Project%20Control

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1.040/1.401/ESD.018Project Management, Spring
2007Lecture 15Project Control
Samuel Labi and Fred Moavenzadeh Department of
Civil and Environmental Engineering Massachusetts
Institute of Technology
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Project Control
Recall The 5 Phases of Project Management

DESIGN, PLANNING
CLOSEOUT
OPERATIONS
FEASIBILITY
DEVELOPMENT
CLOSEOUT
Organization Estimation Planning
Finance Evaluation
Monitoring Control Changes Claims Quality
Reviews
Actual Start of Project
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Monitoring Control A Feedback Process
Project Control

Detect deviations
Control 1. Actions 2. Revised Plans, Cash Flows,
Schedules, etc.
Monitoring 1. Measurement 2. Performance Analysis)
Correct Deviations
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Project Control The Big Picture
Project Control

Given
Project is Off-track
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Project Control
Project Control The Big Picture

Given
Project is Off-track
Monitoring indicates that - Project is behind
time-schedule, and/or - Project has exceeded
budget, and/or - Quality of materials or
finished work is below standard, and/or -
Productivity is lower than as planned, etc.
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Project Control
Project Control The Big Picture

Resources for PC (the 4-Ms)
Given
Project is Off-track
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Project Control

Project Control The Big Picture

Resources for PC (the 4-Ms)
Given
Project is Off-track
Resources available to the Project Manager for
Project Control - Money - Manpower (labor) -
Materials - Machinery (Equipment)
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Project Control
Project Control The Big Picture

Resources for PC (the 4-Ms)
Given
Mechanism and Elements of PC
Project is Off-track
Adjust the resources
Adjust the project characteristics size, scope,
etc
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Project Control

Project Control The Big Picture

Resources for PC (the 4-Ms)
Given
Mechanism and Elements of PC
Project is Off-track
Adjust the resources
Adjust the project characteristics size, scope,
etc
More labor? Better labor? Better
supervision? More materials? Better
materials? More equipment? Better equipment? More
money?
resources
Reduce project size? Reduce project
scope? Terminate project?
project
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Project Control
Project Control The Big Picture

Resources for PC (the 4-Ms)
Given
Mechanism and Elements of PC
Project is Off-track
Adjust the resources
Adjust the project characteristics size, scope,
etc
output
Project brought back on-track
Was the Project Control successful? How can we
tell?
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Project Control
Project Control The Big Picture

Resources for PC (the 4-Ms)
Given
Elements and Mechanism of PC
Project is Off-track
Adjust the resources
Adjust the project characteristics size, scope,
etc
output
Project brought back on-track
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Outline of this Lecture
Project Control

1. How can we tell when PC is needed?
2. What resources are available for PC?
3. What are the elements of PC?
4. What is the mechanism of PC?
5. Some important issues in Project Control

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• Part 1
• How can we tell
• when Project Control is needed?

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Is Project Control is needed now? How can we tell?
Specific Clues
General Clues
Primitive Indicators
Other Indicators
Performance and Quality
Time
Cost
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How can we tell when Project Control is needed?
GENERAL CLUES (Meredith and Mantel, 2006)

• Performance
• - Unexpected technical problems arise
• - Insufficient resources are unavailable when
  needed
• - Quality or reliability problems occur
• - Owner/Client requires changes in technical
  specifications
• - Inter-functional complications and conflicts
  arise
• - Market changes that increase/decrease the
  projects value

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How can we tell when Project Control is needed?

GENERAL CLUES (Meredith and Mantel, 2006)

• Cost
• - Technical difficulties that require more
  resources
• - Scope of work increases
• - Bid amount (accepted for the contract award)
  is too low
• - Reporting of the monitoring results are
  poor/late
• - Project budgeting for contractor cash flows
  not done right
• - Changes in market prices of the inputs

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How can we tell when Project Control is needed?

GENERAL CLUES (Meredith and Mantel, 2006)

• Time
• - Technical difficulties require more time to
  solve
• - Scope of work increases
• - Unexpected utilities needing relocation
• - Task sequencing not done right
• - Required material, labor/equipment unavailable
  when needed
• - Key preceding tasks were not completed on time.

