earned schedule 2

Earned Schedule

The Earned Schedule (ES) is a rather recent methodology.

It was first introduced in 2003 and it is a method of analysis that extends and completes the benefits of the Earned Value Management.

Currently, the Earned Schedule method is used globally in projects of any type and size.

This method is taught in academics, is included in project management manuals and standards dictated by the PMI and is also a research topic at the university.

Not only theory but also practice. It is now widely demonstrated that the ES is useful for project managers for the analysis and control of project performance.

Why is the Earned Schedule born?

Everything is born and takes its cue from the EVM (Earned Value Management) method that offers the project manager and other stakeholders the possibility to visualize the actual costs of the project during its entire life cycle. This, as it is easy to deduce, allows a more effective management of the project itself.

In its original form, the EVM was used to evaluate project performance and predict the cost of the project upon completion.

Normally, project control is established at the level of the work package or the cost report.

In fact, however, this control, although helps in cost management, does not contribute to the control of implementation times. EVM data indeed are not generally used to estimate the time needed to complete a task, a work package or a project or to predict the completion date.

This can lead the project manager to make bad decisions about the Project in general.

It is precisely to fill this gap that the concept of Earned Schedule (ES) is born.

In fact, the ES can transform EVM metrics into time or duration metrics in order to improve the evaluation of the project planning performance and to predict the duration required for its completion.

When combined with an appropriate analysis, this approach can improve the understanding of the estimated time for the Project completion.  It can also provide further insights that allow to make better decisions about project planning and other related parameters.

So let’s see more in detail what it is.

Measure and indicators of the Earned Schedule

The idea of Earned Schedule is similar to the concept of Earned Value (EV). However, instead of using the costs to measure project performance, the reference unit is time.

If we consider the projects that are late, in fact, using the Earned Value, we will have unrealistic indicators. The obtained values will, in a misleading way, make the state of the project look better than it actually is.

The problem lies in the fact that the Earned Value is a value indicator and not a scheduling indicator.

This then brings the planned value at the end of the project to coincide with the budget upon completion even if the project is late.

Therefore, the fundamental concept of the ES is to determine the moment, in terms of time, in which the planned work should have corresponded to the value of the work carried out at that precise moment.

earned schedule

The formula of the Earned Schedule

The Earned Schedule formula corresponds to
ES = C + I.

Where  C is the number of intervals in which EV is equal to or greater than PV and I is the share of the intervals after PV.

In the researches carried out, the question asked was whether the ES is a better method of predicting the duration of the final project than the EVM methods.

The answer is that the ES is way better than any other method related to Earned Value Management.

Of all the methods and data sets studied, the ES is referred to as the best duration prediction method of a project.

For sure, this method is useful for project managers when they have to make decisions in order to meet delivery dates.

While the Earned Value provides an estimate of when the project is likely to end, the Earned Schedule produces an understanding of the probability of completion in precise moments over time.

The ES can also provide useful information to the project manager and analysts and is not difficult to calculate.

Of course, additional work is needed, but it is not as time-consuming as a complete bottom-up review of the entire project program.

EVM and ES have been integrated with statistical confidence limits in order to obtain probable results for the final cost and duration of the project.

The results of this work have shown that the proposed approach is sufficiently reliable for the general application of the forecasting method, both in terms of cost and duration.

earned schedule 1

Moreover, it is shown that the ES approach can be applied effectively no matther what the type of work or the extent of the cost and duration of the project.

Big deviations between the project status and the forecasts usually attract the attention of management and translate into corrective actions. Small deviations are usually not taken into account.

By quantifying and highlighting these deviations, it is possible to bring the focus of management on projects or work packages that require more attention.

As a result, these tools support the effective management of projects and improve the management of the portfolio of business projects.

Consistent use of these techniques that predict project outcomes provides an optimal approach to project reviews, increases confidence in project delivarables as time progresses, and improves management’s ability to take corrective action and appropriate decisions.

Conclusions

In conclusion, we can say that the EVM is a powerful methodology that helps project managers and other stakeholders managing projects and programs more effectively.

By integrating it with the ES method, it is possible to produce valid indicators and reliable predictions on the duration of the project.

The research found out that, compared to other methods based on the EVM, the ES produces the best predictions on the duration of the project.

The Earned Schedule method has a lot to offer to the project manager in order to help him drive and control his project from the beginning to the end.

Have you ever had the opportunity to apply the Earned Schedule to one of your projects? What are your observations? Write them in the comments.

Analyze your projects with the right tools.

How to make a project budget

How can I create a budget for a project if I have no historical basis on which to orient myself?

When starting a project, it is difficult to know how much it will cost.

If we are dealing with a repetitive project, we will probably have a history on which to base ourselves.

In this case it may be easier to draw up a project budget, but different is the case when it comes to a new project.

