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Chapter 7
Monitoring and Controlling the Project
This chapter addresses issues related to monitoring and controlling the project.
Monitoring refers to collecting, recording and reporting information about the project
while controlling uses this information to bring actual performance into agreement with
the plan. The chapter begins with an overview of the plan-monitor-control cycle.
Emphasis is given to the importance of designing the planning-monitoring-controlling
process. Next the issue of data collection and reporting is discussed including the topics
of data collection and types of data, data analysis, types of reports, and meetings.
Following this, the earned value approach is presented. As the chapter notes, earned
value represents a way to capture both in-process performance and cost on a certain date
as measured against budget or schedule. Finally the chapter concludes with a discussion
of project control, the design of the control system, and scope creep.

Cases and Readings

Some cases appropriate to the subject of this chapter are:
Harvard: 9-193-013 American Airlines: The InterAAct Project (A) and 9-193-014
(B) This 17-page (and 11-page) set of cases describes the design and implementation of
an extensive knowledge information system project. The implementation is in trouble in
the A case and must be reassessed. The (B) case describes the outcome of the successful
implementation. (A) 17 page teaching note (5-194-095) is available.
Western Ontario: 9-91-E009 Riverview Childrens Hospital This 14-page case
concerns an upcoming audit while in the middle of an information system changeover
that is in difficulty. The manager has to decide whether to go ahead with the
implementation or wait until the audit is over, either alternative having serious negative
consequences.
Harvard: 9681-091 Corning Glass Works: The Z-Glass Project This excellent, 15page case shows how a project can get into trouble on many fronts: strategically,
technically, and behaviorally. Involves a turn-around project for a new production process
that is getting worse instead of better. Involves issues of monitoring, control, strategy,
organization, and behavior. Lots of data to work with. A 14 page teaching note (5-683045) is available.
Harvard: 9-396-312 BAE Automated System (B): Denver International Airport
Baggage-Handling System This 3-page follow-up to the (A) case (see Chapter 1)
describes the control actions finally taken to address the airport baggage system problem.
A 32 page teaching note for the (A) and (B) cases (5-399-099) is available.

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Some readings appropriate to the subject of this chapter are:

T.L. Fox et al. Tools of the Trade: A Survey of Project Management Tools (Project
Management Journal, September 1998). The article reports the results of a survey of
PMI members concerning the computer tools they employ. The results identify the tools
they use, their level of use, what they are used for, satisfaction with the tools, training
received on the tools, and the adequacy of the tools. Software beyond project
management packages are included in the survey.
H.J. Thamhain et al. Criteria for Controlling Projects According to Plan (Project
Management Journal, June 1986). This article reports on a study of hundreds of project
managers and the challenges and barriers they perceived in successfully controlling
projects. The potential problems leading to schedule slips and budget overruns are
identified and compared to the directly observed reasons. Also, the general managers
reasons for the slips and overruns are compared to the project managers reasons and
significant differences are noted. Last, the criteria that seem to be important to control
are listed and discussed.
The value of this article for managers is the insight it gives concerning what needs
to be controlled to bring about successful projects. The major factors are defining a
detailed project plan that includes all key project personnel, reaching agreement on the
plan among the project team members and the customer, obtaining the commitment of
management, defining measurable milestones, and detecting problems early.

Answers to Review Questions

1. One reason that the PM cant use the organizations current information system for
project monitoring and reporting is that these systems are often set up to report
information at certain specific periods (e.g., the end of the month or quarter). The
information required to control a project often does not conform to such rigid
timetables. A second reason is that the organizations system is usually structured to
deal with the organizations standard divisions, and departments. Projects rarely
conform to these boundaries.
2. Project selection and planning specify the goals for the project. Project monitoring
and control seek to ensure that the project is making progress toward the achievement
of these goals. The plan also details what activities and schedule must be met
which are things the project manager must control.
3. Project planning specifies the activities, resource usage, and the goals for the project
while control seeks to ensure that the project is making progress toward the
achievement of these goals. Monitoring is concerned with collecting and reporting
information. As such, monitoring connects planning and control in that the plan
specifies the types of data that need to be collected and the reporting becomes the
basis of control.

