Understanding the S-Curve Theory for Project Management Monitoring written by: ciel s cantoria edited by: Michele

e McDonough updated: 5/26/2011 This article discusses S-Curve theory and how it is used in project management as a tool for monitoring the growth, progress and performance of ongoing projects. Understand the S-Curve model, its analysis, data and schedules needed to create the graph that reveals deviations from baseline metrics. Introduction to the S-Curve Concept

An understanding of S-Curve theory and its analyses will help learners and team members grasp the importance of monitoring the progress and growth of an ongoing projectat a specific stage or percentage of completion. Outside of the technical jargon, the S-Curve model simply makes use of the projected number of man-hours and costs to complete the project vs. the actual number of hours and costs incurred within the same time frame. The proposed time, man-hour and cost data are referred to as the baseline data. Understanding the S-Curve Model

Simplify Project Planning defineRefine.com/ProjectPlanning Create A Plan That Really Works Download The Workbook, Start Today Ads by Google The S-Curve is a form of mathematical theory, which aims to represent the utilization of resources over the proposed time of the project. Simply stated, the curvature illustrates the side by side comparisons of the actual time and expenditure components vs. the proposed time and costs allocations of specific resources. As a tracking tool, comparisons of different S- Curves against the standard S-Curve help in monitoring the growth or progress of the project. Data that is simultaneously plotted in graph form will clearly present how efficiently the team has performed so far, in accordance with the time or budget limitations. Two or more curved lines running symmetrically should both be flat at the beginning and become

steep in the center and become flat again towards a convergence at the projects completion date. This is how most project timelines would be depicted. In todays highly technological work environment, there are various software-scheduling packages that can automatically generate these S-Curves. However, the matter of understanding the significance of its theory and its analyses is of utmost importance. Image Credit: Coupled S-Curves courtesy of Wikimedia Commons Plotting and Analyzing the S Curves If done accurately, the S-Curve analysis of the "actual progress to-date curve" against the "baseline curve" facilitates the achievement of project goals by providing a warning of any project deviations from the baseline standards. The S-Curve is constructed using the dates on the X-Axis and the calculated values on the Y-Axis and by plotting data extracted from baseline or production schedules for each task. The Necessary Tools The Baseline Schedule: It contains information about the actual start date and finish date as well as the information on proposed man-hours and expenditure allocations. Use the data contained in this schedule to create the Baseline S Curve. The Production Schedule: It contains information of the actual man-hours and expenditures incurred for a particular stage of the project. The Different S-Curve Models and Analysis The Standard S-Curve Metrics: Baseline S-Curve: This is the S-Curve against which all other S-Curves will be compared as it comprises the proposed allocation of expenditures and man hours to be used for the projects completion within a proposed duration. The Growth Metrics this makes use of the Target S-Curve: The Target S-Curve represents the modified Baseline S-Curve figure, inasmuch as the constant monitoring of project performance could result to certain adjustments of the baseline elements. A new standard will then be calculated and becomes the representative of a new set of metrics. They are, however, called target values, to distinguish them from the originally proposed time and costs. As such, these values now represent the new set of metrics after the original baseline was modified. They are applicable as bases for analyses of succeeding work performances after the adjustment cut-off date. Comparisons between the Baseline and the Target curvatures denote growth of the project as far as scope is concerned. Plotting of the Target S-Curve may finish above or below the Baseline S-Curve, in which case: o If the scope increases and the baseline duration or time allotment is fixed, then it is likely that the project will be completed beyond the targeted date. This results to what is called the Project Slippage, or the difference between the targeted finish dates vs. the baseline finish date. o If the scope increases and the baseline costs or proposed costs are fixed, then it is likely that the project will be completed beyond the budgeted costs, which could

o o

result to fewer profits or even potential losses. If the scope decreases and the baseline duration or time allotment is fixed, then it is likely that the project will be completed ahead of the targeted date. If the scope decreases and the baseline costs or proposed costs are fixed, then it is likely that the project will be completed at less than the budgeted costs, which spells greater profits.

