VCB4043/VDB4053 ENGINEERS

IN SOCIETY:
PROJECT & OPERATION
MANAGEMENT
LECTURE :
PROJECT CONTROL AND
TERMINATION

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 Recap from Previous
Lecture…

 Lect. 1 Main Duties of Project Manager:

 POLC

 Control

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 Lecture outline

 Control definition
 Control mechanisms at various stage of
project life
 Control During Construction : Time Control
 Control During Construction: Cost Control
 Earn Value and S-curve
 Resource Leveling
 Control for Project Termination
 Control for Completion and Handing Over

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 Control Definition
 Measuring what is actually achieved in a project
with regard to the OBJECTIVES (t, c, q),
comparing it with a “baseline” (referenced/original)
performance and monitoring and taking corrective
measures should there be unacceptable deviation
from the baseline

 Or simply ”tracking, monitoring and steering” a

project so that the objectives will be met

 Q. What to control? Control the project resources

and project quality ( by other )

 Q. How often is the measuring done?

 Q. How is it generally done? Control cycle

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 3.1 Control systems
throughout the project
 Control systems / mechanisms must be
provided at each stage of the project

 Defining or Initiation Stage

- Needed for understanding of the business
environment & making sure all necessary controls are
incorporated into the Project
- Mechanism e.g. : Cos Benefit Analysis; Budget ;
Project Charter (wrt cost, time and quality)
 Planning and Design Stage
- To ensure that the final product will satisfy the client
and meet the specifications of the Project Charter
- Mechanism e.g. Benchmarking using models or
prototypes or mock structure

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 3.1 Control systems
throughout the project (cont.)
 Execution (Construction / production) stage
- To ensure all ‘Plans” are being executed and strictly
followed (Schedule Plan, Cost Plan, Quality Plan)

- Mechanism e.g. Time control (Schedule Baseline,

Progress Comparison Bar Charts, Re-scheduling/
Updates, etc.); Cost control (Earn Value and S-curve);
Resource leveling, Quality Control Tests

 Delivering stage
- To check the efficiency or quality of the product
delivered
- Mechanism e.g : Hand-over Document, Defects List,
Defects Liability/ Guarantee Period, Performance
Bond, As-built Drawings

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 3.2 Control During
Construction/Production

 Control during this stage is most important

 Two types of control

 Time (Schedule) Control and

 Cost Control

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3.2.1 Time or Schedule Control

 Time or Schedule Control is concerned

with
 Determining the current status of the project
schedule
 Determining if the project schedule has changed
 Influencing the factors that create schedule
changes
 Managing the actual changes as they occur

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3.2.1 Time or Schedule Control (cont.)
Main Inputs Tools & Techniques Main Outputs
1. Original Schedule - 1. Schedule 1. Updated Schedule
Schedule as planned, comparison bar -updates to changes in
acts as basis for charts start and finish dates
comparison -Displays two bars for
each activity, one 2. Recommended
2. Approved shows current /actual corrective actions
schedule changes status, the other the -Anything done to
original schedule bring future project
- Information on
schedule in line with
approved schedule 2. Performance the approved original
changes measurement project schedule
3.Performance – measure variations in baseline.
reports project schedule
that may occur
- information on time eg using S-curve.
performance such as
the actual progress; 3. Project Mgmt
which planned dates software
have been met and -Track actual progress
which have not etc. dates vs planned
dates and forecast
3. effect of changes

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 3.2.1 Time or Schedule Control:
Progress Monitoring Using
Comparison Bar Charts
 Assume the progress of the activity as a direct
linear function of the elapsed time
 Example: Road construction

Duration Quantity Week Ending

No Acitivity (Days) Amount Units 3/30 4/6 4/13 4/20 4/27 5/4 5/11 5/18 5/25 6/1 6/8 6/15 6/22 6/24 7/6 7/13 7/20 7/27 8/3
1 Move-in 5 -
2 Clear & Grub 20 SF
3 Earth moving 60 CY
4 Site Grading 45 SF
5 Subbase 45
6 Base 25
7 Paving 25

Memorial day Work planned

5/1
Reporting holiday
Work
date completed

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 3.2.2 Cost Control

 Cost Control includes…

 Influencing the factors that create changes to

the cost baseline
 Recording and monitoring cost performance to
detect and understand changes from the cost
baseline
 Assuring that potential cost overruns do not
exceed the authorized funding periodically and
in total for the project.
 Informing appropriate stakeholders of approved
changes
 Acting to bring expected cost overruns within
acceptable limits

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 3.2.2 Cost Control (cont.)

Main Inputs Tools & Techniques Main Outputs

1. Cost estimates 1. Cost change 1. Cost estimate
Cost estimates as control system (updates)
planned, act as - defines procedures
basis for 2. Performance
for changing cost
comparison baseline eg JKR’s.
measurements
- Cost variance and
2. Performance 2. Performance Schedule variance
reports measurement for each activity
-Provide Info on
analysis 3. Forecasted
cost performance
- Assess magnitude
completion cost
3. Approved of any variances that
change will occur e.g. using 4. Recommended
Earned Value . corrective action
requests
-Include 3. Forecasting -Anything done to
modifications to the -Predict future bring expected future
cost of the contract conditions of project performance of
(VO) based on current info project to match
original plan
4. Project Mgmt
software
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Break

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 3.3.3 Earn Value and S-Curve

 Earn value analysis compares the cost value of work

done with the value of work that should have been
done (i.e. the base-line)

 Value of work done comprises of:

 Indirect costs
 Cost of materials delivered on sit
 Cost of actual physical work on site

