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Topic 10 - Project Performance Management.pdf
- 1. Project Performance Management Dr.Huy Nguyen
- 2. • What isa Project Monitoring System? • Examples of Progress Report; • What is the Project Control Process and why is it useful? • How do we monitor Time Performance? • Shortcomings of Monitoring Systems; • Earned Value Management; • Integrated Cost / Schedule System; • Project Baselines. Project Performance Management 2
- 3. • It involvesdetermining what data to collect, how, when and who will collect the data, analysis of the data, and reporting progress. • You need to know what information is needed to satisfy you and your stakeholders. • Think about the Information System Structure. What is a Project Monitoring System? Monitoring System Gather Analyse Report 3
- 4. • What dataare collected? – Current status of project (schedule and cost); – Remaining cost to complete project; – Date that project will be complete; – Potential problems to be addressed currently; – Out-of-control activities requiring intervention; – Cost and/or schedule overruns & their reasons; – Forecasting overruns at time of completion. What is a Project Monitoring System? (cont.) 4
- 5. • Collecting dataand analysis: – Who will collect project data? – How will data be collected? – When will the data be collected? – Who will compile and analyze the data? – Who will receive the reports? – How will the reports be transmitted? – When will the reports be distributed? What is a Project Monitoring System? (cont.) 5
- 6. • Progress ReportFormat: – Progress since last report; – Current status of project: • Schedule; • Cost; • Scope. – Problems and issues since last report: • Actions and resolution of earlier problems; • New variances and problems identified. – Corrective action planned. • How long should a project status report be? – From 5 - 10 pages. Examples of Progress Report 6
- 7. • Project ControlProcess: – The process of comparing actual performance against plan to identify deviations, evaluate courses of action, and take appropriate corrective action. • Project Control Step: WhatistheProjectControlProcessandwhyisituseful? Set and baseline a plan Measuring progress and performance Comparing the plan to the facts Taking action 7
- 8. • Monitoring TimePerformance: – Tools used to catch negative variances from plan and communicate project schedule status; – Tracking and baseline Gantt charts: • Show expected, actual, and trend data for event duration performance; – Control charts: • Plot the difference in scheduled time on the critical path with the actual point on the critical path. How do we monitor Time Performance? 8
- 9. Tracking Gantt chartshowing status through periods Baseline Gantt chart How do we monitor Time Performance? (cont.) • Gantt chart: 9
- 10. How do wemonitor Time Performance? (cont.) • Control chart: 10
- 11. • Monitoring SystemsDisparities: – Time-Phase Baseline Plan: – Correct the failure of most monitoring systems to connect a project’s actual performance to its schedule and forecast budget; – Systems that measure only cost variances do not identify resource and project cost problems associated with falling behind or progressing ahead of schedule; • Earned Value Cost / Schedule System: – An integrated project management system based on the earned value concept that uses a time-phased budget baseline to compare actual and planned schedule and costs. Shortcomings of Monitoring Systems? 11
- 12. • What isEarned Value Management (EVM)? – A project performance measurement technique that integrates scope, time, and cost data; – Give a baseline (original plan plus approved changes) to determine how well the project is meeting its goals; – Must enter actual information periodically to use EVM. • Terms to learn: – PV: Planned Value; – AC: Actual Cost; – EV: Earned Value; – CV: Cost Variance; – SV: Schedule Variance; – CPI: Cost Performance Indicator; – SPI: Schedule Performance Indicator. Earned Value Management 12
- 13. • BAC -Budget at Completion: – Planned budget of the project. • PV - Planned Value (Budget): – This is that portion of the approved total cost estimate planned to be spent on an activity during a given period. • AC - Actual Cost: – The total of direct and indirect costs incurred in finishing work on an activity during a given period. • EV - Earned Value: – An estimate of the value of the physical work actually completed. • CV - Cost Variance: – Earned value minus the actual cost. Shows the difference between the estimated cost of an activity and the actual cost of that activity. • SV - Schedule Variance: – Earned value minus the planned value. Shows the difference between the schedule completion of an activity and the actual completion of that activity. Earned Value Management (cont.) 13
