Managing Projects for Value

CHAPTER 1: PROJECT VALUE..The source of all quantitative measures
Project value is a consequence of successful application of resources to an agreed scope, taking measured risks to balance expectations with capability

Successful projects return value to the business. Successful projects are relatively easy to identify; we usually know them when we see them. They are the projects that improve processes or product, reduce costs and operational inefficiencies, make contributions to the technical and functional competence of the organization, or add capacity and capability to serve customers and markets with greater satisfaction. They are projects that make good on the promises of the project charter, deliver the intended scope, and deliver that scope within a timeframe commensurate with business objectives

CHAPTER 2: INTRODUCTION TO PROBABILITY AND STATISTICS FOR PROJECTS
Lies, damned lies, and statistics! “Nothing in progression can rest on its original plan” …Thomas Monson

Uncertainty is present in every project, every project being a unique assembly of resources and scope. Every project has its ending some time hence. Time displaces project outcomes from the initial estimates; time displacement introduces the opportunity for something not to go according to plan. Perhaps such an opportunity would actually have an upside advantage to the project, or perhaps not. Successful project managers are those quick to grasp the need for the means to evaluate uncertainty. Risk management is the process, but probability and statistics provide the mathematical underpinning for the quantitative analysis of project risk.

CHAPTER 3 ORGANIZING AND ESTIMATING THE WORK
“There likely is no factor that would contribute more to the success of any project than having a good and complete definition of the project’s scope of work.”
Quentin Fleming and Joel Koppelman
“Earned Value Project Management”

Although the business and the project team may have differences about resources and schedule, the common conveyance of ideas across the project balance sheet is scope. Understand the scope clearly and the project management team should be able to then estimate required resources, schedule, and quality. Defining scope and estimating the work are inextricably tightly coupled.

CHAPTER 4 MAKING QUANTITATIVE DECISIONS
"Decision analysis…is the discipline for helping decision makers choose wisely under conditions of uncertainty"
John Schuyler 2001
“Risk and Decision Analysis in Projects”

Quantitative decision-making is most useful when there is a rational policy for obtaining the outcomes. Rationality, used in this sense, means that the decision is a consequence of all the inputs having been applied systematically to a decision-making methodology. Given the inputs and the methodology, the decision outcomes are predictable. If only it were so easy in real projects!

CHAPTER 5 RISK ADJUSTED FINANCIAL VALUE
“Value increases when the satisfaction of the Customer’s need augments and the expenditure of resources diminishes.”
Robert Tassinari, 1985

It is inescapable that project managers will be involved in financial measures and in the financial success of projects. Financial performance in projects, like every other aspect of project performance, is subject to uncertainty: uncertainty of performance by the project team, uncertainty of performance by vendors, suppliers, and partners, and ultimately uncertainty of financial performance by project deliverables in the market place. Uncertainty, we know, is risk.

CHAPTER 6 EXPENSE ACCOUNTING AND EARNED VALUE
"Every individual endeavors to employ his capital so that its produce may be of greatest value."
Adam Smith
The Wealth of Nations 1776

The two measures of budget and actual expenditures taken together as one pair of financial metrics do not provide a measure of value obtained and delivered for the actual expenditures. The fact is that all too often the money is spent for which there is too little to show. Thus, in this chapter, we will “follow the money” a different way and introduce a concept of “earned value” that often draws a different conclusion about project financial success.

CHAPTER 7 QUANTITATIVE TIME MANAGEMENT

"There is no “undo” button for oceans of time"
Tom Pike
“Rethink, Retool, Results”, 1999

The program milestones tie business value to one of the most essential elements of quality: timeliness. It is almost without exception that the left side or business side of the project balance sheet expresses the business sponsor’s timeliness needs. In fact, although it is usual to think of the “4-angle” of scope, quality, time, and cost as being somewhat equal partners, very often timeliness is far more important than project cost. The project cost is often small compared to overall lifecycle costs, but the returns to the project may well be compromised if timeliness is not achieved.

CHAPTER 8 SPECIAL TOPICS IN PROJECT MANAGEMENT
"It is common sense to take a method and try it. If it fails, admit frankly and try another. But above all, try something"
Franklin Roosevelt

Regression analysis is a term applied by mathematicians to the investigation and analysis of the behaviors of one or more data variables in the presence of another data variable. For example one data variable in a project could be cost and another data variable could be time or schedule. Project managers naturally ask the question: how does cost behave in the presence of a longer or shorter schedule? Questions such as these are amenable to regression analysis

CHAPTER 9 QUANTITATIVE METHODS IN PROJECT CONTRACTS

"Now this is not the end. It is not even the beginning of the end. It is perhaps the end of the beginning."
Sir Winston Churchill
London, 1942

Contracts between suppliers and the project team are commonly employed to accomplish two objectives:
First, change the risk profile of the project by transferring risk from the project team to the supplier. Presumably a due diligence examination of the supplier’s ability to perform confirms that the supplier has a higher probability of accomplishing the scope of work in acceptable time at reasonable cost than does the project team. The decision-making processes discussed in this book provide a method and tool for making contracting decisions.

Second, implement policy regarding sharing the project opportunity with participants in the supply chain. If the contract is related to a public-sector project, public policy regarding small business and minority business participation may be operative on the project team. In the private sector, there may be policy to involve selected suppliers and customers in projects, or there be policy to not involve selected participants in the project.

