Mass Customization in eCommerce

The idea behind mass-customization is to create specific products based on the customer’s needs and to deliver that product quickly. Personalization is where the customer’s preferences are aligned with the products being advertised.

Personalization is quite common on Social Media like Facebook or Google. If you mention on FaceBook that you’re thinking about buying a car, you will begin to see ads for cars on your FaceBook site. Likely you will also see those ads on Google as they see what topics I’m searching.  What is interesting about personalization is not that neither Google nor FaceBook really care, nor does the advertiser, who you are, they just care that you’ve expressed an interest in a topic. The advertiser has bought certain keywords from either Google or FaceBook so that when those keywords are used that advertisers ads will appear.  The FaceBook user is unknown to the advertiser until the user decides to let the advertiser know their identity.

Knowledge of your interests can be kept in on a cookie that contains as a user profile and is put on your hard drive of your computer, frequently without you knowing about it or without your permission (Turban, 2012). Some sites do it differently. Amazon, for instance, uses your past buying history to determine the ads or suggestion you see. Google just simply relies on current information as you’re browsing. Personalization also extends to cell phones, tablets, and other forms of digital media (Personalization-Wikipedia, 2016).

Mass-customization is where the customer gets to order a product based on their preferences and it is usually delivered within a short period of time (McCarthy, 2004). Dell Computers is a prime example of a company that has mass-customization down to a science (Mass-Customization-Wikipedia, 2016). The customer will place an order for a laptop that contains certain features they prefer. The customer pays for the order via credit card; Dell sends the order to the factory which produces the ordered laptop. The laptop is then shipped to the customer, usually within 1 week. Mass customization aims to deliver customized products while using the efficiency of mass production (Chen, 2009). The idea is to be to control the costs of production while also meeting the demands of the market.

Amazon’s critical success factors are in its basic challenge: How does it sell consumer goods online and show a profit and decent return on investment. Amazon sells in three basic categories: media, electronics, and other products including Kindle, office supplies, cameras, and toys (Turban, 2012). Amazon has to ensure that it is the innovator in the field constantly staying ahead of the competition in offering a broad variety of products, make it easy to buy from them and even allow the customer to easily return products when not satisfied. This is a good strategy as it makes it a one stop shop online. One just needs to look at Wal-Mart or Target to see the success of one stop shopping. By making it easy to do business with them, Amazon makes it the destination of choice whenever one is shopping, wherever one is shopping. The shopper can access Amazon via their smartphone in Wal-Mart and do comparison shopping right on the spot; even buy it while standing in the store. All of this makes it so that Amazon will continue to grow into the foreseeable future (Amazon-Wikipedia, 2016).

Having recently bought an iPhone 6S+ I was able to go to the Apple website and view the phone, see the different features, and weigh various price breaks. From their website I was able to make the decision between the smaller versions versus the bigger versions by viewing the differences online. But full trust in what I was buying didn’t occur until I went to the Apple store to actually touch and feel the product.

One way that online retailers have solved the problem of trust is by allowing shoppers to buy and easily return, satisfaction guaranteed. Zappos is a prime example of where a customer can buy several sizes of the same shoe, try them on, and return those items that don’t satisfy (Zappos-Wikipedia, 2015). Online trust is difficult to achieve due to the fact that a potential customer cannot touch or examine the product. Without a good return policy, many people will simply not buy the product. Another good policy is allowing customers to rate the product. Amazon encourages and publishes customer opinions on their purchases because they know it encourages others to buy.

References:

Amazon.com – Wikipedia, the free encyclopedia. (2016, February 11). Retrieved February 11, 2016, from

https://en.wikipedia.org/wiki/Amazon.com
Chen, S., Wang, Y., & Tseng, M. (2009). Mass customisation as a collaborative engineering effort.

International Journal of Collaborative Engineering, 1(1), 152.

Mass customization – Wikipedia, the free encyclopedia. (2016, January 4). Retrieved February 11, 2016,

from https://en.wikipedia.org/wiki/Mass_customization

McCarthy, I. P. (2004). Special issue editorial: the what, why and how of mass customization. Production

Planning & Control, 15(4), 347-351. doi:10.1080/0953728042000238854

Personalization – Wikipedia, the free encyclopedia. (2016, February 11). Retrieved February 11, 2016, from

https://en.wikipedia.org/wiki/Personalization

Turban, E. (2012). Electronic commerce 2012: A managerial and social networks perspective. Upper Saddle

River, NJ: Pearson Prentice Hall.

Zappos – Wikipedia, the free encyclopedia. (2015, December 15). Retrieved February 11, 2016, from

https://en.wikipedia.org/wiki/Zappos

Earned Value Project Management

Abstract
Earned Value Project Management (EVPM) can be used very effectively in a typical software development project. This paper, by examining the process briefly step-by-step, will show how easy and effective the earned value process can be to a project. I am currently applying EVPM to my projects at work so I will be including real-life examples to show how effective EVPM is at managing progress in a project and showing its true status at any given time in the project.

Introduction

Earned Value Project Management (EVPM) has been bemoaned as being too much work with limited value. I get many resources that push back at me saying that there is too much documentation for little return. They have trouble seeing the value that EVPM brings to a project. Earned Value Project Management (EVPM) is a project management technique for measuring project performance and progress in an objective manner. It is a disciplined approach to ensuring that the project stays on course, on time, within scope and that it actually is getting its dollars’ worth. EVPM is a systematic process that uses earned value as the primary tool for integrating cost, schedule, technical performance management, and risk management (Kerzner, 2009). EVPM can determine the true status of a project at any given point in the project, but only if the rules for organizing the project are followed. This requires a disciplined approach.

