Chapter 10 Monitoring and Information Systems

1. Chapter 10Monitoring and Information Systems Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99258 chen@jepson.gonzaga.edu

2. Project Management

3. Figure Project Triangle(Project Management Trade-offs) Cost Time [budget] [schedule] The center of project triangle is QUALITY [performance] Scope The objective of the PM is to define project’s scope realistically and ultimately deliver quality of product/serviceon time, on budget and within scope.

4. Project Management versus Process Management “Ultimately, the parallels between process and project management give way to a fundamental difference: process management seeks to eliminatevariability whereas project management must acceptvariability because each project is unique.” Elton, J. & J. Roe. “Bringing Discipline to Project Management” Harvard Business Review

5. Terms • Monitoring - Collecting, recording, and reporting information concerning any and all aspects of project performance • Controlling - Uses the data supplied by monitoring to bring actual performance into compliance with the plan • Evaluation - Judgments regarding the quality and effectiveness of project performance

6. The Planning–Monitoring–Controlling Cycle • We mainly want to monitor: • Time (schedule) • Cost (budget) • Scope (project performance) • Closed-loop system • Revised plans and schedules following corrective actions

7. Project Authorization and Expenditure Control System Information Flow Figure 10-1

8. Designing the Monitoring System • Identify key factors to be controlled: • Scope • Cost • Time • Information to be collected must be identified.

9. Designing the Monitoring System Continued • Do not want to avoid collecting necessary data because it is hard to get. • Do not want to collect too much data. • The next step is to design a reporting system that gets the data to the proper people in a timely and understandable manner.

10. Data Collection • Once we know the data we want, we need to decide how to collect it. • Should the data be collected after some event? • Order and/or precedence • Should it be collected on a regular basis? • Are there any special forms needed for data collection?

11. Data/Information … BAD information is WORSE than ... NO ________information.

12. Attributes of Data/Information Quality We realize that a firm needs betterinformation to survive and prosper. Therefore, high quality information products have to be provided to management.

13. Attributes of Data/Information Quality Timeliness Currency Frequency Time Period Time Dimension Accuracy Relevance Completeness Conciseness Scope performance Clarity Detail Order Presentation Media Form Dimension Content Dimension

14. Much Data Involves • Frequency counts • Raw numbers • Subjective numeric ratings • Indicators • Verbal measures

15. Information Needs and Reporting • Everyone should be tied into the reporting system • see order management slide • Reports should address each level • Not at same depth and frequency for every level • Lower-level needs detailed information • Senior management levels need overview (i.e., summarized) reports • Report frequency is typically high at low levels and less frequent at higher levels

16. The Reporting Process • Reports must contain relevant data. • Must be issued frequently. • Should be available in time for control. • Distribution of project reports depends on interest • For senior management, may be few milestones (what is it?) • For project manager, there may be many critical points

17. Milestone (for “Design” phase) Gantt Chart Shows time estimates of tasks critical vs. non-critical A milestone represents an event or condition that marks the completion of a group of related tasks or the completion of a phase of the project. If any activity on critical path delayed, the overall project time will be increased

18. Benefits of Detailed and Timely Reports • Mutual understanding of the goals • Awareness of the progress of parallel activities • Understanding the relationship of tasks • Early warning signals of problems • Minimizing the confusion • Higher visibility to top management • Keeping client up to date

19. Report Types • Routine - Reports that are issued on a regular basis or each time the project reaches a milestone • Exception - Reports that are generated when an usual condition occurs or as an informational vehicle when an unusual decision is made • Special Analysis - Reports that result from studies commissioned to look into unexpected problems • All are linked to data (database, knowledge base etc.)

20. Meetings • Reports do not have to be written • They can be delivered verbally in meetings • Projects have too many meetings • The trick is to keep them to as few as possible

21. Meeting Rules • Use meetings to make group decisions • Start and end on time and have an agenda • Do your homework before the meeting • Take minutes (what is minutes?) • Avoid attributing remarks to individuals in minutes • Avoid overly formal rules of procedure • Call meeting for serious problems

22. Common Reporting Problems • Too much detail • Poor interface between the data/procedures of the project and the information system of the parent company • Poor correspondence between the planning process and the monitoring process

23. Earned Value Analysis • A valuable technique for monitoring overall project performance is earned value. • One way is by using an aggregate performance measure called earned value. • Have covered monitoring parts • Timing and coordination between individual tasks is important • Must also monitor performance of entire project • Crux of matter should not be overlooked

24. The Earned Value Chart and Calculations • The Earned Value Chart and Calculations • The key element of the earned value technique is the measurement of progress in addition to cost and schedule. • If progress is not measured, then data about cost and schedule is meaningless because the PM does not know what resulted from the expenditures.

25. The Earned Value Chart and Calculations (cont.) • Actual against baseline ignores the amount of work accomplished • Earned value incorporates work accomplished • Multiply the “estimated percent work complete” for each task by the “planned cost” • Only need percent complete estimate for tasks currently in progress.

