1 Project Management: A Managerial Approach Chapter 11 – Project Control.

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Project Management: A Project Management: A Managerial ApproachManagerial Approach

Chapter 11 – Project ControlChapter 11 – Project Control

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OverviewOverview

• Project Control ElementsProject Control Elements

• Project Control ProcessesProject Control Processes

• Post Control ReportPost Control Report

• Controlling ChangeControlling Change

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Purposes of ControlPurposes of Control

• There are two fundamental objectives of There are two fundamental objectives of control:control:– 1. The regulation of results through the alteration 1. The regulation of results through the alteration

of of activities activities– 2. The stewardship of organizational assets2. The stewardship of organizational assets

• The project manager needs to be equally The project manager needs to be equally attentive to both regulation and conservationattentive to both regulation and conservation

• The project manager must guard the physical The project manager must guard the physical assets of the organization, its human assets of the organization, its human resources, and its financial resourcesresources, and its financial resources

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Project ControlProject Control

• Control is the last element in the Control is the last element in the implementation cycle of planning-implementation cycle of planning-monitoring-controllingmonitoring-controlling

• Control is focused on three elements Control is focused on three elements of a projectof a project– PerformancePerformance– CostCost– TimeTime

Performance

Cost Time

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Controlling PerformanceControlling Performance

• There are several things that can cause a There are several things that can cause a project’s performance to require controlproject’s performance to require control::– Unexpected technical problems ariseUnexpected technical problems arise– Insufficient resources are available when neededInsufficient resources are available when needed– Insurmountable technical difficulties are presentInsurmountable technical difficulties are present– Quality or reliability problems occurQuality or reliability problems occur– Client requires changes in specificationsClient requires changes in specifications– Interfunctional complications ariseInterfunctional complications arise– Technological breakthroughs affect the projectTechnological breakthroughs affect the project

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Controlling CostControlling Cost

• There are several things that can cause a There are several things that can cause a project’s cost to require control:project’s cost to require control:– Technical difficulties require more resourcesTechnical difficulties require more resources– The scope of the work increaseThe scope of the work increase– Initial bids were too lowInitial bids were too low– Reporting was poor or untimelyReporting was poor or untimely– Budgeting was inadequateBudgeting was inadequate– Corrective control was not exercised in timeCorrective control was not exercised in time– Input price changes occurredInput price changes occurred

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Controlling TimeControlling Time

• There are several things that can cause a There are several things that can cause a project’s schedule to require control:project’s schedule to require control:– Technical difficulties took longer than planned to Technical difficulties took longer than planned to

resolveresolve– Initial time estimates were optimisticInitial time estimates were optimistic– Task sequencing was incorrectTask sequencing was incorrect– Required inputs of material, personnel, or Required inputs of material, personnel, or

equipment were unavailable when neededequipment were unavailable when needed– Necessary preceding tasks were incompleteNecessary preceding tasks were incomplete– Customer generated change orders required reworkCustomer generated change orders required rework– Governmental regulations were alteredGovernmental regulations were altered

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Physical Asset ControlPhysical Asset Control

• Requires control of the Requires control of the useuse of physical assets of physical assets– Concerned with asset maintenance, whether Concerned with asset maintenance, whether

preventive or correctivepreventive or corrective– Also the timing of maintenance or replacement as Also the timing of maintenance or replacement as

well as the quality of maintenancewell as the quality of maintenance– Setting up maintenance schedules in such a way as Setting up maintenance schedules in such a way as

to keep the equipment in operating condition while to keep the equipment in operating condition while minimizing interference to ongoing workminimizing interference to ongoing work

– Physical inventory whether equipment or material Physical inventory whether equipment or material must also be controlledmust also be controlled

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Human Resource ControlHuman Resource Control

• Stewardship of human resources Stewardship of human resources requires controlling and maintaining requires controlling and maintaining the growth and development of peoplethe growth and development of people

• Projects provide fertile ground for Projects provide fertile ground for cultivating peoplecultivating people

• Because projects are unique, it is Because projects are unique, it is possible for people working on projects possible for people working on projects to gain a wide range of experience in a to gain a wide range of experience in a reasonably short period of timereasonably short period of time

