TM 665 Project Planning

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TM 665Project Planning Control Dr. Frank
Joseph Matejcik
10th Session 4/19/04 Chapter 11 Project Control

• South Dakota School of Mines and Technology,
  Rapid City

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Agenda New Assignment

• Return Exams
• New Assignment Chap. 11 problems 2 6 page 595
  
• Calendar
• M M (Chapter 11 Project Control)

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Tentative Schedule
Chapters Assigned Chapters 12-Jan 1 e-mail
22-Mar 4 Qs on page 226 contact, p24
questions 19-Jan Holiday 29-Mar 5,6(start)Qs
273-4 26-Jan 2 Problems 3-7 page 93 05-Apr 6, 7
Incidents Qs 02-Feb 8 problem 12, MS
Project 12-Apr Holiday 09-Feb 9 problems 3,
5 19-Apr 11 problems 2, 6 16-Feb Holiday
26-Apr 12,13 23-Feb 10 problems 2,
8 3-May Final 01-Mar Test (snow
day) 08-Mar Break 15-Mar 3 Ohio hospital
IM Inc., page 164
Attendance Policy Help me work with you.
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PROJECT CONTROL

• Project Control Defined
• Types of Control Systems
• Need for Balance in Control Systems
• Control of Creative Efforts
• Changes and Change Control

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Project Control Defined

• CONTROL The act of reducing the difference
  between plan and reality
• The last element in the plan-implement-monitor-con
  trol cycle
• Uses the information from the monitoring process
  to get and keep a project on track

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Control Can Be Complicated

• Performance, cost, and schedule issues all have a
  human element
• Symptoms are obvious, but root causes never are
• Messes vs. problems
• Hard to separate random events from systemic
  difficulties

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Controlling Performance

• There are several things that can cause a
  projects performance to require control
• Unexpected technical problems arise
• Insufficient resources are available when needed
• Insurmountable technical difficulties are present
• Quality or reliability problems occur
• Client requires changes in specifications
• Interfunctional complications arise
• Technological breakthroughs affect the project

Before Section 11.1
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Controlling Cost

• There are several things that can cause a
  projects cost to require control
• Technical difficulties require more resources
• The scope of the work increase
• Initial bids were too low
• Reporting was poor or untimely
• Budgeting was inadequate
• Corrective control was not exercised in time
• Input price changes occurred

Before Section 11.1
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Controlling Time

• There are several things that can cause a
  projects schedule to require control
• Technical difficulties took longer than planned
  to resolve
• Initial time estimates were optimistic
• Task sequencing was incorrect
• Required inputs of material, personnel, or
  equipment were unavailable when needed
• Necessary preceding tasks were incomplete
• Customer generated change orders required rework
• Governmental regulations were altered

Before Section 11.1
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Two Fundamental Purposes of Project Control

• Regulate project results through alteration of
  activities
• Efficiently use and protect organizational assets

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Asset Conservation Has Three Aspects

• Physical Assets
• Maintenance, inventories, security protection
• Human Resources
• Managing acquisition, development and performance
  of people
• Financial Resources
• Budgets, audits, financial ratio analyses
• The concept of due diligence

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Physical Asset Control

• Requires control of the use of physical assets
• Concerned with asset maintenance, whether
  preventive or corrective
• Also the timing of maintenance or replacement as
  well as the quality of maintenance
• Setting up maintenance schedules in such a way as
  to keep the equipment in operating condition
  while minimizing interference to ongoing work
• Physical inventory whether equipment or material
  must also be controlled

Section 11.1
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Human Resource Control

• Stewardship of human resources requires
  controlling and maintaining the growth and
  development of people
• Projects provide fertile ground for cultivating
  people
• Because projects are unique, it is possible for
  people working on projects to gain a wide range
  of experience in a reasonably short period of
  time

Section 11.1
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Financial Resource Control

• The techniques of financial control, both
  conservation and regulation, are well known
• Current asset controls
• Project budgets
• Capital investment controls
• These controls are exercised through a series of
  analyses and audits conducted by the
  accounting/controller function

Section 11.1
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Financial Resource Control

• Representation of the accounting/controlling
  function on the project team is mandatory
• The parent organization is responsible for the
  conservation and proper use of resources owned by
  the client or charged to the client
• Due diligence requires that the organization
  proposing a project conduct a reasonable
  investigation, verification, disclosure of all
  material facts relevant to the firms ability to
  conduct the project

Section 11.1
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Purpose of Control

• To make the actual meet the plan
• The Process
• 1. Identify key performance areas
• 2. Set standards
• 3. Measure performance
• 4. Compare
• 5. Take corrective action

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Three Types of Controls

• Cybernetic controls
• Steering
• Key feature automatic operation
• Go-no go controls
• Most common project control
• Test that predetermined specifications have been
  met
• Post controls
• After the fact

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Three Types of Control Processes

• No matter what the purpose in controlling a
  project there are two basic types of control
  mechanisms that can be used
• Go/no-go control
• Post control
• Cybernetic control is a third, but less common
  control mechanism that is rarely directly
  applicable to projects.

