Monthly Archive for January, 2010

  • What is a Summary or Hammock Activity?

  • A summary or hammock activity, shown in ACTIVITY CHART , is used to represent groups of activities in a project schedule. It is used to summarize the schedule information for a group of activities and to allow the entire project to be summarized as a relatively few summary activities. The summary activity shows the start [...]

  • What is a Milestone Chart?

  • A milestone is used to represent groups of activities or significant events or commitments in the project. A milestone chart shows a group of milestones in an organized way similar to a Gantt chart with one milestone per line vertically with a description on the left and the milestone located horizontally along a time scale [...]

  • What is the PERT Method?

  • The PERT method stands for program evaluation and review technique. It is a statistical approach to project schedules. Actually, it is a statistical way of predicting project completions when there is uncertainty about the project durations. The PERT method was developed during the Polaris Missile program in the United States in the 1950s. At that [...]

  • What is the Critical Path Method?

  • The critical path method or CPM is a management tool that helps the project manager recognize where in the project schedule his management effort should be applied. The critical path method recognizes that the activities in the schedule that have zero float are the activities that cannot be delayed without delaying the completion of the [...]

  • What is a Gantt Chart?

  • A Gantt chart, as seen in GANTT CHART, is used to show the project schedule in a graphic form. It is probably the most used graphic report in project management and may be the most used of any of the reports used in project management. The Gantt chart is about 100 years old and was [...]

  • What is Float or Slack in a Project Schedule?

  • First of all, float and slack are two words that mean the same thing. It is perfectly fine to use either term in project management. Float is a measure of flexibility in the project schedule. There are two kinds of float, total float and free float. Total float is usually called float. (Sometimes it seems [...]

  • How do I Make a Project Schedule?

  • In its simplest form the calculation of the schedule is a matter of establishing a start date for the project and adding the durations of the activities in the schedule, being careful not to include the activities that are scheduled to be done in parallel with other activities. The schedule consists of determining the start [...]

  • What are the Early Start, Early Finish, Late Start, and Late Finish Dates of a Project Schedule?

  • The early start, early finish, late start, and late finish dates of a project schedule are the primary dates that are calculated in any project schedule. The early start dates of the project schedule are the earliest that any activity in the schedule can be scheduled to start given the logic and constraints of the [...]

  • What is a Network Diagram?

  • Network diagrams are used in many ways, from engineering to computer programming to management. In project management the network diagram is usually associated with the scheduling function. The network diagram for a schedule shows the logical relationships between the activities of the schedule for a project. The activities are taken two at a time. The [...]

  • What is Depreciation?

  • Depreciation is important to project managers because it has an effect on the overall justification of a project, equipment, and other capital assets that are used on projects and the profitability of projects to the company. Depreciation can make a difference between a project that is justified and one that is not. It can also [...]

  • What are the Financial Measures ROS, ROA, and EVA?

  • There are several measures that are useful in measuring the health of a company. These measures are also useful in measuring the health of a project. The trend in project management is to have the project manager take on more and more responsibility for the projects she is managing. Project managers in the future will [...]

  • What is the Fundamental Accounting Equation?

  • Project managers and project management methods are becoming more widely known, and project management successes are becoming more frequent. For this reason project managers are being given more responsibility in the businesses they work in. It has become more important that project managers treat their projects like small businesses and that they be responsible for [...]

  • What is the Time Value of Money?

  • The time value of money refers to the fact that money we receive in the future is worth less to us than money we receive today. If you loaned us $100 today and we paid you back the $100 two years from now, it would not be fair to you because we have had the [...]

  • Why am I Concerned with Cost Budgeting?

  • Cost budgeting or setting the cost baseline for a project is very important since it forms the foundation for the measurement of performance in the project. Ultimately our performance measurement system is going to measure the actual costs of the project in terms of time and quantity and compare that to the planned expenditures in [...]

  • Why do We Have Two Separate Reserves to Take Care of the Risks?

  • There are two kinds of reserves set up to budget for risks: the contingency reserve and the management reserve. The contingency reserve contains the money to do the risks that were identified. The management reserve contains the money to do the risks that were not identified. These two reserves are separated in order to have [...]