What I will show in this discussion is how effectively EVPM can be on any size project, from $50,000.00 and up and how I have used EVPM on projects with resources both on-shore and off-shore. I will show you step-by-step from the initiation to the closing phase how effectively EVPM can help a Project Manager keep their project on track.

A Brief Look Back

EVPM got its start back in the late 1800’s when industrial engineers on the factory floors in the U.S. wanted to measure their production performance. These engineers created a three dimensional way to measure the performance of work done on the factory floor. They created a baseline called planned standards, and then they measured earned standards at a given point against the actual expenses to measure the performance of the factory. Today, their formula is the most basic form of earned value management today (Fleming & Koppelman, 2010).

Approximately forty years later the U.S. Navy introduced PERT (Program Evaluation Review Technique) to industry as a scheduling and risk management tool. The idea was to promote the use of logic flow diagrams in project planning and to measure the statistical success of using these flow diagrams. It didn’t last very long because it was cumbersome to apply.

Critical Path Method (CPM) was created by DuPont engineer Morgan R. Walker when he looked into developing a method that would improve the scheduling, rescheduling and progress reporting of the companies engineering programs. In 1957 Walker, with Remington computer expert James E. Kelley, Jr., developed a system using an arrow-diagram or network method which came to be known as the Critical Path Method (Archibald & Villoria, 1966). Pert/Cost would be introduced as a means in which to add into the network and manage both time and costs. Problem at the time was that computers had not become sophisticated enough to be able to support the concept.

But out of the Pert/Cost concept came the idea that you could measure earned value. The implementation of Pert/Cost in industry required eleven reporting formats, one of which was “Cost of Work Report” and within it there was a format called “value of work performed”. Pert/Cost standard lasted about three years, mostly due to its cumbersome use and industry not particularly liking being told what to do.

In 1965 the U.S. Air Force created a set of standards allowing it to oversee industry performance without it really telling industry what to do. What the Air Force did was to develop a series of broad base criteria and asked that industry satisfy these broad based criteria using their existing management systems. This developed into the C/SCSC (Cost/Schedule Control Systems Criteria) that every company wishing to do business with the government was required to meet.

And the results of these new criteria were impressive. But problems also arose. The original 35 criteria grew, at one point reaching 174, some being very rigid and dogmatic, mostly inflexible taking away from the original intent of being unobtrusive. In 1995 the National Defense Industrial Association rewrote the Department of Defense (DoD) formal earned value criteria and called the new list of 32 criteria the “Earned Value Management System” (EVMS) (Fleming & Koppelman, 2010). Eventually these new criteria would become part of the American National Standard Institute/Electronic Industries Alliance guidelines, what we normally call ANSI guidelines. And from this came a broad acceptance of the new criteria by industry.

Why Earned Value Project Management (EVPM)?

There are many reasons why EVPM should be used in every project. One reason is that EVPM provides a single management system that all projects should employ. The relationship of the work scheduled to the work completed provides a true gauge of whether one is meeting the goals of the project. The most critical association of what work was completed to how much money was spent to accomplish the work provides an accurate picture of the true performance cost.

EVPM requires the integration of the triple constraint: Scope, Cost, Time, allowing for the accurate measurement of integrated performance throughout the life of the project. Integration is a big issue in managing a project. Many times the project management team defines the project one way, the development teams another way, and further still QA will look at another way. Everyone is reading the same sheet of music, but they’re singing a different song. The requirement of the Work Breakdown Structure (WBS) has helped to bring alignment among the various teams impacted by the project. Its hierarchical structure helps to define the scope of the project in easily understood terminology to both the project team and the business sponsors.

Study after study conducted by the Department of Defense (DoD) shows that those projects using EVPM have demonstrated a pattern of consistent and predictable performance history (Fleming & Koppelman, 2010). The studies have shown that end results of projects using EVPM can be predicted as early as at the 15% -20% completion points. The ability to show at that early stage the direction your project is going allows the Project Manager to adjust course making corrections long before it is too late.

The development of a key metric called the “Cost Performance Index” (CPI), showing that acute relationship between the work actually completed and its matching budget, set against the actual costs spent to complete such work, allows management to constantly monitor the true cost performance of any project. In fact, the studies concluded the cumulative CPI didn’t change by more than 10% from the value at the 20% completion point (Christensen & Heise, 1993). I have used this metric successfully in many of my projects over the years. The Project Manager can deliver a forecast of the total funds required, or the Budget at Completion (BAC), by simply dividing the total project BAC by the cumulative CPI. This assumes that the actual cost performance results to date will likely continue to the end of the project. This is considered to be the best case forecast for a project within a statistical range of final cost estimates.

Another metric, “To Complete Performance Index”, concentrates on the remaining project tasks. It is the opposite of the cumulative CPI in that it reflects what it will take in future performance to recover from a negative actual cost position. The TCPI takes the work remaining, basically the total budget minus the work completed, and divides that by the funds remaining (the latest management financial goal less funds spent) to determine what it will take to complete the project.

One of the important benefits of using a performance measurement system is being able to determine how much of the scheduled work has actually been completed at any given point in the project. The basic issue is whether the project is on schedule, ahead of schedule, or behind schedule? And if you are behind schedule, by how far and what is the cost? Schedule performance knowledge like this is especially powerful when compared against the critical path of the project. Both the earned value Schedule Performance Index (SPI) and Critical Path Method (CPM) are metrics that, when used together, will correctly calculate the true schedule position of any project. Falling behind in getting the work scheduled completed is one of the first indicators of likely future problems. Project Managers do not like to fall behind schedule, even though a more important gauge is perhaps the performance against the project’s critical path. When one falls behind the planned work the tendency to add unplanned resources in an attempt to catch up can be quite strong. In essence, you’re doing the same work as was planned, but now you’ll be spending more money for the same amount of effort. Arbitrary decisions to catch up on the planned work can cause irreversible and non-recoverable damage to the project’s cost performance.

