Transcript Corporate Project Management with SPIDER PROJECT

Management of projects,
programs and portfolios
in Russia and Eastern Europe
Approaches and Lessons Learned
Introduction
• In this presentation we will discuss proven
methodologies, tools and techniques that are
applied to management of projects, programs
and portfolios in Russia and Eastern Europe.
• The questions during the presentation are
welcomed!
Part 1
Program, Portfolio
Management System
Organization
Program and Portfolio Management
Requirements
 To make Programs and Portfolios manageable there are
certain requirements to all Program/Portfolio
participants and projects that include:
 Common methodology shall be used for scheduling,
budgeting, reporting and analyzing project data,
 The same or compatible PM software shall be used,
 The same WBS templates shall be applied to all projects in
the program/portfolio,
 The same resource, cost, material dictionaries shall be used
in all schedule models and reports,
 The same production norms and unit costs shall be used for
contracting and estimating project performance
Program Management Office
• PMO is an organizational unit to centralize and
coordinate the management of projects under its
domain. This unit was created in every Program
management organization.
• Main departments of PMO (by functions):
– Methodology
– Analysis
– Correspondence and Archives
– Program/Portfolio Management
PMO – Methodology Department
• Main functions of Methodology department:
– Development and actualization of the Project
Management Guidelines and other Program
management standards and requirements,
– Organization of Project staff training,
– Consulting, coaching, auditing Program participants,
– Development and actualization of the organization
knowledge base.
PMO – Analysis Department
• PMO Analysis department:
– Develops and implements Program dictionaries and
Reference-books for costs, resources, materials,
– Develops project WBS and other templates,
– Helps project planners with creating project
computer models, project scheduling and budgeting,
risk analysis, performance monitoring and reporting
organization,
– Develops and applies standards for group work with
the Program files and data.
PMO – Analysis Department
• PMO Analysis department:
– Develops and works with the Portfolio/Program
computer model,
– Regularly collects and analyzes actual data,
– Manages Portfolio/Program computer models
archives,
– Supplies project stakeholders with the performance
reports and other necessary information,
– Maintains PMIS and data safety.
PMO – Archive Department
• PMO Communication and Archive department:
– Manages communications with program stakeholders,
– Manages portfolio/program archives,
– Creates and maintains the library of past projects
archives.
PMO – Program Management Department
• PMO Program Management department functions:
– Portfolio/Program Scheduling and Management,
– Management of project priorities,
– Management of Portfolio/Program Risks,
– Dealing with conflicting and competing project
requirements,
– Analysis of change requests and Integrated
Change Control.
PM Information System
• Most large-scale programs are managed using Spider
Project software that is considered as most
functional, powerful and flexible system.
• Spider Project usage is required from all programs
participants. It makes data consolidation and
management easier and more reliable.
PM Information System
• One of the main reasons for selecting Spider Project as
the portfolio/program management tool is based on its
ability to work with physical amounts (volumes) of work
to be done on project activities.
• It helps to implement state and corporate norms like
unit (physical) costs, unit material requirements,
resource productivities (units per hour) for typical
activities and assignments, etc.
• Spider Project permits to create program (corporate)
templates, dictionaries, and databases (reference-books)
that are necessary for proper program management.
Part 2
Program/Project Data
Data requirements
• The requirements to the data that are used for the
portfolio/program planning and control may be
divided into two main groups:
– High level requirements based on program/portfolio
management needs,
– Low level requirements that shall be applied to creating
project computer models.
• High level requirements consider data organization,
• Low level requirements cover details and instructions
on creating project computer models.
Organizing data
• The same Project, Phase, Activity, Resource,
Material, and Department coding structures are used
in all projects,
• Resources that are used in all projects belong to the
program (corporate) resource pool,
• Resources of the same type share the same
characteristics (like cost, production rates, material
consumption per work hour),
Organizing data
• Program management systems have specific
requirements that are vital for successful
implementation.
