Chapter 10

Monitoring and Information

Systems

Jason C. H. Chen, Ph.D.

Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99258
chen@jepson.gonzaga.edu
Dr. Chen, Special Topic: Project Management 1
 Project Management

Dr. Chen, Special Topic: Project Management

 Figure Project Triangle
(Project Management Trade-offs)

Time Cost
[schedule] [budget] The center of
project triangle
is
QUALITY

Scope [performance]
The objective of the PM is to define projects scope realistically and ultimately
deliver quality of product/service on time, on budget and within scope.
Dr. Chen, Special Topic: Project Management
 Project Management versus Process Management

Ultimately, the parallels between process and

project management give way to a fundamental
difference: process management seeks to
eliminate variability whereas project
management must accept variability because
each project is unique.
Elton, J. & J. Roe. Bringing Discipline to Project
Management Harvard Business Review

Dr. Chen, Special Topic: Project Management

 Terms
Monitoring - Collecting, recording, and
reporting information concerning any and all
aspects of project performance
Controlling - Uses the data supplied by
monitoring to bring actual performance into
compliance with the plan
Evaluation - Judgments regarding the
quality and effectiveness of project
performance

Dr. Chen, Special Topic: Project Management

 The PlanningMonitoringControlling
Cycle

We mainly want to monitor:

Time (schedule)
Cost (budget)
Scope (project performance)
Closed-loop system
Revised plans and schedules following
corrective actions

Dr. Chen, Special Topic: Project Management

 Project Authorization and Expenditure Control
System Information Flow

Dr. Chen, Special Topic: Project Management Figure 10-1

 Designing the Monitoring System
Identify key factors to be controlled:
Scope
Cost
Time
Information to be collected must be
identified.

Dr. Chen, Special Topic: Project Management

 Designing the Monitoring System
Continued

Do not want to avoid collecting necessary

data because it is hard to get.
Do not want to collect too much data.
The next step is to design a reporting system
that gets the data to the proper people in a
timely and understandable manner.

Dr. Chen, Special Topic: Project Management

 Data Collection
Once we know the data we want, we need to
decide how to collect it.
Should the data be collected after some
event?
Order and/or precedence
Should it be collected on a regular basis?
Are there any special forms needed for data
collection?

Dr. Chen, Special Topic: Project Management

 Data/Information

BAD information is WORSE than ...

NO
________information.

Dr. Chen, Special Topic: Project Management

 Attributes of Data/Information
Quality
We realize that a firm needs better
information to survive and prosper.
Therefore, high quality information
products have to be provided to
management.

Dr. Chen, Special Topic: Project Management

 Attributes of Data/Information
Quality

Dr. Chen, Special Topic: Project Management

 Much Data Involves
Frequency counts
Raw numbers
Subjective numeric ratings
Indicators
Verbal measures

Dr. Chen, Special Topic: Project Management

 Information Needs and Reporting
Everyone should be tied into the reporting
system
see order management slide
Reports should address each level
Not at same depth and frequency for every
level
Lower-level needs detailed information
Senior management levels need overview (i.e.,
summarized) reports
Report frequency is typically high at low
levels and less frequent at higher levels
Dr. Chen, Special Topic: Project Management
 The Reporting Process
Reports must contain relevant data.
Must be issued frequently.
Should be available in time for control.
Distribution of project reports depends on
interest
For senior management, may be few milestones
(what is it?)
For project manager, there may be many critical
points

Dr. Chen, Special Topic: Project Management

 Gantt Chart Milestone
(for Design phase)

critical vs. non-critical Shows time estimates of tasks

A milestone represents an event or condition that marks the completion of

a group of related tasks or the completion of a phase of the project.
If any activity on critical path delayed, the overall project time will be
increased
Dr. Chen, Special Topic: Project Management
 Benefits of Detailed and Timely Reports

Mutual understanding of the goals

Awareness of the progress of parallel
activities
Understanding the relationship of tasks
Early warning signals of problems
Minimizing the confusion
Higher visibility to top management
Keeping client up to date

Dr. Chen, Special Topic: Project Management

 Report Types
Routine - Reports that are issued on a regular
basis or each time the project reaches a milestone
Exception - Reports that are generated when an
usual condition occurs or as an informational
vehicle when an unusual decision is made
Special Analysis - Reports that result from
studies commissioned to look into unexpected
problems
All are linked to data (database, knowledge base
etc.)

