Steps in Project Control 1. Set a baseline plan 2. Measure progress - - PDF document

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Steps in Project Control

• 1. Set a baseline plan
• 2. Measure progress and performance
• 3. Compare the plan against actual performance
• 4. Take appropriate action

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Earned Value Management Definitions of Terms

• Planned Value (PV This also known as BCWS.): the authorized budget

assigned to the scheduled work. This is the budgeted (or baseline) cost of tasks estimated at the start the project plan, based on the costs of resources assigned to those tasks, plus any fixed costs associated with the tasks, up to the status date you choose.

• For example, the total planned budget for a 4-day task is $100 and it

starts on a Monday. If you set the status date to the following Wednesday, you’ll see that the PV is $75. However, with this value, you don’t know how well your project is doing.

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Earned Value Management Definitions of Terms – cont.

• Earned Value (EV This is also known as BCWP): the value of completed

work expressed in terms of the approved budget assigned to the work that has been performed.

• This is the value of the work performed by the status date, measured in

currency.

• For example, if after 2 days 60% percent of the work on a task has been

completed, you might expect to have spent 60 percent of the total task budget, or $60. If it turns out that you spent $80, then you can safely say you’re over budget and behind schedule. Ouch!

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Earned Value Management Definitions of Terms – cont.

• Actual Costs (AC This is also known as ACWP): actual costs incurred to

accomplish the work that gives earned value.

• This is the actual cost required to complete all or some portion of the

tasks, up to the status date. For example, if the 4-day task actually incurs a total cost of $35 during each of the first 2 days, the AC for this period is $70 (but the PV is still $75).

• However, with this value, you don’t know how well your project is doing.

For example, if you planned to get a lot more work done for that same $70, that doesn’t sound good. You need to know (you guess it) earned value to fully assess the efficiency of your project.

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Earned Value Management Derived Values

• Schedule Variance: SV = EV - PV
• Schedule Performance Index: SPI = EV/PV
• i.e Shows that right now you got $1.05 worth of work

for each $1 worth of scheduled work.

• Cost Variance: CV = EV - AC
• Cost Performance Index: CPI = EV/AC

Hint for remembering formulas – all the right hand side expressions begin with the term EV.

An important theme running through these common earned value terms is the status date. Earned value analysis assumes you want to see the progress on your project prior to a specific point in time that you choose. Because a picture is worth a thousand words, let’s look at this graphically. Here’s a chart showing a steady accumulation of cost over the lifetime of a project. The dotted line shows a steady expenditure

• ver the lifetime of the project.

After work on the project has begun, a chart of the key values of earned value analysis may look like this The status date determines the values MS Project calculates. The actual cost (AC) of this project has exceeded the budgeted cost. The earned value (EV) reflects the true value of the work performed. In this case, the value of the work performed is less than the amount spent to perform that work.

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Exercise

If EV = 350, AC = 400, PV = 325, what is CV?

• A. 25
• B. -25
• C. 50
• D. -50

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Exercise

If EV = 350, AC = 400, PV = 325, what is CV?

• A. 25
• B. -25
• C. 50
• D. -50

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Using CPI and SPI for Project Status

• A CPI of less than 1 indicates that the project cost are over budget; a CPI

greater than 1 indicates that the project is running under budget. Do you see why? Remember CPI = EV/AC.

• For example, a CPI of .75 would indicate that you are getting 75 cents of

value for every dollar you are spending.

• An SPI of less than 1 indicates that the project schedule is behind; an SPI

greater than 1 indicates that the project is running ahead of schedule. Do you see why? Remember SPI = EV/PV.

• For example, a CPI of .75 would indicate that you are progressing at a rate
• f 75% of the rate you planned.

Hint for remembering: larger is better in both CPI and SPI. Over 1 is good, below 1 is bad.

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Exercise

A CPI of .89 means:

• A. At this time, we expect the total project

to cost 89% more than planned.

• B. When the project is completed we will

have spent 89% more.

• C. Your project is only progressing at 89% of

that planned.

• D. Your project is only getting 89 cents out
• f every dollar invested.

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Exercise

A CPI of .89 means:

• A. At this time, we expect the total project

to cost 89% more than planned.

• B. When the project is completed we will

have spent 89% more.

• C. Your project is only progressing at 89% of

that planned.

• D. Your project is only getting 89 cents
• ut of every dollar invested.

