2. Stage III: Project Execution and Control Earned Value Analysis B: Chapter 8: pages 10-13 B: Chapter 12: the entire chapter

3. 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?

4. Freeze Requirements???  What are the PROS?  What are the CONS?

5. 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

6. 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 is considered a modern BEST PRACTICE

7. 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 “Wouldn’t 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 system’s details

8. Processes utilized in Stage III  Integration management:  Project plan execution; integrated change control  Scope management:  Scope change control  Time management:  Schedule control  Cost management:  Cost control  Quality management:  Quality control

9. Processes utilized in Stage III, Continued  Communication management:  Information distribution, Performance reporting  Risk management:  Risk monitoring and control  Procurement management:  Contract administration

10. Controlling Changes to the Project Schedule  Perform reality checks on schedules  Allow for contingencies??  Don’t 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

11. 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

12. Factors leading to poor Execution  Multitasking—doing several things at once  Procrastination (student syndrome)—putting things off until the last minute  Others we will discuss later

13. Multitasking A finishes B finishes

14. 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

15. 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

16. Figure 6-1. Cost Control Input Form for Business Systems Replacement Project

17. Earned Value Analysis Terms  Budgeted cost of work performed (BCWP), also called earned value, is the percentage of work actually completed multiplied by the budget for the activity  Budgeted cost of work scheduled (BCWS),  Budgeted cost of work scheduled (BCWS), also called planned value, 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, are the total direct and indirect costs incurred in accomplishing work on an activity during a given period

18. Earned Value analysis--EVA  Earned value = Budgeted Cost of Work Performed (BCWP)  Planned value = Budgeted Cost of Work Scheduled (BCWS), and  Actual Cost = Actual Cost of Work Performed (ACWP)  When you complete an activity, you earn the budgeted value of that activity

19. Schedule Variance (SV)  Defined as the difference between the budgeted cost of work performed and the budgeted cost of work scheduled  = BCWP - BCWS  Indicates the deviation between the work content performed and the work content scheduled for the control period

20. Cost Variance (CV)  Defined as the difference between the budgeted cost of work performed and the actual cost of work performed  = BCWP - ACWP  A positive CV indicates a lower actual cost than budgeted for the control period, while a negative CV indicates a cost overrun

21. Schedule Performance Index (SPI)  Defined as the ratio BCWP/BCWS  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

22. Cost Performance Index (CPI)  Defined as the ratio BCWP/ACWP  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

23. Table 6-7. Earned Value Formulas

24. Table 6-6. Earned Value Calculations for One Activity After Week One

25. 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

26. Figure 6-2. Earned Value Calculations for a One-Year Project After Five Months

27. 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.

28. Why Earned Value Analysis??  You can’t tell what your true cost variance is because you don’t 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?

29. 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

30. Updating schedule estimates  TAC = Time at completion = total time required to complete the schedule  ETAC = Estimated (revised) time to complete  Assuming the TAC was 12 months what is the ETAC?  ETAC = TAC / SPI = 12 /.77  15.6 months  Project will be delayed almost 4 months

31. Updating, Cont’d  WR = Work Remaining = budgeted cost of the work not yet accomplished by the end of the reporting period  WR = BAC - BCWP  ETC = updated estimate of the cost of work remaining = COST(WR)  EAC = updated estimate of the total project cost = ACWP + ETC

32. Figure 6-3. Earned Value Chart for Project After Five Months EAC

33. 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

34. 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

35. Tracking: MS Project will track—  Task start dates  Task finish dates  Task duration  Task cost work  Percentage of task that is complete

36. 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

37. 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

38. Indicating progress on a task as a percentage  In the task name field of the Gantt Chart  Double click—this brings up the task information sheet  Select the general tab  In the percentage complete box type a whole number between 0 and 100

39. 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

43. 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??