Transcript
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TM 665: Project Planning & Control 1
TM 665: Lecture 11
Project Audits, Termination & Review
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TM 665: Project Planning & Control 2
Agenda
Project Audits (CH 12) Goal-based Project Outcomes
Project Audit Reports
Audit Life Cycle
Report Credibility Revenue Reporting
Project Termination (CH 13) Methods of Project Termination
Early Project Termination
Project Shortcomings
PM Responsibilities
Project Final Report
Final Exam Review
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TM 665: Project Planning & Control 3
Project Auditing
A major vehicle for evaluation is the project audit, a
more or less formal inquiry into any aspect of the project
A project audit is highly flexible and may focus onwhatever matters senior management desires
The evaluation of a project must have credibility in theeyes of the management group for whom it is performed
and also in the eyes of the project team on whom it isperformed
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TM 665: Project Planning & Control 4
Purposes of Evaluation - Goals of Project Audit
Four independent dimensions of success:
The most straightforward dimension is the projects efficiencyin meeting both the budget and schedule
Another dimension, and the most complex, is that ofcustomer impact/satisfaction
A third dimension, again somewhat straightforward and
expected, is business/direct success
The last dimension, somewhat more difficult and nebulous toascertain, is future potential
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TM 665: Project Planning & Control 5
Purposes of Evaluation - Goals of Project Audit
Another primary purpose of evaluation is to help translate
the achievement of the projects goals into a contribution
to the parent organizations goals
To do this, all facets of the project are studied in order toidentify and understandthe projects strengths andweaknesses
The result is a set ofrecommendations that can helpboth ongoing and future projects
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TM 665: Project Planning & Control 6
Evaluation Benefits of Project Audit
A successful project evaluation via audit can
help an organization:1. Identify problems earlier
2. Clarify performance, cost, and time relationships
3. Improve project performance
4. Locate opportunities for future technological advances
5. Evaluate the quality of project management
6. Reduce costs
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Purposes of Evaluation Need for Project Audit
Organizational Benefits Speed the achievement of results
Identify mistakes, remedy them, and avoid them in the future
Provide information to the client
Reconfirm the organizations interest in, and commitment to,
the project
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TM 665: Project Planning & Control 9
Purposes of Evaluation Other Project Audit Outcomes
Ancillary goals are often unstated, but IMPORTANT:
Identify organizational strengths and weaknesses in
project-related personnel, management, and decision-
making techniques and systems
Identify risk factors in the firms use of projects
Improve the way projects contribute to the professional
growth of project team members
Identify project personnel who have high potential for
managerial leadership
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TM 665: Project Planning & Control 10
Project Audit
The project audit is a thorough examinationof the management of a project, itsmethodologyand procedures, its records, itsproperties, its budgets and expenditures and
its degree of completion
The formal report may be presented in variousformats, but should, at a minimum containcomments on some specific points
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TM 665: Project Planning & Control 11
Project Audit
Six parts of a project audit:
1. Current status of the project
2. Future status
3. Status of crucial tasks
4. Risk assessment
5. Information pertinent to other projects
6. Limitations of the audit
It is far broader in scope than a financial audit andmay deal with the project as a whole or any subset ofproject components
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TM 665: Project Planning & Control 12
Audit Depth
Timeand money are two of the most common limitson depth of investigation and level of detail presentedin the audit report
Accumulation, storage, and maintenance of auditabledata are important cost elements
Two often overlooked costs are the self protective
activity of team members during an audit, and thepotential for project morale to suffer as a result of anegative audit
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TM 665: Project Planning & Control 13
Audit Depth
There are three distinct and easily recognized levels
of project auditing:
1. General audit - normally most constrained by time
and resources and is usually a brief review of theproject touching lightly on the six parts of an audit
2. Detailed audit - usually conducted when a follow-upto the general audit is required
3. Technical audit - generally carried out by a qualifiedtechnician under the direct guidance of the project
auditor
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TM 665: Project Planning & Control 14
Audit Timing
The first audits are usually done early in theprojects life, and are often focused on the technicalissues in order to make sure that key technical
problems have been solved Audits done later in the life cycle of a project are of
less immediate value to the project, but are more
valuable to the parent organization
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TM 665: Project Planning & Control 15
Audit Timing
As the project develops, technical risks are less likelyto be matters of concern
Conformity to the schedule and budget become theprimary interests
Managementissues are major matters of interest foraudits made latein the projects life
Postproject audits are often a legal necessity becausethe client specified such an audit in the contract
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TM 665: Project Planning & Control 16
Risk Event Graph
Risk
High
Cost
Low
Project Life Cycle
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TM 665: Project Planning & Control 17
Preparation and Use of Audit Reports
The information should be arranged so as to facilitate
the comparison ofpredicted versus actual results
Significant deviations of actual from predicted resultsshould be highlighted and explained in a set offootnotes or comments
Negative comments about individuals or groupsassociated with the project should be avoided
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TM 665: Project Planning & Control 18
Construction and Use of Audit Reports
Information that should be contained in the audit report:
1. Introduction
2. Current Status
3. Future Project Status
