Best Practices for Project Management

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BEST PRACTICES FOR

PROJECT MANAGEMENT

Version: 1.0

Date: 08 Aug 2007



Best Practices for Project Management

e-Government Program (yesser) - 2 -

Table of Contents

1. Executive Summary .......................................................................................................... 4 2. Introduction ....................................................................................................................... 5

2.1. Purpose ....................................................................................................................... 5 2.2. Document Structure ..................................................................................................... 5 2.3. Referenced Documents ................................................................................................ 5

3. Overview ............................................................................................................................ 6 3.1. The Importance of Project Management in the IT Department ..................................... 6 3.2. The Context of Project Management in the IT Department ........................................... 7 3.3. The Project Management Team Structure .................................................................... 8 3.4. Qualifications of the Project Manager ......................................................................... 10

3.4.1. Project Theory and Knowledge Areas ........................................................................................... 10 3.4.2. Management and Soft skills .......................................................................................................... 10 3.4.3. Technical Skills ............................................................................................................................ 11

3.5. Finding and Preparing Qualified Project Managers .................................................... 11 4. Projects in the Government ............................................................................................ 13 5. Project Management Standard ....................................................................................... 15

5.1. PMI Process Groups .................................................................................................. 15 5.2. PMI Knowledge Areas ................................................................................................ 16 5.3. The Project lifecycle ................................................................................................... 17

6. Setting up Projects ......................................................................................................... 19 6.1. Staffing the Project ..................................................................................................... 19 6.2. Setting up Quality Management ................................................................................. 19 6.3. Establishing Project Reporting ................................................................................... 20 6.4. Example on Earned Value Management .................................................................... 21

7. Project Management Recommendations ....................................................................... 24 8. Appendix I

–Methodologies Used ................................................................................. 25

9. Appendix II – Risk Management ..................................................................................... 26 9.1. Definitions .................................................................................................................. 26 9.2. Risk Management Process ........................................................................................ 27

9.2.1. Risk Identification ......................................................................................................................... 27 9.2.2. Risk Analysis ............................................................................................................................... 27 9.2.3. Risk Planning ............................................................................................................................... 27 9.2.4. Risk Tracking ............................................................................................................................... 28 9.2.5. Risk Control ................................................................................................................................. 28 9.2.6. Risk Learning ............................................................................................................................... 28

10. Appendix III: Managing Stakeholders Expectations ..................................................... 29 11. Appendix IV – Sample Project Report............................................................................ 30





List of Tables

Table 1 - Examples of the Defined Project Roles ....................................................................... 9 Table 2 – Challenges – In-house Projects ................................................................................ 13 Table 3

–Challenges

–External Projects ................................................................................. 13

Table 4 - Product vs. Project Deliverables ................................................................................ 17

List of Figures

Figure 1 - Project Management Context ..................................................................................... 7 Figure 2 - Structure of the Project Team ..................................................................................... 8 Figure 3 - PMI Process Groups ................................................................................................ 16 Figure 4- Quality Management Concept ................................................................................... 20 Figure 5 – Example Earned Value Diagram ............................................................................. 23 Figure 6 - MSF Risk Management Process .............................................................................. 27





1. Executive Summary

Projects are considered an integral part of the IT departments’ activities. Due to this fact,

IT departments need to view project management in the right context in term ofimportance, skill requirements, ability to deliver, organizational integration, and expectedresults.

This document aims to address the various areas that need to be considered by ITDepartments’ management when it comes to Project Management. In this document,different focus was given to the critical areas in order to ensure a successful delivery ofprojects according to right principles and environmental needs of project management.Putting together the right principles does not only rely on good standards and bestpractices, but it also takes into account different considerations such as the environmenttype (private or government).

The critical areas that are addressed in this document include:

• Importance of project management in delivering successful results: Noting thatprojects will have high tendency of failing to achieve expected results, havingproper project management should be endorsed and adopted in the IT department

• Building proper organization for project management: Within IT, projectmanagement has to take a formal role in term of organization, team structures,roles, and qualifications

• Handling projects according to their type: Within the government environment,

projects consists of two types: in-house and outsourced. Each comes with its ownrequirements and challenges

• Strong know how of industry best practices and recommendations: An overview ispresented for Project Management Institute (PMI) standards as it is the de-factoreference for project management in the Kingdom

• Practical considerations for adopting and implementing project management:Practical examples and considerations have been presented along with relevantrecommendations that can be considered by the IT departments on ProjectManagement

This document is not a reiteration of the theory. This document presents the theoreticaland practical concepts in a manner that is relevant and of context to the IT departmentsthat plans to implement or enhance their project management activities.





2. Introduction

This document is a set of best practices followed in the management of projects in IT

departments. It guides the IT managers in planning and setting up proper projectmanagement structure and environment. This is a living document, and it will be furtherdeveloped and regularly reviewed to ensure that it continues to provide the latest and thebest practices used in managing IT projects within the government organization.

