Tools and Techniques for
Corporate Project Management
Vladimir Liberzon
Spider Management Technologies
Session # PTA08
Introduction
• In this presentation we will discuss proven
tools and techniques that are used for the
corporate project management by many
companies.
• The questions during the presentation are
welcomed!
Introduction
• Some of these tools, like PM Guidelines,
Document and Contract templates, refer to
implementation of standard approaches to
typical processes, others refer to project
computer modeling. In this presentation we
will discuss corporate computer modeling
tools and techniques.
Part 1
Requirements
Project and Portfolio Computer
Model Requirements
• Based on the corporate standards
(dictionaries, databases and libraries),
• Calculates resource constrained schedules
taking into account all limitations including
resource, financial and supply constraints,
Project and Portfolio Computer
Model Requirements
• Takes into account project priorities,
• Simulates expenses and revenues that allow
management of project and portfolio cash
flows,
Project and Portfolio Computer
Model Requirements
• Is able to assign resources basing on their
skills,
• Calculates Resource Critical Path and
feasible time, cost and material reserves,
• Simulates project risks and uncertainties,
Project and Portfolio Computer
Model Requirements
• Supplies top management with the
integrated information that reflects not only
status data but also trends of project and
portfolio performance that are necessary for
timely decision making,
• Keeps project and portfolio history.
Part 2
Data
Organizing data
• Corporate project management systems
have specific requirements that are vital for
successful implementation.
• It is necessary to be sure that:
Data Requirements
• Project costs have the same structure in all
projects (same cost components are used),
• Cost Accounts are the same in all projects,
• The same Project, Phase, Activity,
Resource, and Department coding structures
are used in all projects,
Data Requirements
• Resources that are used in all projects
belong to the corporate resource pool,
• Resources of the same type share the same
characteristics (like rate, material
consumption per work hour),
Data Requirements
• Activities of the same type have the same
characteristics in all projects (like unit cost,
material requirements per work volume unit, etc.),
• Typical resource assignments have the same
characteristics in all projects (like productivity,
cost and material requirements),
Data Requirements
• Typical processes are modeled in the same
way in all projects.
• These, and project performance simulation
requirements, define the necessary data
structures that have some distinctions
described further.
Data Structure
• The main elements of any project computer
model are:
–
–
–
–
–
project activities,
activity dependencies,
resources and their assignments,
calendars, costs,
Work, Resource and Cost Breakdown Structures.
Activity Data
• Usually project activities are characterized by
their duration. Besides duration, it is
frequently necessary to set the activity’s
physical volume (quantity) of work.
• Activity volume can be measured in meters,
tons, function points, planned work hours,
percents or any other units.
Activity Data
• Unlike activity duration, activity volume does
not depend on assigned resources. By
introducing activity volumes, we will be able to
use corporate databases that define:
• cost and material requirements per typical
activity volume unit.
• Typical resource assignment productivity or
production rate.
Dependency Data
• Sometimes it is necessary to set more than
one link between activities.
• Besides the positive and negative time lags, it
is useful to set volume lags, which is
preferable in many cases.
Resource Data
• Resources are divided into two classes:
– renewable (human resources and mechanisms) and
– consumable (materials).
• This way we will be able to assign materials to
resources defining their consumption per
resource work hour or work volume unit.
Example: a car consumes gas.
Resource Data
• Besides the individual resources one may set
resource crews (we call them multi-resources)
and resource skills (roles).
• Multi-resources are the settled groups of
resources working together (e.g. a team, a
crew, a car with a driver, etc.).
Resource Data
• Resources sharing the same skills comprise
Resource Assignment Role. Resources with
the same skills are interchangeable though
they may have different productivities
performing the same activities.
Assignment Data
• Assigning resources to activities implies the
notion of a team - a group of resources
working on an activity together. The team can
include individual resources, multi-resources
and skills.
Assignment Data
• If more than one team is assigned then resources
belonging to the different teams work on an
activity independently of each other.
• When the volume or duration of team
assignment is not defined the team will continue
working until the work on the activity is
completed. This approach allows simulation of
shift work.
Assignment Data
• Resources can be assigned to activities part time. In
this case one will set percentage of assigned
resources utilization together with resource
quantity (not just the total percentage calculated by
multiplying percents and quantities, that leaves the
necessary amount of resources unclear - two resource units
with 50% utilization are equivalent to one resource unit
used to its full capacity).