Dr. Chen, Special Topic: Project Management

 Meetings
Reports do not have to be written
They can be delivered verbally in meetings
Projects have too many meetings
The trick is to keep them to as few as
possible

Dr. Chen, Special Topic: Project Management

 Meeting Rules
Use meetings to make group decisions
Start and end on time and have an agenda
Do your homework before the meeting
Take minutes (what is minutes?)
Avoid attributing remarks to individuals in
minutes
Avoid overly formal rules of procedure
Call meeting for serious problems

Dr. Chen, Special Topic: Project Management

 Common Reporting Problems
Too much detail
Poor interface between the data/procedures
of the project and the information system of
the parent company
Poor correspondence between the planning
process and the monitoring process

Dr. Chen, Special Topic: Project Management

 Earned Value Analysis
A valuable technique for monitoring overall
project performance is earned value.
One way is by using an aggregate performance
measure called earned value.
Have covered monitoring parts
Timing and coordination between individual tasks is
important
Must also monitor performance of entire project
Crux of matter should not be overlooked

Dr. Chen, Special Topic: Project Management

 The Earned Value Chart and Calculations

The Earned Value Chart and Calculations

The key element of the earned value technique
is the measurement of progress in addition to
cost and schedule.
If progress is not measured, then data about cost
and schedule is meaningless because the PM
does not know what resulted from the
expenditures.

Dr. Chen, Special Topic: Project Management

 The Earned Value Chart and Calculations
(cont.)
Actual against baseline ignores the amount
of work accomplished
Earned value incorporates work
accomplished
Multiply the estimated percent work
complete for each task by the planned
cost
Only need percent complete estimate for
tasks currently in progress.

Dr. Chen, Special Topic: Project Management

 Rules to Aid in Estimating Percent
Completion
50-50 rule
Taking credit for 50% complete when the task
begins and the other 50% when the task ends
(50-50 estimate).
0-100 percent rule
Taking no credit for progress until the task
completes (0-100 rule).

Dr. Chen, Special Topic: Project Management

 Rules to Aid in Estimating Percent
Completion
Critical input use rule
Taking credit for progress based on the use of a
critical input. This works only if the process
consuming the input is reliable and well defined.
Proportionality rule
Taking credit for progress based on either the
percent of the budget that has been expended or
the percent of the elapsed time that has gone by
(proportionality rule).

Dr. Chen, Special Topic: Project Management

 The Earned Value Chart

EAC = ETC + AC
Dr. Chen, Special Topic: Project Management
Figure 10-6
 Variances

Variances can help analyze a project

1. A negative variance is bad
2. Cost and schedule variances are calculated as
the earned value minus some other measure
Will look at some of the more common
ones

CV = EV AC

Dr. Chen, Special Topic: Project Management

 Cost Variance (CV)
CV = EV AC
EV: earned value
AC: actual cost of the work

Negative variance indicates a cost overrun

Magnitude depends on the costs

Dr. Chen, Special Topic: Project Management

 Schedule Variance (SV)
SV = EV PV
PV: planned value (the cost of the work we
scheduled to be performed to date)

Negative variance indicates you are behind

schedule
Measured using costs

Dr. Chen, Special Topic: Project Management

 Time Variance (TV)
TV = ST AT
ST: time scheduled for the work that has been
performed
AT: actual time used to perform

Negative variance indicates you are behind

schedule

TV = SV / slope
Slope = PV / Days

Dr. Chen, Special Topic: Project Management

 Indices
Cost Performance Index
CPI = EV/AC
Schedule Performance Index
SPI = EV/PV
Time Performance Index
TPI = ST/AT
Cost Schedule Index
CSI = EV2/(AC)(PV)

Dr. Chen, Special Topic: Project Management

 Summary on Variances and Indices
CV = EV AC Cost Performance Index
CV: cost variance CPI = EV/AC
EV: earned value Schedule Performance
AC: actual cost of the work Index
SV = EV PV SPI = EV/PV
SV: schedule variance Time Performance Index
PV: planned value (the cost of the TPI = ST/AT
work we scheduled to be performed
Cost Schedule Index
to date)
CSI = EV2/(AC)(PV)
TV = ST AT
TV: time variance
ST: time scheduled for the work TV = SV / slope
that has been performed Slope = PV / Days
AT: actual time used to perform
Dr. Chen, Special Topic: Project Management
 To complete and At
Completion
Project manager reviewing what is complete
and what remains
Final cost and final completion date are
moving targets
The project manager compiles these into a to
complete forecast
Actual + forecast = final date and cost at
completion

Dr. Chen, Special Topic: Project Management

 ETC and EAC

ETC = (BAC + EV)/CPI

EAC = ETC + AC
where,
ETC = Estimated cost to complete
BAC = Budget at completion
EV = Earned value
CPI = Cost performance index
EAC = Estimated cost at completion
AC = Amount expended to date (actual cost)