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Financial Resource ControlFinancial Resource Control

• The techniques of financial control, both The techniques of financial control, both conservation and regulation, are well conservation and regulation, are well known:known:– Current asset controlsCurrent asset controls– Project budgetsProject budgets– Capital investment controlsCapital investment controls

• These controls are exercised through a These controls are exercised through a series of analyses and audits conducted series of analyses and audits conducted by the accounting/controller functionby the accounting/controller function

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Financial Resource ControlFinancial Resource Control

• Representation of the accounting/controlling Representation of the accounting/controlling function on the project team is mandatoryfunction on the project team is mandatory

• The parent organization is responsible for The parent organization is responsible for the conservation and proper the conservation and proper useuse of of resources owned by the client or charged to resources owned by the client or charged to the clientthe client

• Due diligence requires that the organization Due diligence requires that the organization proposing a project conduct a reasonable proposing a project conduct a reasonable investigation, verification, and disclosure of investigation, verification, and disclosure of all material facts relevant to the firm’s ability all material facts relevant to the firm’s ability to conduct the projectto conduct the project

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Three Types of Control Three Types of Control ProcessesProcesses

• Decisions must be made concerning:Decisions must be made concerning:– At what points in the project will control At what points in the project will control

be exerted be exerted – What is to be controlledWhat is to be controlled– How it will be measured How it will be measured – How much deviation will be toleratedHow much deviation will be tolerated– How to spot and correct potential How to spot and correct potential

deviations before they occurdeviations before they occur

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Three Types of Control ProcessesThree Types of Control Processes

• No matter what the purpose in No matter what the purpose in controlling a project there are controlling a project there are three basic types of control three basic types of control mechanisms that can be used:mechanisms that can be used:– Go/no-go controlGo/no-go control– Post controlPost control– Cybernetic controlCybernetic control is a third, but is a third, but

less common PM control mechanismless common PM control mechanism•Sensor(s)-based Feedback LoopSensor(s)-based Feedback Loop

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Go/No-go ControlsGo/No-go Controls

• Take the form of testing to see if some Take the form of testing to see if some specific precondition has been metspecific precondition has been met

• Most of the control in project management Most of the control in project management falls into this categoryfalls into this category

• This type of control can be used on almost This type of control can be used on almost every aspect of a projectevery aspect of a project

• Must exercise judgment in the use of go/no-Must exercise judgment in the use of go/no-go controlsgo controls

• Go/no-go controls operate only when and if Go/no-go controls operate only when and if the controller uses themthe controller uses them

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Information Requirements: Go/no-go Information Requirements: Go/no-go ControlsControls

• The project proposal, plans specifications, The project proposal, plans specifications, schedules and budgets contain all the schedules and budgets contain all the information needed to apply go/no-go information needed to apply go/no-go controls to the projectcontrols to the project

• Milestones are the key events that serve as Milestones are the key events that serve as a focus for ongoing control activitya focus for ongoing control activity

• These milestones are the project’s These milestones are the project’s deliverables in the form of in-process output deliverables in the form of in-process output or final outputor final output

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Go/No-go ControlsGo/No-go Controls

• Response to go/no-go controls tends to be Response to go/no-go controls tends to be neutral or negativeneutral or negative

• ““Barely good enough” results are just as Barely good enough” results are just as acceptable as “perfect” resultsacceptable as “perfect” results

• The system makes it difficult for the worker The system makes it difficult for the worker to take pride in high quality work because to take pride in high quality work because the system does not recognize gradations of the system does not recognize gradations of qualityquality

• The fact that this kind of control emphasizes The fact that this kind of control emphasizes “good enough” performance is no excuse for “good enough” performance is no excuse for the nonchalant application of careless the nonchalant application of careless standardsstandards

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PostcontrolPostcontrol

• Postcontrols are applied after the factPostcontrols are applied after the fact

• Directed toward improving the chances for Directed toward improving the chances for future projects to meet their goalsfuture projects to meet their goals

