Great Planning and Managing Resources Discussion 1

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April 20th, 2022

Table of Contents

Planning and Managing Resources

Take reference from attached pdf and do the given Question answer in Word Document.

“Using Earned Value Management for Project Managers” Course Project

Part One: Create an Action Plan for Effective Meetings

As you have seen in this module, it’s critical for project managers to plan, schedule, and run effective meetings, yet it’s not uncommon for team members and contributors to resist attending. You will now create an action plan to guide your efforts on the job so that you can plan to get the best value out of meetings and make sure they serve your projects well.

Answer the following questions, using as much space as you need.

Complete the grid below.
Implementing Project Control	Project meetings play a very vital role in the implementation of project control due to the following reasons :· Sharing updates on the project and discussing new information if there is some.· Following up on the previous meeting’s agenda, on how are things tracking after the last meeting, any improvements or any correction of errors· Discussing the financials, resources, tools, and deadlines can bring some new ideas to monitor, control or achieve them
Key Business Problem(s)	The problems that I have experienced a lot in past with my project meetings are the length of the meetings and specific agenda for the meetings. When we have our monthly or weekly meetings on our turnover or safety. We always start a meeting and the first thing we start with is this meeting is going to be short but once the discussion starts it always tends to go out the ballpark in time and also sometimes we get distracted quickly on our agendas too which also tends to make our meetings longer than expected.
Strategies	When planning for the effective meetings in coming days I will be planning on the agenda of the meeting and communicate with the team before the meeting is scheduled so that we can be more focused on the agenda for discussion rather than getting distracted and jumping to another topic for discussion and making it longer than the allocated time for the meeting.
Steps	· Planning on agendas and mentioning sub-agendas if there is any to be mentioned before the meeting so that we get on the right track on the meeting agendas.· Having one person as a timekeeper who can signal or remind the host about the time left to complete the meeting.· Getting a confirmation back from the team once they get the communication about the meetings schedule and its agendas.
Timeline	· Will get my team to send back a confirmation after getting an invite for a meeting.· Allocating a certain time for meeting to last and assigning one person as a timekeeper in every meeting.· Before every meeting laying out ground rules of the meeting and expectation or involvement from the team.
Measurement/Results	The timekeeper or tracker will inform us about how long we take for discussion.Having a clear perspective on agenda before the meeting will help the team to do some brainstorm and have a very fruitful discussion.

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CEPM504: Using Earned Value Management for Project Managers

College of Engineering, Cornell University

Part Two: Calculate Planned Cost, Actual Cost, and Earned Value

In this part of the course project, you will work with an existing budget from a completed project. You can choose any budget: one from your past work; one from another position; one that another project manager created, if you are not currently in a role in which you typically create budgets yourself; or one from a project outside of your current position. You may attach your budget at the end of this project if you choose.

Answer the following questions, using as much space as you need.

1. For this particular project, what were the total planned costs? Describe briefly the process used to arrive at a planned cost estimate.

2. What were the actual costs? If there was a variance, what do you think caused it? Explain briefly some of the key reasons you think there was a variance between planned costs and actual costs.

3. Examine this past project budget through the lens of resource scheduling and project duration. We know that cost variance has implications for the schedule and for the project’s time to completion. Were there signals in place that indicated to you that based on cost variance, the project schedule would be affected? Describe what you observed (or, alternately, what you wish you had observed).

4. Referring to the work that was done on any completed project: go back to your project schedule and choose a date midway through the project. What was the planned value at that point in time? Alternately, if you don’t have access to the data required to answer this, describe in your own words how you would go about computing planned value for any hypothetical project midway through completion and how doing so would help improve your practice of project management.

5. Refer to any current project underway and its budget. What is the earned value as of today? Alternately, if you don’t have access to the data required to answer this, describe in your own words how you would go about computing earned value for any hypothetical project midway through completion and how doing so would help improve your practice of project management.

Part Three: Forecast Project Cost

Answer the following questions, using as much space as you need.

Refer back to the sample project examined in module two and imagine that everything is executed perfectly. Imagine that you’re now in time period 17. Activity 4-5 is now complete as scheduled, and Activity 3-6 has also just completed, two periods ahead of schedule. Imagine that Resource A cost $6,000 for each period it was active on Activity 3-6: 5 periods, not the 7 periods at $5,000 per period expected. You are now ahead.

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Using the methods presented in this module, answer the following questions.

1. What is the cost variance?

2. What is the new forecasted total cost at completion if you use Method 1?

3. What is the new forecasted total cost at completion if you use Method 2?

“Planning and Managing Resources” Course Project

Part One: Flexing Schedules and Resources to Your Advantage

As you have seen, for some activities there are options for how you might choose to allocate resources to tasks over time, and there are strategies you can use to choose the best options for you. Now you will reflect on some of your past work experiences in project management in which you’ve used flexibility to achieve your goals.

Answer the following questions, using as much space as you need.

1. Think of a project you have worked on for which you needed to use some flexibility in allocating resources to tasks for some aspect of the work. Describe what happened in that case. What did you do? How did that flexibility help you accomplish your goals?

2. Think of a past situation in which activity was further decomposed (split into multiple activities) to address person availabilities. What happened in that case? How did you break down the activity to resolve the resource constraints? (If you have not had this experience, imagine how such a case might arise within your organization. How would you try to handle it?)

The recent project I have worked was a conversion of the whole store from 4th of July event to Back to school, the store I work in is one of the big supercenters in the market so we have big assortments of the product than some stores close by so the customers are in the know where to go for season change deal, so I had to do the conversion by July 4, 2020, and for that, I had to send a team overnight who can clear out the shelves of any left-over 4th of July merchandise and price it and put it in clearance. Also, I had to change the schedule of my hourly supervisors to come early at 4:00 am so that the store can be filled with the new back to school product before the store opens at 7;00 am. Two members from an overnight team who are very knowledgeable couldn’t work the shift at night but were ok working early in the morning because of their kids and family reason. So, what I did in the situation was I had a meeting with the team about who wants to volunteer to go overnight and who wants to be in the fill team, two of my supervisors from the early shift stepped-up and volunteer to go overnight for clearing out the shelves and other two sales associates came in the morning to fill it up. It resulted in a little delay in the filling part we didn’t meet the deadline of 7:00 AM but on the bright side, we trained those two sales associates to be in the fill team.

3. Leverage that past experience now. Bearing in mind the lessons of this module, what do you think you can do differently in the future to get a better result from your scheduling and resource allocation strategies? Share your ideas.

Logical sequence of work to obtain the greatest efficiency in all project goals

Part Two: Using Critical Project Management Tools

Answer the following questions, using as much space as you need.

Let’s reinterpret the resource demands over time for a left-justified schedule assuming you have five people available. Create a left-justified schedule for the project above, assuming five people, and answer the following questions.

1. Map the earliest start times for each activity to the resource demands over time. What are the earliest start times for each activity?

2. Level the schedule so it is consistent with resource availabilities. What is the new project duration?

3. For this project network, identify the critical sequence. (Frame your answer as Activity Node X to Activity Node Y to Activity Node Z, etc.)

Macintosh HD:Users:sherman:Desktop:CEPM502_course_project.png

4. Optional Question: Consider the project network as shown above. Think about fast-tracking in the absence of resource constraints. Suppose activities 5-8 and 8-12 can be done in parallel. At what level of parallelization is the original critical path no longer the only critical path?

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CEPM502: Planning and Managing Resources

College of Engineering, Cornell University

Part Three: Managing Creep, Scope, and the Unknown

Managing scope, the different kinds of creep, and all the things that are known unknowns and unknown unknowns are critical tasks for project managers. Now you will have a chance to plan how you will put the strategies from this module to work for you in some aspect of your current challenges. Outline your plans for improvement. What will you do differently? How do you think it will help you meet your goals?

Answer the following questions, using as much space as you need.

Complete the grid below.
Key Business Problem(s) to be Addressed	What is the key scheduling or project management problem you want to work on?
Strategies	Identify which strategies from the course you plan to use to get better results.
Steps	What are the specific actions you will take to achieve your goals Be as specific as you can in outlining how you will manage some aspect of scope, creep, or the unknown.
Timeline	Identify a timeline for implementation. What will you do (or will you have your team do) in the next month? What will you have completed over the next quarter?
Measurement/Results	How are you going to measure your results or demonstrate that your efforts have had a positive impact? What will success look like in this case?Outline your measurement strategies here.

CEPM504: Using Earned Value Management for Project

Managers What you’ll do

Identify strategies for computing planned cost, planned value, and earned value Examine strategies for conducting project meetings in a way that they serve their purpose Examine Schedule Performance Index and Cost Performance Index so that you can use them to your benefit Forecast project cost using standard methods

Course Description

By calculating how much work has been completed on your project as progress goes on, you can update your forecasts regarding how much work is left to do and how long it will actually take to finish. At the same time, by calculating how much money you have already invested in your project, you can forecast how much more money you will have to spend in order to

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finish it. However, to really understand whether a project has gone off track, we need to connect these two elements, cost and the amount of work completed, together. That is where earned value comes in. Earned value helps you understand if the value of the work completed is consistent with the funds expended.

It also gives you a mechanism to forecast what it might cost to complete the project, given past performance. Hence, performing earned value calculations puts you in a position to make informed decisions as to corrective actions. In this course, from Linda K. Nozick, Director and Professor of Civil and Environmental Engineering at Cornell, you will learn about Earned Value (EV) and how it can be productively used to control a project.

This course is designed for seasoned project managers who seek an introduction to EVM to achieve better practical results for implementing project controls, including financial controls and schedule controls.

The calculations presented here are meant for any experienced project manager, including those who are not engineers, to apply to any size project. Students in this course must already have a foundational understanding of standard project management tools and processes including project networks, project budgets and schedules, and work breakdown structures.

Linda K. Nozick Professor and Director of Civil and Environmental Engineering College of Engineering, Cornell

CEPM504: Using Earned Value Management for Project Managers Cornell University

University

Linda K. Nozick is Professor and Director of Civil and Environmental Engineering at Cornell University. She is a past Director of the College Program in Systems Engineering, a program she co-founded. She has been the recipient of several awards including a CAREER award from the National Science Foundation and a Presidential Early Career Award for Scientists and Engineers from President Clinton for “the development of innovative solutions to problems associated with the transportation of hazardous waste.”

She has authored over 60 peer-reviewed publications, many focused on transportation, the movement of hazardous materials and the modeling of critical infrastructure systems. She has been an associate editor for Naval Research Logistics and a member of the editorial board of Transportation Research Part A. She has served on two National Academy Committees to advise the US Department of Energy on renewal of their infrastructure.

During the 1998-1999 academic year she was a Visiting Associate Professor in the Operations Research Department at the Naval Postgraduate School in Monterey, California. Professor Nozick holds a B.S. in Systems Analysis and Engineering from the George Washington University and a M.S.E and Ph.D. in Systems Engineering from the University of Pennsylvania.

CEPM504: Using Earned Value Management for Project Managers Cornell University

Table of Contents

Meet Your Class

1. Meet Your Class

Module 1: Implement Project Controls through Meetings

1. Module Introduction: Implement Project Controls through Meetings

2. Watch: What Are Project Controls? 3. Watch: Project Meetings Done Right 4. Tool: Best Practices for Meetings 5. Getting Great Value from Meetings 6. Course Project, Part One: Implementing Project Controls

through Meetings 7. Module Wrap-up: Implement Project Controls through

Meetings

Module 2: Calculate Planned Cost, Actual Cost, and Earned Value

1. Module Introduction: Calculate Planned Cost, Actual Cost,

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and Earned Value 2. Tool: The Work Breakdown Structure Tutorial 3. Watch: The Project Budget 4. Top-Down or Bottom-Up? 5. Watch: Understanding “Planned Cost” 6. Watch: Understanding “Actual Cost” 7. Watch: Using “Planned Value” 8. Watch: Determining “Earned Value” 9. Course Project, Part Two: Calculate Planned Cost, Actual

Cost, and Earned Value 10. Module Wrap-up: Calculate Planned Cost, Actual Cost, and

Earned Value

Module 3: Forecast Project Cost

1. Module Introduction: Forecast Project Cost 2. Watch: Understanding Schedule Variance 3. Watch: Understanding Cost Variance 4. Watch: Examine the Schedule Performance Index 5. Watch: Examine the the Cost Performance Index 6. Watch: SPI and CPI: Why Do You Need Both? 7. Examine SPI and CPI 8. Watch: How Variances and Performances Indexes are Helpful 9.

Watch: Forecasting Cost Method 1, Using Earned Value 10. Watch: Forecasting Cost Method 2, Using CPI 11. Course Project, Part Three: Forecasting Project Cost 12. Module Wrap-up: Forecast Project Cost 13. Read: Thank You and Farewell

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Meet Your Class 1. Meet Your Class

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Meet Your Class

Using the discussion below, please introduce yourself to the class. We’re all eager to learn more about you. What do you hope to learn from the course? What is your profession? Where are you located? Please respond in a text format or as a video using the film strip icon that is available when you click “Reply.”

(If posting a video response, we recommend that you do not use your cell phone as most do not use Flash software which is required to convert the recording.)

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Module 1: Implement Project Controls through Meetings

1. Module Introduction: Implement Project Controls through Meetings

through Meetings 7. Module Wrap-up: Implement Project Controls through

Meetings

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Module Introduction: Implement Project Controls through Meetings

The success of any project depends, in large part, on how well you can plan and monitor the work throughout the project life cycle. When project managers talk about “project controls,” they may

be referring to a broad range of tools, systems, or methodologies, but all controls have one aim: to minimize the gaps between plans and execution. In this module, you will examine how you can use one tool, project meetings, to deliver better results. Project meetings tend to be an area in which many project managers struggle to get full team support and helpful participation. Why is this so? What can you do to get better results?

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Watch: What Are Project Controls?

As a project manager, a large part of your responsibility is not to sit back passively and collect status reports, but to actively track progress against goals, measure costs, monitor spending and schedules, and identify when corrective measures are needed. All of this has to be done on an iterative basis, and you’ll use tools to do it.

Transcript

Project controls are a really important element of project management. Project controls are actually all of the metrics, processes and tools that we use to understand the current status of a project, and we use it through the entire course of the project to understand how it’s performing. These controls also let us identify when corrective action is needed and what the magnitude and type of corrective action that is necessary.

So as you can imagine from these definition, project controls are actually very broad in scope. There are a lot of things that fall under project controls. For instance, all the stuff on scheduling, schedule tracking, schedule updating, everything we’ve talked about related to risk management including identification, assessment, and the design of interventions, along with everything associated with cost estimation and controlling costs.

