1 PROJECT MONITORING & CONTROL

2 Project Monitoring and Control Why do we monitor? What do we monitor? When to we monitor? How do we monitor?

3 Why do we monitor? Simply because we know that things don’t always go according to plan (no matter how much we prepare) To detect and react appropriately to deviations and changes to plans

4 What do we monitor ? Men (human resources) Machines Materials Money Space Time Tasks Quality/Technical Performance

5 What do we monitor ? Inputs Time Money Resources Material Usage Tasks Quality/Technical Performance Outputs  Progress  Costs  Job starts  Job completion Also - Monitor Changes (design spec) - Quality performance

6 When do we monitor?  End of the project  Continuously  Regularly  Logically  While there is still time to react  As soon as possible  At task completion  At pre-planned decision points (milestones)

7 Where do we monitor? At head office? At the site office? On the spot? Depends on situation and the ‘whats’

8 How do we monitor Through meetings with clients, parties involved in project (Contractor, supplier,etc.) For schedule – Update CPA, PERT Charts, Update Gantt Charts Using Earned Value Analysis Calculate Critical Ratios Milestones Reports Tests and inspections Delivery or staggered delivery PMIS (Project Management Info Sys) Updating

9 Meetings – Some monitoring issues What problems do you have and what is being done to correct them? What problems do you anticipate in the future? Do you need any resources you do not yet have? Do you need information you do not have yet? Do you know anything that will give you schedule difficulties? Any possibility your task will finish early/late? Will your task be completed under/over/on budget?

10 Project Control Cycle PLAN Specifications Project Schedule Project budget Resource plan Vendor contracts MONITOR Record status Report progress Report cost COMPARE Actual status against plan -Schedule -Cost ACTION Correct deviations from plan RE-PLAN as necessary

11 Project Control Control – process and activities needed to correct deviations from plan Control the triple constraints –time (schedule) –cost (budget, expenses, etc) –performance (specifications, testing results, etc.)

12 Techniques for control Earned Value Analysis Critical Ratio

13 Earned Value Analysis One way of measuring overall performance using an aggregate performance measure - earned value Earned value of work performed for those tasks in progress obtained by multiplying the estimated percent completion for each task by the planned cost for that task If total value of the work accomplished is in balance with the planned (baseline) cost, then top mgmt has no particular need for a detailed analysis of individual tasks Earned value concept – combines cost reporting & aggregate performance reporting into one comprehensive chart next page)

14 Earned Value Chart – basis for evaluating cost & performance to date

15 Earned Value Analysis - Variances 4 types of variances; time variance – subtract the actual time from the time scheduled for the value completed spending variance – actual cost less value completed schedule variance – value completed less the baseline plan total variance – sum of the latter two;

16 Earned Value Variance - Calculations Spending variance = actual cost – value completed + Schedule variance = value completed – baseline cost = Total variance = actual cost – baseline cost

17 EXAMPLE A project at day 70 exhibits an actual cost of RM 78,000, a scheduled cost of RM 84,000, and a value completed of RM 81,000. What are the total variance, spending variance, and schedule variance. Estimate the time variance. Day 70 RM Baseline – scheduled cost – 84,000 Actual cost – 78,000 Value completed – 81,000

18 Solution Spending variance = actual cost – value completed + Schedule variance = value completed – baseline cost = Total variance = actual cost – baseline cost Spending variance = 78,000 – 81,000 = -3,000 (Cost under run) Schedule variance = 81,000 – 84,000 = -3,000 (behind schedule) Total variance = 78,000 – 84,000 = -6,000 Estimated Time variance = Schedule variance/(slope of Scheduled cost) = -3,000/ [84,000/70 days] = days (behind schedule)

19 Critical ratio Sometimes, especially large projects, it may be worthwhile calculating a set of critical ratios for all project activities The critical ratio is actual progress x budgeted cost scheduled progressactual cost If ratio is 1 everything is probably on target The further away form 1 the ratio is, the more we may need to investigate

20 Critical ratio example Calculate the critical ratios for the following activities and indicate which are probably on target and need to be investigated. ActivityActual progress Scheduled Progress Budgeted Cost Actual cost Critical ratio (CR) A4 days 6040 B3 days2 days50 C2 days3 days3020 D1 day 2030 E2 days4 days25

21 Critical ratio example Can be on schedule and below budget (Act A) Why so good? Cutting corners? Can be behind schedule but below budget (Act C) Can be on budget but physical progress lagging (Act E) Can be on schedule but cost running higher than budget (Act D) On budget ahead of schedule (Act B)

22 Summary Need proper project monitoring and control mechanisms Tools available to help in monitoring and controlling activities There are human control and management aspects not covered here