• It is applied through a relatively formal It is applied through a relatively formal document that contains document that contains four distinct four distinct sectionssections::– The project objectivesThe project objectives– Milestones, checkpoints, and budgetsMilestones, checkpoints, and budgets– The final report on projectThe final report on project– Recommendations for performance and Recommendations for performance and

process improvementprocess improvement

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PostcontrolsPostcontrols• Postcontrols are seen as much the Postcontrols are seen as much the

same as a report cardsame as a report card• They may serve as the basis for reward They may serve as the basis for reward

or punishment, but they are received or punishment, but they are received too late to change current performancetoo late to change current performance

• Because postcontrols are placed on the Because postcontrols are placed on the process of conducting a project, they process of conducting a project, they may be applied to such areas as: may be applied to such areas as: communication, cooperation, quality of communication, cooperation, quality of project management, and the nature of project management, and the nature of interaction with the clientinteraction with the client

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Cybernetic ControlsCybernetic Controls

• Human response to steering controls Human response to steering controls tends to be positivetends to be positive

• Steering controls are usually viewed as Steering controls are usually viewed as helpful rather than a source of unwelcome helpful rather than a source of unwelcome pressurepressure

• Response to steering controls also Response to steering controls also depends on the acceptance that the goals depends on the acceptance that the goals of the control system are appropriateof the control system are appropriate

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Characteristics of a Control Characteristics of a Control SystemSystem• A good control system:A good control system:

– Should be flexibleShould be flexible– Should be cost effectiveShould be cost effective– Must be truly usefulMust be truly useful– Must satisfy the real needs of the projectMust satisfy the real needs of the project– Must operate in a timely mannerMust operate in a timely manner– Sensors and monitors should be sufficiently Sensors and monitors should be sufficiently

accurate and precise to control the project within accurate and precise to control the project within the limits that are functional for the client and the limits that are functional for the client and parent organizationparent organization

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Characteristics of a Control Characteristics of a Control SystemSystem

• A good control system (cont.):A good control system (cont.):– Should be as simple as possible Should be as simple as possible – Should be easy to maintainShould be easy to maintain– Should be capable of being extended or Should be capable of being extended or

otherwise alteredotherwise altered– Should be fully documented when installedShould be fully documented when installed

• the documentation should include a complete training the documentation should include a complete training program in system operationprogram in system operation

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Control SystemsControl Systems

• All control systems use feedback as a control All control systems use feedback as a control processprocess

• The control of performance, cost, and time The control of performance, cost, and time usually require different input data:usually require different input data:– PerformancePerformance - engineering change notices, test - engineering change notices, test

results, quality checks, rework tickets, scrap ratesresults, quality checks, rework tickets, scrap rates– CostCost - budgets to actual cash flows, purchase - budgets to actual cash flows, purchase

orders, absenteeism, income reports, labor hour orders, absenteeism, income reports, labor hour charges, accounting variance reportscharges, accounting variance reports

– ScheduleSchedule - benchmark reports, status reports, - benchmark reports, status reports, PERT/CPM networks, earned value graphs, Gantt PERT/CPM networks, earned value graphs, Gantt charts, WBS, and action planscharts, WBS, and action plans

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Control ToolsControl Tools

• Some of the most important tools available for Some of the most important tools available for the project manager to use in controlling the the project manager to use in controlling the project are variance analysis and trend project are variance analysis and trend projectionprojection

• A budget plan or expected growth curve of A budget plan or expected growth curve of time or cost for a certain task is plottedtime or cost for a certain task is plotted

• Actual values are plotted as a dashed line as Actual values are plotted as a dashed line as the work is actually finishedthe work is actually finished

• At each point in time a new projection from At each point in time a new projection from the actual data is used to forecast what will the actual data is used to forecast what will occur in the futureoccur in the future

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Control ToolsControl Tools

• Trend projectionTrend projection

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Critical Ratio Control ChartsCritical Ratio Control Charts

• The critical ratio is made up of two parts:The critical ratio is made up of two parts:– The ratio of actual progress to scheduled The ratio of actual progress to scheduled

progressprogress– The ratio of budgeted cost to actual costThe ratio of budgeted cost to actual cost

• The critical ratio is a good measure of the The critical ratio is a good measure of the general health of the projectgeneral health of the project

