22.4.18 Monitoring and Control-Omm

Centre for
Continuing Education
Session conducted by
Dr Rajesh Gupta
B Tech, PGDOM, PhD
Area of interest
• Operations management
• Project Management
• Quantitative Techniques
• Quality Management
UPES – The Nation Builders University
PROJECT MANAGEMENT AND CONTRACT

ADMINISTRATION
22nd April, 2018
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Alpha solutions private limited – client’s concern about project progress
Alpha solutions private limited was established in 2012. The company started undertaking
projects for developing internet security software from corporates. By the year 2016, the
company was already doing business with more than 30 corporates and had developed the
reputation of its expertise in the field. The company was headed by Mr. Mehra as the Managing
Director and Anil assisted him as chief project manager. Anil was responsible to allot the new
projects to one of eight project managers working for the company.
Anuj was the project manager for a project with Mohit Industries, one of the most important
clients of Alpha Solutions. Project started on January 1, 2016 and was expected to be handed
over to the client by 30th June, 2016. Anil received a call from CEO of Mohit industries on 24th
March, expressing his concerns over progress of the project. Just two days back, Anuj had also
requested Anil to talk about some unavoidable constraints that cropped up unexpectedly and
also to request for an enhancement of project budget.
Anil discussed the matter with Mr Mehra and both agreed to have a joint meeting with MD of
client’s company and Anuj to resolve the issue. Anil instructed Anuj to come to the MD’s office on
26th March at 10 PM with a report of projects progress. Anuj immediately started collecting
relevant data for the meeting. He instructed all his team to provide data of work completion and
expenses made so far.
On the night of 25th March, Anuj was busy with the data collected and provided by his team
members and to prepare a project progress report.
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The summarized data is as below.
Time Budgeted cost Scheduled completion Actual Completion status Actual cost
Activity Code
(Weeks) (Thousands) status on 26th March on 26th March incurred
Study of Client’s processes A 2 20 100% 100% 24
Security audit of the system B 4 25 100% 100% 22
Development of design for security

C 7 10 100% 90% 10
software
Procurement of hardware D 3 70 100% 70% 55
Trial run of the software E 2 25 50% 0% -
Modification and validation F 5 40 0% 0% -
Software testing G 3 15 0% 0% -
Installation H 4 12 0% 0% -
Training on software I 4 22 0% 0% -
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PROJECT MONITORING AND CONTROL
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Project control process
Process of comparing actual performance against plan to

identify deviations, evaluate possible alternative courses of
action and take appropriate corrective action
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Project control process Steps
• Setting a baseline plan

• Derived from cost and duration information in WBS
• Measuring progress and performance
• Comparing plan against actuals
• Taking action
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Define project objectives
Develop base plan Develop monitoring plan
Compare performance with

Collect data as per monitoring plan
plan
Identify deviation Establish need for action
Apply action
Verify effectiveness of action

taken
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Resources that need to be controlled include
• Physical resources
• Human resources
• Financial resources
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Earned value
•Comparison of cost incurred for an accurately

identified amount of work with the cost budgeted for
the same amount of work
•Requires a detailed work breakdown structure
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BCWS Budgeted cost of work scheduled
BCWP Budgeted cost of work performed
ACWP Actual cost of work performed
CPI Cost performance index
SPI Schedule performance index
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Cost variance = BCWP – ACWP
Schedule variance = BCWP - BCWS
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Cost performance indicators
CPI = BCWP / ACWP
SPI = BCWP / BCWS
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Index CPI SPI
> 1.00 Under cost Ahead of schedule
= 1.00 On cost On schedule
< 1.00 Over cost Behind schedule
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A project was reviewed during its execution. It was
observed that 50% of work scheduled was completed
against a target of 60% on that day. The cost of project
was Rs 10,000,00/- and was distributed over the project
span uniformly. A total of Rs. 5,50,000/- was already spent
on the project. Calculate CPI and SPI and comment on the
project performance.
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Time Budgeted cost Scheduled completion Actual Completion status Actual cost
Activity Code
(Weeks) (Thousands) status on 26th March on 26th March incurred
Study of Client’s processes A 2 20 100% 100% 24
Security audit of the system B 4 25 100% 100% 22
Development of design for security

C 7 10 100% 90% 10
software
Procurement of hardware D 3 70 100% 70% 55
Trial run of the software E 2 25 50% 0% -
Modification and validation F 5 40 0% 0% -
Software testing G 3 15 0% 0% -
Installation H 4 12 0% 0% -
Training on software I 4 22 0% 0% -
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S CURVE – A TOOL FOR
PROJECT MONITORING AND CONTROL
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S Curve as a tool of project monitoring and control
Actual cost at completion