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4. It is more appropriate to let schedules, milestones, scope changes, problems, and the
project teams general need for information dictate the timing of reports. Another
reason not to use periodic reports is that they are often ignored.
5. Other benefits from a good project reporting system include less wasted time
reporting information that is not used, better informed team members and
stakeholders, and a better record of the project that can be used to facilitate future
project planning.
6. The need for information should dictate the report frequency. For projects, it is more
appropriate to let milestones, scope changes, problems, and the project teams general
need for information dictate the timing of reports.
7. The total cost of a partially completed project can be estimated by dividing the
amount spent to date by the estimate of the projects percentage completion. In
general, this is not an effective way to estimate the cost of a partially completed
project. The sum of the costs of completed activities, plus a knowledgeable guess on
the cost incurred on activities underway is apt to be considerably more accurate.

Suggested Answers to Discussion Questions

8. Yes, the time and cost required to develop the planning, monitoring, and controlling
systems should be included in the projects budget. Similarly, the actions required to
monitor and control the project should be included in the WBS. These are essential
tasks for the successful completion of the project.
9. It appears the PM in this case believed that project planning was not important since
no one looked at it. Therefore, the PM likely believed that project planning was a
waste of time that distracted him/her from more important work. The result was a
major loss of business. To correct this situation the company needs to emphasize the
importance of planning to the ultimate success of the project. This may require
formal training programs, perhaps including case studies that demonstrate the types of
problems encountered in projects that were inadequately planned. Also, management
should become more involved in project planning and review project plans. It would
also be useful to modify the system used to review the performance of project
managers to include project planning.
10. Teams members could be asked to score on a 5 or 7 point scale the extent of their
agreement/disagreement to statements such as:
I look forward to coming to work each day.
I find facing and resolving new challenges stimulating.
I often take immediate action when I discover a problem.
11. There are a wide variety of instruments in the organizational behavior literature
available for accessing team morale. Again, using a 5 or 7 point scale, team members

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could be asked to rate the extent of their agreement/disagreement to statements such

as:
I enjoy working with my fellow team members.
I have confidence that our project team can satisfactorily resolve any
issues that may arise.
I would welcome the opportunity to be assigned to another project team.
12. One way the project manager can use the monitoring system to predict future
problems is to extrapolate trends in the data to the future and then compare this
projection with the plan. Indeed, a better use of the monitoring system would be to
use the information to anticipate future problems rather than reacting to them once
they occur. Along these lines, the monitoring system could also include lead
indicators as symptoms of problems.
13. There are a number of ways the use of electronic media could lead to problems with
control. One way is that the PM spends more time managing the electronic media
(e.g., the project management software) than actually managing the project. Another
possible problem is the speed that information can be transmitted can create
problems. For example, an inaccurate entry could immediately trigger an exception
report causing team members to shift their focus to an erroneous or irrelevant issue.
14. A cost variance is calculated as the difference between Budgeted Cost of Work
Performed (BCWP) and the Actual Cost of Work Performed (ACWP). If the ACWP
is larger than the BCWP, the variance is negative indicating that more was spent for
the work performed than was budgeted. The schedule variance is calculated as the
difference between the BCWP and the Budgeted Cost of Work Scheduled (BCWS).
A negative schedule variance indicates a behind schedule situation. In terms of
performance, the earned value chart indicates whether progress is up to expectation,
the baseline planned for this point in time.
15. It would be if, and only if, there was a reliable way to estimate the 50% completion
point. The answer to Question 7 notes a better way to proceed with an in-process cost
estimation.
16. Spending and scheduling variances are more informative when trying to understand
the in-process performance for a given project at a particular point in time. Ratios are
more informative when trying to compare the performance across projects, project
managers, or the progress of a project over time.
17. The bottom line with control is that you dont want the costs of the control systems to
exceed the benefits.
18. Earned value charts are useful for monitoring the progress of in-process projects.
Benchmarking is useful in the project planning phase in helping determine project
goals and resource requirements. Benchmarking can also be used to access an
organizations project management systems and procedures. The critical ratio,

