Analytic Project Management
A
72 Blodgett Ave.
Swampscott, MA 01907
P
(781) 598-1222
M
TM
sdevaux@totalprojectcontrol.com
Drag and Drag Cost:
The Missing Critical Path Metrics
*****
A One Hour Presentation
for
PMI Baltimore Lunch Meeting,
Columbia, MD
by
Stephen A. Devaux
10/28/2013
Copyright 2013, Analytic Project Management, Swampscott, MA
1
What Is Critical Path Drag?
Critical path drag is a critical (literally!) new
CPM metric that was introduced in my 1999
book Total Project Control (TPC).
It is NOT the only, or even the most
important technique or metric of TPC.
But it IS the one whose value is most
intuitively obvious.
2
Copyright 2013, Analytic Project Management, Swampscott, MA
What Critical Path Drag is NOT!
It is NOT Steve Devaux’s invention!
It’s not an invention at all! EVERY project
has a critical path and therefore EVERY
project has activities with drag!
I just identified the importance of critical
path drag and how to compute it.
3
Copyright 2013, Analytic Project Management, Swampscott, MA
All Projects Are Investments.
“An investment in work to create a unique
product, service or result.”
“Value: n; relative worth, merit or importance.”
(http://dictionary.reference.com/browse/value)
In any investment, “value” means value to the
investor!
Copyright 2013, Analytic Project Management, Swampscott, MA
4
Externalities
(A)n externality is a cost or benefit…
incurred by a party who did not agree
to the action causing the cost or
benefit… (P)rices do not reflect the
full costs or benefits of producing or
consuming a product or service.
http://en.wikipedia.org/wiki/Externalities
Items which are left as externalities
are measured at zero!
Copyright 2013, Analytic Project Management, Swampscott, MA
5
The Two Externalities in Projects
TIME
COST
SCOPE
Externalities!
If two sides of the
project investment
triangle are left
unmonetized, and
the third side is
COST, is it any
wonder that
justifying additional
resources is almost
impossible?
Copyright 2013, Analytic Project Management, Swampscott, MA
6
Integrating the Project Investment
If invested resources are measured in dollars,
the other sides of the triangle should be, too.
TIME
COST
SCOPE
$ Invested for
Resources
Otherwise, how can we justify spending even
one dollar on resources?
SCOPE generates the project’s value!
Copyright 2013, Analytic Project Management, Swampscott, MA
7
Every Project…
…is an investment of the resources needed…
…and which is
modified by
TIME and TIME
project
duration.
COST
SCOPE
…to create SCOPE that is expected
to generate greater value than the budget…
8
Copyright 2013, Analytic Project Management, Swampscott, MA
SCOPE Generates the Project’s Value
If a project is an investment, then every project is performed
for the difference between its expected value and its cost.
TIME also can impact
resource usage
$BUDGET
and COST.
What about TIME?
TIME modifies
the value of
the SCOPE.
TIME
COST
SCOPE
$Expected Monetary Value (EMV)
EXP. PROJECT PROFIT =
$EMV of SCOPE - $COST of resources
Copyright 2013, Analytic Project Management, Swampscott, MA
9
The Impact of TIME on EMV
Delivering the product generates almost all the value.
$BUDGET
TIME
COST
($+ or $- per time
unit against...)
SCOPE
$EMV
(as of a given
completion date.)
Typically, the sooner the delivery, the greater the $EMV.
The later the delivery, the lower the $EMV.
Copyright 2013, Analytic Project Management, Swampscott, MA
10
Planning Value thru the DIPP
$BUDGET
($+ or $- per time TIME
unit against...)
COST
SCOPE
$Expected Monetary Value (EMV)
PROJECT PROFIT = ($EMV of SCOPE ± $Accel/Delay)
– ($BUDGET ± COST Variance)
Planned Simple DIPP * =
$EMV of SCOPE
$Planned Cost ETC
* See “When the DIPP Dips”, Project Management Journal, Sep-Oct 1992.
Copyright 2013, Analytic Project Management, Swampscott, MA
11
Tracking Value thru the DIPP
$BUDGET
($+ or $- per time TIME
unit against...)
