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… Is that how you answer? Rodolfo Ambriz, PMP, PMI-RMP, MCTS, MCITP Managing Director, International Institute for Learning México, S.A. de C.V. All project managers or leaders, who have ample experience as well as those who are just beginning in project management, must maintain very good communications with everyone involved in the project, with their clients, superiors, collaborators, contractors, etc., to establish an outstanding decision making process. Everyone always wants to know “how is the project going?”, the challenge lies in answering the question in an objective, truthful, clear and timely manner. Answering “fine, it´s going well” and then pretending that we are one hundred percent focused on our job (to avoid further questioning), generally doesn’t calm people’s anxiety, and today this will only demonstrate that we do not have a system or process that allows us to provide trustworthy data. After the afore mentioned question, we might have to face the most important questions: “How will the project end? Will it finish on time, within budget, and according to quality requirements?” It is quite important to know, in an objective manner, the current status of our projects at all times, with the sole purpose of allowing us to make projections that will allow accurate forecasts for the completion of all main objectives; and based on this, take the appropriate corrective actions, in case they might be needed. The purpose of this article is to present a summary of project management processes, currently considered as best practices worldwide, according to various international standards. Framework A project is a temporary endeavor undertaken to create a unique product, service or result. Project Management (PM) can be defined as the application of knowledge, abilities, tools and techniques to the activities of a project in order to fulfill their requirements; we can also state that it is a process intended to improve project performance. Projects are not isolated or independent efforts, they will always be immersed within the regular operational processes of the performing organization, due to this fact the traditional project management approach has evolved into what we currently know as Enterprise Project Management (EPM), which focuses on improving the organizational/enterprise performance by linking the executed work within projects to the operational work, and above all, within the organization’s strategic objectives.
© 2009, Ing. Rodolfo Ambriz, PMP, MCTS, MCITP
The modern project management procedure is based on three fundamental concepts: • Knowledge Areas: Integration. of which many already exist. (Figure 1). Rodolfo Ambriz. Communications. developing and training all project managers. MCITP -2- . program management (group of projects related to each other) and portfolio management for the organization as a whole or for only a specific section. • Group of Processes: Initiating. Human Resources. it is not possible to cover all project management processes within this article. EVM gives us an approach to measure project performance based on the comparison of actual progress versus planned progress. when the work will be performed (schedule). Earned Value Management Framework A fundamental success factor in any project is the ability of the project manager to make correct and timely decisions. as a fundamental part of the previously mentioned approach. this will allow us to answer the questions posed at the beginning. focusing on process standardization. and in general. Ing. for example the PMI (Project Management Institute). which is comprised of three elements: the work to be performed (scope). As it was previously mentioned. Cost. Monitoring & Controlling. It is also very important to provide concise data to all project stakeholders. Scope. including costs. MCTS. and will deviate us from the originally posed question at the beginning of this article. this is why we will focus solely in the management of one single project. The integration of the above concepts is the basis for the main international standards regarding project management. usage of corporate software tools. to perform the actual work (costs). to work as a center of excellence for project management. has been an ANSI (American National Standard Institute) standard. • Life Cycle and Project Phases. To explain even superficially all that is involved in EPM would lead us into topic so complex that it would turn this article into a full length book. trustworthy and on time information regarding the project’s progress. To implement EVM in a project. PMBOK (Project Management Body of Knowledge) Guide 4th Edition which. PMP. so I will focus in the process related to Earned Value Management. He or she can only achieve this. Executing. Risk. © 2009. since 2000. It is also important to have within the organization a Project Management Office (PMO). Quality. allowing us to evaluate trends to establish forecasts.EPM includes management of individual projects. and resources. and Procurement. it is mandatory to establish the Performance Measurement Baseline (PMB). if they have clear. defined as the enterprise unit that centralizes and coordinates all project management efforts. and Closing. Planning. Time.