4. Critical Management issues
5. Risk Analysis
6. Caveats, Limitations, and Assumptions
P
C T
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TM 665: Project Planning & Control 19
Project Auditor/Evaluator Responsibilities
First and foremost, the auditor should tell the truth
The auditor must approach the audit in an objectiveand ethical manner
Must assume responsibility for what is included and
excluded from consideration in the report
The auditor/evaluator must maintain political and
technical independence during the audit and treat allmaterials as confidential
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Project Auditor/Evaluator Responsibilities
Steps to carry out an audit:
1. Assemble a small team ofexperienced experts
2. Familiarize the team with the requirements of the
project
3. Audit the project on site
4. After the completion, debrief the projects
management
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TM 665: Project Planning & Control 21
Project Auditor/Evaluator Responsibilities
Steps to carry out an audit (cont.):
5. Produce a written report according to a
prespecified format
6. Distribute the report to the project manager
and project team for their response
7. Follow up to see if the recommendations
have been implemented
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TM 665: Project Planning & Control 22
The Project Audit Life Cycle
Like the project itself, the audit has a life cycle
composed of an orderly progression of well-defined
events:
Project audit initiation Project baseline definition
Establishing an audit database
Preliminary analysis of the project
Audit reportpreparation Project audit termination
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TM 665: Project Planning & Control 23
Essentials of an Audit/ Evaluation
For an audit/evaluation to be conducted with skill and
precision, and to be generally accepted by senior
management, the client and the project team, several
conditions must be met:1. The audit team must be properly selected
2. All records and files must be accessible
3. Free contact with project members must be preserved
All of these essentials deserve further discussion
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TM 665: Project Planning & Control 24
Audit/Evaluation Team
The choice of the audit/evaluation team is critical to
the success of the entire process
The size of the team will generally be a function of
the size and complexity of the project
For a small project, one person can often handle all
the tasks of an audit, but for a large project, the team
may require representatives from several areas
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The Audit/Evaluation Team
Typical areas that may furnish audit team members are:
The project itself
The accounting/controlling department
Technical specialty areas The customer
The marketing department
Purchasing/asset management
Human resources Legal/contract administration department
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Audit/Evaluation Team
The main role of the audit/evaluation team is to conduct
a thorough and complete examination of the project or
some prespecified aspect of the project
The team must determine which items should be brought
to managements attention
The team is responsible forconstructiveobservations
and advice based on the training and experience of itsmembers
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TM 665: Project Planning & Control 27
Access to Information
In order for the audit/evaluation team to be effective, it
must have free access to all information relevant to
the project
Most of the information needed will come from theproject teams records or from various departments
such as accounting, personnel, and purchasing
Some of the most valuable information comes fromdocuments that predatetheproject
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Access to Information
Examples of documents that predate the project:
Customer Requirements (i.e. RFP Process)
Minutes ofproject selection meetings
Minutes ofsenior management committees thatdecided to pursue a specific area of technical interest
Priorities must be set to ensure that important analyses
are undertaken before those of lesser importance
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TM 665: Project Planning & Control 29
Access to Project Team and Others
Several rules that should be followed when contactingproject team and other stakeholders
Avoid misunderstandings between the audit/evaluationteam and project team members
Project team should always be made aware of in-progressaudit
Avoid Critical Comments
Constructive suggestions where appropriate
Avoid Off-Hand Comments
No shooting from the hip
Avoid excess comment that could be misinterpreted
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Access to Project Team and Others
At times, information may be given to audit evaluation
team members in confidence
Discreet attempts should be made to confirm such
information through non-confidential sources
If it cannot be confirmed, it should not be used
The auditor/evaluator must protect the sources of
confidential information
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TM 665: Project Planning & Control 31
Measurement
Measurement is an integral part of the audit/evaluation
process
Performance against planned budget and schedule
usually poses no major measurement problems
Measuring the actual expenditure against the plannedbudgetisharder and depends on an in-depthunderstanding of the procedures used by the accounting
department
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TM 665: Project Planning & Control 32
Measurement
Big Challenge: determine what revenues should beassigned to a project
All cost/revenue allocation decisions must be made when
the various projectsareinitiated
When the battles are fought up front, the equity of
cost/revenue allocations ceases to be so serious an issue
As long as allocations are made by a formula, majorconflictis avoided-or at least mitigated
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TM 665: Project Planning & Control 33
Auditor/Evaluator
Above all else, the auditor/evaluator needs
permission to enter the system
If the auditor maintains a calm, relaxed attitude,the project team generally begins to extend
limited trust
The first step is to allow the auditor qualified
access to information about the project
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TM 665: Project Planning & Control 34
Advice for the Auditor/Evaluator
Deal professionally with information gathered, neither
ignoring nor stressing the projects shortcomings
Recognize and reinforce aspects of the projects
strengths
Trust is earned during an audit, even with negative
findings
Trust-building is a slow and delicate process that iseasily lost
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TM 665: Project Planning & Control 35
Break!
