INTEGRATED COSTAND SCHEDULECONTROL INPROJECTMANAGEMENTSECOND EDITION

Ursula Kuehn, PMI> EVP

mMANAGEMENTCONCEPTS

CONTENTS

Preface xxi

Acknowledgments xxix

Part 1—Project Management and theIntegrated Process 1

Chapter 1—Basic Concepts 3Success 3The Project 4Project Management 5Stakeholders 6The Project Team 7The Project Manager 8Project Documentation 9

1Chapter 2—The Integrated Process 11

The Integrated Cost and Schedule Control Processes 11Balancing the Triple Constraint 14The Work Breakdown Structure 16The Guidance System 19Integrated Cost and Schedule Control in the

Federal Government 20

Part 2—The Initiation Process 23a

Chapter 3—Defining the Scope 25Customer-Focused Scope Decisions 26Customer Expectations of What They Can

Get for Their Money 28Building and Using a Deliverable-Oriented WBS 30

viii INTEGRATED COST AND SCHEDULE CONTROL

Chapter 4—Estimating the Cost and Duration ofWork Packages 41Determining Work Packages 41Estimating Work Package Effort 42Including Risk Identification in Work Package

Estimates 46Translating Effort to the Cost of a Work Package 50How Individual Productivity Impacts the Cost

Estimate 51The Control Account 59The Planning Package 59Translating Effort to Duration of a Work Package

Using Availability 60

Chapter 5—Balancing the Scope to the Budget 65Determining Other Stakeholder Needs/Wants 70Baselining the Scope 71The Initiating Process in the Federal Government 71The Control Account Manager and Organizational

Breakdown Structure 75

Part 3—The Planning Process 77

Chapter 6—Understanding Workflow and How WorkPackages Relate 81

;?Finish-to-Start 82Start-to-Start 83Finish-to-Finish 84Start-to-Finish 86Lag and Lead 87Constraints 91

Chapter 7—Building a Network Schedule 93Network Scheduling Using the Arrow

Diagramming Method 94Network Scheduling Using the Precedence

Diagramming Method 104Compressing Our Example Schedule 108Planning Our Example Resources 119Compressing Our Example Even More 122

Contents ix

Chapter 8—Analyzing and Adjusting the Schedule 127Forward Pass 127Backward Pass 130Calculating Float 134Identifying the Critical Path 135Calculating Free Float 136Forward and Backward Pass with Start-to-Start

Relationship 140Forward and Backward Pass with Finish-to-Finish

Relationship 142Compressing the Network Schedule 146Resolving Resource Conflict 147Task and Resource Information 152

Chapter 9—Analyzing Schedule Risk 155Analyzing the Critical Path Using PERT 155Merge Bias 170Merge Bias 172Monte Carlo Simulation 173

Chapter 10—Readdressing the Scope to Balancethe Triple Constraint 177De-Scoping the Project 177Displaying the Integrated Cost and Schedule Plan 177Project Planning in the Federal Government 179

Control Account Plan •:'. 181Integrated Master Plan and Integrated

Master Schedule 181Responsibility Assignment Matrix 183Work Authorization Document 183

Part 4—The Execution and Controlling Process 185

Chapter 11—Establishing a Performance MeasurementBaseline 187Budget at Completion 189Displaying the Baseline on the Network Schedule 190Changing the Baseline 192

INTEGRATED COST AND SCHEDULE CONTROL

Chapter 12—The Federal Integrated Baseline Review 197IBR Process 198IBR Preparation and PMB Assessment 201IBR Execution 204IBR Results Review and Management Processes 206

Chapter 13—Collecting Cost and SchedulePerformance Metrics 207Planned Value 209Actual Cost 212Earned Value 215Calculating Earned Value for Level of Effort 217Determining Project Status Data Using

Only Effort Hours 220Earned Schedule 220

Chapter 14—Performing Earned Value Analysis 223Using Earned Value Analysis to Analyze Cost

and Schedule Performance 223Variance Analysis 225Performance Index Analysis 227Project Percentage Analysis 238

Using Earned Value Analysis to Forecast FutureCost Issues 240

How Much Could the Entire Project Cost? 241How Much Will Be Needed to Complete the Project? 242Are We Over or Under the Budget at Completion? 243What Performance Do We Need to Get Back on Track?.. .243Understanding ANSI/EIA-748 249

Organization 249Planning, Scheduling, and Budgeting 251Accounting Considerations 254Analysis and Management Reports 256