Assignment Data
• Another useful option – variable resource
assignments.
• Example: You may define that the number of resources that may be
used at some work is between 2 and 4, and their workload should
be not less than 40% and not more than 80%. In this case activity
will start if two units of assigned resource are available not less
than 40% of their time, and the team may be increased if
additional resources become available. Finishing other
assignments resources may apply more of their time to the
specified assignment but not more than 80%.
Assignment Data
• Resources can consume materials in the process of
their work. Besides, materials can be assigned to
activities or resource assignments directly. In some
projects it is necessary to simulate not only material
consumption but also production of resources and
materials on activities and assignments.
Calendars
• The calendars shall be set for all activities,
resources and time lags. Availability of all
these calendars is important for the proper
project performance simulation.
Cost Data
• Usually it is not enough just to define activity
and resource costs. It is necessary to know
project expenses and revenues, what will be
spent on wages, on machinery and equipment,
on taxes, etc. Sometimes it is necessary to
allow for multiple currencies. So there is a
need to define and assign cost components.
Cost Data
• Besides setting the cost of an hour of renewable
resource work and the cost of material unit, it is
necessary to be able to set the cost directly for
activities and assignments. People may be paid not
only for the hours spent on the task but also by the
quantity of work they have done. So it is necessary
to set costs for resource assignments (fixed or per
unit of volume). Cost of assignment is one
example of setting contract costs for the project.
Material, Resource and Cost Centers
• You may need to get different reports on the groups
of cost components, materials and resources. That is
why it is necessary to define Cost, Material and
Resource Centers:
• Material center can include any group of materials.
• Resource center can include any group of resources.
• Cost center includes selected cost components.
Multiple WBS
• It is also very useful to have an opportunity
to get project reports that aggregate project
data different ways. Usually we use at least
three Work Breakdown Structures in our
projects: based on project deliverables,
project processes and responsibilities.
Multiple RBS
• Resource Breakdown Structures (RBS) are
especially important in the corporate project
management. Matrix organizational structure
determines the necessity of obtaining the reports
on both Project and Functional RBS. Portfolio
computer model provides the information on
resource usage (and corresponding costs) for the
organization functional departments.
Cost Breakdown Structure
• Cost Breakdown Structure defines organization
cost accounts that will be used in all portfolio
projects.
Project Archives
• The planners should be able to store project
versions and to analyze the progress in project
execution, comparing current project and portfolio
schedules not only with the baseline but also with
any previous version. It enables to assess the
progress in project execution for the last week, last
month, last year, compared to the baseline, etc.
Corporate Databases
(Reference-Books)
• Corporate project management has to be based on the
corporate standards. These standards will include not only
processes and document templates but also estimates of
the typical activity and assignment parameters.
• Activities, resources and assignments belong to the same
type if they share the same characteristics like unit costs,
material consumptions per work volume unit, productivity,
etc.
Corporate Databases
(Reference-Books)
• Corporate databases (Reference-books) should
include at least:
– Activity cost and material requirements per activity
type volume unit,
– Resource assignment cost and material requirements
per assignment type volume unit,
– Resource assignment productivity,
– Assignment work load.
Fragnet Library
• Project fragnets usually describe typical
processes and technologies that are used more
than once. Creating project computer models
using the corporate library of typical fragnets will
help to avoid inconsistencies and assures that the
project model follows corporate standards. A
library of typical fragnets is a very important tool
for the development of corporate culture and
management standards.
Part 3
Schedule
Tasks to solve
• Project scheduling without the resource
limitations taken into the consideration,
• Project resource constrained scheduling
(resource leveling),
• Determination of critical path and time float
for project activities,
Tasks to solve
• Determination of the project requirements for
finance, materials and equipment for any time
period,
• Determination of renewable resources utilization
in time,
Tasks to solve
• Risk analysis and development of the project
schedule and other project parameters
allowing for the risks,
• Project performance measuring,
• Project performance analysis and forecasting
main project parameters.
Tasks to solve
• The problem of project schedule development
without allowing for resource constraints has a
correct mathematical solution (Critical Path
Method), which would be the same for all PM
packages, provided that initial data are identical.
