Project Management A Managerial Approach Chapter 10 Monitoring

Project Management: A Managerial Approach Chapter 10 – Monitoring and Information Systems © 2006 John Wiley and Sons, Inc.

Overview • • • Closed-loop System Monitor System Design Data Collection Project Reports Earned Value Charts © 2006 John Wiley and Sons, Inc.

Monitoring and Information Systems • Evaluation and control of projects are the opposite sides of project selection and planning • Logic of selection dictates the components to be evaluated • The details of the planning expose the elements to be controlled • Monitoring is the collecting, recording, and reporting information concerning any and all aspects of project performance © 2006 John Wiley and Sons, Inc. Chapter 10 -1

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 © 2006 John Wiley and Sons, Inc. Chapter 10 -2

The Planning - Monitoring - Controlling Cycle • The control process should be perceived as a closed loop system • In a closed loop system, revised plans and schedules should follow corrective actions • The planning-monitoring-controlling cycle is continuously in process until the project is complete © 2006 John Wiley and Sons, Inc. Chapter 10 -3

Project Control Closed-Loop MANAGEMENT FEEDBACK LOOPS “Customer” IDs Need “Ballpark” Resource Estimates “Project Plan And Schedule” Develop Functional Specs Verify Specs w/ “Customer Design Specs to Engineering Specs Functional Specs to Design Specs Implement, Monitor, & Control Stakeholder Feedback PM TEAM FEEDBACK LOOPS © 2006 John Wiley and Sons, Inc. REPORT/MONITOR FEEDBACK LOOPS PLANNING/SCHEDULING FEEDBACK LOOPS

Information Flow for the Planning Monitoring - Controlling Cycle © 2006 John Wiley and Sons, Inc. Chapter 10 -4

Designing the Monitoring System • The first step in setting up any monitoring system is to identify the key factors to be controlled • The project manager must define precisely which specific characteristics of performance, cost, and time should be controlled • Exact boundaries must then be established, within which control should be maintained © 2006 John Wiley and Sons, Inc. Chapter 10 -5

Designing the Monitoring System • The best source of items to be monitored is the project action plan • 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -6

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 © 2006 John Wiley and Sons, Inc. Chapter 10 -7

Monitoring for Effectiveness • 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -12

Data Collection Sources • 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -8

Data Collection Reports • 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -9

How to Collect Data • A count of “bugs” found during a series of tests run on a new piece of software: © 2006 John Wiley and Sons, Inc. Chapter 10 -10

How to Collect Data • Percent of specified performance met during repeated trials © 2006 John Wiley and Sons, Inc. Chapter 10 -11

Data Diagnosis • 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -13

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 © 2006 John Wiley and Sons, Inc. Chapter 10 -14

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 © 2006 John Wiley and Sons, Inc. Chapter 10 -15

Reporting Process Effectiveness • 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -16

Monitoring System Drivers • 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -17

Reporting Outcomes • 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -18

Report Types • For the purposes of project management, we can consider three distinct types of reports: – Routine - Regular – Exception – Management Interest – Special analysis – “Lessons Learned” © 2006 John Wiley and Sons, Inc. Chapter 10 -19

Report Types • 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 and it is desirable to inform other managers as well as to document the decision © 2006 John Wiley and Sons, Inc. Chapter 10 -20

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 © 2006 John Wiley and Sons, Inc. Chapter 10 -21

Meetings • Most often, reports are delivered in face-to-face meetings, and in telephone 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 © 2006 John Wiley and Sons, Inc. Chapter 10 -22

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 © 2006 John Wiley and Sons, Inc. Chapter 10 -23

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 © 2006 John Wiley and Sons, Inc. Chapter 10 -24

The Earned Value Chart • One way of measuring overall performance is by using an aggregate performance measure called earned value • A serious difficulty with comparing actual expenditures against budgeted or baseline is that the comparison fails to take into account the amount of work accomplished relative to the cost incurred © 2006 John Wiley and Sons, Inc. Chapter 10 -25

The Earned Value Chart • The earned value of work performed (value completed) for those tasks in progress is found by multiplying the estimated percent completion for each task by the planned cost for that task • The result is the amount that should have been spent on the task so far • The concept of earned value combines cost reporting and aggregate performance reporting into one comprehensive chart © 2006 John Wiley and Sons, Inc. Chapter 10 -26

The Earned Value Chart • Graph to evaluate cost and performance to date: © 2006 John Wiley and Sons, Inc.

