Performance Measurement & Tracking Techniques

Instructor: Jagina McIntyre

Jagina has conducted professional training in communications and analytics for 12 plus years, with a a degree from Kent State University in Journalism and Communications.

Welcome to performance measurement, where you will learn the importance of keeping track of all the key drivers that will keep your project on time and on budget.

Upfront Analysis Keeps Projects on Time and Budget

Have you ever been part of a project that went haywire? Or have a project that was suppose to take a few months drag out for years? Then understanding how performance measurements can keep a project together may be right for you.

Performance measurement is a numeric description of a company's work and the results of that work. This lesson focuses on analysis conducted before a project ends, which can be helpful in keeping it on time and on budget. There are two types of upfront techniques that can be valuable: critical path and earned value analysis.

Get Done on Time

The critical path (CPM) technique is a diagram that identifies the critical activities related to a project, which could delay a project when that activity is late. This technique is beneficial when there are numerous activities that are dependent on each other.

The critical path process:

  1. define tasks - in sequence of execution.
  2. create flowchart - identifies each activity's relationship to another.
  3. identify path type - critical versus non-critical.
  4. define completion dates - for each task.
  5. set alternative paths - for critical paths.

The program evaluation and review technique (PERT) is a type of critical path diagram. A PERT has a fixed completion date and is created starting with the end date. The PERT diagram has arrows or nodes (circles), which are used to represent activities. The line connecting each activity is referred to as the path. The longest path is considered the most critical.

A critical path diagram depicts which activities in a project are dependent on each other.

The most critical path determines the estimated time to complete the entire project. There are two types of estimates: deterministic, when there is a high degree of certainty in the estimate, and probabilistic, which requires an optimistic, realistic, and pessimistic estimate that is analyzed for a best guess.

Meet the Budget

The earned value analysis (EVA) is a technique to measure the progress of a project at any point during the project. It becomes a snapshot in time, and can indicate projects going off course and budget. This tool is used to forecast a project completion date and final cost of the project. The tool compares planned work versus what has actually been completed to date.

The EVA consists of three parts, which are referred to as the work breakdown structure (WBS):

  1. planned value - budget assigned to the work.
  2. actual cost- total cost actually incurred.
  3. earned value - the value the project is worth at that point.

Example

Imagine a shop that sells specialty racing bikes. The parts needed for the bikes come from various vendors. The planned value (budget) to create each bicycle is $150. The goal is to have five custom bikes ordered each week, with a seven day completion on each order, and to sell each bike for $200. Customers receive a 20% discount when an order is late.

The $25 seats are imported from a manufacturer in another region. They take two to three days for each shipment to arrive. The $80 frames are built onsite and a local artist comes in on Wednesdays and Thursdays to paint the custom logos, which includes the customer's name. The artist charges $10 per bike. It takes one day for the design to set. The $20 tires and rims set come from a local shop five minutes away.

The most critical path is the chain, gears, and reflectors kit that are ordered in bulk a month in advance, based on last month's volume, and averages $15 per bike. This kit is shipped from another country and requires seven days lead time to arrive. This cuts the overall cost of the bicycles, making the business profitable. There is a local back-up company that sell the same items for twice as much. These items are reordered when only a quarter of the inventory is left.

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