UNIT - III

1. UNIT - III Project Monitoring and Control

2. Dimensions of Project Monitoring & Control Software Project: Project is a planned, non-routine activity, designed and implemented to achieve a predefined objective in a given time span. Monitoring – collecting, recording, and reporting information concerning project performance that project manger and others wish to know.

3. Project control Controlling – -Uses data from monitor activity to bring actual performance to planned performance. Software = Program + Operating Procedures + Documentation Manuals

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

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

6. Earned Value Analysis

7. Earn 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 percent 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.

8. Earn Value Analysis Methods for estimating percent completion- • The 50-50 estimate. 50% is assumed when task is begun, and remaining 50% when work completed. • 0-100% rule. This rule allows no credit for work until task is complete, highly conservative rule, project always seem late until the very end of project when everything appears to suddenly catch up • Critical input rule. This rule assigns progress according to amount of critical input that has been used. Labor or skilled dependent, machine critical input – buy machine complete task – may be misinformation • Proportional rule. This rule divides planned (or actual) time-to-date by total scheduled time(or budgeted (or actual ) cost-to-date by total budgeted cast] to calculate percent complete. This is commonly used rule.

9. Earned Value Analysis • What is Earned Value Management (EVM)? • A method of integrating scope, schedule, and resources, and for measuring project performance. • It compares the amount of work that was planned with what was actually earned with what was actually spent to determine if cost and schedule performance are as planned.

10. Earned Value Analysis • What is needed for EVM? • A baseline plan • A project budget • (BAC – Budget at Completion) • A project end date • Tasks are identified & scheduled • Each task has a budget or effort • (resource loaded / weighting) • Actuals tracked

11. Earned Value Analysis • To Perform EVM, three values need to be determined • Planned Value (PV or BCWS) • Actual Costs (AC or ACWP) • Earned Value (EV or BCWP)

12. Earned Value Management Planned Value (PV) • “What are the budgeted costs of the work scheduled”? • Time phased based on baseline budget. • Only changes when baseline is changed. • Also referred as “BCWS” & “BAC”.

13. Earned Value Management Actual Costs (AC) • “What are the actual costs of the work performed”? • Based on the actual completion of work packages. • Actual costs for reported work. • Also referred as “ACWP”.

14. Earned Value Management Earned Value (EV) • “What are the budgeted costs of the work performed”? • Based on the actual completion of work packages • Baseline value of the reported work • Also referred as “BCWP”

15. Terms in EV Analysis • EAC: Independent Estimate at Completion • AC : Actual Cost • PF: Performance Factor • BAC: Budget at Completion • EV: Earned Value • CPI: Cost Performance Index • [CPI = EV / AC] • SPI: Schedule Performance Index • [SPI = EV / PV] • CPIx = Value of CPI for last x periods

16. Formulae in EV Analysis CV=[EV-AC] SV=[EV-PV] CPI=[EV/AC] SPI=[EV/PV] EAC=[BAC/CPI] ETC=[EAC-AC] VAC=[BAC-EAC] When memorizing the formulas I have found it best to look for patterns. When I see the correct pattern I know the formula is correct. AC = ACWP PV = BCWS EV = BCWP

17. Earned Value Management Example • Task – Drill & install 10 piezometers • Budget - $100,000 ($10K per piezometer) • Time – 10 weeks (1 piezometer per week) • Progress Report At week 5: • 4 piezometers drilled and installed • $47,500 spent to date PV = $50,000 AC = $47,500 EV = $40,000

18. Earned Value Management • Calculating Earned Value and interpreting results • to measure the progress of the project • help identify trends • forecast costs • and identify ways to correct/mitigate project pitfalls.

19. Earned Value Management Cost Variance (CV) CV = EV - AC • Good News: If CV value is positive, the project is currently under budget (spending less than planned for the work) • Bad News: If CV value is negative, the project is currently over budget (spending more than planned for the work)

20. Earned Value Management Cost Performance Index (CPI) CPI = EV / AC • Good News: If CPI value is >1 or =1, the project cost trend is currently under or at planned budget • Bad News: If CPI value <1, the project cost trend is currently over budget

21. Earned Value Management Cost Variance % (CV%) CV% = CV / EV • Good News: If CV% value is positive, the project is currently under budget by the CV% • Bad News: If CV% value is negative, the project is currently over budget by the CV%

22. Earned Value Management Schedule Variance (SV) SV = EV - PV • Good News*: If SV value is positive, the project is currently ahead of schedule • Bad News: If SV value is negative, the project is currently behind schedule • * - not all positive SVs are good

