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CH 6

Project Time Planning - Project Cost Planning

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Project Time Planning- Cost Planning

As you read this chapter, you will:• Understand the process of activity

decomposition• Understand the level of detail required for

activities• Understand the process of sequencing activities

and the four types of activity dependencies

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Project Time Planning- Cost Planning

Define and understand key cost management terms

Understand all the components of a project budget

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Chapter Review-Objectives The Work Breakdown Structure (WBS) must now be

broken down into finer and finer levels of detail so that work can be estimated, budgeted, and assigned to the right resource to complete.

This chapter defines the other two parts of the triple constraint: time and cost.

This chapter also describes the processes needed to build a thorough list of activities needed to complete the entire scope of the project, sequence them, and cost them.

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Objectives Understand the process of activity decomposition Understand the level of detail required for

activities Understand the process of sequencing activities

and the four types of activity dependencies Understand how to estimate effort Define and understand key cost management

terms Understand all the components of a project

budget

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Chapter Review-Objectives

Time is a critical commodity and usually in short supply during IT projects.

A project manager must learn to plan time accurately to avoid major problems later, during project execution

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Importance of Project Schedules

Managers often cite delivering projects on time as one of their biggest challenges

Average time overrun from 1995 CHAOS report was 222%; improved to 63% in 2001 study; up to 82% in 2003 study

Time is the most precarious element of the triple constraint:Time has the least amount of flexibility; it passes

no matter what!

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Project Time Planning- Cost Planning

The job of a project manager is filled with "time robbers"-activities that at first seem to be short and unobtrusive but

when they are all added together can completely fill an entire workday.

Project managers must become adept at spotting time robbers and dealing with them effectively.

Each one will require a slightly different approach to control.

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Time Robbers

• Task rework• Telephone calls, e-mail• Land mail• Incomplete work• Lack of needed authority Inefficient change

procedures

• Waiting on people• Day-to-day

administration• Too many levels of

review• Casual office

conversations• Poorly run meetings

Those activities that at first seem to be short and unobtrusive but when they are all added together can completely fill an entire work day

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Time Robbers continued

• Executive meddling or micro-management• Poorly motivated or educated customers• Vague goals and objectives• Poor time management• Ill defined project scope• Company politics• Working on under-funded projects

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Project Time Management Processes

The project management body of knowledge (PMBOK) includes the Time Management knowledge area, which contains the following processes: define activities sequence activities, estimate activity resources, estimate activity durations, and develop project schedule.

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Project Time Management Processes

On many projects, these steps can happen all at the same time, especially when the WBS was created for a project using a WBS from previous similar project because many of the activities are already defined.

The following sections cover them one at a time

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Project Time Management Processes Project time management describes the

processes and methods required to create and manage appropriate schedules to complete the project:Activity Definition – identifies the lowest level of

work on the WBS, “work packages”, that needs to be performed to create the finished product deliverable

Activity Sequencing – identifying and documenting the logical and sometimes physical relationships among schedule activities

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Where Do Schedules Come From?

Step 0. Build the WBS Step 1. Define Activities (work packages) Step 2. Sequence Activities and Assign

proper activity dependencies

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Step 1. Defining Activities Depending on the technique used to create the WBS

(refer to chapter 5), typically the work packages are built by decomposing parent activities down into smaller and smaller units of work.

Each activity is decomposed into smaller and smaller units until the deliverable can be: 1) assigned to one person who is held responsible for the

completion of the task, 2) a time and cost estimate can be accurately generated3) schedule created4) metrics tracked

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Helpful Reminders

The 100% rule is in affect; all of the work packages defined must add up to 100% of the total scope of the project

Not all of the work packages will be defined at the same level of detail

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Activity Characteristics Status and/or completion is measurable and

can be reported easily at any time Start and end events are clearly defined and

easily communicated Each activity has a single deliverable Time and cost is easily estimated

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Activity Characteristics Activity duration is within acceptable limits no

longer than 10 work days. This is not a hard unbreakable rule but a suggested guideline that no activity be defined with an effort longer than two weeks

Work assignments are independent, you shouldn’t need to interrupt the work in the middle of an activity due to another activity not working as planned

