Showing posts with label Author (Sathish Babu). Show all posts
Showing posts with label Author (Sathish Babu). Show all posts

Thursday, September 14, 2017

PMP Protein: Seven Basic Tools of Quality

By Sathish Babu, PMP


Every organization uses various tools and techniques for quality management on a project. As a project manager, you should know, identify and pick the correct tools and techniques to manage and control the quality of your project. 

 One of the important set of tools used in organization is “7 basic quality tools”. These tools can provide much information about problems in the project and hence assist to derive solutions for the same. Let’s take a closer look at each one of them to see what makes them unique.

1. Cause and Effect Diagram
Description: Also, known as Ishikawa or fishbone diagrams. It is a graphical tool that helps identify, sort and display possible causes of a problem or quality characteristics. It is frequently used to find the root causes of the defects.

 Benefits:
  • Helps determine root causes.
  • Encourages group participation.
  • Uses an orderly, easy-to-read format.
  • Indicates possible causes of variation.
  • Increases process knowledge.
  • Identifies areas for collecting data.

Diagram:


 Example:

 2. Flow Chart
Definition: It is a diagram that uses graphic symbols to depict the nature and flow of the steps in a process. It can be used to better understand a process in order to determine which steps add value to the process and which ones don’t (and which therefore can be eliminated).

 Benefits:
  • Promote process understanding.
  • Provide tool for training.
  • Identify problem areas and improvement opportunities.
  • Helps for decision-making processes.

Symbols:

Example:


 3. Check Sheet
Definition: Also, known as Tally Sheet or Checklist is a used for gathering and organizing data. It also helps to keep track of data such as quality problems uncovered during inspections.

 Benefits:
  • Records data for further analysis.
  • Provide historical record.
  • Introduce Data Collection methods (where, what, who and how).

Example:

 4. Histogram
Definition: It is a bar chart that shows the distribution of data and a snapshot of data taken from a process. If the histogram is normal, the graph takes the shape of a bell curve. If it is not normal, it may take different shapes based on the condition of the distribution.

 Benefits:
  • Summarize large data sets graphically.
  • Compare measurements to specifications.
  • Communicate information to the team.
  • Assist in decision making.

Example:
If a project had 125 defects, you might think that they all were critical. So, looking at the chart like the one below would help you to get some perspective on the data.

5. Pareto Chart
Definition: It is a bar chart arranged in descending order of height from left to right. Bars on left relatively more important than those on the right. Joseph Juran adapted Vilfredo Pareto’s 80/20  rule to create the 80/20 principle which states that 80% of the defects are usually caused by 20% of the root causes. 

 Benefits:
  • Breaks big problem into smaller pieces.
  • Identifies most significant factors.
  • Shows where to focus efforts.
  • Allows better use of limited resources.
  • Help focus attention on the most critical issues.
  • Prioritize potential “causes” of the problems.
  • Separate the critical few from the uncritical many.

Example:

 6. Control Chart
Definition: It is used determine if the results of a process are within acceptable limits or not. These limits, i.e., upper control limit (UCL) and lower control limit (LCL), are decided by project manager and other stakeholders. If the variables are within the limit, the project will be treated ‘in control’. There is a line in the middle of the control chart which is known as ‘mean’. It represents the middle of the range of an acceptable variation. If seven variables are found in one side of the mean, but within the control limits, it is known as rule of seven and the project will be treated as ‘out of control’. There is also upper and lower specification limit (USL and LSL) which are decided by the end customers.

 Benefits:
These charts allow you to identify the following conditions related to the process that has been monitored,
  • Stability of the process.
  • Predictability of the process.
  • Identification of common cause of variation.
  • Special conditions where the monitoring party needs to react.

Example (reference source - “I Want To Be A PMP” book):

7. Scatter Diagram
Definition: It is used to study and identify the possible relationship between the changes observed in two different sets of variables. A regression line (or trend line) is calculated to show the correlation of variables, and can then be used for estimation and forecasting. 

Example:
Given below are the steps to construct a Scatter diagram.
  • Collect two pieces of data and create a summary table of the data.
  • Draw a diagram labeling the horizontal and vertical axes.
  • It is common that the “cause” variable be labeled on the X axis and the “effect” variable be labeled on the Y axis.
  • Plot the data pairs on the diagram.
  • Interpret the scatter diagram for direction and strength.


