433-643 IT Project Management
Monitoring
Project Monitoring & Controlling
Ä
Monitoring is
◆ Collecting, processing and distributing all project
progress data required by all project stakeholders
Earned Value Analysis
Readings
Ä
Schwalbe, IT Project Management, Chapter 7
Monitoring for controlling
◆ Ensuring members of the project team concerned
with control have available, on a timely basis, all
the information needed to exercise control over
the project
Simmons D B, Ellis N C, Fujihara H and Kuo W, Software
Measurement: A Visualization Toolkit. Prentice-Hall, 1998.
Kemerer C F, Software Cost Estimation Models: Software
Project Management Readings and Cases. McGraw-Hill, 1997.
Standards Australia, Project Performance Measurement using
Earned Value. AS 4817-2003..
L10
Controlling
Ä
L10 - 1
Monitoring Pitfalls ...
Changes to current plan
◆ Uses progress data supplied by the monitoring
process to revise the current plan to maximise
its future congruence with the baseline plan
Should monitor actual data that is clearly
related to progress but is also unlikely to vary
Poor monitoring choices
◆ bias towards Easy to collect data
Ä
Changes to baseline plan
◆ Includes processing, determining impact of and
approving changes to the baseline plan
(data that is already available rather than data that needs
collating and processing)
◆ Objective, easily defendable data rather than
more relevant but more complex subjective data
(eg. lines of code rather than function points)
L10 - 2
L10 - 3
1
Earned Value Chart
Example – EVA for multiple activities
Time ACWP
Now
Assume the following information is available
Cost
BCWS
Schedule
Variance
Actual Cost
ACWP
Cost Variance
(spending overrun)
Baseline Cost
Schedule Plan
BCWS
ATWP
STWP
BCWP
Activity
BAC
($’000)
Duration
(wks)
Precedence
A - Initiation
100
1
--
B - Planning
400
2
A
A
C - Designing
1200
3
D - Estimation
600
2
B
E - Scheduling
200
1
D
Earned Value
BCWP
Time
Variance
Time
L10 - 4
EVA (at t = 4) - Multi Activities
L10 - 5
Activity A at time t = 4
t=4
Activity
BAC
A
100
B
400
C
1200
D
600
E
200
Planned Daily Cost
BCW S
Planned PC
Activity
A
B
C
D
E
100
200
400
100
100
4%
600
700
28%
200
400
600
1300
52%
400
300
700
2000
80%
300
300
2300
92%
200
200
2500
100%
Total
BAC
100
400
1200
600
200
BCW S
100
400
1200
300
0
2500
2000
PC
100%
100%
75%
25%
0%
BCW P
ACW P
100
100
400
500
900
1000
150
200
0
0
1550
1800
SV
0
0
-300
-150
0
CV
0
-100
-100
-50
0
EAC
100
500
1333
800
200
-450
-250
2903
Actual Data at time t = 4
Act
A
B
C
D
E
PC
100%
100%
75%
25%
0%
BCWS
BCWP
SV
CV
FCAC
ACWP
$100
$500
$1000
$200
$0
L10 - 6
= Baseline PC * BAC
= Actual PC * BAC
= BCWP - BCWS
= BCWP - ACWP
= (ACWP/BCWP) * BAC
= 100% * 100 = 100
= 100% * 100 = 100
=0
=0
= (100/100) * 100 = 100
L10 -7
2
Activity B at time t = 4
Activity
A
B
C
D
E
Total
BCWS
BCWP
SV
CV
FCAC
BAC
100
400
1200
600
200
BCW S
100
400
1200
300
0
2500
2000
PC
100%
100%
75%
25%
0%
Activity C at time t = 4
BCW P
100
400
900
150
0
ACW P
100
500
1000
200
0
1550
1800
= Baseline PC * BAC
= Actual PC * BAC
= BCWP - BCWS
= BCWP - ACWP
= (ACWP/BCWP) * BAC
SV
0
0
-300
-150
0
CV
0
-100
-100
-50
0
EAC
100
500
1333
800
200
-450
-250
2903
Activity
A
B
C
D
E
Total
BCWS
BCWP
SV
CV
FCAC
= 100% * 400 = 400
= 100% * 400 = 400
= 400 - 400 = 0
= 400 - 500 = - 100
= (500/400) * 400 = 500
BAC
BCW S
100
100
400
400
1200
1200
600
300
200
0
2500
PC
100%
100%
75%
25%
0%
BCW P
A CW P
100
100
400
500
900
1000
150
200
0
0
2000
1550
= Baseline PC * BAC
= Actual PC * BAC
= BCWP - BCWS
= BCWP - ACWP
= (ACWP/BCWP) * BAC
SV
1800
0
0
