Monitoring and Information Systems

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

2. 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

3. 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

4. Monitoring Has Several Uses • The primary use is projectcontrol • 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

5. 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

6. Project Control Information Flow, Figure 10-1

7. 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

8. 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

9. 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 . . .

10. 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

11. Reporting and Information Flows, Figure 10-5

12. 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

13. 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

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

15. 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

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

17. 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

18. 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

19. Possible Arrangements, Figure 10-8

20. 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

21. 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

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

23. PERT AON Diagram, Figure 10-9

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

25. Example Status at Day 7, Figure 10-11

26. Example Earned Value Chart Day 7, Figure 10-12

27. MSP Budget Sheet, Figure10-13

28. Case: Earned Value at Texas Instruments

29. 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