Project Performance

1. Project Performance Management
Dr. Huy Nguyen

2. • What is a Project Monitoring System?
• Examples of Progress Report;
• What is the Project Control Process and why is it useful?
• How do we monitor Time Performance?
• Shortcomings of Monitoring Systems;
• Earned Value Management;
• Integrated Cost / Schedule System;
• Project Baselines.
Project Performance Management
2

3. • It involves determining what data to collect, how, when and who will collect
the data, analysis of the data, and reporting progress.
• You need to know what information is needed to satisfy you and your
stakeholders.
• Think about the Information System Structure.
What is a Project Monitoring System?
Monitoring System
Gather Analyse Report
3

4. • What data are collected?
– Current status of project (schedule and cost);
– Remaining cost to complete project;
– Date that project will be complete;
– Potential problems to be addressed currently;
– Out-of-control activities requiring intervention;
– Cost and/or schedule overruns & their reasons;
– Forecasting overruns at time of completion.
What is a Project Monitoring System? (cont.)
4

5. • 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?
What is a Project Monitoring System? (cont.)
5

6. • 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?
– From 5 - 10 pages.
Examples of Progress Report
6

7. • Project Control Process:
– The process of comparing actual performance against plan to identify
deviations, evaluate courses of action, and take appropriate corrective
action.
• Project Control Step:
WhatistheProjectControlProcessandwhyisituseful?
Set and baseline
a plan
Measuring
progress and
performance
Comparing the
plan to the facts
Taking action
7

8. • 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.
How do we monitor Time Performance?
8

9. Tracking Gantt chart showing status through periods
Baseline Gantt chart
How do we monitor Time Performance? (cont.)
• Gantt chart:
9

10. How do we monitor Time Performance? (cont.)
• Control chart:
10

11. • Monitoring Systems Disparities:
– Time-Phase Baseline Plan:
– Correct the failure of most monitoring systems to connect a project’s
actual performance to its schedule and forecast budget;
– Systems that measure only cost variances do not identify resource and
project cost problems associated with falling behind or progressing
ahead of schedule;
• 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.
Shortcomings of Monitoring Systems?
11

12. • What is Earned Value Management
(EVM)?
– A project performance
measurement technique that
integrates scope, time, and cost
data;
– Give a baseline (original plan plus
approved changes) to determine
how well the project is meeting its
goals;
– Must enter actual information
periodically to use EVM.
• Terms to learn:
– PV: Planned Value;
– AC: Actual Cost;
– EV: Earned Value;
– CV: Cost Variance;
– SV: Schedule Variance;
– CPI: Cost Performance Indicator;
– SPI: Schedule Performance
Indicator.
Earned Value Management
12

13. • BAC - Budget at Completion:
– Planned budget of the project.
• PV - Planned Value (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.
• 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.
Earned Value Management (cont.)
13

14. • 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.
Earned Value Management (cont.)
14

15. Earned Value Management (cont.)
• Term:
– Earned Value
– Cost Variance
– Schedule Variance
– Cost Performance Indicator
– Schedule Performance Indicator
– Estimate at Completion (EAC)
– Estimated time to Complete (ETC)
– Estimated cost to Complete (ETC)
– Variance at Completion (VAC)
• Formula:
– EV = PV to date X percent complete
– CV = EV – AC
– SV = EV – PV
– CPI = EV / AC
– SPI = EV / PV
– EAC = BAC / CPI
– ETC = Original time estimate / SPI
– ETC = EAC – AC
– VAC = BAC – EAC
15

16. Earned Value Management (cont.)
• 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 if
CPI and SPI less than 100%.
• 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.
Index Cost (CPI) Schedule (SPI)
> 1.0 Under cost Ahead of schedule
= 1.0 On cost On schedule
< 1.0 Over cost Behind schedule
16

17. Integrated Cost / Schedule System
• Developing an Integrated Cost / Schedule System:
Report &
Action
Calculate &
Compute
Collect
Schedule
Resource
plan
WBS
Budget
Plan
Monitor
17

18. Integrated Cost / Schedule System (cont.)
• Define the work using a WBS:
– Scope;
– Work packages;
– Deliverables;
– Organization units;
– Resources;
– Budgets.
• Develop work and resource schedules:
– Schedule resource to activities;
– Time-phased work packages into a network.
• Develop a time-phased 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 time by original budget (EV);
• Compute the schedule variance (EV – PV) and the cost variance (EV – AC).
18

19. Integrated Cost / Schedule System (cont.)
• Sample of an Integrated Cost / Schedule System:
19

20. Project Baseline
• Measure change against the project baseline;
• Baseline is:
– 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).
20

21. Project Baseline (cont.)
• Scope changes to a baseline:
21

22. • Project monitoring system includes 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 by creating WBS, work /
resource schedules, budget, and EVM.
• Project baselines are an anchor point for measuring performance.
Review
22

23. Thank You
Next topic:
Project Schedule Management
23