Best Practices for Project Management

BEST PRACTICES FORPROJECT MANAGEMENT Version: 1.0 Date: 08 Aug 2007 Disclaimer The Saudi e-Government Program (Yesser) has exerted its best effort to achieve the quality, reliability, and accuracy of the information contained in this document. Yesser assumes no liability for inaccurate, or any actions taken in reliance thereon. Yesser encourages readers/visitors to report suggestions on this document through the “Contact Us” . Best Practices for Project Management Table of Contents 1. 2. Executive Summary .......................................................................................................... 4 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. 3.4.2. 3.4.3. Project Theory and Knowledge Areas ........................................................................................... 10 Management and Soft skills .......................................................................................................... 10 Technical Skills ............................................................................................................................ 11 3.5. Finding and Preparing Qualified Project Managers .................................................... 11 Projects in the Government............................................................................................ 13 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 4. 5. 9.2.1. 9.2.2. 9.2.3. 9.2.4. 9.2.5. 9.2.6. Risk Identification ......................................................................................................................... 27 Risk Analysis ............................................................................................................................... 27 Risk Planning ............................................................................................................................... 27 Risk Tracking ............................................................................................................................... 28 Risk Control ................................................................................................................................. 28 Risk Learning ............................................................................................................................... 28 10. Appendix III: Managing Stakeholders Expectations ..................................................... 29 11. Appendix IV – Sample Project Report............................................................................ 30 e-Government Program (yesser) -2- Best Practices for Project Management 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 e-Government Program (yesser) -3- Best Practices for Project Management 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 of importance, skill requirements, ability to deliver, organizational integration, and expected results. This document aims to address the various areas that need to be considered by IT Departments’ 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 of projects according to right principles and environmental needs of project management. Putting together the right principles does not only rely on good standards and best practices, but it also takes into account different considerations such as the environment type (private or government). The critical areas that are addressed in this document include: • Importance of project management in delivering successful results: Noting that projects will have high tendency of failing to achieve expected results, having proper project management should be endorsed and adopted in the IT department Building proper organization for project management: Within IT, project management 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 own requirements and challenges Strong know how of industry best practices and recommendations: An overview is presented for Project Management Institute (PMI) standards as it is the de-facto reference for project management in the Kingdom Practical considerations for adopting and implementing project management: Practical examples and considerations have been presented along with relevant recommendations that can be considered by the IT departments on Project Management • • • • This document is not a reiteration of the theory. This document presents the theoretical and practical concepts in a manner that is relevant and of context to the IT departments that plans to implement or enhance their project management activities. e-Government Program (yesser) -4- Best Practices for Project Management 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 project management structure and environment. This is a living document, and it will be further developed and regularly reviewed to ensure that it continues to provide the latest and the best 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 project management structure and environment that insure the delivery of successful IT projects. The main audience for this document is the IT managers, project managers and middle managers who are involved in executing IT projects. 2.2. Document Structure The structure of this document addresses the intention of the reader. It contains the following sections: 1. Overview: This section describes the importance of project management for the IT departments and its context. It also clarifies the structure of the project team, and the qualifications of the project manager. 2. Projects in the Government: This section describes the projects in the government, 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 misunderstood components of it. 4. Setting up Projects: This section describes how to prepare for projects and how to start them. This covers staffing, quality management and reporting. 5. Project Management Recommendations: This section describes the best practices of project management. It is for the IT managers who want to read quickly a summary of recommendations or tips. 2.3. Referenced Documents The documents listed below have been used as a reference material to the subject of managing 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 e-Government Program (yesser) -5- Best Practices for Project Management 3. 