0:09

This is a module on monitoring and control.

Â The project in progress should be monitored at

Â pre-specified intervals to find out if the progress is according to plan or not.

Â A summary of the monitoring and control process is given in the diagram.

Â As we have seen earlier,

Â the planning process gives the scope of the project, the deliverables,

Â the activities and their estimated durations and resources required,

Â schedule for the task and resources,

Â time phased budget, project completion time etc.

Â The initial estimates on the plan

Â including the schedule are referred to as baseline estimates.

Â At review time, necessary data is collected and

Â the status of the project is analyzed with reference to the earlier plan.

Â A progress report is then prepared and if

Â the project is behind schedule and or the budget,

Â appropriate corrective action needs to be identified and implemented.

Â The initial plan may then be devised and

Â the revised plan would form the basis for the next review.

Â At review time, the data to be collected would include the status of the project,

Â the potential problems to be addressed,

Â identification of activities that may require the intervention, etc.

Â The data collected is then analyzed for identifying the cost and schedule variances.

Â Nation for activities in progress,

Â estimates must be made for the additional cost of the remaining work,

Â and the required duration to complete the remaining work.

Â For activities is yet to be started,

Â revised estimates of cost and time should be made because as the project progresses,

Â some of the uncertainties would have been resolved and better estimates may be possible.

Â From the revised estimates and the proposed corrective actions if any to be taken,

Â we arrive at a revised plan which forms the basis for subsequent review.

Â In the analysis of the current status of the project,

Â two methods are used.

Â One is the use of tracking Gantt chart for

Â estimating the revised completion date for the project,

Â and the other is the earned value analysis which is used

Â for estimating the total cost of completing the project,

Â if no changes are made in the current plan at review time.

Â Please read the use of both of these methods using

Â the same simple software project example

Â that we've been consulting throughout this course.

Â As shown in the table,

Â the project has eight activities.

Â The president relationships, the duration of the activities,

Â and the resource requirements are also shown in the same table.

Â Recall that with only one senior software engineer available,

Â applying the minimum slack rule,

Â the start and finish time of each activity was calculated,

Â and the project completion time was 14 weeks.

Â Now for this schedule,

Â we need to find that time phased budget which is the period by period,

Â or week by week in this example budget.

Â Using the total direct cost for the normal duration of

Â an activity and the period by period break up the same total direct cost,

Â the time phased budget is arrived at.

Â In this example, the direct cost for an activity is assumed to be the same

Â for each week of the duration of activity as given in the table,

Â but it may not always be the case.

Â The calculated time phased budget is given in the next table.

Â Note that the period K is from K minus one to K,

Â and the total direct cost of this project is 470.

Â The total budget for each activity is called the planned value, referred to as PV.

Â In the past, the same value was referred to as budgeted cost of

Â the work schedule and abbreviated BCWS.

Â Suppose the review of the project is undertaken at the end of period

Â 10 and the status of the project is as given in the table.

Â At the end of week 10,

Â status of the project is as follows.

Â Activity A started at the beginning of week 1 and finished at the end of week 2.

Â So it is 100% complete.

Â The actual cost incurred as given by the accounting department is 80.

Â Similarly, activity B started at the beginning of week 3 and ended at the end of week 5.

Â In other words, activity B took only 3 weeks to

Â complete as compared to the initial estimate of 4 weeks.

Â So activity B is also 100% complete.

Â The cost incurred for activity B is 100 as given by the accounting department.

Â Activity C started at the beginning of week 6 and was completed at the end of week 9.

Â The actual cost for activity C is 80 as shown in the table.

Â At the end of week 10,

Â activities D and E are in progress.

Â It is estimated that 30% of activity D has been completed,

Â while they estimate for activity E is 40% complete.

Â The actual cost incurred so far for activities D and E are 20 and 30 respectively.

Â Activities F, G and H have not started as yet.

Â In addition, suppose that activity D is expected to take an additional 2 weeks to

Â complete while the total direct cost for

Â activity D remains the same as estimated earlier.