There are actually very few things that are actually outside the

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scope of project control if you think carefully about it. Things like communication management are not in the scope of project controls. All the human elements that arise in project management, those are really not in the scope of project controls. All the things associated with quality control. Those are not within the scope of project controls. But many, many important things are within that scope. Actually, good project management and good project control, as we know, begins at the very beginning of the project. At the very beginning of the life cycle. You can’t have a project in good control if you don’t understand the scope, for instance, of that project.

So specifying the skill and doing that very carefully, is actually part of having good project controls. Also understanding how you’re going to deal with changes as they come up in the project. All the issues associated with change management, this is part of project controls. If we don’t know how to do that well, we’re clearly not going to be able to be in much control of our projects.

Also project controls identify the establishment of milestones, and how we manage working towards those milestones. Also, project controls includes all the estimation and tracking elements, and updating of the cost estimates. All of these things are really important to a well- executed project over time. Notice that all of these elements of project controls, they’re not just, you establish them once and you walk away. They all require monitoring.

So you’re not just identifying the controls and putting them in place, but you’re monitoring those controls and you’re using those controls for corrective action to understand when you need

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corrective action and what the magnitude of that corrective action needs to look like. If you don’t have any monitoring, then you really don’t have any control over the execution of your project. And the same is true for budget. So budgetary controls. All this idea of you establish a budget, you manage to that budget, you understand when there are deviations from that budget, you update that budget. All of those things are very important to establish in good project controls.

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Watch: Project Meetings Done Right

Project meetings are a necessity. Valuable information gets shared. So why do so many team members resist or even resent project meetings? Professor Nozick discusses how you, as a project manager, can make sure that your meetings are actually serving project goals and delivering value.

Transcript

The design and implementation of project controls will require project meetings. The exercise of those controls will also require meetings. Those meetings will be to collect data. They will be required to address issues as they arise, so that you can—when project controls show a signal of something not going right, that corrective action, the right corrective action can be identified and taken.

So project meetings are going to wind up being a very important element of the process. Some folks on your teams may feel that the meetings are interfering with progress. This is not an uncommon feeling in the project management domain.

So we need to think very carefully about how to conduct those meetings so that that feeling doesn’t permeate the entire group. How do we wind up with that sort of a feeling? Well if the meetings aren’t scheduled and conducted properly, this idea of feeling like they’re a waste of time can creep in. How does this start to happen in more precise terms? Well, it happens usually very innocently. You start having meetings and you don’t stop them when the

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purpose of those meetings has been achieved, right? Or you schedule a meeting in haste as a reaction to an issue and you don’t think carefully through the goals of the meetings. So meetings can certainly be necessary to address an issue that crops up, there’s no doubt about that, it can be very important to addressing an issue that crops up.

But before the meeting occurs, it’s really important to understand what are the goals of that meeting, be able to communicate that goal carefully to everybody so they can understand i, and then there needs to be a plan in place as to how that meeting will be conducted so those goals are achieved, okay? And another way meetings can turn out to feel like they’re a waste of time is when they’re much too long.

So you’ve got to think carefully about how long a meeting should be to achieve its intended purpose. So, in fact, all meetings regardless of the motivation, they need to have a clearly established purpose, and that purpose has to be able to be understood by all of the attendees. That will include meetings for which the sole purpose is just to collect data.

Implementing and using project controls, will require the collection of data. So you’re going to wind up having meetings with individuals, or collections of individuals, so you can continue to update those controls to understand what those metrics look like.

Also, project meetings are going to wind up being necessary to keep people informed so that they can actually work as a team. That is one of the main mechanisms to coordinate activity. Also, to clarify scope. As projects go on, there may be questions about is this inside or outside of the scope? And so, there’ll be meetings

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that only to disseminate decisions to people, so they can understand them and they can ask questions.

So, meetings have very important purposes, and they need to occur, but they need to occur in such a way that people feel that they’re a value to their time, that they’re useful. And also we do have to pay a little bit of attention to the social dynamic of our project. We don’t really think of it in these terms, but meetings actually do lead to a social dynamic on a project.

And that social dynamic is also important to productivity, so that your team really functions as a team. And this aspects of meetings is actually particularly important when you talk about younger people to the team, newer members of the team. And also for folks working on parts of the project that maybe more solitary in nature. These meetings are one of the main ways of social interacting with people. And when you interact more with people in both a social and a technical level the work turns out to be more effective, conducted more effectively.

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Tool: Best Practices for Meetings

Use the Best Practices for Meetings tool

In order to implement project controls effectively, you need to be able host project meetings that serve their intended purpose. Use the list of best practices here to guide your efforts and make sure your project meetings are delivering value for the project and the team members. This will help avoid wasted effort and the perception that project meetings are a waste of valuable time.

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Getting Great Value from Meetings Discussion topic:

It’s not uncommon for team members to complain that project meetings are a waste of time. What do you do to make sure that your project meetings serve their intended purpose? Create a post in which you share your best tip or strategy for getting great value from project meetings.

Instructions:

Click Reply to post a comment or reply to another comment. Please consider that this is a professional forum; courtesy and professional language and tone are expected. Before posting, please review eCornell’s policy regarding plagiarism (the presentation of someone else’s work as your own without source credit).

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Course Project, Part One: Implementing Project Controls through Meetings

As you have seen, running effective project meetings is critical to achieving the goals that your organization has set. In this part of the course project, you will create an action plan to guide your efforts on the job as you plan, host, and run project meetings with your team and stakeholders. Completion of this project is a course requirement.

Instructions:

Download the “Using Earned Value Management for Project Managers” course project. Complete Part One. Save your work. You will not submit your work now. You will submit your completed project at the end of the course for instructor review and credit.

Before you begin:

Review the grading rubric for this assignment. Please review eCornell’s policy regarding plagiarism.

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Module Wrap-up: Implement Project Controls through Meetings

As you have seen, the success of any size project is dependent on how well you can plan and monitor the work throughout the project life cycle. There are many routes to implementing strong project controls, including network scheduling and Gantt charts, among other tools and techniques, but all controls have one aim:

to minimize the gaps between plans and execution. In this module, you examined how you can use one tool, project meetings, to deliver better results. Project meetings tend to be an area in which many project managers struggle to get full team support and helpful participation. A one-size-fits-all approach will not work here. You have to find a way to be successful within the context of your project, your team, and your organization. You have now created an individualized action plan to guide your efforts in this regard.

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Module 2: Calculate Planned Cost, Actual Cost, and Earned

Value 1. Module Introduction: Calculate Planned Cost, Actual Cost,

Cost, and Earned Value 10. Module Wrap-up: Calculate Planned Cost, Actual Cost, and

Earned Value

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Module Introduction: Calculate Planned Cost, Actual Cost, and Earned Value

You have seen the ways in which you can implement better project controls just through handling routine meetings with the project team and stakeholders more effectively. Now you will

examine the ways in which you can monitor and control progress through the project life cycle by comparing your plans to actual work accomplished and monitoring for variances. You will define “earned value,” and look at the ways that you can calculate planned cost, actual cost, and earned value, and then practice using this information to your benefit as you make project decisions.

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Tool: The Work Breakdown Structure Tutorial

The Work Breakdown Structure Tutorial may refresh your memory

To complete this course, it will be important for you to have familiarity with creating a work breakdown structure, which is a standard project management tool. As a seasoned project manager, you are probably already very familiar with work breakdown structures. In the event that you have not worked with them recently, Professor Nozick has prepared this tutorial to refresh your memory about their purpose and creation. If you frequently work with work breakdown structures, you may not need this refresher.

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Watch: The Project Budget

There’s more than one way to develop a project budget, as Professor Nozick explains. Done correctly, a project budget starts at the very beginning of the life cycle of the project, when you identify the number and type of tasks to be done, and the skilled people, materials, and facilities needed. All of these inputs help you develop your project budget.

Graphic adapted from “Designing to Reduce Construction Costs,” Paulson, Boyd; ASCE San Diego conference; April, 1976.

Transcript

So, the project budget reflects the magnitude and the timing of the work to be done over the course of the project. If you look at this graph here you can see that a cost curve generally has kind of an S-shaped focus to it. At the very beginning, you spend relatively slowly on a project, then as it really reaches its full stride, you wind up spending quite rapidly on the project.

This figure also is meant to remind you that over time the influence, the decisions made at the early part of the project have a very large influence on how the project will turn out in the end, how the execution will occur. So if you look at the other curve that’s on this graph this is just a reminder that says, those early decisions, you make a number of decisions that really hem you in for the future of the execution of the project. If those decisions are good, you’re on a really good trajectory. If those decisions are not quite as good, you might not

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be on quite as good on trajectory.

So how do we develop a project budget? Because a lot of this module is all about controls, project controls. And financial controls and schedule controls are really important elements to that. So let’s talk for a few moments about developing the project budget. Actually the developing of the project budget starts at the very beginning of the lifecycle of the project, when you start to develop that work breakdown structure. Remember back to when we described the work breakdown structure. That leads to the identification of the tasks in the project.

When you identify each of the tasks, you’re identifying the amount of work that needs to be done. You’re also including in that identification what kinds of people, and the number of them that will be needed to do it. What materials you will need to do it, as well as what facilities will be necessary. Maybe what subcontractors will be required.

So this will actually provide quite a lot of input to what the budget is going to look like. We take those tasks and we translate those into a resource-feasible schedule over time. Once we have that resource-feasible schedule we can now estimate what the planned budget is going to be, or the budget at completion. How much it will cost to do the entire project.

This is called bottom-up budgeting. There’s a another idea that had developed a budget for a project it’s more of a top down structure. And this sort of a structure assumes that the managers actually know how much the project should cost and then they allocate money downwards to each of the tasks. So those are the two kind of competing ideas of how you can think of building up a

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project budget.

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Top-Down or Bottom-Up? Discussion topic:

Professor Nozick discussed two methods of deriving a project budget: “top-down” and “bottom-up.” Which of these do you prefer?

Create a post in which you make a case for the method you use more frequently, and explain what you see as the benefits of using that method.

Instructions:

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Watch: Understanding “Planned Cost”

Using your work breakdown structure, you can develop planned costs for your project. These may end up being different than the actual costs that will be incurred. Professor Nozick will explain how to develop planned costs and why they may vary from the actual.

Transcript

Realized cost or actual cost are the funds spent doing the actual work. Before we execute the project, we develop what we call planned costs. It’s what we expect to spend based on the work breakdown structure, and the resulting project, resource constraint project schedule. Why are actual costs and the planned costs different sometimes? They’re often different, because oftentimes there’s a task, or many tasks, that don’t come in exactly as we anticipated for costs.

For instance, on a particular task, additional staff may become necessary, because the work is harder than we anticipated. Or we need some extra material, because there’s more waste in the process than we anticipated. On the other side, it could be that the work turns out to be easier on a particular task. And so less staff and less time is needed, and in fact the task costs less. The planned cost for that task are actually higher than the actual cost turns out to be.

Lets go through the idea of how to develop planned costs for a project, through using this example. So, in this example we have six activities and we have two resources available, one of type A

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and one of type B, and they are available through the entire course of the project, however, long that may turn out to be. So, when we look at the project network there is an activity between, which is drawn in the activity network that connects node one with node two. That activity takes nine time periods to execute. It takes one unit of resource A the entire time it’s active.

Similarly the activity that’s represented by the arc that connects node two with node three, that takes three time periods to execute and it takes one unit of resource B over each of those three periods. Using the project network and our resource constraints, that is we only have one unit of resource A and one unit of resource B available continuously throughout the entire project, we can develop the resource loaded schedule, and this will tell us how long the project will take to execute. It also tells us what the critical sequence of activities are.

So in this case it turns out that the activity from node one to node two, from node two to node three, from node three to node six, and from node five to node six, that’s the critical sequence. Notice it’s not just a critical path, it’s actually a critical sequence of activities because we have resource constraints.

The longest path through the project is not sufficient to describe how long the project will in fact take to do. Now we need to associate with each of the resources a cost, because we now know when each resource will be active, and for how long. And we’re going to make the assumption that when the resource is not working on this activity, this project, they will be doing something else and therefore no cost is billed to the project.

Okay. So suppose resource A cost $5000 per period of use and

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resource B cost $3000 per period of resource use. In the first time period, we have one activity which is active, that is the activity from one to two, because the activity from one to four can’t start because we only have one unit of resource A available. And we’re going to assign it to the task that connects nodes one and node two. And that will cost us $5000 per time period.

So in the first time period, the second time period, all the way through to the ninth time period, We’re going to spend $5000 per period. And you can see by the table that we can just add up across the time periods all of the costs, and we can figure out what the budget at completion will be. In this case, it’s $159,000 to complete this project. And you can create a graph of that cumulative dollar spent, and that’s your planned cost over time. And that’s an important element for project controls. That’s going to be the amount of money you’ll expect to spend in that spending profile over time.

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Watch: Understanding “Actual Cost”

The planned costs were based on the work breakdown structure. The realized costs or actual costs are the funds spent doing the actual work. Why not just track spending? Why do you need to forecast a planned cost and compare it to the actual cost? Professor Nozick explains.

Transcript

So at the beginning of the project, once the work breakdown structure has been completed, and a resource constraint project schedule has been identified, we now know we can estimate the cost of the project over its duration. A full spend plan. That’s the planned cost of the project. And let’s go back to our example we had a moment ago, there are six activities.

We have two resources, type A and type B, we have one unit of each, across, available to us whenever we need them. But we only pay for them whenever we’re using them across the planning horizon. From that project network and our resource constraints we can create the resource loaded schedule, and we can identify the planned costs. Now, actual costs, as the project proceeds the actual costs may not be exactly the planned costs. They may be different.

So let’s go through an example of this and look at what happens when they are different, or what can happen. So suppose we’re in the execution of the project and the time period is 17. And we’re on a particular step in the task that connects node three with node six.

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and it turns out that that step is substantially harder than we thought. In fact, it’s so hard that now we’re at the end of time period 22 and that activity is just completed. Task three to six is, the activity that connects nodes three with six is finished, but it’s now time period 22, that’s not what we were thinking.

So now we have to update our schedule, and in fact our project schedule goes from thinking that we’re going to be at 27 time periods to finish, now we’re actually at 32. We’ve had to slide out our schedule, because something came up, it was harder than we thought. So guess what? Our anticipated cost and our actual cost are not going to line up.

So if we think about what our budget looked like as of time period 22, and what our actual costs turned out to be as of time period 22, we can graph that. We can look at the difference. And we’re now tracking costs. We have planned costs, we have actual costs. As of 22 the costs actually look the same, planned and actual.

But we know something’s wrong, because we know that activity took longer than we thought, but it’s not showing up because we’ve elongated the activity. We’ve simply slid out another activity that on per period basis cost the same amount as this one. So in terms of actual cost, we’re still tracking planned, but we’re off. And you can see we’re going to spend more in the end.

