Project

Management
What is a Project
Projects and Operations
What is a Project
 • It is common practice for an organization to have
more than one project active at a time. In fact,
several projects that share common characteristics
or are related in some way are often grouped
together to make management or the project more
efficient.

Programs, • A group of related projects is called a program.

Portfolios
• If there are multiple projects and programs in an
organization, they can further be grouped together
into one or more portfolios. A portfolio is a
collection of projects and programs that satisfy the
strategic needs of an organization.
What is Project Management
Project Management Diamond
Project Management Phases
Project Management Phases
Project risk versus knowledge of project
Stakeholder influence and cost change impact
PMI Framework
PM Processess

Why • Deliverable: ROI

What • SOW, Requirements

How • Design Specification, SDP, Lifecycle

Do • Execution

Done • PPR
Organizational Influences
Organizational Influences…
Organizational Influences…
 WBS
Project Management Estimation
Scheduling
How To Schedule
• 1. Identify “what” needs to be done
• Work Breakdown Structure (WBS)
• 2. Identify “how much” (the size)
• Size estimation techniques
• 3. Identify the dependency between tasks
• Dependency graph, network diagram
• 4. Estimate total duration of the work to be
done
• The actual schedule
Project Elements
• A Project: functions, activities, tasks
A Full WBS Structure
• Up to six levels (3-6 usually) such as

• Upper 3 can be used by customer for reporting (if part of RFP/RFQ)

• Different level can be applied to different uses
• Ex: Level 1: authorizations; 2: budgets; 3: schedules
WBS Chart Example
WBS Outline Example
0.0 Retail Web Site
1.0 Project Management
2.0 Requirements Gathering
3.0 Analysis & Design
4.0 Site Software Development
4.1 HTML Design and Creation
4.2 Backend Software
4.2.1 Database Implementation
4.2.2 Middleware Development
4.2.3 Security Subsystems
4.2.4 Catalog Engine
4.2.5 Transaction Processing
4.3 Graphics and Interface
4.4 Content Creation
5.0 Testing and Production
WBS Chart Example
WBS Chart Example
 • Generic term for discrete tasks with definable end
results
• Typically the “leaves” on the tree
• The “one-to-two” rule
• Often at: 1 or 2 persons for 1 or 2 weeks
• Basis for monitoring and reporting progress
• Can be tied to budget items (charge numbers)
• Resources (personnel) assigned
Work Packages • Ideally shorter rather than longer
• Longer makes in-progress estimates needed
• These are more subjective than “done”
• 2-3 weeks maximum for software projects
• 1 day minimum (occasionally a half day)
• Not so small as to micro-manage
 Top-Down
• The problem is well understood
• Technology and methodology are not new
• This is similar to an earlier project or
problem

Bottom-Up
• Time consuming
WBS • Needs more requirements complete
Techniques Analogy
• Based on past actual experience

Rolling Wave
• 1st pass: go 1-3 levels deep
• Gather more requirements or data
• Add more detail later
Apply Earned Value
Analysis

• Earned Value Analysis (EVA)

• Earned Value Analysis is an objective
method to measure project
performance in terms of scope, time
and cost
• Use EVA metrics are used to measure
project health and project performance
 Point in Time Evaluation

How much work did you PLAN to

complete? (Planned Value)
Earned Value
Characteristics How much work did you ACTUALLY
complete? (Earned Value)