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1. How can we tell when PC is needed?
SPECIFIC CLUES

• Primitive indicators
• More resources or less resources haven been used
  than planned
• Activities are taking long than planned
• Cost of activity (or of project to date) is
  higher than expected

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1. How can we tell when PC is needed?
SPECIFIC CLUES

• Primitive indicators
• More resources or less resources haven been used
  than planned
• Activities are taking long than planned
• Cost of activity (or of project to date) is
  higher than expected

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1. How can we tell when PC is needed?
SPECIFIC CLUES

• Primitive indicators
• More resources or less resources haven been used
  than planned
• Activities are taking long than planned
• Cost of activity (or of project to date) is
  higher than expected

planned
actual
NOW
Legend
planned
actual
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1. How can we tell when PC is needed?
SPECIFIC CLUES

• Primitive indicators
• More resources or less resources haven been used
  than planned
• Activities are taking long than planned
• Cost of activity (or of project to date) is
  higher than expected

70
50
now
time
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1. How can we tell when PC is needed?
SPECIFIC CLUES

• Why are they primitive?
• May be biased.
• Do not consider that progress may be
  overestimated or underestimated due to
• execution of unscheduled work done, or
• execution of more work of low value and less work
  of high value

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1. How can we tell when PC is needed?
SPECIFIC CLUES

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1. How can we tell when PC is needed?
SPECIFIC CLUES

now
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1. How can we tell when PC is needed?

• So we know Project Control is needed (at time t)
  particularly when
• - RVt is ve,
• - RIt lt 1
• - CVt is ve
• - CIt lt1
• - SVt is ve
• - SIt is lt 1
• - TVt is ve
• - TIt is lt 1

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• Part 2
• Resources
• for
• Project Control

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2. Resources for Project Control

• Money
• Machinery (Equipment)
• Materials and Supplies
• Manpower (Labor and Supervision)

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Money as a PC Resource

• Not a direct resource
• Rather, used to influence the amounts or quality
  of the other resources

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Using Equipment for PC

• Often used to augment labor in order to speed up
  project
• Can be expensive
• May involve renting or purchasing

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Materials and Supplies as a PC Resource

• Increase in quality or quantity may be necessary
  to enhance project control
• Improved inventory systems for materials

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Manpower as a PC Resource

• Project problems (time delays, excess costs, poor
  performance, etc.) are partly due to the human
  element (action or inaction)
• In using Manpower as a tool for project control,
  PM encounters human emotions (anger, fear,
  frustration, etc.)

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Part 3 Elements of Project Control
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Elements of Project Control
Project-related
Resources-related
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3. Elements of Project Control
3A. Resource-related
Re-allocate resources

• Manpower-related control
• Machinery-related control
• Money-related control
• Material-related control

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Elements of Project Control
3A. Resource-related

Re-allocate resources

• Manpower
• Machinery
• Money
• Materials

• Also referred to as Human Resource Control
• - Lay-off/fire any under-performing staff
• - Hire staff with needed skills
• Assign staff with specific skills to specific
  activities
• Issues
• PM may be seen as a stern disciplinarian
• PM must avoid heavy handed actions,
• Fix problems without blaming people

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Elements of Project Control
3A. Resource-related

Re-allocate resources

• Manpower
• Machinery
• Money
• Materials

• Also referred to as Physical Asset Control
• - Decommission any under-performing equipment
• - Bring in equipment with appropriate
  capabilities
• - Re-assign specific equipment to specific
  activities

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Elements of Project Control
3A. Resource-related

Re-allocate resources

• Manpower
• Machinery
• Money
• Materials

• Also referred to as Physical Asset Control
• - Decommission any under-performing equipment
• - Bring in equipment with appropriate
  capabilities
• - Re-assign specific equipment to specific
  activities
• Issues
• Equipment decisions may involve some economic
• analysis
• Equipment-based control easier than manpower-
• based control
• Some trade-off may exist between manpower and
• equipment utilization.

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Elements of Project Control
3A. Resource-related

Re-allocate resources

• Manpower
• Machinery
• Money
• Materials

• Also referred to as Financial Resource Control
• - How much money should be spent?
• - How should it be spent?
• PM assisted by
• Project accountant
• Project Finance Manager

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Elements of Project Control
3A. Resource-related

Re-allocate resources

• Manpower
• Machinery
• Money
• Materials

• Discontinue use of sub-standard material
• Seek new sources of superior material

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Elements of Project Control
3B. Project-related

• Options
• - Reduce project size?
• - Reduce project scope?
• - Terminate project?

