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Tools and Techniques for Corporate Project Management

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Tools and Techniques for Corporate Project Management Powered By Docstoc
					  Tools and Techniques for
Corporate Project Management

         Vladimir Liberzon
  Spider Management Technologies
          Session # PTA08
              Introduction
• In this presentation we will discuss proven
  tools and techniques that are used for the
  corporate project management by many
  companies.
• The questions during the presentation
  are welcomed!
              Introduction
• Some of these tools, like PM Guidelines,
  Document and Contract templates, refer to
  implementation of standard approaches to
  typical processes, others refer to project
  computer modeling. In this presentation we
  will discuss corporate computer modeling
  tools and techniques.
    Part 1


Requirements
 Project and Portfolio Computer
      Model Requirements
• Based on the corporate standards
  (dictionaries, databases and libraries),
• Calculates resource constrained schedules
  taking into account all limitations including
  resource, financial and supply constraints,
 Project and Portfolio Computer
      Model Requirements
• Takes into account project priorities,
• Simulates expenses and revenues that allow
  management of project and portfolio cash
  flows,
 Project and Portfolio Computer
      Model Requirements
• Is able to assign resources basing on their
  skills,
• Calculates Resource Critical Path and
  feasible time, cost and material reserves,
• Simulates project risks and uncertainties,
 Project and Portfolio Computer
      Model Requirements
• Supplies top management with the
  integrated information that reflects not only
  status data but also trends of project and
  portfolio performance that are necessary for
  timely decision making,
• Keeps project and portfolio history.
Part 2


Data
            Organizing data

• Corporate project management systems
  have specific requirements that are vital for
  successful implementation.
• It is necessary to be sure that:
          Data Requirements

• Project costs have the same structure in all
  projects (same cost components are used),
• Cost Accounts are the same in all projects,
• The same Project, Phase, Activity,
  Resource, and Department coding structures
  are used in all projects,
         Data Requirements

• Resources that are used in all projects
  belong to the corporate resource pool,
• Resources of the same type share the same
  characteristics (like rate, material
  consumption per work hour),
             Data Requirements

• Activities of the same type have the same
  characteristics in all projects (like unit cost,
  material requirements per work volume unit, etc.),
• Typical resource assignments have the same
  characteristics in all projects (like productivity,
  cost and material requirements),
         Data Requirements