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control charts, and variance analysis are also useful for monitoring the progress of inprocess projects. In particular, the critical ratio is a single measure that includes
performance, cost and schedule. Plotting the critical ratio on a control chart provides
opportunities to spot patterns that may lead to problems. Trend projections can be
performed on any of the data collected by the monitoring and control system to
estimate future values of the data and take corrective actions before the situation
becomes a serious problem.
19. By adding greater scrutiny, a change control system may reduce the number of
change requests, particularly casual requests for changes.
20. It does not mean that the project manager should micromanage the project. Rather, it
suggests that each project team member needs to monitor and control his or her own
work.
21. We use the example of designing and building a new website.
a. Frequency counts: spelling errors per page, number of incorrect links,
pages that take longer than 30 seconds to load.
b. Raw numbers: time for pages to download, size of graphic files, number of
lines of code.
c. Subjective numeric ratings: Quality of webpages, ease of navigation,
search capabilities.
d. Indicator and surrogate measures: Time spent at a site could be used as a
surrogate for user satisfaction.
22. One reason it is hard to not have the weekly progress meeting is that people like to
demonstrate what they have accomplished. The weekly progress meeting might be
appropriate early in the project when coordination is required but team members are
still getting to know each other and have not had an opportunity to develop informal
communication channels.
23. The important thing about variances is that you understand what they mean and
interpret them correctly in reports. Whether the sign is positive or negative when the
cost is over budget or behind schedule is not that important as long as you understand
what the calculation is telling you. Being able to properly interpret the variance and
act accordingly is the critical task. Therefore, making a point in a report to note that
the software package calculated a specific item differently that the standards set by
the PMI is not that important, interpreting the number correctly and discussing the
implications are.

Solutions to Problems
24.
ACWP = 270,000
BCWP = 272,000
BCWS = 261,000

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Cost/spending variance = BCWP ACWP = 272,000 270,000 = 2,000

Schedule variance = BCWP BCWS = 272,000 261,000 = 11,000
CPI = BCWP/ACWP = 272,000/270,000 = 1.007
SPI = BCWP/BCWS = 272,000/261,000 = 1.042
Less has been spent than the baseline plan, and given what has been spent, more
progress has been made than should have been.
25.
ACWP = 156,000
BCWP = 162,000
BCWS = 168,000
Cost/spending variance = BCWP ACWP = 162,000 156,000 = 6,000
Schedule variance = BCWP BCWS = 162,000 168,000 = -6,000
CPI = BCWP/ACWP = 162,000/156,000 = 1.038
SPI = BCWP/BCWS = 162,000/168,000 = .964
Less has been spent than the baseline plan, however, given what has been spent,
less progress has been made than should have been.
26.
d (5)
a (2)
c (2)
b (2)

e (4)

BCWS = 300 + 200 + 250 + .8(600) + .5(400) = 1430

ACWP = 400 + 180 + 300 + 400 + 200 = 1480
BCWP = 300 + 200 + 250 + .2(600) + .2(400) = 950
Cost/spending variance = BCWP ACWP = 950 1,480 = -530
Schedule variance = BCWP BCWS = 950 1,430 = -480
CPI = BCWP/ACWP = 950/1,480 = .642
SPI = BCWP/BCWS = 950/1,430 = .664
More has been spent than the baseline plan and given what has been spent, less
progress has been made than should have been.
CR = (BCWP/BCWS)(BCWP/ACWP) = (950/1430)(950/1480) = .426
BAC = 300 + 200 + 250 + 600 + 400 = 1,750

