Establishing Metrics to Define and Measure Costs

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Sylvia McCombs
Engenio Information Technologies, Inc.

Side Note: The Innovator’s Forum is a year-long discussion group that kicks-off with a full day seminar following the CIDM Best Practices conference. Forum members choose a change management project of interest to focus on throughout the year and update other Forum members through monthly phone conference and a six month meeting to follow-up from the initial seminar.

Project Description
The purpose of this Innovator’s Forum project is to develop and implement a plan to establish metrics that will define and measure current practices and their costs. Establishing these baseline metrics for analysis should help us identify areas for improvement in our processes and methods. As improvements are made, we anticipate increased productivity and quality, which should reduce our costs. We will compare the cost of the new processes and methods with the baseline metrics to identify the reduction of cost.

Objectives
The following describes what I set out to accomplish when I developed this project:

  • By Q1 2005, we need to refine our process for recording time allocations for projects in our department so we can accurately gather, measure, and analyze the resulting data.
  • By Q2 2005, we need reliable metrics to support capacity planning and to identify recruiting needs, project assignment options, and department expenses and cost savings.
  • By Q3 2005, we need to develop customer relations and subsequent feedback loops with internal and external customers to help improve our development and distribution processes.
  • By Q4 2005, we need to implement efficient and effective development and distribution processes to satisfy customer requests for a variety of output.
  • By Q2 2006, we need to reduce the cost of developing and distributing information.

Goals
Goal 1: By Q1 2005, we will have a systematic approach for using metrics to show the cost of developing and distributing our documentation.

Goal 2: Throughout 2005, we will review the metrics periodically to further analyze our cost, processes, and methods.

Goal 3: By Q2 2006, we will identify opportunities for improvements and begin to implement new processes and methods to reduce cost by 20 percent and to increase productivity and quality.

Roadblocks
Although the roadblocks have not kept us from progressing, they have caused significant delays and rework during this project. Tools-related issues have caused ongoing roadblocks, and our dynamic work environment has caused others.

Tools

To align with management requirements for reporting formats, I have switched among three different tools to capture data. We started with MS Project and then switched to Excel, back to MS Project, then to a new database called Concerto, then back to MS Project, and finally back to Excel. Excel has proven to be the most useful, to me, but I continue to maintain the same data in MS Project to satisfy current reporting requirements.

Using Excel, I calculate the projected annual resource needs. This spreadsheet provides us with an “at-a-glance” view of all known projects for the year. This view also shows potential spikes in resource needs, typically caused by multiple concurrent projects. In another spreadsheet, I use formulas to show the resource fluctuations over time. It shows the total available writer resources at the beginning of the year and then shows when resources are shifted, added, or removed throughout the year.

The most difficult aspect of this spreadsheet is to input percentages of resources, but it provides us the most accurate count of resources. For example, one month we may need only 25 percent of a writer’s time on one project, the next month 75 percent the next 100 percent, and so on. When you factor in the entire writing team in percentages of head count, it can be difficult to make changes to one or more resources in any given period of time. It is difficult because writers are frequently assigned to multiple projects, so instead of showing one full resource (100 percent), we show what percentage of that writer’s time is used across concurrent projects. I have found it necessary to use a separate file to keep track of the percentages identified for each writer throughout a project’s schedule. When it is necessary to make changes to resources (head count), I know what percent of a writer’s time is involved in that particular change.

I also use Excel to graphically represent what percent of our total time is spent on each project. Excel Graphs also show us how many projects each writer is assigned and how much time is spent on each project. Another primary graph we create shows how much time each writer spends in each phase of our IP Development Process.

Dynamic Work Environment

Working in a dynamic environment seems to be familiar to most of us in today’s fast-paced, ever-changing business world. I name it as a roadblock because it does create an environment that challenges our ability to effectively track and measure our resources and activities. It also impacts our ability to focus on tasks necessary to accomplish our goals because of the many interruptions and distractions inherent in a dynamic work environment. Being flexible and being able to deal with ambiguity, while making incremental progress on our goals seems to be the norm. Although we work through this on a daily basis, it does limit the efficiency and, no doubt, the outcome of our projects.

Changes in scope or direction
We had planned to track only time spent on projects for program releases but realized that we needed to track how much time was used for non program-related tasks. I revised our time-tracking categories to include ones for special projects and time spent for department infrastructure, administrative, or overhead. The additional categories have greatly increased the accuracy of our time-tracking metrics.

Current Status
We have achieved Goal 1 and are on course for Goal 2. Regarding Goal 3: Although we have begun implementing new processes and methods, we cannot measure the goal to reduce cost by 20 percent until the program releases in Q2 2006. At that time, we will calculate total costs to determine the percent of cost savings, which should result from improvements implemented during 2005 to increase productivity and quality.

This following list addresses the objectives named at the beginning of this article:

  • We have achieved our first objective to refine our process for recording time allocations for projects in our department by Q1 2005. In January 2005, we implemented changes so we can accurately gather, measure, and analyze the data. This action required meeting with the database administrators to make a business case for our requested changes. They were somewhat resistant, but we were successful in presenting our case and gaining approval for our requests.
  • We have achieved our second objective to obtain reliable metrics to support capacity planning and identify recruiting needs, project assignment options, and department expenses and cost savings by Q2 2005. We now receive automated reports from the time-tracking database and manually convert the data to graphic representations. We are working to develop scripts that will further automate tasks.
  • We have begun to develop customer relations and subsequent feedback loops with a few internal and external customers, so we should be able to meet this Q3 goal to help improve our development and distribution processes.
  • We have also begun to analyze and develop initial plans to refine our processes and methods and implement efficient and effective development and distribution processes by Q4 2005.
  • We are far from realizing any cost reduction in developing and distributing our information products using our new processes and methods. We are currently experiencing the anticipated learning curve and an actual increase in costs. Regardless of this, we are optimistic that we will reduce our costs by at least 20 percent by Q2 2006.

Closing
We have made presentations to two levels of management to review our goals and the results of the data we have collected from our time-tracking system. During the presentations, we reviewed our current status and discussed our ongoing analysis of the data. We also shared some ideas for improvements that are emerging during the analysis. We are encouraged by the support from management as they continue to be involved in this project and provide valuable feedback.

Here is one of several graphic representations developed from our time-tracking data. It reflects the percent of developer time spent per project during 2004.

 

Figure 1. Percent of time spent by all information developers per project in 2004

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