LECTURE 2

PROJECT (MAINTENANCE)
MONITORING AND CONTROL

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 Monitoring and Control
• Monitoring what is happening,
• taking the appropriate actions when:
– we have delays,
– the costs are over planed, or
– some of the previous conditions, accorded before,
and that were important in the planning and
acceptance, are missed.

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 Goals:(monitoring and control)
• Determine if the project is under control.
 We arrive to the milestones /objectives
– On time.
– With the expected resources.
– With the quality expected.
– It’s economically acceptable.
• Identify if the project is out of control.
 As soon as we observe some deviations, we must:
– Revise the plan.
– Negotiate the new plan with the client.

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 The Project cycle
THE PROJECT CYCLE

REVIEW
AND ASSESSMENT
EVALUATION

MONITORING

IMPLEMENTATION
AND DESIGN
MONITORING

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 Definition MONITORING
Monitoring is the continuous, systematic and critical
review of operations in order to measure their evolution
and adjust them according to circumstances and project’s
objectives
Monitoring is the regular observation and recording of
activities taking place in a project or Programme. It is a
process of routinely gathering information on all aspects
of the project. Reporting enables the gathered
information to be used in making decisions for improving
project performance

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 HOW TO MONITOR A PROJECT:

-Data about intended achievements

and baseline

- is compared with … Data on actual

achievements

-to identify ... Significant deviations from

plan

-as a basis for ..... identification of problems

and opportunities

-to identify ... Corrective actions

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 Different steps of project’s monitoring..

3
1 2 4

The
The Collecting Processing Taking
project
project data data Analysis decisions

5
Taking corrective
action

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 MONITORING SYSTEM
Set of tools used to measure indicators.
(observation, sampling, questionnaires,)
•Where
•Who
•When / how often
•To whom.

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 Types of MONITORING SYSTEM
1. Process monitoring
2. Technical monitoring
3. Assumption monitoring
4. Financial monitoring
5. Impact monitoring

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The different steps of a monitoring system

1. Collecting data * Preparing the monitoring

* Field work
2. Analyzing data * Triangulation of information
3. Writing the report * Summarizing data
4. Adapting the project * Adaptations to the log-frame
* New projects or activities
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 Designing the Monitoring System
• Identify special characteristics of performance, cost,
and time that need to be controlled
– performance characteristics should be set for each level of
detail in the project
• Real-time data should be collected and compared
against plans
– mechanisms to collect this data must be designed
• Avoid tendency to focus on easily collected data

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 AIM OF MONITORING REPORT
The purpose of monitoring reports is to provide :
-updates on achievements against indicators and
milestones,
-guidance on the elements that should be adjusted

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 MINIMUM STRUCTURE OF
MONITORING REPORT (1)
1. Introduction

2. Monitoring of situation (external factors)

3. Monitoring of objectives and indicators / (+

critical events)

4. Progress of activities

5. Conclusions

6. Recommendations

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OBJECTIVE / PROGRESS :

MONITORING REPORT 2
INDICATOR BASELINE STANDARD MONITORING OBSERVATIONS

RECOMMENDATIONS :

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 What is Control?
• The process of monitoring activities to ensure
that they are being accomplished as planned
and of correcting any significant deviations
• An effective control system ensures that
activities are completed in ways that lead to
the attainment of the organization’s goals

Prentice Hall, 2002

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 Why we need control?
• Because when we plan, we use “estimations” of:
– Software size.
– Necessary tasks.
– Necessary resources for each task.
– Expected Productivity.
– Usually plan differs from realty.
– Software projects substantially differ from one to the next.

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 Work flow when controlling a project
Development start

Gather actual project

information
Plan
(Expected) Compare progress Corrective
with target and actions
Standards of standards
performance NO
Satisfactory?

Yes
¿Project NO
finished?
Yes
Development end
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 Controlling activities
• Develop standards of performance.
– Set conditions or measurements that will exists
when tasks are correctly done.
• Establish monitoring and reporting systems.
– Determine necessary data, who will receive it, and
when they will receive it

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 Controlling activities
• Measure results
– Determine accomplishment of, or extent of
deviation from, goals and standards.
• Initiate corrective actions
– Reinforce standards, adjust goals, or re-plan.

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 Controlling activities
• Reward and discipline
– Praise, remunerate, and discipline applicable
personnel.
• Document controlling methods.
– Document the standards, methods of reporting
and control, bonus plans et al., decisions points,
and so on.

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 DESIGNING THE CONTROL SYSTEM

Importance of having a control system:

• Purpose is to correct errors, not punish the guilty
• Must consider impact on creativity and innovation
• Be careful not emphasize short-run results at the
expense of long-run objectives

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 The Fundamentals Of An Effective Control
System

• Control
– The task of ensuring that planned activities are
getting the desired results.
– Controlling involves setting a target (planning),
measuring performance (evaluation), and
taking corrective action.
– Control also applies to monitoring every task—
large and small—that is delegated.

