How to track Projects using e-PMO dashboard – 4

Measuring Risks & Customer Satisfaction

In my previous blogs, we discussed on creating an e-PMO dashboard to view the overall status of the project through meaningful metrics across various Knowledge Areas in a project. For this, I discussed each of the areas through a series of articles.

1)      How to put project metrics into effective use – that deals with the fundamentals and basics on metrics measurement and dashboards. (See, How to put Project metrics into effective use)

2)      How to track Projects using e-PMO dashboard – I – that deals with visualising an integrated e-PMO dashboard and measuring process and tracking progress (see, How to track projects using e-PMO dashboard - I )

3)      How to track Projects using e-PMO dashboard – 2 – that deals specifically about measuring Financials) (see, How to track projects using e-PMO Dashboard - 2)

4)      How to track Projects using e-PMO dashboard – 3 – that deals specifically about measuring HR) (see, How to track projects using e-PMO Dashboard - 3 )

 Now, let us look at measuring the very reason of executing the project – the customer and the process of measuring the overall risks in the project.

MEASURING THE CUSTOMER FACTOR

Like measuring employee factor and the HR parameters (as in my previous blog), it is equally important and probably a bit dicey to measure the Customer Satisfaction.

Customer satisfaction is more qualitative than quantitative. It is more about whether the customer is happy with the product or service delivered. And on this central theme revolves all knowledge areas. Customer needs to be happy or at least satisfied with the progress as well as end result of the project.

a)      The timelines agreed upon is a major point of discussion especially during the initial process in the project. And even if the time lines are agreed upon, the real test comes when it is time for execution and delivery. Delays, if any need to be managed carefully and sensitively, with genuine reasons for delays.

b)      The Scope agreed upon has always been the biggest challenge to manage with. With most of the managers succumbing to customer and in turn senior pressure to deliver in a crunch time for the so called agreed scope, they end up with a situation where scope creep leads to delays and frustration for both the customer and the project team. So, scope and timelines normally go hand in hand and one has a direct impact on the other. To deal with these situations, it is important to be honest, sincere and disciplined in one’s approach towards making deals. That is where one realises the importance of the project charter, the initially identified risks, the scope and timeline tracking, the RTM (Requirement Traceability Matrix). It all connects…

c)       The cost is yet another area to look into, especially while negotiating with the customer. If the scope is unclear and the time lines rigid, one should be very careful on a fixed price negotiation. One may actually end up making loss or even go bankrupt when things don’t go as foreseen. While scope creep becomes imminent and unavoidable, there are many unknown factors (both internal and external) that can jeopardize the project. A common external example could be an environmental clearance for a hazardous chemical plant set-up where a lot of political and bureaucratic clearances might take enormous time to ensure a safe environment in and around the chemical plant. So, it inadvertently leads to managing risks extremely well. Similarly, if the pricing is purely based on Time and Material, and the customer and the project team later find themselves having difficulty in closing the scope of a project already in execution, then, the scope creep can make a big hole in the customer’s pocket.

Keeping these factors and pointers in mind, some of the important measurements that can help are broadly classified into:

1)      Direct measurements – such as Customer feedback about the quality of the product, project delivery, product installation, project delivery milestones achieved, customer referrals given to new suspects/ prospects.

2)      Indirect measurements – such as Outcome of Product Road Shows, Project Scope adherence, Quality, Timelines, ROI. So, all the project measurements being done are actually interconnected. Point 2 is like a foundation that helps in achieving point 1 i.e., direct measurements. One cannot expect good feedback without having scope, quality, time, cost and HR in place.

A database can be created to track all customer feedbacks, Customer’s experience during deployments, deliveries and upgradations, and all this can be linked to the e-PMO dashboard and a summary can be reported in the customer satisfaction survey.

RISKS, IT’s EVERY WHERE!!

