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There is a core team that should be present, but beyond that, the balance of the team members should be
encouraged to attend only when they have something to contribute or have a need to be kept informed.
A project review meeting on the first Monday of every month could become tedious should the agenda
have no relevance to the current activities of the attendees.
• Dry run your speakers. You as project manager should not always make the entire presentation. For
example, an engineer may report on a technical design, a marketing representative on a sales strategy,
or a computer programmer on a new automated system. Before the presentation, request your speakers
to walk through (talk through) their presentation, for both their benefit and yours. It is too late to make
modifications when they are in front of the audience and presenting erroneous or inappropriate data.
• Organize the project review meeting to your best advantage. As the first speaker, you need to present
briefly and concisely an overview of the meeting, the objective of it, and a quick preview of the agenda.
With this effective form of introduction, you set the tone and alert the participants to your major
concerns.


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ISBN: 0814450431 Pub Date: 01/01/91

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How to Conduct a Review Meeting
Title

• Follow the agenda. Once the agenda is set, follow it. Do not stray from the format. If an attendee
attempts to circumvent your game plan, use the agenda to bring the subject back into focus. Typically
your agenda should cover the following subjects:
-----------
Typical Agenda for a Project Review Meeting
• Major accomplishments since the last review.
• Schedule status (actual versus plan).
• Financial status (actual versus plan, including a clear explanation of variances from plan).
• Major issues (problems) and action plans. Indicate specific assistance required from management or
the customer, as well as from any of the functional areas within the matrix (action plans should
include a deliverable(s) and deadlines).
• Plans for the next period.
• Special topics (those with a sense of urgency).
• Review of action items generated from this meeting and a time and place for the next meeting.

A number of questions will help you gain the information you need:
Suggested Questions for a Project Review Meeting
• Do you foresee any future problems?
• Is your personnel supply in jeopardy? Are people being pulled off projects?
• Is there dissatisfaction among your staff? What™s bothering them?
• How are you dealing with recurrent problems?
• What are you lacking to do your job?
• Have you prepared for long lead deliveries?
• Are you accepting substantive changes that should be addressed in a change control (change of
scope) process?
• Don™t overrun your agenda. Most attendees™ schedules are tight; therefore, they will probably
allocate just so much time to your review meeting. There is a prevailing feeling that too much time is
spent in meetings, so make the briefing concise and stay on target. Record time allotment on the margin
of your working agenda. Maintain your pace, and move on when you need to. When appropriate, carry
over the discussion to the next meeting. Assign team members the responsibility for investigating
subjects and reviewing the results in advance of the next meeting. Remember the rule of thumb: People
can be productive in a meeting environment for approximately one to one and a half hours. After that,
it™s all downhill.
Remember that a well-run review meeting is the forum in which to accomplish many of your key objectives
as project manager: to improve communication, motivate the project team, maintain control, evaluate status,
isolate problems, and institute action plans. Use this opportunity well.

Senior Management Reviews
Project management reports are generated for senior management on a recurring basis, usually at the end of
each cyclical reporting period. These reports, in conjunction with review meetings, afford you a wonderful
opportunity to interact with senior management. In order to maximize this opportunity, make sure that your
project reports for senior management review meetings take less than thirty minutes. The review of the project
status should be structured according to five topics:
1. Project introduction: Summarize the project objectives and the composition of the project team.
2. Problems: Present each problem being faced by the team and include the worst-case scenario, the
action required to fix the problem, and the approvals required to implement the solution.
3. Subjective appraisal: Give your assessment of the state of the project and the degree of client
satisfaction with the effort.
4. Outstanding decisions: Enumerate the decision that senior management and the client must make, as
well as the consequences of a delay in receiving the decisions.
5. Status: Present summary project-management-system displays of the schedule, cost, resource, and
accomplishment states of the project.


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Project Management
by Joan Knudson and Ira Bitz
AMACOM Books
ISBN: 0814450431 Pub Date: 01/01/91

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Title
Chapter 9
A Model for Earned Value:
Achievement-Accomplishment Monitoring
-----------

In this chapter, we explore how to assess the state of the project based on milestone completions”what is
often called earned value or achievement-accomplishment monitoring. Achievement monitors the completion
of milestones. Accomplishment assesses earned value. Earned value shows how much work has been
accomplished and can be used to determine performance standards and to forecast mathematically time and/or
dollars needed to complete the project. It can provide much more information than just whether the project is
ahead of or behind schedule, over or under budget, and/or being efficient or inefficient with the organization™s
money.
Achievement and accomplishment serve the same purpose. They allow you to draw conclusions concerning
the accuracy of the estimates-to-complete furnished by the members of the project team. But the quality of the
information is not the same. Achievement monitoring is an intuitive, judgmental process in which you and the
team members infer the project status from the unique trends and dynamics produced over the project™s life
cycle. Accomplishment planning and control allows a quantified comparison with person-hour and dollar
expenditures, as well as schedule status.
Both approaches are based on milestones, which are identified during the development of the project plan, and
each works best if there are a significant number of milestones, with at least a few scheduled to be completed
during each progress-monitoring period.

