Project Control

Chapter 6: Allocating Resources 1

Three Vital aspects..of Project
Management…
Performance, Cost and time
 Scope
• Technical problems
• Technical difficulties
• Quality problems
• Client wants changes
• Interfunctional complications
• Technological breakthroughs
• Intrateam conflict
• Market changes
11-3
 Cost
• Difficulties may need more resources
• Scope may increase
• Initial bid was too low
• Reporting was poor
• Budget was inadequate
• Correction not on time
• Input price changed

11-4
 Time
• Difficulties took longer than planned to
solve
• Initial estimates were optimistic
• Sequencing was incorrect
• Unavailable resources
• Preceding tasks were incomplete
• Change orders
• Governmental regulations were altered
11-5
Control of Performance, Cost, Time
• Performance
• Unexpected technical problems
• Insufficient resources
• Quality problems etc,

• Cost
• Scope of work increase
• Budgeting was inadequate
• Input prices change

• Time
• Initial time estimates were optimistic
• Task sequencing incorrect
• Technical snags etc.
 Project Control

• Acts that seek to reduce differences

between plan and actuality

• Difficult task
– Human behavior involved
– Problems rarely clear cut

7
Is project control more complicated ?????
Project control
..............……is it more complicated ?
• Not purely mechanistic problem, presence
of human element

• Complications more…where technology

or deliverables are new and unfamiliar.

• PM like all mangers do not discover

problems but discover “mess”
 What is a “mess” ?
Russel Ackoff once described it as..
A general condition of a system that when viewed
by a manager , leads to a statement that begins
%#@^&+# ! and goes downhill from there.

It is the discovery of a mess that leads the PM to

the conclusion that there is a problem (s) lurking
somewhere around. In systems as complex as
projects the tasks of identifying and defining the
problem is formidable.
 Therefore Control Can Be
Complicated
• Performance, cost, & schedule issues all
have a human element
• Symptoms are obvious, but root causes
never are
– “Messes” vs. “problems”
• Hard to separate random events from
systemic difficulties
 Purpose of Control
• Stewardship of organizational assets
– Physical asset control
– Human resources
– Financial control

• Regulation of results through the

alteration of activities
 Asset Conservation Has Three
Aspects
• Physical Assets
– Maintenance, inventories, security protection

• Human Resources
– Managing acquisition, development and performance
of people
• Financial Resources
– Budgets, audits, financial ratio analyses
– The concept of “due diligence”( client resources)*
 Purpose of Control
• To make the actual meet the plan

• The Process
1. Identify key performance areas( Input,
output , processes)
2. Set standards ( realistic- human and other
resources)
3. Measure performance ( automated vs
manual , periodic or non-periodic)
4. Compare
5. Take corrective action
 Three Types of Controls
• Cybernetic controls
– Key feature: automatic operation
• Go-no go controls
– Most common project control
– Test that predetermined specifications have been met
• Post controls
– After the fact
A Cybernetic Control System
Typical Paths for Correction of
Deviation
 Information Requirements for Cybernetic
Controllers
• Must have a counteraction for every
action
• Not possible for complex systems
1. Must define what characteristics of an output
to control
2. Standards must be set
3. Sensors must be acquired
4. Measurements must be compared to a
standard
5. Difference sent to the decision maker

11-18
 More on Go-No Go Controls
• Based on project plans, budgets,
schedules
• Can be periodic or milestone-driven
– Both are essential
• “Phase-gated” criteria are hurdles that
must be passed to go to next project stage
– Common terms: “exit criteria,” “milestone
decisions,” “system maturity models”
 Go/No-go Controls
• Testing to see if some preset condition
has been met
• Most of project management is go/no-go
controls
• Use cannot be based on the calendar
– Some will take place at milestones
– Some will take place when work packages are
completed
– Others will be on-going

11-20
 Go/No-go Controls Continued
• Data to be collected will match the critical
elements of the project plan
• Actual is compared to what was expected
in the plan
• Regular reports are given to the project
manager and senior management

11-21
Sample Project Status Report
 Components of Post Control Process
(Those who do not remember the past are condemned to repeat it ! )