• By combining two ratios, it weighs them By combining two ratios, it weighs them equally, allowing a “bad” ratio to be offset equally, allowing a “bad” ratio to be offset by a “good” ratioby a “good” ratio

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Critical RatioCritical Ratio

Task

Number

Critcal

Ratio

Actual

Cost

Budgeted

Cost

Scheduled

Progress

Actual

Progress

1 (2 / 3) X (6 / 4) = 1.0

2 (2 / 3) X (6 / 6) = .67

3 (3 / 3) X (4 / 6) = .67

4 (3 / 2) X (6 / 6) = 1.5

5 (3 / 3) X (6 / 4) = 1.5

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Critical RatioCritical Ratio

• Critical ratio control chartCritical ratio control chart

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BenchmarkingBenchmarking

• A recent addition to the arsenal of of project A recent addition to the arsenal of of project control tools is control tools is benchmarkingbenchmarking

• Benchmarking makes comparisons to “best Benchmarking makes comparisons to “best in class” practices across organizationsin class” practices across organizations

• Some successful organizations have been Some successful organizations have been benchmarked on their best practices and benchmarked on their best practices and key success factors for projects being key success factors for projects being conducted in functional organizationsconducted in functional organizations

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Best Practices and Keys to Best Practices and Keys to SuccessSuccess

• There were four major areas found to There were four major areas found to help projects in functional organizations:help projects in functional organizations:– Promoting the benefits of project Promoting the benefits of project

management management – Personnel pay for project management skills Personnel pay for project management skills

and high risk projects through bonuses, and high risk projects through bonuses, stock options, and other incentivesstock options, and other incentives

– MethodologyMethodology– Results of project managementResults of project management

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Control as a Function of Control as a Function of ManagementManagement

• The purpose of controlling is always the The purpose of controlling is always the same: to bring the actual schedule, budget, same: to bring the actual schedule, budget, and deliverables of the project into and deliverables of the project into reasonably close congruence with the reasonably close congruence with the planned schedule, budget, and deliverablesplanned schedule, budget, and deliverables

• The job of the project manager is to set The job of the project manager is to set controls that will encourage those controls that will encourage those behaviors that are deemed desirable and behaviors that are deemed desirable and discourage those that are notdiscourage those that are not

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Balance in a Control SystemBalance in a Control System• General features of a balanced control system:General features of a balanced control system:

– Built with cognizance of the fact that investment in Built with cognizance of the fact that investment in control is subject to sharply diminishing returnscontrol is subject to sharply diminishing returns

– Recognizes that as control increases past some Recognizes that as control increases past some point, innovative activity is more and more point, innovative activity is more and more damped, and then finally shut off completelydamped, and then finally shut off completely

– Directed toward the correction of error rather than Directed toward the correction of error rather than toward punishmenttoward punishment

– Exerts control only to the degree required to Exerts control only to the degree required to achieve its objectivesachieve its objectives

– Utilizes the lowest degree of hassle consistent with Utilizes the lowest degree of hassle consistent with accomplishing its goalsaccomplishing its goals

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Control of Creative ActivitiesControl of Creative Activities

• The more creativity involved, the greater the degree The more creativity involved, the greater the degree of uncertainty surrounding outcomesof uncertainty surrounding outcomes

• Too much control tends to inhibit creativityToo much control tends to inhibit creativity• Control is not necessarily the enemy of creativity, nor Control is not necessarily the enemy of creativity, nor

does creative activity imply complete uncertainty ofdoes creative activity imply complete uncertainty of• There are three general approaches to control There are three general approaches to control

creative projects:creative projects:– Progress reviewProgress review– Personnel reassignmentPersonnel reassignment– Control of input resourcesControl of input resources

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Progress ReviewProgress Review

• The progress review focuses on the process The progress review focuses on the process of reaching outcomes rather than on the of reaching outcomes rather than on the outcomes per seoutcomes per se

• The process is controllable even if the The process is controllable even if the precise results are notprecise results are not

• Control should be instituted at each project Control should be instituted at each project milestonemilestone

• The object of control is to ensure that the The object of control is to ensure that the research design is sound and is being research design is sound and is being carried out as planned or amendedcarried out as planned or amended