• Typical processes are modeled in the same
  way in all projects.
• These, and project performance simulation
  requirements, define the necessary data
  structures that have some distinctions
  described further.
              Data Structure
• The main elements of any project computer
  model are:
  –   project activities,
  –   activity dependencies,
  –   resources and their assignments,
  –   calendars, costs,
  –   Work, Resource and Cost Breakdown Structures.
              Activity Data
• Usually project activities are characterized by
  their duration. Besides duration, it is
  frequently necessary to set the activity’s
  physical volume of work.
• Activity volume can be measured in meters,
  tons, etc., planned work hours, percents or any
  other units.
                Activity Data
• Unlike activity duration, activity volume does
  not depend on assigned resources. By
  introducing activity volumes, we will be able to
  use corporate databases that define:
• cost and material requirements per typical
  activity volume unit.
• Typical resource assignment productivity or
  production rate.
           Dependency Data
• Sometimes it is necessary to set more than
  one link between activities.
• Besides the positive and negative time lags, it
  is useful to set volume lags, which is
  preferable in many cases.
             Resource Data
• Resources are divided into two classes:
  – renewable (human resources and mechanisms) and
  – consumable (materials).
• This way we will be able to assign materials to
  resources defining their consumption per
  resource work hour or work volume unit.
                 Example: a car consumes gas.
            Resource Data
• Besides the individual resources one may set
  resource crews (we call them multi-resources)
  and resource skills (roles).
• Multi-resources are the settled groups of
  resources working together (e.g. a team, a
  crew, a car with a driver, etc.).
            Resource Data
• Resources sharing the same skills comprise
  Resource Assignment Pools. Resources with
  the same skills are interchangeable though
  they may have different productivities
  performing the same activities.
           Assignment Data
• Assigning resources to activities implies the
  notion of a team - a group of resources
  working on an activity together. The team can
  include individual resources, multi-resources
  and skills.
             Assignment Data
• If more than one team is assigned then resources
  belonging to the different teams work on an
  activity independently of each other.
• When the volume or duration of team
  assignment is not defined the team will continue
  working until the work on the activity is
  completed. This approach allows simulation of
  shift work.
                 Assignment Data
• Resources can be assigned to activities part time. In
  this case one will set percentage of assigned
  resources utilization together with resource
  quantity (not just the total percentage calculated by
  multiplying percents and quantities, that leaves the
  necessary amount of resources unclear - two resource units
  with 50% utilization are equivalent to one resource unit
  used to its full capacity).
                   Assignment Data
• Another useful option – variable resource
  assignments.
• Example: You may define that the number of resources that may
  be used at some work is between 2 and 4, and their workload
  should be not less than 40% and not more than 80%. In this case
  activity will start if two units of assigned resource are available
  not less than 40% of their time, and the team may be increased if
  additional resources become available. Finishing other
  assignments resources may apply more of their time to the
  specified assignment but not more than 80%.
                Assignment Data
• Resources can consume materials in the process of
  their work. Besides, materials can be assigned to
  activities or resource assignments directly. In some
  projects it is necessary to simulate not only material
  consumption but also production of resources and
  materials on activities and assignments.
                 Calendars
• The calendars shall be set for all activities,
  resources and time lags. Availability of all
  these calendars is important for the proper
  project performance simulation.
                 Cost Data
• Usually it is not enough just to define activity
  and resource costs. It is necessary to know
  project expenses and revenues, what will be
  spent on wages, on machinery and equipment,
  on taxes, etc. Sometimes it is necessary to
  allow for multiple currencies. So there is a
  need to define and assign cost components.
                     Cost Data
• Besides setting the cost of an hour of renewable
  resource work and the cost of material unit, it is
  necessary to be able to set the cost directly for
  activities and assignments. People may be paid not
  only for the hours spent on the task but also by the
  quantity of work they have done. So it is necessary
  to set costs for resource assignments (fixed or per
  unit of volume). Cost of assignment is one
  example of setting contract costs for the project.
  Material, Resource and Cost Centers
• You may need to get different reports on the groups
  of cost components, materials and resources. That is
  why it is necessary to define Cost, Material and
  Resource Centers:
• Material center can include any group of materials.
• Resource center can include any group of resources.
• Cost center includes selected cost components.
             Multiple WBS
• It is also very useful to have an opportunity
  to get project reports that aggregate project
  data different ways. Usually we use at least
  three Work Breakdown Structures in our
  projects: based on project deliverables,
  project processes and responsibilities.
                Multiple RBS
• Resource Breakdown Structures (RBS) are
  especially important in the corporate project
  management. Matrix organizational structure
  determines the necessity of obtaining the reports
  on both Project and Functional RBS. Portfolio
  computer model provides the information on
  resource usage (and corresponding costs) for the
  organization functional departments.
       Cost Breakdown Structure
• Cost Breakdown Structure defines organization
  cost accounts that will be used in all portfolio
  projects.
               Project Archives
• The planners should be able to store project
  versions and to analyze the progress in project
  execution, comparing current project and portfolio
  schedules not only with the baseline but also with
  any previous version. It enables to assess the
  progress in project execution for the last week, last
  month, last year, compared to the baseline, etc.
               Corporate Databases
                (Reference-Books)
• Corporate project management has to be based on the
  corporate standards. These standards will include not only
  processes and document templates but also estimates of
  the typical activity and assignment parameters.
• Activities, resources and assignments belong to the same
  type if they share the same characteristics like unit costs,
  material consumptions per work volume unit, productivity,
  etc.
          Corporate Databases
           (Reference-Books)
• Corporate databases (Reference-books) should
  include at least:
   – Activity cost and material requirements per activity
     type volume unit,
   – Resource assignment cost and material requirements
     per assignment type volume unit,
   – Resource assignment productivity,
   – Assignment work load.
               Fragnet Library
• Project fragnets usually describe typical
  processes and technologies that are used more
  than once. Creating project computer models
  using the corporate library of typical fragnets will
  help to avoid inconsistencies and assures that the
  project model follows corporate standards. A
  library of typical fragnets is a very important tool
  for the development of corporate culture and
  management standards.
  Part 3


