Exam 2: CH 13

5 steps to ensure that the cost/schedule system is integrated: What are steps Steps 1-3 that are accomplished in the planning stage?

1. Define the work using a WBS; this step involves developing documents that include the following info: ---Scope ---Work packages ---Deliverables ---Organization units ---Resources ---Budgets for each work package 2. Develop work and resource schedule ---Schedule resources to activities ---Time-phase work packages into a network 3. Develop a time-phase budget using work packages included in an activity ---Cumulative value of these budgets will become the baseline and will be called the planned budgeted cost of the work schedules (PV) ---Sum should equal the budgeted amounts for all the work packages in the cost accounts

Control is the process of comparing actual performance against plan to identify deviations, evaluate possible alternative courses of actions, and take appropriate corrective action Project control steps for measuring and evaluating project performance:

1. Setting a baseline plan 2. Measuring progress and performance 3. Comparing plan against actual 4. Taking action

5 steps to ensure that the cost/schedule system is integrated: What are Steps 4 and 5 that are sequentially accomplished during the execution stage?

4. At the work package level, collect the actual costs for the work preferred ---These costs will be called the actual cost of the work completed (AC) ---Collect percent complete and multiply this times the original budget amount for the value of the work actually completed; these values will be called earned value (EV) 5. Compute the schedule variance (SV = EV - PV) and cost variance (CV = EV - AC) ---Prepare hierarchical status reports for each level of mgmt.; reports should also include project rollups by organization unit to deliverables ---Actual time performance should be checked against the project network schedule

Purposes of a Baseline (PV)

An anchor point for measuring performance A planned cost and expected schedule against which actual cost and schedule are measured. A basis for cash flows and awarding progress payments. A summation of time-phased budgets (cost accounts as summed work packages) along a project timeline.

Earned Value Cost/Schedule System:

An integrated project management system based on the earned value concept that uses a time-phased budget baseline to compare actual and planned schedule and costs. Earned value system starts with the time-phased costs that provide the project budget baseline, which is called the planned budgeted value of the work scheduled (PV)

Project control steps for measuring and evaluating project performance: Step 1: Setting a Baseline Plan

Baseline plan provides us with the elements for measuring performance Baseline is derived from the cost and duration info found in the WBS database and time-sequence data from the network and resource scheduling decisions From the WBS, the project resource schedule is used to time-phase all work, resources, and budgets into a baseline plan

Control Chart

Chart used to plot the difference between the scheduled time on the critical path at the report date with the actual point on the critical path Because the activity scheduled times represent average durations, 4 observations trending in one direction indicate there is a very high probability that there is an identifiable cause ----The cause should be located and action taken if necessary Control chart trends are very useful for giving warning of potential problems so appropriate action can be taken if necessary Also frequently used to monitor progress toward milestones, which mark events and as such have zero durations For milestones to be effective, they need to be a concrete, specific, and measurable event Having frequent and clearly defined monitoring points for work packages can significantly improve the chances of catching schedule slippage early

Time-Phase Baseline Plan

Corrects the failure of most monitoring systems to connect a project's actual performance to its schedule and forecast budget. ---Systems that measure only cost variances do not identify resource and project cost problems associated with falling behind or progressing ahead of schedule. Given this time-phased baseline, comparisons are made with actual and planned schedule and costs using earned value

Rules for Placing Costs in Baselines: Costs are placed (time-phased) in the baseline exactly as managers expect them to be earned. Percent complete rule?

Costs are periodically assigned to a baseline as units of work are completed over the duration of a work package

Project control steps for measuring and evaluating project performance: Step 4: Taking Action

If deviations from plans are significant, corrective action will be needed to bring the project back in line with the original or revised plan

Project control steps for measuring and evaluating project performance: Step 3: Comparing Plan against Actual

Imperative to measure deviations from plan to determine if action is necessary Periodic monitoring and measuring the status of the project allow for comparisons of actual versus expected plans Status reports should take place every one to four weeks to be useful and allow for proactive correction

Scope Creep

Large changes in scope are easily identified; it is the minor refinements that eventually build to be major scope changes that can cause problems ----These minor refinements are known as scope creep There are situations when scope changes result in positive rewards ---Small change in production process may get the product to market one month early or reduce product cost

Major reasons for creating a baseline are to:

Monitor and report progress Estimate cash flow

3 common control issues:

Scope creep Baseline changes Data acquisition costs and problems

Project control steps for measuring and evaluating project performance: Step 2: Measuring Progress and Performance

Time and budgets are quantitative measures of performance that readily fit into the integrated info system Measuring performance against budget is more difficult and is not simply a case of comparing actual versus budget ---Earned value is necessary to provide a realistic estimate of performance against a time-phased budget ---Earned value: the budgeted cost of the work performed

Defenses against scope creep:

Well-defined scope statement Stating what the project is not, which can avoid misinterpretations later

Creating a project monitoring system involves determining:

What data to collect How, when, and who will collect the data How to analyze the data How to report current progress to management

If scope change is necessary, the impact on the __________ should be clearly documented

baseline Scope change must be quickly added to the original baseline to reflect the change in budget and schedule ----Quickly recording scope changes to the baseline keeps the computed earned values valid

Key to managing scope creep is ______________

change mgmt.