Project Management:
Estimating and Monitoring
Jason Cochran
Director of Information Technology
Seattle
Portland
Baton Rouge
New Orleans
Netdesk.com
San Antonio
Project Management
• Project Management – Discipline of organizing and managing resources
in such a way that the project is completed within defined scope, quality,
time and cost constraints.
• Program Management – Process of managing multiple ongoing interdependant projects. Program Management provides a layer above Project
Management.
• Product Development – Complete process of bringing a new product or
service to market (consumer). The complete Product Development life
cycle will consist of a series of projects
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Project Management – Iron Triangle
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Project Life Cycles
1. Initiating – Authorization of a project or a phase, Feasibility
2. Planning – Systematic approach to identifying the methods, resources,
and activities necessary to accomplish the objective
3. Executing – Management of resources and time
4. Controlling – Monitoring to identify variances
5. Closing – Obtaining sign-off from sponsor, Managing transfer of control
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Project Life Cycles and Processes
All Projects consist of a number
of interlinked processes. These
processes are iterative,
occurring during each phase of
the project life cycle, and
interacting with each other.
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Estimating
Question: What is the difference between
an estimate and a total guess?
Answer: The person holding the pencil.
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Estimate versus Bid
An Estimate is a Project Document that is
intended to predict how much time and the
amount of resources a project will require.
•Informal Estimate – a guess
•Formal Estimate – based on analysis
•Bid – commercial document
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Confidence in Estimating
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Phased Estimating
Phasing – Method of separating sets of project
activities into a series of sequential phases
Phased Estimating – technique in which
schedule and cost estimates are constructed
separately for each stage of the project.
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Setting Phase Gates
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Parametric Estimating
Parametric Estimating takes knowledge from similar, but not
exact, projects and uses parameters, such as cost per unit, to
estimate or scale cost or schedule information
Parametric Estimating has Three Critical Inputs
1. Historical data on unit of work cost
2. Detailed set of specifications, requirements, or blueprints
3. Mathematical model (Parametric Formula) that represents the
relationships of the work involved
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Phased versus Parametric Estimating
•Phased Estimating is the preferred technique for IT
projects never done before
•Parametric Estimating is the preferred technique for
IT projects that are similar to past projects
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Bottom-up Estimating
Bottom-up Estimating is a time-consuming, but
extremely accurate estimating technique.
•Requires Work Breakdown Structure (WBS)
•Estimates cost and schedule at the work package level
of WBS
•Rolls cost up to calculate totals
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Bottom-up Estimating
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First-time/First-use Penalty
The First-time/First-use Penalty is a unit of measure
that is used to represent the quantifiable inefficiencies
and inaccuracies associated with executing a task for
the first time.
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Effort versus Duration
•Effort is a measure of energy applied to a task
•Effort-driven is a task that can be completed faster
through the application of additional energy
•Duration is a measure of how long a task will take to
complete
•Fixed-duration is a task that requires a set amount of
time to complete
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Schedule versus Resource
•A project is Schedule-driven when the final delivery
date is the overriding constraint
•A project is Resource-driven when the availability of
resources (people or money) is the overriding
constraint
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Monitoring – Earned Value
Earned Value Management – Earned Value is a cost-based
performance measurement that compares the amount of work that
was planned with what is actually being preformed.
Earned Value Components
•Budgeted Cost of Work Scheduled (BCWS) – the estimate of
costs needed to complete the scheduled project work
•Budgeted Cost of Work Performed (BCWP) – the estimate of
costs for work actually completed (also known as Earned Value)
•Actual Cost of Work Performed (ACWP) – the actual cost of
completing project work
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Earned Value - Example
A development project has been undertaken with an estimated
length of two months and a cost of $30,000. One month into the
project, 60% of the work has been done and $17,000 was spent
to perform that work.
•What is the BCWS?
•$15,000
•What is the BCWP?
•$18,000
•What is the ACWP?
•$17,000
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Monitoring – Schedule Variance
Schedule Variance (SV) is the measured difference between the
planned or scheduled activity duration (Budgeted Cost of Work
Scheduled) and the actual activity duration (Budgeted Cost of
Work Performed).
SV = BCWP – BCWS
•A positive SV indicates a task that is ahead of schedule.
•A negative SV indicates a task that is behind schedule.
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Schedule Variance- Example
A development project has been undertaken with an estimated
length of two months and a cost of $30,000. One month into the
project, 60% of the work has been done and $17,000 was spent
to perform that work.
•What is the BCWS?
•$15,000
•What is the BCWP?
•$18,000
•What is the SV?
•SV = $18,000 – $15,000 = +$3,000
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Monitoring – Schedule Performance Index
Schedule Performance Index (SPI) is the ratio of work
accomplished versus the work planned.
SPI = BCWP/BCWS
•An SPI value greater than 1 indicates the work is ahead of
schedule.
•An SPI value less than 1 indicates the work is behind schedule.
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Schedule Performance Index- Example
A development project has been undertaken with an estimated
length of two months and a cost of $30,000. One month into the
project, 60% of the work has been done and $17,000 was spent
to perform that work.
•What is the BCWS?
•$15,000
•What is the BCWP?
•$18,000
•What is the SPI?
•SPI = 18,000/15,000 = +1.2
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Monitoring – Cost Variance
Cost Variance (CV) is the difference between the cost budgeted
for an activity and actual cost to finish the activity.
CV = BCWP – ACWP
•A positive CV indicates the project is under budget.
•A negative CV indicates a budget overrun.
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Cost Variance - Example
A development project has been undertaken with an estimated
length of two months and a cost of $30,000. One month into the
project, 60% of the work has been done and $17,000 was spent
to perform that work.
•What is the BCWP?
•$18,000
•What is the ACWP?
•$17,000
•What is the CV?
•CV = $18,000 - $17,000 = +$1,000
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Monitoring – Cost Performance Index
Cost Performance Index (CPI) is ratio of cost budgeted to actual
cost.
CPI= BCWP/ACWP
•A CPI greater than 1 indicates the project is under budget.
•A CPI less than 1 indicates a budget overrun.
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Cost Performance Index - Example
A development project has been undertaken with an estimated
length of two months and a cost of $30,000. One month into the
project, 60% of the work has been done and $17,000 was spent
to perform that work.
•What is the BCWP?
•$18,000
•What is the ACWP?
•$17,000
•What is the CPI?
•CV = 18,000/17,000 = +1.06
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Schedule and Cost Variance
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