Earned Value Reporting – To Complete Schedule Performance Index

In this article on Earned Value Reporting we’ll look at something similar to the To Complete Cost Performance Index – the To Complete Schedule Performance Index, or TCSPI. The To Complete Schedule Performance Index tells us the required schedule performance index that will be needed to meet the schedule.

The book “The Project Management Question and Answer Book” by Michael Newell and Marina Grashina is the source for much of this overview.

What is the to complete schedule performance index?

The to complete schedule performance index, or TCSPI, is similar to the TCCPI except that it calculates a required schedule performance index that will be necessary to meet the project schedule. This measure is rarely used. It is included here for completeness. It has the same problems as the TCCPI and is even more abstract and difficult for people to understand.

The calculation for the TCSPI is done by dividing the work remaining by the remaining schedule.

TCSPI = (BAC – BCWP) / (BAC – BCWS)

It can be seen that as a project’s schedule performance index moves below one, the TCSPI will increase and become greater than one. Although called an “index”, this is not really accurate since all indexes indicate something bad when they fall below one and this index indicates something bad when it is greater than one.

There is a mathematical difficulty with this term as well. If a project is over budget toward the end, it is possible for the BAC and the BCWS to be equal. This produces a division by zero and a point of discontinuity.

Under normal conditions it results in a value that indicates the required performance that the project must have from now until the end of the project.

Example:

Suppose a project is somewhere near 50 percent complete:

BCWS = $100,000

BCWP = $95,000

ACWP = $97,000

BAC = $200,000

SV = BCWP – BCWS

SV = -$5,000

What is the TCSPI?

TCSPI = (BAC – BCWP) / (BAC – BCWS)

TCSPI = (200,000 – 95,000) / (200,000 – 100,000)

TCSPI = 1.05

Notice that if the schedule variance remains the same as the end of the project approaches, the TCSPI increases rapidly. Suppose we have the following when the project is approximately 95 percent complete:

BCWS = $195,000

BCWP = $190,000

ACWP = $192,000

BAC = $200,000

SV = BCWP – BCWS

SV = -$5,000

What is the TCSPI?

TCSPI = (BAC – BCWP) / (BAC – BCWS)

TCSPI = (200,000 – 190,000) / (200,000 – 195,000)

TCSPI = 2.00

As we approach the end of the project, the schedule variance has not changed, but the TCSPI has changed from 1.05 to 2.00. This means that the work that must be accomplished from now to the end of the project must take place at a rate that is twice as fast as was originally planned.

Earned Value Reporting – To Complete Cost Performance Index

In this article on Earned Value Reporting we’ll examine the To Complete Cost Performance Index. In a nutshell, the To Complete Cost Performance Index tells us the cost performance that is required to complete a given project for it’s original budget based on how it is performing right now.

The book “The Project Management Question and Answer Book” by Michael Newell and Marina Grashina is the source for much of this overview.

What is the to complete cost performance index?

The to complete cost performance index, TCCPI, tells us the required cost performance that is necessary to complete the project for the original budget based on the performance of the project as of today.

The to complete cost performance index is a seldom-used indicator, and there are some difficulties in its use. The TCCPI is calculated by dividing the work remaining by the money remaining in the budget to do it. The remaining work in a project is simply the difference between the work already accomplished, the BCWP, and the total work of the project, the BAC. You will recall that when the project is completed, the BCWP must exactly equal the BAC. Mathematically it is impossible for this not to happen since the BAC is equal to the sum of the BCWP and is also equal to the sum of the BCWS. The remaining budget for the project is simply the difference between the total budget for the project, again the BAC, and the amount of money that has been spent to date, the ACWP.

TCCPI = (BAC – BCWP) / (BAC – ACWP)

It can be seen that as a project’s cost performance index moves below one, the TCCPI will increase and become greater than 1. Although called an “index”, this is not really accurate since all indexes indicate something bad when they fall below one and this index indicates something bad when it is greater than one.

The TCCPI gives us a rough estimate of the performance that is required for the remaining portion of the project in order for the project to be completed for the original budget. A TCCPI of 1.33 indicates that the project team must perform with a CPI of 1.33 from now until the project is completed in order for the project to be completed at the original budget.

