By this point of your project, things should be getting very exciting. You’ve researched the project, planned for success, and created (and survived) the budget process—now you’re ready to set your plan into action. Your team is eager to get moving on the project, and there is electricity in the air, as all your hard work is about to come to fruition. Don’t break out the champagne yet. You can congratulate yourself for successfully completing a solid foundation for your project, but you’re going to have to coach your team to follow the project plan through the execution to have a real reason to celebrate.

In this portion of your project, your team will create the components defined in the work breakdown structure (WBS) and follow the sequence of activities in the project network diagram (PND). You will interact with your team members to ensure their successes as they complete the tasks. You’ll create a work authorization system to allow work to continue given past results. You’ll add quality control mechanisms, and you’ll continue to increase your communication among the project team and stakeholders. You’ll be deeply involved with tracking the actual costs of the project and comparing them to the budgeted costs. Finally, you’ll track the implementation against your PND, cost, and time estimates and then implement corrective actions as needed to keep the project on track and on budget. Of course, you’ll document what’s working on the project, what’s not working, and other things you’ve learned in your lessons learned documentation.

In an adaptive project, there is not a project management plan like there is in a predictive project. Adaptive projects, as you know, plan each iteration in a type of rolling wave planning. The project focuses on the product backlog, the sprint backlog, and the finished business value. This doesn’t mean that the team doesn’t plan. Planning happens at the launch of each iteration and throughout the iteration as needed. Because the work is completed in short chunks, planning is also completed in smaller instances. Like all projects, however, there is ample planning at the launch of the project to determine the direction of the project, the architecture of the systems needed, and the framework the project team will follow.

Recall that the items in the product backlog are called user stories. User stories are considered for their level of effort and are assigned user story points. The amount of work the team can complete in an iteration is expressed as X amount of story points, such as 35 user story points. Over time the number of story points the team can create normalizes, and this value is called the velocity. Velocity can help predict when the project will be done based on the number of story points in the product backlog and the duration of each timeboxed iteration in the project.

This part of project management will test and challenge all your planning, research, and ability to lead and react to situations that may impact your project completion. Keep your cool, analyze problems when they arise, and always remember that this project is yours to control, to complete, to savor.

Reviewing Assignments with the Project Team

An ideal project team would consist of people who are confident in their work, their abilities, and their commitment to the project. They would always complete their tasks on time and without flaw, and they’d happily report to you that everything is perfect and on schedule. “In fact,” they’d say, “we’re a little ahead of schedule.” Now let’s step into the real world. Team members will be nervous about their duties. They won’t always complete their tasks on time or without flaw. Team members may report to you that everything is fine, when, in fact, it’s far from that.

One of your responsibilities as the project manager will be to mold this team into a reliable, interdependent collection of professionals who can rely on each other, themselves, and you. Through regular team meetings, outings, and one-on-one conferences, you’ll develop a working relationship with each member and will learn how to motivate, inspire, and lead each individual. You’ll track the work, understand what’s remaining, and even graph assignments in burnup and burndown charts for stakeholders.

In an adaptive project, the team is self-led and self-organizing, which means the team determines who’ll do what assignments in the iteration. During the daily standup meeting, the team members communicate with each other what they’ve accomplished since the last meeting, their work for the day, and if there are any impediments to their progress. So while there is accountability and clear communication regarding who’s doing what, there’s not a command-and-control approach that you’ll see in a predictive project.

Focusing on the Work

One message all project managers should convey to the project team members, but often don’t, is simply to focus on their work, their tasks, and their responsibilities. If team members would ignore the superfluous activities of the project and home in on what their responsibilities are, the project would scream along with few interruptions. Of course, this depends on the level of detail you have completed in the planning processes and the people you have to manage on your project team.

This is not to say that team members shouldn’t be involved in project planning—they should! However, once the plan has been created, the team should just get to work, ignore the gossip and the details that don’t involve them, and focus on their duties to complete their tasks. Planning is not, however, a group process that’s completed and never revisited. Planning is a set of iterative, integrated processes that needs to happen throughout the project. As issues and needs arise, which they will, the project shifts back into planning mode to discover the best responses to issues and concerns that have happened within the project.

Part of planning is to find the most appropriate resource for each project task. The assignment of resources to tasks allows the team members to know what they have to do and when they need to do it. If team members could just ignore activities that are not related to them, the attraction of other technology, and the world of office politics, what a fantastic team they’d make! As a project manager, you should directly encourage your team to focus on their individual tasks. Encourage them to focus on their duties and their commitment to completing their assignments and ignore what anyone else may or may not be doing.

Like a machine, your team is collectively working toward deliverable results, but within the machine are many moving parts to make the deliverable happen. Each component of the machine is responsible for only certain tasks; one component cannot do everything, and all components are required to make the machine work. The same is true within your project. The team is a collection of individuals who need to work together, but who also can work independently as their tasks require it.

Adaptive project teams are sometimes called generalizing specialists. This means the people on the team can do more than one type of work no matter what their role in the team is. For example, a developer could help do testing as needed in the project. This helps get rid of the silo mentality of people only doing one type of work regardless of what the project needs.

Task ownership doesn’t mean that team members should not help each other with tasks because the work may not be assigned to their realm of responsibility. The goal is that team members know their responsibilities, focus on them, take pride in them, and complete them successfully. If other team members need help with tasks, the team should, by all means, be fluid enough to help a colleague and keep the project moving toward its completion.

Hosting a Project Status Meeting

Within your communications management plan, you’ll define which people need what information, when they need it, and how they’ll get the information. Communication can be both formal, like a report, and informal, like a hallway conversation. In project management, both methods of communication are needed. The type of communication you’ll use should be appropriate for the message you send. In other words, communicate major decisions using formal means, such as reports, project plan updates, or memos.

