Presentation on theme: "Cost Estimation Tools and Techniques"— Presentation transcript:
1 Week 10: Project Cost Management (2) Human Resource Quality Communication
2 Cost Estimation Tools and Techniques 3 basic tools and techniques for cost estimates:analogous or top-down: use the actual cost of a previous, similar project as the basis for the new estimatebottom-up: estimate individual work items and sum them to get a total estimateparametric: use project characteristics in a mathematical model to estimate costs
3 Constructive Cost Model (COCOMO) Barry Boehm helped develop the COCOMO models for estimating software development costsParameters include source lines of code or function pointsCOCOMO II is a computerized model available on the WebBoehm suggests that only parametric models do not suffer from the limits of human decision-makingSee “Diktat Proyek Manajemen (7.7)” / “Slides 7-3”Homeworks from week 9 ???IndividualsGroups (optional)
4 Typical Problems with IT Cost Estimates Developing an estimate for a large software project is a complex task requiring a significant amount of effort. Remember that estimates are done at various stages of the projectMany people doing estimates have little experience doing them. Try to provide training and mentoringPeople have a bias toward underestimation. Review estimates and ask important questions to make sure estimates are not biasedManagement wants a number for a bid, not a real estimate. Project managers must negotiate with project sponsors to create realistic cost estimates
5 Business Systems Replacement Project Cost Estimate Overview
6 Business Systems Replacement Project Cash Flow Analysis
7 Cost BudgetingCost budgeting involves allocating the project cost estimate to individual work items and providing a cost baselineFor example, in the Business Systems Replacement project, there was a total purchased cost estimate for FY97 of $600,000 and another $1.2 million for Information Services and TechnologyThese amounts were allocated to appropriate budgets as shown in Table 7-6
8 Business Systems Replacement Project Budget Estimates for FY97 and Explanations
9 Cost Control Project cost control includes monitoring cost performanceensuring that only appropriate project changes are included in a revised cost baselineinforming project stakeholders of authorized changes to the project that will affect costsEarned value management is an important tool for cost control
10 Earned Value Management (EVM) EVM is a project performance measurement technique that integrates scope, time, and cost dataGiven a baseline (original plan plus approved changes), you can determine how well the project is meeting its goalsYou must enter actual information periodically to use EVM.Next figure shows a sample form for collecting information
11 Cost Control Input Form for Business Systems Replacement Project (use software tools)
12 Earned Value Management Terms The planned value (PV), formerly called the budgeted cost of work scheduled (BCWS), also called the budget, is that portion of the approved total cost estimate planned to be spent on an activity during a given periodActual cost (AC), formerly called actual cost of work performed (ACWP), is the total of direct and indirect costs incurred in accomplishing work on an activity during a given periodThe earned value (EV), formerly called the budgeted cost of work performed (BCWP), is an estimate of the value of the physical work actually completed
14 Earned Value FormulasEarned Value = BCWP = Budgeted Cost Work PerformedActual Cost = ACWP = Actual Cost Work PerformedBCWS = Budgeted Cost Work Scheduled
15 Rules of Thumb for Earned Value Numbers Negative numbers for cost and schedule variance indicate problems in those areas. The project is costing more than planned or taking longer than plannedCPI and SPI less than 100% indicate problems
16 Earned Value Calculations for a One-Year Project After Five Months (see example file .xls)
18 Project Portfolio Management Many organizations collect and control an entire suite of projects or investments as one set of interrelated activities in a portfolioFive levels for project portfolio managementPut all your projects in one databasePrioritize the projects in your databaseDivide your projects into two or three budgets based on type of investmentAutomate the repositoryApply modern portfolio theory, including risk-return tools that map project risk on a curve
19 Using Software to Assist in Cost Management Spreadsheets are a common tool for resource planning, cost estimating, cost budgeting, and cost controlMany companies use more sophisticated and centralized financial applications software for cost informationProject management software has many cost-related features
21 Group TaskEstimate the cost of your project depends on your detailed WBS (code implementation).
22 Latihan: Cost Controlling (1) Proyek A dengan estimasi durasi 8 bulan dan total anggaran Rp. 80 juta. Setelah 2 bulan, proyek dikontrol. Manajer proyek mengatakan proyek berjalan dengan anggaran di bawah rencana, hanya 15 juta yang baru dikeluarkan dan 25% kegiatan telah selesai.Proyek B dengan estimasi durasi 8 bulan dan total anggaran Rp. 80 juta. Setelah 2 bulan proyek dikontrol. Manajer proyek mengatakan proyek berjalan dengan anggaran 5 juta lebih dari rencana, dengan penyelesaian 20%.Asumsi: biaya proyek terbagi secara merata pada periode pengerjaan.
23 Latihan: Cost Controlling (2) Kesimpulan apa yang dapat diambil dari data-data yang Anda terima pada kasus di atas ?Hitunglah variabel-variabel yang diperlukan untuk mengevaluasi jalannya proyek !Kesimpulan apa yang dapat Anda lihat setelah proyek dievaluasi dengan variabel-variabel kontrol biaya ?
