Project Planning and Scheduling

CHAPTER ONE: PROJECT IDENTIFICATION

1.1. Why a project?

1.2. Project Identification: Need Assessment
 CHAPTER II: Basics of Project Planning

• What is project planning?

• Introduction
• Project Planning Steps
• Elements of Project Plan
• Project Planning process
• Core Process
• Facilitating Process
• Dimensions of project plan development
• Inputs
• Tools and techniques
• Output
CHAPTER III: Definition of Project Work
1 Project Scope Defnition
Introduction
Statement of Work

2 Defining Project Deliverables

Defining Deliverables through Decomposition

3 Work Breakdown Structure

Work Breakdown Structure (WBS)
Approches of Creating WBS
 Project Planning & Scheduling

CHAPTER VI:PROJECT SCHEDULING

• Meaning of Project Scheduling
• Project Schedule
• Steps In Project Scheduling
• Common Techniques for developing Schedule
• Scheduling techniques for developing activity networks (Develop
Schedule):
• CPM and PERT
CHAPTER V: STATUS REPORTING
EARNED VALUE MANAGEMENT
“If You Fail to Plan, You Are Planning to
Fail” — Benjamin Franklin
 Quote
If you can’t fly, then run,
If you can’t run, then walk,
If you can’t walk, then crawl,
But whatever you do,
You have to keep moving forward.

Martin Luther King Jr.

1
“Our current problems can not be solved
with the same level of thinking which
created them.”

Albert Einstein

1
CHAPTER 1

CHAPTER ONE:
PROJECT IDENTIFICATION
Why a Project?
 A project is generally called upon to provide a solution to a problem
or to take advantage of an opportunity.
These needs might have to do with:
 Reducing costs
 Increasing revenues
 Eliminating waste,
 Increasing productivity and efficiency
 Taking advantage of market opportunities
 Filling social needs; improving service to customers or clients
 Responding to the activities of competitors
 Responding to external changes (e.g. development of new technology)
 Responding to government initiatives or new laws or political consideration
 Resource availability –opportunity to make profitable use of available
resource, and
 Natural calamity –planting against the adverse effects of natural events as
drought or floods
Knowledge areas of project management
 Sources of Project Ideas and Reasons for Project
•Project ideas may originate from various
circumstances. (Micro and macro sources)
A project may be designed:
To solve a problem (in a certain location/organization),
To satisfy a need (business need), or
To use available resources (opportunity),
To attain a strategic objective or meet a market
demand.
 Project Identification
• It is the first step in the realm of project management
• Is the process of assessment and analysis of priority need
which a project can address
• This usually involves a ‘needs assessment’which finds out
what community needs are and whom they affect.
 Project Identification: Need Assessment
⚫ Needs –the minimum amount of certain basic material/services
requirements/desire.
⚫ Scriven and Roth: “Need refers to something (X) that people must have to
be in a satisfactory state. Without X they would be in an unsatisfactory
state; with X they achieve but do not exceed a satisfactory state.
⚫ Needs Assessment: the process of identifying and understanding people’s
needs; a needs assessment survey establishes the urgency for intervention
⚫ It is important to carry out a needs assessment before planning development
work, whether we think we know what the needs are or not. The project
should come out of what people say they want and not from assumptions
that we make. [Why?]
• Conducted after needs assessment to identify resources
(strengths) that the community could use to address the
problems they identified earlier.
• Communities should be encouraged to use their own
resources to address the problems they face.
• The project, if needed, should focus on strengthening the
community’s capacities to address their problems.
• By doing this, we are facilitating the community to address
their problems rather than addressing their problems for
them.
 Types of ASSETS to consider in capacity assessment

• HUMAN: skills, knowledge, ability to work and good health.

• SOCIAL: based on relationships and include organizations and groups
within the community, political structures and informal networks.
• NATURAL: the local environment and include land, trees, water, air, climate
and minerals.
• PHYSICAL: man-made, such as building, transport, water supply and
sanitation services, energy sources and telecommunications.
• ECONOMIC: things that people can use to sustain their livelihoods, such as
money and savings, grain stores, livestock, tools and equipment.
• SPIRITUAL: faith, scripture, guidance and prayer.
• Once a need has been identified which a project can
address, write a concept note.
• A concept note outlines the project idea. It does not have to
contain a lot of detail and may only be about two pages in
length.
• Organization's leadership or a donor can gain an idea of
what we hope to do. They can ensure it fits with strategy,
check its relevance and quality and give feedback before a
lot of time, effort and resources are spent planning the
project.
 CONCEPT NOTES should outline:
Background information
Why the project is necessary?
Who will benefit from the project?
How they will benefit?
An estimate of both the total budget and the
resources needed for design.
 25

• There are four steps to the Analysis Phase of

Project Identification:

(image of reality)
(image of an improved situation
in the future)
(comparison of different options
to address a given situation)
 therefore, aims at
undertaking a preliminary test of a priority idea before
important planning resources, like money & skills are
utilized in detailed project design & appraisal.
 Project Planning & Scheduling
CHAPT E R II: Basics of Project Planning
Table of Contents

1 What is project planning?

Introduction
Project Planning Steps
Elements of Project Plan

2 Project Planning process

Core Process
Facilitating Process

3 Dimensions of project plan development

Inputs
Tools and techniques
Output
What is Project Planning?

A project plan is "A formal, approved document

used to guide both project execution and
project control.
The primary uses of the project plan are to:
document planning assumptions and
decisions,
facilitate communication among stakeholders,
and
document approved scope, cost, and schedule
baselines.
 A project plan may be summary or detailed.
It is a statement of how and when a project’s objectives are to be
achieved, by showing the major products, milestones, activities and
resources required on the project
Basic questions for planning
• What and why? – end result goals/objectives
• When? time frame to accomplish a project
• Where? the place to implement the plan
• Who? responsibility—human resource to
perform the task
• how? strategy/procedures and methods
• How much? volume of resource, work
 Features of planning
It is pro-active
It is a dynamic/ iterative/continuous /ongoing
process which involves learning by reflecting and
acting.
It is not an end by itself, rather a means to an end.
Why planning is important?
 Uses of project plan

Guide project execution

Document project planning assumptions
Document project planning decisions
Facilitate communication
Define key management reviews
Provide a baseline for progress measurement and control
To reduce risk
To allocate resources
………
Purpose of project planning

Directing:
Objectives, Goals, Special influences,
Constraints on the project Scope
Identifying:
Actions, Risks, Responsibilities
Guiding:
Identification of required activities,
Establishing workable procedures
Preparing:
Flexibility to adapt to changes, Retain the
qualities of integrity and durability
For projects to be properly conceived and planned, the
characteristics below must be clearly defined:
• Goal/Objectives
• Expected outputs
• Intended beneficiaries
• Planned lifespan
• Extended outcome of the project
• Principal stakeholders
• Financial and Resource requirements and source of financing
Steps in Planning a New Project

• Identify the Long Range Goals

(Overall Objective) (envision ideal
situation)
• Conduct Problem Identification
(Need Assessment; Capacity
Assessment)
• Determine the Project Goal
• Select a Project Approach/Strategy
• Undertake Feasibility analysis,
appraise and select
• Project Objectives and Activities
• Challenges and Assumptions
Before commencement of any project, the first thing
that we need to do is project planning.
A project plan expresses the objectives &
requirements of the project in terms of:

1 Project Scope
2 Project Schedule
3 Resource Requirement
4 Project cost estimation
5 Project Quality and
6 Project Risk Management
Discussion Questions
1 What Are the main Reasons for failure of many of projects in
our Country?
2 What are the Barriers for Good Planning In Ethiopia ?
Why Projects fail

Poor/No Planning
Poor project and program management discipline
Lack of executive-level support
Wrong team members
Poor communication
No measures for evaluating the success of the
project
No risk management
Inability to manage change
 Barriers to good planning
1 Prevailing paradigms(belief about what the

world is like),
It is not necessarily what they say they believe but what they really
believe that counts
.
People do not walk their talk!
2 The nature of human beings.
People don’t plan because they find the
activity itself is painful.
The basic planning steps are as follows.
1 Define the problem to be solved by the project.