So I haven’t updated planned cost in this graph, but you can see we’re still tracking planned. So there’s no signal. This is a problem. Why is there no signal? It’s because of how the project schedule looks. Okay, we haven’t really integrated the fact that our project schedule has slipped with our cost estimation. And that’s an

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important comment, okay, and that’s really where this whole area of earned value comes in, and planned value. And that’s what we’ll talk about over the next sequence of modules, is how to address that shortcoming. so that when we do project controls we can understand that in fact we are behind when we are behind.

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Watch: Using “Planned Value”

We’ve now looked at forecasting project costs and comparing what was expected to what it actually cost to complete the project, or part of the project. By completing tasks on the project network, you’re also creating value. Professor Nozick discusses what we mean by value in this context, and how it informs project management work.

Transcript

So over the course of the project, we’re not just incurring costs, we’re completing work. In fact, we’re creating value, okay, we’re earning value. So over the course of the project we will create earned value. Before the project starts we’ll create a plan for how we’re going to earn that value over time.

So the earned value or planned value, planned value is actually the escalation in the value of the work you’ve completed over the course of the project. And this is computable using the project schedule. The planned value of the project over time, can be computed using the project schedule, and it’s really analogous to the planned costs. Because the value should rise as the costs rise. And in fact it becomes the authorized budget.

So, if you go back to our example with our project network, and our resource loaded project network through our project schedule, and go back and look at value by task. Originally we talked in terms of cost by task. So if you think about that first activity, the one that

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connects node one with node two, that takes nine periods to do, and takes a unit of resource A during each period that it’s active. Over the course of each of those nine periods, we’re going to get $5,000 worth of value out of executing that activity. It’s also going to be the cost to execute that activity. So if we do it all perfectly on time, by the end of that activity we will have incurred the full project task cost. If it happens perfectly on time, we’ll also have incurred exactly the same in project value.

So, we can now plan the value by each activity that gets done, and then we can create that plan value over the course of the entire project. And at least do an estimate that the planned value for the project is $159,000, just like the planned cost, and it has the escalation over time that’s parallel to the planned costs. But now we can track the actual performance in cost terms and in schedule terms. In cost terms, using planned cost versus actual. And in schedule, planned value versus earned value. How much we really do earn in each period.

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Watch: Determining “Earned Value”

When the team completes work against the project plan, that’s earning value for the organization. Now you will examine what is meant by “earned value,” and how you can calculate earned value on your projects. This will be an important part of monitoring and control.

Transcript

So earned value is the estimated value of all the work that’s been completed. As the project is executed, work gets done and costs are incurred. So the project that we’re in the midst of completing, there’s value associated with the work we’ve already done, or the earned value. And then there’s also the actual costs that have been incurred. So let’s go back to our example. We have our sixth activity example, and we also have our project network. Our resource constrained project schedule comes out of that, because remember again, we have one unit of A available all the time And one unit of B.

So suppose we’re executing this project. We’re stepping right along, and now it’s November 30, 2016. We have finished activity one to two, and we have finished activity one to four. And we’re in the process of trying to complete activity two to three. And all was going fine. Our planned value and our earned value, our cost, they’re right in line. Everything is going as expected. Uh-oh, it’s December 1st, the very beginning of December. And we find out

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we made a mistake. And the process of executing activity two, three. We weren’t finished with it yet, we had done two of the periods, we thought, two months of it, but it looks like we’re going to need to redo it. So that means we’re now going to have a variance from what we planned on.

Okay, we’re going to need to update our resource constrained project schedule. So it looks like activity 2-3 is going to take another three months. So we have two months of schedule slip. We had done two months but the work there is going to need to be reworked completely for one reason or another, and now we’re going to need three more months.

So now our project is not going to finish when we though it will. It’s going to slip by two months. Well now our earned value as of December 1st is not our planned value, because we’ve lost effectively, $6,000 of value, right? Because we have to redo that piece of work.

Okay, our actual costs are now above our earned value. And you might notice in this figure, I’ve also just forecasted out as if the rest of the project will continue the way we anticipated from where we are December 1st. There will be a number of different ways to think about how to forecast future costs, and we’ll talk about them a little bit later. But this is one mechanism to do it. To assume it will execute as we anticipate it in the original schedule, just shifted by two months.

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Course Project, Part Two: Calculate Planned Cost, Actual Cost, and Earned Value

In this part of the course project, you will work with an actual budget and practice working with planned cost, actual cost, and earned value. As you have seen in this module, these measurements will help you make sure that your project is performing to expectations (or implement corrective measures if it’s not).

Completion of this project is a course requirement.

Instructions:

If you have not done so already, download the “Using Earned Value Management for Project Managers” course project, if you have not already done so. Complete Part Two. Save your work. You will not submit your work now. You will submit your completed project at the end of the course for instructor review and credit.

Before you begin:

Review the grading rubric for this assignment. Please review eCornell’s policy regarding plagiarism.

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Module Wrap-up: Calculate Planned Cost, Actual Cost, and Earned Value

Budgets, schedules, status, milestones: all of these are part of the standard toolkit of project managers. Now you have examined some of the ways in which you can implement better project controls by comparing your plans to actual work accomplished and monitoring for variances. You have define “earned value,” and you have explored how to calculate planned cost, actual cost, and earned value. You have also practiced using this information to your benefit to inform better project-mangement decisions.

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Module 3: Forecast Project Cost 1. Module Introduction: Forecast Project Cost 2. Watch: Understanding Schedule Variance 3. Watch: Understanding Cost Variance 4. Watch: Examine the Schedule Performance Index 5. Watch: Examine the the Cost Performance Index 6. Watch: SPI and CPI: Why Do You Need Both? 7. Examine SPI and CPI 8. Watch: How Variances and Performances Indexes are Helpful 9. Watch: Forecasting Cost Method 1, Using Earned Value 10. Watch: Forecasting Cost Method 2, Using CPI 11. Course Project, Part Three: Forecasting Project Cost 12. Module Wrap-up: Forecast Project Cost 13. Read: Thank You and Farewell

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Module Introduction: Forecast Project Cost

You have examined how to assess the performance of the project at a given point in time. That’s not all there is to project control. You will also need to be able to say something about how

you think the cost will evolve over the rest of the project. You’re gathering information as the project executes. Because the project team is doing activities and the organization is paying for them, you are earning value. That information is useful in making estimates of what it will take to go from the moment where you are right now in a project execution all the way to the end.

So, suppose you’re in a specific point in the project execution, and you now need an updated forecast to final costs. How do you make that forecast? You have actual cost that you’ve incurred from the beginning of the project until now, but how do you go about constructing the forecast, which will take those actual costs and then marry them in some way with what your estimate is of what’s coming to get a final budget at completion or a final cost at the end? There are many options available. In this module, you will examine different ways of forecasting cost.

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Watch: Understanding Schedule Variance

By comparing how much work you had planned to get done versus how much has actually been accomplished, you can derive a very helpful measure of performance and efficiency.

Try it: As of today, your project’s earned value is $250,000 and the planned earned value is $300,000.

Transcript

Schedule variance is a very useful way to understand how we are performing in terms of accomplishing work, compared to what we plan to accomplish. So, schedule variance is the difference between earned value and planned earned value, as what we have actually achieved, versus what we planned on achieving. So it’s a straight forward way to compare progress with the plan.

So it’s useful to notice that if we use the formula schedule variance equals earned value minus planned earned value, that value can either be positive, negative, or zero. If it’s positive it means we’ve done more work, our earned value is higher than what we planned to have earned. We’re ahead, we’re ahead of schedule. If it’s negative it means we’ve learned less than we expected to at this point in the project, or we’re behind schedule. And if it’s zero we’re exactly on schedule.

So let’s go to back to our example and let’s do a computation of

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schedule variance. So in our example, we were part way through doing that one activity, one to four, and we, no sorry, two to three, and we realized that we were going to have to redo two months worth of work. Okay, and we created a new schedule.

So at this moment, it’s December 1st. Our planned value at this point was $61,000. We expected to have finished two activities, and be two months into the next one. But in fact we lost two months of work which costs us $6,000. Our actual earned value was only $55,000. Our planned value was $61,000. So 55,000 minus 61,000 is negative 6,000. Our schedule variance is negative 6,000. We’re behind schedule and this tells us by how much.

What does this mean? Are you on schedule?

The difference between earned value ($250,000) and planned earned value ($300,000) is -$50,000.

It’s negative, so you have earned less than you anticipated earning. You are behind schedule.

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Watch: Understanding Cost Variance

As Professor Nozick explains here, you can calculate the difference between the costs you have actually incurred on the project versus the amount you had planned on incurring. You can measure that difference and attach a dollar value to it. Doing so will help you control costs and scope, and you can see why: if the variance between planned and actual becomes significant, you may decide you need to implement corrective actions.

As you have seen, schedule and cost variance taken together are very useful measures of project progress. They give you insight into when corrected actions are needed. If both are positive or zero, your project is on track.

If either or both are negative, there may be a need for corrective action. Of course, it’s going to depend on how negative they are, how big the differences are, in order to gauge the magnitude of the corrective action that’s going to be necessary. But they provide a very coherent way to understand how you’re performing with respect to schedule and how you’re performing with respect to costs.

Transcript

So in parallel to schedule variance, we can also compute a cost variance. So cost variance compares actual cost to planned cost. So what we compute cost variance as earned value minus actual

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cost. So earned value is how much work we’ve actually achieved, and actual cost is what it cost us to do it. If this turns out to be a positive value, we’re under budget because we’ve done more work or we’ve accomplished more than we spent. If it’s negative, it means we’re over budget. It’s costing us more to do the work we anticipated to do. And 0 means that we’re exactly on budget. So if we go back to our old example, and activity 2-3 will take another three months, we have a two month schedule slip.

In terms of cost variance we’re also $6,000 off. Our earned value is $55,000, our actual cost is $61,000. Our cost variance is $55,000 minus $61,000, or minus $6,000. Because it cost us, now why are they identical. In this case they’re identical because that two, those two months we had to throw out of that activity 2-3, they actually came in exactly on budget for those two months. So our actual cost and what we need to do to where we are in our project, the cost variance and the schedule variance are identical. For that reason. If it cost us extra money to do those two months that we had to toss away, they wouldn’t be the same.

So as an example, suppose that in October 2016 and in a November 2016, it took us $10,000 to do those two months of activity that connects nodes two and three. What happens then? What’s the calculation look like then? Well then as of December 1, we still have a value of $55,000 no change. But our cost would actually be 65,000 our actual cost as opposed to the 61,000. The 61,000 assumed that it cost us $3,000 a month for that resource B, but in this case if it costs us 10,000 total, it’s actually costing us $5,000 a month. It’s an extra $4,000. Our actual costs are

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$65,000. So in that case, you compute cost variance as $55,000 minus $65,000. And our cost variance is $10,000. It’s now lager than our scheduled variance.

Try it: As of today, your project’s earned value is $50,000 and the actual cost is $127,312.

What does this mean? Are you within budget?

The difference between earned value ($50,000) and actual costs incurred ($127,312) is -$77,312.

It’s negative, so it’s costing you more to do the work than you anticipated. You are over budget.

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Watch: Examine the Schedule Performance Index

Now Professor Nozick will lead you on an exploration of the schedule performance index, which allows you to calculate schedule efficiency by measuring earned value over planned value at any given point in time.

Transcript

Let’s talk a little bit about schedule and cost performance indexes. Both of this indexes convey information about the level of efficiency in the execution of the project. The schedule performance index does so in terms of schedule, or is a measure of schedule efficiency. The cost performances index does so in terms of cost, so it’s a measure of cost efficiency. Let’s start with the schedule performance index. So the schedule performance index is actually earned value over planned value. Okay, and notice we will measure that at a specific point in time. So over the course of the project, you can always compute the schedule performance index.

Okay, you’ll notice that ratio could be greater than one, less than one or exactly one. If it’s exactly one, what you’ve earned in terms of value at this point in the project, is what you’ve planned to have earned as of this point in the project. And so you’re exactly on schedule. If earned value is higher than what you’ve planned to

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earn by this point in the project, you’re actually ahead of schedule. And if earned, and the value is then greater than one of SPI. If earned value is less than planned value, SPI is less than one, and you’re behind schedule.

So let’s go back to our favorite example. Let’s go back to our December 1st of 2016 when you noticed all of activity 2-3 needs to be redone. So two months of work is not going to be useful. We can then compute the schedule performance index. Remember, we already computed the schedule variance. If we assume that those two months of activity 2-3 cost us $6,0000, 3,000 a month. What we spent is then $61,000. We would have planned to spend by that point in time on the project $61,000 but we haven’t earned 61,000 in value. We’ve only earned 55,000 because that activity those two months has not created value for us.

So the schedule variance is $6,000 and it’s negative. And the schedule performance index is actually 55,000, the earned value divided by the planned value which is 61,000. So it’s about .9. And we’re behind schedule, notice both the variance calculations is negative and the schedule performance index is less than one, indicating that we’re behind schedule.

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Watch: Examine the the Cost Performance Index

So now you will examine more closely the cost performance index. This asks you to examine the ratio between earned value and actual costs, and what conclusions about project performance and efficiency you can draw from that. Professor Nozick explains more.

Transcript

Now let’s talk a little bit about the cost performance index. This is parallel to the schedule performance index we just spoke about. But for the cost performance index, the focus is on the ratio between earned value and actual costs. When this ratio is greater than one, we’re actually under budget, we’ve done more work than what it costs us to do the work.

Okay, more work has happened than we had anticipated and then work turned out to be cheaper. Less than one implies that in fact the project is earning less than the costs are incurred. So we’re going to be over budget. And equal to one means we’re right on track. Our earning and spending is right in line exactly with the plan.

So let’s do an example of cost performance index. Let’s go back to our example and it’s now December 1st, 2016, and we’ve gotten the bad news that that activity 2-3 needs to be redone. And it gets worse, in fact, we look at the actuals for costs, and it turns out that in October of 2016 and November of 2016, a total of $10,000 was

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spent on task two to three, instead of the 6000 we had planned. So as of December 1, 2016, we’ve earned 55,000 our actual cost is 65,000. Our cost variance is negative 10,000. We’re over budget. Our scheduled variance is still the negative $6000. Our cost performance index is 55,000 divided by 65,000 or 0.846. We’re over budget, and we can see that both from the variance calculation and from the cost performance index calculation.

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Watch: SPI and CPI: Why Do You Need Both?

The schedule performance index and the cost performance index are both helpful. They serve different purposes and complement each other, as Professor Nozick explains.

Transcript

So you might be curious now, why do we need to have both variances and indexes? So we talked about a cost variance and a schedule variance. We talked about a schedule performance index and a cost performance index. Can we just have one and not the other? Well they serve different purposes and they’re complimentary. So the variances give in dollar value whether or not you’re above or behind schedule, okay?

Or whether you’re doing well or you have deficiencies, cost or schedule. Indexes also indicate the status of a project, but one of the nice parts of an index is it’s normalized. So over the course of the project, the dollar value magnitudes may mean more or less for the variance calculations.

