Managing Projects as Investments: Earned Value to Business Value

 Content: Redefining projects  Value drivers  Planning and tracking projects as investments  Traditional project tracking  Project success and failure  Of deadlines and budgets  Procrustean bed of deadlines  Quantifying the triple constraint model  COST side of the project investment triangle  Finance departments and overhead burdens  SCOPE side of the project investment triangle  Product scope: Main generator of project value  Project scope: A secondary generator of the project value  Customer value and internal value  Implications of various contract types  Project investment metrics  Expected project profit planning formula  Expected project profit at completion formula  Examples of expected project profit calculation  Summary points  Endnotes   Of time and timing  Simple example of the complexities of managing time  Examples of impact of time on projects  Impact of time on emergency response projects  Impact of time on enabler projects  Impact of time on contractual enabler projects  Ignoring the cost of time  Time as an externality  Summary points  Endnotes   Tracking projects by investment value  Expected value versus actual value  DIPP: A formula to analyze termination of a project investment  Simple DIPP: Setting the baseline for expected project profitability  DIPP Progress Index (DPI): Tracking project value against baseline DIPP  Case for this new approach to planning projects  Summary points  Endnotes   Managing project time  Critical path is-uh-critical!  Activity identification and duration estimating  Hard and soft dependencies  Basics of the CPM algorithm  Critical path drag  Managing change  Riding a changing schedule  Answers and explanations  A tragic example from history  Summary points  Endnotes   Optimizing the schedule with drag and drag cost  Drag cost  True cost of project activities  Resource elasticity and the DRED  Using the DRED with true cost  Cautionary note on using the DRED  Assessing optimization of the CPM schedule  Three-point estimating  Monte Carlo systems  Summary points  Endnotes   Combining project investment tools  Step : Determine expected monetary value of the project  Kindb // : PM Contents ix Step : Develop a value breakdown structure (VBS)  Estimating the value-added of the training project to the immunization program Estimating the value-added of activities in the training project Step : Determine value/cost of time on the project Step : Computing drag cost of optional activities Step : Calculating net value-added of optional activities  Uncertainty principle in schedule optimization  Final word on the schedule optimization process  Using critical path drag to recover a schedule  Computing critical path drag on a schedule subset  Summary points  Endnotes   Of resources and rightsizing  How we got to this point  Resource availability and project CPM schedule  Resource unavailability and activity duration estimates  Role of the functional manager  Utilization rate metric  Maintaining the resource library  Working around lack of a resource library  Resource leveling  Time-limited resource leveling  Resource-limited resource leveling  The cost of leveling with unresolved bottlenecks (the CLUB)  Elusive goal: Stable staffing levels for a project-driven organization  Rightsizing staffing levels for a project-driven organization  Summary points   Fundamentals of earned value  What earned value is and isn\'t  Just what is earned value?  Fundamental basis of earned value tracking  Basic earned value cost tracking formulas  Basic earned value schedule tracking  Flaws in earned value schedule tracking  Gaming the SPI Fixing the SPI  Earned schedule tracking  Tracking the DIPP through earned value  How to use the DIPP to redeem projects  Summary points  Advanced earned value  Earned value based on milestones  Tracking CPI based on labor  To complete performance index (TCPI)  Critical ratio cost index  Earned value based on milestones  Combining earned value metrics with the DIPP  Summary points   Conclusion  Appendix  Glossary  Index  K
 Abstract:             \'\'Due to a lack of appreciation of the true economic identity of projects, techniques and metrics that could hugely improve project selection and performance are not being used. This book provides insights and innovative techniques drawn from more than a quarter century of experience. These techniques have the potential to transform program and project management from the current haphazard application of various techniques and metrics to an incisive and integrated approach where programs and projects are managed for the crucial economic and financial implications that are at the essence of every project investment\'\'
\'\'Preface Every project needs management for two reasons. The first is to plan and manage the tasks of a project and to coordinate getting the work done. The other is to optimize the value of a project as an investment. Managing projects as investments is the new frontier of project management. This book is focused on introducing the tools and methods for optimizing projects as investments. Texts such as my 1999 Total Project Control: A Manager\'s Guide to Integrated Project Planning, Measuring, and Tracking (Wiley) are aimed primarily at the first function of project management- managing the work--and are written for the \'\'practitioners\'\' of project management: project managers, cost account managers, activity leaders, and all project team members. This book is for both the practitioners and for anyone in a project-driven organization who has responsibility for or is affected by projects. This includes, but may not be limited to - Executives in project-driven organizations, who sense that programs and projects are investments and want to shift their focus to understanding them as investments - Sponsors/senior managers, whose limited budgets must fund projects - Business area directors, whose portfolios may include multiple projects - Program managers, whose responsibilities usually include generating value from a coordinated implementation of related project and nonproject efforts\'\'