Next Up:
Project Termination
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TM 665: Project Planning & Control 36
Project Termination Conditions
A project can be said to be terminated when workon the substance of the project has ceased orslowedto the point that further progress is nolonger possible
There are four fundamentally different ways to close
out a project:
1. Extinction
2. Addition3. Integration
4. Starvation
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TM 665: Project Planning & Control 37
Project Termination Factors
1. Low Probability of Success:
Technical Objectives
Commercial Viability
ROI Achieved
2. No Solution
Engineering Design
Lasting Process
3. Intellectual Property Issues
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TM 665: Project Planning & Control 38
Project Extinction
All (substantive) activity ceases
Stopped:
Successful
Met goals Unsuccessful
Failed tests
Superceded
External event
Extinction by Murder
Political assassination; projecticide
Merger redundancy
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TM 665: Project Planning & Control 39
Project Addition
Project becomes a part of organization
New functionality
Protected status disappears eventually
Transfer of assets People
Equipment
Addition of responsibilities
Budgets Practices and procedures
P & L
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TM 665: Project Planning & Control 40
Project Integration
Most common form of termination and also the
most complex
Project Outcome: Becomes Part of Acquiring Organization
Requires Redistribution of Residual Resources
Equipment
Capital Improvements
Follow-on Support
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Project Starvation
Budget Decrement
Reallocation of Resources Away from Project
Business Conditions
Political Considerations
Active without Activity
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When to Terminate a Project
Some questions to ask when considering termination:
Has the project been obviatedby technical advances?
Is the output of the project still cost-effective?
Is it time to integrate or add the project as a part ofregular operations?
Are there betteralternative uses for the funds, time and
personnel devoted to the project?
Has a changein the environment altered the need forthe projects output?
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When to Terminate a Project
Reasons projects fail:
Project organization was not required
Non-Projects and Pseudo-Projects
Insufficient support from senior management
Wrong person as project manager
Poor (or insufficient) planning Lack of Critical Success Factors
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The Termination Process
Components of the termination process
Whether or not to terminate
Goal/Objective-based
or Qualification factors
If terminating:
Carry out termination procedures
Should have been plannedat start Should be done in an orderlymanner
Procedures vary by firm & project type
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TM 665: Project Planning & Control 45
Project Termination Decision Tree
Sensitivity
Analysis
Internal Info
SystemsExternal Info
SystemsDecision
Database(s)
Termination
Rules
Continue
ProjectTermination
Decision?
Termination
Procedures
UncertainKeep
Terminate
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Project Termination Areas
Closeout MtgPlans
Personnel
Organization
PayablesReceivables
Budget Report
Financial
ContractsSupplier Comm
Final Payments
Purchasing
Close FacilitiesDispose Equip/Mat'l
Site
Project Closeout
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The Implementation Process
Duties of the termination manager(not always the PM!):
Complete all remaining work
Notification to & acceptance by client
Complete documentation (accurately!)
Final payments
Redistribute assets
Legal reviewArchive files & records (legal reqmnts)
Follow-on support arrangements
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The Final Report - A Project History
Historical recap
Project biography
The Good, the Bad, and the Ugly
Previous documents
Project plan
Audit(s) Change orders
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The Final Report
Focus areas:
1. Project performance
2. Administrative performance
3. Organizational structure
4. Project and administrative teams
5. Techniques of project management
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The Final Report
Focus area recommendations are minimum
Lessons learned
Benchmarks
Killers
Goal: Future project management improvement
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Bonus Considerations
On-Campus Students:
Discussion participation the last two lectures
Off-Campus Students:
Personal Project Plan
Short paper summarizing what you consider tobe the major points of project management
Yourpersonal PMBOK that you could seeyourself applying as a project manager
Due by e-mail before requesting the Final Exam
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Final Examination
Monday, 07 May, 7:009:00 PM, CB 110 Bring Engineering Notebook, calculator, & PENCIL
Format:
Multiple Choice Select the BEST answer
Dont take too long avoid looking them up
Short Answer & Short Calculation
No need to show your work completely
Answer all parts for full credit
Charts & Networks
Plan for several minutes to study & solve
Read carefully
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