Assignment 4: Earned Value Management (EVM)

Assignment 3 Week 6

Business Project Estimation and Budgeting

Professor Pullen

By: Mark Abbott

11/15/14

The project that I am working on is a total home renovation for investment purposes. The reason I point out that this project is for investment purposes is to begin to show the importance of budget management as far as keeping the cost low so that when it’s rented out there is actually a monthly profit margin. For this project I am using a home that I renovated in the past so I am using the same task, cost, and time frame. The very first task of this project was to find out how much money we had to invest with and find a home with the appraised value to be close to half of the selling prices of the surrounding area. We found a home in a nearby neighborhood for 60 thousand which we financed with the homes around it selling for 85k to 115k. The allowed project budget was not to exceed 25k whatsoever because there simply was no more funds to be had. I was assigned to take care of everything from pricing materials to actually doing the labor and hiring the most affordable contractors on specialty jobs like AC and plumbing. The key objectives of this project was roof, walls, paint, flooring, and landscaping. Each key objective however had several job task included that would need to be done also. Since I would be doing most of the work myself the labor cost was very minimal. My resources pertaining to materials consisted of Builders Surplus and Home Depot for everything. My resources pertaining to expertise was a good friend of mine who was a plumber then used his relationship in the construction world to find an AC repairman and an electrician. Since one of the highest objectives is to minimize cost this project will need a short timeline since the longer it sits empty the more mortgage and insurance payments must be made. This project is estimated to take a total of 33 days from beginning to completion. When this project was all said and done the total renovation cost was 15,500$ invested which is 9500$ less than the budget limit. Total invested was 75,500$ with a final appraised value of 95,000 with a monthly payment of 550$ and was rented out for a monthly fee of 950$.

The RAM for this particular project was extremely simplified just because of the number of employees which was really just me and the contractors that were involved. I had to call a plumber a AC/HVAC man and a electrician. But I did work very closely with my parents throughout this entire project because they were the stakeholders and also ran errands along with helping with the labor so I will include them in the RAM.

RACI CHART	PERSON
ACTIVITY	ME (laborer)	DAD (manager)	MOM (a. manager)
Scheduling	A	RA	C
Budgeting	IR	CR	AR
Labor Activities	R	A	C
Setting up Contractor appointments	I	C	R

R=Responsible A=Accountable C=Consult I=Inform

I set up the RACI chart this way because I am the laborer and my duties are to handle all of the day to day task. I was the one that the orders came down to but I also had to forward discrepancies, problems that arose, newly discovered task, and progress up the chain of command to my dad who played the role of the manager. My dad was the manager and he would set forth the scheduling by setting task deadlines and overseeing each task completion to meet requirements. My mom was the Assistant Manager and she handled the clerical work set up contractor appointments and did materials cost analysis and shopping while also handling the budget. She was responsible for all of these task but was also required to consult with my dad. It was very important that we all communicated effectively in order for everything to run smoothly. It was also important that everyone knew what their responsibilities included to avoid any duties from being overlooked and neglected.

The Network Schedule for this project was quite extensive because of the number of smaller projects involved that also required numerous sub task. The first step in the network schedule was the research project. The research project required extensive research of the market analysis, damage assessment, contractor estimates, permit research, and a accurate assessment of the budget. The next step was the stopping of further decay of the household. This step was mainly weatherproofing the house by boarding up broken windows and ensuring the house was secure. After that the next step was demo which required renting a dumpster. Demo consisted removing all unwanted cabinetry from the bathrooms, living area, and kitchen. It also required the removal of all damaged sheetrock, carpet, tile, and then cleanup of debris. Then roofing was the next step. Roofing is a one day job that in this case did not require existing shingles just simply another layer of shingles to be added on top of the current roof. From there we go into the carpentry step. Carpentry required repairing/adding framework, rotted wood replacement, and window/door framework repair. While the house was a skeleton this was the perfect time for the next steps of HVAC ductwork, electrical, and plumbing which could all be done concurrently. HVAC included duct repair/replacement and system diagnosis for tune up. Electrical included replacing power outlets and junction box repair. Plumbing required fixing underground cracked pipes and toilet and sink plumbing and hot water heater alterations to meet code standards. After that was Insulation and Drywall installation. This includes exactly what the description states but also requires texturing. The next step from that was the flooring. For this step tile was installed throughout the entire house minus the bedrooms that were floored with carpeting. Next was fine carpentry which is the final touches of the carpentry cosmetic work. This includes the installation of baseboards, trimming, and window sills. The last step that actually involves the physical house was the painting step. The inside walls, ceiling, and trim all needed to be painted then the outside also required the same. After that there is landscaping which required weeding, laying mulch, planting cosmetic flowers, cutting grass, and tree trimming. The next step after that was the final cleanup which required sweeping, dusting, and window cleaning. The final step was the final appraisal of the house which determined the final value of the project.

