How project cost increases results from timetable delays

Give three examples of how project cost increases result from timetable delays.
Errors in design are just one of the many issues that can cause schedule delays. Professionals should guarantee correct representation when carrying out a job. There will be hassles whenever they offer a task that has been completed in a way that is at odds with the design expectations of the clients. Due to project corrections made to meet the client's needs, there will be delays in its completion (Heldman 98). Costs for the project will also go up as a result of the additional staff and the length of time needed to implement the changes.
Whenever there are significant adjustments in a particular project, delays may result. This is because these changes will lead to reviews of the budget and the raw materials used may also change. The workforce may also be affected depending on the details of the new project. The deliberations on the budget may take a while because in case the budget is a bit higher than the previous one, more finances will have to be fetched. This can at times be a very challenging process and may also be time-consuming. In such cases, lags may come in because the ongoing project will be at a standstill waiting for the details of the modifications. This will definitely lead to a rise in the cost of the project.

Projects usually have contracts that define the scope of duty. If a particular project has not defined the whole scenario delays may result due to negotiations in the course of work. Whenever some details are not well defined, there reaches a point where the concerned parties ought to decide on the way forward. Some negotiations may take longer depending on the discussions to be made. After the deliberations, the contract ought to get completed in writing, and all the parties to it sign accordingly, which may also take a while. During such agreements, workers will be at a halt awaiting the final decision from the panel. This will lead to delays which will eventually be costly due to the time wasted.

Week 2 Topic 2

Describe the “Top-Down” approach to schedule development. How does the “Bottom-Up” approach serve to validate the Top-Down schedule?

Description of the “Top-Down” Approach to Schedule Development

The “Top-Down” approach is widely used in schedule development. The major decisions in a schedule are usually made by the upper management who later on communicate the details of the deliberations of the schedule manager. The manager after that has the responsibility to share this information with the rest of the team. When it comes to execution, the manager decides on the duties to allocate to the team. This is a very systematic and efficient way of decision making where the deliberations made can get implemented faster. This is a beneficial approach mostly in cases where a certain project has a limited timeline. Also, in this method, the decisions made are likely to be viable and coincide with the goals of a particular organization because they are made directly by the management.

How the “Bottom-Up” Approach Serve to Validate the Top-Down Schedule

In the “Bottom-Up” approach, it is not the upper management communicating details of a project to the team. It is the team coming up with details about a particular project then gives the details to the project manager (Turk 213). Here the team contributes to the significant part of decision making which makes them feel part and parcel of the organization. This helps in making the groups involved in the decision-making process to be very collaborative and also strengthens the team spirit and communication among them.

Both approaches follow a specific order in decision making with the “Bottom-Up” having the team as the major decision makers while the “Top-Down” one has the upper management as the core people in decision making. Organizations can, therefore, adopt any approach depending on the team culture, sensitivity of a particular project and the goals and objectives. The best way to handle these strategies is to have a balance between them. This can get done through ensuring that the upper management consults the team when making pertinent decisions but still has the power to come up with the final decision.

Week 2 Topic 3

What is the difference between resource loading and resource leveling?

What Resource Loading Entails

Resource loading involves the process of assigning tasks to employees and ensuring that all activities in an organization have workers handling them. It helps in making sure that the available resources are managed effectively and efficiently. Optimization of resources is key in this process which helps in ensuring that there are no idle workers and that all employees are giving their best towards the completion of a particular project.

What Resource Leveling Entails

Resource leveling touches on adjusting the resources and the tasks involved to meet the expectations of the organization. In cases where a mismatch is evident between what is available and what is required, some changes need to be done such as giving some roles priority and postponing some of them. This enhances a balance between the resources and the tasks involved and project managers ought to be very careful as there may be instances of overloading the resources at hand. Through this, projects will get completed successfully.

Difference between Resource Loading and Resource Leveling

Resource leveling concentrates on time and the available resources. Here lags are not encouraged because the involved people are working towards meeting a certain deadline. This implies that there is a possibility of the available resources being overloaded which may sometimes affect productivity and the turnaround time (Heldman 222). On the other hand, one can work with resource loading without necessarily having to overwhelm the available resources. Each employee gets assigned tasks that they can finish comfortably and to the expectations of customers. The project managers also ensure that no resource is idle for projects to get completed on time. This manner of allocating resources allows project managers to forecast on the staffing hours on an annual basis. This assists in knowing how best tasks can be assigned which enhances the productivity of employees. As such instances of misallocation of resources will get avoided, and accuracy will get improved when doing a particular project.

Week 3 Topic 1

What are the six earned value methods used for measuring progress of discrete effort?