All other problems are solved using different
approaches and yielding different results.
Resource constrained scheduling
• Resource constrained schedules produced by
different PM software are different. The software
that calculates shorter resource constrained
schedules may save a fortune to its users.
• That is why we pay most attention to resourceconstrained schedule optimization.
Resource constrained scheduling
• The schedule stability is no less important,
especially at the project execution phase.
• That is why our project management software
Spider Project features an additional option - the
support of the earlier project version schedule
(keeping the order of activity execution the same
as in selected earlier project schedule).
Resource Critical Path
• Traditional notion of Critical Path works only
in case of unlimited resources availability.
• Let us consider a simple project consisting of
five activities, presented at the next slide.
Sample Project before leveling
• Activities 2 and 5 are performed by the
same resource.
Sample Project after leveling
• Please pay attention to activities that became
critical. Now delaying each of the activities 1, 2
and 5 will delay the project finish date. We call
these activities Resource Critical and their
sequence comprises Resource Critical Path.
Resource Critical Path
• In many projects it is necessary to simulate
financing and production, and calculate project
schedules taking into account all limitations
(including availability of renewable resources,
material supply and financing schedules). True
critical path should account for all schedule
constraints including resource and financial
limitations.
Resource Critical Path
• We call it Resource Critical Path (RCP) to
distinguish it from the traditional interpretation
of the critical path definition.
• The calculation of RCP is similar to the
calculation of the traditional critical path with
the exception that both early and late dates (and
corresponding activity floats) are calculated
during forward and backward resource (and
material, and cost) leveling.
Resource Constrained Floats
• This technique permits to obtain resource
constrained floats.
• Activity resource constrained float shows the
period for which activity execution may be
postponed within the current schedule with the
set of resources available in this project.
RCP and Critical Chain
• It appears that by adding financial and supply
constraints to the Critical Chain definition as
well as the way of the Critical Chain calculation,
we will obtain something very similar to RCP.
Thus the proven technology of project
management based on RCP that is described
further may be of particular interest for the
Critical Chain theory supporters.
Part 4
Success Criteria
Project Success Criteria
• If project success criteria are set as finishing
project in time and under budget then proper
decision making will be complicated.
• Project managers will not be able to estimate the
effect of their decisions to spend more money but
to finish the project earlier.
• If some project is business oriented then this
project has to have business criteria of its success
or failure.
Project Success Criteria
• One of potential options – to set the profit that
should be achieved at some point in time basing
on the forecast of the revenues that will be
obtained after the project will deliver its results.
• Such success criterion will permit to weight time
and money making managerial decisions.
Project Success Criteria
• At the next slide you may see the project
schedule that is calculated without allowing for
project financing and supply restrictions. There
are periods when project has no money to
proceed and necessary materials (wall frames)
are absent.
Project Success Criteria
• But if project
manager will find
enough money
and materials then
project total profit
to some imposed
date will be close
to $219,000.
Project Success Criteria
• If to calculate
project resource,
financing and
supply constrained
schedule than total
profit will become
more than
$25,000 less.
Project Success Criteria
• Maybe it will be reasonable to borrow
money or to find some other solution?
• To be able to weight options and to choose
the best it is necessary to simulate not only
expenses. This approach is especially
important for portfolio management.
Part 5
Risk Analysis &
Success Driven Project
Management
Why risk analysis
• Our experience of project planning shows that
the probability of successful implementation of
deterministic project schedules and budgets is
very low. Therefore project and portfolio
planning technology should always include risk
simulation to produce reliable results.
Risk Simulation
• Risk simulation may be based on Monte
Carlo simulation or use three scenarios
approach that will be described further.
Risk Simulation –
three scenarios approach
• A project planner obtains three estimates (optimistic, most
probable and pessimistic) for all initial project data
(duration, volumes, productivity, calendars, costs, etc.).
• Risk events are selected and ranked using the usual
approach to risk qualitative analysis. Usually we
recommend to include risk events with the probability
exceeding 90% in the optimistic scenario, exceeding 50%
in the most probable scenario, and all selected risks in the
pessimistic scenario.
