Success Driven Project Management

1
Success DrivenProject Management

• Vladimir Liberzon
• www.spiderproject.ru

2
Introduction

• Modern project management methods and tools
  developed and used in Russia have many advantages
  that are yet unknown to the international project
  management community.
• Some of them will be described in this
  presentation.

3
Introduction

• We will discuss the proven methodology of project
  planning, performance analysis and project
  control that we call Success Driven Project
  Management (SDPM).
• This methodology integrates scope, time, cost,
  and risk management and may be of particular
  interest for the Critical Chain theory supporters
  because both approaches have some common
  features.

4
Introduction

• We will also discuss some notions and methods of
  project planning and performance analysis that
  are common in Russia and necessary for SDPM
  understanding.
• We will illustrate the approaches described in
  this presentation using project management
  software package Spider Project that is most
  popular professional PM tool in Russia.

5
Introduction

• We shall start with the definitions and the first
  of them is the definition of the Critical Path.
• We use the term Resource Critical Path (RCP) to
  specify our interpretation of the classical PMBOK
  Guide definition.
• We believe that project Critical Path, Resource
  Critical Path and Critical Chain
• a) imply the same set of activities and
• b) the traditional interpretation of the critical
  path is not correct.

6
Critical Path

• A Guide to the Project Management Body of
  Knowledge? defines the Critical Path as those
  activities with float less than or equal to a
  specified value, usually zero.
• Float is the amount of time that an activity may
  be delayed from its early start without delaying
  the project finish date.
• Early start is the earliest possible point in
  time at which the uncompleted portions of an
  activity (or the project) can start, based on the
  network logic and any schedule constraints.

7
Critical Path

• Project schedule constraints include resource
  constraints, finance and supply constraints,
  calendar constraints and imposed dates.
• The float should be calculated with all schedule
  constraints as well as the network logic taken
  into account.
• The total float determined by most PM packages
  shows the time reserve for the execution of
  activity, however the availability of resources
  is completely ignored.
• It is not the actual activity float as defined by
  A PMBOK Guide?.

8
Resource Critical Path

• True critical path should account for all
  schedule constraints including resource and
  financial limitations.
• We call it Resource Critical Path (RCP) to
  distinguish it from the traditional
  interpretation of the critical path definition.
• The calculation of RCP is similar to the
  calculation of the traditional critical path with
  the exception that both the early and the late
  dates are calculated during forward and backward
  resource (and material, and cost) levelling.

9
Resource Critical Path

• It appears that by adding financial and supply
  constraints to the Critical Chain definition as
  well as the way of the Critical Chain
  calculation, we will obtain something very
  similar to RCP.
• RCP can consist of activities that are not linked
  to each other. Traditional critical path approach
  assumes that this may be due to the different
  activity calendars and imposed dates. In case of
  RCP calculation, it can also be due to resource
  constraints and financial and supply limitations.

10
Activity Volume

• Projects are often planned (especially in the
  construction and manufacturing) basing on the
  federal, local, industrial or corporate norms and
  standards.
• These standards usually refer to resource
  productivity on the certain activity types, costs
  and materials per unit of activity volume (volume
  of work to be done on activity).
• Usage of these norms affects the planning of
  project activities.

11
Activity Volume

• Activity volume can be measured in meters, tons,
  etc., planned work hours, percents or any other
  units.
• Activity volume is often used as an initial
  activity information instead of duration. If
  assigned resource productivity is defined in
  volume units per hour then activity duration may
  be calculated during project scheduling.
• Activity volume does not depend on assigned
  resources.

12
Resource Productivity

• Calculation of activity duration basing on
  assigned resource productivity has many
  advantages. We have already mentioned the
  possibility of applying corporate norms. Changing
  the norm we change the planned duration of all
  activities of certain type.
• It is especially useful for the forecasting of
  project duration and estimating uncertainties.

13
Resource Analysis

• Resource analysis is an essential part of project
  execution analysis. It is vital for project time
  analysis to be able to forecast resource
  productivity.
• Monitoring of the actual resource performance
  allows to determine trends and to make necessary
  adjustments of resource productivity databases.

