Project Management

A Managerial Approach

Chapter 12

Project Evaluation
 Purposes of Evaluation -
Goals of the System
Main reason of project evaluation is to measure success of
the project.
Four independent measurements of project success:
 The most straightforward dimension is the project’s efficiency
in meeting both the budget and schedule
 Another dimension, and the most complex, is that of customer
satisfaction/impact.
 A third dimension, again somewhat straightforward and
expected, is business/direct success (market success of project)
 The last dimension, somewhat more difficult and nebulous
(unclear) to ascertain, is future potential (launching a new
product)
Chapter 12-2
Purposes of Evaluation -
Goals of the System
 Another primary purpose of evaluation is to
help translate the achievement of the project’s
goals into a contribution to the parent
organization’s goals
 To do this, all aspects of the project are studied
in order to identify and understand the project’s
strengths and weaknesses
 The result is a set of recommendations
(refrences) that can help both on going and
future projects
Chapter 12-3
Purposes of Evaluation -
Goals of the System

 A successful project evaluation can help

an organization:
 Identify problems earlier
 Improve project performance
 Locate opportunities for future technological
advances
 Evaluate the quality of project management
 Reduce costs

Chapter 12-4
Purposes of Evaluation -
Goals of the System

 A successful project evaluation can help

an organization (cont.):
 Speed the achievement of results
 Identify mistakes, remedy them, and avoid them in
the future
 Provide information to the client

Chapter 12-5
Purposes of Evaluation -
Goals of the System
 Evaluation often makes
recommendations that relate to
ancillary (secondary), unplanned, but
important contributions to the project
and its parent:
 Improve understanding of the ways in which
projects may be of value to the organization
 Improve processes for organizing and managing
projects

Chapter 12-6
Purposes of Evaluation -
Goals of the System
 Ancillary goals: Those goals which provide
necessary support to primary activities of an
organization or system.
 Identify organizational strengths and weaknesses in
project-related personnel, management, and
decision-making techniques and systems
 Improve the way projects contribute to the
professional growth of project team members
 Identify project personnel who have high potential
for managerial leadership

Chapter 12-7
Project Auditing

A major vehicle for evaluation is the project audit,

a more or less formal inquiry into any aspect of the
project.

Chapter 12-1
Audit report

 The auditor's report is a disclaimer

issued by either an internal or external
auditor as an assurance service in order
for the user to make decisions based on
the results of the audit
The Project Audit

 The project audit is a thorough

examination of the management of a
project, its methodology and procedures,
its records, its properties, its budgets and
expenditures and its degree of completion
 The formal report may be presented in
various formats, but should focus on
specific points

Chapter 12-8
The Project Audit
 Six parts of a project audit:
 1. Current status of the project
Does work is according to the planned level
 2. Future status
What type of changes are required for future
betterment of project.
 3. Status of crucial tasks
What progress has been made on task that could
decide success or failure of project.
 4. Risk assessment: what can be the reason of
project failure. Chapter 12-9
The Project Audit
 5. Information pertinent to other projects:
How this information can help for the betterment of
future project
 6. Limitations of the audit
What are the factors which affect the data in audit.
 Project audit is not only financial audit It is far
broader in scope than a financial audit and may
deal with the project as a whole or any
component or set of components of the project
The Project Audit Life
Cycle
 Like the project itself, the audit has a life cycle
composed of an orderly progression of well-
defined events:
 Project audit initiation
This step involves starting the audit process, defining
the scope and purpose of the audit process.
 Project baseline definition
It determines the standard of the audit process.
 Establishing an audit database
When standards are establish, execution begins create
a database for use by audit team.
The Project Audit Life
Cycle
 Preliminary analysis of the project
After the standards are set and data are collected,
judgments are made. After judgments communicate
real meaning of audit findings.
 Audit report preparation
A specific format of project report is selected then
Analysis of project is started on the basis of established
standards. Recommendations are also given to
implement.
 Project audit termination
Final report and recommendations are released , this is
done to improve the methods for conducting audit.
Measurement
 Measurement is an integral part of the
audit/evaluation process
 Performance against planned budget and
schedule usually poses no major measurement
problems
 Measuring the actual expenditure against the
planned budget is harder and depends on an
in-depth understanding of the procedures
used by the accounting department
Chapter 12-28
Measurement
 It is a very difficult task to determine what
revenues should be assigned to a project
 All cost/revenue allocation decisions must be
made when the various projects are initiated
 The battles are fought “up front” and the equity
of cost/revenue allocations ceases to be so
serious an issue
 As long as allocations are made by a formula,
major conflict is avoided-or at least, mitigated
Chapter 12-29