CCPM Vs EVM

CCPM Vs EVM:-

CCPM and EVM basiclly both the techniques are used for monitor the project progress and helps in providing early warning to take effective corrective actions.

CCPM focuses on managing constraints, the relationship between tasks and resources within project. CCPM also focuses on overall project progress instead of individual task progress.

EVM examines the relationship between the cost of doing something and the value received by doing it. It tracks tasks and the project as a whole in terms of money.

Some of the points related to CCPM and EVM are:

Will CCPM work with Earned Value?

Yes. But with the possible exception of a risk of driving conflicting behaviors if both systems are used for the same purposes.

It is considered that EVM implemntation is very useful for contract management and CCPM is useful for production work. It requires less effort to implement EVM on CCPM implemented project. Use uncertainity analysis technique for sizing cost buffer. Fever chart can used to measure cost buffer penetration.

Cost Buffer Penetration= 100* CV/Cost Buffer.

Actions to be taken according to buffer status:-

Implementation of CCPM along with EVM gives better control over schedule and cost control.

Earn Value Management (EVM)

EVM:-
EVM emerged as a financial analysis specialty in US Government programs in the 1960s. In the late 1980s and early 1990s, EVM emerged as a project management methodology.
An overview of EVM was included in first PMBOK Guide First Edition in 1987 and expanded in subsequent editions. Efforts to simplify and generalize EVM gained momentum in the early 2000s.

Purpose:- Why EVM?
According to research performed by the Standish Group, an international IT research firm with an expertise in project and value performance, 71 percent of IT projects are either over budget, over time, or under scope. Based on this historical data along with the troubling times of the U.S. economy, it is anticipated that CFOs and Procurement Managers will begin awarding contracts to firms that demonstrate a strong capacity to effectively manage project costs. Earned value management is a project management technique that promotes timely performance measurement and cost management controls.
EVM helps in:
1. Integrates work scope, schedule, cost with risk management and helps in objective progress measurement.
2. Helps in predict future performance from current trends.

EVM Elements:
PV(Planned Value) or BCWS = Hourly Rate * Total Hours Planned or Scheduled
AC (Actual Cost) or ACWP = Hourly Rate * Total Hours Spent
EV(Earned Value) or BCWP = Baselined Cost * % Complete Actual
Cost Variance (CV) = Earned Value (EV) - Actual Cost (AC) OR CV = BCWP - ACWP
CPI(Cost performance index) = Earned Value (EV) /Actual Cost (AC) OR CPI = BCWP / ACWP

Schedule Variance (SV) = Earned Value (EV) - Planned Value (PV) or SV = BCWP - BCWS

SPI (Schedule performance index) = Earned Value (EV) /Planned Value (PV) or SPI = BCWP / BCWS

BAC(Budget at completion) = Baseline Effort-hours * Hourly Rate

Estimate At Completion (EAC):-
Estimate At Completion (EAC) is the estimated cost of the project at the end of the project.
There are three methods to calculate EAC
Variances are Typical - This method is used when the variances at the current stage are typical and are not expected to occur in the future.
AC + ( BAC -EV )
Past Estimating Assumptions are not valid - This method is used when the past estimating assumptions are not valid and fresh estimates are applied to the project.
AC + ETC ( Estimate to complete )
Variances will be present in the future - This method is used when the assumption is that the current variances will be continue to be present in the future.
AC + ( BAC- EV ) / CPI

Variance At Completion (VAC):-
VAC = BAC - EAC

EVM Implementation:-

1.Establish WBS:-WBS is useful for analyse project progress.

2.Identify the activites:-Divide the WBS up to activity levels. Output of this step wiil be list of activities.

3.Schedule Activities:- Once you have activity list, using network diagraming methods perform activity sequencing. You may use CCPM for this.

4.Cost Allocation:- Cost bugdeting and allocation for each activity is very important.

5.Baseline Formation:- These cost and schedule baselines should be saved, against which performace is analized.

All above are planning activities. Once this is compelete and excecution is started, monitoring and controlling is very impotatnt.

