Project Management: A

Managerial Approach

Chapter 10 – Monitoring and

Information Systems
© 2006 John Wiley and Sons, Inc.
 Overview
• Closed-loop System
• Monitor System Design
• Data Collection
• Project Reports
• Earned Value Charts

© 2006 John Wiley and Sons, Inc.

 Monitoring and Information Systems

• Evaluation and control of projects are the opposite sides of

project selection and planning
• Logic of selection dictates the components to be evaluated
• The details of the planning expose the elements to be
controlled
• Monitoring is the collecting, recording, and reporting
information concerning any and all aspects of project
performance

© 2006 John Wiley and Sons, Inc. Chapter 10-1

The Planning - Monitoring - Controlling Cycle

• The key things to be planned, monitored, and

controlled are time (schedule), cost (budget), and
specifications
• The planning methods require a significantly greater
investment of time and energy early in the life cycle of
the project
• These methods significantly reduce the extent and cost
of poor performance and time/cost overruns

© 2006 John Wiley and Sons, Inc. Chapter 10-2

The Planning - Monitoring - Controlling Cycle

• The control process should be perceived as

a closed loop system
• In a closed loop system, revised plans and
schedules should follow corrective actions
• The planning-monitoring-controlling cycle is
continuously in process until the project is
complete

© 2006 John Wiley and Sons, Inc. Chapter 10-3

 Project Control Closed-Loop
PLANNING/SCHEDULING FEEDBACK LOOPS

Develop Verify
“Customer” Functional
IDs Need Specs w/
Specs “Customer

“Ballpark” Design Specs Functional

Resource to Engineer- Specs to
Estimates ing Specs Design Specs

Implement, Stakeholder
“Project Plan Monitor, &
And Schedule” Feedback
Control

PM TEAM FEEDBACK LOOPS

© 2006 John Wiley and Sons, Inc.
Information Flow for the Planning -
Monitoring - Controlling Cycle

© 2006 John Wiley and Sons, Inc. Chapter 10-4

 Designing the Monitoring System
• The first step in setting up any monitoring system is
to identify the key factors to be controlled
• The project manager must define precisely which
specific characteristics of performance, cost, and time
should be controlled
• Exact boundaries must then be established, within which
control should be maintained

© 2006 John Wiley and Sons, Inc. Chapter 10-5

 Designing the Monitoring System
• The best source of items to be monitored is the project
action plan
• The monitoring system is a direct connection between
planning and control
• It is common to focus monitoring activities on data that
are easily gathered - rather than important
• Monitoring should concentrate primarily on measuring
various facets of output rather than intensity of activity

© 2006 John Wiley and Sons, Inc. Chapter 10-6

 Designing the Monitoring System
• The measurement of project performance usually poses
the most difficult data gathering problem
• Performance criteria, standards, and data collection
procedures must be established for each of the factors to
be measured
• Information to be collected may consist of accounting
data, operating data, engineering test data, customer
reactions, specification changes and the like

© 2006 John Wiley and Sons, Inc. Chapter 10-7

 Data Collection Sources
• It is necessary to define precisely what pieces of
information should be gathered and when
• A large proportion of all data collected take one of
the following forms:
– Frequency counts
– Raw numbers
– Subjective numeric ratings
– Indicators
– Verbal measures
© 2006 John Wiley and Sons, Inc. Chapter 10-8
 Data Collection Reports

• After data collection has been completed, reports

on progress should be generated
• These reports include project status reports,
time/cost reports, and variance reports
• Causes and effects should be identified and trends
noted
• Plans, charts and tables should be updated on a
timely basis
© 2006 John Wiley and Sons, Inc. Chapter 10-9
 How to Collect Data
• A count of “bugs” found during a series of tests
run on a new piece of software:

© 2006 John Wiley and Sons, Inc. Chapter 10-10

 Data Diagnosis
• Significant differences from plan should be highlighted
or “flagged” so that they cannot be overlooked by the
controller
• Some care should be given to the issues of honesty and
bias
• An internal audit serves the purpose of ensuring all
information gathered is honest
• No audit can prevent bias - all data are biased by those
who report them
© 2006 John Wiley and Sons, Inc. Chapter 10-13
 How to Collect Data
• The project manager is often dependent on team
members to call attention to problems
• The project manager must make sure that the bearer
of bad news is not punished; nor the admitter-to-error
executed
• The hider-of-mistakes may be shot with impunity -
and then sent to corporate Siberia