Â Activity E is expected to take an additional 2 weeks to complete,

Â while the total direct cost for activity E remains the same 60 as before.

Â The revised times and cost for the activities F,

Â G and H are the same as estimated earlier.

Â 5:44

We are now in a position to draw

Â the tracking Gantt chart that gives the status of the project at the end of week 10.

Â Note the revised estimate of project completion time is 15.

Â That is project is expected to be delayed by one week if no corrective action is taken.

Â We will next look at the earned value analysis in some detail,

Â and do the calculation for the example above.

Â For each activity at review time,

Â earned value is defined as the amount of the current budget that has been

Â earned by the work completed on that activity till the review of time.

Â The abbreviation EV, earned value is now involved,

Â but the abbreviation in the past for the same concept

Â was BCWP for budgeted cost of the work performed.

Â At review time, each of

Â the activities is in one of three mutually exclusive possible states.

Â The activity may have been completed some time on or before the review time,

Â or the activity is in progress and not yet completed,

Â or the activity has not yet started.

Â For activities that have been completed,

Â the earned value equals the planned value.

Â For activities not yet started,

Â the earned value is 0.

Â For activities that are in progress,

Â we need to calculate the earned value.

Â The popular approach is to estimate the percentage completion of the activity,

Â and multiply that by the total planned value for that activity,

Â to arrive at its earned value.

Â This rule is referred to as the percent complete rule.

Â A variant of the percent complete rule for long duration activities is to

Â first break up activity duration into two or more phases,

Â and the percent complete depends upon

Â the status of the activity in terms of which phase it is in,

Â and the percent complete within that phase.

Â For instance, suppose an activity duration is divided into three phases,

Â with the end of Phase 1 representing 30% complete of the activity,

Â while the end of Phase 2 represents 70% complete of the activity.

Â And the end of Phase 3 represents 100% complete of the activity.

Â Suppose the status of activity is that it is in Phase 2 and is in progress,

Â and 20% of Phase 2 has been completed.

Â Then the percent complete for that activity equals 30 + 0.2 into 70 - 30.

Â And this is equal to 38%.

Â There are other possible ad-hoc rules that may be used for

Â calculating the earned value for an activity in progress at review time.

Â The 0/100% rule is that earned value is 0 until the activity is completed,

Â at which time the earned value is 100% of the budget for that activity.

Â The 50/50 rule states that the earned value for an activity in

Â progress is 50% of the budget until it is completed,

Â at which point the earned value is 100% of the budget for that activity.

Â These ad-hoc rules may be reasonable for activities of short duration.

Â The only real advantage of these ad-hoc rules is that we need not

Â estimate the percent complete of an activity at review time.

Â Often, the percent completion of an activity is simply

Â estimated by someone who is familiar with such activities.

Â It should be borne in mind that as in the case of estimation or activity durations,

Â more elaborate procedures for estimating

Â the percent complete of an activity may not be worth the additional time,

Â effort, and cost in arriving at more accurate estimates.

Â Before we can calculate the different variances,

Â we need to run the data for each activity

Â that has been completed or in progress at review time.

Â This is the actual cost incurred for activities completed and

Â the actual costs incurred so far for activities in progress.

Â This data has to be obtained from the accounting department.

Â This implies that the accounts at least in terms of cost incurred are up to date.

Â The actual cost is abreviated as AC while in the past this was

Â referred to as the actual cost of work performed and abbreviated as ACWP.

Â Now with the activity level,

Â the definition of different variances are as follows.

Â The cost of cost variance,

Â CV for an activity is the difference between

Â the earned value and the actual cost for that activity.

Â That is CV equals earned value minus actual cost.

Â This variance is an assessment in monetary terms

Â of the progress of each activity at review time.

Â The schedule variance is the difference between EV and PV.

Â That is schedule variance equal to earned value minus planned value.

Â In the example above,

Â the two variances for each activity at the end of week 10 are shown in the next table.

Â For completed activities, the earned value equals planned value,

Â and the schedule variance SV equals 0.

Â Thus activities A, B and C have SV equal to 0.

Â Activity D is in progress and it has been estimated that activity D is 30% complete.