When it comes to informal communications, project managers should be near their project team. Managing a project where you and your project team are in separate buildings is not conducive to effective communication. If you can be seated physically close to the project team, you should. This allows for informal meetings and conversations to pop up, and it lets you get involved with the team and really lead the work. Virtual teams create new challenges for status meetings and communication. You’ll need an approach that allows you to communicate effectively with remote teams on a regular basis. Teleconferences, videoconferences, web-collaboration software, and good old travel are a few options. While nothing beats face-to-face communication, the reality in today’s world is that it’s just not always an option.

Virtual teams create challenges for effective project management that need to be addressed in the communications management plan. Consider things like time zones and technological factors, such as web collaboration software and calendaring. For international projects, you’ll also need to address language barriers and cultural differences that may affect the project work and overall progress. You’ll also need to address the preferences of the project team and how they’ll communicate, though the criticality of the project may supersede preferences, something else you’ll need to communicate with the project team.

Regardless of where your office is, close to the team or far away from your virtual team, you will need to create a regular schedule to meet with your project team. Regular meetings, whether daily, weekly, biweekly, or on your own custom schedule, will serve several purposes:

•   They enable a team member to report on their activities.

•   They underscore the project vision.

•   They allow the project team to report what’s been accomplished since the last meeting and what they’re working on now.

•   They enable the team to identify problems.

•   They enable the project manager to lead the team without hovering.

•   They create a sense of ownership of the project.

•   They create a sense of responsibility to the project for team members.

To host a team meeting, you need one thing: preparation. Create an agenda, even if it’s a quick list of what needs to be discussed, and then follow it. Also, set a time limit for these meetings—and make it snappy. Perhaps the number one complaint among project teams is WOT (waste of time) meetings. For every meeting, your agenda should include at least these points:

•   The objectives accomplished since the last team meeting

•   Discussion of any situations impacting the entire team

•   Acknowledgment of major team member accomplishments

•   Overall project status—good or bad

•   Pending risks, issues, and upcoming activities

•   The objectives in queue before the next meeting

By starting with a review of the objectives of the past week, you are allowing team members to report on their activities and update the team on the state of the project. You are also allowing the team members to shine in front of their peers by reporting what tasks they have successfully completed. Don’t be surprised if your team applauds when key events are finished.

Another aspect of having your team report what objectives were accomplished is that it creates, again, a sense of responsibility. A team member who knows they’ll have to report that an assignment was not completed on time in front of their peers may be inspired to complete the task. The goal is not to embarrass team members, but to keep team members on schedule and committed to the project.

Should there be any outstanding unresolved issues from the last meeting—for example, the delivery of hardware, software, or other resources—the project manager, or the responsible party, should quickly update the team on the status. The issues discussed should be only those that affect the entire team. Anything impeding the project progress is a team issue.

If team members have completed a major challenge or tasks within the project plan, call attention to that in front of the entire team. Offering a public acknowledgment to the team members is simply giving credit where credit is due. Always acknowledge major completions and, when necessary, acknowledge team members who may not have major tasks but are doing a great job. This heartfelt thank-you is an excellent way to boost morale and show your team that you do care for them and their success—not just the project’s. Team morale has a huge impact on the project’s success. Remember that acknowledgments, thank-yous, and kudos are not something you can fake—develop a true sense of care and compassion for your team.

Next on your agenda should be a quick capsule of the overall status of the project. If the project is on target and moving along swimmingly, this is easy. However, if the project is lagging and the team members aren’t completing their assignments, you need to let them know. Being a tyrant and reprimanding a group is not the goal. The goal is to make adjustments to get the team back on track and focused on their duties and to avoid a pile-up of work and a completion date that has to change. Don’t be shy in expressing your discontent; just use tact and express your passion for the success of the team.

You’ll also want to review risks that have passed, been mitigated, or are pending within the project. Risk management calls for a review of risks and a reminder to the risk owners of triggers that may signal a risk is coming into play. You’re not micromanaging the project team over pending risks, but rather bringing everyone’s attention to the identified risks, making them aware of the risk response plans you’ve created, and assigning ownership to the project team. If there has been any change to a risk, that update should be documented in the risk register.

Finally, hold a round-table discussion against your PND to review assignments in the queue for the upcoming week or weeks. Ideally, you should have each team member verify what tasks they are working on before the next scheduled meeting. This does not need to be a long, drawn-out discussion—just a confirmation of duties. It is also a way to ensure this team meeting ends with your team members knowing what tasks are required of them before they meet with you again.

The foundation for successfully implementing an IT project is not the project plan; the technology being implemented; or the speed of the network, processor, or disk. The foundation is the ability of the team to communicate honestly to the project manager about how the actual work is going, the challenges the members are facing, and how they’ve reacted to those challenges. That type of communication is going to come from their ability to trust you. You have to earn that trust, and, hopefully, if you’ve involved your team members in the planning phases and kept them informed of how the project will develop, you will have it.

Tracking Progress

For several reasons, you must have a formal process for tracking progress. At the top of the list of reasons: Tracking project progress will help you take corrective actions and preventive actions to the project. Corrective actions allow you to direct the project team to fix an error to get the project back in alignment with the project objectives. You might also know this as defect repair. Preventive actions are steps you and the team take to prevent a possible error from ever entering the project—or learning a lesson and not repeating an error again.

You will need to develop an internal process for your team to report completed tasks so that you can reflect the project progress in an electronic form and analyze the team’s work, the budget, and the days until completion. This also allows you to report accurately to management how the project is moving along. When errors, delays, and defects creep into the project, they have a direct effect on the project’s ability to reach its target objectives. No surprises there, I hope.

