SPM Notes

Lecture 4
Milestones:
 Milestone is a significant event that normally has no duration.
 It often takes several activities and a lot of work to complete a milestone.
 Think of them as sign-posts that signify a point in your trip to project completion.
 Milestones are useful tools for setting schedule goals and monitoring progress.
Activity (Task):
 An activity (task) is a component of work performed during the course of a project.
 Activities take time and consume resources.
 The clearly you define activities and milestones , the more accurately you can estimate
the time and resources needed to perform them.
 Example of activities:
• Meeting with Domain-SME
• Formal Review of SRS
• Developing two reports
• Testing of a module
Activity Lists and Attributes:
 Activity list is a tabulation of activities to be included on a project schedule. The list
should include:
• Activity Name
• Activity Identifier or number
• Brief description of the activity
 Activity attributes provide more information about each activity, such as
• Predecessors, Successors
• Leads and lags, Resource requirements
• Constraints, imposed dates
 • and assumptions
Duration:
 Duration is the total number of work periods (hours, days) it takes to complete an
activity.
 Activity Duration is allocated time + elapsed Time
• Effort required to complete the activity (allocated time)
• People’s availability (elapsed time)
 Example: if your Team-lead spends two hour reading your email after he/she sat in
his/her inbox for three days and seven hours (elapsed time), the activity’s planed
duration is four days, even though your Team-lead spends only two hour reading it.
 1. Activity definition: Identifying all the activities (list of tasks) that project team and
stakeholders perform to produce the project deliverables.
2. Activity Sequencing: Identifying and documenting the relationships between project
activities.
• Example: You cannot preform testing before Software development.
3. Activity resource estimating: Estimating how many resources a project team should use
to perform project activities.
• Example: Two BA, Ten Programmers, Four Test-Engg
Computers, office-space, any especial software etc
4. Activity duration Estimating: Estimating the number of work periods (hours, days,
weeks) that are needed to complete individual activities.
5. Schedule Development:
• Analyzing activity sequences
• Activity resource estimates
• Activity duration estimates
• to create the project schedule
6. Schedule Control: Controlling and managing changes to the project schedule.

See the slide lec 4b it is all imp

Lecture 5
Project Cost Management
Project Cost Management as defined in PMBOK as
“the processes involved in planning, estimating, budgeting and controlling the cost
so that project can be completed within the approved budget.”
  Plan Cost Management : Develop cash outflow plan of project on (possibly) monthly
basis.
 Cost estimating: Developing an approximation (or estimate) of the costs of the
resources needed to complete a project.
 Cost budgeting: Allocating the overall cost estimate to individual work items to
establish a baseline for measuring performance.
 Cost control: Controlling changes to the project budget.

Principles of Cost Management

 Most members of an top-management have a better understanding and are more
interested in financial terms than IT terms, so IT project managers must speak their
language.
 Profits are revenues (money coming in) minus expenses (money going out).
Profit = revenue – expenses
 Life cycle costing considers the total cost of ownership, or development plus support
costs, for a project.
 Cash flow analysis determines the estimated annual costs and benefits for a project and
the resulting annual cash flow.
 Direct costs are costs that can be directly related to producing the products and services
of the project. Example: Salaries of team.
  Indirect costs are costs that are not directly related to the products or services of the
project, but are indirectly related to performing the project.
Example: Office expenses, Travelling, Medical Insurance.
 Sunk cost is money that has been spent in the past; when deciding what projects to
invest in or continue, you should not include sunk costs.

Software cost and effort estimation will never be an exact science.

 Many variables can affect the ultimate cost of project and effort applied to develop it.
• Human personality & behavior
• Technical capability and knowledge
• Job Environmental (healthy, cooperative)
• Political (no fairness/ biased)
 Each resource is specified with 4-characteristics:
• Description of the resource skills & experience
• Availability of all those resources
• Timeframe when the resource will be required
• Duration of time that resource will be applied

Estimation Techniques
 Analogous Estimation (top-down)
 Empirical estimation (parametric)
 Decomposition Estimation (bottom-up)
 Process Based (SDLC)
1- Analogous Estimation
 Comparing the proposed project to previously completed similar project in the same
application domain.
 Actual data from the completed projects are extrapolated.
 Analogous estimating is often used to develop a rough order of estimate.
Example: We developed web-site for MCB-AMC
Perhaps same efforts will be required for Meezan Bank web site with perhaps 10% plus-minus
variations.
• Developed web-site in MCB-AMC 03 months
• Perhaps Meezan project can be done in 3-4 months
Example -2
• Open-ERP Inventory module implemented in 2-months (2 resource)
• Similar organization, will do in same efforts

2-Empirical Estimation . . . x = z+y2

 Empirical model use mathematical equations (formula) to perform software estimation.
• COnstructive COst MOdel-II (COCOMO),
• Function Point Counting
• Use Case Points
 Equations are based on theory or historical data.
 Use input such as KLOC, number of functions to perform and other cost drivers.
 Accuracy of model can be improved by calibrating the model to the specific
environment.
 Example: History indicates that report development takes on average of 10 man-hours
using this team in this software shop.
• Using this technique, the PM can multiply 10 x 8 to get a total, or 80 man-hours
for 8 reports.

