TM 665 Project Planning & Control Dr. Frank Joseph Matejcik

1. TM 665Project Planning & Control Dr. Frank Joseph Matejcik 5th Session 2/23/04: Chapter 10 Monitoring and Information Systems South Dakota School of Mines and Technology, Rapid City

2. Agenda & New Assignment • New Assignment: Chap. 10 problems 2 & 8 • Calendar • M & M (Chapter 10 Monitoring and Information Systems)

3. Tentative Schedule Chapters Assigned Chapters 12-Jan 1 e-mail 22-Mar 4 contact, p24 questions 19-Jan Holiday 29-Mar 5, 6(start) 26-Jan 2 Problems 3-7 page 93 05-Apr 6, 7 02-Feb 8 problem 12, MS Project 12-Apr Holiday 09-Feb 9 problems 3, 5 19-Apr 11 16-Feb Holiday 26-Apr 12,13 23-Feb 10 problems 2, 8 3-May Final 01-Mar Test 08-Mar Break 15-Mar 3 Attendance Policy: Help me work with you.

4. Updates to M & M • IIE’s Solutions lists 44 short reviews of Project Management Programs • Multiple offerings from vendors • Some supplement MS Project & other • Prices as high as $1 million, as low as $49 • Web based Systems • Advantage: access anywhere • Disadvantages: Web speed &general dot.com problems • Couldn’t find a free system like Software602’s office suite Not in Text

5. Updates to M & M • OnProject http://www.onproject.com/ • most features of Microsoft Project & share project information w/o setting up a server. • $50/month for < 21 users ( unlimited projects), 30MB of free storage (each additional megabyte costs 6 cents); a download 30-day trial version • Project 2000 costs $249. • Appcity http://www.appcity.com/ • Is free & entirely on line • mainly for IT market • Not a complete PM program Not in Text

6. Monitoring and Information Systems • Project monitoring defined • The plan-monitor-control cycle • Designing the monitoring system • Behavioral aspects of monitoring • Earned value analysis • Earned value examples

7. Project Monitoring Defined • Collecting, recording, and reporting information concerning any and all aspects of project performance that the project manager or others wish to know

8. Effective Monitoring Precedes Control • In Chapter 11, we’ll look at Project Control • Ensuring that actually mesh with the plan • But effective control requires good information • Such pertinent and timely information comes from an accurate monitoring system

9. Monitoring Has Several Uses • Project Monitoring has secondary uses • Project auditing • “Lessons learned” • Reporting to client and senior management • But the primary use is projectcontrol • Ensuring that decision-makers have timely information enabling effective control over the project

10. The Planning-Monitoring-Controlling Cycle • Effective monitoring and control begins with good project planning • What are the critical areas? • How and when can progress be measured? • Who gathers and reports info, to whom? • The plan-monitor-control cycle continues through the entire project

11. The Planning - Monitoring - Controlling Cycle • The key things to be planned, monitored, and controlled are time (schedule), cost (budget), and specifications • The planning methods require a significantly greater investment of time and energy early in the life cycle of the project • These methods significantly reduce the extent and cost of poor performance and time/cost overruns Section 10.1

12. The Planning - Monitoring - Controlling Cycle • The control process should be perceived as a closed loop system • The planning-monitoring-controlling cycle is continuously in process until the project is complete • In a closed loop system, revised plans and schedules should follow corrective actions Section 10.1

13. Project Control Information Flow, Figure 10-1

14. Designing the Monitoring System • 1. Start with the key factors to be controlled • Pareto analysis: a relatively few activities determine most of the project’s success • Use the project plan to identify items to be monitored • Although other areas might be added also

15. Designing the Monitoring System (cont’d) • 2. Develop measurement systems • Measure results, not activity; outputs, rather than inputs • Extract performance, time and cost goals from project plans • Avoid tendency to focus on that which is easily measurable

16. Designing the Monitoring System (cont’d) • 3. Collecting Data: Most data falls into one of five categories, as follows (with examples) • Frequency counts: tally of occurrences . . . • Raw numbers: dates, dollars, percents, specs . . . • Subjective ratings: numerical ranking, red-yellow-green assessments . . . • Indicators: surrogate measures of merit . . . • Verbal measurement: oral or written characterizations . . .

