Project Management: Estimating and Monitoring

1. Project Management: Estimating and Monitoring Jason Cochran Director of Information Technology

2. Project Management • Project Management – Discipline of organizing and managing resources in such a way that the project is completed within defined scope, quality, time and cost constraints. • Program Management – Process of managing multiple ongoing inter-dependant projects. Program Management provides a layer above Project Management. • Product Development – Complete process of bringing a new product or service to market (consumer). The complete Product Development life cycle will consist of a series of projects

3. Project Management – Iron Triangle

4. Project Life Cycles Initiating – Authorization of a project or a phase, Feasibility Planning – Systematic approach to identifying the methods, resources, and activities necessary to accomplish the objective Executing – Management of resources and time Controlling – Monitoring to identify variances Closing – Obtaining sign-off from sponsor, Managing transfer of control

5. Project Life Cycles and Processes All Projects consist of a number of interlinked processes. These processes are iterative, occurring during each phase of the project life cycle, and interacting with each other.

6. Estimating Question: What is the difference between an estimate and a total guess? Answer: The person holding the pencil.

7. Estimate versus Bid An Estimate is a Project Document that is intended to predict how much time and the amount of resources a project will require. • Informal Estimate – a guess • Formal Estimate – based on analysis • Bid – commercial document

8. Confidence in Estimating

9. Phased Estimating Phasing – Method of separating sets of project activities into a series of sequential phases Phased Estimating – technique in which schedule and cost estimates are constructed separately for each stage of the project.

10. Setting Phase Gates

11. Parametric Estimating Parametric Estimating takes knowledge from similar, but not exact, projects and uses parameters, such as cost per unit, to estimate or scale cost or schedule information Parametric Estimating has Three Critical Inputs Historical data on unit of work cost Detailed set of specifications, requirements, or blueprints Mathematical model (Parametric Formula) that represents the relationships of the work involved

12. Phased versus Parametric Estimating • Phased Estimating is the preferred technique for IT projects never done before • Parametric Estimating is the preferred technique for IT projects that are similar to past projects

13. Bottom-up Estimating • Bottom-up Estimating is a time-consuming, but extremely accurate estimating technique. • Requires Work Breakdown Structure (WBS) • Estimates cost and schedule at the work package level of WBS • Rolls cost up to calculate totals

14. Bottom-up Estimating

15. First-time/First-use Penalty The First-time/First-use Penalty is a unit of measure that is used to represent the quantifiable inefficiencies and inaccuracies associated with executing a task for the first time.

16. Effort versus Duration • Effort is a measure of energy applied to a task • Effort-driven is a task that can be completed faster through the application of additional energy • Duration is a measure of how long a task will take to complete • Fixed-duration is a task that requires a set amount of time to complete

17. Schedule versus Resource • A project is Schedule-driven when the final delivery date is the overriding constraint • A project is Resource-driven when the availability of resources (people or money) is the overriding constraint

18. Monitoring – Earned Value • Earned Value Management – Earned Value is a cost-based performance measurement that compares the amount of work that was planned with what is actually being preformed. • Earned Value Components • Budgeted Cost of Work Scheduled (BCWS) – the estimate of costs needed to complete the scheduled project work • Budgeted Cost of Work Performed (BCWP) – the estimate of costs for work actually completed (also known as Earned Value) • Actual Cost of Work Performed (ACWP) – the actual cost of completing project work

19. Earned Value - Example A development project has been undertaken with an estimated length of two months and a cost of $30,000. One month into the project, 60% of the work has been done and $17,000 was spent to perform that work. • What is the BCWS? • $15,000 • What is the BCWP? • $18,000 • What is the ACWP? • $17,000

20. Monitoring – Schedule Variance • Schedule Variance (SV) is the measured difference between the planned or scheduled activity duration (Budgeted Cost of Work Scheduled) and the actual activity duration (Budgeted Cost of Work Performed). • SV = BCWP – BCWS • A positive SV indicates a task that is ahead of schedule. • A negative SV indicates a task that is behind schedule.

21. Schedule Variance- Example A development project has been undertaken with an estimated length of two months and a cost of $30,000. One month into the project, 60% of the work has been done and $17,000 was spent to perform that work. • What is the BCWS? • $15,000 • What is the BCWP? • $18,000 • What is the SV? • SV = $18,000 – $15,000 = +$3,000

22. Monitoring – Schedule Performance Index • Schedule Performance Index (SPI) is the ratio of work accomplished versus the work planned. • SPI = BCWP/BCWS • An SPI value greater than 1 indicates the work is ahead of schedule. • An SPI value less than 1 indicates the work is behind schedule.

23. Schedule Performance Index- Example A development project has been undertaken with an estimated length of two months and a cost of $30,000. One month into the project, 60% of the work has been done and $17,000 was spent to perform that work. • What is the BCWS? • $15,000 • What is the BCWP? • $18,000 • What is the SPI? • SPI = 18,000/15,000 = +1.2

24. Monitoring – Cost Variance • Cost Variance (CV) is the difference between the cost budgeted for an activity and actual cost to finish the activity. • CV = BCWP – ACWP • A positive CV indicates the project is under budget. • A negative CV indicates a budget overrun.

25. Cost Variance - Example A development project has been undertaken with an estimated length of two months and a cost of $30,000. One month into the project, 60% of the work has been done and $17,000 was spent to perform that work. • What is the BCWP? • $18,000 • What is the ACWP? • $17,000 • What is the CV? • CV = $18,000 - $17,000 = +$1,000

26. Monitoring – Cost Performance Index • Cost Performance Index (CPI) is ratio of cost budgeted to actual cost. • CPI= BCWP/ACWP • A CPI greater than 1 indicates the project is under budget. • A CPI less than 1 indicates a budget overrun.

27. Cost Performance Index - Example A development project has been undertaken with an estimated length of two months and a cost of $30,000. One month into the project, 60% of the work has been done and $17,000 was spent to perform that work. • What is the BCWP? • $18,000 • What is the ACWP? • $17,000 • What is the CPI? • CV = 18,000/17,000 = +1.06

28. Schedule and Cost Variance