The employment of Management by Exception allows the portfolio or program managers to concentrate their efforts on those projects that are in trouble. Typically it means that those projects in the red get read, those in the green are of no concern. It allows managers to concentrate on the key metrics of CPI, SPI, TCPI, and EAC to determine if a project needs their help.

Must Have Documents in EVPM

There are three documents that every project must have, as a minimum, in order to employ EVPM:

The Scope

The most important document that can assure success in a project is the project scope document. EVPM cannot be effectively employed unless the Project Manager has defined the job to be done. It really is impossible to measure done if you don’t know what done means. The reason for EVPM is to be able to measure the work of the project as you are progressing. But you cannot know what to measure against unless you have defined the total scope of the project.

The scope, as defined by PMI, is the process of developing a detailed description of the project and product. The key benefit of this process is that it describes the product, service, or result boundaries by defining which of the requirements collected will be included in and excluded from the project scope (Project Management Institute, 2013).

The WBS

The WBS, as defined in PMI PMBOK, is a decomposition of the work deliverables into manageable work packages, it organizes and defines the total scope of the project (Project Management Institute, 2013). The WBS shows, in hierarchical form, each activity required to complete the project. These activities are organized into work packages of various duration’s, usually one day to one week. These packages are then aligned by precedent to determine a project schedule. The WBS will also include the resources that will be used to do the work on a particular package.

Project Schedule

The second requirement deals with the placement of the defined scope into a fixed time frame so that time performance can be measured throughout the life of the project. Some would suggest that these two rules are not unique to earned value project management, and that they are fundamental to all good project management, period. The project schedule is likely the best tool available for managing the day to day communications on any project. And further, one of the best ways to control a project plan is to monitor performance regularly with the use of a formal scheduling routine. Schedule the authorized work in a manner which describes the sequence of work and identifies the significant task dependencies required to meet the requirements of the program. Identify physical products, milestones, technical performance goals, or other indicators that will be used to measure progress. Identify, at least monthly, the significant differences between both planned and actual schedule performance and planned and actual cost performance, and provide the reasons for the variances in the detail needed by program management.

The Budget

Ultimately, you have to have a budget. Without knowing the costs of the different tasks that make up the project the Project Manager has nothing to use in which to measure against. These steps are particularly critical to an earned value project, because once the baseline has been put into place; the actual performance against the baseline will need to be measured regularly for the duration of the project. Regularly, on a periodic basis likely monthly, sometimes weekly, the Project Manager will want to measure how well the project is performing against the baseline. Project performance will be precisely measured employing earned value metrics, normally expressed as a cost or schedule performance variance from the baseline. Such variances will give an early warning of impending problems and are used to determine whether or not corrective action needs be taken in order for the project to stay within the defined parameters.

Baseline

Establishing a Performance Measurement Baseline (PMB), a baseline against which performance may be measured, is an essential requirement of earned value project management. The PMB is the reference point against which a project will measure its actual accomplished work. It will tell whether the project team is keeping up with the planned schedule, and how much work is being accomplished in relation to the monies being spent.

In Practice

Initiation and Project Estimations

I have discussed in a previous paper how the Software Development Lifecycle (SDLC) is implemented at Walgreens (Garling, 2015).  Each project starts out as an idea in which an idea form is submitted to the Intake Management Group. The idea form contains the proposed name of the project, the sponsoring department, the Single Point of Contact (SPOC), and the target date. A business case document, Business Requirements Document (BRD), and the Charter are spelled are also included. These documents provide a detailed description of the proposed project and are submitted with the idea form. These documents provide a very high level view of the proposed project.

The idea form is logged and an announcement goes out to the intake committee members with the intake documentation attached to the meeting invite. The object of this meeting is for the committee to discuss with the requestor what it is the business is asking to be done and why. The committee will go over the specifics of the request, in particular the scope and the BRD of the project. They try to determine which teams in the company will be impacted by the project proposal. The makeup of the committee includes representatives from the Point of Sale (POS) Retail Execution teams:  Development; Quality Assurance; eCommerce; Photo; Inventory Control; Payment Systems; Project Management Office (PMO); Key Performance Indicators (KPI); Electronic Data Warehouse (EDW), amongst others. The point here is that each group is represented to review the idea and to determine which of these various groups may be impacted by the proposed idea.

Phased Approach to Determine Project Costs – Phase Zero

Keep in mind that the Intake Committee is the first step to becoming an official project. If the idea is accepted by the Intake Committee, it is assigned to a Project Manager to help guide the proposed project along to determine the high level affect in time and dollars leading to an E0 estimation document. The E0 Estimation documents what the different teams impacted by the proposed project think, at a very high level, will the cost in dollars and time to do their portion of the project. This estimation is always at a +/-50% range. Much of the estimation is based on past experience of doing similar projects. If it’s a go, then the project is approved by the business sponsors.

At this point the Project Manager has used two methods in developing a project that can utilize EVPM methods: The scope of the project and Bottom-Up-Estimating. Each department impacted by the project delivers its estimation and the Project Manager adds them up. From the time the proposed project is assigned to the Project Manager, his main responsibility is to bring the identified impacted teams together to create a high level estimation of the time and cost of the work required to implement the proposed idea. This requires a well-defined and written scope. This estimation is based on a range of +/- 50%. So, if the QA team estimates it would take 2350 hours to go through the quality assurance process required by Walgreens, it would be quoted as a range from 1175 hours to 3525 hours. Walgreens usually uses a blended hourly rate to determine monetary costs.

The scope of the project is of utmost importance to EVPM. As stated early, you cannot properly plan a project unless you know the scope of the project. After all, how are you going to know when you’re done if you don’t know what you’re doing? Since EVPM is heavily dependent on time and cost, if you don’t define the scope you can never get to how long it will take and thus arrive at a measurable cost.

