792 Workbook Exercises

Monitoring and Controlling Change

The following exercises are presented here:

Exercise 10. 1: Practicing Change Control

Exercise 10.2: Controlling Cost Changes

Exercise 10.3: Controlling Schedule Changes

Exercise 10.4: Reporting Performance, Including Earned Value Technique

Exercise 10.1 : Practicing Change Control

The objectives for Exercise 10.1 are as follows:

Introduce concepts for integrated project change COntrol.

Understand why change control is important.

Practice creating change control procedures.

Background One of the most common problems that project managers complain about is the way changes affect their projects, drastically inflating, extend ing, or reducing their original scope, sched­ule, budget, or quality pla n. A change to the original project plan, whether theelient requests it or team members decide to implement it, ca n change any number of factors on the project. Although cha nge is inevitable (and even welcome, if appropriate) in order for the project to

stay under control, one of your main jobs is to help the team learn to recognize and manage change and create good change control processes. You might use an established system to manage change. If you must establish a system, be sure 10 crea te processes and forms that all of your tea m members understand and will use.

One of the most important steps you must take before you initiate a change management sys­tem is to baseline your project plan . This sets a "stake in the ground" and declares the project's scope, budget, schedule, and quality. The baseline needs to be reviewed and approved by your project stakeholders. Once the baseline is approved, define the process for proiect change. You need to take the following questions into consideration:

Who can req uest a change?

How do they initiate a request to change, and what kinds of changes can be requested?

How is the request processed, and what syStem will you lise 10 record and archive change requests?

How is a request prioritized, analyzed, and reviewed?

What constitutes a change that must be made?

Who approves the request? Will you have meetings? Will a configuration control board (also known as a change control board) need to approve the changes? DIXS the project manager

Monitori ng and Controlling Change 793

have the authority to approve change that can be handled within the current schedule and budget, or will all changes need to be managed and approved by the change board?

If approved, how is change implemented? And what happens if it is not approved? How will you communicate the changes to project stakeholders?

How will you monitor the project to ensure that no unapproved changes are implemented?

During the development of the change process, you also need to document the kind of data you must capture in order to organize and make sound decisions about the requests . The list that follows includes some of the data you need to capture for each change request. Some data can be recorded immediately upon receipt of a change request, but much of it cannot be deter­mined until you analyze the request.

A request description (short title and longer description )

The date the request was su bmitted and the date that the requestor would like to see the change implemented

The originator's name, title, and contact information

Justification for the change

A change request 10 number (This number must be assigned via a change control process and should never change. )

Status of the change (For instance, has the request just been opened? Is it in review? Has it been approved or rejected? Has the change been implemented ?)

Request and/or change priority (high, medium, low)

An analysis, which might incl ude the following items:

Alternatives or trade-offs

A description of the way functionality would be affected, if applicable

Cost and work estimates for implementation

A description of any new risks to the project and impacts to quality, scope, budget, and schedule

Plans for implementing the requested change (include a description of what must be modified to implement the change; consider items such as product, service, or result requirements, project schedule, scope statement, or test plan updates) and the date the change can actually be implemented

Dependent project impacts

The disposition (approval, denial, or modification) and a brief justification for the decision

Sign-offs

To document and track what happens during this process, you need a change log. (Remem­ber we've suggested you design your logs early in the project.) Include fields that allow you to

assign a change request 10 , and briefly describe the change request. The log should include information about the current status and the final disposition of the request. You might use a electronic change request system or keep a paper log in notebooks or a file cabinet . You might

794 Workbook Exercises

decide both methods are needed for ease of use or ::lrchiv::ll purposes. If you establish and doc­ument you r change processes, your project haS::l much better chance of success, and you will manage change instead of change managing you and your team.

In this exercise, you will practice change comrol processes as you help the Sensational Adver­tisemem Productions company create a system for its new cell phone service advertising cam­paign. You will help the aCCQum manager learn how 10 implement the change control processes that will be used by all project managers 011 her account's projects.

Scenario Yo u are working once again with Pam Rosenbaum of Sensational Advertisement Productions (SA P). Pam is the account manager for a telecommunications client's important new product : a cell phone that integrates the latest video funCl ions right imo the phone. The new service will be priced competitively with cell phone services that don't include video.