17. Designing the Monitoring System (cont’d) • 4. Reporting on Data Collected: To turn data into information, it must be contextualized: • Reporting must be timely • Data must be analyzed • Trends: Getting better or worse? • Comparables: Performance compared to specs, past performance, standard hours, etc. • Statistical analysis • Causation and correction

18. Designing the Monitoring System • The best source of items to be monitored is the Work Breakdown Structure • The monitoring system is a direct connection between planning and control • It is common to focus monitoring activities on data that are easily gathered - rather than important • Monitoring should concentrate primarily on measuring various facets of output rather than intensity of activity Section 10.1

19. Designing the Monitoring System • The measurement of project performance usually poses the most difficult data gathering problem • Performance criteria, standards, and data collection procedures must be established for each of the factors to be measured • Information to be collected may consist of accounting data, operating data, engineering test data, customer reactions, specification changes and the like Section 10.1

20. How to Collect Data • It is necessary to define precisely what pieces of information should be gathered and when • A large proportion of all data collected take one of the following forms: • Frequency counts • Raw numbers • Subjective numeric ratings • Indicators • Verbal measures Section 10.1

21. How to Collect Data • After data collection has been completed, reports on progress should be generated • These reports include project status reports, time/cost reports, and variance reports • Causes and effects should be identified and trends noted • Plans, charts and tables should be updated on a timely basis Section 10.1

22. How to Collect Data • A count of “bugs” found during a series of tests run on a new piece of software: Section 10.1

23. How to Collect Data • Percent of specified performance met during repeated trials Section 10.1

24. How to Collect Data • Monitoring can serve to maintain high morale on the project team • Monitoring can also alert team members to problems that will have to be solved • The purpose of the monitoring system is to gather and report data • The purpose of the control system is to act on the data Section 10.1

25. How to Collect Data • Significant differences from plan should be highlighted or “flagged” so that they cannot be overlooked by the controller • Some care should be given to the issues of honesty and bias • An internal audit serves the purpose of ensuring all information gathered is honest • No audit can prevent bias - all data are biased by those who report them Section 10.1

26. How to Collect Data • The project manager is often dependent on team members to call attention to problems • The project manager must make sure that the bearer of bad news is not punished; nor the admitter-to-error executed • The hider-of-mistakes may be shot with impunity - and then sent to corporate Siberia Section 10.1

27. Reporting and Information Flows, Figure 10-5

28. Information Needs and the Reporting Process • The monitoring system ought to be constructed so that it addresses every level of management • Reports do not need to be of the same depth or at the same frequency for each level • The relationship of project reports to the project action plan or WBS is the key to the determination of both report content and frequency Section 10.2

29. Information Needs and the Reporting Process • Reports must contain data relevant to the control of specific tasks that are being carried out according to a specific schedule • The frequency of reporting should be great enough to allow control to be exerted during or before the period in which the task is scheduled for completion • The timing of reports should generally correspond to the timing of project milestones Section 10.2

30. Information Needs and the Reporting Process • The nature of the monitoring system should be consistent with the logic of the planning, budgeting, and scheduling systems • The primary objective is to ensure achievement of the project plan through control • The scheduling and resource usage columns of the project action plan will serve as the key to the design of project reports Section 10.2

31. Information Needs and the Reporting Process Section 10.2 • Benefits of detailed, timely reports delivered to the proper people: • Mutual understanding of the goals of the project • Awareness of the progress of parallel activities • More realistic planning for the needs of all groups • Understanding the relationships of individual tasks to one another and the overall project • Early warning signals of potential problems and delays • Faster management action in response to unacceptable or inappropriate work • Higher visibility to top management

32. Report Types • For the purposes of project management, we can consider three distinct types of reports: • Routine • Exception • Special analysis • Routine reports are those issued on a regular basis Section 10.2

33. Report Types Section 10.2 • Exception reports are useful in two cases: • First, they are directly oriented to project management decision making and should be distributed to the team members who will have a prime responsibility for decisions • Second, they may be used when a decision is made on an exception basis & it is desirable to inform other managers as well as for documentation