2 Develop a mission statement, followed by statements

of major objectives.
3 Develop a project strategy that will meet all project
objectives.
4 Write a scope statement to define project boundaries
(what will and will not be done).
5 Develop a Work Breakdown Structure (WBS) .
 6 Using the WBS, estimate activity durations, resource
requirements, and costs .
7 Prepare the project master schedule and budget.
8 Decide on the project organization structure:
whether matrix or hierarchical (if you are free to
choose).
9 Create the project plan.
10 Get the plan signed off by all project stakeholders.
 The Basic Elements of a Project Plan are:
1 Project Scope Planning
2 Delivery Schedule Planning
3 Project Resources Planning
4 Project Cost Planning
5 Project Quality Planning
6 Supporting Plans
1 Risk Managment Plan
2 Communication Plan
3 Procurment Plan
`1. Project Scope Planning
Any project is expected to provide its stakeholders with
certain outcome,
which is commonly termed as project deliverables
Project scope is about outlining the project
deliverables
Based on project scope, project planner(s) create(s) work
break down structure (WBS).
WBS is a breakdown/ decomposition of project work into
distinct work items at higher level.
The project scope is generally constrained, with respect to
following aspects
Time
Quality
Resources
2.Delivery Schedule Planning

Once project scope is determined and work breakdown

structure (WBS) is created, the next step is to create
delivery timeline.
For each of the deliverable work item identified in the
work breakdown structure (WBS),
project planner needs to identify list of activities need to
perform.
Activities are basis for estimation, scheduling, execution, and
monitoring and controlling of the project work.
For each of these activities he/she needs to figure
out
How long will it take to complete each
activity (days, weeks)?
What kind of resource(s) – required for its
completion (skill set, experience, etc.)?
Based on the estimate of efforts required to carry out
each activity, one can sum up to get duration required for
each deliverable.
A milestone marks a significant event in the project.
Generally, project sponsors would refer to list of
milestones to trace project delivery in respect of timeline
& cost overrun.
The visual representation of project schedule can be
viewed through a Gantt chart.
 Five steps to create delivery schedule
1 Define Tasks/ Activities
2 Tasks/ Activities Sequencing
3 Resources Requirement Estimation
4 Task Durations Estimation
5 Schedule Development
3. Project Resources Planning

Project resource is about the people to be involved in the

project, materials and equipment required for successful
completion of the project
Mainly resource planning tends to revolve about
people/staffing management: Human Resource Plan
From Human Resource Plan one expect:
Roles & responsibilities assignment
Organogram establishment for the project
Staffing management plan:
describes staffing & training requirement,
resource aqusation and calendars, release plan,
rewards & recognitions, etc
4.Project Cost Planning

It helps to baseline the overall project budget in terms of

money
From Project Cost plan, weexpect,
Cost estimates per activity
Discription of Factors considered in Cost Estimates
(Assumptions, Constrients, Parameteres used and
level of confidence we used)
5.Project Quality Planning
To create project quality plan, project planner need to
identify the quality requirements of the project
Project quality plan should highlights:
Quality Process & Policies
Cost-Benefit Analysis of quality assurance and control
process alterntives
Cost of Quality
Conformance cost (Prevention costs, appraisal
cost)
Non-Conformance cost (internal failure cost,
external fail. cost)
Quality Metrics
Quality Checklist
Control Charts
6.Supporting Plans

1 Risk Management Plan:

Involves risk idenification, Risk assesesment, Risk
Response development and Risk managment
2 Communication Plan:
Involves Identifying Project Stakeholders and
Planning project communication.
3 Procurement Plan:
documents purchase policy illustrating purchase
process, buy/lease/rent decisions, vendor selection,
negotiation, financial consensus, duration, legal
concurrence, etc.
Core Process

1 Scope planning:
developing a written scope statement as a basis for
future project decisions
2 Scope definition:
subdividing the major project deliverables into smaller
and more manageable components
3 Activity definition:
identifying the specific activities that must be
performed to produce the various project deliverables
Core Process

4 Activity sequencing:
identifying and documenting interactivity
dependencies
5 Activity duration estimating:
estimating the number of work period which will be
needed to complete individual activities
6 Schedule development:
analyzing activity sequences, activity durations and
resource requirements to create the project schedule
7 Resource planning :
determining what resources and what quantities
Core Process

8 Cost estimating:
developing an approximation of the costs of the
resources
9 Cost budgeting:
allocating the overall cost estimate to individual work
items
10 Project plan development:
taking the results of other planning processes and
putting them into a consistent and coherent
document
 Core Process
Facilitating Process

Facilitating process

1 Quality planning:
identifying which quality standards are relevant to the
project and determining how to satisfy them
2 Organizational planning:
identifying, documenting and assigning project roles,
responsibilities and reporting relationships
3 Staff acquisition:
getting the human resources needed assigned to and
working on the project
Facilitating process

4 Communication planning :
determining the information and communication
needs of the stakeholders;
who needs what information,
when will they need it, and
how it will be given to them
5 Risk identification:
determining which risks are likely to affect the project
and documenting the characteristics of each
6 Risk quantification :
evaluating risks and risks interactions to assess the
range of possible project outcome
 Core Process
Facilitating Process

Facilitating process

7 Risk response development:

defining enhancement steps for opportunities and
responses to threat
8 Procurement planning:
determining what to procure and when
9 Solicitation planning:
documenting product requirements and identifying
potential sources
Inputs to project plan development

The main Inputs to project plan development

includes:
Other planning outputs :
includes all of the outputs derived from the core
and facilitating processes as well as the work
breakdown structure and supporting details
Historical information :
includes all available historical information to
assist in verifying assumptions and assessing
alternatives that are identified as part of this
process
Organizational policies :
formal and informal policies that includes but are not
limited to:
Quality management
Personnel administration
Financial controls
Constraints:
factors that will limit the project management team’s
options
Assumptions:
factors that are considered as true, real or certain but
involves risk
1 Project planning methodology:
Structured approach used to guide the project team
during development of the project plan
2
Stakeholder skills and knowledge:
Tapping stakeholders or other professionals for their
contributions in the project
3
PMIS:
Gather, integrate, and disseminate inputs of the other
project
Out put of project planning
Project plan
A formal, approved documents used to guide
both project execution and project control
Supporting detail
 Project Planning & Scheduling
CH A PTER III: Definition of Project Work
Table of Contents

1 Project Scope Defnition

Introduction
Statement of Work

2 Defining Project Deliverables

Defining Deliverables through Decomposition

3 Work Breakdown Structure

Work Breakdown Structure (WBS)
Approches of Creating WBS
Project scope and scope Managment?

Project scope management can be defined as

“the processes involved in defining and
controlling what is or is not included in a
project”.
It entails making sure that all project stakeholders
have the same understanding of what the
deliverables are and how and when they will be
delivered.
 The five key processes involved in scope
management include:
1 Initiation:
Beginning a project or continuing to the next phase.
Usually involves the creation of a project
charter .
2 Scope planning:
involves establishing decision-making criteria.
1 How do we know when we’re done?

