The Money Files

Thinking about the cost of quality revolves around two things: how much it costs to comply with quality requirements and how much it costs to put problems right.

The infographic below shows the four considerations for working out the cost of quality for your project: prevention and appraisal before things go wrong, and dealing with internal and external failures in case they do.

Which of these do you use on your projects? Tell us more about how you manage the cost of quality in the comments below!

Do you work in a PMO and desperately need extra project managers? I’ve got some tips in this video that should help you make a pitch for the resources you need.

You’ll need to put together a proposal that explains what the person (or people) will do, when you need them, what they will be doing, and what kind of level you are anticipating recruiting at. It also helps if you can make the case for their work being directly linked to a faster delivery of business strategy – in other words, you can help the organisation meet its goals more effectively if you have the bodies on the ground to support the delivery.

There are more tips in the video.

Let me know in the comments: have you been successful in leading the charge to secure more PM resources for your delivery teams? I’d love to hear more tips about how to make the case and get the funding to grow the team!

Pin for later reading

Discrete effort is the name given to the work required for an activity that can be planned, measured and ends up with something specific as the output. The effort involved directly links to the delivery of the thing you are creating.

There are four ways of measuring progress on a task that is managed with discrete effort. Even if this description of what discrete effort is doesn’t make much sense to you, you’ll start to realise what tasks are appropriate to be planned in this way when you see how you track them.

The four methods of measurement are:

• Percent complete (yes, that old favourite!)
• Fixed formula
• Weighted milestone
• Physical measurement.

Now you see how to measure the work on these tasks, can you think of some activities that use discrete effort on your schedule?

I have to confess to spending many years using percent complete before I ditched it: it’s not really suitable for business change projects where the output doesn’t easily break down on a percentage basis. On one project we used weighted milestones, as that aligned with the contract agreement for billing.

All the methods have their place.

In this article I’m going to look at the first two: percent complete and fixed formula, and then in the future post I’ll dig into the others.

Percent complete

Percent complete is exactly as the name suggests: the measure is an estimate of how much has been done in percentage terms, tracked at the end of each reporting period.

Ideally, it should be based on some kind of measurable thing instead of just a number that the team member has come up with. Have you ever been in a meeting where a task is reported at 90% complete for several weeks? I have. In the end, Chris and his 90% complete became a running joke. There was always something his team was working on that was 90% complete – but not quite ready to be signed off.

With percent complete, the planned value (PV) represents the time-phased resource needed to finish the work package. Earned value is then calculated by multiplying the percent complete by the budget at completion for the work package. In other words, you simply use the relevant percent complete for the budget. If the budget for a work package is £100, and the task is 60% complete, the EV is £63.

That makes it easy to work out.

The challenge with using percent complete is that it is not easy to work out. You need to do so in an objective way, and that kind of goes against the grain for many stakeholders, especially team members who haven’t worked in a disciplined EV way before. They might be used to providing very subjective guesses for percent complete, and that’s really not what you are going for here.

Often people use hours worked as a guide for percent complete, but again that’s not always 100% accurate. You could have worked half the time but the deliverable only be 20% complete. The remaining 80% will be achieved with the remaining work hours. So you do have to be a bit careful about how percent complete is implemented – this is why we document how performance will be measured so there is no ambiguity.

Fixed formula

The fixed formula method of progress tracking relies on there being a formula you can use (the clue is in the name). You assign a specific percentage of the budget value of the work package when the work begins. Then the rest of the budget (or time) is assigned when the work is completed.

For example:

A task starts. You assign it as 25% complete, in terms of budget and/or schedule. Then when the work is finished, the work package “earns” the remaining 75%.

You can do this as a 50/50 split or any other breakdown that works for you. Obviously, the total assigned to each milestone in the work package must equal 100%. You don’t have to limit yourself to an allocation at the beginning and then another at the end: if it makes sense to split the task into 5 and assign 20% of the value at each of those fixed points, then do that instead.

This is a good method for allocating value in environments using earned value management, or where you have to report progress at work package level but don’t have the data to track things hour by hour to give you an exact percent complete score.  It’s also a very easy method to use. Once you have your formula set up and your assignments clear, you can just get on with doing the work. The performance measurement will be pretty seamless, as long as you are confident work is progressing to plan. And there’s no cajooling the team into coming up with measures that are a few percentage point higher than last week just to prove something has been done in the last 5 days.

Good for: short duration tasks.

Remember that the percent complete assigned isn’t reflective of the actual work done or costs incured. Stakeholders need to understand the limitations of this method.

There is a variation of the fixed formula method which is 0/100 percent: in other words, the task doesn’t ‘earn’ anything until it’s done. There is no progress or performance measure assigned to it. The work is either fully complete or not done at all.

This is a good option to use for deliveries or where the deliverable is coming from a third party and being tracked outside of your project. For those tasks, the activity is either not finished, or done. For deliveries, for example, the materials are either on site or they aren’t. There isn’t much point in assigning progress when they are en route, as that doesn’t really get you any closer to the end goal.