3.1. Overview The Importance of Project Management in the IT Department Hugh W. Ryan, in an article for Outlook Journal summarized research shows that among all IT development projects, only 16% are delivered to acceptable cost, time and quality. In 1999, Standish Group International found that only 28% of information technology projects are completed successfully. Of 1,027 projects surveyed by the British Computer Society, the Association of Project Managers and the Institute of Management concluded that only 130 (12.7%) were successful.1 The performance of projects in Information Technology has been showing consistently low success rates. The reasons for this are many, but one of the major reasons is the inadequate project management discipline and processes. Projects in the IT department constitute a huge portion of the work performed. The rest of the 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 project effort 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 IT governance 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 communication between 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 and experience to be accumulated and gained gradually and to be recorded as project history, 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 project and their expected contributions to its success 7. It gives visibility on the future and usage of resource as a direct benefit of formal and indispensable planning activities 1 Software Metrics: Best Practices for Successful IT Management, by Paul Goodman. Rothstein Associates © 2004 e-Government Program (yesser) -6- Best Practices for Project Management 3.2. The Context of Project Management in the IT Department Projects manage tasks and small assignments, but the projects themselves are also managed 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 a Project Management Office (PMO). These organized and formalized entities exist mainly to centralize the tracking of the running projects consistently and with coordination and consistent prioritization of resources and constraints. The Project Management Office has many benefits: 1. Establishes and deploys a common set of project management processes and standards, and updates it to account for improvements and best practices 2. Provides training (in-house or outsourced) to build core project management competencies and common experiences 3. Provides project management coaching, and supporting services to keep projects from getting into trouble 4. Tracks and reports basic information on the current status of all projects in the organization and provides project visibility to higher management in a common and 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, project delivery, and the value being provided as an outcome of the project 6. Identify dependencies between running projects and facilitate coordination and prioritization of projects 7. Sharing of experiences and lessons learned amongst projects by facilitating efficient communication and status reporting e-Government Program (yesser) -7- Best Practices for Project Management 3.3. The Project Management Team Structure The project team consists of the following main roles: § § § § § § Project Sponsor: The ultimate decision maker regarding project management decision and performance Project End-users: The beneficiaries of the project results Project Manager: Who is responsible and accountable for the project success and meeting the project objectives Project Director-Program Manager: Oversees the projects and has an overall project accountability Project Quality Manager: Responsible for meeting customer expectations and the 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 uninfluenced opinion about the quality performance of the project. It is also important to note that the project can consist on at least one person and the project sponsor, it cannot be less than that. e-Government Program (yesser) -8- Best Practices for Project Management Each of these roles can be fulfilled by one person or more (a steering committee2 or a task force3 can be formed to fulfill a role). The following table gives an example of the functional roles in the IT department and the government that can play the identified roles: Table 1 - Examples of the Defined Project Roles Role Project Sponsor Example of a role holder/s IT Manager/Director, Government business entity manager, Minister, or any High level manager IT department staff, government employees, or public citizens IT Manager, section manger, team leader or any qualified IT department member IT Manager, IT director, or Chief Technology Officer (CTO) IT Manager, section manger, team leader or any qualified IT department member Any qualified IT department member Project End-users Project Manager Project Director Program Manager Project Quality Manager Project Team members 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 "Project Management Office Guidelines and Processes". 