Monitoring and Information Systems Project monitoring defined The plan-monitor-control cycle Designing the monitoring system Behavioral aspects of monitoring Earned value analysis Earned value examples

Project Monitoring Defined Collecting, recording, and reporting information concerning any and all aspects of project performance that the project manager or others wish to know

Effective Monitoring Precedes Control In Chapter 11, we’ll look at Project Control Ensuring that actuals mesh with the plan But effective control requires good information Such pertinent and timely information comes from an accurate monitoring system

Monitoring Has Several Uses The primary use is project control Ensuring that decision-makers have timely information enabling effective control over the project Project Monitoring has secondary uses Project auditing “Lessons learned” Reporting to client and senior management

The Planning-Monitoring-Controlling Cycle Effective monitoring and control begins with good project planning What are the critical areas? How and when can progress be measured? Who gathers and reports info, to whom? The plan-monitor-control cycle continues through the entire project

Project Control Information Flow, Figure 10-1

Designing the Monitoring System 1. Start with the key factors to be controlled Pareto analysis: a relatively few activities determine most of the project’s success Use the project plan to identify items to be monitored Although other areas might be added also

Designing the Monitoring System (cont’d) 2. Develop measurement systems Measure results, not activity; outputs, rather than inputs Extract performance, time and cost goals from project plans Avoid tendency to focus on that which is easily measurable

Designing the Monitoring System (cont’d) 3. Collecting Data: Most data falls into one of five categories, as follows (with examples) Frequency counts: tally of occurrences . . . Raw numbers: dates, dollars, percents, specs . . . Subjective ratings: numerical ranking, red-yellow-green assessments . . . Indicators: surrogate measures of merit . . . Verbal measurement: oral or written characterizations . . .

Designing the Monitoring System (cont’d) 4. Reporting on Data Collected: To turn data into information, it must be contextualized: Reporting must be timely Data must be analyzed Trends: Getting better or worse? Comparables: Performance compared to specs, past performance, standard hours, etc. Statistical analysis Causation and correction

Reporting and Information Flows, Figure 10-5

Some Behavioral Aspects of Monitoring Systems Effective monitoring reduces surprises, and this can increase trust, morale Some reporting bias is inevitable, but dishonesty is unacceptable “Shooting the messenger” today just creates concealment tomorrow

Earned Value Analysis (EVA) Needed: An objective way to measure overall project performance The problem comparing actual expenditures to baseline plan is that it ignores the amount of work actually completed Thus, Earned Value Analysis A sort of cost accounting for projects

Estimating Percent Complete The 50-50 estimate The 0-100 percent rule Critical input use The proportionality rule

Five Important Terms BCWS: The plan, integrating schedule and budget BCWP: What you planned to spend for work actually done ACWP: Actual dollars spent at a point in time, for the work actually done STWP: Time scheduled for work performed ATWP: Actual time for work performed

More Terms BAC: Budget at completion EAC: Estimated cost at completion ETC: Estimated cost to complete

Indices Help Visualize Performance Projects on cost, on schedule will have indices = 1.0 Indices below 1.0 are unfavorable Cost Performance Index (CPI) = BCWP/ACWP Schedule Performance Index (SPI) = BCWP/BCWS Cost-Schedule Index (CSI) = CPI X SPI

Five Relationships Cost Variance (CV) = BCWP - ACWP Schedule Variance (SV) = BCWP - BCWS Time Variance (TV) = STWP - ATWP Estimated Cost to Complete (ETC) = (BAC – BCWP)/CPI Estimate Cost at Completion (EAC) = ACWP + ETC

Possible Arrangements, Figure 10-8

Example Assume a work package expected to be finished today, at cost of $1500. But you’re only 2/3 complete, and you’ve spent $1350. CPI = BCWP/ACWP = $1000/$1350 = .74 SPI = BCWP/BCWS = $1000/$1500 = .67 CSI = CPI X SPI = .74 X .67 = .49

Example (cont’d) Then you can calculate the estimated cost to complete the project (ETC) and the estimated cost at completion (EAC) ETC = (BAC – BCWP)/CPI = $(1500 – 1000)/.74 = $676 EAC = ACWP + ETC = $1350 + $676 = $2026

Another Earned Value Example A 10-day project, today is day 7 Activity Predecessor Duration (Days) Budget ($) Actual Cost(s) % Complete a - 3 600 680 100 b 2 300 270 c 5 800 80 d 4 400 25 e

PERT AON Diagram, Figure 10-9

Example Baseline Budget Using 50-50 Rule, Figure 10-10

Example Status at Day 7, Figure 10-11

Example Earned Value Chart Day 7, Figure 10-12

MSP Budget Sheet, Figure 10-13

Case: Earned Value at Texas Instruments

Case: Earned Value at Texas Instruments (cont’d) Graphic presentation clearly depicts project’s history More crucial, though, is using EVA as a management tool. This requires: Timely, accurate data collection Expeditious data analysis Appropriate and efficient corrective action