23. Earned Value Management Schedule Performance Index (SPI) SPI = EV / PV • Good News: If SPI value is >1 or =1, the project schedule trend is currently ahead or on planned schedule • Bad News: If SPI value <1, the project schedule trend is currently behind schedule

24. Earned Value Management Schedule Variance % (SV%) SV% = SV / PV • Good News: If SV value is positive, the project is currently ahead of schedule • Bad News: If SV value is negative, the project is currently behind schedule

25. Earned Value Management Estimate at Completion (EAC) #1 Actual costs to date plus a new estimate for all remaining work (original plan no longer valid) EAC = AC + ETC (ETCèEstimate to Complete)

26. Earned Value Management Estimate at Completion (EAC) #2 Actual costs to date plus remaining budget (current variances are viewed as atypical of future variances) EAC = AC + BAC - EV

27. Earned Value Management Estimate at Completion (EAC) #3 & #4 Actual costs to date plus remaining budget modified by a performance factor (CPI) (current variances are viewed as typical of future variances). EAC = AC + [(BAC - EV) / CPI] EAC = BAC / CPI

28. Earned Value Scenario

29. Earned Value Scenario

30. Earned Value Scenario

31. Earned Value Scenario

32. Earned Value Scenario BAC = $100,000 (current project budget) EV = $42,000 (42% of project completed, $100,000 planned) PV = $56,000 (56% of project planned $100,000 completed – initial aging report) AC = $48,000 (from actual expenditures reporting) Is this project on schedule / budget? Or is it in trouble?

33. Earned Value Scenario Cost Variance (CV): CV = EV – AC = $42,000 - $48,000 = - $6,000 Cost Performance Index (CPI): CPI = EV / AC = $42,000 / $48,000 = 0.875 Cost Variance % (CV%): CV% = CV / EV = - $6,000 / $42,000 = 14% OVER BUDGET

34. Earned Value Scenario Schedule Variance (SV): SV = EV – PV = $42,000 - $56,000 = - $14,000 Schedule Performance Index (SPI): SPI = EV / PV = $42,000 / $56,000 = 0.750 Schedule Variance % (SV%): SV% = SV / PV = - $14,000 / $56,000 = 25% BEHIND SCHEDULE

35. Earned Value Scenario Estimate at Completion (EAC): Method #1: EAC = AC + ETC (say $68,000) = $48,000 + $68,000 = $116,000 (Change Management for $16,000 funds request) Method #2: EAC = AC + BAC – EV = $48,000 + $100,000 - $42,000 = $106,000 (Change Management for $6,000 funds request)

36. Earned Value Scenario Estimate to Complete (ETC): Method #3 EAC = AC + [(BAC – EV) / CPI] = $48,000 + [($100,000 - $42,000) / 0.875] = $48,000 + $66,285 = $114,285 (Change Management for $14,285 funds request) Method #4 EAC = BAC / CPI = $100,000 / 0.875 = $114,285 (Change Management for $14,285 funds request)

37. Earned Value Scenario

42. Budget Management • Module 6 Exercise • Work as a team to perform EVM on assigned project on page 69. • Prepare a report similar to the module scenario reporting project progress. • Brief class on methods of recovery, if needed, for project.

43. Budget Management • Graphing Earned Value exercise • Gantt chart baseline (report) • EVM graph • Task information • Cost distribution • EVM worksheets

44. Budget Management • Graphing Earned Value exercise • Planned Value (PV) is always shown in blue with circle nodes • Actual Cost (AC) is always shown in red with square nodes • Earned Value (EV) is always shown in green with triangle nodes

45. Budget Management • Graphing Earned Value exercise • Work together as a team to calculate the task cost (task budget) for each task • Record these values on the worksheet with the total (BAC) calculated • Warning: Wait to plot on the EVM graph as a class – we will use the Cost Distribution Report

46. $60K $50K $40K $30K $20K $10K 1w 2w 3w 4w 5w 6w 7w 8w 9w 10w

47. Budget Management • Graphing Earned Value – week 1 • Task A started on time – 30% complete • Task B started 2 days late – 30% complete • Task C started 1 day late – 25% complete • Tasks D, E, F, G, H, and J have not started • Project Management is on-going • Actual Costs reported for week 1 = $5000

48. $60K $50K $40K $30K $20K $10K 1w 2w 3w 4w 5w 6w 7w 8w 9w 10w

49. $60K $50K $40K $30K $20K $10K 1w 2w 3w 4w 5w 6w 7w 8w 9w 10w Cost Variance Schedule Variance

50. Error Tracking • Allows comparison of current work to past projects and provides a quantitative indication of the quality of the work being conducted. • The more quantitative the approach to project tracking and control, the more likely problems can be anticipated and dealt with in a proactive manner.