2 A steering committee is a team that decides on the priorities or order of projects, programs or tasks A task force is a group specially organized and dedicated to accomplish a critical task 3 e-Government Program (yesser) -9- Best Practices for Project Management 3.4. Qualifications of the Project Manager The project manager is an achiever who must have the ability to achieve the objectives of the 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 aspects and nature of the project management work. There are three main aspects of the project manager work, which require three different skill 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 within constraints to achieve challenging goals and objectives. Therefore, if the goals are not 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 the different knowledge areas of project management altogether in order to serve the project needs To be skilled in technical issues related to project planning and tracking. For example, 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 to closure § § § 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 and skills needed to manage a project successfully. These areas are called the project management 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, and changing nature of human beings. The different personalities of the project team members and stakeholders require different handling and different techniques. What some people see acceptable, others might see it not acceptable! e-Government Program (yesser) - 10 - Best Practices for Project Management The project manager deals with a large number of people and from different backgrounds and with different requirements. The end users for example require more features, while the 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 and coordinating To have superior communication skills, to be a good listener, understanding and considerate 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 vision and the mission of the project 3.4.3. Technical Skills The technical skills are the easiest of the three aspects, because they are acquired from the field of work gradually. The level of knowledge in the project functional or technical area depends on the project nature and situation. If the project manager does not have adequate technical skills, he must have access to a subject matter expert or have one in his team. The project manager can perform better and 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 successfully projects outside their functional or technical specialty. The concept of a generic field or generic industry project manager does not really exist4, but a generic project director, a PMO manager or a generic executive manager does exist and he might span multiple fields or industries. 3.5. Finding and Preparing Qualified Project Managers Qualified project managers can be simply recruited, or prepared, trained and grown from within the existing IT team. In searching for project managers -or project management candidates with the good potential-, the focus should be on the personal traits, like: § § § § Leadership Accepting responsibilities Flexibility and adaptability with others Communication skills 4 Some 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 the project manager in the IT department, and for the IT projects, must be educated and informed (technically or functionally) about the project field or nature e-Government Program (yesser) - 11 - Best Practices for Project Management § Resourcefulness5 Note that skills and knowledge about project management can be learned either in the work environment or on job training, or by professional training in project management. Even qualified project managers must attend at least one professional training. 5 having the ability to find quick and clever ways to overcome difficulties e-Government Program (yesser) - 12 - Best Practices for Project Management 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 and easily monitored by the government entity. 2. External projects: External projects are performed by external suppliers, vendors or subcontractors. The execution of these projects is outside the control of the governmental entity, and hence these projects have more risks and issues, and require special handling. This distinction between the two is important because it affects the staffing of projects, the quality management system and the methodology followed in managing the projects. The following table summarizes the impact and recommended approach to handle inhouse project challenges: Table 2 – Challenges – In-house Projects Challenge Impact Recommendation § Establish a structure that supports projects § Clarify responsibilities and commandments to projects Dedicate a quality manager with each project Select a methodology that is simple, pragmatic and easy to follow Staffing Organization structure and control over the project team Dedication to project and allocating adequate time to perform activities Quality Methodology Less formalized Requires training and investment in time Quality of deliverables Overhead, long learning curve and difficult to implement While the following table summarizes the impact and recommended approach to handle External project challenges: Table 3 – Challenges – External Projects Challenge Impact Staffing 1. Understaffing the project from the client side Poor project performance Recommendation § Agreement and approval of project team staff § Strict conditions in the project contract 2. Inadequate resources from the government entity Poor project performance § Prepare client side project managers § Recruit project management consultants to manage the subcontractor e-Government Program (yesser) - 13 - Best Practices for Project Management Quality Guarantee quality of deliverables from the subcontractor Diverse methodologies from different subcontractors, or no followed methodology Quality of deliverables Dedicate a quality manager with each project from the government and from the subcontractor for each project Unify methodologies to be followed by subcontractors Methodology Inconsistency in project management, reporting and communication It is recommended to have a formal entity (like a PMO) to manage projects and it should impose the same methodology and project reporting structure for all types of projects. e-Government Program (yesser) - 14 - Best Practices for Project Management 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 be done and how to do it. This has been the reason for failure of many projects, when the project team and the client do not talk the same language, and when their expectations differ, 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), Third edition. As this standard is generic, it can be tuned and applied according to the unique project needs, 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 the project (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 various phases of the project 2. Planning processes: The definition of objectives and selection of the best alternatives falls into this category. These processes are time consuming but very important to the success of the project 3. Executing processes: This is when you pull everything together. All your planning and refining of the scope, objectives, and deliverables come into play during the implementation of these processes. They include having all your resources in the right place at the right time with the right plan 4. Monitoring and Controlling processes: This group involves scope management and utilizing processes to keep the project in line with the original objectives. These processes involve a lot of follow-up to make sure everything is within the constraints mandated at the beginning of the project and in the charter 5. Closing process: The signoff process is the formalized closure of the project. This process is linked with the determination by the stakeholders that the project has fulfilled its obligations as stipulated in the original scope statement e-Government Program (yesser) - 15 - Best Practices for Project Management 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 people confuse these with project phases and establish it as a formal project life cycle. ( See Section 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 Areas The knowledge areas in the Project Management Body of Knowledge are essential to each project. Project managers need to understand them and be educated and familiar with 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 the processes to keep it on track. 2. Project scope management: This area is composed of project initiation, scope planning, definition, verification, and change control. In initiation when the project begins 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 key element to the project and its success. 4. Project cost management: This area incorporates resource planning, cost estimating, budgeting, and control. 5. Project quality management: This area involves quality planning, assurance, and control. 6. Project human resource management: This area pertains to organizational 6 PMI - Project Management Institute Standards, Project Management Body of Knowledge PMBOK Version 3 e-Government Program (yesser) - 16 - Best Practices for Project Management planning, staff acquisition, and team development. 7. Project communications management: This area involves communications planning, 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, and closeout. These knowledge areas can be learned through reading, a course, or professional training. 5.3. The Project lifecycle The project lifecycle (as mentioned in the PMBOK) depends on the project nature and domain. In the third edition, it might also depend on the product of the project. For example, a software project can follow the MS MSF (Microsoft Solution Framework) project life cycle or the RUP (Rational Unified Process). However, an infrastructure implementation 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 a software project, and according to the MSF, the phases of creating a software product are (Envisioning, Planning, Development, Stabilizing and Deployment). The product of the project is the measurable outcome or the deliverable. In IT projects, it can 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. The following table provides examples of both: Table 4 - Product vs. Project Deliverables Project Management Deliverables Project Management Plan Project Scope Product Deliverables Product Development Plan Product requirements and features e-Government Program (yesser) - 17 - Best Practices for Project Management Project Performance reports – status reporting Meeting minutes, communications and correspondences Project schedule plan, cost, risks and quality assurance Product test reports and feedback Product training sessions, joint testing and handover Product specifications, manuals and packages e-Government Program (yesser) - 18 - Best Practices for Project Management 6. 6.1. Setting up Projects Staffing the Project Staffing projects starts with allocating a project manager. The project manager should have 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 step goes 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 limited number 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 is crucial to the success of the project. Despite that, project managers neglect it or add few activities at the end of the project or phases. Therefore, Quality Management must be built into 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, problems and deficiencies Quality Management takes care of the quality policy, quality standards, and responsibilities 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 are conducted should be from the Project Management Institute’s (PMI) Standard, which has the following quality components: 1. Quality Planning – identifying and/or verifying quality standards that are relevant to the 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 of unsatisfactory performance or defects. e-Government Program (yesser) - 19 - Best Practices for Project Management 3. Quality Assurance – periodic executive review and evaluation of the overall project performance in order to provide confidence that the project will satisfy the relevant quality 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 a software applications or documents. Other projects need more quality assurance activities because it is process dependant and the nature of the project depends on the approach more that the output like research, analysis, and consulting assignment. The following diagram represents how Quality Management/Planning controls both sides of 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 project plans. 