 Exercises:

 1.Which of the following tools and techniques is used to show which categories of defects are most common?
A. Control charts
B. Pareto charts
C. Checksheets
D. Flowcharts 

 2. Which tool and technique is used to analyze trends?
A. Scatter chart
B. Run chart
C. Checklist
D. Flowchart

 3. Which Control Quality tool is used to analyze processes by visualizing them graphically?
A. Checklists
B. Flowcharts
C. Pareto charts
D. Histograms

 4. Which of the following is associated with the 80/20 rule?
A. Scatter charts
B. Histogram
C. Control chart
D. Pareto chart

 Answers:
1.B, 2.B, 3.B, 4.D
References: 
1. “8.1.2.3: Seven Basic Quality Tools” from PMBOK Guide 5th Edition.
2. “8.3: The 7 Basic Tools of Quality” from Book - I Want To Be A PMP by Satya Narayan Dash.
3. “Chapter - 8. Quality Management” from Head First PMP 3rd Edition.
4. “Chapter - 8. Quality Management” from PMP Exam Prep by Rita Mulcahy
Written by Sathish Babu:
Sathish Babu is working for Motorola Solutions as a Project Lead and having 11+ years of experience in Product, Project Management and Service Delivery in Telecom domain.


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    Friday, August 25, 2017

    PMP Protein: Earned Value Management – Advanced

    By Sathish Babu, PMP


    In my previous article PMP Protein: Earned Value Management (EVM) – Basics, we have discussed about how to calculate earned value, variances and performance indices based on the past performance of a project. These values are important to identify whether you’re on, ahead of, or behind schedule and on, under, or over budget. 

     In this article, we will discuss about forecasting project costs and future performance of a project.
    Terms to Know:
    1. Estimate at Completion (EAC) is a forecast of how much the total project will cost (total cost of completing all work).  It projects the total cost at completion based on project performance up to a point in time.

     When calculating EAC, different formulas can be used, depending on your assumptions. The assumptions are with respect to the cumulative cost performance index (CPI) or a combination or cumulative CPI and cumulative schedule performance index (SPI) or if your estimate is no longer valid. 

     Given below with simple explanation to identify where to use what.
    Formulas:
    EAC = BAC / CPI – If the CPI is expected to be the same for the remainder of the project, the EAC can be calculated using this formula.

     EAC = AC + BAC - EV – If the future work will be accomplished at the planned rate (initial one), the EAC can be calculated using this formula.

     EAC = AC + Bottom Up ETC – If the initial plan is no longer valid, the EAC can be calculated using this formula.

     EAC = AC + (BAC - EV) / (CPI * SPI) – If both the CPI and SPI influences the remaining work, the EAC can be calculated using this formula.

     To know more on how these formulae are derived you can refer:
    PMP Exam Prep: Calculating EAC and ETC for Forecasting

     2. Estimate To Complete (ETC) is the expected cost to finish all the remaining work. It forecasts how much more will be spent on the project, based on past performance.

              Formula for ETC = EAC - AC If the work is proceeding to plan, the cost of completing the
             remaining authorized work can be calculated using this formula.

     3. Variance At Completion (VAC) is the projection of the amount of budget deficit or surplus. It is expressed as a difference between budget at completion and the estimate at completion.

              Formula for VAC = BAC – EAC

     4. To Complete Performance Index (TCPI) describes the performance that must be achieved in order to meet the financial or schedule goals. It is expressed as a ratio of the cost to finish the outstanding work to the budget available.

              Formulas:
             • TCPI = BAC - EV / BAC - AC The efficiency that must be maintained in order to complete to
                plan.
             • TCPI = BAC - EV / EAC - AC The efficiency that must be maintained in order to complete
                the current EAC.

     To know more on how these formulae for TCPI are derived, you can refer:
    To Complete Performance Index (TCPI) and Cost Performance Index (CPI)

     Example:
    Let’s take the same example given in my previous article to continue further.

     A project has a budget of $1,000,000 and schedule for 10 months. It is assumed that the total budget will be spent equally each month until the 10th month is reached. After 4 months, the project manager finds that only 10% of the work is finished and a total of $200,000 spent.

