Transcript Document

Week 10:
Project Cost Management (2)
Human Resource
Quality
Communication
Cost Estimation Tools and Techniques
• 3 basic tools and techniques for cost estimates:
– analogous or top-down: use the actual cost of a
previous, similar project as the basis for the new
estimate
– bottom-up: estimate individual work items and sum
them to get a total estimate
– parametric: use project characteristics in a
mathematical model to estimate costs
Constructive Cost Model (COCOMO)
• Barry Boehm helped develop the COCOMO models for
estimating software development costs
• Parameters include source lines of code or function
points
• COCOMO II is a computerized model available on the
Web
• Boehm suggests that only parametric models do not
suffer from the limits of human decision-making
• See “Diktat Proyek Manajemen (7.7)” / “Slides 7-3”
• Homeworks from week 9 ???
– Individuals
– Groups (optional)
Typical Problems with IT Cost
Estimates
• Developing an estimate for a large software project is a
complex task requiring a significant amount of effort.
Remember that estimates are done at various stages of
the project
• Many people doing estimates have little experience
doing them. Try to provide training and mentoring
• People have a bias toward underestimation. Review
estimates and ask important questions to make sure
estimates are not biased
• Management wants a number for a bid, not a real
estimate. Project managers must negotiate with project
sponsors to create realistic cost estimates
Business Systems Replacement Project Cost Estimate
Overview
Business Systems Replacement Project Cash Flow Analysis
Costs
Oracle/PM Software
(List Price)
60% Discount
Oracle Credits
Net Cash for Software
Software Maintenance
Hardware & Maintenance
Consulting &Training
Tax & Acquisition
Total Purchased Costs
Information Services &
Technology (IS&T)
Finance/Other Staff
Total Costs
FY95
FY96
FY97
($000)
($000)
($000)
992
8 Year Internal
Rate of Return
Future Annual
Costs/Savings
($000)
0
1492
0
250
270
0
50
570
0
(595)
(397)
0
0
0
205
0
205
500
0
500
90
270
320
150
1330
1850
250
270
0
80
600
1200
(595)
(397)
500
340
540
525
230
2135
3550
200
905
990
4170
580
2380
1770
7455
570
(101)
(160)
(88)
0
(349)
(483)
(1160)
(384)
(25)
(2052)
(584)
(1320)
(472)
(25)
(2401)
(597)
(2320)
(800)
(103)
(3820)
3821
328
5054
(3250)
Savings
Mainframe
Finance/Asset/PM
IS&T Support/Data Entry
Interest
Total Savings
Net Cost (Savings)
500
3 Year
Total
($000)
905
35%
Cost Budgeting
• Cost budgeting involves allocating the project
cost estimate to individual work items and
providing a cost baseline
• For example, in the Business Systems
Replacement project, there was a total purchased
cost estimate for FY97 of $600,000 and another
$1.2 million for Information Services and
Technology
• These amounts were allocated to appropriate
budgets as shown in Table 7-6
Business Systems Replacement Project Budget
Estimates for FY97 and Explanations
Budget Category
Headcount (FTE)
Compensation
Consultant/Purchased
Services
Estimated Costs
13
$1,008,500
$424,500
Travel
$25,000
Depreciation
$91,000
Rents/Leases
$98,000
Other Supplies
and Expenses
Total Costs
$153,000
$1,800,000
Explanation
Included are 9 programmer/analysts, 2
database analysts, 2 infrastructure
technicians.
Calculated by employee change notices
(ECNs) and assumed a 4% pay increase in
June. Overload support was planned at
$10,000.
Expected consulting needs in support of the
Project Accounting and Cascade
implementation efforts; maintenance
expenses associated with the HewlettPackard (HP) computing platforms;
maintenance expenses associated with the
software purchased in support of the BSR
project.
Incidental travel expenses incurred in
support of the BSR project, most associated
with attendance of user conferences and
off-site training.
Included is the per head share of
workstation depreciation, the Cascade HP
platform depreciation, and the depreciation
expense associated with capitalized
software purchases.