2.1. Purpose

The purpose of this document is to provide guidance for IT managers in setting up projectmanagement structure and environment that insure the delivery of successful IT projects.

The main audience for this document is the IT managers, project managers and middlemanagers who are involved in executing IT projects.

2.2. Document Structure

The structure of this document addresses the intention of the reader. It contains thefollowing sections:

1. Overview: This section describes the importance of project management for the ITdepartments and its context. It also clarifies the structure of the project team, andthe qualifications of the project manager.

2. Projects in the Government: This section describes the projects in thegovernment, their types, nature, and recommendations for them.

3. Project Management Standard: This section describes on a high level the PMI

standards for project management. It also explains the confused or misunderstoodcomponents of it.

4. Setting up Projects: This section describes how to prepare for projects and howto start them. This covers staffing, quality management and reporting.

5. Project Management Recommendations: This section describes the bestpractices of project management. It is for the IT managers who want to readquickly a summary of recommendations or tips.

2.3. Referenced Documents

The documents listed below have been used as a reference material to the subject ofmanaging IT projects, they also provide details on their designated subjects:

1. Guide to the Documents of IT Best Practices

2. Glossary of Terms for the IT Best Practices

3. Best Practices of IT Organization Design

4. Project Management Office Guidelines and Processes





3. Overview

3.1. The Importance of Project Management in the IT Department

Hugh W. Ryan, in an article for Outlook Journal summarized research showsthat among all IT development projects, only 16% are delivered to acceptablecost, time and quality.

In 1999, Standish Group International found that only 28% of informationtechnology projects are completed successfully.

Of 1,027 projects surveyed by the British Computer Society, the Associationof Project Managers and the Institute of Management concluded that only130 (12.7%) were successful.1

The performance of projects in Information Technology has been showing consistently lowsuccess rates. The reasons for this are many, but one of the major reasons is theinadequate project management discipline and processes.

Projects in the IT department constitute a huge portion of the work performed. The rest ofthe work is routine and of operational nature. Almost any change in the IT department -concerning the management, the process or the tools- is preformed through a project.However, what is not a project is the routine, operation and repetitive work. The projecteffort has to be unique, if it is not unique, it is not a project.

Projects are "change enablers" and thus they are used to meet strategic plans and ITgovernance objectives. They are also very strong management tool, they are well defined,they have specific purpose and objectives and they are bounded to a preset timeframe.

Running work by projects has many benefits:

1. It formalizes the work around objectives and sound justification

2. It facilitates working in teams and it enhances cooperation and communicationbetween individuals and team members

3. It makes tasks easier to organize, plan, control and track

4. It makes achievements visible and tracked, in addition, it allows knowledge andexperience to be accumulated and gained gradually and to be recorded as projecthistory, giving indicative information about future work

5. It allows controlling the cost of work and other constraints

6. It clarifies the responsibilities of individuals, teams and entities toward a projectand their expected contributions to its success

7. It gives visibility on the future and usage of resource as a direct benefit of formaland indispensable planning activities

1Software Metrics: Best Practices for Successful IT Management, by Paul Goodman. Rothstein

Associates © 2004





3.2. The Context of Project Management in the IT Department

Projects manage tasks and small assignments, but the projects themselves are alsomanaged as programs. The following diagram depicts the idea:

Figure 1 - Project Management Context

Recently, projects and programs are managed under a formally established entity called aProject Management Office (PMO). These organized and formalized entities exist mainlyto centralize the tracking of the running projects consistently and with coordination andconsistent prioritization of resources and constraints.

The Project Management Office has many benefits:

1. Establishes and deploys a common set of project management processes andstandards, and updates it to account for improvements and best practices

2. Provides training (in-house or outsourced) to build core project managementcompetencies and common experiences

3. Provides project management coaching, and supporting services to keepprojects from getting into trouble

4. Tracks and reports basic information on the current status of all projects in theorganization and provides project visibility to higher management in a commonand consistent manner in order to control the competing objectives (Time, Cost,Scope and Quality) of projects

5. Tracks organization-wide metrics on the state of project management, projectdelivery, and the value being provided as an outcome of the project

6. Identify dependencies between running projects and facilitate coordination andprioritization of projects

7. Sharing of experiences and lessons learned amongst projects by facilitatingefficient communication and status reporting





3.3. The Project Management Team Structure

The project team consists of the following main roles:

§

Project Sponsor: The ultimate decision maker regarding project managementdecision and performance

§ Project End-users: The beneficiaries of the project results

§ Project Manager: Who is responsible and accountable for the project success andmeeting the project objectives

§ Project Director-Program Manager: Oversees the projects and has an overallproject accountability

§ Project Quality Manager: Responsible for meeting customer expectations andthe acceptable level of quality.

§ Project Team members: People who participate in project execution.

The reporting structure for project team can be represented as follows:

Figure 2 - Structure of the Project Team

The quality manager (as clarified in the diagram) is not reporting to the project manager,he should report to the project director in order to give an unbiased and uninfluencedopinion about the quality performance of the project.