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ETC = (BAC BCWP)/CPI = (1750 950)/.642 = 1246.11

EAC = ETC + ACWP = 1246.11 + 1480 = 2726.11
27. Students should begin by inputting the original planned project data into MSPs
entry table as it appears in the problem. Only the activity names, predecessors,
durations, can be entered in the Entry table.
The Gantt chart would look as follows:

The budgeted cost data is entered using the Cost Table. To enter this data you
select the View menu, then Tables, then select Cost from the drop down list.
Enter the budgeted cost information under the Fixed Cost section of the table.
Fixed costs are assigned by activities as opposed to by resources. This problem is
concerned about a cost of activity not a resource cost. The table will look as
follows:

Once the original data is in the action plan format, the students should save the
Baseline data so that a comparison to actual can be calculated by MSP. To do this
you need to go to the Tools menu, select Tracking, then select Save Baseline, then
click OK so that you are saving the baseline for the entire project.
Once the baseline has been saved, students need to enter the actual data provided
in the problem. You next need to create a table to enter the actual costs and
percent complete. By default MSP automatically calculates actual costs based on
the percent an activity has been completed. In this example we need to turn off
this feature. To do this you must select the Tools menu, then the Options line, then
you select Calculations Tab. Next you deselect the option Actual costs are
calculated by MSP. Once the automatic cost calculation is turned off, you select
Table from the View menu and then select the Tracking table from the drop down
menu to enter the information that you have on actual costs and percent complete.
Enter the information that is provided in the case. The software will calculate the
rest. Your spreadsheet/table should look as follows: [The start and finished dates

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will be based on the dates that you start the project, in this example the project
was started on January 15, 2001. If you choose not to enter a start date, MSP will
default to using todays date.]

Once you have entered the actual data, MSP will calculate the information needed
to answer questions #27 based on the date of comparison, in this problem, that is
the end of the sixth week. Using the start date of January 15th, the end of the
sixth week would be February 23, 2001. (No matter what your start date is, it is
easy to see in MSP when the end of the sixth week would be.) You must first
enter that date for the comparison, to do that you go to the Project Menu, select
Project Information and enter the date under Current Date. Next, you are ready to
view the earned value information for this project. Select the View menu, then
Table, then More Tables, from this drop down menu select Earned Value table and
click Apply. The following is the chart that should appear:

By adding or subtracting the totals of the columns you can determine the total
project variances as outlined in Problem #26. (Please recall that MSP reverses the
calculations.)

Incidents for Discussion Suggested Answers

St. Margarets Hospital: Mary Lynn needs an aggregate measure of project
performance for the three projects in question. An earned value analysis would be an
effective tool to see if the projects are on schedule, behind, etc. She would be able to
determine the expected completion dates for the projects. Milestones should also be built
into the project plans so that she could measure clearly along those progress points, for
each project.
Stoneworth Paving Company: A new control system is needed, but will not solve all of
the problems, or keep this project from being late. For the future, Preston needs a control
system that will better identify and report on supplier constraints and dates, staffing, and
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quality. If the this project is to be expedited in order to catch up with the schedule, a
control system that is oriented toward a high-pressure, time-critical projects will be
required. Monitoring of the proper measures will also be critical.
Carver Insurance Company: This is a good control system for improving the user
responsiveness of IS but may be unresponsive to the larger needs of the firm, particularly
if later activities depend on the completion of ISs tasks. An external PM would be
concerned about the delay on the IS activities as they strive for meeting internal quality
requirements.
Cable Tech, Inc.: No, Jean will not be able to take effective action from headquarters,
being removed from the site. Also delay in getting reports to her will leave too long a
period between occurrence of the attendance problem and a response. The policies
themselves are also in question. There is no flexibility in the policies for differences in
reasons between sites. In many cases the problem may be the companys fault, beyond
the control of the employee. Also, the employees were never consulted on the design of
these policies and my reject their enforcement. Last, although punishment is provided
for, rewards for good attendance are not recognized so no positive motivation is being
considered.