Expenses associated with the Mach1
computing platforms.
Incidental expenses associated with things
such as training, reward and recognition,
long distance phone charges, miscellaneous
office supplies.
Cost Control
• Project cost control includes
– monitoring cost performance
– ensuring that only appropriate project changes are
included in a revised cost baseline
– informing project stakeholders of authorized
changes to the project that will affect costs
• Earned value management is an important tool
for cost control
Earned Value Management (EVM)
• EVM is a project performance measurement
technique that integrates scope, time, and cost
data
• Given a baseline (original plan plus approved
changes), you can determine how well the
project is meeting its goals
• You must enter actual information periodically
to use EVM.
• Next figure shows a sample form for collecting
information
Cost Control Input Form for Business Systems
Replacement Project (use software tools)
Design Interface Process Customer Information
Description:
WBS#: 6.8.1.2
Assignments
SMC
Role:
PA
Availability:
Involved:
Role:
Availability:
Involved:
Role:
Availability:
Involved:
Role:
Availability:
6
Optimistic:
Effort (in hours)
Most Likely:
20
30
Pessimistic:
40
Develop an operational process design for the Customer Information
interface from the Invoicing System to Oracle Receivables. This task will
accept as input the business/functional requirements developed during the
tactical analysis phase and produce as output a physical operational design,
which provides the specifications, required for code development.
Process Design Document - Technical
- Operation/Physical DFD
- Process Specifications
- Interface Data Map
Calculated
Plan
Effort:
Plan
Duration
:
30
5
Hrs
Days
Delay (Days):
Description
Results / Deliverables
Revision Date:
Forecast
Hours per day
Responsible:
Revision:
Assumptions
- All business rules and issues will be resolved prior to this task.
- The ERD & data model for Oracle Receivables & any Oracle
extension required will be completed and available prior to this task.
- The ERD for the Invoicing System will be completed and available
prior to this task.
- Few iterations of the review/modify cycle will be required.
- Primarily a documentation task.
Dependencies
Predecessors (WBS#):
4.7
Successors (WBS#):
Earned Value Management Terms
• The planned value (PV), formerly called the
budgeted cost of work scheduled (BCWS), also called
the budget, is that portion of the approved total cost
estimate planned to be spent on an activity during a
given period
• Actual cost (AC), formerly called actual cost of work
performed (ACWP), is the total of direct and indirect
costs incurred in accomplishing work on an activity
during a given period
• The earned value (EV), formerly called the budgeted
cost of work performed (BCWP), is an estimate of the
value of the physical work actually completed
Earned Value Calculations
Earned Value Formulas
Earned Value = BCWP = Budgeted Cost Work Performed
Actual Cost = ACWP = Actual Cost Work Performed
BCWS = Budgeted Cost Work Scheduled
Rules of Thumb for Earned Value
Numbers
• Negative numbers for cost and schedule
variance indicate problems in those areas. The
project is costing more than planned or taking
longer than planned
• CPI and SPI less than 100% indicate problems
Earned Value Calculations for a One-Year
Project After Five Months (see example file .xls)
Earned Value Chart
Project Portfolio Management
• Many organizations collect and control an entire suite
of projects or investments as one set of interrelated
activities in a portfolio
• Five levels for project portfolio management
– Put all your projects in one database
– Prioritize the projects in your database
– Divide your projects into two or three budgets based on type
of investment
– Automate the repository
– Apply modern portfolio theory, including risk-return tools
that map project risk on a curve
Using Software to Assist in Cost
Management
• Spreadsheets are a common tool for resource
planning, cost estimating, cost budgeting, and
cost control
• Many companies use more sophisticated and
centralized financial applications software for
cost information
• Project management software has many costrelated features
Sample Enterprise Project Management
Screen
Group Task
• Estimate the cost of your project depends on
your detailed WBS (code implementation).
