Project Management Part 6 Project Control

1. Project ManagementPart 6Project Control

2. Topic Outline: Project Control • Project control steps • Measuring and monitoring system • Resource allocation and resource conflicts • Project accelerating/crashing • Resource loading and leveling • Project control exercise • Project tracking tools • Earned value analysis • Scope creep and change control system Part 6 - Project Control

3. Project Control • Project control taking corrective actions to keep the project on target toward meeting its goals: time, cost, performance • The project manager has final responsibility for project control • There are many ways to exert control; the PM must decide which is most appropriate • Resource allocations, funding decisions, personnel assignments, change in priorities Part 6 - Project Control

4. Project Control – 3 Steps • Measuring & Monitoring • Identifying/tracking key performance metrics • Evaluating • Analyzing causes of problems and potential corrective actions • Correcting • Taking corrective actions to bring project performance back in line with goals Part 6 - Project Control

5. Measuring & Monitoring System Many issues must be decided for a good measuring and monitoring system • What should be measured and monitored? • How should it be measured? • Who should monitor it? • How should it be monitored? • When should it be monitored? • Where should info be stored? • Who should have access to info? Part 6 - Project Control

6. Project Reports as a Control Tool • Reports are one way to give many different people a chance to look for potential problems • They also can keep everyone updated about the current project status • Everyone concerned with the project should receive reports containing info. relevant to issues under their control • What types of info. should an engineer working on a project receive, vs. senior management? • When should these reports be provided? Part 6 - Project Control

7. Resource Allocation • Resource allocation can be used as a control mechanism • Allocating more, less, or different physical resources can affect the progress of activities, and can affect their cost and/or the quality of outputs/deliverables as well • Assigning more, less, or different employees also can affect project performance • Allocating more or less funds to an activity is yet another way to affect project performance Part 6 - Project Control

8. Resource Conflicts • Sometimes a limited resource is needed (at the same time) by several activities in one project or by different activities in multiple projects (so some of the activities must wait) • Setting priority rules for which activity get the constrained resource first can be a means of project control • In the case of multiple projects, the goals and importance of all the projects should be considered Part 6 - Project Control

9. Resource Conflict Rules Example: Suppose two tasks from different projects need to use the radiation testing lab chamber at the same time. Which gets it first? • task with the least slack time • task that needs the least time in the lab • task that needs the most time in the lab • task with the most following activities • task from the more important or profitable project • arbitrary—flip a coin Part 6 - Project Control

10. Project Accelerating/Crashing • Project crashing (or accelerating a project) is another way to exert project control • “Crashing” a project means shortening its duration, or speeding it up (doing it quicker) • Unfortunately, this almost always costs more • Sometimes crashing is done because earlier activities were delayed; other times it is done because the customer is willing to trade a higher cost for a shorter project time frame Part 6 - Project Control

11. Project Crashing Rules: • only crash critical activities • crash the cheapest critical activity first • assume each task can be crashed one day at a time (simplifying assumption, but not necessary) • all critical paths must decrease by one day, in order for the project duration to decrease by one day Crashing example Part 6 - Project Control

12. Resource Loading • For each resource during each time period, determine the total amount of resource time required by all activities combined • Compare this total time with the capacity of the resource during each time period • Identify resources that are over-utilized (or overloaded) during any time period • What should be done about it? Part 6 - Project Control

13. Resource Leveling • Re-scheduling some activities to eliminate resource overloading in certain time periods • Try to delay activities that have extra slack time first—this will not delay the project • If that doesn’t work, then activities must be delayed which will delay the project due date • Popular project management software will identify resource overloading and will perform resource leveling automatically if requested Part 6 - Project Control

14. Project Control Exercise Envirosafe Project case (30 minutes) • Divide into small groups • Read case • Discuss why the project was late and over budget; root causes • Recommend control procedures and other changes that should prevent future problems Part 6 - Project Control

15. Project Tracking Tools • Popular project management software allows you to easily track cost and schedule performance as the project progresses • This provides a useful tool for project control • The current cost and schedule status must be entered routinely (daily or weekly) • For each activity, you must estimate: actual cost so far, and percent complete • Earned Value Analysis is a common tracking tool that provides performance metrics Part 6 - Project Control

16. Earned Value Analysis • Earned Value Analysis compares the current project status with the original (baseline) plan • It computes several performance metrics for individual activities and for the entire project • It focuses on cost and schedule performance • It’s a useful tool for project control • Popular project management software computes these metrics Part 6 - Project Control

