Strategic Appli In Project Management Reflection and Discussion Forum Week 13 Reflection and Discussion Forum Week 13Assigned Readings:Chapter. 13 Progres

Strategic Appli In Project Management Reflection and Discussion Forum Week 13

Reflection and Discussion Forum Week 13Assigned Readings:Chapter. 13 Progres

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Reflection and Discussion Forum Week 13

Reflection and Discussion Forum Week 13Assigned Readings:Chapter. 13 Progress and Performance Measurement and EvaluationInitial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.Also, provide a graduate-level response to each of the following questions:

  1. Why is it important for project managers to resist changes to the project baseline? Under what conditions would a project manager make changes to a baseline? When would a project manager not allow changes to a baseline?

[Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student’s own words – do not provide quotes!] [Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review] 

 

Activity 13

 Read the Case “Shoreline Stadium Status Report Case”  at the end of chapter 13 and response to the following questions:You are an assistant to Percival Young, president of G&L Construction. He has asked you to prepare a brief report on the status of the Shoreline Stadium project.(Rest of case not shown due to length.) 

Chapter Thirteen

Progress and Performance Measurement and Evaluation

13–1

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13–2

Where We Are Now

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13–2

Project Management 6e.

Learning Objectives

Identify the four steps for controlling a project

Utilize a tracking Gantt to monitor time performance

Understand and appreciate the significance of earned value

Calculate and interpret cost and schedule variance

Calculate and interpret performance and percent indexes

Forecast final project cost

Identify and manage scope creep

13–3

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Chapter Outline

13.1 Structure of a Project Monitoring Information

System

13.2 The Project Control Process

13.3 Monitoring Time Performance

13.4 Development of an Earned Value

Cost/Schedule System

13.5 Developing a Status Report: A Hypothetical

Example

13.6 Indexes to Monitor Progress

13.7 Forecasting Final Project Cost

13.8 Other Control Issues

13–4

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13–5

Structure of a Project Monitoring Information System

Creating a project monitoring system involves determining:

What data to collect

How, when, and who will collect the data

How to analyze the data

How to report current progress to management

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13–5

Project Management 6e.

13–6

Project Monitoring Information System

Information System Structure

What Data Are Collected?

Current status of project (schedule and cost)

Remaining cost to compete project

Date that project will be complete

Potential problems to be addressed now

Cost and/or schedule overruns and the reasons for them

Forecast of overruns at time of project completion

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13–6

Project Management 6e.

13–7

Project Monitoring Info. System (cont’d)

Information System Structure (cont’d)

Collecting Data and Analysis

Who will collect project data?

How will data be collected?

When will the data be collected?

Who will compile and analyze the data?

Reports and Reporting

Who will receive the reports?

How will the reports be transmitted?

When will the reports be distributed?

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13–7

Project Management 6e.

13–8

Project Progress Report Format

Progress since last report

Current status of project

Schedule

Cost

Scope

Cumulative trends

Problems and issues since last report

Actions and resolution of earlier problems

New variances and problems identified

Corrective action planned

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13–8

Project Management 6e.

13–9

The Project Control Process

Control

The process of comparing actual performance against plan to identify deviations, evaluate courses of action, and take appropriate corrective action

Project Control Steps

Setting a baseline plan

Measuring progress and performance

Comparing plan against actual

Taking action

Tools for Monitoring Time Performance

Tracking Gantt chart

Control chart

Milestone schedules

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13–9

Project Management 6e.

13–10

Baseline and Tracking Gantt Charts

FIGURE 13.1

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13–10

Project Management 6e.

13–11

Project Schedule Control Chart

FIGURE 13.2

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13–11

Project Management 6e.

Development of an Earned Value Cost/Schedule System

Time-Phase Baseline Plan

Corrects the failure of most monitoring systems to connect a project’s actual performance to its schedule and forecast budget.

Systems that measure only cost variances do not identify resource and project cost problems associated with falling behind or progressing ahead of schedule.

Earned Value Cost/Schedule System

An integrated project management system based on the earned value concept that uses a time-phased budget baseline to compare actual and planned schedule and costs

13–12

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13–12

Project Management 6e.

