Chapter 12 Review

Measuring Progress

The key to finishing a project on time and on budget is to start out that way and stay on track throughout. Progress measurement tools are how we identify problems when they are small, when there is still time to catch up. Cost and schedule progress comprise two-thirds of the cost-schedule-quality equilibrium and are the primary focus of progress measurement.

• Measuring schedule performance
• Each work package in the plan is a measurable unit of progress, each has start and finish dates.
• The primary tool for illustrating a schedule is also good for displaying schedule status, the Gantt chart
• Use the 0-50-100 rule
• To simplify task reporting use 0% complete for tasks that have not yet started, 50% for tasks that are in process, and 100% for completed tasks. Since no work package is greater than 80 hours of work no task should be in progress for more than one week. If it is you know that there is a problem.
• Every work package should have completion criteria and should not be considered complete until it meets these criteria.
• Schedule completion measure accomplishment, not the effort expended.
• Measuring cost performance
• Cost performance is acutely critical because cost measures productivity
• Each work package has estimates for labor, equipment and materials
• Be sure to capture actual costs and compare planned and actual costs to determine whether the project is progressing as planned
• How to get cooperation in reporting labor hours
• Point out that there is a legitimate need to track actual labor hours. It provides early warning on cost problems and improves estimates on future projects.
• Make it easy to report by using the largest increments possible for reporting actual hours
• Problems associated with graphing cost performance
• The rate at which money is being spent doesn't indicate whether the work is getting done
• Accounting lag time can make cost information arrive months late
• Earned value reporting
• To get a true picture of cost performance, the planned and actual cost for all completed tasks need to be compared. Earned value reporting uses cost data to give more accurate cost and schedule reports by combining cost and schedule status to provide a complete picture of the project.
• Calculating cost variance using earned value
• Planned cost
• Budgeted cost of any or all tasks
• Budgeted cost of work performed (BCWP)
• The planned cost of tasks that are complete
• Actual cost of work performed (ACWP)
• The actual cost of tasks that have been completed
• Cost variance (CV)
• CV =BCWP-ACWP
• Cost variance percent (CV%): the cost variance divided by the planned cost
• CV%=CV/BCWP (positive CV% is good/under budget, negative CV% is bad/over budget)
• Cost performance index (CPI)
• Earned value (BCWP) divided by actual cost (CPI > 1.0 = under budget; CPI > 1.0 = over budget)
• Budget at completion (BAC)
• The approved budget for the project
• Estimate at completion (EAC): the reestimate of the total project budget
• The original budget is multiplied by the ACWP and divided by the BCWP.
• Estimate to complete (ETC): budget amount needed to finish the project based on the current CPI
• ETC=EAC-AC
• Variance to completion (VAC): estimated difference at the end of the project between budget and actual cost.
• VAC=BAC-EAC
• New terminology used by the PMI
• BCWS=PV
• BCWP=EV
• ACWP=AC
• Use cost variance to identify problems early
• Recalculating the estimated cost at completion using earned value implies the current trends will continue.
• Calculating schedule variance using earned value
• Earned value calculations can help measure schedule variance just as they help measure cost variance. It is useful because it takes into account the number and size of tasks that are behind schedule:
• Budgeted cost of work performed (BCWP)
• budgeted cost of tasks that are complete
• Budgeted cost of work scheduled (BCWS)
• budgeted cost of work that should have been completed to date
• Schedule variance (SV)
• the difference between the value of the work that was planned for completion and the value of the work that was actually completed
• SV=BCWP-BCWS
• Schedule variance percent (SV%): schedule variance divided by the planned cost to date
• SV% = SV / BCWS
• Schedule performance index (SPI): SPI > 1.0 = ahead of schedule; SPI < 0 = behind schedule
• SPI = BCWP/BCWS
• Graphing an earned value chart yields the most accurate presentation of a project's cost and schedule performance.
• Earned value is an easy calculation if you have a detailed plan and capture actual performance data.
• The WBS is critical to a successful earned value calculation. 
• Each task on the WBS must be a discrete task that meets the following criteria:
• Defined start and finish dates
• Produces a tangible outcome whose completion can be objectively assessed
• Costs must be assigned to the task, even if they are only labor costs
• Problems occur when the WBS contains one of the following mistakes:
• WBS tasks should rarely represent an ongoing activity, these are called level of effort (LOE) tasks and require some basis staffing level throughout the project
• PM time is an example of an acceptable LOE
• It is not possible to track cost or schedule variance within an LOE task that has not been adequately broken down.
• LOE tasks produce the illustion that the task is on schedule and on budget until it doesn't finish on time and every subsequent day costs and schedule variances increase.
• An LOE task that is understaffed sends the message that it is under budget because fewer people are working on the task than originally budgeted.
• Keep the lowest level tasks small, if the work packages are large, the variance is likely to be skewed (+/-) from week to week.
• Data isn't information
• Trends are more useful than snapshots. Forecasting on trends tells us whether our management strategies are working.
• Schedule variance doesn't tell the whole story. Projects with many concurrent tasks benefit from calculating variance because many are bound to be ahead and others late. If the critical path tasks are late, the entire project will be held up.
• Watch the schedule variance and the critical path.
• Size increases complexity for earned value.
• The projects that benefit most from earned value calculations have the greatest challenges implementing it.
• Escalation thresholds
• The determining factors for who handles a problem or approves a solution are its cost and schedule impacts. Thresholds accomplish several important functions:
• Change management thresholds separate the changes the project team can approve from the ones that require board approval
• Problem-solving thresholds bring the appropriate level of attention to specific problems.
• Rising a problem to the appropriate level immediately minimized the negative impact. Don't wait for regularly scheduled project meetings.
• Cost and schedule baselines
• Comparison point
• Planned and accepted cost-schedule-quality equilibrium for the project.
• A new baseline should be as realistic as possible and reflect the level of performance that led to the baseline change.