It is also important to note that the project can consist on at least one person and theproject sponsor, it cannot be less than that.





Each of these roles can be fulfilled by one person or more (a steering committee2 or a taskforce3 can be formed to fulfill a role). The following table gives an example of thefunctional roles in the IT department and the government that can play the identified roles:

Table 1 - Examples of the Defined Project Roles

Role Example of a role holder/s

Project SponsorIT Manager/Director, Government business entitymanager, Minister, or any High level manager

Project End-usersIT department staff, government employees, or publiccitizens

Project ManagerIT Manager, section manger, team leader or anyqualified IT department member

Project Director -Program Manager

IT Manager, IT director, or Chief Technology Officer(CTO)

Project Quality ManagerIT Manager, section manger, team leader or anyqualified IT department member

Project Team members Any qualified IT department member

Please refer to the Project Management section in the "Best Practices of IT Organization

Design" for details on the project management organization structure in the IT department.

For details on Project Management Office setup and processes, please refer to "ProjectManagement Office Guidelines and Processes".

2

A steering committee is a team that decides on the priorities or order of projects, programs or tasks

3A task force is a group specially organized and dedicated to accomplish a critical task





3.4. Qualifications of the Project Manager

The project manager is an achiever who must have the ability to achieve the objectives ofthe project and its expected results. This might seem easy, but it actually requires the

project manager to have a large set of skills and abilities that cover the different aspectsand nature of the project management work.

There are three main aspects of the project manager work, which require three differentskill sets:

3.4.1.Project Theory and Knowledge Areas

A project in nature is different from classical and traditional work: it is not a set of tasks,routine procedures, relaxed research or production, it is however a work withinconstraints to achieve challenging goals and objectives. Therefore, if the goals arenot met, the project fails, if the goals are met but outside the constraints, it also fails, it has

to meet the goals within constraints.

This unique nature of projects requires the project manager:

§ To have the ability to manage resources like cost, time, people, etc.

§ To be able to prioritize, understand what is important and what is not

§ To be able to manage concurrently multiple streams of work, and integrate thedifferent knowledge areas of project management altogether in order to serve theproject needs

§ To be skilled in technical issues related to project planning and tracking. Forexample, creating project plans and reports using technical tools like MS project,

Primavera planner, office tools, etc.§ To understand how the project impacts the organization and the project sponsor in

terms of budget, schedule and the change process being made

§ To live through real life projects, and see the full project lifecycle from beginning toclosure

Most importantly, the project manager must adapt a methodology in managing projects,like the PMI standards. The project manager must be knowledgeable in the areas andskills needed to manage a project successfully. These areas are called the projectmanagement knowledge areas (See section 5: Project Management Standard ).

3.4.2.Management and Soft skills

"Management could have been easy if it was not for people"

Indeed, achieving results through people is difficult. This comes from the complex, andchanging nature of human beings. The different personalities of the project team membersand stakeholders require different handling and different techniques. What some peoplesee acceptable, others might see it not acceptable!





The project manager deals with a large number of people and from different backgroundsand with different requirements. The end users for example require more features, whilethe project sponsor wants quick-wins.

It is important for the project manager:

§ To know how to deal with people with professionalism, fairness and objectivity

§ To take into account personal interests and align them with the project goals

§ To have general management skills, planning, organizing, controlling andcoordinating

§ To have superior communication skills, to be a good listener, understanding andconsiderate

§ To know how to motivate people and how to reward good performance

§ To be able to understand personality traits and cultural differences

§ To be able to assess performance of individuals and enhance it

§To be able to build teams and establish good work relationships

§ To be able to introduce change to the organization and align people on the visionand the mission of the project

3.4.3. Technical Skills

The technical skills are the easiest of the three aspects, because they are acquired fromthe field of work gradually. The level of knowledge in the project functional or technicalarea depends on the project nature and situation.

If the project manager does not have adequate technical skills, he must have access to asubject matter expert or have one in his team. The project manager can perform betterand can be creative and innovative if he has adequate technical or functional skills.

There are however, very rare cases in which a project manager managed successfullyprojects outside their functional or technical specialty. The concept of a generic field orgeneric industry project manager does not really exist4, but a generic project director, aPMO manager or a generic executive manager does exist and he might span multiplefields or industries.

3.5. Finding and Preparing Qualified Project Managers

Qualified project managers can be simply recruited, or prepared, trained and grown fromwithin the existing IT team. In searching for project managers -or project managementcandidates with the good potential-, the focus should be on the personal traits, like:

§ Leadership

§ Accepting responsibilities

§ Flexibility and adaptability with others

§ Communication skills

4Some cases worked when the project manager had large experience and multi talents. Or when the

project was a program or mega project, and his work had a nature of directing or coordinating. But theproject manager in the IT department, and for the IT projects, must be educated and informed (technicallyor functionally) about the project field or nature





§ Resourcefulness5

Note that skills and knowledge about project management can be learned either in thework environment or on job training, or by professional training in project management.Even qualified project managers must attend at least one professional training.