When you move across the project, in normalized terms, those values don’t grow over time. They’re still supposed to be a little bit above one, above one, beneath one, zero as opposed to growing in different kinds of scales for the variance calculations.

The same as if you go across projects and you want to compare performance across projects. The projects might have very different scopes, very different scales, so the variances are somehow hard to compare, but the performance indexes are not

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as hard to compare because they’re normalized. Also it’s a little easier to understand how to use the performance indexes when you want to forecast future cost. Because when we start doing the project, we have a budget at completion, we have what we expect to spend on the project.

As we go through the project, we gather information on the execution of the project and we may need to update that forecast, update that estimate, creating a new forecast of costs. And the performance index is one piece of data we can use those kinds of measures to update that budget at completion value.

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Examine SPI and CPI

Answer the following questions to check your understanding of the concepts presented in this module.

You must achieve a score of 100% on this quiz to complete the course. You may take it as many times as needed to achieve that score.

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Watch: How Variances and Performances Indexes are Helpful

Part of your project-management effort involves being able to make good predictions about costs going forward. You need to be able to predict with some accuracy how much more it will cost to complete the project, as Professor Nozick explains.

Transcript

So we’ve talked quite a bit about how to assess the performance of the project at a given point in time. That’s not all there is to project control. We’ll also need to be able to say something about how we think the cost will evolve over the rest of the project. We’re gathering information as the project executes, because we’re doing activities, we’re paying for them, we are earning value.

That information is useful in making estimates of what it will take to go from the moment we are right now in a project execution all the way to the end. So, suppose we’re in a specific point in the project execution, and we now need an updated forecast to final costs. How do we make that forecast? We have actual cost that we’ve incurred from the beginning of the project until now, we should be using it.

So how do we go about constructing the forecast, which will take those actual costs and then marry them in some way with what our estimate of what’s coming, to get a final budget at completion or a

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final cost at the end. So there’s some choices about how to do it. In fact, there are many choices about how to do it. I’m just going to give some illustrative ones, so we’ll go through three ways of doing it. All of them have pluses and minuses. The first one we’ll talk about is, suppose we assume that the rest of the work will be executed exactly as we planned in the original plan. All we really have to do then is to integrate the actual cost we’ve incurred up till now.

Another mechanism to create a forecast would be to use CPI, the cost performance index, to somehow scale the cost of the remaining work, based on the cost efficiency, we have been able to achieve up to this point in time in the project.

We could also integrate into that estimate the scheduled performance index… and the cost performance index, to also scale the remaining costs, and that’s the basis of the third method. But if you look out in the literature, you’ll find there’s a number of ways to build these forecasts, and I’m just going to talk about three of them.

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Watch: Forecasting Cost Method 1, Using Earned Value

The first method you will examine uses earned value. Suppose you assume that the rest of the work will be executed exactly as you had planned in the original plan. All you really have to do to forecast cost is to integrate the actual cost you’ve incurred up until now.

Note to students: Professor Nozick misspoke at 2:04. She said we “spent 55,000.” Actually, we spent 61,000 but only produced 55,000 of value. The calculations are correct.

Transcript

So, let’s do an example of forecasting cost. We’re at some point in the execution of a project. We have actual cost and now we need to make an updated estimate for how much it’s going to cost to complete the project. One mechanism to do that is to assume that all the remaining activities will be done consistent with the baseline schedule, and the baseline costs. All we really have to do then is to integrate the actual costs for the part of the project that’s already done, to the estimate for the remaining activities.

So let’s do that in the context of our six activity example. We had a project network with six activities. We had a resource loaded schedule. We thought we would finish as of the end of April 2018.

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As of November 30th, 2016 we were humming along. Two activities were complete and we were two months into activity 2-3. And then we noticed on December 1st we had a problem, and all of that activity 2-3 needed to be redone.

So we had to update our project schedule and in fact it meant that we would have two months of schedule slip, we’d finish in June of 2018 instead of April. And we now have actual costs. The actual costs take us through December 1st. We spent $61,000. We did activities 1-2 and 1-4. We had started 2-3 and had to eliminate all of that work.

So by December 1st, 2016 we spent $61,000. We had only $55,000 of earned value at that point in time because only the two activities, the work was done to the specification necessary. At the beginning of the project, we thought the entire project would cost us $159,000. What we have left is $104,000 worth of work remaining.

We’ve spent 55,000, so our final estimate is $165,000, and we have a $6,000 cost variance at the end. So that’s our new forecast for the cost of this project. It went up from 159,000 to 165,000, that’s the result of having to redo the first two months of activity 2-3. And we had already spent $6,000 for the work, but we need to do it again. And the spend plan is going to go longer this time. It’s going to go out to the end of the project which is now two months longer.

So let’s talk a little bit about this sort of a method. What are the assumptions behind it? So when can you take the actual cost you’ve already incurred and simply then use the baseline cost for all the remaining activity that you haven’t done? Well this is a very reasonable thing, if you feel like the thing that delayed the past

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work was really confined to that work only. If you think it’s going to bubble through to new activities that you haven’t done, well then you’re going to need to inflate up those costs in one way or another if it’s actually a delay.

In our example, it’s a cost overrun, and it’s also a delay. It could be that you’re ahead of schedule and, in fact, it’s cost you less than you expect, and your new budget at completion is lower. If you’re going to use the old cost, it means that you don’t believe what happened to help you at the beginning is going to continue to persist through the rest of the project. As long as you believe that’s true, this is a very logical method to use to integrate, to create a forecast.

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Watch: Forecasting Cost Method 2, Using CPI

Another mechanism to create a forecast would be to use the cost performance index to somehow scale the cost of the remaining work, based on the cost efficiency, you have been able to achieve up to this point in time in the project. You could also integrate into that estimate the scheduled performance index.

Transcript

So in the previous discussion of how to estimate costs, we simply took remaining cost on the project. We took the old schedule, the planned schedule for the activities that hadn’t been done and simply grabbed their costs.

We added that to the actual cost to create the budget at completion, what we expect the entire project to cost us. We didn’t translate any impacts that actual cost turned out to be from what we planned them to be into impacts on later activity costs.

We did that under the assumption that whatever happened in the beginning to make the cost higher or lower than what we expected, was really confined to that part of the project and wouldn’t leak over to the new parts of the project, the ones we haven’t done yet. You could make an alternative argument in many cases, that in fact whatever has happened in the past is reflective of the future.

So whatever inefficiencies we had with respect to cost previously will haunt us for the rest of the project or whatever breaks we had with respect to costs will actually will see more benefits later on of

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that same character. So if we believe that that is actually true, we can use the cost performance index to scale the cost of the remaining work. And use that to estimate the cost of the future work that we haven’t done yet.

We wed that to the actual cost we’ve already incurred, we now have a forecast for future cost, or for total cost of the project. So just to remind you, CPI or Cost Performance Index is earned value divided by actual cost. So if we were to use this method, we could take the entire planned cost of the project and divide by our CPI, and that would give us an estimate of the final cost for the project.

Okay, that amounts to taking planned cost, multiplying by actual cost, and then dividing by earned value. Again, this is going to assume that whatever cost based efficiency we’ve been experiencing in the past we’ll experience in the future.

So if we go back to our old example, we had $159,000 project, that’s what we expected it to cost us. As of December 1, 2016 We had spent $61,000, we had gotten $55,000 in value. We had a CPI of .902 approximately.

So if you take 159,000 and divide it by .0902 You get about $176,270. This amounts to us forecasting that there will be a cost overrun in the vicinity of $17,000. That just takes the efficiency we’ve seen to date, in terms of our project, and in terms of cost, and projects the same one into the future.

So as long as you believe past performance is reflective of future performance, this is a very logical way to do it, but it’s focused on cost overrun, or cost performance, cost efficiency. We haven’t integrated anything about schedule efficiency in here.

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Course Project, Part Three: Forecasting Project Cost

Now you will use the methods presented in this module to practice forecasting cost. This is a critical part of earned value management. Having the ability to forecast cost effectively will help you deliver better results for your organization on your projects.

Completion of this project is a course requirement.

Instructions:

If you have not already done so, download the “Using Earned Value Management for Project Managers” course project. Complete Part Three. Save your work. Review your completed course project, then click the Submit Assignment button on this page to attach your course project document and send it to your instructor for evaluation and credit.

Before you begin:

Review the grading rubric for this assignment. Please review eCornell’s policy regarding plagiarism.

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Module Wrap-up: Forecast Project Cost

Project control involves more than just monitoring efforts and tracking costs on an ongoing basis. You also need to be able to gather critical information throughout execution so that you can accurately predict costs going forward. You’ll use earned value to help make those predictions. You have now explored how to create an updated forecast of final costs.

Constructing the forecast will take the actual project costs and marry them in some way with your estimate of what’s coming to get a final budget at completion or a final cost at the end. There are many options available to project managers to create these estimates of final costs, and in this module, you examined some of them.

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CEPM504: Using Earned Value Management for Project Managers Cornell University

Linda K. Nozick Professor and Director

Civil and Environmental Engineering Cornell University

Congratulations on completing “Using Earned Value Management for Project Managers.” I hope you now feel more comfortable using different methods to forecast cost, calculate earned value and both the schedule and cost performance index, and use these tools to help implement better project controls.

I hope you are in a better position to use effective tools and strategies to serve your projects and your organization.

From all of us at Cornell University and eCornell, thank you for participating in this course.

Read: Thank You and Farewell

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Sincerely,

Linda K. Nozick

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Table Of Contents
Meet Your Class
Module 1: Implement Project Controls through Meetings
Module 2: Calculate Planned Cost, Actual Cost, and Earned Value
Module 3: Forecast Project Cost

CEPM502: Planning and Managing Resources

What you’ll do

Use strategies to deal with overly optimistic estimates Assess the appropriate considerations and project attributes in deciding how much to level a schedule Perform resource leveling Identify critical resources for a project Make sound decisions as to whether (or not) to crash specific activities or to fast-track them to support schedule compression analysis Use strategies for mitigating scope-, hope-, effort- and team-member scope creep

Course Description

Research shows that a high percentage of projects take significantly longer than expected and cost

more than anticipated. Moreover, if you ask people for an estimate of how long a task will take them to complete, their estimate will usually be overly optimistic. Sometimes, if you bring in extra people to try to help with a task, that actually slows down progress

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instead of accelerating it. Why is this? And what can you do about it? You will examine these questions in this course, with Linda K. Nozick, Professor and Director of Civil and Environmental Engineering at Cornell University. You will also identify strategies to integrate resource availability constraints into project planning, scheduling, and control.

This course is designed for seasoned project managers who seek better practical results to align available resources with tasks and bring activities to completion on time. Students will examine compression strategies to help bring a project that’s running late back on track and will explore how to handle common types of project creep, such as customer requests that require extra time and team members who decide to invest extra effort in a task.

This course addresses formal project management mechanisms with particular emphasis on the human element: what can project managers do to resolve issues brought about in the normal course of working with customers, team members, and stakeholders?

Linda K. Nozick Professor and Director of Civil and Environmental Engineering College of Engineering, Cornell University

Linda K. Nozick is Professor and Director of Civil and Environmental Engineering at Cornell University. She is a past Director of the College Program in Systems Engineering, a

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program she co-founded. She has been the recipient of several awards, including a CAREER award from the National Science Foundation and a Presidential Early Career Award for Scientists and Engineers from President Clinton for “the development of innovative solutions to problems associated with the transportation of hazardous waste.”

She has authored over 60 peer-reviewed publications, many focused on transportation, the movement of hazardous materials and the modeling of critical infrastructure systems.

She has been an associate editor for Naval Research Logistics and a member of the editorial board of Transportation Research Part A. She has served on two National Academy Committees to advise the US Department of Energy on renewal of their infrastructure.

During the 1998-1999 academic year, she was a Visiting Associate Professor in the Operations Research Department at the Naval Postgraduate School in Monterey, California. Professor Nozick holds a B.S. in Systems Analysis and Engineering from the George Washington University and an M.S.E and Ph.D. in Systems Engineering from the University of Pennsylvania.

Author Welcome

So, I’m glad you’ve decided to join us for this course. This course will help you understand the connection between project schedules and resources and also some of the social issues— some of the behavioral issues that surround humans as part of projects.

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Table of Contents

Module 1: Flex Schedules and Resources to Your Advantage

1. Module Introduction: Flex Schedules and Resources to Your Advantage

2. Watch: Schedules and Why They Matter 3. Watch: Resources and Schedules 4. Scheduling Challenges 5. Watch: Options When You Level a Schedule 6. Watch: How Much to Level? 7. Watch: The Results of Leveling 8. Course Project, Part One: Flexing Schedules and Resources

to Your Advantage 9. Module Wrap-up: Flex Schedules and Resources to Your

Advantage

Module 2: Use Critical Project Management Tools

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6. Watch: Fast-Tracking and Schedule Compression 7. Watch: Crashing 8. Tool: The Fast-Tracking and Crashing Worksheet 9. Course Project, Part Two: Using Critical Project Management

Tools 10. Module Wrap-up: Use Critical Project Management Tools

Module 3: Manage Scope, Creep, and the Unknown

1. Module Introduction: Manage Scope, the Creeps, and the Unknown

2. Read: Managing the Unknown 3. Watch: The Planning Fallacy 4. Tool: Address the Planning Fallacy 5. Watch: Brooks’ Law 6. Read: Scope-, Hope-, Effort-, and Team-Member-Scope

Creep 7. Managing the Creeps 8. Course Project, Part Three: Managing Creep, Scope, and the

Unknown 9. Module Wrap-up: Manage Scope, the Creeps, and the

Unknown 10. Read: Thank You and Farewell

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Module 1: Flex Schedules and Resources to Your Advantage

1. Module Introduction: Flex Schedules and Resources to Your Advantage

to Your Advantage 9. Module Wrap-up: Flex Schedules and Resources to Your

Advantage

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Module Introduction: Flex Schedules and Resources to Your Advantage

In the final analysis, project management is very complex. It requires careful monitoring and control of the details—it’s not easy; that’s why a high percentage of projects run longer than anticipated and cost more than planned. Customers will

change their minds about what they want, tasks will take longer than people estimated, and skilled resources won’t always be available for your project when you thought they would. For a seasoned project manager working with an experienced team, however, are schedules even necessary? People on your team know how to do their jobs, after all; you have a series of identified tasks, and team members can be trusted to work on them as expediently as possible.

In this module, Professor Nozick explains why the advantages for project managers of working with schedules cannot be overstated. This module also allows you to examine strategies for working with schedules—aligning and realigning available resources to tasks—and using different options for leveling schedules so you can meet your critical goal:

bringing projects to completion on time and on budget. You will have an opportunity to discuss scheduling challenges with your peers, and you will complete part one of your course project, in which you leverage the lessons of past experience for improved future performance.