• Benefits future projects more than the

present one
• Four parts
– Project objectives
– Milestones, checkpoints, budgets
– Final report on project results
– Recommendations
 Postcontrol
• These are controls that are applied after
the fact
• Their purpose is to mainly improve the
performance on future projects
• Often times, a final report is prepared
comparing the plan with reality
• Sometimes called “lessons learned”

11-24
Some Desirable Control System
Features
• Flexible, able to react and report
unforeseen events
• Cost effective (control value > control cost)
• Useful and ethical
• Accurate, precise, timely
• Simple and maintainable
• Fully documented
 Tools for Control
• Variance Analysis
• Trend Projections
• Critical Ratio
• Cost Control Charts

CR < 1.0 Indicates a Potential Problem

Actual Progress Budgeted Cost
CR  
Scheduled Progress Actual Cost
Trend Projection
 Critical Ratio
• Critical ratio = actual progress X budgeted cost
scheduled progress actual cost

• Indices and ratios greater than 1.0 are favorable

Critical Ratio
Control Limits
Cost Control Chart
 BENCHMARKING
Making comparisons to “best in class”
practices across organizations.

Benchmarking of
– processes
– Tools
– Techniques
– practices
• What is Benchmarking? (self study-reading
purpose)
• "Benchmarking is the process of measuring an organization's internal
processes then identifying, understanding, and adapting outstanding
practices from other organizations considered to be best-in-class.

• Most business processes are common throughout industries. For

example; NASA has the same basic Human Resources requirements
for hiring and developing employees as does American Express.
British Telecom has the same Customer Satisfaction Survey process
as Brooklyn Union Gas. These processes, albeit from different
industries, are all common and can be benchmarked very effectively.
It's called "getting out of the box".
One of the biggest mistakes organizations make when first
benchmarking is that they limit their benchmarking activity to their
own industry.

Benchmarking within your industry is essential.

However, you already have a pretty good idea how your
industry performs so it's imperative that you reach
outside and above your own industry into other
industries that perform a similar process but may have
to perform this process extremely well in order to
succeed.
Problem

Customer surveys indicate long wait times

for hotel rooms, especially for repeat
Customers
Solution

Benchmarked admittance process with

hospital emergency room departments
resulting in dramatically reduced check-in
times. Also netted less employees
needed, automation for frequent hotel
guests, and many more process
improvements .
Effective Control Systems Must
be Balanced
Balance means
– Measuring both tangibles and intangibles
– Looking at both long-term and short term
– Keeping flexibility in the system
– Addressing human factors
– Focusing on correction, not punishment
– Optimizing control, not maximizing it
 A Question of Balance
• Too little control?
• Too much control?
C
Cost of control

C
Mistakes

Amount of Control
 Components of a Control
System
• Sensor
• Standard
• Comparator
• Decision maker
• Effector
Control of Creative
Activities ??????
 Control of Creative Activities

• Controlling “knowledge work” is difficult

• Three tools
– Progress reviews
– Reassigning people
– Control of resource inputs
CONTROL OF CHANGE
AND
SCOPE CREEP
 Business Changes
• Business-related
• Driven by such things as:
– Deliverables changes
– Funding shifts
– Schedule changes
– Acts of God
– Subcontractor changes
 Technical Changes
• Technological issues, such as:
– New technologies
– Competitor response
– Changes in client requirements
Controlling Changes and Scope
Creep
• Changes can drive higher costs and
stretched out schedules
• So controlling them is an essential project
management task
– A formal change system is a must for project
control
 PROCESS of Change Control
System
• Review all requested changes
• Identify impact of change
• Evaluate advantages and disadvantages
of requested change
• Install process so that individual with
authority may accept or reject changes
 Five Principles of a Formal
Change Program
• All contracts specify formal change
process
• All changes require formal change order
• All change orders approved in writing by
client and project organization
• Project manager is always consulted
• The approved change order becomes part
of the master plan
 Changes and Change Control
• Remember the last step of the control
process: Take corrective action, so that
the actual matches the plan