34. Report Types • Special analysis reports are used to disseminate the results of special studies conducted as a part of the project • These reports may also be used in response to special problems that arise during the project • Usually they cover matters that may be of interest to other project managers, or make use of analytic methods that might be helpful on other projects Section 10.2

35. Meetings • Most often, reports are delivered in face-to-face meetings, and in conference calls • Some simple rules can lead to more productive meetings: • Use meetings for making group decisions • Have preset starting and stopping times • Make sure that homework is done prior to the meeting Section 10.2

36. Meetings • Some simple rules for more productive meetings (cont.): • Avoid attributing remarks or viewpoints to individuals in the meeting minutes • Avoid overly formal rules of procedure • If a serious problem or crisis arises, call a meeting for the purpose of dealing with that issue only Section 10.2

37. Common Reporting Problems • There are three common difficulties in the design of project reports: • There is usually too much detail, both in the reports themselves and the input being solicited from workers • Poor interface between the project information system and the parent firm’s information system • Poor correspondence between the planning and the monitoring systems Section 10.2

38. Some Behavioral Aspects of Monitoring Systems • Effective monitoring reduces surprises, and this can increase trust, morale • Some reporting bias is inevitable, but dishonesty is unacceptable • “Shooting the messenger” today just creates concealment tomorrow

39. Earned Value Analysis (EVA) • Needed: An objective way to measure overall project performance • The problem comparing actual expenditures to baseline plan is that it ignores the amount of work actually completed • Thus, Earned Value Analysis • A sort of cost accounting for projects

40. Five Important Terms • BCWS: The plan, integrating schedule and budget • BCWP: What you planned to spend for work actually done • ACWP: Actual dollars spent at a point in time, for the work actually done • STWP: Time scheduled for work performed • ATWP: Actual time for work performed

41. The Earned Value Chart Figure 10-7, Page 526 It “defines” the Terms. • Graph to evaluate cost & performance to date: Section 10.2

42. The Earned Value Chart • Variances on the earned value chart follow two primary guidelines: • 1. A negative is “bad” • 2. The cost variances are calculated as the earned value minus some other measure • BCWP - budgeted cost of work performed • ACWP - actual cost of work performed • BCWS - budgeted cost of work scheduled • STWP - scheduled time for work performed • ATWP - actual time of work performed Section 10.2

43. More Terms • BAC: Budget at completion • EAC: Estimated cost at completion • ETC: Estimated cost to complete

44. Five Relationships • Cost Variance (CV) = BCWP - ACWP • Schedule Variance (SV) = BCWP - BCWS • Time Variance (TV) = STWP - ATWP • Estimated Cost to Complete (ETC) = (BAC – BCWP)/CPI • Estimate Cost at Completion (EAC) = ACWP + ETC

45. Indices Help Visualize Performance • Projects on cost, on schedule will have indices = 1.0 • Indices below 1.0 are unfavorable • Cost Performance Index (CPI) = BCWP/ACWP • Schedule Performance Index (SPI) = BCWP/BCWS • Cost-Schedule Index (CSI) = CPI X SPI

46. Possible Arrangements, Figure 10-8

47. Example • Assume a work package expected to be finished today, at cost of $1500. But you’re only 2/3 complete, and you’ve spent $1350. • CPI = BCWP/ACWP = $1000/$1350 = .74 • SPI = BCWP/BCWS = $1000/$1500 = .67 • CSI = CPI/SPI = .74 X .67 = .49

48. Example (cont’d) • Then you can calculate the estimated cost to complete the project (ETC) and the estimated cost at completion (EAC) • ETC = (BAC – BCWP)/CPI = $(1500 – 1000)/.74 = $676 • EAC = ACWP + ETC = $1350 + $676 = $2026

49. Activity Predecessor Duration(Days) Budget($) Actual Cost(s) % Complete a - 3 600 680 100 b a 2 300 270 100 c a 5 800 80 d b 4 400 25 e c 2 400 0 Another Earned Value Example • A 10-day project, today is day 7

50. PERT AON Diagram, Figure 10-9