Transcript Success Driven Project Management

Success Driven
Project
Management
Vladimir Liberzon
www.spiderproject.ru
Introduction
• Modern project management methods
and tools developed and used in Russia
have many advantages that are yet
unknown to the international project
management community.
• Some of them will be described in this
presentation.
Introduction
• We will discuss the proven methodology
of project planning, performance
analysis and project control that we call
Success Driven Project Management
(SDPM).
• This methodology integrates scope, time,
cost, and risk management and may be
of particular interest for the Critical
Chain theory supporters because both
approaches have some common
features.
Introduction
• We will also discuss some notions and
methods of project planning and
performance analysis that are common
in Russia and necessary for SDPM
understanding.
• We will illustrate the approaches
described in this presentation using
project management software package
Spider Project that is most popular
professional PM tool in Russia.
Introduction
• We shall start with the definitions and
the first of them is the definition of the
Critical Path.
• We use the term Resource Critical Path
(RCP) to specify our interpretation of the
classical PMBOK Guide® definition.
• We believe that project Critical Path,
Resource Critical Path and Critical Chain
– a) imply the same set of activities and
– b) the traditional interpretation of the
critical path is not correct.
Critical Path
• A Guide to the Project Management Body
of Knowledge defines the Critical Path as
those activities with float less than or
equal to a specified value, usually zero.
• Float is the amount of time that an activity
may be delayed from its early start without
delaying the project finish date.
• Early start is the earliest possible point in
time at which the uncompleted portions of
an activity (or the project) can start, based
on the network logic and any schedule
constraints.
Critical Path
• Project schedule constraints include resource
constraints, finance and supply constraints,
calendar constraints and imposed dates.
• The float should be calculated with all schedule
constraints as well as the network logic taken
into account.
• The total float determined by most PM
packages shows the time reserve for the
execution of activity, however the availability
of resources is completely ignored.
• It is not the actual activity float as defined by A
PMBOK Guide.
Resource Critical Path
• True critical path should account for all
schedule constraints including resource and
financial limitations.
• 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 the early and
the late dates are calculated during forward
and backward resource (and material, and
cost) levelling.
Resource Critical Path
• 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.
• RCP can consist of activities that are not
linked to each other. Traditional critical
path approach assumes that this may be
due to the different activity calendars and
imposed dates. In case of RCP calculation,
it can also be due to resource constraints
and financial and supply limitations.
Activity Volume
• Projects are often planned (especially in
the construction and manufacturing)
basing on the federal, local, industrial or
corporate norms and standards.
• These standards usually refer to resource
productivity on the certain activity types,
costs and materials per unit of activity
volume (volume of work to be done on
activity).
• Usage of these norms affects the
planning of project activities.
Activity Volume
• Activity volume can be measured in
meters, tons, etc., planned work hours,
percents or any other units.
• Activity volume is often used as an initial
activity information instead of duration.
If assigned resource productivity is
defined in volume units per hour then
activity duration may be calculated
during project scheduling.
• Activity volume does not depend on
assigned resources.
Resource Productivity
• Calculation of activity duration basing on
assigned resource productivity has many
advantages. We have already mentioned
the possibility of applying corporate
norms. Changing the norm we change the
planned duration of all activities of certain
type.
• It is especially useful for the forecasting of
project duration and estimating
uncertainties.
Resource Analysis
• Resource analysis is an essential part of
project execution analysis. It is vital for
project time analysis to be able to
forecast resource productivity.
• Monitoring of the actual resource
performance allows to determine trends
and to make necessary adjustments of
resource productivity databases.
Resource Analysis
• The usage of project resources varies at
the different project phases. The
forecasting that accounts for these
differences is considerably more accurate
than the methods of Earned Value
Analysis.
• Methods of risk analysis and simulation
should include estimations and
simulations of activity volumes, resource
productivity, resource availability, etc.
Resource Analysis
• The main problem with the traditional
methods of risk simulation is their initial
assumption that cost and duration
deviations of different activities are
independent of each other.
• Activities performed by a set of resources
will have correlated duration. Not taking
this into consideration leads to producing
wrong risk simulation results.
Sample Project
• Let’s illustrate the basic concepts
described earlier using sample project
consisting of only three independent
activities and two resources.
• Project data are shown at the next slide.