24 The Importance of Human Resource Management People determine the success and failure of organizations and projectsRecent statistics about IT workforce:The total number of U.S. IT workers was more than 10.1 million in December 2002, up from 9.9 million in January 2002IT managers predict they will need to hire an additional 1.2 million workers in the near futureHiring by non-IT companies outpaces hiring by IT companies by a ratio of 12:1
25 What is Project Human Resource Management? Project human resource management includes the processes required to make the most effective use of the people involved with a project. Processes includeOrganizational planningStaff acquisitionTeam development
26 Keys to Managing People Psychologists and management theorists have devoted much research and thought to the field of managing people at workImportant areas related to project management includemotivation (intrinsic and extrinsic)influence and powereffectiveness
28 McGregor’s Theory X and Theory Y Douglas McGregor popularized the human relations approach to management in the 1960sTheory X: assumes workers dislike and avoid work, so managers must use coercion, threats, and various control schemes to get workers to meet objectivesTheory Y: assumes individuals consider work as natural as play or rest and enjoy the satisfaction of esteem and self-actualization needsTheory Z: introduced in 1981 by William Ouchi and is based on the Japanese approach to motivating workers, emphasizing trust, quality, collective decision making, and cultural values
29 Thamhain and Wilemon’s Ways to Have Influence on Projects 1. Authority: the legitimate hierarchical right to issue orders2. Assignment: the project manager's perceived ability to influence a worker's later work assignments3. Budget: the project manager's perceived ability to authorize others' use of discretionary funds4. Promotion: the ability to improve a worker's position5. Money: the ability to increase a worker's pay and benefits6. Penalty: the project manager's ability to cause punishment7. Work challenge: the ability to assign work that capitalizes on a worker's enjoyment of doing a particular task8. Expertise: the project manager's perceived special knowledge that others deem important9. Friendship: the ability to establish friendly personal relationships between the project manager and others
30 Organizational Planning Organizational planning involves identifying, documenting, and assigning project roles, responsibilities, and reporting relationshipsOutputs and processes includeproject organizational chartswork definition and assignment processresponsibility assignment matrixesresource histograms
31 Sample Organizational Chart for a Large IT Project
34 Staff AcquisitionStaffing plans and good hiring procedures are important in staff acquisition, as are incentives for recruiting and retentionSome companies give their employees one dollar for every hour a new person they helped hire worksSome organizations allow people to work from home as an incentiveResearch shows that people leave their jobs because they don’t make a difference, don’t get proper recognition, aren’t learning anything new, don’t like their coworkers, and want to earn more money
35 Resource LevelingResource leveling is a technique for resolving resource conflicts by delaying tasksThe main purpose of resource leveling is to create a smoother distribution of resource usage and reduce overallocation
37 Team DevelopmentIt takes teamwork to successfully complete most projectsTraining can help people understand themselves, each other, and how to work better in teamsTeam building activities includephysical challengespsychological preference indicator tools
39 Individual TaskIdentify what is the type of your co-workers in your project ?Is he / she appropriate to the job descriptions ?
40 What Is Quality?The International Organization for Standardization (ISO) defines quality as the totality of characteristics of an entity that bear on its ability to satisfy stated or implied needsOther experts define quality based onconformance to requirements: meeting written specificationsfitness for use: ensuring a product can be used as it was intended
41 Project Quality Management Processes Quality planning: identifying which quality standards are relevant to the project and how to satisfy themQuality assurance: evaluating overall project performance to ensure the project will satisfy the relevant quality standardsQuality control: monitoring specific project results to ensure that they comply with the relevant quality standards while identifying ways to improve overall quality
42 Quality PlanningIt is important to design in quality and communicate important factors that directly contribute to meeting the customer’s requirementsDesign of experiments helps identify which variables have the most influence on the overall outcome of a processMany scope aspects of IT projects affect quality like functionality, features, system outputs, performance, reliability, and maintainability (ISO 9126)
43 Quality AssuranceQuality assurance includes all the activities related to satisfying the relevant quality standards for a projectAnother goal of quality assurance is continuous quality improvementBenchmarking can be used to generate ideas for quality improvementsQuality audits help identify lessons learned that can improve performance on current or future projects
44 Quality Control The main outputs of quality control are acceptance decisionsreworkprocess adjustmentsSome tools and techniques includePareto analysisstatistical samplingSix Sigmaquality control charts
45 Pareto AnalysisPareto analysis involves identifying the vital few contributors that account for the most quality problems in a systemAlso called the rule, meaning that 80% of problems are often due to 20% of the causesProject Managers know that 20 percent of the work (the first 10 percent and the last 10 percent) consume 80 percent of your time and resourcesPareto diagrams are histograms that help identify and prioritize problem areas
47 TestingMany IT professionals think of testing as a stage that comes near the end of IT product developmentTesting should be done during almost every phase of the IT product development life cycle
48 Testing Tasks in the Software Development Life Cycle
49 Types of TestsA unit test is done to test each individual component (often a program) to ensure it is as defect free as possibleIntegration testing occurs between unit and system testing to test functionally grouped componentsSystem testing tests the entire system as one entityUser acceptance testing is an independent test performed by the end user prior to accepting the delivered system
50 Group TaskIdentify the ISO 9126 (available in the course web and dictat 10.6), what kind of Software Qualities will be tested in your project?
51 Project Communications Management Processes Communications planning: determining the information and communications needs of the stakeholdersInformation distribution: making needed information available in a timely mannerPerformance reporting: collecting and disseminating performance informationAdministrative closure: generating, gathering, and disseminating information to formalize phase or project completion
52 Sample Stakeholder Analysis for Project Communications
54 The Impact of the Number of People on Communications Channels
55 Performance Reporting Performance reporting keeps stakeholders informed about how resources are being used to achieve project objectivesStatus reports describe where the project stands at a specific point in timeProgress reports describe what the project team has accomplished during a certain period of timeProject forecasting predicts future project status and progress based on past information and trendsStatus review meetings often include performance reporting
56 Administrative Closure A project or phase of a project requires closureAdministrative closure producesproject archivesformal acceptancelessons learned
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