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Lecture 10 - Monitoring and Controlling Project
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LECTURE 10
Monitoring and Controlling Project
Introduction
Control is the process of:
comparing actual performance to the plan
to determine the variances,
evaluate possible alternatives, and
take appropriate action.
The ability to control a project is directly tied to the effectiveness of the project plan.
Problems will always occur but they should be kept to a minimum.
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Good Cost And Control System
PLANNINGWORK
AUTHORIZATIONAND RELEASE
DATACOLLECTION
AND REPORTING
COSTACCOUNTING
CUSTOMER ANDMANAGEMENT
REPORTING
PHASE I PHASE II PHASE III PHASE IV PHASE V
OPERATING CYCLECYCLE
PLANNING
Cost estimating Cost accounting Project cash flow Company cash flow Direct labor costing Overhead rate costing Others, such as incentives, penalties, and profit-sharing
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Explanation of Project Costs
Project Indirect Costs
Costs that cannot be associated with any particular work package or project activity.
Supervision, administration, consultants, and interest
Costs that vary (increase) with time.
Reducing project time directly reduces indirect costs.
Direct Costs
Normal costs that can be assigned directly to a specific work package or project activity.
Labor, materials, equipment, and subcontractors
Crashing activities increases direct costs.
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Principles of Monitoring and Control
Set up a formal process to control changes in the project.
Dont micro-manage.
Elevate problems to the lowest level of management that can make the decision and take action.
Be consistent, calculating and reporting schedule progress, cost expenditures, and scope performance throughout the project life.
If you have more than one project, be sure to handle significant, highly-visible projects first and more often, followed by average and then low priority projects.
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Establishing a Plan to Monitorand Control the Project
Determining Information Needs
Determining Data Collection Methods
Determining Frequency of Data Collection
Status Information
Variances
Reports
Course of Action
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Determine Data Collection Methods
Electronic
Manual
Onsite Inspection
One-on-one Interviews
Team Meetings
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Determine Frequency of Data Collection
The reporting requirements of the customers
Average duration of the project activities.
Experience (known or unknown subject matter).
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Variances
Impact on the project.
Whether impact is a problem.
Cause of variance, including reasons and people involved.
Whether the cause of the variance will create variances elsewhere in the project.
The management cost and control system (MCCS)
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Reports
What the plan says should be happening.
What is ACTUALLY happening (status).
Variance between plan and status.
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Cost data collection and reporting flow chart
Actuals
Labor
ACWP
InventoryAccounts
BCWP
Computer
BCWS
Monthly TotalProgram Effort
Weekly LaborReports
MCCS Comparisonreports To All Mngt
Variance Report
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Course of Action
Implement the decision.
Follow up to ensure that the action solves the problem.
Take additional action if necessary to solve the problem.
Document the decisions that make significant changes in the approved plans.
Take preventative action to ensure that similar problems dont happen again.
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Variance Analyses
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Variables for Variance Analysis
Budgeted Cost For Worked Scheduled (BCWS)
The budgeted amount of cost for word scheduled to be accomplished plus the amount of level of effort or apportioned effort scheduled to be accomplished in a given time period.
Budgeted Cost For Work Performed (BCWP)
The budgeted amount of cost for completed word, plus budgeted for level of effort or apportioned effort activity completed within a given time period. This is sometimes referred to as an earned value.
Actual Cost For Work Performed (ACWP)
The amount reported as actually expended in completing the work accomplished within a given time period.
Cost Variance = BCWP ACWP
Schedule/Performance Variance = BCWP - BCWS14
Methods of Variances Analysis
The cost variance (CV) compares deviations only from the budget and does not provide a measure of comparison between work scheduled and work accomplished.
The scheduling variance (SV) provides a comparison between planned and actual performance but does not include costs.
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Cost Variance Calculation
A NEGATIVE VARIANCE INDICATES A COST OVERRUN
CV = BCWP - ACWP
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Schedule Variance Calculation
SV = BCWP - BCWS
A NEGATIVE VARIANCE INDICATESA BEHIND SCHEDULE CONDITION
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Variance Percents
SCHEDULE VARIANCE % =(SVP)
COST VARIANCE % =(CVP)
SVBCWS X 100
CVBCWP X 100
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Classroom Activity 10a
Consider a potential problem that could occur in your current project.
What recommendation would you make to solve it and to whom would you make it?
What alternatives would you suggest if they dont accept your recommendation?
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Questions?