2 How do we know when we’ve won?

3 Who gets to decide

Deliverables include scope statement and scope

management plan
3 Scope definition:
creating a work breakdown structure (WBS) :
to break major deliverables down into smaller,
more manageable components.
4 Scope verification:
formal acceptance of scope definition by key
stakeholders.
5 Scope change control:
Controlling ‘scope creep’.
1. Project Charter

The key document that often defines project initiation is

the project charter.
A project charter is a document that formally recognises
the existence of a project and provides direction on the
project’s objectives and management.
Once the project charter is signed by the project sponsor,
it provides authorisation for the project manager to
start planning.
Key project stakeholders should sign the charter.
At a minimum a project charter should contain:
1 Title and date of authorisation

2 Name of project manager and contact info

3 Statement of project Scope

4 Summary of approach:

roles and responsibilities matrix

sign-off page for key stakeholders.
2. Scope planning

Scope planning involves developing documents to clarify

project scope and the basis for project decisions including
criteria for phase sign-off.
The key output is a scope statement.
The scope statement,is the key document used to
articulate and confirm the scope of the project.
Scope Statment include the following:
Projecι jνsιίficαιίon:
What is the business need?
‘Why are wedoing this project?
Project products:
Key products and services – e.g., minimum
hardware and software requirements
Scope Statment include :
Summary of project deliverables
Scope management plan:
(cost, time and quality measures of success and clearly
articulates both what the project will deliver and what it will
not deliver)
Sometimes called a Statement of Work
Scope definition – The Work Breakdown Structure.
3.Scope definition

Scope denition referes to breaking the work down into

manageable pieces.
Good scope definition:
helps to improve the accuracy of time, cost and
resource estimates
defines a baseline for performance measurement and
project control
assists in communicating work responsibilities.
A work breakdown structure (WBS) is defined as:
“a deliverables oriented depiction of the work involved
in a project that defines the total scope of the
project”.
It is a detailed listing of what is required to deliver the
product/service of the project.
It is the “heart” or foundation of project management that
provides the basis for planning and development for the
project
Scope change control

Scope creeps the tendency for project scope to

get larger and larger.
As project manager you want to ensure
client satisfaction and benefit realisation.
This is a phenomenon that often occurs in
projects as a result of the best of intentions
Two methods of controlling scope creep are
scope verification and scope change control
4.Scope Verification

Scope verification involves documenting the

project’s processes and products and getting
the key stakeholders to sign off on them.
In a project, this is usually accomplished
through what are known as:
Business Requirements Document and
Technical Specifications Document.
5.Scope Change Control

Scope Change Control usually entails a

formalised process for changing project scope
wherein
the implications in terms of time and cost
are clearly stated.
Key stakeholders are required to sign-off on
accepted changes to the scope of the project.
The best preventative measure for project
scope change is:
doing a thorough job of requirements and
specifications in the first place.
Statement of Work(SOW)

The Statement of Work (SOW), is the bible for the work

the project must produce.
It is a key governance tool used to direct work for a
vendor or contractor, or internally.
The SOW must contain a description of all the work that
is expected.
The description need not be at the detail level, but
should be comprehensive.
include work that produces the projects
deliverables
include administrative work such as project
reporting.
Statment of Work VS Scope statment

SOW is not needed when a project is small and simple

enough to directly translate Scope Statement into Work
Breakdown Structure tool.
The SOW should be written after Scope Statement,
during the planning phase of a project.
Scope Statement should be written first and it should
capture, in very general terms, the product of the
project.
Statment of Work VS Scope Statment

The Statement of Work defines the work to be done,

so it must be written before the work can be
scheduled, or broken down.
All the elements captured in Scope Statement should
appear in SOW.
The Scope Statement tends to capture the deliverables of
the project at a high level:
SOW will contain these deliverables:
When they are to be delivered by, and
How the deliverables will be built.
The SOW should also contain information about
deliverables at a more detailed level.
 The SOW information categories comprises of:
1 Scope of work:
A detailed description of the work, the software and hardware
to be used, and the exact nature of the work.
2 Location of the work:
Where the location of the work to be done would be other
than a standard location.
This would be applicable to an SOW for work to be performed
offshore.
3 Period of performance:
The start and finish date for the project

4 Deliverables schedule:
Due dates for the deliverables of the project.
This would include completion dates for development, QA
testing, User Acceptance Testing, etc.
5 Applicable standards:
Industry standards or other standards imposed on the project
deliverables.
These should include any standards such as ISO
6 Acceptance criteria:
These would include any quality standards that must be met,
for example zero priority 1 defects.
Other conditions that must be met such as number of test
cases executed, etc.
7 Specialised requirements:
These will include any special qualifications for the workforce,
such as a PMP certified Project Manager.
Scope of work, period of performance, and deliverables
schedule are all mandatory information.
The rest are optional and will only apply to those projects
where they are applicable.
The scope of work to be performed should include
administrative work as well as work on the project
deliverables.
SOW is the official scope baseline for the project, hence it
should get the approval of the sponsors, or the customer
first.
Anything detailed in the SOW must be present in the
final product.
SOW is used for WBS.
The start and end dates captured in your SOW
should be captured in the WBS.
SOW is used as a communications tool to explain the
work of the project to stakeholders.
Purpose of SOW

The main purpose of a SOW is:

to define the liabilities, responsibilities, and work
agreements between clients and service providers.
it define the scope of the engagement and Key
Performance Indicators for the engagement.
 Defining Deliverables through Decomposition

• Decomposition involves subdividing the major project deliverables or sub deliverables into
smaller, more manageable components until the deliverables are defined in sufficient detail.
• This helps to support development of project activities (planning, executing,
controlling, and closing).
• Decomposition involves the following major steps:
 Identifying the Deliverable’s Components
 Deciding whether adequate cost and duration estimates can be developed at this level of detail for each
deliverable.
The components of the deliverable need to be described in terms of tangible, verifiable
results in order to allow performance measurement.

As with the major components, each deliverable’s components need to be defined in

terms of how the work of the project will be organized and accomplished.
 Tangible, verifiable results can include services, as well as products.
For example, status reporting could be described as weekly status reports.
In summary, project deliverables must be defined in
sufficient detail to support development of project
activities.
By decomposing major project deliverables into
components and naming them, it is possible to create a
series of activities that can be estimated, scheduled, and
tracked.
These activities are known as work packages, and are the
lowest level component of a WBS.
The backbone of any good schedule or budget is a
well-rounded work breakdown structure
A well-rounded WBS has the following characteristics:
Includes entire scope of work
the agreed work packages associated with both a cost
(i.e. resourcing, materials, etc.) and a time (i.e. a
start and finish time)
the work package can be identified at the lowest level
and each preceding level is within the scope of the
project
Work Breakdown Structure. is the process of dividing
complex projects to simpler and manageable tasks.
It entails listing all the phases, activities and tasks that
make up the project.
A phαse is a set of related activities that
comprise a substantial portion of an overall
project.
An αcιίvίιy is a set of tasks which
must be undertaken to complete a
portion of a project.
A ιαsk is an item of work to be completed within
a project.
The WBS is a hierarchical tree of end tasks/activities to
be accomplished.
A work item is one small piece of the project.
A work package is the lowest-level item.
Responsibility is assigned at the work package and work
item tasks.
Purpose of WBS

