Faculty of Engineering and Technology

School of Engineering

6304MECH and 6465ELE

Industrial Management,
Engineering Management
Dr Ben Matellini
d.b.matellini@ljmu.ac.uk
Room 1.30B, Byrom Street
Project Management
component of module
Lecture 4 of PM
 Project Control

OR
Getting what we planned.

“It’s not just doing the right thing, it’s about doing
the thing right.”

Lecture number 4a
 Agenda
• Project control
− Project monitoring
− Tracking earned value

4
 The Project Management Life Cycle

Process
and Scope/ Project
product
Define it brief
knowledge

Close / Develop it Plan / Design it

Project Execute & Proposal

outputs
(products)
Control /
Do it

A series of phases undertaken to deliver the project outcome (product or service.)

5
 Aspects of project control

Monitoring progress

Tracking Earned Value

Managing quality

6
 What to monitor?
Matters that could
• Time elapsed and time left
affect tasks: • Effort (hours) consumed and left
• Risks materialising Time • Estimated time and effort required to complete
• Unexpected events • Milestone status – on time?
• Scope creep • Validity of assumptions – to complete on time
• Imposed changes
• The News
• Communications

Cost Specification
• Planned costs versus actual costs • Milestone outputs achieved
• Estimated costs to complete • Quality control, performance
• Expenditure by cost type • Quality assurance
• Validity of assumptions re. future costs • Realism of milestone targets left
• Cash flow situation

7
 Project monitoring and control
“The project control cycle is continuous”

Updating documents
and records as Setting a goal
required

Making
controlled
Taking action and Measuring progress
changes to
recycling the
reduce or
process
eliminate
variations

Comparing
Understanding actual and
causes of variations planned
and possible Identifying variations Pinto (2007),
remedies against current plan p411
8
Project monitoring and control advice
• You can only manage forward –
you cannot re-manage the past
• Good monitoring enables you to
anticipate problems before they
arise
• Be aware that some information
you receive may be wrong
• People may hide problems in
the hope they can fix them

Focus on solving problems, not blaming people

9
 The evolving baseline - analogy
Time
Actual outturn of project

Original project baseline (A)

Original tolerances (B) Latest agreed plan

revision (C)

Budget Specification

Project boundaries can and do change.

10
 Agenda
• Project control
− Project monitoring
− Tracking earned value

11
 Project control

- Earned Value Analysis

12
 Monitoring progress – costs and time

Cumulative
cost
Baseline plan

Estimated
expenditure
to completion

Actual expenditure to date

Time
TODAY
13
 Monitoring progress – Earned Value
Analysis
• Controlling time and cost is extremely importance. They
can make or break a project !

• A comprehensive time and cost trend analysis

technique is the Earned Value Analysis (EVA).

• EVA allows you to monitor time and cost performance

elements and combine them to make predictions on your
project outcome.

Time = Money = Time = Money

14
 Earned Value Analysis – what is it?

• EVA will tell you:

- How efficient/inefficient you have been in the past
- What your Estimate at Completion will be
(something very good to know).

• EVA predicts what it will cost and how much time

it will take to complete the project based on your
current performance.

• EVA combines time, cost and production data to

present this analysis. Therefore the data used has to
be as up to date and accurate as possible.

15
 Earned Value Management
- Determine Earned Value.
‘Value’ is ‘earned’ by completing tasks. The budget for each task is the value earned.

Project Task Planned Budgeted Tasks Actual Earned

week no. duration cost done cost value
(weeks)
1 101 1 £5,000 P £5,000

2 102 1 £8,000 P £8,000

3 103 1 £7,000 P £7,000

4 104 1 £12,000 P £12,000

5 105 1 £14,000 O
TODAY £46,000 £36,000 £32,000

6 106 1 £10,000
7 107 1 £13,000 Maylor, H
Project
8 108 1 £11,000 manage-
ment 3rd ed.
9 109 1 £16,000 Harlow:
Pearson,
10 110 1 £4,000 p278

TOTAL 10 £100,000 16
 This is about where we are TODAY,
compared with where we planned to be.
Project Task Planned Budgeted Tasks Actual Earned
week no. duration cost done cost value
(weeks)
1-5 101-105 £46,000 101-104 £36,000 £32,000

Planned or Budgeted Cost of Work Scheduled

BCWS

Actual Cost of Work Performed

Three key ACWP
measures
Budgeted Cost of Work Performed
BCWP
EARNED VALUE
17
 Understanding the true situation
Project Task Planned Budgeted Tasks Actual Earned
week no. duration cost done cost value
(weeks) BCWS ACWP BCWP
1-5 101-105 £46,000 101-104 £36,000 £32,000

Planned or Budgeted Cost of Work Scheduled

BCWS

Actual Cost of Work Performed

ACWP

Budgeted Cost of Work Performed

BCWP
EARNED VALUE

Consider cost performance (Cost Variance), i.e. after completing tasks 101
to 104: Earned Value is £4,000 less than actual spend. This is NOT good.
 Understanding the true situation
Project Task Planned Budgeted Tasks Actual Earned
week no. duration cost done cost value
(weeks) BCWS ACWP BCWP
1-5 101-105 £46,000 101-104 £36,000 £32,000