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 and consistently. One of the common and recommended project tracking and measurement methods is the Earned Value Management. Earned Value Management (EVM) gives an indication about project status in terms of Time, 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 of work scheduled to be performed by the specified date ACWP - Actual Cost of Work Performed: Cost incurred to accomplish the work that has been done to the specified date BCWP - Budgeted Cost of Work Performed: The planned (not actual) cost to complete the work that has been done up to the specified date Another two calculated metrics that gives indication about the status of schedule and cost are: e-Government Program (yesser) - 20 - Best Practices for Project Management § § SV: Schedule Variance (BCWP-BCWS): A comparison of amount of work performed 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 work performed 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 negative variance for cost means the project is over budget. It is important to look at these measures objectively and according to the requirements, for example, 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) resources in (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 the other one worked for (4) days, both were able to accomplish (25%) of the task. This means that 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 by end of the 4th day is: [4 + 4] days X SAR 1,000 = SAR 8,000 [this is also the baseline at day 4] ACWP : Cost incurred to accomplish the work that has been done until the 4th day is the actual effort spent: which is 6 [man days] X SAR 1,000 = SAR 6,000 [this is the spent until day 4] BCWP : The planned cost to complete the work that has been done (actual progress 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 § § § § e-Government Program (yesser) - 21 - Best Practices for Project Management This means that the project is doing fine in terms of spending, but it is late by what worth SAR 2,000. Another way to look at cost, especially in government projects is to consider the cost unit as a working man-day. And by this cost of resources is measured by how many days they spend working on a task, the numbers become as follows: § § § § § BCWS : Planned cost of the total amount of work scheduled to be performed by end 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 4th day is 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 (actual progress 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 effort being spent. Status at the end of day 8: Because of the delay, the project manager decided to add an extra resource, so the three resources worked for (4) days and they were able to accomplish (70%) of the task. This means 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 by end of the 8th day is: [8 (previous 4 days) + 8 ] days = 16 man days [this is also the baseline at day 8] ACWP : Cost incurred to accomplish the work that has been done until the 8th day is the actual effort spent: which is [6 (previous 4 days) + 12] = 18 man days [this is the spent until day 8] BCWP : The planned cost to complete the work that has been done (actual progress 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 1.2 man-days. Although the project progress is excellent because it is ahead of schedule, the project cost suffered from the 3rd 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: e-Government Program (yesser) - 22 - Best Practices for Project Management Earned Value Diagram 20 18 16 Effort in Days 14 12 10 8 6 4 2 0 Reporting Period- 4 days 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 first reporting period (after 4 days), the cost was aligned with progress, but with deviation in schedule. 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 can see the cost is above the baseline as well! At this point, the project manager discussed the status of the project with the project director and the sponsor, and it turned out that the budget of the project has a buffer, and meeting 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 schedule momentum, and finish the project as early as possible even with slight spending deviation or 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 other assignments: 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. e-Government Program (yesser) - 23 - Best Practices for Project Management 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 project manager 2. Dedicated Project managers from the project provider and the client, fully qualified and 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 the project 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 resides physically 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 monitoring and reporting on all running projects 14. Used earned value management reports on projects and define measurable indicators 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 all running projects 18. Manage expectations of the client, and all the stakeholders 19. Integrated change management process and continues updating and improvements to plans and deliverables e-Government Program (yesser) - 24 - Best Practices for Project Management 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 ) e-Government Program (yesser) - 25 - Best Practices for Project Management 9. 9.1. Appendix II – Risk Management Definitions7 Risk is exposure to the consequences of uncertainty. In a project context, it is the chance of something happening that will have an impact upon objectives. It includes the possibility of loss or gain, or variation from a desired or planned outcome, as a consequence of the uncertainty associated with following a particular course of action. Risk thus has two elements: the likelihood or probability of something happening, and the consequences or impacts if it does. Risk Management refers to the culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects. The risk management 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 often specified events may occur and the magnitude of their consequences. It may use any of a wide variety of mathematical and other models and techniques. Risk evaluation determines whether the risk is tolerable or not and identifies the risks that should be accorded the highest priority in developing responses for risk treatment. Risk treatment establishes and implements management responses for dealing with risks, in ways 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 risk management includes processes for identifying and taking advantage of opportunities and benefits. 