Sample Project - Data
Activity
Name
Activity
Volume
Assigned
Resource
Resource
Resource
Productivity Hour Cost
Activity 1
120
Resource 1
0.5
50
Activity 2
60
Resource 2
0.3
30
Activity 3
60
Resource 2
0.3
30
Sample Project - Critical Path
• At this slide you see project schedule
before resource leveling. Activity 1 is
critical. Other activities have 5 day float.
Sample Project - RCP
• After resource leveling activities 2 and 3
became critical while activity 1 has 20
day float (resource float).
• So RCP consists of activities 2 and 3.
Activity Resource Float
• Activity resource floats have one large
advantage over the total floats calculated
by most PM software. This advantage is
feasibility.
• Traditional total float shows the period for
which activity execution may be postponed
if project resources are unlimited.
• Activity resource float shows the period for
which activity execution may be postponed
within the current schedule with the set of
resources available in this project.
Risk simulation
• Our experience of project planning shows
that the probability of successful
implementation of deterministic project
schedules and budgets is very low.
• Therefore project planning technology
should always include risk simulation to
produce reliable results.
• We will describe the approach to project
planning that is supported by Spider
Project.
Project Planning
• The project planner obtains three
estimates (optimistic, most probable and
pessimistic) for all initial project data.
• These data are used to calculate
optimistic, most probable and pessimistic
project schedules and budgets.
• The most probable and pessimistic
project versions will usually contain
additional activities and costs and
employ other resources and different
calendars than the optimistic schedule.
Desired Data
• The planner should define desirable
probabilities of meeting target dates,
costs, and material consumption rates at
major project milestones.
• Basing on these probabilities, the
package calculates corresponding desired
project target dates, costs, and material
requirements.
• These desired data form the basis for
contract negotiations and decision
making.
Target Data
• Negotiations may result in establishing
new target data.
• Spider Project helps to negotiate by
answering the questions on probability to
meet any restrictions on time and on
budget.
• Probability of meeting target data (cost,
time, quantity) is called Success
Probability.
• Success Probability is the BEST indicator
of the current project status.
Target Schedule
• In addition, the package calculates the
“target schedule”.
• Target Schedule is the backward project
resource constrained schedule with the
most probable activity duration, material
requirements and costs and target
milestone dates.
• Let’s apply the described approach to our
sample project.
Risk simulation for Sample
project
• We will make very simple assumption:
• Optimistic productivity of assigned
resources is 20% higher and pessimistic is
20% lower than the planned ones.
• Let’s assume that we have no other risks :)).
R e s o u rc e
Nam e
M o s t P ro b a b le
R e s o u rc e
P ro d u c tiv ity
O p tim is tic
R e s o u rc e
P ro d u c tiv ity
P e s s im is tic
R e s o u rc e
P ro d u c tiv ity
R e s o u rc e 1
0 .5
0 .6
0 .4
R e s o u rc e 2
0 .3
0 .3 6
0 .2 4
Desired Data
• We want to be on time with 70%
probability and under budget with 75%
probability.
• The package will identify the desired finish
date and the required project budget:
P a ra m e te r N a m e
F in is h D a te
P ro je c t B u d g e t
M ost
P ro b a b le
V a lu e
D e s ire d
P ro b a b ility
D e s ire d
V a lu e
1 0 .0 5 .2 0 0 2
1 6 :0 0
2 4 0 0 0 .0 0
70
1 5 .0 5 .2 0 0 2
1 4 :0 8
2 5 6 1 2 .9 0
75
Desired Data
Target Data
• Let’s assume that after negotiating the
contract we established project target
finish date and target budget.
• The package will calculate the probability of
meeting target parameters and we will see
that we were lucky with time and should be
very cautious with the project budget:
P a ra m e te r N a m e
F in is h D a te
P ro je c t B u d g e t
T a rg e t V a lu e
Success
P ro b a b ility
1 5 .0 5 .2 0 0 2 1 6 :0 0
7 2 .1 0
2 5 0 0 0 .0 0
6 3 .7 1
“Most Probable” Data
• Let’s assume that the most probable
version of our project was defined as the
project baseline.
• The initial probabilities to meet most
probable project parameters:
Parameter Name
Finish Date
Project Budget
Target Value
10.05.2002 16:00
Success
Probability
40.93
24000.00
40.93
“Most Probable” Data
• These probabilities are high because we
did not simulate risk events.