The critical path of this project is an estimated 33 days assuming nothing major is found or happens. Each task in this project was given enough time to eliminate anything that could potentially cause float to occur. While this project was going on we also kept a watchful eye on every task to be sure to fix problems as they arose that could potentially cause a delay or float on another project later and associated with another task. For example when we pulled the toilets during the demo phase we noticed the flange that secures the toilets were old rusted and breaking apart. In order to help streamline the plumbing process and not to add anymore task to the plumbing phase we saw that as a good time to go ahead and change the flange so the plumbing deadline wouldn’t be interfered with. In managing the critical path however I did find that some task took longer than anticipated so in order to meet the deadline date for that task I was required to work overtime during the days to stay on schedule. Also I found some task were faster than anticipated which also help eliminate the possibility of float because it allowed more time for subsequent task. So to maintain the critical path was really just paying attention to projects as they were in progress and having a strong knowledge of knowing what to do in the possibility something did come up.

Determining the project scope and controlling that scope should be the first concern of most project managers. (www.corpedgroup.com/resources/pm/gettingscoperight.asp). The best way to start to be able to manage my project schedule is setting up and building the proper WBS since the WBS is the building blocks of a schedule. The WBS is the clearest way to visually display every individual’s roles and duties expected. “A WBS is a hierarchical reflection of all the work in the project in terms of deliverables. In order to produce these deliverables, work must be performed.” (projectsmart.co.uk/best-practice.php). The most common way to start to develop a good WBS is to start at the top level and work down. From the PMBOK some processes to “Plan Schedule Management” is to “establish policies, procedures, and documentation for planning, developing, managing, executing, and controlling the project schedule. The key benefit of this process is that it provides guidance and direction on how the project schedule will be managed throughout the project” (PMBOK Guide 5th Edition page 145). So the first practice I would use is establishing a good strong scope baseline. “The scope baseline includes the project scope statement and the work breakdown structure (WBS) details used for defining activities, duration estimation, and schedule management” (PMBOK Guide 5th Edition page 146). With a solid scope baseline all the basic steps of a projects scheduling is for the most part covered, the goal is for all of them to be covered but sometimes unforeseeable task arise. The second technique I would use is Expert Judgment. “Expert judgment, guided by historical information, provides valuable insight about the environment and information from prior similar projects. Expert judgment can also suggest whether to combine methods and how to reconcile differences between them. Judgment based upon expertise in an application area, knowledge area, discipline, industry, etc, as appropriate for the activity being performed, should be used in developing the schedule management plan.” (PMBOK Guide 5th Edition page 147). For this project expert judgment is what was used the most to maintain a timely schedule. Expert judgment doesn’t necessarily have to come from just one expert, in our case the expert judgment was a collective of different people that had expertise in the different projects. For example my dad had expertise in framework and his judgment expertise was needed in order to locate and determine which walls were loadbearing and could not be altered or removed without his oversight. I was a judgment expert in the drywall and insulation phase. I knew the best way to texture the walls and determine which walls needed to be insulated or not.

References:

PMBOK Guide 5th Edition.

www.corpedgroup.com/resources/pm/gettingscoperight.asp

projectsmart.co.uk/best-practice.php

http://www0.cs.ucl.ac.uk/staff/A.Finkelstein/advmsc/1.pdf