Project

Monitoring
and Control
Project Management Process Groups
 • Performed through out the project cycle.
• Track, review, measure, and report progress. Identify
course correction and changes required.
• Activities
– Comparing actual project performance with plans – Cost, time,
quality etc.
– Assess performance to identify corrective, preventive action.
– Identify new risks and response plan
– Forecasting – cost; time
– Monitoring implementation of changes
– Provide reports on project progress and performance
– Provide exception reports to top management
– Identify change requests

Monitor and control the work

 • Expert judgement
• Analytical techniques
– Variance: Plan Vs Actual (Cost, Time, Scope etc.)
– Root cause analysis
– S-Curves (Plan vs Actual)
– PERT & Activity Network – A-o-A or A-o-N (Plan vs Actual)
– Gantt Charts with milestones & activities (Plan vs Actual)
– Earned value analysis
• Project management information system
– Daily, Weekly and Monthly progress reports (Plan vs Actual)
– Exception reports
• Meetings – progress review meetings

Tool and Techniques

 Controlling Project Objectives
Time Control- Actual performance Vs Scheduled Performance
• EST, EFT, LST,LFT
• Guard against Parkinson’s Law -"work expands so as to fill the time available for its completion“.
• Check for Planning Flaws

Cost Control- Actual expenditure Vs Budgeted

• Check on additional and redundant cost centres
• Re-check estimate and budgeting errors
• Re-check for inclusion of contingencies and risks
• Check for alignment of changes their impact on the budget and collation of various decisions.

Scope and Quality Control-Actual Vs Benchmarks ( Standards)

• Identify Control points and performance indices
• Plan for assurance not control
• Balance between Quality, Time and costs
• Develop common understanding of Scope and quality. Stakeholder cooperation
• Generate a responsibility centre for quality assurance and control
 Setting
goal(s)

Taking
action and
Measuring
recycling
progress
the
process

Comparing
actual with
plan
Project control cycle
 Plan

Plan Progress
below plan
Invoicing as
per plan
Progress as
per plan
Invoicing is
below plan

Invoice schedule

S Curves can be used for monitoring activities, budget, revenues etc.

Draw backs: It will not tell reason for delay; It will not provide integrated view, i.e. link
between budget & time is not reflected

S - Curves
Control of In-Progress Projects
Though a lot of effort is expended in selecting capital projects, things
often go wrong in the implementation phase. This is evident from the
frequent cost and time over-runs witnessed in practice. Hence it is
necessary to exercise strict control on in-progress capital projects There
are two aspects of controlling in-progress capital projects.

• Establishment of internal control procedures

• Use of regular progress reports
 • Plan Vs Actual activity
network

Activity Network
Courtesy :PMBOK 6
Courtesy :P
MBOK 6
 Actual

Gantt Chart - Milestones

 Critical activity
Tracking Gantt Chart

Plan
Actual

Intermediate stage
Is the activity on track?
Gant Chart cannot answer

Gantt Chart – Activity schedule

 • EVM Combines scope, schedule and resources
measurements to assess project progress and
performance
• Used for Project performance measurement
• It integrates scope baseline, schedule baseline and
cost baseline to form performance baseline

Earned Value Management (EVM)

 • Planned value (PV) or Budgeted cost of work scheduled (BCWS):
Authorized budget for an activity / work package / WBS.
– PV or BCWS = Budgeted quantity of work x rate
– = Budgeted value x Plan % complete
– At Project level, PV or BCWS = Budget at Completion (BAC)
• Earned value (EV) or Budgeted cost of work performed (BCWP):
It is the budgeted value corresponding to actual quantum of
work completed / performed, i.e. what the project has earned at
that point in time.
– EV or BCWP = Actual quantity of work performed x rate
– = Budgeted value x Actual % complete
• Actual cost (AC) or Actual cost of work performed (ACWP):
Actual cost incurred to perform the work during specified period
or at that point in time.
– AC or ACWP = Actual cost of work done / completed
EVM
 • Variances
– Schedule variance (SV) = EV or BCWP – PV or BCWS
• It means how much the project performance is variant from plan.
• That’s why is called schedule variance.
• How much the project is ahead or behind schedule.
• If SV is +ve, the project is ahead and if it is –ve the project is behind schedule.
– Cost variance (CV) = EV or BCWP – AC or ACWP
• It means if there is budget surplus or deficit.
• If CV is +ve, there is budget surplus and it is –ve there is budget deficit.
• It is an indication of cost performance of the project.

