Introduction to Project Management
A basic introduction to common project
management processes that may be typically
encountered during a projects lifetime.
Complied by AlNik Solutions for project
managers using PMPlan products.
“Robert’s Rules of Order for Project Management”
1.
2.
3.
4.
5.
Get a project charter
Create the project scope statement
Create the WBS with the project team
Create the activity list from the WBS
Sequence the activities in the order in which
they must – or should – happen
6. Estimate the time of the activities based on
which resources you have to complete the
activities
7. Assign the needed resources to the activities
8. Get it done.
From “Real Life Project Management: Managing the
Project Scope” by Joseph Phillips Jan 28, 2005
Agenda of Presentation
•
•
•
•
General Project Management
Work Breakdown Structure
Scheduling
Earned Value Management
Common Project Processes
• Initiation
– Defines the project objectives and grants authority to the project
manager.
• Planning
– Refines the project objectives and scope and plans the steps
necessary to meet the project’s objectives.
• Executing
– Puts the project plan into motion and performs the work of the
project.
• Controlling
– Measures the performance of the executing activities and
compares the results with the project plan.
• Closing
– Documents the formal acceptance of the project’s product and
brings all aspects of the project to a close.
Managing the Triple Constraint
• Project Scope
– How much work is to be done? Increasing the scope
causes more work to be done, and vice versa.
• Time
– The schedule of the project. Modifying the schedule
alters the start and end dates for tasks in the project
and can alter the project’s overall end date.
• Cost
– The cost required to accomplish the project’s
objectives. Modifying the cost of the project generally
has an impact on the scope, time, or quality of the
project.
Project Manager Roles and Interactions
Elements of Developing a Project Plan
Client
SOW
Work
Breakdown
Structure
Activity
Definition
Resource
Pool
Resource
Planning
Activity
Sequencing
Activity
Duration
Estimating
Cost
Estimating
Schedule
Development
Project Plan
Development
Work
Packages
PMPlan can address these elements
when developing the project plan.
What is a Work Breakdown Structure
“The Work Breakdown Structure (WBS) is the foundation for defining the project’s work as
it relates to the objectives and establishes a structure for managing the work to its
completion. The WBS defines:
• the project’s work in terms of activities that create deliverables.
• the project’s life-cycle process, in terms of process steps appropriate to that project
and organization.
And is the basis for establishing:
• All of the effort/cost to be expended to create the deliverables and supporting
processes.
• The assigned responsibility for accomplishing and coordinating the work.
” (from the PMI Practice Standard for Work Breakdown Structures, Oct 2000)”
Good WBS Design Principles
• The 100% Rule
– The WBS defines 100% of the work of the project
– Anything that isn’t defined in the WBS is outside the scope of the project.
– The work content on any item is the sum of what is included under that
work item
• Upper Levels are Planned outcomes (deliverables), not
planned actions
• Ends of WBS include the activities needed to create the
project deliverables
• Mutually-exclusive elements
– Work should only appear in one place in the WBS
• WBS must be consistent with the way the project will be
performed and controlled
• Must be easy to update
WBS Role
• Partition the major project deliverables into
smaller components to improve the
accuracy of cost estimates
• Provide a mechanism for collecting actual
costs
• Provide a mechanism for performance
measurement and control
Sample WBS – Product Type Project
Product Project Ship System
1 Project Management
2 Ship
2.1 Hull Structure
2.2 Propulsion Plant
2.3 Command and
Surveillance
2.4 Auxiliary Systems
2.5 Outfit and
Furnishings
2.6 Armament
2.7
Integration/Engineerin
g
2.8 Ship Assembly
and Support Systems
3 System Engineering
4 System Test and
Evaluation
5 Integrated Logistics
Support
6 Operational/Site
Activation
7 Industrial Facilities
Sample WBS – Service Type Project
Service Project International
Conference Project
1 Project Management
2 Attendees
3 Transportation
4 Facilities
5 Program
6 Displays
Sample WBS – Results Type Project
Results Project HACCP
Implementation
1 Project
Management
2 Work Plan
3 Product and
Process Analysis
4 Hazard Analysis
5 Q.A. Process
6 CCP Plan
Process
7 HACCP
Implementation
Why create a WBS?