17. Earned Value • Earned Value for a task = (budgeted cost of task)*(% completion of task) • It’s often difficult to estimate % completion of a task; 4 approaches once task is started: • assume 50% completion until task is finished • assume 0% until task is finished • use % of budgeted cost or time used so far • best guess of knowledgeable person (best) • Earned Value for the entire project is the summation of earned values for all tasks Part 6 - Project Control

18. Earned Value Metrics • BCWS—Budgeted Cost of Work Scheduled (PV) • baseline cost of scheduled work • ACWP—Actual Cost of Work Performed (AC) • actual cost of work actually performed so far • BCWP—Budgeted Cost of Work Performed (EV) • budgeted cost of work actually performed so far • Cost variance (CV) = BCWP – ACWP • Schedule variance (SV) = BCWP – BCWS • BAC—Budgeted cost At Completion Part 6 - Project Control

19. Earned Value Chart • 3 lines on chart: • Baseline—planned cost over time (BCWS) • Actual Cost line (ACWP) • Earned Value line (BCWP) • Schedule variance (negative is bad) • Cost variance (negative is bad) • Example chart on next slide • describe project performance in this example Part 6 - Project Control

20. Performance Cost Sched. Cost schedule plan (baseline) Dollars ACWP Cost variance Actual cost BCWS Schedule variance BCWP Value completed (Earned Value) Now Time Earned Value Chart 1 Part 6 - Project Control

21. Performance Cost Sched. ACWP Dollars BCWS baseline BCWP =EV Now Time Earned Value Chart 2 Part 6 - Project Control

22. Performance Cost Sched. Dollars BCWP = EV BCWS baseline ACWP Now Time Earned Value Chart 3 Part 6 - Project Control

23. Performance Cost Sched. Dollars BCWS baseline ACWP BCWP = EV Now Time Earned Value Chart 4 Part 6 - Project Control

24. Performance Cost Sched. Dollars BCWS baseline BCWP = EV ACWP Now Time Earned Value Chart 5 Part 6 - Project Control

25. Performance Cost Sched. Dollars BCWS baseline BCWP =EV ACWP Now Time Earned Value Chart 6 Part 6 - Project Control

26. Earned Value Metrics • BCWS—Budgeted Cost of Work Scheduled (PV) • baseline cost of scheduled work • ACWP—Actual Cost of Work Performed (AC) • actual cost of work actually performed so far • BCWP—Budgeted Cost of Work Performed (EV) • budgeted cost of work actually performed so far • Cost variance (CV) = BCWP – ACWP • Schedule variance (SV) = BCWP – BCWS • BAC—Budgeted cost At Completion Part 6 - Project Control

27. CPI and SPI CPI and SPI give the same information as cost variance and schedule variance, except as a ratio instead of as a $ difference • Cost Performance Index (CPI) • CPI = BCWP / ACWP (or EV / AC) • Schedule Performance Index (SPI) • SPI = BCWP / BCWS (or EV / PV) • Values less than 1.0 are undesirable Part 6 - Project Control

28. Example Example: Budgeted cost for finished task = $850; Actual cost to date = $550; Task is 70% complete, but was scheduled to be 80% complete by now BCWS = 0.8*($850) = $680 PV (baseline) BCWP = 0.7*($850) = $595 EV ACWP = $550 AC Cost variance = BCWP – ACWP = +$45 (good) Schedule variance = BCWP – BCWS = -$85 (bad) CPI = BCWP / ACWP = 1.082 (good) SPI = BCWP / BCWS = 0.875 (bad) Part 6 - Project Control

29. ETC and EAC Two more cost metrics are ETC and EAC • Estimated (remaining cost) To Completion • ETC = (BAC – BCWP) / CPI • (note: Microsoft Project does not divide by CPI) • BAC = budgeted cost at completion = $850 • ETC = (850 – 595) / 1.082 = $235.67 • Estimated (total cost) At Completion • EAC = ETC + ACWP • EAC = 235.67 + 550 = $785.67 Part 6 - Project Control

30. Scope Creep • PM must be cautious of scope creep. Why? • Most common cause is due to the client or project team wanting to enhance the project’s deliverables • The later that changes are made, the more difficult and costly they become • Scope creep is welcome if it lowers costs or enhances the firm’s competitiveness • A change control system allows the PM to assess the impacts and desirability of potential changes before deciding to implement them Part 6 - Project Control

31. Change Control System • Review suggested changes • Assess all impacts to project goals • Evaluate advantages and disadvantages • Consider alternative changes that are better • Allow responsible parties to make decision in light of all information • Communicate changes to everyone involved • Implement changes • Summarize all changes and impacts in report Part 6 - Project Control