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	“Quantitative Methods in Project Management” by John C. Goodpasture, PMP Published by J Ross Publishing, Boca Raton, Florida, 2003 Other published works by John C. Goodpasture
	CHAPTER 1: PROJECT VALUE..The source of all quantitative measures Project value is a consequence of successful application of resources to an agreed scope, taking measured risks to balance expectations with capability Successful projects return value to the business. Successful projects are relatively easy to identify; we usually know them when we see them. They are the projects that improve processes or product, reduce costs and operational inefficiencies, make contributions to the technical and functional competence of the organization, or add capacity and capability to serve customers and markets with greater satisfaction. They are projects that make good on the promises of the project charter, deliver the intended scope, and deliver that scope within a timeframe commensurate with business objectives CHAPTER 2: INTRODUCTION TO PROBABILITY AND STATISTICS FOR PROJECTS Lies, damned lies, and statistics! “Nothing in progression can rest on its original plan” …Thomas Monson Uncertainty is present in every project, every project being a unique assembly of resources and scope. Every project has its ending some time hence. Time displaces project outcomes from the initial estimates; time displacement introduces the opportunity for something not to go according to plan. Perhaps such an opportunity would actually have an upside advantage to the project, or perhaps not. Successful project managers are those quick to grasp the need for the means to evaluate uncertainty. Risk management is the process, but probability and statistics provide the mathematical underpinning for the quantitative analysis of project risk. CHAPTER 3 ORGANIZING AND ESTIMATING THE WORK “There likely is no factor that would contribute more to the success of any project than having a good and complete definition of the project’s scope of work.” Quentin Fleming and Joel Koppelman “Earned Value Project Management” Although the business and the project team may have differences about resources and schedule, the common conveyance of ideas across the project balance sheet is scope. Understand the scope clearly and the project management team should be able to then estimate required resources, schedule, and quality. Defining scope and estimating the work are inextricably tightly coupled. CHAPTER 4 MAKING QUANTITATIVE DECISIONS "Decision analysis…is the discipline for helping decision makers choose wisely under conditions of uncertainty" John Schuyler 2001 “Risk and Decision Analysis in Projects” Quantitative decision-making is most useful when there is a rational policy for obtaining the outcomes. Rationality, used in this sense, means that the decision is a consequence of all the inputs having been applied systematically to a decision-making methodology. Given the inputs and the methodology, the decision outcomes are predictable. If only it were so easy in real projects! CHAPTER 5 RISK ADJUSTED FINANCIAL VALUE “Value increases when the satisfaction of the Customer’s need augments and the expenditure of resources diminishes.” Robert Tassinari, 1985 It is inescapable that project managers will be involved in financial measures and in the financial success of projects. Financial performance in projects, like every other aspect of project performance, is subject to uncertainty: uncertainty of performance by the project team, uncertainty of performance by vendors, suppliers, and partners, and ultimately uncertainty of financial performance by project deliverables in the market place. Uncertainty, we know, is risk. CHAPTER 6 EXPENSE ACCOUNTING AND EARNED VALUE "Every individual endeavors to employ his capital so that its produce may be of greatest value." Adam Smith The Wealth of Nations 1776 The two measures of budget and actual expenditures taken together as one pair of financial metrics do not provide a measure of value obtained and delivered for the actual expenditures. The fact is that all too often the money is spent for which there is too little to show. Thus, in this chapter, we will “follow the money” a different way and introduce a concept of “earned value” that often draws a different conclusion about project financial success. CHAPTER 7 QUANTITATIVE TIME MANAGEMENT "There is no “undo” button for oceans of time" Tom Pike “Rethink, Retool, Results”, 1999 The program milestones tie business value to one of the most essential elements of quality: timeliness. It is almost without exception that the left side or business side of the project balance sheet expresses the business sponsor’s timeliness needs. In fact, although it is usual to think of the “4-angle” of scope, quality, time, and cost as being somewhat equal partners, very often timeliness is far more important than project cost. The project cost is often small compared to overall lifecycle costs, but the returns to the project may well be compromised if timeliness is not achieved. CHAPTER 8 SPECIAL TOPICS IN PROJECT MANAGEMENT "It is common sense to take a method and try it. If it fails, admit frankly and try another. But above all, try something" Franklin Roosevelt Regression analysis is a term applied by mathematicians to the investigation and analysis of the behaviors of one or more data variables in the presence of another data variable. For example one data variable in a project could be cost and another data variable could be time or schedule. Project managers naturally ask the question: how does cost behave in the presence of a longer or shorter schedule? Questions such as these are amenable to regression analysis CHAPTER 9 QUANTITATIVE METHODS IN PROJECT CONTRACTS "Now this is not the end. It is not even the beginning of the end. It is perhaps the end of the beginning." Sir Winston Churchill London, 1942 Contracts between suppliers and the project team are commonly employed to accomplish two objectives: First, change the risk profile of the project by transferring risk from the project team to the supplier. Presumably a due diligence examination of the supplier’s ability to perform confirms that the supplier has a higher probability of accomplishing the scope of work in acceptable time at reasonable cost than does the project team. The decision-making processes discussed in this book provide a method and tool for making contracting decisions. Second, implement policy regarding sharing the project opportunity with participants in the supply chain. If the contract is related to a public-sector project, public policy regarding small business and minority business participation may be operative on the project team. In the private sector, there may be policy to involve selected suppliers and customers in projects, or there be policy to not involve selected participants in the project.