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Schedule Management Cost Management

Project Management in the Information Age MASY1-GC 1250

Session 5

V 21.6

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The Project Schedule or Workplan

• The required work activities • Expressed in sequential order • With start and finish dates • The estimated duration for activities • The estimated work effort required • Relationships, dependencies, & constraints • The resources required • This establishes a baseline schedule!

Inputs Needed to Develop a Schedule

• Project scope statement • The Work Breakdown Structure (WBS) • Activity list • Activity attributes • Activity duration and effort • Relationships • Activity resource requirements • Resource calendars

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“Backward Chaining” Methodology

• Start with final outcomes / deliverables • Integrate resource information • Define activities for the desired outcomes • Determine the order of activities

(especially ‘critical’ ones!) • Be realistic! • Iterate!

The Work Breakdown Structure (WBS)

• Hierarchical “decomposition” of project scope • “Divide and conquer” • Can organize by:

o Project Phases o Deliverables

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WBS Example

• Developing a website: o Initiate the project o Plan the work o Gather requirements o Design the site o Build o Test o Deploy

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WBS Example

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Develop a website

2. Plan the work

3. Design the site

4. Build the site

5. Test 6. Deploy

1. Initiate the project

WBS Example (cont’d.)

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3. Design the site

3.2 Design data repository

3.3 Design business rules

3.1 Design user interface

Refining the WBS

• Continue the process of “progressive decomposition” until components are: o Understood well enough to estimate o Relatively “small”

Components meeting these conditions are “work packages” of activities and tasks.

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Creating the Activity List and Attributes

• An activity list is a table of activities and tasks to be included in a project schedule o The activity name o An identifier or number o A brief description

• The activity attributes provide schedule-related details o Predecessors and successors o Logical relationships o Leads and Lags o Resource requirements o Constraints and imposed dates

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Activity Sequencing

• Order or sequence activities as needed • Dependencies determine sequencing

o Does an activity need to be finished before another one can start?

o Can several activities be done concurrently? o Can some activities overlap?

• Activity sequencing has a significant impact on developing and managing a project schedule

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Creating Relationships

• Mandatory dependencies o Inherent in the work being performed on a

project  You cannot train sales representatives until they are recruited

• Discretionary dependencies o Defined by the project team

 The vetting and approval process

• External dependencies o Relationships between project and non-project

activities  The preparation of the Project Team Meeting Room

– Telecommunications – Wireless Network – Painting and Preparation

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Activity Dependencies

Consider activities A and B: • Finish to Start (FS): B cannot start until A is

finished • Start to Start (SS): B cannot start until A starts • Finish to Finish (FF): B cannot finish until A

finishes

Don’t worry about Start to Finish (SF) dependencies!

Task Date Constraints

• Date constraints are conditions or limitations placed on the start or finish date of a task

• If a project is scheduled from ‘Start Date’, all tasks are scheduled by default with a ‘Start as Soon as Possible’ constraint

• If a project is scheduled from ‘Finish Date’, all tasks are scheduled by default with a ‘Start as Late as Possible’ constraint

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Activity Duration

• Duration includes the actual amount of time spent working on an activity plus elapsed time

• For example: oEven though it might take one workweek or

five workdays to do the actual work, the duration estimate might be two weeks to allow extra time needed to obtain outside certification or to resource availability

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Effort Estimation

• Effort is the number of workdays or work hours required to complete a task oA duration estimate of one day could be

based on  one person doing 7.5 hours of effort in one

day or  five people performing 37.5 hours of work

during the same day.

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Duration and Effort

• Duration relates to the elapsed time estimate, not the effort estimate

• Duration and effort are related! oProject team members must document their

assumptions when creating duration estimates and update the estimates as the project progresses

Leads and Lags

• Leads: Start an activity by an amount of time before a predecessor is completed (overlapping activities)

• Lags: Time added between activities (buffers)

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Estimation Is A Team Activity!

• Estimation is hard to do well! • Best to use assigned resources to estimate

activity effort and duration • Leverage knowledge and past performance

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“Single Point” Estimation

• Come up with one and only one estimate for activity effort

• Common problems with this approach: o Lack of experience o Excessive optimism or pessimism o Deadline pressure

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Estimation Techniques for Schedule and Budget

• Analogous: Derive estimates from similar activities from past projects

• Parametric: Use a mathematical formula to interpolate or extrapolate from experience

• Heuristic: A “shortcut” or “rule of thumb” • Three Point Estimation: Based on optimistic, most

likely and pessimistic estimates • Phase Gate: Reassess after each phase • Rolling Wave: “Just-in-time” estimation.

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Milestones

• A milestone is a significant event in a project • It is marker to help identify ‘accomplishments’ • There is no duration for a milestone: ‘0’ • Project Sponsors and Senior Managers often focus on

major milestones when reviewing projects • Sample milestones may include

o Approval of specifications o The completion of a specific phase, such as testing o The delivery of results, such as training documentation o The start of a project o The end of a project

Milestones

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Load Testing (Activity with

duration)

Performance Testing

(Activity with duration)

Testing Completed (Milestone)

Regression Testing

(Activity with duration)

The Project Calendar

• The default is the Standard Base which defines o Working Days o Non-Working Days o Working Times

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Project Baselines

• The approved project scope, duration, work, and resources form the project baseline

• Performance in meeting the project baseline is tracked and managed o Actual vs. Planned work

• The original baseline can change over time • Multiple baselines may be saved

Controlling The Schedule

• Data collection • Review • Forecasts • Adjustments

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Monitor Tasks and Activities

• Are tasks being completed on time? • Are critical tasks on target? • Are task owners taking responsibility? • Has the project changed? • Are other tasks or resources required?

