Prof. Dem - CASE 1 (PM)

THE THREE LEVELS OF BALANCING A PROJECT

1. Project. 2. Business case. 3. Enterprise.

How do you categorize summary tasks? (WBS)

· Each summary task and work package must be named as an activity that produces a product. This means giving each task a descriptive name that includes a strong verb—the activity—and a strong noun—the product. Without these, the task becomes ambiguous. Two cases in point: o Open-ended tasks. o Open-ended activities.

Traditional approach

· It usually start with the management providing the scope with time and costs àPM has to transform it into a plan (this includes hardware, software, labor etc) à it creates something called „monolithic" it stands for a single integrated deliverable (one package) · SCOPE -> Deliverable -> WBS · Often the client is unsatisfied (due to price, time etc.) therefore new alternatives are necessary: o Reducing project scope by eliminating part of the deliverable o Squeezing the schedule estimate (less vocation, cut contingencies) o Outsourcing (to make things faster)

Modular approach

· Requires the PM to understand client and the environment ->with this knowledge they subdivide the monolithic deliverable into modules (requires a prior segmentation) · A separate plan will be built for each module -> the overall plan is the consolidation · Two critical aspects are o Identifying and creating meaningful modules o Prioritizing modules § To obtain this PM has to work closely with client to be able to put meaningful benefits to each module § This may deliver some benefits earlier and minimize risk & in addition the client participates on the project and definition of the modules

Hardy & Chaudhuri's case study - What is it about?

· This case study is about the preparation for the unplannable · Normally project could have been prepared and planned in advance and work over years with few milestones in between -> this works only under stable conditions, however, todays conditions are very instable and disruptive

What does it entail to estimate work packages?

(each work package is being estimated in terms of the amount of labor, equipment needed, and its duration)

How do you identify task relationships in order to achieve a realistic schedule?

* Define task relationships only between work packages! * Task relationships should reflect only sequence constraints, not resource constraints! Sequence constraints - some tasks must be done before others.

What can we do to assure the project will be done correctly?

-Peer reviews (based on the assumption that 3-6 brains are better than 1) -Checklists -Systematic testing

What are the Planning Steps?

1. Build a work breakdown structure. 2. Identify task relationships. 3. Estimate work packages. 4. Calculate initial schedule. 5. Assign and level resources.

The Process of Resource Leveling

1. Forecast the resource requirements throughout the project for the initial schedule. 2. Identify the resource peaks. 3. At each peak, delay noncritical tasks within their float. 4. Eliminate the remaining peaks by reevaluating the work package estimates.

What makes up a realistic schedule according to Verzuh?

A realistic schedule: -Include a detailed knowledge of the work to be done -Has task sequences in the correct order -Accounts for external constraints beyond the control of the team -Can be accomplished on time, given the availability of skilled people and enough equipment

(WBS) Competition Criteria - Acceptance process

Acceptance process: o One of Stephen Covey's seven habits of effective people is to "begin with the end in mind." This is particularly good advice for project managers, who need to consider early on the process for delivering the final product. This process is called the acceptance process. Considering the acceptance process might add a few tasks to the WBS, such as turnover tasks at the end of the project.

Balancing the Trade-Off Among Cost, Schedule, and Quality - 3 RULES

Balancing the Trade-Off Among Cost, Schedule, and Quality · 1. Time. The project, as defined, won't be finished in the time originally envisioned in the project rules. · 2. Money. The project can deliver the desired outcome on schedule, but the cost is too high. · 3. Resources. The projected cost is acceptable, but the schedule calls for people, equipment, or materials that aren't available. You could afford them, but there aren't any to hire.

What does it help to develop/build/create in the project?

Building a WBS helps to: -Provide a detailed illustration of the project's scope -Monitor progress -Create accurate cost and schedule estimates -Build project teams

How to Calculate initial schedule?

Calculate initial schedule: · the initial schedule is calculated by using the network diagram and the duration of each work package to determine the start and finish dates for each task, and for the entire project · Early start —The earliest date a task can begin, given the tasks preceding it. · Early finish —The earliest date a task can finish, given the tasks preceding it. · Late start —The latest date a task can begin without delaying the finish date of the project. · Late finish —The latest date a task can finish without delaying the finish date of the project.

