MS4801 Project Management

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MS4801 Project Management

• Week 6
• Estimating (continued), Risk Analysis Schedule
  Control

Great deeds are usually wrought at great risk.
- Herodotus, Greek historian
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Macro vs. Micro Estimating
Best approach is to do both
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Estimating Time and Costs

• Macro Approaches
• 1) Ratio methods e.g., 2,700 sq ft _at_ 100
• 2) Apportion methods historical dependency,
  time/costs apportioned to deliverables (e.g.,
  slide 8)
• 3) Function point methods software industry,
  inputs, outputs, inquiries, files,
  interfaces
• 4) Learning curves repeated tasks weighted more
  heavily when initially completed

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See learning curve tables

• 50 to manufacture ONE flying pig (5 pigs 250)
• 60 learning curve
• 5th .3054 x 5015.27
• Cost to manufacture five flying pigs
• 50 x 2.71135.50

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Norwegian Satellite Development Company

• Cost estimates for World Satellite Telephone
  Exchange Project
• NSDC has a contract to produce eight satellites
  to support a worldwide telephone system ( for
  Alaska Telecom, Inc.) that allows individuals to
  use a single, portable telephone in any location
  on earth to call in and out. NSDC will develop
  and produced the eight units. NSDC has estimated
  that the RD costs will be 12,000. Material
  costs are expected to be 6,000. They have
  estimated the design and production of the first
  satellite will require 1,000 labor hours and an
  80 improvement curve is expected. Skilled labor
  cost is 30 per hour. Desired profit for all
  projects is 25 of total costs.
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• A. How many labor hours should the eighth
  satellite require?
• B. How many labor hours for the whole project of
  eight satellites?
•  C. What should NSCD estimate as the total cost
  for this project?

RD 12,000 Materials 6,000 Labor 5346x30
160,380 COSTS178,380 25 PROFIT44,595 TOTAL
PROJECT ESTIMATE 222,975
 1000 labor hours x.512 512 labor hours for the
8th unit
 1000 labor hours for per unit x 5.346 5346
total for 8 units
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Estimating Time and Costs

• Micro approaches
• 1) Template method use when project is similar
  to past project
• 2) Parametric procedures applied to specific
  tasks like the macro ratio method, but applied
  to individual tasks
• 3) Detailed estimates for the WBS most reliable
  method (go to example)
• 4) Phase estimating begins with macro approach
  then refines as phases of project completed (go
  to example)

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Refining estimates

• Some PMs adjust project costs up by 20 because
• Interaction costs are hidden
• Normal conditions are a starting point, but
  seldom reality
• Things go wrong on projects
• Changes in project scope and plans occur

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Apportion Method
Return to Slide 3
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Phase Estimating
Return to Slide 6
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WBS Estimate
Return to Slide 6
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Risk Assessment Process

• Use brainstorming
• Do not focus on consequences, rather focus on
  events that cause
• Focus on whole project rather than parts of the
  project
• Use WBS to be sure nothing is missed

• Step 1 Risk identification
• Step 2 Risk assessment
• Step 3 Risk response development
• Contingency planning
• Contingency funding
• Step 4 Risk response control
• Change control management

• Risk Assessment Forms
• GO TO 13

• Mitigating Risk reduce likelihood / reduce
  impact
• Transfer Risk costs
• Share Risk
• Retain Risk
• GO TO 14

Go to Response Control
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Risk Assessment FormMS Office 97 to XP
Go to next slide
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Risk Severity Matrix
Return to Slide 12
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Risk Response Matrix
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Step 4 Risk Response Control
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Alaska Fly-Fishing Expedition

• See handout

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Schedule Control

• WEEK 6, Chapter 7

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Project Control Process

• The key to effective project control is to
  measure actual progress and compare it to planned
  progress on a timely and regular basis and to
  take necessary corrective action immediately.
• Establish a regular reporting period.
• During each reporting period, collect
• data on actual performance
• information on any changes to project scope,
  schedule and budget.
• If changes are incorporated, a new plan must be
  established.

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Effects of Actual Schedule Performance

• Actual finish times (AFT) of completed activities
  will determine the earliest start and earliest
  finish times for the remaining activities.

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Incorporating Project Changes into the Schedule

• Changes might be initiated by the customer or the
  project team, or they might be the result of an
  unanticipated occurrence.
• The degree of impact may depend on when the
  changes are requested.
• When the customer requests a change, additional
  costs might need to be charged.

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Updating the Project Schedule

• An updated project schedule can be calculated
  based on actual finish times of completed
  activities

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Approaches to Schedule Control Four Steps

• Analyze the schedule
• Decide what corrective actions should be taken,
  if any
• Revise the plan
• Recalculate the schedule

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Approaches to Schedule Control

• A change in the estimated duration of any
  activity will cause a corresponding change in the
  slack for that path.
• When a path of activities has negative slack,
  focus on
• Activities that are near term.
• Activities that have long estimated durations.

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Reducing the Estimated Durations

• Apply more resources.
• Assign a person with greater expertise to perform
  or help with the activity.
• Reduce the scope or requirements for an activity.
  
• Totally eliminate some activities.
• Increase productivity through improved methods or
  technology.

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Approaches to Schedule Control

• Reducing durations of activities usually results
  in an increase in costs or a reduction in scope.
• The key is to effectively address paths with
  negative or deteriorating slack values as soon as
  they are identified.

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