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Lecture 07

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PROJECT MONITORING

CONTROLLING, EVALUATING AND COMPLETING


THE PROJECT!
UEME4253 Project Management

Monitoring and Control


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!Monitoring is the collection, recording,

and reporting of project information


!Control uses the monitored data to bring
actual performance into agreement with the
plan
!Monitoring and Control are the opposite
sides of project selection (which dictates
what to monitor) and planning (which
identifies the elements to be controlled)
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Plan-Monitor-Control Cycle
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!The planmonitor-control cycle constitutes

a closed loop process


!There is often a temptation to minimize the
planningmonitoringcontrolling effort so
that real work can be done

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Project Authorization and Expenditure Control System


Information Flow
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Designing the Monitoring System


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!Identify special characteristics of scope,

cost, and time that need to be controlled

specific performance characteristics should be set for each


level of detail in the project

p
D

A
collected) to measure achievement against

!Real-time data must be identified (i.e.,

the plan

mechanisms to collect this data must be designed

!It is important to avoid the tendency to

focus on easily collected data

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Data Collection Formats


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!Frequency counts
!Raw numbers

!Subjective numeric ratings


!Indicators and surrogates
!Verbal characterizations

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Data Analysis
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!Aggregation techniques
!Fitting statistical distributions
!Curve fitting

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Number of Bugs per Unit of Test Time During


Test of Software
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Percent of Specified Performance Met During


Successive Repeated Trials
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Ratio of Actual Material Cost to Estimated


Material Cost
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Reporting
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!Routine performance reports

project status reports


time/cost reports
variance reports

ngreiiew

!Avoid periodic or routine reports


!Not all stakeholders need to receive

period

same information
!Impact of electronic media
.
!Problems in the relationship between
the projects information system and the
overall organizations information
system
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Report Types
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!Routine

status, progress, and forecast reports are considered routine

!Exception

a report used for special decisions or unexpected situations


where affected team members need to be made aware, and the
change itself documented

!Special analysis

the results of a special study which documents a particular


opportunity or problem within the project itself

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Meeting Guidelines
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!Meetings should be used primarily for group

decision making not for mere progress


reports
!Distribute written agenda in advance of
meeting to ensure that all attendees are
properly prepared for the meeting

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Meeting Guidelines continued


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!Chair of meeting should take minutes

avoid attributing remarks to individuals in the minutes

!Avoid excessive formality


!If meeting is held to address specific crisis,

restrict meeting to this issue alone

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Virtual Reports, Meetings, and Project


Management
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!The Internet can be used to communicate

and report about the projects status

irrespective of the location of the project team members

!Software programs allow the project

manager to utilize the organization local


area network or intranet
!Virtual project teams with members
spread worldwide
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Earned Value
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!The earned value (EV) of a task or project is

the budgeted cost of the work actually done


it is calculated by multiplying the budgeted cost of the task

by the percentage completion of the task

!The percent of a tasks budget actually spent

is not good indicator of percent completion

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Conventions Used to Estimate Progress on Tasks


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!50-50

task is listed as 50% complete when initiated and the


remaining 50% added when task is completed

!100%

the task is 100% complete when finished and zero percent


before that
projects will always appear to be behind schedule

!Ratio of cost (or time) expended to cost (or

time) budgeted

neither is an accurate estimator of percentage completion

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Variances
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!Cost/Spending Variance

earned value (EV) actual cost (AC)

!Schedule Variance

earned value (EV) planned cost (PV)

!CPI (Cost Performance Index)

earned value (EV)/actual cost (AC)

!SPI (Schedule Performance Index)

earned value (EV)/planned cost (PV)

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Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

What is Earned Value?


Combines Measurements of
Scope
Your Original Plan
Schedule
Current Plan
Cost
Budget vs. Actual

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

Primavera Variables
Planned Value
Cost & Schedule information comes from baseline
Actual Value
Actual cost
Earned Value
What has physically been built

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

A Simplified Example: (PV)


10 Day Project to build 10 Concrete Forms
1 Form Per Day
$100 Per Day
Time

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

At the end of day 5


5 Forms Completed
$500
Planned Value (PV) = 500
Time

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

Lets Just Say..


Day 5
Only 3 Forms Completed
Our Earned Value (EV) = 300
Time

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

Lets also say we have a cost over-run..