VARIANCES
Cost Variance (CV) = BCWP – ACWP = £32,000 - £36,000
(the difference between Earned value and the actual cost for the # of tasks
completed by this stage)
Schedule Variance (SV) = BCWP – BCWS = £32,000 - £46,000
(the difference between Earned value and what was budgeted for the expected # of tasks
that should have been completed by this stage)

An indication of cost performance (Another way to view the variances is

EFFICIENCY INDICES
through efficiency indices)
Cost Performance Index (CPI) = BCWP =
ACWP BCWS: Budgeted Cost of
Work Scheduled
Schedule Performance Index (SPI) = BCWP = ACWP: Actual Cost of
BCWS Work Performed
BCWP: Budgeted Cost of
An indication of time performance Work Performed 19
 Understanding the true situation
Project Task Planned Budgeted Tasks Actual Earned
week no. duration cost done cost value
(weeks) BCWS ACWP BCWP
1-5 101-105 £46,000 101-104 £36,000 £32,000

VARIANCES
Cost Variance (CV) = BCWP – ACWP = £32,000 - £36,000
Schedule Variance (SV) = BCWP – BCWS = £32,000 - £46,000

An indication of cost performance

EFFICIENCY INDICES
Cost Performance Index (CPI) = BCWP = £32,000
ACWP £36,000
Schedule Performance Index (SPI) = BCWP = £32,000
BCWS £46,000

An indication of time performance 20

 Understanding the true situation
Project Task Planned Budgeted Tasks Actual Earned
week no. duration cost done cost value
(weeks) BCWS ACWP BCWP
1-5 101-105 £46,000 101-104 £36,000 £32,000

VARIANCES
Cost Variance (CV) = BCWP – ACWP = £32,000 - £36,000 = - £4,000 +ve good
-ve bad
Schedule Variance (SV) = BCWP – BCWS = £32,000 - £46,000 = - £14,000

EFFICIENCY INDICES
Cost Performance Index (CPI) = BCWP = £32,000 = 0.889
ACWP £36,000 >1 = good
<1 = bad
Schedule Performance Index (SPI) = BCWP = £32,000 = 0.696
BCWS £46,000

21
 Predicting what the TOTAL project will
cost and how long it will take.
Project Task Planned Budgeted Tasks Actual Earned
week no. duration cost done cost value
(weeks) BCWS ACWP BCWP
1-5 101-105 £46,000 101-104 £36,000 £32,000

FORECASTS:
Estimated Cost at Completion = Original Budget
CPI

Estimated Time at Completion = Original Time Estimate

SPI CPI: Cost
Performance Index
SPI: Schedule
= Performance Index

22
 Predicting what the TOTAL project will
cost and how long it will take. Project Task no. Planned Budgeted Tasks Actual Earned
week duration cost done cost value
(weeks)

ORIGINAL PLAN: 1 101 1 £5,000 P £5,000

2 102 1 £8,000 P £8,000

Total project Budget = £100,000 3 103 1 £7,000 P £7,000

4 104 1 £12,000 P £12,000

Total project duration = 10 weeks.
5 105 1 £14,000 O
TODAY £46,000 £36,000 £32,000

FORECASTS: 6 106 1 £10,000

7 107 1 £13,000
Estimated Cost at Completion = Original Budget
8 108 1 £11,000
CPI
9 109 1 £16,000

10 110 1 £4,000
= £100,000 / 0.889 = £112,500 TOTAL 10 £100,000

Estimated Time at Completion = Original Time Estimate

SPI

= 10 weeks / 0.696 = 14.4 weeks

23
 The results are significant
Implications if nothing is changed:
• An over spend of £12,500 (12.5%)
• A delay in the project of 4.4 weeks – almost 1.5 times longer !!!

FORECASTS:
Estimated Cost at Completion = Original Budget
CPI

= £100,000 / 0.889 = £112,500

Estimated Time at Completion = Original Time Estimate

SPI

= 10 weeks / 0.696 = 14.4 weeks

24
 The results are significant
Implications if nothing is changed:
• An over spend of £12,500 (12.5%)
• A delay in the project of 4.4 weeks – almost 1.5 times longer !!!

Problem solving action needs to be taken.

• Identify what are the causes of overspend and delay.

• What are the possible solutions?

• Evaluate the effectiveness of the solutions (cost-benefit).

• Decide what to do – but GET OTHERS INVOLVED?