How much did you spend to

complete the work? (Actual Cost)
 Planned Value is the work scheduled and
the authorized budget to accomplish that
work. For example, if a project has a
budget of $100,000 and month six
represents 50 percent of the project
work, the PV for month six is $50,000.
Planned Value
(PV) Planned Value used to be known as the
Budget Cost of Work Schedule (BCWS)
 • Earned Value is the physical work
completed to date and the authorized
budget for that work. For example, if a
project has a budget of $100,000 and
Earned Value the work completed to date represents
25 percent of the entire project work,
(EV) its EV is $25,000.
• Earned Value used to be known as the
Budgeted Cost of Work Performed
(BCWP).
 • Actual Cost is the actual amount of
monies the project has required to
date. For example, if a project has a
Actual Cost budget of $100,000 and $35,000 has
been spent on the project to date, the
(AC) AC of the project would be $35,000.
• Actual Cost used to be known as Actual
Cost of Work Performed (ACWP).
 • A $10,000 software project is
scheduled for 4 weeks.
• At the end of the third week, the
project is 50% complete and the actual
costs to date is $9,000
EVA Example • Planned Value (PV) = $7,500
• Earned Value (EV) = $5,000
• Actual Cost (AC) = $9,000
 November 21, 2005

• Schedule Variance (SV) – measures

how project is doing relative to the
schedule
SV = EV – PV
Earned Value Positive➔ Ahead of Sched., Negative
➔ Behind Sched.
Concepts • Cost Variance (CV) – measures how
(cont.) project is performing; productivity
measure
CV = EV – AC
Positive ➔Efficient, Negative ➔
Inefficient

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 November 21, 2005

• Schedule Performance Index (SPI) –

measure of schedule compliance: is
work being done at the planned rate?
SPI = EV/PV
Earned Value <1 ➔ Slower than planned, >1 ➔
Concepts Faster than planned
• Cost Performance Index (CPI) –
(cont.) productivity measure: is the work
costing what was expected?
CPI = EV/AC
< 1 ➔Inefficient, > 1 ➔ Efficient

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 • Schedule Variance
• = EV – PV = $5,000 – $7,500 = - $2,500
• Schedule Performance Index (SPI)
• = EV/PV = $5,000 / $7,500 = .66
• Cost Variance
What is the •
•
= EV – AC = $5,000 - $9,000 = - $4,000
Cost Performance Index (CPI)
project health? • = EV/AC = $5,000 / $9,000 = .55

• Objective metrics indicate the project

is behind schedule and over budget.
• On-target projects have an SPI and CPI
of 1 or greater
 • If the project continues at the current
performance, what is the true cost of
the project?
Forecasting • Estimate At Complete
• = Budget At Complete (BAC) / CPI
Costs • = $10,000 / .55 = $18,181
• At the end of the project, the total
project costs will be $18,181
One More
Example
 November 21, 2005

• Estimate To Complete (ETC) – estimate

of the effort required to complete the
Earned Value project from the current date
Concepts ETC = (BAC – EV)/CPI
• Estimate At Completion (EAC) – the
(cont.) estimated total cost of the project
EAC = AC + ETC

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 Cost
Performance
Index (CPI).

• A project with a CPI of .93 means you are spending 1.00 for every .93
worth of work accomplished. Therefore, a CPI under 1.00 means the
project is performing poorly against the plan.
 • EAC=Budget at Completion (BAC)/Cost
Performance Index (CPI)
• For example, if the project’s BAC is
$575,000 and the CPI is .91, the
EAC for this project is $631,868
EAC/ETC • Estimate to Complete (ETC)
• ETC=EAC-AC
 • Traffic Light status is useful in
Establish conveying overall project with one
color
Ranges to • Establish objective SPI and CPI ranges
to determine the true project color.
Guide Traffic • Green [1.0 - .95]
Light Status • Yellow [.94-.85]
• Red [.84, 0]
You are the Program Manager managing the construction of a new airport. Five
project managers are directly reporting to you. Each project manager is assigned a
part of the total scope of works to be executed independently. The total duration
allowed to complete all works is 24 months and the total approved budget is
$10,000,000.
At the end of the first year, you should have completed $6,000,000 worth of work
but the project is only 50% complete. Actual costs reported by each project
manager for the first year are:
Project manager 1: $200,000 , Project manager 2: $1,200,000 , Project manager 3:
$1,800,000 ,Project manager 4: $500,000 , Project manager 5: $900,000