The Progress Metrics This is a comparison between the Target S-Curve and the Actual S-Curve, in which the latter is a measure of the actual man-hours and expenditures of a project on a specific completion stage date. Ordinarily, the Actual S-Curve is expected to run below the lines of the Target S-Curve, since the results of constant monitoring entails compliance and observance of the targeted time and costs. Hence, the two curved lines are expected to meet or converge towards the end of the project completion. If the curvatures present a graph where the Actual S-Curve runs open-ended above the Target S Curve as of cut-off monitoring date, consider the possibility of errors in the data contained in the production schedules. A careful review should be made to pinpoint unrealistic values of man-hours and costs incurred for the already completed stage. Image Credit S-curve(Asymmetric).jpg courtesy of Wikimedia Commons Value and Percentage Metrics: o Cost vs. Time S-Curve: This type of analysis is suitable for projects that require both labor and non-labor intensive elements. The main concern here is the cumulative costs at a specific stage of the project and its effect on the cash flow as well as the potential risks of exceeding the allotted costs. Creating the Cost vs. Time S-Curve Use the actual cumulative amount of expenditures incurred from baseline start date to cut-off date of progress stage and compare the S curve created against the Baseline S curve for total cost allotment for the same cut-off date. o Man Hours vs. Time S-Curve : This type of analysis is suitable for projects that are estimated as labor intensive, in which the project manager has to know the cumulative amount of man hours worked at a specific stage of the project. Results of the graph will provide the basis for adjustment, whether there is underperformance that warrants additional labor force or the implementation of closer supervision. Creating the Man Hours vs. Time S-Curve: Use the actual cumulative amount of man-hours worked from baseline start date to cut-off date of progress stage and compare the S curve created against the Baseline S curve for man-hour allotment

for the same cut-off date. As a note, the models and analyses can be used to monitor the different phases or tasks of a project. Since time is of the essence, the convenience of using the most appropriate and multi-faceted project management software allows the application of this theory for different project management scenarios. We Also Recommend... What Is Project Slippage? A Project Manager's Guide to Scheduling Tools & Techniques Least Squares Regression Analysis Can Help Projects Comprehensive Guide to Project Budgeting and Costing for Project Management Learners Fuzzy Regression Analysis for Fuzzy Data What others are reading Who Was Supposed to Turn the Lights Out? Keeping Track of Your Project's Action Items in Excel Understanding the S-Curve Theory for Project Management Monitoring Need to Confirm a Meeting? Free Tips and Examples that Work! Illustrate Workflow Process With a Swim Lane Diagram The Project Management Life Cycle - Successfully Guide Your Projects to Completion Using Excel to Monitor Production Downtime Project Communication Tips: Nonverbal Communication in Different Cultures Written Root Cause Analysis Example Example of Stakeholder Analysis Looking at the Benefits of TQM Related Topics: Agile Project Management Change Management Methods & Ideologies Monitoring a Project PM Certification PM Software Reviews & Tips PM Templates & Forms Project Planning Resource Management Risk Management Six Sigma

