Project Administration Process
The process described below is used in PAI's service offerings and taught to student project administrators during training. It is adaptable to both new and already executing projects and is tailored to each unique environment. More information on plan construction, tracking, and reporting may be found in Project Administration Library item (2), and an example of the application of the process is described in Project Administration Library items (9) and (10). Please contact us if you have any questions.
Once project scope is firm and a planning budget is available planning may begin. Plans are constructed in one or more 1 to 2 hour interviews with the project manager and, at the project manager's discretion, one or more members of the project team and/or subject matter experts. A powerful structured plan building interview technique is used that captures all known information about the project including the 5 task data elements needed to create a comprehensive plan; description, duration, resources, their work efforts or costs, predecessors, and successors. Attendees are asked a series of questions and watch their plan materialize as the PA enters the information into the project management software tool. At the end of each meeting the plan is printed and distributed for review. Interviews are repeated until there are no more changes. The resulting plan then passes through 2 reconciliation phases, first to reconcile cross project dependencies and resource conflicts, then to reconcile the plan's cost and schedule projections with management's or the sponsor's expectations.
Interviews continue during the reconciliation process until a detailed executable baselined Microsoft Project or ABT Project Workbench project plan is produced that everyone agrees to containing the dates every task will be performed based on their predecessor and successor relationships and resources assigned. This plan is a contract between the project team, the sponsor, and the resource owners. The physical plan file is maintained by the PA and should reside on a data warehouse accessible in read only mode by all interested parties. If the project requires cost justification a Cost/Benefit Analysis graph may be constructed similar to that shown on the PA Justification page. The project plan will provide the implementation cost schedule for the graph, the sponsor must provide the expected return on investment schedule.
When all agree on the plan and the implementation budget is available implementation and tracking begins. The tracking process used will depend on the volume of weekly activity, the physical proximity of the input providers, the availability of electronic communication, and the preferences of the project manager and/or participants. It is common to collect progress data electronically, screen it for errors and inconsistencies, enter it into the project management tool, produce reports that show project status, and review the reports at the weekly status meeting.
PAI prefers instead to interview the project manager and/or the team in front of the PC if possible or on the phone, enter the progress information, let the tool show the resulting slippages if any, and give the team an opportunity to adjust future activities to recover their schedule. This technique enables the team to fix their problems before the status meeting and, if recovery is not possible, the status meeting discussion can then focus on contingency plans this week instead of next week.
The progress tracking data that is captured supports earned value reporting, a specification developed by the US Department of Defense in the late 1960's to help their contractors better control their projects and recently rediscovered by contemporary project managers. Earned value assesses the value of the work completed to date in terms of the original baseline estimate for that work. Without earned value one only sees expenditure to date with respect to the total project estimate. For example, if we spent $50K to date and the project budget is $100K are we 50% complete? With earned value we can see if 50% of the original baseline work has been done for that $50K spent, a much more meaningful measure of progress.
Earned value is easiest to understand at the task level before applying it to the multitask or project level. The following example uses person-days (PD's) of work for task cost. If each resource's pay rate is known the same calculations can be performed in dollars. Where pay rates are politically sensitive plans may be built using PD's and translated into $ for authorized individuals.
Suppose a task in the baseline plan is scheduled to take 10 PD's over a 10 day duration and should be complete at status report time. And suppose the project team reports they started on time but only did 6 PD's of work during the 10 days they have been working on it, have 6 PD's remaining, and they expect to finish it on day 12 instead of day 10.
If they did 6 PD's and have 6 PD's to go the work is 50% complete which means the earned value of the task is 5 PD's (50% of the baseline plan's 10 PD's). But it took 6 PD's of actual work to earn the 5 PD's of baseline work, a cost variance (CV) of 1 PD with respect to baseline.
One can project that if it is has taken 6 PD's of actual work to earn 5 PD's of baseline work then it will take 12 PD's to earn the total of 10 PD's of baseline work. The task estimate at completion (EAC) is therefore 12 PD's based on the CV at reporting time.
Since the entire 10 PD task should have been completed at reporting time but only 5 PD's was earned the task has a schedule variance (SV) of -5 PD's. It is 5 person-days behind (PDB) in terms of the original baseline estimate.
The task was supposed to complete on the 10th day but is now projected to complete on day 12, a slip of 2 days. Therefore the task has a Finish Variance (FV) of 2 days. If the task has successors the project management tool will force all its successors to slip 2 days as well possibly affecting a milestone. One can simply scan the FV column of all future milestones to see if any are affected. With this early warning system one may examine the predecessor tasks to the threatened milestones and make adjustments, like adding resources to shorten some task durations.
Note that the team is putting 3 people on the task next week to complete the remaining 6 PD's of work in 2 elapsed days. If the team hadn't told us they would finish on day 12 we would calculate the estimated completion date based on the rate of work to date as follows: Since it took 10 days to do 6 PD's of work it should take another 10 days to do the remaining 6 PD's of the task, making the task a total of 20 days duration. Fortunately we asked the team when they will finish.
If one asks for the 3 progress tracking variables; work done, work remaining, and the projected or actual finish date when taking task status, all earned value measurements become available to generate tabular status reports describing status at the task, project, department, or organization level, or rolled together for the entire company.
One can also plot the data to see status trends at the project, department, organization, or company level. In the graph below the Budgeted Cost of Work Scheduled (BCWS) line in green represents cumulative baseline work to be completed each week for the duration of the project. This plot is sometimes known as an "S" curve. The value at the top right end of the line is the estimated total cost of the project.
As the project executes one can plot each week the Actual Cost of Work Performed (ACWP) in orange and the Budgeted Cost of Work Performed (BCWP), otherwise known as the earned value, in yellow on the graph. Note ACWP and BCWP can only be plotted to the Today or status report line since their values are determined each week from tracking information.
In this example the project has spent more (ACWP) and accomplished less (BCWP) than originally planned (BCWS) as of this date. If the project were going exactly as planned all 3 lines would coincide. If the project were going better than expected the ACWP line would be below and the BCWP line would be above the BCWS line.
The schedule variance (SV) shows how many person-days behind the project is (BCWP-BCWS), the cost variance (CV) shows how much more we spent than we should have (BCWP-ACWP) to accomplish the current earned value, and the time variance (TV) shows how many business work days ago we should have reached today's earned value (BCWP). Based on these observations one can estimate the final cost of the project:
EAC (Estimate at Completion) = (ACWP / BCWP) x BAC
BAC (Budget at Completion) is the value at the end of the BCWS line, "Cost at end of Project".
For example, if we spent $100K (ACWP) to date but only accomplished $80K (BCWP) of work against the baseline plan, and the BAC is $1M, then $100K / $80K x $1M = $1.25M, a projected $250K overrun. The further into the project the more accurate the projection.
The project finish variance (FV) is derived directly from the project plan and is based on the cumulative effects of FV's to date and their successors.
A variety of indexes indicating the health of the project may be derived from the above measurements. See earned value metrics in the glossary. For a more in depth discussion of earned value see the Project Administration Library item (11).
To see how PAI can help your organization implement state of the art project administration visit our PAI Services & Training page and/or contact us.