Chapter Seven

Project Monitoring , Controlling and

Evaluation

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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

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Monitoring Has Several Uses

 The primary use is project control

 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

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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

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Designing the Monitoring
System

1. Start with the key factors to be controlled

o Pareto analysis: a relatively few activities
determine most of the project’s success
o Use the project plan to identify items to be
monitored.

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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

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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 . . .

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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

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Structure of a Project Monitoring Information
System

Creating a project monitoring system

involves determining:
 What data to collect
 How, when, and who will collect the data
 How to analyze the data
 How to report current progress to
management

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Cont’d…
 What data are collected?
 Current status of project (schedule and cost)
 Remaining cost to compete project
 Date that project will be complete
 Potential problems to be addressed now
 Out-of-control activities requiring intervention
 Cost and/or schedule overruns and the reasons for them
 Forecast of overruns at time of project completion

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Cont’d…
 Collecting data and analysis
• Who will collect project data?
• How will data be collected?
• When will the data be collected?
• Who will compile and analyze the data?
 Reports and reporting
• Who will receive the reports?
• How will the reports be transmitted?
• When will the reports be distributed?

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Project Progress Report Format
Progress since last report
Current status of project
• Schedule
• Cost
• Scope
Cumulative trends
Problems and issues since last report
• Actions and resolution of earlier problems
• New variances and problems identified
Corrective action planned

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The Project Control Process
Control is the process of comparing actual performance against plan
to identify deviations, evaluate courses of action, and take
appropriate corrective action.
 Project Control Steps
1. Setting a baseline plan.
2. Measuring progress and performance.
3. Comparing plan against actual.
4. Taking action.
 Tools
 Tracking and baseline Gantt charts
 Control charts

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Earned Value Analysis

 “Earned Value Analysis” is an industry

standard way to measure a project’s
progress, forecast its completion date and
final cost, and provide schedule and
budget variances along the way.

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Cont’d…
 Earned Value Management (EVM) is a project
management technique that objectively
tracks physical accomplishment of work.
 More elaborately:
 EVM is used to track the progress and status
of a project and forecasts the likely future
performance of the project.
 EVM integrates the scope, schedule, and cost
of a project.
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 Cont’d…
 EVM answers a lot of questions to the
stakeholders in a project related to its
performance.
 EVM can be used to show the past and the
current performance of a project and predict the
future performance of the project by the use of
statistical techniques.
 Good planning coupled with effective use of EVM
will reduce a lot of issues arising out of schedule
and cost overruns.
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The 3 fundamental metrics

 Budgeted Cost of Work Scheduled.

 Budgeted Cost of Work Performed.

 Actual Cost of Work Performed.

Planned Value:

 Planned value (PV) is also referred to as

Budgeted Cost of Work Scheduled
(BCWS). PV or BCWS is the total cost of
the work scheduled/planned as of a
reporting date.
 It is calculated as:
 PV or BCWS = Hourly Rate × Total Hours
Planned or Scheduled
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Cont’d…

 Budgeted Cost of Work Scheduled (BCWS)

or Planned Value (PV) – The sum of
budgets for all work packages scheduled
to be accomplished within a given time
period.

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 Cont’d…
 It is the total budgeted cost up to the
analysis date.
 Approximated by the total budget
multiplied by the fraction of total project
duration at the analysis date.
 “How much work should have been
done?”
 Budgeted Cost of Work
Performed
 This is the “Earned Value.”
 Abbreviated as BCWP.
 For completed work, it is the cost
originally budgeted to accomplish that
work.
Cont’d…
 Earned value (EV) is also referred to as
Budgeted Cost of Work Performed
(BCWP). EV or BCWP is the total cost of
the work completed/performed as of a
reporting date.
 It is calculated as:
 EV or BCWP = Baselined Cost × %
Complete Actual

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Cont’d….

 Budgeted Cost of Work Performed

(BCWP) or Earned Value (EV) – The sum
of budgets for completed work packages
and completed portions of open work
packages.
 “How much work was actually done?”

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 Actual Cost of Work
Performed

 Abbreviated ACWP.
 What it actually cost to accomplish all the
work completed as of the analysis date.
 “What did the work that was actually done
actually cost?”
 Derived Metrics

 Schedule Variance (SV)

 Schedule Performance Index (SPI)
 Cost Variance (CV)
 Cost Performance Index (CPI)
 A Few More Acronyms

 BAC - Budget At Completion

 = Total Original Budgeted Cost
 Same as BCWS at completion
 EAC - Estimate At Completion
 = Cumulative Actuals + Estimate-To-Complete
 VAC - Variance At Completion
 = Forecast of final cost variance
 Doing The Math
 SV = BCWP (EV) - BCWS
 Negative means Behind Schedule
 SPI = BCWP / BCWS
 Less than 1.00 means Behind Schedule
 CV = BCWP - ACWP
 Negative means Over Budget
 CPI = BCWP / ACWP
 Less than 1.00 means Over Budget
 EAC = BAC / CPI
Cont’d…
EV Earned value for a task is simply the percent complete times its original budget. Stated differently,
EV is the percent of the original budget that has been earned by actual work completed.

PV The planned time-phased baseline of the value of the work scheduled. An approved cost estimate
of the resources scheduled in a time-phased cumulative baseline [BCWS—budgeted cost of the
work scheduled].

AC Actual cost of the work completed. The sum of the costs incurred in accomplishing work. [ACWP
—actual cost of the work performed].

CV Cost variance is the difference between the earned value and the actual costs for the work
completed to date where CV = EV – AC.

SV Schedule variance is the difference between the earned value and the baseline line to date where
SV = EV – PV.

BAC Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts.

EAC Estimated cost at completion.

ETC Estimated cost to complete remaining work.

VAC Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion.

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 Development of Project Baselines
 Purposes of a Baseline (PV)
 An anchor point for measuring performance
 A planned cost and expected schedule against
which actual cost and schedule are measured.
 A basis for cash flows and awarding progress
payments.
 A summation of time-phased budgets (cost accounts
as summed work packages) along a project timeline.
 What Costs Are Included in Baselines?
 Labor, equipment, materials, project direct overhead
costs (DOC)

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Methods of Variance Analysis
 Comparing Earned Value
 With the expected schedule value.
 With the actual costs.
 Assessing Status of a Project
 Required data elements
 Data Budgeted cost of the work scheduled (PV)
 Budgeted cost of the work completed (EV)
 Actual cost of the work completed (AC)
 Calculate schedule and cost variances
 A positive variance indicates a desirable condition,
while a negative variance suggests problems or
changes that have taken place.

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Cont’d…
 Cost Variance (CV)
 Indicates if the work accomplished using labor
and materials costs more or less than was
planned at any point in the project.
 Schedule Variance (SV)
 Presents an overall assessment in dollar terms
of the progress of all work packages in the
project scheduled to date.

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Cost/Schedule Graph

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Earned-Value Review Exercise

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Indexes to Monitor Progress

 Performance Indexes
 Cost Performance Index (CPI)
 Measures the cost efficiency of work accomplished to date.
 CPI = EV/AC
 Scheduling Performance Index (SPI)
 Measures scheduling efficiency
 SPI = EV/PV
 Percent Complete Indexes
 Indicates how much of the work accomplished represents of
the total budgeted (BAC) and actual (AC) dollars to date.
 PCIB = EV/BAC
 PCIC = AC/EAC

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Interpretation of Indexes

Index Cost (CPI) Schedule (SPI)

>1.00 Under cost Ahead of schedule
=1.00 On cost On schedule
<1.00 Over cost Behind schedule

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 END OF CHAPTER

???

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