6.Progress updation:- This activity should be periodic. Update the task progress, completion. Here take the caution to not to be subjective. Following techniques can be used to progress measurement:
•Fixed Formula :
The Fixed Formula method for determining progress applies to work packages and control
accounts that span a short period of time (within an accounting period, < 3 months). This method applies a percent complete to the start and finish of an activity. Generally, the percentages used in the formula are 0/100, 50/50, or 25/75. 0/100 - Nothing is earned when activity starts but 100% of budget is earned when completed 50/50 - 50% is earned when activity starts and the balance is earned on completion 25/75 - 25% is earned when activity starts and the balance is earned on completion
•Milestone Weights: The next method of calculating EV that we will discuss is Milestone Weights.The Milestone Weighting method assigns budget value to each milestone. Not until
full completion of each milestone is the budget earned. Milestone Weighting is used as a method for work packages withlong term durations and ideally should have milestones each month or accounting period.
•Milestone Weights with % Complete: The Milestone Weighting with Percent Complete method assigns budget value to each milestone, and it is earned based on the percent of work
Completed against each individual milestone
•Units Complete: The Unit Complete method uses a physical count to determine what is
earned. To use Unit Complete you must have units that are identical or similar and they must
have the same budget value
•Percent Complete: The Subjective Percent Complete method applies a percent complete to a budget value to determine what is earned. The percent complete value is determined by the Control Account Manager or other designated individuals. The percent complete is applied to the Budget at Completion (BAC) for a given activity to determine the current and cumulative EV
•Level of Effort:- The Level of Effort (LOE) method is based on the passage of time. A monthly budget value is earned with the passage of time and is always equal to the monthly planned amount. When using LOE, the PV is always equal to the EV This method is usually used for accounts that are more time related than task oriented.

7.Actual cost:- Update actual cost required for each task completion for effective analysis.

Using above inputs, calculate Schedule variance, Cost variance, Cost performance Index, Schedule perforemance index. Estimates to complete depends upoun trends be in exection.

Work Break-down Structure (WBS)

WBS:-
Concept of WBS is developed with PERT(Program Evaluation and Review Technique). Work break down structure can be considered as foundation for project planning. PMBOK defines WBS as "A deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables."
Purpose: - Why do we need WBS?
1. The WBS organizes and defines the total scope of the project
2.WBS helps in assigning responsibilities, resource allocation, monitoring the project, and controlling the project.
3.WBS helps in detailed cost estimating and control along with providing guidance for schedule development and control.
Process to create WBS: - The WBS subdivides project work into smaller, more manageable pieces of work, with each descending level of the WBS representing an increasingly detailed definition of the project work.PMI provide some guidelines:
100% rule :"The rule applies at all levels within the hierarchy: the sum of the work at the “child” level must equal 100% of the work represented by the “parent” and the WBS should not include any work that falls outside the actual scope of the project, that is, it cannot include more than 100% of the work… It is important to remember that the 100% rule also applies to the activity level." In practice WBS captures only 90-95 work. There are lots of managerial tasks that have to perform to get work done.
8/80 rule for WBS: No work package should be less than 8 hours or more than 80 hours.
WBS can be created by breaking project work using criteria's like:
Functional or technological disciplines. (marketing/legal/admin/development/testing)Vendor/Subcontractor responsibilities.
Physical locations.
System/Subsystems.
As per PMBOK inputs required for creating WBS:
Organizational Process Assets: Organizational process assets are the formal and informal policies, procedures, and guidelines.
Project Scope Statement : The project scope statement describes the projects deliverables and the work required to create those deliverables.
Scope Management Plan: Guidelines for how scope is to be managed and how scope changes are to be integrated into the project.
Approved Change Requests: Approved change request should be include in WBS.
Along with these inputs your project team is very important for creating WBS.
Tools/techniques to create WBS:
Work Breakdown Structure Templates: Although each project is unique, a WBS from a previous project can often be used as a template for a new project, since some projects will resemble another prior project to some extent.
Decomposition : Decomposition is the subdivision of project deliverables into smaller, more manageable components until the work and deliverables are defined to the work package level. The work package level is the lowest level in the WBS, and is the point at which the cost and schedule for the work can be reliably estimated.
Decomposition of the total project work generally involves the following activities:
Identifying the deliverables and related work
Structuring and organizing the WBS
Decomposing the upper WBS levels into lower level detailed components
Developing and assigning identification codes to the WBS components
Verifying that the degree of decomposition of the work is necessary and sufficient.
Post-it technique: Write each deliverable on a post-it note and stick them at the top of a wall. Then you and your team start to break down each deliverable into components and write each component on its own post-it note. This way, as you place them on the wall and start to create your tree structure, everyone can easily see what has been accomplished and where you are headed. Also this technique allows for easy movement of components around within the WBS.
Pitfalls and misconceptions:
Level of work package detail: The To Do list approach to WBS construction belief that the WBS is actually a step-by-step procedure for doing everything. Ultimately this leads to micro-management, which is not generally attractive to team members. If work package is too large it also becomes difficult to handle. So use 8:80 rule.
Task Approach: Your WBS should be list of deliverables and should not list of activities or task. Tasks and activities can vary and change throughout the project, but deliverables cannot without a change request, so you do not want to list activities and tasks in the WBS.
WBS as Plan:The WBS should not be used as a replacement for the project plan or schedule. It is considered poor practice to construct a project schedule before designing a proper WBS.

