The Fundamental Metrics Measuring Efficiency of Implementing IT Projects - Research Paper Example

?METRICS IN IT INDUSTRY Project evaluation remains an essential and continuous process seeking to ensure successful implementation of any project. The various metrics assessed during these evaluations differ within different industries. The uniqueness of IT projects is revealed through the discrepancies in the metrics assessed in projects undertaken within the industry. Cost, time and scope remain the fundamental metrics measuring efficiency of implementing IT projects. Cost performance index and schedule performance index remain the major ratios utilized in measurement of cost and time, in IT projects, respectively. Scope becomes sufficiently measured through observation of the changes required during the implementation process. This paper explores the various metrics utilized in assessment of the efficacy in implementation of these unique IT projects. TABLE OF CONTENTS ABSTRACT 2 TABLE OF CONTENTS 3 INTRODUCTION 4 METHODOLOGY 4 Planning 5 Controlling 6 DATA COLLECTION AND ANALYSIS 6 FINDINGS 9 Project metrics 10 Metrics in IT projects 11 Cost 11 Time 13 Scope 15 CONCLUSION 16 REFERENCES 18 INTRODUCTION The information technology industry represents a unique characteristic for development projects aimed at providing improved technologies, both in software and hardware sectors. The planning process for the projects remains an essential component for minimizing project failure ultimately assuring success. Poor management of IT projects remains the highest cause of project failures within the industry. It is estimated that this accounts for 54% failure with technical challenges causing 3% (Gulla, 2012). Proper management begins with development of proper plans during the initial project stages. The evaluation process seeks to make an assessment of the project progress during implementation. Efficient assessment and consequent evaluation involves identification of the various metrics being evaluated to ensure efficiency of the implementation process. Within the IT industry, the major metrics measured during evaluation include time, cost and project scope. These measures make IT projects significantly unique from other projects. METHODOLOGY The project development methodology will be based on a waterfall approach, which shall include sequential undertaking of various aspects of the project. The process will be broken down into different stages which shall follow each other. The waterfall methodology being utilized shall be as indicated in the chart below. Measurement of the various metrics involved in the project will be undertaken following completion of each stage and relevant actions taken, based on the results of performance indexes. Figure 1the waterfall methodology Planning The project planning aspect involves the development of a plan providing guideline towards undertaking a desired development project. This marks the beginning stage of any project being implemented. The element of undertaking sufficient planning remains fundamental in assuring success, or causing ultimate project failure. The planning process involves provision of various aspects of the project, commonly through estimations. These estimations provide guidelines during implementation; hence their accuracy remains essential in assuring success. The provided estimates must remain reflective of actual figures, with minimal discrepancies. During the project evaluation process, the actual figures become measured against the provided project estimates, established during the planning stages. Poor planning remains the fundamental cause for most project failures. While the planning phase remains fundamental in ensuring success, the numerous aspects involved within the planning phase contribute towards successful implementation. Individuals involved in the planning phase of any projects should ensure that the plans suffice the project requirements. This serves in eliminating and minimizing continuous changes during the project implementation phase. The planning phase should provide a comprehensive guideline for undertaking monitoring and evaluation of various project aspects. The monitoring aspect of the project should be undertaken properly and continuously to ensure efficiency in the implementation process. Various measurable metrics must be identified, clearly defined, and key indicators identified. The essential operation levels must be stipulated during the planning phase for successful completion of any project. Controlling Controlling element remains essential in ensuring successful implementation of projects within the information technology industry. The information collected regarding system performance becomes essential in determining the controlling elements to be implemented, and the approach to be utilised. Controlling involves gathering information regarding system performance, comparing the performance with the desired level, and ultimately initiating essential action plan(Dobre, 2007). The element of control remains focused on checking the cost, time and overall project performance. Controlling seeks to evaluate the project against the expected results from the project. It therefore remains essential to establish anticipated results before implementing controlling elements. Controlling remains extremely essential as losing sight of these fundamental targets could result in project failure. Control actions adopted following undertaking measurement of these metrics remain based on the results of the performance indexes. This measurement is undertaken at specific stages of the project implementation process. Common practice within many information technology projects involves undertaking measurement on a quarterly basis. In projects taking short durations, completion of each stage forms a critical stage for undertaking project performance measurement. DATA COLLECTION AND ANALYSIS Data collection will involve undertaking of a continuous assessment of the various metrics as identified. The different performance indexes will be utilised in ensuring effectiveness in the analysis provided regarding project performance. Measurement of project performance will include utilisation of various earned value management (EVM) indexes calculated for the various metrics being controlled. Baseline values become established and actual performance becomes measured against these baselines. The schedule performance index is normally presented according to the following baselines SPI ? 