UNIT-V
PERFORMANCE MEASUREMENT AND EVALUATION
What Are Project Controls?
Project controls are processes for gathering and analyzing project data to keep costs and
schedules on track. The functions of project controls include initiating, planning, monitoring
and controlling, communicating, and closing out project costs and schedule. Ultimately,
project controls are iterative processes for measuring project status, forecasting likely
outcomes based on those measurements and then improving project performance if those
projected outcomes are unacceptable.
Activities under the umbrella of project controls may include:
• Aligning projects with portfolio/organization goals and objectives
• Developing a work-breakdown structure (WBS)
• Collaborating on initial project schedules
• Developing a risk management plan
• Project budgeting and forecasting
• Monitoring project costs
• Feedback and reporting
• Optimizing project strategies to enable better outcomes in the future
Reports That Every Project Controls Team Should Have
Too often, project controls are perceived as “back office analytics,” without a clear
understanding of how it directly relates back to project performance and ROI. This
makes it difficult for project teams to grab the attention of management.
However, when recommendations are backed by facts and actionable data, teams are
more likely to embrace them. This is why it’s essential to build smart, automated and
regular reports into the process.
Here are a few reports that help to socialize project controls concepts with project
teams and allow everyone to align on the best path forward:
Cost Report
Change Management Register
Risk Register
Challenges Within Project Controls
Lack of commitment and support from senior
management
Perception as just another cost function
Confrontational dynamic
Manual and outdated processes
Project Control Cycle- A general model
1. Setting a goal
2. Measuring progress
4. Taking action
3. Comparing actual with planned
performance.
MONITORING PROJECT PERFORMANCE
For project monitoring and control, both individual task budgets and the
cumulative project budget are relevant. The cumulative budget can be broken
down by time over the project’s projected duration
The Project s-curve:
MILESTONE ANALYSIS
Another method for monitoring project progress is milestone analysis. A
milestone is an event or stage of the project that represents a significant
accomplishment on the road to the project’s completion. Completion of a
deliverable (a combination of multiple project tasks), an important activity on
the project’s critical path, or even a calendar date can all be milestones. In
effect, milestones are road markers that we observe on our travels along the
project’s life cycle.
There are several benefits to using milestones as a form of project
control.
1. Milestones signal the completion of important project steps.
2. Milestones can motivate the project team.
3. Milestones offer points at which to reevaluate client needs and any potential
change requests
4. Milestones help coordinate schedules with vendors and suppliers.
5. Milestones identify key project review gates.
6. Milestones signal other team members when their participation is expected to
begin.
7. Milestones can delineate the various deliverables developed in the Work
Breakdown Structure and thereby enable the project team to develop a better
overall view of the project
TRACKING GANTT CHART
It is useful for evaluating project performance at specific points in time. The
tracking Gantt chart allows the project team to constantly update the project’s
status by linking task completion to the schedule baseline. Rather than monitor
costs and budget expenditures, a tracking Gantt chart identifies the stage of
completion each task has attained by a specific date within the project.
The figure represents Project Blue, involving five activities. As the project progresses,
its current status is indicated by the vertical status bar shown for Thursday, July 24. To
date, activity A (Licensing Agreement) has been 100% completed, while its two
subsequent tasks, Specification Design and Site Certification, are shown as having
progressed proportionally by the identified tracking date. That is, activity B
(Specification Design) is rated as 57% completed, and activity C (Site Certification) as
80% completed. Activities D and E have not yet begun.
It is also possible to measure both positive and negative deviations from the schedule
baseline with the tracking Gantt chart. Let us suppose, using our Project Blue example, that
activity B remains approximately 57% completed as of the baseline date indicated. On the
other hand, activity C has not progressed as rapidly and is only 20% completed as of the July
24 date. The chart can be configured to identify the variations, either positive or negative, in
activity completion against the project baseline. These features are demonstrated in Figure
13.7, showing the current date for the project and the delay in progress on activity C.
