Chapter 4: Project Monitoring and

Evaluation/Controlling

Maru Shete (PhD and Assoc. Prof.)

 Monitoring & Evaluation (M&E)

M & E are two different management tools that are
closely related, interactive and mutually supportive

Through routine tracking of project progress,
monitoring can provide quantitative and qualitative
data useful for designing and implementing project
evaluation exercises

Through the results of periodic evaluations,
monitoring tools and strategies can be refined and
further developed

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 Comparison Between M&E
Item Monitoring Evaluation
Frequency Regular, ongoing Episodic
Main action Keeping track/oversight Assessment
Basic purpose Improving efficiency Improve effectiveness, impact,
Adjusting work plan future programming
Focus Inputs/outputs, process outcomes, Effectiveness, relevance,
work plans efficiency, impact, sustainability
Information Routine systems, field visits, Same plus
sources stakeholder meetings, output Surveys (pre-post project)
reports, rapid assessments Special studies
Undertaken by Project/program managers External evaluators
Community workers Community (beneficiaries)
Supervisors Project/program managers
Community (beneficiaries) Supervisors
Funders Funders
Other Stakeholders

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 Commonalities of M&E

Both monitoring and evaluation must be planned at the
program/ project level

Baseline data and appropriate indicators of

performance and results must be established

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 Planning a Monitoring System
1. What should be monitored?

Keep information requirements to a bare minimum

Collect info that will be most helpful to those who will use it

2. How?

Select methods to track indicators/report on progress

Observations, interviews, routine reporting, sentinel sites

Both formal/informal and quantitative/qualitative methods

Decide how information will be recorded systematically and reported
clearly

Consider the time and skills of those who will collect the data

Pretest new monitoring instruments

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 Planning a Monitoring System
3. Who should be involved when?

Clearly identifying who will collect information on
indicators, when (frequency) and who will receive it

The monitoring plan should also identify who will be
involved in reviewing progress and providing feedback

4. What resources are needed and available?

The human and financial cost of gathering, reporting
and reviewing data should be identified

Needed funding and time should be set aside for this
work

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 Planning a Monitoring System
5. Consultation and Training

Discuss the monitoring program with a representative
group from each level before it is put into effect

Provide training to those who will be using the
monitoring systems

6. Prepare a work plan

for each year

listing the main activities to be carried out, their
output, timing and parties involved

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 Tools for Project monitoring/controlling:
The Earned Value Analysis
What is Earned Value?

It is a project monitoring and measurement system that:
1. establishes a clear relationship between planned accomplishments
and actual accomplishments
2. reinforces and rewards good planning practices

Basic concepts of Earned Value Management (EVM)

Each task in a project earns value as planned work is completed

For example, if you were paid on this basis, you would earn $x at key
milestones based on the value of what you have completed (earned value)

Earned value can be compared to actual cost and budgeted cost to
determine variance and predict future performance

One way of measuring overall performance is by using an
aggregate performance measure called earned value

A serious difficulty with comparing actual expenditures against
budgeted or baseline is that the comparison fails to take into
account the amount of work accomplished relative to the cost
incurred
 Cont…

The earned value of work performed (value completed) for
those tasks in progress is found by multiplying the
estimated percent completion for each task by the planned
cost for that task

The result is the amount that should have been spent on
the task so far

The concept of earned value combines cost reporting and
aggregate performance reporting into one comprehensive
chart
 Cont…

Variances on the earned value chart follow two primary guidelines:

Negative means there is a deviation from plan—not good

The cost variances are calculated as the earned value minus some other measure
1. Earned Value (EV):

The value (in person-hours) in terms of your base budget of what you
have accomplished at a given point in time (or, % complete X Planned
Value/Cost). In short, budgeted cost of work performed
2. Actual Cost (AC):

How much work (person-hours) you have actually spent at a given point
in time. In short, Actual cost of work performed
3. Planned Value/Cost (PV/PC):

How much work (person-hours) you planned to have accomplished at a given
point in time (this is from the WBS in your plan). In short, Budgeted cost of
work scheduled
4. Scheduled Time (ST): Schedule for work performed
5. Actual Time (AT): Actual time of work performed
 Earned Value: Example
Today

18

11.2

On Day X:

PLANNED VALUE (Budgeted cost of the work scheduled, BCWS) =
18 + 10 + 16 + 6 = 50

EARNED VALUE (Budgeted cost of the work performed, BCWP) =
18 + 8 + 11.2 + 0 = 37.2

ACTUAL COST (of the work performed , ACWP) =
45 (from your project tracking - not evident in above chart)

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 Earned Value: Example
Actual Cost:
Cost what you have Today
actually spent to this point in
time.
Cost (Person-Hours)
Hours)

Planned Value:
Value what your plan
called for sending on the tasks
planned to be completed by this
date.

Earned Value:
Value value (cost) of
what you have accomplished to
date, per the base plan.

Time (Date)
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 Earned Value: Example

Today

Over
Budget
Cost (Person-Hours)
Hours)

Behind
Schedule

Time (Date)
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 Variance

Any schedule or cost deviation from a specific plan.