Creating a Reporting Process

You should create a mechanism that allows your team to report the status of assigned tasks on a regular schedule. In some organizations this is a formal work authorization system. This system requires project team members to report activities completed with given metrics so that downstream activities can begin. A project management information system (PMIS) can streamline this process—so long as the quality of data is there and you can verify that the work is actually being completed.

Some project managers like team members to report as each milestone is reached, while others prefer weekly status reports on the tasks completed over the last seven days. Whichever method you choose or develop, it is important that your collection of data be on a consistent schedule. Although it’s not well advised, you can start a project and collect status reports weekly one month and then biweekly the next. Develop a schedule that works best for you and fits the project and stick with it. Of course, you’ll document this schedule of status reporting in your communications management plan.

Determine the format for how work should be reported. Ideally, you should base this on the number of hours or days assigned to the task. For example, during the activity duration estimating process, say you allot 56 hours for testing a new application and assign Rick to the task. When Rick reports his progress, he should indicate the number of hours into the testing phase, in addition to a percentage of the total completed work Rick believes is done. As Rick moves closer to 56 hours, he should be moving closer to 100 percent completion of the task. Figure 9-1 shows the impact of exceeded hours on the budget and the overall time of the project duration. The actual collection of work completed will allow you to see how the progress is going and to make adjustments to the project schedule to keep things on track.

Figure 9-1  Tasks that exceed their durations impact both the budget and the project.

When problems arise in the implementation phase, the number of hours assigned to a task will no doubt increase. For example, Rick’s testing of the new application is taking longer than the 56 hours assigned to the task because of the discovery of a hardware conflict. Drawing on your communication with Rick, what you have learned through your regular meetings, and the hours reported by Rick through your reporting process, you should be able to ascertain quickly if more hours will be required for the testing activity. In other words, it shouldn’t be a surprise when Rick reports he’ll need some more time to complete his task.

To react to this problem, you need to analyze how additional hours will impact the following:

•   Dependent tasks in the PND

•   Other, nondependent tasks in the PND that Rick has been assigned to

•   The critical path

•   The budget

•   The project completion date

•   The management reserve

•   Additional resources

•   Risks

•   Communication needed regarding the additional hours

To resolve a problem, analyze each of the facets of the project plan impacted by the new requirement for additional time. If dependent tasks are being held up by the problem, you need to find a solution to resolve the problem as quickly as possible. Generally this means you’ll have to do one or more of the following things, discussed in the following sections:

•   Implement schedule duration compression

•   Invoke management reserve

•   Reassign the work unit

Implement Schedule Duration Compression

Schedule duration compression is a fancy way of saying, “Hurry up!” You often need to compress the schedule when things are running late in your project. One of the easiest methods to implement is to examine your activities in the project network diagram for activities that have a finish-to-start relationship. You might enable some of these activities to overlap with their predecessors by adding lead time to the activities. For example, an activity to create a new software application might precede the activity to write the user manual for the software. It’s feasible that the technical writer for the user manual could write portions of the manual before the entire software application is compiled, packaged, and ready to ship. Lead time would allow one activity to overlap slightly with its predecessor to finish sooner than was originally planned.

A similar approach to lead time is fast tracking. While lead time focuses on individual activities in the project, fast tracking focuses on entire phases or individual activities of the project. Fast tracking allows phases to overlap slightly so that all of the activities in the subsequent phase can finish sooner than what was planned if the phase didn’t start until after the previous phase had finished. Fast tracking is considered risky, however, because if there are errors in the previous phase, they can have huge ramifications on the work already completed in the second, overlapping phase.

Another approach to schedule compression is crashing. Crashing allows you to add more effort to an activity or phase to get the work done faster. Crashing a project increases the labor to complete effort-driven activities, but this approach can also increase the cost of the project because someone is paying for the labor you’ve added. There’s a special law of economics you have to consider, too: the law of diminishing returns. This law states that you can’t add labor to reduce the duration of the work. You can’t add 100 electricians to pull 100 network cables through an office plenum and be done with the job in just a few minutes. Furthermore, the law states the cost of the added labor may exceed the yield the labor creates. For example, you can add 100 electricians to reduce the amount of time for the network cable installation, but it probably won’t be very cost effective, and there’s only so much work each electrician can do in the task. Finally, when you add too much labor, the laborers are going to get in each other’s way and things can become counterproductive.

In theory, assigning additional resources to a task should reduce the amount of time required for the task to complete. In reality, this is not always the case. For example, when installing an operating system that takes one hour to install, assigning two team members to the task doesn’t mean that the installation procedure will take only 30 minutes. These activities are fixed-duration as opposed to activities that are effort-driven. In some instances, however, assigning an individual who is more experienced in the technology may cost more per hour (as in the case of a consultant), but that person can finish the task in less time, saving overall costs and preventing the delay of dependent tasks.

Invoke Management Reserve

Recall that management reserve is a final task in the critical path of the PND. It is an artificial task that is generally 10 to 15 percent of the total amount of time allotted for all tasks. When tasks exceed their allotted time, you assign the overrun to the management reserve task. For example, Rick is testing the software and will overrun the allotted time by 24 hours. A project manager could assign the 24 hours toward the completion of the management reserve and allow the critical path to continue as planned—assuming no other constraints are affected by the delay of the activity.

You can also use a combination of additional resources and management reserve. For example, assigning an additional team member to assist Rick may reduce the time overrun from 24 hours to 16 hours. The 16 hours would then be applied to management reserve.

Reassign the Work Unit

Finally, you can choose to reassign the task to someone more qualified in the procedure. If Rick has exasperated himself and cannot resolve the issue with the software, then you may elect to hire a consultant or assign another team member to the task. The result of this solution is generally less risk of additional hours spent by Rick, but additional financial costs applied to the budget, as Figure 9-2 shows.

Figure 9-2  As risk is reduced, cost may increase.

