Lessons in Project Management - 7 - Project Performance Management

International Project Management

Prof. Dr. Frank Habermann

Lecture 7 –
Project Performance Management

Content

 Understanding project related sub-systems
 Basic performance management model
– Reporting project prgress
– Controlling project progress
 Project portfolio management model
 Enterprise project management model

© Becota GmbH | www.becota.com | 2010

Performance
against

what?
© Becota | www.becota.org | 2010

Remember lecture#1:
Each project is a system

Each system
has a certain structure shows specific behavior!

SYSTEM Sub
System A

Sub Sub INPUT OUTPUT
system
System B System C (element)

acting as acting as
Sub-sub Sub-sub
„receiver“ „sender“
System C1 System C2
(customer) (provider)
...
Static relationships Dynamic relationships
(composition/decomposition) (communication/collaboration)


Remember lecture #5:
Breaking down the project in sub-systems

Processes & Tasks
work breakdown structure

project

sub
project

work
package

task


Remember lecture #5:
Breaking down the project in sub-systems

Processes & Tasks
work breakdown structure

project

sub
project

measurable items!
work
package

task


Organizing interrelated sub-systems

Processes & Tasks Roles & Responsibilities
work breakdown structure organisational structure

project
project
manager

sub
project

work
package

task



Processes & Tasks Roles & Responsibilities
work breakdown structure organisational structure

project
project
manager

sub sp
project manager

work wp
package owner

task
task
owner



Processes & Tasks Roles & Responsibilities Resources & Tools
work breakdown structure organisational structure project goal structure
Q
project Project
project
manager goals
C T

sub sp
project manager

work wp
package owner

task
task
owner



Processes & Tasks Roles & Responsibilities Resources & Tools
work breakdown structure organisational structure project goal structure
Q
project Project
project
manager goals
C T

sub sp sp
project manager goals

work wp wp
package owner goals

task task
task
owner goals


Project management model

Project
Management

Sub Project
Management

Work Package
Management



Project
Management one

Sub Project few
Management

Work Package many
Management



processes

Project
Management

Sub Project

technology
Management

Work Package
Management

people



define criteria
set parameters
monitor progress processes

Project
Management
controlling

reporting
Sub Project

technology
Management

Work Package
Management

collect data
people
analyse information
communicate progress


Reporting
the project‘s

progress


S/he who writes stays in the job!

Source: http://www.articlemarketinghq.com/wp-content/uploads/2010/12/writer.jpg © Becota | www.becota.org | 2010

Trivial reporting cycle

Source: http://www.projects.uts.edu.au/images/diagram16.gif © Becota | www.becota.org | 2010

More sophisticated reporting schedule
Once Daily Weekly At Phase Review

Source: http://www.jiscinfonet.ac.uk/
images/report-schedule.png © Becota | www.becota.org | 2010

Remember lecture#2:
Know your stakeholders and have a communication plan

Source: Verzuh, E., The Fast Forward MBA in Project Management, p. 74 © Becota | www.becota.org | 2010

Controlling
the project‘s

progress


Right or wrong?

The closer the deadline comes, the more important
is controlling project progress (in order to ensure success).

Source: http://www.aviationlawmonitor.com/uploads/image/a3-52_control_tower.jpg © Becota | www.becota.org | 2010

Wrong!

But celebrate, even if your luck is undeserved…

Picture source: adapted from www.freakingnews.com/pictures/29500/Air-Traffic-Control- © Becota | www.becota.org | 2010

Project performance management
already starts with the business case

Business
case

Source: adapted from Craig Brown, Project Management, 9. Performance Management,
received via www.slideshare.net on May 4, 2010 © Becota | www.becota.org | 2010


Business
WBS
case

Plan



Business
WBS
case

Plan
Delive- Project
Budget
rables plan



Business
WBS
case

Plan
Delive- Project
Budget
rables plan

Track cost & Track output Track task
effort quality duration
(time sheets) (product models) (gantt chart)
Control



Business
WBS
case

Plan
Delive- Project
Budget
rables plan

Track cost & Track output Track task
Control
Compare
plan/model
to reality



Business
WBS
case

Plan
Delive- Project
Budget
rables plan
If there is no time
left to take action,
controlling does not
Track cost & Track output Track task make any sense!
Control
Compare
plan/model Take action
to reality


