Leadership Principles and Project Management

Leadership Principles and Project Management

Budget Management (PERT Method & Contingency) Estimates Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window. - Peter Drucker, management consultant, educator, and author Registered Education Provider Materials in this class are based on the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK Guide) Fifth Edition, Project Management Institute, Inc., 2013. PMBOK is a registered mark of the Project

Management Institute, Inc. What Could Possibly Go Wrong? Our Goal is to Prevent Problems! Technical challenges Organizational changes Personnel transitions Equipment problems What is the impact on our project? Over Budget! Behind Schedule! A project with a high degree of uncertainty The Polaris Missile was delivered 3 years ahead of schedule! and within budget!! Program Evaluation &

Review Technique (PERT) Strategies for Positive Risks Opportunities Exploit ensure the risk happens Share allocate some or all to 3rd party Enhance increase the probability of an opportunity Accept - willing to take advantage if it comes along Strategies for Negative Risks Threats

Avoid change PM plan to eliminate Transfer shift all or some to 3rd party Mitigate reduce probably and/or impact to within acceptable limits Accept no action; deal with risks as they occur Uncertainty Known Unknowns Contingency Reserve Part of the cost baseline May change as project progresses Risk response is acceptance Mitigation and contingency plans are documented Management Reserve Unforeseen work that is within scope Part of project budget

Requires approved change Added to cost baseline as used Estimating Analogous Cost Estimating May be less accurate than other methods May take less time and cost less to do than other methods Parametric Cost Estimating Increased accuracy possible Depends on data and infrastructure built into process Bottom-up Estimating Estimate each work package For greater accuracy keep breaking it down Three-Point Estimating Consider estimate uncertainty (RISK)

Improve accuracy Most Likely Optimistic Pessimistic Triangular Distribution E = (O + M + P)/3 Beta Distribution (PERT) E = (O + 4M + P)/6 Variance Project Cost Management The cost of the resources needed to complete project activities. Equipment Material

People Expected Monetary Value EMV = Probability x Impact Probability: may be calculated or brainstormed Impact: Pessimistic minus PERT PERT Estimate Task Most Likely Pessimistic Optimistic PERT Plan Test

40 60 30 42 Write Test Document 80 120 60 84 Conduct Testing

160 240 130 169 Test Report 40 50 35 41 SUM

320 470 255 336 PERT Estimate = (P + 4xML + O)/6 Calculating Contingency Task Risk Probability Impact

EMV Plan Test Lack of agreement 40% 18 8 Write Test Document Configuration delays 30% 36

11 Conduct Testing Equipment Availability 50% 71 36 Test Report Data from interns 15% 9

2 134 57 SUM PERT + EMV = Plan 336 + 57 = 393 Abbreviated Process Create WBS Estimate Work Packages Resources and Relationships Identify Risks Calculate EMV Manage Critical Path! Create WBS

Abbreviated Process Create WBS Estimate Work Packages Resources and Relationships Identify Risks Calculate EMV Manage Critical Path! Estimate Work Packages Abbreviated Process Create WBS Estimate Work Packages Resources and Relationships Identify Risks Calculate EMV Manage Critical Path! Performance

Measurement Baseline TASK Duration A B C D E F G H 4 3 1 2 1 2

7 5 Predecess or Milestone Milestone A B C C D, E E Precedence Diagram Apply Logical Predecessors Abbreviated Process

Create WBS Estimate Work Packages Resources and Relationships Identify Risks Calculate EMV Manage Critical Path! PERT Estimating Event A B C D E F G H Contingency Probabilit

y Impact 50.0% 56 25.0% 53 30.0% 18 75.0% 35 40.0% 44 25.0% 35 50.0% 113 65.0% 61 EMV

28 14 6 27 18 9 57 40 Abbreviated Process Create WBS Estimate Work Packages Resources and Relationships Identify Risks Calculate EMV Manage Critical Path! Identify Risks PERT

TASK ML Estimate O Standard P Deviation Contingency PERT + PERT + PERT Probabili Impa PERT [P-O]/6 1 2

+ 3 ty ct EMV () A 160 120 220 164 17 181 198

214 50.0% 56 28 B 120 100 180 127 13

141 154 167 25.0% 53 14 C 40 30 60

42 5 47 52 57 30.0% 18 6 D 80

65 120 85 9 95 104 113 75.0% 35 27

E 40 25 90 46 11 57 68 79 40.0%

44 18 F 80 70 120 85 8 94 102

110 25.0% 35 9 G 280 200 400 287 33

321 354 387 50.0% 113 57 H 200 180 270

209 15 224 239 254 65.0% 61 40 SUM 1,000

790 1,460 1,045 111 1,160 1,271 1,381 415 199 Estimate 1,000 Contingen cy

0 790 1,460 1,045 1,160 1,271 1,381 1,244 160 271 381

244 (210) 460 45 PERT Estimate = (P + 4xML + O)/6 s = Abbreviated Process Create WBS Estimate Work Packages Resources and Relationships Identify Risks Calculate EMV Manage Critical Path!

Critical Path Critical Chain Method Work expands so as to fill the time available for its completion. - Parkinson's law Gantt Chart Schedule The TRUTH about SCHEDULES! Schedules are a project management tool! MANAGING the Critical Path! Fast-Tracking

Can tasks be done in parallel? Do the original constraints still exist? Crashing Are resources available? Are there hidden costs or risks? LatherRinseRepeat Review WBS Re-Estimate Work Packages Resources and Relationships Assess Risks Calculate Expected Monetary Value Manage Critical Path! Progressive Elaboration Quote

Everyone needs deadlines. - Walter Walt Elias Disney, animator, cartoonist and director Contact Information ( http://www.leadershiptechniquesllc.com) Lisa Hammer, PMP: (301)667-3915 [email protected] David B. Newman, PMP: (240)4466231 [email protected] Customized Seminars and Consulting Services Reliable - Dynamic Relevant No one would have crossed the ocean if he could have gotten

off the ship in the storm. - Charles Kettering, American inventor

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