ProjectFlightDeck

Concept: When work is done out of sequence, knowledge gaps are inevitable. To bridge the gaps, performers must make assumptions about missing inputs. At some point, the missing information becomes available, and when it does, it often differs from the assumptions. That means what has already been done must be reworked.

Rework is doubly wasteful. First, and obviously, re-doing what has already been done is lost time and money—time that could be spent completing new deliverables. Second, and less obviously, the time spent making the assumptions is also lost time and money—it too could have been spent on completing new deliverables. In both cases, performers feel frustration with a work process that is the exact opposite of “one and done”. They want to stop wasting time.

Knowing rework will be required and even knowing which tasks are likely to cause rework are important but only part of what you need to know to stop losing time.  What’s missing is a fix on the impact of rework.

Figure 1

Practice: One key impact of rework is on cost. As explained in last month’s post, the Schedule Adherence Index (SAI) offers a way to estimate the amount of rework in a period. The next step is to estimate the cost of rework over the whole project.

Given that the amount of rework equals the area under a curve, the cost of rework for the period is simply that area multiplied by the budget, that is:

Equation 21^[1]

By adding up the rework cost for each period, we get the cumulative cost of work for the project up to and including the Actual Time:

Equation 22

The rework cost for the whole project (Rework_Tot) can then be forecasted:

Equation 23

The forecast acknowledges the estimated cost of rework up to the current time (Rework_Cum) and then forecasts the budget impact over the remainder of the project. The forecast uses the current value of SAI as a benchmark level of performance, specifically for adherence to the schedule. It then applies that level of performance to the remaining budget.

In effect, the forecast says that, assuming the same level of performance on the remaining work (as represented by the remaining budget), here is the amount of budget that will be required for the rework that is to come. Add that to the rework cost already incurred, and the result is the rework cost for the whole project. [2]

Finally, we’ve arrived at the cost of rework—a metric that can be used to assess schedule performance.

One advantage of the metric is that the forecast is meaningful across the whole project timeline. The necessary rise of P-Factor to 1.0 does not influence the cost of rework because the amount of rework has been normalized to the remaining work on the project. As already pointed out, this cancels the effect of increases in knowledge and decreases in candidates for rework.

Armed with the cost of rework, we’re now in a position to use the information in managing the project.

Notes:

[1] The equation numbering scheme continues from the previous post, as all of the equations are connected.

[2] As Walt notes, this is reminiscent of the EVM formula for the Estimate at Completion (EAC), EAC=AC + ((BAC-EV)/CPI), where AC is the Actual Cost and CPI is the Cost Performance Index. 

References:

Lipke, W. (2012). Schedule Adherence and Rework. CrossTalk, November-December.

Lipke, W. (2011b) Schedule Adherence and Rework. PM World Today, July.

Lipke, W. (2011a) Schedule Adherence and Rework. The Measurable News, Issue 1 (corrected version).