- 14. • CPI -Cost Performance Indicator: – The ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project; – If the CPI is equal to 1 or 100% then the planned and actual costs are equal, or the costs are as budgeted; – If the CPI is less than 1 or less than 100%, the project is over budget; – If the CPI is greater than 1 or more than 100%, the project is under budget. • SPI - Schedule Performance Indicator: – The ratio of earned value to planned value and can be used to estimate the projected time to complete the project; – Similar to the CPI, an SPI of 1 or 100% means the project is on schedule; – If the SPI is greater than 1 or 100% then the project is ahead of schedule; – If the SPI is less than 1 or 100%, the project is behind schedule. Earned Value Management (cont.) 14
- 15. Earned Value Management(cont.) • Term: – Earned Value – Cost Variance – Schedule Variance – Cost Performance Indicator – Schedule Performance Indicator – Estimate at Completion (EAC) – Estimated time to Complete (ETC) – Estimated cost to Complete (ETC) – Variance at Completion (VAC) • Formula: – EV = PV to date X percent complete – CV = EV – AC – SV = EV – PV – CPI = EV / AC – SPI = EV / PV – EAC = BAC / CPI – ETC = Original time estimate / SPI – ETC = EAC – AC – VAC = BAC – EAC 15
- 16. Earned Value Management(cont.) • Rules for Earned Value Numbers: – Negative numbers for cost and schedule variance indicate problems in those areas; – The project is costing more than planned or taking longer than planned if CPI and SPI less than 100%. • There are methods used to revise estimates of future project costs: – EVM allows experts in the field to change original baseline durations and costs because new information tells them the original estimates are not accurate; – EVM uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable. Index Cost (CPI) Schedule (SPI) > 1.0 Under cost Ahead of schedule = 1.0 On cost On schedule < 1.0 Over cost Behind schedule 16
- 17. Integrated Cost /Schedule System • Developing an Integrated Cost / Schedule System: Report & Action Calculate & Compute Collect Schedule Resource plan WBS Budget Plan Monitor 17
- 18. Integrated Cost /Schedule System (cont.) • Define the work using a WBS: – Scope; – Work packages; – Deliverables; – Organization units; – Resources; – Budgets. • Develop work and resource schedules: – Schedule resource to activities; – Time-phased work packages into a network. • Develop a time-phased budget using work packages included in an activity - Accumulate budgets (PV); • At the work package level, collect the actual costs for the work performed (AC); • Multiply percent complete time by original budget (EV); • Compute the schedule variance (EV – PV) and the cost variance (EV – AC). 18
- 19. Integrated Cost /Schedule System (cont.) • Sample of an Integrated Cost / Schedule System: 19
- 20. Project Baseline • Measurechange against the project baseline; • Baseline is: – An anchor point for measuring performance; – A planned cost and expected schedule against which actual cost and schedule are measured; – A basis for cash flows and awarding progress payments; – A summation of time-phased budgets (cost accounts as summed work packages) along a project timeline. • What costs are included in baselines? – Labor; – Equipment; – Materials; – Project direct overhead costs (DOC). 20
- 21. Project Baseline (cont.) •Scope changes to a baseline: 21
- 22. • Project monitoringsystem includes data collection, analysis and reporting. • Project control steps include baseline plan, progress measurement, comparing actual against projected plan, and actions. • Performance can be monitored using tools such as: tracking Gantts, control charts, baseline plans and earned value management. • Earned value management (EVM) is a technique which incorporated scope, time and cost data to determine the health of the project. • Integrated Cost / Schedule systems are developed by creating WBS, work / resource schedules, budget, and EVM. • Project baselines are an anchor point for measuring performance. Review 22
- 23. Thank You Next topic: ProjectSchedule Management 23