5having the ability to find quick and clever ways to overcome difficulties





4. Projects in the Government

There are two types of projects in the government:

1. In-house projects: In-house project are performed by the in-house government staff,and for a government entity. These projects are within control and work is visible andeasily monitored by the government entity.

2. External projects: External projects are performed by external suppliers, vendors orsubcontractors. The execution of these projects is outside the control of thegovernmental entity, and hence these projects have more risks and issues, andrequire special handling.

This distinction between the two is important because it affects the staffing of projects, thequality management system and the methodology followed in managing the projects.

The following table summarizes the impact and recommended approach to handle in-house project challenges:

Table 2 – Challenges – In-house Projects

Challenge Impact Recommendation

Staffing Organization structureand control over theproject team

Dedication to project andallocating adequate timeto perform activities

§Establish a structure thatsupports projects

§Clarify responsibilities andcommandments toprojects

Quality Less formalized Quality of deliverables Dedicate a quality managerwith each project

Methodology Requires training andinvestment in time

Overhead, long learningcurve and difficult toimplement

Select a methodology that issimple, pragmatic and easyto follow

While the following table summarizes the impact and recommended approach to handleExternal project challenges:

Table 3 – Challenges – External Projects

Challenge Impact Recommendation

Staffing 1. Understaffing theproject from theclient side

Poor projectperformance

§Agreement and approval ofproject team staff

§Strict conditions in the projectcontract

2. Inadequateresources from thegovernment entity

Poor projectperformance

§Prepare client side projectmanagers

§Recruit project management

consultants to manage thesubcontractor





Quality Guarantee quality ofdeliverables from thesubcontractor

Quality ofdeliverables

Dedicate a quality manager witheach project from thegovernment and from thesubcontractor for each project

Methodology Diverse methodologies

from differentsubcontractors, or nofollowed methodology

Inconsistency in

project management,reporting andcommunication

Unify methodologies to be

followed by subcontractors

It is recommended to have a formal entity (like a PMO) to manage projects and it shouldimpose the same methodology and project reporting structure for all types of projects.





5. Project Management Standard

Using a defined project management standard or methodology has many benefits, but the

most important one (without ignoring consistency) is the clarity on what is needed to bedone and how to do it. This has been the reason for failure of many projects, when theproject team and the client do not talk the same language, and when their expectationsdiffer, the project will face many problems.

The most common standard used worldwide is the Project Management Institute (PMI)standards. It is detailed in the Project Management Body of Knowledge (PMBOK), Thirdedition.

As this standard is generic, it can be tuned and applied according to the unique projectneeds, which differ from one project to another.

In the PMI standard, it is important to differentiate between three different elements that

cause confusion and misunderstanding:

1. PMI Project Management process groups (see section 5.1)

2. PMI Project Management knowledge areas (see section 5.2)

3. Project lifecycle which is determined by the project nature, field or the product of theproject (see section 5.3)

5.1. PMI Process Groups

The processes of the Project Management Institute fall into the following groups:

1. Initiating processes: These are the processes that authorize the project or variousphases of the project

2. Planning processes: The definition of objectives and selection of the bestalternatives falls into this category. These processes are time consuming but veryimportant to the success of the project

3. Executing processes: This is when you pull everything together. All your planningand refining of the scope, objectives, and deliverables come into play during theimplementation of these processes. They include having all your resources in the rightplace at the right time with the right plan

4. Monitoring and Controlling processes: This group involves scope management andutilizing processes to keep the project in line with the original objectives. Theseprocesses involve a lot of follow-up to make sure everything is within the constraintsmandated at the beginning of the project and in the charter

5. Closing process: The signoff process is the formalized closure of the project. Thisprocess is linked with the determination by the stakeholders that the project hasfulfilled its obligations as stipulated in the original scope statement





The diagram6 below shows the different process groups:

Figure 3 - PMI Process Groups

Note that these are not project phases; they are just groups of processes. Many peopleconfuse these with project phases and establish it as a formal project life cycle. ( SeeSection 5.3 The Project Lifecycle )

There is not a single process for project management that falls outside these processes.Any process or procedure should fall into one of these process groups.

5.2. PMI Knowledge AreasThe knowledge areas in the Project Management Body of Knowledge are essential toeach project. Project managers need to understand them and be educated and familiarwith them in order to integrate appropriately, they are:

1. Project integration management: This area includes plan development, execution,and integrated change control. This involves input to develop the plan and theprocesses to keep it on track.

2. Project scope management: This area is composed of project initiation, scopeplanning, definition, verification, and change control. In initiation when the projectbegins with the outline of what you want to accomplish and the processes that are

required to make any alterations to the scope.

3. Project time management: This area encompasses activity definition, sequencing,duration estimating, schedule development, and control. Remember that time is a keyelement to the project and its success.

4. Project cost management: This area incorporates resource planning, costestimating, budgeting, and control.

5. Project quality management: This area involves quality planning, assurance, andcontrol.

6. Project human resource management: This area pertains to organizational

6PMI - Project Management Institute Standards, Project Management Body of Knowledge PMBOK

Version 3





planning, staff acquisition, and team development.