• It is necessary to be sure that:
– WBS structures that are used in different projects of
the program are compatible,
– Project costs have the same structure in all projects
(same cost components are used),
– Cost accounts are the same in all projects,
Organizing data
– 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),
– Typical (repeating) processes are modeled in the
same way in all projects,
– Project archives are kept and stored as required.
Organizing data
• These requirements are set on the portfolio/program
level and are mandatory for all participants.
• Templates, reference-books, coding systems etc. are
developed in the Program Management Office.
• Program Management office creates Databases or
Reference-books that contain those parameters that
shall be used for planning of all projects of the
portfolio/program.
Program Databases (Reference-Books)
• Program or Organization Reference-books include at
least:
– Activity cost and material requirements per volume unit
for all activity types,
– Resource assignment cost and material requirements per
volume unit for all assignment types,
– Resource assignment productivities for all assignment
types,
– Resource assignment work loads for all assignment types.
• Activities, resources and resource assignments belong to
the same type if they share the same characteristics.
Typical Fragment Library
• Project fragments usually describe typical processes
and technologies that are used more than once as small
projects.
• Creating project computer models using the library of
typical fragments helps to avoid inconsistencies and
assures that the project model follows Program
standards.
• A library of typical fragments is very important tool for
the development of common culture and management
standards.
Program Templates
• Portfolio/Program management has to be based on the
corporate/program standards. These standards include
not only estimates of the typical process, activity,
resource, and assignment parameters but also project
templates.
• Besides, Program Management Guideline developed in
the Program Management Office describes Program
management routine (when and what reports shall be
presented, performance review meetings schedule, etc.)
and change management processes.
Organizing data
• This slide shows WBS
template for Arena
construction projects
required by Program
Management Office of
Olimpstroy for Sochi 2014
Program planning.
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 Structure shall be the same in all projects
belonging to the Program and is defined on the
Program level.
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.
• At least one WBS is mandatory and required by
Program Management Office. Others may be selected
by project management teams.
Contract Breakdown Structure
• Contract Breakdown Structure is the powerful tool for
management of contract relationships. The same
organizations are involved in multiple projects and in
different programs.
• Contract Breakdown Structures are used to get reports
on the contract performance and contract cash flows.
Cost Breakdown Structure
• Cost Breakdown Structure for contract costs is defined
by Program Management Office.
• Contractors can add cost components and create Cost
centers for planning and tracking real expenses.
• We manage not only expenses but also financing.
• Program managers control program, project and
contract cash flows.
Project Archives
• The planners store project versions and analyze
the progress in project execution, comparing
current project, program and portfolio schedules
not only with the baselines but also with any
previous versions. It enables to assess the
progress in project execution for the last week,
last month, last year, compared to the baseline,
etc.
Part 3
Portfolio/Program/Project
Scheduling
Scheduling Tasks
• Project/Program/Portfolio scheduling without resource
limitations taken into the consideration,
• Project/Program/Portfolio resource constrained
scheduling (resource leveling),
• Determination of feasible activity resource constrained
floats and those activities that are critical,
• Determination of the Project/Program/Portfolio cost,
material and resource requirements for any time period.
– Project cost and material requirements are the results of
project scheduling if activity and resource costs and material
requirements were defined.
Critical Path Method
• 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
shortest 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 leveling option - the
support of the earlier project version schedule (keeping
the order of activity execution the same as in selected
earlier project schedule).
Sample Project before leveling
• 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.
• 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 to 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.
• We call it Resource Critical Path (RCP) to distinguish it
from the traditional interpretation of the critical path
definition.
Resource Critical Path
• 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) levelling.
• 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 without delaying project finish.
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.
Part 4
Success Criteria
Project Success Criteria
• If project success criteria are set as finishing project on
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.
• We suggest to set one integrated criterion of the
project/program success or failure.