Â So its earned value equals 0.3 times 40 equals 12.

Â Similarly, for activity E,

Â earned value equals 0.4 into 60 equal to 24.

Â So CV and SV for activities D and E are -8 and -6 respectively.

Â The totals are given in the last row of the table.

Â These values will be used to calculate some variances of

Â the project level as we will see later in this module.

Â There are two other variances that have been defined.

Â The resource variance RV for an activity

Â is the difference between the cost that should have been

Â incurred as per the budget and the actual cost incurred as on the review date.

Â That is RV equals planned value minus actual cost.

Â Time variance, TV is the difference between the time schedule for work

Â that has been performed and the actual time used to perform the work, AT.

Â That is TV = ST - AT.

Â These variances provide some useful information,

Â although they're not as popular as CV and SV.

Â Next we will extend our analysis to the project level.

Â The baseline budget for the project is referred to as budget at

Â completion or abbreviated as BAC.

Â At review time, we need to calculate

Â the revised estimate of the total cost of completion of the project.

Â In order to do this,

Â we need to estimate the cost of completing the remaining work.

Â There are two approaches to this estimation,

Â one approach is to find out from experts and other persons associated with

Â the project what their estimate

Â is for the expected cost of completing the remaining work.

Â Suppose this estimate is denoted as ECR1,

Â then the revised estimate of the expected total cost at completion of the project

Â is ETC1 equals ECR1 plus TAC.

Â The TAC is the total actual cost as on review date.

Â Then the cost variance at completion of the project which is denoted as

Â VAC1 is BAC minus ETC1.

Â The second approach is to calculate the revised estimate of

Â the total cost of completion of the project is to use

Â the cumulative cost performance index and

Â the efficiency index to estimate the cost of completing the remaining work.

Â The cumulative cost performance index denoted as CPI is equal to TEV over TAC,

Â where TEV and TAC are the the total earned value and

Â the total actual cost respectively as on the review date.

Â Note that if TEV is less than TAC,

Â CPI is less than 1,

Â indicating that the performance to date is below expectation.

Â If CPI is greater than 1,

Â the performance to date is better than expectation.

Â Assuming that the remaining work will would be

Â performed at the same efficiency as on review date,

Â the estimated cost of completing the remaining work is

Â ECR2 equals work remaining over CPI,

Â which is equal to BAC minus TEV over TEV over AC.

Â Now the revised estimate of the expected total cost and completion is

Â ETC2 which is equal to ECR2 plus TAC,

Â and the cost variance VAC2 equals BAC minus ETC2.

Â Instead of defining variances as above

Â an alternate approaches is to define performance indices for monitoring the progress.

Â Now at the activity level, the cost performance index,

Â CPI for an activity is EV over AC,

Â where EV and AC are the earned value and the actual cost respectively for that activity.

Â Similarly, at the activity level schedule performance index

Â or SPI for an activity is EV over PV,

Â where EV and PV are the earned value and planned value respectively.

Â At the project level, we look at the total sales on review date for earned value,

Â planned value and actual cost which are denoted as TEV,

Â TPV and TAC respectively.

Â CPI at the project level is equal to TEV over TAC, and SPI is equal to TEV over TPV.

Â At the project level,

Â if CPI is less than one, it implies that there is a cost overrun.

Â But CPI greater than one implies that the cost incurred is less than the budget.

Â Similarly, SPI less than one implies that the project is behind schedule,

Â while SPI greater than one implies that the project is ahead of schedule.

Â The cost schedule index denoted as CSI is a product of CPI and SPI.

Â That is CSI equal to CPI multiplied by SPI,

Â which in turn equals TEV over TAC,

Â multiplied by TEV over TPV.

Â That is equal to TEV squared over TAC multiplied by TPV.

Â The rational for CSI is that if both CPI and SPI are greater than one,

Â then the product CSI is greater than one,

Â and the progress on the project is good.

Â If both CPI and SPI are less than one,

Â and the product CSI is less than one,

Â and the progress on the project is not adequate.

