1. Chapter 10 Monitoring and Information Systems
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99258

2. Project Management

3. Figure Project Triangle (Project Management Trade-offs)
Cost
Time
[budget]
[schedule]
The center of project triangle is
QUALITY
Scope
[performance]
The objective of the PM is to define project’s scope realistically and ultimately deliver quality of product/service on time, on budget and within scope.

4. Project Management versus Process Management
11/29/100
Project Management versus Process Management
“Ultimately, the parallels between process and project management give way to a fundamental difference: process management seeks to eliminate variability whereas project management must accept variability because each project is unique.”
Elton, J. & J. Roe. “Bringing Discipline to Project Management” Harvard Business Review 2

5. Terms
Monitoring - Collecting, recording, and reporting information concerning any and all aspects of project performance
Controlling - Uses the data supplied by monitoring to bring actual performance into compliance with the plan
Evaluation - Judgments regarding the quality and effectiveness of project performance

6. The Planning–Monitoring–Controlling Cycle
We mainly want to monitor:
Time (schedule)
Cost (budget)
Scope (project performance)
Closed-loop system
Revised plans and schedules following corrective actions

7. Project Authorization and Expenditure Control System Information Flow
Figure 10-1

8. Designing the Monitoring System
Identify key factors to be controlled:
Scope
Cost
Time
Information to be collected must be identified.

9. Designing the Monitoring System Continued
Do not want to avoid collecting necessary data because it is hard to get.
Do not want to collect too much data.
The next step is to design a reporting system that gets the data to the proper people in a timely and understandable manner.

10. Data Collection
Once we know the data we want, we need to decide how to collect it.
Should the data be collected after some event?
Order and/or precedence
Should it be collected on a regular basis?
Are there any special forms needed for data collection?

11. BAD information is WORSE than ...
Data/Information …
BAD information is WORSE than ...
________information. NO

12. Attributes of Data/Information Quality
We realize that a firm needs better information to survive and prosper. Therefore, high quality information products have to be provided to management.

13. Attributes of Data/Information Quality
This slide corresponds to Figure 1.17 on p. 26 and relates to the material on pp. 25.
Timeliness
Currency
Frequency
Time Period
Time
Dimension
Information Quality is a function of information products whose characteristics, attributes, and dimensions help provide managers with data and information that leads to better decision making. The components of information quality can be grouped into three dimensions:
The Time Dimension. In business, most information is frequently time sensitive. It is good or accurate or relevant only for a specified time period. Accordingly, the IS can be designed to provide information according to one or more time relevant dimensions: demand reporting (when it is wanted), exception reporting (when specified conditions occur), or periodic reporting (at regular time intervals). Instructor's Note: These dimensions are covered in greater detail under the Management Information Systems slide.
Teaching Tip: Have students identify different time dimension needs for each level of management and give examples of information products appropriate to each level on this dimension.
The Content Dimension. This dimension addresses the accuracy and completeness of the information. It is also important that, within these two parameters, the information be as concise as possible. IS design must take these considerations into account.
The Form Dimension. It is also critically important that information must be attractive and easy to use. Each functional area of the organization requires that data and information products be presented on demand in the form typical of that area of specialization. This demands that IS design identify and build into the IS the capability for end users to call up information in a form they are used to working with. For example, marketing managers and production supervisors should be able to access the same data and have it converted into a format relevant to each of their areas.
Accuracy
Relevance
Completeness
Conciseness
Scope
performance
Clarity
Detail
Order
Presentation
Media
Content
Dimension
Form
Dimension

14. Much Data Involves Frequency counts Raw numbers
Subjective numeric ratings
Indicators
Verbal measures

15. Information Needs and Reporting
Everyone should be tied into the reporting system
see order management slide
Reports should address each level
Not at same depth and frequency for every level
Lower-level needs detailed information
Senior management levels need overview (i.e., summarized) reports
Report frequency is typically high at low levels and less frequent at higher levels
Everyone concerned with the project should be appropriately tied into the project reporting system. The monitoring system ought to be constructed so that it addresses every level of management, but reports need not be of the same depth or at the same frequency for each level. Lower-level personnel have a need for detailed information about individual tasks and the factors affecting such tasks. Report frequency is usually high. For the senior management levels, overview reports describe progress in more aggregated terms with less individual task detail unless senior management has a special interest in a specific activity or task. Reports are issued less often. In both cases, the structure of the reports should reflect the work breakdown structure, with each managerial level receiving reports that allow the exercise of control at the relevant level.