(WBS) Competition Criteria - Checklists

Checklists. For instance, an engineering group at an aerospace company has developed checklists for evaluating new drawings. The checklists cover the standard tests each drawing must pass, and a lead engineer will use the checklist to evaluate another engineer's drawing. In this case, completion criteria for a drawing involve "passing the checklist."

Project Management - Critical Path

Critical Path: · The term critical path is one of the most widely used—and most widely misunderstood—of all project management terms. But the concept is simple: The critical path is defined as all of the tasks with zero or negative float. When outlined on a network diagram, the critical path is the longest path through the network (the longest path means the longest duration, not necessarily the most tasks) · The tasks that have zero float must be completed at their early finish date, or the project finish will be delayed. Making sure that all critical path tasks begin and end on time is the surest way of making the project end on time. That's why you'll hear a project manager motivating someone to complete a task by telling the person, "It's on the critical path!" · Since it is the longest path through the network, the critical path is one measure of schedule viability. This is because it demonstrates the minimum time the project will take. Sometimes it takes a network diagram with the critical path outlined to show stakeholders that their optimistic schedule estimate is unrealistic.

Estimation - Estimating Equipment Used on Multiple Projects

Estimating Equipment Used on Multiple Projects · Use a unit cost approach to estimate equipment purchased for one project but expected to be used on many others. Here's an example. · R&D engineers for an aerospace company needed an expensive computer to run complex tests. At $50,000, the computer would double the project budget, and this extra cost would probably prevent the project from being approved. But since they could identify five other potential projects that would use the machine in the immediate future, they were able to justify the cost of the new computer by spreading its cost over the expected use for the next two years. The formula used to spread the cost across several projects gave them a unit cost (hourly rate) that they could apply to their project estimate.

Project Milestones

Milestones: · 1. Project start and finish milestones are useful anchors for the network. The milestones don't change anything on the project, but many people find that they make the network diagram easier to read. · 2. Milestones can be used to mark input from one party to another. Many projects are dependent on inputs from certain external sources (they have external dependencies). For example, a government agency might release an environmental impact report for an electric utility on a certain date. A project in that electric utility can use that release date as a milestone. Figure 9.2 shows a milestone representing an external dependency.

(WBS) Competition Criteria - How will we know it was done correctly? Methods

Peer reviews Checklists Systematic testing Acceptance process WBS Guidelines Vary

(WBS) Competition Criteria - Peer reviews

Peer reviews. These are common in many industries in the early part of a product development life cycle when there is nothing tangible to test. Peer reviews, also known as walk-throughs, are based on the premise that three to six heads are better than one. Passing the review doesn't guarantee the product will be perfect, but experience has shown that subjecting tasks to peer reviews results in dramatically better results in the front end of the development life cycle—and this leads to more cost-effective work in the construction phase.

According to Verzuh which are the 3 major steps when building a WBS?

Step 1 - Begin at the top Step 2 - Name all the tasks required to produce deliverables Step 3 - Organize the WBS

What is the first step of making the WBS?

Step 1 - Begin at the top Start by naming all the tasks required to create the deliverables named in the SOW -> (summary tasks) (Done by reviewing the project definition and risk management strategy) It can be done by listing either major deliverables or the high-level tasks (tier 1 tasks)

What is the second step of making the WBS?

Step 2 - Name all the tasks required to produce deliverables The next step is to break down each task into the lower-level, detailed tasks required to produce the product (work packages)

What is the third step of making the WBS?

Step 3 - Organize the WBS Once all work packages are identified, it is possible to rearrange them in different ways. ● Different ways of organizing work packages may emphasize different aspects of a project. (So, organize it based on what you want to emphasize)

What does the WBS consist of?

Summary task -> an action that need to be taken (not actually executed, kind of a title) Work packages -> activity that needs to be taken for the completion of the summary task

(WBS) Competition Criteria - Systematic testing

Systematic testing. There are almost always tests to run later in a product's life cycle. For example, airplane manufacturers have extensive test labs that simulate the stresses experienced by aircraft in flight. Passing rigorous, systematic testing can be defined as completion criteria.

Name the 5 planning steps of realistic scheduling according to Verzuh (2016)!