At Walgreens we keep in mind that at this point in the process we do not know the requirements in great detail. We use phased planning to define the scope and plan out the projects. Each phase serves as a gateway to the next phase causing the business and the PMO to determine if the project should move forward. In between each phase the project team is forming where members from each impacted team is assigned to the project. Their time is tracked in a software application known as PlanWell. PlanWell is an application that tries to mimic MS Project.

As I said earlier, Phase Zero determines go or no go with an estimation of +/- 50%.  Phase Zero includes the Business Case document, the BRD, the Project Charter, a high level scope document and the E0 Estimation document. By approving the Phase Zero estimation the business sponsor has to set aside monies up to the upper limit of the estimation range.

At this point the project team has to prepare to present the project to an executive group called the IT Hub group. The IT Hub group will use the same documentation as the E0 estimation to determine if the project fits into the overall strategic goals of the company. This group is comprised of the management teams from each of the divisions within Walgreens. The IT Hub is a newcomer to the decision process. Walgreens has begun to recognize the importance of making sure these projects actually fit into the overall strategy of the company, especially with the recent merger with Boots. At this point in the IT Hubs development this will be the only time it reviews the project. If the IT Hub disapproves of the project, the project will be canceled.

Phase One

Phase One begins to determine detailed requirements. It produces the initial Functional Requirements Documents (FRD); provides more detailed information on the scope of the project; the project plan is developed; a Work Breakdown Structure (WBS) begins to be detailed out with the tasks and activities needed to complete the project; a more detailed BRD; creation of the project in PlanWell; the Project Management Plan (PMP) details the Communication Plan, the Risk Management Plan, the Change Request plan, the Document Management plan; all of these documents help to bring the team to the point of submitting what’s called an E1 Estimation. The E1 Estimation document tells the business that the team feels confident enough to estimate the cost of the project to within +/- 25%.

At this point a gateway meeting is held with the business sponsors, the PMO office, and representatives from each of the identified impacted teams. Their sole job in Phase One is to review the documentation put together by the project team and give a go/no go signal.

As the project team progressed with the analysis of the requirements of the project they were creating several important documents and information pertinent to using EVPM: The scope of the project; the WBS; and Functional Requirements Documents (FRD’s). Each of these documents would help to create the information needed to use key metrics in EVPM.

The team needed to determine the scope so that they could define the tasks needed to fulfill the scope requirements. From these tasks the team could determine the order in which each needed to be completed. They were especially interested in determining dependencies. Once they had determined the order of the tasks they could then determine the duration for each task and how many resources were needed for each task. Keep in mind that the number of resources could change if we determined that adding or subtracting helped with meeting our target date or our target cost.

From the completed WBS we would be able to create a schedule. The duration of each task can be converted into costs by taking the estimated duration and multiply by the blended hourly costs. Now we are able to determine Planned Value (PV) and eventually our Budget-at-Completion (BAC).

Phase Two

Phase Two brings the project team to the point of submitting an E2 Estimation, which is the final cost and time estimation delivered to the business. The project team is telling the business that it feels confident enough that it can bring this project together to a successful conclusion to within +/- 10%. By this time all project documentation has been created and approved. The scope document has been frozen with any changes requiring implementation of the Change Request process. All final FRD’s and TDD’s have been submitted, and the teams are ready to start the final phase: development.

Status Reporting

Each month the accounting department delivers to the PMO the monthly financial report through PlanWell. This report details the costs by project, by phase in the project, and by department. The Project Manager has to take this information and create what is called the monthly financial reports to each department and to the sponsoring business.

The financial report explains to the departments the financial status of their portion of the project, and explains to the sponsoring business unit the overall financial status of the project. The financial report shows the approved budget (PV), the actual spent for the project (AC), the remaining budget needed (ETC) and the Total Estimated Cost (EAC).

The project will also begin producing a weekly status report and possibly a monthly executive report. These reports contain a short summary of the project status, financial updates, what the project completed during the reporting period, and what it has planned to accomplish during the next reporting period. The length and detail of the information depends on the audience.

Project Performance Metrics

Once development begins, the Project Manager starts to use Project Performance Metrics (PPM) used in EVPM. The PPM measures project management performance compared to the approved budget and committed delivery date. The goal for Project Manager is to deliver projects within 10% of their budgeted work effort and within 10 calendar days of the agreed upon delivery date. The metrics are rolled up to the various management levels to measure project management performance at each level.

The key requirements for this metric are that projects are baselined at the appropriate time, and finding the true reason for any baseline change. The performance baseline work effort and go-live date are captured by the PMO, and the actual hours are captured using time sheets in the PlanWell project management system.

These PPM metrics are communicated to managers and above in the weekly status reports and the monthly executive status report. Two very important documents in the project are the project plan schedule and the WBS.

Included with the WBS is a document that further defines each work package activity of the WBS known as a WBS Dictionary. The WBS Dictionary includes a detailed description of the work to be done, what activity precedes and succeeds the activity. It also lists dependencies within and outside of the project, such as corporate servers that may be needed to house the result of the work package. It also lists the resource(s) responsible for developing the work package and the duration level of effort, usually in hourly units, to accomplish the work. The WBS Dictionary, at Walgreens, includes the blended hourly rate for the resource ($57/hour). Contractors at Walgreens are not allowed to know the exact rate of resources.

From the WBS and the project schedule we can use the following metrics that make up the PPM used in EVPM:

Planned Value (PV)

The Planned Value (PV): The PV, sometimes referred to as the Budgeted Cost of Work Scheduled (BCWS), is the authorized budgeted cost for a given work package. It is sometimes referred to as the performance measurement baseline (PMB) and the total PV project is known as Budget-at-Completion (BAC). It is made up of the planned duration and cost for the activity.

