There are a number of misconceptions regarding PMBOK that need to be understood. These “misunderstandings” can lead to significant difficulties.
Issue 1: CPI (Cost Performance Index) greater than 1.0 signifies a well managed project
CPI greater than 1.0 simply means the estimates were greater than actual results. This may be the result of padding the estimates. Also, failure to properly account for other constraints; schedule, quality, customer satisfaction, risk, resources and scope may result in project failure regardless of an attractive CPI.
Issue 2: SPI (Schedule Performance Index) greater than 1.0 means the project is ahead schedule.
It is the Critical Path that determines how long a project will take. SPI may be a good indicator that the project MAY be performing well against the schedule baseline, but it most certainly does not indicate if the project is ahead or behind schedule. The reason relates to the extent of the priority made to completing Critical Path items on time. If the Critical Path work is not prioritized, there may be delays as work packages of Non Critical paths may be completed ahead of schedule while work packages on the Critical Path become delayed and delay the project. Completion of Critical Path work packages at the expense of non Critical paths may cause those other paths to become critical – resulting in a delayed project.
Also, projects where the ETV (Expected TIME value of risk) is not added to the schedule as risk schedule reserve, WILL be late without significant luck. PMBOK never addresses this issue at all.
Issue 3: PMBOK describes how estimates should be made for each activity defined in the WBS, but leads to tragic, failure because of lack of capacity planning.
Capacity planning forces consideration of non worked and non productive time into planning. Holidays, vacations, rest periods, other personal conversations, web browsing, chatting at the water cooler, personal calls, instant messaging and all these have significant impact on both the cost and the schedule but are not included in estimates. Two 15 minute mandatory breaks per day equal 6.5% of all available time. Assuming vacation days and illness may cost 10 days in the year, that is 4% of all available time. According to a Price Coopers study published in the Wall Street Journal, 40% of all work hours are non productive. The impact of this is staggering.
Issue 4: PMBOK simply glances over descriptions of how to determine Earned Value and Planned Value. This renders comparisons to be virtually meaningless.
Completed activities and work packages do earn value. However, the purpose of Earned and Schedule Value is to determine how the project is performing against a budget. For that reason, it must include budget items such initiating and planning costs, project management costs, risk costs, meetings and other costs in the budget. Therefore, one must include those in calculations of Earned and Planned Value. Failure to do so will render metrics such as CPI (Cost Performance Index), SPI (Schedule Performance Index), ETC (Estimate to Complete), EAC (Estimate at Completion) and BV (Budget Variance) as slightly better than meaningless.
Issue 5: PMBOK never addresses how meetings are accounted for in cost and schedule.
If they are necessary meetings called for as regular work, those should be included in the WBS. Regular team meeting should be estimated and included in the project budget as a line item. One cannot consider them overhead, because overhead relates to costs you do not control. The average amount of team members should be multiplied by the estimated time of each meeting which is multiplied by the average hourly cost which is multiplied by the amount of weeks in the critical path. If these costs are not included in the budget, the project will likely fail. ALSO, meetings would need to be included in Earned Value. Design meetings and other meetings necessary to the product should be planned, estimated and tracked. When this is done, the cost of meetings is better understood and they tend to become more efficient. Earned Value for regular team meetings is calculated as the weekly cost of meetings you included in the budget – whether you held the meeting or not. SO, if the meetings go over the time you budgeted, it will reduce your CPI. If you run more efficient meetings, it increases CPI.
For Further Discussion:
For the impact of other issues where PMBOK needs to be improved, please view other topics in our blog page. You, the readers, are encouraged to continue this conversation and blogs will be revised and you will be given credit.