G.Dessler, 2003

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 Primary Mechanisms by Which Project
Manager Exerts Control
• Process Reviews
• Personnel Assignments
• Resource Allocations

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 Management and the Control Process

FIGURE 14–1
G.Dessler, 2003

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 Components of a Control System
• Sensor / Effector
• Standard
• Comparator
• Decision Maker

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 Types of Control

Prentice Hall, 2002

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 Steps in the Control Process
• Measuring actual performance
– Personal observation, statistical reports, oral
reports, and written reports
– Management by walking around (MBWA)
• Comparing actual performance against a
standard
– Comparison to objective measures: budgets,
standards, goals
– Range of variation
Prentice Hall, 2002
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 Defining an Acceptable Range of Variation

Prentice Hall, 2002

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 Steps in the Control Process
(cont’d)
• Taking managerial action to correct deviations or
inadequate standards
– Immediate corrective action
• Correcting a problem at once to get performance back on track
– Basic corrective action
• Determining how and why performance has deviated and then
correcting the source of deviation
– Revising the standard
• Adjusting the performance standard to reflect current and
predicted future performance capabilities

Prentice Hall, 2002

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 The Control Process

Prentice Hall, 2002

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 Qualities of an Effective
Control System
Accuracy Timeliness

Economy Flexibility

Understandability Reasonable criteria

Emphasis on the
Strategic placement
exception

Multiple criteria Corrective action

Prentice Hall, 2002
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 Approaches To Maintaining Control
1. The Traditional Control Process
– Step 1: Set a standard, target, or goal.
– Step 2: Measure actual performance against
standards (observation and timing).
– Step 3: Take corrective action.
2. The Commitment-Based Control Process
– Encouraging all employees to exercise ethical self-
control (as they initiate process improvements and
new ways of responding to customers’ needs.

G.Dessler, 2003
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 Types of Traditional Control Systems
• Diagnostic controls
– A control system that used to monitor and optimize targets
and outcomes; budgets, performance management and
measurement, business plans, valuation standards and
compensation systems.
• Boundary Controls
– Policies, such as codes of conduct, that establish rules and
identify the actions and pitfalls that employees must avoid.
• Personal/Interactive Controls
– Control methods that involve direct, face-to-face
interaction with employees so as to monitor rapidly
changing information and respond proactively to changing
conditions.

G.Dessler, 2003
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 Two Basic Categories of Control Systems

FIGURE 14–4
G.Dessler, 2003
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 Categories of reporting
Report type Examples Comments
Verbal formal Weekly or monthly Written minutes
regular progress meetings should be kept
Verbal formal End- of- stage
Ad- hoc review meeting
Written formal J ob sheets, Normally weekly
regular progress reports using forms
Written formal Exception reports,
Ad- hoc change reports
Verbal I nformal Canteen discussion, Provides early
Ad- hoc social interaction warnings.

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 Compare progress against target and
standards
• What we expects is based on:
– Productivity standards, and
– planning agreements.
• The work can be correct from the standards
point of view but not according to the plan.
• We can be in one of this situations(follows)

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 Compare progress with target and
standards
According According to Action to take
to plan standards

Yes Yes I t’s alright

Yes NO Lock at the standards

deviations and adj ust if
necessary, discipline
NO Yes Replan, adj ust goals, take
corrective actions.
NO NO Be caref ul. Apply all previous.

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 Compare progress with target: the plan
• Using a Gantt diagram we draft a line:
– Starting and ending in the top and down of the
Gantt diagram on the actual day.
– The vertex of this line cross:
• the non finished tasks at the estimated % done.
• Only the end of tasks that were expected not to be
finished yet.
• The start of tasks that we suppose that must be started
yet.

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 Compare progress with target: Plan

a
today

in
G

rd
ry tr ct
l
N

el

Ex e
ao
O

? rf
W
R

Pe
W
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 Tools /Techniques for Monitoring and
Control
• Earned Value Analysis
• Variance Analysis
• Trend Projections
• Critical Ratio

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 Forecasting With Earned Value Management
• Earned value management (EVM)
– is a project performance measurement technique that
integrates scope, time, and cost data.
– Given a baseline, project managers and their teams can
determine
• how well the project is meeting scope, time, and cost
goals
– by entering actual information
– and then comparing it to the baseline.
• The baseline information includes:
– Scope data (WBS tasks)
– Time data (start and finish estimates for each task)
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– Cost data (cost estimates for 41each task)
 Earned Value Terms
• The planned value (PV)
– is that portion of the approved total cost estimate planned to be
spent on an activity during a given period.
• The actual cost (AC)
– is the total direct and indirect costs incurred in accomplishing
work on an activity during a given period.
• The earned value (EV)
– is an estimate of the value of the physical work actually
completed.
 It is based on the original planned costs for the activity and the
rate at which the team is completing work on the activity to
date.
• The rate of performance (RP)
- is the ratio of actual work completed to the percentage of
work planned to have been completed at any given time.