1 project behind schedule SPI = 1 project on schedule SPI ? 1 project ahead of schedule Another index essential in performance controlling is the cost performance index, which shall be represented according to the following baseline. CPI ? 1 project is above budget CPI = 1 project is within budget CPI ? 1 project is below budget The critical ratio is a combination of schedule and cost performance indexes which can be utilised in assessing and creating a balance between the two performance measures. The critical ratio is determined through multiplication of the two previously identified indexes. The CR remains essential in establishing performance of the project according to the results provided below CR < 1poor project performance CR = 1 project performance on target CR > good project performance There are two types of control charts utilised in making evaluation of projects, variables control chart and attributes control charts. Variables control charts shall be utilised to establish variable aspects like time, while attribute charts shall be utilised to establish presence or absence of different attributes. This will enhance the process of undertaking analysis of the index results following evaluation. Below is a cost control chart for the relatively large project consisting of about 100 development projects. The upper control limits (UCL) and lower control limits (LCL) have been set at 30 and 25 respectively for the cost control. According to the range chart which relies on the deviation from the standard level required, the project has continued to operate within the required range. Corrective action would be initiated at the point where the measurable values move out of range. FINDINGS The following findings were established regarding various metrics available within projects Project metrics Project metrics could be defined as measure of desirable success of various project implementation activities. Each element presents a specific component within the project, which must be satisfied according to the determined performance indicators. The development of performance metrics follows development of desired results during the planning stages of development projects. The metrics become developed through first establishing the various critical processes or requirements based on stakeholder expectations (Vandevoorde & Vanhoucke, 2006). Secondly, the anticipated work outputs become clearly defined and quantified to enhance the element of undertaking evaluation during implementation. Lastly, targets become established and are utilized in measuring the results of each metric. Project management commonly involves assessment of various aspects based on the criteria provided in the table below Metric Work output targets and indicators Time performance against the developed work schedule schedule performance index (SPI) and schedule variance Cost performance against the estimated budgetary allocation cost performance index (CPI) and cost variance Resource utilization of resources according to established critical limits amount of resources overspent per project iteration Scope the experienced scope changes during the project implementation process number of requested project changes during implementation Quality the experienced quality problems number of problems fixed during testing of different iterations Actions adherence to the project action item list the number of actions lying behind the project schedule and stipulated deadlines Metrics in IT projects Metrics refer to the existing measures of quantifiable components within various project management programs. They can be directly observed during the project lifetime or a specified system could be developed during the project implementation seeking to provide a continuous evaluation process for the various metrics. Identification of the desired metrics therefore remains fundamental in ensuring efficacy in the measurement of observation process for the defined metrics (DeMarco, 1986). The information technology industry presents a surmountable challenge for project managers seeking to develop measurement metrics. The available metrics therefore become limited to the various constraints experienced during the process of implementing the project. These constraints could be identified as the various elements related to cost, schedule and scope of the projects. The main purpose behind undertaking evaluation of metrics based on constraints remains elimination of the numerous elements causing project failure. The three aspects of cost, scope and schedule have been identified as providing the greatest potential for project failure. Assessment of these metrics seeks to ascertain the capacity for projects to remains within the provisions and guidelines provided. Successful project implementation would ensure the project meets the required assessment against the essential evaluation metrics (Rook, 1986). The complexity of numerous IT projects makes individuals involved within these projects to rely heavily on the above identified metrics. Within other industries however, other project metrics exist, because of the involvement of