Successful project management relies heavily upon the individuals that practice it. Whether simple or complex, the various elements of a project – scope, cost, schedule, resource, risk, quality, safety and environment – need to be managed. In order to assist the project manager, a number of software tools have been developed to combine the cost, schedule and resource elements of a project. These tools have become extremely powerful, capable of processing significant amounts of information to create a model for any project. At any point in time, details of schedule performance (progress), cost performance and resource requirements can be obtained. In addition the software can identify and analyse the project’s critical paths (which can and do change) thereby establishing the activities and resource requirements that will drive the end date. However, for the outputs to mean anything, consideration needs to be given to the input data.
Projects can be broken down successively into smaller and smaller activities. Each of these activities have a time duration and a cost associated with them. They will also have dependencies, i.e. they will be dependent on a previous activity or activities being completed before they can commence. In addition they will have activities that can be carried out concurrently and activities that will succeed them. Processing this information generates an overall cost, schedule and resource model. As a project progresses, activities are completed allowing the model to be populated with actual data, which in turn enables the reporting of key performance indices. Common indices include ‘Earned Value’, ‘Schedule Performance’ and ‘Cost Performance’. Earned Value (EV) equates to the ‘budgeted cost of work performed’ (BCWP) and is a measure of progress. In essence each activity has a baseline cost and time duration. The cost profile for the activity is modelled – it may be a straight-line profile, it may involve high initial costs or it may be an ‘S’ curve. For each activity a percent complete figure is established based on actual progress, the budgeted cost associated is the EV for the activity. Summing these for all of the activities generates a BCWP or EV for the project. Schedule Performance is the relationship between the EV and the ‘budgeted cost of work scheduled’ (BCWS). The BCWS is obtained for each activity by relating its baseline cost and time profile to ‘Time Now’ and not percent complete. The ratio of EV over BCWS is the Schedule Performance Index (SPI) for the activity. Similarly the ratio of EV over the sum of the BCWSs will generate the SPI.
Cost Performance is the relationship between the BCWP and the ‘actual cost of work performed’ (ACWP). The ratio of BCWP over ACWP is the Cost Performance Index (CPI). CPIs can be generated for each activity providing that care is taken to ensure that the actual cost make-up is consistent with the baseline cost, e.g. indirect costs such as overheads.
If the indices are one or more the project is running on or ahead of time and budget. Conversely if the indices are less than one the project is behind time and budget. But care needs to be taken. The starting point for the calculation of the indices is the baseline schedule and cost profile. It is common for the original budget to reflect the contracted price for the work and the schedule the original contract programme. Changes to the work generate changes to the cost and programme. If these are not reflected in the EV they will distort the indices. It is not unusual for projects with indices of less than one to be on time and within budget pending the resolution of a number of contract variations that might only be settled at the end of the job.
However, the strengths of the various computer-based tools that are available are that they can quickly evaluate the impact of change on a project. Models can be generated to reflect new cost, schedule and resource profiles thereby informing the decision making process going forward. The speed and ease with which new models can be generated means that the reactive process that goes with evaluating the impact of change can be supported by the proactive approach associated with risk modelling.
The development of ‘what if’ scenarios ensures that contingency planning options can be established in advance to improve the probability of delivering on time. The use of cost and schedule risk assessments using tools such as ‘Monte Carlo’ enable many iterations to be modelled for each activity, thereby determining minimum, most-likely and maximum values for cost and time. In so doing the project manager can obtain an understanding of the likely outcome of a project. Again care needs to be taken. The range between the maximum and minimum values is often a good indication of the level of uncertainty that may exist on a project outcome. The greater the range the higher the uncertainty.
Project collaboration tools
In recent years the development of PC based software has been joined by the development of internet based ‘project collaboration’ tools. One of the biggest challenges facing project managers is the management of the flow of documentation. From the inception of any project through to its completion there is a need to ensure that all interested parties are kept within the information loop. Communication channels and protocols, such as the format in which data is to be transmitted, need to be clearly understood. Project collaboration tools have been established to bring clients, designers and suppliers together during the design, procurement and implementation phases of projects. It is considered that the use of such tools provides an opportunity to simplify the communication process and facilitate the standardisation of designs through the early involvement of suppliers.
The internet is also increasingly being used to manage resource availability, particularly in disciplines where skills are in short supply. Suppliers can indicate their resource capabilities and current and future workload requirements. Clients can then manage the development and implementation of their projects thereby ensuring that the demand profile for key skills reflects the available supply.
Project management software, both PC and internet based, provides a set of tools that can ensure the successful execution of projects. However, the tools themselves do not guarantee success – they are simply aids, albeit increasingly powerful ones. The onus remains with the project manager to understand the tools available and to use them wisely.