1 It helps to define and organise the scope of the total

project more accurately and specifically.
2 It helps with assigning responsibilities, resource allocation,
monitoring the project, and controlling the project.
This allows for better estimating of cost, risk, and
time because you can work from the smaller tasks
back up to the level of the entire project.
3
It allows for double check all the deliverables’ specifics
with the stakeholders and make sure there is nothing
missing or overlapping.
WBS decomposition steps

WBS decomposition steps are:

1 Identify the deliverables and related work

2 Structure and organize the WBS

3 Decompose the upper WBS level into lower level

detailed components
4 Develop and assign identification codes to these

components
5 Verify that the degree of decomposition of the work is

necessary and sufficient

Identify WBS:
Each level in WBS is assigned a unique ID
Each component at these levels is also assigned a
unique ID
These identifiers are used to:
Track and sum costs
Scheduling
Resource assigning
Link to chart of accounts
PMGT642
The WBS should answer the following questions:
Does the detail in the WBS reflect the entire project?
Are the work packages SMART?
Have the tasks been defined clearly?
WBS Rule

1 Begin with the scope statement

2 Task descriptions developed using a verb
3 Develop WBS to lowest level of control required to
effectively manage a project
(Work Package – guideline 80 hours of effort)
4 Each work package is developed to accomplish a discrete
and separate element of work
5
Allow assignment to a single organisational unit for
exclusive responsibility
6 Organise the WBS by Task: a. phase b. activity c. task
d. step. OR
7
Organise the WBS by Deliverables: a. hardware b.
software c. network.
A work package is a deliverable or product at the lowest
level of the WBS.
To create a work breakdown structure you need to
understand the project and its scope as well as the needs
and knowledge of the stakeholders.
The entire project team should be involved in creating and
reviewing the WBS.
The principle is “the people who do the work should help
plan the work.”
Project Planning & Scheduling
CHAPT ER VI:PROJECT SCHEDULING

PMGT642
• Project Scheduling convey the following basic information:
• 1.The specific activity to be conducted, organized
sequentially according to results (what activity/task?)
• 2.A specific time when this activity is to be undertaken and
for how long (timeframe?)
• 3.Who is to take responsibility for this activity
(resource?)
A project schedule is a document collecting all the work needed
to deliver the project on time.
Provides a detailed plan that represents how and when the
project will deliver results
Based on the time estimates, the start and finish times for
each activity are worked out, critical path is identified, along with
the slack and float for the non-critical paths.
Serves as a tool for communication, managing
stakeholders’ expectations, and as a basis for performance
reporting. 87

Dr. Melkamu
 Project-specific data (Project Information)
needed for scheduling:

 The activities Dependencies

Planned dates Resources
(Start and Finish)
Constraints
Durations
88

Dr. Melkamu
 Steps In Project Scheduling

1. Define Activities

2. Sequence Activities/Determine Dependencies

3. Estimates Activity Durations

4. Estimate and Assign Activity Cost & Resources
(From other Project Management Knowledge Areas)

5. Develop Schedule
 Steps In Project Scheduling: 1.Define Activities

•Define Activities is the process of identifying and

documenting the specific actions to be
performed to produce the project deliverables.
• By using a Work Breakdown Structure (WBS), it
decomposes work packages into schedule activities
that provide a basis for estimating, scheduling,
executing, monitoring, and controlling the project work.
Define Activities Process
 OUTPUT FOR <DEFINE ACTIVITIES> PROCESS
93

• This process breaks down work packages into activities

ACTIVITIES
• decomposed work packages
• represent the work effort required to complete the work
package.
• provide a basis for estimating, scheduling, executing,
monitoring, and controlling the project work.
• Activities can be subdivided into TASKS.
 Define Activities

 Extension of the Work Breakdown

Structure (WBS).

 Contains “Tasks, “Activities,”

“Work Packages” …

Whatever you call the work, write

it down.
 MAJOR OUTPUTS TO THE PROCESS

1.ACTIVITY LIST

• 2.ACTIVITY ATTRIBUTES:
• • identifying multiple components such as unique activity identifier (ID),
WBSID,and activity label or name;
• • activity descriptions, predecessor, successor, logical
relationships, leads and lags
• 3. MILESTONE LIST
 MAJOR OUTPUTS TO THE PROCESS

• Milestone
MILESTONE
Summarize the completion of an
important set of activities or the
completion of an important event in a
project such as a subproject, which is just
a smaller portion of the overall project.
 Steps In Project Scheduling
2. Sequence Activities/Determine Dependencies
• Tasks are not an island, and often one cannot be started
until the other is completed. That’s called a task
dependency, and your schedule is going to have to reflect
these linked tasks.
• Sequence Activities is the process of identifying and
documenting relationships among the project activities.
• it defines the logical sequence of work to obtain the
greatest efficiency given all project constraints.
i. TECHNIQUES FOR <Sequence Activities> PROCESS: 99

PRECEDENCE DIAGRAMMING METHOD/PDM/

• PDM is a technique used for constructing a
schedule model in which activities are
represented by nodes and are graphically
linked by one or more logical relationships to
show the sequence in which the a ctivities are to
be performed.
• PDM includes four types of dependencies or
logical relationships.
• A predecessor activity is an a ctivity that logically
comes before a dependent activity in a
schedule.
• A successor activity is a dependent activity that
logically comes after another activity in a
schedule.
 ii. TECHNIQUES FOR <Sequence Activities> PROCESS:
DEPENDENCY DETERMINATION AND INTEGRATION

•Mandatory or • Dependency has four attributes, but two can

be applicable at the same time in the
Discretionary, following ways:
1. Mandatory External Dependencies,
•Internal or
2. Mandatory Internal Dependencies,
External
3. Discretionary External Dependencies, Or
4. Discretionary Internal Dependencies.
 MANDATORY DEPENDENCIES
Also called HARD LOGIC/HARD DEPENDENCIES

• Are those that are legally or contractually required or

inherent in the nature of the work.
• Often involve physical limitations:
• Ex: 1) a construction project, where it is impossible to erect
the superstructure until after the foundation has been built,
2) an electronics project, where a prototype has to be built
before it can be tested.
• Technical dependencies may not be mandatory.
 DISCRETIONARY DEPENDENCIES
Also called PREFERRED LOGIC, PREFERENTIAL LOGIC, OR SOFT LOGIC

• Are established based on knowledge of best practices

within a particular application area or some unusual
aspect of the project where a specific sequence is
desired, even though there may be other acceptable
sequences.
• When fast tracking techniques are employed, these
discretionary dependencies should be reviewed and
considered for modification or removal.
 DISCRETIONARY DEPENDENCIES

Example:
• Generally accepted best practices recommend that
during construction, the electrical work should start after
finishing the plumbing work.
This order is not mandatory and both activities may
occur at the same time (in parallel), but performing the
activities in sequential order reduces the overall project
risk.
 EXTERNAL DEPENDENCIES
• Involve a relationship between project and non project activities.
• These dependencies are usually outside of the project team’s
control.
• EX:
Testing activity in a software project may be dependent on the
delivery of hardware from an external source,
Governmental environmental hearings may need to be held
before site preparation can begin on a construction project.
 INTERNAL DEPENDENCIES

• Involve a precedence relationship between

project activities and are generally inside the
project team’s control.
•EX: If the team cannot test a machine until
they assemble it, there is an internal
mandatory dependency.
 iii. TECHNIQUES FOR <Sequence Activities> PROCESS:
LEAD AND LAG

• A lead is the amount of time a

successor activity can be
advanced with respect to a
predecessor activity.

