Chapter 5
Planning the Project and Its Resources
In This Chapter
▶ Planning the steps
▶ Creating the schedule
▶ Assigning resources
▶ Tracking spending
▶ Making changes
So you’ve won the project now it’s time to start the work. But before you start working on your project you must make sure you’ve planned and scheduled all the project’s steps and milestones. This chapter shines the spotlight on the planning process that will ensure success.
Creating the Project Plan
Your project plan will spell out all the steps that must take place and be checked off along the way in order to ensure that every part of the project has been completed. These steps may be termed tasks, phases, steps, or milestones within your project. Your project could be simple and have just a few tasks, or it could be a very large and complex project with hundreds of steps to reach completion. It’s critical to develop a structure that is easy to follow and allows for change.
The plan is an instruction manual for the project, but it has another important purpose: allowing the project manager to keep track of the project’s progress and make sure steps are being completed on time and on budget.
Fully understand the costs of people, materials, expenses, and subcontractors that will be needed to complete the proj- ect. The project plan will help you keep track of the planned costs versus the actual costs, so you’ll know whether you’re on-target.
A key component of the plan is knowing the amount of time particular phases will require for completion. So if you know that the first step of the project is to assess the current situa- tion and you expect that task to take four hours, you need to plan for those four hours. After that is completed, your lead designer will take the notes from the consultant and start work. That work is expected to take 40 hours. So your plan might start to look something like Table 5-1.
As a project manager, your job is to not only make sure the project is delivered on time in order to meet the client’s expectations but to monitor your budgeted costs along the way to ensure that the project is done at or under the pro- jected cost so you make money for the business. It doesn’t
do you much good to deliver a $10,000 project on time for the client if it took twice as many hours and expenses to complete and cost the business $15,000.
Things happen and plans change, so make sure that you have the capability to manage those changes and track the impact those changes have on the plan including changes to people, materials, and costs
Your project planning tool should show you not only the hours required but also the costs projected in order to complete the work. So it might start to look something like Table 5-2.
Stay tuned, because you’ll need to track the actual costs to ensure the project comes in at or under budget.
Scheduling the Project
You’ve charted out the tasks or phases of your project and how much time is projected to complete each task. Now you must figure out when each task needs to be completed. The client may have a specific deadline for a particular piece of the project, or perhaps one task must be completed before another task is started. As the project manager, you will schedule the tasks, when they need to start, and when they need to be completed. Such a schedule might look something like Table 5-3.
Just as you must be able to manage project changes that impact the tasks and costs, you also must be able to track the impact those changes will have on the schedule of the plan.
Scheduling the Resources
You’re making good progress on the plan. You know when the work needs to be done and what type of person needs to do the work. Now you have to figure out exactly who will do the actual work.
In the example here, if you have only one designer, this question is a no-brainer. You just have to know when that designer is available to do the work, which means you need to find out what’s currently on his plate and when he can fit in this new task.
But what if you have five designers? Which one should you use for this project? A planning tool can help you see which resources are available to do the work based on the assignments the designers already have and when the new task needs to be completed. Also, does the designer for this task need a specific set of skills, familiarity with a specific tool, or a certain experience level for this project?
A project scheduling tool with resource attributes will give you the ability to search for the right resource, with the right skills, at the right costs, and when you need them.
It’s quite possible that your resources don’t all have the same cost basis, and if that’s the case, it’s important to be sure that the specific person doesn’t cost you more than you were planning to spend. For example, if you budgeted for a designer who is paid $25 an hour but end up having to use your most senior designer who is paid $35 per hour, what does that do to your project budget?
Understanding Budget versus Actual
In the $10,000 project, you determined what your costs would likely be. Now, you need to monitor the costs as the project progresses. This is termed budget versus actual.
For example, you projected that your designer would spend 40 hours doing the work on this project, but now you need to know how much time it actually took to do the work. If it took less time, that means it cost less than you thought, and because you still get paid the same amount by the client, the project is turning out to be more profitable than expected. But what if it took your designer 50 hours to do the work? What does that do to your profitability, and is it possible to get it back in line by adjusting other tasks or costs on the project? And from a scheduling perspective, because design took longer than expected, are other tasks affected?