The account ha s a project manager for each of the sales campaigns: Michael l-larland for print, Judy Arakawa for TV, and Joseph Matumbo for telemarketing. Each of these project managers works one-on-one with marketing man::lgers within the telecommunications com­pany. T heir telecommunications coumerparts provide direction and approval for the project work. Pam acts as the project manager for the accoum, coordinating the campaigns and track­ing the schedule and budget.

You know that Pam faces some real challenges because of the way SA P, the telecommunica­tions client, and the project are organized. Pam knows she must create a change control process for the overall program, as well as for each indi vidual project. You both know that a change in one campaign could seriously affect the others, because SA P still has a tight budget for all its advertising. Joseph has already been in 10 see Pam about changes to his campaign. Just days after he baselined his project plan and received approval from Bessie Phillips, his counterpart at the telecommunications client, Bessie came back to see him. The president of her company had come up with a new idea that "must be implemented." A telemarketing survey must be added to the campaign. Telemarketers will call cUSlOmers 10 ask them to participate in the survey. After the customer answers the questions, the telemarkctcr will try to sell them the new phone service.

You and Pam must work together to create an integra ted change control process that works for both SAP and its client .

Testing Your Knowledge of Practicing Change Control Use your knowledge of change management 10 help Pam create a change control process by answering the following questions.

1. What must Pam do before you can begin to create the change control process?

2. How should Pam and the other project managers review change requests? What items should they consider in their analysis?

3. What should Joseph do about Bessie Phillips' request to add a telemarketing survey to his campaign?

4. Why would you recommend that Pam create a log for the change requests?

Monitor ing and Controll ing Change 795

5. Should each project have a separate log and its own change request management?

6. Who should sit on the configuration change board?

Exercise 10.2: Controlling Cost Changes The objectives for Exercise 10.2 are as follows:

Describe the similarities in cost and schedule change control processes.

Describe the three most popular EAC formulas.

Background The project planning is done, and you are execming your project. It's time to manage project costs using the Cost Control process. The Cost Control process is similar to the Schedule Control process that will be discussed in Exercise 10.3. These processes use many of the same inpms, such as their respective baselines, performance reports, and change requests. Both processes use tools and techniques such as change control systems and performance measurements to control the changes. Both processes produce outputs such as baseline updates, performance measure· ments, requested changes, corrective action, and project management plan updates .

Forecasting Using Estimate at Completion

The one major features that differentiates these two processes is the forecasting tool and tech· nique. Forecasting makes a prediction about the outcome of costs of a project . One of the costs this tool and technique concentrates on is called estimate at completion (EAC ). EAC can be calculated at any point in project execution and forecasts the li kely final costs of the project. You can ca lculate the estimate at completion in three ways. We'll spend some time on each .

Working with Flawed Original Estimates

EAC = Ace + ETC

Use this EAC calculation if your original estimates were flawed. You can tell your original estimates were flawed because most of the estimates do not track with plan execmion . First determine the estimate to completion (ETC). The ETC is the amount of money you'll need to

complete the project. Then add the ETC to the amount that has actually been spent so far, the actual cost (Ace) to determine the new estimate at completion. Here's an example: Your project is 50 percent complete, and it is running over budget . The original budget is $15,000. At this point, you should have spent $7,500 . When you review the budget reports, you find you have spent $9,000 so far (A0} According to the performance reports, you still need $7,500 to finish the work (ETC).

EAC = Ace + ETC

EAC = $9,000 + $7,500

EAC = $16,500

You will need have additional funds approved if you are to complete your project.

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Adjusting for Atypical Cost Variances

EAC = ACc + BAC - EV

Use this EAC formula when the cost variances you are experiencing are not typical and are not expected to continue. In this calculation, you take the total planned budget for the project (BAC ) and add it to the actual cost (ACC). You then subtract the work accomplished (EV) to determine the estimate at completion . Say your pro ject is 60 percent complere. You have spent $10,000 (ACC) so far. T he total budget for the project was $25,000 (BAC ). Based on the per· formance reports, you know you have an earned value (EV) of $18,000.

