Thursday, November 15, 2007

What Are the Outputs of Scope Change Control?

How do you know if you have successfully conducted the scope change control process? The success of the scope change control process will be demonstrated by the accuracy and completeness of what it produces—its outputs, which are:
  • approved scope changes
  • corrective action
  • lessons learned
  • adjusted baseline
Scope changes are any modifications to the agreed-upon project scope as defined by the approved work breakdown structure. These changes often require adjustments to cost, time, or project. When the changes occur, project managers need to update planning documents and notify stakeholders as appropriate. These changes can be minor, such as making small changes to project limits or eliminating work that is not required, or major, such as adding work that was not in the original project plan or changing the project design.

Approved scope changes usually lead to corrective action. In general, corrective action is anything done to bring expected future project performance in line with the project plan. It often requires a root-cause analysis to identify the cause of the variances. Once you identify the cause of the variance, you or your team members can take appropriate corrective action.

Examples of corrective actions include narrowing the project scope to deliver the work results on budget or on time and adjusting resources by adding project team members or substituting project supplies.

Have you ever finished a project and wished you had done something differently? One of the outputs from scope change control is lessons learned. You can keep information about closed-out projects and use it to save time and money on future endeavors. The lessons learned during scope change control should become part of a project's historical database.

As you document the lessons learned, you could include the main causes of cost or schedule variances, the reasons behind the corrective action chosen, and any actions you will perform differently in future projects.

The final output from scope change control is an adjusted baseline. A baseline is the original approved plan for the project or particular project phase. On a project, there are often several separate baselines, such as the cost baseline, the schedule baseline, or the performance measurement baseline. Depending on the nature of the scope change, the corresponding baseline document may need to be revised or reissued to reflect the approved change. The adjusted baseline becomes the basis for determining future changes.

Approved scope changes, corrective actions, lessons learned, and adjusted baseline are the outputs of the scope change control process. To ensure your project's success, you will want to be certain these important and necessary elements are not overlooked and become part of the project process and final report.

Monday, November 12, 2007

Measuring the Impact of Approved Project Changes

If you are familiar with performance measurement techniques, you know that one of them—earned value—is used to forecast estimates before work is started. Did you know you could also use it to forecast the effect of a project change?

When a change is verified, the work must be incorporated into the project plan, which usually increases the cost and lengthens the schedule. As the work for the change progresses, earned value (EV) analysis can be used to forecast how the change will affect the project completion estimates for budget and schedule. This will allow the project manager to better control the change.
  • Planned value (PV) - is the approved cost estimate for a change during a specific period of time. It answers the questions: "How much will the work for the change for this time period cost?" and "How much work should be done by now?"
  • Actual cost (AC) - is the real amount it costs to perform the change in a given time period. It answers the question: "How much has it cost for the work on the change so far?"
  • Earned value (EV) - is the value of the work actually completed on a change in a given time period. It answers the question: "How much work is done and what was the original budget to complete that work?"
To use EV analysis to measure the performance associated with the change and the project as a whole, you will need to calculate two performance indicators:
  • schedule performance index (SPI)
  • cost performance index (CPI)
The SPI is the ratio of earned value of the accepted change to the planned cost of the change at the present point in time. It indicates how the change is affecting the schedule right now. To calculate the SPI, divide the earned value by the planned value.
Project managers can use the information resulting from the SPI calculations to make changes to the final product delivery schedule.
  • If SPI is equal to 1.0 - no changes to schedule are necessary.
  • If SPI is greater than 1.0 - project will finish ahead of schedule.
  • If SPI is less than 1.0 - additional days will be needed to complete the project.
The EV for Carla's textile project is $188,000 and the PV is $200,000. To calculate the schedule performance index for her project, Carla divides the EV of the change, $188,000, by the PV of the change, 200,000, to equal 0.94. Since the result is less than 1.0, Carla will need to add additional days to her project schedule because of the change.

Another factor that you must look at when a change has been accepted is how the change will affect the final cost, or cost upon completion, of the project. To do so, calculate the cost performance index (CPI). It divides the sum of all individual EV budgets by the sum of all AC budgets. When calculating CPI, round your answer to the first decimal place.

CPI = Total of EV/ Total of AC

The results of the SPI and CPI are then used to forecast the project completion estimates for the changed project.

Earned value analysis provides a way to measure project performance and determine where your project is heading after the approval of a change to the project. This helps project managers to determine if the finished project will be on time and within budget.

Friday, November 9, 2007

Should You Approve, Endorse or Reject a Change Request?

Knowing how to manage scope changes can make the difference between project success and failure. To increase your chance of success, you need a technique that enables you to track and manage changes as they occur.

Some changes to project scope, such as legislative changes or new safety standards, are mandatory. By definition, mandatory changes must be implemented. Other requests for changes are not mandatory but may be beneficial. If implemented, these changes can impact the project schedule, budget, or both, so they must be effectively managed.

Scope change control defines the procedures by which the project scope may be changed. It includes the paperwork, tracking systems, and approvals necessary for authorizing changes.

Before authorizing changes, a project manager must:
  1. assess the impact of the requested change
  2. choose the appropriate status for the change request
Since the opportunity to add value decreases and the cost of change increases as project work progresses, you need to consider the work effort and the associated cost when assessing the impact of proposed scope changes.
The more time a scope change requires, the more it will affect the project budget. You need to assess the length of time, or work effort, it will take to implement the proposed change.