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 Planned Value
• The cumulative cost of
BAC
the approved costs
• PV(t) = planned value
at time t
PV(t)
• BAC = Budget at
completion

t Planned
End

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 Actual Cost
• The actual cumulative
cost of the work done
so far + estimation to
end AC(t)

t Actual
End

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 Earned Value
• Measures real achieved
results (in terms on
earnings)
• The sum of the approved
cost estimates for
activities completed up to
a specified date
• At the end of the project,
EV = PV

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 Example

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 Analysis at date, some values

BAC • Expresses project progress

C (in terms on monetary
PV c values)
AC • Used to compute
performances

a • Some simple values

b – CV = EV - AC
EV – SV = EV - PV

– a = T - Ta
Tb Ta T – b = T - Tb
– c

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 Cost Performance Index (CPI)
• Compares budgeted cost of work performed to
actual cost

• Indicated the efficiency of the project

– CPI = EV/AC

How much we are actually getting for each euro we

thought we would spend.

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 Schedule Performance Index (SPI)
• Compares work performed to work planned

– SPI = EV/PV

• How fast does the project progress w.r.t. how

fast we expected it to be?

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 Forecasting with Earned Value
• The budget at completion (BAC), or the approved total budget for the
project, can be divided by the cost performance index to calculate the
estimate at completion (EAC), which is a forecast of how much the
project will cost upon completion.
• Likewise, the approved time estimate for the project can be divided by
the schedule performance index to calculate when the project will be
completed.
– CPI = EV/AC = $900,000/$1,200,000 = .75
– SPI = EV/PV = $900,000/$600,000 = 1.5
– EAC = BAC/CPI = $1,200,000/.75 = $1,600,000
– New time estimate = Original time estimate / SPI = 12 months/1.5 = 8 months
• Earned value, therefore, provides an excellent way to monitor project
performance and provide forecasts based on performance to date.

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 Forecasting with Earned Value (Cont’d)
• estimate at completion (EAC),
– which is a forecast of how much the project will cost upon completion
– EAC = BAC/CPI
• The budget at completion (BAC), or the approved total budget for the
project, can be divided by the cost performance index
• CPI = $700,000/$750,000 = .933333
• SPI = $700,000/$689,500 = 1.015228
• EAC = $1000,000/.933333 = $1,071,429
• Likewise, to calculate when the project will be completed
– the approved time estimate for the project can be divided by the
schedule performance index
– New time estimate = 12 months/.933333 = 11.82 months
• Earned value, therefore,
– provides an excellent way to monitor project performance
– and provide forecasts based on performance to date.

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 To Complete Performance Index
• The efficiency that must be achieved to
complete the remaining work with the
remaining money

– TCPI = (BAC - EV) / (BAC - AC)

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 Earned Value Formulas

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 Interpreting EV-indicators
• Typically indicators are stable after 20% of the project
• In general, negative numbers for cost and schedule
variance indicate problems in those areas.
– Negative numbers mean
• the project is costing more than planned
• or taking longer than planned.

• CPI > 1 project is on budget

• CPI < 1 project is over budget
• SPI > 1 project is ahead of time
• SPI < 1 project is behind schedule
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 Sample Earned Value Chart

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 Integrated Change Control
• Three Objectives
– Influence the factors that cause changes
• to ensure that changes are beneficial
– Everyone needs to focus on promoting changes that are
beneficial
– Determine that a change has occurred.
– Manage actual changes as they occur.
• Note: The project management plan
– provides the baseline for identifying and
controlling project changes.
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 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 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.

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 Conventions Used to Estimate Progress on
Tasks
• 50-50
– 50% complete when task started and other 50%
added when task finished
• 100%
– 100% complete when finished and zero percent
before that
• Ratio of Cost Expended to Cost Budgeted

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 Variances
• Cost/Spending Variance (CV)
EV - AC
• Schedule Variance (SV)
EV - PV
• CPI
EV/AC
• SPI
EV/PV

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 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
- A job with low critical ratio(less than 1.0) ---- falling behind schedule.
If CR is exactly 1.0 ---- the job is on schedule.
If CR is greater than 1.0 ---- the job is ahead of schedule and has
some slack.
 The further away from 1 the ratio is, the more we may need to
investigate

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

Activity Actual Scheduled Budgete Actual Critical

progress Progress d Cost cost ratio
(CR)
A 4 days 4 days 60 40

B 3 days 2 days 50 50

C 2 days 3 days 30 20

D 1 day 1 day 20 30

E 2 days 4 days 25 25

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