14
Resource Analysis

• The usage of project resources varies at the
  different project phases. The forecasting that
  accounts for these differences is considerably
  more accurate than the methods of Earned Value
  Analysis.
• Methods of risk analysis and simulation should
  include estimations and simulations of activity
  volumes, resource productivity, resource
  availability, etc.

15
Resource Analysis

• The main problem with the traditional methods of
  risk simulation is their initial assumption that
  cost and duration deviations of different
  activities are independent of each other.
• Activities performed by a set of resources will
  have correlated duration. Not taking this into
  consideration leads to producing wrong risk
  simulation results.

16
Sample Project

• Lets illustrate the basic concepts described
  earlier using sample project consisting of only
  three independent activities and two resources.
• Project data are shown at the next slide.

17
Sample Project - Data
18
Sample Project - Critical Path

• At this slide you see project schedule before
  resource leveling. Activity 1 is critical. Other
  activities have 5 day float.

19
Sample Project - RCP

• After resource leveling activities 2 and 3 became
  critical while activity 1 has 20 day float
  (resource float).
• So RCP consists of activities 2 and 3.

20
Activity Resource Float

• Activity resource floats have one large advantage
  over the total floats calculated by most PM
  software. This advantage is feasibility.
• Traditional total float shows the period for
  which activity execution may be postponed if
  project resources are unlimited.
• Activity resource float shows the period for
  which activity execution may be postponed within
  the current schedule with the set of resources
  available in this project.

21
Risk simulation

• Our experience of project planning shows that the
  probability of successful implementation of
  deterministic project schedules and budgets is
  very low.
• Therefore project planning technology should
  always include risk simulation to produce
  reliable results.
• We will describe the approach to project planning
  that is supported by Spider Project.

22
Project Planning

• The project planner obtains three estimates
  (optimistic, most probable and pessimistic) for
  all initial project data.
• These data are used to calculate optimistic, most
  probable and pessimistic project schedules and
  budgets.
• The most probable and pessimistic project
  versions will usually contain additional
  activities and costs and employ other resources
  and different calendars than the optimistic
  schedule.

23
Desired Data

• The planner should define desirable probabilities
  of meeting target dates, costs, and material
  consumption rates at major project milestones.
• Basing on these probabilities, the package
  calculates corresponding desired project target
  dates, costs, and material requirements.
• These desired data form the basis for contract
  negotiations and decision making.

24
Target Data

• Negotiations may result in establishing new
  target data.
• Spider Project helps to negotiate by answering
  the questions on probability to meet any
  restrictions on time and on budget.
• Probability of meeting target data (cost, time,
  quantity) is called Success Probability.
• Success Probability is the BEST indicator of the
  current project status.

25
Target Schedule

• In addition, the package calculates the target
  schedule.
• Target Schedule is the backward project resource
  constrained schedule with the most probable
  activity duration, material requirements and
  costs and target milestone dates.
• Lets apply the described approach to our sample
  project.

26
Risk simulation for Sample project

• We will make very simple assumption
• Optimistic productivity of assigned resources is
  20 higher and pessimistic is 20 lower than the
  planned ones.
• Lets assume that we have no other risks )).

27
Desired Data

• We want to be on time with 70 probability and
  under budget with 75 probability.
• The package will identify the desired finish date
  and the required project budget

28
Desired Data
29
Target Data

• Lets assume that after negotiating the contract
  we established project target finish date and
  target budget.
• The package will calculate the probability of
  meeting target parameters and we will see that we
  were lucky with time and should be very cautious
  with the project budget

30
Most Probable Data

• Lets assume that the most probable version of
  our project was defined as the project baseline.
• The initial probabilities to meet most probable
  project parameters

31
Most Probable Data

• These probabilities are high because we did not
  simulate risk events.
• We will track the probabilities of meeting
  baseline data (24000) and contract budget
  (25000).

32
Project Execution

• Now lets simulate Sample project execution.
• Lets assume that the actual resource 1
  productivity was 10 higher than expected (0.55),
  while the actual resource 2 productivity was 10
  lower (0.27).
• Lets assume that the productivity of these
  resources did not change during project
  execution.
• Our task - to estimate project performance, to
  forecast future project results, and to decide if
  corrective action is necessary.

