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LECTURE:
PROJECT OVERVIEW
Project Management
FMT HANU
Lecture outline
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◻ Project controlling
◻ Status reporting
◻ Tracking progress
Reading
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◻Chapter 7 (p.161 - 176)
Terms to understand
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◻ Status reporting
◻ Communications mechanisms
◻ Elevator report
◻ Burn rate
◻ Direct costs, indirect costs
◻ Earning value analysis, schedule variance and cost
variance, percent complete and percent spent
Controlling
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Project Manager’s role
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◻ Identifying and prioritizing the flow of information
throughout the project and among its participants
◻ Requires good business judgment to handle this load
of information as the project manager
Project Manager’s role
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◻ A project manager is responsible and accountable to
the project sponsor, project resources, and other
project stakeholders on three dimensions associated
with a project’s progress:
🡪 planned versus actual
🡪 progress, changes in the project
🡪 and potential and/or actual project disruption
🡺 Communication is at the heart of the project
manager’s job.
Communications Mechanisms
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Elevator report
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◻ PM should be able to provide the project sponsor
or client a snapshot of key activities at any point in
time.
◻ Must be simple and concise! Similar to the
elevator speech.
◻ Can be in a formal or informal setting
In an elevator report
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What was
accomplished in
this period.
What they have
to look forward to
completing in the
near future.
What issues exist
that could have a
negative impact
on the project.
Elements of the Elevator Report
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Activity category
Completion status
Critical path
Stakeholders directly impacted
Accomplishment/ Issue
Notes
Responsible party
1. Activity category
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Completed this period
Accomplish-
ments Scheduled for
completion in the
Represents either upcoming period
accomplishments
or issues Closed this period
Issues Open from prior period
Opened in the current
period
*Closed = resolved
Open = hasn’t been resolved
2. Completion status
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Ahead or behind
schedule
Accomplish- Ahead or behind
ments budget
Status of the
Date closed
accomplishment
or issue in
element 1 Date reported
Issues Date due
*Closed = resolved Date closed
Open = hasn’t been resolved
3. Critical path
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◻ Does the accomplishment or issue appear on the
critical path?
🡪 If accomplishment, carried more weight (pressure
to be completed on time, no float).
🡪 If issue, may require the application of more
resources to complete.
4. Stakeholders directly impacted
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◻ Which stakeholders are impacted by this
accomplishment or issue.
◻ PM may need to contact the stakeholder and
actively manage the situation.
Accomplishment/ Issue
• The nature of the accomplishment/ issue
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Notes
• Help better explain the accomplishment/
issue
Responsible party
•Name of individual(s) who are responsible for
the accomplishment/ issue.
Planned Progress
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◻ One of the PM’s key role is to communicate the
progress of the project to stakeholders.
• Timeline for delivery -- Contractual
TIME dates commitment
-- Managing
stakeholders’
expectations.
-- Basis for
• Monetary comparison of
BUDGET commitments of current work
activity.
stakeholders
Progress related to the Time Line
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◻ All project are driven by time, sometimes as the
primary driver…
🡪 Building developer who has to complete an
accommodation project so families can move in
before the start of a new school year.
❑ … or the secondary driver.
🡪 IT project manager implementing a discretionary
(optional) IT system that has low priority in an
organization.
Progress related to the Budget
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◻ “Burn rate” is the cash needs of a project, or at
what rate does the project require cash to move
forward.
◻ Financial stakeholders need to be aware that burn
rate may not be constant throughout the project,
to ensure funding is adequate.
◻ Direct vs. indirect costs
Direct vs. Indirect Costs
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◻ Direct Costs: Direct costs are expenses that are billed directly to
the project.
🡪 Eg: team travel expenses, team wages, cost of material used in a
project, costs incurred for recognition and awards materials used
to construct a building.
◻ Indirect Costs: Indirect costs are costs that are shared and
allocated among several or all projects.
🡪 Eg: salary of an architect or a project manager who is partially
allocated across many projects. But since the project manager is
allocated to several projects, the costs incurred on his salary are
indirect costs to the project.
Tracking tools
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• Compares actual progress with anticipated
Variance analysis progress outlined in budget
• Tracks budget, schedule, quality against targets
• Looks to see if progress is getting better, worse or
Trend analysis staying the same
• Tracks budget, schedule, quality against targets
Earned Value Analysis • Calculates cost, scheduling, and scope together
• Determines productivity indices, performance
(EVA) measurements, variances of schedule and budget.
Schedule Variance (SV) & • Compares the amount of money scheduled to be spent
Schedule Variance Index on a project with the amount of work paid for and
(SVI) actually accomplished.
• Compare the amount of money actually spent on a
Cost Variance (CV) &
project with the amount of work paid for and actually
Cost Variance Index (CVI) accomplished.
