Read the attached article and answer the following questions 1 & 2:
1.Write a brief note on the criteria’s used to evaluate the performance of Project Manager to which Zaitz, senior project manager with EDS’s Medicaid Management Information Systems Group, does not agree.
2.Explain the criteria’s recommended by Zaitz, senior project manager with EDS’s Medicaid Management Information Systems Group, to evaluate the performance of Project Manager.
3.Among the following four projects proposed to you, choose the project that you desire based on payback period method.
Cost of the project$250,000$135,000$175,000$225,000
Annual net cash flows$84,000$56,000$68,000$81,000
4.If the rate of return is 0.15, compute the discount cash flow to determine the NPV of the projects A, whose cost is $125,000 and net cash flows is $35,000, $43,000 and $67,000 for three financial years. .
5.Based on the NPV determined in question 4, should the project A be accepted or rejected based on profitability index.
6.Using the information given in question 4, what will be the NPV of the project if the expected rate of inflation is 3%?
An Objective Method for Evaluating Project Managers’ Performance
A long-time project manager for EDS outlines a sensible way to evaluate project managers’ performance using objective metrics that matter most to the business.
CIO – Project managers are ultimately responsible for making sure projects are completed on time, on budget and with the features and functionality specified by the project’s stakeholders. So one would presume that project managers’ performance would be evaluated based on those same criteria. It sounds obvious, right?
In fact, it’s not always the case that project managers are evaluated on the basis of whether their projects are completed on time, on budget or with the required functionality.
At EDS, for example, project managers are reviewed based on subjective criteria, such as their communication skills, passion for achieving business results and business ethics, according to Jed Zaitz, a senior project manager with EDS’s Medicaid Management Information Systems Group. Zaitz says objective, measurable criteria, such as whether a project manager’s projects are completed on time or on budget, are not factored into performance appraisals for project managers at EDS because in many cases those metrics aren’t available.
But Zaitz wants that to change.
“Project managers, unlike business analysts, testers or developers, have responsibility for project delivery, and they should be measured on their success or failure. That should at least be factored into the appraisal,” he says. “To ignore objective metrics makes no sense.”
Objective Metrics Are Key to Company Success
Zaitz, who earned his PMP (project management professional) certification from the Project Management Institute, believes objective metrics can help improve project managers’ project delivery rates. If, during performance reviews, project managers find out exactly where their performance is falling short, their managers can talk with them about ways to improve their performance.
“Improvement of one or two percent in a project manager’s performance would add huge numbers to the bottom line of a company,” says Zaitz, who’s worked for EDS for 32 years. “Even a small improvement would have very significant results.”
Zaitz developed a methodology for evaluating project managers’ performance about nine months ago, while he was managing a team of 15 project managers who completed five to six projects each year. The methodology is based on the traditional definition of a successful project: one that comes in on time, on budget and with few defects.
Zaitz’s Performance Review Methodology
Here’s how Zaitz’s performance review process works: Project managers earn 100 points for completing a project. But if the project isn’t completed on time, the project manager gets points docked from his score—say two points for every week the project is late.
Similarly, if the project comes in over budget or is implemented with defects, the project manager loses points—such as a half a point for each defect found within 60 days of the project going live or a half a point for each one percent the project went over budget.
Project size is also taken into consideration. Zaitz measures the size of each project according to its number of function points.
Zaitz notes that organizations can subtract more or fewer points from a project manager’s score depending on which elements of project success (e.g. time, budget and quality) they wish to emphasize. For instance, if an organization prizes speed over quality, and if a project manager misses the go-live date, the project manager could be docked five points for each week the project was late instead of two.
Though Zaitz’s methodology is focused on objective metrics, it takes into consideration stretch goals, such as early delivery of projects and technical productivity (getting more done with fewer resources or for less money), and soft skills. For example, if project managers complete their projects ahead of time or under budget, they can earn bonus points (especially if quality is not compromised.)
EDS hasn’t adopted Zaitz’s methodology, but the senior project manager says one group within the company plans to pilot it. He adds that rolling out the methodology throughout the company, which was recently acquired by HP, will require a significant cultural change. But the reward may be greater than the risk.
Says Zaitz: “For an organization like EDS, which probably has 1,000 project managers, it’s very important to know its true top performers because if a new project comes up that’s very challenging for a very important customer, you want to pick the right person to work on it.”
By Meridith Levinson
Tue, September 23, 2008