-300
-150
0
CV
0
-100
-100
-50
0
EAC
100
500
1333
800
200
-450
-250
2903
= 100% * 1200 = 1200
= 75% * 1200 = 900
= 900 - 1200 = - 300
= 900 - 1000 = - 100
= (1000/900) * 1200 = 1333
L10 -8
Activity E at time t = 4
Activity D at time t = 4
Activity
A
B
C
D
E
Total
BCWS
BCWP
SV
CV
FCAC
BAC
BCWS
100
100
400
400
1200
1200
600
300
200
0
2500
PC
100%
100%
75%
25%
0%
BCW P
A CW P
100
100
400
500
900
1000
150
200
0
0
2000
= Baseline PC * BAC
= Actual PC * BAC
= BCWP - BCWS
= BCWP - ACWP
= (ACWP/BCWP) * BAC
1550
L10 -9
1800
SV
0
0
-300
-150
0
CV
0
-100
-100
-50
0
EAC
100
500
1333
800
200
-450
-250
2903
Activity
A
B
C
D
E
Total
= 50% * 600 = 300
= 25% * 600 = 150
= 150 - 300 = - 150
= 150 - 200 = - 50
= (200/150) * 600 = 800
BCWS
BCWP
SV
CV
FCAC
L10 -10
BAC
100
400
1200
600
200
BCW S
100
400
1200
300
0
2500
2000
PC
100%
100%
75%
25%
0%
= Baseline PC * BAC
= Actual PC * BAC
= BCWP - BCWS
= BCWP - ACWP
= (ACWP/BCWP) * BAC
BCW P
ACW P
100
100
400
500
900
1000
150
200
0
0
1550
1800
SV
0
0
-300
-150
0
CV
0
-100
-100
-50
0
EAC
100
500
1333
800
200
-450
-250
2903
= 0% * 200 = 0
= 0% * 200 = 0
=0
=0
= (?) * 200 = 200
L10 -11
3
EVA (Another Measure) - Multi Activities
EVA of whole Project at time t = 4
Activity
A
B
C
D
E
BAC
BCWS
100
100
400
400
1200
1200
600
300
200
0
Total
2500
BCWS
BCWP
SV
CV
FCAC
PC
100%
100%
75%
25%
0%
BCW P
ACW P
100
100
400
500
900
1000
150
200
0
0
2000
1550
= 2000
= 1550
= BCWP - BCWS
= BCWP - ACWP
= (ACWP/BCWP) * BAC
1800
SV
0
0
-300
-150
0
CV
0
-100
-100
-50
0
EAC
100
500
1333
800
200
-450
-250
2903
Ä
Critical Ratio (Useful for Larger Projects)
CR = (actual progress/scheduled progress)*(budget cost/actual cost)
= (AP/SP)*(BCWP/ACWP)
(assumes that two Ratios are weighted equally)
Activity
A
B
C
D
E
= 1550 - 2000 = - 450
= 1550 - 1800 = - 250
= (1800/1550) * 2500 = 2,903
AP
2
2
3
3
3
SP
3
3
3
2
3
BCW P
6
6
4
6
6
ACW P
4
6
6
6
4
CR
1.00
0.67
0.67
1.50
1.50
Status
On
Behind
Behind
Ahead
Ahead
L10 -12
L10 - 13
WBS for the example software
development project
Another Simple Example
Consider a project to develop a specialized
software to control a packaging machine, and
install it at the customer’s factory.
Develop
Design
1
activity
number
4
2
6
Software Project
$100,000
Install
& Test
3
2
Design
Develop
$24,000
$60,000
Install&
Test
$16,000
duration
Estimate (wks)
L10 - 14
L10 - 15
4
Budgeted cost by period for
Actual cost by period for
the software project
the software project
Week
Week
TBC
1
2
3
4
Design
24
4
4
8
8
Develop
60
Install & Test
16
Total
100
5
6
7
8
9
10
11
12
Design
Cumulative
8
8
12
12
10
1
2
3
4
5
2
5
9
5
1
2
8
Develop
10
8
8
Install & Test
6
7
Total
Spent
8
22
10
14
12
46
0
4
4
8
8
8
8
12
12
10
10
8
8
Total
2
5
9
7
9
10
14
12
4
8
16
24
32
40
52
64
74
84
92
100
Cumulative
2
7
16
23
32
42
56
68
68
(amounts are in thousand dollars)
(amounts are in thousand dollars)
L10 - 16
Cumulative percentage complete by period
L10 - 17
Cumulative Earned Value by period
Week
1
2
3
4
Weeks
5
6
7
8
TBC
Design
10
25
80
80
100
100
100
100
Develop
0
0
0
5
15
25
40
50
Install & Test
0
0
0
0
0
0
0
0
Design
24
Build
60
Install & Test
16
Cumulative
1
100
2.4
2.4
2
6
6
3
4
19.2
21.6
24
24
24
24
3
9
15
24
30
24.6
33
39
48
54
19.2
5
6
7
8
(amounts are in thousand dollars)
L10 - 18
L10 -19
5
Cost Forecasting
Cost performance index and cost variance
1. Assuming that the remainder of the project continues
to be performed at the same efficiency rate
CPI = BCWP/ACWP = $54,000/$68,000 = 0.79
This ratio indicates that for every $1.0 actually spent,
only $0.79 of earned value was received.