Project managers are required to account for their budget estimates.

Given the great uncertainty that usually prevails in the initial phase of a project, this can be one of the major challenges of a project manager.

The ability to create an accurate budget is an essential skill for a project manager.

It can be a daunting task, especially for new project managers; however, once the first budget is created, you will have a first reference system.

From then on, it will be easier to manage this aspect for future projects.

The approaches to drafting a budget

There are two main approaches that can be adopted when drawing up a budget:

  • Top-down approach: decide how much the project will cost in total and divide the amount between the various phases of work;
  • Bottom-up approach: estimate the total cost of the project, calculating the individual work steps, starting from the lowest level, and then adding the whole.

Both approaches, like all things, have their advantages and disadvantages.

Let’s try to evaluate them together.

How to make a project budget: The top-down approach

The top-down approach, literally from top to bottom, is more than simply a guess of the total amount on which to base the whole project.

In fact, it is necessary to explain how the work will be carried out and structured within the amount of budget allocated for each phase of the project.

One should ask oneself if the balance sheet seems realistic on the basis of the experience of past projects, if there are any.

The advantage of the top-down budgeting approach is that it focuses on achieving the project within the allocated budget and leads to efficiency and reduction of costly practices.

A disadvantage is that it presupposes that the person who creates the budget has sufficient knowledge and skills to make a reasonable cost estimate.

If this is not the case, a conflict may occur when a team member is assigned an unrealistic and insufficient budget to complete his work phase.
In fact, there is the risk that deliberately low budgets are created with the – false – belief that this will encourage cost savings and waste elimination.

How to make a project budget: the bottom-up approach

In the second approach, bottom-up, literally from bottom to top, the project budget is built starting from the individual work stages, from the lowest level, and adding them up until reaching the total cost of the project.

The team is often involved in identifying the tasks and activities needed to complete the project and to estimate the various costs.

The advantage of the bottom-up budgeting approach is its accuracy, assuming that we have not forgotten any activity, and consequently its cost.

It is good for team morale because the project manager involves the team in budgeting.

For this reason, this approach is sometimes called participatory budget.

A disadvantage of the bottom-up approach is the difficulty of obtaining a complete list of activities and tasks necessary to complete the project, especially if it is something new, or if we are dealing with a young and / or inexperienced team.

In fact, the risk in starting new projects or in the involvement of junior resources, may be that of not contemplating entire phases of activity and process.

This inevitably leads to totally unleashing not only the costs, but also the time required to complete the project.

The different types of cost in creating the budget

In creating the budget the Project Manager must take into account different factors and above all the different types of costs.

There are basically two types of costs that affect project managers when they create a budget:

  • Direct costs
  • And indirect costs.

The former are uniquely attributed to the project and can be easily definied, such as: the cost of personnel, equipment, travel, consultants, ecc.

Indirect costs, on the other hand, are related to expense items loaded simultaneously on more than one project. Only part of their total cost is charged to a single project.

For example: telephone bills, office rent, company insurance, office equipment, etc.

How to calculate these costs?

For example, if the project will take 6 weeks and the internet bill is € 50 per month, the total cost of the project will be € 75.

To get an idea of the other costs, you can take a look at the previous year.

It will be necessary to see what has been spent on the whole and then divide it by 52 (the number of weeks in the year) to obtain an average weekly cost.

This can be valid for an indirect cost such as that of the equipment.

How to make a project budget: the management reserve

A management reserve or contingency reserve is usually added to projects and usually corresponds to a percentage of the total cost and time of the project.

This fund is used when events related to unexpected costs occur during the project.

The management reserve should be adjusted according to the level of risk identified for the project.

Clearly, the more risky the project is, the greater the management reserve will have to be, and viceversa.

A routine project, already carried out several times, will have a lower management reserve than a totally new project.

The budget will therefore be made up of direct costs, indirect costs and the amount that serves as a management reserve.

 How to make a project budget

How to make a project budget: ineligible costs

There are also costs that are generally not eligible in a project and therefore can not be included in the budget.

In general we can identify them in the following:

  • Non-accountable costs, such as voluntary work;
  • Capital investment costs;
  • Financial charges;
  • Passive interests;
  • Losses caused by the currency exchange, among other things not quantifiable given the volatility;
  • VAT in the case it is a recoverable cost;
  • Costs covered by EU funding or by another type of state funding;
  • Sanctions.

Manage budget changes

Projects rarely go according to plan in every detail.

It is therefore necessary that the project manager is able to identify when costs vary from budget and manage these changes.

A project manager must regularly compare the amount of money spent with the amount provided and report this information to the managers, the company president and the stakeholders.

It is therefore necessary to establish a method on how these progress will be measured and reported.