many activities. Cost The element of cost seeks to provide a quantifiable measure of project performance against the provided budgetary allocation. The project cost management aspect might be maintained through allocation of specialized teams to undertake the various activities pertaining to budgets and other related issues. The process begins with making project plans, then providing estimations of anticipated project costs. The anticipated costs are then utilized in development of a project budget. The budget remains the fundamental guideline against which project costs become measured for excellence. Before commencement of any project, budgets must be developed to ascertain the financial capabilities for implementing the project (Kerzner, 2013). The final element in project cost management occurs during the implementation and is called cost monitoring. This is normally done in relation to the provided guidelines. Monitoring seeks to make certain that the venture costs stay put within the provisions of the budgetary allocation While undertaking these measurements, objectivity in the measurement technique remains essential in ensuring efficacy of the measurement technique. The cost performance index (CPI) remains the major technique providing an indication of efficacy on project cost management. This aspect could be defined as providing measurement of the efficiency of all project expenses in achievement of desired outcomes. The cost performance index is a ratio of earned value against the actual costs incurred in gaining the project value. It commonly remains the basis upon which successful utilization of financial resources is undertaken. The index can also be utilized in computation of expected final costs for IT projects. Following assessment of project utilizing CPI as a key indicator, project managers could estimate the overall performance of the project against provided budget. In the management of project cost, different types of values become essential in seeking to establish efficacy of cost management. The approved budgetary allocation for completing the project commonly known as planned value (PV) forms the first cost assessment indicator. This is normally contained within the budgetary estimations. Since the budget offers an estimated value, a record of actual cost must be presented for comparison against the estimations provided during project planning stage. The actual cost contains information regarding actual costs incurred in completing specified quantity of project work. The approved budget for the work completed represents the earned value (EV) for the project. All these values must be continuously monitored to ensure successful cost management within IT projects (Philipson & Antvik, 2009). The chart below indicates a sample graph monitoring these three aspects essential in project cost management. The difference between the planed cost and actual cost provides the cost variance. This remains a fundamental cost indicator for efficiency of cost management through indicating the project’s cost overheads. Figure 2monitoring actual cost, planned value and earned value in a project Time The element of time seeks to provide measurement against a provided project completion schedule. This is aimed at ensuring work is undertaken according to the established project plan developed during the planning stages of project. The schedule provides a platform for continuous assessment of the project implementation process throughout the project lifetime. The schedule plan and the actual work undertaken remain the essential components utilized in the measurement of time aspect within IT projects. A significant variance in the schedule would initiate corrective measure and in critical development projects can ultimately result in project failure. Providing a work schedule remains essential in ensuring timely completion of development projects within the IT industry (Fairley, 2011). As an extremely sensitive industry, time management and operating within schedule could minimize expenses while enhancing time management efficacy. Within many development projects, schedule performance index, remains the key indicator for efficiency in time management. This could be defined as the ratio approved budget for completed work to budget of planned work. Schedule variance is also another fundamental indicator of time management efficiency within projects. This is presented through a marginal difference in the amount of work performed and the amount for planned work. The schedule performance index and schedule variance remain the major indicators of schedule efficiency within projects. These quantities can be utilized in determining projects behind schedule and those operating within the provided timeline. They are commonly referred to as the measures of schedule efficiency. The chart below provides a guideline to understanding numerous elements utilized in measuring efficacy of schedule and cost constraints within IT projects Figure 3schedule and cost variance performance indicators The aspect of time remains critical in ensuring efficiency, effectiveness and productivity of various activities undertaken within a project timeline. The existing limitation in provided time presents increased necessity to undertake efficient time management approaches in project management. Efficiency in time management involves scheduling of activities in a manner which ensures efficient continuity of the processes (Project Mnagement Institute, 2008). In development of project schedules consideration of available time remains essential as time is a limited resource. While other resources might be added time cannot be available once utilized, neither can time be replaced if lost. The element of time creates a surmountable challenge for project managers within the IT industry. Deadlines