33
Sample Project Execution - 1st week

• We will use Resource analysis, Success
  Probability analysis, and Earned Value analysis.
• We assume that estimates were done each week and
  will analize trends.
• Initial baseline data (estimate at completion)
• Project Finish - 10.05.2002 1600
• Project Cost - 24000.00

34
Sample Project Execution - 1st week

• After the first week

35
Resource Analysis - 1st week

• Providing Resource Analysis we shall decide if
  the actual deviations in resource productivity
  are accidental or the planned productivity should
  be adjusted.
• Lets adjust them raising productivity of
  resource 1 by 5 (0.525) and lowering the
  productivity of resource 2 by the same 5
  (0.285).
• Our new forecast (estimate at completion)
• Project Finish - 15.05.2002 1509
• Project Cost - 24028.09

36
Resource Analysis - 1st week
Advice your project may be late and over budget
37
Success Probability Analysis 1st week
38
Success Probability Analysis 1st week

• The cost probability trends are positive, timely
  performance probability trend is negative.
• Advice pay attention to resource productivity.

39
Earned Value Analysis 1st week
Advice everything is fine. Your project will finish early and under budget Advice everything is fine. Your project will finish early and under budget






ACWP 3200
BCWP 3280
BCWS 3200
CV 80
SV 80
CPI 1.025
SPI 1.025
40
Resource Analysis - 2nd week

• New performance data show that the planned
  resource productivity should be adjusted again.
• Lets adjust them raising productivity of
  resource 1 to 0.5375 and lowering the
  productivity of resource 2 to 0.2775).
• Our 2nd forecast (estimate at completion)
• Project Finish - 17.05.2002 1035
• Project Cost - 24107.63

41
Resource Analysis - 3rd week

• New performance data show that the planned
  resource productivity should be made equal to the
  actual because they did not change from the
  project start.
• Our 3rd forecast (estimate at completion)
• Project Finish - 20.05.2002 1226
• Project Cost - 24242.44

42
Resource Analysis - 3rd week
43
Resource Analysis

• These forecasts will not change later. The
  forecasts based on resource analysis might be
  very accurate but are not easy to make and
  require detailed performance reports.
• Besides they do not consider project risks that
  depend on factors other than resource
  performance.

44
Success Probability Analysis

• Success Probability shows current project status,
  Success Probability trends show project manager
  if corrective action is needed.
• Success Probability trends for our Sample project
  is shown in the next slide.
• In the same slide you will see Earned Value data
  for the Sample Project.

45
Success Probability Analysis
46
Success Probability Analysis

• Success probability trends show us that the
  project will be
• certainly late and
• probably over budget of 24000
• though certainly under budget of 25000.

47
Earned Value Analysis

• Earned Value Analysis data do not show problems
  with our project too long. Quite contrary it
  shows that everything is fine till the end of the
  execution of activity 1.
• Trends of Earned Value data are shown in the next
  slide.

48
Earned Value Analysis
Parameter 04.03.2002 11.03.2002 18.03.2002 25.03.2002 01.04.2002 08.04.2002 15.04.2002 22.04.2002 29.04.2002
ACWP 3200 6400 9600 12800 16000 18109.1 19309.1 20509.1 21709.1
BCWP 3280 6560 9840 13120 16400 18480 19560 20640 21720
BCWS 3200 6400 9600 12800 16000 19200 20400 21600 22800
CV 80 160 240 320 400 370.89 250.89 130.89 10.89
CV 2.5 2.5 2.5 2.5 2.5 2.05 1.3 0.64 0.05
SV 80 160 240 320 400 -720 -840 -960 -1080
SV 2.5 2.5 2.5 2.5 2.5 -3.75 -4.12 -4.44 -4.74
CPI 1.02 1.02 1.02 1.02 1.02 1.02 1.01 1.01 1
CPI 102.5 102.5 102.5 102.5 102.5 102.05 101.3 100.64 100.05
SPI 1.02 1.02 1.02 1.02 1.02 0.96 0.96 0.96 0.95
SPI 102.5 102.5 102.5 102.5 102.5 96.25 95.88 95.56 95.26
49
SDPM Project Management Technology

• We recommend using the optimistic project version
  for setting tasks for project implementers while
  the calculated contingency reserves should be
  used by the PM team for the management purposes.
• Start (finish) contingency reserves (buffers) are
  calculated as the difference between activity
  start (finish) time in the optimistic and target
  schedules.
• Contingency reserves are also calculated for the
  activity cost and material requirements.