     We have already calculated the following values my earlier post.

    If you know your CPI now, you can use it to predict what your project will actually cost when it’s complete. 

    • If your CPI is below 1, EAC will be larger than project budget (BAC).
    • If your CPI is above 1, EAC will be smaller than project budget (BAC).
    • If your CPI is under budget, TCPI calculation will be based on your BAC.
    • If your CPI is over budget, TCPI calculation will be based on your EAC.

    Let’s derive further to find out estimates of final cost and time to complete.

    It is always a good practice to plot the values on a graph in order to help stakeholders concerned to visualize the progress and the health of the project. This is shown below.

    Twist for Exam: 
    Sometimes you get question which provides partial information. Depending on the information you are given in a question, you can reverse the formulas. 

    Below are some formulas for you.


    Most of the earned value questions on the exam will be pretty straightforward. You will be given the numbers that you need to plug into a formula and when you do it you will get the answer. But occasionally, you will get a question that isn’t quite so straightforward.

    Below are some exercises for you. 

    Exercises:
    1. Your project has a total budget of $300,000. You can check your records and find that you have spent $175,000 so far. The team has completed 40% of the project work. However, when you check the schedule it says that 50% of the work should have been completed. What is the SPI and CPI of your project?
    2. BAC is $40,000 and EAC is $30,000, EV is $17,000 and AC is $15,000. What is your TCPI considering BAC as the budget?
    3. Your project has a BAC of $4,522 and EV of $587.66. What is the PV of your project?

    Aiming for Exam:
    • The earned value formulas have numbers divided into or subtracted from EV.
    • Variance is always subtraction and an index is always division.
    • SV and SPI use PV, while CV and CPI use AC. EV comes first in each of these formulas.
    • If it is a variance, the formula is EV minus something.
    • If it is an index, the formula is EV divided by something.
    • If the formula relates to cost, use AC.
    • If the formula relates to schedules, use PV.
    • For variances interpretation: negative is bad and positive is good.
    • For index interpretation: and less than one is bad and greater than one is good.

    References: 
    1. “7.4 Control Costs” from PMBOK Guide 5th Edition.
    2. “Chapter – 8: Project Cost Management” from Book - I Want To Be A PMP by Satya Narayan Dash.
    3. “Chapter - 7. Cost Management” from Head First PMP 3rd Edition.

    Written by Sathish Babu:
    Sathish Babu is working for Kodiak Networks as a Project Manager and having 11+ years of experience in Product, Project Management and Service Delivery in Telecom domain.




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      Monday, August 07, 2017

      PMP Protein: Earned Value Management – Basics

      By Sathish Babu, PMP

      Earned Value Management (EVM) is one of the most important concepts that you need to understand for the PMP® exam and you may expect a good amount of questions from this topic. This technique helps you to think about your project the way your sponsor thinks about it.

       Benefits of EVM:
      Have you ever wondered if there would be a best practice to help you figure out how your project is progressing and better way to control costs rather than rely on hope, guesses, general estimation or approximate percentage complete? 

      • How valuable will it be, if you know the answer for the following on your project:
      • Are we behind or ahead of schedule?
      • Are we currently under or over budget?
      • When is the project likely to be completed?
      • What is the remaining work likely to cost?
      • How much will we be under or over budget at the end?
      These are the benefits of EVM and it has been used as one of the tools and techniques in the “control costs” process under the “project cost management” knowledge area.
      Why To Conduct EVM?
      Listed below are few key points.
      • Helps to figure out how much of your project’s value has been delivered to the customer so far.
      • Helps to know that how you are doing compared to how you thought you would do.
      • Helps to control the performance measurement baseline (Scope baseline, Schedule baseline and Cost baseline).
      • Helps predict future performance based on trends.
      • Provides accurate and timely data for effective decision making.
      • Helps to find changes you need to make on a project. It may also result in change requests.

      Advantages of EVM:
      Listed below are few key advantages of EVM.
      • Preventing scope creep.
      • Improving communication and visibility with stakeholders.
      • Reducing risk.
      • Profitability analysis.
      • Project forecasting.
      • Better accountability.
      • Performance tracking.
      Terms to know for EVM calculation:
      First, we need to understand the following. 