EAC = ACc + BAC - EV

EAC = $10,000 + $25,000 - $18,000

EAC = $17,000

You can proudly forecas t that your project will come in under budget, with an estimated cost at completion of $17,000.

Adjusting for Typical and Continuing Cost Variances

EAC = (ACC + {( BAC - EV) + CPIC)

Use this EAC calculation when the variances you are seeing are typical and you expect them to continue. In rhis calculation, you take the work accomplished (EV) and suhtract it from the total budget for the project (BAC). Add that figure to the actual monies spent to date (ACC). Then divide that figure by the cumulative cost performance index (CPIC). Your project is 33 percent complete, and the total budget for the project was $17,000 (BAC) . Based on the per· formance reports, you know that you have an earned value of $5,000 (EV). The actua l costs of the project to date are $7,000 (ACC). The cumulative cost performance index is 1.10 (CPIC).

EAC = ACc + (( BAC - EV) + CPIC)

EAC = $7,000 + (( $17,000 - $5,000) + 1.1 0)

EAC = $17,909

Based on these calcu lations, you expect to be over budget by $909 . You are probably wondering what the estimate to completion is for your Pinnacle Candy

Company pro ject. Now, you will get a chance to calculate it.

Scenario You are, once again, working on the EspressoFix Bar project . T he budget of $100,000 was established before you started as temporary project manager. You are 19 days into project execution and have had some problems with the test kitchen, the chef creating the recipe, and the candy itself. Pinnacle management wants to know just how much more it will take to see whether the idea of "a candy bar that satisfies every coffee addict's need for coffee" is mar· ketable. You check the reports and do some calculations . Earned value is $40,000 . The actual pro jects costs are currently $65,000. The cost performance index, CPI, is 0.6 . Now it's time to prepare the progress report for management.

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Testing Your Knowledge of Controlling Cost Changes Use your project management expertise and your knowledge of the EspressoFix Bar project to answer the fol!owing questions on controlling cost changes:

1. What are two common tools and techniques that are used in the Schedule and Cost Con­trol processes?

2. What are five common outputs that are produced in both the Schedule Control and Cost Control processes?

3. Which EAC calculation should you use if your original estimates were flawed?

4. Which EAC calculation is used when the current variances are not typical and are not expected to continue?

5. What calculation is used when the variances you are seeing are typical and you expect them to continue?

6. You have decided that the problems with the chef are a fluke and you don't foresee any additional variances. What is your estimate at completion?

7. You have decided that the original estimates on the Pinnacle Candy Company project were flawed . Your ETC is $50,000. What is your estimate at completion?

8. You realize that you did not use the right resources to estimate the costs for the EspressoFix Bar project. The variances you are seeing are typical, and you expect the rest of the project to go as poorly. What is your estimate at completion?

Exercise 10.3: Controlling Schedule Changes The objectives for Exercise 10.3 are as fol!ows:

Describe the processes required to control schedule changes .

Describe the key elements of a schedule management plan.

Describe the concept of a baseline.

Background

You finished purring your schedule together and have approval from the executive sponsor. You know that if you execute the schedule exactly as you have planned, you will complete this project on rime, on budget, and with the quality the sponsor has requested . Now, how do you keep that schedule from changing? First, determine the status of your project; second, pla n for change; third, determine whether the schedule has changed; and fi nal! y, manage the actual changes. These steps describe the PMBOK Guide process known as Schedule Control. Sched­ule Control is in the Monitoring and Controlling process group. Monitoring and Control!ing processes describe how to monitor and measure project results and define actions to take so the project completes as planned. Schedule Control is highly related to another Monitoring and Control!ing process cal!ed Integrated Change Control. You need to know how these two processes interrelate for the PMP exam. We covered Integrated Change Control previously.

798 Workbook Exe rcises

You'll look at the components of Schedule Control and spend some time on each of them now.

