Engineering Project Management

Prof. Dr. Nabil I. El SawalhiProfessor of Construction Management

Chapter 7

Control

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Introduction• Monitoring and Control are opposite sides of selection and

planning

– bases for selection dictate what to monitor

– plans identify elements to control

• Monitoring is collection, recording, and reporting of information

• Control uses monitored information to align actual performance with the plan

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Plan-Monitor-Control Cycle

• Closed loop process

• Planning-monitoring-controlling effort often minimized to spend time on “the real work”

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Project Authorization and Expenditure Control System Information Flow

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Designing the Monitoring System

• Identify special characteristics of performance, cost, and time that need to be controlled

– performance characteristics should be set for each level of detail in the project

• Real-time data should be collected and compared against plans

– mechanisms to collect this data must be designed

• Avoid tendency to focus on easily collected data

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DATA COLLECTION AND REPORTING

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Formats of Data

• Frequency Counts

• Raw Numbers

• Subjective Numeric Ratings

• Indicators and Surrogates

• Verbal Characterizations

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Data Analysis• Aggregation Techniques

• Fitting Statistical Distributions

• Curve Fitting

• Quality Management Techniques

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Project Control

• The aim of control is to ensure that project’s status is reported in consistent, cost-effective and timely manner to PM to enable any necessary actions can be taken in timely manner.

• The Control Model is “Plan-do-Review”.

• Do will take the following forms:

• Do nothing if work progressing as planned.

• Refer on if the change lies outside control of the project team.

• Change the plan, if there is deviation.

• Change the work, either scope or methods.

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The Role of PM

• Establish the system

• Allocate responsibilities

• Ensure that cost are properly allocated

• Ensure that payments are authorized.

• Purposes of Control

• Stewardship of Organizational Assets

– physical asset control

– human resources

– financial control

• Regulation of Results Through the Alteration of Activities

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PM monitoring

• The PM can Monitor the project by:

• Obtaining regular verbal reports;

• Progress report;

• Internal measurement procedures;

• External audit.

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Tools for Control

• Variance Analysis

• Trend Projections

• Earned Value Analysis

• Critical Ratio

cost actual

cost budgeted

progress scheduled

progress actual

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Trend Projection

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Critical Ratios with Control Limits

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Cost Control Chart

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Reporting• Reports

– Project Status Reports

– Time/Cost Reports

– Variance Reports

• Not all stakeholders need to receive same information

• Avoid periodic reports

• Impact of Electronic Media

• Relationship between project’s information system and overall organization’s information system

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Report Types

• Routine

• Exception

• Special Analysis

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Meeting Guidelines

• Meetings should be help primarily for group decision making

– avoid weekly progress report meetings

• Distribute written agenda in advance of meeting

• Ensure everyone is properly prepared for meeting

• Chair of meeting should take minutes

– avoid attributing remarks to individuals in the minutes

• Avoid excessive formality

• If meeting is held to address specific crisis, restrict meeting to this issue alone

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Virtual Reports, Meetings, and Project Management

• Use of the Internet

• Use of Software Programs

• Virtual Project Teams

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Earned Value Analysis

• It is an industry standard way to:

• measure a project’s progress,

• forecast its completion date and final cost, and

• provide schedule and budget variances along the way.

By integrating three measurements, it provides consistent, numerical indicators with which you can evaluate and compare projects.

• Knowing where you are on schedule?

• Knowing where you are on budget?

• Knowing where you are on work accomplished

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• It compares the PLANNED amount of work with what has actually been COMPLETED, to determine if COST , SCHEDULE, and WORK ACCOMPLISHED are progressing as planned.

• Work is “Earned” or credited as it is completed.

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Earned Value• Earned Value analysis (EVA) compare the value of work done

with the value of work that should have been done.

• Budget cost of work scheduled(BCWS) is the value of work that should have been done at a given point of time. This take the work planned to have been done and the budget for each task and indicates the portion of the budget planned to have been used.

• Budget cost of work performed (BCWP)is the value of the work done at a given point of time. This take the work that has been done and the budget for each task and indicate what portion of the budget ought to have been used to achieve it.

• Actual Cost of work performed (ACWP)

• Productivity factor (PF) is the ratio of estimated man-hours to the actual man-hours.

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• SV = schedule variance= (BCWP-BCWS). Negative number imply that the work is behind schedule.

• CV= Cost Variance= (BCWP-ACWP) negative number implies a current budget overrun.

• Variance at completion is the budget at completion (BAC) minus the estimate at completion.

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Typical S Curve

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Variances

• Cost/Spending Variance

EV (Earned Value) – AC (Actual Value)

• Schedule Variance

EV – PV (Planed Value)

• CPI (Cost Performance Index). value under 100 means that project is over budget

EV/AC= BCWP/ACWP

• SPI (Schedule Performance Index). value under 100 means that project is over budget or behind

• EV/PV= BCWP/BCWS

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Additional Items of Interest

• Estimated (Remaining Cost) to Completion

ETC = (BAC - EV)/CPI

• (Total Cost) Estimated at Completion

EAC = ETC + AC•CSI: Cost Schedule Index (CSI=CPI x SPI)

The further CSI is from 1.0, the less likely project recovery becomes.

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Example on EVA

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S-Curve analysis

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Example

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On Day X:

PLANNED VALUE (Budgeted cost of the work scheduled, BCWS) =

18 + 10 + 16 + 6 = 50

EARNED VALUE (Budgeted cost of the work performed, BCWP) =

18 + 8 + 14 + 0 = 40

ACTUAL COST (of the work performed , ACWP) =

45 (from your project tracking - not evident in above chart)

Example Project

• Plans to spend $100K in each of first 4 weeks (baseline budget, per documented plan)

• Actuals at end of week 4: $325K– BCWS = $400K ($100K x 4)

– ACWP = $325K

• What conclusions can you draw?

• Under budget?

• Is project on schedule?

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• Suppose BCWP is $300K

– How is this determined?

• What conclusions now?

– SV = BCWP – BCWS

– SV = $300k - $400K = -$100K

• Behind schedule, but what does the $100K in variance really mean?

– CV = BCWP – ACWP = $300K - $325K

• Over budget by $25K

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• How can you use this information?

– Careful analysis of variance and trends

– Resetting schedule or budget, when appropriate

• Variance Analysis Questions

– What is the problem causing the variance?

– What is the impact on time, cost and performance?

– What is the impact on other efforts, if any?

– What corrective action is planned or under way?

– What are the expected results of the corrective action?

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• Extraordinary variance or alarming trends may be cause for reset or cancellation of a project, but where do you draw the line?

• How much variance to allow depends on a number of factors:

– Life-cycle phase

– Length of life-cycle phase

– Length of project

– Type of estimate

– Accuracy of estimate

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Performance Index Trends

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Ideal Performance Index

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