Module – 5

Executing Projects
Monitoring & Controlling Projects
Project Contracting
 Primary Process Groups in Project
Management
• Initiating
• Planning
• Executing
• Monitoring
• Controlling
• Closing
 PDCA
• It is an integrative nature, referred to as “plan-
do-check-act,” that underlies these processes.
• The Initiating process starts the “plan-do-act-
check” cycle.
• The Planning process corresponds to the
“plan” component.
• The Executing process corresponds to the “do”
component.
• The Monitoring and Controlling process
corresponds to the “check-act” component.
• The Closing process ends them
 Project Planning
• During the project planning phase, plans are
developed in the form of project baselines for
schedule, cost, scope, quality and risks, all of
which are components of the overall project
plan.
• This gives the project manager a basis for
monitoring project progress.
• It also provides the criteria for basing
decisions necessary for managing the changes
required to help get the project back on track.
 Project Monitoring and Control
• Project monitoring and control also
provide information to support status
reporting, progress measurement,
forecasting and updating current cost and
schedule information.
• During this process, it is also important to
ensure that implementation of approved
changes are monitored when and they
occur.
 Project Monitoring and Control

• Automated project management

information systems and Earned
Value are among the most commonly
used.
• Both are also used to update information.
• Earned Value also provides a means for
forecasting future performance based
upon past performance
 Communication Management
• “Right information reaches the right stakeholder at the
right time in the right manner” so that effective and
efficient exchange of information takes place, resulting
in greater collaboration between all stakeholders
• “Communication management includes the processes
required to ensure timely and appropriate generation,
collection, distribution, storage, retrieval and ultimate
disposition of project information.‘’
• Communication is a two way process of sending
information from one entity to another.
 Communication Skills and Interpersonal
Skills Needed include the following:
• Written communication ability
• Verbal communication ability
• Non-verbal communication skills
• Listening skills
• Empathy for the stakeholders
• Questioning and probing skills
• Influencing ability
• Interpersonal skills (Conflict management)
• Political and social skills
 Steps in Project Communication
Plan Communication Management –
• This includes understanding the information
requirement for each stakeholder or stakeholder group.
• Also understanding each stakeholder or stakeholder
groups’ communication preferences such as language,
medium, technology, frequency, format if any for each
information exchange.
• During communication planning, the team also
develops a strategy for information exchange using
different communication methods such as “interactive,
push and pull” methods.
• Understanding the social and cultural background of
each stakeholder is also done and accordingly
communication approach is prepared.
• Manage Communication – Communication starts
happening throughout the project by following the
communication management plan. The required
information is collected, created, distributed, and
stored for future reference throughout the project life
cycle fulfilling the information needs of all
stakeholders. Here the project manager and the team
members responsible for communication use their
communication skills.
• Monitor Communication – While communication
starts in the project, it is also important to keep
ensuring that the information needs of all stakeholders
are met. Any issues of stakeholders pertaining to
communication and their information needs are
addressed by adjusting the communication plan. This
is also an on-going parallel process which runs
throughout the project life cycle.
 What is earned value?
• Earned value (EV) is a way to measure and
monitor the level of work completed on a project
against the plan.
• it’s a quick way to tell if you’re behind schedule or
over budget on your project.
• You can calculate the EV of a project by
multiplying the percentage complete by the total
project budget.
• For example, let’s say you’re 60% done, and your
project budget is $100,000 — your earned value
is then $60,000.
 Earned Value Management (EVM)
• Helps project managers to measure project
performance.
• It is a systematic project management process used to
find variances in projects based on the comparison of
worked performed and work planned.
• EVM is used on the cost and schedule control and can
be very useful in project forecasting.
• The project baseline is an essential component of
EVM and serves as a reference point for all EVM
related activities.
• EVM provides quantitative data for project decision
making
 EVM contributes to:
• Preventing scope creep
• Improving communication and visibility
with stakeholders
• Reducing risk
• Profitability analysis
• Project forecasting
• Better accountability
• Performance tracking
 To describe project’s schedule and cost performance
with EVM, following indicators are used:
• Schedule variance (SV): This is a measure of the difference
between the work that was actually done against the amount of work
that was planned to be done. This clearly shows the project is on
schedule or not.
• Cost variance (CV): This is the measure of the difference between
the amount that was budgeted for the work meant to be done and the
amount that was actually spent for the work performed. Thus this
shows if the project is on budget or not.
• Schedule performance index (SPI): This is the ratio between the
budget that is approved for the work that is performed to the budget
that is approved for the work that was planned in the first place. This
is a relative measure of the project’s time efficiency.
• Cost performance index (CPI): This is the ration between the
approved budgets for the work that is performed to the budget that
was actually spent for the stipulated work. It is a relative measure of
the cost efficiency of the project and can be used to estimate the cost
of the remainder of the task.
 Schedule Variance (SV)
Schedule variance is the difference between your planned progress and your
actual progress to date.