Cost Over run
Budgeted cost at completion
BCWS
Schedule variance
ACWP
Cost Variance
BCWP Schedule slippage
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CPI < 1 SPI < 1
BCWS
ACWP
BCWP
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CPI < 1 SPI = 1
BCWS
ACWP
BCWP
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CPI = 1 SPI = 1
BCWS
ACWP
BCWP
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Determine
2000
• Budgeted cost of completion
BCWS
• Projected cost of completion
1800
• Projected cost variance
1640 • Scheduled time of
1600
completion
1450 • Projected time of completion
1400
• Projected schedule slippage
ACWP
AFTER 12.5 WEEKS
1200
• CPI
1100
• SPI
1000
• CR
• CV
800
• SV
PROJECTED AT COMPLETION
400
• CPI
• SPI
200 BCWP • CR
• CV
• SV
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
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Activity % Scheduled Completion Budgeted cost % Actual Completion
A 100 2000 100
B 100 3500 90
C 100 1500 90
D 60 3000 35
E 40 1000 0
For the above data, calculate SPI and cost variance of all activities and for
project in totality.
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A project was evaluated at different milestones for performance. The data collected at
different milestones is as under.
If the total budgeted cost for project was Rs 5, 00,000, comment on the performance of
project.
Milestone 1 2 3 4 5
Actual cost incurred 1,02,000 1,65,000 2,75,000 2,98,000 3,79,000
Work completed 20% 35% 54% 60% 75%
Work scheduled 24% 39% 52% 64% 73%
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Milestone 1 2 3 4 5
Actual cost incurred 1,02,000 1,65,000 2,75,000 2,98,000 3,79,000
Work completed 20% 35% 54% 60% 75%
Work scheduled 24% 39% 52% 64% 73%
ACWP 1,02,000 1,65,000 2,75,000 2,98,000 3,79,000
BCWP 1,00,000 1,75,000 2,70,000 3,00,000 3,75,000
BCWS 1,20,000 1,95,000 2,60,000 3,20,000 3,65,000
CPI 0.98 1.06 0.98 1.01 0.99
SPI 0.83 0.90 1.03 0.94 1.03
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TEST YOUR UNDERSTANDING
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10000
80000
ACWP
Cost 6000
BCWS
5000
BCWP
Week
15 22
At 15th week on completion

Question Determine Answer
Question Determine Answer
number
number
1 CPI 4 CPI
2 SPI 5 SPI
6 Cost to complete remaining

3 Critical ratio work after 15th week
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Centre for

PROJECT MANAGEMENT AND CONTRACT

22nd April, 2018

Study of Client’s processes A 2 20 100% 100% 24

Security audit of the system B 4 25 100% 100% 22

Development of design for security

Procurement of hardware D 3 70 100% 70% 55

Trial run of the software E 2 25 50% 0% -

Modification and validation F 5 40 0% 0% -

PROJECT MONITORING AND CONTROL

Project control process

Process of comparing actual performance against plan to

Project control process Steps

• Setting a baseline plan

Define project objectives

Develop base plan Develop monitoring plan

Compare performance with

Identify deviation Establish need for action

Verify effectiveness of action

Resources that need to be controlled include

•Comparison of cost incurred for an accurately

•Requires a detailed work breakdown structure

BCWS Budgeted cost of work scheduled

BCWP Budgeted cost of work performed

ACWP Actual cost of work performed

CPI Cost performance index

SPI Schedule performance index

Cost variance = BCWP – ACWP

Schedule variance = BCWP - BCWS

Cost performance indicators

CPI = BCWP / ACWP

SPI = BCWP / BCWS

Index CPI SPI

> 1.00 Under cost Ahead of schedule

= 1.00 On cost On schedule

< 1.00 Over cost Behind schedule

A project was reviewed during its execution. It was

observed that 50% of work scheduled was completed

against a target of 60% on that day. The cost of project

was Rs 10,000,00/- and was distributed over the project

span uniformly. A total of Rs. 5,50,000/- was already spent

on the project. Calculate CPI and SPI and comment on the

Study of Client’s processes A 2 20 100% 100% 24

Security audit of the system B 4 25 100% 100% 22

Development of design for security

Procurement of hardware D 3 70 100% 70% 55

Trial run of the software E 2 25 50% 0% -

Modification and validation F 5 40 0% 0% -

S CURVE – A TOOL FOR

PROJECT MONITORING AND CONTROL

Actual cost at completion

BCWP Schedule slippage

Activity % Scheduled Completion Budgeted cost % Actual Completion

A 100 2000 100

Actual cost incurred 1,02,000 1,65,000 2,75,000 2,98,000 3,79,000

Work completed 20% 35% 54% 60% 75%

Work scheduled 24% 39% 52% 64% 73%