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Watch: Schedules and Why They Matter

If you’re an experienced project manager, you know all the tasks that need to get done and you have assigned resources to tasks. Is it necessary to create project schedules? In this video, Professor Nozick makes a practical case for the benefits of using schedules to run projects effectively.

Transcript

So, why is a project schedule needed? Why not just create a list of tasks and assign them and be done with it? Well, in reality, a project schedule is really much, much more than an assignment of people to tasks. It certainly includes the information from the work breakdown structure—namely, a task list and a hierarchy between those tasks—but that’s not all that it includes.

It also includes task duration information, it gives information about the dependencies between tasks—that is, what tasks need to be completed before other ones can begin. And this is critical to running the project effectively.

Also, it puts a timeline to tasks. That helps us understand how to assign resources to those tasks so that the project moves smoothly. A project timeline is absolutely critical to communicating with all stakeholders when you’re running the project; not just the client, not just the program manager— who the project manager reports to— but also team members. So that timeline is very, very important and it’s the basis of many discussions as the project evolves.

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It’s also a critical tracking tool for the progress of the project. As tasks complete on the project, you’ll update your project schedule. As tasks lag behind, it’ll be your visibility into how to address those delays. So, the idea that this project schedule is a living document and changes as the project executes— that’s very, very important. Without a project schedule, it’s virtually impossible to understand what the impact of a delay on one task will mean to the other tasks on the project and, therefore, into the resource schedule that you have in mind, okay?

And that you’ve explicitly made in the project schedule. It also gives you a good mechanism to track the expenses that have been incurred on the project, against the work that’s actually been completed on the project. That’s a critical part of controlling your project. So, an important question that comes up very frequently is, well, do all projects really need a schedule or is that really just for big projects or complex projects? What if I have a small project?

Well, the answer to that question is really, no matter what the size of the project is, you’re going to need a project schedule. Part of that is just to make sure everyone’s on the same page. The good news in terms of project scheduling—if it’s a small project— is, the effort that you have to put in to create that project and to update that project, well, it’s proportionately easier if the project is smaller rather than larger.

But there’s no way to really get around having a project schedule and really being able to—at the same time— control your project. Project managers, project team members with good experience, really do understand the importance of a project schedule.

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So, there’s really no issue of understanding why this is important among many of your stakeholders. However, as new members, young members, move on to a team, they may have less of an understanding of why it’s so important to have a project schedule and why it’s so important for them to continually be communicating progress on their tasks so that the schedule can be updated. You just need to be sensitive to this and help bring them into the system of being a member—an effective member—of a project team.

That’s really the only moral to the story. You’ve got to be sensitive to where they’re coming from, but over time they will also learn the importance of a project schedule. And also the Gantt chart, which comes out of the project schedule— that’s going to be the basis of much communication as the project proceeds. And you’re not going to have a Gantt chart without a project schedule.

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Watch: Resources and Schedules

As you think about how to assign people to tasks, you need to consider complex variables, such as existing precedence constraints, which people are best suited to do the tasks at hand, and whether people have a steady flow of work.

Transcript

So, resources. Resources are the people and things that are needed to get the project done. Things can include a variety of items including materials— different kinds of materials— equipment, and facilities. When you think about people as resources, you have to think about their skills.

So, when you’re thinking about scheduling a project and then assigning resources — assigning people to some of the different activities—you have to think about what their intrinsic skills are that they will be bringing to the project and make sure it matches the tasks that you are assigning them to.

Also, the timing for each resource is critical to project management and program management. As the project manager, it is obvious why the timing of when you will need resources is important to you. You see your task schedule, you see the requirements for each of those tasks, and therefore, you see who you might need to do those activities.

If you’re the program manager you’re one level up in the organization, and you’re looking across a bunch of different projects and trying to figure out how your resources will be balanced across all of them. And, of course, that means that you

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care very deeply about what each of the project managers is doing with respect to their own activities and, therefore, with respect to each of the resources that they will use over the course of the project.

So, that brings up an important question. When you schedule tasks, often times there’s some leeway in how you’re going to schedule those tasks over time. Certainly you have to pay attention to resource requirements and availabilities, you have to pay attention to precedence constraints. But even within that, there’s often some judgment about how to actually sequence the activity.

So, here’s a example. In this case I have three activities. Activity A, which takes two time periods or two days to complete and requires two units of a resource. Activity B, it takes three days to complete and requires two units of a resource as well.

That means those two units of resources have to be available during the entire three periods, or three days, that the activity is active. And the final activity is activity C, that takes five days to complete and requires four people during the time that it’s active. Okay, so, one thought is to do this as a left-justified schedule. What does that mean? Well, left-justified means each activity is scheduled at its earliest possible time, given precedence constraints.

So, in this example, in fact, there are no precedence requirements. All three activities can start at the same time— at the very beginning of the project. That leads to a graph of resource use over time like the following. So, if you look at activity C, it starts in time period one— zero, at the very beginning of the project— ends

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in time period five, and has four people assigned to it throughout the entire duration. Activity B also starts at the beginning of the planning horizon. It’s active between—from the beginning of the planning horizon all the way to the end of day three. And it takes two people to use— two people for every period that it’s active.

And, finally, activity A, which takes two periods to do and requires two people the entire time it’s active. And, so, you can see that the maximum number of people I will need is eight. But notice that those eight people aren’t busy the entire five days. In fact, if you think of starting at time period day two, in fact, two people are now not needed for the rest of the project.

If you look at time period three for the remaining two days, there’s another two people that are also idle. Those people could be offered to the program manager for use on other projects, for example. An alternative schedule is the one where you do activity C starting at the very beginning of the planning horizon and activity A. A will then end at the end of the second day, and activity C will end at the end of the fifth day.

As of day two, you can now start activity B, because two people have been freed up from activity A. That brings the peak number of people that you need down from eight to six, and, in fact, now you can keep those six people busy the entire five days the project is active.

Now, there are some advantages to this. As a project manager, one of the most important things you can do is keep very good team members happy so they want to keep working for you in the future. They are happy when there are a very steady stream of work, they know what’s expected, and they enjoy it. When you

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move people around a lot they get less comfortable, okay? And they can get anxious. And, so, some of your better people may not want to live in a world that’s very tumultuous.

So, in some perspective, in fact, the second schedule is far better, because you’ve now got everybody busy on your project all the time, assuming the people that can do activity A are the same ones that can do activity B. That’s a very attractive idea.

So, as you think about assigning people to projects, think about it from the team members’ perspective and how will they feel about that schedule. A schedule which has them bouncing around a lot is not generally one that they’re going to enjoy very much. So, that’s an important thing to think about.

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Scheduling Challenges

Discussion topic:

Scheduling appropriately within a project or across projects, with changing resource availability and fluctuating needs, is a constant challenge for project managers. Create a post in which you respond to the following:

1. What do you find to be most challenging about scheduling? Offer 1-2 examples of why this is a difficult challenge in your experience.

2. What’s your experience with reallocating resources to fit project needs? Share 1-2 of your own ideas or best practices.

Instructions:

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Watch: Options When You Level a Schedule

Leveling a schedule, as Professor Nozick explains, means that you are being appropriately flexible to achieve an end goal: you’re realigning human resources to match scheduling demands.

Transcript

So, a resource level schedule is a schedule for which the supply of a resource over time matches the demand for that resource implied by the schedule. The process of adjusting a schedule to make this true is the process of leveling a schedule and it’s actually quite a complicated thing to do. For instance, up to now we’ve assumed that task durations are fixed.

This is not always true and this is one piece of the flexibility in leveling. For instance, sometimes the duration is fixed and you’re required to have a certain amount of resources applied in a particular way during that duration of that activity. There’s no choice.

For example, suppose your activity takes a certain task length time to do, maybe that’s five time periods or five days. And it takes five people applied evenly over those five days. So, those five people are busy with that activity all five days.

And it has to be applied exactly that way; those five people need to be available all five days that it’s active. That’s a very rigid way to run the task. And it could be that that’s required to do the task well. You could also have a fixed amount of resources that need to be applied to the task, but it doesn’t really matter how they’re applied. So, as an example, suppose it’s the second case— fixed resources are

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required, but it doesn’t matter how they’re applied.

Think of our activity which is five days in length, and requires, effectively, five people when it’s active, that is, 25 person days. Maybe it doesn’t matter how those 25 person days are accumulated over the time that it’s active. So, it could be that you could apply nine people for a day at the beginning and make a lot of progress.

And then apply five people for the next three days, and then only one person for the last day to finish it up. Each of those plans is 25 person days long, but they’re very different for when people need to be available.

And whether or not you have this flexibility really has to do with how that activity— the kind of work that needs to be done for that activity. But certainly, if they have that flexibility, that does add a dimension of complexity to the leveling process.

Generally, just as a rule of thumb, it’s better to use resources evenly over a project. That tends to be cheaper. So, being able to push down the spikes in your resource needs to be more level, generally that works better, both on a human side and on a financial side.

It also ensures that you’ll have no over-allocation of resources— too many people standing around and not enough work to do. So, again, leveling resources over time, that’s a complicated activity.

Because there’s usually a lot of flexibility about how to do it. We talked on the resource side, it’s also true on the activity tasks specification side. So, for instance, when you go level your resources, that is try to bring your resource availabilities into line with your project schedule, you might rethink your precedence constraints, because that may be a good way to level.

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For example, you might slide start dates around, you might modify your resource loadings over time, you might modify your task dependencies. For instance, suppose you’re on a software project and you’re going to do documentation and then testing.

You might think about resource leveling and go, “You know, based on the skills I need in each one of those activities, I can actually do them in parallel more than I thought.” And that will let me somehow level out the different skill sets that I have working at a given time. That is, maybe I’ll do the testing over a longer period of time and have a little bit less unique bodies doing it. And the same with the documentation. I might also split up tasks.

For instance, instead of having testing as one long block where there’s really no stopping, but the resources are being applied over time through that contiguous block, you might go, “Well, there’s actually more flexibility here. I don’t really have to go straight all the way through. And so I’m going to split up testing into two different activities: testing one and testing two.”

And maybe that will help me level in a nice way. Cause there’s also other work going on at the same time. Now, tools like Microsoft Project are very useful to level. You can use them to automatically level for you. In practice, most of the time you’re going to want to make modifications and so you can always—in tools—get a suggested level schedule and then manually manipulate it, or you can go to— usually they have a nice set of robust tools to manually do the leveling.

As you can see, though, from this discussion, there’s no single resultant leveled schedule. It has a lot to do with which tradeoffs

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you want to make on how you want to apply your resources and the final structure for your project network. Generally, there’s quite a few degrees of freedom on both sides of that and so there are many difficult schedules that are level that could be made to work. Which one’s better for your organization? There’s other issues there to make that decision.

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Watch: How Much to Level?

There are a number of factors to consider when it comes to leveling. Professor Nozick offers an illustrated example of how this concept works in practical application.

Transcript

So, let’s walk through a few examples of thinking about leveling and how do we bring our schedule and our resource assignment into line with our resource availabilities. To do this, let’s go back to our example from the previous video where we had three activities:

A, B, and C. Activity A took two periods of duration, activity C took five periods of duration, activity B took three periods in duration. And activity A took two resources, C took four and B took two resources.

And in this example, as I’m talking through it, we will make changes and discuss about how those resource assignments can be made to the activities. But, for the moment, let’s think of activity A as requiring, effectively, four person days of resources, activity C requiring 20 person days of resources.

Now, one thought about how to do this is just a left-justified schedule. Since there are no precedence requirements, we can simply start each activity at the very beginning of the planning horizon.

In which case, the duration of this project is five days long because activity C takes five periods to complete because it’s four people and five time periods. Activity B takes three periods to complete because it’s two people over three time periods. And activity A takes two periods to complete because it’s two time

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periods and two people. So if we did that— our left-justified schedule— it’d take us five periods to finish it, or five days, and would require, at its peak, eight people involved. Of course, all those eight people are not needed across the entire project. Now, let’s talk a little bit about actual resource assignments. And let’s suppose we only have four people available. So my schedule, my left-justified schedule, is not resource feasible. It’s precedence feasible, because there’s no precedence requirements, but it’s not resource feasible.

Let’s also assume that the resource loadings to tasks over time are flexible; the total amount of person days of effort is known, but how it needs to be applied, while the task is active, that’s up to us. That’s part of the leveling process. That’s part of our degrees of freedom in creating our schedule. So for task A, it requires four person days. We could do it with a half a person and take eight days to do it, that’s okay. Because that means there’s four person days that have been expended.

For activity B, six person days are required. And for activity C, 20 person days. Now, you can imagine that there’s a lot of choices of how we can now execute this project. Since we have four people available, one thought is simply to go as fast as we can on each activity, in order from A to B to C.

So, since we have four people available, I need four person days for task A, one day and get it done. For task B, which would happen right after task A completes, a day and a half will take care of it with all four people focused on it. And finally, activity C takes five days to do if all four people are focused on it continuously. And so, then we get this new schedule, which is different than our old one.

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Another option is to say, “Okay, I want to do all three of those activities still kind of in parallel.” Maybe there’s no direct information that needs to be exchanged between them, but it’s kind of nice to move in on them together for some reason. So suppose I said, for activity C, I’m going to assign two people to it. I need 20 person-days of effort; they can do that over ten days.

For activity B, I’m going to assign one person to it and they’re going to start at the beginning of the planning horizon. And since I’m only going to assign one person to it, it’s going to take me six days to finish it. And for activity A, that takes four person days, I’m going to assign one person to it, starting at the beginning of the planning horizon, and that will now take four days to complete from the very beginning.

Now, I still have all four tasks, sorry, all three tasks going on in parallel, but they’re slower because I’ve cut the per-period down of assignment. Third choice is, “Gee, maybe I’ll focus most of my activity on C, because C is bigger— there’s more work in it.” So I’ll have my three people working on it out of the four. Now, let that other person work on activity A and B in sequence until their activities are completed. And so, I get a schedule that looks like whats on the slide in front of you. Now the activity finishes in time period seven and a half.

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Watch: The Results of Leveling

Now you will examine what the implications of the leveling effort are. What does it mean for the project and for the schedule?

Transcript

So each of those three choices had different implications for the duration of the project. The one where we did A, B, and C in series took us seven-and-a-half days to do. The one where I assigned two people to activity C and then the remaining two people did activities A and B, starting at the beginning of the planning horizon, that took ten days to complete.

And my final choice which is three people going to activity C until it finishes at, on the sixth, two thirds of the way through the sixth day. And then A and B are executed in sequence, in series by the remaining fourth person. That took about seven and a half days to do.

These are only three choices of many others. That are worth looking at. And that shows you the complexity of the leveling process. It’s an illustration of it. Now, suppose that per period resource assignments, the activities are not flexible? That is for activity A. It’s active for two time periods or two days. You must have two people assigned that entire two days.