HOW TO PREVENT PROJECT SLIPPAGE

Definition Of Slippage Project slippage is the time a project is late compared to the initial schedule baseline. Slippage can also be defined as the variation between the planned dates of a project starting and finishing. Slippage may take place when initiation of activities on the planned start dates is delayed and not controlled. Project slippage is a great concern for the project team, sponsor, and stakeholders. Therefore, concerted efforts are essential for its prevention. Slippage can produce harmful effects, like additional cost of human resources or poor organization reputation. Image Credit: morguefile.com/deanjenkins Prevention Of Slippage Slippage may be prevented by careful planning, executing, monitoring, and control efforts. The following actions may be useful in this regard: Sap Excel Download www.smartexporter.de/en Export data from SAP and analyze tax-relevant data. Quickly & easily Ads by Google Proper Resources Just what is project slippage? Generally, slippage occurs when appropriate resources, in number and quantity, are not provided to a project. The requirements of resources are accurately determined by the project team using the applicable tools, and efforts should be made for their provision. Strictly Follow The Project Plan The other general cause for project slippage is not strictly following the project plan. Activities are added to the project scope that result in an increase in cost, and slippage is likely to occur. Risk Management Risk management should be properly executed, including a proper risk identification, their qualitative and quantitative analysis, and suitable risk response plans. The risks should be monitored and controlled by assessing the existing risks as well as identification of new risks during the project execution. The new risks that are identified should also be analyzed qualitatively and quantitatively. Monte Carlo simulation software may be used for the conduct of Monte Carlo method risk analysis. This process is a fast and economical technique for risk quantification. It has been used by NASA and other important organizations in the world. Motivation To Vendors Generally, the supplies are delayed by the vendors engaged in a project, due to which timely execution of the activities is not possible. Therefore, efforts should be undertaken to motivate the vendors for delivery of their supplies in accordance with the schedule that has been agreed. An incentive clause may be included in their contract that involves additional payment if the supplies are delivered in accordance with the schedule. The vendor will therefore be motivated to ensure timely provision of the supplies. Suitable Methodology Suitable methodologies may be used that assist to track, review, and regulate progress. Variations in cost or schedule are indicated that can be controlled by the project management team. Useful

methodologies include construction cost estimating software, budget spread sheet, and primavera project management software like Primavera P6. Joint Application Development, generally called JAD sessions, may be conducted for the preparation of project plans, where JAD facilitation is the responsibility of a coordinator. Project delays cost project increase in organization. Therefore, efforts should be undertaken for the completion of activities in accordance with the schedule. Use Of S-Curves S-curves are considered to be an essential tool in projects. They permit tracking of project progress over time. They facilitate the identification of slippage and other likely issues that may seriously affect the project. A realistic assessment of the real S-curve and the planned S-curve will indicate the project progress and the variations. Normally, in most projects that are not properly planned and executed, the real S-curve will be under the planned S-curve. This indicates project slippage. We Also Recommend... Helpful Tips to Manage Project Slippage The Requirements for Closing Out Your Project Understand the Necessity for Internal Audit Project Deliverables Introducing a Weekly Time Tracking System: Do You Simply Impose it? Better Project Status Tracking: Top 10 Tips for Project Teams

USING S-CURVES
Why Use an S-curve? S-curves are an important project management tool. They allow the progress of a project to be tracked visually over time, and form a historical record of what has happened to date. Analyses of Scurves allow project managers to quickly identify project growth, slippage, and potential problems that could adversely impact the project if no remedial action is taken. Determining Growth Comparison of the Baseline and Target S-curves quickly reveals if the project has grown (Target Scurve finishes above Baseline S-curve) or contracted (Target S-curve finishes below Baseline Scurve) in scope. A change in the project's scopes implies a re-allocation of resources (increase or decrease), and the very possible requirement to raise contract variations. If the resources are fixed, then the duration of the project will increase (finish later) or decrease (finish earlier), possibly leading to the need to submit an extension of time claim.

Figure 6: Calculating Project Growth using S-curves Determining Slippage Slippage is defined as: "The amount of time a task has been delayed from its original baseline schedule. The slippage is the difference between the scheduled start or finish date for a task and the baseline start or finish date. Slippage can occur when a baseline plan is set and the actual dates subsequently entered for tasks are later than the baseline dates or the actual durations are longer than the baseline schedule durations". [2] Comparison of the Baseline S-curve and Target S-curve quickly reveals any project slippage (i.e. the Target S-curve finishes to the right of the Baseline S-curve). Additional resources will need to be allocated or additional hours worked in order to eliminate (or at least reduce) the slippage. An extension of time claim may need to be submitted if the slippage cannot be eliminated or reduced to an acceptable level.