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Personnel ReassignmentPersonnel Reassignment

• This type of control is straightforward - This type of control is straightforward - individuals who are productive are keptindividuals who are productive are kept

• Those who are not, are moved to other Those who are not, are moved to other jobs or to other organizationsjobs or to other organizations

• While it is not difficult to identify those While it is not difficult to identify those who fall in the top and bottom quartiles, it who fall in the top and bottom quartiles, it is usually quite hard to make clear is usually quite hard to make clear distinctions between the people in the distinctions between the people in the middle quartilesmiddle quartiles

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Control of Input ResourcesControl of Input Resources

• The focus is on efficiencyThe focus is on efficiency

• The ability to manipulate input resources The ability to manipulate input resources carries with it considerable control over carries with it considerable control over outputoutput

• Considerable resource expenditure may Considerable resource expenditure may occur with no visible results, but suddenly occur with no visible results, but suddenly many outcomes may be deliveredmany outcomes may be delivered

• The milestones for application of resource The milestones for application of resource control must be chosen with great carecontrol must be chosen with great care

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Control of Change and Scope Control of Change and Scope CreepCreep

• Coping with changes and changing priorities is Coping with changes and changing priorities is perceived as the most important single problem perceived as the most important single problem facing the project managerfacing the project manager

• The most common changes are due to the The most common changes are due to the natural tendency of the client and project team natural tendency of the client and project team members to try to improve the product or servicemembers to try to improve the product or service

• The later these changes are made in the project, The later these changes are made in the project, the more difficult and costly they are to completethe more difficult and costly they are to complete

• Without control, a continuing accumulation of Without control, a continuing accumulation of little changes can have a major negative impact little changes can have a major negative impact on the project’s schedule and coston the project’s schedule and cost

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Control of Change and Scope Control of Change and Scope CreepCreep

• The project manager’s best hope is to control The project manager’s best hope is to control the process by which change is introduced and the process by which change is introduced and accomplishedaccomplished

• This can be done with a formal change control This can be done with a formal change control system that is able to:system that is able to:– Review all requested changes and identify all task Review all requested changes and identify all task

impactsimpacts– Translate those impacts into project performance, cost, Translate those impacts into project performance, cost,

and scheduleand schedule– Evaluate the benefits and costs of the requested Evaluate the benefits and costs of the requested

changeschanges– Accept or reject the changes and communicate to all Accept or reject the changes and communicate to all

concerned partiesconcerned parties– Ensure that changes are implemented properlyEnsure that changes are implemented properly

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Effective Change Control Effective Change Control ProcedureProcedure

• The following guidelines, applied with reasonable The following guidelines, applied with reasonable rigor, can be used to effectively control changes:rigor, can be used to effectively control changes:– 1. All project contracts or agreements must include a 1. All project contracts or agreements must include a

description of how requests for a change description of how requests for a change in the in the project’s plan, budget, schedule, project’s plan, budget, schedule, and/or and/or deliverables, will be deliverables, will be introduced and processedintroduced and processed

– 2. Any change in a project will be in the form of a 2. Any change in a project will be in the form of a change order that will include a description of change order that will include a description of

the the agreed-upon change together with any agreed-upon change together with any changes in changes in the plan, budget, schedule, and/or the plan, budget, schedule, and/or deliverables that deliverables that result from the change result from the change

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Effective Change Control Effective Change Control ProcedureProcedure– 3. Changes must be approved, in writing, by the 3. Changes must be approved, in writing, by the

client’s agent as well as by an appropriate client’s agent as well as by an appropriate representative of senior management of the representative of senior management of the

firm firm responsible for carrying out the project responsible for carrying out the project– 4. The project manager must be consulted on all 4. The project manager must be consulted on all

desired changes prior to the preparation and desired changes prior to the preparation and approval of the change order. The project approval of the change order. The project

manager’s approval, however, is not manager’s approval, however, is not requiredrequired

– 5. Once the change order has been completed and 5. Once the change order has been completed and approved, the project master plan should be approved, the project master plan should be

amended to reflect the change, and the amended to reflect the change, and the change change order becomes part of the master plan order becomes part of the master plan