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Chapter13.ProjectEvaluationandControl.pptx

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Project Management: Achieving Competitive Advantage

Fifth Edition

Chapter 13

Project Evaluation and Control

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Learning Objectives (1 of 2)

13.1 Understand the nature of the control cycle and the four key steps in a general project control model.

13.2 Recognize the strengths and weaknesses of common project evaluation and control methods.

13.3 Understand how Earned Value Management can assist project tracking and evaluation.

13.4 Use Earned Value Management for project portfolio analysis.

Learning Objectives (2 of 2)

13.5 Understand critical issues in the effective use of Earned Value Management.

13.6 Understand behavioral concepts and other human issues in evaluation and control.

13.7 From Appendix 13.1: Understand the advantages of Earned Schedule methods for determining project schedule variance, schedule performance index, and estimates to completion.

P M B o K Core Concepts

Project Management Body of Knowledge (P M B o K ) covered in this chapter includes:

Control Schedule (P M B o K 6.7)

Control Costs (P M B o K 7.4)

Earned Value System (P M B o K 7.4.2.1)

Forecasting (P M B o K 7.4.2.2)

Performance Reviews (P M B o K 7.4.2.4)

Control Cycles—General Model

Setting a goal.

Measuring progress.

Comparing actual with planned performance.

Taking action.

Figure 13.2 The Project Control Cycle

Figure 13.3 Project S-Curves

Figure 13.4 Project Sierra’s S-Curve Showing Negative Variance

Milestone Analysis

Milestones are events or stages of the project that represent a significant accomplishment.

Milestones:

Signal completion of important steps

Motivate team and suppliers

Offer reevaluation points

Help coordinate schedules

Identify key review gates

Signal other team members when their participation begins

Delineate work packages

Figure 13.5 Gantt Chart with Milestones

Figure 13.6 Assessing Project Blue’s Status Using Tracking Gantt Chart

Figure 13.7 Tracking Gantt with Project Activity Deviation

Project status is updated by linking task completion to the schedule baseline.

Earned Value Management

Earned Value Management (E V M) recognizes that it is necessary to jointly consider the impact of time, cost, and project performance on any analysis of current project status.

Earned Value (E V) directly links all three primary project success metrics (cost, schedule, and performance).

Earned Value Terms

Planned value (P V)

Earned value (E V)

Actual cost of work performed (A C)

Schedule variance (S V) and schedule performance index (S P I)

Cost variance (C V) and cost performance index (C P I)

Budgeted cost at completion (B A C)

Estimate at completion (E A C)

Steps in Earned Value Management

Clearly define each activity including its resource

needs and budget.

Create usage schedules for activities and resources.

Develop a time-phased budget (P V).

Total the actual costs of doing each task (A C).

Calculate both the budget variance (C V) and schedule

variance (S V).

Figure 13.11 Project Baseline, Using Earned Value

Figure 13.12 Earned Value Milestones

Earned Value Example

Schedule Variances

Planned Value (P V) = 103

Earned Value (E V) = 44

Cost Variances

Cumulative Actual Cost of Work Performed (A C) = 78

Figure 13.16 Earned Value Report for Project Atlas on May 19

Flow of Earned Value System

Northrop Grumman’s flow of earned value management:

Proposal stage

Contract award

Baseline stage

Maintenance phase

Using Earned Value to Manage a Portfolio of Projects

Table 13.9 Project Portfolio Earned Value (in thousands $)

Project	P V	E V	Time Var ($)	Var	A C	Cost Var ($)	Var+	Plan	Est. at Completion
Alpha	91	73	-18	18	83	-10	10	254	289
Beta	130	135	5	0	125	10	0	302	280
Gamma	65	60	-5	5	75	-15	15	127	159
Delta	25	23	-2	2	27	-4	4	48	56
Epsilon	84	82	-2	2	81	1	0	180	178
Blank	395	373	Blank	Blank	391	Blank	Blank	Blank	962

Total Schedule Variance 27

Relative Schedule Variance

Total Cost Variance 29

Relative Cost Variance

Completion Values in E V M

Accurate and up-to-date information is critical in the use of E V M.

Percentage Complete Rule

Human Factors in Project Evaluation and Control

Project coordination and relations among stakeholders

Adequacy of project structure and control

Project uniqueness, importance, and public exposure

Success criteria salience and consensus

Lack of budgetary pressure

Avoidance of initial overoptimism and conceptual difficulties

Critical Success Factors in the Project Implementation Profile

Project mission

Top management support

Project plans and schedules

Client consultation

Personnel

Technical tasks

Client acceptance

Monitoring and feedback

Communication channels

Troubleshooting

Summary (1 of 2)

Understand the nature of the control cycle and the four key steps in a general project control model.

Recognize the strengths and weaknesses of common project evaluation and control methods.

Understand how Earned Value Management can assist project tracking and evaluation.

Use Earned Value Management for project portfolio analysis.

Summary (2 of 2)

Understand critical issues in the effective use of Earned Value Management.

Understand behavioral concepts and other human issues in evaluation and control.

From Appendix 13.1: Understand the advantages of Earned Schedule methods for determining project schedule variance, schedule performance index, and estimates to completion.

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44EV

Schedule Performance Index43

103PV

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Estimated Time to Completion7163 months

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44EV

Cost Performance Index56

78AC

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Estimated Cost to Completion210,714118,0

.56

6.84

395

7.34

395

Rule

100

Rule