• Earned Value (EV). valued with the costs used to define the PMB. CV = EV – AC SV% = SV / PV CV% = CV / EV Performance Indices • Schedule Performance Index (SPI). • Actual Cost (AC). SV = EV – PV Cost Variance (CV). Ing. The value of the PMB at the status date. Rodolfo Ambriz. These can be expressed in percentages. SPI = EV / PV • Cost Performance Index (CPI). The cost incurred for the accomplished work at the status date. MCTS. CPI = EV / AC • To Complete Performance Index (TCPI). TCPI = (BAC – EV) / (BAC – AC). What you have accomplished at the status date. divided between the Budget at Completion (BAC): • PV% = PV / BAC • EV% = EV / BAC • AC% = AC / BAC Variances • • • • Schedule Variance (SV).Figure 1. PMP. MCITP -3- . Performance Measurement Baseline Integration The Basic Elements Three key values: • Planned Value (PV). © 2009.
depending on historical performance data and trends: o EAC = BAC – SV. MCITP -4- . It is recommended to obtain it through a network analysis of the project. • Estimate to Complete (ETC). SPIACt = PMB duration / EACt © 2009. PMP. o EAC = BAC / CPI. CPIAC = BAC / EAC There is an emerging approach that takes time-based schedule measures instead of cost measures to calculate the schedule performance: • Time Estimate at Completion (EACt). EAC can be calculated in different ways. o EAC = AC + new estimate for the remaining work. Future costs are calculated based on the cost and schedule performance efficiency rates to date. o EAC = BAC / (CPI * SPI). The forecasted duration of the project. Future costs are calculated based on the cost performance efficiency rate to date. VAC = BAC – EAC • VAC% = VAC / BAC • Cost Performance Index at Conclusion (CPIAC). or it could also be obtained through a gross estimate of the final duration using SPI in case the tendency might continue: EACt = (BAC / SPI) / (BAC / PMB duration) = PMB duration / SPI • Time Variance at Completion (VACt).Forecasts • Estimate at Completion (EAC). MCTS. VACt = PMB duration – EACt • VACt% = VACt / PMB duration • Time Schedule Performance Index at Conclusion (SPIACt). Future costs would be the same as in the PMB because variances to date were atypical. Rodolfo Ambriz. The forecasted final project cost. ETC = EAC – AC • Variance at Completion (VAC). Ing.
If for some reason it is not required to control resources it might be possible to only estimate costs for tasks. Resources and Costs To use EVM it is required that every task has all necessary resources assigned with their respective rates. PMP. Rodolfo Ambriz. MCITP -5- . EVM can be applied with the information contained in a Gantt Chart. the recommended technique for measuring progress depends on the deliverable characteristics as well as task duration.Figure 2. Scope It is recommended to decompose the work to be performed following the rules. © 2009. For this it is necessary to take into consideration the technique that will be used to determine the EV during project execution. MCTS. Time Phased Budget and Earned Value Management Measurement Techniques Time phased budget distribution is the key to effective EVM implementation. Ing. regulations and best practices to create a Work Breakdown Structure (WBS) that is adequate for the project. Deliverables – Characteristics Task Duration 1 or 2 measurement periods More than 2 measurement periods Recommended Earned Value Measurement Technique Fixed Formula Weighted Milestones % Duration Complete % Work Complete Percent Complete % Physical Units Complete % Physical Complete Apportioned Effort Level of Effort Tangible Intangible Any duration Figure 3. Earned Value Measurement Techniques As you can appreciate in figure 3. EVM Elements Applying EVM EVM within Planning As mentioned previously. a good EVM implementation is based in the correct integration of scope. but it is widely recommended to use instead a dynamic schedule that will allow us to perceive the impact of any changes to the schedule and so be able to take all appropriate corrective measures in a timely manner. Schedule In terms of schedule. schedule and cost within project planning.
whose partial progress is the same as the proportion of real time spent in relationship with total work (hours). • % Duration Complete = Actual Duration / Total Duration: It is recommended for tasks that have a linear performance (proportional and uniform) throughout its duration. Percent Complete The most generally used EV measurement technique. and the other 50% when it is finished). • % Physical Complete = Physical complete evaluation at the status date: It is recommended for tasks in which the partial progress must be evaluated in accordance with the physical complete of all deliverables and where we are unable to apply any of the three techniques previously mentioned. depending on the task characteristics and its deliverables. • % Physical Units Complete = Actual Units / Total Units: It is recommended for tasks. Weighted Milestones The weighted milestones technique is recommended for tasks with relatively long durations. for example cubic meters of poured concrete or tons of placed steel. MCITP -6- . 25/75.Fixed Formula This is a simplified technique for assessing task progress quickly and easily. • % Work Complete = Actual Work / Total Work: It is recommended for tasks. but where you have specific milestones with verifiable deliverables to which you can assign weighted values. where progress is credited according to the percentage completed at the status date. MCTS. Rodolfo Ambriz. Ing. Percent complete can be calculated in different ways. etc. PMP. whose partial progress is estimated upon the number of physical units delivered versus the total amount of units produced. © 2009.). The most common formulas are 0/100 (no progress is credited until 100% of the task is done) and 50/50 (you credit a task as 50% complete when it started. Apportioned Effort This technique is recommended when a task has a direct relationship with another task that has its own Earned Value measurement technique. where it could be difficult to evaluate partial progress. (30/70. Any other combination can be used.