Remember lecture#1:
Standard project management life cycle

INITIATE RUN COMPLETE

Project
Contract
Detailed
Project Require-
Charter Rough ments
Require- Definition Test
Project Plan Hand-over
ments Conceptual Approvals Documention
Plan Solution (technical & (e.g. Support
Definition
(Models) organizational) Info)
Solution Closure
Documentation Report
Training
Plan


proceeds with detailed plans, models, and concepts
RUN
Rough Test Plan
Require-
Detailed Training
ments
Require- Plan
Definition Conceptual Solution
Plan ments
Solution Documentation
Definition
(Models)


proceeds with detailed plans, models, and concepts
RUN
Rough Test Plan
Require-
Detailed Training
ments
Require- Plan
Definition Conceptual Solution
Plan ments
Solution Documentation
Definition
(Models)

Track output quality
(product models)

Control
Compare
plan/model
to reality
Take action


Example for tracking time (activity-based)

Source: Figure 13.1 Baseline Gantt Chart (Gray & Larson, 2006, p414) © Becota | www.becota.org | 2010

Example for tracking time (activity-based)

Alternative (simplified) approach
using the 0-50-100 rule:

0 = not started yet
50 = started, but not completed*
100 = completed

* Should not appear
in a series of status reports

Source: Figure 13.1 Baseline Gantt Chart (Gray & Larson, 2006, p414) © Becota | www.becota.org | 2010

Example for tracking time (cumulative)

Source: Figure 13.2 Project Schedule Control Chart (Gray & Larson, 2006, p415) © Becota | www.becota.org | 2010

Earned value analysis

Combining budget and schedule status to get a complete picture of the project

ahead under
Schedule Budget

on on

behind over


Earned value analysis

Combining budget and schedule status to get a complete picture of the project

ahead under
Schedule Budget

on on

behind over
3x3 = 9
possible
combinations


Important terms

 Cost variance: the difference between budgeted cost (also called
„earned value“) and actual cost for the work completed
CV = BC – AC
» If CV positive => „under budget“ (GOOD)
» If CV negative => „over buget“ (BAD)


Important terms

 Cost variance: the difference between budgeted cost (also called
„earned value“) and actual cost for the work completed
CV = BC – AC
» If CV positive => „under budget“ (GOOD)
» If CV negative => „over buget“ (BAD)

 Schedule variance: the difference between scheduled completion time and
actual completion time of the activities performed
SV = ST – AT
» If SV positive => „ahead of schedule“ (GOOD)
» If SV negative => „behind schedule“ (BAD)


Cost and schedule performance chart

Source: http://pmtips.net/wp-content/uploads/2009/11/escalation-threshold.jpg © Becota | www.becota.org | 2010


Re P1 to P4:
what is the least
and what is the most
critical project?
P4
P2

P1

P3



TRADE-OFF GOOD

BAD TRADE-OFF



Common business practice:
grey shaded area represents
variance within the discretion
of the project manager (i.e.
not requiring any escalation)


Now, let‘s take it to the

next
higher business

level

Remember lecture#3:
Project scoping and contracting

Business need &
purpose

Shall we initialize this project?

Project


Not every business need will lead to a project!

Need 2 Need 6 Need 8
dozens/ …Need n
Need 1 Need 4
hundreds/
thousands Need 3 Need 7 Need 9
Need 5

single/
some/
X percent of… Project(s) ? © Becota | www.becota.org | 2010

Not every business need will lead to a project!

…Need n
Need 1 Need 4
Need 5

Limitations Strategic fit
- Money - Brands
- Time - Culture
- Resources - Capabilities

Project(s)

Project portfolio management model

Portfolio
Management

Program
Management

Project
Management

Source: adapted from Eric Verzuh, The Fast Forward MBA in Project Management, pp. 360, 384 © Becota | www.becota.org | 2010

Project portfolio management model

Main goal
Align project selection with
business strategy

Portfolio Main tasks
Management • Identify major stakeholders and
continuously communicate portfolio
(review, maintain, select alternatives)
• Define project governance factors and
Program corporate project standards
Management • Order and assess project requests
from the business (business cases)
• Assign project resources based
upon strategic priorities
Project
Management • Optimize deployment of resources
across project boundaries
• Set up programs to enhance
effectivity of interrelated projects

Source: adapted from Eric Verzuh, The Fast Forward MBA in Project Management, pp. 360, 384 © Becota | www.becota.org | 2010

Portfolio management
is based on strategic management methods

Competitive Forces Balanced Scorecard

Portfolio
Management

SWOT Analysis ROI Analysis

Strategy Map … and many more!