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Step 2. Activity Sequencing involves identifying and documenting the

logical and sometimes physical relationships among schedule activities Mandatory dependencies: inherent in the nature

of the work; write software and then testDiscretionary dependencies: defined by the

project team offer the most flexibility; External dependencies: based on work being

performed by an entity outside of the organization You must determine correct dependencies to

create a realistic schedule

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Benefits from Proper Scheduling Provides a consistent framework for repeatable

project successes Effectively illustrates the interdependence of all

tasks Clearly denotes the dates that resources need to

be available Determines milestone and project completion

dates Identifies critical path activities that if delayed will

delay the project completion date

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Benefits from Proper Scheduling Identifies which activities are not on the critical

path and thus can be delayed if needed without affecting the project completion date

Identifies resource availability Shows which tasks can or are being done in

parallel

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Schedules Regardless of which scheduling method is

chosen, they all strive to graphically demonstrate the sequential relationships between activities

The two techniques of activity sequencing are the precedence diagram method and the activity on arrow diagramming method

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Arrow Diagramming Method (ADM)

Also called activity-on-arrow (AOA) project network diagram

Activities are represented by lines with arrows Nodes or circles are the starting and ending

points of activities Key Drawback: Can only show finish-to-start

dependencies

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Sample Activity-on-Arrow (AOA) Network Diagram

• Lines with arrows represent tasks• Circles with words or numbers represent the

begin or end of a task

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Process for Creating AOA Diagrams1. You draw the first Begin circle or node and then proceed

with the tasks that do not have a predecessor, usually the first tasks to be done on the project. These are shown in the diagram as lines A, K, and F

2. Then you move to the next tasks listed in the WBS in order of precedence. Activity B has a predecessor of A and Activity C has a predecessor of B and so on. Tasks M, G, and L have no successors so we draw their arrows to the End node

3. You add circles at the end of each arrow as an end point. At the end of the process you then number each circle

4. Be prepared as you draw this diagram to draw and then erase and redraw as you work your way down the task list

5. You may need to add dummy activities to complete the diagram

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Precedence Diagramming Method (PDM)

uses boxes to represent activities (nodes) and lines with arrows to represent the dependencies see example next slide

The task names are for this example shortened to just letters. The lines with arrows are not labeled

Notice that some of the activities (C, F, G, and H) have more than one predecessor; some only have a successor (Begin) and some only have a predecessor (End)

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Sample PD

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Microsoft Project Sample PD

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Activity Dependency Types Finish-to-start

Finish coding module before unit testing Start-to-start

Start on Training Model after Use cases started Finish-to-Finish

Can’t complete training model until User Interface model complete

Start-to-FinishPhase out legacy system can’t finish until x days

after New system starts acceptance testing

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Information available from Network Analysis of AOA or PDM

Interdependencies of activities Project completion time Impact of late starts Impact of early starts Trade-offs between resources and time “What if” exercises Cost of a crash program Slippages in planning/performance Evaluation of performance

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Estimate Activity Resources Before estimating activity durations, you must have a good

idea of the quantity and type or level of resources that will be assigned to each activity.

Consider important issues in estimating resources:How difficult/complex will it be to complete specific

activities on this project?What is the organization’s history in doing similar

activities?Are the required resources available? Internal or External?Very important to match the right person with the right

task!

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Estimate Activity Resources

Process Activities:Activity resource requirementsResource calendarsAssigned resources

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Techniques for Resource Estimating

1. Expert judgment2. Analogous3. Alternatives analysis

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Hints to Remember Never create an initial schedule that requires

resources to work overtime, you are already planning for problems

Be careful of what Ed Yourdon calls the “Marine Corps mentality: Real Programmers Don’t Need Sleep”. Many IT resources especially the new young ones trying to impress their new colleagues and bosses will not readily admit when they are overwhelmed and need help

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Activity Duration Estimating

After defining activities, determining their sequence, assigning appropriate resources, the next step in time management is duration estimating

Duration includes the effort (actual amount of time worked on an activity) plus elapsed time

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Typical Problems with Estimates Developing an estimate for a large technology

project is a complex task requiring a significant amount of effort.

