Project Management: Chapter4: Project Monitoring & Control Process

Project Management: Chapter3: Project Planning & Scheduling
August 27, 2017
Ethics Theory
September 6, 2017

1.Project Monitoring & Control Process

2. Monitoring Process (on a regular basis)

2.1 Monitoring and controlling activities

2.2 Key Results from monitoring process

3. Techniques to evaluate project performance

3.1 Earned Value Analysis

3.2 The Critical Ratio

3.3 Line of Balance

3.4 Graphical Evaluation and Review Technique (GERT)

3.5 Review Meetings

4. Project Crashing and Time-Cost Trade-Off

 

1. Project Monitoring & Control Process

  • Evaluation and comparison of actual measured results against those planned is the fundamental principle of project monitoring process.
  • Whenever there is a variance, corrective action is required to keep the project on schedule and to budget.
  • The inputs are the project plan and progress reports that contain data collected from the project team.
  • Where progress deviates significantly, and this usually means outside of a predetermined tolerance limit, it is important to identify the underlying causes and take corrective action.

Following diagram shows the project monitoring cycle to be followed at regular period of intervals of the project duration.

 

2. Monitoring Process (on a regular basis)

  • Collect.
    • Get the data about the current status of your project.
  •  Measure and Compare.
    • Compare with baseline plan, highlight any deviation, make a projection based on current data.
  • Assess and Re-plan.
    • Decide whether corrective actions are necessary.
    • If so, plan, document, and take the corrective actions.

2.1 Monitoring and controlling activities

  • Involves tracking, reviewing, and regulating project progress
  • Includes status reporting, progress measurement, and forecasting
  • Reports on scope, schedule, cost, resources, quality, and risks
  • Controls project and project document changes
  • Includes control of scope, schedule, costs, and risks
  • Formalizes acceptance of deliverables
  • Records quality control results
  • Implements risk treatment plans and actions
  • Administers suppliers

2.2 Key Results from monitoring process

  • Progress and status reports
  • Plan updates
  • Risks registers
  • Change requests
  • Work products/deliverables

Ref: http://www.free-management-ebooks.com/faqpm/processes-05.htm

3. Techniques to evaluate project performance

3.1 Earned Value Analysis

Objective:

  • To measure the progress of an activity, deliverable and/or project by comparing the actual value to planned value, thereby indicating the probability of meeting the scope, time & cost budget of the activity, deliverable and/or project, and need for any corrective actions.
  • To analyze the project performance, calculate the variance for schedule and cost and indicates where the project stands in comparison to the estimates calculated earlier for this point in time.

Many a times one could easily be on time, however may overspend, or may be on time & within budget however scope may be incomplete. In simple terms, EV analysis is better than comparing actual to planned results or by simply guessing the project status.

Ref: http://www.spmbook.com/downloads/slides/pdf/c03.08-09-executionmonitoringcontrol.key.pdf

Definitions

Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS)

Originally planned cost of the work that should have been done by this time

 

Actual Cost (AC) or Actual Cost of Work Performed (ACWP) Actual cost expenses on this project upto this time
 

Earned Value (EV) or Budgeted cost of Work Performed (BCWP)

 

Estimated cost of budgeted work completed

Budget at Completion (BAC) Total budget for the project
Estimate At Completion (EAC) Estimated final cost of the project
Estimate To Completion (ETC) Estimated cost of the remaining work of the project

 

Description EVA Formulas  Result
Cost Variance (CV) CV = EV – AC Positive value is good. Negative value unfavourable.
Schedule Variance (SV) SV = EV – PV Value below 1.0 = below par performance. Value above 1.0 = above par performance The further away the ratio is from 1.0 the more urgent need to investigate
Cost Performance Indicator (CPI) CPI = EV / AC, compares performed to actual cost  >1 means project efficient, <1 means project inefficient
Schedule Performance Indicator (SPI) SPI = EV / PV, compares work performed to work planned  >1 means project ahead of schedule, <1 means project behind schedule
Estimate At Completion (EAC) EAC = BAC/CPI  
Estimate To Complete (ETC) ETC = (BAC – EV) / CPI  

Example

Assume a project that has exactly one task. The task was baselined at 100 hours, but 110 hours have been spent and the estimate to complete is 10 additional hours. The task was to have been completed already. Assume an hourly rate of $100 per hour.