CCPM Implementation-II

CCPM solution:

1. Aggressive scheduling- Reduce original estimates of each task by 50% to remove buffer which helps in reduce student syndrome and parkinson's effect.

It is considered that each developer, tester gives estimation after including safety time and contingency. It is very difficult to detect how much safty is added in each task so the thumb rule is reduce the estimates by 50%. When you reduce the estimates into 50%, you will get strange reaction from your team. So it is challenging task to convience team to remove buffer form each task and add it at project level. Manager should not introduce new estimates as commitment from the team and make clear that it is not mandetory to meet these estimstes.Team may think this as PM is putting pressure to complte the task early but this step is very important to eliminate student syndrome and parkinson's effect.

2. Remove bad Multitasking- Control the WIP(Work in progress) by each team member.

Make sure that each resource works on single (minimum as possible) task at a time. This will aviod the delayed start of next task and also help in reducing set up time and set down time to improve productive time.

3. Eliminate desychronization losses: Remove estimated start date and finish date for tasks as we should protect the complition date of whole project than complition of each task. Start successor task as cuurent task gets finished (Unless there is some dependacy from other task)

4. Introduce flow time- Flow time (Dedicated time for focusing only on given task) of around 3-4 hours through day should be introduced to improve productivity. There wiil be no meetings, calls, knowledge transfer during flow time.

5. Buffer Management- Frequent reporting (may be daily 5-10 min stand-up meeting) from team is very important. This help in detecting early warnigs (risks) and this can be work as effective forum forum for solving blocking issues. Task priorities should be decided according to project and feeding buffer consumption.

Project buffer penetration:

Green: OK.

Yellow: Plan buffer recovery.

Red : Take Action for buffer recovery.

Threshold points on Fever chart should be determined by mangement, there are no standard method to determine it.

Threshold point should be realistic and should not be to low to minimise false signals. Followings may be used as threshold points:

Buffer penetration%

Critical chain complete % ---Grren to Yellow transition % ---Yellow to Red transition %
0 ----------------------------------15 ---------------------------------30
100------------------------------- 75--------------------------------- 90

Advantages of CCPM implementation: -

1. Proper Planing: CCPM implementation requires well defined scope and planning shedule with cosidering resource contention.
2.Early Warnigs: Frequent reporting helps in finding task progerss. As we are tracking remaining duration for each on-going task, if anybody gets stuck because of reasons like expansion of work, beacuse of incompetancy with fuctional or technical knowledge it comes to know very early during task execution. This helps to take necessary decisions for proper control over project.
3. Remove the wastage: The task dates become deadlines. They cause waste because people who finish the task early don’t pass it on.”

On time compltion of project is improved from 40% to 92% after CCPM implementation.