Status Collecting Tools

As a project manager, you may not always have the time to chat with each team member every week to get a verbal confirmation on the progress of each task. You will need a process to streamline the collection of hard numbers on the hours and percentages of the work completed. There are several methods you can use to collect this information from your team:

•   E-mail  A simple solution is to have your team members e-mail the hours of the work they’ve completed on their assigned task. This simple solution is not very automated, but at a minimum it allows for easy collection and accessible reporting for all team members. Of course, you’d then have to transfer the information into Microsoft Project, Excel, or another project management software program.

•   Information radiators  Adaptive projects utilize an information radiator, which is a collection of charts, project information, and status updates in a public place where everyone can access the information. An information radiator typically includes a burndown chart of the product, schedule forecasts, a product roadmap, issue tracking, a Kanban board, and any other significant information that’s needed for the project. It’s just a public way to be transparent, but also a centralized location for project information as stakeholders need.

•   Spreadsheets  A slightly more advanced method to collect and compute project status is through a weekly spreadsheet each team member would complete to report the tasks that person has been working on. You could create a template that lists the tasks, allotted hours, and hours actually worked on the tasks and include an area for any comments from the team member. Once you receive the spreadsheet, electronically of course, you can have macros and formulas retrieve the team members’ information and dovetail it into a master spreadsheet.

•   Web forms  An aggressive approach is to create a web-based reporting system that would allow team members to report their activities and the hours committed to each via a web page form. The submitted form could be configured to automatically calculate percentages of work, overruns, and impact on the critical path. This would be ideal for a geographically dispersed team.

•   Project management information system (PMIS)  Any of the preceding methods can be used in conjunction with a PMIS, such as Microsoft Project Server, Jira, Basecamp, MS Teams, or Monday.com. A PMIS can enable collaboration via e-mail, web interfaces, and other applications such as Excel. If you are using a PMIS from the onset of your project, you will have created the WBS, the Gantt chart, and the PND within the application. Calculating task completions, overruns, and assignments of additional resources is easier to do with a collaborative PMIS. Server-based products allow for true collaboration between the project manager and the project team via web technologies.

Whichever method you choose or develop for your project, it is imperative that you create and document a detailed schedule for collecting project status. You must have periodic project updates, or the project will grow stale, you’ll miss opportunities to make adjustments to prevent overruns, and team members may lag behind on tasks. A consistent, persistent project manager is needed to keep a project team dedicated to tasks and collect information about the completion of each task.

Communicating Project Status

How will you communicate project status to the project stakeholders and to the project team? Many project managers use a weekly status report that provides an update of what’s been accomplished in the project over the past week, any issues that need to be addressed, status of risks, overall project completeness, and project performance. While status reports are handy, they aren’t always the best method to provide information about the project.

Status reports are push communication—you are pushing the report to the stakeholders via e-mail. A pull communication is a reporting feature that’s growing in popularity. A pull communication for project status lets stakeholders visit a project website or information radiator to communicate what’s happening right now in the project. It’s pulled from a central repository that is updated frequently based on project information.

As a project manager you’ll use many different tools to manage communications within a project. Common communication tools include the following:

•   Dashboards  A dashboard is a one-stop window into the project, a console containing all the project starts and performance results. For example, your dashboard might show the project tasks completed, tasks remaining, number of items currently in progress, schedule and cost performance, total hours of labor by the team, and labor hours for each worker. The dashboard might have filters and toggle switches so users can compare and contrast information. For stakeholders, the dashboard could be read-only and allow them to see only certain parts of the project information based on security and configured rules for the project.

•   Knowledge management tools  Knowledge management tools are a way to find and filter information in the project. These are usually accessed by a stakeholder through a web form to get information such as project costs, progress, labor hours, pending risks, and risks resolved. These tools could also be configured to allow people to see the project scope, WBS, budget, project charter, and other documents in the project—again, based on the user’s role in the project, access rights to the information, and what the project manager wants to share. These tools also help with reporting and archiving project information for future usage.

•   Performance measurement tools  Later in this chapter, we’ll explore earned value management, a suite of formulas used to show project performance. Your dashboard, project website, or information radiator could show these values and chart out the project performance for your project. You can choose to show cost, schedule, and likely future performance based on the current conditions of the project. You can also track and share expenditures that the project has taken on or will take on so management can plan accordingly.

Tracking Financial Obligations

In addition to collecting information on the status of tasks from your team members, you will have a responsibility to collect information on the financial aspect of your predictive project. You will need, and generally be required, to meet with your project sponsor to report the status of the cost of the project. When variances exist, you’ll likely have to document them in a cost variance report. This report explains the variance, the cause of the variance, and its impact on the project’s success. You will need to report on a regular schedule the following items:

•   The amount of budget spent on the project to date (cumulative costs)

•   Any cost variances

•   Actual costs versus the budgeted costs

•   Value of work performed

•   Cost variances and offset

•   Suggestions, when necessary, to reduce the cost of resources

Tracking Actual Costs

To track the actual cost of the project, collect the amount charged on invoices from vendors and consultants and the dollar amount assigned to the team members’ hours or the tasks they are completing. The ongoing sum of this collection is the actual cost of the project. This includes rework due to lack of quality; waste from materials; and purchased time from consultants, subject matter experts, or vendors.

The invoices you receive from vendors will be, obviously, a result of the goods or services rendered. The deliverables (service or goods) stem from a commitment document—which is a generic way of referring to a contract, a purchase order, or a letter of intent. This leads to the committed cost. A committed cost is the amount of money approved and assigned to a portion or the entirety of a project. On a regular schedule, you apply the committed cost to the actual cost. As Figure 9-3 demonstrates, the process of applying the committed cost to the actual cost should result in a balance based on the original budget creation.