For example, let’s say that a given activity or work package is determined to take two resources five days to accomplish. Each resource cost is $57.00 per hour. Each work day is regularly scheduled for eight hours Monday through Friday. With two resources performing the work, that would come to a total of sixteen hours per day. Since it will take five days to complete the work, our costs would come to a total of $4560.00 (80 hours x $57.00).

Earned Value (EV)

The Earned Value (EV), sometimes referred to as the Budgeted Cost of Work Performed (BCWP), is the value of the authorized budgeted amount at a given point in the project. Using our above example, where each resource cost is $57.00 per hour, and each work day is eight hours per day Monday through Friday, by day three in the schedule for this activity the Project Manager  would have the expectation that EV would equal $2736.00 worth of work had been completed according to the plan.

Actual Cost (AC)

The Actual Cost (AC), sometimes referred to as the Actual Cost of Work Performed (ACWP), is determined by the number of hours multiplied by the blended rate of $57.00 per hour. As each resource completes the day’s work they’re required to clock their time into PlanWell against whatever project they were working that day. The time entered is in hourly units.

For example, let’s take our aforementioned work activity or work package that we determined would take two resources five days to accomplish. With each resource costing $57.00 per hour, and each work day is eight hours Monday through Friday, we know our PV should come to a total of $4560.00 (80 hours x $57.00). By day three in the schedule for this activity the Project Manager would have the expectation that $2736.00 PV of work has been completed according to the plan. But our AC came in at $3648.00, and they only accomplished two days of planned work.

According to the above scenario the project is overspending and behind schedule. In fact it was expected, by day three, to have cost the project a total of $2736.00 for 48 hours of work. The two resources have accomplished only two days of work at a cost of $3648.00. Using the Cost Variance (CV) formula we can determine where we stand at this point:

CV = EV – AC

Cost Variance (CV) is a way to determine cost performance on a project. It is equal to the Earned Value (EV) minus the Actual Costs (AC). This measurement is critical as it indicates the relationship of physical performance to actual costs.

In our examples case the formula would look like:

CV = $2736.00 – $3648.00 = -$912.00

Another way to look at the same relationship is through the Cost Performance Index (CPI). It is considered the more critical of the Earned Value Metrics. A value of less than 1.0 would mean you’re spending more then you’re getting, while a value greater than one means you’re spending less and getting more.

In our example the formula would look like:

CPI = EV/AC

CPI = $2736.00/$3648.00 = .75

As you can see, the project CPI is less than 1.0. Basically, the project is spending more than is getting done. The project is getting $.75 worth of work for every $1.00 spent.

Part of the monthly financial report is to show the department and the business what is needed to complete the project as far as cost is concerned. We use the Estimate-to-Complete (ETC) and the Estimate-at-Completion to indicate what is needed to complete the project.

We use the following formula to determine ETC:

ETC = BAC – EV

ETC = $4560.00 – $2736.00 = $1824.00

The above formula is used if we expect everything to be on time and on budget.

If we expect, as in the case of our example, that we’re neither on time nor within budget and we expect this track to continue then we would use the following formula to determine ETC:

ETC = (BAC – EV)/CPI

ETC = ($4560.00 – $2736.00)/.75 = $2432.00

Estimate-to-Complete is the amount of funds that will be needed to complete the project (Subramanian, V., & Ramachandran, R., 2010). The method used to calculate the amount depends on the circumstances. In our example it was expected that the variance we experienced would continue for the remainder of the project.

We will use the same logic for determining our Estimated-at-Completion costs in that the variances we have experienced will continue. Our formula we will use is as follows:

EAC = AC + [(BAC – EV) ÷ CPI]

EAC = $3648.00 + [($4560.00 – $2736.00))/.75)] = $6080.00

My EAC is equal to $6080.00 and my Variance-at-Completion (VAC) would be equal to:

VAC = BAC – EAC

VAC = $4560.00 – $6080.00 = -$1520.00

The report I would have to deliver to the business would like this:

Approved Budget (PV)    Total Budget    Actual Spent FY15 (AC)    Remaining Budget Needed (ETC)    Total Estimated Cost (EAC)    Est. Variance (VAC)
$4680.00                           $4680.00         $3648.00                             $2432.00                                               $6080.00                                   ($1520.00)

Conclusion:

As I’ve shown, the use of these metrics in EVPM gives us a fairly accurate picture of the status of the project on a monthly basis. Part of the problem we have at Walgreens is that the Project Manager is not given the previous month’s financial status of their project until the second week of the current month. What this means is that we’re basically a month behind when we learn of the bad news given in our example above. It can be very tough to fix the problem in our example when we don’t learn about it until six weeks later.

The object of EVPM is to give the Project Manager an accurate picture of the status of their project at any given moment so they can make corrections before matters get worse. By depriving them of basic information the company risks a successful conclusion to many of their projects. As you can see from our example, the numbers give us a pretty accurate picture of the status of the project. Using these metrics, in a timely fashion, gives the Project Manager the ability to control events quickly so that they can keep the project moving forward.

References:

Archibald, R. D., & Villoria, R. L. (1966). Network-based management systems (PERT/CPM). New York: Wiley.
Christensen, D. S., & Heise, S. R. (1993). Cost performance index stability. National Contract Management Association Journal.
Fleming, Q. W., & Koppelman, J. M. (2010). Earned value project management. Newtown Square, PA: Project Management Institute.
Garling, R. (2015). project metrics week 7 paper. AMU
Lipke, W. H. (2009). Earned schedule: An extension to earned value management– for managing schedule performance. Raleigh, N.C.: Lulu Pub.
Project Management Institute. (2013). A guide to the project management body of knowledge (PMBOK guide), fifth edition. Newtown Square, PA: Author.
Subramanian, V., & Ramachandran, R. (2010). McGraw-Hill’s PMP certification mathematics: project management professional exam preparation. New York, NY: McGraw-Hill.
Verzuh, E. (2012). The fast forward MBA in project management, fourth edition. Hoboken, NJ: John Wiley & Sons.