• There may be various options. 25

 Project crashing - analyzing
cost-time trade-offs
• In projects there is always a cost-time trade-off
• We could put more money into the project to get
it completed sooner.
– For example, hiring extra people, running extra shifts
or using more powerful equipment
• This is known as ‘Crashing a project’. It often
– increases direct costs (extra labour, equipment, etc.)
– but decreases indirect costs (security, insurance,
liability, etc.).
– potential reward for early delivery!
26
- End -
 Appendix – further reading

1. Background to Quality in projects

2. Project Communication

28
 1. Definitions of quality
• Something that satisfies me at a price I can afford
(most customers)

• Conformance to specifications
(everyday reality in manufacturing)

• The totality of features and characteristics of a

product or service that bear upon its ability to
satisfy stated or implied needs.
(ISO)

29
 Quality control and quality assurance
Quality control: the part of
quality management
focussed on fulfilling quality
requirements – that is the
quality of the output defined
in the specification.
QC:
• monitors specific project
results against defined
requirements
• focuses on identifying and
correcting defects
• is done within the project,
by project team members.
• is part of day to day
activity
Quality assurance: the part of
quality management focussed on
providing confidence that quality
requirements will be fulfilled.
The
project QA:
output • evaluates project performance
regularly (how things are being
The project done - methods)
• focuses on preventing defects
by assessing process used to
make the product.
• is done mainly by people who
visit the project to assess how
well it is being executed.
• is an independent check
30
 Remember: Quality in = Quality out
“Quality: The degree to which a set of inherent characteristics fulfills
requirements."
PMI, Guide to the Project Management Book of Knowledge

Desired timescale

Right people
Desired cost
PROJECT
Right methods
ACTIVITIES
Desired quality

Right standards
Satisfied customer

31
Example of quality tool - Cause and effect diagram for
problem identification
Cause Cause Cause

Effect

Cause Cause Cause

The Fishbone diagram developed by Kauro Ishikawa:

• Used to get to the root cause of a problem which has many
possible causes.
• It can be a useful tool to help define quality problems in a
format that is easily understood.
32
 Diagnosing the cause of a problem
Cause Cause Cause

Effect

Cause Cause Cause

• 8P – Price, Promotion, People, Processes, Place/plant, Policies, Procedures,
Produce/Service – recommended for administrative and service industries
• 6M - Machine, Methods, Material, Maintenance, Man, Mother Nature
(environment) – recommended for manufacturing and process industries
• 4S – Surroundings, Suppliers, Systems, Skills – recommended for some
service industries
• Conduct a brainstorming exercise to devise a relevant classification for the 33
project at hand
 Using the fishbone diagram
Use this technique to:
• Diagnose source of actual problem
• Consider sources of risks
• Identify features required in the project specification
• Can also use in reverse by putting solution on tail !!!
INJECTORS HP PIPES
2 washers
Injector sticking
Sealing washers Ends closed up Wrong bore
Debris
No washer Joint leading
Faulty nozzle
Not sealing on head DIESEL
ENGINE LOW
Not tightened enough Incorrect build
Valves not POWER
Setting wrong Incorrect fitting Filter blocked seating Wrong
Poor timing Governor interference compression ratio

Debris
Worn parts Fuel level incorrect ENGINE CSC
Manufacturing
PUMPS Handbook, 1996,
p 6.12

34
 2. Project communication
Why?
• Report, inform, advise
• Conform (to process or standard), create record
• Request or solicit information
• Inspire, recognise, and thank people
• Prove, demonstrate
• Convince
Who?
Who provides communication, who receives it?
What?
What is the information required? In what format?
When?
What are the dates and frequency of communications?
How?
Is communication in person or through what media?
Where?
Does communication have to be in specific places? 35
 Have a communication plan

Stakeholder Communication Timing Format Mechanism Person

frequency responsible

Project sponsor Monthly Week 1 of Short report Email Project manager

each month

Accounts Monthly spend Week 3 of Short budget Email and Administrator

department schedule each month Sharepoint

Press Monthly Week 1 of 1 page brief Email and Public relations

each month Teams meeting officer

Team leaders Weekly Every Monday Oral Teams meeting Project manager

Etc …..

Adapted from Maylor, H. (2010), Project

Management, FT Prentice Hall, p209

36
Project communication – getting the
message across

• Tell them what you’re going to tell them.

• Tell them.
• Tell them what you’ve just told them.

37
Use a common language for better understanding

C3H8
propane
5,000
words

Everyday
Tort language
5,000 10,000 Lawyer
words words

Chemist

Cooper, B. (1964),
Writing Technical
Reports, Penguin, p18.

38
 Types of communication (1)
• One-to-one Meetings: You still have to prepare for any one-to-
one meeting. No meeting is entirely routine.
o Phone
o Online
o In-person

• Group Meetings: Meetings are expensive – think of the working

hours. Have only necessary people attending.
o Online
o In-person

39
 Types of communication (2)
• Electronic messages: - Keep them short. Key information only.
Key recipients only. Caution - electronic is forever.

• Written: Collect material, select material, ensure source and

accuracy.
o Electronic – can be kept forever
o Hard copy – becoming less common

• Presentations: Presentations are to illustrate not communicate –

that’s what you do! Use slides for low density information (not
like this one !!!); use printed material for high density material.

40