The Role of Milestones
A milestone is a marker for a major event”a significant point in development. In the world of information
systems, a milestone might be the delivery of an internal design or systems test. In construction, a milestone
might be the delivery of materials. And in research and development, funding or completion of a prototype
test might be considered a milestone.
Before that milestone can ever be met, a series of smaller markers must be passed. Waiting to check progress
until a major milestone is reached is an invitation to disaster. It is these small deliverables that you will be
managing. What is due today? If it isn™t ready, when will it be? What is needed to get back on track?
In achievement monitoring, milestones are not weighted on the basis of complexity or difficulty. They are
identified and incorporated into the project schedule. A milestone schedule is developed so that you know
when each milestone is scheduled to be achieved. During the course of informal project control or
management by wandering around, you must verify the timely completion of the milestones and indicate their
completion on the project status report. Finally, you must use the achievement data to assess whether the cost
and schedule estimates are consistent with the achievement to date. Consistent data should raise your level of
confidence; inconsistent data will raise doubts about the estimates-to-complete furnished by task leaders.
In performing an assessment of achievement to date, it is not possible to determine the worth of the completed
milestones as a percentage of the total worth of the project milestones. An invalid conclusion would be to
infer that 33 percent of a project has been achieved because twenty-five of seventy-five milestones are
completed. It may be interesting to know that twenty-five of seventy-five milestones have been completed,
but the project might be only 5 percent complete”or 95 percent complete”based on the relative worth of
those milestones.
Accomplishment monitoring contains several added steps. The first step is the same: Identify the milestones
and incorporate them into the project schedule. The second step, developing a milestone schedule, is also the
same regardless of whether achievement or accomplishment is being used. But the third step is complex. Each
milestone must be given a difficulty weight, which forms the basis of the earned value calculations and the
mathematical assessment of the yield of efforts to date (a subject discussed later in this chapter). During the
course of informal project control or management by wandering around, verify the timely completion of the
milestones and indicate their completion on the project status report. Finally, make the earned value
calculations and use them to check the consistency of the earned value data with the cost and schedule
estimates. Consistency can raise your level of confidence; inconsistency can raise doubts about the
estimates-to-complete furnished by the task leaders.
The critical issue in accomplishment monitoring is to determine how milestones are weighted. The
Department of Defense (and other government agencies that use milestone reporting) prefers to use the
milestone budget as an indicator of the worth of the milestone. Thus, the percentage of completion of the
project is calculated by dividing the budget of the completed milestones by the total direct cost budget of the
project. If $5,650 worth of milestones have been completed out of a total budget of $25,000, the project is
said to be 22.6 percent complete. The major problem in using budget as the weight for the milestones is the
purchased item distortion. Purchased items that are not difficult to obtain but are high-cost items receive a
disproportionately high value in the calculation of percentage complete.
Other organizations use person-hours, labor budgets, or expert assigned points. In the person-hour approach,
the percentage of completion of the project is calculated by dividing the planned person-hours of the
completed milestones by the total person-hours of the project. While this eliminates the purchased item
distortion, it creates its own distortion in which tasks requiring a large number of hours of unskilled labor are
valued more highly than tasks requiring slightly fewer hours of the most skilled professionals in the
organization.
In the labor budget approach, the percentage of completion of the project is calculated by dividing the labor
budget of the completed milestones by the total labor budget of the project. This reduces the distortion created
by tasks requiring large amounts of unskilled labor, but it is based on an assumption that may not prove true:
that people are compensated on the basis of the value of their contribution to the effort.
Using a group of experts to assign point values to each of the project milestones yields the most accurate
results. In this approach, the percentage of completion of the project is calculated by dividing the point values
of the completed milestones by the total point values of all project milestones. This approach is the least
frequently used, however, since the added cost of assigning points to the milestones, and revising the point
values if the project scope changes, can be great.
Any of these weighting techniques can be used at the end of a period in order to derive a planned percentage
of completion for the project and an actual percentage of completion for comparison purposes. The data can
be further analyzed as checks on the status being reported by the members of the project team.
Because many project control techniques do not focus on the physical completion of work or do not place
sufficient emphasis on this factor, either achievement or accomplishment monitoring needs to be part of every
organization™s approach to project management. Many organizations ought to consider developing a
procedure for each approach so they can apply the achievement approach to smaller, less significant projects
and the accomplishment approach to larger, more visible, and more critical projects.