Section 11.2
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Cybernetic Control
Figure 11-1

Section 11.2
Figure 11-2
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More on Go-No Go Controls

• Based on project plans, budgets, schedules
• Can be periodic or milestone-driven
• Both are essential
• Phase-gated criteria are hurdles that must be
  passed to go to next project stage
• Common terms exit criteria, milestone
  decisions, system maturity models

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Go/No-go Controls

• Take the form of testing to see if some specific
  precondition has been met
• Most of the control in project management falls
  into this category
• This type of control can be used on almost every
  aspect of a project
• Must exercise judgment in the use of go/no-go
  controls
• Go/no-go controls operate only when and if the
  controller uses them

Section 11.2
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Information Requirements for Go/no-go Controls

• The project proposal, plans specifications,
  schedules and budgets contain all the information
  needed to apply go/no-go controls to the project
• Milestones are the key events that serve as a
  focus for ongoing control activity
• These milestones are the projects deliverables
  in the form of in-process output or final output

Section 11.2
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Sample Project Status Report, Figure 11-5
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Components of Post Control Process

• Benefits future projects more than the present
  one
• See Project Auditing in Chapter 12
• Four parts
• Project objectives
• Milestones, checkpoints, budgets
• Final report on project results
• Recommendations

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Some Desirable Control System Features

• Flexible, able to adapt to unforeseen events
• Cost effective (control value gt control cost)
• Useful and ethical
• Accurate, precise, timely
• Simple and maintainable
• Fully documented

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Control Systems

• All control systems use feedback as a control
  process
• The control of performance, cost, and time
  usually require different input data
• Performance - engineering change notices, test
  results, quality checks, rework tickets, scrap
  rates
• Cost - budgets to actual cash flows, purchase
  orders, absenteeism, income reports, labor hour
  charges, accounting variance reports
• Schedule - benchmark reports, status reports,
  PERT/CPM networks, earned value graphs, Gantt
  charts, WBS, and action plans

Section 11.3
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Control Tools

• Some of the most important tools available for
  the project manager to use in controlling the
  project are variance analysis and trend
  projection
• A budget plan or expected growth curve of time or
  cost for a certain task is plotted
• Actual values are plotted as a dashed line as the
  work is actually finished
• At each point in time a new projection from the
  actual data is used to forecast what will occur
  in the future

Section 11.3
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Control Tools

• Trend projection

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Critical Ratio

• Critical ratio actual progress X
  budgeted cost scheduled progress
  actual cost
• I.e., CSI SPI X CPI, as in Chapter 10
• Indices and ratios greater than 1.0 are favorable

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Critical Ratio Control Limits, Fig. 11-8
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Cost Control Chart, Fig.11-9
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Benchmarking

• A recent addition to the arsenal of of project
  control tools is benchmarking
• Benchmarking makes comparisons to best in class
  practices across organizations
• Some successful organizations have been
  benchmarked on their best practices and key
  success factors for projects being conducted in
  functional organizations

Section 11.3
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Cybernetic Controls

• Human response to steering controls tends to be
  positive
• Steering controls are usually viewed as helpful
  rather than a source of unwelcome pressure
• Response to steering controls also depends on the
  acceptance that the goals of the control system
  are appropriate

Section 11.4
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Go/No-go Controls

• Response to go/no-go controls tends to be neutral
  or negative
• Barely good enough results are just as
  acceptable as perfect results
• The system makes it difficult for the worker to
  take pride in high quality work because the
  system does not recognize gradations of quality
• The fact that this kind of control emphasizes
  good enough performance is no excuse for the
  nonchalant application of careless standards

Section 11.4
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Postcontrols

• Postcontrols are seen as much the same as a
  report card
• They may serve as the basis for reward or
  punishment, but they are received too late to
  change current performance
• Because postcontrols are placed on the process of
  conducting a project, they may be applied to such
  areas as communication, cooperation, quality
  of project management, the nature of
  interaction with the client

Section 11.4
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Effective Control Systems Must be Balanced

• Balance means
• Measuring both tangibles and intangibles
• Looking at both long-term and short
• Keeping flexibility in the system
• Addressing human factors
• Focusing on correction, not punishment
• Optimizing control, not maximizing it

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A Question of Balance

• Too little control?
• Too much control?