Definition of a Discrete Effort

A discrete effort is an activity that can get planned, measured and has an output that can get specified. It is also known as a measurable effort.

Earned Value Methods Used for Measuring Progress of Discrete Effort

Fixed Formula

This is the most commonly used method for measuring performance. It is also known as the 50/50 formula. The first number on the left shows the percentage of progress given whenever a particular activity begins (Heldman 159). It does not take into account how much of the project has been done so long as it has begun. The second number is usually the percentage given after a particular project is finished. This method of measuring effort is very effective making it preferred by many.

Weighted Milestone

This method divides work into a fixed number of pieces and assigns each piece a particular weight. The total sum of the weights is usually 100% which implies that percentages are usually used in the process. The weight is the percentage accomplished when a particular activity gets done.

Percent complete

This technique gives a percent of progress depending on a predefined rule. This rule is usually directly related to a characteristic that can get observed in the course of performance. It is a user-friendly method that has a high degree of exactness.

Apportioned Effort

This is a method which gives a certain percentage to work done according to the progress of the project. It is mostly applied to project management where one can easily ascertain the development of work. In this case, the extent of project execution determines that percentage given.

Level of effort

This method creates a division between the total planned value within a unit that has a planned a value for every measurement duration. This planned value is usually accredited automatically at the end of the project. In this technique, there are no chances of schedule variance, but cost variance is possible.

Schedule Performance Index

This is a very reliable measure of the work completed in a project. It is usually a ratio of the total earned value to the planned value and has a high degree of accuracy. Project managers typically use this technique because it has a high degree of reliable making it very powerful.

Week 3 Topic 2

What is being compared through variance analysis?

Variance analysis highlights the major reasons for the changes in income and expenditure within a particular duration compared to the budget. This study is usually fundamental in enabling organizations to know how far they are in achieving their set budget.

This implies that variance analysis compares the actual and the planned budget. The planned budget, in this case, is usually flexed to give room for organizations to work hard in attaining the budget. It is usually a forecast of what an enterprise is planning to achieve within a specified period to ensure that it has a goal (Turk 276). The duration of attaining the planned budget should be known to all stakeholders to ensure that there is teamwork in the process. Usually, the actual budget is lower than the predicted one to ensure control over a business. This analysis is usually very useful when done on a monthly basis to ensure that a proper track of the figures gets kept. It is the role of the management to make sure that all employees work towards meeting the planned budget to narrow down the variance. For organizations to come up with a realistic budget of the planned and actual figures, they should take their time to study the trend for a particular period. This comparison ensures that organizations are on track when it comes to their financials and ensures that they work towards meeting their objectives. The analysis also enables them to work on areas that seem to lag them behind from meeting their set budget. With variance analysis, organizations can plan their financial activities and set performance benchmarks with ease. Also, this is a control measure that enables stakeholders to keep track on the performance of the organization, and each responsibility center gets measured and evaluated compared with the budgetary standards.

Week 3 Topic 3

If SV = 0, is the project on schedule?

Schedule variance is often abbreviated as SV. It is an essential output of Earned Value Management. It helps in enabling a project supervisor to have details on how far a particular project is at the time of analysis (Heldman 173). The project at hand can either be behind schedule or ahead depending on the resources. This variance can get computed by getting the difference of planned value from the earned value, as below.

SV=EV-PV

From the equation above, we can determine that if the Schedule Variance is zero, the assignment is on schedule. When a particular project gets done to completion, the Schedule variance becomes zero. This is since, when a specified project is completed; all the Planned Value is usually earned. Schedule Variance, therefore, clearly depicts the monetary value that a particular task is either behind or ahead of schedule relative to the budget. It is very crucial for project managers to keep their projects on schedule as it helps in avoiding unnecessary lags. It also assists in staying away from cost overruns as a result of the slippage of the schedule. It is important to note that as you go beyond the stipulated timelines, the costs begin rising exponentially and may end up being unmanageable. Being on schedule also helps the service providers to be deemed reliable and assists in marketing their services. Project managers who take their projects seriously are usually preferred by clients because unnecessary lags are usually very expensive in the long run. When running projects, cost-cutting is often a very important principle that should get embraced by service providers. Clients prefer avoiding unnecessary costs because most of the times they have budgeted for the project to completion. This means that in case of any occurrence that tends to make the budget rise, it may inconvenience them.

Week 4 Topic 1

How would you explain to management how EAC and ETC forecasts work and how they are calculated?