Conflict Resolution in Project Management

Introduction:

Conflict in project management is very much like conflict in a marriage: it’s going to happen. The key is in the process used to resolve the conflict. The likelihood that conflict occurs in information systems development projects is extremely high because the individuals involved are from different backgrounds and cultures working together in the project. Conflicts can arise due to differences in values, needs, perceptions, and personalities. Appropriate skills in dealing with conflict can help project managers to handle conflicts effectively and lead to a successful conclusion of the project.
Amy Ohlendorf discusses in her article that conflict is a state in which different parties are aware of the incompatibility of their positions with each other and that these parties choose to hold those positions even though they know them to be incompatible (Ohlendorf, 2001). In her article she discusses how to understand the pros and cons of conflict; how it can be both beneficial and detrimental to the project.

Conflict Causes:

We have to realize that the environment the Project Manager works in can be characterized by large cultural diversity (PMBOK, 2013). Teams are made up of people with many different experiences, come from many different countries; each with their own unique culture and language. Their values will be very different from the Project Manager and other members of the team. These differences will cause them to look and perceive the expectations of the project completely different from other team members. What the Project Manager should do is use these differences to the advantage of the project and the team (PMBOK, 2013). Ms. Ohlendorf points out that these differences can aid in strengthening the project outcome as well as the organization overall if one takes a positive proactive approach (Ohlendorf, 2001).

Storming Stage and Conflict Resolution Approaches

The Project Manager has to realize that not all conflict is bad (Wong, 2007) in fact, some conflict can actually aid in pushing the project through complex problems. A good debate amongst peers can actually help to bring them closer together into a tighter working relationship. These types of debates generally will occur, as described in the Tuckman Ladder (cited in PMBOK, 2013), during the storming stage in a project. Many times conflicts can arise during this stage.

The Project Manager can use a number of approaches to resolving conflicts (Kerzner, 2001):

•    Confronting –The conflicting parties meet face-to-face to collaborate and come to an agreement to resolve the issue. This style involves open and direct communication which should lead the way to solving the problem. It should be used when it is early in the project so you have time, conflicting parties need a win-win, and it helps to foster good working relations.

•    Compromising – Also known as give and take. In this case both parties need to win but you don’t have the luxury of time. A decision needs to be made and coming to the middle ground can help move things along. The thing with compromising is that all involved may get a little of something, but they don’t everything. Some might consider that better than nothing at all while others will feel they got too little. The Project Manager has to be prepared to use a little smoothing when using this approach.

•    Smoothing – Some refer to this as an accommodating or agreeable way to come to resolution in an argument. I would use this if the stakes are low and I want to pocket some good will for down the road.

•    Forcing – Used when a decision has to be made due to time or cost and the conflicting parties are not being agreeable. I’ve used this when the project simply had no more wiggle room or the sponsors basically said do it. I have used this in conjunction with smoothing so as not to have too many ruffled feathers.

•    Avoiding – This approach is used when there is time to avoid so that you can better prepare yourself for a future discussion. You can use avoidance when the cost or the risk is low. But avoidance is not something that can be used very often. Ignoring the problem doesn’t make it go away. Smoothing might be in order here due to the need to placate until better prepared.

The impact on the project when using the above approaches has been shown to either lesson the amount of conflict or increase it. I have found that using the above approaches, while applicable in all stages (forming, norming, performing, and adjourning) I have found them used to a greater amount during the storming stage. A more confronting style has shown to limit the amount of conflict later in the project due to resolving issues early on rather using compromising, smoothing, or avoidance. Forcing can be one of the worst when it comes to lessening conflict as it usually leaves team members with hard feelings making them less likely to want to work on the project since their needs aren’t being met (Wong, 2007). The manner in which the Project Manager approaches conflict creates the manner in which the team responds to conflict in the future. Starting out by avoiding conflict will only increase the chances of it occurring as, or if, the project progresses (Ohlendorf, 2001).

Cognitive Analysis Approach:

I have found that the Project Manager needs to take what is referred to as a cognitive analysis approach to conflict resolution. The cognitive approach says that conflict is mainly due to perceptive differences between conflicting individuals. Using the confronting approach with cognitive analysis allows for feedback to be presented allowing for each side to gain insight into what the other is thinking. This insight gives conflicting teammates an opening to reach a satisfactory resolution to the conflicting issue. By identifying the real issue in the conflict resolution it allowed each side to concentrate on the real issue, not side issues which tend to be emotional. Each teammate comes to a greater understanding and appreciation of the other thus creating a cohesive working relationship (Ohlendorf, 2001).

Listening:

One of the top skills that the Project Manager needs throughout these approaches is their ability to listen. And keep in mind that listening works both with the Project Manager and with the team member. Many times team members are busy trying to figure out how to win the argument rather than listening to what the other team member is saying. This behavior is particularly prevalent when the project has been doing a lot of avoidance or when the issue has been forced due to an uncompromising party to the conflict. Recently a conflict arose in my current project due to a decision forced on one team by another team impacted by the needs of the project. The team that had forced the original decision was now finding itself in the position to have to defend that decision to the sponsors of the project. They were trying to wiggle their way out of it and just kept digging that hole deeper and deeper. They weren’t listening, even when the team they had forced the original decision on was offering a face saving compromise. Listening would have led them to resolving the issue. Not listening almost caused irreparable damage the project as well as to relationships and reputations.