Remember that estimates are done at various stages of the project “Progressive Elaboration”ROM (-25% to + 75%) or SWAGBudget (-10% to + 25%)Definitive (-5% to 10%)

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Typical Problems continued Many people doing estimates have little

experience doing them. Try to provide training and mentoring

People have a bias toward underestimation. Review estimates and ask important questions to make sure estimates are not biased

Management wants a number for a bid or just to look good to superiors, not a real estimate. Project managers must negotiate with project sponsors to create realistic estimates

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The Mythical Man-Month author Fredrick Brooks

Techniques used by most to do estimates are poorly developed. Many are based on a flawed assumption that all will go well. Problems and changes are sure to happen to the project and need to be considered

Many techniques confuse effort with progress, assuming that a person and time are interchangeable

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The Mythical Man-Month author Fredrick Brooks

“Adding manpower to a late software project makes it later.” Just putting more people on a task does not necessarily reduce the time it takes to complete it

A man-month in estimating refers to how much work can be done by a worker in a given month, referred to today as “person-month” - “time-robbers” keep this from being 160 hours

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Cone of Uncertainty

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Activity Duration Estimating Methods

1. Analogous2. Top-down3. Bottom-up4. Three-point5. Simulation6. COCOMO

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Activity Duration Estimating To arrive at an estimate of time, you first determine

which estimate of work size is needed. As Capers Jones, a noted author in this area, points

out, the first step in accurately estimating an IT application is determining its size.

Over the years, many different techniques have been used, including lines of code, function points, feature points, and so on.

After the effort has been sized using one of these methods, time estimates can be applied

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Task Sizing – Lines of Code Has been one of the most used methods Based on historical results Effort, dollars, documentation, software bugs, and

number of resources Advantages

Can be very quick and inexpensive to generateCan be done early in the processUniversal metricCan be generated easily, in most environments

automatically Facilitate a lessons-learned process

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Lines of Code - Disadvantages Must compensate for technology differences Can’t be done well unless relevant history exists Must determine what counts as a line of code What level of resource is generating the code No industry standards Need to distinguish between auto-generated

code and original work Needs to be continually updated

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Function Points used to estimate time and dollars based on

the generated system requirements specification

A function point measures the size of a business function that the new system needs to have such as an input screen or a report

Function Point analysis can be done at any point in the project but are not considered accurate until late in the planning phase

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Process of Function PointsStep 1: Count the number of business functions within each of the

following categories: user inputs, user outputs, inquiries, data structures, and external interfaces

Step 2: Determine the complexity level of each function as simple, medium, or complex. For example output complexity is determined by the number of elements involved, any complex calculations or complex process logic and the number of data structures.

Step 3: Assign weights for each level of complexity within each category

Step 4: Multiply each function by its weight and then sum each product to obtain the total unadjusted function points.

Step 5: Compute the Value Adjustment Factor (VAF)Step 6: Compute adjusted function point total using the formula

[Unadjusted total x (0.65 + 0.01 x VAF)]

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Example

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Next Step: compute the value adjustment factor based on the following table

0 = no effect1 = incidental2 = moderate3 = average4 = significant5 = essential

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Function Points Next: calculate the total adjusted function points:

Unadjusted total x (0.65 + 0.01 x VAF) or 1050 x (0.65 + 0.01 x 40) = 1102.50

ResultsEffort = (1.49 hrs effort per f/point) (1102.50) = 1,642.7 hrsDocumentation (.25 pages per f/point) (1102.50) = 275.63

pagesBugs (.025 bugs per f/point) (1102.50) = 27.5 bugsUser Instructed Rework (.04 per f/point) (1102.50) = 44.1Dollars ($105.10 per f/point) (1102.50) = $115,872.75

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Uses for Function Points # of pages of documentation per FP Levels of effort per FP (person months) Level of expertise per FP (expert, novice) Cost per FP

New derivative called “Feature Points” or “Object Points”

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Advantages with Function Points It is independent of programming language and

technology It can be used early in the project life cycle at the

end of the requirements discovery phase or design phase

A wealth of research exists to support the process Impact of scope changes easier for all to

comprehend and track Organizations can track their own results and

improve the function point estimates It can be used in any development environment

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Issues with Function Points Requires many subjective evaluations

(complexity ratings and environmental factors) Accuracy is greatly increased only after the

detailed design phase or after a few project iterations have been performed

Takes some time (training) to perfect and can vary depending on who is doing the calculations due to personal bias

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Techniques for Estimating

System AnalogyTop-down estimatesPackage-Level or “Bottom-up” Analogy

Three Point Simulation (Monte Carlo) COCOMO Version 2.0 (Parametric Model)

