The term project management is pretty general, which can make it difficult to define. Many people use the term “project manager” as if that definition was set in stone. But what most experts agree upon is that project management involves three main components: planning, execution, and evaluation.
Planning includes determining how much time will be needed for the work, establishing deadlines, creating milestones, and other similar functions.
Execution means doing the things you have planned. This could include meeting with others, gathering supplies, and performing tasks such as programming or designing.
Evaluation looks at whether everything went well and if there are any changes that need to be made. For example, when projects run late, some organizations will re-evaluate how many staff members they need to meet their deadline.
Calculating expected time and variance takes into account all these factors. You would add them together and divide by two, since we are talking about average here!
Project managers usually talk about variances being due to something outside of the project (maybe the equipment breaks down) or unexpected events (a key person leaving). Both of those cause delays, so they increase the length of the task.
Expected time is how long an individual employee believes the project should take, adjusted for all possible obstacles. His or her team member may be able to help you get this information, but does not always do it themselves.
The final project management metric you should be familiar with is variance. This is calculated by taking the difference between an organization’s target time and how long it actually took to complete a task, then dividing that number by the organization’s target.
The more targets there are, the smaller this ratio becomes-the less variation there was in the tasks completed, the lower the variance!
When calculating variance for a given timeline, remember that not every day of delay equals equal weighting. For example, if a team member leaves the company two weeks before completion, that’s only half a week’s worth of delay, but it still needs to be accounted for when calculating variance.
Because projects have both duration and frequency components, it makes sense to calculate both types of variance separately.
Calculate ETD and ETA
The expected time for a project is simply calculated by multiplying the probability of success (or completion) with the average duration of successful projects.
The variance is defined as how much individual durations vary around the mean. It refers to how well or poorly each task will run on its own, not just whether it runs longer or shorter than the average.
For example, if you were bidding on a contract and received an estimate of one week for a given task, then your variance would be one week – that task could take two weeks, or even more!
As you can see, this depends very heavily on what else needs to be done before the project can move onto the next stage. If there’s nothing additional that must happen, then the variance becomes irrelevant because the project will almost certainly succeed and hit the target date within that timeframe anyway.
However, if other tasks depend upon the completed ones, then their due dates are moved forward and so they have less time to complete themselves, which increases the risk that they won’t meet their deadlines.
Calculate interest on the project
A more formal way to describe this is called “calculating internal rate of return (IRR).” This can be done by adding up all of the expenses in the company and then multiplying that number by 1 minus the IRR.
This product equals the cost of investing in the company. The numerator is equal to the sum of all costs for the business, which includes investment, salary, and marketing per company standards.
The denominator is the time frame or length of the financement. For our example, we will use one year as the time frame.
After these numbers are calculated, they both have a ratio or decimal place after them. This ratio represents how much money the company makes in comparison to what it spends to make it. The lower this value is, the better off the company is.
For our example, the numerator is 5,000 and the denominator is 2,500. Therefore, the ratio or decimal place is 0.20, or two-fold. Two means double so 20% is twice as good as one.
In other words, the company made $2 extra dollars for every $5 spent. This shows that even if the company was not very well run, they still received valuable knowledge from investing in the company.
This also implies that the people working there were paid fairly enough! They got their pay back in return for spending money to learn something about the company.
Calculate impact of scope changes
A very important project cost factor is how much you have to spend due to changing requirements. This is referred to as change, or scope, cost. Scope costs occur when your project goals are changed, reduced, or removed.
Scope costs can be categorized into two types: direct and indirect. Direct scope cost occurs when part of your project budget is spent directly because of changing priorities. Indirect scope costs happen when resources needed for your project are no longer available due to other projects being put onto their time sheet.
For example, if your project’s goal was to create an online shopping tool, but one week before launch, the company that owns the server on which your site will live goes out of business, then your team has to find new servers and engineers to re-architect the system, all of which take time and money.
This is an indirect cost since it doesn’t come right away from the project, but it is still factored into the equation. The more likely something is, the higher the risk, the higher the potential cost!
Project managers must consider these costs when estimating project duration. If changes arise at the last minute, this adds extra time to the project completion date (PCD).
By considering the likelihood of major changes happening, we can determine how long it will really take to complete our project.
Calculate potential success factors
A key part of project management is knowing what can help your team succeed or fail on a project. You need to be clear about what will influence its completion, as well as how much time it should take to complete.
There are several important factors that could affect whether a project completes on schedule and if it does, how long it takes to do so. The length of time needed for a project to finish depends not only on external forces such as weather, but also internal ones like the availability of resources and motivation of individual team members.
By considering these possibilities, you can calculate an expected amount of time a project needs to run and the variance around this number. This information helps you determine if the current state of the project is good enough and if changes need to be made, which can keep it on track.
You can use the results of this calculation to make decisions about whether to continue investing in the project or move onto something else.
Calculate risk factors
In project management, there is an important concept called variance. This term refers to how much time something could take longer than expected.
A common example of this is when a team has planned to launch a product at noon today, but they don’t start working until 1 p.m. because someone needed extra time to review their draft. The delay prolongs the launch by one hour, so that hour has more weight in calculating what time the final release will happen.
This is referred to as extended duration, or escalation. A similar situation happens when a part needs additional work, which adds complexity to the process and lengthens the completion date. These are both examples of prolonged duration, or contingency.
By measuring these two types of durations separately, we can calculate our anticipated timing for the end result. This is referred to as expected time. By also accounting for variability, you get a better understanding of how likely the goal is and how much control you have over it.
Variance is calculated using standard deviation. This is determined by taking the difference between the most optimistic forecasted outcome and the worst case scenario and dividing the first number by the second.
Calculate project management methods
There are two main types of project management that you can use depending on what level of detail you want to have in your projects. At the most basic level, there is direct supervision, also known as hands-on leadership. With this type of project manager, you work under their guidance with little to no autonomy.
At the next level, you have supervisory control, or indirect leadership. Here, you have more freedom than direct supervision, but you must make sure everything goes according to plan.
The inbetween stage is called autonomous production, which gives you both adequate direction and independence from others. This is the ideal situation for most businesses, as not all industries require an extremely structured environment where nothing can go wrong.
Project managers at this level get to exercise some good old-fashioned managerial skills like motivation, time estimation, and leadership. They may even be asked to do something outside of their area of expertise, which can prove challenging if they don’t take enough time to research and prepare!
Autonomous production is the perfect balance between having someone watch over you and letting yourself grow independently. In fact, the best project managers typically fall somewhere in the middle of the spectrum, as they enjoy both levels equally.
Calculate planning, organizing, staffing, and managing
When calculating time for these components, you should include all of the activities that make up your project. You can use different formulas or methods to calculate each component’s length.
Some of the most common ways to measure project duration are using the ideal-real method, the effective completion date (ECD) method, the critical path method, and the waterfall model. All four use total task lengths to determine how long an activity takes to complete.
The ideal-real method calculates the amount of time needed to complete tasks relative to what we call the ideal level — or the normal speed at which things take place. The ECD method uses the longest job in the process as its base, so it includes enough time for any delays.
The critical path method is similar to the ECD method, but instead of including a buffer for possible delay, it only adds time to the end of the project. This is because once an item gets pushed off the chart, there’s no going back!
The final calculation technique, the waterfall model, groups projects into logical steps, and estimates how much time each step will take. It then sums those up to get a total project length.