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Reflection and Discussion Forum Week 5 Reflection and Discussion Forum Week 5Assigned Readings:Chapter 11: Resource PlanningChapter 12: Budget PlanningInitial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.Also, provide a graduate-level response to each of the following questions: How would a cost management plan address the challenges of managing project costs within the internal financial procedures and accounting codes of an organization? What benefits do budgeting processes bring to projects, and what weaknesses do they possess? [Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student's own words - do not provide quotes!] [Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review]    Problem Set #5 Earned-value analysis. A project budget calls for the following expenditures:TaskDateBudgeted AmountBuild formsApril 1$10,000Pour foundationApril 1$50,000May 1$100,000Frame wallsMay 1$30,000June 1$30,000Remaining tasksJuly 1 and beyond$500,000 Define each term in your own words, calculate these values for the above project, and show your work: Budgeted cost baseline (make a graph illustrating this one) Budget at completion (BAC) Planned value (PV) as of May 1 Earned value (EV) as of May 1 if the foundation work is only two-thirds complete. Everything else is on schedule. SV as of May 1. Actual cost as of May 1 is $160,000. Calculate the cost variance (CV) as of May 1. Schedule performance index (SPI) Cost performance index (CPI) Estimate to complete (ETC), assuming that the previous cost variances will not affect future costs Estimate at completion (EAC) Resource Planning This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning 1 Resource Planning Importance Relationship to Schedule Planning Human Resources Other Resources This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Resource Planning After you have created the first draft of your schedule, an important step is to identify the resources required Sometimes the same resource is needed for two different tasks, so they cannot be carried out concurrently Resources include Human resources Other resources such as equipment, office space, computer hardware or software, construction materials This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Relationship Between Schedule Planning and Resource Planning Based on the WBS, the PM and team have prepared the initial draft of the schedule This is a key step If you don’t yet understand the scheduling part of the planning process, review it before proceeding to resource planning This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Estimating—tools and techniques Expert judgment Alternative analysis Published estimating data Project management software Bottom-up estimating This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Resource Leveling If two or more concurrent activities need to use the same resources, the schedule may need to be adjusted If a very expensive piece of equipment such as a crane is required, the tasks may have to be rescheduled consecutively rather than concurrently This can also happen due to staff requirements Software such as MS Project has resource leveling tools This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning The mythical man-month What is the impact of adding people to a project that is struggling to meet deadlines? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning HR Planning The most important resource is the people Select the right people Technically skilled Motivated Provide them with the resources and training they need Nurture them—provide compensation and recognition Deal with issues promptly and as directly as possible This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning The person-day The work of one person for one day is a person-day You may also work with person-hours Think about how easy or difficult it is to substitute one person for ten days in place of ten people for one day on different tasks: Installing ten dozen new PCs on desktops in an office area Configuring the server which the PCs will use for file and print sharing Creating a new computer game Pouring a foundation Building the forms into which the foundation will be poured This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Typical project team roles Project Manager Developer Engineer Subject matter expert Team members Customer / client representative This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning The HR environment Laws Employment regulations such as wage legislation, holidays Health and safety Culture Organizational standards Collective Agreements This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Employee performance management Employee performance employee’s work results such as quality or quantity of outputs, work behavior (such as punctuality) job-related attributes (such as cooperation and initiative) After conducting employee performance reviews managers should: provide feedback to employees about how well they have performed on established goals provide feedback to employees about areas in which the subordinate is weak or could do better take corrective action to address problems with employees performing at or below the minimum expectations reward superior performers to encourage their continued excellence This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Rewards for employees Discuss This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Maslow’s Hierarchy of Needs Physiological Safety Love/belonging Esteem Self-actualization This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Emotional Intelligence Self-awareness Self-regulation Empathy Relationship management This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Personality Types Myers-Briggs: four dimensions: Extroversion <–> Introversion Sensing <–> Intuition Thinking <–> Feeling Judging <–> Perceiving Sixteen personality types can be derived from the four dimensions Generally, a MIX of personality types on a project brings strength Knowing your own type and the types of other team members can help people work together This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Dimensions of Leadership Robert Tannenbaum and Warren Schmidt leaders are either autocratic or democratic Harold Leavitt leaders are pathfinders (visionaries), problem solvers (analytical), or implementers (team oriented) James MacGregor Burns leaders are either transactional (focused on actions and decisions) or transformational (focused on the long-term needs of the group and organization) Fred Fiedler contingency theory, the ability of leaders to adapt This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Negotiation A key project management skill Frequently, PMs have accountability but may have limited authority Matrix management structure Subject matter experts Negotiating with Other managers Suppliers Customers Others This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Conflict Conflict is not a bad thing—it can be healthy for people to be able to express differences about how to approach the work Conflict-resolution styles: Avoiding Forcing Collaborating Compromising Accommodating This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Delegation PM is not expected to DO all the work Must identify and clearly assign work to others on the team Make expectations clear Recognize performance Follow through This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Resource management techniques Resource leveling Objective is 100% utilization Software can help This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Resource Planning Summary Planning for resource utilization is a key process in preparing a project plan Resource planning follows the first draft of the schedule and impacts the schedule Resources include human resources and other resources Managing human resources includes hiring, training, motivating, rewarding A number of models can be used to help the team work together There are several theories of leadership; leadership is more than issuing directives This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning Questions? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 11: Resource Planning 23 Budget Planning This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning 1 Budget Management Importance Estimating costs to compare and select Methods of Estimating Managing the Budget Budget timeline Budget variances This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Importance of budget planning Cost is one of the three project constraints A budget is a plan or forecast Cost management also includes tracking and managing variances from the planned expenditures Detailed estimates are important This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Estimating costs to compare and select projects Payback, rate of return or NPV (or combine them) Need accurate numbers but must balance with the cost of getting more accurate estimates This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Estimating methods Analogous estimate Find a similar project or task and assume this one will be the same or similar The more experience the estimator has, the better this works Learn from each project DPCI (Darnell-Preston Complexity Index) can help with benchmarking Parametric estimate Parameters such as number of square feet for a building; number of kitchens, bathrooms, etc. for a house. Bottom-up estimating Estimate each item or task and add them together Generally more accurate but takes more effort to create This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Estimating Guidelines Don’t gold-plate: estimate what you expect, and meet that estimate. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Managing the Budget Cash flow Make a plan of WHEN the outflows will occur, and ensure that the money is available on time Contingency reserves For unexpected expenses that arise during the project There are almost always some surprises, but can’t predict at the start what it will be Project Manager does not allocate to the sub-projects but manages it centrally Can be spent and still be within the original project budget Management Reserves For scope changes Not likely to be spent; not part of project baseline This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Reporting Progress: Earned value management Budgeted Cost of work Scheduled BCWS Detailed estimates for each activity in the project Planned Value PV Total budgeted cost as of a certain date in the project Earned Value EV Budgeted cost of the completed work as of a certain date in the project Actual Cost AC Actual cost of the completed work as of a certain date in the project Budget at Completion BAC Total budgeted costs for the entire project This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Project Cost Chart BAC This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Budget Baseline February March April May June July 10000 12000 22000 30000 40000 45000 Budget Baseline and Project Cost Chart The project budget is usually shown graphically, illustrating the cumulative planned spending. Typical shape for the budget curve is s-shaped, with less spending at the beginning and end of the project. Add the periodic expenditures on a regular basis to create the Project Cost Chart. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Project Cost Chart (up to May) BAC AC This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Actual Expenditures February March April May June July 5000 7000 30000 35000 Bud get Baseline February March April May June July 10000 12000 22000 30000 40000 45000 Schedule Variance: SV Difference between planned and actual progress SV=EV-PV Positive value: project is ahead of schedule Zero: project is on-time Negative: project is behind schedule This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Cost Variance: CV The difference between the earned value and the actual cost is the cost variance: CV=EV-AC If positive, you are achieving more than you predicted for the money If zero, you are right on the plan If negative, you are achieving less than you predicted for the money This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Schedule Performance Index: SPI Compares progress on the scope to spending: SPI = EV/PV SPI less than one indicates the project is behind schedule SPI of one is right on schedule SPI greater than one the project is ahead of schedule This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Cost Performance Index: CPI Compares the budget spent to date with progress to date: CPI=EV/AC A value greater than one: under budget Equal to one: on budget Less than one: overspending the budget This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Estimated Cost to Complete the Project: ETC Formula to use depends on what the PM expects with regard to future project costs and whether the original budget assumptions remain valid This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning ETC if past variances are not expected to continue: ETC = BAC – EV This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning ETC if past variances are expected to continue at the same level ETC = (BAC – EV)/CPI This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Estimated Final Project Cost: EAC EAC = ETC + AC This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Budget Timeline Contractual agreements often require partial payments Prepare a schedule, based on contractual and other expenditure requirements This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Budget Management Summary Cost estimations may be used to choose between options Managing the budget includes Estimating costs and setting a budget Determining when the budgeted costs should occur Tracking expenditures Managing variances between the budget and the expenditures Methods of Estimating Analogous, Parametric, Bottom-up Managing the Budget Budget timeline Budget variances This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Budget Management Summary (continued) Budgeting and Cost Management are important activities for project managers There are several methods for estimating the costs Estimated costs may be used to choose between options Project progress and budget management are closely related and can be managed with indices: BCWS, PV, SV, AC, CV, SPI, CPI, ETC, BAC and EAC Contingency funds allow for the unexpected Reporting to the team and to management are important components in budget management This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning Questions? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 12: Budget Planning 23