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System Analogy bases a current work package time estimate

on the actual time of a work package from a similar project already completedUsually done in a “Top-down” approachHave 3 or 4 experts review requirementsMake sure you have the experience and that the

two systems are very similarCan use time, or LOC, or Function Points

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Package-Level or Bottom-Up Analogy Involves estimating individual work activities and

summing them to get a project total Each person assigned to that work activity, does

the estimate Can be time intensive to develop Dependent on each individuals ability to estimate Combining several independent estimates yields a

better estimate than separate estimates. Errors are randomly distributed; statistically speaking

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Three Point Use a weighted average approach or beta

probability distribution approach to capture three point estimates for each work packageOptimistic, Normal, Pessimistic

Equations for expected value (E), and the standard deviation (SD) are:E = (a + 4b + c)/6; SD = (c-a)/6

a = the optimistic estimateb = normal estimatec = pessimistic estimate

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Three Point

Adds the element of risk into its calculations SME’s determine three types of estimates:

Most LikelyOptimisticPessimistic

Next the SME uses the weighted average formula

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Three Point Example

Weighted average = 8 workdays + 4 X 10 workdays + 24 workdays = 12 days

6where: optimistic time= 8 daysmost likely time = 10 dayspessimistic time = 24 days Therefore, you’d use 12 days on the schedule instead of 10

when using this technique.

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Simulation a technique that randomly generates specific end

values for a variable with a specific probability distribution

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COCOMO First developed by Barry Boehm in 1981 Most widely accepted models available today Revised into version II in 1995 Version II setup to handle new development

methodologies; RAD, Iterative/Incremental, COTS packages, O-O application distribution, frameworks and components, etc.

Models available on website and algorithms are published. Commercial software exists

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COCOMO Consists of three project types described as:

Organic – small project teams, little innovation, constraints and deadlines are few, stable development environments, known familiar technology, few changes expected

Semidetached – medium sized project teams, some innovation, few constraints, tighter deadlines, and more changes expected, still a fairly stable development environment

Embedded – largest of the three in all categories, large project teams, constant innovation, many constraints, very tight deadlines, and many changes expected, complex development environment

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Effort Sizing

Organic:Effort = 2.4 x KLOC1.05 where KLOC = 1000 lines of codeDuration = 2.5 x Effort0.38

SemidetachedEffort = 3.0 x KLOC1.12 Duration = 2.5 x Effort0.35

EmbeddedEffort = 3.6 x KLOC1.2Duration = 2.5 x Effort0.32

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COCOMO Levels Early Application – used mainly for office type

applications, after completion of the Analysis phase assumes high level language

Early design – limited version of the application, intended to be used prior to any architecture analysis and relies heavily on function point analysis

Post-architecture – used to get a view of the project’s cost once an initial architecture is in place but prior to detailed design. Most used model, original model

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COCOMO Advantages

Can be Quick Can be done early in the project Can be tailored to fit any organization Can be applied at different phases of the life

cycle Many models exist to aid organizations in

getting started

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COCOMO Issues Ignores documentation and other requirements No compensation for customer attributes

(availability, knowledge, cooperation) Ignores personnel turnover issues Based on historical data which may be obsolete Used only to estimate the development effort,

other phases of the project (planning, implementation) are not accounted for

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Schedule Development Uses results of the other time management processes

(activity definition, sequencing, estimating) to determine the start and end date of the project

Also determines the planned start and completion dates for each activity listed on the WBS. The deliverable from this process is the project schedule

Tools used for schedule development: Critical path method PERT Critical Chain Resource Leveling

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Schedule Benefits Creates a consistent framework which can be

followed from project to project and during the execution of the project

Illustrates the interdependencies of each activity on the WBS

Facilitates communication within the project team and between the team and stakeholders

Aides in the identification of critical activities

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Schedule Benefits

Aides the project manager to evaluate all alternatives and their impact when making scheduling changes during the project

Reduces the amount of resource scheduling conflicts

Provides visibility to those tasks that can or must be run in parallel to keep the project on track

Facilitates “what-if” analysis

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PERT

The Program Evaluation and Review Technique (PERT) was developed by the U.S. Navy in cooperation with the consulting firm Booz-Allen Hamilton for the Polaris missile/submarine project in 1958 to help organize the activities of 11,000+ contractors

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PERT Uses a weighted average approach or beta

probability distribution to capture the three point estimates discussed in previous lecture (optimistic, most likely, and pessimistic) for activity duration

The PERT weighted averages for each activity are added to the network diagram to show the start dates and finish dates for each and the final project end date

