BackgroundThis paperis part of an assignment project to install an Emergency Power Plant at a TidalBarrier. With some of the information related to an Excel and MS Project workassignment; this word document includes the definition or meaning of “project”,some examples and also explains what it is meant by a Budget (BCWS); inrelations to the other part of the assignment and some examples. It alsoexplains how Earned Value System (EV) works, and a research backed on why it ismore appropriate for projects than a simple Actual vs Budget system. The paperalso talks about Gantt chart, its benefits and limitations.IntroductionProjectDefinitionProjectManagement Book of Knowledge says “A project is a temporary endeavor undertakento create a unique product, service, or result” (PMBOK, 2017). Unique Product Can be either a part of anotheritem, an augmentation or improvement to an item, or a new end item. A uniqueservice or capability to perform a service.
Unique Result, An outcome or document like a researchproject that improves knowledge that can be used to establish whether newprocess will benefit a company or society.Unique CombinationOne or more products, services orresults like a software application, its associated documentation, and help deskservice(Watt, 2017).Projectsare started to accomplish an objective by generating deliverables. A deliverable can be tangible orintangible good or service produced because of a project that is planned to besent to an internal customer or external (Investopedia, 2017)Anobjective is an outcome toward which work is to be directed, a strategyposition to be attained, a purpose to be achieved, a result to be obtained, aproduct to be produced, or a service to be performed (PMBOK, 2017).
Thetemporary nature of projects shows that a project has a definite beginning andan end. Temporary does not necessary mean a project has a short duration. Theend of a project is reached when one or more of the following is true:· The project’s objective have been achieved;· The objective will not or cannot be met;· Funding is exhausted· The need for the project no longer exists · The human or physical resources are no longer available· The project is terminated for legal cause orconvenience · Their deliverables may exists beyond the end of theproject. Example build of the Golden Gate bridge in San Francisco will create deliverablesexpected to last for centuries (Watts, 2017) Typesof projects From theabove definition, there are several types of projects including research,administrative, process improvement.
Research ProjectsAresearch project is done to have a clear definition of an outcome. The results fromthe project may lead to an understudying, improvement of a service orproduction. An example could be a research project that may find a plan in acompany unfeasible. This type of projects is done to obtain new knowledge. AdministrativeProjectThistypes of project is done to support the administrative systems. It could be todesign and develop the technology goals and find solutions to issues in runningsections of the company for employees and stakeholders smoothly. Process ImprovementProjectThis isa strategic planning methodology aimed at identifying the operationsor employee skills that could be improved to encourage smoother procedures,more efficient workflow and overall business growth. This process canalso be referred to as functionalprocess improvement (Rouse, 2017).
The purpose is to meet customerdemands and business goals more effectively. ProjectManagement Definition ProjectManagement is the planning, delegation, monitoring and controlling of allaspects of the project, and the motivation of those involved, to achieve theprojects within the expected performance targets (Bentley, 2009).PMbokdefines Project management as the application of knowledge, skills, tools andtechniques to project activities to meet the project requirements. (PMBOK, 2017).These skills are needed to help assist the project manager to complete projecton time and on budget or below budget. A project manager learns these skillsthrough experience and some common sense. There are different methodologies inproject management as it is a very broad subject.
Project Management (PM) MethodologiesMethodologiesare guidelines and a body of knowledge used in Projects. These guidelines whenused, can help projects run smoothly and identify any risks or slacks in theproject. Examples are Agile, PRINCE2 and Six Sigma just to list a few out ofthe many Appendix1 explains a few of the methodologies.Gantt chartHistory of Gantt chartThe first chart of this form wasdevised in the mid 1890s by Karol Adamiecki, a Polish engineer who ran asteelwork in southern Poland and had become interested in management ideas and techniques(Gantt.com, 2017). Fifteen years after Adamiecki, Henry Gantt, anAmerican Project Management expert, formulated his own rendition of the chartand it was this that turned out to be generally known in western nations. HenryGantt name ended up attached with graphs of this sort.
Initially Gantt charts were maderelentlessly by hand; each time a task is transformed, the diagram is redrawnand this restricted their helpfulness. Constant change being a component ofprojects made it difficult. These days, with advance technologyand project management software, Gantt charts are used effectively andprinted effortlessly. Gantt chartA Gantt chartis a graphical depiction of a project schedule that shows the start and finishdates of several elements of a project that include resources, milestones,tasks and dependencies. (Investopedia, 2017)How It WorksGantt chartsare the most used charts in project management. They are useful in planning a projectand defining the sequence of tasks that require completion.
The chart isdepicted as a horizontal bar chart, bars of different lengths represent theproject timeline that includes task sequences, duration, start and end datesfor each task. The horizontal bar also shows how much of a task requirescompletion. The horizontal bar length is proportional to the time necessary fora task’s completion. In addition, the project tasks are visible on the verticalbar (Investopedia, 2017). Gantt chartaids project managers in communicating project status or plans and helps ensurethe project remains on track.The chartidentifies tasks that may be executed in parallel and identifies tasks thatcannot be started or finished until other tasks are complete.
