Introduction to Project Management

1
Introduction to Project Management

• A basic introduction to common project management
  processes that may be typically encountered
  during a projects lifetime.
• Complied by AlNik Solutions for project managers
  using PMPlan products.

2
Roberts Rules of Order for Project Management

• Get a project charter
• Create the project scope statement
• Create the WBS with the project team
• Create the activity list from the WBS
• Sequence the activities in the order in which
  they must or should happen
• Estimate the time of the activities based on
  which resources you have to complete the
  activities
• Assign the needed resources to the activities
• Get it done.

From Real Life Project Management Managing the
Project Scope by Joseph Phillips Jan 28, 2005
3
Agenda of Presentation

• General Project Management
• Work Breakdown Structure
• Scheduling
• Earned Value Management

4
Common Project Processes

• Initiation
• Defines the project objectives and grants
  authority to the project manager.
• Planning
• Refines the project objectives and scope and
  plans the steps necessary to meet the projects
  objectives.
• Executing
• Puts the project plan into motion and performs
  the work of the project.
• Controlling
• Measures the performance of the executing
  activities and compares the results with the
  project plan.
• Closing
• Documents the formal acceptance of the projects
  product and brings all aspects of the project to
  a close.

5
Elements of a Projects Life Cycle
Client Statement of Work
Project Monitoring
Revised Project Plan
Preliminary Project Plan
Project Execution
Internal Review
Work Authorization
Client Requested Changes
Proposal Project Plan
Baseline Project Plan
Client Review/ Negotiations
PMPlan can be used effectively for most of the
elements of a projects life cycle.
6
Managing the Triple Constraint

• Project Scope
• How much work is to be done? Increasing the
  scope causes more work to be done, and vice
  versa.
• Time
• The schedule of the project. Modifying the
  schedule alters the start and end dates for tasks
  in the project and can alter the projects
  overall end date.
• Cost
• The cost required to accomplish the projects
  objectives. Modifying the cost of the project
  generally has an impact on the scope, time, or
  quality of the project.

7
Project Manager Roles and Interactions
8
Elements of Developing a Project Plan
Activity Definition
Activity Sequencing
Client SOW
Schedule Development
Activity Duration Estimating
Resource Pool
Work Breakdown Structure
Project Plan Development
Resource Planning
Cost Estimating
Work Packages
PMPlan can address these elements when developing
the project plan.
9
What is a Work Breakdown Structure

• The Work Breakdown Structure (WBS) is the
  foundation for defining the projects work as it
  relates to the objectives and establishes a
  structure for managing the work to its
  completion. The WBS defines
• the projects work in terms of activities that
  create deliverables.
• the projects life-cycle process, in terms of
  process steps appropriate to that project and
  organization.
• And is the basis for establishing
• All of the effort/cost to be expended to create
  the deliverables and supporting processes.
• The assigned responsibility for accomplishing
  and coordinating the work.
• (from the PMI Practice Standard for Work
  Breakdown Structures, Oct 2000)

10
Good WBS Design Principles

• The 100 Rule
• The WBS defines 100 of the work of the project
• Anything that isnt defined in the WBS is outside
  the scope of the project.
• The work content on any item is the sum of what
  is included under that work item
• Upper Levels are Planned outcomes (deliverables),
  not planned actions
• Ends of WBS include the activities needed to
  create the project deliverables
• Mutually-exclusive elements
• Work should only appear in one place in the WBS
• WBS must be consistent with the way the project
  will be performed and controlled
• Must be easy to update

11
WBS Role

• Partition the major project deliverables into
  smaller components to improve the accuracy of
  cost estimates
• Provide a mechanism for collecting actual costs
• Provide a mechanism for performance measurement
  and control

12
Sample WBS Product Type Project
13
Sample WBS Service Type Project
14
Sample WBS Results Type Project
15
Why create a WBS?

• Cost Estimating
• Cost Budgeting
• Resource Planning
• Risk Management Planning
• Activity Definition

16
Scheduling

• Scheduling forces
• Quantification of discrete effort
• Placement of tasks in proper relationship
• Two most common scheduling methodologies
• Bar Charts (aka Gantt Charts)
• Critical Path Method (CPM) using Precedence
  Diagramming Method (PDM)

17
Bar / Gantt Charts Defined

• Analyze and specify the basic approach in
  execution
• Segment into reasonable number of activities
• Estimate the time required to perform each
  activity
• Manually places activities in time order
• Sequential performance
• Parallel performance
• Adjust to specified completion time

18
Bar / Gantt Charts Advantages

• Plan, schedule and progress are all depicted
  graphically on a single chart
• Easily read
• Provides simple way to schedule small undertaking
• Provides summary display of more detailed plans
  and schedules
• Best used for management briefings

19
Bar / Gantt Charts Disadvantages

• Planning and scheduling are considered
  simultaneously
• Simplicity precludes sufficient detail for timely
  detection of slippages
• Activity dependencies cannot adequately be shown
• Difficult to determine how activity progress
  delays affect project completion
• Difficult to establish and maintain for large
  projects.