There is a mathematical difficulty with this term as well. If a project is over budget toward the end of the project, it is possible for the BAC and the ACWP to be equal. This produces a division by zero and a point of discontinuity.

Under normal conditions it results in a value that indicates the required performance that the project must have from now until the end of the project.

Example:

Suppose a project is somewhere near 50 percent complete:

BCWS = $100,000

BCWP = $95,000

ACWP = $97,000

BAC = $200,000

CV = BCWP – ACWP

CV = -$2,000

What is the TCCPI?

TCCPI = (BAC – BCWP) / (BAC – ACWP)

TCCPI = (200,000 – 95,000) / (200,000 – 97,000)

TCCPI = 1.02

In this example the project would be required to do all of the remaining work at a 2 percent higher cost performance than was originally planned. This may be particularly difficult since the cost performance index to date is only 98 percent. We will be asking the project team to improve their cost performance by some 4 percent.

Notice that if the cost variance remains the same as the end of the project approaches, the TCCPI increases rapidly. Suppose we have the following when the project is approximately 95 percent complete:

BCWS = $195,000

BCWP = $190,000

ACWP = $192,000

BAC = $200,000

CV = BCWP – ACWP

CV = -$2,000

What is the TCCPI?

TCCPI = (BAC – BCWP) / (BAC – ACWP)

TCCPI = (200,000 – 190,000) / (200,000 – 192,000)

TCCPI = 1..25

As we approach the end of the project, the cost variance has not changed, but the TCCPI has changed from 1.02 to 1.25. This is an indicator that the cost variance will be much more difficult to recover now than it was earlier in the project.

Building Effective Teams

The information in this article is derived mainly from a section of a book by Ralph Kleim and Irwin Ludin entitled “Project Management Practitioner’s Handbook.” It probes the characteristics of both poor teams and effective teams and identifies actions that the project manager might take to help realize some of the effective team characteristics.

Team Building

A team is more than just a group of people doing work. It is an assembly of individuals with diverse backgrounds who interact for a specific purpose. The idea is to capture and direct the synergy generated by the group to efficiently and effectively achieve a goal. Throughout the years, experienced project managers have witnessed many signs of ineffective teams.

Characteristics of Poor Teams

• No processes for gaining consensus or resolving conflicts. Team squabbles and overt and covert discussions are ongoing occurrences, making cooperation difficult, even impossible.
• Team members who lack commitment to the goal. No one has an emotional attachment to the goal.
• No camaraderie or esprit de corps. The players do not feel that they are part of a team. Instead, everyone acts in his or her own interests.
• Lack of openness and trust. Everyone is guarded, protective of his or her own interests. Openness and truthfulness are perceived as yielding to someone, giving a competitive advantage, or exposing vulnerabilities.
• Vague role definitions. The reporting structures and responsibilities are unclear, causing conflicts. Territorial disputes and power struggles occur often.
• No commonality or cohesiveness. The team is an unorganized grouping of people. No one feels a sense of community or brotherhood. No common ground exists other than to meet periodically to work. This results in lost synergy.
• Conformity and mind protection. Insecurity permeates people for fear of being different or ostracized. People do not speak or share information unless it reinforces behavior or thoughts.
• Low tolerance for diversity. The pressure to conform is so intense that anyone different in thinking or work style is ostracized or not taken seriously. Whistle-blowers and creative types, for instance, may be viewed with suspicion. Under such circumstances no opportunity is available to capitalize on people’s strengths and address their weaknesses.
• Insufficient resources. Whether it’s people, equipment, supplies, facilities, time, or money, insufficient resources make teams ineffective. The situation can also lead to squabbling, dissention, even revolts. If resources are not distributed in an objective, meaningful manner, then differences can magnify into severe conflicts. Members of the team can quickly become polarized.
• Lack of management support. If team members perceive—whether justifiably or not—that management is not supportive of the project, then motivation can plummet. People will feel that the work is not valuable, at least to the organization.
• Listless team members. The goals are vague or nonexistent. Even if the goals are defined, no one—including the project manager—seems to focus on them. Instead, everyone is aimless.
• Discontinuity between individual expectations and group expectations. There is a misalignment between the two, with the latter not valuing the former. A symbiotic relationship between the two just does not exist.