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Part 4 Mechanisms of Project Control
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Mechanisms of Project Control

• Types of Mechanisms
• - Cybernetic
• - Go/No-go
• - Post-control

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Types of Control Mechanisms

• Cybernetic
• - Cyber means Steer or helmsman (Greek
  language)
• - May be First-, Second-, or Third-order

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Cybernetic control mechanisms
Monitoring mechanism (e.g. sensor)

Inputs

• Mechanism
• System output monitored by sensor
• Sensor measurements transmitted to Comparator
• Measurements compared with predetermined
  standards
• - Deviation from standard sent to decision-maker
• If deviation from standard is too large, signal
  sent to Effector

Process
Outputs
Effector and Decision-maker
Comparator
Standards
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Cybernetic control mechanisms
Monitoring mechanism (e.g. sensor)

Inputs

• Mechanism
• System output monitored by sensor
• Sensor measurements transmitted to Comparator
• Measurements compared with predetermined
  standards
• - Deviation from standard sent to decision-maker
• If deviation from standard is too large, signal
  sent to Effector

Process
Outputs
Effector and Decision-maker
Comparator
Standards
This is a First-order cybernetic control system.
(Standards are fixed) Example Thermostat that
keeps room temperature to 70F all year round.
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Cybernetic control mechanisms
Monitoring mechanism (e.g. sensor)

Inputs

• Mechanism
• Same as described for First-order Cybernetic
  systems, but
• Standards are not fixed, but the manner they
  change is fixed.

Process
Outputs
Effector and Decision-maker
Comparator
Standards
Memory Pre-programmed Responses
This is a Second-order cybernetic control system
(standards vary according to a fixed set of
rules) Examples Thermostat that keeps room
temperature to 70F in winter and 65F in
summer, Robot installations, Automated inventory
systems, Automated record keeping systems
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Cybernetic control mechanisms
Monitoring mechanism (e.g. sensor)

Inputs

• Mechanism
• Same as described for First-order Cybernetic
  systems, but
• Standards are not fixed but are variable. Also,
  the manner they change is variable because there
  is a consciousness (human element) involved.

Process
Outputs
Effector and Decision-maker
Comparator
Standards
Consciousness Memory, Selection
This is a Third-order cybernetic control system
(standards vary according to a variable set of
rules) Examples Most Project management systems.
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Cybernetic control in Project Management

1. PM must clearly define outputs in terms of
   relevant project characteristics
2. PM must establish standards for each
   characteristic
3. Monitoring mechanisms (sensors) must be
   established to measure the characteristics at
   regular intervals
4. For each characteristic, the trigger point or
   maximum deviation (difference between attained
   level and standard level) should be
   established.
5. If triggered, appropriate action should be taken
   to minimize the deviation between Attained Level
   and Standard Level of performance.

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Go/No-go Mechanisms of Project Control

• Testing to see if some specific precondition has
  been achieved
• Yes/No (discrete)
• Control in most PM fall into this category
  (Cooper, 1994 Meredith and Mantel, 2006)
• Example Was Activity X completed within 6
  months?
• Did Activity Y cost exceed its budget of 1.5
  million?
• Some engineering judgment is necessary in
  exercising these types of controls.

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Post-Control Types of Project Control

• Also called Post-performance control,
  Post-performance review
• Is done after the activity or project is over
• Like a post-mortem or report card
• Is it Locking the barn door after the horse has
  escaped?
• Or is it We need to learn from the past to avoid
  future mistakes?
• Generates lessons from current projects so that
  future projects can be controlled better.