FCAC = Total Budgeted Cost/ CPI
= $100,000/ 0.79 = $126,582
2. Ignoring the past efficiency rate, assuming that the
work on the remaining portion of the project will be
done according to budget
CV = BCWP- ACWP = $54,000- $68,000
=- $14,000
This indicates that the value of work performed through
to week 8 is $14,000 less than the amount actually spent.
FCAC = ACWP + (TBC – BCWP)
= $68,000 + ($100,000 - $54,000) = $114,000
L10 -20
Graph of Budgeted cost, Actual cost and
Earned Value
Bar chart of Budgeted Cost, Actual Cost and
Earned Value
100
100
90
Cost ($’000)
L10 -21
90
80
80
70
70
60
60
50
50
40
40
68%
30
30
Budgeted
Actual
20
64%
Series1
54%
Percentage
Budgeted
Cost
to have been
spent
Percentage
Cost
Actually
spent
Percentage
of Work
Completed
20
Earned Value
10
10
0
0
1
1
2
3
4
5
6
7
8
9
10
11
2
3
12
Weeks
L10 - 22
L10 - 23
6
Risk Management
Learning Objectives
Risk Management
Understand what risk is and the importance of good project risk
management
Suggested Readings
Discuss the elements involved in risk management planning
Schwalbe, IT Project Management, Chapter 11
List common sources of risks on projects
Boehm B, Tutorial: Software Risk Management. IEEE Computer
Society Press, 1989.
Describe the risk identification process and tools and techniques to
help identify project risks
Hall E M, Managing Risk: Methods for Software Systems
Development. Addition-Wesley, 1998.
Discuss the qualitative risk analysis process and explain how to
calculate risk factors, use probability/impact matrix, the Top Ten Risk
Item Tracking technique, and expert judgment to rank risks
L10
L10 - 24
What is Risk?
Importance of Project Risk Management
Project risk management is about identifying, assigning,
and responding to risk throughout the life of a project and
in the best interests of meeting project objectives
Risk management is often overlooked on projects, but it
can help improve project success by helping select good
projects, determining project scope, and developing
realistic estimates
A dictionary definition of risk is
“the possibility of loss or injury”
Project risk involves understanding potential
problems that might occur on the project and
how they might impede project success
Risk management is like a form of
insurance; it is an investment
KPMG study (2001) found that 55 percent of runaway
projects did no risk management at all
L10 - 25
L10 -26
7
What is Project Risk Management?
What is Project Risk Management? (cont.)
The goal of project risk management is to minimize potential
risks while maximizing potential opportunities.
Major processes:
- Risk management planning: deciding how to approach
and plan the risk management activities for the project
- Risk identification: determining which risks are likely to
affect a project and documenting their characteristics
- Qualitative risk analysis: characterizing and analyzing
risks and prioritizing their effects on project objectives
- Quantitative risk analysis: measuring the probability
and consequences of risks
- Risk response planning: taking steps to enhance
opportunities and reduce threats to meeting project
objectives
- Risk monitoring and control: monitoring known risks,
identifying new risks, reducing risks, and evaluating
the effectiveness of risk reduction
L10 - 27
What needs controlling
L10 - 28
Software Risk
Quality
- a task has not really been finished unless
the product of that task is satisfactory
Risks are those events or conditions that may occur,
and whose occurrence, if it does take place, has a harmful
or negative effect on a project.
A risk is a probabilistic event – it may or may not occur.
- activity reported as finished could need
to be re-worked
For this reason, we frequently have an optimistic tendency
to simply not see risks or to wish that they will not occur.
This kind of attitude gets the project into trouble if the
risk events materialize, something likely to happen in a
large project.