Conclusion:

Conflict in project management is inevitable but when properly managed it can lead to favorable conditions. However, conflict can be very detrimental to a project if it is not well managed. For Project Managers the challenge is to try to find what the right amount of conflict in project management is. By understanding the subtleties of conflict, and learning the nuances of the different approaches to conflict resolution, Project Managers can establish an atmosphere in which comradery is encouraged and the project goals are reached.

References:

Kerzner, H. (2001). Project management: A systems approach to planning, scheduling, and controlling. New York: John Wiley.
Ohlendorf, A. (2001). Conflict resolution in project management. Information Systems Analysis.
Project Management Institute. (2013). A guide to the project management body of knowledge (PMBOK guide), fifth edition. Newtown Square, PA: Author.
Wong, Z. (2007). Human factors in project management: Concepts, tools, and techniques for inspiring teamwork and motivation. San Francisco: Jossey-Bass.

Things to Keep in Mind When Doing Keyword Research to Attract Customers

Many people can create a long list of the top keywords manually But the question is: are these the right keywords for your business? You have to choose carefully the terms you are going to use to attract customers and to describe your business to them so they buy. Remember, you only have one shot at this, best to get it right the first time.

Keywords are those words that you want to use in your content that your targeted market uses to find you in a Google search. You want to choose the terms which rank well but have a low competitor rate in the search engines because these are the terms that buyers use. General terms attract tire kickers, specific targeted terms attract buyers.

Many small businesses cannot compete in the world of high competition general search terms for a variety of reasons including being new to the Internet, little time to develop needed content to create links back to their website to name a few. Thus, it is very important to do your research carefully so that the keywords you choose to use in your website and other web content will actually produce the desired result.

You can come up with a list of possible words to use using a number of free keyword suggestion tools available on the internet. You can choose to use one keyword or multiple word keywords and you can get traffic from these words, but these are the expensive highly competitive keywords that will require much time and work to produce results.

Long tail keyword phrases are those terms I spoke of earlier which can effectively target your buying customers. Research will show you that prospects will likely type in these multiple word phrases giving you more and better chances of getting quality ready to buy customers to your site. These people have spent time looking for you and are interested in what you do.

The question is: Are you ready to tell them why you and not the other guy?

There are 4 things you need to do that will make your keyword research more:

  • First: Find out the needs of your prospective customers. This information will make your online marketing campaign successful.
  • Know what you’re about. Define your company, its products/services and find those keywords that are suitable to your mission.
  • From your list of keyword phrases select those that you think are the most fitting and effective words. Only then will your targeting efforts become more specific.
  • Consider your competition when doing your keyword research competition. Your ability to compete will also depend on what keywords you used in comparison to your competitors.

Keep in mind that driving traffic to your website using SEO keyword research is only part of the process.  Getting traffic to your website is only part of the battle. Upon arriving you have to convince.  More on that later.

Yellowbird Marketing Solutions

On-Line Video

Advertiser are shifting funding from standard banners and rich media to online video because it’s bringing major benefits to their companies. But they’re still advertising on television making online video a compliment to TV rather than an alternative to it.

A study by Brightroll is showing that at least 85% of the ad agencies said spending was moving from other types of advertising to online video. Moving funds from television, though, wasn’t happening as one might expect, with less than 65% of all agencies doing so. Companies that were pulling funds from TV were doing so in much smaller increments.

Many companies in the survey agreed (91%) that targeting capabilities are an important consideration when buying online video. Behavioral targeting is clearly viewed as beneficial, even though still not a wide spread practice. Only 40% of those responding indicated they would use the practice when leveraging their advertising.

I found it interesting that 96% of those ad agencies responding in Brightroll’s survey saw research as something of value their clients, yet only 35% actually conduct research for them. When asked which area of online video advertising one would to see an increase in research done 29% said performance vs television advertising, followed by 28% saying they would like to see increased research in  the “Change in purchase intent or brand lift”. Audience profiling research cam in last with only 4% wanting to see increased research done. Research provides invaluable insight into how well a campaign performs and allows for improved optimization of future campaigns.

Media buyers are predicting that this year online video will see the largest increase in spending  with mobile video following closely behind and social media coming in closely in third place this year. Display, search and tv advertising followed with dismal expectations of any kind of increase.

Overall, I think online video is becoming a clear winner in the advertising expenditure race this year and will likely surge further ahead for the foreseeable future. There are many services out there offering top notch technical product and knowledge, so it should be relatively easy to either DIY or have find a qualified professional to help you.

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Change

Have we changed all that much? Some are claiming a transformation has, or is, taking place in the way that we relate to one another. Perhaps they’re right. The way we create relationships sure seems different. The way we create dialogue with potential clients is changing. The way we deliver messages has most certainly changed. But other things seem to be regressing.

Newspapers used to control the message. We saw the world through their eyes. Our thoughts were formed around their thoughts. History shows the first published newspaper was in Rome in 59 B.C.

Newspapers would reign supreme until 1906 when the first radio program was broadcast by Reginald Fessenden from Ocean Bluff-Brant Rock, MA. Even though the telegraph system was an earlier precursor to radio, it didn’t have the same effect that radio would have on how people got the news of the day.

Radio, though, would operate under the same premise as newspapers whereby the listener was as dependent as the reader on which someone had to produce the broadcast. And delivery of each was no small matter either. Newspaper and radio station require major financial resources. Newspaper distribution is a very labor intensive business, from the reporter to the newspaper boy we would be looking at hundreds, perhaps thousands, of people to get that newspaper to your hands. While radio would begin a sea of change that allow the distribution of the news over the air waves, it still required a fair number of people to operate. But all one needed to listen was a radio and electricity. These two requirements would mean that initial growth of radio would be very slow. But, as we shall see, not as slow as newspapers. We would hear the first news program, sports radio and entertainment radio in 1920. Many of these stations are still around today, hopefully using much better equipment.

