Stage III: Execution Stave IV: Monitoring and Control

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Stage III Execution Stave IV Monitoring and
Control

• Earned Value Analysis
• Burns Chapter 8 pages 10-13
• Burns 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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The Project Control Process

• Control
• The process of comparing actual performance
  against plan to identify deviations, evaluate
  courses of action, and take appropriate
  corrective action.
• Project Control Steps
• Setting a baseline plan.
• Measuring progress and performance.
• Comparing plan against actual.
• Taking action.
• Tools
• Tracking and baseline Gantt charts
• Control charts

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What is a baseline?

• It makes the plan difficult to change
• Its an anchor point for measuring performance
  against plan
• Planned cost
• Planned schedule
• Planned scope

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Baseline and Tracking Gantt Charts
FIGURE 13.1
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Project Schedule Control Chart
FIGURE 13.2
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Disparity Among Monitoring Systems

• Time-Phase Baseline Plan
• Corrects the failure of most monitoring systems
  to connect a projects actual performance to its
  schedule and forecast budget.
• Systems that measure only cost variances do not
  identify resource and project cost problems
  associated with falling behind or progressing
  ahead of schedule.
• Earned Value Cost/Schedule System
• An integrated project management system based on
  the earned value concept that uses a time-phased
  budget baseline to compare actual and planned
  schedule and costs.

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Glossary of Terms
EV Earned value for a task is simply the percent complete times its original budget. Stated differently, EV is the percent of the original budget that has been earned by actual work completed.
PV The planned time-phased baseline of the value of the work scheduled. An approved cost estimate of the resources scheduled in a time-phased cumulative baseline BCWSbudgeted cost of the work scheduled.
AC Actual cost of the work completed. The sum of the costs incurred in accomplishing work. ACWPactual cost of the work performed.
CV Cost variance is the difference between the earned value and the actual costs for the work completed to date where CV EV AC.
SV Schedule variance is the difference between the earned value and the baseline line to date where SV EV PV.
BAC Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts.
EAC Estimated cost at completion.
ETC Estimated cost to complete remaining work.
VAC Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion.
TABLE 13.1
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Developing an Integrated Cost/Schedule System

• Define the work using a WBS.
• Scope
• Work packages
• Deliverables
• Organization units
• Resources
• Budgets
• Develop work and resource schedules.
• Schedule resources to activities
• Time-phase work packages into a network

1. Develop a time-phased budget using work packages
   included in an activity. Accumulate budgets (PV).
2. At the work package level, collect the actual
   costs for the work performed (AC). Multiply
   percent complete times original budget (EV).
3. Compute the schedule variance (EV-PV) and the
   cost variance (EV-AC).

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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 (Change Control Board) 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 Phase IIIthe Execution
Process Group

• Integration management
• Monitor and Control Project Work
• Perform Integrated Change Control
• Scope management
• Control Scope
• Time management
• Control Schedule
• Cost management
• Control cost
• Quality management
• Perform Quality Control

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Processes utilized in Phase III, the Execution
Process Group

• Communication management
• Distribute Information
• Report Performance
• Risk management
• Monitor and Control Risks
• Procurement management
• Administer Procurements

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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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A Change Control Process
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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--EVA

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

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Earned Value Analysis Terms

• Budgeted cost of work performed (BCWP), also
  called Earned Value, EV, is the percentage of
  work actually completed multiplied by the budget
  for the activity
• Budgeted cost of work scheduled (BCWS), also
  called Planned Value, PV, 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, AC, are the total direct and
  indirect costs incurred in accomplishing work on
  an activity during a given period

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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 EV - PV
• 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 EV - AC
• 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 EV/PV
• 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 EV/AC
• 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, as determined by the CP
• ETAC Estimated (revised) time to complete
• Assuming the TAC was 12 months and the SPI .77,
  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
• EAC updated estimate of the total project cost
  BAC/CPI BAC/CI
• ETAC updated estimate of the total project
  duration TAC/SPI TAC/SI

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Figure 6-3. Earned Value Chart for Project After
Five Months
EAC
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Cost/Schedule Graph
FIGURE 13.4
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Earned-Value Review Exercise
FIGURE 13.5
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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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The End..
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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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