A widely used method for medium and high complexity projects is the earned value method.

This is a method of periodic comparison of the estimated costs – budget value – with the actual costs during the project – actual value.

The earned value method can provide information not only with regard to cost variances, but also with regard to time deviations, ie if the project is on time or not.

A simple way to evaluate the progress of the project is to take two values:

  • Direct cost percentages pertaining to an activity;
  • Sum of already worked hours on the activity and the forecast of the hours until the end of the project.

The progress of the activity will therefore result from the product between these two indicators. If it less than 1, it means that we are facing a project delay.

At the end of a project, it will be necessary to evaluate if a budget deviation has taken place and what were the reasons that caused it.

Regardless of the approach a project manager chooses to make the budget, it is essential to take the time to monitor it throughout the whole project.

In fact, for project management, cost monitoring is a strategic aspect.

For this reason in Twproject, we have developed the functionalities able to insert and manage both the costs generated by the work (direct costs) and the additional costs (indirect costs), reserving, of course, such access only to the Project Managers.

how to make a project budget

The importance of monitoring and managing a budget is crucial! Here is a small example of the support that TWproject can give you.

how to make a project budget

In this example (an integral part of the previous screen) your forecast margin (calculated from budget and planned costs) is 850.

This is the first estimate you’ve made, and it’s probably very close to what you told your client.

Then, in a second phase, you have refined your estimate: the second line represents how it is going in relation to what is planned.

The last line is the “real” situation, you have a budget of 2500, and you have spent 1285.

Great! There is a margin of 1215, better than expected!

In short, build, customize, monitor the Budget: fundamental aspects for a winning project!

What are the biggest difficulties you have experienced while creating a budget?

What strategy did you use?

Leave us a comment and share your experience with us.

Start now to create an accurate project budget

The Most Effective Strategy to Estimate Projects

Estimate projects correctly is a difficult task that every project manager has to face. It doesn’t matter if you estimate in order to evaluate resource work load (time/effort estimation) or just to create customers’ offer (cost estimation), the problem is just the same.

How can I predict exceptions, delay, bottle necks and create an estimate that is as close to reality as possible?

The answer is quite simple, you can, if you count on your team.

Identify the problem:

Estimate projects is difficult, in particular when you came to big ones that last months, maybe years. In these specific cases estimation could be just a guess. An incorrect estimation can generate several problems, for your team and your company in general:

  • Underestimated projects: this is what happens the most, particularly when project managers have direct contact with customers, if you want read more about why underestimation is so common you should read this article.
    Robert works for a small company where he is a project manager and also the commercial director. He knows that his team is doing its best but he doesn’t want to lose any new customers opportunity. For this reason he underestimates his projects, trying to convince the team that every new customer can make the difference for a small company like theirs. Doing this, the quality of the product decreases, the team is overloaded and the project manager completely loses the correct perception of the project cost. Robert knows that his company will suffer of high turn over.
  • Overestimated projects: Project managers more connected with the team tend instead to a pessimistic estimation of the project.
    John is a project manager and lead architect of a young software house. Every time a new projects begin he speaks to his team to make the correct estimation of tasks. Being near to his colleagues he knows how many problem they face and he prefers to overestimate his projects. Resources look over planned and the commercial department can lose opportunities for this lack of communication. At the end of the year John knows that his team could have released more products with a correct estimation.

Being a project manager with estimating problem you have probably found yourself in one of the two described above, maybe with different circumstances but probably with the same outcome.

Of course a correct project estimation can fix all these problems, correct schedulingresources’ workload. So, how can we improve it?

Find the solution:

Being a project manager, maybe a senior one, your management skills are probably very refined, you know the effort for managing a team conflict, you probably know how to calculate the revenue of your task, but what about developing that specific product requirements? The project manager is able to identify all the phases of the project structure, but who better knows how does it take to accomplish a specific phase than the resource working on it?

The key for a correct project estimation is in your team knowledge.

Nicole is a project manager at ACME spa. She works with a smart and diversified team. Every time she is assigned to a new project and she has to estimate it she organizes a meeting with her team to develop the Gantt of the projects. Nicole sets the milestones if she has some and tries to define the end date of the project. She identifies the best resources for the work and then she asks them a refined schedule and estimation of their small portion of work. No one knows better than Giulia how effort it takes to make a perfect email layout. Nicole asks also to her colleague which problems she encounters the most and with which delay. Nicole asks to her team members to become everyone the project manager of his own specific tasks.

The knowledge of the team is very precise and very close to every specific matter, they know most of the possible exceptions, every possible delay, every bottle neck on their specific phase. To have a complete and precise estimation you have to go deeper with your team and analyze with them all the phases, let them estimate their phases like they would be the project managers, delegate. This approach will help you improve your resource management in general.

