiplied by the budget for
  the activity
• Budgeted cost of work scheduled (BCWS), also
  called planned value, is that portion of the
  approved total cost estimate planned to be spent
  on an activity during a given period
• Actual cost of work performed (ACWP), also called
  actual cost, are the total direct and indirect
  costs incurred in accomplishing work on an
  activity during a given period

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Earned Value analysis--EVA

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

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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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Schedule Performance Index (SPI)

• 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 Performance Index (CPI)

• 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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Table 6-7. Earned Value Formulas
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Table 6-6. Earned Value Calculations for One
Activity After Week One
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Rules of Thumb for EVA Numbers

• Negative numbers for cost and schedule variance
  indicate problems in those areas. The project is
  costing more than planned or taking longer than
  planned
• CPI and SPI less than 100 indicate problems

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Figure 6-2. Earned Value Calculations for a
One-Year Project After Five Months
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In the Figure above

• Budget at Completion BAC original budget at
  the planned completion date
• Time at Completion TAC original completion
  time
• In the figure above, 100,000 in month 12
• Estimate at completion EAC BAC/CPI
• Estimate at completion 100,000/.83 120,455
• Estimated time to complete ETAC TAC/SPI
• Estimated time to complete 12/.96 12.55 mos.

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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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Updating cost estimates

• BAC Budget at completion total budget of the
  project activities based on the original project
  plan
• Assuming the original budget (the BAC) was
  200,000 and the CPI is 1.12, what is EAC?
• EAC BAC / CPI 200,000 / 1.12
• 178,571

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Updating schedule estimates

• TAC Time at completion total time required to
  complete the schedule
• ETAC Estimated (revised) time to complete
• Assuming the TAC was 12 months what is the ETAC?
• ETAC TAC / SPI 12 / .77
• 15.6 months
• Project will be delayed almost 4 months

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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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Figure 6-3. Earned Value Chart for Project After
Five Months
EAC
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Using Software to Assist in Cost Management

• Spreadsheets are a common tool for resource
  planning, cost estimating, cost budgeting, and
  cost control
• Many companies use more sophisticated and
  centralized financial applications software for
  cost information
• Project management software has many cost-related
  features

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Using MS Project for Execution Control

• First, make certain your project plan is complete
  and final
• Second, save it as a baseline
• Begin entering actual information
• Actual costs
• Percentage complete

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Tracking MS Project will track

• Task start dates
• Task finish dates
• Task duration
• Task cost work
• Percentage of task that is complete

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Getting Earned Value Data Visible

• You can go to view and replace the entry table
  with the Earned Value table
• Or, you can enter the earned value columns into
  your existing table through the Insert Column
  facility.
• The columns are BCWP, BCWS, ACWP, CV, SC, SPI,
  CPI, etc.
• You can also request the Tracking Gantt Chart off
  the LHS side of MS Project

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Entering actual start Finish dates for a task

• On the view bar, click Gantt chart
• In the task name field select the task to update
• On the Tools menu, point to tracking and click
  Update Tasks
• Under Actual, type the dates in the Start and
  Finish boxes

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Indicating progress on a task as a percentage

• In the task name field of the Gantt Chart
• Double clickthis brings up the task information
  sheet
• Select the general tab
• In the percentage complete box type a whole
  number between 0 and 100

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Entering actual costs for a resource assignment

• On the Tools menu, click options, then click the
  calculation tab
• Clear the Actual costs are always calculated by
  MS Project check box
• Click OK
• On the view bar, click Task usage
• On the view menu, point to the Table, and click
  Tracking
• Drag the divider bar to the right to view the
  Activity Cost field
• In the activity cost field, type the actual cost
  for the assignment for which you want to update
  costs

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Recitation

• What are two of the four Myers/Briggs dimensions?
• What are the other two?
• To what Myers/Briggs category do most IT
  professionals belong?
• Who is the motivation guru?
• What are his five levels?
• Who gave us Theory X and Theory Y??

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