50
Success Probability

• But the most valuable indicators of project
  performance are Success Probabilities -
  probabilities of meeting target project
  parameters.
• Trends of Success Probabilities show project
  manager if the corrective action is needed.
• The value of Success Probability shows current
  project status better than any other project
  parameter.

51
Project Control Parameters

• Project manager obtains the following estimates
  necessary for effective project control
• Probabilities of meeting target project
  parameters (success probabilities),
• Target activity start and finish dates, resource
  and material requirements and cost,
• Planned activity start and finish dates, resource
  and material requirements and cost in the current
  schedule,

52
Project Control Parameters

• Activity resource floats that show the time for
  which activity execution may be postponed without
  delaying project finish date in the current
  schedule,
• Activity contingency reserves (buffers) for time,
  cost and materials calculated as the difference
  between the corresponding optimistic and target
  parameters.
• The following slide shows the optimistic and
  target schedules, and other scheduling and risk
  analysis information for our Sample project.

53
Project Control Parameters
54
SDPM tips for the project control

• Plan day-to-day activities using the optimistic
  estimates but pay special attention to resource
  floats and to contingency reserves.
• Include the causes of delays in activity
  completion and cost overruns in performance
  reports.
• Regularly update the estimates in the optimistic,
  most probable and pessimistic project schedules.
• Regularly recalculate the success probabilities
  and analyse trends.

55
SDPM and Critical Chain - common

• You may notice that SDPM and Critical Chain
  approaches have a lot in common.
• Resource Critical Path is the same as Critical
  Chain.
• Therefore Critical Chain project buffer may be
  regarded as an analogue of SDPM contingency time
  reserve,
• feeding buffers are similar to resource floats.
• Both the SDPM and Critical Chain approaches
  recommend to use the optimistic estimates for
  setting the tasks for project implementers.
• But there are differences too.

56
SDPM and Critical Chain - different

• We cannot agree with the Critical Chain theorys
  assumption that one should always avoid
  multitasking.
• Usually there are many subcritical activities
  belonging to the different network paths and even
  the minor delays in the execution of subcritical
  activities can lead to the changes in the RCP.
  This comes into conflict with the Critical Chain
  theorys assumption that the Critical Chain never
  changes during the project execution.
• The assumption that only one project drum (in our
  terminology - critical) resource exists is also
  dubious. Our experience shows that critical
  resources are different at the different phases
  of project lifecycle.

57
SDPM technology steps 1

• Assess risks and create optimistic, pessimistic
  and expected estimations of activity duration and
  volumes, resource productivity and quantity,
  activity and resource cost, calendars, etc.

• Estimates are usually based not only on expert
  judgement but also on regulatory or corporate
  norms.

58
SDPM technology steps 2

• Calculate optimistic, most probable, and
  pessimistic resource and cost constrained project
  schedules.

59
SDPM technology steps 3

• Calculate project and each phase desired finish
  dates and costs (with the desired probability of
  successful execution).

60
SDPM technology steps 4

• Negotiate and define target finish dates and
  costs.

61
SDPM technology steps 5

• Calculate target schedule with the most probable
  activity duration but target finish dates
  (backward resource constrained schedule).

62
SDPM technology steps 6

• Determine time and cost buffers, and
  probabilities of meeting target parameters.

63
SDPM technology steps 7

• Use the optimistic schedule as a plan for the
  employees.

• Using optimistic estimates, we increase our
  chances to obtain the reports on any deviations
  from the proper activity execution. This
  information is necessary for quality and risk
  analysis.

64
SDPM technology steps 8

• Control risks and regularly recalculate necessary
  time buffers and success probabilities.

65
THANK YOU

• We would appreciate your comments on this
  presentation.
• We invite everybody interested in developing
  common approaches to contact Moscow PMI Chapter
  (E-mail spider_at_mail.cnt.ru).