Project Success Criteria
• Many projects can be considered as business oriented:
– construction of roads, power plants, bridges, ports,
telecommunication networks, etc. will bring economic results,
– Implementation of the corporate information system will
improve organization processes, etc.
• In any case the delay of project finish date usually
increases project cost, and acceleration means saving
some money.
• So each day of project delay means some money losses
and finishing project earlier means additional profit.
Estimating these profits and losses we can define the
cost of the project day (maybe separate and different
for acceleration and delay).
Project Success Criteria
• Another option – 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 criteria will permit to weight time and
money making managerial decisions.
• 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 and necessary materials (wall frames) to
proceed.
Project Success Criteria
• If project manager
will find enough
money and
materials then
project total profit
to the imposed
date will be close
to $219,000.
Project Success Criteria
• If to calculate
project resource,
financing and
supply
constrained
schedule than it
become clear that
the project will
loose $25,000 due
to necessary
delays.
Project Success Criteria
• Maybe it is reasonable to borrow money or to find
some other solution?
• To be able to weight options and to select the best it
is necessary to consider not only expenses.
• Proper project (program, portfolio) schedule model
is the powerful tool that helps to select the best
decisions.
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.
• We prefer 3 scenario approach for the
reasons explained 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
• 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.
• As the result project planner obtains three expected
finish dates, costs and material consumptions for all
major milestones.
• They are used to rebuild probability curves for the
dates, costs and material requirements.
Project/Program Targets
• Target dates of most infrastructure projects are usually
predefined. They may be set not only for the whole
program/project but also for its major phases.
• Project planning usually includes determining how to
organize project/program execution to be able to meet
required target dates with the reasonable reliability.
Success Probabilities
• Probabilities to meet approved project targets we call
Success Probabilities. These targets may be set for all
project parameters that will be controlled (profit,
expenses, duration, material consumption).
• 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.
• Using this approach we obtain 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.
Monte Carlo and 3 Scenarios
• Let’s look at the difference between accuracy and
precision.
• Accuracy:
Precision:
Monte Carlo and 3 Scenarios
•
•
•
•
•
Monte Carlo means Accuracy but lack of Precision.
3 Scenarios means Precision but lack of Accuracy.
The choice depends on management approach.
Our approach may be called “Management by Trends”.
We think that trends supply management with most
valuable information on project performance.
• We think that trend analysis helps to discover
performance problems ASAP and to apply corrective
actions if necessary.
• It is the main reason why 3 scenarios approach was
selected.
Monte Carlo and 3 Scenarios
• We think that the quality of initial data for project risk
simulation is never good enough but Monte Carlo risk
simulation creates an impression of accuracy that is
actually dangerous for project managers.
• In any case we need Optimistic schedule and budget for
project performance management.
• We need to understand what happens with success
probability during project performance and so we need
data precision.
Part 6
Project/Program/Portfolio
Performance Management
Performance Measurement
• Performance measurement routine shall be set for all
projects belonging to the program.
• Portfolio/Program schedule is revised regularly. For most
programs it is done weekly. To be able to reschedule the
portfolio/program it is necessary that all projects
belonging to the program have the same data date.
• So the portfolio/program management team requires
from all project management teams to enter actual data
of their projects at specified dates and time (for an
example: each week on Tuesday before 12:00 the actual
status on Tuesday 08:00 shall be entered).
Performance Measurement
• If different projects have different data date then
program scheduling became impossible and most
reports will not be reliable.
• So setting the rules for entering actual data is
mandatory for program/portfolio management.
• This specifics makes client-server approach to
organizing group work with the project/program
models less efficient than in other application areas.
Performance Measurement
• In our programs project management teams collect
reports not on the “percent complete”, but on physical
quantities (volumes) that were done, time that was
spent, materials and equipment that were consumed,
money that were spent on project activities.
• So we don’t understand discussions on the best ways to
measure activity percent complete.