An ineffective team is conflict ridden, filled with distrust, unfocused, and reeking of negative competition. These conditions manifest themselves in high turnover and absenteeism, considerable frustration levels, poor communication, no esprit de corps, and intolerance.

The project manager, of course, wants a project team with desirable characteristics:

Characteristics of Effective Teams

• Acceptance of new ideas and objective evaluation of them
• Sustained common norms, values, and beliefs without excessive conformity
• Synergy through mutual support
• Loyalty and commitment to the project
• Focus on end results
• A trusting, open attitude
• Ability to gain consensus and resolve conflicts
• High morale and esprit de corps
• Information and resources sharing

An experienced project manager knows all too well that a team with these characteristics is difficult to achieve. Yet he also knows that such characteristics will not arise unless he takes action. There are some actions that the project manager might take to engender such characteristics:

• He sets the example. He not only espouses certain values and beliefs but also exercises them. He wants people to be trustful and open, so he is trustful and open. He expects people to be committed, so he is committed. In other words, he “walks the talk.”

• He encourages communication—oral, written, and electronic. He knows that communication is more than writing memos, standing in front of a team, or setting up a Web site. It requires sharing information in an open and trusting manner, holding frequent meetings (status reviews and staff), publishing a project manual, defining acronyms and jargon, employing technology as a communications tool, and encouraging task interdependence.

• He has the team focus on results. They direct all their energies toward achieving the vision. Whether he or the team makes a decision, it is made in the context of achieving the vision. The project manager constantly communicates the vision and establishes change control and problem-solving processes.

• He engenders high morale and esprit de corps by developing and maintaining the energy that comes from teaming. He knows, however, that he must continually nurture that energy to keep it flowing. So he empowers team members, encourages consensus building and win-win solutions, increases task interdependence, matches the right person with the right task, and teams people with complementary work styles.

• He builds commitment to the vision and the project. Throughout the project cycle, team commitment can rise or fall. Ideally, the project manager wants to achieve the former. Ways to do that include matching people’s interests with tasks, encouraging participative decision making, empowering people, seeking input and feedback, assigning people with responsibility for completing deliverables, and keeping the project in the forefront of everyone’s mind.

• He lays the groundwork for synergy. A team is more than the sum of its members. But synergy requires cooperation. Ways to obtain cooperation include providing cross-training so that people understand each other’s roles and responsibilities, clearly defining roles and responsibilities, determining each team member’s strengths and weaknesses and making assignments that capitalize on the former, and having groups within the team be accountable for a complete work unit (e.g., subproduct or deliverable).

• He encourages greater diversity in thinking, work style, and behavior. Always mindful of the danger of groupthink, the project manager encourages different thoughts and perspectives. He encourages experimentation and brainstorming to develop new ideas and keep an open mind, seeks task interdependence to encourage communication, and nurtures a continuous learning environment.

Telecommuting Brings Green IT to the Masses

A recent series of articles from InformationWeek focused on Green IT. The final installment of the three-part series focused on telecommuting and what it means to greener IT practices.

I’ve already professed to be a strong proponent of telecommuting and managing projects and project teams remotely.

Past articles of mine or articles that I was interviewed for on telecommuting and/or green project management include:

• The Remote Project Manager
• Going Green with IT Project Management
• More on Green Project Management
• Greening Your Projects

I think telecommuting is efficient, a huge cost savings, very green for many reaons, a logically good business decision, and definitely works well with today’s technology. This article intrigued me and I felt the need to share a portion of it here with you.

Telework Saves Green, Too

For years, workplace experts have plugged telecommuting programs as a low-cost way to attract new employees and retain current ones. But implementing secure remote access also can be a cornerstone of a green IT initiative. Having hundreds of workers converge on a large, central hub, often in an urban area, is an environmental nightmare. Enabling remote access is a win/win: A positive green impact plus real dollar savings, better business resiliency, and increased morale.

The Role of IT

IT’s role is significant when putting a telecommuter policy in place because smart technology choices are needed to help employees work remotely without loss of productivity. But clearly, there’s more to this than just a new VPN or remote backup system. Successful teleworker programs require organization-wide buy-in. Work-at-home policies and procedures must be put in place, and that means close coordination among IT, human resources, and business stakeholders, who also must assess the impact of proposed telecommuting initiatives and policies in terms of overall savings and operational benefits to the entire organization, not just IT. That’s a critical point, because if you measure the effectiveness of the program by its effect on IT’s budget alone, you’ll miss the bigger picture.

