Project Management Flashcards
EV
Earned Value
AC
Actual Costs
PV
Planned Value
CV
Cost Variance
SV
Schedule Variance
CPI
Cost Performance Index
SPI
Schedule Performance Index
EAC
Estimated Cost at Completion
BAC
Budgeted Cost at Completion
VAC
Variance at Completion
ECD
Estimated Completion Date
ECTC
Estimated Cost to Complete
SC
Scheduled Completion Date
CV=
EV-AC
SV=
EV-PV
CPI=
EV/AC
SPI=
EV/PV
VAC=
BAC-EAC
EAC1=
BAC-CV
EAC2=
BAC/CPI
ECD1=
SC-SV(time)
ECD2=
SC(time taken to perform work to date/time work should have taken)
Assumption 1:
Outstanding work will be completed at original budget at completion
Assumption 2:
Outstanding work will be completed at same cost factor observed in project so far
Stages of Project Control Analysis:
- Define work breakdown structure
- Identify and develop resource schedule
- Develop time-phased budget
- Develop actual cost of work performed
- Collect percentage complete and multiply by original planned budget to determine the value of the work completed (EV)
- Complete variance analysis
Gantt charts can be used for
effective communication in monitoring time performance across all levels
A tracking Gantt chart can be useful
- to track and trend schedule performance
- to add actual and revised time estimates
- to provide a quick overview of project status
Benefits of earned value analysis:
- Disciplined planning and risk management
- Good project visibility
- Objective and quantitative performance measurement
- Early indication of problems
- Ability to accurately predict project cost and schedule
Drawbacks of schedule variance:
- Does not show individual activity contribution on graphs
- Does not distinguish between critical and non-critical activities
- Directly concerned with schedule for spending money and not directly concerned with time-based schedule
- Can be difficult to visualise
If CV>0
underbudget
If CV<0
overbudget
If SV>0
ahead of schedule
If SV<0
behind schedule
Scope creep is
the cumulative effect of minor refinements to the original project scope
Scope creep is common early in projects because
- additional features are added
- new technologies are discovered
- poor design assumptions are found
Scope creep can be reduced by
having a well defined scope statement and stating the limitations on the project at the start
Advantages of scope creep:
Small changes could decrease time to market or reduce cost
Disadvantages of scope creep:
- Leads to delays or cost overruns
- Reduces team motivation
Baseline changes are
changes during the project life cycle that are inevitable
Examples of baseline changes are
changes in government policy, the economy, or unforeseen problems
Baseline changes should only be accepted if:
- the project will fail without the change
- the project will improve significantly because of the change
- the customer demands the change and will pay
It is important that information flow
is clearly mapped and stakeholders are informed
Engineers should value organisational strategy because:
- They must be able to make appropriate decisions and adjustments
- They must be able to be a successful advocate for themselves
Strategy decribes
how an organisation intends to compete with the resources available in the existing a perceived future environment
There are four steps to the implementations of an organisation’s strategy:
- Review and define “mission”, what the organisation intends to be
- Create long-range goals and objectives; specific, tangible and measurable actions
- Analyse and formulate strategies to reach these objectives
- Implement strategies through projects
A portfolio management system involves
- the classification of projects
- the criteria used to select them
- ensuring a good range of sources of project proposals are used
- the evaluation of those proposals
A portfolio management systems ensures
projects are aligned with strategic goals and prioritised suitably
Benefits of project portfolio management:
- Disciplined project selection process
- Ensures projects are aligned with strategic targets
- Projects prioritised on measurable, common criteria and not emotions and internal politics
- Supports a move towards fulfilling organisation’s strategy
Projects can be classified in three ways:
Compliance and emergency, operational, and strategic
Steps for determining whether to invest in a project:
- Define the project
- Define the stakeholders
- Define the decision criteria
- Calculate the economic benefits
- Estimate the economic costs
- Formulate the net benefit stream
- Complete cost-benefit analysis
- Complete sensitivity analysis
- Assess other benefits not included in CBA
- Report the findings
To complete cost-benefit analysis it is necessary to
convert into a common unit of measurement, most commonly money, this requires subjective judgements
If net present value > 0
Invest
If net present value < 0
Don’t invest
Net present value=
Cost for period 0 + the sum for periods 1 to t of ((cost for period t/(1 + discount rate for period t)^t)
To adjust for risk in cost-benefit analysis
make the discount rate higher
Multiple criteria analysis is
a weighted scoring model that uses a range of weighted selection criteria to evaluate project proposals
Compared to cost-benefit analysis, multiple criteria analysis is
more subjection but allows for things beyond financial gain to be considered
Criticism of cost-benefit analysis:
- Due to data constraints, largely based on assumptions
- Requires intuition
- Needs adaptation to local surroundings
Types of costs and benefits not counted in net present value:
- Transfer payments
- Sunk costs
- Depreciation of assets
Payback period (years) =
estimate project cost/annual savings
Purpose of payback period:
Estimated time taken to recover investment more simply that NPV
Use of payback period:
- Quick evaluation
- Eliminates risky (long payback period) projects
Limitations of payback period:
- Ignores time value of money
- Assumes cost inflows for investment period only
- Does not consider profitability
A risk is
an uncertain event of condition that, if it occurs, has a positive or negative effect on the project objectives
As a project goes on, in terms of risk,