20
Bar / Gantt Chart Sample
Actual Progress
Ahead of Schedule
Planned Progress
Completed Task
Behind Schedule
Time Now
21
Critical Path Method Advantages

• Identifies activities that control the project
  length
• Determines shortest time for completion
• Identifies activities that are critical (i.e.
  cannot be delayed)
• Shows available float for non-critical activities
• Allows evaluation of what-if scenarios
• Allows monitoring control of fast-track
  projects
• With software can be resource loaded and leveled

22
Critical Path Method Disadvantages

• Only as good as the effort put forth to properly
  model the plan
• Can be difficult to properly update
• Can be easily misused
• May lead to a false sense of security
• Actual conditions may necessitate significant
  modifications to model to accurately reflect
  reality

23
Precedence Diagramming Method (PDM)

• PDM network rules
• Activities are represented by boxes or nodes that
  are assigned properties of the activity they
  represent
• Precedences are shown by arrows that have both
  direction and time properties
• Precedences consist of two parts A relationship
  and a lag value or constraint
• Finish to Start FS
• Finish to Finish FF
• Start to Start SS
• Start to Finish SF

Lag x Days ( a negative lag is called a lead)
24
PDM Precedence Diagram

• PDM activities are comprised of
• Activity descriptions
• Nodes representing the activity
• Arrows representing relationship / dependency
• Points indicating direction of relationship /
  dependency

25
PDM Logic Relationships
Finish to Start (FS) Activity A must Finish
before Activity B may Start. The lag is usually
zero. FS is the most common type.
Start to Finish (SF) Activity A must start
before Activity B may Finish. The lag is usually
greater than either activity duration. FS is the
least common type.
26
PDM Logic Relationships
Finish to Finish (FF) Activity A must Finish
before Activity B may Finish. The lag value is
usually greater than zero. FF is a less common
type.
Start to Start (SS) Activity A must Start
before Activity B may Start. The lag value is
usually greater than zero. SS is a less common
type.
27
PDM Time Calculations

• Once the Network is constructed and duration of
  each activity is estimated, we can determined the
  following four time values
• Earliest Start (ES) The earliest possible time
  an activity can begin
• Earliest Finish (EF) The earliest possible time
  an activity can finish
• Latest Start (LS) The latest possible time an
  activity can start without delaying project
  completion
• Latest Finish (LF) The latest possible time an
  activity can start without delaying project
  completion

28
PDM Time Calculations

• ES and EF are determined by making a Forward Pass
  (left-to-right) through the Network. ES of an
  activity is equal to the latest of early finish
  times of its predecessors. EF is the total of
  the activity ES plus its duration.
• LS and LF are determined by making a Backward
  Pass (right-to-left) through the Network. LF of
  an activity is equal to the smallest of the LS
  times of the activities exiting from the activity
  in question. LS of an activity is equal to its
  LF minus its duration.

29
PDM Activity Notation and Assumptions

• Each activity box consists of six cells
• For the following example assume all activities
• Begin on the morning of the scheduled start date
• End the evening of the scheduled finish date
• Using a 7-day workdays per week calendar