The Earned Value Chart • Variances on the earned value chart follow two primary guidelines: – 1. A negative is means there is a deviation from plan—not good – 2. The cost variances are calculated as the earned value minus some other measure • • • EV - Earned Value: budgeted cost of work performed AC - actual cost of work performed PV - Planned Value: budgeted cost of work scheduled ST - scheduled time for work performed AT - actual time of work performed © 2006 John Wiley and Sons, Inc. Chapter 10 -28

The Earned Value Chart • EV - AC = cost variance (CV, overrun is negative) • EV - PV = schedule variance (SV, late is negative) • ST - AT = time variance (TV, delay is negative) • If the earned value chart shows a cost overrun or performance underrun, the project manager must figure out what to do to get the system back on target • Options may include borrowing resources, or holding a meeting of project team members to suggest solutions, or notifying the client that the project may be late or over budget © 2006 John Wiley and Sons, Inc. Chapter 10 -29

The Earned Value Chart • Variances are also formulated as ratios rather than differences – Cost Performance Index (CPI) = EV/AC – Schedule Performance Index (SPI) = EV/PV – Time Performance Index (TPI) = ST/AT • Use of ratios is particularly helpful when comparing the performance of several projects © 2006 John Wiley and Sons, Inc. Chapter 10 -30

Milestone Reporting • Milestone reports serve to keep all parties up to date on what has been accomplished • If accomplishments are inadequate or late, these reports serve as starting points for remedial planning © 2006 John Wiley and Sons, Inc. Chapter 10 -34

Computerized PMIS • New microcomputer-based project management information systems (PMISs) are considerably more sophisticated than earlier systems • Uses the microcomputer’s graphics, color, and other features more extensively • Many systems can handle almost any size project, being limited only by the memory available in the computer © 2006 John Wiley and Sons, Inc. Chapter 10 -35

Computerized PMIS • The PMIS trend of the 1990 s has been to integrate the project management software with spreadsheets, databases, word processors, communication, graphics, and the other capabilities of Windows-based software packages • The current trend is to facilitate the global sharing of project information, including complete status reporting, through local networks as well as the Internet © 2006 John Wiley and Sons, Inc. Chapter 10 -36

Current Software • The explosive growth of project management software during the early 1990 s saw the creation of more than 500 packages • Systems can be easily misused or inappropriately applied - as can any tools • The most common error is managing the PMIS rather than the project itself © 2006 John Wiley and Sons, Inc. Chapter 10 -37

Current Software • In addition to managing the PMIS instead of the project, other problems include: – Computer paralysis – PMIS verification – Information overload – Project isolation – Computer dependence – PMIS misdirection © 2006 John Wiley and Sons, Inc. Chapter 10 -38

Choosing Software • Characteristics of generally desirable attributes in project management software: » Friendliness » Schedules » Calendars » Budgets » Reports » Graphics » Charts » Migration © 2006 John Wiley and Sons, Inc. Chapter 10 -39

Typical Software Output © 2006 John Wiley and Sons, Inc. Chapter 10 -40

Typical Software Output • Early and late start and finish dates and slack © 2006 John Wiley and Sons, Inc. Chapter 10 -41

Typical Software Output • Project Cost Tracking © 2006 John Wiley and Sons, Inc. Chapter 10 -42

Typical Software Output • AON Network © 2006 John Wiley and Sons, Inc. Chapter 10 -43

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