• A lag is the amount of time a

successor activity will be delayed
with respect to a predecessor
activity.
Output for <Sequence Activities> process:
Project Schedule Network Diagrams
107

• Is the logical representation

(organization) of scheduled project
activities and shows the sequences and
relationships between activities
necessary to complete a project.
• It is always drawn form left to right and
reflects the chronological order of the
activities.
• Help to understand the relationships
and interdependencies of activities and
how the work should really go together.
 Steps In Project Scheduling
3. Estimate Activity Durations
4. Estimate Activity Resources (and Assign)

• • After the activities are defined and broken down into tasks,
you next have to determine the duration or cost (time
and effort) itwill take to complete them.

• • This is an essential piece of the equation in order to

calculate the correct schedule.
 ESTIMATION

An estimate is “a rough or approximate calculation.”

Estimates:
Lead to realistic plans.
Provide buy-in, motivation through
activity owner participation.
Reveal uncertainties, risks.
Aid in project understanding.
Balance optimism Estimation Terminology:
 Work days, Work hours
 Effort
 Duration
 Calendar Duration
 ESTIMATION PITFALLS

 People dislike estimating.

People are too optimistic.

 People lack needed information.

 Estimates are too high level.

 PREREQUISITES FOR GOOD ESTIMATE

•Clear project objectives and scope

•Listed project assumptions and constraints
•WBS
•Owners for all activities (preferably, willing
owners)
•Adequate staffing and expertise
•Access to relevant history and metrics
 PREREQUISITES FOR GOOD ESTIMATE

•Clear project objectives and scope

•Listed project assumptions and constraints
•WBS
•Owners for all activities (preferably, willing
owners)
•Adequate staffing and expertise
•Access to relevant history and metrics
PROJECT ESTIMATES Resource
Factors

Non Project
A history base Factors

Project Assumptions Task

Project
Factors Information
Information Archived
Metrics

Anecdotal
Data

Estimates
Estimating Process
 ESTIMATE ACTIVITY DURATIONS
• Isthe process of estimating the number of work
periods [=activity duration] needed to complete
individual activities with estimated resources.
• It provides the amount of time each a ctivity will
take to complete.
• The duration estimate is progressively elaborated, and the
process considers the quality and availability of the input
data.
Collecting Realistic
“Most Likely”
Estimates
• Involve the activity owners.
• Probe for reasons and methods.
• Assess confidence.
• Do part of the work and extrapolate.
• Break the activities down further.
• Discuss with your peers and manager.
• Ask experts.
• Validate with history and metrics.
• Use more than one estimating approach and
compare the results.
• Reconcile duration and effort/cost estimates.
• Use collaborative forecasting techniques (Delphi).

Module 3 ©2015 Tom Kendrick 115

 Factors that may influence the duration estimates
1. Required resource quantities, types or skill levels,
2. Advances in technology
3. Motivation of staff
4. Constraints imposed on the duration,
5. Law of diminishing returns.
[When one factor (e.g., resource) used to determine the effort required to produce a unit of
work is increased while all other factors remain fixed, a point will eventually be reached at
which additions of that one factor start to yield progressively smaller or diminishing
increases in output.]
• Is a technique for estimating the duration or cost of an activity or a
project using historical data from a similar activity or project such
as duration, budget, size, weight, and complexity, as the basis for
estimating the same parameter for a future project.
• Used when there is a limited amount of detailed information
about the project
• Most reliable when the previous activities are similar in fact and
not just in appearance, and the project team members preparing the
estimates have the needed expertise
•Uses an algorithm or a statistical relationship
between historical data and other variables to
calculate an estimate for activity parameters, such as
cost, budget, and duration.
• Example: (CABLE INSTALLATION): the meters of cable
multiplied by the number of labor hours per meter. If the assigned
resource is capable of installing 25 meters of cable per hour, the
duration required to install 1,000 meters is 40 hours (1,000 meters
divided by 25 meters per hour).
duration cost
Bottom-up estimation
Bottom-up estimation involves estimating the cost of
individual project activities or work packages and then
summarizing individual estimates to get a project total.
Bottom-up estimation is dependent on a well-structured work
breakdown structure (WBS).
The low level of the WBS presents activities/work packages
that can be associated with a time and cost estimate.
As the low-level components of the WBS are estimated, they
can be accumulated to present estimates at various levels.
•The process of analyzing activity sequences,
durations, resource requirements, and schedule
constraints to create the project schedule model.
•The schedule model with planned dates for
completing project activities helps for project
execution and monitoring and controlling.
 Common Techniques for <Develop Schedule> Process 123

1.Resource Optimization
Techniques
2.Schedule Compression
3.Critical Path Method
 124

1. RESOURCE OPTIMIZATION TECHNIQUES

•Resource optimization is used to adjust

the start and finish dates of activities to
adjust planned resource use to be equal
to or less than resource availability.
 1. RESOURCE OPTIMIZATION TECHNIQUES:

1.1.
•Start and finish dates are adjusted based on resource
constraints with the goal of balancing the demand for
resources with the available supply.
•Can be used when shared or critically required
resources are available only at certain times or in limited
quantities, or are overallocated, or there is a need to keep
resource usage at a constant level.
•Can often cause the original critical path to change.
 12
6

Resource
Leveling

=distributing
the workload
among the
team members
 1. RESOURCE OPTIMIZATION TECHNIQUES:

1.2.
• Adjusts the activities of a schedule model such that the
requirements for resources on the project do not exceed certain
predefined resource limits.
• In resource smoothing, as opposed to resource leveling, the
project’s critical path is not changed and the completion date
may not be delayed.
• In other words, activities may only be delayed within their
free and total float.
• May not be able to optimize all resources.
 2. SCHEDULE COMPRESSION 128

used to shorten or accelerate the schedule duration without reducing the project scope
in order to meet schedule constraints, imposed dates, or other schedule objectives.

Fast tracking Crashing

• Activities or phases normally • shorten the incremental cost
done in sequence are schedule duration for the least by
performed in parallel for at adding resources.
least a portion of their • Ex: approving overtime, bringing in
duration. additional resources,
• EX: constructing the • Works only for activities on the
foundation for a building critical path where additional
before completing all of the resources will shorten the activity’s
architectural drawings. duration.
• May result in rework and • May result in increased risk and/or
increased risk. cost.
 Types of Network Diagram
1. Precedence Diagram or Activity 2.Arrow Diagram or Activity
on Node (AoN) Diagrams: No on Arrow (AoA) Diagram:
dummies are necessary; Common;
easy to understand; have more uses dummy activity; complicated
information
There are two primary scheduling techniques for
developing activity networks (Develop
Schedule):
Techniques for managing project implementation
 Project Management:-
 is the application of knowledge, skills, tools, and techniques
to project activities in order to meet or exceed stakeholder
needs and expectations from a project.

 The management of large projects requires analytical techniques

for scheduling activities and allocating resources.

 The common network techniques used for project management

implementation are:
1. CPM (Critical Path Method ).
2. PERT (Project Evaluation and Review Technique )
 Applications of these tools are pervasive, from construction to
software development
 SOME TERMS IN NETWORK PLANNING

Event:

 is a specific instant of time which marks the start

and the end of an activity.

 consumes neither time nor resources.

 denoted by a circle or a node and the event

number is written within the circle.
Activity:

 Tasks or jobs to be performed in a project are called

activities.

 An activity may be a process, a material handling or

material procurement cycle.