The most common method for calculating the work effort in relation to a specific scope change request is the resource profiling method. The resource profiling method uses the Baseline Effort, Skill Factor, Work Interruption Factor, and Part-time Effect to calculate Normalized Effort (NE)—a real-world estimate of work effort.
  • Baseline Effort (BE) - The BE assumes that the task will be worked on full-time, without interruption, by a team member with a high level of technical skill and knowledge. To determine the BE, determine the ideal length of time it will take to complete the task in a perfect world.
  • Skill Factor (SF) - The SF represents the proficiencies of the team members who will complete the proposed work. A value of one indicates expert knowledge in the area. A value of two indicates a proficient and acceptable skill level. A value of three indicates little or no knowledge.
  • Work Interruption Factor (WIF) - The WIF takes into account reasons for temporary work stoppage. The most common type of interruptions are idle time, meetings, breaks, and communication. To calculate the WIF, add ten percent per interruption type and one percent for each team member.
  • Part-time Effect (PTE) - The PTE compensates for the fact that the team may work on more than one activity at a time. To determine PTE, assign a 0 percent loss for full-time work, a 10 percent loss for three quarter time work, a 15 percent loss for part-time work, and a 20 percent loss for one quarter time.
Once you know how to calculate the factors used in resource profiling, you can calculate the Normalized Effort (NE).
To calculate NE, subtract the WIF from 100. Then divide 100 by this value. Next, subtract the PTE from 100. Then divide 100 by this value. Finally, multiply these two values with BE and SF.

In addition to determining the work effort, you need to determine the associated costs of the proposed change. There are many direct and indirect costs associated with implementing a scope change. Some of these costs include:
  • overtime payments
  • late completion penalty
  • lost business opportunity
  • rework
  • new equipment
  • insurance requirements
  • changes to guarantee or warranty.
The associated costs of a proposed change should be expressed in a cost estimate (CE). To produce an effective cost estimate, you need to include all of the resources required for the task, including the time it takes to complete the change. The more resources you include, the more accurate your cost estimate will be.

There are some situations in which you won't have enough information to assess the impact of a requested change. The change request form could be missing vital information or be improperly filled out. In these situations, you should request more information from the person who originally requested the scope change or from other members of the project team who would be able to supply supporting details. You must then reassess the impact of the change.

Once you have all of the required information, you need to choose the appropriate status for the change request. The three status options are: approve, endorse, or reject.

You should base your scope change control decision on the results of comparing the estimated effort and the associated costs to the contingency reserve for your project.
  • You should approve a change request if the contingency reserve is greater than the effort and cost estimate. For example, if the estimated effort is 12 hours, and the contingency reserve is 40 hours, you should approve the change.
  • You should endorse the change request to the project steering committee if the estimated effort and associated cost are less than ten percent above the reserve. The project steering committee would need to approve the discrepancy.
  • You should reject a change request if the contingency reserve is less than the effort and cost estimate. Approving a change in this situation would cause deviations and overruns not approved by the project steering committee or the client.
By using accurate work effort and cost estimates, you will be able to assess the impact of project changes and determine the status of the changes. These methods of scope change control will help your project stay on the right track.

Sunday, November 4, 2007

Two Other Important Inputs to Scope Change Control

Your project scope is a dynamic entity. If you don't keep an eye on it, it can spin out of control and wreak havoc on your project. Project scope verification and change control are the processes used to keep your project on target, on schedule, and within budget. The main inputs to these processes are the work results, product documentation, work breakdown structure (WBS), scope statement, and project plan. Two other inputs to scope change control are also invaluable in scope verification and change control. These "other" inputs are the scope management plan and performance reports.
  • Scope management plan

    The scope management plan is a basic high-level plan for scope change control. Developed during the scope planning process, it is actually a part of the scope statement. It will help you rate how proposed changes will impact the project.

    High-impact changes are the most severe and affect the whole company. Scope changes of this type affect the revenue and schedule of a project. For example, a delay in supplies could be rated as a high-impact change if it will impede the project schedule.

    Medium-impact changes affect the project team members. These scope changes could alter how the team approaches the project, but shouldn't add time or money to the project.

    Low-impact changes affect individual members of the team. Team members may need to modify a particular task within a project phase. Low-impact changes should not affect project baselines.

    Another component of the scope management plan used as an input to scope change control is the description of roles and responsibilities in relation to scope changes. Clearly defined responsibilities make the change process smoother because the team members will know exactly what they are expected to do.

    The requester is any project stakeholder who submits a change request. It is his or her responsibility to fully complete the change request form and forward it to the change coordinator for the project.

    The change coordinator receives new change requests and ensures they are complete. The change coordinator is responsible for requesting clarification of any confusing information and forwarding the change request to the assessment team. This person may also lead the assessment team.

    The members of the assessment team are responsible for determining the impact of the proposed change on the scope of the project. They also provide an estimate of effort to implement the change.

    The project manager reviews the assessment information and determines the impact on project schedule and budget. It is the responsibility of the PM to approve or reject any change request that is within his threshold of acceptance. He passes any other changes to the project steering committee.

    The project steering committee reviews change requests only when asked by the project manager. The steering committee has the authority to approve or reject these changes.
  • Performance reports

    Performance reports are also inputs to scope change control. One of the duties of the project manager is to provide stakeholders with periodic project updates. Performance reports provide the project manager with a means to provide accurate, periodic reports. The reports include values of planned, actual, and earned costs, which show project performance at the present time as compared to the baseline or objectives. You can use these values to measure performance after making a change.
"Other" inputs to scope change control help to ensure that changes to your project's scope are adequately controlled. Together, the scope management plan and performance reports provide additional information to help you manage scope changes and incorporate them more easily into your project.