Copyright 2012 John Wiley & Sons, Inc. Chapter 10 Monitoring and Information Systems

Copyright 2012 John Wiley & Sons, Inc. Chapter 11 Project Control

10-3 Terms Monitoring - Collecting, recording, and reporting information concerning any and all aspects of project performance Controlling - Uses the data supplied by monitoring to bring actual performance into compliance with the plan Evaluation - Judgments regarding the quality and effectiveness of project performance

10-4 Earned Value Analysis Having covered monitoring parts – Timing and coordination between individual tasks is important Must also monitor performance of entire project – Crux of matter should not be overlooked One way is by using an aggregate performance measure called earned value

10-5 The Earned Value Chart and Calculations Actual against baseline ignores the amount of work accomplished Earned value incorporates work accomplished Multiply the estimated percent work complete for each task by the planned cost Only need percent complete estimate for tasks currently in progress

10-6 The Earned Value Chart Figure 10-6

10-7 Earned Value (EV) EV = BAC x % complete Earned Value gives a measurement of how much has been accomplished in monetary terms, based on the “value” inherent in the budget BAC is the budget at completion

10-8 Variances Variances can help analyze a project 1. A negative variance is bad 2. Cost and schedule variances are calculated as the earned value minus some other measure Will look at some of the more common ones

10-9 Cost Variance (CV) CV = EV – AC Negative variance indicates a cost overrun Magnitude depends on the costs

10-10 Schedule Variance (SV) SV = EV – PV Negative variance indicates you are behind schedule Measured using costs

10-11 Time Variance (TV) TV = ST – AT Negative variance indicates you are behind schedule ST = scheduled time to get this far AT = actual time to get this far

10-12 Indices Cost Performance Index CPI = EV/AC Schedule Performance Index SPI = EV/PV Time Performance Index TPI = ST/AT Cost Schedule Index CSI = CPI x SPI = EV 2 /(AC)(PV)

10-13 “To complete” and “At Completion” Project manager reviewing what is complete and what remains Final cost and final completion date are moving targets The project manager compiles these into a to complete forecast Actual + forecast = final date and cost at completion

10-14 ETC and EAC ETC = (BAC – EV)/CPI = EAC - AC EAC = ETC + AC = AC / % complete where, ETC = Estimated cost to complete BAC = Budget at completion EV = Earned value CPI = Cost performance index EAC = Estimated cost at completion AC = Amount expended to date (actual cost)

11-15 Critical Ratio Control Charts Table 11-1

11-16 Focus of Control Scope Cost Time

11-17 Scope Technical problems Technical difficulties Quality problems Client wants changes Interfunctional complications Technological breakthroughs Intrateam conflict Market changes

11-18 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

11-19 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

11-20 Three Types of Control Processes Cybernetic control Go/no-go control Post control

11-21 Cybernetic Control A system that is constantly monitored When a deviation is spotted, corrective action is taken Cybernetic controls are not common in projects Negative feedback loop

11-22 A Cybernetic Control System Figure 11-2

11-23 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

11-24 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

11-25 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

11-26 Phase-Gated Processes Controls the project at various points throughout its life cycle Most commonly used for new product/service development projects Project must pass gate to continue funding

11-27 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”

11-28 Postcontrol Report Sections The project objectives Milestones, gates, and budgets The final report on project results Recommendations for performance and process improvement

11-29 Control of Change and Scope Creep Uncertainty about the technology Increase in the knowledge base or sophistication Modification of the rules applying to the project Coping with changes is perceived as the most important problem facing project managers

11-30 Purpose of Formal Change Control System Review all changes Identify all task impacts Translate impacts into scope, cost, and schedule Evaluate the benefits and costs

11-31 Purpose of Formal Change Control System Continued Identify alternative changes Accept or reject Communicate Ensure implementation Report

11-32 Guidelines for an Effective Change Control Procedure Include change process in all agreements Issue a change order for all approved changes Project manager must be consulted Changes must be approved in writing Master plan must be amended

11-33 Control as a Function of Management Control is usually exercised through people Control is exercised when monitoring flags a problem The control may come from any level of management The goal of the control is to get the project back on track

11-34 Human Response to Controls Cybernetic controls – Response tends to be positive Go/no-go controls – Response tends to be neutral or negative Post controls – See as a report card – Response depends on “grade”

11-35 Balance in a Control System Placing too much weight on easy-to- measure factors Emphasizing shorter-run results at the expense of longer-run objectives Ignoring changes in the environment or goals Overcontrol by the top management “If it is not measured, it is not important”

11-36 Control of Creative Activities Creativity is hard to control Too much control will stifle creativity Three general approaches – Process Review – Personnel Reassignment – Control of Input Resources

11-37 Formal Change Control System Review requests for changes Identify impacts Translate impacts to plan Evaluate cost and benefits Identify alternative changes Accept or reject Communicate Ensure implementation Report

11-38 Change Guidelines All contracts specify how change will be handled Any change requires a change order Project manager must be consulted Must be approved in writing Master plan should reflect changes