Management by trends
• Project/Program/Portfolio planners keep archives to be
able to get trends of project/program/portfolio
parameters.
• We recommend to manage projects/programs/portfolios
basing on the analysis of performance trends.
• If some project is 5 days ahead of the baseline but one
week ago it was 8 days and one month ago 20 days then
some corrective action is needed.
• If the project is behind the schedule but the distance
become smaller then project team improves project
performance and interference is not necessary.
Earned Value Analysis
• Earned Value Analysis is another method that is used
for estimating program performance.
• But this method is used very carefully because:
– the real situation may be distorted,
– project managers are motivated to do expensive works ASAP
and cheap works ALAP.
Success Probability Trends
• We consider success probability trends as the really
integrated project performance measurement tool.
• Success probabilities may change due to:
–
–
–
–
–
Performance results
Scope changes
Cost changes
Risk changes
Resource changes
• Thus success probability trends reflect not only project
performance results but also what is going on around
the project.
Success Driven Project Management
• 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.
• We call Management by Trends methodology
Success Driven Project Management.
Part 7
Project/Program/Portfolio
Performance Reports
Performance Reports
• Performance reports usually include project/portfolio
Gantt Charts, S-curves, Earned Value Graphs, Contract
Cash Flows, and Time-Location (or Linear) Diagrams.
• Examples of Program Gantt Chart and Combined Road
Linear Diagram are shown in the next slides.
• Linear Diagram is most useful in projects with clear
metrics, like road or high rise buildings construction.
Program Gantt Chart
Linear Diagram
Part 8
Conclusions
Tips for Corporate Program Management
1. There is a need for common methodology,
templates, reference-books to be able to plan and to
analyze programs or portfolios.
2. There is a need for Program Management Office –
organizational unit that develops corporate program
management standards, collects actual information
on project performance and works with the Portfolio
Computer Model, creating and updating portfolio
plan and analyzing portfolio performance.
Tips for Program Management
3. Most norms and standards are applied to the activity
physical units (m, t, m3, piece, etc.). So it is necessary
to plan activity schedule and to monitor project
performance basing on physical quantities (volumes
of work) measurement.
4. Portfolio and Program Computer Models includes the
models of individual projects and shall be resource
loaded.
Tips for Program Management
5. We recommend to create a library of project
fragments that may be used for fast development of
the detailed project computer models.
6. We recommend to set reliable target dates basing
on risk analysis and simulation but to use optimistic
project schedule for setting tasks for project
participants.
7. Time and Cost contingency buffer penetrations shall
be regularly re-estimated. If these buffers are
consumed too fast there is a need for corrective
actions.
Tips for Program Management
8. We recommend to keep project archives and to
analyze trends of project parameters.
9. If trends are negative corrective actions shall be
considered even if the status is good.
10. Earned Value Analysis supplies management with
the useful information on project status. But it shall
be used carefully and only as the supplement to
other methods of project performance
measurement.
Tips for Program Management
11. Success Probability trends are the best integrated
indicators of project health.
12. Positive trends show that project buffer
penetrations are lower than expected. Negative
trends show that buffers are consumed faster than
expected and corrective actions may be necessary.
13. Success probability trends depend not only on
project performance but also on risks that may
appear and disappear during project life cycle. That
is why they may be considered as integrated
indicators necessary for decision making.
Success Driven Project Management Flowchart
REFERENCE-BOOKS:
Code Structures
Typical Fragnet
Library
Resources
Materials
Cost Components
Cost Breakdown
Structure
Resource Breakdown
Structure
Calendars
Project Schedule
WBS Templates
Project Budget
Project Portfolio
Risk Analysis
Risk Register
Success and
Failure Criteria
Issue Register
Resource Productivities
Unit Costs
Material Requirements
per Volume Unit
Skills
Multi-Resources
Performance
Reports
Success and
Failure
Probabilities
Success
Probability Trends
+
Corrective
Actions
Work
Authorization