7. Project communications management: This area involves communicationsplanning, information distribution, performance reporting, and administrative closure.

8. Project risk management: This area describes risk management planning,identification, qualitative and quantitative risk analysis, response planning, monitoring,

and control.

9. Project procurement management: This area focuses on procurement planning,solicitation planning, solicitation, source selection, contract administration, andcloseout.

These knowledge areas can be learned through reading, a course, or professionaltraining.

5.3. The Project lifecycle

The project lifecycle (as mentioned in the PMBOK) depends on the project nature anddomain. In the third edition, it might also depend on the product of the project. Forexample, a software project can follow the MS MSF (Microsoft Solution Framework)project life cycle or the RUP (Rational Unified Process). However, an infrastructureimplementation project has a very different lifecycle and approach.

There are however a set of phases that exist in each project:

1. Initiation phase: in which the project starts

2. Closure phase: in which the project ends, and closure activities take place

3. Interim phases: the number and order of those phases depend on the approach,

methodology, product of the project and field of the project. For example in asoftware project, and according to the MSF, the phases of creating a softwareproduct are (Envisioning, Planning, Development, Stabilizing and Deployment).

The product of the project is the measurable outcome or the deliverable. In IT projects, itcan be many of things, like:

§ Documentation of research, design, reports, templates, etc.

§ Software packages burned on a CD, or stored in a permanent digital format

§ Software code, including files of code, images, etc.

§ Hardware equipment

§ Activities or tasks measured by time or soft outputs like (support, training,coaching, monitoring, coordination, etc.)

These deliverables are different from project management related deliverables. Thefollowing table provides examples of both:

Table 4 - Product vs. Project Deliverables

Project Management Deliverables Product Deliverables

Project Management Plan Product Development Plan

Project Scope Product requirements and features





Project Performance reports – statusreporting

Product test reports and feedback

Meeting minutes, communications andcorrespondences

Product training sessions, joint testingand handover

Project schedule plan, cost, risks andquality assurance Product specifications, manuals andpackages





6. Setting up Projects

6.1. Staffing the ProjectStaffing projects starts with allocating a project manager. The project manager shouldhave the qualifications described in the "Qualifications of the Project Manager" section.

Then the project manager is responsible for staffing the rest of the project team. This stepgoes through the following activities:

1. Understanding of the project requirements

2. Planning the staffing needs of the project, which includes

a. Number of people needed to complete the project

b. Needed expertise and knowledge (Functional and Technical)

c. Time table for joining and releasing project team members

3. Fulfilling the staffing needs as planned

Step (3) is very challenging: most projects tend to be understaffed because of the limitednumber of people or because of the unavailability of adequate expertise.

Even when the project is staffed as planned, some people might not perform as expected,and hence additional planning and monitoring is needed to handle such staffing problems.

6.2. Setting up Quality Management

Quality management is one of the most neglected areas in project management. It iscrucial to the success of the project. Despite that, project managers neglect it or add fewactivities at the end of the project or phases. Therefore, Quality Management must be builtinto the project management system, and should be aligned with all project activities.

Quality management aims to guarantee two things:

1. Fitness of use: the activities are producing what the client needs

2. Freedom from deficiencies: the product of the activities is free from bugs, problemsand deficiencies

Quality Management takes care of the quality policy, quality standards, andresponsibilities and implements them by means such as quality planning, quality control,quality assurance and quality improvement.

The approach for ensuring that the appropriate Quality Management activities areconducted should be from the Project Management Institute’s (PMI) Standard, which hasthe following quality components:

1. Quality Planning – identifying and/or verifying quality standards that are relevant tothe project and determining how to satisfy them.

2. Quality Control – monitoring specific project results and deliverables to determine if

they comply with relevant quality standards and identifying ways to eliminate causes ofunsatisfactory performance or defects.





3. Quality Assurance – periodic executive review and evaluation of the overall projectperformance in order to provide confidence that the project will satisfy the relevantquality standards.

Quality management/planning includes selecting the kind of quality activities needed,depending on the project nature and needs. For example, some project might need more

quality control than assurance because they are producing feasible deliverables like asoftware applications or documents. Other projects need more quality assuranceactivities because it is process dependant and the nature of the project depends on theapproach more that the output like research, analysis, and consulting assignment.

The following diagram represents how Quality Management/Planning controls both sidesof quality:

Figure 4- Quality Management Concept

6.3. Establishing Project Reporting

“You can’t control what you can’t measure.” Tom DeMarco, Controlling Software Projects Measuring performance of projects is crucial to track and control deviation from projectplans. It is recommended to have an up to the minute Key Performance Indicators (KPI's)that reflect the actual status of the project performance and progress accurately andconsistently.

One of the common and recommended project tracking and measurement methods is theEarned Value Management.