Earned value management
An increasingly popular method used in project monitoring and control consists of a mechanism that
has become known as Earned value Management (EVM).
Earned value management (EVM) is a project management methodology that integrates schedule,
costs, and scope to measure project performance. Based on planned and actual values, EVM
predicts the future and enables project managers to adjust accordingly.
In turn, Earned Value Management Systems (EVMS) refer to the software, processes, tools, and
templates used for EVM.
origins of EVM date to the 1960s when U.S. government contracting agencies began to question the
ability of contractors to accurately track their costs across the life of various projects As a result, after
1967, the Department of Defense imposed Cost/Schedule Control Systems Criteria that suggested, in
effect, that any future projects procured by the U.S. government in which the risk of cost growth was
to be retained by the government must satisfy these criteria. In the more than four years since its
origin, EVM has been practiced in multiple settings, by agencies from governments as diverse as
Australia, Canada, and Sweden, as well as by a host of project-based firms in numerous industries
Unlike previous project tracking approaches, EVM recognizes that it is necessary to
jointly consider the impact of time, cost, and project performance on any analysis of
current project status.
Put another way: Any monitoring system that only compares actual against budgeted
cost numbers ignores the fact that the client is spending that money to accomplish
something—to create a project.
Therefore, EVM reintroduces and stresses the importance of analyzing the time element
in project status updates. Time is important because it becomes the basis for determining
how much work should be accomplished at certain milestone points.
EVM also allows the project team to make future projections of project status based on
its current state. At any point in the project’s development, we are able to calculate both
schedule and budget efficiency factors (the efficiency with which budget is being used
relative to the value that is being created) and use those values to make future
projections about the estimated cost and schedule to project completion
Benefits:
Earned value management is a power tool with many benefits, enabling you to:
Map work with costs, reducing unknowns into quantifiable factors.
Compare and benchmark the current status against the project baseline and identify critical
paths.
Create a data-based framework to take actions and make decisions for the future.
Intervene fast and ahead of time (for example, you can tweak(Improve by making some
adjustments to it) project scope and budgets, rollback functionalities, procure more
resources, invest in better technologies, set customer expectations, etc.).
Provide visibility and create accountability in stakeholders through clear metrics.
Provide insight into the big picture at both project and portfolio levels.
Terminology for earned Value
Planned value (PV). The authorized budget assigned to scheduled work. At any
given moment, planned value defines the physical work that should have been
accomplished to that point in time. It can also be thought of as a cost estimate of the
budgeted resources scheduled across the project’s life cycle (cumulative baseline). In
older terminology, PV used to be referred to as BCWS (Budgeted Cost of Work
Scheduled).
Earned value(EV). This is a measure of the work performed expressed in terms of
the budget authorized for that work. This is the real budgeted cost, or “value,” of the
work that has actually been performed to date. In older terminology, EV used to be
referred to as Budgeted Cost of Work Performed (BCWP).
Actual cost (AC)of work performed. This is the realized cost for the work
performed on an activity during a specific time period. It is the cumulative total
costs incurred in accomplishing the various project work packages that EV
measured. In older terminology, AC used to be referred to as Actual Cost of Work
Performed (ACWP).
Schedule variance(SV) This is a measure of schedule performance expressed as
the difference between the earned value and the planned value, or EV – PV. It is
the amount by which the project is ahead or behind the delivery date at a given
point in time.
Cost variance (CV ). This is a measure of cost performance expressed as the
difference between the earned value and the actual cost of work performed, or EV
– AC. It is the amount of budget deficit or surplus at a given point in time.
Schedule Performance index (SPI). The rate at which project performance is
meeting schedule expectations up to a point in time. SPI is expressed as the earned
value to date divided by the planned value of work scheduled to be performed
(EV/PV). This value allows us to calculate the projected schedule of the project to
completion.
Cost Performance index (CPI). The rate at which project performance is meeting
cost expectations during a given period of time. CPI is expressed as the earned
value divided by the actual, cumulative cost of the work performed to date
(EV/AC). This value allows us to calculate the projected budget to completion.