Schedule
             Tasks to solve
• Project scheduling without the resource
  limitations taken into the consideration,
• Project resource constrained scheduling
  (resource leveling),
• Determination of critical path and time float
  for project activities,
                Tasks to solve
• Determination of the project requirements for
  finance, materials and equipment for any time
  period,
• Determination of renewable resources utilization
  in time,
             Tasks to solve
• Risk analysis and development of the project
  schedule and other project parameters
  allowing for the risks,
• Project performance measuring,
• Project performance analysis and forecasting
  main project parameters.
                Tasks to solve
• The problem of project schedule development
  without allowing for resource constraints has a
  correct mathematical solution (Critical Path
  Method), which would be the same for all PM
  packages, provided that initial data are identical.
  All other problems are solved using different
  approaches and yielding different results.
   Resource constrained scheduling
• Resource constrained schedules produced by
  different PM software are different. The software
  that calculates shorter resource constrained
  schedules may save a fortune to its users.
• That is why we pay most attention to resource-
  constrained schedule optimization.
   Resource constrained scheduling
• The schedule stability is no less important,
  especially at the project execution phase.
• That is why our project management software
  Spider Project features an additional option - the
  support of the earlier project version schedule
  (keeping the order of activity execution the same
  as in selected earlier project schedule).
       Resource Critical Path
• Traditional notion of Critical Path works only
  in case of unlimited resources availability.
• Let us consider a simple project consisting of
  five activities, presented at the next slide.
  Sample Project before leveling
• Activities 2 and 5 are performed by the
  same resource.
     Sample Project after leveling
• Please pay attention to activities that became
  critical. Now delaying each of the activities 1, 2
  and 5 will delay the project finish date. We call
  these activities Resource Critical and their
  sequence comprises Resource Critical Path.
         Resource Critical Path
• In many projects it is necessary to simulate
  financing and production, and calculate project
  schedules taking into account all limitations
  (including availability of renewable resources,
  material supply and financing schedules). True
  critical path should account for all schedule
  constraints including resource and financial
  limitations.
          Resource Critical Path
• We call it Resource Critical Path (RCP) to
  distinguish it from the traditional interpretation
  of the critical path definition.
• The calculation of RCP is similar to the
  calculation of the traditional critical path with
  the exception that both early and late dates (and
  corresponding activity floats) are calculated
  during forward and backward resource (and
  material, and cost) leveling.
   Resource Constrained Floats
• This technique permits to obtain resource
  constrained floats.
• Activity resource constrained float shows the
  period for which activity execution may be
  postponed within the current schedule with the
  set of resources available in this project.
         RCP and Critical Chain
• It appears that by adding financial and supply
  constraints to the Critical Chain definition as
  well as the way of the Critical Chain calculation,
  we will obtain something very similar to RCP.
  Thus the proven technology of project
  management based on RCP that is described
  further may be of particular interest for the
  Critical Chain theory supporters.
      Part 4


Success Criteria
          Project Success Criteria
• If project success criteria are set as finishing
  project in time and under budget then proper
  decision making will be complicated.
• Project managers will not be able to estimate the
  effect of their decisions to spend more money but
  to finish the project earlier.
• If some project is business oriented then this
  project has to have business criteria of its success
  or failure.
         Project Success Criteria
• One of potential options – to set the profit that
  should be achieved at some point in time basing
  on the forecast of the revenues that will be
  obtained after the project will deliver its results.
• Such success criterion will permit to weight time
  and money making managerial decisions.
         Project Success Criteria
• At the next slide you may see the project
  schedule that is calculated without allowing for
  project financing and supply restrictions. There
  are periods when project has no money to
  proceed and necessary materials (wall frames)
  are absent.
             Project Success Criteria
• But if project
  manager will find
  enough money
  and materials then
  project total profit
  to some imposed
  date will be close
  to $219,000.
            Project Success Criteria
• If to calculate
  project resource,
  financing and
  supply constrained
  schedule than total
  profit will become
  more than
  $25,000 less.
       Project Success Criteria
• Maybe it will be reasonable to borrow
  money or to find some other solution?
• To be able to weight options and to choose
  the best it is necessary to simulate not only
  expenses. This approach is especially
  important for portfolio management.
        Part 5