 An activity is shown by an arrow and it begins and ends

with an event.

 Unlike event, an activity consumes time and resources.

 An activity is denoted by letters and along with estimated

time to accomplish the activity written.
 Critical Activities:
 Are those activities, if consume more than their estimated
time, the project will be delayed.
 Is denoted by a thick arrow to distinguish it from a non-
critical activity.
 Critical Path:
 Critical Path (CP) is formed by critical activities.
 Is the longest path and consumes the maximum time.
 Any amount of delay on CP will delay the entire project
by the same amount.
 WBS (Work Breakdown Structure) represents-

 a systematic and logical breakdown of the project into its

component parts.

 Constructed by dividing the project into major parts, with

each of these being further divided into sub-parts.

 This is continued till a breakdown is done in terms of

manageable units of work for which responsibility can be
defined.

WBS is a deliverable oriented grouping of project elements

which organizes and defines the total scope of the project.
Critical path Method (CPM)
 Is used for planning and controlling project activities in
the most logical and economic sequence of operations for
accomplishing a project.

 If the duration of each activity of the project is known with

certainty, the Critical Path Method (CPM) can be used to
determine the length of time required to complete a project.

 CPM can also be used to determine how long each activity in

the project can be delayed without delaying the completion
time of the project.

 It is used for optimizing resources allocation and minimizing

overall cost for a given project.
 CPM is Deterministic
CPM assumes that durations are more
deterministic; that is, they are easier to ascertain
and can be assigned to activities with greater
confidence (OR durations are fairly predictable
that is, they do not consider variation in the activity
completion time). 138

Dr. Melkamu
Advantages of CPM
 It highlights the critical activities on which management should
focus attention to reduce project completion time.
 It helps management in diverting resources from non-critical to
critical activities. In other words, it facilitates optimum utilization
of resources.
 It provides a technique of planning and scheduling project.
Scheduling helps to determine completion date and to evaluate
progress towards the completion of the project.
 It gives complete information about the significance, size,
duration and performance of an activity.
 It helps to identify potential bottlenecks and to avoid unnecessary
pressure on the paths that will not result in earlier completion of
the project.
 It helps to identify the sequence of jobs that determine the earlier
completion date for the project.
 Steps in CPM Project Planning

1. Specify the individual activities.

2. Determine the sequence of those activities.

3. Draw a network diagram.

4. Estimate the completion time for each activity.

5. Identify the critical path (longest path through the

network)

6. Update the CPM diagram as the project progresses.

 Has mostly been used in deterministic situations like

construction projects and Employs more or less standard
components and stable technology.
 Consider The Following Project Activities
Activities Immediate Duration (in months )
Predecessors
A - 2
B - 5
C - 4
D B 5
E A 7
F A 3
G B 3
H C,D 6
I C,D 2
J E 5
K F,G,H 4
L F,G,H 3
M M I 12
N J,K 8
 E(7) 5
2
8

B(5) G(3)
1 3 6
9

4
7
I(2)

Activity, Duration
 Critical Path (CP) & Critical Path Method (CPM)
• ES – Earliest Start Time: the earliest time at which the activity can start
given that its precedent activities must be completed first.
• EF – Earliest Finish Time: equal to the ES for the activity plus the time
required to complete the activity (Duration)
• LF – Latest Finish Time: the latest time at which the activity can be
completed without delaying the project
• LS – latest Start Time: equal to the LF minus the time required to
complete the activity.
• Slack is the amount of time that an activity can be delayed past its ES or
EF without delaying the project. OR the amount of time that a non-
critical path activity can be delayed without delaying the project.
• Slack = (LS) - (ES), or (LF) - (EF).
135
Critical Path (CP) & Critical Path Method (CPM)

136
Earliest and Latest Start and Finish Times

 In a network, earliest start and finish times are found by repeatedly

calculating forward from the beginning of the project until the end (END).

 Use the following equations:

Earliest Start Time = ES = max[EF of immediate predecessors]

Earliest Finish Time = EF = ES + activity duration

 Latest start and finish times for each activity are found by working
backwards, from the end of the project to the beginning.

 Use the following equations:

Latest Finish Time = LF = min[LS of immediate successors]

Latest Start Time = LS = LF - activity duration

 15
8 9
2 5 20
20
2
8

5 16
5 16
0 B(5) G(3) L(3) 28
1 3 6 9
0 28

7
4
16
10 12
10

LF
Start and Finish Times
ES
Activity Slack, Critical Activities, and Critical Paths
 Activity Slack denotes the amount of time each
activity can be delayed without violating the
entire project duration. The activity slack for each
node may be easily calculated:

Activity Slack = SLACK = LS - ES = LF - EF

 Activities with zero slack cannot be delayed

without affecting the entire project duration and
are called critical activities.
 Critical Path (CP) &
Critical Path Method (CPM)
• CP is the path through the project network in which none of the activities
have slack ( with 0 slack times), i.e., ES=LS and EF=LF for all activities in
the path.
• The CP can be identified by determining the four important parameters,
ES, EF, LS, and LF for each activity by performing a forward and backward
pass analysis, resp.
• The CP is the sequence of activities that represents the longest path
through a project, which determines the shortest possible (min.)
project duration. 134

 15
8 9
2 5 20
20
2
8

5 16
5 16
0 B(5) G(3) L(3) 28
1 3 6 9
0 28

7
4
14
10 12
LF
10
ES

Start and Finish Times and Critical Path

 In any network, there will be activities with zero slack.
 Any delay to these activities will produce a delay in
the completion of the project as a whole.
 We call these tasks critical activities, and a path through
the network made up of critical activities is called a
critical path.
 In the previous example, critical activities and the critical
path for the project are shown in bold.
 i.e. for this project, the critical path is B-D-H-K-N
And the total duration is 5+5+6+4+8= 28
 The critical path is:
 the longest path through the network, and
 its duration is equal to the duration of the project.
Limitations of CPM
 It operates on the assumption that there is a precise known time
that each activity in the project will take. But this may not be true
in real situations.
 CPM does not incorporate statistical analysis in determining time
estimates.
 Each time changes are introduced into network the entire
evaluation of the project has to be repeated and a new critical path
has to be determined.
 It is not suitable for situation which does not have definite start
and definite finish.
 It tends to produce exceptionally good results on the CPM
Planned jobs which is not possible to reproduce on later jobs.
 It is not a panacea for all ills. It can not by itself solve a problem.
It only facilitates a thorough examination of the problem and
alternative solutions for it.
PERT:
 If the duration of activities is not known with certainty, the
Program Evaluation and Review Technique (PERT) can
be used to estimate the probability that the project will be
completed by a given deadline.
 That is , A distinguishing feature of PERT is its ability
to deal with uncertainty in activity completion times.
 Mostly used in non-deterministic or probabilistic
situations such as: space research, R & D projects.
 There is little past history on which to base network
construction and time estimates.
 Thus, PERT is a network model that allows for
randomness in activity completion times.
 PERT
(Program Evaluation & Review Technique)

143
How to Estimate activity times under PERT System
(TIME ESTIMATES IN PERT)
 Optimistic time, (to) :
 This is the shortest time taken by an activity if
everything goes exceptionally well.
 Most likely time, (tm) :
 It is the time in which the activity is normally
expected to complete under normal contingencies.
 Pessimistic time, (tp):
 It is the maximum time that would be required to
complete the activity if bad luck encounters at
every turn.
 Consider The Following Project Activities
Activities Immediate Duration (in weeks )
Predecessors

