Project Monitoring and Control

1. Project Monitoring and Control

2. Project Monitoring and Control • Monitoring – collecting, recording, and reporting information concerning project performance that project manger and others wish to know • Controlling – uses data from monitor activity to bring actual performance to planned performance

3. Project Monitoring and Control • Why do we monitor? • What do we monitor? • When to we monitor? • How do we monitor?

4. 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

5. What do we monitor? • Progress • Costs • Job starts • Job completion • Engineering / Design changes • Variation order (VO) • Time • Money • Resources • Material Usage • Tasks • Quality/Technical Performance

6. When do we monitor? • End of the project • Continuously • As soon as possible • At task completion

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

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

9. Project Control Cycle Establish operational schedule Measure and report progress Compare actual with planned Determine effect on completion Plan/implement corrective action Update operational schedule

10. Integrated Project Control Integration management is the key to overall project success: • Coordinate the people, the plan and work required to complete the project • Focus on the big picture of the project • Make strategic decisions during critical times • Communicate key project information to senior management

11. Internal & External Project Control • Both Internal & external control systems are used to monitor & regulate project activities. • Internal Control : refers to the contractor's systems and procedures for monitoring work and taking corrective action. • External Control : refers to the additional procedures & standards imposed by the client, including taking over project coordination and administrative functions.

12. External Control • Frequent reports on overall project performance. • Reports on schedules, cost and technical performance. • Inspections of work by client’s programme managers • Inspection of books & records of the contractor. • Strict terms on allowable project costs, pricing policies, and so on.

13. Techniques for monitoring and control • Earned Value Analysis • Critical Ratio

14. Earned Value Analysis • A way of measuring overall performance (not individual task) is using an aggregate performance measure - Earned Value • Earned value of work performed (value completed) for those tasks in progress found by multiplying the estimated present physical completion of work for each task by the planned cost for those tasks. The result is amount that should be spent on the task so far. This can be compared with actual amount spent.

15. Earned Value Analysis • Earned value concept – combines cost reporting & aggregate performance reporting into one comprehensive chart • Earned value chart – basis for evaluating cost and performance to date

16. Earned Value Analysis • Baseline cost to completion – referred to as budget at completion (BAC) • Actual cost to date – referred to as estimated cost at completion (EAC) • Identify several variances according to two guidelines

17. Earned Value Analysis - Variances • Cost (spending) variance (CV) – difference between budgeted cost of work performed (earned value) (BCWP) and actual cost of that work (ACWP) CV = BCWP – ACWP (negative value - cost overrun) • Schedule variance (SV) – difference between earned value (BCWP) and cost of work we scheduled to perform to date (BCWS) SV = BCWP – BCWS (negative value - behind schedule) • Time variance (TV) –difference between time scheduled for work performed (STWP) and actual time to perform it (ATWP) TV = STWP – ATWP (negative value - delay)

18. Earned Value Index ( Ratios) - Formula Cost Performance Index (CPI) = BCWP/ACWP Schedule Performance Index (SPI) = BCWP/BCWS Time Performance Index (TPI) = STWP/ATWP

19. Interpretation of Indexes TABLE 13.3

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

21. 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 progress actual 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

22. Critical ratio example Calculate the critical ratios for the following activities and indicate which are probably on target and need to be investigated.

23. TYPES OF PROJECT RISK People Time Political Financial Technical

24. TOOLS FOR RISK MANAGEMENT • Expert opinion • Simulation • Historical Analysis • Risk Analysis • Contracting Strategy • Insurance, bonding • Management attention