the probability of a risk occurring decreases, but the knowledge of risk variables and the cost to fix a risk increase
Risk identification can be done through
- brainstorming
- interviewing experts
- mapping risks onto work breakdown structure
- using a risk profile related to project type
A black swan event is
an event that is rare, high impact, and predictable only in hindsight
Risk assessment can be done by use of
a FMEA or impact-likelihood matrix
FMEA stands for
failure mode and effect analysis
Common methods of risk mitigation are:
- Reduction
- Avoidance
- Transfer
- Retention
Does subcontracting work mitigate the associated risks?
NO!
With regard to risk, it is good practice
to encourage everyone to speak freely, identify issues early and document who is responsible
Contingency can be done through:
- budget reserves
- management reserves
- time buffer
An activity is
an element of a project that requires time
A merge activity is
an activity with one(?) or more activities preceding it
Parallel activities are
activities that occur at the same time
A burst activity is
an activity with one(?) or more activities following it
Total float is
the difference between the latest and earliest finish time, the amount of time an activity can be delayed by and remain on schedule
Free float is
the difference between the earliest start time of a subsequent activity and the earliest finish time of an activity under consideration, the amount of time an activity can be delayed without delaying successor activites
Critical activities are
activities with zero total float
Estimation is
the process of approximating or forecasting the cost and time to complete the project deliverables
In estimation, there is the need to balance the trade-off between
better accuracy and the cost to secure this increased accuracy
Uses of estimation:
- Provides information to support good decision making
- Required to schedule work and resources
- Used to determine an estimate of total project cost and duration
- Helps to determine whether it is financially worth doing
- Helps to determine cash flow
- Used as the basis for project control
Direct costs are
chargeable to a specific work package, represents real cash outflows, and must be paid as the project progresses
Indirect costs include
overhead costs, fees and taxation, inflation, mark-up and contingency funds
A top-down approach
takes a broad overview of the whole project and supplies a fast, less accurate estimate
A bottom-up approach
takes time to calculate with cost a time estimated for each activity of the work breakdown structure, and supplies a thorough, detailed and accurate estimation
Benefits of detailed estimating methods:
- High level of confidence compared to other approaches
- More detail, used for monitoring and control
- Enhanced scope and activity definition
- Detailed quantities to establish more accurate metrics
- Can be revised as the project progresses
Limitations of detailed estimating methods:
- Uses up time to calculate
- It costs more
Labour rates include
wages, national insurance, holiday pay, bonuses, overtime etc. (not just pay received by employee)
Parametric estimating consists of
creating logical and repeatable relationships between independent variables and dependent variables
Benefits of parametric estimation:
- Versatility
- Sensitiviy
Drawbacks of parametric estimation:
- Assumes linearity
- Database requirements
- Differing definitions of the unit of capacity
- Relevancy of data
The formula for capacity factor method is
Cost(new)=Cost(known)x(Capacity(new)/Capacity(known))^(Capacity factor)
Factors that could have a significant impact on estimation quality include:
- The duration of the project and how far away it is
- People estimating with inappropriate expertise
- Project structure and organisation (concentrated focus or efficient sharing of personnel)
- “Padding out”
- Equipment downtime
- National holidays/legal working limits
Reasons why costs may overrun:
- Low initial estimates due to to poor perception of the whole project
- Tasks were considered in isolation so interactions were not fully considered
- Unforeseen technical difficulties
- Changes in scope and project definition
- Economic and other external factors
A work breakdown structure attempts to show
what activities must be done, who will do each activity, how long each activity will take, what materials are required for each activity and how much each activity will cost
The consensus method of estimation involves
using pooled experience of senior managers to estimate total project costs and time
Benefits of consensus method:
- Can be used when historical data not available
- Estimate is developed at minimal time and cost
- Experts could provide new insight into project
Drawbacks of consensus method:
- Lack of objectivity
- Risk of one expert dominating discussion
- Not regarded as accurate
The learning curve method states
the time to perform an activity improves with repetition
The main benefit of Delphi method is
it completely removes egos, bandwagons and strong personalities
The Delphi method involves
well-informed individuals making estimates anonymously, and being encouraged to change their opinions in light of the opinions of other experts
Resource scheduling is
a means to allocate resources to activities to allow the project manager to make realistic judgements of resource availability and project durations
Benefits of resource scheduling:
- Realistic alternatives can be considered if resources cannot be met
- It is possible to gauge impacts of unforeseen events
- It is possible to assess trade-offs between cost and time
- It is possible to assess flexibility in resources and reduce peak demand in the project and therefore reduce costs
Overall schedule slippage is
when a project is delayed because another project it shares resources with is delayed
Disadvantages of “first come first serve” rule in project scheduling:
- Resources are not fully optimised
- Benefit of working on multiple projects not felt
Advantage of “first come first serve” rule in project scheduling:
More reliable completion estimates
The project cost baseline is
the projection of what you plan to spend during the project life-cycle
What are the reasons to reduce project duration?