Determining the Status of your Project

Before execute you r project plan, you need to determine how you will track what has been accomplished . Tracking is usually done with a status update. People working on the pro ject report the time worked on specific tasks. In project management terms, a status update is called a perfonnance report; it is an input into the Schedule Control process. You can do time report· ing in several ways. You can choose to report work progress as follows:

A percentage complete for a task

The time spent on a task

The time spent and the time remaining on a task

For each project, you will need to determine the frequency of the status reports. Here is a ru le of thumb: ask yourself, "How long can a task be out of control and the project manager not know about it without jeopardizing the project?" Based on the answer to this question, you might set the frequency at once a week, once every two weeks, or once a month. Com· paring the actual time to the schedu le is the way you determine progress.

Planning for Schedule Change

As you developed your schedule, you became aware of many factors that can influence it. Some of those items were assumptions; some were constraints. You also know that some assumptions might not be true and, if untrue, can possibly disrupt your pro ject . As you fina lize the schedule, you need to create a schedule management plan . This plan documents the assumptions and can· straints. The schedule management plan is a subset of the larger project management plan. It documents how you intend to control changes that impact the schedule. A schedule manage­ment plan can be as detailed or as simple as you need . The key here is to plan for change and determine how you will respond when changes occur. While developing the plan, you will want to consider all the items in your change management system, as well as the following:

How will you determine the impact of a change to the schedule?

What are the advantages or disadvantages of a llowing schedule changes?

Who can approve a schedule change? Under what circumstances?

If the change is approved, how is the schedule updated?

Once the schedule management plan is set, you are ready to begin executing your schedule.

Has the Schedule Changed?

The third step in Schedule Control is determining whether the schedule has changed . To know whether the schedule has changed, you must know the following:

The original schedu le (what you planned to have done at this point in time)

The current status (what you actually have done)

The variance between the two

Monitor ing and Controll ing Change 799

\Vhat you planned to have done J ust before you begin the execution of the schedule, you set a baseline. The schedule baseline is a copy of your plan that shows the original schedule for the project. You set aside this copy as a reference, to be used for analysis across the remainder of the project. Most project managers use project management software to plan and track their projects. Almost all of these systems have a simple command that s..wes a baseline for comparison pur­poses. If you are creating and tracking your project manually, you need to set aside a copy of your project plan prior to execution . Never update, add notes to, or change the baseline copy of the plan in any way. The schedule baseline is an input into the Schedule Control process.

\Vhat you have aClUally done Monitor the status and other progress reports from your team . Apply the actual time spent to your project schedule. Also, look at current estimates for work yet to becompleted. This information will give you a good understanding of yourschedu le'scurrent status .

The variance between the two You created a baseline of what you plan to do. You applied the actual time spent. Now it's time to compare the t\vo. This is called variance analysis. Vari· ance analysis is a tool and technique of the Schedule Development process . In variance anal­ysis, you look at several factors and determine whether your project will complete on time. You should examine several areas:

Late starts and late finishes (have any tasks on the critical path started late or fin­ished late?)

Early starts and early finishes (have any tasks on the critical path changed their early start and early finish dates?)

Remaining work (do any tasks on the critical path have remaining work that will force them to finish late?)

Completion date (is the current completion date for the project the same as you orig­inally planned?)

Managing Changes

The fourth and last component of Schedule Control is managing the actual changes on your project . In this final step, you take action to keep your project on track. Managing changes proactively helps you respond to the following:

Requested changes to your project

Variances to the completion schedule

If you plan for change and assess schedule changes appropriately, then managing changes will be easy. You are simply working through processes you already defined. For requested changes, use the change control process that you defined for the project . For variances, use the process established when assessing how the schedule has changed . Your analysis, decisions, and corrective actions regarding changes and variances will help you manage the project to a successful completion .

In this exercise, you'll get a chance to practice controlling changes to the credit card va li· dation project.

Workbook Exe rcises

Scenario You're still working as temporary project manager for SyslemsDelivery's credit card valida­tion project . Management believes that this product will be in high demand at every major retailer in the country, if they can get this "next best thing in credit card fraud prevention" to market quickly. You just completed your schedule and were able to compress the duration so that the project will complete in the desired time frame. You've got approval from your exec­utive sponsor on your plan . He is pleased with your delivery date and told you that you will receive a bonus if you deliver on schedule. You know you're going to need to control the schedule to get that bonus .