•
•
•
•
•
Cost Estimating
Cost Budgeting
Resource Planning
Risk Management Planning
Activity Definition
Scheduling
• Scheduling forces:
– Quantification of discrete effort
– Placement of tasks in proper relationship
• Two most common scheduling
methodologies
– Bar Charts (aka Gantt Charts)
– Critical Path Method (CPM) using Precedence
Diagramming Method (PDM)
Bar / Gantt Charts Defined:
• Analyze and specify the basic approach in
execution
• Segment into reasonable number of activities
• Estimate the time required to perform each
activity
• Manually places activities in time order
– Sequential performance
– Parallel performance
• Adjust to specified completion time
Bar / Gantt Charts Advantages:
• Plan, schedule and progress are all
depicted graphically on a single chart
• Easily read
• Provides simple way to schedule small
undertaking
• Provides summary display of more detailed
plans and schedules
• Best used for management briefings
Bar / Gantt Charts Disadvantages:
• Planning and scheduling are considered
simultaneously
• Simplicity precludes sufficient detail for
timely detection of slippages
• Activity dependencies cannot adequately be
shown
• Difficult to determine how activity progress
delays affect project completion
• Difficult to establish and maintain for large
projects.
Bar / Gantt Chart Sample
Jan07
Actual Progress
Apr07
Feb07
Mar07
May07
Jun07
Status Date: 02/Mar/2007
25
01
08
15
22
29
05
12
19
26
05
12
19
26
02
09
16
23
30
07
14
21
28
04
WBS Description
Sample Project Plan
1 Literature Search
Ahead of Schedule
2 Concepts Development
3 Lab Models
Planned Progress
Completed Task
4 Design
5 Prototype
Behind
Schedule
Time Now
Critical Path Method Advantages:
• Identifies activities that control the project length
• Determines shortest time for completion
• Identifies activities that are critical (i.e. cannot be
delayed)
• Shows available float for non-critical activities
• Allows evaluation of “what-if” scenarios
• Allows monitoring & control of fast-track projects
• With software can be resource loaded and leveled
Critical Path Method Disadvantages
• Only as good as the effort put forth to
properly model the plan
• Can be difficult to properly update
• Can be easily misused
• May lead to a false sense of security
• Actual conditions may necessitate
significant modifications to model to
accurately reflect reality
Precedence Diagramming Method (PDM)
• PDM network rules:
– Activities are represented by boxes or nodes that are
assigned properties of the activity they represent
– Precedences are shown by arrows that have both
direction and time properties
– Precedences consist of two parts: A relationship and a
lag value or constraint
•
•
•
•
Finish – to – Start
Finish – to – Finish
Start – to – Start
Start – to – Finish
FS
FF
SS
SF
Lag = x Days
( a negative lag is
called a lead)
PDM – Precedence Diagram
• PDM activities are comprised of:
– Activity descriptions
– Nodes representing the activity
– Arrows representing relationship / dependency
– Points indicating direction of relationship /
dependency
PDM Logic Relationships
Finish to Start (FS) – Activity A must Finish before Activity B may Start.
The lag is usually zero. FS is the most common type.
Activity A
Activity B
Start to Finish (SF) – Activity A must start before Activity B may Finish. The
lag is usually greater than either activity duration. FS is the least common type.
Activity A
Activity B
PDM Logic Relationships
Finish to Finish (FF) – Activity A must Finish before Activity B may Finish.
The lag value is usually greater than zero. FF is a less common type.
Activity A
Activity B
Start to Start (SS) – Activity A must Start before Activity B may Start.
The lag value is usually greater than zero. SS is a less common type.
Activity A
Activity B
PDM Time Calculations
• Once the Network is constructed and duration of
each activity is estimated, we can determined the
following four time values:
– Earliest Start (ES) – The earliest possible time an
activity can begin
– Earliest Finish (EF) – The earliest possible time an
activity can finish
– Latest Start (LS) – The latest possible time an activity
can start without delaying project completion
– Latest Finish (LF) – The latest possible time an activity
can start without delaying project completion
PDM Time Calculations
• ES and EF are determined by making a Forward
Pass (left-to-right) through the Network. ES of an
activity is equal to the latest of early finish times of
its predecessors. EF is the total of the activity ES
plus its duration.
• LS and LF are determined by making a Backward
Pass (right-to-left) through the Network. LF of an
activity is equal to the smallest of the LS times of
the activities exiting from the activity in question.
LS of an activity is equal to its LF minus its
duration.