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Critical Path Method (CPM)

CPM uses the sequence and duration of activities to determine the total project duration

A critical path for a project is the series of activities that determines the earliest time by which the project can be completed

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Critical Path Method (CPM) Produces two key pieces of information:

1. the amount of slack or also referred to as float for each activity in the schedule and

2. the longest path through the schedule or said another way the shortest time the project can be completed referred to as the critical path

All activities that fall on this path are referred to as critical path activities

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Slack

The difference between the earliest time an activity can begin and the latest time an activity can begin without changing the completion date of the project

In most projects of any size, there is typically only one critical path which means that all of the other paths have tasks with slack but theoretically a project can have multiple critical paths

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Free Slack

The difference between the earliest time an activity can begin and the latest time an activity can begin without changing the completion date of any successor task

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Methods to Find the Critical Path

1. Calculate slack for each activity on the WBS using a network diagram, or

2. Find the longest path through the network diagram

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Find the Critical Path

Begin

1 3 6

2

4

5

7

A

D

E

G

K

F

I

JC

B LEnd

H2

5

4

5

2

1

7

3

8

3

9

4

(0,2)

(2,7)

(2,7)

(0,2) (5,6)

(7,9)

(7,9)(9,18)

(2,6)

(0,4)

(3,8)

(0,5)

(5,12)

(8,15) (15,18)

(12,15)

(4,7)(6,9)

(9,18)

(10,18) (18,22)

(18,22)(4,12)

(2,3)

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Find Critical Path Calculating Slack The calculation is performed for each activity in two

passes through the entire network diagram for each path. The first pass through starts at the begin node and moves

to the end node through each path calculating the ES and EF.

The second pass through starts at the end node and moves to the beginning node through each path calculating LS an LF

Those activities with zero slack are on the critical path

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Find the Longest Path

Path 1 = A, D, G, K, L = 22 daysPath 2 = A, E, H, K, L = 19Path 3 = A, E, I, L = 15Path 4 = B, H, K, L = 20Path 5 = B, I, L = 16Path 6 = C, F, J, L = 19

Path A,D,G,K,L is the critical path duration is longest

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Critical Path

If one of more activities on the critical path takes longer than planned, the whole project schedule will slip unless corrective action is taken

Misconceptions:The critical path is not the one with all the critical

activities; it only accounts for timeThe critical path can change as the project

progresses!!!!!!!!!

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Techniques for Shortening a Project Schedule (Schedule Analysis)

Knowing the critical path helps you make schedule trade-offs

Shortening durations of critical tasks by adding more resources or changing their scope

Crashing tasks by obtaining the greatest amount of schedule compression for the least incremental cost

Fast tracking tasks by doing them in parallel or overlapping them

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Importance of Updating Critical Path Data

The critical path may change as you enter actual start and finish dates during project execution

As soon as you know the project completion date will change, negotiate/communicate with the project sponsor

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Critical Chain Scheduling Technique that addresses the challenge of

meeting or beating project finish dates and an application of the Theory of Constraints (time, resources, cost, scope, etc.), one aspect that limits a project’s ability to achieve more of its goals, weakest links

Developed by Eliyahu Goldratt in his book The Goal

Critical chain is a method of scheduling that takes constraints into account when creating a project schedule and includes buffers to protect the project completion date unlike CPM which is only based on time

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Buffers and Critical Chain A buffer is additional time to complete a task Murphy’s Law states that if something can go wrong,

it will, and Parkinson’s Law states that work expands to fill the time allowed. In traditional estimates, people often add a buffer and use it if it’s needed or not

Critical chain schedule removes buffers from individual tasks and instead createsA project buffer, which is additional time added before the

project’s due date Feeding buffers, additional time added before tasks on the

critical path

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Critical Chain

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Critical Chain Scheduling Powerful tool that involves:

Critical path analysisResource constraints, andChanges in how task estimates are made in terms of

buffers (reduce the over/under estimating game)Focus attention on critical tasks

Another issue presented by Goldratt which adds to the benefit of using buffers is the problem of resources multitasking with the idea of reducing idle time between tasks

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Multi-Tasking ExampleMulti-tasking

One task at a time

Multitasking often leads to longer delivery times due to wasted setup/startup time

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Resource Loading and Leveling

Resource loading defines the amount of time a specific resource is needed over each time period

Project software is great at highlighting issues of overloading a resource – having a resource working more time in a day than is available

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Microsoft Project Resource Usage Report

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Resource leveling

Is the process of rescheduling activities on the project schedule that have available slack to achieve a more balanced distribution of resource usage

Project software will do this for you…within limits!