Budgeted cost at completion (BAC). This value represents the total budget for a
project.
Estimate at completion(EAC). The expected total cost of completing all work on
the project. This is the projected (forecasted) total cost based on project
performance to that point in time. It is represented as the sum of actual costs (AC)
plus an estimate to complete all remaining work
Steps in Earned Value Management
There are five steps in Earned Value Management (EVM):
1. Clearly define each activity or task that will be performed on the project, including its
resource needs as well as a detailed budget.
2. Create the activity and resource usage schedules.
3. Develop a “time-phased” budget that shows expenditures across the project’s life.
4. Total the actual costs of doing each task to arrive at the actual cost of work performed
(AC).
5. Calculate both a project’s budget variance and schedule variance while it is still in
process.
Human factors in project Evaluation and control
Another recurring problem with establishing accurate or meaningful EVM results has to do
with the need to recognize the human factor in all project activity completion projections.
A key component of any process evaluation of project performance must include an
assessment of its people, their technical skills, management, teamwork, communication
processes, motivation, leadership, and so forth…
Past research examining the impact of human factors on project success bears out the
importance of considering the wider “management” challenge inherent in managing project.
Project coordination and relations among stakeholders
Adequacy of project structure and control
Project uniqueness, importance, and public exposure
Success criteria salience and consensus
Lack of budgetary pressure
Avoidance of initial overoptimism and conceptual difficulties
Project termination
Project termination consists of all activities consistent with closing out the project. It
is a process that provides for acceptance of the project by the project’s sponsor,
completion of various project records, final revision and issue of documentation to
reflect its final condition, and the retention of essential project do….
These two alternatives are sometimes referred to as natural termination, in which the
project has achieved its goals and is moving toward its logical conclusion, and
unnatural termination, in which a shift in political, economic, customer, or
technological conditions has rendered the project without purpose.
Types of Project Termination
4 reasons for project termination:
1. Termination by extinction
2. Termination by addition.
3. Termination by integration.
4. Termination by starvation.
Types of Project Termination
1. Termination by extinction:
The project is stopped. It may and because it has been successful and achieved its goals; the new product has been
developed and handed over to the client, or the software has been installed and is running.
2. Termination by addition:
Most projects are “in-house” carried out by the project team for use in the parent organization. If a project is a major
success, it may be terminated by institutionalizing it as a formal part of the parent organization.
3. Termination by integration:
This method of terminating a project is the most common way of dealing with the successful project, and the most
complex. The property; equipment, material, personnel and functions of the project are distributed among the existing
elements of the parent organization. The output of the project becomes a standard part of the operating systems of the
patent, or the client.
4. Termination by starvation:
There is a fourth type of project termination although strictly speaking, it is not a “termination” at all. It is slow starvation
by a budget decrement. Almost anyone who has been involved with projects over a sufficient period of time to have
covered a business recession has had to cope with budget cuts.
Therefore, we emphasize again that it is vital to run the regular project closure procedures for a project we have to
Project Follow up
Project Follow-up is a general process for controlling and monitoring status of project work to ensure that the
project is performed on schedule, within budget and as per requirements.
It uses feedback on costs, schedules, requirements, employee performance, and other critical factors to
determine project success.
The key goal of the follow-up process is to monitor the course of a project and adjust project activities when
needed to ensure effectiveness of project results. The process achieves this goal by performing the following 6
steps:
Managing variances to confirm there is no uncontrolled change that causes project instability
Controlling scope to ensure the project is performed within accepted boundaries and requirements.
Monitoring spending to avoid cost overruns and budget failure
Responding to risks to keep the project feasible and effective
Assuring quality to ensure customer acceptance of deliverables
Controlling schedules to prevent delay and procrastination
The project follow-up process starts with the beginning of project activities, lasts throughout project
implementation, and ends up with completion of project goals. Another name of this process is project delivery
Current and future trends in project
management