Bonnie Biafore is a Project Management Institute (PMI)-certified Project Management Professional (PMP). She is a consultant, trainer, speaker, and award-winning author of several books about investing, personal finance, and project management, including On Time! On Track! On Target! Managing Your Projects Successfully with Microsoft® Project (Microsoft Press, 2006). Work Essentials recently talked with Bonnie about tracking project variances.
Work Essentials: We know you as a successful project management consultant, writer, and corporate trainer, but you actually have a lot more in your background than that. Can you give us a brief history of your professional accomplishments?
Bonnie Biafore: I actually graduated from college and graduate school with degrees in architecture and structural engineering, so I have an engineer's penchant for taking things apart to see how they work. During my career, I have worked as a structural engineer, technical sales engineer, software developer, project manager, writer, trainer, and now a speaker.
I have managed all kinds of projects, including internal projects for developing new demos for trade shows, and contracting to companies implementing multi-million-dollar software projects. As a contractor, I had to earn everyone's support and trust — workers, client management, customer project managers, and so on.
Other accomplishments stem from volunteer work. I taught people about investing for a non-profit organization. I've always thought that teachers learn much more than the students. By teaching people how to analyze company financial statements and performance, I learned a lot about corporate finance, which helped me manage projects more successfully. I understand what management looks for and can present project status in terms executives understand and care about.
Work Essentials: You're also a Microsoft Office Project 2007 expert, and definitely what people would refer to as a power user. Is there an advantage to knowing more than just the basics of a product like Office Project 2007?
Bonnie Biafore: I blame my engineering background for my power user status, which applies to most of the programs on my computers: Office Project, Word, Excel, and PowerPoint, to name a few. I think people do themselves a great disservice by not learning the features that programs offer and how those features can help.
In a nutshell, you can accomplish most tasks with basic features. But the results are often time-consuming, tedious, and inflexible, like Office Project 2007 schedules that are hard to modify or documents that are hard to format. For example, I've seen people manually create individual tasks for recurring status meetings when they could create one recurring task in Office Project 2007 to cover every status meeting.
Office Project 2007 is a little different in that people have to understand something about project management to master basic and power features. Consider resource assignments. Some tasks, like building widgets, change duration as you increase or decrease the resources. Other tasks, such as a quarterly corporate meeting, are the same duration no matter how many people participate. By learning how effort-driven scheduling and other resource assignment calculations in Office Project 2007 work, you can assign resources to tasks and allocate work to individuals the way you want, the first time, every time. Office Project 2007 includes several new features that simplify frequently performed project management tasks. These are definitely worth mastering.
Work Essentials: Let's talk specifically about tracking variance in a project. First of all, most projects will have some kind of variance. Is it important to know what to look for?
Bonnie Biafore: Absolutely. You don't pick any old mushroom in a forest and eat it. And, you want to know whether the snake in your path is poisonous before you step around it, or back up as fast as you can. Every project has variances. If a project doesn't show any variance, someone is cooking the books.
Project managers have to understand the story variances tell, so they can decide when to act and what to do. Schedule and cost variance are the big ones, of course.
It's important to know when to worry about variances. If a management team allocates a 15-percent contingency fund, the project manager shouldn't wait to take action until the project is over budget by that amount. In technical terms, that's closing the barn door after the horse has escaped.
From teaching investing, I've learned to watch trends instead of snapshot values. I watch the changes in variances over time as well as the current variance value. For instance, I'll simply continue to watch a task that is 10-percent behind schedule, but is also showing smaller schedule variances over the last few status points. On the other hand, I might immediately launch into action on a task that is only 1-percent behind schedule, but has been slipping more each week.
Top of Page
Work Essentials: In project management, is there a connection between variance management and change management?
Bonnie Biafore: Yes and no. The question really depends on whether change management is in practice at all. If organizations don't have change management in place, project managers earn their salary managing variance — because every change requested is almost certain to create undesirable variances. Scope creep is the most common cause of budget and schedule problems. In Office Project 2007, change highlighting is a great way to see how change requests affect your schedule and cost.
With change management in place, project managers simply update the project baseline to reflect approved changes. The change requests don't produce variance, because the baseline increases to include the duration and cost of the new or revised tasks. Variances continue to reflect tasks that don't perform according to plan.
Work Essentials: What is change highlighting?
Bonnie Biafore: The Change Highlighting feature in Office Project 2007 shows how changes trickle down through a schedule. For example, if I increase the work and duration in a task to produce three versions of a marketing brochure instead of one, change highlighting probably highlights the start and finish dates of all down-stream tasks and highlights the costs and work for the brochure task with its summary tasks.
Work Essentials: Is tracking project variance a soft skill, or can you calculate it using Office Project 2007?
Bonnie Biafore: Tracking project variance is partly soft skill, like when hard-nosed detectives follow the scent of money to find the culprit. Project managers learn to sense trouble before the numbers say anything. Savvy insight aside, Office Project 2007 offers lots of calculations for variances. First, there are basic fields, such as Cost Variance, Duration Variance, Work Variance, Start Variance, and Finish Variance. Office Project 2007 calculates the difference between actual and baseline values. Sorting incomplete tasks by variance values is a quick way to prioritize the tasks that need attention. I prefer to use the earned-value fields. Office Project 2007 generates an Office Excel 2007 spreadsheet that compares budgeted cost of work scheduled (BCWS), budgeted cost of work performed (BCSP), and actual cost of work performed (ACWP) to show schedule and budget status at each status point in the past and forecasts performance through the end of the project.
Cost variance percent, or CV%, and schedule variance percent, or SV%, use the earned-value fields to show variances as a percentage, which is great for setting thresholds, or warning levels.
Top of Page
Work Essentials: After you've identified a significant enough variance in the project, who needs to know about it?
Bonnie Biafore: Actually, I think about who needs to know about variances of any size, not just large ones. When small variances show unwanted trends, the resources assigned to those tasks might be the only people who need to know. Project managers can work with them to uncover issues and implement course correction without bothering project stakeholders.
If a variance grows large enough, notifying stakeholders is wise, because eventually they will find out and ask about it. I like to research the issue and have a clear explanation of the problem and my proposed solution, which keeps the status meetings short. Sometimes, notifying stakeholders and project sponsors of smaller variances is required, because they can help resolve the issue.
Work Essentials: At the time of this interview, your latest Microsoft Press book is On Time! On Track! On Target! Managing Your Projects Successfully with Microsoft Project. What else is happening in the near future for you?
Bonnie Biafore: I made a promise of no new books in 2006, but I'm not sure that promise will hold. I'm working on developing additional personal finance presentations for speaking engagements. To support my personal finance work, I am taking courses in a Certified Financial Planner curriculum. I also plan to blog in earnest, both about project management and personal finance.
I made another promise to have fun, instead of working all the time and that is a lesson that everyone, not just project managers, should learn. As Stephen Covey teaches in The 7 Habits of Highly Effective People (Free Press, 1990), sharpening the saw is essential to being productive. I'm taking a course in silversmithing, exercising again, and volunteering at a horse sanctuary near my home. Oh, yeah, and I'm hoping to work a little more on my novel, which is about stupid criminals.
Top of Page