Used within an organization to verify the budget and
schedule for a project

Frequently used as a key component of plan reviews and
performance measurement

Must compare scheduling and budget variance at the same
time

Schedule variance:
variance deviations from work planned – not a
measure of changes in cost

Cost variance:
variance deviations from the budget – not a measure of
work scheduled vs. work completed

Example: applying more $$/people to a task may maintain the schedule,
but it adds to cost… schedule on track… over budget on expenses (cost)
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 Variance Analysis
Cost variance (CV)= EV – AC; Cost overrun when CV is negative
Schedule variance (SV)= EV – PV; Behind Schedule when SV is
negative
Time variance (TV)=ST – AT; Delay when TV is negative

If the earned value chart shows a cost overrun or performance
underrun, the project manager must figure out what to do to get the
system back on target

Options may include borrowing resources, or holding a meeting of
project team members to suggest solutions, or notifying the client
that the project may be late or over budget
Variance Analysis with Ratios

Variances are also formulated as ratios rather than
differences
1. Cost Performance Index (CPI) = EV/AC

When CPI>1An exceptional performance and If
CPI<1Poor performance
2. Schedule Performance Index (SPI) = EV/PV

When SPI>1An exceptional performance and If
SPI<1Poor performance
2. Time Performance Index (TPI) = ST/AT

Use of ratios is particularly helpful when comparing

the performance of several projects
 Earned Value & Variance: Example
18

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On Day X:

PLANNED VALUE (PV) = 18 + 10 + 16 + 6 = 50

EARNED VALUE (EV) = 18 + 8 + 14 + 0 = 37.2

ACTUAL COST (AC) = 45 (from your project tracking)
Therefore:

Schedule Variance = EV – PV = 37.2 - 50 = -12.8 (behind schedule)

Schedule Performance Index = 37.2 / 50 = 0.74 or 74% of plan

Cost Variance =EV - AC = 37.2 - 45 = -7.8; Cost overrun

Cost Performance Index = 37.2/45 = 0.826, or you are getting an 826¢ return on every $1.00
17 (or, person-hour) spent on this project
Example

Planned $1500 to complete work package.

Scheduled to have been finished today.

Actual expenditure to date is $1350.

Estimate work is 2/3 complete.
1. What are cost and schedule variances?
Cost variance
Cost variance = EV – AC
= $1500(2/3) - $1350
= $1000 - $1350
= -$350
Schedule Variance
Schedule variance = EV – PV
= $1500(2/3) - $1500
= -$500
Cost Performance Index (CPI)
CPI = EV/AC
=($1500/(2/3) / $1350)
= 1000/1350
= 0.74
SPI (Schedule Performance Index)

SPI = EV/PV
= ($1500(2/3))/$1500
= $1000/$1500
= 0.67
Estimate to Complete (ETC) and
Estimate at Completion (EAC)

Estimate to complete (ETC) = (PV-EV)/CPI

=(1500-1000)/0.74
= $676

Estimate at completion (EAC)= ETC + AC

= $676 + $1350
= $2026
 Exercise: Taken from Last Exam
Case 1. Tabulated Summary for Project X (Cumulative values of Project X, a 12 month project, with values to
the end of month 8).
Month PC AC %Comp EV CPI SPI
1 50 50 10%
2 150 80 20%
3 260 200 30%
4 370 300 45%
5 490 420 55%
6 590 510 65%
7 700 635 75%
8 800 780 80%
9 870
10 930
11 980
12 1000
BAC

Notes: Planned Cost (PC); Actual Costs (AC); Percentage Complete (%Comp); and Budget at Completion
(BAC).
 Questions:

Using the information provided in the table above, answer the
following questions.
1. What is the Earned Value at the end of month 8? (5 points)
2. What is the Cost Performance Index (CPI) at the end of month 8?
(5 points)
3. What is the Schedule Performance Index (SPI) at the end of Month
8? (5 points)
4. What is the Budget at Completion (BAC) at the end of Month 8? (5
points)
5. Looking at the project as a whole, describe the progress of the
project thus far in terms of predicted schedule and cost
implications. (5 points)
Answers:
1. What is the Earned Value at the end of month 8? (5 points)

EarnedValue (EV)= (% Completed)(Planned Value/Cost); (0.8)(ETB3410)= ETB 2728
2. What is the Cost Performance Index (CPI) at the end of month 8? (5 points)

Cost Performance Index (CPI)= EV/Actual Cost(AC); 2728/2975= 0.916 (91.6%). A situation of cost
overrun, or for every one birr investment, the return was only 0.916 cents.
3. What is the Schedule Performance Index (SPI) at the end of Month 8? (5
points)

Scheduled Performance Index (SPI)= EV/PV; 2728/2975=0.8.The project is behind schedule, i.e the
project accomplished only 80% of the job that should have been done until month 8.
4. What is the Budget at Completion (BAC) at the end of Month 8? (5 points)

Estimate to complete the work at the end of month 8 (ETC) = (PV-EV)/CPI; (3410-2728)/0.916= ETB
744.54.This means that the project requires ETB 744.54 to complete the whole activities planned until
month 8.Then, the BAC (EAC) of all the activities of month 8 will be: AC (ETB 3410)+ ETB
744.54=3719.54
5. Looking at the project as a whole, describe the progress of the project thus far
in terms of predicted schedule and cost implications. (5 points)

The project requires ETB 3719.54to complete the whole activities planned until month 8 while the budget
allocated until this month was ETB 3410.Therefore, the cost implication due to poor performance: ETB
3719.5 - 3410= ETB 309.54

The Schedule Variance will be: EV – PV= ETB 62728-ETB3410= ETB -682. Due to late accomplishment,
the project incurred this much additional cost.
Case 2: A project has an original budget of ETB600,000 and after the first 4 months of a
12 months planned project time, the scheduled costs, actual costs and earned values are
as follows:
Performance Time
Indicators
Month 1 Month2 Month 3 Month 4

Scheduled cost 32,000 60,000 150,000 240,000

(ETB)
Actual cost 35,000 70,000 160,000 250,000
(ETB)
Earned value 30,000 50,000 140,000 230,000
(ETB)

Answer the following questions based on the information provided.

1. Draw the three curves: Scheduled cost, Actual cost & Earned Value
2. Calculate the Cost Variance for month 4
3. Calculate the Schedule Variance (cost based) for month 4
4. Calculate the CPI for month 4
The End!!!