Example – Quality Thresholds Example © 2009. Rodolfo Ambriz. EVM and Quality Thresholds In every company there are acceptable tolerances of performance. For example. all trends must be reviewed. EVM Performance Analysis and Forecasting During project execution and control is necessary to analyze its performance in order to be able to answer the question posed by all stakeholders: How is the project going? Likewise. You can define tolerable zones (green). moreover. warning zone (yellow) and trouble zone (red). which might also represent some kind of problem. actual progress needs to be registered for each project task in accordance to the selected Earned Value measurement technique during planning. We can also establish alert zones (blue) as an indicator that performance is “too good”. Figure 4. MCTS. directing your attention to projects and tasks with problems. Ing. the Project Management task which produces a lot of deliverables every week. or that produce a lot of them. decide which corrective measures will be applied and determine all forecasts to answer the most important question of all: How will the project end? In each status date. and EVM allows you to establish quality thresholds so you’ll know if the project is within the control limits. MCITP -7- . or is out of control. The indices and variances calculated in EVM are perfect for this. the remaining work to be performed in the task needs to be updated. this way we will always have the most update and trustworthy information on the project. PMP.Level of Effort It is recommended for tasks that do not produce tangible and verifiable deliverables. This will also allow you to practice management by exception.
Figure 5. That requires a project manager willing to do the required analysis and take corrective actions when needed. MCTS. © 2009. Example – Traffic light indicators to control EVM Example Conclusions The key to effective implementation of EVM is to keep your model as simple as you can. Analyze your project and define what will work for it. it is possible to integrate a Corporate Control Panel for the Project Portfolio. allowing you to obtain the necessary feedback to facilitate a good decision making process. You need to balance the necessity of accurate detailed information with the need for easy handling of your model. Rodolfo Ambriz. EVM itself will not make successful projects. MCITP -8- . Don’t force your project to fit some criteria. If all projects and programs within the organization are managed in a standard manner. approach or EVM measurement technique. Thus the performance of all projects can be reviewed with similar criteria. Always remember the main objective of EVM is to give you the right feedback to facilitate your decision making. PMP. Ing.
. USA: John Wiley & Sons. Ross Publishing. Rodolfo (2008). He has extensive experience in project management consulting and training. MCITP) is Managing Director of IIL Mexico. References Ambriz. Example . USA: J. In Search of Excellence in Project Management.V. MCTS. The Book By and For Professionals.Figure 6. Kerzner. Kerzner. PA. Applied Project Management. Harold (2005). PMI-RMP. and the author of the book “Dynamic Scheduling with Microsoft Office Project 2007. responsible for corporate business in Latin America. PMP. S. Harold (2006).A. Kerzner. Practice Standard for Earned Value Management. de C.Corporate Control Panel for the Project Portfolio. PMP®. Project Management Institute (2000). USA: John Wiley & Sons. PMI® PMBOK® Guide – Third Edition Spanish translation committee member. Project Management Institute. The book by and for Professionals”. 9th Edition. A Guide to the Project Management Body of Knowledge (PMBOK®). Project Management Best Practices: Achieving Global Excellence. Dynamic Scheduling with Microsoft® Office Project 2007. Rodolfo Ambriz (BSCE. Using a Project Management Maturity Model: Strategic Planning for Project Management. Newtown Square. MCTS. USA: John Wiley & Sons. Rodolfo Ambriz. 2nd Edition. mostly in large projects in Mexico as well as in other Latin American countries. USA: John Wiley & Sons. speaker and panelist in different PMI Global Congresses. Harold (2004). Advanced Project Management: Best Practices on Implementation. Ing. USA: John Wiley & Sons. Kerzner. and a REP Advisory Group Member from 2005 to 2008. Project Management Institute (2002). © 2009.Newtown Square. published in 2008. Harold (2005). He was President of the PMI® Mexico Chapter in 1998 and 1999. Kerzner. He is also a professor at La Salle University in Mexico City. PMI® Latin America Director of Regional Advocacy 2002. Harold (1999). MCITP -9- . Project Management: A Systems Approach to Planning. USA: John Wiley & Sons. Scheduling and Controlling. Project Management Institute. PA. Kerzner. Harold (1998).
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