From Russia With Love:

1
From RussiaWith Love

• Truly Integrated
• Project Scope, Schedule, Resource and Risk
  Information
• Vladimir Liberzon, PMP
• and Russell D. Archibald, PMP

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Need for Integrated Project Scope, Schedule,
Resource and Risk Information

1. Project performance estimation that includes all
   valuable factors
2. Reliable estimates of future project results
3. Early warning of potential problems
4. Proper motivation for activity performance
   sequencing resource allocation

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Presentation Objectives

• Describe proven methods used in Russia
• Success Driven Project Management/SDPM Unique
  aspects
• Discuss its application on a sample project
• Compare SDPM with earned value critical chain
  methods

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Success Driven Project Management/SDPM

• Planning Stage
• Calculate finish dates costs with the required
  probabilities of their successful achievement
• Set target dates, costs other restrictions
• Calculate success probabilities
• Determine contingency reserves
• Execution and Control
• Calculate current probabilities of achieving
  goals
• Track success probability trends
• Manage contingency reserves

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Success Probability

1. System forecasts resulting required resources
   contingency reserves based on user defined
   acceptable probability of success to meet
   specific scope, schedule cost targets
2. System calculates the probability of meeting
   imposed targets (success probabilities)

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The Project Planning Dilemma

• Goals
• Complete project ASAP with minimum cost, also
• Develop plan with guaranteed 100 success
• But 100 plan will not be competitive today

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Resolving the Dilemma

• Competitive, realistic plan must
• Make success of project probable (something less
  than 100)
• But still make it acceptable to project
  stakeholders
• Requires evaluation negotiation of various
  target success probabilities leading to
  well-informed decision to proceed

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Resource Critical Path/RCP

• True (resource) critical path must reflect ALL
  schedule constraints resource, finance, supply,
  calendar, imposed dates
• All constraints must be considered in both
  forward backward passes

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All Project Information Is Inter-related

• Project scope affects schedule, resources, cost,
  risk
• On many projects this information is not truly
  integrated because
• Separation of responsibilities
• Most PM software does not properly integrate and
  calculate it

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Eight Integration Methods Used

• Systematic scope definition (indentured
  structures)
• Network planning
• Resources
• Consumable, renewable, utilized produced
• Units, teams/crews, interchangeable units or
  crews
• Assigned to project activities
• Constraints in both forward backward passes

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Eight Integration Methods (Contd)

• Activity durations calculated scope or volume
  rate
• 5. True (resource) critical path calculated
• Logical schedule constraints
• Resource, financial supply limitations in both
  the forward and backward passes

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Eight Integration Methods (Contd)

• 6. Risk uncertainties simulated probability
  distribution for main project results (project
  its main phases finish dates, costs, resource
  requirements)
• 7. Actuals reported compared, contingency
  reserves tracked

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Eight Integration Methods (Contd)

• Current probabilities of success calculated and
  trends determined for
• Schedules
• Costs
• Resources

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Methods Unique to SDPM

1. Multiple breakdown structures
2. Resource information analysis
3. Activity duration calculation or estimation
4. Resource critical path, resource floats,
   resource contingency reserves
5. Risk simulation success probability analysis
6. Success probability trends

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1. Multiple Project/Work Breakdown Structures

• Life cycle
• Deliverables
• Physical areas
• Responsibilities

• Functional type of work
• Cost account
• Contract
• Others

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2. Resource Information Analysis

• Two types
• Consumable materials, supplies other
  expendables
• Renewable labor, equipment, facilities
• Units, teams, or assignment pools
• Norms for resource productivity
• May be utilized or produced

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3. Activity Duration Calculation or Estimation

• Activity volume is estimated (any measurable
  units)
• Volume often used as initial estimate duration
  calculated using resource productivity factors
• Uncertainties forecast by varying productivity
  factors

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4. Resource Critical Path

• True critical path reflects ALL schedule
  constraints
• Network logic, resource, finance, supply,
  calendar, imposed dates
• Activity float must reflect ALL constraints
• Most PM software packages ignore resource
  constraints on backward pass incorrect critical
  path

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4. Resource Critical Path/RCP (Contd)

• Activity resource float resource critical path
  reflect resource constraints during backward pass
• Activity resource float can be used feasibly
• Shows possible delay considering set of available
  resources
• Adding financial supply constraints to the
  Critical Chain definition you then have RCP

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5. Risk Simulation Success Probability Analysis

• Single, deterministic estimates produce plans
  with low probability of success
• Risk simulation produces more reliable results
• Risk simulation may be based on Monte-Carlo
  approach (impossible to use for large projects)
  or based on 3 scenarios approach

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5. Risk Simulation Success Probability Analysis
(Contd)

• 3 estimates are made for
• Resource usage or productivity rates
• Work scope volume
• Activity duration (if estimated directly)
• Cost estimates
• Calendar/weather variation

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5. Risk Simulation Success Probability Analysis
(Contd)

• Identified risk events are estimated to reflect
  their consequences, including risk response plans
  in optimistic, most probable or pessimistic
  project scenarios.
• All three scenarios are calculated.
• The probability curves are rebuilt using the
  three values obtained.