COST
SCOPE
Planned Simple DIPP =
Actual Simple DIPP =
$EMV
$EMV of SCOPE
$Planned Cost ETC
($EMV of SCOPE ± $Accel/Delay)
($BUDGET ± COST Variance)
DIPP Progress Index (DPI) =
Actual DIPP
Planned DIPP
Copyright 2013, Analytic Project Management, Swampscott, MA
12
The DIPP and the DPI
The following 26 week project has an EMV of $240,000 and an initial
budget of $90,560:
*
DIPP Progress Index (DPI) = Actual DIPP ÷ Planned DIPP
What is the DPI at Week 18 if the Actual DIPP is 5.43? 5.43 / 6.03 = .90
What events could cause an Actual DIPP that’s lower or higher than planned?
What is the DPI at Week 18 if the Actual DIPP is 6.33?
Copyright 2013, Analytic Project Management, Swampscott, MA
6.33 / 6.03 = 1.05
Estimating the Cost/Value of Time is
ESSENTIAL to Good Project Management!
Otherwise it will be an externality –
worth zero!
In many project schedules, the cost of
resources is often less than the cost of the
time that they would save!
This is especially true on enabler projects
within a program, i.e., projects that enable
other valuable projects.
Copyright 2013, Analytic Project Management, Swampscott, MA
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Introducing:
Paradise Island!
A luxury Resort Island for YOUR Investment,
And for YOUR Exquisite Pleasure!
Grand Opening Jan 1, 2017!
Copyright 2013, Analytic Project Management, Swampscott, MA
With magnificent
golf courses…
PROFITS:
$156M/year
PROFITS:
$104M/year
…And a marina…
…And luxury hotels
and restaurants!
PROFITS:
$258M/year!
All construction scheduled to begin Jan 1, 2014!
Copyright 2013, Analytic Project Management, Swampscott, MA
Guest Privacy Guaranteed!
Access to island ONLY via Garden of Eden Bridge!
(Under construction, scheduled completion Dec 31, 2013)
(EXPECTED PROFITS from TOLLS: $2M/year.)
Copyright 2013, Analytic Project Management, Swampscott, MA
Five Key Milestones!
Bridge scheduled completion Dec 31, 2013
PROFITS: $2M/year ($40,000/week)
WEEKLY COST OF DELAY:
$10,000,000/week!
Golf course construction scheduled to begin Jan 1, 2014
PROFITS: $104M/year ($2,000,000/week)
WEEKLY COST OF DELAY: $2,000,000/week
Marina construction scheduled to begin Jan 1, 2014
PROFITS: $156M/year ($3,000,000/week
WEEKLY COST OF DELAY: $3,000,000/week
Hotel/Restaurant construction scheduled to begin Jan 1, 2014
PROFITS: $258M/year ($5,000,000/week)
WEEKLY COST OF DELAY: $5,000,000/week
Grand Opening scheduled for Jan 1, 2017
PROFITS: $520M/year ($10,000,000/week)
WEEKLY COST OF DELAY: $10,000,000/week
Copyright 2013, Analytic Project Management, Swampscott, MA
Enabler Projects
The value of an enabler project is multiplied
by the value of the projects it enables.
Additionally, the value/cost of time on an
enabler project is often multiplied by the
value of the projects it enables.
Copyright 2013, Analytic Project Management, Swampscott, MA
19
And So To Critical Path Drag
Every project is as long as its
longest path of activities.
The Drag Efficient
We can choose to plan and
optimize that path, or we can
ignore it.
But the project will STILL be
as long as its actual longest
path!
Failure to manage the critical path properly means failure
to control the impact of duration on the investment.
What impacts a project’s delivery date?
The work, delays, constraints, and bottlenecks that
comprise a project’s critical path (and have drag!).
Copyright 2013, Analytic Project Management, Swampscott, MA
20
The Forward & Backward Passes
1. EARLY START
2. EARLY FINISH
DUR.
3. LATE START
ES
4.
LATE FINISH
LS
ACT.
ID
EF
LF
21
Copyright 2013, Analytic Project Management, Swampscott,
What Does CPM Say?
16
45
B
1
A
TF=6
15
16
C
39
40
52
D
E
71
51
Total float = amount of time an activity can
slip without delaying the end of the project.
But what about ON the critical path? What does
CP analysis say about critical activities?
Answer: ZERO (Float = 0)!
Copyright 2013, Analytic Project Management, Swampscott, MA
22
Traditional CPM Quantifies…
TF=3.5M
TF=2M
TF=3M
Off the critical path
 Total Float
 Free Float
On the critical path
 Total Float = 0
But about stuff that’s ON the critical path,
traditional CPM (and CPM software) says “ZERO!