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Desired characteristics of a project control
mechanism

• Flexible PC should be able to react to changes
  in system performance
• Cost-effective Value of PC should exceed cost
  of PC
• Useful Must really satisfy the needs of
  project, not the whims of the PM
• Timely Be able to react quickly before the
  problem overwhelms the project
• Simple Easy to understand and operate
• Adjustable Capable of being adjusted to reflect
  changing priorities
• Documented so that training is possible

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Some Interesting Issues in Project Control

• Flexibility
• Trade-offs
• Some things to watch out for
• Impediments to Project acceleration
• Cost-only and time-only actions to control
  projects

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Value of Flexibility in Project Planning
Some Interesting Issues in Project Control

• Flexibility is primary defense against risk
• Planning too tightly may highly complicate
  control
• Flexibility in construction is key during control
  
• Want adequate float and contingency to change
  plans if needed
• Be careful on value engineering that limits
  flexibility!

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Trade-offs between Performance Measures during
Project Control
Some Interesting Issues in Project Control

• Can sometimes only correct for one performance
  measure at a time
• Time
• Cost
• Quality
• Need to understand tradeoffs and triage
• Pick where to make tradeoffs (e.g. non-critical
  activities)

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Tradeoffs
Some Interesting Issues in Project Control
Acceleration ? (Overtime, shift work,
Rework, higher-end equipment, better crews
etc.)
Need for rework imposes high expenses High
quality needs can lead to costly
miscalculations on labor time

Slow progress ? Delayed occupation,
Higher interest on const. loan Loss
of tenants Opportunity cost
Less ? Low progress Resource reduction
Selection of poor quality workers Default of
contractor/subs
Trying to save Can lead to substitution,
lower quality workmanship
Time
Quality
Quality level impacts speed of work, Level of
rework
Quality problems result from overtime,
shift work, new hires
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Trade-offs The Time-Quality-Money Triage
Some Interesting Issues in Project Control

• In many cases, the best we can do is to pick the
  areas where tradeoffs do the least harm e.g.
• Move resources from non-critical activities
• Accelerate only critical activities
• Sacrifice quality on non-critical items that can
  be remedied after substantial completion

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Some things to watch out for Overreacting/Improvi
sation, etc.)
Some Interesting Issues in Project Control

• When trying to correct, often bump up against
  other limiting factors
• Space constraints/Hiring time/Morale/Coordination
  difficulties
• Improvisation dangerous (working w/o planning)
• Often can lead to Snowballing (increased
  problems at a rapidly accelerating rate)
• Confusion, discoordination, cascading
  unanticipated effects, suboptimal work
  efficiency, lack of morale
• Breaking Job rhythm and learning curves can
  really inhibit productivity!

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Controlling the Time Schedule Project Crashing
Some Interesting Issues in Project Control

• Adding new project resources
• Changing the production function (Change the
  technology)
• Change operation conditions by altering the
  precedence, sequence, or timing of work
• Fast-track, activity overlapping
• Overtime
• Shift work
• Changes in the tools, methods, operating
  conditions
• Work in more sheltered location

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Impediments to Project Acceleration
Some Interesting Issues in Project Control

• Human resources
• Multiple-shift work
• Environmental/safety issues, High cost,
  Neighborhood objections
• Overtime/extended workdays
• Fatigue, Lower morale, Rework
• Increasing of workers
• Training (takes time of most experienced!), Space
  constraints, Hiring time
• Technology
• Using more, larger or more efficient equipment
• Training/learning curve, Procurement time, Space
  constraints
• Using faster-installing materials
• Procurement, Submittals for owner approval
• Alternate construction methods
• Skill set, Learning curve, Unknown side-effects

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Some Interesting Issues in Project Control
Impediments to Project Acceleration

• Human resources
• Multiple-shift work
• Environmental/safety issues, High cost,
  Neighborhood objections
• Overtime/extended workdays
• Fatigue, Lower morale, Rework
• Increasing of workers
• Training (takes time of most experienced!), Space
  constraints, Hiring time
• Technology
• Using more, larger or more efficient equipment
• Training/learning curve, Procurement time, Space
  constraints
• Using faster-installing materials
• Procurement, Submittals for owner approval
• Alternate construction methods
• Skill set, Learning curve, Unknown side-effects

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Time-only or Cost-Only Control Actions
Some Interesting Issues in Project Control

• Sometimes, reduce time without increasing cost
• Change operating methods and process to increase
  work efficiency and product quality
• Outsourcing
• Sometimes, reduce cost without increasing time
• Outsourcing
• Substitute with less expensive but acceptable
  materials or equipment