PROJECT

MANAGEMENT
INSTRUCTOR: DR. NGUYEN THI HOA HONG
FACULTY OF BUSINESS ADMINISTRATION
EMAIL: HONGNTH@FTU.EDU.VN
PHONE NUMBER: 0936831031

8-1
Project Control and Close-out
CHAPTER 8

8-2
Chapter Objectives
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
Understand critical issues in the effectiveness use of Earned Value Management
Understand behavioral concepts and other human issues in evaluation and control.
Distinguish among the four main forms of project termination
Recognize the seven key steps in formal project closeout
Know the challenges and components of a final project report

8-3
The Project Control Cycle

8-4
The Project S-Curve

Cumulative Cost
($ in thousands)
60

40 $10,000 Negative Var

Cumulative
20 Budgeted Cost
Cumulative
Actual Cost
5 10 15 20 25 30 35 40 45 50
Elapsed Time (in weeks)
8-5
Project S-curve
ADVANTAGES DISADVANTAGES

Simplicity Do not allow to make reasonable

interpretation of the cause of variance
Provide real-time tracking info of
budget expenditure
Info visualized and updated
continuously

8-6
Milestone Analysis
Milestones are events or stages of the project that represent a significant
accomplishment.
Milestones
…show completion of important steps
…can motivate the team
…offer reevaluation points
…help coordinate schedules with vendors and suppliers
…identify key review gates
…signal the team and suppliers
…delineate work packages

8-7
Tracking Gantt Chart

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

8-8
Tracking Gantt Chart
BENEFITS DRAWBACKS

Easy to understand Do not indentify the underlying source

of problem in case of task slippage
Update quickly
Do not allow for future projection of
Provide real-time project control the project’s status

8-9
Earned Value Management
Cost
Project
S-Curves
Cost

Performance Schedule
Earned Cost
Value
Performance Schedule

Performance Schedule
Tracking Control Charts
8-10
Earned Value Terms
❖Planned value (PV): cost estimate of budgeted resource across project life

❖Earned value (EV): real budgeted cost/”value” of work that has been performed to date

❖Actual cost of work performed (AC): cumulative total cost incurred

❖Cost variance= EV-AC

❖Schedule variance= EV-PV

❖Schedule performance index (SPI)= EV/PV

❖Cost performance index (CPI)= EV/AC

❖Budgeted cost at completion (BAC): total budget for a project

❖Estimate at completion (EAC) = AC + an estimate to complete all remaining work

8-11
Steps in Earned Value Management
1. Clearly define each activity including its resource needs and budget

2. Create usage schedules for activities and resources

3. Develop a time-phased budget (PV)

4. Total the actual costs of doing each task (AC)

5. Calculate both the budget variance (CV) and schedule variance (SV)

8-12
Earned Value Milestones
AC
Actual

Cost Overspend
PV EV
Budget

Slip

Schedule Performed
Schedule

8-13
Earned Value Example 8.1

8-14
Earned Value Example 8.1
Schedule Variances
Planned Value (PV) = 38 = 15+10+10+3
Earned Value (EV) = 30 = 15+8+6+1
Schedule Performance Index = .79 = 30/38 = EV/PV
Estimated Time to Completion = (1/.79)x4=5

Cost Variances
Actual Cost of Work Performed (AC) = 40 = 8+11+8+13
Cost Performance Index = .75 = 30/40 = EV/AC
Estimated Cost to Completion = 50.7 = (1/.75)x38

8-15
Completion Values in EVM
Accurate and up-to-date information is critical in the use of EVM

➢0/100 Rule (short duration)

➢50/50 Rule (short duration)

➢Percentage Complete Rule= based on quarters,thirds…

8-16
Human Factors in Project Evaluation & Control
❖Optimistic progress reports

❖Level of detail

❖Process evaluation

❖Non-technical performance measurement

8-17
Project Termination
All activities consistent with closing out the project

❖Extinction

❖Addition

❖Integration

❖Starvation

8-18
Termination by extinction
The project may end because it has been successful and achieved its goals
The project may also be stopped because it is unsuccessful or has been
superseded
When a decision is made to terminate a project by extinction, the most
noticeable event is that all activity on the substance of the project ceases
Examples:
1. The product has been developed and handed over to the client.
2. The building has been completed and accepted by the owner

8-19
Termination by addition
If a project is a major success, it may be terminated by institutionalizing it as a
formal part of the parent organization

Project personnel, property, and equipment are often simply transferred from
the dying project to the newly born division

8-20
Termination by integration
•This method of terminating projects is the most common way of dealing with
successful projects, and the most complex
• The property, equipment, material, personnel, and functions of the project are
reintegrated into within the existing structure of the parent organization

8-21
Termination by starvation
This type of project termination is a “slow starvation by budget decrement”

A form of neglect by slowly decreasing the budget to the point that the project
cannot possibly remain viable.

8-22
Elements of Project Closeout Management

Gaining Harvesting
Finishing Handing
Over the Acceptance the Benefits
The Work
Product for the Reviewing
Product How
It All Went

Putting it All to Bed

Disbanding the Team

8-23
Lessons Learned Meetings
Common Errors
➢Misidentifying systematic errors
➢Misinterpreting lessons based on events
➢Failure to pass along conclusions

Meeting Guidelines
✓Establish clear rules of behavior
✓Describe objectively what occurred
✓Fix the problem, not the blame

8-24
Closeout Paperwork
Documentation

Legal

Cost

Personnel

8-25
Final Report Elements
❑Project performance

❑Administrative performance

❑Organizational structure

❑Team performance

❑Project management techniques

❑Benefits to the organization and customer

8-26