3- Decomposition Estimation
 In decomposition approach, the project is first divided into tasks and then estimates
for the different tasks of the project are obtained.
 The overall estimate of the project is derived from the estimates of its manageable
small segments.
  Essentially, in this approach the size and complexity of the project is captured in the set
of tasks the project has to perform.
 Bottom-up approach lends itself to direct estimation of effort; once the project is
partitioned into smaller tasks (WBS), it is possible to directly estimate the effort
required for them, especially if tasks are relatively small.

4- Process Based
 The most common technique for estimating a project is to base the estimate on the
process (SDLC) that will be used for developing the software.

Cost Budgeting
 Cost budgeting involves allocating the project cost estimate to individual work items
over time.
 WBS is a required input for the cost budgeting process because it defines the work
items (tasks-List).
 Important goal is to produce a cost baseline:
Cost-Benefit evaluation techniques
 Pay Back Period: the amount of time it takes for an investment to pay for itself.
 Return on investment: Provides a way of computing return on amount invested.
 Net Present Value: future view of costs and benefits converted to today’s value.
Cost Control
 To keep the project cost under control we should regularly compare the . .
• Estimated cost with Actual cost as of today.
• This will help Project Manager know that project is over-budget or under-
budget.
 Any unexpected variables in a budget where
• actual cost is exceeding the estimated cost
• by a significant percentage must be addressed immediately for cost control.
•
 Lecture 6
Project cost control includes:
 Monitoring cost performance.
 Ensuring that only appropriate project changes are included in a revised cost baseline.
 Informing project stakeholders of authorized changes to the project that will affect
costs.
 Many organizations around the globe have problems with cost control.

Earned Value Technique

 Earned Value is a method of measuring project performance by comparing the . .
• Amount of work planned with that actually accomplished, in order to
determine
• If cost and schedule performed as planned.
 EV technique aims to answer questions in relation to the projects business case:
 Where are we today?
 How much work is completed, as of today.

Project Status Report – Example

To calculate EV, we must have Project plan in place.
Plan should have following three elements
1) Scope of the Project
2) Project Schedule
3) Project Cost
 Status-Report
• End of Tuesday (after 2-days work)
• Schedule = Only one side complete
• Cost Incurred = Rs 30,000 spent on only one side

 Planned Vale: how much work should have been completed as per plan
 Plan Schedule = One side per day
 Plan Cost = Rs. 10,000 per side
 That implies that we should have completed two-sides (in terms of value) PV =
Rs. 20,000
 Earned Value: how much work we have finished as of today (in terms of value)
 Only one side (in terms of value) EV = Rs. 10,000
 Actual Cost: how much money we spent as of today.
 How much money we spent as of today AC = Rs. 30,000
 Schedule Variance (in terms of value)
 Only one side completed, means behind the schedule by one day (in terms of Value) Rs
-10,000
• SV = EV – PV
• SV = 10,000 – 20,000 = -10,000
 SV will ultimately equal zero when the project is completed because of all the planned
value have been earned.
SV = EarnedV – PlannedV
Negative SV indicates a behind-schedule condition.

 Cost Variance
 Already spent Rs. 30,000 that means, over budget by two days expenses Rs -20,000
• CV = EV – AC
• CV = 10,000 – 30,000 = -20,000
Negative CV indicates a cost-overrun condition. Analysis of cost variance will identify
areas of concern on:
• Inaccuracies in the original estimates (under-estimated)
• Lower productivity than expected
• Unexpected increases in material, labor or equipment costs

Performance Index
Cost Performance Index (CPI)
CPI is the ratio of Earned value with respect to actual cost. CPI value less than 1.0
indicates a cost overrun.
CPI = EarnedV / ActualC

Schedule Performance Index (SPI)

SPI is the ratio of EV with respect to Planned value.
SPI = EarnedV / PlannedV
SPI is used to predict the completion date.

Estimate of Completion (EAC)

 Management’s assessment of the cost of the project at completion. After variance
analysis, the estimated cost at completion is determined.
EAC = BAC / CPI

Variance at Completion (VAC)

VAC = BudgetAC – EstimatedAC

Lecture 7
Stakeholder Management
 Stakeholder Management is an important discipline that PM use to win support from
others.
 It helps PM ensure that their projects succeed where others fail.
 Stakeholder Analysis is the technique used to identify the key people who have to be
won over.
 Effective communication with objective
 When you do a meeting – it should have agenda and action items
derived form meeting
 When you tell somebody his/her role – it should be clear and
understandable by individual
 When somebody report work progress – it should be quantifiable report
of project
Purpose of project stakeholder management is to
 Identify all stakeholders (people) affected by project
 Analyze stakeholder expectations /needs
 Effectively engage stakeholders for better results
Output of stakeholder identification is stakeholder register (list)
Stakeholder register includes basic information on stakeholders:
 Identification information:
• Stakeholders’ names,
• Locations,
• Contact information.
  Assessment information: Stakeholders’ major requirements and expectations,
potential influences, and phases of the project in which stakeholders have the most
interest.
 Stakeholder classification:
• Stakeholder internal or external to the organization?
• Stakeholder a supporter of the project or blocker?