Day 5
Only 3 Forms Completed
Each form cost $200 to build
Actual Cost (AC) - ($200 x 3 Days) = $600
Time

$200

$200

$200

$100

$100

$100

$100

$100

$100

$100

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

We now have our variables to compute Earned Value


Day 5
(PV) = 500
(EV) = 300
(AC) = 600

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

Day 5
(EV) (PV) = Schedule Variance
300 - 500 = -200
Behind Schedule
(EV) (AC) = Cost Variance
$300 - $600 = $-300
Over Budget

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

Cost & Schedule Indices


Schedule Index
A ratio of what was earned vs. what was planned
An index less than 1 is behind schedule
An index greater than 1 is ahead of schedule
EV/PV = SPI (Schedule Performance index)
300/500 = .6

Business Process Outsourcing

PROJECT MANAGEMENT SOLUTIONS THAT SIMPLY WORK.

Cost & Schedule Indices


Cost index
A ratio of what we Earned vs. the Actual Cost
An index less than 1 is over budget
An index greater than 1 is under budget
EV/AC = Cost Performance Index
$300/$600 = .5

Additional Items of Interest


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BAC

-7

Budget

Project

!Estimated remaining cost to completion

estimated cost to completion (ETC) = budget at completion


(BAC) earned value (EV) divided by cost performance index
(CPI)
BAC

E
-

!Estimated total cost at completion

estimated at completion (EAC) = estimated cost to


completion ( ETC) + actual cost (AC)

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T
.

Project Control
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!Control, the act of reducing differences

between the plan and actuality, is the final


element in the planning-monitoringcontrolling cycle
!Control is a difficult task because

it involves human behavior


problems are rarely clear cut so that the need for
change and redirection is also fuzzy

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Purposes of Control
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!Stewardship of organizational assets

physical asset control


human resources management
financial control through the use of accounting tools

!Regulation of results through the alteration

of activities
this step involves taking action when reality deviates from

plan
it includes both mechanistic and human elements

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Purposes of a Control System


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!Correct errors but not to identify and

punish the guilty


!Control the investment, subject to
diminishing returns
!Consider impact on creativity and
innovation
!Ensure that short-run results are not
emphasized at the expense of long term
results
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Primary Mechanisms by which Project Manager


Exerts Control
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Process reviews
! Personnel reassignments
! Resource allocations
!

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Components of a Control System


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! Sensor

! Decision Maker

Its purpose is to measure any


aspect of the projects output
that one wishes to control
! Standard
The control system must
have a standard of items to
measure against
! Comparator
Compares the output of the
sensor with the standard

To decide if the difference


between what is measured
and the standard is large
enough to warrant attention.
! Effector
If the decision maker decided
that some action is required
to reduced the difference
between what the sensor
measures and the standard
requires, the effector must
then take action

UEME4253 Project Management

Copyright 2011 John Wiley & Sons, Inc.

Types of Control Systems


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!Go/No-Go controls

a predetermined standard must be met for permission to be


granted to continue

!Post-control (postperformance reviews)

applied after the project has been completed


purpose is to allow future projects to learn from past project
experience

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Sample Project Milestone Status Report


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Tools for Control


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!Variance analysis
!Trend projections
!Earned value analysis
!Critical ratio:

actual progress
budgeted cost

scheduled progress
actual cost
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Trend Projection
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Critical Ratios with Control Limits


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Cost Control Chart


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Scope Creep
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!Scope creep is the uncontrolled changes in a

projects scope and is frequently cited by


project managers as the single most
important problem they face
!Common Reasons for Change Requests

client modifications to project


modifications resulting from insights gained by project team
members
availability of new materials
introduction of new technologies

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Purpose of Change Control System


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!Review all requested changes


!Identify all impacts the change may have on

other project tasks


!Evaluate advantages and disadvantages of
requested change
!Install process so that individual with
authority may accept or reject changes
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Purpose of Change Control System

continued
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!Most importantly: communicate accepted

change to concerned parties


!Ensure that the changes are implemented
properly
!Prepare reports that summarize all
changes made to-date and their impact
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Rules for Controlling - Scope Creep


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!Include a change control system in every

project contract
!Require all changes be introduced by a
change order
!Require approval in writing by the clients
agent and senior management
!Consult with project manager prior to
preparation of change order
!Amend master plan to reflect changes
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