P ROJECT G OVERNANCE

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ANANTH NATARAJAN
PMI
PROCESSES
• 5 Process Groups

• 10 Knowledge Areas
1. Project Integration Management
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
5. Project Quality Management
6. Project Human Resource Management
7. Project Communications Management
8. Project Risk Management
9. Project Procurement Management
10. Project Stakeholder Management

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PROCESS GROUPS
 P ROJECT C ONTROL S YSTEM

Plan Control
schedule,
Initiate Execute
cost , scope,
quality
Project
Closing
Monitoring processes

M on
Delivery Processes
Yes

itor
Deviation
vs plan
PROCESS VS PROJECT

PROCESS PROJECT
• Repetitive • Non-repetitive
• Isolatable to single entity • Unique result
• New organizational • Time-bound
configurations • Difficult to measure
• Length

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 PROJECT RISK

• Project risk is defined by the Project Management Institute (PMI) as, "an
uncertain event or condition that, if it occurs, has a positive or negative
effect on a project’s objectives.” - PMI
 RISK - OTHER DEFINITIONS

• Uncertainty - quantifiable probability of possible outcomes,

• Risk - subset of uncertainty involving only realization of undesirable outcomes,
• Strict uncertainty - knowledge of possible outcomes without their probabilities
of realization
• “Ignorance” or “Knightian Uncertainty” - Potential outcomes which are
unforeseen and not present in known distributional information
Hubbard (2009)
RISK – DEVIATION FROM BASELINE

“Ignorance” or “Knightian • Unforeseen outcomes not present in

Uncertainty” known distributional information

• Possible deviations from baseline

Strict uncertainty whose probability is unknown

• Probability (quantifiable) of deviation

Uncertainty from baseline

• Probability (quantifiable) of
Risk (subset of Uncertainty) undesirable deviation from baseline
 response
Coordinated
e
igat
Mit

Systems
Information
Meetings,
Risk Analysis,
Qualitative
ect
D et
B OWTIE

Event

re ct
Cor
Corrections to
plan (Risk
Quantification,
forecasting)

v e nt
Pre
Good Collective
Planning
 PERIODIC PROJECT REVIEW

• Review Project With Team

• Review project with teams at their companies
• Review all similar projects within company
INFORMATION SYSTEM

INFORMATION RESPONSE
• Sharing • Speed
• Collaboration • Collective

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 P ROGRESS M EASUREMENT

Has the right thing been done to the right quality within the planned cost
and time?
• Scope
• Cost
• Schedule
EARNED Where have we been?
VALUE
MANAGEMENT

Where are we now?

Where are we going?

Reichel, 2006

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 • Orioginated with DoD (US)
• PERT

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 ESTIMATES TO COMPLETE

Item Questions

Planned Value (PV) How much work should be done?

Earned Value (EV) How much work was done?

Actual Cost (AC) How much did the work cost?

Budget at Completion (BAC) What is the total job budgeted to cost?

Estimate at Completion (EAC) What do we expect the total job to cost?

Reichel, 2006
EVM
FORMULAS
Schedule Variance (SV): SV = EV – PV

Cost Variance (CV): CV = EV – AC

Schedule Performance Index (SPI): SPI =

EV / PV

Cost Performance Index (CPI): CPI = EV /

AC

Estimate at Completion (EAC): EAC = BAC

/ CPI

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 ESTIMATE AT COMPLETION

Future performance will be based on the budgeted cost EAC = AC + (BAC – EV)

Future cost performance will be based on past cost performance EAC = AC + [(BAC – EV) /
CPI]
Future cost performance will be influenced by past schedule EAC = AC + [(BAC -EV) /
performance (CPI x SPI)]
EAC = AC + [(BAC – EV) /
(0.8·CPI x 0.2·SPI)]
The Budget and Schedule are no longer valid EAC = AC + ETC
 OPTIONS UPON DEVIATION

• Cancel Project
• Ignore Deviation
• Corrective action
• Revise plan
EVM IN PRACTICE

• US DoD
• A-12 Avenger II

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 LIMITATIONS OF EARNED VALUE

• Does not really track Value

• Corrective mechanisms not identifiable
• Real crisis can emerge and transform a project profoundly
• Change is not linearly extrapolatable