13–13

Glossary of Terms

TABLE 13.1

EV Earned value for a task is simply the percent complete times its original budget. Stated differently, EV is the percent of the original budget that has been earned by actual work completed. [BCWP—budgeted cost of the work performed].
PV The planned time-phased baseline of the value of the work scheduled. An approved cost estimate of the resources scheduled in a time-phased cumulative baseline [BCWS—budgeted cost of the work scheduled].
AC Actual cost of the work completed. The sum of the costs incurred in accomplishing work. [ACWP—actual cost of the work performed].
CV Cost variance is the difference between the earned value and the actual costs for the work completed to date where CV = EV – AC.
SV Schedule variance is the difference between the earned value and the baseline line to date where SV = EV – PV.
BAC Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts.
EAC Estimated cost at completion.
ETC Estimated cost to complete remaining work.
VAC Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion.

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Project Management 6e.

13–14

Developing an Integrated Cost/Schedule System

Define the work using a WBS.

Scope

Work packages

Deliverables

Organization units

Resources

Budgets

Develop work and
resource schedules.

Schedule resources
to activities

Time-phase work packages into a network

Develop a time-phased budget using work packages included in an activity. Accumulate budgets (PV).

At the work package level, collect the actual costs for the work performed (AC). Multiply percent complete times original budget (EV).`

Compute the schedule variance (EV-PV) and the cost variance (EV-AC).

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13–14

Project Management 6e.

13–15

Project Management Information System Overview

FIGURE 13.3

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Project Management 6e.

13–16

Development of Project Baselines (cont’d)

Rules for Placing Costs in Baselines

Costs are placed exactly as they are expected to be “earned” in order to track them to their point of origin.

Percent Complete Rule

Costs are periodically assigned to a baseline as units of work are completed over the duration of a work package.

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13–16

Project Management 6e.

13–17

Development of Project Baselines (cont’d)

Purposes of a Baseline (PV)

An anchor point for measuring performance

A planned cost and expected schedule against which actual cost and schedule are measured

A basis for cash flows and awarding progress payments

A summation of time-phased budgets (cost accounts as summed work packages) along a project timeline

What Costs Are Included in Baselines?

Project direct overhead costs: labor, equipment, materials

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13–17

Project Management 6e.

13–18

Methods of Variance Analysis

Comparing Earned Value with:

The expected schedule value

The actual costs

Assessing Status of a Project

Required three data elements

Planned cost of the work scheduled (PV)

Budgeted cost of the work completed (EV)

Actual cost of the work completed (AC)

Calculate schedule and cost variances

A positive variance indicates a desirable condition, while a negative variance suggests problems or changes that have taken place.

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13–18

Project Management 6e.

13–19

Methods of Variance Analysis

Cost Variance (CV)

Indicates if the work accomplished costs more or less than was planned at any point in the project.

Schedule Variance (SV)

Presents an overall assessment in dollar terms of the progress of all work packages in the project scheduled to date.

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13–19

Project Management 6e.

13–20

Cost/Schedule Graph

FIGURE 13.4

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13–20

Project Management 6e.

13–21

Earned-Value Review Exercise

FIGURE 13.5

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13–21

Project Management 6e.

13–22

Developing A Status Report:
A Hypothetical Example

Assumptions

Each cost account has only one work package, and each cost account will be represented as an activity on the network.

The project network early start times will serve as the basis for assigning the baseline values.

From the moment work an activity begins, some actual costs will be incurred each period until the activity is completed.

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13–22

Project Management 6e.

13–23

Work Breakdown Structure with Cost Accounts

FIGURE 13.6

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13–23

Project Management 6e.

13–24

Digital Camera Prototype Project Baseline Gantt Chart

FIGURE 13.7

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13–24

Project Management 6e.

13–25

Digital Camera Prototype Project Baseline Budget ($000)

FIGURE 13.8

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13–25

Project Management 6e.

13–26

Digital Camera Prototype Status Reports: Periods 1–3

TABLE 13.2

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13–26

Project Management 6e.

13–27

Digital Camera Prototype Status Reports: Periods 4 & 5

TABLE 13.2 (cont’d)

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13–27

Project Management 6e.

