Doing the Right Things for Your Customer

Customers are a demanding group … that’s a given. When we have all of our regular project responsibilities to deal with on a daily and weekly basis, how do we know when we’re doing the right things for our customers? How do we know we’re managing them well, responding to the right requests, saying ‘yes’ when we should and saying ‘no’ when we should, and ensuring that our actions are not detrimental to the forward progress of our project?

You can’t always base it on customer satisfaction levels. Because attentive ‘do-anything-for-the-customer’ behavior may get a project manager and team high marks mid-way through a project. But upon implementation, if they’ve said yes to too many things that ended up modifying scope and delivering a system to the customer that is ultimately not what they ordered, then that customer satisfaction at the end of the project will be low. The end user community will have a product that they didn’t sign up for and that’s a very bad thing.

In order to ensure we’re doing right by our customers, we first need to have confidence in what we’re doing. And we need to have confidence that we’re doing the right things for the project. We can do that in a few ways, including:

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Scoping the Project for Better Requirements

Good scope before requirements

The earlier you define scope, the more efficient your requirement definition process will be. Work done before scope definition is usually wasted effort. An early scope definition keeps requirements writers from diverging, reduces requirement inconsistencies, and keeps the big picture in view. It also shortens the time required for requirement writing and rewriting and reduces debates.

If you do not give everyone writing or reviewing requirements your scope definition, they are likely to create their own. Imagine listening to a movie without watching it – as I have done many times on trips in the SUV listening to a movie several times but never seeing it as it’s playing in the DVD player behind my head. I have a vision – my own vision – of what’s going on and what the characters look like and what the set looks like, but if no one describes it to me in detail or I don’t see it for myself then that’s all it is … my own vision. And it likely differs greatly from the actual film itself. Read more »

The Importance of Project Management Software

Have you ever wondered how important software is for managing projects? How much time does it save? How much it can help you in delivering a successful project? What parts of it are lifesavers and what parts can you live without?

Having these questions ourselves, our company has conducted a research with a subject “Project management on an enterprise level”, during the past month, supported by Seavus Project Planner and Seavus DropMind™. The main purpose of the research was to identify the needs and requirements of people who are faced with project challenges everyday.

The research has shown some very interesting results that we would like your input on.

Part I

First, let’s share the statistics about the respondents. The first part of the survey was dedicated to analyzing industry the companies operate in, company’ size, location and job title of the respondent.

From the responses provided, most respondents work in companies within Manufacturing (13.40%) and Consulting (11.34%) industries, directly followed by Business / Professional Services (8.25%), Construction / Home Improvement (8.25%) and Government / Military (7.22%). Other industries presented have less than 7 % of respondents.

Regarding the companies size, most respondents work in SME (24.74%) directly followed by companies with 1000-10000 employees (18.56%). However most of these companies have between 1 and 3 offices (51.55%).

The job title of the respondents is summarized in the graphic below:

We believe this reach provides an accurate sample of the PM market, and that the conclusions can be trusted.

Part II

Next part of the survey was connected to the actual usage of the project management software that is chosen within the responders’ company.

We wanted to explore the usage of the Microsoft® EPM within these companies and more or less we were surprised by the answers. It is interesting to see that large number of companies that have been using MS Project Standard are not using Microsoft® EPM and do not even consider implementing this solution within their companies.

However, it was also interesting to see the importance of different parts constituting the project management solutions for the people using Microsoft® EPM (or for those that are considering using it in the future) and for the people who haven’t been using it or are not considering using it in the future. We have divided the most important features in 4 categories: Project Management, Resource Management, Time Management and Collaboration. Follow up the appropriate responses in the tables below:

(The green colored cells are related to respondents who are or will be using Microsoft® EPM and the orange colored cells are related to people who are not or will not be using Microsoft® EPM).

As you can notice all of the features above are important and very important for the biggest number of the respondents, except for the wikis which both groups has indicated as not important feature. Moreover, almost 79% of respondents stated that it is very important or critical for them to track project progress. Assigning privileges/roles is valued with 3, (on a scale from 1 as useless and 5 as critically important), from almost 50% of the respondents and for all respondents is important to know that their project is on budget and on schedule.