• We will track the probabilities of meeting
baseline data ($24000) and contract
budget ($25000).
Project Execution
• Now let’s simulate Sample project
execution.
• Let’s assume that the actual resource 1
productivity was 10% higher than expected
(0.55), while the actual resource 2
productivity was 10% lower (0.27).
• Let’s assume that the productivity of these
resources did not change during project
execution.
• Our task - to estimate project performance,
to forecast future project results, and to
decide if corrective action is necessary.
Sample Project Execution - 1st
week
• We will use Resource analysis, Success
Probability analysis, and Earned Value
analysis.
• We assume that estimates were done
each week and will analize trends.
• Initial baseline data (estimate at
completion):
• Project Finish
- 10.05.2002 16:00
• Project Cost
- 24000.00
Sample Project Execution - 1st
week
• After the first week:
Resource Analysis - 1st week
• Providing Resource Analysis we shall decide
if the actual deviations in resource
productivity are accidental or the planned
productivity should be adjusted.
• Let’s adjust them raising productivity of
resource 1 by 5% (0.525) and lowering the
productivity of resource 2 by the same 5%
(0.285).
• Our new forecast (estimate at completion):
• Project Finish
- 15.05.2002 15:09
• Project Cost
- 24028.09
Resource Analysis - 1st week
Advice: your project may be late and over budget
Success Probability Analysis – 1st
week
Success Probability Analysis – 1st
week
• The cost probability trends are positive,
timely performance probability trend is
negative.
• Advice – pay attention to resource
productivity.
Earned Value Analysis – 1st
week
ACWP
3200
BCWP
3280
BCWS
3200
CV
80
SV
80
CPI
1.025
SPI
1.025
•Advice –
everything is fine.
Your project will
finish early and
under budget
Resource Analysis - 2nd week
• New performance data show that the
planned resource productivity should be
adjusted again.
• Let’s adjust them raising productivity of
resource 1 to 0.5375 and lowering the
productivity of resource 2 to 0.2775).
• Our 2nd forecast (estimate at
completion):
• Project Finish
- 17.05.2002 10:35
• Project Cost
- 24107.63
Resource Analysis - 3rd week
• New performance data show that the
planned resource productivity should be
made equal to the actual because they
did not change from the project start.
• Our 3rd forecast (estimate at
completion):
• Project Finish
- 20.05.2002 12:26
• Project Cost
- 24242.44
Resource Analysis - 3rd week
Resource Analysis
• These forecasts will not change later. The
forecasts based on resource analysis
might be very accurate but are not easy
to make and require detailed
performance reports.
• Besides they do not consider project risks
that depend on factors other than
resource performance.
Success Probability Analysis
• Success Probability shows current project
status, Success Probability trends show
project manager if corrective action is
needed.
• Success Probability trends for our Sample
project is shown in the next slide.
• In the same slide you will see Earned
Value data for the Sample Project.
Success Probability Analysis
Success Probability Analysis
•
Success probability trends show us that
the project will be
1. certainly late and
2. probably over budget of $24000
3. though certainly under budget of
$25000.
Earned Value Analysis
• Earned Value Analysis data do not show
problems with our project too long. Quite
contrary it shows that everything is fine
till the end of the execution of activity 1.
• Trends of Earned Value data are shown in
the next slide.
Earned Value Analysis
Parameter
04.03.200
2
11.03.200
2
18.03.200
2
25.03.2002
01.04.2002
08.04.2002
15.04.2002
22.04.2002
29.04.2002
ACWP
3200
6400
9600
12800
16000
18109.
1
BCWP
3280
6560
9840
13120
16400
18480
19560
20640
21720
BCWS
3200
6400
9600
12800
16000
19200
20400
21600
22800
CV
80
160
240
320
400
370.89
250.89
130.89
10.89
CV%
2.5
2.5
2.5
2.5
2.5
2.05
1.3
0.64
0.05
SV
80
160
240
320
400
-720
-840
-960
-1080
SV%
2.5
2.5
2.5
2.5
2.5
-3.75
-4.12
-4.44
-4.74
CPI
1.02 1.02
1.02
1.02
1.02
1.02
1.01
1.01
1
CPI%
102.5
102.5
102.5
102.5
102.5
102.05
101.3
100.64
100.05
SPI
1.02 1.02
1.02
1.02
1.02
0.96
0.96
0.96
0.95
SPI%
102.5
102.5
102.5
102.5
96.25
95.88
95.56
95.26
102.5
19309.