Fixed formula is a flexible way to think about performance measurement in earned value settings, but it’s also helpful for projects that are not using EV.

Do you use percent complete or fixed formula? Or something else? In the next half of this article, I’ll talk about the other two methods: weighted milestones and physical measurement. See you then!

Pin for later reading

I get it – if you don’t use earned value on your projects, you might be wondering what you can takeaway from The Practice Standard for Earned Value.

That was my view too, having never worked on a project where earned value was a necessary part of how we measured performance. However, there are lots of project tracking and performance management tips you can pick up from the standard. As with all things project management, tailoring is the answer. You can choose to apply some of the tools and techniques from the EV canon and ignore the ones that don’t work for you (like last month’s dive into creating the performance measurement baseline, which I can’t imagine doing unless the project/client demanded it).

The process we are looking at today is Analyse Project Performance. Unsurprisingly, as you can tell from the name, it’s the process of comparing what we said we would do to what has actually happened, with a view to understanding the current status and taking corrective action where appropriate.

You’ll need to do this regardless of whether you use EV on your project or not – admittedly, you won’t have a performance management baseline to use if you aren’t in an EV environment, but part of project management for any type and size of project is doing that comparison and making adjustments accordingly.

We do that so we can capitalise on opportunities, mitigate against variances, take action and keep the project on track, as well as predict where we are going to end up if things continue as they are.

Top tip: These analyses are best done by EVM software. These days, when tools are so advanced and the state of project management tech is so good, there’s no need to work out variances by hand. Reduce the likelihood of human error and draw on your IT systems to do all this analysis for you.

Inputs

There are just two inputs to this process:

The project management plan – in particular, the performance measurement baseline that was put together in the previous step. There will be other bits of the plan that are useful as well, like variance thresholds if they are documented (they should be)

Work performance information – because you use this to compare to the plan and see if you are where you thought you would be.

Work performance information in this process is more than simply asking people what they’ve done or taking a look at timesheets. This is where the maths part of EV kicks in: you’re looking at planned value, earned value, actual cost and budget at completion, those staple calculations of an EV management system.

I could write whole articles about those formula, so I won’t go into detail about those. For now, know that you’ll need to get project performance data from your software tools and know how to interpret the formula.

What to do

So what does it look like to work through this process and analyse project performance?

We can break it down a bit.

What you’re doing is looking at the variances and performance indices. Look at schedule and cost variance, and work out the schedule performance index, cost performance index and the to complete performance index.

When I say ‘work out’, I mean (hopefully) press a button in your software and get a report that does the maths for you, presenting you with an easy-to-read dashboard or data sheet that gives you the information. You can work it all out by hand, and it’s really helpful to know how to work out the formulas and what they are for, but over in the real world, let’s rely on software tools to speed things up.

The indices will tell you if you are ahead or behind schedule and budget.

That’s good to know, but alone, it’s not really very helpful. We also need to do some forecasting.

What that means is we use the EV data to forecast performance forward, giving us information about what things will look like when the project is complete. Again, that’s useful data to help stakeholders understand how the project is going and what actions might be necessary to address any variances.

Estimate to complete, estimate at completion, variance at completion and the to complete index are the useful formula here.

Finally, you can look at percentage comparisons and trend analysis to help you work out what might happen in the future given past performance. It’s all useful data, but the key thing that jumps out at me is that there is no narrative; no context. You’ll need to add the story to help people understand the ‘why’.

Outputs

The outputs from this process are:

Performance measurement methods

Funding forecasts and trends

Correct and preventive actions – what to do once you’ve deciphered the information and worked out what that means for you.

Typically, you’ll be looking at graphs and tables, and a lot of numbers. What’s really important is that whoever is looking at the numbers understands what they are looking at, what they represent and what they mean for the project. That might mean doing some team training about EV so that everyone starts from the same common language.

There is a ton of detail in The Practice Standard along with a worked example, so if some of these terms don’t mean much to you, or you want to see some ‘real’ graphs that explain what all this is about, I highly recommend checking out the standard for a more in-depth explanation of this process, because most of what we typically think of as EV is this step.

This is the time in the process where you compare planned performance (the performance measurement baseline) to current performance. Some variance is to be expected because life happens and changes are part of managing the work. However, the management skill is in balancing the work to address any variances and bring the project back within metrics to show it is in control.

Next time, I’ll be diving into the next process in the earned value management standard, which is maintaining the performance measurement baseline.

Pin for later reading

We all know that in agile methods, time is time-boxed. Iterations are the way work is managed. Time is fixed. But does that mean you don’t need to spend any effort thinking about time management? Not at all.

There are a number of different agile artifacts that influence and shape the project team’s approach to managing time on the project. They start with the product roadmap and get progressively more and more granular until you end up at the sprint backlog. If we’re talking sprints, we’re talking Scrum, but you can see how this approach is relevant for other agile methods too.

While there is a lot of flexibility in the ‘what’ in agile, the ‘when’ is pretty strictly controlled.

What are your top tips for managing time on agile projects? Do you use any other artifacts to help the team stay on track? Share them in the comments below!