Variance Analysis
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◻ Simple tool
◻ Compare actual progress with anticipated progress
as outlined in the budget
◻ Used to compare actual budget, schedule, and
quality with targets
Trend analysis
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◻ Simple tool
◻ Looks to see if the progress of the project is getting
better, worse or staying the same.
◻ Used to track progress against budget, schedule,
quality with targets.
Earned Value Analysis (EVA)
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◻ More complicated
Name of measurement Explanation
◻ Reports on a few measurements:
Budgeted Cost of Work Numbers in your original budget,
Scheduled (BCWS) or how much do you think the
OR Planned Value (PV) project will cost?
Budget at Completion (BAC) If project is on time
BCWS at the end of project
Actual Cost of Work Performed and on budget,
Costs that actually incurred on
(ACWP) the project.
OR Actual Cost (AC) EV = PV
Budgeted Cost of Work The work that was performed
Performed (BCWP) (no
(actually variances)
paid) and compare to
OR Earned value (EV) original budget.
Schedule variance and cost variance
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◻ From the 3 concepts above, we can track a
project’s schedule and budget to using schedule
variance (SV) and cost variance (CV)
Schedule Variance (SV) and Schedule Variance Index
(SVI)
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- Compares the amount of
money scheduled to be
spent on a project (or the
project to some point in
time) with the amount of
work that was paid for and
actually accomplished. 1.If project is on time, SV should
- Predict how much time it be 0.
2.Negative SV is bad,
will take to complete the positive SV is good (ahead of
project. schedule).
- SV = EV - PV 3.SVI < 1 -> bad,
SVI > 1 -> good.
- SVI = EV/ PV
Cost Variance (CV) and Cost Variance Index (CVI)
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- Compare the amount of
money actually spent on a
project (or at some point
in the project) with the
amount of work that was
paid for and actually
accomplished. 1.If project is on budget,
- Predict how much money CV should be 0.
2.Negative CV is bad,
it will take to complete the positive CV is good (under budget)
project. 3.CVI < 1 -> bad,
- CV = EV - AC CVI > 1 -> good.
- CVI= EV/AC
Percent complete and percent spent
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◻ How far along in the project are you?
Percent complete = EV/ BAC
◻ How much money have you spent of the original
budget?
Percent spent = AC/ BAC
Example!
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◻ A team has been tasked with planting the trees on the
plot of land behind our company’s new factory. The
plan is to plant:
- 30 batches of 20 trees (600 trees)
- 5 batches per day (100 trees)
- Budgeted cost per tree is $2.90 -> total budget is $2.90
* 600 trees = $1,740
❑After the first day, 70 trees were planted, at a total cost
of $350 (rent a machine which cost $147 for the day.
Example!
30 Planned time =
600/ 100 = 6
◻ A team has been tasked with plating the trees ondaysthe
plot of land behind our company’s new factory. The
plan is to plant:
Budget at
- 30 batches of 20 trees (600 trees) completion =
- 5 batches per day (100 trees) $1,740
- Budgeted cost per tree is $2.90 -> total budget is $2.90
* 600 trees = $1,740
❑After the first day, 70 trees were planted, at a total cost
of $350 (rent a machine which cost $147 for the day.
Example! 1. Earned Value (job
actually performed and
31 paid for) after the first day:
70 trees * 2.90$ = 203$
◻ A team has been tasked with plating the trees on the
plot of land behind our company’s 2.new factory.
Planned valueThe
for the
plan is to plant: first day:
- 30 batches of 20 trees (600 trees) 100 trees * 2.90$ = 290$
- 5 batches per day (100 trees) 3. Actual cost = 350$
- Budgeted cost per tree is $2.90 -> total budget is $2.90
* 600 trees = $1,740
❑After the first day, 70 trees were planted, at a total cost
of $350 (rent a machine which cost $147 for the day.
Example! Schedule variance (SV) =
EV – PV = 203$ – 290$ = -87$ < 0
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◻ A team has been tasked withSVI = EV/ PV
plating the= 203/
trees290
on=the
0.70
(We are
plot of land behind our company’s latefactory.
new and have only
The
performed 70% of the work
plan is to plant:
planned).
- 30 batches of 20 trees (600 trees)
- 5 batches per day (100 trees)-> This is bad!
- Budgeted cost per tree is $2.90 -> total budget is $2.90
* 600 trees = $1,740
❑After the first day, 70 trees were planted, at a total cost
of $350 (rent a machine which cost $147 for the day.
Example! Cost variance (CV) = EV – AC = 203$
– 350$ = - 147$ < 0
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◻ A team has been tasked withCVI = 203/the
plating 350 trees
= 0.58 on the
(we arenew
plot of land behind our company’s overfactory.
budget The
and have
plan is to plant: spent 58% more budget than
anticipated).