O M P
A - 5 6 7

B - 1 3 5

C - 1 4 7

D A 1 2 3

E B 1 2 9

F C 1 5 9

G C 2 2 8

H E,F 4 4 10

I D 2 5 8

J H,G 2 2 8
Required:
 construct the project network
 Calculate mean(expected duration) using the formula;

and variance of each activity, using the formula;

 Find the critical path and expected project completion

time.
 What is the probability of completing the project on or
before 22 weeks (home work)
 5
2

6 8
3
1

7
4

Activity, Duration
Activities Duration (in weeks ) Mean Variance
duration

O M P

A 5 6 7 6 0.11
B 1 3 5 3 0.44
C 1 4 7 4 1.00
D 1 2 3 2 0.11
E 1 2 9 3 1.78
F 1 5 9 5 1.78
G 2 2 8 3 1.00
H 4 4 10 5 1.00
I 2 5 8 5 1.00
J 2 2 8 3 1.00
 Expected Project Time

■Expected project time is the sum of the

expected times of the critical path activities.
■Project variance is the sum of the critical path
activities’ variances

148
Dr. Melkamu
 12
10 8
6
5
2

9
17
6 9 8
3 17
0
1
0 6
3

7
4 14
14
4
4

The critical path will be ….. C-F-H-J = 4+5+5+3 = 17

Advantages of PERT
 It focuses attention on critical or bottle neck elements of the
project so that a manger may either allocate resources to
them or keep a careful watch on them as the project
progress. It permits control by exception and better
management of resources.
 It provides a forward looking type of control or a feed
forward control.
 It provides an up-to-date information on the progress of the
project so that the necessary steps may be taken.
 It helps in coordinating different parts of the project so as to
achieve completion of the project in time.
Limitations of PERT
 It is based on time estimates rather than known time for each
activity. There may be errors in time estimates due to human
bias.
 It emphasis on time not costs.
 It is not practicable for routine planning of recurring activities.
It is useful in complex projects consisting of numerous
activities which are independent of each other and whose
completion times are uncertain.
 Time estimates to perform activities constitute a major
limitation of PERT.
 Probabilities are calculated on the assumption that a large
number of independent activities operate on critical path and as
such the distribution of total time is normal. This assumption
may not be true in real life situations.
 Project duration can be reduced-
o by assigning more labor to project activities, often in the form
of overtime, and
o by assigning more resources (material, equipment, etc).
 However, additional labor and resources cost money and
hence increase the overall project cost.
 Thus, the decision to reduce the project duration must be
based on an analysis of the trade-off between time and
cost.
 Project crashing-
 is a method for shortening the project duration by reducing
the time of one or more of the critical project activities to a
time that is less than the normal activity time.
 This reduction in the normal activities times is called
‘crashing’.
 Crashing is achieved by devoting more resources (in terms
of money) to the activities to be crashed.
 Status Reporting

 Status Reporting is the activity that conveys information about project

progress to individuals or groups that require information.
 Status reporting should happen frequently; it is usually suggested weekly or
at least once every two weeks.
 Leaving intervals longer than two weeks creates a risk that problems that
occur may go unnoticed and uncorrected for too long a period. This
correlates well with the basic duration of a project task: That is usually no
more than two weeks.
 Status Reporting
 Project managers are primarily responsible for status reporting, although on
larger, more complex projects, an administrator may collect information and
report status to the overall project manager, who would then report to other
stakeholders as is necessary.
 The project status report should be concise and to the point.
 Depending on the audience, it may have a greater or lesser level of detail.
 For the project sponsor and anyone else who has a direct stake in the project
(including the project team), the status report should be detailed enough so
that they will have sufficient information to understand the state of the project
and be able to make decisions concerning it. If some issues are more complex,
other documents explaining them may accompany the status report.
 Status Reporting
 The status report should include at least:
 An accounting of tasks for the period concerned
 Earned Value calculations. If they indicate any problems, any information
concerning root causes should be included.
 The most important tool used in schedule control is earned value
estimation.
 Schedule Control consists of monitoring the project schedule to
determine if the project is on schedule and making any necessary
changes.
 A financial and accounting dashboard containing pertinent information
related to the organization's overall financial and accounting requirements
 EARNED VALUE MANAGEMENT
• A methodology that combines scope, schedule, and cost (resource)
measurements to assess project performance and progress.
• EVM can play a crucial role in answering management questions that are
critical to the success of every project, such as:
• Are we ahead of or behind schedule?
• How efficiently are we using our time?
• When is the project likely to be completed?
• Are we under or over our budget?
• How efficiently are we using our resources?
• What is the remaining work likely to cost?
• What is the entire project likely to cost?
• How much will we be under or over budget?
 EARNED VALUE MANAGEMENT
If the application of EVM to a project reveals that it is
behind schedule or over budget, the project manager
can use the EVM methodology to help identify:
 Where problems are occurring;
 Whether the problems are critical or not;
 What it will take to get the project back on track.
 EARNED VALUE ANALYSIS
• The WBS provides the basis for scheduling the project scope of work.
• As the project implementation unfolds, physically completed work is
evaluated and earned value determined.
• In summary, EVA requires a fully defined project scope integrated with
allocated resources, all translated into a sound project schedule for
performance.
• Often, these three inputs are termed a bottom-up project baseline plan
• Both the planned value and earned value are derived from the project
schedule information and are critical for successful EVA. For that reason, the
project schedule is a critical input to EVA.
 Performance Measurement Baseline (PMB)

• PMB should first be established in order to determine how much of the planned
work the project team has accomplished at any point in time.
• The foundation for the tasks is the project baseline plan, which fully defines
project scope, integrating it with allocated resources and translating them into a
project schedule for performance, all.
• Establishing a PMB involves three tasks:
1. Decompose work scope to a manageable level (within the framework of the WBS)
2. Determining points of management control and who is responsible for them,
3. Develop time-phased budget for each work task
4. Selecting a method for measurement of earned value
5. Setting up the baseline.
 Three Key Components to Earned Value
17
2

1. Planned Value (PV)

• Is the physical work scheduled or “what you plan to do”. [Budgeted Cost of Work Scheduled—
BCWS]
• That portion of the approved cost estimate planned to be spent on the activity during a
given period
• The authorized budget assigned to scheduled work
• PV =(%Planned Complete) X (BAC)
• The total planned value- total budget- for the project is also known as Budget at
Completion (BAC).
2. Actual Cost (AC) [Actual Cost of Work Performed—ACWP]
• is the realized cost incurred for the work performed on an activity during a
specific time period or “what you have spent”.
• Is the total of direct and indirect costs actually incurred in accomplishing work on
the activity during a given period
 Three Key Components to Earned Value
17
3

