10-1

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

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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

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Effective Monitoring Precedes Control In Chapter 11, we’ll look at Project

Control Ensuring that actuals mesh with the

plan But effective control requires good

information Such pertinent and timely information

comes from an accurate monitoring system

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Monitoring Has Several Uses The primary use is project control

Ensuring that decision-makers have timely information enabling effective control over the project

Project Monitoring has secondary uses Project auditing “Lessons learned” Reporting to client and senior management

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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

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Project Control Information Flow, Figure 10-1

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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

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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

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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 . . .

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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

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Reporting and Information Flows, Figure 10-5

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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

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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

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Estimating Percent Complete The 50-50 estimate The 0-100 percent rule Critical input use The proportionality rule

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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

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More Terms BAC: Budget at completion

EAC: Estimated cost at completion

ETC: Estimated cost to complete

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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

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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

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Possible Arrangements, Figure 10-8

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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 X SPI = .74 X .67 = .49

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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

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Another Earned Value Example A 10-day project, today is day 7

Activity Predecessor

Duration

(Days)

Budget($)

Actual Cost(s)

% Complet

e

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

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PERT AON Diagram, Figure 10-9

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Example Baseline Budget Using 50-50 Rule, Figure 10-10

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Example Status at Day 7, Figure 10-11

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Example Earned Value Chart Day 7, Figure 10-12

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MSP Budget Sheet, Figure10-13

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Case: Earned Value at Texas Instruments

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Case: Earned Value at Texas Instruments (cont’d) Graphic presentation clearly depicts

project’s history More crucial, though, is using EVA as

a management tool. This requires: Timely, accurate data collection Expeditious data analysis Appropriate and efficient corrective

action