And coming up fast…Television can trace it’s beginnings to 1873 when Willoughby Smith discovered the photoconductivity of selenium, to the invention of the scanning disc in 1884 by Paul Nipkow and John Baird’s demonstration of televised moving images in 1926. Regular broadcast TV would begin in 1946 and by 1953 color TV was available nationwide.

But producing a TV show cost a bundle and it required a television set as well as electricity. The user was still dependent upon others to receive the news of the day. Everyone was dependent on reading, hearing and seeing information that was based on what someone else deemed news worthy. As such we didn’t get to read, hear or see everything, only what someone else decided for us.

That would soon be changing.

Next: The big change

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It’s about traffic

Ok, the big question I get from my customers is how can I get more of the right kind of traffic to my website. A very good question. I certainly don’t get someone asking me to lessen the amount of traffic to their website.

Here’s what I do to attract more customers: I consistently try to put engaging content on my blogs, on my website and on my Social media sites that relates to what I do and to who I am as a person. I figure that I love what I do and so I know I’m going to be very passionate when writing about it. I also enjoy a number of others things in my life and I like to write about those subjects, too.

I have a great girlfriend whom I live with. We love taking care of each other.

I enjoy hiking in the local county forest preserves in the area. I love to take long bicycle rides. I like reading, watching a good movie on the TV. We’ll go out to the movies only to watch a flick where it has to be viewed on the big screen…like Avatar for instance. I enjoy BBQ on warm summer days sipping on a long tall cool imported or micro brewed beer with friends and neighbors.

I am very passionate about politics. You will likely see a few posts here where I wax poetically about the issues of the day. I think it’s important that we all are involved. After all, you may have the answer to solving this mess we’re in.

I love to garden. You can see how my garden progresses each year by viewing my Facebook page. I’ll talk more about this subject in the very near future.

Anyway, to get more traffic I know I need to add other things to the mix along with the good content. You see, everyone is saying you have to have good engaging content.

Really? Hmmm, imagine that.

But good and engaging content to one person falls flat to another. For example, my girlfriend hates computers. She uses them, but when I try to explain something technical to her she gets all glassy eyed and tries to change the subject to something else. I do the same to her when she tries to talk about a subject I have no real interest in.

So my subject matter has to be pointed at the right kind of traffic. Someone who is interested in what it is I do.

Getting attention can be easy. Charlie Sheen has been getting tons of attention. But as you can see from his traveling show, some audiences love him and some just think he’s stupid.

In my case, or at least I hope so, I want to attract attention that builds my business. I have to address those interested in what I do by showing them I know what I’m talking about. I have show why I’m the subject matter expert in my chosen field. And do this in a way that provides value and is entertaining. If my writing is boring then people will not read it.

All this means that I have to know who my “A” customer is. My “A” customer is the one I really enjoy doing business with. And it’s not the guy from across town who just wants to pick my brain all the time. Him I need to drop him like a hot rock.

Your “A” customer is the person/company that can afford your product, who will benefit from it, that is eager to buy from you. Those customers make being in business a pleasure.

So, write to your “A” customer.

Confusing Internet

Many small to medium size companies find the Internet to be a very confusing place.

My friend Tom was recently lamenting:

  • How come I’m not getting traffic to my web site?
  • What is this Social Media thing all about?
  • Will it last? I’m told I should have a website.
  • I’m told I should be on Facebook, Twitter, YouTube…aahhh.
  • Too much to decide on, too much time involved figuring it all out.
  • How is it that some people seem to be all over the Internet and I can’t even get off square one?

Like anything out there worth doing, the Internet takes a lot of hard work, which means a lot of time. And time is something many of us have very little of to start with. So to put more time into something that has a really steep learning curve and doesn’t seem to produce results makes absolutely no sense whatsoever, right?

Tom continued to think out loud:

But gee whiz, look at Charlie, the Butcher across the street. I’ve never seen him so filled up with customers. The wife said she saw a coupon he had put onto this thing called Facebook. All of her girlfriends are raving about it. She used that new smart phone I got her last Christmas to scan something called a QR code, whatever that is.

But I just had the website redone last year and it cost me a bundle. I’m still not getting any leads from it.

Come to think about it, that damn phone book ad isn’t producing butkus. And it costs hundreds per quarter for it, tried to cancel it months ago but I couldn’t figure out how to do it.

Sure wish there was someone out there who understood business and could help me develop a marketing strategy that would make sense, remove the confusion and make it productive.

Well there is, Tom. Call me at Yellowbird Marketing Solutions and I’ll help you figure it all. We can help you develop a package that will fit your budget and produce results. I’ll even show you how to cancel that phone book ad that does nothing but frustrate you.

You can find me at:

How’s that keyword list working for you?

How’s that keyword list working for you?

When I sit down with a potential customer to discuss market strategies we get to the topic of keyword research.

And I run into a number who think that because they’re in a particular business, they know all of the keywords someone would use to find them on the web.

And, of course, they use these words in describing their business.

Some of these words may actually be good words. But they don’t know because they used the SWAG method to determine their list.

question mark

SWAG, for those not in the know…Scientific Wild Ass Guess…

…Because these websites still get little to no traffic.

When it comes to keywords, there are plenty of keywords that have
tons of traffic…

Money

…But having traffic isn’t enough if you want to run a PROFITABLE web-site….

…or are they tire-kickers who will ask a lot of questions, expect a lot of free stuff, and then leave not      spending a dime with you?

Your marketing strategy needs to target the buying customers ready to spend and make you money – not the tire-kickers who cost you money.

Unless you’re targeting buyers instead of “tire-kickers”, all of your SEO efforts and thus your market strategy, will be completely wasted on attracting worthless visitors who never buy.