- 30 batches of 20 trees (600 trees)
- 5 batches per day (100 trees)-> This is also bad!
- Budgeted cost per tree is $2.90 -> total budget is $2.90
* 600 trees = $1,740
❑After the first day, 70 trees were planted, at a total cost
of $350 (rent a machine which cost $147 for the day.
Example!
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◻ A team has been tasked withPercent
platingcomplete
the trees=onEV/the
BAC
= 203$/new
plot of land behind our company’s 1,740$ = 0.12
factory. (12%)
The
plan is to plant:
Percent spent = AC/ BAC
- 30 batches of 20 trees (600 trees)
= 350$/ 1,740$ = 0.20 (20%)
- 5 batches per day (100 trees)
- Budgeted cost per tree is $2.90 -> total budget is $2.90
* 600 trees = $1,740
❑After the first day, 70 trees were planted, at a total cost
of $350 (rent a machine which cost $147 for the day.
Practice
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◻ Assume a small four-week software enhancement
is budgeted for $10,000. While reporting status
during the third week, the project manager
determines his week has only completed 50
percent of the work. Based on the project
schedule, the team was supposed to complete 75
percent of the work during the third week. The
project manager also noticed they’ve spent $9,000
to date on the project. What is the overall health of
the project?
Practice
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◻ Assume a small four-week software enhancement
is budgeted for $10,000. While reporting status
Hint: First step is to
during the third week, the project manager
convert percent
complete
determines his week has only completed 50 percent
percent of the work. Based on the complete
project and percent
spent into EV and PV.
schedule, the team was supposed to complete 75
percent of the work during the third week. The
project manager also noticed they’ve spent $9,000
to date on the project. What is the overall health of
the project?
Suggested answer
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◻ EV = Percent complete * BAC = 50% * $10,000 =
By the third week,
the team was
$5,000 supposed to
complete 75% of the
◻ PV = Percent spent * BAC = 75% * $10,000 = but only 50%
work,
has been done.
$7,500
◻ AC = $9,000 (given)
🡪 SV = EV – PV = 5,000 – 7,500 = -2,500 Both are
bad!
🡪 CV = EV – AC = 5,000 – 9,000 = - 4,000
Both less than 1,
Suggested answer which means the
project is both late
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and over budget.
◻ EV = Percent complete * BAC = 50% * $10,000 =
-- SVI = 67% means
$5,000 the project is late,
◻ PV = Percent spent * BAC = 75% * $10,000 = $7,500only
we’ve completed
67% of the work
◻ AC = $9,000 (given) planned for the end
🡪 SV = EV – PV = 5,000 – 7,500 = -2,500of third week.
🡪 CV = EV – AC = 5,000 – 9,000 = - 4,000-- CVI = 56% means
🡪 SVI = 5,000/ 7,500 = 0.67 (67%) we are over budget,
cost of completing
🡪 CVI = 5,000/ 9,000 = 0.56 (56%) the work is higher
than planned.
Suggested answer
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Conclusion:
◻ EV = Percent complete
1. The project
* BAChad spent*90
= 50% percent=of its
$10,000
$5,000 budget only to only complete 50 percent of
the work. The project is behind schedule
◻ PV = Percent spent * BAC
and will = 75%
be over * $10,000
budget = $7,500
at the end of the
◻ AC = $9,000 (given)
project.
2. If the
🡪 SV = EV – PV = 5,000 project=continues
– 7,500 -2,500 at this rate, it will
cost the company:
🡪 CV = EV – AC = 5,000BAC/– 9,000
CVI ==10,000/0.55
- 4,000 = 18,181$
🡪 SVI = 5,000/ 7,500 = 0.67 (67%)
to complete the project.
3. The project
🡪 CVI = 5,000/ 9,000 = 0.56 (56%) manager will likely need to
reduce scope, extend the project schedule
or obtain more funding to deliver the
original software enhancement.
Practice 1
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◻ You have a project to be completed in 12 months.
The budget of the project is 100,000 USD. Six
months have passed and 60,000 USD has been
spent. On closer review, you find that only 40% of
the work has been completed so far while the
schedule says that 50% of the work should be
completed. What to conclude about the project?
Practice 2
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◻ Suppose you have a budgeted cost of a project at
$900,000. The project is to be completed in 9
months. After a month, you have completed 10
percent of the project at a total expense of
$100,000. The planned completion should have
been 15 percent. Now, let’s see how healthy the
project is.
Terms to understand
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◻ Status reporting
◻ Communications mechanisms
◻ Elevator report
◻ Burn rate
◻ Direct costs, indirect costs
◻ Earning value analysis, schedule variance and cost
variance, percent complete and percent spent
