1. From Russia With Love: Truly Integrated Project Scope, Schedule, Resource and Risk Information Vladimir Liberzon, PMP and Russell D. Archibald, PMP

2. 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

3. 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

4. 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

5. 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)

6. 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

7. 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

8. 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

9. 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

10. Eight Integration Methods Used 1.Systematic scope definition (indentured structures) 2.Network planning 3.Resources: Consumable, renewable, utilized & produced Units, teams/crews, interchangeable units or crews Assigned to project activities Constraints in both forward & backward passes

11. Eight Integration Methods (Cont’d) 4.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

12. Eight Integration Methods (Cont’d) 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

13. Eight Integration Methods (Cont’d) 8.Current probabilities of success calculated and trends determined for: Schedules Costs Resources

14. 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

15. 1. Multiple Project/Work Breakdown Structures Life cycle Deliverables Physical areas Responsibilities Functional type of work Cost account Contract Others

16. 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

17. 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

18. 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

19. 4. Resource Critical Path/RCP (Cont’d) 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

20. 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

21. 5. Risk Simulation & Success Probability Analysis (Cont’d) 3 estimates are made for: Resource usage or productivity rates Work scope & volume Activity duration (if estimated directly) Cost estimates Calendar/weather variation

22. 5. Risk Simulation & Success Probability Analysis (Cont’d) 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.

23. 5. Risk Simulation & Success Probability Analysis (Cont’d) 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

24. 5. Risk Simulation & Success Probability Analysis (Cont’d) 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

25. 5. Risk Simulation & Success Probability Analysis (Cont’d) 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

26. 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

27. 6. Success Probability Trends (Cont’d) Success probabilities change due to: –Performance results –Scope changes –Cost changes –Risk changes –Resource changes

28. 6. Success Probability Trends (Cont’d) 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

29. 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

30. Illustration: Software Purchase Project Target Schedule

31. Illustration Software Purchase Project Let’s 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 Let’s 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

32. Success Probability Trends for Software Purchase Project

33. EVA Trends for Software Purchase Project Next slide shows Cost Performance Index/CPI & Schedule Performance Index/SPI trends for the Software Purchase project

34. CPI & SPI Trends for Software Purchase Project

35. 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)

36. Success Probability Trends for Software Purchase Project

37. 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

38. Sample Project Gantt Chart

39. 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!

40. EVA of Sample Project ParameterValue AC100 EV100 PV10 SV90 CPI1 CPI%100 SPI10 SPI%1000

41. 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.

42. 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

43. Differences With Critical Chain Don’t agree that “one should always avoid multi-tasking” Don’t accept CC assumptions that: –“Critical chain never changes” –Only one “project drum [critical] resource” exists Our experience: critical resources change in different project phases

44. 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

45. 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

46. Recommendations for Implementing SDPM (Cont’d) Set agreed target dates & costs, calculate success probabilities Set optimistic targets for project implementers and manage calculated contingency reserves

47. Recommendations for Implementing SDPM (Cont’d) 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

48. Conclusions For effective project management, truly integrated information is required: –Scope –Schedule –Resources –Cost –Risk

49. Conclusions (Cont’d) Truly integrated information is practical to produce Identifying the resource critical path and calculating success probability trends help to produce more successful project performance

50. 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

51. Questions? As time permits now, & During the remainder of the Congress Via e-mail/Web: “Vladimir Liberzon” spider@mail.cnt.ru “Russ Archibald” archie@unisono.net.mx Info on Spider Project package: www.spiderproject.ru

52. Thanks for Listening We appreciate your comments We look forward to further feedback and exchange