Stakeholder Engagement Categories

Unaware: Unaware of the project and its potential impacts on them.
Blocker: Aware of the project yet resistant to change
Neutral: Aware of the project yet neither supportive nor resistant.
Supportive: Aware of the project and supportive of change.

Planning Stakeholder Management

Stakeholder management plan can include:
 Current and desired engagement levels (only inform or consult)
 Inter-relationships between stakeholders
 Communication requirements
 Potential management strategies for each stakeholders
  Methods for updating the stakeholder management plan
After identifying key project stakeholders, you can use different classification models to
determine an approach for managing stakeholder relationships.
Power / interest grid can be used to group stakeholders based on their level of authority
(power) and their level of influence (interest) for project outcomes.

Managing Stakeholder Engagement

Best Practices
 PM are often faced challenges, especially in managing stakeholders.
 Sometimes they simply cannot meet requests from important stakeholders.
 Suggestions for handling these situations include the following:
• Be clear from the start
• Explain the consequences
• Have a contingency plan
• Avoid surprises
• Take a stand (based on knowledge & logic)
Controlling Stakeholder Engagement
 Project schedule should include activities and deliverables related to stakeholder
engagement, such as surveys, reviews, demonstrations, and sign-offs.

Lecture 8
Risk Management
 Risk identification
 Risk assessment (estimation)
 Risk Strategy/plan
 Risk monitoring, and management

 Identify possible risks: recognize what can go wrong in your project

 Assess risk analyze each risk to estimate the probability that it will occur and the
impact (i.e., damage) that it will do if it does occur
• Rank the risks by probability and impact
 Low or Medium or High
 High, or Catastrophic
 Plan (strategy) for risk: determine an approach for addressing or mitigating each risk;
produce a plan for implementing the approach.
 Monitoring risk: deal with each risk by implementing its defined plan and tracking the
plan to completion.

Assessing Risks - Probability and Consequences

 Probability of occurrence:
• You can express the likelihood that a risk will occur as probability. Probability is a
number between 0 and 1, with signifying that a situation will never happen, and
1.0 signifying that it will always occur.
 Category ranking:
• Classify risks into categories that represent their likelihood. You may use high,
medium, and low, or sometimes, rarely, and never.
 Relative likelihood of occurrence:
• If you have two possible risks, you can express how much more likely one is to
occur than the other.
 • Example: you can declare that the first risk is twice as likely to occur as the
second.
 Relying on historical information:
• You can estimate the probability of a risk occurring by considering the number of
times the risk actually occurred on similar projects, in last 2-3 years.
 Qualitative risk assessment involves making a formal judgment on the consequence and
probability using
Risk = Severity X Likelihood
Risk = Impact X Probability

 Probability
 High – Greater than 70% probability of occurrence
 Medium – Between 30% and 70% probability of occurrence
 Low – Below 30% probability of occurrence
 Severity (Impact)
 High – Risk that has the potential to greatly impact project cost, project
schedule or performance
 Medium – Risk that has the potential to slightly impact project cost,
project schedule or performance
 Low – Risk that has relatively little impact on cost, schedule or
performance

Risk Control
 Avoidance: This strategy involves a conscious decision on the part of the organization to
avoid completely a particular risk by discontinuing the operation producing the risk.
 Example decide not to use a new, un-tested procedure that you are concerned
may not produce the desired project results.
 Transfer: This refers to the legal assignment of the costs of certain potential losses from
one party to another. The most common way is by insurance.
 Mitigation: Either reduce the likelihood that a risk occurs, or minimize the negative
consequences if it does occur.
  Minimize the chances that the risk will occur. Take actions to reduce the
chances that an undesirable situation will come to pass.
 Example: consider that you have a person on your project who’s new to your
organization. Consequently, you feel the person may take longer to do her
assigned task than you planned.
 Develop contingencies to minimize the negative consequences if an undesirable
situation does come to pass.

Lecture 9
Project Communication Management
 Greatest threat to many projects is a failure to communicate among stakeholders.

1) Communications Planning: determining the information and communications needs

of the stakeholders
2) Information Distribution: making needed information available in a timely manner.
3) Performance Reporting: collecting and disseminating performance information.
• Performance reporting keeps stakeholders informed about how resources
are being used to achieve project objectives
4) Administrative Closure: generating, gathering, and disseminating information to
formalize phase or project completion.

Improving Project Communications

1. Manage Conflicts effectively
2. Develop better communication skills
• (Clear, Concise, Complete, Correct)
3. Run effective meetings
• (Meaningful, necessary Participation, intended outcome )
4. Use Email effectively
5. Use templates for project communications
6. Developing a Communications Infrastructure