Seattle Portland Baton Rouge New Orleans San Antonio

Netdesk.com

Project Management: Estimating and Monitoring

Jason CochranDirector of Information Technology

Trained, Certified, & Ready.

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

Trained, Certified, & Ready.

Project Management – Iron Triangle

Trained, Certified, & Ready.

Project Life Cycles

1. Initiating – Authorization of a project or a phase, Feasibility

2. Planning – Systematic approach to identifying the methods, resources,

and activities necessary to accomplish the objective

3. Executing – Management of resources and time

4. Controlling – Monitoring to identify variances

5. Closing – Obtaining sign-off from sponsor, Managing transfer of control

Trained, Certified, & Ready.

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.

Trained, Certified, & Ready.

Estimating

Question: What is the difference between an estimate and a total guess?

Answer: The person holding the pencil.

Trained, Certified, & Ready.

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

Trained, Certified, & Ready.

Confidence in Estimating

Trained, Certified, & Ready.

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.

Trained, Certified, & Ready.

Setting Phase Gates

Trained, Certified, & Ready.

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 Inputs1. Historical data on unit of work cost2. Detailed set of specifications, requirements, or blueprints3. Mathematical model (Parametric Formula) that represents

the relationships of the work involved

Trained, Certified, & Ready.

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

Trained, Certified, & Ready.

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

Trained, Certified, & Ready.

Bottom-up Estimating

Trained, Certified, & Ready.

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.

Trained, Certified, & Ready.

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

Trained, Certified, & Ready.

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

Trained, Certified, & Ready.

Monitoring – Earned ValueEarned 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

Trained, Certified, & Ready.

Earned Value - ExampleA 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

Trained, Certified, & Ready.

Monitoring – Schedule VarianceSchedule 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.

Trained, Certified, & Ready.

Schedule Variance- ExampleA 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

Trained, Certified, & Ready.

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.

Trained, Certified, & Ready.

Schedule Performance Index- ExampleA 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

Trained, Certified, & Ready.

Monitoring – Cost VarianceCost 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.

Trained, Certified, & Ready.

Cost Variance - ExampleA 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

Trained, Certified, & Ready.

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.

Trained, Certified, & Ready.

Cost Performance Index - ExampleA 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

Trained, Certified, & Ready.

Schedule and Cost Variance