Other interesting answers were given on questions such as where the respondents store important documents (.mpp files; general documents and project related documents). The answers were diverse, since this was an open question. However, some of the most frequent answers were: on the Server, SharePoint, Network, and File Server and it is more than obvious that people want to have their pm solution installed on the server in the company (89%) than to have it hosted (10.81%). Moreover, they prefer to install the solution from their own IT department (75.68%) than to have the installation from the solution provider (24.32%), but almost 57% of the respondents are ready to pay for installation and support from third party.

The answers on the question “How the teams update task progress?” were expected. 37.55% of the respondents stated that e-mail is used for updating task progress. Surprising 18.18% of respondents verbally update tasks and 15.58% use MS® Excel. Software programs were mentioned by a small number of people.

Same answers were given on the question “How do you share info about late tasks, risks, or general project related knowledge?” with 75.32% for e-mail, 48.05% verbally and 28.57% MS® Excel.

This survey provided many valuable answers, but as you can notice, there are some conflict areas. We encourage you to share your opinion on the results and moreover your experience in the field. Let’s create together the big picture of this survey.

Earned Value Reporting – Cost Performance Index

We’ll continue our discussion of Earned Value Reporting by looking at Cost Performance Index in this article. The Cost Performance Index refers to how the project is performing based on the actual spending of the project budget.

Much of the following information came from Newell and Grashina’s book entitled “The Project Management Question and Answer Book.”

What is the cost performance index?

The cost performance index or CPI is a measure of how well the project is doing in terms of spending the project budget. It is a comparison of the actual expenditures to the work that was accomplished. The index is a value that allows projects of different sizes to be compared.

The cost performance index is like the cost variance discussed previously with one important difference. When we calculated the cost variance, the result was a figure in dollars. If the dollars were a negative number, the variance was considered bad, and if the dollars were positive, the variance was considered good. The problem with this method is that it is difficult to compare projects of different sizes to one another. It would be better to have a measure that gave the health of the project regardless of its size. For this purpose we will use indexes.

Instead of subtracting the actual cost of work performed from the budgeted cost of work performed as we did when we calculated the cost variance, we will divide the same two numbers.

CPI = BCWP / ACWP

CPI = EC / AC

We can see that if the project is following its plan, the amount of work accomplished and the amount of money spent to accomplish it are the same, and the resulting value will be one. So, an index of one means that the project is following its project plan.

If the actual cost is greater than what is being accomplished, the denominator in the fraction will be larger than the numerator, and the resulting value will be less than one. This is generally considered to be a bad condition. If the actual cost is less than what is being accomplished, the resulting number will be greater than one and this is considered to be good. Of course any deviation from the project plan is bad even if the deviation is considered favorable. We should investigate to determine why this condition exists.

Example:

Two projects have their cost performance index calculated. Both projects are 10 percent over budget at the time of the calculation. Project One has a budget of $1,000,000, and Project Two has a budget of $10,000. These budget figures are the amounts that should have been spent as of today’s date. We will assume that the project is on schedule at this point in time. What is the cost performance index for each?

Project One is over budget by 10 percent of its budget or $100,000.

Project Two is also over budget by 10 percent of its budget or $1,000.

CPI = BCWP / ACWP

The BCWP is $1,000,000 for Project One.

The ACWP is $1,100,000 for Project One ($1,000,000 + $100,000).

The BCWP is $10,000 for Project Two.

The ACWP is $11,000 for Project Two ($10,000 + $1,000).

CV = BCWP – ACWP

The cost variance for Project One is $1,000,000 ? $1,100,000 or ? $100,000. The cost variance for Project Two is $10,000 ? $11,000 or $1,000 The CPI for Project One is $1,000,000 / $1,100,000 or 0.909. The CPI for Project Two is $10,000 / $11,000 or 0.909.

Notice that the size of the project does not make any difference in the calculation of the index. Projects that are each behind 10 percent have the same value for their cost performance index. This makes assessing the health or sickness of projects of different sizes much easier.

Earned Value Reporting – Intro Part 2

In the previous Intro Part 1 article we began to look at Earned Value Reporting as described in Newell and Grashina’s book “The Project Management Question and Answer Book.” In this Intro Part 2 article, we’ll exam Cumulative Variance Reports before diving deepr into other EVR concepts and reporting mechanisms.

