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Chapter 4: Schedule, cost, and situation analysis (pt. 3)

Chapter 4: Schedule, cost, and situation analysis (pt. 3). ISE 443 / ETM 543 Fall 2013. A few more points about controlling cost and the schedule. Monitoring other direct costs (ODCs) . travel, equipment , consultants, mailing, reproduction, telephone, materials, software, etc.

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Chapter 4: Schedule, cost, and situation analysis (pt. 3)

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  1. Chapter 4: Schedule, cost, and situation analysis (pt. 3) ISE 443 / ETM 543 Fall 2013

  2. A few more points about controlling cost and the schedule • Monitoring other direct costs (ODCs). • travel, equipment, consultants, mailing, reproduction, telephone, materials, software, etc. • these can come in late • subcontracts require special attention • Monitoring for different contract types. • Cost contracts • Fixed-price contracts • Time and materials (T&M) contracts • Corporate rate changes. • Reserves.

  3. A few more points about controlling cost and the schedule • Cost item limitations and trades. • some items (e.g., travel) may be contractually limited • sometimes it is permissible to transfer funds from one budget item to another • be aware of the terms and conditions of the contract • Cost graphs. • communicates history, current status, and projected budget • makes trends visible • Cost reporting to customers. • most often done by accounting/finance or contracts office • PM must make arrangements to ensure he/she is aware of the reports being sent to the customer

  4. Special considerations are involved before initiating FFP contracts … • “Top Dozen” list • Assure high performance team (HPT) with proven track record. • Construct a contingency plan. • Set aside reserves. • Perform no out-of-scope work. • Assure “chunking” of work with associated payments. • Establish clear, measurable acceptance criteria. • Limit software warranties. • Have limits on penalty clauses. • Incorporate the proposal by reference. • Establish special rewards for the project team. • Set up a cost information system. • Know when to walk away.

  5. Some of these are self-explanatory, but let’s expand on a few … • Contingency plan • Review project risks and have a backup plan • “What would you do if your most critical team member got hit by a bus?” • Reserves • contingency reserve • management reserve • kept as a separate budget item and controlled by PM or higher management • Incorporating the proposal by reference • commits the project team to all promises in the proposal • avoid problems by “scrubbing” the proposal before including it in the contract

  6. Situation Analysis (SA) is the process of continuous, sharp monitoring of the project • fundamentally, PM involves continuously asking: • Are we on schedule? • Are we within budget? • Are we satisfying all performance requirements? • this might also be called “situation awareness” • once one or more problems or potential problems has been identified, the cause(s) and potential solutions must be identified

  7. To illustrate this, let’s work through an example • Imagine that it is late October and your group has a milestone approaching for the project. Two of the group members have reported that they have spent 15% more time on the project than was budgeted. One group member has been evasive about being able to finish a critical piece of the milestone on time. Another group member is expressing significant frustration with a perceived lack of commitment from other members of the group and is complaining about the total amount of work needing to be done in the next 2 weeks in all of that group member’s classes.

  8. STEP 1: Assemble all of the facts Based on your experience, develop a list of “facts” that could plausibly apply to this scenario.

  9. STEP 2: Identify evident problems (That is, what can you identify as specific problems for the group right now.)

  10. STEP 3: Identify “inferred” or potential problems Based on your experience, what problems do you think might be underlying some of the scenario? What in the scenario might cause problems in the near or distant future?

  11. STEP 4: Prioritize the problems List the problems you feel you should address in order from most to least critical. Note the problems you won’t be addressing at this time.

  12. STEP 5: Plan solutions Based on your experience, develop a plausible set of reasons for the top priority problems you identified. Develop a plan or plans to address these problems.

  13. STEP 6: Evaluate risks/benefits/costs Evaluate your plan(s) – what are the risks associated with the plan? What are the benefits and costs?

  14. STEP 7: Is the plan satisfactory? Based on your evaluation, determine whether or not the plan(s) are satisfactory. If not, return to step 5 and try again. If so, move to implementation.

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