Figure 7: Calculating Project Slippage using S-curves Determining Progress Comparison of the Target S-curve and Actual S-curve reveals the progress of the project over time. In most cases, the Actual S-curve will sit below the Target S-curve for the majority of the project (due to many factors, including delays in updating the production schedule). Only towards the end of the project will the curves converge and finally meet. The Actual S-curve can never finish above the Target S-curve. If the Actual S-curve sits above the Target S-curve at the Cut Off Date, the Production Schedule should be examined to determine if the project is truly ahead of schedule, or if the Production Schedule contains unrealistic percentage complete values for ongoing tasks.

Figure 8: Calculating Project Progress using S-curves

10 STRATEGIES FOR REDUCING OVERHEAD EXPENSES

Written by: Todd Taggart, Grant Thornton LLP Banks are continuing to post enormous losses, and the stock market is struggling to recover from a mid-year swoon. Every sector of the U.S. economy is feeling the effects of the meltdown in the housing market. During the months ahead, contractors should seek out and eliminate unnecessary overhead expenses to not only survive, but to position themselves for a more profitable future. The following strategies for locating and reducing overhead expenses can help you streamline costs and save money. 1. Closely review your fleet of cars and pickups Most contractors have built fleets of cars and pickups through a legacy reward system for their employees and find that expense has gone unmanaged. Now is the time to take a hard look at this major expense. Smart contractors are reexamining the need for all company-owned vehicles on a car-by-car, truck-by-truck basis and reducing their overall fleet size. In addition, for those employees who need a company pickup, parking it at the contractor's place of business overnight is now becoming commonplace to discourage personal use of company assets. 2. Look at outsourcing IT If the support systems (or "back office") that supports your field employees, supervisors and accounting function have traditionally been all in-house, you may be saddling your company with the expense and risk of maintaining a network of computers and peripherals that is unnecessary. New advances in telecommunications make it not only possible, but attractive, to outsource large chunks of your IT systems through data warehousing, vendor management and many other areas. 3. Explore new ways to provide employee benefits New alternatives for providing cost-effective benefits to your employees should be examined closely. For example, health savings accounts, which can provide savings to contractors and attractive benefits to older employees, may be an attractive option for employees over age fifty-five. 4. Narrow supplier base and create negotiated contracts Times are difficult for everyone in the construction industry. If ever there is time to create strong alliances with suppliers, it is now. In good times, we maximize our margin by pricing our services at the highest levels and our suppliers do the same. Develop stronger relationships with fewer suppliers that are not focused on maximizing current margins, but on creating long term relationships. 5. Employ greater discipline in planning and forecasting Contractors live and practice the philosophy of measure twice and cut once. Practicing this in the office with our general ledger, budgets and forecasts is just as important as practicing this in the field. A disciplined planning process creates efficiencies in our financial operations and provides an effective tool to communicate future cost and risk control to creditors.

6. Multipurpose employees In difficult economic market times, we are all trying to do more with less. We can apply this same thinking to our staffing. Maximum productivity from each employee is the goal. One way to approach this challenge is to identify workers that can serve in multiple roles and eliminate downtime while they are waiting on another key task in the critical path of construction to complete. 7. Invest in an enhanced change order process Contractors love to build! When an unexpected jobsite condition crops up, the first inclination of a contractor is to jump in and fix it-then hope to be paid later. Invest in a tightly controlled change order process to ensure that work done beyond the scope of the contract will be well-documented and approved prior to incurring additional costs. In addition to saving on project costs, expect savings related to additional audit and lending costs associated with unpriced change orders at year end. 8. Delay transaction taxes Sales and use taxes accrue to the contractor as the "end user" of materials and supplies purchased for construction contracts. Consider creating a purchasing company that takes advantage of a resale exemption. Construction materials can be purchased tax-free and then warehoused until needed for a construction contract. Transaction taxes are not due until they are transferred to the entity performing the construction, normally resulting in an immediate cash savings by delaying the payment of tax. A side benefit to a purchasing company may accrue to the contractor by allowing a more centralized approach to inventory management. 9. Take a hard look at underutilized equipment In a downturn in the construction environment, the value of equipment normally declines as contractors flood the market with underutilized assets. The current worldwide shortage of steel and the increased international construction boom have worked together to keep used equipment prices high. Now is the time to look carefully at equipment that can be marketed without creating significant operation issues. Generating cash by auctioning equipment reduces current depreciation and repair costs and the cash can be used to reduce debt, further reducing interest costs. 10. Spend money This recommendation seems counterintuitive in an article devoted to reducing overhead, but the harsh reality is that contractors need to spend money to save money. Key employees need to be cared for and kept happy. Look at long-term compensation and retention programs to make sure that your key employees stay with you during tough times. Invest in safety programs to lower workers compensation costs. Spend (wisely) for the future!