Hindsight may be 20/20, but it doesn’t always do you a lot of good. Evaluating budget versus actual after the project is complete doesn’t allow you to make adjustments to steer the project back on course. It’s critical to evaluate the progress of the project at regular intervals while the project is underway and you still have the opportunity to make adjustments.
So how do you calculate the actual part of this equation? Chapter 2 discusses the components of a project-based ERP system, and time collection is a big piece. If your designer is logging his time against this project, a project-based ERP system can automatically update the project plan. When you look at the plan, you can see that 30 hours were logged so far. As project manager, you can evaluate whether your designer will finish with ten more hours of work and if not, you have a problem. It might look something like Table 5-4.
Embracing Change
Many things may change during the course of a project, but from the perspective of the budget, you can boil them down to two types of changes. There are changes that the client agrees to and will pay for, and there are changes that the client won’t pay for.
For example, the client may change the scope of the project. Perhaps instead of designing one thing, the client wants you to design two, which means the design hours will double
and you can’t do two things for the previously agreed-upon $10,000. In this case, you will change the scope of the project and inform the client that the fee will also change. The client will determine whether to have you proceed with the additional work.
This is often referred to as change in scope or a change order. Perhaps you told the client that the additional design will cost an extra $5,000, the client agreed, and now you need to change your plan. You don’t want this to look like you went over budget on the project, so you will create a revision to the plan, adjusting the hours and schedule. The original plan is often called the baseline, and your new plan will be called the revision.
However, sometimes the plan changes, but the client hasn’t agreed to any increase in price. For example, maybe you esti- mated that it would take four hours for the assessment, which turned out to take eight. The client is still paying $10,000, but you just increased your costs. In response, you may want to talk to your designer and see if it’s possible to do the work in 35 hours instead of 40 to make up the difference.
If you’re starting a new project that is similar to previous work you did, consider using that previously completed proj- ect as the baseline for your new project. That way you’ll have an accurate estimate of what it will take to complete the proj- ect based on real-world experience. Project-based ERP planning tools will help you do this.
Factoring In Other Key Measurements
Budget versus actual is critical. However, it is far from the only measurement that a planning tool can be used for. Here are some examples.
Utilization
Utilization tracks the workload being carried by your people. Consider the case of Bob. If Bob can work 40 hours a week on project-related work, how much of his 40 hours is actually focused on project-related work?
If he worked 30 hours on projects last week and had 40 hours available for project work, his utilization is 75 percent. That is a normal ratio, and the other 25 percent is likely work on internal projects or administrative work. But what if Bob was utilized at 50 percent? You need to find Bob more work. What if Bob is working 50 hours a week on projects and he should have been working no more than 40? You could be overworking Bob. Resource tools can help identify if you’re balancing the workload.
Realization
Realization looks at Bob’s overall contribution to the bottom line. If Bob worked 30 hours on his project last week (against his 40 available hours), from a utilization standpoint, discussed in the preceding section, he is 75 percent utilized. But what if he was only supposed to work 20 hours on that project? Just because Bob is busy, that doesn’t mean all of his work is contributing to the bottom line of the project.
If he worked 30 hours but was supposed to work just 20, that essentially means you’re not getting paid for 10 of his hours on the project. It might be an hourly rate project, but the
customer isn’t going to pay for 30 hours when they originally agreed to 20. Or it’s possible those ten hours put you over the project’s budget because you do have to pay Bob for those hours. Realization helps you determine Bob’s revenue contri- bution. Busy doesn’t always mean profitable.
ETC (Estimate to complete)
Estimate to complete (also called ETC) is the amount of money or time you think will be needed to complete the remaining work for a project or phase of a project. This measurement can help you gauge how much of your budget is required to finish out the project and can also help you see if it will end as expected (or better) or if you need to make some adjustments.
EAC (Estimate at completion)
Estimate at completion, or EAC, is the amount of money or time that the project will cost you in the end. It is calculated as:
The Amount of Work Already Completed + ETC
EAC can help you identify whether your project is likely to come in exactly how you expected, or if there are going to be problems (such as being over budget) that need to be addressed before the project is complete.
Earned Value Management (EVM) and Integrated Program Management (IPM) are methodologies that help project managers manage scope, schedule, and budget. For more detail on these topics, please check out Integrated Program Management For Dummies, Deltek Special Edition and Earned Value Management For Dummies, Deltek Special Edition at www.deltek.com/dummies.