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5. Risk Simulation Success Probability Analysis
(Contd)

• Determine the desired probability of meeting
  project finish dates, costs and resource
  requirements
• Obtain desired project finish date, budget,
  resource requirements
• These data form basis for negotiating approval
  to proceed

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5. Risk Simulation Success Probability Analysis
(Contd)

• Negotiations may establish new targets
• Success probability is defined as the probability
  of meeting approved targets
• Dates, cost, quantity
• Success probability is the best indicator of
  current project status during execution

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5. Risk Simulation Success Probability Analysis
(Contd)

• Target schedule is the backward (from the target
  dates) resource constrained schedule using most
  probable estimates
• The optimistic schedule is used for setting task
  schedules for project implementers
• Contingency reserves or buffers
• Difference between activity start times (or cost,
  material requirements) in the optimistic and
  target schedules

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6. Success Probability Trends

• Success probabilities are calculated periodically
  stored
• Their trends show current project status
• Negative (downward) success probability trend
  indicates corrective action needed
• Positive success probability trend indicates
  performance is OK

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6. Success Probability Trends (Contd)

• Success probabilities change due to
• Performance results
• Scope changes
• Cost changes
• Risk changes
• Resource changes

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6. Success Probability Trends (Contd)

• Project managers are encouraged to solve
  uncertainties ASAP
• This can increase success probabilities even with
  activity finish delays cost overruns
• Postponing problem activities leads to negative
  trends in success probabilities
• This attribute of success probability trends is
  especially useful in new product development
  project management

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Illustration Software Purchase Project

• Our forum discussion now turns to sample project
  Software Purchase
• This project consists of 10 activities including
  2 milestones and uses 3 resources
• Resource productivities were estimated with 30
  reliability. Thus productivities in the
  pessimistic version were 30 lower and in the
  optimistic version 30 higher than in the most
  probable version

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Illustration Software Purchase Project
Target Schedule
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Illustration Software Purchase Project

• Lets assume that the actual productivity of the
  expensive resource was 20 higher than estimated
  and the low cost resource worked with a 20 lower
  productivity than expected
• Lets consider the most probable version as the
  baseline. The baseline cost is 66,220, Target
  cost (57 probability) is 70,000
• Next slide shows the success probability trends
  if our assumptions were true

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Success Probability Trendsfor Software Purchase
Project
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EVA Trendsfor Software Purchase Project

• Next slide shows Cost Performance Index/CPI
  Schedule Performance Index/SPI trends for the
  Software Purchase project

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CPI SPI Trendsfor Software Purchase Project
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SDPM and Earned Value Analysis

• SDPM success probability trends reflect
  performance results plus network dependencies
  project risks
• EVA reflects only performance results
• In the Sample project
• SPI exceeds 100 on August 11
• But on August 11 SPDM shows the probability of
  meeting baseline finish date is equal to zero
  (next slide)

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Success Probability Trendsfor Software Purchase
Project
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Earned Value Analysis

• EVA approach is not totally integrated
• EVA considers sunk costs but not
• Network logic dependencies
• Project risks
• Resource performance
• EVA problems are illustrated in the following
  slides for the sample project

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Sample Project Gantt Chart
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EVA of Sample Project

• If activity 3 is started first (in spite of the
  Gantt chart schedule) then after the first week
  the SPI will be 10 or 1000
• But on-schedule completion will be impossible!

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EVA of Sample Project
Parameter Value
AC 100
EV 100
PV 10
SV 90
CPI 1
CPI 100
SPI 10
SPI 1000
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Using EVA

• Recommend applying EVA to critical path
  activities only
• Cannot use EVA from one project phase to forecast
  results of another phase if resources are
  different.

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Common Features SDPM Critical Chain Method/CCM

• Resource critical path is the same as Critical
  Chain if we add financial and supply constraints
  to the Critical Chain definition
• CC project buffer is analogous to SDPM
  contingency time reserve
• Resource float is analogous to CC feeding
  buffers
• Both approaches recommend using optimistic
  estimates to set schedule

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Differences With Critical Chain

• Dont agree that one should always avoid
  multi-tasking
• Dont accept CC assumptions that
• Critical chain never changes
• Only one project drum critical resource
  exists
• Our experience critical resources change in
  different project phases

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Differences With Critical Chain

• CC more qualitative than quantitative
• Time cost reserve usage evaluation
• SDPM Success probability trends show if reserves
  expended faster or slower than planned more
  effective than
• CC Qualitative judgment whether buffers were
  properly utilized

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Recommendations for Implementing SDPM

• Simulate uncertainties to obtain probability
  distributions
• Set desired target probabilities, then calculate
  requirements to meet them
• Use these data to negotiate realistic commitments

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Recommendations for Implementing SDPM (Contd)

• Set agreed target dates costs, calculate
  success probabilities
• Set optimistic targets for project implementers
  and manage calculated contingency reserves

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Recommendations for Implementing SDPM (Contd)

• Control risks, revise recalculate success
  probabilities reflecting progress, changes,
  risk estimation updates
• Manage with success probability trends
• Negative trends take corrective action
  regardless of current level of success
  probabilities

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Conclusions

• For effective project management, truly
  integrated information is required
• Scope
• Schedule
• Resources
• Cost
• Risk

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Conclusions (Contd)

• Truly integrated information is practical to
  produce
• Identifying the resource critical path and
  calculating success probability trends help to
  produce more successful project performance

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Are These Methods Practical?

• Over past 10 years SDPM was successfully applied
  to hundreds of projects in
• Spider Project software automates the process

Aerospace Defense Banking Defense Engineering Construction Manufacturing Metallurgy Oil Gas Ship Building Software Development Telecommunications Others
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Questions?

• As time permits now,
• During the remainder of the Congress
• Via e-mail/Web
• Vladimir Liberzon spider_at_mail.cnt.ru
• Russ Archibald archie_at_unisono.net.mx
• Info on Spider Project package
  www.spiderproject.ru

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Thanks for Listening

• We appreciate your comments
• We look forward to further feedback and exchange