       1) Baseline is a snapshot of the planned budget, schedule and finalized scope for a project. You compare your actual performance against the baseline so you always know how you are doing versus what you planned.

       2) Budget at Completion (BAC) is just your project budget. Once you finalized and estimated cost for all activities and resources, you will get the total project budget. This is shown below. (reference sources - “I Want To Be A PMP” book and PMBOK® Guide 5th Edition.)
      Project Budget Components

      3) Planned Value (PV) is also referred to as Budgeted Cost of Work Scheduled (BCWS) defines the physical, scheduled or planned work that should have been completed.

      Formula for PV = BAC x Planned % complete

      4) Earned Value (EV) is also referred to as Budgeted Cost of Work Performed (BCWP) all about how much your project actually earned. When you calculate EV, you are showing your sponsor how much value that investment has earned.

      Formula for EV = BAC x Actual % complete

      5) Actual Cost (AC) is also referred to as Actual Cost of Work Performed (ACWP) all about the costs actually incurred for the work completed by the specified date.

      6) Schedule Variance (SV) is about the difference between PV and EV, to tell whether the project work is ahead of, on or behind schedule.

      Formula for SV = EV – PV

      We can interpret SV as below.
      • If the variance is positive, your project is ahead of schedule.
      • If the variance is negative, your project is behind schedule.
      • If the variance is zero, your project is on schedule.

       7) Cost Variance (CV) is about the difference between EV and AC, to tell whether the project work is under, on or over budget.

      Formula for CV = EV - AC

      We can interpret CV as below.
      • If the variance is positive, your project is under budget.
      • If the variance is negative, your project is over budget.
      • If the variance is zero, your project is on budget.

      8) Schedule Performance Index (SPI) is about the ratio between EV and PV, to reflect whether the project work is ahead of, on or behind schedule in relative terms.

      Formula for SPI = EV/PV

      We can interpret SPI as below.
      • If the ratio is greater than 1, your project is ahead of schedule.
      • If the ratio is less than 1, your project is behind schedule.
      • If the ratio is equal to 1, your project is on schedule.

      9) Cost Performance Index (CPI) is about the ratio between EV and AC, to reflect whether the project work is under / on / over budget in relative terms.

      Formula for CPI = EV/AC

      We can interpret SPI as below.
      • If the ratio is greater than 1, your project is under budget.
      • If the ratio is less than 1, your project is over budget.
      • If the ratio is equal to 1, your project is on budget.

      How to Calculate Earned Value:
      The best way to understand EVM example is to solve one example. So, let’s take one simple example to understand it.

      A project has a budget of $1,000,000 and schedule for 10 months. It is assumed that the total budget will be spent equally each month until the 10th month is reached. After 4 months, the project manager finds that only 10% of the work is finished and a total of $200,000 spent.


      These values are important to identify whether you’re on, ahead of, or behind schedule and on, under, or over budget. But just comparing your actual expenditures with your budget can’t tell you whether you’re on, under, or over budget. This is where variances and performance index comes in.

      How to Calculate Variances and Performance Indices:
      Let’s take the same problem to calculate further.

       To arrive at the correct answers for EVM questions, all you need to do in the PMP Exam is to,
      • Read the question carefully.
      • Select the correct formula to apply.
      • Calculate the answer (this is often the easiest part! You can get most answers without the use of calculators).
      In common practices, EVM will also involve plotting the values on a graph in order to help stakeholders concerned to visualize the progress and the health of the project. This is shown below.


      Now we have identified the actual status of a project and how it is progressing. We will discuss more about future performance and forecasting calculation for a project in my next article.

      References: 
      1. “7.4 Control Costs” from PMBOK Guide 5th Edition.
      2. “Chapter – 8: Project Cost Management” from Book “I Want To Be A PMP” by Satya Narayan Dash.
      3. “Chapter - 7. Cost Management” from Head First PMP 3rd Edition.

      Written by Sathish Babu:
      Sathish Babu is working for Kodiak Networks as a Project Manager and having 11+ years of experience in Product, Project Management and Service Delivery in Telecom domain.

       Part 2 of EVM Series:
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