How EAC and ETC Forecasts Work

In the forecasting process, EAC and ETC are the primary parameters used in estimation. EAC means estimate at completion while ETC denotes estimate to complete. ETC is the anticipated cost to finish the pending work of a particular project while EAC means the expected total cost involved in completing all the work within the scope of a specific project. ETC forecasts on how much more finances will be required to ensure that a particular project gets completed successfully (Heldman 169). It can get determined by either coming up with a bottom-up estimate which involves asking the work package owners, members of the team or even the sellers for a comprehensive budget that is revised. Alternatively, project managers can deduct the actual costs from the estimate at completion. Since EAC puts into consideration the sum of the expected cost, it is the total actual cost incurred in a certain project (AC) and the ETC.

How EAC and ETC Forecasts are calculated

The computations of these parameters can be done using various approaches depending on the forecasts involved and the nature of the projects. EAC and ETC can, therefore, get computed as below;

Estimate at completion=Actual Cost + Estimate to complete. This equation can also be put as EAC=AC+ ETC. This is the main formula for EAC. From this formula, ETC can be computed as ETC= EAC-AC. EAC remains constant most of the times and does not directly change at all assumptions (Turk 298). ETC is however subject to changes in various assumptions. It has a direct impact on EAC because, whenever it changes EAC changes as well. Since ETC is the cost required to finish the remaining work, is usually driven by a particular performance index. This performance index or factor can be a cost performance factor or also the cost performance index. It can also be cost performance index (CPI) with the schedule performance index (SPI) combined, or a weighted combination of CPI and SPI.

Week 4 Topic 2

If EV is higher than AC, what does this signify? What is likely to happen to the forecasted cost at completion compared to the approved budget?

The cost performance index is often a proportion of the Earned Value divided by the Actual Cost. Therefore, whenever the EV is higher than the AC, it means that the project assigned is being completed for less than the estimated duration. In this case, the project is under-running, and the cost performance index is usually greater than one. If the work assigned gets done before the stipulated duration, then there is a likelihood of the running costs reducing. This is due to the fact the there are no delays in the course of duty which enhances productivity. A project completed before time means that the planning was accurate and the availability of resources and raw materials was adequate (Turk 247). There were, therefore, no inconveniences in the course of duty.

When making arrangements for a particular project, project managers usually come up with a specific budget to provide the necessary guidance throughout the course. The budget usually contains the forecasted costs that are to get incurred in the project course. Stakeholders should ensure that this budget is realistic to avoid inconvenience in the course of duty. Therefore, whenever a project gets completed before the scheduled time, the forecasted costs are likely to go down. This is because time has been saved and the resources utilized in the process will not be active throughout the stipulated period. Therefore, upon the completion of this project, the managers will realize that the costs will have reduced significantly. If the expenses reduce, clients are likely to benefit as they will be able to allocate the resources and finances at disposal to another project if any at a reduced cost as well. This step will be aimed at ensuring that no resources go to waste. At the end of the project, managers will realize that the approved budget will have reduced which will be an added advantage to them.

Week 4 Topic 3

Why bother to analyze very positive variances?

A positive variance is also known as favorable budget variance. Variances usually occur on a regular basis because forecasters are not able to foretell the future with utmost accuracy (Heldman 189). Analyzing positive variances, therefore, is very important in enabling stakeholders to adjust their goals accordingly and in a more realistic manner. This process of analysis should, thus, be taken very seriously by the management to ensure that there are no costly mistakes. Errors in this course may result in making the wrong decisions which make affect the productivity of organizations. Through this analysis, managers usually make very important decisions for their companies hence the need for accuracy and regular confirmation of the figures before presenting them to the management (Heldman 224).

Analyzing these variances is essential in knowing the progress of companies towards achieving the predicted budget. This means that the management will be able to keep track of the income and expenditure of the organization to develop a strategy that will aid a favorable variance. One way to achieve a positive variance is by reducing the expenditure levels and avoiding income leakages in organizations. The management should be very careful so that their teams embrace cost-cutting strategies. With a cost-cutting culture, these firms will find their way to a positive variance conveniently.

Through a thorough analysis, stakeholders are able to find any discrepancies in the budget and able to hold the people responsible accountable. It is essential that they take their time when carrying out the process to ensure accuracy. Whenever they find out that there is a significant deviation from the planned activities, it gets advised that they hold the departments involved accountable. As such, the accuracy of the budget will get maintained which is key towards maintaining a positive variance in these organizations.



 



Works Cited

Heldman, Kim. Project Management Professional Exam Study Guide. . Indianapolis: Wiley Pub, 2007.

Turk, Wayne. Common Sense Project Management. Milwaukee: ASQ Quality Press, 2008.