Download Important Aspects of Execution Phase

By Ibrahim Alaff
20 Sept 2016
Introduction
 What are the basic types of organizational
environments - project management perspective?
 Hierarchical (Functional or Divisional)
 Matrix (weak, balanced and strong)
 Projects/program based
 Composite (New)
 Does the organizational structure/environment have an
impact on the way projects´ are executed?
 It is one of the dominating factors
 Major black-hole
 Vast majority (if not all) organizations try to say that they
are more project friendly than reality.
Sources: http://www.mypmhome.com/three-types-of-project-management-organizations
PMBOK, experience and textbook
Resources Procurement
 What are the resources requirements for any project?
 Staff
 Fixed and Variable Assets (Equipment and/or Materials)
 Services
 What is the impact of organizational structure on
procurement procedure
Type
Hierarchical
Matrix
Projects/program
based
Flexibility
Low to none
Low to moderate
Moderate to high
Time requirements
Long to very long
Long to moderate
Moderate to short
Documentation
Very high
High to moderate
High to moderate
Source: Textbook, Experience, PMBOK and PRINCE 2 manual
Main milestones of Procurement
procedure
 Review and update pre-set specifications
 Take the decision Buy, Hire/Rent or Not
 Buy or hire/rent
 How
 When
 Where
 Not
 Where from within
 Get approval of line manager(s)
 Get needed Approvals of Procurement Plan
 Follow up on Execution and Payment
 Document
Impact of authority holder on
staffing and recruitment?
Authority Holder
Area
PM
Recruitment
Staffing
•
Project team will be
•
formed of highly
skilled individuals.
•
• The team will be
almost the same for all •
projects.
• PM get best team from
his perspective.
• Project team will be
•
mainly from external
staff.
•
• High outsourcing
• Recruitment will be
very easy and rapid
Matrix
Line Manager
Continuous struggle and
•
negotiations.
Upper management usually
intervene.
•
Main team structure stable
for project duration.
•
Project team would be
mainly of internal staff.
Outsourcing would be
possible if funding is
available
PM request, Line
managers decide and PM
have to make do.
Team Change from time
to time within the project
All staff has an
opportunity to get
Projects experience.
• Project is executed
with internal staff only.
• Very low outsourcing if
any.
• Recruiting will need
very long time and
tedious procedure
Source: Textbook, Experience, PMBOK and PRINCE 2 manual
Impact of authority holder on
Assets and Services procurement?
Authority Holder
Type
PM
Matrix
Line Manager
Assets
• Rent/hire Fixed
Assets
• Buy variable Assets
• Buy all assets.
• Buy Assets for the
• Project team uses the
department
assets
• Project make do with
• After project closure
assets identified by
assets are distributed
the department
among departments
Services
• Majority to all are
hired/rented
• Internal or from
authorized
suppliers.
• Internal or from
authorized
suppliers.
Source: Textbook, Experience, PMBOK and PRINCE 2 manual
Earned Value Management
 A method for integrating scope, schedule, and
resources, and for measuring project performance.
 It compares the value of work that was planned, the
value of work that was actually completed, and the
amount of money that was actually spent, to
determine if cost and schedule performance are as
planned.
Source: http://support.sas.com/documentation/cdl/en/orpmug/59678/HTML/default/evmgloss.htm
Earned Value Management
Method (EVM)
 Developed in 1960s by Boeing Cooperation
 Now civil standard in GB and USA
 EVM not only Costs Vs Estimate but also Costs vs
Results.
 Useful tool for integrated control of larger projects
 In reality used in strong matrix and higher
organizations.
 One of the ways to forecast the final cost of the project
and implementation.
20% Performance Verification
 Gives an early forecast of project performance.
Difference between Earned Value
and Planned Value
 Planned Value: The physical work scheduled, plus the
authorized budget to accomplish the scheduled work.
Previously, this was called the budgeted cost of work
scheduled (BCWS).
 Earned Value: The physical work accomplished plus the
authorized budget for this work. The sum of the approved
cost estimates (may include overhead allocation) for
activities (or portions of activities) completed during a
given period (usually project-to-date). Previously called the
budgeted cost of work performed (BCWP) for an activity or
group of activities.
Source: http://support.sas.com/documentation/cdl/en/orpmug/59678/HTML/default/evmgloss.htm
Using EVM
 Key indicators used are
 Cost Performance Index (CPI)
 Scheduled Performance Index (SPI)
 CPI = Earned Value (EV) / Actual Cost (AC)
 EV = Budgeted Cost of performed activity
 SPI = Earned Value (EV) / Planned Value (PV)
 PV = budget value at the set point of time.
 Forecast Cost = Planned Costs / CPI
 Forecast Delivery = Planned Delivery /SPI
Example
 A 12 months – 10 Million SEK Project for designing new
model of ABC cars had the following financial schedule
Result
Value
Time needed
Design of new headlights
340000
1 Month
Design of Back lights
110000
1 month
 Monitoring of actual implementation yielded that after 2
moths implementation only the headlight design was
completed with a cost of 37000 SEK
 CPI = 340000/370000 = 0.92
 SPI = 340000/450000 = 0.76
 Forecast Cost = 10 Mil / 0.92 = 10.870 Mil SEK
 Forecast Delivery = 12 / 0.76 = 15.79 months
Thank you very much
Any Questions?