Figure 9-3  The committed cost and actual cost should be in balance.

The comparison of the actual cost and the committed cost should reflect the cumulative budget cost for the entire project. If there are inconsistencies, a line item comparison of the goods and services delivered against the cumulative budget may be required. Discrepancies between the actual cost and the committed cost may arise from flux in hardware prices, additional services or features added, or an error on behalf of the vendor (at least you can call it an error). Refer to your contract for details on price overruns.

An expenditure is the actual spending of project money. When you purchase goods or services, management will want to see when the expenditure happened and reconcile it with the invoice or purchase order attached to the expense. Your project’s budget will need to track the expenditure as the item or service purchased is logged against your project. In other words, as you spend money on the project, the available balance of funds for your project is lowered. You might also need to report an expenditure that has happened or that is about to happen. You don’t want to surprise the key stakeholders with a pending expense and stall your project.

The key to controlling the finances within your project is to safeguard your budget and react to cost variances as soon as they appear. This requires a routine to confirm the cost of goods or services delivered and the cumulative budgeted costs. You can automate this procedure within Microsoft Excel and Microsoft Project.

When cost variances happen—and sooner or later they will—you will need a plan to analyze the costs and see what offsets may be made to control the total actual costs for the project. In other words, spending $5,000 for a consultant’s time that was not budgeted will leave your budget $5,000 in the red. (In the red means a negative balance. In the black means a positive balance.) You will have to either find a solution to reduce other costs or approach management for additional funding.

Your first approach is to examine the budget to see how the extra expense can be reduced. You can reduce expenses by

•   Using less-expensive resources

•   Assigning additional resources to a task to complete it sooner and reduce its overall labor costs

•   Arranging the PND so that tasks are start to start (SS) or finish to finish (FF) rather than finish to start (FS)

•   Reducing the cost value allotted to the management reserve

•   Reducing the size of the project scope

Determining Earned Value

Earned value is an excellent system to test, in an ongoing process, whether the work completed on a project is in alignment with the budgeted costs for a project. Earned value is a measure for project performance. This approach to financial management is ideal for hourly workers such as consultants, application developers, and resources that have a fixed hourly rate.

Earned value project management evolved from the early 1900s, from the factory floors. Industrial engineers created a formula to predict the value of a factory. Their formula has three variables: earned standards (what the factory actually produced), the accumulative costs incurred, and the original budgeted costs. To use the formula, the engineers took the earned standards number and compared it to the actual costs amount. Then they compared the earned standards with their planned goals for the factory output.

The comparison of values allowed the engineers to predict the profitability for a company from the output and costs of the workers and machines within the factories. Based on these figures, changes could be made to streamline production, address actual costs, or determine a plan of action for a less-than-profitable output.

To apply this formula to today’s world, a project manager first needs to have completed all of the planning stages. Specifically, the project manager must have the WBS completed with accurate predictions of the amount of time and cost estimates required for each of the work packages. While some of the time required may be little more than estimates, there must be a serious attempt to calculate time for each work unit, as addressed in Chapter 5. Without an accurate account of time for each task within a project, earned value is not reliable because it compares the current output with the predicted output.

Controlling Finances

Your organization probably already has set processes for handling requests for payments, purchase orders, and payment on invoices. If you are not familiar with the internal flow of paperwork, the approval of funds dispersed, or the procedure to supply purchase orders versus payment on invoices, speak with your project sponsor or company comptroller, who’ll be happy to educate you on the process.

In addition to just knowing where to route papers and whom to call when invoices are due, you’ll need a formal approach to tracking and analyzing the actual costs. You can use a number of ways to create a system for collecting this information, though Microsoft Excel and Microsoft Project are two of the best tools available to project managers. In addition, you’ll need organization and a regular schedule to update the expenses on your project.

Earned value management (EVM) has a few fundamental values:

•   Earned value (EV)  Earned value is representative of the work completed to date, regardless of how long it took to accomplish it. For example, if a project has a budget of $100,000 and the work completed to date represents 25 percent of the entire project work, its EV is $25,000.

•   Planned value (PV)  Planned value is how much the project should cost to get to a specific point in the schedule. For example, if a project has a budget of $100,000 and month six represents 50 percent of the project work, the PV for month six is $50,000.

•   Actual costs (AC)  Actual costs are the actual amount of monies the project has required to date. For example, if a project has a budget of $100,000 and $35,000 has been spent on the project to date, the AC of the project would be $35,000.

•   Cost variance (CV)  A cost variance occurs when the actual cost of the project work is more or less than the EV. For example, your EV is calculated to be $25,000 but you had to spend $35,000 to get there. This would result in a negative $10,000 cost variance.

•   Schedule variance (SV)  A schedule variance occurs when the EV is more or less than the PV. For example, the project is supposed to be worth $75,000 in month six; however, at month six your EV is only $45,000. You’ve got a whopping SV of negative $30,000.

To implement EVM, the project manager collects the status of the computed percentage of tasks completed. For example, as team members report their status of hours applied to their assigned duties, your project management software can report a percentage of the task completed. Each work unit that has a predicted number of hours can be assigned a dollar amount as well. For example, if Marcella the programmer needs 36 hours to reach a particular milestone, and her hourly rate is $130, the dollar amount assigned to the work is $4,680.

If Marcella has completed 12 hours of the work and is on schedule now at a third of completion, the earned value is 33.33 percent of $4,680 (the total cost of the work unit), which is $1,560. However, if Marcella has completed 12 hours of the work but reports that only 20 percent of the project is completed, the earned value is now out of sync with budgeted costs. The cost of the work unit has just risen to $7,800 if Marcella stays on this schedule of production.