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Exercise

A SPI of .76 means:

• A. You are over budget.
• B. You are ahead of schedule.
• C. You are only progressing at 76% of the

rate originally planned.

• D. You are only progressing at 24% of the

rate originally planned.

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Exercise

A SPI of .76 means:

• A. You are over budget.
• B. You are ahead of schedule.
• C. You are only progressing at 76% of

the rate originally planned.

• D. You are only progressing at 24% of the

rate originally planned. Scheduling in MS Project Video

The Scheduling formula: duration, units, and work

After you schedule a task but before you assign a resource to it, the task has duration but no work associated with it. Work represents the amount of effort a resource or resources will spend to complete a task. For example, if you have is the same as the amount have one person working full time, the amount of time measured as work is the same as the amount of time measured in duration. In general, the amount of work will match the duration unless you assign more than one resource to a task or the one resource you assign is not full time. Project calculates work using wat is sometimes called the scheduling formula: Duration X Assignment Units = Work Let’s look at an example in the Task Form. The duration of task 3 is one week, or 5 working days. For the 100 % of Toni’s working time to the

• task. The scheduling formula for task 3 looks like this:

40 hours (same as one week) task duration X 100% assignment units = 40 hours of work In other words, with Toni assigned to task 3 at 100% units the task should require 40 hours of work

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Here’s a more comprehensive example. If you assigned two resources, Jane Dow and Zac Woodall to task 9, each at 100% assignment units, the scheduling formula for task 9 looks like this 24 hours (same as 3 days) task duration X 200% assignment units = 48 hours of work The 48 hours of work is the sum of Jane’s 24 hours of work plus Zac’s 24 hours of work. In other word, as currently scheduled both resources will work full-time on the task in parallel for its three-day duration Scheduling in MS Project Video

Effort Driven Tasks

MS Project gives you an option to control how it should calculate work on a task when you assign additional resources to it or when you unassign resources from the task. This is called effort driven tasks and it works like this: The work of the task remains constant as you assign or unassign resources. As more resources are assign the

duration of the task decreases but the total work remains the same and is distributed among the assigned resources. The default is effort driven scheduling is disabled for all tasks in Project You can turn it on for the entire project or just specific tasks. For the whole project do the following: file>options>schedule>click the box for new tasks are effort driven

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Exercise

1) What is your cost variance and your CPI? 2) What do these calculations tell you about your project? 3) What is your schedule variance and your SPI? 4) What do these calculations tell you about your project? 5) What actions might you consider at this point?

You have just received updated progress reports on the project you are managing. The project’s budget is 2000 hours. Your project plan calls for you to have completed work at this point in time which was budgeted to require a total of 800 hours. The work that you have so far completed was budgeted for a total of 600 hours. The number of hours you have charged against the project budget to date is 900.

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Monitoring Involves Measurement and Modification

• Major outputs of the Control Schedule and Control Cost

Processes are

• Delivery time forecasts
• Budget forecasts
• Plan updates
• Schedule baseline
• Budget baseline
• The use of a change control process to make corrective changes in

reaction to performance measures

• Other project changes requests

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More on Earned Value Management (EVM)

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Using CPI and SPI for Projections Three Additional Terms

• Budget at Completion (BAC) = total budget
• Estimate at Completion (EAC) = estimate for total project

(can be recomputed throughout the project – see next slide)

• Estimate to Complete (ETC) = newly estimated remaining

cost to complete the project from some given point

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Re-Computing EAC (Estimate at Completion)

A new EAC can be computed at any point in the project in several different ways, depending on assumptions we are willing to make:

• EAC = AC + ETC -- use this method when original estimates have

proven to be flawed and are no longer relevant to changing

• conditions. Note that this makes use of a new estimate in ETC.
• EAC = AC + (BAC – EV) -- use this method when current variances are

seen as an anomaly that we don’t expect to continue. Note that BAC – EV = the remaining budget.

• EAC = AC + [(BAC – EV)/CPI] -- use this method when current

variances are seen as typical of future variances. Note that the term (BAC – EV)/CPI represents the remaining budget normalized for the currently observed cost performance index.