© 2006 John Wiley and Sons, Inc. Chapter 10-14

 Reporting Process
• The monitoring system ought to be constructed so that it
addresses every level of management
• Reports do not need to be of the same depth or at the
same frequency for each level
• The relationship of project reports to the project
action plan or WBS is the key to the determination of
both report content and frequency

© 2006 John Wiley and Sons, Inc. Chapter 10-15

 Reporting Process Effectiveness

• Reports must contain data relevant to the control of

specific tasks that are being carried out according to a
specific schedule
• The frequency of reporting should be great enough to
allow control to be exerted during or before the period in
which the task is scheduled for completion
• The timing of reports should generally correspond to the
timing of project milestones

© 2006 John Wiley and Sons, Inc. Chapter 10-16

 Monitoring System Drivers

• The nature of the monitoring system should be consistent

with the logic of the planning, budgeting, and
scheduling systems
• The primary objective is to ensure achievement of the
project plan through control
• The scheduling and resource usage columns of the
project action plan will serve as the key to the design of
project reports

© 2006 John Wiley and Sons, Inc. Chapter 10-17

 Reporting Outcomes
• Benefits of detailed, timely reports delivered to the proper
people:
– Mutual understanding of the goals of the project
– Awareness of the progress of parallel activities
– More realistic planning for the needs of all groups
– Understanding the relationships of individual tasks to one
another and the overall project
– Early warning signals of potential problems and delays
– Faster management action in response to unacceptable or
inappropriate work
– Higher visibility to top management
© 2006 John Wiley and Sons, Inc. Chapter 10-18
 Common Reporting Problems

• There are three common difficulties in the design of

project reports:

– There is usually too much detail, both in the reports

themselves and the input being solicited from workers
– Poor interface between the project information system and
the parent firm’s information system
– Poor correspondence between the planning and the
monitoring systems

© 2006 John Wiley and Sons, Inc. Chapter 10-24

 The Earned Value Chart

• One way of measuring overall performance is by

using an aggregate performance measure called
earned value
• A serious difficulty with comparing actual
expenditures against budgeted or baseline is that
the comparison fails to take into account the
amount of work accomplished relative to the cost
incurred
© 2006 John Wiley and Sons, Inc. Chapter 10-25
 The Earned Value Chart

• The earned value of work performed (value completed)

for those tasks in progress is found by multiplying the
estimated percent completion for each task by the planned
cost for that task
• The result is the amount that should have been spent on
the task so far
• The concept of earned value combines cost reporting and
aggregate performance reporting into one comprehensive
chart
© 2006 John Wiley and Sons, Inc. Chapter 10-26
 The Earned Value Chart
• Graph to evaluate cost and performance to date:

© 2006 John Wiley and Sons, Inc.

 The Earned Value Chart
• Variances on the earned value chart follow two primary
guidelines:
– 1. A negative is means there is a deviation from plan—not good
– 2. The cost variances are calculated as the
earned value minus some other measure
• EV - Earned Value: budgeted cost of work performed
• AC - actual cost of work performed
• PV - Planned Value: budgeted cost of work scheduled
• ST - scheduled time for work performed
• AT - actual time of work performed
© 2006 John Wiley and Sons, Inc. Chapter 10-28
 The Earned Value Chart
• EV - AC = cost variance (CV, overrun is negative)
• EV - PV = schedule variance (SV, late is negative)
• ST - AT = time variance (TV, delay is negative)
• If the earned value chart shows a cost overrun or
performance underrun, the project manager must figure out
what to do to get the system back on target
• Options may include borrowing resources, or holding a
meeting of project team members to suggest solutions, or
notifying the client that the project may be late or over
budget
© 2006 John Wiley and Sons, Inc. Chapter 10-29
 The Earned Value Chart

• Variances are also formulated as ratios rather than

differences
– Cost Performance Index (CPI) = EV/AC
– Schedule Performance Index (SPI) = EV/PV
– Time Performance Index (TPI) = ST/AT
• Use of ratios is particularly helpful when comparing
the performance of several projects

© 2006 John Wiley and Sons, Inc. Chapter 10-30

Copyright 2006 John Wiley & Sons, Inc.
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© 2006 John Wiley and Sons, Inc.