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Project Management
by Joan Knudson and Ira Bitz
AMACOM Books
ISBN: 0814450431 Pub Date: 01/01/91

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Achievement Monitoring
Title

Achievement monitoring works best when there are many milestones in the plan. The example in Figure 9-1
uses a milestone plan for a ten-month project. Each box with a number inside represents a milestone. The
number equals the budget dollars for each milestone. Zeros have been eliminated.
-----------
Let™s examine the potential achievement status of the project at the end of the fifth month. If we monitor cost
and schedule performance, then we will expect the project to be 50 percent complete (five months of a
ten-month project completed). If completion of milestones is the measuring criterion, then at the end of five
months, we could expect the project to be 48 percent complete (ten of twenty-one milestones completed). We
can also expect that 70 budget dollars (sum of milestone budgets for the first five months) out of a total of 126
budget dollars (sum for all milestones) will have been completed, or 55 percent complete (70/126). Thus we
have a range of expectations from 48 percent complete to 55 percent complete, with the 55 percent
completion clearly being accurate because it is based on earned value.
Figure 9-2 presents the actual milestone completions at the end of the fifth month. Note that Milestone 8 has
been completed ahead of schedule, while Milestone 13 should have been completed over a month ago. The
value of the completed milestones is 65 (the sum of the completed milestones budgets). Using earned value,
the project is actually 51.5 percent complete (65/126). The project is 3.5 percent behind where it ought to be
(55 percent “ 51.5 percent).
Now let us assume that the cost accounting system tells us that we spent $73 to complete the current
milestones (this is an arbitrary number we have chosen for the sake of the example). This information will
enable us to anticipate the information to be generated by the members of the project team and will thereby
demonstrate the power of earned value. We can expect the members of the project team to report that they are
behind schedule by approximately 7.1 percent. The difference between the budgets of the planned milestones
(70) and the completed milestones (65), divided by the budget of the planned milestones [(70 “ 65)/70] gives
this result. However, we can expect the members of the project team to report that they are under budget by
approximately 12.3 percent. The difference between the budgets of the completed milestones (65) and the cost
incurred to complete them (73), divided by the budget of the completed milestones [(65 “ 73)/65] gives this
result.
Analysis of Accomplishment Data
The effort that goes into calculating the weighted value of completed milestones can yield information useful
to you over and above the ability to report accurately a percentage of completion at the close of a reporting
period. The analyses we will use here can be performed with any rational weighting scheme for
milestones”budget, labor budget, person-hours, or expert assigned points. For this discussion, we will
assume that milestones have been weighted on the basis of their budgets.




Figure 9-1 Milestone plan for a ten-month project. Each numbered box is a milestone; the number in each
box shows the budget dollars for it.

Comparison of Budgeted Cost of Milestones Scheduled and Budgeted Cost of
Milestones Performed
A comparison of the budgeted cost of milestones scheduled (BCMS) and the budgeted cost of milestones
performed (BCMP) yields an assessment of schedule performance on the project:
Three Typical Interpretations for Schedule Performance
1. If BCMS is greater than BCMP, the project is behind schedule.
2. If these two values are equal, the project is on schedule.
3. If the BCMP is greater than BCMS, the project is ahead of schedule.

These values are calculated from your verification of milestone completions rather than by reports from the
task leaders. If task leaders report milestone completions, these analyses will not function as a check and
balance on cost and schedule progress reporting. When you compare BCMS and BCMP, the results should be
consistent with the schedule status as reported by the task leaders through the schedule of
estimates-to-complete. If the results are consistent, it is likely that the task leaders™ assessment of schedule
performance is accurate. If the results are inconsistent, it is likely that there is a problem with the schedule
estimates-to-complete rendered by the task leaders.