Cumulative Variance Reporting

Sometimes in very large projects there is a problem with representing the project plan and the other earned value factors on a cumulative basis. When the project budget is very large, the vertical scale of the report is so small that minor but important variations cannot be seen well. In this situation a variance reporting method can be used.

To plot the earned values on a variance chart as shown in Figure 2 we simply plot a horizontal line and label it zero. Now, instead of plotting the actual values of the BCWS, BCWP, and ACWP we plot the differences between the BCWS and the other two earned value reporting factors. When we do this, the vertical scale that we need is greatly reduced in size since we are concerned only with plotting the difference between the earned value factors and not the entire budget of the project.

FIGURE 2

The next one, the ACWP or AC, is pretty simple too. This stands for the actual cost of work performed. Like the BCWS it is a plot over time of expenditures. This time, instead of plotting the project’s planned expenditures we are plotting the project’s real expenditures over time. At the end of each reporting period, we take the total amount of money that was spent on the project during that period and plot it as an addition to the total amount of money that had been spent as of the last reporting period.

It is important that every expenditure that is made on the project be collected and be collected in a timely way. The timing of the collection of the actual cost of work performed must match the anticipated timing of the expenditures that were planned and plotted as the BCWS. This is terribly important since, if expenditures are collected early or late in the project in relation to the project plan, the earned value report will show a positive or negative variance when there may really be none.

The ACWP plot is a cumulative plot as well. If the project expenditures are actually what they were planned to be, then the ACWP and the BCWS lines will plot one on top of the other. If the lines do not coincide, there is something different from the plan taking place in the project. We are either spending too much or too fast or we are not spending enough or fast enough to meet our plan.

The next factor is the BCWP or EV. This is the only one that is a little tricky. BCWP stands for the budgeted cost of work performed. It is sometimes called the earned value as well. This is where we get the name of the earned value report. Like the BCWS and the ACWP, the BCWP is a plot of money over time. If you recall, we said earlier that each of the project tasks has a budget and schedule associated with it. The BCWP is a plot of the work that was actually accomplished. If we complete a task that had a budget of $1,000, then the BCWP for that task when it is completed is $1,000. We plot this on a cumulative basis as well. It does not matter whether we spend $1,000 or $2,000 or any other amount to accomplish this task, we earn and plot only the budgeted amount in the BCWP.

Like the ACWP, the BCWP should plot right on top of the BCWS line. If the plot of the BCWP is above or below the BCWS line, it means that the number of tasks that are being completed is greater than or less than the plan. This tells us that we are ahead of or behind schedule. If we have done all of the tasks that were supposed to be done at this point in time, the cumulative value of the BCWP will be precisely equal to the BCWS.

When we put all three of these plots together, we have the earned value report. The plots should plot right on top of one another if the project is being done on time and in accord with the budgeted amount that was in the project plan.

Example:

Suppose a project is in progress and as of today the planned expenditures for the project were to have been $500,000. Suppose also that there were five tasks and the tasks had budgets of $30,000, $100,000, $250,000, $100,000, and $20,000, respectively. The actual cost of each of the tasks that were worked on was $11,000, $120,000, $230,000, $105,000, and $20,000. Tasks 1, 2, 3, and 4 are complete.

What are the BCWS, ACWP, and BCWP (PV, AC, and EV)?

• BCWS is $500,000
• ACWP is $486,000
• BCWP is $480,000

From these figures we can see that the accomplishments of the project as of today are somewhat less than what was planned for. This is the difference between the earned value and the planned value to date. The planned value is the BCWS and the earned value is the BCWP. This means that we are $20,000 behind schedule.

We can also see that the actual cost is $14,000 less than the planned expenditures to date. This means that we are somewhat under budget. Unfortunately we are $14,000 under budget but also $20,000 behind schedule. If we add the $20,000 of work that should have been completed but was not, we find ourselves projecting a $6,000 over budget condition. It could be that things are actually worse than they appear at first glance. If the performance to date continues, the amount over budget will probably be even higher at the end of the project. This is usually considered a bad situation.