Project Management

9. Performance Management

Week 9

Performance management

Once you have selected a project

Once you have selected a project

And planned it

Once you have selected a project

And planned it
And hired the team

Once you have selected a project

And planned it
And hired the team
And started the work

Once you have selected a project

And planned it
And hired the team
And started the work
How do you stay on track?

How do you even know if you are

progressing to plan?

Gray & Larson, 2006, Ch 13.

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

What
WhatisisaaProject
ProjectMonitoring
MonitoringSystem?
System?

Monitoring
Monitoring System
System
Gather
Gather

Analyse
Analyse

Report
Report

ItItinvolves
involvesdetermining
determiningwhat
whatdata
datato
tocollect,
collect,how,
how,when
whenan
anwho
whowill
will
collect
collectthe
thedata;
data;analysis
analysisof
ofthe
thedata;
data;and
andreporting
reportingprogress
progress

You need to know what

information is needed to
satisfy you and your
stakeholders.

Think about the

Information System
Structure

What data are

collected?

current
currentstatus
statusof
ofproject
project
(schedule
(scheduleand
andcost)
cost)
remaining
remainingcost
costto
tocompete
compete
project
project
date
datethat
thatproject
projectwill
willbe
be
complete
complete
potential
potentialproblems
problemsto
tobe
be
addressed
addressednow
now

What
What data
data are
are
collected?
collected?

out-of-control
out-of-controlactivities
activities
requiring
requiringintervention
intervention
Cost
Costand/or
and/orschedule
scheduleoverruns
overruns
&&their
theirreasons
reasons
Forecasting
Forecastingoverruns
overrunsat
attime
time
of
completion
of completion

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?
who will receive the reports?
how will the reports be transmitted?
when will the reports be distributed?

Photo by germanium

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

Progress Report Format

Progress since last report
Current status of project
Schedule
Cost
Scope
Problems and issues since last
report
Actions and resolution of
earlier problems
New variances and
problems identified
Corrective action planned

How long
should a
project
status
report be?

1 page

<example>

More info

www.projectconnections.com/knowhow/subsets/sample-templates/StatusReports.doc

www.ic.arizona.edu/~profcomm/writing/samples/stat_samp_s1.htm

http://www.projectperfect.com.au/info_status_report.php

http://saulcarliner.home.att.net/idbusiness/statusreport.htm

office.microsoft.com/en-us/templates/TC011417231033.aspx

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

Project Control Process

The process of comparing actual performance against plan to identify

deviations, evaluate courses of action, and take appropriate
corrective action

Pensiero

Project Control Steps

Set and
baseline a
plan

Measuring
progress and
performance

Comparing the
plan to the
facts

Taking Action

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

Monitoring Time Performance

Monitoring Time Performance

Tools used to catch negative
variances from plan and
communicate project schedule
status:

Monitoring Time Performance

Tools used to catch negative
variances from plan and
communicate project schedule
status:
Tracking and baseline Gantt
charts
show expected, actual, and
trend data for event
duration performance

Time

A Gantt Chart
Figure 13.1 Baseline Gantt Chart
(Gray & Larson, 2006, p414)

Monitoring Time Performance

Tools used to catch negative
variances from plan and
communicate project schedule
status:
Tracking and baseline Gantt charts
show expected, actual, and
trend data for event
duration performance
Control charts
plot the difference in
scheduled time on the
critical path with the actual
point on the critical path

A Control Chart
Figure 13.2 Project Schedule Control Chart
(Gray & Larson, 2006, p415)

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

Monitoring Systems Disparities

Picture by
Pensiero

Time-Phase Baseline Plan

Picture by
Pensiero

Corrects the failure of most monitoring systems to

connect a projects actual performance to its schedule
and forecast budget

Picture by
Pensiero

Systems that measure only cost variances do not

identify resource and project cost problems associated
with falling behind or progressing ahead of schedule

Picture by
Pensiero

Earned Value Cost/Schedule System

An integrated project management system based on the earned value

concept that uses a time-phased budget baseline to compare actual
and planned schedule and costs

Picture by airgap

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

Earned
Earned Value
Value Management
Management

What is Earned Value Management (EVM)?

What is Earned Value Management (EVM)?

A project performance measurement technique

that integrates scope, time, and cost data.

What is Earned Value Management (EVM)?

A project performance measurement technique

that integrates scope, time, and cost data.
Given a baseline (original plan plus approved changes), you can
determine how well the project is meeting its goals.
You must enter actual information periodically to use EVM.

What is Earned Value Management (EVM)?

A project performance measurement technique

that integrates scope, time, and cost data.
Given a baseline (original plan plus approved changes), you can
determine how well the project is meeting its goals.
You must enter actual information periodically to use EVM.

Terms to learn
PV

Planned Value

CV

Cost Variance

AC

Actual Cost

SV

Schedule Variance

EV

Earned Value

CPI

Cost Performance
Indicator

SPI

Schedule Performance
Indicator

PV

Planned Value

(Also called the budget)

This is that portion of the approved

total cost estimate planned to be
spent on an activity during a given
period

AC

Actual Cost

The total of direct and indirect costs

incurred in finishing work on an
activity during a given period

EV

Earned Value

An estimate of the value of the

physical work actually completed

CV

Cost Variance

Earned value minus the actual cost.