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Resource Leveling Activities Move activities – manually move activities by

changing the discretionary dependencies or entering hard dates

Split – manually split activities such that only part of the activity is done at one time

Reduce resource availability – change the resource so they are not working full time on the task which will have the affect of lengthening the activity duration

Change/add resources to the task Authorizing the resource to work overtime

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Leveling ExampleSimple Network Diagram Before Leveling

After leveling

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Leveling Benefits Team Productivity Team Morale Reduced costs (less overtime and less

multitasking) Leveled costs, less erratic swings from period to

period Less management Especially important when hiring outside help to

fully utilize them while assigned Better use of resources across projects

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Cost Management Planning Cost is a resource sacrificed or fore-gone to

achieve a specific objective or something given up in exchange

Costs are usually measured in monetary units like dollars

Project cost management is concerned with the planning, estimating, budgeting, and control of the cost of project resources needed to complete 100% of the activities of the project

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Cost Management Planning Processes

Cost estimating: developing an estimate of the costs and resources needed to complete a project

Cost budgeting: allocating the overall cost estimate to individual work items to establish a baseline for measuring performance

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Basic Principles of Cost Management Burden Rate

is the cost of a human resource which takes into consideration more than just his/her salary or hourly rate, for things such as benefits, vacation, holidays, etc

Direct vs. Indirect Costs direct costs are directly attributable to the activities of the project

(purchasing hardware or software, labor cost of workers on the team. Indirect costs, the opposite of direct, are costs that are not directly attributable to the activities of the project (overhead rates such as management salaries, energy costs, rents, etc.).

Recurring vs. Nonrecurring costs Recurring costs appear more than once throughout the life of the

project (annual hardware and software maintenance). Nonrecurring costs appear only once (initial purchase cost of hardware and software).

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Basic Principles of Cost Management Fixed vs. Variable Costs

fixed costs are expenses whose total does not change in proportion to the activity of a business or project, within the relevant time period or scale of production (rent, insurance). Variable costs change based on the activity of a business or project (project employee costs).

Opportunity CostsA measure of the anticipated return against the

anticipated return an organization would receive on a highest yielding alternative investment that contains a similar risk assessment.

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Basic Principles of Cost Management Sunk Cost

cost expended that cannot be retrieved on a product or service. Money already spent that can not be recovered

Life Cycle Costs all costs incurred over the life time of the product

or service

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Basic Principles of Cost Management

Reserves are dollars included in a cost estimate to mitigate cost risk by allowing for future situations that are difficult to predict. (Critical Chain buffers)Contingency reserves allow for future situations

that may be partially planned for (sometimes called known unknowns) and are included in the project cost baseline

Management reserves allow for future situations that are unpredictable (sometimes called unknown unknowns)

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Cost Estimating The cost estimating process is used to develop accurate

cost estimates for the resources needed to complete each activity of the project

The human resource time estimates have already been done, so in this part of the process simply apply the relevant burden rate for each selected resource

Next, accurate cost estimates need to be created for all types of resources not just human resources such as: materials, equipment, and facilities

Remember cost estimating is done in a progressive elaboration manner

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Cost Estimates Accuracy

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Final Point

Know the purpose and audience of the estimate before communicating the results or selecting the method of estimating One time only project vs. follow on potential Will you be held to this estimate, what are the

ramifications for being wrong

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Cost Budgeting Process

Presents to the stakeholders and project team the entire picture of costs for the project taking into account all of the following cost categories: direct and indirect, recurring and nonrecurring, fixed and variable, and all life cycle costs

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Sample Cost Budget

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The Time & Cost Planning Process1. Define project activities to the “right” level of detail in

the WBS (decomposition), so that they are assignable, assessable, and controllable

2. Define the sequence of activities and also the type of dependency (mandatory, discretionary, external) between all tasks on the WBS

3. Assign the right resources to work on each activity based on the skills needed to perform the work, resource availability and budget restrictions

4. Create time estimates for each activity; accuracy dependent on need and capabilities of the estimator

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The Time & Cost Planning Process5. Build the project schedule and understand and

identify the critical path, critical chain, and available slack for each activity

6. Perform resource leveling to ensure a workable schedule and maximize worker productivity

7. Assign costs for all resources throughout the project schedule

8. Build and finalize the initial project budget (including all elements of the budget) which will establish your project baseline

9. Obtain sponsor approval to proceed

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THE TIME AND COST MANAGEMENT PLANNING PROCESS

The following is the process for project time and cost planning:

Step 1. Define project activities to the correct level of detail in the WBS (decomposition) so that they are assignable, assessable, and controllable.