Testing Your Knowledge of Controlling Schedule Changes Use your project management expertise and your knowledge of the credit card validation project to answer the following questions on controlling schedule changes :

1. Name four of the key elements of a schedule management plan .

2 . What must you know to determine whether a schedule has changed?

3 . The copy of your plan that is never changed and shows exactly wbat you initially planned to do is called what?

4. What are the four steps of Schedule Control?

Exercise 10.4: Reporting Performance and Using the Earned Value Technique The objectives for Exercise 10.4 are as follows:

Understand the importance of performance measurement analysis .

Learn how to choose the best methods for performance reporting.

Understand the earned value technique.

Practice using the earned value technique.

Background Once your project gets underway, you need to communicate where it stands and how it is pro­gressing to your sponsor and other executives. It's important to provide the executives with objective information . You need to measure progress in terms of the major elements of your project (cost, schedule, and quality within the current scope) and report your findings objec­tively. You might also report the status of procurement and risk management activities . You might hold regularly scheduled performance reviews. Text, graphs, and charts all are useful formats readily available for your use as you generate progress reports.

Reporting Performance

You have a variety of methods to choose from for reporting performance and comparing the current state of the project to the original estimates (baselines). You might choose to add bar

Monitor ing and Controlling Change 801

charts, S curves, histograms, and tables to help you present results to management in a way that they can easily understand . Some performance reporting methods a vai lable to you are as follows:

Project status

Forecasting

Variance analysis

Trend analysis

Earned value analysis

In this exercise, we will briefly discuss variance analysis and trend analysis and then go on to a more detailed discussion of earned value techniques .

To report on schedule performance, you might consider a milestone report. This report shows graphically whether your proiect is on track, provided you include the original, baseline targets. The diagram shown here is a milestone report chart that includes milestone comple­tion status, individual task status, and a comparison to the baseline . This graphic reports at a glance that, although the project was originally baselined 10 complete on March 7, it now has a finish date of March 12. This proiect is behind schedule. You can easily see which tasks made the project end date move out.

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Look closely. You can see that extra days were needed to produce the manual outlines. (Maybe someone left something out of the scope statement.) The performance reviewers might ask the tech writer to work overtime, or they might accept the changed dates because confirm­ing that the documentation is complete and correct is more important than getting the manual

802 Workbook Exe rcises

produced on time. Perhaps, with a complete outline, the tech writer can make up the time, because less rework will be required.

If cost is a prime constraint for you r project, you might use a budget report to inform stake· holders of the project's cost status . Show how much you've spent in relation to the total budget and how that compares to what you expected to spend . You can lise this information to gauge whether you have spent too much (or too little) and determine how that impacts work you have yet to complete.

You might use variance analysis reports to show whether you are ahead, behind, or on tar· get for the scheduled end date or budget. The diagram shown here is a schedule variance report for the documentation project. You can easily see that, although some tasks started early, the overall variance for completing the project is 3 .1 days past the original target.

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If quality is an overriding constraint, you might use trend analysis (possibly using scatter diagrams) to show the number of defects and progress toward reducing them and improving quality. This is also a useful method of conveying schedule or budget trends . You might choose to use a combination of these and other methods to provide a complete picture of project progress.

Using the Earned Value Technique (EVT)

Use earned value analysis to show variance and trends in cost and schedule as they relate to one another. It is especially powerful if you display the information graphically. Many believe that earned value analysis (EVA ) is one of the best ways to report performance. T he PMBO K Guide emphasizes it as the primary performance reporting methodology for project management .

Monitoring and Controll ing Change 803

Here are some of many terms and fo rmulas you need to lea rn to be able to describe and use ea rned value analysis.

PLANNED VALUE IPV)

Planned value is also known as budgeted cost of work scheduled (BCWS). It describes what most of us know as our budget. It is the estimated cost of work and ot her items req uired to complete a ta sk or WRS component.

