Upon reviewing a vendor’s Integrated Master Schedule, created in MS Project, I noticed something very peculiar. Where some tasks could clearly be marked as Fixed Duration, everything was Fixed Units. I think there are two answers for this. Either there was a misunderstanding about the work to be performed or the person doing the schedule needs some help understanding task types. I believe working with MS Project can make your eyes bleed if you’re not used to it. But if you’re armed with just a little information about task types, it can be a whole lot easier.
I would love to go into a detailed explanation about Fixed Work, Fixed Units, and Fixed Duration. If I did, however, you’d probably leave my site never to return. Instead, I found a very helpful video on YouTube. Why go hunting for this stuff when you can just find it here?
When I was studying for the PMP exam, a few years ago, I remember memorizing a group of formulas. One of those was the “Variance of Activity.” At this point, don’t remember if it was even referenced in the exam. There were no direct questions asking “what is the formula for…” On my exam, I remember having numerous questions resulting from schedule variance calculations and cost variance calculations. To my surprise, I went searching for the Variance of Activity formula in the PMBOK (4th Edition) and I can’t find it! So as not to lead people astray when giving PMP study advice, I’m now researching each formula I was once told to memorize. I’m very surprised PMI didn’t save us a lot of trouble and list known formulas in the back of the PMBOK.
Are you studying for the PMP exam and struggling with the concept of Schedule Performance Index (SPI) and Cost Performance Index (CPI)? Are you just bored and want to impress your friends with your knowledge of SPI and CPI? Well, I’m going to try to make it easy for you.
To the left you’ll see two charts. Both are displaying variances on a monthly basis. The first chart is displaying variances in thousands of dollars, both in schedule and cost. The second chart is displaying the variances as they relate to a performance index.
Definitions and Formulas
Earned Value (EV) – The estimated value of the work actually accomplished
Actual Cost (AC) – The actual cost incurred from the work accomplished
Planned Value (PV) – The estimated value of the work planned to be done
[Chart 1 - Variance (In Dollars)]
Scheduled Variance (SV)=EV – PV
a NEGATIVE schedule variance is behind schedule and
a POSITIVE schedule variance is ahead of schedule
Cost Variance (CV)=EV – AC
a NEGATIVE cost variance is over budget and
a POSITIVE cost variance is under budget
[Chart 2 - Variance]
Schedule Performance Index (SPI)=EV ÷ PV
You are progressing at __% of the rate originally planned
Cost Performance Index (CPI)=EV ÷ AC
You are getting $_____ worth of work out of every $1 spent
Practical Application
So, where does that leave us? Your goal is to have a $0 (zero dollar) cost and schedule variance, resulting in a SPI and CPI of 1.0. That would mean you estimated correctly, leading into your project. Going into the PMP exam, you should know these formulas and how to calculate all of the above. Here are a 2 simple questions you should be able to answer:
1. Is a 1.3 CPI a good thing or a bad thing? Why?
This is a good thing! A 1.3 CPI translates to you getting 1.3 dollars of results for every dollar you put into the project.
2. Is a 0.90 SPI a good thing or a bad thing? Why?
This is a bad thing! A 0.90 SPI translates to your project progressing at 90 percent of the rate originally planned.
Here is the moment of truth. What kind of question is going to be on the PMP exam?
Example Question: Based on the charts listed above, what would you be more concerned with, schedule or cost, if you were taking over this project from another project manager?
Answer: The answer is cost. As of August, CPI is closest to 1.
While trying to keep control of a project or even your life, you need to yield to a cone of uncertainty. What am I talking about, you ask? As Hurricane Bill recently approached the United States, many would frequent news sites to view possible paths the hurricane might take. The further into the future the path was predicted, the larger the cone of uncertainty became. If you looked at the current date and time, you would see the beginning of the cone. If you plotted it on a graph, it would be an exact x-y coordinate. Now let’s leverage this analogy for the purpose of understanding Waterfall and Agile.
Waterfall
With waterfall (path A from the figure), you work and work and work, trying to refine your requirements documentation, your schedule, and your budget before the project even begins. You do everything you can to lay it all out, attempting to account for every possible variable. Unfortunately, you don’t know what tomorrow will bring. So, the further out the schedule goes, the greater the risk something is going to change. What’s it going to be? Is scope going to creep or maybe the schedule will slip? Whatever foreseen changes are ahead, there are going to be exponentially more unforeseen the further out the schedule goes.
Agile
With Agile (path B from the figure), you begin with the greatest unknown. Just accept it! You’re not the Amazing Kreskin. You can’t predict the future. The only thing that is guaranteed is something is going to change. So, plan for that change. Know the goal you’re trying to reach. Keep your eye on that goal. Now, do what you do. Develop, lead, manage… it doesn’t matter. What does matter is you see where you are right now, know where you want to go, and then at a measured time, see where you are again. Make some adjustments and repeat. You will find if you just accept the change, you can use it to your advantage to get closer and closer to your goal.
Summary
You can not predict the future, only plan for it. You can not steer a hurricane, only plan for it. You can not prevent change… Can you guess what comes next? That’s right, you plan for it.
The number one search on the Critical Path website is for a Critical Path and Float worksheet. Though you should be using software to calculate a critical path, if it is mission critical, it is important to understand the concept for the PMP exam.
Rather then go into the specifics on how to calculate the critical path and float in this post, I’ll merely say a free worksheet template and PowerPoint presentation are available and you can download them at any time. (see links below)
•Remember the Critical Path tells you the activities that can not slip a day without increasing the total duration of the project or moving the project completion date. It is the longest path of logically related activities through the network which cannot slip without impacting the total project duration, termed zero float.
Project Management | Derek Huether | February 10, 2010 | 
Comments (2) 
Duration, Helpful Hints, Microsoft, Project, Schedule, Units, Video, Work
When I was studying for the PMP exam, a few years ago, I remember memorizing a group of formulas. One of those was the “Variance of Activity.” At this point, don’t remember if it was even referenced in the exam. There were no direct questions asking “what is the formula for…” On my exam, I remember having numerous questions resulting from schedule variance calculations and cost variance calculations. To my surprise, I went searching for the Variance of Activity formula in the PMBOK (4th Edition) and I can’t find it! So as not to lead people astray when giving PMP study advice, I’m now researching each formula I was once told to memorize. I’m very surprised PMI didn’t save us a lot of trouble and list known formulas in the back of the PMBOK.
Also available in PDF