Latihan: Cost Controlling (1)
• Proyek A dengan estimasi durasi 8 bulan dan total anggaran
Rp. 80 juta. Setelah 2 bulan, proyek dikontrol. Manajer
proyek mengatakan proyek berjalan dengan anggaran di
bawah rencana, hanya 15 juta yang baru dikeluarkan dan
25% kegiatan telah selesai.
• Proyek B dengan estimasi durasi 8 bulan dan total anggaran
Rp. 80 juta. Setelah 2 bulan proyek dikontrol. Manajer
proyek mengatakan proyek berjalan dengan anggaran 5 juta
lebih dari rencana, dengan penyelesaian 20%.
• Asumsi: biaya proyek terbagi secara merata pada periode
pengerjaan.
Latihan: Cost Controlling (2)
1. Kesimpulan apa yang dapat diambil dari datadata yang Anda terima pada kasus di atas ?
2. Hitunglah variabel-variabel yang diperlukan
untuk mengevaluasi jalannya proyek !
3. Kesimpulan apa yang dapat Anda lihat setelah
proyek dievaluasi dengan variabel-variabel
kontrol biaya ?
The Importance of Human
Resource Management
• People determine the success and failure of
organizations and projects
• Recent statistics about IT workforce:
– The total number of U.S. IT workers was more than
10.1 million in December 2002, up from 9.9 million
in January 2002
– IT managers predict they will need to hire an
additional 1.2 million workers in the near future
– Hiring by non-IT companies outpaces hiring by IT
companies by a ratio of 12:1
What is Project Human Resource
Management?
• Project human resource management includes
the processes required to make the most
effective use of the people involved with a
project. Processes include
– Organizational planning
– Staff acquisition
– Team development
Keys to Managing People
• Psychologists and management theorists have
devoted much research and thought to the field
of managing people at work
• Important areas related to project management
include
– motivation (intrinsic and extrinsic)
– influence and power
– effectiveness
Abraham Maslow’s Hierarchy of
Needs
McGregor’s Theory X and Theory Y
• Douglas McGregor popularized the human relations
approach to management in the 1960s
• Theory X: assumes workers dislike and avoid work, so
managers must use coercion, threats, and various
control schemes to get workers to meet objectives
• Theory Y: assumes individuals consider work as natural
as play or rest and enjoy the satisfaction of esteem and
self-actualization needs
• Theory Z: introduced in 1981 by William Ouchi and is
based on the Japanese approach to motivating workers,
emphasizing trust, quality, collective decision making,
and cultural values
Thamhain and Wilemon’s Ways to Have
Influence on Projects
1. Authority: the legitimate hierarchical right to issue orders
2. Assignment: the project manager's perceived ability to influence a
worker's later work assignments
3. Budget: the project manager's perceived ability to authorize others'
use of discretionary funds
4. Promotion: the ability to improve a worker's position
5. Money: the ability to increase a worker's pay and benefits
6. Penalty: the project manager's ability to cause punishment
7. Work challenge: the ability to assign work that capitalizes on a
worker's enjoyment of doing a particular task
8. Expertise: the project manager's perceived special knowledge that
others deem important
9. Friendship: the ability to establish friendly personal relationships
between the project manager and others
Organizational Planning
• Organizational planning involves
identifying, documenting, and assigning
project roles, responsibilities, and
reporting relationships
• Outputs and processes include
– project organizational charts
– work definition and assignment process
– responsibility assignment matrixes
– resource histograms
Sample Organizational Chart for a
Large IT Project
Work Definition and Assignment
Process
Sample Responsibility
Assignment Matrix (RAM)
Staff Acquisition
• Staffing plans and good hiring procedures are
important in staff acquisition, as are incentives for
recruiting and retention
• Some companies give their employees one dollar for
every hour a new person they helped hire works
• Some organizations allow people to work from home
as an incentive
• Research shows that people leave their jobs because
they don’t make a difference, don’t get proper
recognition, aren’t learning anything new, don’t like
their coworkers, and want to earn more money
Resource Leveling
• Resource leveling is a technique for resolving
resource conflicts by delaying tasks
• The main purpose of resource leveling is to
create a smoother distribution of resource usage
and reduce overallocation
Resource Leveling Example
Team Development
• It takes teamwork to successfully complete most
projects
• Training can help people understand
themselves, each other, and how to work better
in teams
• Team building activities include
– physical challenges
– psychological preference indicator tools
Social Styles
Individual Task
• Identify what is the type of your co-workers in
your project ?