3. Earned Value (EV) [BCWP—Budgeted Cost of Work Performed]

• Is the quantification of the “worth” of the work done to date or “what you
physically accomplished”
• That proportion of the total budget represented by the work actually completed
• a measure of work performed expressed in terms of the budget authorized for that
work.
• EV =(%Work Completed)*(BAC)
 Variance Analysis: SV & CV
1. Schedule Variance (SV)
• is a measure of schedule performance;
• the difference between the earned value and the planned value;
• SV = EV – PV
• Positive = Ahead of Schedule (work NOT YET schedule to be complete at this time has
been done) ; Zero = On schedule;
• Negative = Behind Schedule (work schedule to be complete at this time is not done)
2. Cost Variance (CV)
• is the amount of budget deficit or surplus at a given point in time,
• the difference between earned value and the actual cost; CV= EV − AC
• Positive = Under planned cost (Under Budget); Zero = On planned cost;
Negative = Over planned cost (Over Budget)
 Variance Analysis: SV & CV
1.Schedule Variance Percentage (SV%)
•SV % = SV/PV
•Tells you what percentage schedule varies from what has been
planned to date.
2. Cost Variance Percentage (CV %)
• CV % = CV/EV
• Tells you what percentage cost varies from what has been earned to date.
• Example: If the CV is $749 and the CV% is 2.3% it means that to date the
project has a Cost Variance of $749 or (0.023 or 2.3%)
 Performance Indices: SPI & CPI
1.Schedule Performance Index (SPI)
• is a measure of schedule efficiency;
• the ratio of earned value to planned value;
• SPI = EV/PV;
a) SPI > 1.0; more work was completed than was planned (ahead of
schedule)
b) SPI < 1.0; less work was completed than was planned (behind
schedule)
c) SPI = 1.0; on schedule
 Performance Indices: SPI & CPI
2. Cost Performance Index (CPI)
• is a measure of the cost efficiency of budgeted resources
• It is considered the most critical EVM metric and measures the cost
efficiency for the work completed.
• Expressed as a ratio of earned value to actual cost;
• CPI = EV/AC;
a)CPI > 1.0; Under Planned Cost (Under Budget); the cost of completing the
work is less than planned)
b)CPI < 1.0; Over Planned Cost (Over Budget); the cost of completing the
work is higher than planned)
c)CPI = 1.0; On planned cost (On Budget); the cost of completing the work is right
on the plan)
Variance at Completion VAC VAC = BAC – EAC
Interpretations of Basic EVM Performance Measures
 TREND ANALYSIS EVM
• Trend analysis examines project performance over time to determine
if performance is improving or deteriorating.
• Graphical analysis techniques are valuable for understanding
performance to date and for comparison to future performance goals
in the form of BAC versus estimate at completion (EAC) and
completion dates.
• Examples of the trend analysis techniques include but are not limited
to:
1.Charts
2.Forecasting
3.Reserve Analysis
 TREND ANALYSIS: CHARTS
• In earned value analysis, three parameters of planned value,
earned value, and actual cost can be monitored and reported
on both a period-by-period basis (typically weekly or
monthly) and on a cumulative basis.
• Figure in the next slide uses S-curves to display EV data for a
project that is performing over budget and behind the
schedule.
TREND ANALYSIS: CHARTS (S-curve)
 TREND ANALYSIS: Forecasting (EAC, ETC, VAC)
• Now that we know where our project stands, it is time to look
ahead and answer some questions about the future of our
project, such as:
a)If things continue as they have been going, what will be our
final project cost?
b)How much will this vary from our current project budget?
c)What type of performance do we need to have in order to be
within our project budget by the end of the project?
 TREND ANALYSIS: Forecasting (EAC, ETC, VAC)
1.Estimate At Completion (EAC)
• As the project progresses, the project team may develop a
forecast for the EAC that may differ from the BAC based on the
work performance information.
• Forecasting the EAC involves making projections of conditions
and events in the project’s future based on current performance
information and other knowledge available at the time .
• EACs are typically based on the actual costs incurred for work
completed, plus an estimate to complete (ETC) the remaining
work.
 TREND ANALYSIS: Forecasting
1.If the initial plan is no longer valid:
• EAC = AC + Bottom-up ETC
2.EAC forecast for ETC work performed at the budgeted rate (If the future
work will be accomplished at the planned rate).
• EAC = AC + (BAC – EV)
3.EAC forecast for ETC work performed at the present CPI (If the CPI is
expected to be the same for the remainder of the project).
• EAC = BAC / CPI
4.EAC forecast for ETC work considering both SPI and CPI factors (If both
the CPI and SPI influence the remaining work):
• EAC = AC + [(BAC – EV) / (CPI × SPI)]
EAC= AC + ETC
 TREND ANALYSIS: Forecasting (EAC, ETC, VAC)
2. Estimate To Completion (ETC)
a)Assuming work is proceeding on plan, the cost of completing the remaining
authorized work can be calculated using: ETC= EAC – AC
b)Re-estimate the remaining work from the bottom up: ETC= Re-estimate
c) After calculating the CPI, we can figure out what the cost to complete the remaining work on
our project will be if our performance on the rest of the project is the same with we experienced
so far. In other words, what the remaining work will cost if our current CPI holds.
• ETC= (BAC – EV) / CPI
 TREND ANALYSIS: Forecasting (EAC, ETC, VAC)
3. Variance At Completion (VAC)
• A projection of the amount of budget deficit or surplus
• The difference between what we had budgeted (the BAC) and the current estimate
at completion (EAC).
• The estimated difference in cost at the completion of the project.
• VAC = BAC – EAC
• Positive = Under planned cost
• Neutral = On planned cost
• Negative = Over planned cost
 TREND ANALYSIS: Reserve Analysis
• During cost control, reserve analysis is used to monitor the
status of contingency and management reserves for the project
to determine if these reserves are still needed or if additional
reserves need to be requested.
• As work on the project progresses, these reserves may be used
as planned to cover the cost of risk responses or other
contingencies.
• Conversely, when opportunities are captured and resulting in
cost savings, funds may be added to the contingency amount, or
taken from the project as margin/profit.
 TREND ANALYSIS: Reserve Analysis
• If the identified risks do not occur, the unused contingency
reserves may be removed from the project budget to free up
resources for other projects or operations.
• Additional risk analysis during the project may reveal a need to
request that additional reserves be added to the project budget.
 To-complete Performance Index (TCPI)
• TCPI is a measure of the cost performance that is required to be
achieved with the remaining resources in order to meet a
specified management goal, expressed as the ratio of the cost to
finish the outstanding work to the remaining budget.
• TCPI is the calculated cost performance index that is achieved
on the remaining work to meet a specified management goal,
such as the BAC or the EAC.
• If it becomes obvious that the BAC is no longer viable, the
project manager should consider the forecasted EAC.
 To-complete Performance Index (TCPI)
Once approved, the EAC may replace the BAC in the TCPI
calculation.
The efficiency that must be maintained in order to complete on
plan: TCPI= (BAC – EV) / (BAC – AC).
• BAC – EV: the work remaining
The Efficiency that must be maintained in order to complete
the current EAC: TCPI= (BAC – EV) / (EAC – AC).
• BAC - AC or EAC – AC: Funds remaining
 To-complete Performance Index (TCPI)
• If the cumulative CPI falls below the baseline, all future work
of the project will need to be performed immediately in the
range of the TCPI (BAC) to stay within the authorized BAC.
• Whether this level of performance is achievable is a judgment
call based on a number of considerations, including risk, time
remaining in the project, and technical performance.
• This level of performance is displayed as the TCPI (EAC) line.
Figure: To-complete Performance Index (TCPI)
 Interpretation: TCPI
• Greater than 1.0 = More Work than Budget Left (Harder to
complete)
• Exactly 1.0 = Right amount of remaining Budget for remaining
work (Same to complete)

• Less than 1.0 =

More Budget than
Work Left (Easier
to complete)
 PROJECT PLANNING & CONTROL MATRICS
The components that are normally measured and controlled
using planning and scheduling software:
• Scope
• Time
• Resource Effort/Work (these are called Units)
• Cost
 A change in any one of these components normally results in a
change in one or more of the others.
• “It is not the strongest species that survives; nor
the most intelligent; but the one most responsive
to change”

Charles Darwin
Survival of the fittest' is the unwritten but the
radical rule of this game.