ch04 M.ppt

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Project Management in Practice ISVFourth Edition

Prepared byScott M. Shafer,Updated by

William E. Matthews andThomas G. Roberts,

William Paterson University

Copyright 2011 John Wiley & Sons, Inc.

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Mantel, Meredith, Shafer, and Stton

John Wiley and Sons, Inc.

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The Use of !d"ets


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Budgets are plans for allocatin" or"ani#ationalreso!rces to pro$ect activities

forecastin" re%!ired reso!rces, %!antities needed,when needed, and costs

!d"ets help tie pro$ect to overall or"ani#ational

ob$ectives!d"ets can be !sed as a tool by !pper mana"ement

to monitor and "!ide pro$ects.

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Top&'own !d"etin"


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ased on collective $!d"ments ande(periences of top and middle mana"ers

)verall pro$ect cost estimated byestimatin" the costs of ma$or tas*s

+dvanta"es

acc!racy of estimatin" overall b!d"et errors in f!ndin" small tas*s need not be

individ!ally identified

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ottom&Up !d"etin"


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Wor* rea*down Str!ct!re -WS identifieselemental tas*s

Those responsible for e(ec!tin" these tas*sestimate reso!rce re%!irements

+dvanta"e

more acc!rate in the detailed tas*s

'isadvanta"e ris* of overloo*in" tas*s

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Wor* Element /ostin"


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'etermine reso!rce re%!irements and thencosts for each tas*

fi(ed costs -e."., materials labor time and labor rate

e%!ipment time and e%!ipment rate

overhead "eneral, sales, and administrative -GS0+

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The 1mpact of !d"et /!tson Type 2 and Type 3 Pro$ect 4ife /ycles


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+ctivity 5ers!s Pro"ram !d"etin"


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Activityoriented b!d"etin" are basedon historical data acc!m!lated thro!"h

an activity&based acco!ntin" system e(penses assi"ned to basic b!d"et lines

WithProgramb!d"ets, each pro$ect is

divided by tas* and time period allows for a""re"ation across pro$ects

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+cco!ntability


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Each person who has a task to do must ownthe design and execution of that task and

must be held responsible for its timelachie!ement"#

$ccountabilit is the twin of empowerment"#

Jim McCarthy, Dynamics of Software Development , Microsoft Press,1995

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1mprovin" Estimates and 6orecasts


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6orms

4earnin" c!rvesTrac*in" si"nals

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6orms


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+ form for "atherin" data on pro$ect reso!rce needs mi"htincl!de7

people 8 mana"ers, technical and non&technical

money

materials 8 facilities, e%!ipment, tools, space, etc.

special services+nd mi"ht identify7

person to contact how many9m!ch needed when needed whether available

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4earnin" /!rves


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r

n nTT

1=

where

Tn' the ti(e re)ired to co(plete the nthnit

T1= the ti(e re)ired to co(plete the first nit

r' log*learning rate+log*2+

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Trac*in" Si"nals


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+ trac*in" si"nal n!mber can reveal-tell if there is a systematic bias in costand other estimates : and whether thebias is positive or ne"ative

y observin" their own errors a pro$ect

mana"er can learn to ma*e !nbiasedestimates

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)ther 6actors 1nfl!encin" the S!ccess of aPro$ect


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/han"es in reso!rce prices estimate rate of price chan"e individ!ally for inp!ts

that have si"nificant impact on costs

Waste and spoila"eTeam member t!rnover costsUsin" ;mythical man&months< by 6red roo*s.

)r"ani#ation climate=!st bad l!c*

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Estimate of Pro$ect /ost & Made at Pro$ect Start


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Three asic /a!ses for/han"e in Pro$ects and Their !d"ets


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Errors made by cost estimator as to how toachieve tas*s.

>ew *nowled"e abo!t the nat!re of theperformance "oal or settin".

+ mandate : a new law or standard, etc.

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?andlin" /han"es


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+ccept a ne"ative chan"e and ta*e a loss on thepro$ect -least preferred

Prepare for chan"e ahead of time : incl!deprovisions in the ori"inal contract that allow forrene"otiated price and sched!le for client&orderedchan"es in performance -best practice

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@ey Elements of Ris* Mana"ement


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Ris* mana"ement plannin"

Ris* identification A!alitative ris* analysis

A!antitative ris* analysis

Ris* response plannin" Ris* monitorin" and control

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6ail!re Mode and Effect +nalysis -6ME+


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4ist ways pro$ect mi"ht potentially fail

Eval!ate severity -S of each fail!re

;2< represents fail!re with no effect and ;2B< representsvery severe and ha#ardo!s fail!re

Estimate li*elihood -4 of each fail!reocc!rrin"

;2< indicatin" that fail!re is rather remote and not li*elyto occ!r and ;2B< indicatin" that fail!re is almost certainto occ!r

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6ail!re Mode and Effect +nalysis -6ME+

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)ther +pproaches to Ris* Mana"ement


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Game theory +ss!me that competitors and the environment areyo!r enemies

Select a co!rse of action that minimi#es thema(im!m harm

E(pected val!e

The val!e of the o!tcome m!ltiplied by theprobability of the o!tcome occ!rrin"

Sim!lation

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/opyri"ht


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%opright 2 11 &ohn 'ile ( Sons) Inc"

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Permissions 'epartment, =ohn Wiley 0 Sons, 1nc. The p!rchaser mayma*e bac*&!p copies for his9her own !se only and not for distrib!tionor resale. The P!blisher ass!mes no responsibility for errors,omissions, or dama"es, ca!sed by the !se of these pro"rams or from the!se of the information herein.

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ch04 M.ppt