Why I took this topic at the end is to help appreciate that all that we discussed about processes, project progress, scope, time, cost, HR, Customer satisfaction, and so on, has an element of risk in it. As a matter of fact, risk is everywhere. Coming to projects, the very nature of project is CHANGE. Hence, risk is an integral part of any project. So, it is not about avoiding risks, but how well do we manage it that’s important. Reiterating some of the fundamentals of Risk Management. See my previous article - How to show risk information in Enterprise Project Management Dashboard

Risks can be positive or negative. The whole idea is to exploit, share and enhance the probability and impact of occurrence of positive risks and mitigate, avoid or transfer the impact and probability of occurrence of negative risks. One should carefully design the risk register with appropriate fields like

Risk ID, Risk Name, Risk Details, Risk Owner, Risk Raised By, Risk Raised Date, Risk Follow up date, Risk Priority, Current Status, Risk Response etc..

Risks identification and management should start as early as the initiating process of the project… right when the project charter is being prepared, to highlight the high level risks. A proper Risk Management Plan needs to be in place to plan out exactly how the risks will be managed. Based on the risk management plan, one needs to identify the risks and log it into the risk register. Do a qualitative and quantitative risk analysis. Keep lower rated risks in a separate watch list that could help at a later point of time. Start tracking the risks as early as possible during the executing and monitoring & controlling process.

For this, a separate risk management tool can be developed. This can then be linked to the centralised e-PMO dashboard.

The display of risks can be segregated into high level risks at the program level for top and senior management, detailed level risks at the project level for the executing project managers and leads to view and act upon. Based on the probability and impact of the risk, appropriate RBAG status can be provided to help manage and address the risk appropriately.

SUMMING IT ALL UP

So, how does the centralised e-PMO dashboard look like? Again, it would depend on whether the e-PMO has been developed at the program level, or project level. It would depend upon the nature and size of the program or the project. It would also depend on what kind of view and access rights is provided at each level of the organisation hierarchy.

However, simplifying the elements of the e-PMO dashboard as we discussed in this and my previous blogs, it would primarily show (to name the basic elements): Customer Satisfactory indices, EVM related measurements that would give status indicators for time and cost, Scope related measurements, quality related measurements, HR related indices, Project charter and key points related to the very purpose of the project, Risk related details and indices etc. The list and the display will vary from project to project and also on the organisation culture, their risk tolerance level and so on.

However, if a project is being fundamentally progressed with an honest, disciplined and systematic approach and all the key areas as discussed is being taken care of and measured, then the e-PMO dashboard can provide lot of meaning and inference for better project management. 

How to track Projects using e-PMO dashboard – 3

Measuring the Human Factor

In my previous blogs,  we discussed specifically on measuring Processes & Financials(see, How to track projects using e-PMO dashboard - I and How to track projects using e-PMO dashboard - 2 )  using a consolidated e-PMO dashboard. Now, let us look at measuring the most important element of the project – The people who work for the project.

Re-iterating the key points for measuring project progress, (see How to put project metrics into effective use) , ….

1)      Ensure that the metrics are aligned with the organisational or programme goals, i.e., Financial, Process, Customer and HR related to say the least.

2)      Ensure that the metrics cover the vital areas of the project. i.e., they focus on deliverables, Customer satisfaction, Intelligence, Quality, Development, Scope, HR, and last but not the least Risks and Issues.

3)      Ensure that clear metrics criteria’s are established and communicated to all relevant stake holders.

ENTERPRISE PROJECT MANAGEMENT DASHBOARD

EPM Dashboard is normally used to show the end to end project status across all phases in a given project. It is especially useful in large budget projects that would have multiple stakeholders and sizeable end result, service or product. Here, I have referred to a large scale IT project.

Naturally, the EPM dashboard that we are assuming here is of a large proportion with rich UI and consolidation of variety of tools. As an example, see, How to show risk information in Enterprise Project Management Dashboard .