Shows the difference between the
estimated cost of an activity and the
actual cost of that activity

TABLE 13.1

SV

Schedule Variance

Earned value minus the planned

value. Shows the difference between
the schedule completion of an
activity and the actual completion of
that activity

TABLE 13.1

CPI

Cost Performance
Indicator

The ratio of earned value to actual

cost and can be used to estimate the
projected cost of completing the
project.
If the CPI is equal to 1 or 100% then
the planned and actual costs are
equal, or the costs are as budgeted.
If the CPI is less than 1 or less than
100%, the project is over budget.
If the CPI is greater than 1 or more
than 100%, the project is under
budget

SPI

Schedule Performance
Indicator

The ratio of earned value to planned

value and can be used to estimate
the projected time to complete the
project.
Similar to the CPI, an SPI of 1 or
100% means the project is on
schedule.
If the SPI is greater than 1 or 100%
then the project is ahead of
schedule.
If the SPI is less than 1 or 100%, the
project is behind schedule

Quick EVM quiz

What can we say
if CPI > 1

TABLE 13.1

Quick EVM quiz

What can we say
if CPI > 1

If the CPI is greater

than 1 or more than
100%, the project is
under budget

Quick EVM quiz

What is EV minus
AC?

Quick EVM quiz

What is EV minus
AC?
EV AC = SV
Earned Value (what was done)
Minus
Actual Cost (what has been paid)
=
Schedule Variance

Scenario Example

Scenario Example
Purchasing & Installing Web Server
Duration 1 week,
Budget $10,000.

Scenario Example
Purchasing & Installing Web Server
Duration 1 week, Budget $10,000.
PV Planned Value for that activity for that week = $10,000
AC Actual Cost suppose it actually took 2 weeks and cost
$20,000. Assume $15,000 were incurred in week 1, and $5,000
in week 2. These costs are the actual costs for that activity
each week
EV Earned Value earned value after one week is $7,500.
(10,000 * 75%)
Example: CP829_Lecture_Week9_EarnedValue.xls

Earned Value Chart for Project after 5-Months

Max Wideman

Rules for Earned Value Numbers

Negative numbers for cost and schedule variance indicate problems in
those areas
The project is costing more than planned or taking longer than
planned
CPI and SPI less than 100% indicate problems

Table 13.3 Interpretation of Indexes

(Gray & Larson, 2006, p429)

An alternative

Source:
http://www.mountaingoatsoftware.com/release_burndown

Week
Week22
lecture
lecture

So, what do you do when your plan changes?

There are methods used to revise

estimates of future project costs

EVM allows experts in the field to change original baseline durations

and costs because new information tells them the original estimates
are not accurate
EVM uses actual costs-to-date plus an efficiency index to project final
costs in large projects where the original budget is unreliable

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

Developing an Integrated Cost/Schedule System

WBS

Plan

Resource
plan
Schedule
Budget

Monitor

Collect
Calculate
Compute

Define the work using a WBS

Scope
Work packages
Deliverables
Organization units
Resources
Budgets

Develop work and resource

schedules
Schedule resource to
activities
Time-phase work packages
into a network

Photo by shimonkey

Develop a timephased budget

using work
packages
included in an
activity.
Accumulate
budgets (PV)

At the work
package level,
collect the
actual costs for
the work
performed (AC)

Multiply
percent
complete times
original budget
(EV)

Compute the
schedule
variance (EVPV) and the
cost variance
(EV-AC)

Integrated
Cost/
Schedules

Figure 13.3 Project Management Information Systems Overview

(Gray & Larson, 2006, p419)

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

Project Baselines

Week
Week44
lecture
lecture

a Baseline is an anchor
point for measuring
performance

Photo by
_Robert C_ @
flickr

a planned cost and expected schedule

against which actual cost and schedule
are measured

Gold by

a basis for cash flows and

awarding progress payments

Photo by quaziefoto
@ flickr

a summation of time-phased
budgets (cost accounts as
summed work packages) along a
project timeline

Picture by
Network Osaka @

What Costs Are Included in Baselines?

Labor
Equipment
Materials
Project direct overhead costs (DOC)

Figure 13.14 Scope Changes to a Baseline

(Gray & Larson, 2006, p436)

What is a Project Monitoring System

Examples of Progress Reports
What is the Project Control Process and why is it useful?
How do I Monitor Time Performance
The shortcomings of monitoring Systems
Earned Value Management a silver bullet?
Integrated Cost/Schedule System
Project Baselines

Review
Project monitoring system include; data collection; analysis and
reporting.
Project control steps include; baseline plan, progress measurement,
comparing actual against projected plan, and actions.
Performance can be monitored using tools such as; tracking Gantts,
control charts, baseline plans and earned value management.
Earned value management (EVM) is a technique which incorporated
scope, time and cost data to determine the health of the project.
Integrated Cost/Schedule systems are developed creating; WBS,
work/resource schedules, budget, and EVM.
Project baselines are an anchor point for measuring performance.

References
Horodyski, K. (1995). Managing and developing teams. Footscray, Vic.: Open
Training Services.
Greenberg, J. & Baron, R. (1993). Behavior in organizations (4th ed.). Syd.,
NSW: Allyn and Bacon.
Robbins, S., et al. (1998). Organisational behaviour (2nd ed.). Sydney:
Prentice-Hall

BetterProjects.net

Awesome title page picture by

Derek Farr ( DetroitDerek )