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Control of Creative Activities

• Controlling knowledge work is difficult
• The more creativity involved, the greater the
  degree of uncertainty surrounding outcomes
• Too much control tends to inhibit creativity
• Three tools
• Progress reviews
• Reassigning people
• Control of resource inputs

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Progress Review

• The progress review focuses on the process of
  reaching outcomes rather than on the outcomes per
  se
• The process is controllable even if the precise
  results are not
• Control should be instituted at each project
  milestone
• The object of control is to ensure that the
  research design is sound and is being carried
  out as planned or amended

Section 11.6
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Personnel Reassignment

• This type of control is straightforward -
  individuals who are productive are kept
• Those who are not, are moved to other jobs or to
  other organizations
• While it is not difficult to identify those who
  fall in the top and bottom quartiles, it is
  usually quite hard to make clear distinctions
  between the people in the middle quartiles

Section 11.6
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Control of Input Resources

• The focus is on efficiency
• The ability to manipulate input resources carries
  with it considerable control over output
• Considerable resource expenditure may occur with
  no visible results, but suddenly many outcomes
  may be delivered
• The milestones for application of resource
  control must be chosen with great care

Section 11.6
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Controlling Changes and Scope Creep

• Changes can drive higher costs and stretched out
  schedules
• So controlling them is an essential project
  management task
• A formal change system is a must for project
  control

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Control of Change Scope Creep

• Coping with changes and changing priorities is
  perceived as the most important single problem
  facing the project manager
• The most common changes are due to the natural
  tendency of the client and project team members
  to try to improve the product or service
• The later these changes are made in the project,
  the more difficult and costly they are to
  complete
• Without control, a continuing accumulation of
  little changes can have a major negative impact
  on the projects schedule and cost

Section 11.7
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Control of Change Scope Creep

• The project managers best hope is to control the
  process by which change is introduced
  accomplished
• This can be done with a formal change control
  system that is able to
• Review all requested changes and identify all
  task impacts
• Translate those impacts into project performance,
  cost, and schedule
• Evaluate the benefits and costs of the requested
  changes
• Accept or reject the changes and communicate to
  all concerned parties
• Ensure that changes are implemented properly

Section 11.7
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Five Principles of a Formal Change Program

• All contracts specify formal change process
• All changes require formal change order
• All change orders approved in writing by client
  and project organization
• Project manager is always consulted
• The approved change order becomes part of the
  master plan

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Effective Change Control Procedure

• The following guidelines, applied with reasonable
  rigor, can be used to effectively control
  changes
• 1. All project contracts or agreements must
  include a description of how requests for a
  change in the projects plan, budget, schedule,
  and/or deliverables, will be introduced and
  processed
• 2. Any change in a project will be in the form
  of a change order that will include a
  description of the agreed-upon change together
  with any changes in the plan,budget, schedule,
  and/or deliverables that result from the change

Section 11.7
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Effective Change Control Procedure

• 3. Changes must be approved, in writing, by the
  clients agent as well as by an appropriate
  representative of senior management of the firm
  responsible for carrying out the project
• 4. The project manager must be consulted on all
  desired changes prior to the preparation
  approval of the change order. The project
  managers approval, however, is not required
• 5. Once the change order has been completed
  approved, the project master plan should be
  amended to reflect the change, and the change
  order becomes part of the master plan

Section 11.7
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Changes and Change Control

• Remember the last step of the control process
  Take corrective action, so that the actual
  matches the plan
• Two Types Business and Technical Changes

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Business Changes

• Business-related
• Driven by such things as
• Spec relief
• Deliverables changes
• Funding shifts
• Schedule changes
• Acts of God
• Subcontractor changes

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Technical Changes

• Technological issues, such as
• New technologies
• Laws of physics
• Competitor response
• Changes in client requirements (real or
  political)

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Summary

• Control is for performance, cost, time
• The two fundamental purposes of control are to
  regulate results through altering activity and to
  conserve the organizations physical, human, and
  financial assets
• The two main types of control processes are
  go/no-go and postcontrol

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Summary

• The postcontrol report contains four sections
• Project objectives
• Milestones and budgets
• Final project results
• Recommendations for improvement
• The trend projection curve, critical ratios, and
  the control chart are useful control tools

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Summary

• Control systems have a close relationship to
  motivation and should be well-balanced that is
  cost effective, appropriate to the desired end
  results, and not overdone
• Three approaches to the control of creativity are
  progress review, personnel reassignment, and
  control of inputs
• The biggest single problem facing a project
  manager is the control of change