23
Copyright 2013, Analytic Project Management, Swampscott, MA
Where to Shorten?
16
22
1
1
A
TF=0
45
B
51
TF=6
15
52
15
52
16
16
C
TF=0
39
40
39
40
D
51
E
71
71
TF=0
51
TF=0
Suppose each unit of duration cuts ROI by $5,000?
Of the four activities on the CP (A, C, D, E),
which TWO should we look at first to shorten?
1. A & C? 2. A & D? 3. A & E? 4. C & D? 5. C & E?
Copyright 2013, Analytic Project Management, Swampscott, MA
24
Computing Drag in a Simple Network
Drag is ONLY on the critical path. It is the amount of
time that an activity is ADDING to the project duration.
16
22
1
1
A
45
B
51
TF=6
15
52
15
TF=0
DRAG=15
52
16
16
C
39
40
39
40
TF=0
DRAG=6
D
51
51
E
71
71
TF=0
DRAG=20
TF=0
DRAG=6
Copyright 2013, Analytic Project Management, Swampscott, MA
25
Computing DRAG in a Simple Network
(cont.)
16
B
22
1
1
A
45
51
TF=6
15
52
15
TF=0
DRAG=15
52
16
16
C
39
40
39
40
TF=0
DRAG=4
D
51
51
TF=0
DRAG=4
32
16
20
F
47
51
TF=4
Copyright 2013, Analytic Project Management, Swampscott, MA
E
71
71
TF=0
DRAG=20
Computing DRAG in a Simple Network (cont.)
16
B
22
1
1
A
TF=0
DRAG=15
51
TF=6
15
15
45
22
2
16 37
16
38 39
39
C
G
52
52
40
51
C
D
16
39
40
51
16 37
38 39
TF=0
TF=0
TF=0
DRAG=4 DRAG=2 DRAG=4
E
71
71
TF=0
DRAG=20
32
16
20
F
47
51
TF=4
Copyright 2013, Analytic Project Management, Swampscott, MA
27
Formula for Computing DRAG
1.
If it has no parallel path activities:
DRAG of Activity X = its duration.
2.
If there are parallel paths:
DRAG of Activity X = whichever is LESS:
Its duration
OR
the TF of the parallel activity with the least TF.
• Sumatra.com’s Project Optimizer software, an add-on to MS Project.
• Spider Project released a version in April 2009 that computes drag.
• InterPlan Systems is releasing a drag-computing version this year
Copyright 2013, Analytic Project Management, Swampscott, MA
28
Drag Exercise 1
20
10
15
5
5
29
Copyright 2013, Analytic Project Management, Swampscott, MA
Computing DRAG Cost
If every unit of time reduces project profit by $10,000:
16
B
22
1
A
45
51
15
1
15
DRAG=15
DC=$150K
52
22
2
16 37
16
38 39
39
C
C’
40
51
C
D
16
39
40
51
16 37
38 39
DRAG=4 DRAG=2 DRAG=4
DC=$40K DC=$20K DC=$40K
71
E
52
71
DRAG=20
DC=$200K
32
16
20
F
47
51
The drag cost metric is what you use to
justify the additional resources you need!
Copyright 2013, Analytic Project Management, Swampscott, MA
30
What is the True Cost of an Activity?
Imagine that this project has a budget of $300,000, allotted as follows:
16
B
22
1
1
A
51
BUDG=$65,000
15
52
22
2
16 37
16
38 39
39
G
40
383939
40
15
BUDG=$30,000
45
C
16
16
37
C
52
D
51
E
71
71
BUDG=$35,000
51
BUDG=$50,000 BUDG=$5,000 BUDG=$40,000
32
16
20
F
47
51
BUDG=$75,000
Which two work activities TRULY cost the most?
