Net Present Value (NPV) is the current worth of an income stream in today's currency. It is used to make a decision to proceed with an expenditure, for example: The construction of a new building Proceeding with a new business line Purchase of equipment Net Present value takes into account the time value of money. It uses a discount rate to convert future … [Read more...]
The project sponsor is a very important part of the project management organizational chart. In fact, every project has a sponsor. The project sponsor is one, and only one, level above the project manager. They do not manage the day to day operations of the project but they ensure the resources are in place, promote the project, and hold overall responsibility for the … [Read more...]
Like termites that build their invisible kingdoms secretly and slowly, projects have a similar parasite that grows under the surface until it suddenly exposes itself with disastrous consequences. It's called scope creep, and it has eaten many projects alive. Scope creep is the unauthorized addition of tasks into a project. If the project manager is not on the lookout, … [Read more...]
Generally speaking, the scope of a project should not change. However, in the real world scope change is difficult to eliminate altogether. Inevitably the presence of many interrelated moving parts means that the initial project estimate and the final project cost (or deadline) are rarely the same. Scope change can be authorized or unauthorized. The latter is often … [Read more...]
In 1986, the NASA Space Shuttle Challenger exploded spectacularly upon take-off in front of one of the largest live TV audiences in history (to that time). The investigation concluded that several tiny O-rings that sealed the rocket booster to the fuel supply failed. These O-rings were about 1 foot in diameter. Just like the tiny O-rings were able to bring down the … [Read more...]
I once experienced a project horror story whereby a piece of equipment was snowed in at a previous project, delaying the project by several weeks until a transport vehicle could get to the stranded machine. Since there are relatively few of these around, the project either had to wait or additional costs had to be incurred to procure another one. Managing these types … [Read more...]
If there's one part of project management that's bigger than all the rest, it's project scheduling. Since a project is defined as a temporary endeavor with a distinct beginning and end, defining when that end takes place and making sure it finishes on time are extremely important to any project, large or small. Professional project managers look at the schedule every … [Read more...]
In the operating room, Doctors monitor the vital signs of their patients using a device called an electrocardiogram. This device is familiar to most people - It's the monitor that displays the electrical pulses of the heart. In project management, project health is measured by the Cost Performance Index, usually abbreviated as CPI. The Cost Performance Index is one of … [Read more...]
In project management, getting an early indication of problems is the silver bullet that allows the project manager to correct the problems before they start. Cost Variance, usually abbreviated as CV, is one of the fundamental outputs of Earned Value Management. It tells the project manager how far ahead or behind the project is at the point of analysis, usually right … [Read more...]
Project scheduling is to a project manager like landing an airplane is to a pilot. It is often the largest and most visible aspect of project management. In this article, I will develop a professional, resource levelled project schedule that provides tremendous confidence in the ability to meet the project deadline. First, let's deal with the theoretical foundation. … [Read more...]