Earned Value Management (EVM) gives an indication about project status in terms ofTime, Effort and Cost. It integrates three main KPI's and gives a true and objective status

of the project upon which conclusions and corrective actions can be made.

The main three KPI's used in EVM are:

§ BCWS - Budgeted Cost of Work Scheduled: Planned cost of the total amount ofwork scheduled to be performed by the specified date

§ ACWP - Actual Cost of Work Performed: Cost incurred to accomplish the work thathas been done to the specified date

§ BCWP - Budgeted Cost of Work Performed: The planned (not actual) cost tocomplete the work that has been done up to the specified date

Another two calculated metrics that gives indication about the status of schedule andcost are:





§ SV: Schedule Variance (BCWP-BCWS): A comparison of amount of workperformed during a given period of time to what was scheduled to be performed

§ CV: Cost Variance (BCWP-ACWP): A comparison of the budgeted cost of workperformed with actual cost

In order to apply the EVM method:1. Specify a date on which and EVM report will be produced

2. Specify the three values (BCWS, ACWP, and the BCWP)

3. Calculate SV and CV

A negative variance for SV means the project is behind schedule, while a negativevariance for cost means the project is over budget.

It is important to look at these measures objectively and according to the requirements, forexample, it might be acceptable to be over budget with ahead of schedule.

6.4. Example on Earned Value Management

Project Case:

A task has been estimated to take (24) man-days of effort, and to be done by (2) resourcesin (12) working days. Each resource costs SAR 1,000 a day.

The baseline of the task is:

§ Effort: 24 man days

§ Schedule: 12 man days

§ Cost: 24 X 1000 = SAR 24,000

The project status is requested to be reported every 4 days.

Status at the end of day 4:

One resource took a (2) days sick leave, and was able to work for (2) days only, while theother one worked for (4) days, both were able to accomplish (25%) of the task. This meansthat the:

Actual Effort spend so far is 2+4=6 man days

Actual Progress achieved (Earned) is 25% [which means 25% X 24= 6 days]

Applying the earned value measures gives us:

§ BCWS : Planned cost of the total amount of work scheduled to be performed byend of the 4th day is: [4 + 4] days X SAR 1,000 = SAR 8,000 [this is also thebaseline at day 4]

§ ACWP : Cost incurred to accomplish the work that has been done until the 4 th dayis the actual effort spent: which is 6 [man days] X SAR 1,000 = SAR 6,000 [this isthe spent until day 4]

§ BCWP : The planned cost to complete the work that has been done (actualprogress 25%) up to the 4th day is : 6 days X SAR 1,000 = SAR 6,000

§ The SV: Schedule Variance (BCWP-BCWS) is: 6000-8000 = SAR -2,000

§ While the CV: Cost Variance (BCWP-ACWP): 6000-6000 = SAR 0





This means that the project is doing fine in terms of spending, but it is late by what worthSAR 2,000.

Another way to look at cost, especially in government projects is to consider the cost unitas a working man-day. And by this cost of resources is measured by how many days theyspend working on a task, the numbers become as follows:

§ BCWS : Planned cost of the total amount of work scheduled to be performed byend of the 4th day is: [4 + 4] days = 8 man days [this is also the baseline at day 4]

§ ACWP : Cost incurred to accomplish the work that has been done until the 4 th dayis the actual effort spent: which is 6 man days [this is the spent until day 4]

§ BCWP : The planned cost to complete the work that has been done (actualprogress 25%) up to the 4th day is : 25% X 24= 6 man days

§ The SV: Schedule Variance (BCWP-BCWS) is: 6-8 = -2 man days

§ While the CV: Cost Variance (BCWP-ACWP): 6-6 = 0 days

This means that the project is late by 2 man-days, but it is doing fine in terms of effortbeing spent.

Status at the end of day 8:

Because of the delay, the project manager decided to add an extra resource, so the threeresources worked for (4) days and they were able to accomplish (70%) of the task. Thismeans that the:

Actual Effort spend is 4+4+4=12 man days

Actual Progress achieved (Earned) is 70% [which means 70% X 24= 16.8 days]

Applying the earned value measures gives us:

§ BCWS : Planned cost of the total amount of work scheduled to be performed byend of the 8th day is: [8 (previous 4 days) + 8 ] days = 16 man days [this is alsothe baseline at day 8]

§ ACWP : Cost incurred to accomplish the work that has been done until the 8 th dayis the actual effort spent: which is [6 (previous 4 days) + 12] = 18 man days [this isthe spent until day 8]

§ BCWP : The planned cost to complete the work that has been done (actualprogress 70%) up to the 4th day is : 70% X 24= 16.8 man days

§ The SV: Schedule Variance (BCWP-BCWS) is: 16.8-16 = 0.8 man days

§ While the CV: Cost Variance (BCWP-ACWP): 16.8-18 = -1.2 days

This means that the project is ahead of schedule by 0.8 day, while it is overspent by 1.2man-days.