- Strong global competition and rapid technological development
- Unforeseen delays
- Imposed deadlines
What are the reasons not to reduce project duration?
- Higher direct costs
- Health and safety
- Planned obselesence
How to accelerate a time-constrained project:
- Add resources
- Outsource project work
- Schedule overtime
- Appoint a core project team
- Do it twice (the first time at a lower quality)
Advantages of scheduling overtime:
-Avoids additional costs, time and communication of adding resources
Disadvantages of scheduling overtime
- There are regulations for maximum working hours
- Reduced productivity
- Increased resentment
Outsourcing is often not possible due to
confidentiality
How to accelerate a resource-constrained project:
- Fast-tracking, adjust project logic
- Critical chain project management
- Reduce project scope
- Compromise quality
Project management is
the planning, monitoring and control of all aspects of a
project and the motivation of all those involved in it, in
order to achieve the project objectives within agreed
criteria criteria of time, cost and performance
British standard stages of a project life-cycle:
- Concept
- Feasibility
- Evaluation
- Authorisation
- Implementation
- Completion
- Operation
- Termination
Four general stages of a project life-cycle:
- Defining
- Planning
- Implementing
- Delivery
A project is
a unique set of co-ordinated activities, with definite starting and finishing points, undertaken by an individual or organisation to meet specific objectives within defined schedule, cost and performance parameters
The project scope should include
the objective, the deliverables, the milestones, the technical requirements, the limits and exclusions and the reviews with the customer
The three main things to be traded-off in projects are
cost, quality and time
Other than the three main things to be traded off, other project parameters include
safety, environmental factors and scope
Role of a work-breakdown structure:
- Shows interrelationship between work packages in hierarchical framework
- Assures products and work elements identified
- Ensures level of integration into organisation
- Forms basis of project control
Project management has become increasingly important because
project life cycles have become shorter
Examples of when the objective of a project may not be to be profitable:
- capture larger market share
- develop core technology to be used in next generation products
- to prevent government intervention and regulation
In unit-rate estimating
the output rates and costs of materials used are combined, indirect cost must be considered seperately
The estimator determines costs for each item in the project, based on:
- information from recently completed contracts
- built-up rates from analysis of historical data
- published information
- estimator’s experience
In activity-based estimation
the total of the total quantities of resources involved in each activity
Examples of parametric estimating techniques:
- End products unit method
- Physical dimension method
- Capacity factor method
- Ratio and factor method
In the specific analogy method
the known cost of similar projects are used as a starting estimate and it is revised based on differences in design
Benefits of specific analogy method:
- can be used before detailed data is available
- estimate is developed quickly at a low cost
- straightforward to justify using historical data
Drawbacks of specific analogy method:
- only uses a single data point
- detailed cost breakdown difficult to locate
- may be too subjective in adjustment factors
Ladders
allow activities to be split into segments, so the following activity can start sooner without delaying the project
Overcoming resource problems from working on multiple projects:
- first come first served rule
- treat all projects as a “mega-project”
- outsourcing resource allocation issues
Resource bottlenecking is when
resources needed across multiple projects cannot be met, hence causing a delay across some of these projects
Potential impacts of resource smoothing:
- loss of flexibility and reduction is float of some activities
- increased risk of overall project delay