- testing is difficult to control: depends on
an unknown number of errors
L10 - 29
L10 - 30
8
Software Risk
Risk and Risk Management
Many projects do not follow a formal risk management
Approach. Because of their failure to plan for the unexpected,
they find themselves in a state of perpetual crisis, inability to
make effectively and timely decisions.
Many call this approach crisis management or fire fighting
because the project stakeholders take a reactive approach or
only address the project risks after they have become problems.
Unforeseen events have an adverse impact on
a project’s cost, schedule, or quality.
The aim of risk management is not to avoid getting
into projects that have risk but rather to minimize
the impact of risks in the project that are undertaken.
“Anything worth doing has risks”
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L10 – 31
Nature of Risks
Risk Management Processes
Risks result from three general classes:
• Risk Management Planning
Known risks
• Risk Identification
(events that are going to occur, eg death and taxes)
• Qualitative Risk Analysis
Known-unknown risks
• Quantitative Risk Analysis
(identifiable uncertainties, eg errors in the code but number
not known)
• Risk Response Planning
Unknown-unknown risks
• Risk Monitoring and Control
(risks or events we can not even imagine happening,
eg a few years ago people had not even heard of internet
how could they comprehend the impact it would have on us)
L10 - 33
L10 - 34
9
Types of Risks
Risk Sources
Technical
Technical
Operational
Political
Legal
Supportability
Programmatic
Regulatory
Market
Social
Internal
Cost
External
Schedule
L10 - 35
Risk Management
Analysing and Quantifying Risks
Some new and some old tools are:
‰
‰
‰
‰
‰
‰
L10 - 36
Risk Management is the formal process of
Brainstorming
Delphi method
Sensitivity analysis
Probability analysis
Monte Carlo simulation
Decision tree analysis
Risk identification
Risk quantification
Risk response development, and
Risk response control
L10 - 37
L10 - 38
10
Risk Management
Risk Assessment
aims to identify the risks and then take actions to minimize
their effect on the project.
To identify, analyze and prioritize the risks
Two key components of Risk management
Risk Assessment
Risk Control
To prioritize risks, estimate the probability of its
occurrence and its consequence when it does occur.
The product of these values, the expected value of the loss
for the risk (called risk exposure), can be used for prioritizing
Risk identification
Risk Assessment
Risk analysis
Risk prioritization
Risk Management
RE (R) = Prob (R) × Loss (R)
Risk management planning
Risk Control
Risk resolution
Risk monitoring
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L10 - 39
Summary - Risk Management
Risk Control
After the risks are prioritized, decide which ones will be
managed is a management decision.
Software Engineering Institute
Identify - search for and locate risks before they become problems
One approach is to take preventive or avoidance actions so
that the perceived risk ceases to be a risk.
For each risk, you must devise and execute risk management
plans. Because the perception of risk changes with time, you
must also monitor both the risk and the execution of the
plans to minimize its consequences.
Analyze - transform risk data into decision-making information, evaluate
impact, classify risks and prioritize risks.
Plan -
translate risk information into decisions and mitigating actions
and implement those actions.
Track -
monitor risk indicators and mitigation actions.
Control - Correct for deviations from the risk mitigation plans.
Risk management can be integrated in the software
development process itself.
L10 - 41
L10 - 42
11
Risk Concepts – An Example
Example
Consider a computer show for which an important goal is to provide
uninterrupted computer services.
(cont.)
It is not easy to measure the value of risk or risk
management.
For this goal, one clear risk is electric power failure. The power may or
may not fail. If it does fail, even for a second, the computer services will
be affected substantially (the machines will have to reboot, data will be
lost , and so on). If this case is unacceptable (that is, if the cost of power
failure is high), a universal power supply (UPS) can be deployed to
minimize its consequences.
Suppose, however, that the power supply does not fail even for a second.
If it is suspected that the power may go out for a long period, a backup
generator may be set up to minimize the problem.
Does this mean that the expenditure on these components
was a waste?
With this risk management systems in place, if the power does go out,
even for a long period, the show related goals will not be compromised.
If the power fails for one-half hours during the show, the value provided
by the UPS and generator might be calculated as the “savings” achieved
by having the computer running while the power was out.
No, because the power could have failed. The value of risk management
cannot be directly measured in term of value or output produced.
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L10 - 43
Example
(cont.)
Note Risk entails Additional Cost (cost of the generator etc)
These components (the UPS and generator) won’t be needed
if the risk of power failure did not exit.
Next week
Quality Management
Risk management is considered cost- effective only
if the cost of risk management is considerably less
than the loss incurred if the risk materialize.
L10 -45
12