Although the project progress is excellent because it is ahead of schedule, the project cost suffered from the 3 rd added resource because of the delay he caused due to learning and communication with the team

The following diagram represents the data for the two periods:





Earned Value Diagram

0

2

4

6

8

10

1214

16

18

20

Reporting Period- 4 days

E f f o r t i n D a y s Baseline

Spent

Progress - Earned Value

Figure 5 – Example Earned Value Diagram

Note that at the beginning of the project, all indicators were at point zero. Then at the firstreporting period (after 4 days), the cost was aligned with progress, but with deviation inschedule. Currently at the third reporting period (after 8 days), the delivered value(Progress) in yellow is ahead of schedule, it is above the baseline in blue, but as you cansee the cost is above the baseline as well!

At this point, the project manager discussed the status of the project with the projectdirector and the sponsor, and it turned out that the budget of the project has a buffer, andmeeting the schedule or finishing earlier is a strategic quick win for the IT department.Thus, the decision was taken to continue with the same team (of three) and schedulemomentum, and finish the project as early as possible even with slight spending deviationor overruns.

At the end of day 11, the status was as follows:

The task was completed at day 11, and the team was released to work on otherassignments:

Actual Effort spend at completion is 18 + 9 = 27 man days

Schedule at completion was 11 days

This means that the project was completed ahead of schedule but with overruns.





7. Project Management Recommendations

The following tips summarize the common best practices and policies for managing

successful projects:

1. Clear and formal project sponsorship coupled with empowerment to the projectmanager

2. Dedicated Project managers from the project provider and the client, fully qualifiedand experienced

3. Active involvement of all the project stakeholders

4. Retaining the project team until the end of the project

5. Clear and adequate planning for dependencies

6. Adequate attention to the business case and requirements being addressed in theproject according to the client view

7. Interactive, engaged and responding client

8. Phased approach, dividing long projects in phases

9. Comprehensive analysis, design, and planning

10. No remote project management (managing a project team remotely while it residesphysically in a different location or country)

11. Applying quality management from the beginning

12. Avoiding procrastination of feedback and closure of deliverables

13. Establishing a project management office or entity that is responsible for monitoringand reporting on all running projects

14. Used earned value management reports on projects and define measurableindicators in order to make a clear reporting and take corrective actions on deviation

15. Validating the estimation of cost, time and resources

16. Clear, communicated and shared objectives and end results for the project

17. Adapting a project management methodology and support it to be used for allrunning projects

18. Manage expectations of the client, and all the stakeholders

19. Integrated change management process and continues updating and improvementsto plans and deliverables





8. Appendix I – Methodologies Used

This document made use of the following standards and methodologies:

1. PMI - Project Management Institute Standards, Project Management Body of Knowledge PMBOK Version 3

2. PRINCE2 ® (Projects in Controlled Environment )





9. Appendix II – Risk Management

9.1. Definitions7

Risk is exposure to the consequences of uncertainty. In a project context, it is the chanceof something happening that will have an impact upon objectives. It includes the possibilityof loss or gain, or variation from a desired or planned outcome, as a consequence of theuncertainty associated with following a particular course of action. Risk thus has twoelements: the likelihood or probability of something happening, and the consequences orimpacts if it does.

Risk Management refers to the culture, processes and structures that are directedtowards the effective management of potential opportunities and adverse effects. The riskmanagement process proactively involves the systematic application of management

policies, processes and procedures to the tasks of establishing the context, identifying,analyzing, assessing, treating, monitoring and communicating risk.

Risk identification is the process of determining what, how and why things may happen.Risk analysis is the systematic use of available information to determine how oftenspecified events may occur and the magnitude of their consequences. It may use any of awide variety of mathematical and other models and techniques.

Risk evaluation determines whether the risk is tolerable or not and identifies the risks thatshould be accorded the highest priority in developing responses for risk treatment. Risktreatment establishes and implements management responses for dealing with risks, inways appropriate to the significance of the risk and the importance of the project.

We usually think about risk in terms of potential problems or negative outcomes. However,under the definitions here, risk includes positive impacts or consequences as well, and riskmanagement includes processes for identifying and taking advantage of opportunities andbenefits.

7 Quoted as is form: "Project Risk Management Guidelines: Managing Risk in Large Projects and

Complex Procurements" Dale F. Cooper, Stephen Grey, Geoffrey Raymond and Phil Walker. BroadleafCapital International. Copyright © 2005 John Wiley & Sons Ltd, The Atrium, Southern Gate,Chichester,West Sussex PO19 8SQ, England





9.2. Risk Management Process8

According to the Microsoft solution framework, the risk management process consists of aset of integrated processes as described in the following diagram:

Figure 6 - MSF Risk Management Process

9.2.1.Risk Identification

Risk Identification allows individuals to surface risks so that the team becomes aware of apotential problem. As the input to the risk management process, risk identification shouldbe undertaken as early as possible and repeated frequently throughout the project life

cycle.

9.2.2.Risk Analysis

Risk Analysis transforms the estimates or data about specific project risks that developedduring risk identification into a form that the team can use to make decisions aroundprioritization. Risk Prioritization enables the team to commit project resources to managethe most important risks.

