Analyzing Project Variances

Before you begin tracking project progress, you should save a project baseline. A baseline is a locked-down version of the project plan that isn’t affected by status updates. It’s a powerful tool for spotting discrepancies between actual work and scheduled work. After you receive status reports on project tasks and update the actual schedule, automatically or manually, you can compare the schedule to the baseline to identify potential problems. If the project scope changes or external factors require you to change the project schedule, such as a hurricane or a labor strike, you can adjust the baseline. Project lets you store up to ten interim plans that you can compare to the baseline or actual work completed.

Project includes tools for earned value analysis, also called BCWP (Budgeted Cost of Work Performed) analysis. Earned value analysis measures key performance indicators and compares them to the baseline. The gap, or variance, between the baseline and actual performance indicates whether the project is being implemented as planned. Cost variance is the difference between a task’s planned cost and its actual cost. Schedule variance is the difference between the actual progress and the scheduled progress of a task. You can use these variances to calculate useful ratios that indicate project performance. For more information on earned value analysis, see Chapter 12.

Managing Project Schedules

If a project is running as scheduled, schedule management is an easy task. When tasks are completed ahead of schedule, you’ll probably breathe a sigh of relief and then move on to other management activities. Problem projects are those in which critical tasks start to slip. For a visual representation of project performance against the schedule, you can add progress lines to the Gantt chart to show the percentage of each task completed as of a specific date, as shown in Figure 3.3. When a task’s progress line’s peak is pointed to the left, the task is behind schedule. Peaks that point to the right indicate tasks that are ahead of schedule.

Figure 3.3: Progress lines identify tasks that are ahead of or behind the baseline.

Earned value analysis as well as progress lines help you identify the performance gap; closing the gap is the job of the project manager. If other tasks are being completed ahead of schedule, you may be able to reallocate resources and get the project back on track. Fortunately, Project lets you easily move resources between tasks; or it may be appropriate to adjust one of the four project parameters:

• Time: Extend the project finish date

• Scope: Eliminate or alter project activities

• Costs: Throw overtime at the problem task

• Performance: Lower the standards

You’ll find information on all of Project’s schedule management tools in Chapter 12.

Tip 

Effective schedule management begins prior to the implementation stage, during project design and development. In other words, it’s better to change the schedule before the project starts. It lessens stress and makes you look better as a project manager. See Chapter 13 for information on PERT and other tools to help estimate and manage project risk.

Managing Resources

Throughout the project, the project manager needs to analyze resource usage. If some tasks aren’t progressing according to schedule, you’ll be forced to examine your resource utilization. There are other reasons to review the way your project plan uses resources that include:

• Underallocated resources can be used in other projects that share the same resource pool.

• Increased resource use by other higher-priority projects lowers the resource availability for your project.

• Resources can be moved from low-risk or less-critical tasks to critical tasks within a project.

• Idle resources cost money.

With Project, you can view assignments for all resources or for specific work groups. You can quickly view resources with available time and then assign them to tasks that are falling behind schedule.

Overallocated resources increase the risk that a project will fall behind schedule, so Project includes several tools for identifying and leveling or reassigning over- and underallocated resources. In the Resource Usage table shown in Figure 3.4, you can look at the Overallocation line and quickly see that Amber Mondrial is overcommitted on both August 13th and August 15th. On the 13th she’s currently scheduled to work 12 hours, and on the 15th she’s working a whopping 16 hours—both of which should be normal 8-hour workdays. If she doesn’t work extra hours on both days, however, one or more tasks will not be completed as scheduled. Some resources should probably be shifted her way; you don’t want to risk burning out employees before the project really picks up steam.

Figure 3.4: The Resource Usage table alerts you to overallocated resources and unassigned tasks.

Resource management is a common and constant task in project management, and Project includes views, tables, charts, and reports to help you with these critical tasks. Chapters 9, 10, and 11 help you with this sort of resource management.

Managing Costs

Costs are one of the most difficult aspects of a project to manage and control. Some costs are external. For example, when vendors raise prices, you may not be able to locate other acceptable vendors without sacrificing time or quality. Earned value analysis (see “Managing Project Schedules” earlier in this chapter) identifies cost variances, but identification does not provide a solution. When actual costs exceed the project plan, you need to decide how to keep the total costs under control. You can adjust the total project cost, scope, performance, or schedule—the choice depends on which parameter is most critical to the project’s stakeholders.

Microsoft Project lets you model changes in project parameters and then make recommendations for project changes. Adjust one of the project parameters, and observe the effect on the other parameters—including cost—to see whether the trade-offs are acceptable. For more information on cost management and control, see Chapter 12.

Managing Project Scope

During project implementation, you may need to increase or decrease the scope of the project. When scope increases, one of the other project parameters also needs to change. As the project manager, you may not have the authority to reject any and all requests to change project scope. You can, however, set the ground rules for decisions about scope changes. This should be done when the project proposal is accepted. See Chapter 11 for information on managing expectations about project scope.