Dr. Chen, Special Topic: Project Management

 Milestone Reporting
Reports that are created when a project
reaches a major milestone
They are designed to keep everyone up-to-
date on project status
For executives and clients, these may be the
only reports they receive

Dr. Chen, Special Topic: Project Management

 Computerized PMIS (Project Management
Information Systems)
Real projects are often large
Hundreds of tasks
Thousands of work units
Reporting is clearly a job for the computer
Project management information systems
were one of the earlier applications
Initially focus was on scheduling
Now it includes, earned values, variances,
and more
Dr. Chen, Special Topic: Project Management
 PMIS Errors
Computer paralysis
Information overload
Project isolation
Computer dependence
PMIS misdirection

Dr. Chen, Special Topic: Project Management

 Creating a Project Budget
WBS
The budget is a plan
that identifies the
Project resources, goals and
Plan schedule that allows a
firm to achieve those
Scheduling Budgeting
goals

Top-down
Bottom-up

Dr. Chen, Special Topic: Project Management

 VIDEO
VIDEO:
7.
An_Introduction_to_the_Earned_Value_M
easurement_System(15m)
8. Value_Driven_Project_Mgt(9m28s)

Dr. Chen, Special Topic: Project Management

 Problem 1:
($000)

Month AC PV EV CV = EV AC
22 $540 $523 $535 SV = EV PV
CV $(5) Unfavorable Negative variances are
SV $12 Favorable unfavorable.

EV: earned value

AC: actual cost of the work

Dr. Chen, Special Topic: Project Management

 Problem 2:
($000)
Month AC PV EV
CV = EV AC
5 $34 $42 $39
CPI = EV/AC
CV $5
Favorable SV = EV PV
CPI 1.15
SPI = EV/PV
SV $(3)
Unfavorable
SPI 0.93

Negative variances are unfavorable.

If an index is less than one, the variance is
unfavorable.

PV: planned value (the cost of the

work we scheduled to be
performed to date)
Dr. Chen, Special Topic: Project Management
 Problem 3:
($000)

Day AC PV EV
70 $78 $84 $81
CV $3
Favorable
CPI 1.04
SV $(3)
Unfavorable
SPI 0.96
CSI 1.00 On target
TV (2.50) Days delayed
CSI = (CPI)(SPI)
TV = SV / slope
Slope = PV / Days
CSI is on target because the unfavorable
SV is offset by the favorable CV.
TV predicts that the project is 2.5 days
behind schedule given the estimated EV.
Dr. Chen, Special Topic: Project Management
 Problem 4:
($000)

Month AC PV EV This project is seriously

17 $350 $475 $300
CV $(50)
delayed (SPI) and also over
Unfavorable budget (CV).
CPI 0.86
SV $(175)
Unfavorable
SPI 0.63
CSI 0.54 Unfavorable

Cost Performance Index

CPI = EV/AC
Schedule Performance Index
SPI = EV/PV
Time Performance Index
TPI = ST/AT
Cost Schedule Index
CSI = EV2/(AC)(PV)

Dr. Chen, Special Topic: Project Management

 Problem 5:
($000)
Month AC PV EV
10 $23 $17 $20
CV $(3)
Unfavorable
CPI 0.87
SV $3
Favorable
SPI 1.18
CSI 1.03 Favorable

This project is ahead of schedule,

but has an unfavorable CV.

Dr. Chen, Special Topic: Project Management

 Problem 6:
($000)
AC = $550 AC = $750
Day AC PV EV Day AC PV EV
65 $550 $735 $678 65 $750 $735 $678
CV $128 CV $(72)
Favorable Unfavorable
CPI 1.23 CPI 0.90
SV $(57) SV $(57)
Unfavorable Unfavorable
SPI 0.92 SPI 0.92
CSI 1.13 Favorable CSI 0.83 Unfavorable
TV (5.00) Days behind TV (5.00) Days behind

The first step is to estimate EV. Starting with TV, we solve to determine SV.
Once SV is known, EV can be determined because the PV was given.
In problem 6, changing the AC value only affects cost-related measures
and indices. The SV and SPI are unaffected by a change in AC.

Dr. Chen, Special Topic: Project Management

 Problem 7:
($000)
AC PV EV
$10.0 $12.0 $8.4
CV $(1.6)
Unfavorable
CPI 0.84
SV $(3.6)
Unfavorable
SPI 0.70
CSI 0.59 Unfavorable

In this problem, EV = 70% PV.

This client is probably upset because the CSI suggests
that this project is likely to be delayed and to cost more
than originally planned.

Dr. Chen, Special Topic: Project Management