Â If one of them is greater than one and the other is less than one,

Â then the product CSI may be less than one hour greater than one.

Â In this case, if CSI is greater than one then progress on one dimension is good enough.

Â To review the overall progress is adequate,

Â although the progress on the other dimension is not really adequate.

Â On the other hand,

Â if CSI is less than one then the overall progress is not considered as adequate.

Â In the example, we have consider taking the values in the last row of the table.

Â We have TPV equals 340.

Â TEV equals 326, and TAC equals 310.

Â And CPI equals to TEV over TAC equals 326 by 310, which is equal to 1.052.

Â And SPI equal to TEV over TPV,

Â equals 326 by 340, equal to 0.959.

Â CSI then is TEV squared over TAC multiplied by TPV,

Â is equal to 326 squared divided by 310 into 340,

Â which is equal to 1.008.

Â So, the overall progress of the project is adequate,

Â although the project is slightly behind schedule as indicated by SPI.

Â At the activity level, to find the EV for an activity in progress at review time.

Â We have to estimate the percent complete of that activity.

Â At the project level,

Â we have three measures of percentage completion.

Â One measure is based on the budgeted cost of the project,

Â but ignoring the actual cost incurred till review time.

Â This percent complete index denoted as PCIB is simply equal to TEV over BAC.

Â The other two measures denoted as PCIC1 and PCIC2,

Â are based on the actual cost incurred till review time,

Â and the expected cost at completion of the project.

Â Recall that we had two ways of estimating the total cost at completion of the project.

Â These two estimates were denoted as ETC1 and ETC2.

Â So we had the percent complete index PCIC1 as equal to TAC over ETC1.

Â And PCIC2 is equal to TAC over ETC2.

Â In the example, we've have been considering PCIB equals 326 over 470,

Â which is equal to 0.694.

Â Suppose the experts estimated cost of completing the remaining work is 200,

Â that is ECR1 is 200, then the expected total cost at completion of

Â the project ETC1 equals TAC plus ECR1 equals to 310 plus 200, which is equal to 510.

Â So the cost variance at completion of the project,

Â VAC1 equals BAC minus ETC1, equal 470 minus 510, which is equal to minus 40.

Â And PCIC1 is 310 over 510, equals to 0.608.

Â If we use a cumulative performance index at review time,

Â CPI equals TEV over TAC,

Â which is equal to 326 over 310 equal to 1.052.

Â And the estimated cost of the remaining work ECR2 is equal to work remaining over CPI,

Â which is equal to BAC minus TEV divided by TEV over actual cost, AC.

Â This is equal to 470 minus 326 over 326 over 310,

Â which is equal to 144 divided by 326 over 310,

Â which gives us a value of 136.933.

Â Now ETC2 equals TAC plus ECR2 that is equal to

Â 310 plus 136.933, equal to 446.933.

Â And the cost variance at completion of the project is VAC2 equals BAC minus ETC2,

Â equal to 470 minus 446.933 equals 23.067 which is positive.

Â While VAC1 was negative equal to -40.

Â Now, PCIC2 equals 310 over 446.933 which is equal to 0.694.

Â Finally, we have the two complete performance index,

Â TCPI which is the amount of value each unit of currency in

Â the remaining budget should earn to stay

Â within the total budget at the completion of the project.

Â The remaining budget is given by BAC minus TAC.

Â While the value still to be earned is BAC minus earned value, EB.

Â Hence, TCPI equals BAC minus TEV over BAC minus AC.

Â If TCPI is greater than 1,

Â then there's more work to be done than the available budget.

Â This would imply that the productivity has

Â to be increased if there has to be no cost overrun.

Â If TCPI is less than 1,

Â then there is less work to be done than the available budget.

Â This implies that the project may be completed without using all the budget,

Â and one may consider increasing the scope of the project while staying within the budget.

Â For the example we have been looking at,

Â TCPI equals 470 minus 326 over 470 minus 310,

Â which is equal to 144 over 160 which is 0.9.

Â Since TCPI is less than 1,

Â it is estimated that the project may be completed without using all the budget.

Â This completes our module on monitoring and control.

Â