HOW TO REDUCE YOUR OVERHEAD COSTS Reducing overhead costs can save you thousands of dollars. There are multiple ways to reduce your overhead costs and still be productive. Overhead are accountable for large money quantities that can make the difference in your operational costs. Here we present some ideas on how to cut or reduce your overhead costs. Vehicle Fleet If you have a large vehicle and truck fleet, you need to study their consumption and how operating costs are getting larger. Analyze the quantity and size of your fleet and determine if you need to sell those unused vehicles or trucks in the other hand if you need to replace those old vehicles with newer or more efficient ones. In addition, for those employees who need a company pickup, parking it at the contractor's place of business overnight is now becoming commonplace to discourage personal use of company assets. Go Green The same rigorous environmental standards that people are beginning to use at home could be applied on the business premises. Any item that can be reused--disks, paper, folders and so on-should be reused. Items that cannot be reused should be recycled whenever possible. This will not only cut your purchasing costs, it could also reduce your trash collection bill. Incentives If an employee comes to you with a savvy solution, credit him for coming up with a cost-cutting idea that saves your company money. Creating incentive plans for beneficial ideas such as employee discounts, added time off, free lunch for a week in the company cafeteria, or even a cash bonus may win greater favor and support than just an honorable mention in the company newsletter. Negotiate Contracts Times are difficult for everyone in the construction industry. Develop stronger relationships with fewer suppliers who are not focused on maximizing current margins, but on creating long term relationships. Also try to contact that old friend that you can really talk with him with open books. A good friend sometimes can get better and discounted prices for you. New Technology Investigate ways that your company can do things faster at a reduced cost. Make sure your practices and procedures are up-to-date and look for streamlined processes. Incorporate energy-efficient lighting and cleaner ways to operate into the plan. Multipurpose Labors In difficult economic market times, we are all trying to do more with less. Maximum productivity from each employee is the goal. Identify, look or hire workers that can serve in multiple roles and eliminate downtime while they are waiting on another key task in the critical path of construction to complete. Change Orders Contractors love to build! Prior to get that extra work or change order done, analyze the circumstances and why that change is occurring. Invest in a tightly controlled change order process to ensure that work done beyond the scope of the contract will be well-documented and approved prior to incurring additional costs.

Transaction Taxes Construction materials can be purchased tax-free and then warehoused until needed for a construction contract. Transaction taxes are not due until they are transferred to the entity performing the construction, normally resulting in an immediate cash saving by delaying the payment of tax. A side benefit to a purchasing company may accrue to the contractor by allowing a more centralized approach to inventory management. Spend Money Spend Money? Key employees need to be cared for and kept happy. Look at long-term compensation and retention programs to make sure that your key employees stay with you during tough times. Invest in safety programs to lower workers compensation costs. Sit down with employees and getting their opinions as to how overhead can best be trimmed. Overhead Information Extended Overhead Increase Employee Productivity Estimating Software Related Articles Vehicle Fleet Costs Reduce Business Costs - How to Reduce Small Business Costs Alternatives to Layoffs Overhead and Labor Costs A Comfortable Workplace - Managing People