  Risk Analysis &
Success Driven Project
    Management
            Why risk analysis
• Our experience of project planning shows that
  the probability of successful implementation of
  deterministic project schedules and budgets is
  very low. Therefore project and portfolio
  planning technology should always include risk
  simulation to produce reliable results.
            Risk Simulation
• Risk simulation may be based on Monte
  Carlo simulation or use three scenarios
  approach that will be described further.
             Risk Simulation –
          three scenarios approach
• A project planner obtains three estimates (optimistic, most
  probable and pessimistic) for all initial project data
  (duration, volumes, productivity, calendars, costs, etc.).
• Risk events are selected and ranked using the usual
  approach to risk qualitative analysis. Usually we
  recommend to include risk events with the probability
  exceeding 90% in the optimistic scenario, exceeding 50%
  in the most probable scenario, and all selected risks in the
  pessimistic scenario.
            Risk Simulation –
         three scenarios approach
• The most probable and pessimistic project
  scenarios may contain additional activities and
  costs due to corresponding risk events and may
  employ additional resources and different
  calendars than the optimistic project scenario. As
  the result project planner obtains three expected
  finish dates, costs and material consumptions for
  all major milestones.
           Desired Parameters
• They are used to rebuild probability curves for the
  dates, costs and material requirements.
• Defining desired probabilities of meeting project
  targets a project planner obtains desired finish
  dates, costs and material requirements for any
  project deliverable.
        Success Probabilities
• If the targets were approved then it is necessary to
  calculate the probabilities of meeting required project
  targets. If they are reasonable then they may be
  accepted.
• Probabilities to meet approved project targets we call
  Success Probabilities. These targets may include all
  project parameters that will be controlled (profit,
  expenses, duration, material consumption).
                   Baseline
• Target dates do not belong to any schedule.
  Usually they are between most probable and
  pessimistic dates. A set of target dates and costs
  (analogue of milestone schedule) is the real
  project baseline.
• But baseline schedule does not exist!
                     Buffers
• We recommend to use optimistic schedule for
  setting tasks for project implementers and
  manage project reserves.
• Project planner obtains not only the set of target
  dates but also a critical schedule – a project
  schedule calculated backward from target dates.
  The difference between current and critical dates
  shows current schedule contingency reserves
  (buffers).
             Sample Critical Schedule
• There are time, cost
  and material buffers
  that show
  contingency reserves
  not only for a project
  as a whole (analogue
  of Critical Chain
  project buffer) but
  also for any activity
  in the optimistic
  project schedule.
       Success Probability Trends
• The best way to measure project performance is
  to estimate what is going on with the project
  success probabilities. If they raise it means that
  contingency reserves are spent slower than
  expected, if they drop it means that project
  performance is not as good as it was planned and
  corrective actions are needed.
       Success Probability Trends
• Success probabilities may change due to:
  –   Performance results
  –   Scope changes
  –   Cost changes
  –   Risk changes
  –   Resource changes
      Success Probability Trends
• Thus success probability trends reflect not
  only project performance results but also what
  is going on around the project.
• We consider success probability trends as
  the really integrated project performance
  measurement tool.
      Success Probability Trends
• Success probability trends may be used as the
  only information about project performance at
  the top management level because this
  information is sufficient for performance
  estimation and decision making.
Success Driven Project Management
 • We call the described methodology Success
   Driven Project Management.
Success Driven Project Management
• If project performance is estimated by success
  probability trends then project managers are
  encouraged to resolve uncertainties ASAP. This
  can increase success probabilities even with
  activity finish delays & cost overruns.
• Postponing problem activities leads to negative
  trends in success probabilities.
Success Driven Project Management
 • This attribute of success probability trends
   is especially useful in new product
   development project management.
 • On the corporate level it is very useful to
   know trends and current probabilities of
   meeting targets for all portfolio projects.
    Part 6

Conclusions
Corporate PM Tools and Techniques
• Organizing data in a way that supports proper
  resource work simulation and application of
  corporate norms and standards.
• Creating a set of reference-books and the
  fragnet libraries that are obligatory for creating
  project computer models.
Corporate PM Tools and Techniques
• Calculating Resource Critical Path and resource
  constrained floats for every project and project
  portfolio.
• Risk assessment and simulation.
• Defining project success and failure criteria that
  reflect achieving project business goals.
Corporate PM Tools and Techniques
• Defining project targets (and corresponding
  contingency reserves) that may be achieved with
  reasonable probabilities.
• Regularly recalculating the current probabilities of
  meeting project targets during execution and
  analyzing success probability trends. Negative
  success probability trends require corrective
  actions.
Success Driven Project Management Flowchart
REFERENCE-BOOKS:            Code Structures          Typical Fragnet
Resources                                               Library
                            Project Schedule
Materials
                                                     WBS Templates
Cost Components
                             Project Budget
Cost Breakdown Structure                             Project Portfolio

Resource Breakdown           Risk Analysis            Risk Register
Structure
Calendars                  Success and Failure        Issue Register
                                Criteria
Resource Productivities
                                                      Performance
Unit Costs
                           Success and Failure          Reports
Material Requirements         Probabilities
per Volume Unit
                                                 -
                                                        Corrective
Skills                     Success Probability           Actions
Multi-Resources                 Trends
                                                 +       Work
                                                      Authorization
           Contact Information
                • Session # PTA08
               • Vladimir Liberzon
       • Spider Management Technologies,
Address: Russia, Moscow, Semenovskaya sq. 7 - 16
           • E-mail: spider@mail.cnt.ru
          • Telephone: +7 095 540 43 97

				
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