Suggested Case Analyses and Solutions

St. Dismas Assisted Living Facility -- V
Teaching Purpose: This installment of the Assisted Living Facility case addresses issues
related to project progress meetings and determining how much time has to be made up
to get back to the original baseline schedule.
1. What do you think the construction project manager should have done when the
Director of Security stopped attending the project meetings?
The construction project manager has set up a very good communications system
to keep the project team informed, even if they were not able to attend the
meetings. Kyle Nanno should deliver the CEOs message to the Director of
Security, if he does not respond within the deadline date that Kyle sets, Kyle
should have Fred and the other members of the project team give their input into
the security panel location decision. Fred needs to take appropriate disciplinary
action against the Director of Security for not fulfilling his job duties as a member
of the project team.
2. Do you think it is an effective communications tool to send the construction project
meeting minutes to the ALF steering team and the President? Support your answer.
It is an effective means of communications to send project team meeting minutes
on this project to the construction team, especially as the project nears completion
and a great number of details need to be followed up on. However, the Steering
Team and the President do not necessarily need the level of detail that they are
given. If details of a project are provided, most people will want to comment on it

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and be involved in any decisions that need to be made. If this is not appropriate,
then those people should only be provided with information about what directly
affects their area and told that their input is important to the success of the project.
3. How much time has to be made up for the original, baseline schedule to be met?
The Gantt chart in the case has been updated as of 4/11/01. The project shows a
finish date variance of 14 days. The project as a whole is 14 days behind
schedule. They ran 15 days late on Phase 1 of the project. The project was 14
days early on both Phase 2 and Phase 3 of the project.
4. Develop an action plan and draw a Gantt chart for the Parking Lot phase of the
project. Answer Freds questions.
If everything goes as scheduled the Gantt chart for the Parking Lot construction
would look as follows:

If St. Dismus did not hear from the city until May 1, 2001, the Gantt chart would
be adjusted as follows: (New end date for the project would be 6/12/01.)

The latest date to be notified by the city to meet the June 15th deadline is May 7th.
This would make the end date of the project June 15th.
5. What information does Fred need to make a decision about building a hair salon?
This is an example of scope creep. The building of the hair salon was not in the
original project plan. Fred must determine, first if he wants to build a hair salon
for residents, he should have the COO and VP of marketing do a complete
business plan with a cost benefit analysis/return on investment for this endeavor.

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After that is done, Fred must determine the impact that this would have on the
construction project. He must identify the additional costs, changes necessary to
the design and schedule.
Palmstar Enterprises, Inc.
Teaching Purpose: This case provides students with the opportunity to investigate the
trade-off of introducing a product late but staying on budget versus increasing the budget
to complete the project on schedule.
1. What has a larger impact on Palmstars profits, delaying the 2000cs introduction by
3 months or increasing the projects budget by 30 percent?
Delaying the launch of the product by 3 months would result in a loss of
$18,000,000 (200,000 units $450/unit .2 contribution margin) in contribution
to profit and overhead. Adding resources to complete the project on time would
increase costs and therefore lower profits by $900,000 (30% of $3 million).
Therefore, not launching the 2000c on time would have a much larger impact on
Palmstars profits.
2. Are there other factors you would consider in addition to profit?
There are a variety of other factors that should be considered including damage to
Palmstars reputation and loss of market share. The analysis could also be
enhanced had information been available on how rapidly unit prices decline in
this market and Palmstars cost of capital. With this added information, a
discounted cash flow analysis could have been undertaken.
3. What should Palmstar do? Why?
Clearly, Palmstar should spend the extra $900,000 to launch the 2000c on time.
This will maximize its profits, help to enhance its reputation, and help preserve its
competitive position. There is usually very little to be gained from being late to
the market.
4. How generalizable do you think the results of your analysis in this particular case are
to other situations?
Very generalizable. Companies often focus too much on the added cost of
completing a project on time but fail to investigate the benefits of getting a
product to the market sooner. The benefits of getting to market sooner increase as
the intensity of competition increases, as product life cycles shorten, and as
pricing pressure increases. These characteristics are all common in todays
globally competitive marketplace.