The primary benefit of predicting earned value is that a project manager can predict if the project is going to be in financial trouble early on in the implementation phase, as Figure 9-4 demonstrates. Unfortunately, many IT project managers simply do not take the time necessary to predict the earned value of their project as they implement it. It is not a difficult process and should be, quite frankly, mandatory to keep expenses in alignment.

Figure 9-4  Earned value can predict if a project will be financially strapped.

Let’s take a look at the EV formula in action. This example is for a project that has a budget of $250,000. The project is 15 percent complete, but it should be 20 percent complete by this point in the calendar. In addition, the project manager has had to spend $43,000 of the budget just to get to this point in the project.

In this book’s online resources, you will find an Excel file named EV Worksheet that you can use to calculate your own EVM figures for your projects. You will be working more with computing earned values in an upcoming exercise. (Refer to Appendix C for accessing the online resources.)

Calculating the Cost Performance Index

The cost performance index (CPI) is a reflection of the amount of actual cumulative dollars spent on a project’s work and how close that value is to the predicted budgeted amount.

For example, as Figure 9-5 depicts, a total network upgrade project has a budget at completion of $209,300, and to date the project has spent $34,500 on actual costs. Based on the percentage of the completed project, which is 15 percent, the EV is $31,395. The planned value, however, is $36,000. The project also has a CV of –$3,105.

Figure 9-5  CPI reflects how closely the project is following the budget.

To compute the CPI for this project, the earned value, $31,395, is divided by the actual costs, $34,500. This results in 0.91, which means the project is 9 percent off the target rate of spending for this stage in the project. The project manager can use this information to reschedule resources; adjust schedules; reassign tasks; and, if worse comes to worst, ask for additional funding.

Calculating the Scheduled Performance Index

The scheduled performance index (SPI) is a formula to calculate the ratio of the actual work performed versus the work planned. The SPI is an efficiency rating of the work completed over a given amount of time. It is not a dollar amount, but rather a percentage of how closely the completed work is to the predicted work. The formula to calculate the SPI is fairly simple, as Figure 9-6 shows.

Figure 9-6  SPI is the ratio of the work performed (earned value) to the work planned (planned value).

If the result of your formula is 1, you are on schedule. If the result is less than 1, you are behind schedule. Of course, if the result is greater than 1, you are ahead of schedule. For example, if the EV is $18,887 and the PV is $20,875, the SPI is 0.90, which is less than 1, so this project is behind schedule.

Predicting Project Performance

The estimate at completion (EAC) is a prediction of what the total cost of the project will be, given current performance factors. As your project progresses, there may be some variances between the cost estimate and the actual cost to reach milestones within your project. The difference between these estimates is the cost variance. These cost variances affect the overall performance of the project—and it’s what the CPI is really based on.

There are several different formulas for calculating the EAC, but the most common formula is EAC = BAC / CPI. Consider a project where the BAC is $200,000 and the CPI is 0.80. In this instance, the EAC is $250,000. In other words, this project isn’t doing so hot, so if things keep trekking along as they are, the project will actually cost $250,000.

Using this information, you can use another fun formula to predict how much more money the project will need in order to reach the end of the project—also known as the estimate to complete (ETC). The ETC is a pretty straightforward formula: ETC = EAC – AC. Let’s say our EAC was calculated to be $250,000, and our AC is currently $25,000; our ETC would then be $225,000. That’s how much more the project will need to reach its closing.

Calculating the To-Complete Performance Index

Once you’ve calculated the CPI and the SPI and you realize your project may be late, your first thought is, “How can we get back on schedule?” Okay, that’s not your first thought, but pretend it is.

Imagine a formula that would tell you if the project can meet the budget at completion based on current conditions. Or imagine a formula that can predict if the project can even achieve your new estimate at completion. Well, forget your imagination and just use the to-complete performance index (TCPI). This formula can forecast the likelihood that a project will achieve its goals given what’s happening in the project right now. There are two different flavors for the TCPI, depending on what you want to accomplish:

•   If you want to see if your project can meet the budget at completion, you’ll use this formula: TCPI = (BAC – EV) / (BAC – AC).

•   If you want to see if your project can meet the newly created estimate at completion, you’ll use this version of the formula: TCPI = (BAC – EV) / (EAC – AC).

Anything greater than 1 in either formula means that you’ll have to be more efficient than you planned to achieve the BAC or the EAC, depending on the formula you’ve used. Basically, the greater the number is over 1, the less likely it is that you’ll be able to meet your BAC or EAC, depending on which formula you’ve used. The lower the number is from 1, the more likely you are to reach your BAC or EAC (again, depending on which formula you’ve used).

To predict how much harder you and your project team will need to work to finish the project within budget, you’ll need to calculate the TCPI. At the end of the formula, which is shown in Figure 9-7, if the number is greater than 1, you’ll have to buckle down and work harder. If the result is 1 or less, breathe a sigh of relief; you can make it on your current schedule.

Figure 9-7  TCPI is a formula to predict the ability of a project to stay within budget.

Let’s consider a project that has a BAC of $750,000 and is 30 percent complete, although it was planned to be 50 percent complete by this point. In addition, the project has spent $240,000 so far in the execution. The formula we’ll use is TCPI = (BAC – EV) / (EAC – AC). In this example, the formula would read TCPI = (750,000 – 225000) / (800,000 – 240,000), which equates to 0.97. Given this project’s EAC, the project manager is likely to hit the new EAC.

Communicating the Project Burn Rate

Just like it sounds, a burn rate describes how quickly you’re burning through the project budget. The burn rate shows the consumption of funds by the project and the anticipated costs of the remainder of the project. Imagine a project that has a budget of $500,000. As the project team works on the project, there is a cost associated with their work—their hourly wage. (Your projects may or may not include the costs of the employees in your budget, but let’s say that it does for this example.) As the project team works and accumulates costs, it’s reflected in the burn rate for the project. So if the project team has five people and their total hourly rate has cost the project $120,000 to date, the burn rate is $120,000 against the $500,000 budget. Add to that any other expenditures to date, and you’ll quickly see how you’re burning through the project budget.