ACTUAL COST lAC)

Actual cost is often called actual cost of work perfomled (ACWP). It describes what most of us think of as actual work and the rate applied to that work. It is the cost incurred up to a par­ticular point in time for a task or WBS component. You captu re this from labor performed and include any expenses incurred.

EARNED VALUE lEV)

Earned val ue is called budgeted cost of work performed (BCWP) in many organizations. EV compares, at a particular point in time, the value of a task or WBS component to the estimate. It is based on the theory that work accomplished is worth something~ven if it is not complete. To use this method, you must initially establish the way YOll will measure earned value. Some organizations decide work has an earned \'al ue of zero until it is at least 20 percent or 50 percent done. Some decide work needs to be 100 percent complete before value can be applied.

Calculating Variances and Forecasting Project Completion You will use the following formulas to calculate varia nces and fo recast completions using pla nned value, actual cost, and earned value.

COST VARIANCE ICV)

CV = EV - AC

This form ula tells you whether costs are higher or lower than budgeted. For instance, if on the status reporting date you estimate earned value for work completed on the documentation project is $ 1,605 (the outline and some writing have some val ue as of the status date) but the actual costs for producing that work are $2, 120, the CV is <$5 15>. At this poi nt, the cost vari­ance is a negative num ber (as shown with the angle brackets < », and the pro ject is over bud­get. When it is a positive number, the project is under budget. Zero is right on target.

SCHEDULE VARIANCE ISV)

SV= EV-PV

SV tells you whether the project schedule is behind or ahead of its esti mate. For instance, if the ea rned val ue for the documelUation project is $ 1,605 and the planned value is $1,550, the SV is $55. If the schedule variance is a negative num ber, the project is behind schedule. If it is a positive number, the project is ahead of schedule. Zero is right on ta rget.

Here are some basic truths about looking at these variances in concert:

If CV is positive and SV is positive, the projcct is under budget and ahead of schedule.

If CV is negative and SV is nega tive, the projCCt COStS are over budget, and the schedule is slipping.

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If CV is positive and SV is negative, some project tasks might not have starred or they've starred but not enough resources have been assigned to them.

If CV is negative and SV is positive, then extra money might have been spent 10 shorten (crash ) the schedule.

PERFORMANCE INDEXES (CPI, ePIc, AND SPI)

CPI = EV +AC

CPIc = EVc + ACC

SPI = EV+ PV

The cost performance index (CPI ) expresses the ratio of earned value to actual cost to provide a numerical description of cost performance for the project. If the result is greater than 1, your cost performance is great. If it is less than 1, your cost performance is poor. If it is zero, you are on target. This is a ratio that can tell you how well you are doing for a particular activity.

For instance, on the First Draft task for the documentation project, here's the calculation:

EV = 965.50

AC = 1,000

CPI = 965 .5 + 1,000

CPI = 0.97

Since CPI is less than 1, you have a cost overrun for the First Draft task . Another related calculation, called cumulative CPI (CPIC), sums the periodic earned values

divided by the sum of the individual actual costs. For this calculation, use the formula CPIc = EVC + ACc. CPIc forecasts actual costs at project end. For the documentation project, here's the calculation :

EV c = 1,605

ACC = 2,120

CPIc = 1,605 + 2,120

CPIc = 0.76

The cumulative performance index is 0.76 (less than 1) and indicates that you have a cost overrun . You could take the original budget calculation (in this case, $8,800 ) and divide it by CPIC (0.76 ) 10 forecast the new budget, $11 ,579 .

To calculate a schedule performance index (SPI ), use the formula SPI = EV + PV. If the result is greater than 1, your schedule performance is great; you are ahead of schedule. If it is less than 1, your schedule performance is poor, and the project is behind schedule. If it is zero, you are on target. Again, using the documentation project, here's the calcu lation :

EV = 1,605

PV = 1,550

SPI = 1,605 + 1,550

SPI =I .04

Monitor ing and Controlling Change 805

This means you are about 0 .04 days ahead of schedule . You can use this to show trends over time by comparing the performance index resul ts you get at a particular point in time to

earlier or later results. The chart shown here is the earned value for individua l tasks in the documentation project and

fo r the entire project. Notice that this project describes costs using the terms BeWS, BCWP, and ACWP rather than PV, EV, and AC. ln practice, you might see either set of terms. For the exam, be sure to use PV, EV, and AC.