26. Rules to Aid in Estimating Percent Completion • 50-50 rule • Taking credit for 50% complete when the task begins and the other 50% when the task ends (50-50 estimate). • 0-100 percent rule • Taking no credit for progress until the task completes (0-100 rule).

27. Rules to Aid in Estimating Percent Completion • Critical input use rule • Taking credit for progress based on the use of a critical input. This works only if the process consuming the input is reliable and well defined. • Proportionality rule • Taking credit for progress based on either the percent of the budget that has been expended or the percent of the elapsed time that has gone by (proportionality rule).

28. The Earned Value Chart EAC = ETC + AC Figure 10-6

29. Variances • Variances can help analyze a project • A negative variance is bad • Cost and schedule variances are calculated as the earned value minus some other measure • Will look at some of the more common ones CV = EV – AC

30. Cost Variance (CV) • CV = EV – AC • EV: earned value • AC: actual cost of the work • Negative variance indicates a cost overrun • Magnitude depends on the costs

31. Schedule Variance (SV) • SV = EV – PV • PV: planned value (the cost of the work we scheduled to be performed to date) • Negative variance indicates you are behind schedule • Measured using costs

32. Time Variance (TV) • TV = ST – AT • ST: time scheduled for the work that has been performed • AT: actual time used to perform • Negative variance indicates you are behind schedule TV = SV / slope Slope = PV / Days

33. Indices • Cost Performance Index CPI = EV/AC • Schedule Performance Index SPI = EV/PV • Time Performance Index TPI = ST/AT • Cost Schedule Index CSI = EV2/(AC)(PV)

34. Summary on Variances and Indices CV = EV – AC CV: cost variance EV: earned value AC: actual cost of the work SV = EV – PV SV: schedule variance PV: planned value (the cost of the work we scheduled to be performed to date) TV = ST – AT TV: time variance ST: time scheduled for the work that has been performed AT: actual time used to perform • Cost Performance Index CPI = EV/AC • Schedule Performance Index SPI = EV/PV • Time Performance Index TPI = ST/AT • Cost Schedule Index CSI = EV2/(AC)(PV) TV = SV / slope Slope = PV / Days

35. “To complete” and “At Completion” • Project manager reviewing what is complete and what remains • Final cost and final completion date are moving targets • The project manager compiles these into a to complete forecast • Actual + forecast = final date and cost at completion

36. ETC and EAC ETC = (BAC + EV)/CPI EAC = ETC + AC where, ETC = Estimated cost to complete BAC = Budget at completion EV = Earned value CPI = Cost performance index EAC = Estimated cost at completion AC = Amount expended to date (actual cost)

37. Milestone Reporting • Reports that are created when a project reaches a major milestone • They are designed to keep everyone up-to-date on project status • For executives and clients, these may be the only reports they receive

38. Computerized PMIS (Project Management Information Systems) • Real projects are often large • Hundreds of tasks • Thousands of work units • Reporting is clearly a job for the computer • Project management information systems were one of the earlier applications • Initially focus was on scheduling • Now it includes, earned values, variances, and more

39. PMIS Errors • Computer paralysis • Information overload • Project isolation • Computer dependence • PMIS misdirection

40. WBS Project Plan Scheduling Budgeting Creating a Project Budget The budget is a planthat identifies the resources, goals and schedule that allows a firm to achieve those goals • Top-down • Bottom-up

41. VIDEO • VIDEO: • 7. An_Introduction_to_the_Earned_Value_Measurement_System(15m) • 8. Value_Driven_Project_Mgt(9m28s)

42. Problem 1: ($000) CV = EV – AC SV = EV – PV Negative variances are unfavorable. EV: earned value AC: actual cost of the work

43. Problem 2: ($000) CV = EV – AC CPI = EV/AC SV = EV – PV SPI = EV/PV Negative variances are unfavorable. If an index is less than one, the variance is unfavorable. PV: planned value (the cost of the work we scheduled to be performed to date)

44. Problem 3: ($000) CSI = (CPI)(SPI) TV = SV / slope Slope = PV / Days CSI is on target because the unfavorable SV is offset by the favorable CV. TV predicts that the project is 2.5 days behind schedule given the estimated EV.

45. Problem 4: ($000) This project is seriously delayed(SPI) and also over budget (CV). Cost Performance Index CPI = EV/AC Schedule Performance Index SPI = EV/PV Time Performance Index TPI = ST/AT Cost Schedule Index CSI = EV2/(AC)(PV)

46. Problem 5: ($000) This project is ahead of schedule, but has an unfavorable CV.

47. Problem 6: ($000) The first step is to estimate EV. Starting with TV, we solve to determine SV. Once SV is known, EV can be determined because the PV was given. In problem 6, changing the AC value only affects cost-related measures and indices. The SV and SPI are unaffected by a change in AC.

48. Problem 7: ($000) In this problem, EV = 70%  PV. This client is probably upset because the CSI suggests that this project is likely to be delayed and to cost more than originally planned.