MEASURING HR RELATED PARAMETERS USING e-PMO

Measuring the HR factor has never been so easy especially because of the very nature of what is being measured i.e., human. Understanding the processes involved in managing the project teams is one part of the story while the later part is managing human resources that need more involvement by the HR managers, including the project managers. For this, most often, the organisation deals with the situation by placing LOCAL HR’s who understand quite a more about the project and who can work closely with the project managers in the project itself.

To get into measuring the employment related metrics, one needs to understand what HR related processes are involved during a project life cycle. Well, it involves almost everything and is more intense than HR related processes for an overall organisation. Though going through all that in much detail is not possible in a single blog, but it helps to understand some of the key elements.
There are 4 major processes involved in HR Management as put across in the PMBOK 4^th edition.

1)      Developing the HR Plan: This is where the overall plan and approach towards HR management is planned out in the Planning process of the overall project. This includes but not limited to:

a.        Planning the Activity resource requirements.

b.       The Org Chart and Position descriptions and the roles are put in place.

c.       How will the recruitment take place, and at what rate will the resources be replenished (based on the attrition rate)?

d.      What kind of salary packages and bonus structures will be available based on the different grades and positions?

e.      What kind of rewards, recognitions, punishments needs to be put in place?

f.        What sort of acquisitions, negotiations, or virtual teams, co-location will be needed?

g.       Path for interpersonal skills, training, team building, employee engagement.

h.      How will the performance be assessed?

i.         How will the employee’s KRA’s relate to the project, programme and organisational goals?

Though this is planned early in the project, the HR Management Plan goes through iterations and changes as the project progresses.

2)      Acquiring the Project Teams: This is where the actual acquisition of project teams starts based on the plan and approach put across in the Human Resource Plan during the planning phase. Some key people and limited resources are already on board. The project has just started execution and hiring is in frenzy. Technical, support and managerial resources are being hired left, right and centre either internally from a different project, or from the market, or resources being pooled from a recently done acquisition. This is where the project manager and the HR manager’s negotiation skills are of utmost importance to manage the project under BAC.  Once the resources are hired and assigned to the project, a resource baseline normally helps. At this stage, the HR and Project manager needs to rely heavily on the project management plan, HR plan, and all these should be available in the e-PMO for ready reference.

3)      Developing the Project Team: Once the project kicks off and the resources start working in their respective areas, be it project management, general management, development, testing or support related activities, it is important to start developing the project team. This has far reaching affect on the project… especially on the attrition. A project well grounded with the ground rules and clear communication and right processes and methodologies is bound to retain more of its employees than those that are poorly managed, with no clear future or motivations, and no future path or no career growth plans for individual employee. Finally, as the project needs to be delivered and every employee works towards the common goal, everyone needs motivation, career progression, rewards, recognition, and each employee finally asks the question “What is there in it for me?”. This is where the HR must intervene and start execution of employee engagements to make each employee feel as part of the team, start rewards and recognition programs, clearly communicate the path for developing interpersonal skills, training, team building, Bbase lining of KRA’s and start measurement of KRA’s against the goals. This is where e-PMO could be of utmost importance. While the HR programs are being conducted, the HR measurements can be done using e-MPO to ensure that the measurement is objectively done, with no element of bias or human judgement coming into it. A parallel effort needs to be put to develop software that can measure the following:

a.       Employee Engagement:  In terms of measuring each employee’s and team’s contribution towards:

                                                              i.      Project related activities: Outstanding contributions to make the project successful. This will directly relate to rewards, bonuses and recognitions.

                                                            ii.      Trainings, Team building, Interpersonal skills – To measure the growth of employees.

b.      KRA/KPI measurement: KRA’s/KPI's achieved and being progressed for a given financial year. This will directly relate to appraisals at the end of the year. This will also help the employee to grow horizontally or vertically in an organisation and or project.

c.       Conflict resolutions: Resolving conflicts is of utmost importance in any project or project team. A log can be maintained to ensure that appropriate decisions are being taken and appropriate conflict resolution techniques are being used.