9.2.3.Risk Planning

Risk Planning takes the information obtained from risk analysis and uses it to formulatestrategies, plans, and actions. Risk Scheduling ensures that these plans are approved and

then incorporated into the standard day-to-day project management process and8

Copyright© Microsoft: Microsoft Solution Framework MSF: Risk Management





infrastructure to ensure that risk management is carried out as part of the day-to-dayactivities of the team. Risk scheduling explicitly connects risk planning with projectplanning.

9.2.4.Risk Tracking

Risk Tracking monitors the status of specific risks and the progress in their respectiveaction plans. Risk tracking also includes monitoring the probability, impact, exposure, andother measures of risk for changes that could alter priority or risk plans and projectfeatures, resources, or schedule. Risk tracking enables visibility of the risk managementprocess within the project from the perspective of risk levels as opposed to the taskcompletion perspective of the standard operational project management process. Risk Reporting ensures that the team, sponsor, and other stakeholders are aware of the statusof project risks and the plans to manage them.

9.2.5.Risk Control

Risk Control is the process of executing risk action plans and their associated statusreporting. Risk control also includes initiation of project change control requests when

changes in risk status or risk plans could result in changes in project features, resources orschedule.

9.2.6.Risk Learning

Risk Learning formalizes the lessons learned and relevant project artifacts and tools andcaptures that knowledge in reusable form for reuse within the team and by the enterprise.





10. Appendix III: Managing StakeholdersExpectations

Project stakeholders are identified as person(s) or organization(s) that get activelyinvolved in the project and have a stake in its activities and deliverables. Stakeholders canbe the customer, sponsor, or even the public or general population.

Stakeholders will usually exert direct influence on the project and its deliverables.Managing their expectations can be a challenging task taking into account the differentneeds and requirements of each of the stakeholder. This becomes apparent when there isa lack of scope clearance.

In order for the project manager to be successful in controlling and managingstakeholders’ expectations, it is needed to take into consideration vital steps such as:

•Proper stakeholder identification exercise. Any project manager that does notknow or clearly identify the different stakeholders involved in the project will havemajor difficulties in delivering the project to expectations. Many of the projects failof lack of stakeholders buy-in

• Documenting right stakeholder expectations: It is necessary that the scope of workdefinition exercise to be thorough and complete. Lack of depth on the scope willresult in a gap in stakeholder expectations. As a result and during the initiation andplanning stages, the project manager needs to spend ample time to define theright depth in order to identify the right scope to meet the exact stakeholderexpectations

• Effective Communication Plan: There should be a proper communication plan

defined in order for the project manager to handle and realign the expectations ofthe stakeholders. Meetings, emails, and workshops are only some means in whichthe communication plan will actively work to deliver the right messages andmeasure the expectation and satisfaction levels of the stakeholders on the projectprogress

The project manager personal skills also plays a vital role in managing stakeholderexpectations. In addition to the personal skills, there should always be channels ofinformal and formal communication. Conflict Resolution has to take into account thedifferent types and natures of the different stakeholders.

Communication (Regardless of the mechanism and means) has to focus on four types:

• Informal Written: such as notes and memos

• Formal Written: such as Project Charter and Management Plan

• Informal Verbal: such as conversations

• Formal Verbal: such as meetings, workshops, and presentations





11. Appendix IV – Sample Project Report

1. Executive Summary

Overall Status:

The project is moving slowly due to handover sessions and revision of the scope.

§ Green 1

(Controlled)

Yellow 2

(Caution)

Red 3

(Critical)

Reason for Deviation

Schedule: [] [X] [] Delays are encountered due to handover

Scope: [] [X] [] The scope is being assessed again to decide on thebest fit approach for the project

Quality: [X] [] []

1Project is within, scope and on schedule.

2 Project has deviated slightly from the plan.

3 Project has fallen significantly behind schedule, is forecasted to be significantly over budget, or has taken on tasks that are out of scope.

Main Phases:Phase Status Owner Issues Next Action

Inception Complete

Elaboration Inprogress

Construction Pending

Transition NotStarted

PPrroojjeecctt WWeeeekkllyy SSttaattuuss RReeppoorrtt

Project Name:

Project Manager:

Date of Issue: 2006-11-04

Reporting period: 2006-10-27 to 2006-11-01




2. Project Controls

Issues (Issues requiring resolution by Project Team or Executive Committee):

Issue Description Severity Owner Status Impacted Area

Risks (Report on any change in priority or status of major project risks, and any risks discovered since earlier risk assessments

along with proposed risk response):

Risk Description Probability Owner Mitigation

3. Action Items

Description Owner Status Due Date Notes

4. Accomplishments for This Period

Accomplishments during this Reporting Period (Should relate to project plan):

1.

5. Planed Accomplishment for Next Period

Plans during the next Reporting Period for the project team:

1.

Plans during the next Reporting Period for the CLIENT:

1.

Best Practices for Project Management

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