The 5 planning steps of realistic scheduling are: a. Build a WBS b. Identify task relationships c. Estimate work packages d. Calculate initial schedule e. Assign and level resources

In which form(s) can it be set up?

The WBS can be set up in a graphic or outline form.

What is the WBS (Work Breakdown Structure)?

The WBS is the tool for breaking down a project into its component parts. -> (It identifies all the tasks in a project) WBS is the basis for the project's schedule and budget.

How does one calculate an initial schedule to achieve a realistic schedule?

The initial schedule is calculated by using the network diagram and the duration of each work package to determine the start and finish dates for each task, and for the entire project.

Estimation - Use the Burdened Labor Rate

Use the Burdened Labor Rate · The actual hourly pay of salaried employees varies from person to person, often for no discernible reason. But it is rare to have to worry about actual pay when estimating labor costs. Instead, look to the finance department to establish a standard burdened labor rate for each labor type. A burdened rate is the average cost of an employee to the firm. It includes wages, benefits, and overhead. Overhead represents the many fixed costs that are spread over all projects, such as functional management, workplace facilities and equipment, and non-project costs like training. It's not necessary for a project manager to figure out this rate; nearly every company has an established burdened labor rate on record.

(WBS) Competition Criteria - WBS Guidelines Vary

WBS Guidelines Vary o Work packages as subprojects or groups of activities. When a project costs $50 million, $500 million, or $5 billion, it can make a lot of sense to decompose it into chunks that are still very large—far more than 80 hours! On these projects, a work package can be worth $100,000 and up. In this case, the work package itself can be decomposed using all the WBS guidelines found in this chapter.

What is commonly used to display task relationships?

a Predecessor Table

What are the two questions used as Completion Criteria?

a. What does it mean to be complete with this task? b. How will we know it was done correctly? -> -Peer reviews (based on the assumption that 3-6 brains are better than 1) -Checklists -Systematic testing

(WBS) -· Planning for quality

o If a defect caused by incorrect requirements is fixed in the construction or maintenance phase, it can cost 50 to 200 times as much to fix as it would have in the requirements phase. o Each hour spent on quality assurance activities such as design reviews saves 3 to 10 hours on downstream costs.

(WBS) - Open-ended activities

o Open-ended activities. "Database "is a task that will show up in thousands of projects this year, but what is the action required? It could be many things, from design to load to test. That's the point—it is unclear what is meant by this task. Clarify the task by including an activity, as in "Test the database."

(WBS) - Open-ended tasks

o Open-ended tasks. "Perform analysis "or "Do research "are activities we understand, but since there is no hard product being produced, they are activities that could go on indefinitely. Better task names include the products of the analysis or research, such as "Define hardware requirements," Write a problem statement, "or "List candidate vendors. "The focus on producing a product gives the task—and the team—a clear ending, which makes it easier both to estimate and to track the task.

(WBS) Competition Criteria - The 2 main Questions

o What does it mean to be complete with this task? o How will we know it was done correctly?

What do you need in order to start a WBS?

you should review the project definition (SOW) and risk management strategy.

Planning Steps - Build a work breakdown structure.

· . Build a work breakdown structure. The team identifies all the tasks required to build the specified deliverables. The scope statement and project purpose help to define the boundaries of the project.

THE THREE LEVELS OF BALANCING A PROJECT - BUSINESS CASE

· . Business case. If the project cannot achieve its cost-schedule quality goals, then the equilibrium among these three factors must be reexamined. This means that the business case for the project must be reevaluated. Changing any of the goals of the project puts this decision beyond the authority of the project manager and team. To understand why the decision to change the cost-schedule-quality equilibrium has to be made at the business level, consider that: o Cost goals are related to profitability goals. Raising cost targets for the project means reevaluating the profit goals. o Schedules are closely linked to the business case. Projects that deliver late often incur some profit penalty, through either missed opportunities or actual monetary penalties spelled out in the contract. o Changing the features and performance level of the product affects the quality—and therefore the value—of the end product. o Balancing the project to the business case requires agreement from all the stakeholders, but most of all, from those who will be affected by changes to cost, schedule, or quality.