• Is he / she appropriate to the job descriptions ?
What Is Quality?
• The International Organization for
Standardization (ISO) defines quality as the
totality of characteristics of an entity that bear
on its ability to satisfy stated or implied needs
• Other experts define quality based on
– conformance to requirements: meeting written
specifications
– fitness for use: ensuring a product can be used as it
was intended
Project Quality Management
Processes
• Quality planning: identifying which quality
standards are relevant to the project and how to
satisfy them
• Quality assurance: evaluating overall project
performance to ensure the project will satisfy
the relevant quality standards
• Quality control: monitoring specific project
results to ensure that they comply with the
relevant quality standards while identifying
ways to improve overall quality
Quality Planning
• It is important to design in quality and
communicate important factors that directly
contribute to meeting the customer’s
requirements
• Design of experiments helps identify which
variables have the most influence on the
overall outcome of a process
• Many scope aspects of IT projects affect
quality like functionality, features, system
outputs, performance, reliability, and
maintainability (ISO 9126)
Quality Assurance
• Quality assurance includes all the activities
related to satisfying the relevant quality standards
for a project
• Another goal of quality assurance is continuous
quality improvement
• Benchmarking can be used to generate ideas for
quality improvements
• Quality audits help identify lessons learned that
can improve performance on current or future
projects
Quality Control
• The main outputs of quality control are
– acceptance decisions
– rework
– process adjustments
• Some tools and techniques include
–
–
–
–
Pareto analysis
statistical sampling
Six Sigma
quality control charts
Pareto Analysis
• Pareto analysis involves identifying the vital few
contributors that account for the most quality problems
in a system
• Also called the 80-20 rule, meaning that 80% of
problems are often due to 20% of the causes
• Project Managers know that 20 percent of the work
(the first 10 percent and the last 10 percent) consume
80 percent of your time and resources
• Pareto diagrams are histograms that help identify and
prioritize problem areas
Figure 8-1. Sample Pareto
Diagram
Testing
• Many IT professionals think of testing as a stage
that comes near the end of IT product
development
• Testing should be done during almost every
phase of the IT product development life cycle
Testing Tasks in the Software Development Life Cycle
Types of Tests
• A unit test is done to test each individual
component (often a program) to ensure it is as
defect free as possible
• Integration testing occurs between unit and
system testing to test functionally grouped
components
• System testing tests the entire system as one
entity
• User acceptance testing is an independent test
performed by the end user prior to accepting
the delivered system
Group Task
• Identify the ISO 9126 (available in the course
web and dictat 10.6), what kind of Software
Qualities will be tested in your project?
Project Communications
Management Processes
• Communications planning: determining the
information and communications needs of the
stakeholders
• Information distribution: making needed
information available in a timely manner
• Performance reporting: collecting and
disseminating performance information
• Administrative closure: generating, gathering,
and disseminating information to formalize
phase or project completion
Sample Stakeholder Analysis for Project Communications
Media Choice Table
The Impact of the Number of People on
Communications Channels
Performance Reporting
• Performance reporting keeps stakeholders
informed about how resources are being used to
achieve project objectives
– Status reports describe where the project stands at a
specific point in time
– Progress reports describe what the project team has
accomplished during a certain period of time
– Project forecasting predicts future project status and
progress based on past information and trends
– Status review meetings often include performance
reporting
Administrative Closure
• A project or phase of a project requires closure
• Administrative closure produces
– project archives
– formal acceptance
– lessons learned
Sample Template for a Monthly Progress
Report
Sample Template for a Letter of
Agreement for a Class Project
Final Project Documentation Items