Suppose for continuing on for activity B, that’s active for three days, you must have two people assigned for each of those three days. And similarly for activity C that goes five days, and you must have four people assigned during that time. If I need to stay

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underneath my ceiling of four people, no more than four people Here’s a couple of other choices about how to do it. Well I could start with activity C, do that for five days, and then do A and B together, that would be okay.

I could alternatively start with B and then start A, and then as A and B finish, start C. It’s another way to do it. Okay, so these are all ways of leveling the schedule to comply with that four person limit on the resources that are available.

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Course Project, Part One: Flexing Schedules and Resources to Your Advantage

As you have seen, one of the great tools that project managers have available to them is the ability to rethink plans to meet changing circumstances. You may find that as work ebbs and flows, and as customer needs fluctuate, you need to revise your scheduling and resource allocation plans to meet the project’s needs.

This part of the course project will give you a chance to reflect on the experiences of the past and consider how you can do better in the future to align available resources to organizational needs. Completion of this project is a course requirement.

Instructions:

Download the “Planning and Managing Resources” course project, if you have not already done so. Complete Part One. Save your work. You will not submit your work now. You will submit your completed project at the end of the course for instructor review and credit.

Before you begin:

Review the grading rubric for this assignment. Please review eCornell’s policy regarding plagiarism.

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Module Wrap-up: Flex Schedules and Resources to Your Advantage

You have now examined the practical reasons why schedules are necessary and have seen why project management requires careful monitoring and control of the details. People won’t be available when you thought they would be, problems and project issues will arise, but as the project manager, you can do something about it. You have defined leveling a schedule and looked at some of the ways you can use leveling to bring about a better project outcome.

You have explored strategies for working with schedules, aligning and realigning available resources to tasks, and using different options for flexing so that you can meet your critical goal: bringing projects to completion on time and on budget. You have now had an opportunity to discuss scheduling challenges with your peers, and you have completed part one of your course project, in which you leveraged the lessons of past experience for improved future performance.

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Module 2: Use Critical Project Management Tools

1. Module Introduction: Use Critical Project Management Tools 2. Watch: Schedules and the Critical Path Forward Pass 3. Watch: Schedules and the Critical Path Backward Pass 4. Watch: Resources and the Critical Sequence 5. Read: Reasons to Accelerate (or Compress) 6. Watch: Fast-Tracking and Schedule Compression 7. Watch: Crashing 8. Tool: The Fast-Tracking and Crashing Worksheet 9. Course Project, Part Two: Using Critical Project Management

Tools 10. Module Wrap-up: Use Critical Project Management Tools

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Module Introduction: Use Critical Project Management Tools

In this module, you will explore the critical path. The beauty of working with the critical path in the project network, for project managers, is that it helps you figure out where to focus your attention. This module examines activities in the critical path

and looks at methods of realigning available resources to complete those tasks. If your project is running late, you may need to accelerate some parts of it to bring it back on track. You will examine acceleration and compression strategies that can be used to modify schedules in trouble and you will access a helpful tool to guide your work in this area. You will also complete the second part of your course project, in which you will work with critical project management tools related to schedule control.

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Watch: Schedules and the Critical Path Forward Pass

You want to get your projects completed on time. When you think about the project network, you can think of the critical path forward pass as a mechanism to determine the earliest possible and latest possible start times for each activity so the project completes as soon as possible. Identifying those start times will help you determine when to assign people to work.

Transcript

Okay, so, we’ll take a break from talking about resources for a moment and go back and talk about project duration where we don’t consider resources. Then I’m going to add resources back into our discussion. So, the critical path method is a phenomenally good tool to try to understand project duration when there are no resource availability issues, okay?

So, what you wind up doing in the critical path method, is you find the earliest and the latest start time for each activity so that the project completes as soon as possible. The activities for which the earliest start times and the latest start time are identical, those are the ones on the critical path.

So, lets walk through this calculation together. So, here’s a project network. I have six activities. The numbers along the arcs are, in fact, the activity durations. So, the activity represented by the arc between node one and node two— that takes nine days to do.

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Okay, so let’s compute the earliest start time for every activity, all six of them. So, we know the earliest start time for the activity that connects nodes one and two together. That’s time period zero— the beginning of the planning horizon. And you’ll notice, I have associated with every single node, two numbers.

Only for node one is the earliest start time, or the earliest time you can reach that node, given. The rest are blank as of yet. We’ll fill them in as we go through what’s called the forward pass. That will give us the first number of the two. And then we’ll do the backward pass, and that will give us the second number in the pair, for each one of those.

So, again, the activity that… connects node one to node two, that can start at time period zero. Based on that start time, we can reach node two in nine time periods because it takes nine time periods, or nine days, to complete the activity that connects one with two. We can reach node four in two time periods. Now that I know the earliest start times for activities one to two and one to four, and the earliest time I can reach nodes two and four, I can now figure out the earliest time I can reach nodes three and five.

So, for node three it’s going to be nine plus three, which is 12. And for node five, it’s going to be two plus five, which is seven. Now I’m in a position to compute the earliest time I can reach node six; the end of the project. So, if I take the top half via node three, it’s going to take me 12 plus seven time periods to get there, or 19. If I need to use the— if I go along the lower path, it will take me seven plus nine, which is 16.

So, I cannot reach node six and be completed with the project until I take and handle the longest of the two, which gets me to node six

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via node three. That’s going to happen last, compared to node five to six. Okay, I’m still going to do all the work of course, along the bottom path, but that’s quicker for me to get to node six via that path. But I don’t really complete node six until I’ve got both of them done, that is, all the work that goes along the northern path and the southern path. So, the earliest time I can reach node six is, in fact, time period 19 and it’s governed by that top half.

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Watch: Schedules and the Critical Path Backward Pass

The backward pass is a very helpful mechanism for project managers. It helps answer the question: What’s the latest date that we can allow a given activity to start and still complete the project on time?

Transcript

Now if I’m going to finish that project in 19 days, what’s the latest time I can reach nodes three and node five? Well for node three, it’s going to be 19 minus seven, or 12. And for node five, it’s going to be 19 minus nine, which is 10, okay. Notice that node three—I have no flexibility.

The earliest I can get there is time period 12, and the earliest time I’m going to start the activity that goes from three to six, it better be time period 12, or we’re not going to make it by time period 19. For node five, there’s a little bit of flexibility. I could arrive there time period seven, eight, nine, or 10, and be okay. Okay, and still not change—not jeopardize—that completion date, as long as that last period of activity only takes nine time periods.

Notice I’ve got some hedging words in here now. I didn’t have them when I started this. I said activity that connects nodes one with node two takes time period nine. In practice, nothing is perfect and always goes on time and on schedule. So, the critical path method works on fixed durations known with certainty. Well the

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reality is, when you use it in real life, not much is usually known with certainty. So, this gives you a sense of how much flexibility you have across your project network and where that flexibility is when things don’t go exactly according to plan. Okay, so I’ve now found the latest start times for the activities between three and node six. And the latest start time for the activity between nodes five and node six. I can now back up to nodes two and four.

So, for node two, I need to be starting the activity that goes between nodes two and three, no later than 12 minus three, or time period nine, or nine days into the project. The same is true for the activity that goes between nodes four and five. Ten minus five, or five— that’s the last time— that’s the latest time I can reach node four is time period five.

And now I can go compute the earliest start time, sorry, the latest start time for the project. Namely, the time I start node one or can begin activities one to two and one to four. And that’s time period zero, governed by that northern path. So, what’s very important to notice when you look at this project network, is that the critical path is what connects one, two, three, and six together.

Notice the earliest start time, and the latest start time are all exactly the same. You have no flexibility. Anything that takes longer along that path will elongate the project duration. The same is not true along that lower path. We have some flexibility there. And so, if things run a little later on activities one to four, it’s okay, as long as they don’t run too late. If they go past time period five, you are now going to be elongating the duration of that project. Along the red path, any delays will elongate the project; that’s why

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that’s called the critical path. And that’s a very, very important tool for a project manager to understand: in their project plan, what is the critical path? It gives them a sense of what tasks to be most mindful of. It doesn’t mean you can ignore everything else, but it does give some sense of urgency to some tasks over others.

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Watch: Resources and the Critical Sequence

The critical path makes a fundamental assumption: when the schedule needs people to work on activities, they will be available. In reality, that won’t always be the case. You will need other tools in place to accommodate resource availability, as Professor Nozick explains. For our purposes in this course, we’ll examine the concept of the “critical sequence.” This is a helpful concept for practical purposes, although not one defined by the Project Management Body of Knowledge (PMBOK).

Student notes:

The critical sequence is always equal to or longer than the critical path. The critical path, shown here in red, assumes there are no resource constraints. We’re assuming for the purposes of this discussion that the resources will be available when we need them. (Of course, that will not always be the case in real life.)

Transcript

So, the critical path is a very useful calculation to do on a project network. But it completely ignores resource availabilities. So, in our previous example, we saw that it took nine days to complete that project. That’s based on the notion, whatever resources are needed for each of those activities is available. What if that’s not true? And then, how does that impact the critical path? Because the concept of the critical path is really useful: the idea of giving

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project managers an idea of where to focus some of their attention.

So, suppose I have two resources: A and B, and I have one of each. And each activity requires one or the other, but not both. So, the activity that connects nodes one and two together that goes for nine days, that requires resource type A. And the one that connects nodes two and three together, that requires resource of type B. So, as you notice across that network, for each activity we know what resource is required.

And we assume that that resource is applied uniformly throughout the time that that task is active. Okay, so, we have our critical path. What does that mean for resource loading, ignoring the availability for a moment? Okay?

So, if you look at the graph at the bottom, that graph shows you days on the horizontal axis and along the vertical it’s my two resources, A and B. If I do that activity— all those activities effectively at their earliest start time— I get the picture in the graph below on that slide.

Now, there’s a problem with that. We have tremendous resource conflicts. I only have one resource of type A but you notice I’ve scheduled the activities that connect nodes one and two and nodes one and four to go on at the same time. So, in those first two days of the planning horizon, I’ve overused resource A.

I need two of them, I only have one. I have a similar problem when you look a little further down the timeline and you see that activity five, six is going on at the same time as the activity that connects one with two and the activity that connects three with six. And that’s a problem. So, we need to think about addressing that, and we need to figure out how to create a schedule that’s more in line with the

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resource availabilities. So, one thought about how to do that, one reasonable thought—I only have one unit of each resource available— is I’ll go ahead and I’ll execute the activity that connects nodes one and node two together, okay. So, at the very beginning of the planning horizon I start activity one to two.

And then, once that’s completed, I go ahead and do the activity that connects two and three together, and at the same time, I also start the activity that connects one and four together, okay? So, I’m prioritizing the top path over the lower path, but I’m doing it as its resource feasible, okay? And then, once I’m done with the activity two to three from resource B, I can then pop back up and do the activity that connects three and six together.

That completes the top path, but I haven’t finished the bottom path, so my project is not over yet, right? I still need to complete, at that point, the activity that connects five with six because that requires resource A, and that’s just become free as I’ve finished the activity that connects three with six. So what was a 19 day project is now substantially longer; it’s now 28 days.

So, no longer do I have a critical path anymore. I now have what you could call a critical sequence that’s both resource feasible and precedence feasible. That is, I’m looking at activities one to two, then two to three, then three to six, then five to six, because they’re governing the duration of my project.

So, in summary, take a look at the resource left-justified, resource over schedule from the critical path method, and then going left- justified. And you can see the resource conflicts I have. And then on the bottom of that slide, to the right, you can see my critical

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sequence focused schedule. Notice how much longer my critical sequence is than my critical path was. Okay, the critical sequence will always be longer—equal to or longer than the critical path. It will be equal if, in fact, you had enough resources to fully staff the project and nothing was in conflict with anything else.

In this case that’s not, this is not what’s happened. We have a direct conflict for resource A— both paths need it, okay? And balancing out those needs creates a longer project duration than we intended initially, or we thought we would have initially, based on critical path method alone.

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Read: Reasons to Accelerate (or Compress)

• “Fast tracking” means assigning tasks to be done in parallel

• “Crashing” means assigning more resources to a given task

There are good reasons why a project manager might try to accelerate or compress a project schedule. Fast-tracking (realigning the work so that more tasks are done in parallel, rather than in sequence) and crashing (increasing the number of people dedicated to work on a task) are two important managerial strategies that are focused on shortening the project schedule or the project duration. The object is to modify the initial schedule or to address a schedule that’s now running late.

There are many reasons that a project might be running late and there are many reasons that a project manager might try to accelerate the activities so that it gets back on track. One reason your project might be running late is that the original timeline might have been very optimistic.

Some tasks may have needed to take longer. It could be that there were unanticipated technical difficulties that delayed task completion or something didn’t work as well as anticipated, requiring a time-consuming fix. Changes to personnel can also affect schedule; an activity that the project manager thought would be relatively quick is taking longer

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because the new person doesn’t have the same expertise that the previous person did.

Project managers might also choose to try to compress a schedule that’s not actually behind. The landscape of work is constantly changing, and that will affect project management efforts. For example, the customer may need the project results delivered more quickly than had been anticipated. Something may have changed in their competitive landscape and they request that your team now finishes the project sooner.

Another example could be that new work is coming in to your organization and some of the resources that you will need for the new work are still actively involved with an older project, and so there’s a need to accelerate the first project to get it out of the way. Or, there may have been new goals set that change the project needs, or someone got promoted and moved into another job, so a project manager will try to accelerate some pieces of the project so that they can be finished before those personnel changes happen.

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Watch: Fast-Tracking and Schedule Compression

Professor Nozick examines one way to help a project that has gone off track in terms of its schedule: you can rethink your plans for how some of the work will be executed. Fast-tracking allows you to look for opportunities to move some of the activities that had been planned in sequence to be done in parallel instead.

Transcript

So, fast-tracking is one mechanism to try to move the project ahead quicker. The core idea there is to try to re-think how the work is being done along the critical path. And maybe there are some opportunities to do more of that work in parallel, so the critical path becomes shorter, okay? We focus on the critical path because that’s the path where there’s quote unquote quote “no extra time,” no float.

There’s no extra time that isn’t needed to get the actual work done that’s available. As you accelerate the work along the critical path, of course, eventually, other paths might become critical, so you need to watch that. You can’t just shorten the critical path very, very small and assume that that’s still the critical path.

So, let’s go back to our example from the previous video. In this example we had six activities and, in this case, we actually had a project—a critical path— a critical sequence, not just a critical path. I’m going to talk about fast-tracking in the context of a critical

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sequence instead of just the critical path, just to highlight for you that resources really do matter and the critical path method is an extremely important tool, but we always have to think about how the resource loading will occur and see if it really is still just the critical path you need to worry about or it’s evolved into a sequence of activities that may not form a path. In this last example, it was actually a critical sequence of activities that are not a single path.