Description Formulae Result
PV Hourly Rate * Total Hours Planned or Scheduled 100*100 = 10,000
AC Hourly Rate * Total Hours Spent 100*110 = 11,000
% Complete AC divided by estimated cost at completion which is  11,000 plus cost of 10 additional hours 11000/(11000+1000) = 91.667%
EV Baselined Cost * % Complete Actual 9166.667 (baseline of 10,000 * 91.667% complete)
BAC Baselined Effort in hours * Hourly Rate 10000 (100 hours * 100) indicates initially budget signed off for the project
EAC AC + ETC 12000 (11000 + 1000) notice this is over budget
VAC BAC – EAC -2000 (10000 – 12000) indicates additional funds required to complete work
% Completed Planned PV / BAC 100% (10000/10000)
% Completed Actual AC / EAC 91.7% (11000/12000) lesser than planned completion
SV Earned Value (EV) – Planned Value (PV) -833.33 (9166.667 – 10000) negative schedule variance or behind schedule
SPI SPI = EV / PV 0.9167 (9166.667 / 10000)  indicating poor schedule performance
CV Earned Value (EV) – Actual Cost (AC) -1.833.33 (9166.67 – 11000) indicating a cost overrun
CPI Earned Value (EV) /Actual Cost (AC) 0.833 (9166.667 / 11000) indicating over budget

Ref: https://www.simplilearn.com/whats-in-earned-value-management-rar84-article

3.2 The Critical Ratio

  • The critical ratio (CR) is the product of CPI and SPI.  It can also be called the cost-schedule index (CSI).
  • It is used as an indicator of the overall project health

CR = CPI x SPI.

For the above project,    CR = 0.833*0.9167 = 0.764.

  • A CR of 1.00 indicates that the overall project performance is on target.
  • This may result from both CPI and SPI being close to target, or, if one of these indices suggests poor performance, the other must be indicating good performance.
  • This allows some trade-offs to reach the desired project goals.

A graph of the critical ratio over time provides a quick indicator of trends in the overall project performance, and of the impact of any corrective actions. These graphs may be very effective in project reviews

3.3 Line of Balance

The  Line of Balance (LOB) Scheduling Technique was originated by the Goodyear Company in the early 1940’s for the programming and control of both repetitive and non‐repetitive projects.

The Line‐of‐Balance also known as the Repetitive Scheduling Method (RSM), Location Based Scheduling, Vertical Production Method or Vertical Scheduling Method.

  • Line of Balance (LOB) is a method of showing the repetitive work that may exist in a project as a single line on a graph.
  • A LOB Chart shows the rate at which the work that makes up all of the activities has to be undertaken to stay on schedule.
  • The relationship of one trade or process to the subsequent trade or process is defined by the space between the lines.

A simple diagram in which line shows location and time at which a certain crew will be working on a given operation is known as LOB. It is used on repetitive work such as constructing multiple dwelling units, when used on linear work such as roads and railways the technique is more accurately called Time/Location Charts

The purpose of the LOB method is to ensure that the many activities of a repetitive production process stay “in balance” that is, they are producing at a pace which allows an even flow of the items produced through a process and at a speed compatible with the goals set forth in a plan.

Advantages of LOB schedule

  • Clearly shows the amount of work taking place in a certain area at a specific time of the project.
  • Has the ability to show and optimize the resources used for large number of repeated activities, executed in several zones or locations.
  • Easier cost and time optimization analysis because of all the information available for each activity in the project.
  • Ease of setup and its superior presentation and visualization.
  • Easier to modify, update and change the schedule.
  • Better managing of all the various sub-contractors in the project.
  • Allows for simpler and clearer resource management and resource optimization functions.
  • Visualization of productivity and location of crews.
  • It allows project managers to see, in the middle of a project, whether they can meet the schedule if they continue working as they have been.

3.4 Graphical Evaluation and Review Technique (GERT)

Graphical Evaluation and Review Technique, commonly known as GERT, is a network analysis technique used in project management that allows probabilistic treatment of both network logic and estimation of activity duration. The technique was first described in 1966 by Dr. Alan B. Pritsker of Purdue University and W.W. Happ.

Advantages:

  • GERT approach addresses the majority of the limitations associated with PERT/CPM technique. GERT allows loops between tasks.
  • Allows for conditional and probabilistic treatment of logical relationships
  • GERT considers both deterministic and probabilistic branching unlike PERT. It incorporates both in the network analysis.
  • GERT allows additional branching features not provided by CPM or PERT.

