How to caculate project health

Never saw this question...

A project is an investment in an integrated effort that represents tradeoffs across scope (product and project), time, and cost, all modifiable by risk/opportunity. To reduce distortion/gaming/moral hazard, any measure of project health needs to be an integrated measure reflecting all those variables.

For all other investments, the key metrics are expected monetary value (EMV), or net present value (NPV), or ROI/profit (value above cost). For complex reasons, projects are the sole investment in which these metrics are overlooked. Even when the sponsor(s)/investor(s) do take the trouble to analyze these metrics, thay are almost never communicated to the project team. And then they aren't used as part of the tracking metrics: the project tracking metrics become "On time" and "On budget?", ignoring the two most important (and subtle) parts of the project: expected monetary value and the cost of time.

Project tracking metrics should always be a comparison between planned status and actual status. The planned status should be based on a planned index called the DIPP:

DIPP = ($EMV + or - $accel premium or delay cost) divided by $Planned Cost Estimate-to-complete (ETC)  

Notice that, since the EMV is generated by the scope, and the cost of acceleration or delay is based on the cost of time, the DIPP incorporates all three sides of the Triple Constraint Triangle (plus risk!) in one integrated index.

• The $EMV in the Planned DIPP will be assumed to be a constant except for retirement/manifestation of scheduled risk/opportunity factors.
• The planned DIPP will assume no acceleration or delay. 
• The Cost ETC is planned as the complement to the BCWS (PV) or cost accrual function.

The tracking DIPP (also called the DIPP Progress Index or DPI) at any point in implementation is the Actual DIPP divided by the Planned DIPP:

• The acceleration or delay will be computed based on the actual Schedule Performance Index (SPI) (preferably the ALAP SPI). 
• The Cost ETC will be computed based on the actual CPI Performance Index (CPI) (preferably by functional area). 

If the Planned DIPP at the end of April was projected to be 6.0 (meaning a return of 600%) on the future investment, and the Actual DIPP is 5.4, this would mean a DPI of .90, or a return of only 540% of the future investment, or 90% of what was expected based on current trends. And those trends must be based in one of five factors:  

1. A change in scope that has altered $EMV.
2. A change in market factors that has altered $EMV.
3. A delay in completion date.
4. An increased Cost ETC based on CPI.
5. A risk or opportunity factor that has not been retired or manifested on schedule.  

However, a project team that understands on what it is being measured will strive to do better on those measurements. Perhaps they will accomplish an Actual DIPP of 6.3 for a DPI of 1.05 instead, by working faster, or more economically, or providing greater quality. And of course, they are even more likely to accomplish this if there is an incentive built in to completion above planned DIPP. 

And wouldn't that be a terrible thing, if projects turned out to be more valuable than planned?

Fraternally in project management,

Steve the Bajan

Hi Trivikram,

the software that was used in the presentation was Spider Project.

Success Probability Trend Analysis and methodology that is based on this we call Success Driven Project Management.

More about SDPM may be found in http://spiderproject.com/images/img/pdf/Methods%20and%20Tools%20of%20Success%20Driven%20Project%20Management.pdf and other publications on www.spiderproject.com, and www.sdpmworld.com

Let me know if additional information will be required.

Best Regards,

Vladimir

Hi Vladimir,

Your doc was excellent.

Few clarifications pls...

Want to know what was the software being used (Excel!!!... mmmm i doubt)

Want to have more details on Trend Analysis & SPTA.

Thanks

3v.

Proactive project surveillance is a key art to master in the support of effective governance but simple measures are largely useless. Some thoughts that may help are in our White Paper at: http://www.mosaicprojects.com.au/WhitePapers/WP1080_Project_Reviews.pdf

  ND,

For your PROJECT HEALTH, I suggest you prepare and present the following  

S-Curve:

Monthly & Overall accomplishment ___% & Variance __% (show Plan vs Actual values & curves, by categories)

Updated Project Schedule:

Show Estimated Project Completion Date, and Activities on Critical Path

Resource (Man-hours):

Planned vs Actual (to date)

Cost & Revenue:

Budget vs Actual (to date)

Cash IN vs OUT (to date)

Narratives:

List of Major Accomplishments (this Month),

List of Major Delayed Activities   

List of Major Activities Next Month, and

List of Major Critical Activities (in coming ~3 Months)

Hope this helps...

Regards,

Larry R  

Hi,

Vladimir provided a very good link indeed.

For me, I will do as following. 

1. Do a Earned Value Analysis depends on manhours or quantities or costs. This means your baseline need to be completed first.

2. Do 2 Critical Path Analysis based on longest path and the other on float <30 days for big project, 0 days for smaller one.

3. Do a Resource Analysis to determine practicabiliy. This should be in baselining process but if you are updating. Then need to manually resource level. Do not auto resource level.

4. Do a 2 weeks and 1 month lookahead to determine workloads.

5. Risk Analysis, if you have the necessary software.

Nilesh,

look at http://spiderproject.com/images/img/pdf/Project%20Control%20Methodologies.pdf

This presentation includes a brief review of performance analysis techniques.

Best Regards,

Vladimir