4)      Managing the Project Team: Once the parameters are set as in point 2 and 3 above. One needs to start managing the project team as per the process guidelines. Any change in process or a better way to deal with situations needs to be documented, go through the Change control board and once agreed, communicated clearly to the entire project or organisation. The e-PMO can also be used well for managing the changes through Change Control board. The factors like employee engagement, trainings undertaken, team building, outstanding contributions as well as scope for improvement needs to be managed, measured and tracked well through a centralised e-PMO kind of tool. Some organisations use HRMS packages that can also be integrated with the e-PMO. However, care should be taken on security and providing correct and relevant access to authorised personnel ONLY, to ensure the right dissemination of information across the organisation.

In my next blog, we shall discuss about measuring customer satisfaction and the most important element in the project i.e., Risk.

How to track Projects using e-PMO dashboard – 2

Measuring Financials

In my previous blog we discussed specifically on measuring Processes (see, How to track Projects using e-PMO dashboard - I) using a consolidated e-PMO dashboard. Next, let us get to know more on how we can measure and use financial measures to effectively track Projects.

Re-iterating the key points for measuring project progress, (see How to put Project Metrics into effective use) , ….

1)      Ensure that the metrics are aligned with the organisational or programme goals, i.e., Financial, Process, Customer and HR related to say the least.

2)      Ensure that the metrics cover the vital areas of the project. i.e., they focus on deliverables, Customer satisfaction, Intelligence, Quality, Development, Scope, HR, and last but not the least Risks and Issues.

3)      Ensure that clear metrics criteria’s are established and communicated to all relevant stake holders.

ENTERPRISE PROJECT MANAGEMENT DASHBOARD

EPM Dashboard is normally used to show the end to end project status across all phases in a given project. It is especially useful in large budget projects that would have multiple stakeholders and sizeable end result, service or product. Here, I have referred to a large scale IT project.

Naturally, the EPM dashboard that we are assuming here is of a large proportion with rich UI and consolidation of variety of tools. As an example, see, How to show risk information in Enterprise Project Management Dashboard .

MEASURING FINANCIALS USING e-PMO

Measuring financials is of utmost importance since that tells us a number of things and helps take quantitative decisions. It helps to keep subjective decisions at bay and reduce the element of bias coming into decision making in the project. Some key elements where financial measurement helps are:

1)      Deciding which project to invest in and whether to initiate the project at all.

2)      Tracking whether the project is under the baseline budget.

3)      Is it feasible to go for revised Budget at Completion?

4)      Is it viable to use contingency or management reserves?

5)      How does it add up to the overall company budget and financials?

To measure these, there are certain financial measurements that are very useful, namely:

A)     Project Selection Criteria

B)      Earned Value Analysis

C)      Financial Accounting / Statements

Let us touch upon each one of these below:

A)     Project Selection Criteria: Here, a number of measurements are useful such as:          

a.       Net Present Value: The Net Present Value is calculated as the difference between the Present Value of all incomes and the Present Value of all expenses.

i.e., NPV = PV_income – PV_expenses

If NPV is higher, it is good for the project. This measurement is useful in the initiating process of the project where the project charter is created and financial information is summarised to help in Go – No Go decision regarding the project.

b.      Benefit Cost Ratio: Benefit to Cost ratio is simply put, the ratio of the revenues and cost. i.e., BCR = Revenues / Cost. Higher the BCR, better for the project.

c.       Internal Rate of Return: The IRR lets us know the Rate of Return that we will get if the project is executed. Higher the IRR, better for the project.

d.      Payback period: Payback period tells us how much time will it take to break even or simply put, to recover all the costs incurred in the project and start making profits. Lesser the Payback period, better for the project.

All these measurements can be done on a portfolio of projects and can help decide which project to go for. The comparative data can be displayed on the e-PMO dashboard to help take informed decision before signing the project charter. Since such data are very sensitive, proper care should be taken to ensure that ONLY authorised personnel can access such information. For this, it is very important that the e-PMO has appropriate security and ONLY appropriate data is visible to the appropriate level in the Organisation hierarchy.