PDM Activity Notation and Assumptions
• Each activity box consists of six cells
Activity
ES
LS
4
11
E
6
2
13
Duration
EF
LF
0
Lag
• For the following example assume all
activities:
– Begin on the morning of the scheduled start
date
– End the evening of the scheduled finish date
– Using a 7-day workdays per week calendar
Forward Pass Example
Early Start Calculations
6
8
D
4
9
E
1
8
(F to G) 10 + 0 + 1 = 11
(E to G) 8 + 0 + 1 = 9
(D to G) 9 + 2 + 1 = 12
2
0
Largest ES
12
G
7
18
0
4
F
7
10
Early Finish Calculation
12 + 7 – 1 = 18
Backward Pass Example
Late Start Calculation
22 - 4 + 1 = 19
14
19
2
K
4
17
22
0
18
25
H
7
24
31
18
24
I
4
21
27
18
34
J
1
18
34
0
Late Finish Calculations
(H to K) 25 - 2 - 1 = 22
(I to K) 24 - 0 - 1 = 23
(J to K) 34 - 0 - 1 = 33
CPM Example Exercise
B
A
6d
J
C
11d
H
20d
D
20d
20d
E
13d
F
9d
G
20d
I
6d
13d
CPM Example Exercise
Forward Pass Results
A
1d 6d 6d
J
1d 20d 20d
B
7d 11d 17d
C
18d 20d 37d
D
21d 13d 33d
H
63d 20d 82d
E
34d 9d 42d
F
43d 20d 62d
G
34d 6d 39d
I
40d 13d 52d
CPM Example Exercise
Backward Pass Results
A
1d 6d 6d
4d
9d
J
1d 20d 20d
1d
20d
B
7d 11d 17d
10d
20d
C
18d 20d 37d
43d
62d
D
21d 13d 33d
21d
33d
H
63d 20d 82d
63d
82d
E
34d 9d 42d
34d
42d
F
43d 20d 62d
43d
62d
G
34d 6d 39d
44d
49d
I
40d 13d 52d
50d
62d
CPM Example Exercise
Backward Pass Results
A
1d 6d 6d
4d
9d
J
1d 20d 20d
1d
20d
B
7d 11d 17d
10d
20d
C
18d 20d 37d
43d
62d
D
21d 13d 33d
21d
33d
H
63d 20d 82d
63d
82d
E
34d 9d 42d
34d
42d
F
43d 20d 62d
43d
62d
G
34d 6d 39d
44d
49d
I
40d 13d 52d
50d
62d
CPM – Float (or Slack) and Critical Path
• Additional Network calculations provides other
important information allowing analysis and
control:
– Total Float (TF) – The amount of time an activity can
be delayed without delaying the overall project
completion, which is equal to Late Finish minus Early
Finish.
– Free Float (FF) – The amount of time an activity can be
delayed without delaying the start of another activity.
Can be determine by subtracting the smallest Total
Float going into an activity from each predecessor into
that activity.
– Critical Path – The path through the Network that has
the longest total duration, thus it defines the shortest
period of time in which the project may be completed.
Float Calculation Example
21
35
29
39
FT =
15
FF =
5
V
10
30
45
FT =
10
FT =
10
FT =
0
FF =
0
FF =
0
FF =
0
W
7
35
45
36
46
44
44
X
5
40
50
FT =
0
FF =
0
Y
1
50
50
51
51
Z
10
60
60
CPM Example Exercise
Continue with Exercise
A
1d 6d 6d
4d
9d
J
1d 20d 20d
1d
20d
B
7d 11d 17d
10d
20d
C
18d 20d 37d
43d
62d
D
21d 13d 33d
21d
33d
H
63d 20d 82d
63d
82d
E
34d 9d 42d
34d
42d
F
43d 20d 62d
43d
62d
G
34d 6d 39d
44d
49d
I
40d 13d 52d
50d
62d
CPM Example Exercise
Float Results
A
1d 6d 6d
4d 3d 9d
J
1d 20d 20d
1d 0d 20d
B
7d 11d 17d
10d 3d 20d
C
18d 20d 37d
43d 25d 62d
D
21d 13d 33d
21d 0d 33d
H
63d 20d 82d
63d 0d 82d
E
34d 9d 42d
34d 0d 42d
F
43d 20d 62d
43d 0d 62d
G
34d 6d 39d
44d 10d 49d
I
40d 13d 52d
50d 10d 62d
CPM Example Exercise
Critical Path Traced
A
1d 6d 6d
4d 3d 9d
J
1d 20d 20d
1d 0d 20d
B
7d 11d 17d
10d 3d 20d
C
18d 20d 37d
43d 25d 62d
D
21d 13d 33d
21d 0d 33d
H
63d 20d 82d
63d 0d 82d
E
34d 9d 42d
34d 0d 42d
F
43d 20d 62d
43d 0d 62d
G
34d 6d 39d
44d 10d 49d
I
40d 13d 52d
50d 10d 62d
Scheduling Basics Review
• Two widely used scheduling techniques:
– Bar / Gantt Charts
• Project, schedule & progress depicted on a single
chart
• Easy to read
• Good for management review and oversight
– Critical Path Method (CPM)
• Identifies activities that control the project length
• Identifies activities that are critical
• Shows available float for non-critical activities
Earned Value Tracking
Earned Value (EV) based performance
measurement systems “Link
Expenditures to accomplishments”
This review of Earned Value Concept will:
• Describe a simple project and its progress
• Define Earned Value and related terms
• Show how Earned Value defines project
performance
Earned Value System
• Can:
– Provide early (Difficult to ignore) performance
problem identification
– Improve financial Reporting
• Does not:
– Recognize Critical Paths
• Will not:
– Take management action
Measurement Terminology
•
Budget at Completion (BAC)
– The sum of the total budget for a work package, major task, or project.