 Earn value can also be presented in the form of S-

curve –simpler and more widely used

 S-curve examines and compares the value of work

done with the actual value or progress – in terms of
time (delays) or amount (over or under-achievement)

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 Important Terms
• Time-now is the date when progress is measured
• Budget at Completion (BAC) is the original cost estimate
indicating the funds required to complete work
• Percentage Complete (PC) (planned) is the planned
work progress up to time-now
• Percentage Complete (PC) (actual) is the actual work
progress up to time-now
• Earned Value (EV) is the budgeted cost of work actually
completed on that point of time (based on budgeted rates).
EV = PC(actual) x BAC eg 25% x RM 2,500,000 =RM 625,000

• Planned Value (PV) is the portion of cost of work planned

to have been spent between start date and time-now
PV = PC (planned) x BAC

• Actual Cost (AC) is the total actual cost incurred between

the start date and time-now
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 Earned Value
Characteristics
 Point in Time Evaluation
 How much work did you PLAN to
complete? (Planned Value)
 How much work did you ACTUALLY
complete? (Earned Value)
 How much did you spend to complete the
work? (Actual Cost)
 EVA Example
A $10,000 software project is scheduled for 4
weeks.
At the end of the third week, the project is 50%
complete and the actual costs to date is $9,000

Planned Value (PV) = $7,500

Earned Value (EV) = $5,000
Actual Cost (AC) = $9,000
What is the project health?

Schedule Variance
= EV – PV = $5,000 – $7,500 = - $2,500
Schedule Performance Index (SPI)
= EV/PV = $5,000 / $7,500 = .66
Cost Variance
= EV – AC = $5,000 - $9,000 = - $4,000
Cost Performance Index (CPI)
= EV/AC = $5,000 / $9,000 = .55

Objective metrics indicate the project is

behind schedule and over budget.
On-target projects have an SPI and CPI of 1
or greater
 Forecasting Costs

 If the project continues at the current

performance, what is the true cost of the
project?
 Estimate At Complete
= Budget At Complete (BAC) / CPI
= $10,000 / .55 = $18,181
At the end of the project, the total project costs will
be $18,181
 Establish Ranges to
Guide Traffic Light Status
 Traffic Light status is useful in conveying
overall project with one color
 Establish objective SPI and CPI ranges to
determine the true project color.
Green [1.0 - .95]
Yellow [.94-.85]
Red [.84, 0]
 Earned Value Summary
 Earned Value is an objective method of
determining project performance instead of
subjective approaches
 Apply Earned Value enforces the project
discipline of tracking project actual
performance against baseline costs and
dates
 Estimate at Complete calculation can
forecast true project costs based on project
performance
 EARNED VALUE ANALYSIS

Overspend
Budget At Completion (BAC)
100%

AC Schedule
PV Variance
(total actual
cost) (planned wk
done wrt
budget)
EV Cost
(actual wk Variance
done wrt
budget)

Time-now Slippage
Time
Time of completion
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 S CURVE
Completion

100%
Planned / scheduled

Value of work Delay

Unachieved
Work
Job
Start Actual /
(Earned
0%
Time-now Time
Q. Why “S” shape ?

SIRIM example revisited

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 3.4 Resource Allocation and
Leveling
 Resources of a project need to be
 scheduled i.e. right amount of resources must be
allocated to a given task at the required time
 leveled i.e. distributed accordingly at the required time
to avoid or minimize fluctuations in day-to-day use.
 Resource Leveling (RL) makes use of “floats” or
time tolerances in the schedule to re-schedule
resources and bring back any deviation of actual
progress from schedule to within acceptable limits
 RL applies to resources which are hired i.e. labour
and equipment as the need for these resources
fluctuates greatly as some activities start (requiring
resources) while other finish (releasing resources)
 RL improves efficiency and minimize project cost
(by optimizing labour usage and cost)

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 3.4 Resource Allocation and
Leveling (cont.)
 STEPS:

 Determine critical path and floats from network

or other techniques

 Identify key resource and produce bar chart

using network data

 Plot histogram of resource demand

 Reschedule timing of activities using float to

obtain a more even demand profile

 Redraw the resource profile

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 3.5 Control in Project
Termination
 The Project Manager will continuously monitor,
control and manage the project to ensure the good
progress.

 But if PM finds the performance is very

unsatisfactory and/or contractor is no longer
capable of continuing the project, then PM may
recommend to S.O. Termination of the project.
Performance Bond of the contract will also be
forfeited.

 The procedure for issuing notice of termination

must follow conditions of contract e.g. adequate
time given for contractor to improve performance
and adequate notice or warning letters given to
terminate the contract.

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 3.6 Control in Project
Completion and Handing Over
 If then project has been successfully completed,
then PM must certify this

 In construction projects, completion refers to

”Practical Completion” - a stage where the
project constructed has achieved its intended
function, or can be occupied or used despite
some outstanding work to be completed, or
some repair work which, if carried out, will not
cause inconvenience to the user or occupier.

 The control mechanism used is “Certificate of

Practical Completion” issued to the contractor,
together with a list of outstanding works and
defects observed in project to be carried out or
made good during a “Defects Liability Period”
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 3.6 Control in Project
Completion and Handing
Over (cont.)
 DLP is a guarantee period during which
the contractor has to complete any
outstanding works or carry out repairs to
any defects in the completed facility,
failing which the Performance Bond will
be forfeited.

 Upon completion of the the project, a

Handing Over Document is prepared and
signed by the client.This starts the
handing over of responsibility to the client
for the whole project.

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End of Lecture

Thank you

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