B)      Earned Value Analysis:  Earned Value Analysis helps to quantitatively track the project progress. It helps in creating a baseline against which the project is tracked with the actual progress made, see, How to use Earned Value Management using MSProject 2007 for more details. More complex projects or programmes can be tracked through multiple baselines. Common tools available in the market that are used for Earned Value Analysis are MS Project, Prima Vera, and Easy Gantt etc…

Before baselining a project, it is important to come up with proper estimation. Most common tool used for Estimation is PERT, where the optimistic, pessimistic and Most Likely time for completing a project is found. The estimated time for completing the project is found by using the formula: Estimated time Te= ((O + 4 ML + P)/ 6)

Such data can come directly from MS Project or any such tracking tool used. Hence it is important that the tool is synced up with the e-PMO Database. The Parametric estimation technique such as DOCOMO Model, Function Point analysis etc can be used in conjunction with 3 point estimates (PERT) to come up with better estimates.

After applying scheduling techniques and applying leads/ lags and resource levelling, the project is finally baselined with the budget and time required for completion.

What comes out is the Performance Measurement Baseline or Cost Performance Baseline, also referred to as: Budget At Completion = BAC. Based on the BAC, the following parameters are calculated.

·         Planned Value (PV) = Budgeted Cost of Work Scheduled (BCWS) = % (PV / BAC)

·         Earned Value (EV) = Budgeted Cost of Work Performed (BCWP) = % (Work completed) x BAC.

·         Actual Cost (AC) = Actual Cost of Work Performed (ACWP) = % (AC / BAC)

Based on this, once can now calculate the Schedule Variance and Cost Variance.

·         Scheduled Variance (SV) = EV – PV. If > 0, Ahead of Schedule.

·         Cost Variance (CV) = EV – AC. If > 0, Under Budget.

·         Schedule Performance Index (SPI) = EV / PV. If > 1, Ahead of Schedule.

·         Cost Performance Index (CPI) = EV/ AC. If > 1, under budget.

If the project needs re-baselining, a revised EAC (Estimate At Completion) is calculated. This is then used as a baseline. Estimate at Completion = BAC/ CPI OR = AC + (BAC-EV) OR = AC + (BAC-EV)/ (CPI x SPI).

·         To Complete Performance Index (TCPI) _intial = Work remaining / Funds remaining = (BAC-EV)/(BAC-AC). A higher TCPI means Tighter budget

·         To Complete Performance Index (TCPI) _revised = Work remaining / Funds remaining = (BAC-EV)/(EAC-AC).

If all the budgeted expenditure and the contingency built on the project is over, then, based on the situation, the management can use the management reserve as a lump sum amount or as a percentage of the overall project BAC to help get the project on track and deliver. Remember, the management reserve is the last resort. It is used ONLY when all the agreed budget and contingency reserve built on top of it is totally exhausted. A provision for this can be made and visible only to the authorised personnel.

All these calculations are automatically calculated in the automated project tracking tools such as MS Project. So, connecting to the MS Project fields can provide the data directly for display on the e-PMO dashboard. One also has the option to track the entire project including all the calculations as a part of the e-PMO dashboard where the software can be developed in-house. But, this might involve additional efforts and resources and this needs to be taken into account as well. The data can be used to show Earned Value graphical charts that can directly provide inferences.

C)      Financial Accounting / Statements:  Accounting can provide the overall financial health of the organisation and also for a Strategic Business Unit with responsibility of a programme or portfolio. What Accounting can do is to provide key financial information such as Return on Investment (ROI), Return on Equity (ROE), Profitabiity, Net Profit, etc. This can help management take decisions on whether the project or groups of projects are viable and which project can continue and which ones need to be shelved.

Combining all this can provide a very comprehensive and accurate financial report of the project on a single e-PMO dashboard. Combine this with the statistics on deliverables, scope and quality discussed in my previous blog and it makes tracking the project more accurate.

In my next blog, we shall discuss about measuring HR related parameters that are crucial for the success of a project.