Activity
Lag
0
EF
4
E
6
ES
LS
LF
11
2
13
Duration
30
Forward Pass Example
Early Start Calculations
(F to G) 10 0 1 11 (E to G) 8 0 1
9 (D to G) 9 2 1 12
2
Largest ES
0
0
Early Finish Calculation 12 7 1 18
31
Backward Pass Example
2
Late Start Calculation 22 - 4 1 19
0
0
Late Finish Calculations
(H to K) 25 - 2 - 1 22 (I to K) 24 - 0 - 1
23 (J to K) 34 - 0 - 1 33
32
CPM Example Exercise
B
C
H
A
6d
11d
20d
20d
J
D
E
F
20d
13d
9d
20d
G
I
6d
13d
FS
FF
SS
SF
33
CPM Example Exercise
Forward Pass Results
B
C
H
A
1d
6d
7d
17d
18d
37d
63d
82d
6d
11d
20d
20d
J
D
E
F
20d
13d
9d
20d
1d
20d
21d
33d
34d
42d
43d
62d
G
I
34d
39d
40d
52d
6d
13d
34
CPM Example Exercise
Backward Pass Results
B
C
H
A
1d
6d
7d
17d
18d
37d
63d
82d
6d
11d
20d
20d
4d
9d
10d
20d
43d
62d
63d
82d
J
D
E
F
20d
13d
9d
20d
1d
20d
21d
33d
34d
42d
43d
62d
1d
20d
21d
33d
34d
42d
43d
62d
G
I
34d
39d
40d
52d
6d
13d
44d
49d
50d
62d
35
CPM Example Exercise
Backward Pass Results
B
C
H
A
1d
6d
7d
17d
18d
37d
63d
82d
6d
11d
20d
20d
4d
9d
10d
20d
43d
62d
63d
82d
J
D
E
F
20d
13d
9d
20d
1d
20d
21d
33d
34d
42d
43d
62d
1d
20d
21d
33d
34d
42d
43d
62d
G
I
34d
39d
40d
52d
6d
13d
44d
49d
50d
62d
36
CPM Float (or Slack) and Critical Path

• Additional Network calculations provides other
  important information allowing analysis and
  control
• Total Float (TF) The amount of time an activity
  can be delayed without delaying the overall
  project completion, which is equal to Late Finish
  minus Early Finish.
• Free Float (FF) The amount of time an activity
  can be delayed without delaying the start of
  another activity. Can be determine by subtracting
  the smallest Total Float going into an activity
  from each predecessor into that activity.
• Critical Path The path through the Network that
  has the longest total duration, thus it defines
  the shortest period of time in which the project
  may be completed.

37
Float Calculation Example
38
CPM Example Exercise
Continue with Exercise
B
C
H
A
1d
6d
7d
17d
18d
37d
63d
82d
6d
11d
20d
20d
4d
9d
10d
20d
43d
62d
63d
82d
J
D
E
F
20d
13d
9d
20d
1d
20d
21d
33d
34d
42d
43d
62d
1d
20d
21d
33d
34d
42d
43d
62d
G
I
34d
39d
40d
52d
6d
13d
44d
49d
50d
62d
39
CPM Example Exercise
Float Results
B
C
H
A
1d
6d
7d
17d
18d
37d
63d
82d
6d
11d
20d
20d
4d
9d
10d
20d
43d
62d
63d
82d
3d
3d
25d
0d
J
D
E
F
20d
13d
9d
20d
1d
20d
21d
33d
34d
42d
43d
62d
1d
20d
21d
33d
34d
42d
43d
62d
0d
0d
0d
0d
G
I
34d
39d
40d
52d
6d
13d
44d
49d
50d
62d
10d
10d
40
CPM Example Exercise
Critical Path Traced
B
C
H
A
1d
6d
6d
7d
11d
17d
18d
20d
37d
63d
20d
82d
4d
3d
9d
10d
3d
20d
43d
25d
62d
63d
0d
82d
J
D
E
F
1d
20d
20d
21d
13d
33d
34d
9d
42d
43d
20d
62d
1d
0d
20d
21d
0d
33d
34d
0d
42d
43d
0d
62d
G
I
34d
6d
39d
40d
13d
52d
44d
10d
49d
50d
10d
62d
FS
FF
SS
SF
41
Scheduling Basics Review

• Two widely used scheduling techniques
• Bar / Gantt Charts
• Project, schedule progress depicted on a single
  chart
• Easy to read
• Good for management review and oversight
• Critical Path Method (CPM)
• Identifies activities that control the project
  length
• Identifies activities that are critical
• Shows available float for non-critical activities

42
Earned Value Tracking

• Earned Value (EV) based performance measurement
  systems Link Expenditures to accomplishments

43
This review of Earned Value Concept will

• Describe a simple project and its progress
• Define Earned Value and related terms
• Show how Earned Value defines project performance

44
Earned Value System

• Can
• Provide early (Difficult to ignore) performance
  problem identification
• Improve financial Reporting
• Does not
• Recognize Critical Paths
• Will not
• Take management action