Risk Simulation –
three scenarios approach
• The most probable and pessimistic project
scenarios may contain additional activities and
costs due to corresponding risk events and may
employ additional resources and different
calendars than the optimistic project scenario. As
the result project planner obtains three expected
finish dates, costs and material consumptions for
all major milestones.
Desired Parameters
• They are used to rebuild probability curves for the
dates, costs and material requirements.
• Defining desired probabilities of meeting project
targets a project planner obtains desired finish
dates, costs and material requirements for any
project deliverable.
Success Probabilities
• If the targets were approved then it is necessary to
calculate the probabilities of meeting required project
targets. If they are reasonable then they may be
accepted.
• Probabilities to meet approved project targets we call
Success Probabilities. These targets may include all
project parameters that will be controlled (profit,
expenses, duration, material consumption).
Baseline
• Target dates do not belong to any schedule.
Usually they are between most probable and
pessimistic dates. A set of target dates and costs
(analogue of milestone schedule) is the real
project baseline.
• But baseline schedule does not exist!
Buffers
• We recommend to use optimistic schedule for
setting tasks for project implementers and
manage project reserves.
• Project planner obtains not only the set of target
dates but also a critical schedule – a project
schedule calculated backward from target dates.
The difference between current and critical dates
shows current schedule contingency reserves
(buffers).
Sample Critical Schedule
• There are time, cost
and material buffers
that show
contingency reserves
not only for a project
as a whole (analogue
of Critical Chain
project buffer) but
also for any activity
in the optimistic
project schedule.
Success Probability Trends
• The best way to measure project performance is
to estimate what is going on with the project
success probabilities. If they raise it means that
contingency reserves are spent slower than
expected, if they drop it means that project
performance is not as good as it was planned and
corrective actions are needed.
Success Probability Trends
• Success probabilities may change due to:
–
–
–
–
–
Performance results
Scope changes
Cost changes
Risk changes
Resource changes
Success Probability Trends
• Thus success probability trends reflect not
only project performance results but also what
is going on around the project.
• We consider success probability trends as
the really integrated project performance
measurement tool.
Success Probability Trends
• Success probability trends may be used as the
only information about project performance at
the top management level because this
information is sufficient for performance
estimation and decision making.
Success Driven Project Management
• We call the described methodology Success
Driven Project Management.
Success Driven Project Management
• If project performance is estimated by success
probability trends then project managers are
encouraged to resolve uncertainties ASAP. This
can increase success probabilities even with
activity finish delays & cost overruns.
• Postponing problem activities leads to negative
trends in success probabilities.
Success Driven Project Management
• This attribute of success probability trends
is especially useful in new product
development project management.
• On the corporate level it is very useful to
know trends and current probabilities of
meeting targets for all portfolio projects.
Part 6
Conclusions
Corporate PM Tools and Techniques
• Organizing data in a way that supports proper
resource work simulation and application of
corporate norms and standards.
• Creating a set of reference-books and the
fragnet libraries that are obligatory for creating
project computer models.
Corporate PM Tools and Techniques
• Calculating Resource Critical Path and resource
constrained floats for every project and project
portfolio.
• Risk assessment and simulation.
• Defining project success and failure criteria that
reflect achieving project business goals.
Corporate PM Tools and Techniques
• Defining project targets (and corresponding
contingency reserves) that may be achieved with
reasonable probabilities.
• Regularly recalculating the current probabilities of
meeting project targets during execution and
analyzing success probability trends. Negative
success probability trends require corrective
actions.
Success Driven Project Management Flowchart
REFERENCE-BOOKS:
Code Structures
Typical Fragnet
Library
Resources
Materials
Cost Components
Project Schedule
WBS Templates
Project Budget
Project Portfolio
Cost Breakdown Structure
Resource Breakdown
Structure
Calendars
Resource Productivities
Unit Costs
Material Requirements
per Volume Unit
Skills
Multi-Resources
Risk Analysis
Risk Register
Success and Failure
Criteria
Issue Register
Performance
Reports
Success and Failure
Probabilities
Success Probability
Trends
+
Corrective
Actions
Work
Authorization
Contact Information
• Session # PTA08
• Vladimir Liberzon
• Spider Management Technologies,
Address: Russia, Moscow, Semenovskaya sq. 7 - 16
oE-mail: spider@mail.cnt.ru
oPhone: +7 495 540 43 97