Disadvantages:

  • GERT technique is the complex programme (Monte Carlo simulation) required to model the GERT system

3.5 Review Meetings

  • The most important resources in projects are people.
  • The actions that project people take towards their assigned tasks leads to task completion on-time or delayed.
  • In a worst case scenario, a task would not be completed.
  • Project control techniques targeted at people must enable the timely completion of tasks.

Delays and incomplete tasks could lead to project delays, depending on whether the activities are in the critical path. In addition, project costs get impacted negatively. Delayed tasks translate to effort that has not been budgeted for, therefore cost of that task to completion goes up.

Some simple, yet effective, project control techniques that you can use to ensure timely completion of tasks are:

  • Conducting Daily Team Meetings: As the name implies, this activity involves having a project huddle in which team members give a status update of their tasks. Daily team meetings also involve identifying dependencies and risks to the assigned tasks.
  • Conducting Project Health Meetings: These meetings involve the larger team since many projects are broken into sub-projects, intra-project dependencies are analyzed. Various factors are used to access the project health. For example, you can use earned value analysis, team motivation, and client satisfaction.

4. Project Crashing and Time-Cost Trade-Off

Project duration can often be reduced by assigning more labor to project activities, in the form of overtime, and by assigning more resources (material, equipment, and so on). However, additional labor and resources increase the project cost. Thus, the decision to reduce the project duration must be based on an analysis of the trade-off between time and cost.

Project crashing

  • It is a method for shortening the project duration by reducing the time of one (or more) of the critical project activities to less than its normal activity time.
  • This reduction in the normal activity time is referred to as crashing.
  • Crashing is achieved by devoting more resources to the activities to be crashed.

“Crashing an activity” (“Crashing the network”):

  • Reducing the time required to complete an activity (in hopes that this will reduce the completion time of the entire project) by assigning additional resources to that activity.
  • But reducing the duration time of the activities on the critical path may change the critical path.

Some of the terms generally used in this process are

  • Normal Time (NT): the expected time to complete an activity
  • Normal Cost (NC): the cost to complete the activity in its normal time
  • Crash Time (CT): the shortest possible time in which the activity can be completed
  • Crash Cost (CC): the cost to complete the activity in the shortest possible time (ie., the cost to complete the activity in its crash time)
  • Crash Cost per time period(Cost Slope) = (CC – NC) / (NT – CT)

  • As projects continue over time, they consume indirect costs, including the cost of facilities, equipment, and machinery, interest on investment, utilities, labor, personnel costs, and the loss of skills and labor from members of the project team who are not working at their regular jobs.
  • Financial penalties for not completing a project on time were also incurred. For example, many construction contracts and government contracts have penalty clauses for exceeding the project completion date.
  • Project crashing costs and indirect costs have an inverse relationship; crashing costs are highest when the project is shortened, whereas indirect costs increase as the project duration increases. This time-cost relationship is illustrated in the above figure. The best, or optimal, project time is at the minimum point on the total cost curve.

Project crashing Example:

Critical path for the house building network in following figure is activities 1-2-3-4-6-7 and the project duration was 9 months, or 36 weeks. Suppose the home builder needed the house in 30 weeks and wanted to know how much extra cost would be incurred to complete the house by this time.

Following table represents the time and costs before and after project crashing

 

Activity Normal Time 9Weeks) Crash Time (Weeks) Normal Cost Crash Cost Total allowable Crash Time (Weeks) Crash Cost per Week
1-2 12 7 3000 5000 5 400
2-3 8 5 2000 3500 3 500
2-4 4 3 4000 7000 1 3000
3-4 0 0 0 0 0 0
4-5 4 1 500 1100 3 200
4-6 12 9 50000 71000 3 7000
5-6 4 1 500 1100 3 200
6-7 4 3 15000 22000 1 7000
 Total     75000 110700    

 

The total cost of crashing the project to 30 weeks is 2,500. The contractor could inform the customer that an additional cost of only 2,500 would be incurred to finish the house in 30 weeks.

Ref:

Ref: http://www.free-management-ebooks.com/faqpm/processes-05.htm

Ref: http://www.spmbook.com/downloads/slides/pdf/c03.08-09-executionmonitoringcontrol.key.pdf

http://www.prenhall.com/divisions/bp/app/russellcd/PROTECT/CHAPTERS/CHAP17/HEAD05.HTM

 

 

4 Comments

  1. Vikram Dhole says:

    How to download the noted

  2. bhupendra singh says:

    sir in project management there is no chapter 2 only chapter 1,3 and 4 are there. sir, please clear that this is a mistake or one chapter is left.

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