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Adjusting The Schedule

• Crashing: Add resources to reduce the overall duration of activities

• Fast-tracking: Reschedule activities to overlap or be done in parallel

Either approach may increase costs!

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Agile Approaches To Schedule Management

• “Time-box” the project • Tolerate scope uncertainty • Incremental delivery • Just-in-time planning (rolling wave) • Risk-based estimation (planning poker)

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Agile Estimation

• Feature-based, not activity-based • Estimates reflect uncertainty • Team-based estimation

Project Cost Management

• The planning and structure necessary to control the costs (expenses) of the project o Plan cost management o Estimate costs o Determine budget o Control costs

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Key Project Budget Stakeholders

• The Owner o To help determine the financial impact and value

• Project Manager o To help determine the anticipated costs

• Project Controller o To help track, manage, and maintain

• Project Team o To help determine an expense guideline for its work

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The Preliminary Budget

• The preliminary budget is produced in the Initiation Phase

• It is a preliminary estimate of the total expenditures expected for the project o Labor, material, and equipment costs

• It serves as a basis to allocate monies to support the project

• At a Rough-Order-of-Magnitude (ROM)

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Developing the Preliminary Budget

• Estimate project costs using a combination of science, logic, common sense, and experience o Solicit the opinions and feedback of project

participants to get a broad spectrum of information, experience, and opinion

o Focus on the costs factors that depend on the needs of the specific project

o Refer to cost estimates of similar projects in the past that were accurate

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Estimate the Preliminary Expenses

• Estimate the expenses at the level of detail you understand o Provide an estimate for the entire project at a high

level

o State in clear terms that the preliminary expenses are ‘estimates’

o Reserve a detailed estimate for the project work until after the ‘Scope’ has been agreed to

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High-level Estimates

• Cost can be categorized as labor, material, capital, and other costs as appropriate o Labor…Labor rates o Material…Vendor quotes o Equipment…Platform costs o Other…Consultant fees or training costs

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The Basis for the Preliminary Estimates

• Identify fundamental assumptions used to develop, calculate, or explain the expense estimates o The basis for calculating the labor cost might be a

standard labor rate multiplied by staff hours

o The cost of hardware might be based on sizing need for storage and performance

o The cost of materials might be based on the number of square feet of wall surface to paint

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The Detailed Budget

• The detailed project budget is produced in the Planning Phase when more detail about the project is known

• It is more detailed than preliminary budget • Typical budget specific expenses

o Staff, consultants, materials, hardware, software, equipment, travel, training, and supplies

• It becomes the baseline for the ‘Execute’ and ‘Control’ phases of the lifecycle

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The Purpose of the Detailed Budget

• The detailed budget provides the project sponsor with a best estimate of how much the project will cost

• It helps manage expectations and gives the project sponsor information to develop a detailed cost/benefit for the project

• It provides a basis on which to establish the ‘baseline’ budget

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Developing the Detailed Budget

• Start from the preliminary budget • Refer to budget information for similar projects • Identify detailed labor expenses associated with

schedule activities • Identify detailed material expenses associated

with schedule activities or phases

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Line-item Budget Categories

• Salaries • Fringe Benefits • Equipment • Hardware and Software • Training and Travel • Materials and Supplies • Consultants • Overhead costs (indirect costs)

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Project Cost Budgeting

• Allocate the project cost estimates to tasks • The tasks are based on the WBS for the project • The WBS represents Scope and its deliverables • Produce a cost baseline • Establish a time-phased budget • Enable the project manager to

o Measure and monitor cost performance o Assess ‘actual’ to ‘plan’ variances

Budget Contingency Planning

• Assessing ‘unknowns’ is very important • The ‘crises’ that are inherent and a regular part

of any project will affect the bottom line • The budget estimate should have reserves or

“buffers” built-in • Best practice for the overall reserves is 20-30

percent of the total project cost

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Cost Reserves

• Contingency reserves o For “known-unknowns” o Included in cost baseline o Includes rework and money for handling risks

• Management reserves o For “unknown unknowns” o Not included in cost baseline

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Cost Management and Control System

• Planning • Work authorization and release • Cost data collection and reporting • Cost analysis (comparison to baselines) • Reporting • Take action and/or replan as needed

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Cost Control Requirements

• Measure resources consumed • Measure status and accomplishments • Compare measurements to projections • Compare projections to standards • Provide an analytical basis for

o Diagnosis o Re-calibration o Change

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Problem Areas in Cost Control

• Organization o Inadequate Work Breakdown Structure o Poor work definition at the task levels o Lack of formal system procedures

• Planning and Budgeting o Inadequate forward planning o Poor integration of budget, schedule, work

authorization

• Poor Estimation!!! • Project Complexity

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