Step 2. Define the sequence of activities and also the type of dependencies (mandatory, discretionary, external) between all tasks on the WBS.

.

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THE TIME AND COST MANAGEMENT PLANNING PROCESS

Step 3. Assign the right resources to work on each activity, based on the skills needed to perform the work, resource availability, and budget restrictions.

Step 4. Create time estimates for each activity; the accuracy of these estimates depends on need and the capabilities of the estimator.

Step 5. Build the project schedule and understand and identify the critical path, critical chain, and available slack for each activity.

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THE TIME AND COST MANAGEMENT PLANNING PROCESS

Step 6. Perform resource leveling to ensure a workable schedule and maximize worker productivity.

Step 7. Assign costs for all resources throughout the project schedule.

Step 8. Build and finalize the initial project budget (including all elements of the budget) to establish your project baseline.

Step 9. Obtain sponsor approval to proceed

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Chapter Review

1. The day-to-day job of a project manager is plagued with time robbers that must be kept to a minimum. Time robbers, activities that steal precious time away from value-added activities, include personnel conflict issues, impromptu meetings with customers, and long, recurring conversations with vendors.

2. The activity definition process is used to decompose the initial WBS into assignable units of work that can be estimated and monitored.

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Chapter Review

3. The 100 percent rule for activities within a WBS states that the total of activities must

define 100 percent of the work needed to complete the product of the project.

4. The next step in the completion of the WBS is to sequence the activities documenting into logical and sometimes physical (mandatory) relationships among all the activities

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Chapter Review

5. An activity dependency can be classified as mandatory, discretionary, or external.

6. Two techniques that can help project managers with sequential activities are the precedence diagram method and the activity on arrow diagramming method.

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Chapter Review

7. The precedence diagram method permits four types of dependencies: finish-to-start, finish-to-finish, start-to-start, and start-to finish.

8. After the WBS is decomposed to its lowest necessary levels, resource needs must be determined, found, and then assigned responsibility for the completion of tasks. Finally, a resource's availability must be assessed and tracked

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Chapter Review 9. Based on the proficiency level of a resource,a time estimate

for each activity is created,and its associated cost is estimated. Many techniques can be used in estimating, including the lines of code, function points, analogous, simulation, and COCOMO methods.

10. PERT (Program Evaluation and Review Technique) uses a weighted-average approach with three time estimates for each activity or group of activities. The three estimates that subject matter experts make are: most optimistic time to complete, most pessimistic time to complete, and the normal time to complete the activity.

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Chapter Review 11. The critical path method (CPM) uses the

sequence and duration of activities to determine the total project duration. CPM is the shortest time in which a project can be completed. Each activity on the critical path, by definition, has zero slack.

12. The critical chain method gives project managers a process that tracks critical activities and scarce resources. Based on the theory of constraints, it identifies and tracks the activities that may be in greatest jeopardy of missing their time/ cost estimates or are critical to the success of the project.

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Chapter Review

13. The cost estimating process is used to develop accurate cost estimates for each activity. An estimate becomes more accurate as the project executes and approaches completion.

14. Cost budgeting attempts to build a complete picture of all costs associated with executing a project

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Projects and Research 1.Research the techniques companies are using today for

estimating time and cost in their projects. 2. Use the Internet to research the other two projects R & S is

doing-customer relationship management and collections management-by looking at similar projects other companies have done. Build a high-level WBS and build a rough order of magnitude budget.

3. Research new developments and directions for the COCOMO II estimating technique.

4. Build a WBS and schedule for a spring break trip to Florida. Identify all dependencies as either mandatory, discretionary, or external.

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Projects and Research

5. Discuss a project you have worked on where cost was not an issue (unlimited budget) and time was the major factor. Was the project successful?

6. Build a complete budget and write a scope statement for a project that would outfit a university computer lab, complete with hardware, software, and network connectivity. The project will be completed over the course of one summer. Be sure to include one-time costs and recurring costs.