Okay, so, in this case, the critical activities are highlighted in red. And when we think about fast-tracking, we think about looking at the work packages in each of those activities and asking, “Hmm, could I have parallelized more of that work than I have?” Okay, so, for sake of argument, let’s look at the activity that connects nodes one and two and then also the activity that connects two with three.

Right now these are going to be done in series. What if we could make them a little bit more in parallel? So, in fact, activity that connects two with three actually can start before the activity that connects one with two completes. Okay? The base line has Activity B, in fact, idle until I completely finish the activity one to two. Maybe we can get B working earlier.

Let’s see. So, the top of this slide shows the original schedule, okay? The bottom shows, “But what happens if I really only have one period of idleness on activities A’s part? So, what happens if I split up activity one to two, into two pieces? One that takes eight and one that takes only a single day. Okay. And then I now schedule it along those ideas. Now activity that connects two with three can start the moment the first eight periods are done of the

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activity that connects one with two.

So, now I can modify the project network and now it looks like this. I’ve inserted, effectively, one new node and relabeled one node. So, now the project network has a activity that connects node one with node 2A, and that’s eight periods long, and it’s eight days worth of the work that went with the original activity from one to two.

Now I have another arc, or another activity, that connects 2A with three, that’s that remaining one day of effort on the original activity that connects node one with two. And now I also have an activity that connects node 2B with activity—with node 3.

That’s the work represented by the original activity between 2 and 3. And I’ve inserted a dash line between activities for node 2A and 2B. That’s what we call a dummy activity and it takes no resources up. That leads to the schedule on the left hand side.

And notice, now, I’ve shrunk my schedule by one day. That ability to do some of the work in parallel allowed me to close up the gap on activity—on resource A’s time: they had a day free, now they don’t. Now I have been able to compress the schedule by one day. But in order to do that I had to rethink the work in those two activities and ask myself, “Is it logical that some of that could be done in parallel?” If the answer to that is no, you’re not going be able to fast-track in that way. If the answer is yes, then you have an opportunity, okay.

And notice, the amount that I could get of benefit was really driven by all the other activities and how they’re being assigned to the resources available. I could try to fast-track some more and see if I could do more things in parallel, for instance, but activities that

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connects nodes three and six and nodes five and six—but I really only have one person, okay. So there’s other issues with trying to fast track those two together, in terms of having enough resources available.

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Watch: Crashing

As you have seen, fast-tracking is one way to move project work ahead faster. It requires rethinking the work you had planned and realigning people to work on some tasks in parallel. Professor Nozick examines another mechanism of moving work ahead faster: crashing.

Note: Will crashing always increase costs? Crashing does not automatically increase activity costs, unless the added resource has a higher labor cost than the one originally assigned. You are not doing more work, just getting the original scope completed sooner.

But when you think about crashing, labor cost is something you want to pay attention to; if your only crashing option is adding in a more expensive resource than the one you had originally planned for, that’s something to consider.

Transcript

So, crashing is another way to think about shortening your project. And the core idea for crashing is to add extra resources to make the schedule shorter. Okay. So, when we fast-tracked we didn’t necessary add any new resources. In fact, we didn’t. We just allowed more things to happen in parallel versus in series.

Okay. So, fast-tracking, nominally, doesn’t cost more. Crashing generally will because you’re adding more resources. Just like with fast-tracking, as you add resources to the activities along the critical path, you have to look—or critical sequence—you need to

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look at other paths and make sure nothing else is going to become critical, to the point where your wasting resources along the critical path because it’s no longer critical. So, here’s an example of crashing. So, the top figure is our resource assignments on our baseline schedule. Now, suppose what seems to really be hanging up this project is resource type A. If we had a second person that could do activity A, we’d go a lot faster.

So, one way to crash— it’s obvious in this schedule— is to say, “What happens if I went out and got another resource A and made that available?” Well, if I did that I could really shrink my project duration. Because now I could work on the activities that connect node one with two and the activities that connect node one with four together at the same time.

The same is true with activities that connect node three with six and nodes five with six. Now I can make the schedule a lot shorter but I’m going to pay a price for it. It’s not cheap. I need a new resource A available to me to make that all work.

So, fast-tracking and crashing; they’re both very important ways to think about accelerating a schedule that’s either too long initially, or is falling behind and you want to catch up. Fast-tracking focuses on rethinking the work, so that more is done in parallel.

Crashing is all about adding extra resources so that more work can then be done in parallel. Now, it’s important— there’s a subtle thing here. Fast-tracking; since you’re rethinking your work and you’re doing more in parallel, you may be inserting more risk into your project plan. You need to pay attention to that.

What happens if you decide, I can fast track; I’m going to start

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putting things in parallel. And then you’re finding out, “Well, gee. Now I have a chicken or the egg problem between the activities that are going on at the same time.” Each one is looking for something. Okay, so that’s a risk. And fast-tracking, in general, is no more expensive unless some of those risks come to fruition, in which case it may turn out to be—add some costs. Crashing is generally more expensive because you’re explicitly adding resources to your project.

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Tool: The Fast-Tracking and Crashing Worksheet

• Use the Fast-Tracking and Crashing Worksheet

What do you do when a project schedule is running late? You may need to work together with team members and managers to try to bring the project back on track. It may be helpful to use the downloadable tool on this page to guide the group conversations you have and critical decisions you make regarding schedule compression.

Download the worksheet and save it for future reference. You can use it in your project-management team meetings and when working with project team members. It will help you identify whether the problems on a particular project offer a good opportunity to use the mitigation strategies of fast-tracking or crashing.

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Course Project, Part Two: Using Critical Project Management Tools

Being able to work with available resources and to level a schedule in order to meet project demands is a critical capability for project managers. In this part of the course project, you will practice leveling a schedule so it’s consistent with known resource availabilities. You will identify the earliest start times for activities and consider both the critical path and critical sequence, and how those relate to resource allocations. Completion of this project is a course requirement.

Instructions:

Download the “Planning and Managing Resources” course project, if you have not already done so. Complete Part Two. Save your work. You will not submit your work now. You will submit your completed project at the end of the course for instructor review and credit.

Before you begin:

Review the grading rubric for this assignment. Please review eCornell’s policy regarding plagiarism.

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Module Wrap-up: Use Critical Project Management Tools

The critical path, as you have seen, helps project managers figure out where to put the most attention. In this module, you worked with the critical path and the critical sequence and considered their implications for schedule monitoring and control. You have looked at methods of realigning available resources to work on the critical path.

You have also explored some mechanisms for accelerating or compressing a schedule for a project running late. You accessed a helpful tool to guide your team work and management conversations to help you determine whether fast-tracking or crashing are appropriate strategies for your project.

You also completed the second part of your course project, in which you worked with critical project management tools related to schedule control.

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Module 3: Manage Scope, Creep, and the Unknown

1. Module Introduction: Manage Scope, the Creeps, and the Unknown

2. Read: Managing the Unknown 3. Watch: The Planning Fallacy 4. Tool: Address the Planning Fallacy 5. Watch: Brooks’ Law 6. Read: Scope-, Hope-, Effort-, and Team-Member-Scope

Creep 7. Managing the Creeps 8. Course Project, Part Three: Managing Creep, Scope, and the

Unknown 9. Module Wrap-up: Manage Scope, the Creeps, and the

Unknown 10. Read: Thank You and Farewell 11. Stay Connected

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Module Introduction: Manage Scope, the Creeps, and the Unknown

Which of these scenarios sound familiar to you? After work begins, the customers change their mind about what they want. A team member falls behind, but doesn’t mention it to you because he believes he can catch up. People underestimate

how long tasks will actually take to complete. For seasoned project managers, these scenarios are all too familiar. They can add up to significant delays and cost overruns. But what can you do about it?

As the project manager, you can anticipate that these things will happen and you can use recommended strategies for addressing them. In this module, you will focus on managing those little changes along the way that accumulate to send projects over time and over budget.

You will access a helpful tool that you can use to get better estimates of how long tasks will actually take. You will discuss with your peers the best project management strategies in this area, and you will explore what the research says about bringing in more people to help. Is it always the best answer, or does it sometimes backfire?

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Read: Managing the Unknown

• Project managers need to try to anticipate what might go wrong and plan for it

• Continually analyzing your schedule for vulnerabilities will make it easier to cope when unexpected problems arise

Managing resources is very complicated, and the more you think about contingencies the better off you will be. At the beginning of a project, you can look at the work breakdown structure. Some tasks are well known, well understood, and the resource needs are clear. Think of those tasks as “known knowns.”

Other tasks are more ambiguous. When you look at the task description, and the resource needs over time are there for estimates because the task itself is ambiguous, that implies some risks. Think of those tasks as” known unknowns.” You know that you don’t know. That’s an important piece of information.

There are other known unknowns. The schedule as a whole is a baseline and it will need to be revised over time. Because you don’t know the exact work that will need to be done under a few of those tasks, you won’t know the exact resources those tasks will

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consume. You won’t know the exact duration. You will make some logical estimates, you’ll get a baseline, and as time goes on, you will revise the project schedule, but you can reliably assume that some revisions will need to be made.

it is also important to realize there are “unknown unknowns,” or things that may happen that you couldn’t have anticipated. Those unknown unknowns may change your project schedule. For instance, someone with a critical skill might leave the organization or become ill. A technology that you assumed would be available isn’t available.

Your customer’s needs have evolved, so the work will have to evolve. All of these are examples of unknown unknowns. It’s hard to plan for obstacles that you don’t know will arise, but they’ll necessitate an evolution in the schedule.

It’s important to continually analyze your evolving schedule (and the implied resource allocations) for vulnerabilities. That ongoing analysis will make it much easier to cope with unexpected situations as they occur—or the unknown unknowns that just pop up.

Here are a few common schedule risks to think about:

The project schedule has been made with “rose-colored glasses,” meaning with great optimism. Sometimes you don’t get a really good estimate for how long certain activities will take because the people doing the estimates are overly optimistic about what they can accomplish. This can cause the project to run longer than anticipated, change your resource allocations, and have you scrambling to get these activities done.

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Your re-estimation of effort is not as accurate as you would like. It could be that when you calculated your effort for a given activity, you used person hours, and the person you had in mind is very efficient. You could end up in a situation where the person who is actually available is not as efficient. A team member doesn’t understand what their responsibilities are in a timely fashion, so they do not spend their time as productively as you had anticipated.

The work breakdown structure you created to do the project was incomplete. Something hadn’t been anticipated and yet it needs to be done. Hiring for the project turns out to be harder than you thought. This means that critical people aren’t available at the time that you figured they would be when you leveled your schedule. Interpersonal issues may arise between team members. Lots of problems on projects are actually not technical in nature, but are, instead, human issues.

The project scope expands. The work that you initially think needs to be done within a project actually increases over time. The target completion date for the project changes due to evolving customer needs. A contractor doesn’t deliver some of the work you need for the project on time, or it’s of insufficient quality. The funds you had planned to use to run the project are not all available on time, and so things fall behind.

As you can see, there are many reasons you might wind up having to revisit and revise your project schedule. Understanding that these things can happen, and making sure as you look at your

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project schedule you think ahead to what might go wrong, will be critical. It’s hard to identify the unknown unknowns at the beginning, but the more familiar you are with your opportunities to get back to a given baseline schedule, the better off you’ll be.

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CEPM502: Planning and Managing Resources Cornell University

Watch: The Planning Fallacy

You probably already know, intuitively, that people are often overly optimistic about how long it will take them to complete their work. That optimism creates schedule difficulties. Why people are overly optimistic in estimates has been the subject of insightful published research, as Professor Nozick explains.

Transcript

So, when we’re doing project work or trying to create a project schedule, we have to do a lot of planning. And a lot of that planning focuses around how long it will take to do work. Many times when you estimate how long it will take to do some work you can be unnecessarily optimistic.

For instance, let’s go back to an example everybody has in the recesses of their memory from when they were in high school: writing a paper. I bet you can remember times when you estimated how long it would take to do a piece of homework, like write a paper, and you found out it took far longer.

So, as an example, when you make your plan and you’re going to write your paper, you might go a little way into doing that paper and realize, “Gee, some of the material I need to do the research to support the paper I need to order from a different library.” It will take time to get that. It makes writing the paper— completing the step—much longer. You might decide that the initial thesis you had for your paper has some flaws in it and now you need to rethink it. That could make writing the paper take longer than you thought.

CEPM502: Planning and Managing Resources Cornell University

Something else might happen in another course. Suppose you’re working on a project for a different course and there are some issues with the team dynamics for that project and so now you have to devote more time to that project.

Now you’re not finishing your paper as quickly as you thought. In the real world, in the work world, this idea that it takes longer to do some of the work than you initially thought, that also is applied to financial estimates for how much money it will take. That’s also been seen as well.

It’s not just in the time it takes to complete a project, but also the financial estimates of how much it will take to complete a project. So, of the many examples in the work domain, big construction projects like the big dig in Boston, the Channel tunnel between London and Paris; both of those took way longer than expected and cost a lot more. You don’t have to look very far in terms of construction projects to find ones that took much longer than anticipated and cost substantially more.

The Standish Group—that’s an organization that publishes surveys on the performance of information technology projects. They noted on survey projects between 2010 and 2014, over 50% of the projects costs more than 180% of their original estimates.

McKinsey & Company did a similar report on large IT projects and they found about 45% of them ran over budget, 7% over time, and deliver 56% less value than expected. So, the planning fallacy is alive and well. Kahneman and Tversky first coined the term, “the planning fallacy,” back in 1979 to describe this kind of behavior of being overly optimistic.

Now, what are the sources for the planning fallacy? Well, there’s

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quite a few. One thought is, when individuals try to create these estimates, they create a scenario in their head about how they would do something. And then they give an answer to how long it will take based on that scenario in their head.

That scenario doesn’t tend to include what can go wrong. It’s usually based on a successful outcome, okay. So, intrinsically, it has less content associated with what could go wrong. Also, since the person is so heavily focused on what they’re going to do to complete the activities or what’s going to happen to complete the activities, they tend to ignore other things that are also going on at the same time.

For instance, work on other projects they’re involved in. Their social life. Their propensity to procrastinate. All of these affect the time that it will really take to finish the activity. Too little— they often put way too little reliance on past experiences, which might suggest longer durations. They’re looking at the activity through this scenario, which tends to be rose-colored glasses, which often ignores what might go wrong.

It’s very understandable how we get there, and we get to these estimates that are too short. The question is what do we do about them? Because when you plan for something and don’t leave an adequate amount of time, that becomes a very complicated situation to manage. So, some of the things you can do to address the planning fallacy include—it turns out the planning fallacy is more focused on you looking at how much time it will take you to do something. When you’re starting to ask about the next person, that bias evaporates to a large degree.