It aids indetecting potential bottlenecks and helps to identify tasks that may have beenexcluded from the project timeline.The chartdepicts task slack time or additional time for completion of a task that shouldnot delay the project, non-critical activities that may be delayed and criticalactivities that must executed on time (Investopedia, 2017). With the help ofMicrosoft Project software, the timing throughout the project is monitored andcan be updated at any time.
For example, For instance, the figure below which shows how theGantt chart was used to set strategy to Design, build and install an emergencypower plant at a Tidal barrier. The duration undertaken for this plan is 78days, with the main actions are shown in red which are the critical path of theproject. The other tasks are events that bounce over periods of timeInsert picture……………………………………. Ofproject Gantt Chart In Ganttcharts, there are three main relationships between sequential tasks:· Finish toStart (FS) – FS tasks cannot start before aprevious (and related) task is finished.
However, they can start later.· Start toStart (SS) – SS tasks cannot start until apreceding task starts. However, they can start later.· Finish toFinish (FF) – FF tasks cannot end before a precedingtask ends. However, they can end later.· Start toFinish (SF), SF is very rarely used. If the projectwas required to be completed in two months (60 days) instead of the 78 days,some additional steps needs to be considered.
These 6 steps by Ron Holohan(Appendix 2) will help with the task.Benefits & Limitations of Gantt chartThe tablelists a few benefits and limitations of Gantt Chart. Benefits Limitations Clarity One of the biggest benefits of a Gantt chart is the tool’s ability to combine multiple tasks and timelines into a single document. Stakeholders can easily understand where teams are in a process while grasping the ways in which independent elements come together toward project completion.
(Brighthub Project Management, 2017) They need to be constantly updated As you get into a project, things will change. If you are going to use a Gantt chart you must be able to change the chart easily and frequently. If you don’t do this, it will be ignored. Again, you will probably need software to do this unless you’re keeping your project management at a high level. (PROJECT-MANAGEMENT.COM, 2017) Time Management The scheduling capability of a Gantt chart serves as a major benefit in a creative environment. Helping teams understand the overall impact of project delays which can foster stronger collaboration while encouraging better task organization.
(Brighthub Project Management, 2017) Difficult to see on one sheet of paper The software products that produce these charts need to be viewed on a computer screen, usually in segments, to be able to see the whole project. It then becomes difficult to show the details of the plan to an audience. Further, you can print out the chart, but this will normally entail quite a large “cut and paste” exercise. If you are going to do this frequently, it can be very time-consuming. (PROJECT-MANAGEMENT.COM, 2017) Communication Teams can use Gantt charts to replace meetings and enhance other status updates. Simply clarifying chart positions offers an easy, visual method to help team members understand task progress. (Brighthub Project Management, 2017) The size of the bar does not indicate the amount of work Each bar on the chart indicates the time-period over which a set of tasks will be completed.
However, by looking at the bar for a set of tasks, you cannot tell what level of resources are required to achieve those tasks. So, a short bar might take 500 man hours while a longer bar may only take 20 man hours. The longer bar may indicate to the uninformed that it is a bigger task, when in fact it is not. (PROJECT-MANAGEMENT.COM, 2017) Float calculation and the critical path Using the Gantt chartfrom Microsoft project as it is shown from figure 1, has helped to draw eachactivity and calculate the Early Start day to determine the earliest completiontime as it is shown in the figure 2 below. At the end, the latest times of eachactivity has been calculated to show the float and the critical path. Budgeted Cost of WorkScheduled (BCWS)BudgetedCost of Work Scheduled (BCWS) is the sum of the budgets for all work scheduledto be accomplished with a given time. It also includes the cost of previouswork completed and can address a specific period of performance or a date intime.
(AcqNotes, 2017) The sheet also shows the cumulativecost of the activities according to the finishing time against the cost of eachactivity as it is shown from the figure below. è Budgeted Cost ofWork Performed (BCWP) is the budgeted cost of the value of work that hasactually been accomplished or completed to date. It can be used to address theentire project, individual task or work packages. It’s compared against Actual Cost of WorkPerformed (ACWP). BCWPis a tool used in Earn Value Management and is also called Earned Value. (AcqNotes, 2017).
During the project process the BCWP is compared to the BCWS to determine if theproject is ahead or behind the projected time. If the BCWP is less than the BCWSthen the scheduled work package was not completed on time. Actual Vs BudgetSystemExample by (Keenan, 2017): if you go over budget by $1,000, and your budget is $500,that’s a very significant change. However, if you budgeted $50,000, thedifference is far less significant.Subtract the budgeted amount fromthe actual amount to find the increase or decrease from the budgeted amount.