Copyright 2013, Analytic Project Management, Swampscott, MA
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Computing True Cost
If every unit of time reduces project profit by $10,000:
16
B
22
1
A
BUDG=$30,000
DC=$150K
TC=$180,000
51
BUDG=$65,000 TC=$65,000
15
1
15
DRAG=15
45
52
22
2
16 37
16
38 39
39
C
C
C’
40
D
51
16
40
51
37
383939
DRAG=4 DRAG=2 DRAG=4
16
BUDG=$50,000 BUDG=$5,000
DC=$40K DC=$20K
BUDG=$40,000
DC=$40K
TC=$90,000 TC=$25,000 TC=$80,000
32
16
20
F
47
51
BUDG=$75,000 TC=$75,000
Copyright 2013, Analytic Project Management, Swampscott, MA
71
E
52
71
DRAG=20
BUDG=$35,000
DC=$200K
TC=$235,000
If E’s budget is
doubled to $70,000
and its duration thus
reduced to 10:
DC=$100K
TC=$170,000
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Adding Resources to Reduce Drag
1. Drag shows which activities will benefit the
project most by being shortened – both up
front and when things slip!
2. Drag Cost justifies resources -- if an activity has a
DRAG Cost of $10,000 per week, that justifies up to
$30,000 to lessen its DRAG by three weeks.
3. If a CP activity has significant drag and is resource
elastic, why does it have part-time resources?
4. Each good decision displays its worth by increasing
the project ROI, DIPP and DPI, the whole reason for
the project investment!
33
Copyright 2013, Analytic Project Management, Swampscott, MA
DRAG Puts the Focus…
…where it belongs: ON the critical path!
DRAG=2M
D=1.5M
DRAG=2M
DRAG=2M
34
Copyright 2013, Analytic Project Management, Swampscott, MA
It’s NOT Always That Simple…
…Larger projects and complex dependencies make
computing DRAG more problematic.
Start-toStart (SS)
Start-toStart (SS)
with lag
Finish-toFinish (FF)
Finish-toFinish (FF)
with lag
Start-toFinish (SF)
Start-toFinish (SF)
with lag
35
Copyright 2013, Analytic Project Management, Swampscott, MA
Decomposition With Lags
Decomposition
Relationship
1. SS with lag
TF=0
D=2
D=4+2=6
TF=0
D=4
2. FF with lag
D=3
TF=0
D=3
TF=2
10
N
D=3
TF=3
D=3
3. SF with lag
D=4
TF=0
D=3
TF=3
TF=0
D=1
TF=1
36
Copyright 2013, Analytic Project Management, Swampscott, MA
Eight Points in Conclusion
1. All projects are investments.
2. Almost all project investments are very time sensitive –
shorter adds to ROI, longer subtracts.
3. We MUST start estimating the value/cost of time!
4. Project durations are driven by the critical path.
5. Traditional CPM metrics quantify non-CP work.
6. CP drag tells us what is costing how much time!
7. That time can be human lives. And pain. And MONEY!
8. That money can justify both resources and the value that a
good scheduler can bring to a project.
37
Copyright 2013, Analytic Project Management, Swampscott, MA
Stephen A. Devaux, MSPM, PMP
President, Analytic Project Management
72 Blodgett Ave., Swampscott, MA 01907
Office: 781-598-1222 Cell: 617-763-3067 Email: apm7@ix.netcom.com
PUBLICATIONS
• Total Project Control: A Manager’s Guide to Integrated Project Planning, Measuring, and Tracking,
May 1999, John Wiley & Sons.
• “The Drag Efficient,” article in Jan/Feb 2012 issue of Defense AT&L Magazine . Reprinted in
CRC Press’s book Project Management in the Oil and Gas Industry.
• “Time is a Murderer,” chapter in
CRC Press’s 2013 book Handbook of Emergency Response.
•Six-part series on TPC methods, published in Projects@Work on-line magazine, Oct-Dec 2006:
“The Value-abled Project”
“Moneyproject”
“Time is a Crook”
“Delay Tactics” “Drag Racing on the Critical Path” “Paving the Critical Path”
“Scheduling is a Drag, “published in Projects@Work on-line magazine, Jan 2009, (co-author
with William Duncan, author of the 1996 PMBOK Guide).
•“When the DIPP Dips,” Project Management Journal, September 1992. Reprinted in PMI’s book
Essentials of Project Control, 1999, Pinto & Trailer, ed.
•“Moneyproject: Metrics, Baseball, and PM”, webinar for PMI’s Metrics SIG, 2005.
•“Total Project Control in IS Projects: Managing Projects and Portfolios for Maximum Value”,
webinar for PMI’s Information Systems SIG (IS-SIG), 2003.
Copyright 2013, Analytic Project Management, Swampscott, MA
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