SV = EV (Earned value) - PV (Planned value).

Let’s assume you have a four-month-long project, and you’re two months in,
but the project is only 25% complete.
In this case,
EV = 1 months (25% of four months),
and
PV = 2 months.

Therefore your SV is 1 - 2 = -1.

Since the number is negative, it indicates you’re behind schedule.

 Cost Variance (CV):

cost variance is the difference between how much you

planned on spending thus far and your actual costs to date.
CV = EV - AC (actual cost).
Let’s use the earlier example.
Your project budget is $100,000 and you’re 60% done, which
means your EV is $60,000.
If you’ve spent $70,000 so far to get to this point in the
project, your CV is -$10,000.
You can tell you’re over budget because the number is
negative, which may indicate a problem with the project or
that the project could go over budget or run out of money.
 Schedule Performance Index (SPI)
Schedule Performance Index (SPI):
This measure is similar to SV but is often preferred as it translates the numbers into a value that is easily
compared across tasks or projects.

SPI = EV/PV.

When SPI is above 1.00, you’re ahead of schedule.

If it’s below 1.00, you’re behind.
To take the example from above, SPI would be 1/2 = 0.5.

Using SPI is different than simply comparing your progress against your baseline.

Comparing your actual schedule against your plan may indicate you’re behind on two tasks.
So, you know where your immediate problem is, but not necessarily how it impacts the overall project
or your expected completion date. Using earned value, you can calculate your SPI both by task and for
the project as a whole. When you take the SPI for each task and look at the bigger picture, you can see
that your project is ahead of schedule, even with two late tasks. This helps you better understand the
overall impact of the late tasks on the project.
 Cost Performance Index (CPI)
• As with SPI, CPI allows you to simplify the answer for better analysis.
The CPI calculation is: CPI = EV/AC.
• When CPI is over 1.00, you’re under budget, and when it’s under 1.00, you’re
overspending.
• In the scenario above,
CPI = 60,000/ 70,000 = 0.86, indicating an overspend.
CPI can be used to forecast your project’s completion.
For example, you can divide your total project budget by your current CPI to get the
expected total cost at completion.
The formula is Estimate at Completion (EAC) = Budget/ CPI.
In the above example, this would be $100,000/ 0.86 = $116,279.07.

Meaning, that at this point in the project, based on current trends, you will likely end
up overspending your budget by $16,279.07.
Knowing this early allows you the time to either find ways to cut costs or secure more
funding.
 Scope Creep
• Scope creep is a dreaded thing that can happen
on any project, wasting money, decreasing
satisfaction, and causing the expected project
value to not be met.
• Adding additional features or functions of a
new product, requirements, or work that is not
authorized (i.e., beyond the agreed-upon
scope).
• If an expansion of scope is approved, then it is
not scope creep.
 Reasons for scope creep that include:
• Lack of clarity and depth to the original specification
document.
• Allowing direct [unmanaged] contact between client and
team participants.
• Customers trying to get extra work “on the cheap.”
• Beginning design and development of something before a
thorough requirements analysis and cost-benefit analysis has
been done.
• Scope creep “where you do it to yourself” because of lack of
foresight and planning.
• Poorly defined initial requirements.
• “Management promises the sun and the moon, and breaks
the backs of the developers to give them just that in
impossibly tight time frames.”
 Project Audit
• A project audit is a formal review of a
project, often intended to assess the extent to which
project management standards are being upheld.
• Audits are generally carried out by a specially
designated audit department, the Project
Management Office, an approved management
committee or an external auditor.
• Whoever is responsible for performing the
audit must be in charge of the designated authority
and issue related recommendations.
• The final objective of a project audit is to ensure that
the project meets the standards of project
management through investigation and evaluation.
 Objectives of Project Audit
1. Ensure the quality of products and services:
• A project audit acts as a quality assurance tool. It reviews
the project life cycle evaluating the results yielded during the different
stages, from the design phase to implementation.
• When reviewing the design phase, a project audit evaluates the
thoroughness of the design concepts, including the analysis of
alternative designs.
• Furthermore, it is assessed whether the solution is ready for the pilot
test and finally, during the implementation review, the project audit
assesses and confirms the implementation at each site where the
product is adopted.
• The identification of the errors during the process contributes to
the resolution of the problems and to understand if the project should
continue through a go/no-go decision at each stage.
2. Ensure the quality of project management
• A project audit ascertains that the project management
satisfies the standards by assessing whether it complies with
the organisation’s policies, processes and procedures. It
evaluates the methodology used to help identify gaps in
order to introduce the required improvements.