16. The Reporting Process Reports must contain relevant data.
Must be issued frequently.
Should be available in time for control.
Distribution of project reports depends on interest
For senior management, may be few milestones (what is it?)
For project manager, there may be many critical points
The relationship of project reports to the project action plan or work breakdown structure is the key to the determination of both report content and frequency. Reports must contain data applicable 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. In addition to the criterion that reports should be available in time to be used for project control, the timing of reports should generally correspond to the timing of project milestones.
The distribution of project reports depends on who is interested. For senior management, there may be only a few milestones, even in large projects. For the project manager there may be many critical points in the project schedule at which major decisions must be made, large changes in the resource base must be initiated, or key technical results achieved. Similar points relevant to lower levels relate to finer detail and occur with higher frequency.

17. critical vs. non-critical
Gantt Chart
Milestone
(for “Design” phase)
critical vs. non-critical
Shows time estimates of tasks
A milestone represents an event or condition that marks the completion of a group of related tasks or the completion of a phase of the project.
If any activity on critical path delayed, the overall project time will be increased

18. Benefits of Detailed and Timely Reports
Mutual understanding of the goals
Awareness of the progress of parallel activities
Understanding the relationship of tasks
Early warning signals of problems
Minimizing the confusion
Higher visibility to top management
Keeping client up to date

19. Report Types
Routine - Reports that are issued on a regular basis or each time the project reaches a milestone
Exception - Reports that are generated when an usual condition occurs or as an informational vehicle when an unusual decision is made
Special Analysis - Reports that result from studies commissioned to look into unexpected problems
All are linked to data (database, knowledge base etc.)

20. Meetings Reports do not have to be written
They can be delivered verbally in meetings
Projects have too many meetings
The trick is to keep them to as few as possible

21. Meeting Rules Use meetings to make group decisions
Start and end on time and have an agenda
Do your homework before the meeting
Take minutes (what is minutes?)
Avoid attributing remarks to individuals in minutes
Avoid overly formal rules of procedure
Call meeting for serious problems

22. Common Reporting Problems
Too much detail
Poor interface between the data/procedures of the project and the information system of the parent company
Poor correspondence between the planning process and the monitoring process

23. Earned Value Analysis
A valuable technique for monitoring overall project performance is earned value.
One way is by using an aggregate performance measure called earned value.
Have covered monitoring parts
Timing and coordination between individual tasks is important
Must also monitor performance of entire project
Crux of matter should not be overlooked

24. The Earned Value Chart and Calculations
The key element of the earned value technique is the measurement of progress in addition to cost and schedule.
If progress is not measured, then data about cost and schedule is meaningless because the PM does not know what resulted from the expenditures.

25. The Earned Value Chart and Calculations (cont.)
Actual against baseline ignores the amount of work accomplished
Earned value incorporates work accomplished
Multiply the “estimated percent work complete” for each task by the “planned cost”
Only need percent complete estimate for tasks currently in progress.

26. Rules to Aid in Estimating Percent Completion
Taking credit for 50% complete when the task begins and the other 50% when the task ends (50-50 estimate).
0-100 percent rule
Taking no credit for progress until the task completes (0-100 rule).

27. Rules to Aid in Estimating Percent Completion
Critical input use rule
Taking credit for progress based on the use of a critical input. This works only if the process consuming the input is reliable and well defined.
Proportionality rule
Taking credit for progress based on either the percent of the budget that has been expended or the percent of the elapsed time that has gone by (proportionality rule).

28. The Earned Value Chart
EAC = ETC + AC
Figure 10-6

29. Variances Variances can help analyze a project
A negative variance is bad
Cost and schedule variances are calculated as the earned value minus some other measure
Will look at some of the more common ones
CV = EV – AC

30. Cost Variance (CV) CV = EV – AC EV: earned value
AC: actual cost of the work
Negative variance indicates a cost overrun
Magnitude depends on the costs

31. Schedule Variance (SV)
SV = EV – PV
PV: planned value (the cost of the work we scheduled to be performed to date)
Negative variance indicates you are behind schedule
Measured using costs

32. Time Variance (TV) TV = ST – AT
ST: time scheduled for the work that has been performed
AT: actual time used to perform
Negative variance indicates you are behind schedule
TV = SV / slope
Slope = PV / Days

33. Indices Cost Performance Index CPI = EV/AC Schedule Performance Index
SPI = EV/PV
Time Performance Index
TPI = ST/AT
Cost Schedule Index
CSI = EV2/(AC)(PV)

34. Summary on Variances and Indices
CV = EV – AC
CV: cost variance
EV: earned value
AC: actual cost of the work
SV = EV – PV
SV: schedule variance
PV: planned value (the cost of the work we scheduled to be performed to date)
TV = ST – AT
TV: time variance
ST: time scheduled for the work that has been performed
AT: actual time used to perform
Cost Performance Index
CPI = EV/AC
Schedule Performance Index
SPI = EV/PV
Time Performance Index
TPI = ST/AT
Cost Schedule Index
CSI = EV2/(AC)(PV)
TV = SV / slope
Slope = PV / Days