•
Planned Value (PV)
– The scheduled cost based on the allocation cost items such resources and material
during the timeline of an activity
– Also called Budgeted Cost for Work Scheduled (BCWS)
•
Earned Value (EV)
– The value of the work performed to-date using any reasonably accurate, mutually
acceptable methodology for determining value (i.e.; 0/100%, 50/50%, 30/40/40, ratio
of units completed versus total units, manager estimate, level of effort, being some
examples).
– Also called Budgeted Cost for Work Performed (BCWP)
•
Actual Valve (AV)
– Total incurred costs charged to a work package by the company’s accounting
system, which can include labor costs, direct costs (overhead), and indirect costs
(material, travel, and etc.)
– Also called Actual Cost for Work Performed (ACWP)
These values are used to calculate performance.
Performance Terminology
• Cost Variance (CV)
– CV = EV – AV = BCWP – ACWP
• Cost Performance Index (CPI)
– The cost efficiency ratio of earned value to actual costs (CPI = EV/AV)
– In PMPlan, the CPI is used to calculate Estimate at Completion (EAC)
(EAC = BAC/CPI)
• Schedule Variance (SV)
– SV = EV – PV =BCWP – BCWS
• Schedule Performance Index (SPI)
– The schedule efficiency ratio of earned value accomplished against
planned value (SPI = EV/PV). The SPI describes what portion of the
planned schedule was actually accomplished.
• Variance at Completion (VAC)
– The predicted magnitude of possible underrun or overrun at completion of
work package, major task, or project (VAC = BAC – EAC)
Review of Earned Value Concept
• Will
– Describe a simple project and its progress
– Define earned value and related terms
– Show how earned value defines project
performance
Note: Sample tables and graphics shown in following slides are from PMPlan
Schedule
• This shows a sample project schedule
Planned Budget
• The sample project is loaded with resources
which results in an allocated spend plan.
Time-Phased Spend Plan
• This shows the time-phased spend plan if the
project proceeds as planned.
Typical Approach of Tracking of Actual versus Planned
• The chart tells us we have spent less than
planned to date, but
• We cannot tell if we are behind schedule, nor if
the cost for work completed matches the actual
costs.
Using Earned Value Method
• For Earned Value Method to work well you need
to breakdown the project into measurable
activities (Note: in PMPlan,Cost Budgeting is
done at the activity level not work package).
• It is recommended that your work packages
(where you accumulate actual costs) be one or
two levels above the activities.
• The following five slides show different
performance results of our sample project.
Example PMPlan Earned Value Worksheet
•
•
•
•
•
The project manager or task leader enters either a earned percentage or a $
value.
Actual Cost is also entered. In this worksheet, actual cost can also include
open commitments such as unpaid invoices for material and equipment.
The ‘Threshold’ is a percent of the AV to the BAC, which determines when the
application uses the CPI to calculate VAC. If AV is less than ‘Threshold’, the
VAC equals CV.
Based on the data entered, this project is both behind schedule and over
budget. Even though the current CV = $4,000, the VAC indicates a potential
overrun of $5,517.
The next slide shows two other views of this data.
Project has Negative SV and CV
• In the lower half of the graph,
the EV is below both the PV
and AC indicating problems with
cost and schedule.
• The upper half of the graph
shows both CPI and SPI
relative to a value of 1. It is
showing that progress is being
made to improve the schedule,
but cost problem remains.
• The black EV bars in the Gantt
schedule at the right shows that
‘Design’ and ‘Prototype’
activities are behind schedule.
Status when have - SV and zero (0) CV
• The EV and AC are
equal, thus actual
cost are inline with
accomplishments.
• Even though the
project is behind
schedule, the
schedule variance
trend shows a strong
improvement in
schedule.
Status when have zero (0) SV, + CV
• This project is
on schedule
and should be
completed
under budget.
• With the project
all of the earned
bars line up with
the green status
line.
Why 50% Complete may not be half the schedule bar!
•
•
•
In the above sample, all three activities have earned values of 50% of BAC, but the black earned
bars are not the same length even though the planned bars are the same.
Task A is behind schedule, because 75% of the budget was to be spent by end of December.
Task B is ahead of schedule, because only 25% of the budget was to be spent by end of
December.
In Summary – an Earned Value System
• Can:
– Provide early (Difficult to ignore) performance
problem identification
– Improve financial Reporting
• Does not:
– Recognize Critical Paths
• Will not:
– Take management action
Project Management Methods Summary
• We have described three major processes
used in project management
– Work Breakdown Structure
– Scheduling
– Earned Value Management
• We are ready now to see how PMPlan can
help you with these processes