13–28

Digital Camera Prototype Status Reports: Periods 6 & 7

TABLE 13.2 (cont’d)

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13–28

Project Management 6e.

13–29

Digital Camera Prototype Summary Graph ($000)

FIGURE 13.9

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13–29

Project Management 6e.

13–30

Digital Camera Project-Tracking Gantt Chart
Showing Status—Through Period 7

FIGURE 13.10

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13–30

Project Management 6e.

13–31

Project Rollup End Period 7 ($000)

FIGURE 13.11

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Project Management 6e.

13–32

Indexes to Monitor Progress

Performance Indexes

Cost Performance Index (CPI) = EV/AC

Measures the cost efficiency of work accomplished to date.

Scheduling Performance Index (SPI) = EV/PV

Measures scheduling efficiency to date.

Percent Complete Indexes

Indicate how much of the work accomplished represents of the total budgeted (BAC) and actual (AC) dollars to date.

Percent Complete Index Budgeted Costs (PCIB) = EV/BAC

Percent Complete Index Actual Costs (PCIC) = AC/EAC

Management Reserve Index (MRI) = CV/MR

Reflects the amount of Management Reserve (MR) that has been absorbed by cost over-runs.

Is popular in the construction industry.

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13–32

Project Management 6e.

13–33

Interpretation of Indexes

TABLE 13.3

Index Cost (CPI) Schedule (SPI)
>1.00 Under cost Ahead of schedule
=1.00 On cost On schedule
<1.00 Over cost Behind schedule

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13–33

Project Management 6e.

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Indexes
Periods 1–7

FIGURE 13.12

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13–34

Project Management 6e.

13–35

Additional Earned Value Rules

Rules applied to short-duration activities and/or small-cost activities

0/100 percent rule

Assumes 100% of budget credit is earned at once and only when the work is completed.

50/50 rule

Allows for 50% of the value of the work package budget to be earned when it is started and 50% to be earned when the package is completed.

Ruled used gates before the total budgeted value of an activity can be claimed

Percent complete with weighted monitoring gates

Uses subjective estimated percent complete in combination with hard, tangible monitoring points.

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13–35

Project Management 6e.

13–36

Forecasting Final Project Cost

Methods used to revise estimates of future project costs:

Revised estimated cost at completion (EACre)

Allows experts in the field to change original baseline durations and costs because new information tells them
the original estimates are not accurate.

Forecasting cost at completion (EACf)

Uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable.

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13–36

Project Management 6e.

13–37

Forecasting Models: EACre and EACf

The equation for

The equation for

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13–37

Project Management 6e.

13–38

Forecasting Final Project Cost (cont’d)

Method supplemented to the estimate at completion (EACf) computation:

To Complete Performance Index (TCPI)

Measures the amount of value each remaining dollar in the budget must earn to stay within the budget.

A ratio less than 1.00 indicates an ability to complete the project without using all of the remaining budget.

The equation for

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13–38

Project Management 6e.

13–39

Monthly Status Report

EXHIBIT 13.1

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13–39

Project Management 6e.

13–40

Trojan Nuclear Plant Decommissioning Earned Value Status Report

EXHIBIT 13.2

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13–40

Project Management 6e.

13–41

Other Control Issues

Issues In Maintaining Control of Projects

Scope Creep

Baseline Changes

Technical Performance Measurement

Data Acquisition Costs and Problems

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13–41

Project Management 6e.

13–42

Scope Changes to a Baseline

FIGURE 13.13

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13–42

Project Management 6e.

13–43

Conference Center WiFi Project
Communication Plan

FIGURE 13.14

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13–43

Project Management 6e.

13–44

Key Terms

Baseline budget

Budget at completion (BAC)

Control chart

Cost performance index (CPI)

Cost variance (CV)

Earned value (EV)

Estimated Cost at Completion—Forecasted (EACf)

Estimated Cost at Completion—Revised Estimates (EACre)

Percent complete index—budget costs (PCIB)

Percent complete index—actual costs (PCIC)

Schedule performance index (SPI)

Schedule variance (SV)

Scope creep

To complete performance index (TCPI)

Tracking Gantt chart

Variance at completion (VAC)

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13–44

Project Management 6e.

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