Planning Steps - Assign and level resources

· Assign and level resources. The team adjusts the schedule to account for resource constraints. Tasks are rescheduled in order to optimize the use of people and equipment used on the project. o Tasks 1 and 2 have no predecessors. Either one can be done first, or, if there are enough people, they could be done at the same time. Tasks that can be performed at the same time are known as concurrent tasks.

Project Management - What to AVOID

· Ballparks in Elevators · Estimating Without Complete Specifications · Confusing an Estimate with a Bid · Padding the Estimate

Project Management - AVOID - Ballparks in Elevators

· Ballparks in Elevators: if your manager catches you in the elevator don't give him a random number which you „feel like is right " o Try to respond in a way that, there are too many factors and that's why you don't want to give a misleading response

Modular approach - PRO's

· Business benefits are delivered earlier (each module delivers part of a benefit) · Clients can refine project scope based on experience -> since results can be seen as each module unfolds · Reduction of risk -> in case of fail, the obtained modules may still be used · Efficient use of resources (designer team finished module A, IT guys can start making module A, then module B etc.) reduced peak of requirements One obtains constantly client feedback

Planning Steps - Calculate initial schedule

· Calculate initial schedule. After estimating the duration of each work package and figuring in the sequence of tasks, the team calculates the total duration of the project. (This initial schedule, while useful for planning, will probably need to be revised further down the line.)

Project Management - AVOID - Confusing an Estimate with a Bid

· Confusing an Estimate with a Bid o An estimate is a projection of how much and how long a project will take, while a bid is the schedule and budget a subcontractor offers to deliver the project. The bid will quite likely be made up of estimates, but it will also include profit margins for the subcontractor. The important distinction is that a bid is calculated to be both attractive to the customer and profitable to the bidder, while an estimate is a prediction of what it will really take to deliver.

Negotiate the Estimate or Negotiate the Equilibrium?

· Don't Negotiate the Estimate—Negotiate the Equilibrium - This estimate was built from the product specifications, and it represents a realistic balance of cost, schedule, and quality. Dickering over cost or schedule alone throws the entire estimate out of equilibrium. While no estimate will go unchallenged, the proper defense is to demonstrate how the estimate is tied to the product specification and work breakdown structure. When estimates are developed correctly, they can be reduced only by changing the product or the productivity of the workers.

THE THREE LEVELS OF BALANCING A PROJECT - ENTERPRISE

· Enterprise. When the project and business case balance, but the firm has to choose which projects to pursue, it is then balancing the project at the enterprise level. The enterprise could be a department within a firm, an entire company, or a government agency. This decision is absolutely beyond the power of the project manager and team, and it may even exceed the authority of the sponsor and the functional managers, although they'll be active participants in the decision. Choosing which projects to pursue and how to spread limited resources over multiple projects is primarily a business management decision, even though it requires project management information. o 1. Outsourcing allows you to pursue more projects with the same number of people, if you have enough money to pay the outside firm. o 2. Phased product delivery means that more projects can be run at the same time, with many small product deliveries rather than a few big ones. o 3. Reducing product scope on several projects requires cost-benefit trade-off analysis among projects, rather than just among functions on a single product. o 4. Using productivity tools can be a strategic decision to improve productivity across projects. The proper tools can bring great leaps in productivity increases; this may enable firms to pursue many more projects with the same number of people.

Planning Steps - Estimate work packages

· Estimate work packages. Each of these detailed tasks has an estimate developed that includes the amount of labor and equipment needed and the duration of the task.

Project Management - AVOID - Estimating Without Complete Specifications

· Estimating Without Complete Specifications o software developers and managers of information systems (IS) projects seem to make this mistake regularly. Someone has an idea, the idea is approved, with a budget and a deadline, and off they go! They don't seem concerned that the specifics of implementing the idea won't be known until they are halfway through the project. The allure of this mistake is that it seems as if team members are adopting good business practices; after all, they do have a budget and schedule attached to the new initiative. But without complete specifications, it isn't clear what the project will be producing, so there is no basis for an accurate estimate.