1
20509.
1
21709.
1
SDPM Project Management
Technology
• We recommend using the optimistic project
version for setting tasks for project
implementers while the calculated
contingency reserves should be used by the
PM team for the management purposes.
• Start (finish) contingency reserves
(buffers) are calculated as the difference
between activity start (finish) time in the
optimistic and target schedules.
• Contingency reserves are also calculated for
the activity cost and material requirements.
Success Probability
• But the most valuable indicators of
project performance are Success
Probabilities - probabilities of meeting
target project parameters.
• Trends of Success Probabilities show
project manager if the corrective action is
needed.
• The value of Success Probability shows
current project status better than any
other project parameter.
Project Control Parameters
• Project manager obtains the following
estimates necessary for effective project
control:
• Probabilities of meeting target project
parameters (success probabilities),
• Target activity start and finish dates,
resource and material requirements and
cost,
• Planned activity start and finish dates,
resource and material requirements and
cost in the current schedule,
Project Control Parameters
• Activity resource floats that show the time
for which activity execution may be
postponed without delaying project finish
date in the current schedule,
• Activity contingency reserves (buffers) for
time, cost and materials calculated as the
difference between the corresponding
optimistic and target parameters.
• The following slide shows the optimistic
and target schedules, and other scheduling
and risk analysis information for our
Sample project.
Project Control Parameters
SDPM tips for the project control
• Plan day-to-day activities using the
optimistic estimates but pay special
attention to resource floats and to
contingency reserves.
• Include the causes of delays in activity
completion and cost overruns in performance
reports.
• Regularly update the estimates in the
optimistic, most probable and pessimistic
project schedules.
• Regularly recalculate the success
probabilities and analyse trends.
SDPM and Critical Chain common
• You may notice that SDPM and Critical Chain
approaches have a lot in common.
• Resource Critical Path is the same as Critical Chain.
• Therefore Critical Chain project buffer may be
regarded as an analogue of SDPM contingency
time reserve,
• feeding buffers are similar to resource floats.
• Both the SDPM and Critical Chain approaches
recommend to use the optimistic estimates for
setting the tasks for project implementers.
• But there are differences too.
SDPM and Critical Chain different
• We cannot agree with the Critical Chain theory’s
assumption that one should always avoid multitasking.
• Usually there are many subcritical activities belonging to
the different network paths and even the minor delays in
the execution of subcritical activities can lead to the
changes in the RCP. This comes into conflict with the
Critical Chain theory’s assumption that the Critical Chain
never changes during the project execution.
• The assumption that only one project drum (in our
terminology - critical) resource exists is also dubious. Our
experience shows that critical resources are different at
the different phases of project lifecycle.
SDPM technology steps:
1
• Assess risks and create optimistic,
pessimistic and expected estimations
of activity duration and volumes,
resource productivity and quantity,
activity and resource cost, calendars,
• Estimates
are usually based not only on
etc.
expert judgement but also on
regulatory or corporate norms.
SDPM technology steps:
2
• Calculate optimistic, most probable,
and pessimistic resource and cost
constrained project schedules.
SDPM technology steps:
3
• Calculate project and each phase
desired finish dates and costs (with
the desired probability of successful
execution).
SDPM technology steps:
4
• Negotiate and define target finish
dates and costs.
SDPM technology steps:
5
• Calculate target schedule with the
most probable activity duration but
target finish dates (backward resource
constrained schedule).
SDPM technology steps:
6
• Determine time and cost buffers, and
probabilities of meeting target
parameters.
SDPM technology steps:
7
• Use the optimistic schedule as a plan
for the employees.
Using
optimistic estimates, we increase our chances to
obtain the reports on any deviations from the proper activity
execution. This information is necessary for quality and risk
analysis.
SDPM technology steps:
8
• Control risks and regularly recalculate
necessary time buffers and success
probabilities.
THANK YOU
• We would appreciate your comments on this
presentation.
• We invite everybody interested in developing
common approaches to contact Moscow PMI
Chapter (E-mail: [email protected]).