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09 Oct 2008Professor Mario Vanhoucke has always had a passion for fundamental research. When an American IT expert developed a technique for measuring the duration of a project, he started to analyse it purely out of academic interest. Imagine his surprise when he discovered that the business world was interested too! This led to a research project spanning six years, the results of which are soon to be published in book form under the title of ‘Measuring Time’.
Time is money
It may be a cliché but it is a fact of life for businesses, and for some it is really crucial to be able to predict the duration of a project. A good example is a company that designs and maintains baggage handling systems. The value of each contract they enter into is fixed, but can be set higher if they can promise a shorter delivery date. If they fail to meet the agreed completion date, there is a penalty fee to pay for each day late. It is therefore essential to be able to forecast a short but reasonable deadline.
Mario Vanhoucke explains: “The ‘earned value’ technique is frequently used to estimate the cost and duration of a project. However, it has the drawback of expressing the duration in units of cost rather than time, i.e. what it will cost if the project overruns by x hours. An American IT expert examined the problem and developed the ‘earned schedule’ technique based on ‘earned value’ in order to predict the duration of a project. He applied the technique to a real-life project and it worked. So far, so good – but that was no guarantee that it would work for every project. My curiosity was aroused and I started a research project with a number of companies to find out which projects ‘earned schedule’ could be applied to.”
Predicting success
In practice, a project often involves a complex array of activities. These activities may be carried out in succession, as in a building project for example, or simultaneously, as is often the case with IT projects. Mario Vanhoucke again: “I used a software program to classify 4,100 fictive projects that had all the characteristics that can be found in practice. Surprisingly, the conventional schedule-risk analysis and the more recent earned value/earned schedule techniques appeared to complement each other perfectly. The earned value/earned schedule approach, which measures performance at project level, turns out to work well for serial projects, while schedule-risk analysis of just those activities identified in a preliminary schedule risk analysis gives more reliable results for parallel projects.”
The researcher tested the fictive projects in practice, and was slightly taken aback when project managers said “OK, now we know whether these techniques give reliable signals, but what we’re interested in is whether or not the project will be successful.” Mario Vanhoucke: “That came as a bit of a shock but it was a good point of course. So I set up a new simulation study, which lasted three years and was designed to establish whether interventions prompted by a negative signal actually had a positive effect and, conversely, whether it was a good thing to take no action when the signal was positive. Unlike the signals given by older techniques, which sometimes prompted expensive and fruitless interventions, the signals from the new technique proved to be reliable: you should indeed intervene when there is a negative signal, and otherwise not. Of course, the signals are no more than signals; the data input must be of good quality to start with, and then the success of the project mainly depends on the project manager’s interpretation and the actions he or she undertakes. If you’re tracking just one simple project, you don’t really need this tool, but it’s extremely useful if you’re managing several complex projects.”
In 2007 Professor Mario Vanhoucke was presented with a Project Management Institute award for his research on “Measuring the Accuracy of Earned Value/Earned Schedule Forecasting Predictors”. Today, the technique is already being applied in Belgium, the UK, Germany and Spain.
Info
http://www.protrack.be/protrack_research.php
http://www.pmi-cpm.org/pages/measurable_news/documents/Winter20072008Final5_000.pdf
Prof. Dr Mario Vanhoucke is Professor in Project Management and Programme Director of the 4-day Project Management programme at Vlerick Leuven Gent Management School. Prof. Dr Mario Vanhoucke has experience with multiple real life projects like Westerschelde Tunnel and TMVW.
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