45
Measurement Terminology

• Budget at Completion (BAC)
• The sum of the total budget for a work package,
  major task, or project.
• Planned Value (PV)
• The scheduled cost based on the allocation cost
  items such resources and material during the
  timeline of an activity
• Also called Budgeted Cost for Work Scheduled
  (BCWS)
• Earned Value (EV)
• The value of the work performed to-date using any
  reasonably accurate, mutually acceptable
  methodology for determining value (i.e. 0/100,
  50/50, 30/40/40, ratio of units completed versus
  total units, manager estimate, level of effort,
  being some examples).
• Also called Budgeted Cost for Work Performed
  (BCWP)
• Actual Valve (AV)
• Total incurred costs charged to a work package by
  the companys accounting system, which can
  include labor costs, direct costs (overhead), and
  indirect costs (material, travel, and etc.)
• Also called Actual Cost for Work Performed (ACWP)

These values are used to calculate performance.
46
Performance Terminology

• Cost Variance (CV)
• CV EV AV BCWP ACWP
• Cost Performance Index (CPI)
• The cost efficiency ratio of earned value to
  actual costs (CPI EV/AV)
• In PMPlan, the CPI is used to calculate Estimate
  at Completion (EAC) (EAC BAC/CPI)
• Schedule Variance (SV)
• SV EV PV BCWP BCWS
• Schedule Performance Index (SPI)
• The schedule efficiency ratio of earned value
  accomplished against planned value (SPI EV/PV).
  The SPI describes what portion of the planned
  schedule was actually accomplished.
• Variance at Completion (VAC)
• The predicted magnitude of possible underrun or
  overrun at completion of work package, major
  task, or project (VAC BAC EAC)

47
Review of Earned Value Concept

• Will
• Describe a simple project and its progress
• Define earned value and related terms
• Show how earned value defines project performance

Note Sample tables and graphics shown in
following slides are from PMPlan
48
Schedule

• This shows a sample project schedule

49
Planned Budget

• The sample project is loaded with resources which
  results in an allocated spend plan.

50
Time-Phased Spend Plan

• This shows the time-phased spend plan if the
  project proceeds as planned.

51
Typical Approach of Tracking of Actual versus
Planned

• The chart tells us we have spent less than
  planned to date, but
• We cannot tell if we are behind schedule, nor if
  the cost for work completed matches the actual
  costs.

52
Using Earned Value Method

• For Earned Value Method to work well you need to
  breakdown the project into measurable activities
  (Note in PMPlan,Cost Budgeting is done at the
  activity level not work package).
• It is recommended that your work packages (where
  you accumulate actual costs) be one or two levels
  above the activities.
• The following five slides show different
  performance results of our sample project.

53
Example PMPlan Earned Value Worksheet

• The project manager or task leader enters either
  a earned percentage or a value.
• Actual Cost is also entered. In this worksheet,
  actual cost can also include open commitments
  such as unpaid invoices for material and
  equipment.
• The Threshold is a percent of the AV to the
  BAC, which determines when the application uses
  the CPI to calculate VAC. If AV is less than
  Threshold, the VAC equals CV.
• Based on the data entered, this project is both
  behind schedule and over budget. Even though the
  current CV 4,000, the VAC indicates a
  potential overrun of 5,517.
• The next slide shows two other views of this data.

54
Project has Negative SV and CV

• In the lower half of the graph, the EV is below
  both the PV and AC indicating problems with cost
  and schedule.
• The upper half of the graph shows both CPI and
  SPI relative to a value of 1. It is showing that
  progress is being made to improve the schedule,
  but cost problem remains.
• The black EV bars in the Gantt schedule at the
  right shows that Design and Prototype
  activities are behind schedule.

55
Status when have - SV and zero (0) CV

• The EV and AC are equal, thus actual cost are
  inline with accomplishments.
• Even though the project is behind schedule, the
  schedule variance trend shows a strong
  improvement in schedule.

56
Status when have zero (0) SV, CV

• This project is on schedule and should be
  completed under budget.
• With the project all of the earned bars line up
  with the green status line.

57
Why 50 Complete may not be half the schedule bar!

• In the above sample, all three activities have
  earned values of 50 of BAC, but the black earned
  bars are not the same length even though the
  planned bars are the same.
• Task A is behind schedule, because 75 of the
  budget was to be spent by end of December.
• Task B is ahead of schedule, because only 25 of
  the budget was to be spent by end of December.

58
In Summary an Earned Value System

• Can
• Provide early (Difficult to ignore) performance
  problem identification
• Improve financial Reporting
• Does not
• Recognize Critical Paths
• Will not
• Take management action

59
Project Management Methods Summary

• We have described three major processes used in
  project management
• Work Breakdown Structure
• Scheduling
• Earned Value Management
• We are ready now to see how PMPlan can help you
  with these processes