LECTURE 10

Monitoring and Controlling

Project

Introduction

Control is the process of:

comparing actual performance to the plan
to determine the variances,
evaluate possible alternatives, and
take appropriate action.

The ability to control a project is directly tied to the

effectiveness of the project plan.

Problems will always occur but they should be kept to

a minimum.

Good Cost And Control System

Cost estimating
Cost accounting
Project cash flow
Company cash flow
Direct labor costing
Overhead rate costing
Others, such as incentives, penalties, and profit-sharing

PLANNING

PHASE I

PLANNING
CYCLE

WORK
AUTHORIZATION
AND RELEASE

DATA
COLLECTION
AND REPORTING

COST
ACCOUNTING

CUSTOMER AND
MANAGEMENT
REPORTING

PHASE II

PHASE III

PHASE IV

PHASE V

OPERATING CYCLE
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Explanation of Project Costs

Project Indirect Costs
Costs that cannot be associated with any particular work
package or project activity.
Supervision, administration, consultants, and interest
Costs that vary (increase) with time.
Reducing project time directly reduces indirect costs.

Direct Costs
Normal costs that can be assigned directly to a
specific work package or project activity.
Labor, materials, equipment, and subcontractors

Crashing activities increases direct costs.

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Principles of Monitoring and Control

Set up a formal process to control changes in the project.

Dont micro-manage.

Elevate problems to the lowest level of management that

can make the decision and take action.

Be consistent, calculating and reporting schedule progress,

cost expenditures, and scope performance throughout the
project life.

If you have more than one project, be sure to handle

significant, highly-visible projects first and more often,
followed by average and then low priority projects.
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Establishing a Plan to Monitor

and Control the Project
Determining Information Needs
Determining Data Collection Methods
Determining Frequency of Data Collection
Status Information
Variances
Reports
Course of Action
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Determine Data Collection Methods

Electronic
Manual
Onsite Inspection
One-on-one Interviews
Team Meetings

Determine Frequency of Data Collection

The reporting requirements of the customers

Average duration of the project activities.

Experience (known or unknown subject matter).

Variances

Impact on the project.

Whether impact is a problem.
Cause of variance, including reasons and people
involved.
Whether the cause of the variance will create
variances elsewhere in the project.
The management cost and control system (MCCS)

Reports

What the plan says should be happening.

What is ACTUALLY happening (status).

Variance between plan and status.

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Cost data collection and reporting flow chart

Actuals
Labor

Monthly Total
Program Effort
BCWP
Weekly Labor
Reports

ACWP

Inventory
Accounts

Computer
MCCS Comparison
reports To All Mngt
BCWS
Variance Report

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Course of Action

Implement the decision.

Follow up to ensure that the action solves the
problem.
Take additional action if necessary to solve the
problem.
Document the decisions that make significant
changes in the approved plans.
Take preventative action to ensure that similar
problems dont happen again.

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Variance Analyses

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Variables for Variance Analysis

Budgeted Cost For Worked Scheduled (BCWS)
The budgeted amount of cost for word scheduled to be
accomplished plus the amount of level of effort or apportioned effort
scheduled to be accomplished in a given time period.
Budgeted Cost For Work Performed (BCWP)
The budgeted amount of cost for completed word, plus budgeted for
level of effort or apportioned effort activity completed within a given
time period. This is sometimes referred to as an earned value.
Actual Cost For Work Performed (ACWP)
The amount reported as actually expended in completing the work
accomplished within a given time period.
Cost Variance = BCWP ACWP
Schedule/Performance Variance = BCWP - BCWS

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Methods of Variances Analysis

The cost variance (CV) compares deviations
only from the budget and does not provide a
measure of comparison between work
scheduled and work accomplished.
The scheduling variance (SV) provides a
comparison between planned and actual
performance but does not include costs.

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Cost Variance Calculation

CV = BCWP - ACWP

A NEGATIVE VARIANCE
INDICATES A COST OVERRUN

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Schedule Variance Calculation

SV = BCWP - BCWS

A NEGATIVE VARIANCE INDICATES

A BEHIND SCHEDULE CONDITION
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Variance Percents

SCHEDULE VARIANCE %
(SVP)

COST VARIANCE %
(CVP)

= SV
BCWS X 100

= CV
BCWP X 100

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Classroom Activity 10a

Consider a potential problem that could occur in your

current project.

What recommendation would you make to solve it and

to whom would you make it?

What alternatives would you suggest if they dont

accept your recommendation?

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Questions?

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