Work to complete

• Review past data to assess credibility of cost and schedule information in the previous step.

The project manager may have sufficient background to quickly assess the significance of a particular variance and the probable impact of that variance on project team performance. Knowledge of the project requirements (possibly with the assistance of the project sponsor) will usually help a project manager determine whether corrective action must be taken at all, or whether the project should simply be permitted to continue as originally conceived.

Whether or not immediate action is required, a quick analysis of why a potential problem has developed is in order. Obviously, it will not help to "cure the symptoms" if the "disease" itself is not remedied. The project manager must remain objective in such problem identification, since he himself is a key member of the project team and may be personally responsible for problems that are occurring. Suspect areas typically include:

• Inadequate planning. Either planning was not done in sufficient detail or controls were not established to determine that the project is proceeding according to the approved plan.

• Scope changes. Cost and schedule overruns are the normal result of scope changes that are permitted without formal incorporation in the project plan or increase in the resources authorized for the project.

• Poor performance. Because of the high level of interdependencies that exist within any project team structure, unacceptable performance by one individual may quickly undermine the performance of the entire team.

• Excess performance. Frequently an overzealous team member will unintentionally distort the planned balance between cost, schedule, and performance on the project.

• Environmental restraints—particularly on projects involving "third-party approvals" or dependent on outside resources. Changes, delays, or nonperformance by parties outside the project team may have an adverse impact on the team performance.

Some projects appear to be out of tolerance when, in fact, they are not. For example, some construction projects are so front-loaded with costs that there appears to be a major discrepancy when one actually does not exist. The front-end loading of cost was planned for.

The fourth step in the project trade-off process is to list alternative courses of action. This step usually means brainstorming the possible methods of completing the project by compromising some combination of time, cost, or performance. Hopefully, this step will refine these possible alternatives into the three or four most likely scenarios for project completion. At this point, some intuitive decision-making may be required to keep the list of alternatives at a manageable level.

In order fully to identify the alternatives, the project manager must have specific answers to key questions involving time, cost, and performance:

• Is a time delay acceptable to the customer?

• Will the time delay change the completion date for other projects and other customers?

• What is the cause for the time delay?

• Can resources be recommitted to meet the new schedule?

• What will be the cost for the new schedule?

• Will the increased time give us added improvement?

• Will an extension of this project cause delays on other projects in the customer's house?

• What will the customer's response be?

• Will the increased time change our learning curve?

• Will this hurt our company's ability to procure future contracts?

• What is causing the cost overrun?

• What can be done to reduce the remaining costs?

• Will the customer accept an additional charge?

• Should we absorb the extra cost?

• Can we renegotiate the time or performance standards to stay within cost?

• Are the budgeted costs for the remainder of the project accurate?

• Will there be any net value gains for the increased funding?

• Is this the only way to satisfy performance?

• Will this hurt our company's ability to procure future contracts?

• Is this the only way to maintain the schedule?

• Performance

• Can the original specifications be met?

• If not, at what cost can we guarantee compliance?

• Are the specifications negotiable?

• What are the advantages to the company and customer for specification changes?

• What are the disadvantages to the company and customer for performance changes?

• Are we increasing or decreasing performance?

• Will the customer accept a change?

• Will there be a product or employee liability incurred?

• Will the change in specifications cause a redistribution of project resources?

• Will this change hurt our company's ability to procure future contracts?

Once the answers to these questions are obtained, it is often best to plot the results graphically. Graphical methods have been used during the past two decades to determine crashing costs for shortening the length of a project. To use the graphical techniques, we must decide on which of the three parameters to hold fixed.

geted cost. It may be possible to add resources and work overtime so that the time target can be met. Depending upon the way that overtime is burdened, it may be possible to find a minimum point in the curve where further delays will cause the total cost to escalate.

Curve A in Figure 16-6 shows the case where "time is money," and any additional time will increase the cost to complete. Factors such as management support time will always increase the cost to complete. There are, however, some situations where the increased costs occur in plateaus. This is shown in curve B of Figure 16-6. This could result from having to wait for temperature conditioning of a component before additional work can be completed, or simply waiting for nonscheduled resources to be available. In the latter case, the trade-off decision points may be at the end of each plateau.

With performance fixed, there are four methods available for constructing and analyzing the time-cost curves:

• Additional resources may be required. This will usually drive up the cost very fast. Assuming that the resources are available, cost control problems can occur as a result of adding resources after initial project budgeting.

Situation 1: Performance Is Held Constant (to Specifications)

With performance fixed, cost can be expressed as a function of time. Sample curves appear in Figures 16-5 and 16-6. In Figure 16-5, the circled X indicates the target cost and target time. Unfortunately, the cost to complete the project at the target time is higher than the bud-

TARGET COST, TIME
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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