Comparison of Budgeted Cost of Milestones Performed and Actual Cost of
Milestones Performed
A comparison of the budgeted cost of milestones performed (BCMP) and actual cost of milestones performed
(ACMP) yields three assessments of cost performance on the project:
Assessments of Cost Performance
1. If BCMP is greater than ACMP, the project is under budget.
2. If these two values are equal, the project is on budget.
3. If the ACMP is greater than BCMP, the project is over budget.




Figure 9-2 Actual milestone completions at the end of the project™s fifth month.
When you compare BCMP and ACMP, the results should be consistent with the cost status reported by the
task leaders through the cost estimates-to-complete. If the results are consistent, it is likely that the task
leaders™ assessment of cost performance is accurate. If they are inconsistent, it is likely that there is a problem
with the cost estimates-to-complete rendered by the task leaders.
The problem with cost estimates could stem from an erroneous assessment of cost to complete, it could be
unwarranted optimism on the part of the task leaders, or it could be an error in the processing of the data. In
any case, you need to determine why there is an inconsistency between cost performance to date and the cost
estimates-to-complete.

Schedule Performance Index and Cost Performance Index
The final element of the analysis is the calculation of two important trends: the schedule performance index
(SPI) and the cost performance index (CPI):
Key Accomplishment Trends
1. The schedule performance index is equal to the budgeted cost of milestones performed divided by
the budgeted cost of milestones scheduled.
2. The cost performance index is equal to the budgeted cost of milestones performed divided by the
actual cost of milestones performed.

Calculate the performance index SPI and CPI at the end of each reporting period. Ideally, each index should
be equal to 1, which indicates that actual performance and planned performance are the same. An index value
less than 1 indicates you are behind schedule or over budget, and an index value greater than 1 indicates you
are ahead of schedule or under budget. Index values calculated at the end of a period of performance add little
to the value of the information already available to you. They become meaningful and useful when they are
available for a number of periods and can be used to indicate a trend in schedule and/ or cost performance.
Plotting these values on a single graph where the x-axis is the end period and the y-axis is the index value will
show a clear picture of both the schedule and cost performance trends on the project. You can then see if the
index values are changing in an alarming manner or if the change indicates that the project is under control.


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by Joan Knudson and Ira Bitz
AMACOM Books
ISBN: 0814450431 Pub Date: 01/01/91

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Calculations Using Accomplishment Data
Title

The calculations employed in the analysis of accomplishment data use these acronyms:
BAC = budget at completion
BCMS = budgeted cost of milestones scheduled (or the planned
-----------
earned value)
BCMP = budgeted cost of milestones performed (or actual earned value)
ACMP = actual cost of milestones performed (or actual dollars spent)

Example 1
Activity ABC is to produce 100 units and is scheduled to take 5 weeks. Each unit is planned to cost $75.*
Below are the basic data needed to work through this example.
1. Planned status at the end of the third week. If 100 units are scheduled to be produced in 5 weeks, 20
units are scheduled to be generated per week if we assume linear production. Therefore, at the end of
the third week, 60 units are planned to be produced. If the standard cost of each unit is $75, the BCMS
is $4,500.
2. Actual status at the end of the third week. Fifty units have been produced, earning the value of
$3,750. In other words, 50 units — $75 (standard cost) = $3,750. Therefore, the BCMP is $3,750.
3. Monies actually spent: The financial reports indicate that $3,000 has been spent; therefore, the
ACMP is $3,000.
To summarize:
• BAC of the project is planned to be $7,500.
• At the end of the third week, BCMS is $4,500, BCMP is $3,750, and ACMP is $3,000.

Questions:
Here are seven questions that can be answered with the data provided. Work through the calculations; then
look up the answers and explanations that follow.
*For purposes of this example, it does not matter whether the units are widgets or miles of pipe or drawings.
It is important, however, that a quantifiable measurement of the number of units can be attached to the output
from this activity.
1. Project™s cost variance = BCMP “ ACMP.
Answer: $_____
Are we over budget or under budget?_____
2. Schedule variance in cost terms = BCMP “ BCMS.
Answer: $_____
Are we ahead of or behind schedule?_____
3. Cost performance index (CPI) = BCMP/ACMP.
Answer:_____
Are we performing better or worse than planned?_____
4. Schedule performance index (SPI) = BCMP/BCMS.
Answer:_____
Are we performing better or worse than planned?_____
5. Budgeted cost for the remaining milestones (BCRM) = BAC “BCMP
Answer: $_____
6. Estimate to complete the project (ETC) = (BAC “ BCMP)/CPI
Answer: $_____
7. Total estimate at completion (EAC) = ACMP + ETC

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