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ICDL Project Planning (ICDL): Green Report, Red Numbers

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Green Report, Red Numbers

At the end of month four of a nine-month, £900,000 CRM implementation, the project manager reports: planned value £480,000, earned value £420,000, actual cost £455,000. The milestone 'data model signed off' was reported complete, but the architect says the sign-off was verbal and two interfaces are still being reworked. The team has been working paid overtime for six weeks to hold the reported dates, and the last two status reports have said 'on track, minor issues'. The steering committee meets in three days and the sponsor has told the project manager to 'present a confident picture because the board is nervous'. The team's own estimate of the cost to complete the remaining work is £520,000. Nothing has been formally accepted or handed over yet, and the vendor contract requires written approval for any scope change.

1. Calculate CV, SV, CPI, SPI and an EAC using CPI. What does this combination tell the steering committee that a simple percent-complete figure would hide?

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Calculations (in £):

  • CV = EV − AC = 420,000 − 455,000 = −35,000 (over budget)
  • SV = EV − PV = 420,000 − 480,000 = −60,000 (behind schedule)
  • CPI = EV / AC = 420,000 / 455,000 = 0.92
  • SPI = EV / PV = 420,000 / 480,000 = 0.88
  • EAC = BAC / CPI = 900,000 / 0.92 ≈ £975,000, an overrun of about £75,000

Bottom-up cross-check: AC + ETC = 455,000 + 520,000 = £975,000. Two independent methods landing on the same figure is a strong signal that the overrun is real.

What a percent-complete figure hides:

  1. It conflates time and money, so it cannot show that both cost and schedule are adverse.
  2. It depends on earned value, and the verbally 'signed off' data model is not complete, so EV is overstated. The genuine CPI and SPI are likely worse than shown.
  3. Overtime has inflated AC without earning value, which is exactly the pattern a completion percentage conceals.
  4. It gives no forward projection; CPI-based EAC does.

2. The sponsor has asked for a 'confident picture'. How should the project manager respond, and what should the report contain?

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The project manager should decline to misrepresent the position, politely but unambiguously. Agreeing would breach the reporting duty and would also be self-defeating: the figures are reproducible, the architect has already contradicted the milestone, and a board that discovers an overrun £75,000 into a £900,000 project loses confidence in the reporting system, not just in the project.

A workable response is to offer an accurate report that is as useful as possible: state the variance and the revised forecast, then lead with decision options so the board is being asked to choose rather than merely to absorb bad news.

The report should contain:

  • CPI, SPI, CV, SV and the EAC of about £975,000, with both calculation methods shown.
  • A correction to the milestone status, with the outstanding work on the two interfaces named.
  • Root causes: underestimation, rework on the interfaces, and overtime masking the problem.
  • Recovery options with dates, costs and consequences: extend the schedule, descope defined functionality, or add skilled resource.
  • The change-control position on the interface rework, including whether the vendor's contract requires written approval that has not been obtained.
  • Overtime and morale risk, and the team's actual capacity.
  • The decision requested from the committee, by a named date.

3. What closure activities are at risk here, and what should be done before the project is declared complete?

Read the worked answer

At-risk closure activities:

  1. Acceptance. No deliverable has been formally accepted; the data model 'sign-off' was verbal. Declaring completion on verbal approval would be indefensible.
  2. Contract closure. The vendor contract requires written approval for scope changes, and interface rework may constitute an unapproved change, creating a payment dispute.
  3. Product handover. Operations have not been transitioned, so support responsibility is undetermined.
  4. Financial closure. Overtime liabilities and outstanding invoices must be reconciled against the final forecast.
  5. Lessons learned and benefits. Reporting integrity failed for two cycles; unless this is captured, the same pattern will repeat.

Before declaring completion:

  • Obtain written acceptance of the data model and interfaces against stated criteria, with any defects listed and agreed as post-closure items.
  • Regularise the change-control record and obtain retrospective written approval where work was done without it, or agree the position with procurement.
  • Complete handover with named support owners and documented procedures.
  • Capture lessons learned while the people are still available, and release the team formally.
  • Archive project records to the retention policy, and schedule benefits measurement.