Analyzing Variances

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The idea behind variance analysis is a good one and something that you can easily calculate with today ' s project management software. As you go through your time- and cost-estimating efforts, you key in the costs associated with a given task. Then, when you actually incur the costs, you either key in the time spent or the cost of the procured item, and the variance is calculated for you. If you ' re creating a cheap project plan using ordinary spreadsheet software, it may require a little more work to set this up, but it' s just as effective. To get your variance, you compare the actual to the estimated and figure out what percentage you lag or that you' re ahead.

One variance that is often overlooked is the amount of time that you use a non-human resource for a task. For example, you might estimate that you ' l l use some load simulation software to test a website for eight hours. Since the software was purchased as an enterprise product and others need to book time on it as well, your estimate of how long your project is going to need to use this software may impact other projects. Figure 10.1 shows a Microsoft Project 2000 sample project ' s Cost table. You can easily move from view to view by simply right-clicking the top-left corner of the project' s spreadsheet screen and selecting the view you' d like to look at. Figure 10.2 shows this toggle mechanism.

Tip The hours variance in a Microsoft Project worksheet is viewed by selecting the Variance table.

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Figure 10.1: Some sample fixed costs keyed into a Microsoft Project worksheet

Figure 10.1: Some sample fixed costs keyed into a Microsoft Project worksheet

Figure 10.2: Toggling between table views in Microsoft Project Managing Valid Scope Changes

If a scope change is considered and the change is valid, then one of your tasks is to manage the change. A good change-management policy that's already in place will assist you in implementing the change. For example, a change- management policy might dictate that a proposed scope change should be brought before a steering committee prior to implementing it. That way you could talk about the proposed change with stakeholders, analyze the risks associated with it, and obtain buy-in from the group prior to moving forward with the change.

It might turn out that if someone wants a change and they find that they have to go through a rigorous process—one that requires a couple of weeks to grind through—the change may not be that important after all. Not that your job is to nix changes, but the change has to be important enough to potentially add time and cost to the original projections.

Once a change has been validated, then you have to revisit the project plan, perhaps bring additional people on board, get permission to expend additional resources and, most importantly, obtain approval from the project sponsor to integrate the change. In larger projects, you go through a scope-document revision process: when scope changes are made and the document is updated, you have the new working doc for official sign-off in addition to its earlier versions.

Tip Portal software lends itself well to document version control for processes such as this scope document change scenario.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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