Real Benefits

In fact – unlike the technologies and architectures such as green storage initiatives and centralized application implementations that more directly impact IT in terms of environmental footprint or bottom-line operational expenses – the real payback from a comprehensive telecommuting program is more likely to come on the business side. Benefits here include lower costs associated with office space, including utilities and leases; increased worker satisfaction and productivity; and operational flexibility. Having employees distributed around a region or the country adds resiliency and aids business continuity. Organizations with superior telecommuter infrastructures and established home-worker policies can more effectively sustain operations when natural or man-made disasters make working at the office impossible for a large number of employees.

Many IT organizations already have basic VPN capabilities in place, so the initial cost of implementing a bare-bones telecommuter program is relatively low.

Behzad Behtash wrote the full article for the 12/8/08 issue of InformationWeek magazine

Proactive Steps to Keep Your Business Running Smoothly

Businesses today – especially in this current economy – need to think and rethink how they are doing business and what they are doing to keep that business running smoothly. When things are going good, it’s easy to get fat and forget about the little things that in the long run can mean the difference between business continuity and business closure.

I’m certain there are many more, but below I’ve outlined six items that an organization – especially smaller companies – can focus on to avoid costly IT problems down the road and also to save – in general – on their overall business practices costs right now.

Slash Overhead with Remote Setups

I’ve written about this one before, but it deserves further mention here. Allowing employees, when it’s appropriate, practical and workable, to setup and work remotely can save big dollars on overhead. It also forces more electronic communication and business processes, which further save money for your organization and, by default, require more ‘green’ business processes to happen in order to make communication and business, in general, work.

Disaster Preparation

Many businesses – especially small businesses – do very little to nothing at all to prepare for disaster. I read recently about a company that was tight on space and kept their water cooler AND their server in the same closet. An employee spilled water on the server and all data was lost. Another organization kept their server in a room right behind the employee break room. An employee overcooked food in the microwave, started a fire, and the server was toast before the fire was even much of a danger.

Backing up is another shortcoming. Many businesses – again…especially smaller organizations – keep their backups onsite (if they backup at all!). The key is to not think you’re invincible. I’ve been there and I’ve lost everything as a result. It can happen to anyone and it does happen to anyone. I’ve worked with an organization on a project to recover data from backup tapes of a company that was located in the World Trade Center buildings on 9/11. I know what those tapes look like and what it takes to recover that information – no one expected that day to happen.

Review Your IT Setup

Don’t wait until things go wrong to review and rethink the systems that you have in place. Bring in an outside resource to perform a vulnerability assessment to identify what’s working, what isn’t, and where your security risks are. Proactive maintenance and support is something that large companies often do and small companies often overlook. A good assessment can cost as little as $1,000, and can save a business many times that in the long run.

Pay Attention to Security

Some larger organizations – especially companies with government contracts in place – likely place a greater emphasis on security…especially if one or more of their contracts require it. But smaller companies often see security as an expense and something too techie to take on and therefore do little or nothing to safeguard themselves and their data (theirs and their customer’s data) against attack or theft.

Simple steps like encrypting data and requiring passwords on laptops and mobile devices can go a long way in getting a small business down the right path to data security. There are also cheap cloud computing options like Google messenger with Postini secured mail and archiving that make securing networks easy for even very small organizations.

Setup a VPN

In today’s business environment, every business, regardless of size, should be using a VPN to link their office with remote workers in a secure, cost-efficient fashion. If you’re considering allowing remote work, then it’s absolutely necessary. Bigger companies have found VPNs to be the cheapest, most effective way to link workers across the country or across town.

Bring in a Consultant

The thought of bringing in outside help is scary for many companies. Managers think they’re becoming obsolete if you bring in someone to help redefine processes….they think you’re trying to find ways to get rid of positions and individuals. However, bringing in fresh eyes to review how your business does business is often a critical step in getting your organization to the next level of viability and competitiveness. Old processes don’t always work at the next level…often everything about the way you do business needs to be rethought you’re you’ll never get there.