  • What is the Cost Baseline?

  • The cost baseline is the basis for the earned value reporting system. It is the budget for the estimated cost of the project spread over the time periods of the project. As we noted in project, in managing a project we are concerned about three baselines: the schedule baseline, the cost baseline, and the scope [...]

  • What is a Cost Improvement Curve?

  • A cost improvement curve is based loosely on the idea of a learning curve. In some contracts, generally large ones, the client may require the vendor to reduce the price of items supplied later in the project to less than the delivery price of earlier items of the project. The application of cost improvement curves [...]

  • What is the Law of Diminishing Returns?

  • The law of diminishing returns says that each time we do something to receive a benefit, the benefit will be less and less. The best way to think of this is by a simple example. If we are with a small child on a hot summer day and we pass an ice cream stand and [...]

  • What is the Difference Between Estimated Cost and Price?

  • Estimating cost means developing the approximate cost of completing the entire project or part of it. It is the expected quantitative result. When we estimate the cost of doing a project, we are estimating the amount of money that it will take to complete the entire project. In addition to the project completion cost, we [...]

  • What is Statistical Cost Estimating?

  • Statistical cost estimating is a method of using statistics to determine the range of values of a cost estimate and the probability that the actual cost will occur between the two values in the range. This is the same technique that is discussed in the PERT method that is discussed in Time Management under "What [...]

  • What is Life Cycle Cost?

  • Life cycle cost is the cost that is associated with the project from the beginning of the project to the end of its useful life and beyond. It includes the cost of acquiring the project, operating it, and disposing of it at the end of its useful life. It may even include money spent after [...]

  • What are Estimating Factors?

  • Productivity and utilization are the two factors we are concerned with when doing estimating for projects. Both of these factors are applicable to cost as well as schedule estimates. Productivity is a measure of how much faster or slower a particular resource is from the normal resource. A person who is very good or very [...]

  • What Terms are Used in Estimating?

  • The terms used in estimating are related to the use of project management software. Because of the defaults used in project management software, we have been using these terms in our estimates. Effort: The hours of labor to do work. Effort is usually expressed as man-hours or people-hours but could be expressed as man-days, man-months, [...]

  • What is a Project Estimate?

  • In order to run the project we must know how long things take, how much they will cost, and what kind of resources will be required. The only way we can get this data is by doing good estimates. Without good estimates we have no way of knowing where we are at any point in [...]

  • What is Scope Change Control?

  • Any project that has ever been done has probably had scope changes. It is only reasonable that as a project develops, learning takes place and the environment of the project changes. These changes can result in scope changes on the project. Since they are nearly inevitable, it is best to prepare to deal with changes [...]

  • How do I Test the Work Breakdown Structure?

  • From the systems engineering and systems management way of thinking, we can say that each task in the WBS is a process that converts inputs to outputs. In the WBS we have identified the tasks that must be completed in order for us to complete the project. Is this really good enough, or can we [...]

  • How do I do a Work Breakdown Structure?

  • Doing a work breakdown structure is one of the simplest things that you will do as a project manager, yet it is one of the things that many project managers and their staff do not do well. Part of the reason must be that it is so simple that many managers do not think that [...]

  • What is a Work Breakdown Structure (WBS)?

  • Once we have identified all of the things that we are supposed to produce in the project, it is necessary to develop the specific items of work that must be done to complete all of the work. The work breakdown structure takes the project and divides it into smaller pieces. These can be called subprojects. [...]

  • What is a Scope Statement?

  • The scope statement is the defining statement of the project. It is the document that defines the project and is the basis for making decisions about the project. The scope statement is a dynamic document in that in the beginning it contains the information available, and as the project progresses, it is changed and added [...]

  • What is the Requirements Process?

  • There are many ways to develop the deliverables of a project. It is important that a procedure be established for each project that will ensure that all of the necessary deliverables of the project are found and that all unnecessary requirements are eliminated from the list of deliverables. All of the stakeholders of the project [...]

  • What is a Project Justification?

  • Although some projects are done by direct order, most of the projects that we will be involved with will have a justification. The most credible justification is one where the identified benefits of doing the project are greater than the cost of doing the project. It is important to understand that there are many ways [...]