3. Identify the business risk

• Project audits support the identification of business
factors where risks may reside, which could affect budget,
time, environment and quality.
• The project audit assesses the feasibility of the project in
terms of affordability and performance by providing
transparency and assessing costs, time and resources.
• Apply a review and equalization approach when it comes to
controlling the budget, examining data that includes
estimated and actual costs, as well as costs of meeting goals.
4. Improve project performance
• The monitoring of the various phases of the project life
cycle can contribute to the improvement of the project
team’s performance.
• The audit also helps to improve the budget and resource
allocation.
• Identifying priorities, corrective measures and preventive
actions can lead to a positive project outcome.
• The troubleshooting process allows the project team to
provide solutions and helps prevent similar problems from
recurring in the future.

5. Learn
• A project audit can deliver learning opportunities through
assessments of project management expertise.
• Providing reviews and feedback allows individuals and
project teams to ponder their own performance.
 Procurement management
• It follows a logical order.
• First, you plan what you need to contract; then you
plan how you’ll do it.
• Next, you send out your contract requirements to
sellers. They bid for the chance to work with you.
You pick the best one, and then you sign the contract
with them.
• Once the work begins, you monitor it to make sure
that the contract is being followed.
• When the work is done, you close out the contract
and fill out all the paperwork.
• You figure out what kinds of contracts make sense for
your project, and you try to define all of the parts of
the project that will be contracted out.
 Contract Types
1. Fixed price contract cost of client:
• Fixed Price contracts are used when the scope of work is
clearly defined and the requirements are well understood.
The seller needs to understand the requirements and also all
the associated risks which may occur during the project
work, while making a fixed prices quotation.
• Once agreed, it becomes a win-win for both sides. The buyer
is assured of a fixed price to be paid once the defined scope
of work is completed by the seller.
• The payments will be made based on delivering well defined
outcomes.
• It will take solid maturity and clarity on both sides to come
up with fixed-price contracts. Negotiation may take some
time.
2. Time and Material Contract (T&M):
• Time and Material contracts are very popular contract type
which is used for regular purchases for standard items.
Items may include augmenting temporary manpower for
the project with well-defined skills and expertise level.
• Item also includes standard materials which may be
needed for consumption in the project.
• In T&M contracts, the organization will select some
preferred suppliers of such manpower and materials.
• The vendors will be selected based on their capabilities and
experience. There will be a negotiated price (or rate) for
such supplies. The final price paid will be for the amount of
quantity of such resources consumed or purchased.
• Managing T&M contracts is pretty simple. T&M contract
uses both the flavours of fixed price and reimbursement
based on consumption.
3. Cost Reimbursable Contract (CR):
• In cost reimbursable contract the buyer pays the
actual cost incurred by the seller and an additional
fee or profit.
• There are 2 components paid separately in this
kind of contract. While actual cost is reimbursed
as per actual, the fee amount is somewhat decided
upfront.
• This kind of contract is used when the
requirements are not clear.
• Cost reimbursable contracts are used for new
research and development
 Outsourcing
• A majority of processes project management
outsourcing that could be outsourced are those for
project control.
• The concept could be understood in terms of
various structures, roles, and models.
• Although it has some advantages there are some
challenges as well.
• For example, an organization interested in
maintaining its focus on its core competency could
benefit from it. At the same time there could loss of
control or threat of loss of sensitive data.
 Pros and Cons of Project Management
Outsourcing
Pros:
• Clients can focus on core competencies
• Faster ramp up time or time to market
• Fresh look from an outside view
• Vendor can ensure that best practices are
followed and can provide latest trends in specific
sectors
• Preparation for similar projects in future.
Cons:
• Commitment (buy-in) and resources required
internally, even though external resources are used
• Relationship with vendor needs to be managed
otherwise no benefits are accrued
• Because ownership of resources does not exist
with client, vendor can discontinue the
relationship
• Depending on the nature of the project, data
security may be compromised
• May cost more if the relationship does not work
out.