For example, if you budgeted $1,200 for broker fees and you spent $1,340,subtract $1,200 from $1,340 to find you went over budget by $140.Divide the amount by which theactual differed from the budget to find the rate of change. In this example,divide $140 by $1,200 to get 0.
1167.Multiply the rate by 100 to findthe percentage change from the budget to the actual. Completing this example,multiply 0.1167 by 100 to find you went over budget by 11.67 percent.Budget verses actual costs doesnot give a clear picture. Earned value puts a dollar value on status andprovides indices that tell you your project’s ‘health’ at a glance.
Evaluating your project’s health ismore than just the status of major milestonesand budget verses actual costs, it is the evaluation of the true condition ofthe project. In addition, using management by exception and evaluation ofindices to predict your project’s outcome is anefficient way to manage a project. (Schulte, Ruthanne, 2000) Earned ValueManagement explained By Umesh DwivediEarned Value calculations require thefollowing:· Planned Value (PV) = The budgeted amount through thecurrent reporting period.· Actual Cost (AC) = Actual costs to date.· Earned Value (EV) = Total project budget multiplied by the% complete of the project. Earned Value Management (EVM)helps project managers to measure project performance. It is a systematicproject management process used to find variances in projects based on thecomparison of worked performed and work planned. EVM is used on the cost andschedule control and can be very useful in project forecasting.
The projectbaseline is an essential component of EVM and serves as a reference point forall EVM related activities. EVM provides quantitative data for project decisionmaking.EVM MeasuresEVM consists of the followingprimary and derived data elements. Each data point value is based on the timeor date an EVM measure is performed on the project.
Primary Data PointsBudget at Completion (BAC)Total cost of the projectBudgeted Cost for Work Scheduled (BCWS) / Planned Value (PV)The amount expressed in Pounds (or hours) of work to beperformed as per the schedule planPV = BAC * % of planned work.Budgeted Cost for Work Performed (BCWP) / Earned Value (EV)The amount expressed in Pounds (or hours) on the actual workedperformedEV = BAC * % of Actual workActual Cost of Work Performed (ACWP) / Actual Cost (AC)The sum of all costs (in Pounds) actually accrued for a task todateFor example, say we should havecompleted £800 pounds of work by today. We completed £600 worth of work. TheBCWP is £600. The BCWS is £800.
And if we actually paid £700 then (ACWP) =£700.Derived Data PointsCost Forecasting:Estimate at Completion (EAC)The expected TOTAL cost required to finish complete workEAC = BAC / CPI= AC + ETC= AC + ((BAC – EV) / CPI) (typical case)= AC + (BAC – EV) (atypical case)Here atypical means it isassumed that similar variances will not occur in the future.Estimate to complete (ETC)The expected cost required to finish all the REMAINING workETC = EAC – AC= (BAC / CPI) – (EV/CPI)= (BAC – EV) / CPIVariances:Cost Variances (CV)How much under or over budgetCV = EV-ACNEGATIVE is over budget, POSITIVE is under budgetSchedule Variances (SV)How much ahead or behind scheduleSV = EV-PVNEGATIVE is behind schedule, POSITIVE is ahead of scheduleVariance at Completion (VAC)Variance of TOTAL cost of the work and expected costVAC = BAC – EACPerformance Indices:Cost Performance IndexCPI = EV / ACOver (< 1) or under (> 1) budgetSchedule Performance IndexSPI = EV / PVAhead (> 1) or behind (< 1) scheduleEVM ExampleThe best way to understand anEVM example is to solve it.Problem: A project has a budget of £10M and schedule for 10months. It is assumed that the total budget will be spent equally each monthuntil the 10th month is reached.
After 2 months, the project manager finds thatonly 5% of the work is finished and a total of £1M spent.Solution: PV = £2MEV = £10M * 0.05 = £0.5MAV = £1MCV = EV-AC = 0.5-1 = -0.5MCV% = 100 * (CV/EV) = 100*(-0.5/0.5) = -100% overrunSV = EV-PV = 0.5-2 = -1.5 monthsSV% = 100 * (SV/PV) = 100*(-1.5/2) = -75% behindCPI = EV/AC = 0.5/1 = 0.5SPI = EV/PV = 0.5/2 = 0.25EAC = BAC/CPI = 10/0.5 = £20METC = (BAC-EV) / CPI = (10-0.5)/0.5 = £19MTime to compete = (10-0.5)/0.25= 38 MonthsThis project will take TOTAL£20M (19+1) and 40 (38+2) Months to complete.EVM BenefitsPreventing scope creepImproving communication and visibility with stakeholdersReducing riskProfitability analysisProject forecastingBetter accountabilityPerformance tracking (Dwivedi, 2017)Summary Earned value is used to calculateSchedule Variance, Cost Variance, Schedule Performance Index, Cost PerformanceIndex, Estimate at Completion, and To Complete Performance Index.