With this information, you can forecast costs based on the predicted work remaining in the project and the future purchases your project will make. Mistakes and rework can drive your burn rate through the roof—and blow your project budget. By tracking expenses with a burn rate, you can see whether you’ll have enough funds left to finish the project work, assuming that everything in the project goes according to plan. Tracking the project burn rate will also help you uncover the risk of depleting the project budget before the project is actually finished.

CompTIA Project+ Exam Highlight: Initiating Processes

In order to execute, predictive projects need a plan and adaptive projects need a product backlog of requirements. Predictive projects require a project management plan and are resistant to change. Most of your planning questions on the CompTIA Project+ exam will reflect predictive projects, but adaptive projects use planning too, obviously, but not with the same formality of predictive projects. While predictive projects create a project management plan for all of the project management knowledge areas, adaptive projects focus on getting the work done in short intervals of planning and doing.

Executing the project is all about getting the work done. It’s the project team’s opportunity to fulfill the project plans you and the team have created together. On the CompTIA Project+ exam, you’ll have a few questions on project execution, but not as many as you might expect. Consider how project execution focuses on the actual work of the project and how each type of project work is different.

1.6 Given a scenario, apply schedule development and management activities and techniques  A project is a temporary endeavor, so it requires a schedule to reach the business value. When the schedule is longer than warranted, the project manager and the team can work together to implement schedule duration compression. Fast tracking allows phases of the project work to overlap, but increases risk in the project. Crashing adds resources to effort-driven activities to finish the work faster. In some instances, contingency reserves can be utilized to allow for tasks that are taking longer than anticipated. Finally, we touched based on the idea of user story points the team can complete in an iteration, which is called the team’s velocity. Velocity helps predict when the adaptive project will be finished.

1.7 Compare and contrast quality management concepts and performance management concepts  Earned value management is a technique to measure overall project performance through a suite of formulas. Reference the file called EV Worksheet in this book’s online resources for an approach to memorizing these formulas for the CompTIA Project+ exam. Here’s a quick recap of each formula and how it is calculated:

1.8 Compare and contrast communication management concepts  As the project team executes the project plan, they’ll need to report to you on their status of completing their assignment. You should host regularly scheduled status meetings for the project team. When you’re working with virtual teams, as may often be the case, you’ll need to adjust your communication efforts to ensure that the remote project team members are involved in the project execution and communication. Vendors that play a role on your project team will also need to be included in regular communication to be active parts of the project team, responsible for completing their activities.

1.10 Given a scenario, perform basic activities related to team and resource management  Projects are done by people, not computers, equipment, and software. It’s the management of the people, the most important resource in the project, that requires finesse, emotional intelligence, and leadership to get the project done. Human resource management is about communicating project status and letting people experiment and develop keen methods to get the work done, while still controlling the boundaries of the project work. Meetings are one of the most effective ways to discuss how the team is progressing, what’s been accomplished and left to do, and any impediments, risks, or issues that should be addressed.

Chapter Review

As the project manager, you are responsible for all facets of the project planning and implementation. If you’ve built a solid foundation, and surely you have, the implementation will follow your work breakdown structure and the project network diagram. Predictive projects plan upfront and try to predict what will happen in the project. Adaptive projects plan just a little upfront, with the majority of planning done throughout the project, and expect requirements and direction to change.

On a regular schedule, you’ll meet with your team members to review their work, congratulate them on successful milestones, and prep them for the next project activities. A regular, efficient meeting keeps the team focused on the project vision and accountable for the tasks to be completed. Part of keeping the project on track will be to create a process to collect work information from your team. You’ll need a regularly scheduled method to request and retrieve information on the team members’ progress for assigned tasks.

Just as you hold your team members accountable for their actions, management will hold you accountable for yours. Specifically, management is interested in your ability to control the finances and deliver expected results on time. You will need an education on how your organization processes payments, creates purchase orders, and reviews budget adjustments. You will also need a process to keep tabs on the finances and hours committed to a project and a method to track the value of work.

Project management is a long process that requires dedication from you and the project team. Your job is to ensure that the team stays dedicated to the project, that finances are always in order, and that you are always ready to react appropriately to any situation. Sounds easy, right?

Exercise

This exercise allows you to apply the knowledge you have learned in this chapter and is followed by the possible solution.

Exercise Solution

The following offer possible solutions for the chapter exercises.

Questions

1.   You are the project manager of the NYQ Project for your organization. Your project is slipping on some tasks and you would like to implement duration compression for this project. Which one of the following is a duration compression technique that generally does not increase risks within the project?

A.   Crashing

B.   Fast tracking

C.   Resource leveling

D.   Lead time for all fixed-duration activities

2.   What should be the goal of the individuals on the project team?

A.   To make the company more profitable

B.   To help each team member finish their tasks

C.   To focus on completing their own tasks

D.   To finish their work as quickly as possible

3.   Why should a project manager host a regularly scheduled team meeting?

A.   A meeting allows team members to report on their activities.

B.   A meeting allows the project manager to make changes to the project scope.

C.   A meeting allows team members to air grievances about other team members.

D.   A meeting allows the stakeholder to identify requirements.

4.   What concept is defined in the law of diminishing returns?

A.   Work expands to fill the amount of time allotted to it.

B.   Padding the time surrounding activities causes project risks.

C.   Adding labor increases project costs.

D.   You cannot continually add labor to reduce project duration.

5.   What is a work authorization system?

A.   A method to approve work that’s been completed

B.   A method for the project stakeholders to approve the project work

C.   A method to allow successor work to begin based on the completion of predecessor work

D.   A method to allow the project manager to track uncompleted milestones

6.   Why should a project manager allow team members to report on completed milestones in a team meeting?

A.   To create team development through project work

B.   To create a sense of pride in the work accomplished

C.   To create internal competition on the project

D.   To create peer pressure to outdo the other team members

7.   Why should you review the upcoming assignments in a project team meeting?

A.   To remind the team members of the work they must complete

B.   To remind the team that you are in charge of the project

C.   To confirm that team members know their duties for last week

D.   To confirm that the project is moving and on track

8.   Your project has a budget of $280,000 and is 30 percent complete. You have spent $90,000 on your project, however, the project is overbudget and late due to some rework and additional time from a vendor. Your project is supposed to be 50 percent complete by this time. What is your earned value for this project?