So, asking someone else is one very useful mechanism to try to get a better estimate of how long something will take. Also, when

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there is historical data of how long something will take. If the person is just factoring it in as they create this scenario to whatever degree they choose to in a very implicit way, they’re likely not to give it the real balance that it deserves. So, making those comparisons more explicit in the assessment, that’s very important.

There’s also this idea of a pre-mortem. Deborah Mitchell…Jay Russo at Cornell, Deborah Mitchell at Wharton, and Nancy Pennington at the University of Chicago— they identified that prospective hindsight, substantially increases the likelihood of correctly identifying the reason for a future outcome. That’s a lot of thoughts but let’s try to unpack it a little bit. So what’s prospective highlight?

That’s imagining high— prospective hindsight. That’s imagining a future event and then asking what caused it. Okay, so that gives us a mechanism: the idea of this pre-mortem. So, Gary Klein in his book, “The Power of Intuition: How to Use Your Gut Feelings to Make Better Decisions at Work,” he identifies a six- step process about how to use a pre-mortem to figure out what is a better estimate for the time it may take to do something.

So, for instance, you say to the person, instead of, “How long will this take?” “Imagine this takes this long. How did it become that long?” And then as the person goes through the process of trying to construct events that have that duration, you get much better feedback of how long that activity might take, or that project might take. Okay, so this idea of a pre-mortem: that’s a very useful concept in how to structure the discussion of how long something will take to complete. And finally, it’s very important that we have

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processes in place to monitor progress and encourage honesty so that we can identify issues faster.

Issues are going to happen. They are going to come up when you manage your projects. There is no doubt it will happen. The important thing is that people feel free to say they’re running behind, and what it’s taking them, and what they believe the hang up is so you can get in with interdictions as effectively and as quickly as possible. So, these processes for monitoring progress and encouraging honesty in the identification of issues by team members— that’s a very important piece of addressing the planning fallacy.

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CEPM502: Planning and Managing Resources Cornell University

Tool: Address the Planning Fallacy

• The Address the Planning Fallacy Tool itemizes the recommended strategies

As Professor Nozick has discussed, research shows that a high percentage of projects take longer than expected and cost more than anticipated. It’s easy to see how people create budget and duration estimates that are overly optimistic. The question is: what can you do about it? The four strategies outlined below are very effective in helping project managers achieve better results.

Strategy One: Ask Someone Else

The planning fallacy is focused on you, the individual, estimating how much time it will take you to do something. When you ask another person doing the same job task for an estimate, the personal bias evaporates to a large degree. Asking someone else to give their estimated duration is a very useful mechanism to try to get a more accurate and less biased estimate of how long something will take.

Strategy Two: Use Historical Data

You can make comparisons very explicit in your assessment by

CEPM502: Planning and Managing Resources Cornell University

relying on historical data. How long have similar activities taken in the past? Using historical data removes that personal bias, reducing the effects of the planning fallacy.

Strategy Three: Use a “Pre-mortem”

Research conducted in 1989 by Deborah J. Mitchell, of the Wharton School; Jay Russo, of Cornell; and Nancy Pennington, of the University of Colorado, showed the benefits of using “prospective hindsight,” which means imagining a future event and then asking yourself what caused it. That gives you a mechanism to anticipate what is likely to go wrong and to plan for it.

Author Gary Klein, in his book, The Power of Intuition, recommends using your gut feeling to make better decisions at work. He identifies a six-step process about how to use a pre-mortem to figure out a better estimate for the time it may take to do something.

For example: instead of saying to a team member, “How long do you think this will take?” You would say, “Imagine this task takes this amount of time. What do you think would cause that extended duration?”

And then as the person goes through the process of trying to think of the likely causes of interruptions and delays, you get much better insight into how long that activity will actually take. The idea of a pre-mortem is a very useful concept when you’re trying to structure a discussion regarding how long something will take to complete.

Strategy Four: Processes

CEPM502: Planning and Managing Resources Cornell University

It’s very important to have processes in place to monitor progress and encourage honesty so that you can identify issues faster. Issues are going to happen. They are going to come up when you manage your projects. The important thing is that people feel free to say they’re running behind, and why, and what they believe the hang-up is.

That will give you the chance to implement interventions as effectively and as quickly as possible. Having sound processes for monitoring progress and encouraging honesty in the identification of issues by team members is a very important piece of addressing the planning fallacy.

“Back to the Future: the Role of Temporal Perspective in the Explanation of Events,” Journal of Behavioral Decision Making, 2, 25-38: Mitchell, Deborah J., Russo, J. Edward, and Pennington, Nancy (1989). The Power of Intuition: How to Use Your Gut Feelings to Make Better Decisions at Work (Gary Klein, Crown Business, 2004).

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CEPM502: Planning and Managing Resources Cornell University

Watch: Brooks’ Law

Professor Nozick discusses a question that’s very important to project managers: if a task is running late, can you resolve this problem by assigning more people to the task to accelerate progress?

Professor Nozick references “Brooks’ Law,” which is the observation that sometimes when person-power is added to a project it slows down progress rather than accelerates it, as well as the book in which the term was coined: The Mythical Man-Month: Essays on Software Engineering; Brooks, Frederick P., Jr., Addison-Wesley Professional (1975, 1995)

Transcript

So, it’s very common to talk about how many work hours or days are needed to do something. This leads to the thought that if I double the number of people assigned I can halve the amount of time required. So, let’s create an example. Suppose a task requires 40 hours to complete.

Does that mean one person for one 40 hour work week and ten people for four hours each is sufficient? If I find that a task is running late can I simply assign more people and accelerate progress? That’s a very important question. Brooks’ law is an observation that sometimes, when person power is added to a project, it slows down progress rather than accelerates it.

The observations that underlied the coining of the term Brooks’ law

CEPM502: Planning and Managing Resources Cornell University

were made in the context of software projects but the warning to be on the look out for this possibility— that when you assign extra resources to make something go faster, in fact, it may go slower, is equally valid in other domains, not just software.

Brooks’ law first appeared in the book, “The Mythical Man-Month,” written by Fred Brooks in 1975. Now, what could be causing this? Add more resources we think we’ll go faster. So, let’s think a little bit about what it might mean when you actually add more people to a project.

So, when more people are added to a project, the idea of communication— the amount of communication— between the individuals, that grows up very fast, right, because it goes with the number of connections there are from one person to all the other people. So, as you add more people, there’s more connections, okay.

All that time for communicating— that takes away effort from doing the actual work, okay? The graph here shows the number of people along the horizontal axis and along the vertical axis the number of connections. As we go from one person on a project with zero connections, to two people with one connection, and then you start going up to five, and then to 15, and then on, and on, and you can see how rapidly this is growing.

Another element that causes— probably underlies—the reality of Brooks’ law, in some contexts, is that, as you add people to a project, those people may not know what’s going on on the project, and now you have this issue of training. And who’s going to bring those people up to speed, but the people who are on the project already, doing the work? Okay. And so, that can also slow down

CEPM502: Planning and Managing Resources Cornell University

progress. So, we’re going to be cautious that we’re not saying “No. Don’t ever add staff to a task which is falling behind.” But be cognizant of what might be done to make that productive. That is, how do you control the processes of bringing the new people onto the team, getting them socialized into the team and into the workflow of the team, without delaying the work of everybody else who’s on the project. That’s an important thing to think about before adding lots of people to the activity.

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CEPM502: Planning and Managing Resources Cornell University

Read: Scope-, Hope-, Effort-, and Team- Member-Scope Creep

• Small, unanticipated changes to the project can add up to major cost overruns and delays

• Project managers can work with team members to mitigate the damage of any type of creep

“Creep” refers to a sequence of small changes that can accumulate to cause substantial difficulties in the execution of a project. Each small change on its own may seem so insignificant that it can be overlooked by project management.

You may think that you can neglect the little changes that take place along the way, but if you don’t address them as they accrue, and they continue to add up, they can create both tremendous changes in the schedule and serious cost overruns. So it’s very important for you to figure out how to manage the different types of creep effectively.

Scope Creep

Scope creep is the uncontrolled expansion of the amount of work to be done on the project. Strictly speaking, it’s any change in the

CEPM502: Planning and Managing Resources Cornell University

project to be delivered that was not part of the original project plan. In general, scope creep is customer-driven and comes from trying to meet a new requirement that may not have been formally introduced into the system. It’s driven by the customer or somehow done to please the customer.

It’s very important that the project manager understands the impacts of each one of these changes so that a decision can be made about whether or not the request will be accommodated and how it will happen. “How,”

in this case, means a timeline accommodation and likely a resource assignment accommodation. Just because it might please the customer to expand the work, it still affects the project and the organization; if it’s important enough to be done, it needs to be done in a way that’s consistent with resource availability and milestone timelines or the requests have to be modified.

Hope Creep

Hope creep is created by a team member. Sometimes a team member falls behind on a task, but they believe they can get back on schedule and make it on time. They make a conscious choice not to make the project manager aware of the difficulties. They’re not doing it to be dishonest or malicious, or to cover up an imperfect performance.

They’re doing it because they genuinely think that they can get back to where they need to be without causing chaos for the project manager. In reality, many times that hope doesn’t come to fruition and it turns out that the task runs late and affects the whole project. The real problem is that the project manager hasn’t been made aware of it early enough to try to make accommodations. So, as the task goes late, other people are

CEPM502: Planning and Managing Resources Cornell University

standing around waiting to begin other activities. Assignment changes need to be made quickly with a much smaller time window to make this transition a smooth one. It’s very important for the project manager to verify progress reports made by team members and not simply collect status reports.

You can ask for demos, you can walk through some pieces of the work project together, you can ask questions: How far are you? How did that step happen? That will give you reason to believe that what you’re being told is, in fact, correct. And remember, it’s not about maliciousness, it’s about people genuinely trying to do their work and not wanting to disappoint anyone else on their team. That, really, is what leads to hope creep.

Effort Creep

Effort creep takes place when the progress on a project by a team member isn’t proportional to the amount of effort they have expanded. It’s taking longer than anticipated. For team members who appear to have this issue, it’s important for the project manager to get frequent updates so he or she can identify any difficulties and try to get ahead of the problem. Effort creep can be caused by communication issues between team members.

It can happen because of a slow interface between one activity and the next. It could be that the team member has a weakness in their skill set for a particular task and will need help to find a way to get that task done. It may be that the effort estimates for that activity were, in fact, too low, given the task complexity. The project manager just needs to know it and adjust accordingly. One of the critical tasks for a project manager is to refrain from assigning

CEPM502: Planning and Managing Resources Cornell University

blame; the goal is to figure out as much as you can about how the team member got to this point so that you can help resolve the problem. To build trust with your team members, it is important to get a handle on these things as early as possible.

Team-Member Scope Creep

Team-member scope creep is also referred to as “gold plating.” It happens when a team member (or members, plural) adds extra features to their work to please the customer or to illustrate their competence. Work is a source of pride for people. Being able to do something better than anticipated can make people feel very good.

And the team members are probably not doing this to cause problems down the road, but they may not realize that when they add extra effort or additional features, the customer may not really want that. From a team member’s vantage point in the organization, they may not have enough direct customer insight to make a correct judgment about what’s necessary or what should be added. Therefore, it is possible that the customer may not find this new feature worthwhile.

It’s also possible that if one employee decides independently to add what he thinks is an excellent feature, thinking that it’s just a little bit of extra work for him, this can cause problems for someone else in some other part of the project. For project managers dealing with team-member scope creep:

yes, you want to allow your team members to shine, you want them to be able to show their technical prowess. That is meaningful to people and it will keep them engaged and wanting to keep working. But there needs to be a formal process to consider all changes to project scope that takes into consideration what it

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will mean to accommodate that change in other parts of the project. The goal is to end up with a very thoughtful decision about whether or not this new feature should be added. And you will also want to know how the customer will respond before you allow the team member to put in the extra work.

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CEPM502: Planning and Managing Resources Cornell University

Managing the Creeps

Discussion topic:

You have identified four common types of creep: scope creep, hope creep, effort creep, and team member scope creep.

Create a post in which you respond to the following:

1. Which of these four types of creep have you found to be the most problematic?

2. Offer 1-2 best practices for handling this type of creep. What have you found to be an effective strategy? Which project- management processes do you rely on here?

Instructions:

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CEPM502: Planning and Managing Resources Cornell University

Course Project, Part Three: Managing Creep, Scope, and the Unknown

As you have seen in this module (and, no doubt, as you have experienced in your work as a project manager) being able to manage project scope, the different types of creep, and all the questions that may arise from “unknowns,” is a huge part of effective project management.

You have seen Professor Nozick discuss the challenges and the strategies that exist within great project management. This part of the course project gives you a chance at practical application of what you have learned. You will now create an action plan for yourself. It will guide your efforts on the job as you strive to be more effective in handling some of the tricky demands of project management. Completion of this project is a course requirement.

Instructions:

Download the “Planning and Managing Resources” course project, if you have not already done so. Complete Part Three. Save your work. Click the Submit Assignment button on this page to attach your completed course project document and send it to your instructor for evaluation and credit.

Before you begin:

CEPM502: Planning and Managing Resources Cornell University

Review the grading rubric for this assignment. Please review eCornell’s policy regarding plagiarism.

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CEPM502: Planning and Managing Resources Cornell University

Module Wrap-up: Manage Scope, the Creeps, and the Unknown

People will fall behind in their tasks or will spend too long trying to make their work more impressive than necessary. Critical resources won’t be available for your project when you planned to have them. Customers will ask for more work than was originally agreed to. As the project manager, you can anticipate that similar issues will arise on your projects and can use recommended strategies to address them. In this module, you focused on managing the “creeps”:

those little changes that accumulate along the way and send projects over time and over budget. You accessed a helpful tool that you can use to get better estimates of how long tasks will actually take. You discussed with your peers the best project management strategies in this area.

And you explored what the research says about bringing in more people to help. Brooks’ Law, for example, observes that adding person- power to tasks may actually slow down progress instead of accelerating it.

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CEPM502: Planning and Managing Resources Cornell University

Linda K. Nozick Professor and Director

Civil and Environmental Engineering Cornell University

Congratulations on completing “Planning and Managing Resources.” I hope you now feel more comfortable integrating resource availability constraints into project planning, scheduling, and control, and that you are ready to consider fast-tracking and crashing to bring late projects back on track. I hope you are in a better position to use effective tools and strategies to serve your projects and your organization.

From all of us at Cornell University and eCornell, thank you for participating in this course.

Sincerely,

Read: Thank You and Farewell

CEPM502: Planning and Managing Resources Cornell University

Linda K. Nozick

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CEPM502: Planning and Managing Resources Cornell University

Table Of Contents
Module 1: Flex Schedules and Resources to Your Advantage
Module 2: Use Critical Project Management Tools
Module 3: Manage Scope, Creep, and the Unknown

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