$ Revisions and Data Maintenance 257

Chapter 15—Steering Future PerformanceBack Toward the Baseline 259

Contents xi

Chapter 16—Contract Performance Reports Requiredby the Federal Government 265Header Information, Formats 1—4 266

Government Contractor 266Contract 266Project 266Report Period 267

Format 1—Work Breakdown Structure 267Quantity 267Negotiated Cost 267Estimated Cost of Authorized Unpriced Work 270Target Profit/Fee 270Target Price 270Estimated Price 270Contract Ceiling 270Estimated Contract Ceiling 271Over-Target Baseline/Over-Target Schedule 271Estimated Cost at Completion 271Management Estimate at Completion. 271Estimate at Completion—Based on a SimpleFormula of BAC/CPI 272Estimate at Completion—Based on theFormula EAC = AC + (BAC-EV)/SPI*CPI 272Contract Budget Base 272Variance 272Authorized Representative. 272

Performance Data 273Column (1) Work Breakdown Structure Number 273Column (2) Work Breakdown Structure Elements 273Cost of Money 273General and Administrative 273Undistributed Budget 274Subtotal (Performance Measurement Baseline) 274

$ Management Reserve 274Total 275

" Columns (2) through (22) 275Columns (1), (3), (4), and (5) 275

xii INTEGRATED COST AND SCHEDULE CONTROL

Columns (6) and (13)—Planned Value(Budgeted Cost of Work Scheduled) 275

Columns (7) and (14)—Earned Value(Budgeted Cost of Work Performed) 275

Columns (8) and (15)—Actual Cost(Actual Cost of Work Performed) 276

Columns (9) and (16)—Schedule Variance 276Columns (10) and (17)—Cost Variance 276Columns (11) and (18)—Schedule Performance

Index 277Columns (12) and (19)—Cost Performance Index 277Column (20)—Planned Value in Time 278Column (21)—Earned Value in Time .278Column (22)—Schedule Variance in Time 278Column (23)—Schedule Performance

Index in Time 278Column (24)—Budget at Completion 279Column (25)—Estimate at Completion 279Column (26)—Variance at Completion . ; 279Column (27)—To-Complete Performance Index 279

Format 2—Organizational Breakdown Structure 280Column (1) Organizational Category 280Cost of Money 281General aftd Administrative. 281Undistributed Budget 281Subtotal (Performance Measurement Baseline) 281Management Reserve 281Total..'. 284Columns (2) through (18) 284

Format 3—Baseline 284Baseline Data 284Original Negotiated Cost 284Negotiated Changes 284

H Current Negotiated Cost 285Estimated Cost of Authorized Unpriced Work 285

" Project Budget Base 285Total Allocated Budget 285Difference 285

Contents xiii

Contract Start Date 288Contract Definitization Date 288Planned Completion Date 288Performance Measurement Schedule Inconsistent with

Contractual Schedule 288Over-Target Schedule Agreement 289Indicators of a Performance Measurement Schedule

Inconsistent with the Contractual Schedule 289Contract Completion Date 289Estimated Completion Date 289Performance Data 290Column (1)—Performance Measurement Baseline

(Beginning of Period) 290Baseline Changes 290Performance Measurement Baseline (End of Period).. .290Management Reserve 291Total 291Column (2)—Planned Value—Cumulative to Date . . . .291Column (3)—Planned Value for Report Period 291Columns (4) through (14) 292Column (15)—Undistributed Budget 292Column (16)—Total Budget 292

Format 4—Staffing 293Performance Data 293Column (i)—Labor Category 293This doesn't seem right to me 293Total 296Columri (2)—Actual—Current Period 296Column (2)—Actual—End of Current Period

(Cumulative) 296Columns (4) Through (14)—Forecast

(Non-Cumulative) 296Column (15)—Forecast at Completion 297

format 5—Explanations And Problem Analysis 297General 297

• Total Project 299Cost and Schedule Variances 299Setting Variance Analysis Thresholds 300

xiv INTEGRATED COST AND SCHEDULE CONTROL

Management Estimate at Completion 300Undistributed Budget 301Management Reserve Changes 301Baseline Changes 301Staffing Level Changes 301

Part 5—The Closeout Process 303

Chapter 17—Analyzing the Cost and Schedule Metricsof Deliverables 305

Chapter 18—Archiving Cost and Schedule Data forContinuous Process Improvement 309

Index 311