A.   $56,000

B.   $84,000

C.   $140,000

D.   0.93

9.   Your project has a budget of $280,000 and is 30 percent complete. You have spent $90,000 on your project, however, due to some rework and additional time from a vendor. Your project is supposed to be 50 percent complete by this time. What is your CPI for this project?

A.   0.93

B.   93

C.   0.60

D.   $6,000

10.   Your project has a budget of $280,000 and is 30 percent complete. You have spent $90,000 on your project, however, due to some rework and additional time from a vendor. Your project is supposed to be 50 percent complete by this time. What is your SPI for this project?

A.   0.93

B.   0.60

C.   0.77

D.   1.01

11.   Your project has a budget of $280,000 and is 30 percent complete. You have spent $90,000 on your project, however, due to some rework and additional time from a vendor. Your project is supposed to be 50 percent complete by this time. What is your EAC for this project?

A.   $300,000

B.   $210,000

C.   1.03

D.   –56,000

12.   Heather is working on an operating system rollout to 1,256 workstations. The rollout is completed through imaging software, but there are scripts that have to be run at each workstation to complete the installation. The task has been assigned 400 hours to complete. Heather reports that she has committed 200 hours to date but is only 30 percent complete on the assignment because the process is taking longer than originally planned. What should a project manager do in this instance?

A.   Remove Heather from the assignment and reassign another team member.

B.   Add resources to the assignment to decrease the length of time to completion.

C.   Add time to the critical path.

D.   Remove all of the time from the management reserve and apply it to this assignment.

13.   When a project is taking more hours to complete than originally planned, which of the following is a viable solution to reduce the hours required while maintaining costs?

A.   Use less-expensive materials.

B.   Fast-track the project.

C.   Assign additional resources.

D.   Apply management reserve.

14.   True or False: Assigning additional resources to a task will always reduce the amount of time required to complete the task.

A.   True, added labor reduces task duration.

B.   False, added labor doesn’t affect fixed-duration activities.

C.   True, added labor is called project crashing.

D.   False, added labor, or project crashing, won’t reduce project duration.

15.   What is the risk in reassigning a lagging task to a consultant you’ve hired to complete the task?

A.   Additional time

B.   Additional costs

C.   Demoralization of the project team

D.   Decrease in management reserve

Answers

1.   A. Crashing generally does not add risks to the project, but it does add costs because of the added labor.

2.   C. The goal of project team members should be to focus on completing their own tasks. If each team member would focus on completing the assignments as planned, the project would flow smoothly.

3.   A. Regular team meetings accomplish many different tasks—including allowing team members to report on their activities and allowing the team to solve project problems as a group.

4.   D. The law of diminishing returns addresses the concept of adding labor to reduce the duration of activity. While you may be able to add labor to decrease the duration of a task, you cannot continually add labor to reduce the duration of the task. In addition, added labor may become counterproductive for the project. Finally, the cost of the labor added may not be worth the yield (the value) of the work the added labor is able to perform.

5.   C. A work authorization system is a formal process where project team members report the completion of their tasks so that downstream activities may begin.

6.   B. By requiring team members to report verbally on the status of their assignments, they are held accountable for their activities. In addition, this practice creates a sense of pride for the team members who have accomplished major milestones in the project.

7.   D. By reviewing the assignments with the project team, you are ensuring that the project is moving and on track. At the same time, you are confirming that the team members know their duties for the week and reminding them what their assignments are—but overall, the purpose is to keep the project moving.

8.   B. The project’s EV is found by multiplying the budget at completion by the percent of the project that is complete. In this instance, the EV is $84,000.

9.   A. Your cost performance index (CPI) can be found by dividing the earned value (EV) by the actual costs (AC). In this instance, the CPI is 0.93.

10.   B. You can find your scheduled performance index (SPI) by dividing the earned value (EV) by the planned value (PV). In this instance, the SPI is 0.60.

11.   A. To find the estimate at completion, you use the formula budget at completion (BAC) / cost performance index (CPI). The CPI for this project is 0.93, and the budget is $280,000. The EAC for this project, based on current performance, is $300,000. Note that, without rounding, $280,000 / 0.93 is $301,075.

12.   B. The project manager should assign additional resources to the project if at all possible. By adding resources to the project, the PM enables Heather and another individual to launch the installation process on more workstations simultaneously throughout the network. The length of the actual installation process will still take the same amount of time, but the number of workstations involved can increase.

13.   B. This question is asking for a schedule duration compression technique, which will not increase project costs. The only viable option is to fast-track the project; this approach allows entire phases of the project to overlap.

14.   B. False. Simply adding resources to all tasks will not always decrease the amount of time a task requires. For example, when installing an application, the time of the application installation can be streamlined through policies or scripts, but the installation time is limited by the speed of the workstation, not the number of team members installing the application.

15.   B. When reducing risk, project managers usually increase cost. By hiring an expert consultant to complete a lagging task, the project manager will most likely have to pay a higher hourly rate for the consultant to be involved in the project.