Chapter 10
Monitoring and Information
Systems
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99258
chen@jepson.gonzaga.edu
Dr. Chen, Special Topic: Project Management
1
Project Management
Dr. Chen, Special Topic: Project Management
Figure Project Triangle
(Project Management Trade-offs)
Cost
[budget]
Time
[schedule]
The center of
project triangle
is
QUALITY
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 variability because
each project is unique.”
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 ...
NO
________information.
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
critical vs. non-critical
Milestone
(for “Design” phase)
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 overall
project performance is earned value.
• 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 progress in addition to
cost and schedule.
– 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
EAC = ETC + AC
Dr. Chen, Special Topic: Project Management
Figure 10-6
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 = EV2/(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
Dr. Chen, Special Topic: Project Management
• Cost Performance Index
CPI = EV/AC
• Schedule Performance
Index
SPI = EV/PV
• Time Performance Index
TPI = ST/AT
• Cost Schedule Index
CSI = EV2/(AC)(PV)
TV = SV / slope
Slope = PV / Days
“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-todate 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
Dr. Chen, Special Topic: Project Management
Budgeting
The budget is a plan
that identifies the
resources, goals and
schedule that allows a
firm to achieve those
goals
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
EV
$523
$535
Unfavorable
Favorable
EV: earned value
AC: actual cost of the work
Dr. Chen, Special Topic: Project Management
CV = EV – AC
SV = EV – PV
Negative variances are
unfavorable.
Problem 2:
($000)
Month
AC
5
$34
CV
$5
CPI
1.15
SV
$(3)
SPI 0.93
PV
$42
EV
$39
Favorable
CV = EV – AC
CPI = EV/AC
SV = EV – PV
SPI = EV/PV
Unfavorable
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 AC
17
$350
CV
$(50)
CPI
0.86
SV
$(175)
SPI
0.63
CSI
0.54
PV
$475
EV
$300
Unfavorable
Unfavorable
Unfavorable
Cost Performance Index
CPI = EV/AC
Schedule Performance Index
SPI = EV/PV
Time Performance Index
TPI = ST/AT
Cost Schedule Index
CSI = EV2/(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
Problem 6:
($000)
Day
65
CV
CPI
SV
SPI
CSI
TV
AC = $550
AC
PV
EV
$550
$735
$678
$128
Favorable
1.23
$(57)
Unfavorable
0.92
1.13
Favorable
(5.00)
Days behind
Day
65
CV
CPI
SV
SPI
CSI
TV
AC = $750
AC
PV
EV
$750
$735
$678
$(72)
Unfavorable
0.90
$(57)
Unfavorable
0.92
0.83
Unfavorable
(5.00)
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