Planning Steps - Identify task relationships

· Identify task relationships. The detailed tasks, known as work packages, are placed in the proper sequence. o Define task relationships only between work packages. Even though a project might have hundreds of work packages and several levels of summary tasks, keep the sequence constraints at the work package level. Summary tasks, remember, are simply groups of work packages, so it wouldn't make sense to put a task relationship between a summary task and its work package. (The only exception to this rule occurs occasionally on very large projects, where networks can be created to illustrate project relationships at the summary level.) o Task relationships should reflect only sequence constraints between work packages, not resource constraints. Changing a network diagram because of resource constraints is the most common error in building network diagrams. The fact that there aren't enough people or other resources to work on multiple tasks at the same time is irrelevant here. Regardless of resources, the tasks will still have to be performed in the same order

Estimation - Estimating Equipment That Will Be Used Up

· If equipment will be purchased and used up on a single project, then all you will need to do is add up the pieces of equipment and the cost of each (a parametric estimate). For example, a boring machine used to dig utility tunnels uses up drill bits at the rate of 1 every 50 feet. So, a 1,300-foot tunnel will require 26 drill bits (1,300 divided by 50).

Hardy & Chaudhuri's case study - Details (2/2)

· In this way value could be delivered to the business much sooner · The division by modules is also very helpful since it gives flexibility to react to changes in the market (which is very important since the financial industry is a very rapid/disruptive market · As can be seen in the picture above the project was divided into 3 modules o Functionality for floating contracts on the mainframe o Remainder of the functionally of the mainframe o Functionality of the client server · During the project to company had a big merger which lead to significant changes in the structure and strategy -> the modular approach enabled reprioritization of the modules and components -> a little bit later again a big merge came with an even bigger company which required changes in the technological architecture of the company (this meant that the third module was not even required anymore) -> module A was still used module B (the developed prototype) was used for similar project

What does the Scheduling Process include?

· Includes a detailed knowledge of the work to be done. · Has task sequences in the correct order. · Accounts for external constraints beyond the control of the team. · Can be accomplished on time, given the availability of skilled people and enough equipment.

Modular approach - Example

· Information system which delivers 7 functions to 2 types of customers · The prioritizing process may look like that (PIC) · Now the project can be divided into different modules o Monolithic approach to deliver everything at ones o Deliver first module A then B then C o Or deliver first D (business customer func 1-7) and then module E private

Modular approach - CON's

· May be longer · May cost more This due to planning and integrating the regression testing

Hardy & Chaudhuri's case study - Details (1/2)

· Newcours is one of the largest international non-bank lenders · The goal was to optimize HR incl. Technology à it could be met by developing a customized and flexible billing & payment process (flexible customer invoicing) · Since the market did not provide what they looked for they decide to build one · The project would require a lot of changes (80 % of company's business + changes in two major leasing systems) · After the realization that the project executed in the traditional form would bear to many risks, they have decided to use a modular approach

Project Management - AVOID - Padding the Estimate

· Padding the Estimate o There are many legitimate reasons for adding time or money to an estimate. Contingency funds may be added for risks identified during the risk management process. Extra time is usually added to allow for inevitable delays due to illness or vacations. But padding the estimate is different. Adding time and money to the estimate solely for the purpose of bringing the project in early and under budget is neither legitimate nor productive. The best strategy is to offer honest, detailed estimates.

Different Estimation types:

· Phased Estimating o Phased estimating is a favorite among project managers because it requires cost and schedule commitments for only one phase of the project at a time. · Apportioning o Also known as top-down estimating, apportioning begins with a total project estimate, then assigns a percentage of that total to each of the phases and tasks of the project. The work breakdown structure provides the framework for top-down estimating. o Since apportioning is based on a formula derived from historical data of other, similar projects, the historic projects must be very similar to the project at hand for the formula to be accurate. o Since apportioning divides a total project estimate into smaller pieces, it will be accurate only if the overall estimate is accurate. · Parametric Estimates o Technique seeks a basic unit of work to act as a multiplier to size the entire project. The golden rules of estimating really apply with this technique: It is always based on historical data, and the estimator must develop a solid parametric formula. To see how parametric estimating works · Bottom-Up Estimating o Bottom-up estimating requires the most effort, but it is also the most accurate. As the name implies, all the detailed tasks are estimated and then combined, or rolled up