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n ~ earned YII$1,55O.00 $1 .605.50 $2,12000 $55.50 ($514.50) 1 $8 ,800.00 1$4.400.00 ($1.410 .03) ! -l t Sto1oo cu '--'- $0.00 ~ $0 00 $0. 00 $OoJ~ ~ $0 .00 $0.00

2 ProJuce o 1WJ.oo Jfj~OO I 11,I20 oo (I IBJOJ) ~400 oo) 11.600 00 1800.00 (160000)

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5 D",'! "fOP " $0.00 $0 001

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6 El it $0.00 ro.(() $0. 00 $0. 00 $~ CO 12 ,{[() 00 $1 ;:00.00 (11,lOClOO)

51100 ~ Edit cc mp

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You will also see the terms estimate at completion (EACI, budgeted at comple­t ion (BAC), va riance at completion (VAC), and estimate to completion (ETC). These terms are covered in Exercise 10.2.

PRESENTING THE RESULTS

One of the best ways to show earned value variances and trends is to create a cumulative cost curve and continue 10 plot it over the life of your project. Depending on how long your project is, you might update it weekly, biweekly, or monthly. The cumulative cost curve is a graphic presentation of the relationship between EV, AV, and PV planed over rime. If your plot resul ts in a single curve (we've never seen this in real life), your project is on track in terms of both budget and schedule. If the plot results in more than one curve, you have a variance in cost, schedule, or both . T he relationship between curves at any given point in time gives a quick

806 Workbook Exe rcises

graphic reference to schedule and budget variances . The cumulative cost curve shown here represents a project with both schedu le and cost variances.

SIiPiJag Time Now

Once you measure and plot your progress, you might find that you need to discuss corrective actions with your team . You might need to approach the executive team for help with correc­tive action, if you cannot resolve the problem within your team. For instance, with the docu­mentation pro ject, the review team might ask you to reduce the scope of the documentation to help reduce the budget and time to complete the work.

Creating a Performance Report

Now that you're acquainted with a variety of performance reporting formats and how each presents data, you're ready to create a performance report. Use the steps that follow:

1. Determine which information needs to be communicated: schedu le, budget, quality, risk, procurement activi ties, or scope changes.

2 . Determine the progress measures to use and how often to take them. Make sure you base­line your budget and schedule.

3 . If you choose the earned value technique, use tools that will help you generate the data regu larly. Find a scheduling tool with an earned value reportingcapabiliry so you can cap­ture earned value regularly.

4 . Determine the best format for the report based on the needs of the audience. You will probably want to use several reporting formats for the status report : text, illustrations or photographs, and charts or graphs . Executives usually prefer charts and graphs; that for­mat allows them to absorb a substantial amount of information with just a glance. Create a set of standard charts or graphs that can be easily updated to include in your perfor­mance reports.

5. Schedule performance review meetings regularly, discuss any variances, and decide what corrective action is required .

Now it's time to practice and see how well you can analyze earned value through perfor­mance reporting.

Monitoring and Controlling Change 807

Scenario About two years ago, Health America began research and reporting on whether major hos­pitals are achieving specific goals as identified by the president of the United States. You are helping the project manager, Bill Smi th, set up performance reporting using eilrned value and other performance reporting methods. The performance repons will go to HA execu­tives and the Depanment of Health and Hu man Services (HHS). Bill is reporting earned valuc performance to both groups of stakeholders for the first time. You have determined that earned valuc for the current reponing period is $1.9 million. Your planned value is $2.5 million. Your actual costs are $1.8 million.

Testing Your Knowledge of Reporting Performance, Including EVT Use your knowledge of earned value to answer the following questions.

1. What are SV and ev for this project? What do the results mean?

2. What arc SPI and ePIC for this project? What do the results mean?

3. If Bill wanted to show quali ty improvements over time for the hospitals, what kind of performance reporting might he use?

4. Why is Performance Reporting important?

5. What are some of the tools and techniques Bill could use to present information for the performance reports?