• Indices
– Schedule performance index (SPI) = EV/PV or BCWP/BCWS
• It is a measure of schedule efficiency
• If SPI >1, the project team had completed more work than the plan. SPI<1,
the project team has done less work than the plan.
– Cost performance index (CPI) = EV / AC or BCWP/ACWP
• It is a measure of cost efficiency
• If CPI >1, the project has no cost overrun. CPI<1, the project has cost overrun

Control Parameters
 At any point in time during the course of the project

Projec BCWS BCWP ACWP SV = SPI = CV= CPI= Project evaluation /

t (Budgeted (Budget (Actual EV-PV EV/PV EV-AC EV/AC Remarks
cost of ed cost cost of
work of work work
scheduled) perform perform
or PV, ed) or ed) or
Crores EV AC
Crores Crores
Alpha 5000 5000 5000 The project is on
schedule and it is
also on budget, ie.
0 1 0 1 No cost overrun.
Beta 5000 4000 6000 The project is
- behind schedule
1000.0 - and there is cost
0 0.80 2000.00 0.67 overrun.
Gama 4000 5000 5000 The project is ahead
of schedule and the
project is on budget,
1000.0 i.e. there is no cost
Earned Value Analysis 0 1.25 0.00 1.00 overrun.
PROJECT S-CURVE
PROJECT S-CURVE SHOWING NEGATIVE
VARIANCE
Earned Value Milestones
• Scenario 1- Chance of Finishing the Work at BAC (Budget at
Completion)
• Scenario 2- Chance of Finishing the Work at EAC (Estimate
at Completion)
– Based on AC( Actual Cost) + Bottom up ETC (Estimate to Complete)
– Sub Scenarios
• EAC forecast for ETC work performed at the budgeted rate.
– EAC = AC + (BAC – EV).
• EAC forecast for ETC work performed at the present CPI.
– EAC = BAC / CPI
• EAC forecast for ETC work considering both SPI and CPI factors.
– EAC = AC + [(BAC – EV) / (CPI × SPI)]

Forecasting
The to-complete performance index (TCPI) is a measure of the cost performance
that is required to be achieved with the remaining resources in order to meet a
specified management goal, expressed as the ratio of the cost to finish the
outstanding work to the remaining budget.
• The equation for the TCPI based on the BAC: (BAC – EV) [ Cost to Finish] / (BAC – AC) [ remaining
budget].

• The equation for the TCPI is based on the EAC: (BAC – EV) / (EAC – AC).

To-Complete Performance Index (TCPI)

 Activity Jan Feb Mar Apr May Jun Jul Plan %C Value
• Staffing 8 7 15 100 15
• Blueprinting 4 6 10 80
8
• Prototyp Devel 2 8 10 60
6
• Full Design 3 8 10 21 33
7
• Construction 2 30 32 25
8
• Transfer 10 10 0 0
• Punch List 15 5 20 0
0
• Σ = 118
44
• Monthly Plan 8 7 6 17 10 55 15
• Cumulative 8 15 21 38 48 103 118
• Monthly Actual 8 11 8 11 10 30 0
• Cumulative Actual 8 19 27 38 48 78
Earned Value Example ( Tracking in the month of June)
Schedule Variances
Planned Value (P V) = 103
Earned Value (E V) = 44

Cost Variances
Cumulative Actual Cost of Work Performed
(A C) = 78
 • Schedule mgmt.
– On-demand scheduling:
• Uses Theory of Constraints (ToC) – a chain is as strong as its weakest
link (constraint), identify constraint (bottleneck), eliminate bottlenecks,
eliminate multi-tasking and create buffers.
• Uses Pull-based scheduling – don’t start new project, pull from backlog
and deliver incremental product as resources become available.
Balance demand with teams throughput.

• Cost Mgmt
– Earned Schedule (ES) method an extension of Earned Value
Management
– In EVM the schedule performance metric is essentially in
monitory value, Schedule Variance = (Budgeted cost of work
performed – Budgeted cost of work scheduled/planned).
– In ES the schedule performance is determined in Time units.
Emerging Trends
• ES: The duration from the
beginning of the project to
the date on which the PV
should have been equal to
the current value of EV.
• AT (Actual Time)
• Time Variance (TV) = ES-AT

Source: PMI

Earned Schedule (ES)

 Abandonment Analysis

To decide whether the project should be continued or terminated or

divested, the following information is required:

Present value of the expected cash flows (PVCF) This is defined as :

m NCn
PVCF = Σ
n=1 (1+r)n

where m is the balance life of the project at the time of review and r is the
appropriate discount rate.
■ Salvage value (SV) This is the value expected to be realised from
terminating the project and selling its assets.
■ Divestiture value (DV) This is the price offered by a third party to buy
the project.

Given the values of PVCF, SV, and DV, the following are the
decision rules.
If Action

PVCF < SV < DV Divest

PVCF < DV < SV Terminate
SV < DV < PVCF Continue
SV < PVCF < DV Divest
DV < SV < PVCF Continue
DV < PVCF < SV Terminate
 Illustration
Initial Analysis Analysis in Year 3
Year Initial forecast Present Year Actual cash Forecast Present value
of cash flow value at 12% flow in year 3 of cash flow at11%

0 (250) (250) (230)

1 30 26.8 20
2 50 39.9 30
3 80 60.0 65
4 100 63.6 1 80 72.1
5 100 56.7 2 90 73.1
6 80 40.6 3 70 51.2
7 60 27.1 4 50 33.0
8 50 20.2 5 40 23.7

Initial NPV = 84.9 NPV at the end of year 3 = 253.1

Salvage value (SV) at end of 3rd yr = 175Million Decision should be to divest

Third party offer, DV = 260 Million because SV<PVCF<DV