THE THREE LEVELS OF BALANCING A PROJECT - PROJECT

· Project. Balancing at the project level requires making changes that keep the project on track for its original cost, schedule, and quality objectives. Since these three parts of the project equilibrium won't change, the project manager and team should have authority to make these decisions. o Re-estimate the project § Positive. If certain estimates can be legitimately reduced, the project cost, and perhaps the schedule estimates, will shrink, and the accuracy of your estimates will have increased. § Negative. Unless there is new information to justify better estimates, don't fall prey to wishful thinking. o Change Task Assignments to Take Advantage of Schedule Float § 1. They both need the same resource type. (Pulling attorneys off a task to help a bricklayer won't work.) § 2. The noncritical task needs enough float to allow it to be delayed without delaying the entire project. Don't forget that shortening tasks on the critical path will take float away from all noncritical tasks. You may find that reducing duration on a few critical path tasks changes the critical path. § 3. You must be able to reduce the duration of the critical path tasks by applying more people. (See Tables 9.2 and 9.5 in Chapter 9 for examples of tasks that don't decrease in duration by adding people.) o Add people to the project o Increase Productivity by Using Experts from Within the Firm o Increase Productivity by Using Experts from Outside the Firm o Outsource the Entire Project or a Significant Portion of It o Outsource the Entire Project or a Significant Portion of It o Crash the schedule § Positive. The table makes it clear which tasks are the cheapest to compress. § Negative. The only potential negative is that the estimates in the table may turn out to be not completely accurate. o Work Overtime o Reducing Product Performance Is Not an Option

Planning - WBS - Detailed Steps

· Provide a detailed illustration of project scope. Though the statement of work defines scope at the conceptual level, a comprehensive look at a project's scope can be accomplished only with a WBS. · Monitor progress. The tasks on the WBS become the basis for monitoring progress, because each is a measurable unit of work. · Create accurate cost and schedule estimates. The WBS will detail costs for equipment, labor, and materials on each task. · Build project teams. Every team member wants clear work assignments and a sense of how his or her work fits into the overall effort. A good WBS does both. You can also increase the team's commitment to the plan by having them participate in building the WBS.

Project Management - Float

· Some tasks have flexibility in when they can be performed in the schedule, and others have no flexibility. The term for this schedule flexibility is float. (Another common term is slack.) Float is calculated by subtracting early start from late start · When all the float has been used up, a new term emerges to describe the situation: negative float. Negative float results when externally imposed finish dates are impossible to meet (such as 10 presents to buy at 6 p.m. on December 24) · When there is negative float, it means that adjustments will have to be made to bring the schedule in line with the critical path. This is the kind of information you will need when you renegotiate the cost-schedule-quality equilibrium.

Project Management - Estimating fundamentals

· The people on the project team may be unknown to the manager. However, their particular skills and knowledge will affect their productivity, and the more complex the tasks are, the more this productivity factor counts. · Projects that rely on new technology face questions about the reliability of the new technology and the learning curve of the team. · Since estimates are used to coordinate activities and forecast resources, incorrect timing predictions will cost money. If the project is behind schedule when a subcontractor arrives, you may have to pay the subcontractor to sit around and wait. If it is so far behind schedule that the vendor must be sent away, then this vendor may not be available when needed.

How should estimations be done?

· Three factors define who the right people are: o 1. The estimators must be experienced with the work they are estimating. No matter which techniques are used, estimating is always based on an understanding of the work to be done. o 2. The people who will actually perform the work should also be involved in estimating it. They will have the best grasp of their own limitations. They will know, for example, just how much time their schedule will allow them to work on this project; they will also know whether they will need a steep learning curve before they are productive. Most important, when people make an estimate for their own work, they are usually more motivated to achieve it than when the estimate comes from the outside. o 3. The estimators must understand the goals and techniques of estimating. Even when people understand the task at hand, they should not be allowed to estimate their own work until they learn both how to estimate and the goal of estimating, which is to produce accurate estimates that will come true, not optimistic projections of the best possible performance.

What is the sole purpose of summary tasks on the WBS?

· When organizing the work breakdown structure, remember that the sole purpose of summary tasks on the WBS is for communication or visibility. (Recall that summary tasks aren't actually executed, they just summarize work packages.) So, every summary task should be meaningful to some stakeholder (including the project manager). If there are summary tasks that have no audience, erase them.