Re-estimate Make up for variances Adjust for variances

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Exercise

EAC is a periodic evaluation of:

• A. Cost of work completed
• B. Value of work performed
• C. Anticipated total cost at project

completion

• D. What it will cost to finish the job

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Exercise

EAC is a periodic evaluation of:

• A. Cost of work completed
• B. Value of work performed
• C. Anticipated total cost at project

completion

• D. What it will cost to finish the job

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Exercise

1) Suppose your analysis of the main difficulties the project has experienced indicates that these issues are an anomaly. Further, you are convinced that the underlying problems have been corrected, and so you don’t expect them to continue. What new estimate for the total project budget would you give your manager, based on what you know now? 2) Suppose your analysis of the main difficulties the project has experienced indicates a different result – that the problems are endemic to this project and will continue. How does this change the new estimate for your manager? Consider again the project that you have just received updated progress reports on. Recall that the project’s budget is 2000 hours. Your project plan calls for you to have completed work at this point in time which was budgeted to require a total of 800 hours. The work that you have so far completed was budgeted for a total of 600 hours. The number of hours you have charged against the project budget to date is 900. Your manager has asked you for a revised estimate for the total cost of the project.

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PMP Style Questions Some Practice Exercises

Appendix A

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Exercise #1

You are taking over a project and determine the following: Task B has an early finish of day 3, a late finish of day 6, and an early start of day 2. Task L is being done by a hard-to-get resource. The CPI is 1.1 and the SPI is .8. Based on this information what would you be more concerned about?

• A. Float
• B. Resources
• C. Cost
• D. Schedule

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Exercise #1

You are taking over a project and determine the following: Task B has an early finish of day 3, a late finish of day 6, and an early start of day 2. Task L is being done by a hard-to-get resource. The CPI is 1.1 and the SPI is .8. Based on this information what would you be more concerned about?

• A. Float
• B. Resources
• C. Cost
• D. Schedule

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Exercise #2

Your customer notifies you that the project must be completed two weeks earlier. What do you do?

• A. Tell them that the project’s critical path

does not allow the project to be finished earlier.

• B. Tell your boss.
• C. Meet with the team and look for options

for crashing or fast tracking the critical path.

• D. Work hard and see what the project

status is next month.

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Exercise #2

Your customer notifies you that the project must be completed two weeks earlier. What do you do?

• A. Tell them that the project’s critical path

does not allow the project to be finished earlier.

• B. Tell your boss.
• C. Meet with the team and look for
• ptions for crashing or fast tracking

the critical path.

• D. Work hard and see what the project

status is next month.

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Exercise #3

EAC is a periodic evaluation of:

• A. Cost of work completed
• B. Value of work performed
• C. Anticipated total cost at project

completion

• D. What it will cost to finish the job

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Exercise #3

EAC is a periodic evaluation of:

• A. Cost of work completed
• B. Value of work performed
• C. Anticipated total cost at project

completion

• D. What it will cost to finish the job

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Exercise #4

Which of the following is not needed in order to come up with a project schedule and cost estimates?

• A. WBS
• B. Network Diagram
• C. Risks
• D. Change control procedure

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Exercise #4

Which of the following is not needed in order to come up with a project schedule and cost estimates?

• A. WBS
• B. Network Diagram
• C. Risks
• D. Change control procedure

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Exercise #5

During the execution of a project, a large number of changes are made to the project. The project manager should:

• A. Wait until all changes are known and print
• ut a new schedule
• B. Make changes as needed but retain the

schedule baseline

• C. Make changes as needed
• D. Talk to management before any changes

are made

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Exercise #5

During the execution of a project, a large number of changes are made to the project. The project manager should:

• A. Wait until all changes are known and print
• ut a new schedule
• B. Make changes as needed but retain

the schedule baseline

• C. Make changes as needed
• D. Talk to management before any changes

are made

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Exercise #6

You are a project manager for a new building design project and have just received a project charter. You can create a detailed project schedule only after:

• A. A project plan is created
• B. A WBS is created
• C. A budget is created
• D. A project control plan is created

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Exercise #6

You are a project manager for a new building design project and have just received a project charter. You can create a detailed project schedule only after:

• A. A project plan is created
• B. A WBS is created
• C. A budget is created
• D. A project control plan is created

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Exercise #7

A project sponsor has been holding team meetings during project planning to get a project underway. Then the company hires a new project manager for the project. Who should be in control of the project during project planning?

• A. The project manager
• B. The team manager
• C. Functional manager
• D. The project manager’s boss

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Exercise #7

A project sponsor has been holding team meetings during project planning to get a project underway. Then the company hires a new project manager for the project. Who should be in control of the project during project planning?

• A. The project manager
• B. The team manager
• C. Functional manager
• D. The project manager’s boss