for delivering completed projects must be satisfied in accordance to the stipulated project schedule. Scope This could be identified as the third major constraint in project management combining the elements of time and cost. The project scope determines the various expected project achievements from utilization of available financial and time resources. The achievement of balanced results commonly depends on the clarity and precision of both budget and project schedule. The project scope defines specific timelines when certain project elements should be completed. The project scope might be utilized in determining the expectation of stakeholders in terms of function and performance of the project, once completed (Ivan, Visoiu, & Palalghita, 2007). The scope is commonly developed during the planning stage as it involves documentation of goals, objectives, tasks, deliverables, costs and deadlines. The documentation of these aspects of the projects enables a project team to remain focused on delivering all project aspects as required. During the development and subsequent documentation of project scope, the element of change must become sufficiently addressed. Changes during the project implementation stage remains inevitable as they are results of external conditions. Effectiveness of scope development could be measured through the integration of change within the project implementation course. Since resources remain limited, the project scope should focus on providing optional methods of delivering desired results, while utilizing the allocated resources. Scope creep arises when the developed project scope results in a project requiring additional resources like time (Kan, 2002). Scope creep commonly results from poor planning and miscommunication during the project implementation process. Effective scope management involves proper communication and planning processes to ensure delivery of project requirements without resource constraint. Within the IT industry projects, the fundamental indicator of scope efficacy remains the number of changes requested during the project implementation process. While implementation of various changes remains inevitable, the number of changes requested forms the basis for estimating efficiency of a project scope. Following the request for change, analysis is normally undertaken to establish the effects of implementing of failing to implement the requested change. Since resources remain the fundamental focus for implementing a project scope, a cost- benefit analysis could be utilized in assessment of the values for adopting the change. This kind of analysis seeks to evaluate the financial implications on the project for implementing the change. Changes should be avoided while seeking to ensure projects become completed without the requirement for additional resources. Low numbers of change request indicate a proper project scope. CONCLUSION The implementation of different development project begins with establishment of a desirable plan for executing the implementation process. The planning phase remains an essential stage for project management as it determines the operations to be undertaken at later stages of implementation. During the planning phase various performance indicators for different metrics must be identified and their measurement determined to ensure successful implementation of the project. While many projects involve measurement of six elements, within the IT industry the major metrics addressed remain the various project constraints of cost, time and scope (Fasolino, Natale, Poli, & Quaranta, 2000). This makes IT projects significantly unique compared to projects within other industries. The various metrics measured must have quantifiable figures upon which to measure efficiency of the process. Various calculated indexes and variances are utilized in measurement of cost and time aspects in project management. Scope remains based on the performance of available resources against predetermined expectations, developed during the planning phase. REFERENCES DeMarco, T. (1986). Controlling Software Projects: Management, Measurement and Estimation. New Jersey: Prentice Hall. Dobre, E. (2007). Control of Projects - A Cybenetic Control. Journal of Applied Quantitative Methods, 2(3), 327–333. Fairley, R. E. (2011). Managing and leading software projects. New York: John Wiley & Sons. Fasolino, A. R., Natale, D., Poli, A., & Quaranta, A. A. (2000). Metrics in the development and maintenance of software: an application in a large scale environment. Journal of Software Maintenance: Research and Practice, 12(6), 343–355. Gulla, J. (2012, February). Seven Reasons IT Projects Fail. IBM Systems, 7–9. Retrieved from http://www.ibmsystemsmag.com/power/Systems-Management/Workload-Management/project_pitfalls/ Ivan, I., Visoiu, A., & Palalghita, D. (2007). Projects and Programs Evaluation. Risks, resources, activities, portfolio and project management. Journal of Applied Quantitative Methods, 2(3), 302–319. Kan, S. H. (2002). Metrics and models in software quality engineering (2nd ed.). Boston: Addison-Wesley Longman Publishing Co. Kerzner, H. R. (2013). Project management: a systems approach to planning, scheduling, and controlling (11th ed.). New York: Willey. Philipson, E., & Antvik, S. (2009). Earned Value Management - an introduction. London: Philipson Biz. Project Mnagement Institute. (2008). Project Time Management. In A guide to the project management body of knowledge (4th ed., p. 145). Newton Square: Project Management Institute. Rook, P. (1986). Controlling software projects. Software Engineering Journal, 1(1), 7. Vandevoorde, S., & Vanhoucke, M. (2006). A comparison of different project duration forecasting methods using earned value metrics. International journal of project management, 24(4), 289–302.  Read More