Also, if you work on projects that can repeat in time you could ask your team to specify every step of the work with its effort.

This to-do lists could be used as a template in time, to avoid loosing time estimating the same things again and again.

Save your team knowledge is the key to estimate projects correctly. It is what you can use to make comparison and learn in time estimating even better.

Conclusion

Using this strategy you could be able to have a better idea of the effort of the project and every possible exception that can occur.

  • Identify your project phases and your goal end date
  • Identify your milestones and discuss them with your team
  • Select the best resources for each phase and delegate the task to them
  • Let the team write down every step of their phase to estimate it.
  • Use the knowledge from the team on every phases to estimate the entire project from bottom up

Using this strategy with a project management software that can help you creating a Gantt chart, assigning your resources, checking their workload could really make the difference, estimate projects will become easier.

If you want to learn more about how to introduce a project management software in you company you can read our article.

Start now estimating your projects correctly

Twproject 6.0.60017: Mobile Receipt Upload

Things are a little bit messy right now at Twproject because we are developing a brand new mobile app and we are totally over excited with all the new great features we are developing. Waiting for this new amazing release, we are still improving our beautiful application, even the mobile one, today in fact I introduce you the new mobile expenses editor with the possibility to upload pictures directly from your phone. You just need to update your Twproject and the mobile application will be updated too.

File upload on assignment expenses was already available on the web application but now it is available on the mobile view too, so practical to just take pictures of your tickets and receipt and upload them on your assignment.

The complete list of bugfix and improvements is here: https://twproject.com/twproject-changelog/

This is a free upgrade for all users of Twproject 6.

It does not include database changes.

Costs Management with Twproject

Costs management is of course one of the aspects that makes the success of a project and it affects deeply the value chain. Perhaps it can be easy to manage the costs as a whole, but sometimes it is not as easy as it looks to enquire about specific aspects or the ramification of costs.

The something is going wrong feeling is, of course, not enough. The certainty that something is going wrong is not enough as well: it is necessary to know exactly what is going wrong, why and at which level (whole project, task, sub-task).

Twproject is the full featured web based project management software that gives you full visibility and control over your projects, and it manages all the aspects of the value chain as well. It allows to manage the costs of a project, particularly also the costs related to the work performed (for example, travel costs).

Furthermore, with Twproject it is possible to assign a budget related to specific issues of a single Project / Task / Sub-task (equipment, courses, external consultants…). The budget management and assignation process can be “atomized”, so that the control workflow becomes more flexible, easier, more “on the spot”.

project-data-overview-5

In this way the cost allocation can be constantly monitored as a whole and in its elements: Twproject can send an alert if the cost (even for the single Project / Task / Sub-task) is reaching the budget limit, so it is possible to monitor, and react to, budget overflow, just when and where it is really needed.

Just follow this link if you want to know more about cost management with Twproject.

 

Still in doubt? Well you can try yourself with a free demo.

Simplistic cost/benefit evaluations of organizational tools adoption

SDY1

I’ve recently received yet another request of a cost-benefit analysis given by the adoption of Teamwork, in general, of project and groupware management software. Not always in those exact terms, but we do periodically receive such requests. One may rephrase the question as “what is the exact economical gain given by adopting Teamwork”?

Very superficially, this looks like a clear question, which requires an exact answer. Let’s take a closer look.

What does it mean “adopting Teamwork”? If one takes even a cursory look at Teamwork user guide, one should quickly realize that for a tool that can integrate at so many different levels with IT infrastructure, this may mean all sorts of different things: one may be handling just high level projects, sharing them on the web, or one may have integrated it from intranet authentication and certification forms, following every little action in the company.

One may be using the exchange function with Subversion, Google calendars  and Twitter, so even the boundaries between what is done in the company by Teamwork and what is done by other applications is blurred. So “adopting Teamwork” has different meanings for each adoption process.

But there is an even bigger conceptual mistake that is lingering here, given by the first part of the question, “exact economical gain”: i.e. that taking steps in improving quality of work, by implementing software aided organizational procedures, is a purely economical gain that can be accounted for say is a year after the reorganization. Anybody that has experience in reorganization and working on quality of work and communication knows that consequences cannot be evaluated so simplistically, though they can be great, and span an entire work life.

This said, the benefit that one will have basically depends on the plan and determination of the leader that is introducing innovation, by her/his culture, open mindedness and experience in the field and in human relationship, and the respect that she gets from the team; and we believe that in some cases (not all), Teamwork can be of help for such individuals, more structured help than just a to-do list shared online. But don’t ask us to fool you with numbers thrown at random; you should probably be very suspicious of vendors that promise X% “gains in efficiency” by doing this or that. Our customer list is partly public, the best way is to ask them, and everybody will give a different answer. Just my two cents.

Pietro Polsinelli