Transcript Ch10:Monitoring and Information Systems
Chapter 10 Monitoring and Information Systems
Jason C. H. Chen, Ph.D.
Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99258 [email protected]
Dr. Chen, Special Topic: Project Management
1
Project Management
Dr. Chen, Special Topic: Project Management
Figure Project Triangle (Project Management Trade-offs) Time [schedule] QUALITY Cost [budget] The center of project triangle is Scope [performance] The objective of the PM is to define project’s 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 each project is unique.”
variability
because 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 Planning–Monitoring–Controlling 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 ...
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
project performance is earned value.
overall • 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
cost
and
schedule
.
progress
in addition to – 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
Dr. Chen, Special Topic: Project Management Figure 10-6 EAC = ETC + AC
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
= EV 2 /(AC)(PV)
Dr. Chen, Special Topic: Project Management
Summary on Variances and Indices
CV = EV – AC
CV
: cost variance
EV
: earned value
AC
: actual cost of the work SV = EV – PV
SV:
schedule variance
PV
: planned value (the cost of the work we scheduled to be performed to date) TV = ST – AT
TV:
time variance ST : time scheduled for the work that has been performed AT : actual time used to perform • Cost Performance Index
CPI
= EV/AC • Schedule Performance Index
SPI TPI CSI
= EV/PV • Time Performance Index = ST/AT • Cost Schedule Index = EV 2 /(AC)(PV)
TV = SV / slope Slope = PV / Days 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 Project Plan Scheduling
• • Top-down Bottom-up
Budgeting The
budget is a plan
that identifies the resources, goals and schedule that allows a firm to achieve those goals 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
22
CV SV AC
$540 $(5) $12
PV
$523
EV
$535 Unfavorable Favorable
CV = EV – AC SV = EV – PV Negative variances are unfavorable.
EV : earned value AC : actual cost of the work Dr. Chen, Special Topic: Project Management
Problem 2: ($000) Month
5
CV CPI SV SPI AC
$34 $5 1.15
$(3) 0.93
PV
$42
EV
$39 Favorable Unfavorable
CV = EV – AC CPI = EV/AC SV = EV – PV SPI = EV/PV 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
70
CV CPI SV SPI CSI TV AC
$78 $3 1.04
$(3) 0.96
1.00
(2.50)
PV
$84
EV
$81 Favorable Unfavorable On target 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
17
CV CPI SV SPI CSI AC
$350 $(50) 0.86
$(175) 0.63
0.54
PV
$475
EV
$300 Unfavorable Unfavorable Unfavorable
Cost Performance Index CPI SPI = EV/AC Schedule Performance Index = EV/PV Time Performance Index TPI CSI = ST/AT Cost Schedule Index = EV 2 /(AC)(PV) Dr. Chen, Special Topic: Project Management This project is seriously delayed (SPI) and also over budget (CV).
Problem 5: ($000) Month
10
CV CPI SV SPI CSI AC
$23 $(3) 0.87
$3 1.18
1.03
PV
$17
EV
$20 Unfavorable Favorable Favorable
This project is ahead of schedule , but has an unfavorable CV.
Dr. Chen, Special Topic: Project Management
Day
65
CV CPI SV SPI CSI TV Problem 6: ($000) AC
$550
AC = $550 PV
$735 $128 1.23
EV
$678 Favorable $(57) 0.92
1.13
(5.00) Unfavorable Favorable Days behind
Day
65
CV CPI SV SPI CSI TV AC
$750
AC = $750 PV
$735 $(72) 0.90
EV
$678 Unfavorable $(57) 0.92
0.83
(5.00) Unfavorable Unfavorable 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) CV CPI SV SPI CSI AC
$10.0
$(1.6) 0.84
$(3.6) 0.70
0.59
PV
$12.0
EV
$8.4
Unfavorable Unfavorable 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