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. Broadleaf Capital International. Copyright © 2005 John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester,West Sussex PO19 8SQ, England 7 e-Government Program (yesser) - 26 - Best Practices for Project Management 9.2. Risk Management Process8 According to the Microsoft solution framework, the risk management process consists of a set 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 a potential problem. As the input to the risk management process, risk identification should be 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 developed during risk identification into a form that the team can use to make decisions around prioritization. Risk Prioritization enables the team to commit project resources to manage the most important risks. 9.2.3.Risk Planning Risk Planning takes the information obtained from risk analysis and uses it to formulate strategies, plans, and actions. Risk Scheduling ensures that these plans are approved and then incorporated into the standard day-to-day project management process and 8 Copyright© Microsoft: Microsoft Solution Framework MSF: Risk Management e-Government Program (yesser) - 27 - Best Practices for Project Management infrastructure to ensure that risk management is carried out as part of the day-to-day activities of the team. Risk scheduling explicitly connects risk planning with project planning. 9.2.4.Risk Tracking Risk Tracking monitors the status of specific risks and the progress in their respective action plans. Risk tracking also includes monitoring the probability, impact, exposure, and other measures of risk for changes that could alter priority or risk plans and project features, resources, or schedule. Risk tracking enables visibility of the risk management process within the project from the perspective of risk levels as opposed to the task completion perspective of the standard operational project management process. Risk Reporting ensures that the team, sponsor, and other stakeholders are aware of the status of 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 status reporting. 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 or schedule. 9.2.6.Risk Learning Risk Learning formalizes the lessons learned and relevant project artifacts and tools and captures that knowledge in reusable form for reuse within the team and by the enterprise. e-Government Program (yesser) - 28 - Best Practices for Project Management 10. Appendix III: Managing Stakeholders Expectations Project stakeholders are identified as person(s) or organization(s) that get actively involved in the project and have a stake in its activities and deliverables. Stakeholders can be 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 different needs and requirements of each of the stakeholder. This becomes apparent when there is a lack of scope clearance. In order for the project manager to be successful in controlling and managing stakeholders’ expectations, it is needed to take into consideration vital steps such as: • Proper stakeholder identification exercise. Any project manager that does not know or clearly identify the different stakeholders involved in the project will have major difficulties in delivering the project to expectations. Many of the projects fail of lack of stakeholders buy-in Documenting right stakeholder expectations: It is necessary that the scope of work definition exercise to be thorough and complete. Lack of depth on the scope will result in a gap in stakeholder expectations. As a result and during the initiation and planning stages, the project manager needs to spend ample time to define the right depth in order to identify the right scope to meet the exact stakeholder expectations Effective Communication Plan: There should be a proper communication plan defined in order for the project manager to handle and realign the expectations of the stakeholders. Meetings, emails, and workshops are only some means in which the communication plan will actively work to deliver the right messages and measure the expectation and satisfaction levels of the stakeholders on the project progress • • The project manager personal skills also plays a vital role in managing stakeholder expectations. In addition to the personal skills, there should always be channels of informal and formal communication. Conflict Resolution has to take into account the different 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 e-Government Program (yesser) - 29 - Best Practices for Project Management 11. Appendix IV – Sample Project Report Project Weekly Status Report Project Name: Project Manager: Date of Issue: 2006-11-04 Reporting period: 2006-10-27 to 2006-11-01 1. Executive Summary Overall Status: The project is moving slowly due to handover sessions and revision of the scope. § Schedule: Scope: Quality: 1 2 Green 1 (Controlled) Yellow 2 Red 3 (Critical) Reason for Deviation Delays are encountered due to handover The scope is being assessed again to decide on the best fit approach for the project (Caution) [] [] [X] [X] [X] [] [] [] [] 3 Project has fallen significantly behind schedule, is forecasted to be significantly over budget, or has taken on tasks that are out of scope. Project is within, scope and on schedule. Project has deviated slightly from the plan. Main Phases: Phase Inception Elaboration Construction Transition Status Owner Issues Next Action Complete In progress Pending Not Started e-Government Program (yesser) - 30 - Best Practices for Project Management 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. e-Government Program (yesser) - 31 -