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Test Questions
True/False and Multiple Choice
T 1. ___ The items in a project to monitor and control are time, cost, and performance.
F 2. ___ It is more important to manage the project activities than to set up monitors and
controls.
T 3. ___ The monitoring and control processes should be a part of the original project
plan.
T 4. ___ It is more important to monitor the results of the activities rather than the
activities themselves.
F 5. ___ Everyone involved in the project should receive the same reports on the project
status so that everyone has the same knowledge of the project.
T 6. ___ Reports on project progress should be customized for individual stakeholders.
F 7. ___ A negative spending variance is considered good while a negative schedule
variance would be considered bad.
F 8. ___ It is important to hold weekly progress meetings to give project updates to
management.
T 9. ___ It is sometimes important to limit the access to project information for
some stakeholders.
F 10. ___ Top management needs detailed information about project status.
T 11. ___ Cost or schedule variances should be a warning sign to the project manager.
T 12. ___ Earned value is a project performance measure.
T 13. ___ The first step in setting up a monitoring system is identifying key factors to be
controlled.
T 14. ___ The project manager should be more concerned with preventing problems than
fixing them.
T 15. ___ Ratios are often more useful measures of performance than differences.
F 16. ___ Differences are usually more useful measures of performance than ratios.

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d 17. ___ The purpose(s) of monitoring a project is to:

a. provide information about the project to the client
b. keep management informed about the project
c. collect and supply information to control the project
d. all of the above
e. A and C
e 18. ___ Reports on the project status are necessary because:
a. they motivate project workers
b. they let others know what is going on
c. they minimize confusion
d. they are needed to control the project
e. All of the above
b 19. ___ Monitoring is the linkage between:
a. measuring and controlling
b. planning and controlling
c. project execution and controlling
d. planning and reporting
e. all of the above
c 20. ___ The first step in setting up a monitoring system is to:
a. identify personnel
b. identify all project milestones
c. identify key factors to be controlled
d. identify reports required
e. develop a change request form
e 21. ___ The best source of items to be monitored is the:
a. work breakdown structure
b. PERT network
c. budget
d. linear responsibility chart
e. action plan
d 22. ___ When calculating a projects earned value, the best source of information on
percent completion of the project is:
a. the percent of budget actually spent
b. the percent of planned project duration actually elapsed
c. the 0-50-100 rule
d. the best guess of the project manager
e. none of the above

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Short Answer
23. Define the terms monitoring and control.
Project monitoring is the collection, recording and reporting of project information.
Project control is the use of monitored data and information to bring project
performance into agreement with the project plan.
24. Name the formats most useful for data collection.
Frequency counts, raw numbers, subjective numeric ratings, indicators and
surrogates, verbal characterizations.
25. Why is the timing of monitoring reports critical?
So that an appropriate response or action can be taken in time to solve any problems
that the reports show.
26. What is the best way to estimate percent completion or activities for finding earned
value?
The subjective estimates of a knowledgeable individual are apt to be most accurate.
Problem
27. A project at month 4 had an actual cost of $340,000, a planned cost of $420,000, and
a value completed of $390,000. Find the spending and schedule variances. How is
the project doing?
Solution:
BCWS = $420,000
ACWP = $340,000
BCWP = $390,000
Cost/spending variance = BCWP ACWP = $390,000 - $340,000 = $50,000
Schedule variance = BCWP BCWS = $390,000 $420,000 = -$30,000
Less has been spent than the baseline plan, however, given what has been spent,
less progress has been made than should have been.

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