Project Management

The Money Files

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A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts. Written by Elizabeth Harrin from GirlsGuideToPM.com.

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Earned Value: 5 Things To Have In Place Before You Get Started

Categories: budget, success factors

So you want to go with Earned Value as a way of tracking time and cost performance? Good for you. Here are 5 pre-requisites that you’ll need to consider before you really get into the detail of doing the work.

Oh, and this assumes that you’ve already ticked the pre-requisite that is ‘team and manager on board for a major change in how we track project performance’ because EV is quite a culture shock to the uninitiated.

With that out the way, let’s dive in!

Pre-req #1. Detailed Scope

You’ll need to have a work breakdown structure in place, with a degree of detail you perhaps haven’t had to focus on before.

In order to track your progress against your scope you have to know what the scope is. Without that, you’re going to struggle to get any degree of accuracy in your reporting. Break down your tasks to a decent level as well, so that you aren’t struggling to report progress on a task that’s gigantic.

Pre-req #2. A Timetable

Armed with your breakdown of tasks you can then start adding dates to them. Again, if you want to track whether you are hitting your milestones and working ahead or behind schedule, you need to start from somewhere. This is your baseline schedule.

Build out your dates for each element on the work breakdown structure. Make sure they take into account the fact that your estimates are realistic and that you’ve got the agreement of the team member involved before committing them to anything.

This is the point to layer over your resourcing and capacity planning, so that you aren’t scheduling work in a vacuum. Take into account holidays and other absences so your schedule is as accurate as it can be.

Pre-req #3. A Breakdown of Costs

Earned Value is only good for tracking time and cost performance. It’s very good at that, but it’s not going to give you the context for changes or a feeling for how quality is being achieved (or not). The timetable gives you the info you need to start thinking about tracking time; a cost breakdown structure gives you the info for tracking cost.

Take your work breakdown structure and cost it out. Whether you do this top down, bottom  up or some other method of applying costs to work packages – it doesn’t really matter. However you get there, the end result is the same. You should be able to apply a fixed cost to a piece of work that has a scheduled completion date.

Pre-req #4. A Plan for Reporting Progress

Next, you need to establish an approach for reporting progress with the team. This sounds more straightforward than it is because you’ll need to be able to say what % complete through a task is, and some tasks don’t breakdown nicely.

For example, if part of your task involves ordering kit and then you have to wait until it’s delivered and then you do something with it to set it up, your work and expenses aren’t going to be evenly spread across all the days allocated to that task. It would be better to split the work into two tasks: Order Kit (which finishes at the time that the kit is delivered and costs as much as the kit costs) and then Do Something With Kit (which takes as long as it takes and costs the amount you bill for resources).

Generally you’ll report whether a task is not yet started, in flight or complete, so you should to agree whether the % complete targets of 0%, 50% and 100% are adequate for your needs. And, for each task, what 50% looks like. That could be quite easy with some tasks, especially where the work is spread evenly over the time – it’s where work isn’t spread evenly that makes it a bit harder to predict.

You can go as granular as you like but don’t get so hung up on working this out that you never get started tracking EV in earnest.

Pre-req #5. A Plan for Collecting The Data

When you’ve got agreement on how progress is going to be measured, you should agree with your team how they are going to get that progress to you. This is likely to be in the same way that they do now, in your non-EV world, either through checking in with you during the task formally or informally, completing a status report or giving an update at your regular team progress meeting.

It simply sets expectations so that everyone knows what they should be doing and when.

With those 5 pre-requisites in place you should be good to start monitoring time and cost performance with your EV spreadsheets and tools.

I found a good (short) video from Simon Harris introducing EV so if this article has given you the appetite to take it further, watch this.

Posted on: June 27, 2017 08:59 AM | Permalink | Comments (12)

Top Conditions for Project Success: Budget Focus

Categories: success factors

The APM have recently produced a research paper about what makes projects successful, called The Conditions for Project Success.

The 12 factors that “provide a framework for project success” are not likely to be things that come as a surprise:

  1. Effective governance
  2. Goals and objectives
  3. Commitment to project success
  4. Capable sponsors
  5. Secure funding
  6. Project planning and review
  7. Supportive organisations
  8. End users and operators
  9. Competent project teams
  10. Aligned supply chain
  11. Proven methods and tools
  12. Appropriate standards

The bit that is most interesting in the context of this blog is how those factors map to successfully delivering on your project budget.

What makes for a successful project budget?

The research report looks at how strongly each of these success factors map to common measures of success such as time, quality, stakeholder satisfaction and then a general measure of success across the board. The budget one relates to “delivery to budget” so I take from that whether or not the project was completed without exceeding the budget.

The top six success factors which influence your ability to hit your budget targets are:

Planning and project review

This was in the top three for all success measures, which makes a lot of sense. This area covers progress monitoring, good scheduling, a flexible approach backed up by risk management and a sensible approach to managing change, good project initiation and an approach to lessons learned.

Effective governance

This was another factor that correlated strongly to project success across all the measures. You can’t monitor and control your spending unless you have clear governance in place. And more than clear governance: it needs to be effective at keeping that spending under control.

Goals and objectives

Unsurprisingly, this was the third success factor that mapped widely across all areas.

Proven methods

Related to the budget measure specifically, proven methods (i.e. “best practice” techniques) has the same statistical influence as goals and objectives and the next one…

Supportive organisations

This relates to whether the culture, structure and environment are set up to be conducive to project success. The example given in the research document is that trade unions are supportive of the project.

Competent project teams

As you’d expect, having project managers and team members who know what they are doing and are capable of carrying out their roles without making stupid mistakes is pretty important.

Commitment to project success

This relates to everyone involved believing that the project is achievable. In other words, making sure everyone is aligned to the vision and that the vision is not ridiculous. This has to flow across all the team members from the sponsor to suppliers and any other third parties involved.

The least important success factors

The three success factors deemed statistically the least important to being able to deliver to budget are:

  • Aligned supply chain
  • Capable sponsors
  • Appropriate standards

What about funding?

Surprisingly, secure funding as a success factor comes in at number nine. It’s not in the bottom three, but it isn’t in the top six either. I thought that was odd: surely secure funding is a pre-requisite for hitting your budget?

I suppose, on thinking about it, that it isn’t. If your funding isn’t properly in place then you don’t have a budget to hit.

Subsidiary success factors

The survey also looked at subsidary success factors: those that aren’t considered the main ones (the 12 mentioned above) but that are still statisically significant when you look at their contribution to project success. I should probably add at this point that it was a survey, so these are respondent-reported outcomes rather than an independent expert analysing project data and assigning success factors and measures objectively.

The three subsidiary success factors that correlate with delivery to budget are:

  1. The project has realistic time schedules
  2. Tight control of budgets is in place to ensure that the value of available funding is maximised
  3. The project has active risk management.

Again, none of this stuff is rocket science. If making sure that your project delivers within the budget you have agreed, then you need to make sure you have enough time to do it, manage your money well and mitigate risk in a sensible way.

Do these results about project success factors and their impact on whether or not you can deliver to budget come as a surprise to you? Let us know in the comments.

About the survey: The study was done by asking 25 leading project management professionals to come up with an initial framework for success factors and then checking it out with 862 practitioners. You can read more about it on the APM website and the whole report from BMG is available as a PDF download here.

Posted on: July 07, 2015 10:41 AM | Permalink | Comments (4)
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