Project portfolio management as a process (part 1)

Review
business strategy

Source: adapted from Gray/Larson (2006), Figure 2.1 Strategic Management Process, p25 © Becota | www.becota.org | 2010


Review
business strategy
External Internal Where are
environment: environment: we now?
opportunities, strengths,
threats weaknesses



Review
business strategy
threats weaknesses

Define
measurable goals
Where do we
want to be?
Define
portfolio alternatives



Review
business strategy
threats weaknesses

Define
measurable goals
Where do we
want to be?
Define

Implement
portfolio strategy
How do we
get there?
Select
projects


CUSTOMER
(Business)
(Executives)
BOARD
Manager(s)
OPERATIONS PORTFOLIO
(Business)

Source: adapted from Eric Verzuh, The Fast Forward MBA in Project Management, pp. 385 © Becota | www.becota.org | 2010


business-internal
CUSTOMER
(Business)

pre-assessment
Problem or Request
opportunity! a project
(Executives)
BOARD
Manager(s)
(Business)



business-internal
CUSTOMER
(Business)

pre-assessment
Problem or Request

business
(Executives)

case
BOARD
Manager(s)

Collect and
assess proposals
(Business)



business-internal
CUSTOMER
(Business)

pre-assessment
Problem or Request

business
(Executives)

case
BOARD
Manager(s)

Collect and
assess proposals
(Business)

Run projects



business-internal
CUSTOMER
(Business)

pre-assessment
Problem or Request

business
(Executives)

case
BOARD
Manager(s)

Collect and
Portfolio assess proposals
Management

Program
Management
(Business)

Run projects
Project
Management



business-internal
CUSTOMER
(Business)

pre-assessment
Problem or Request

business
(Executives)

case
BOARD
Manager(s)

Collect and
assess proposals
Check
resources & portfolio
(Business)

Report current
projects progress Run projects
Report availability
of resources



business-internal
CUSTOMER
(Business)

pre-assessment
Problem or Request

business
(Executives)

case
BOARD

Approve
project
project candidates
candidates
Manager(s)

Collect and
assess proposals
Check
resources & portfolio
(Business)

Report current
projects progress Run projects
Report availability
of resources


Project portfolio categories
A portfolio is made up of different categories.
Type and number of categories are resulting from strategic considerations.
Within each category projects are ranked according to their priority.

Project A Project M Project S

Project B Project N Project T

Project C Project O Project U

Project D Project V

Project W

Project X

Category: Category: Category:
Sustaining Cost-Cutting New Revenue


Creating and selecting portfolio options
Project category is represented by a circle‘s color.
Project cost is represented by a circle‘s diameter.

Most

A
N
BENEFIT
to business
U
O

C
Least
Least EASE Most
of implementation


finally, let‘s

bring
it all

together

Enterprise project management model

Portfolio
Management

Program
Management

Project
Project
Management
Management

Sub Project
Management

Work Package
Management



Portfolio
Management less then 5*

Program
some more
Management

Project dozens
Management

Sub Project hundreds
Management

Work Package up to thousands
Management
* In very big enterprises

A business process is comparable to a
regular train on the track


A business project is a very special business process:
it is comparable to a very special train on the track

Picture source: http://media.news.de/resources/thumbs/37/ © Becota GmbH | www.becota.com | 2010

Business controlling is comparable to the
railway control center‘s work



Portfolio
Strategic Management
Level

Program
Management

Tactical Project
level Management

Sub Project
Management

Operational
level Work Package
Management


Enterprise project management levels

Management level

strategic

tactical

operational



Management level Project is…

Spending the
weekend
approved at the sea. Going by
strategic car. Avoiding major
highways.

controlled
tactical

executed
operational




Spending the
weekend
highways.
Business Case/
Contract

controlled
tactical

Deliverables /
Budget / Schedule
executed
operational




Spending the Only the things you measure
weekend you can manage!
highways.

controlled
tactical

Performance is measured
executed bottom up!
operational



With portfolio management
Portfolio you make projects an integrated
Strategic Management part of our regular business!
Level

Program
Management

Tactical Project
level Management

Sub Project
Management

Operational
level Work Package
Management


Thank you very much!

presentation by

Frank Habermann
founder of Becota and Professor of Business

http://de.linkedin.com/in/frankhabermann/en

If you have enjoyed this presentation,
please let us know!

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-> visit our corporate website at http://www.becota.com

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