35. “To complete” and “At Completion”
Project manager reviewing what is complete and what remains
Final cost and final completion date are moving targets
The project manager compiles these into a to complete forecast
Actual + forecast = final date and cost at completion

36. ETC and EAC ETC = (BAC + EV)/CPI EAC = ETC + AC where,
ETC = Estimated cost to complete
BAC = Budget at completion
EV = Earned value
CPI = Cost performance index
EAC = Estimated cost at completion
AC = Amount expended to date (actual cost)

37. Milestone Reporting
Reports that are created when a project reaches a major milestone
They are designed to keep everyone up-to-date on project status
For executives and clients, these may be the only reports they receive

38. Computerized PMIS (Project Management Information Systems)
Real projects are often large
Hundreds of tasks
Thousands of work units
Reporting is clearly a job for the computer
Project management information systems were one of the earlier applications
Initially focus was on scheduling
Now it includes, earned values, variances, and more

39. PMIS Errors Computer paralysis Information overload Project isolation
Computer dependence
PMIS misdirection

40. Creating a Project Budget
Project Plan
WBS
Scheduling
Budgeting
The budget is a plan that identifies the resources, goals and schedule that allows a firm to achieve those goals
Top-down
Bottom-up
Chapter 8 of Pinto’s text

41. VIDEO
VIDEO:
7. An_Introduction_to_the_Earned_Value_Measurement_System(15m)
8. Value_Driven_Project_Mgt(9m28s)

42. AC: actual cost of the work
Problem 1:
($000)
Month AC PV EV 22
$540
$523
$535 CV
$(5)
Unfavorable SV
$12
Favorable
CV = EV – AC
SV = EV – PV
Negative variances are unfavorable.
EV: earned value
AC: actual cost of the work

43. Negative variances are unfavorable.
Problem 2:
($000)
Month AC PV EV 5
$34
$42
$39 CV $5
Favorable
CPI
1.15 SV
$(3)
Unfavorable
SPI
0.93
CV = EV – AC
CPI = EV/AC
SV = EV – PV
SPI = EV/PV
Negative variances are unfavorable.
If an index is less than one, the variance is unfavorable.
PV: planned value (the cost of the work we scheduled to be performed to date)

44. Problem 3: ($000) Day AC PV EV 70 $78 $84 $81 CV $3 Favorable CPI 1.04SV
$(3)
Unfavorable
SPI
0.96
CSI
1.00
On target TV
(2.50)
Days delayed
CSI = (CPI)(SPI)
TV = SV / slope
Slope = PV / Days
CSI is on target because the unfavorable SV is offset by the favorable CV.
TV predicts that the project is 2.5 days behind schedule given the estimated EV.

45. This project is seriously delayed (SPI) and also over budget (CV).
Problem 4:
($000)
Month AC PV EV 17
$350
$475
$300 CV
$(50)
Unfavorable
CPI
0.86 SV
$(175)
SPI
0.63
CSI
0.54
This project is seriously delayed (SPI) and also over budget (CV).
Cost Performance Index
CPI = EV/AC
Schedule Performance Index
SPI = EV/PV
Time Performance Index
TPI = ST/AT
Cost Schedule Index
CSI = EV2/(AC)(PV)

46. This project is ahead of schedule, but has an unfavorable CV.
Problem 5:
($000)
Month AC PV EV 10
$23
$17
$20 CV
$(3)
Unfavorable
CPI
0.87 SV $3
Favorable
SPI
1.18
CSI
1.03
This project is ahead of schedule, but has an unfavorable CV.

47. Problem 6:
($000)
AC = $550
AC = $750
Day AC PV EV 65
$550
$735
$678
$750 CV
$128
Favorable
$(72)
Unfavorable
CPI
1.23
0.90 SV
$(57)
SPI
0.92
CSI
1.13
0.83 TV
(5.00)
Days behind
The first step is to estimate EV. Starting with TV, we solve to determine SV. Once SV is known, EV can be determined because the PV was given.
In problem 6, changing the AC value only affects cost-related measures and indices. The SV and SPI are unaffected by a change in AC.

48. In this problem, EV = 70%  PV.
($000) AC PV EV
$10.0
$12.0
$8.4 CV
$(1.6)
Unfavorable
CPI
0.84 SV
$(3.6)
SPI
0.70
CSI
0.59
In this problem, EV = 70%  PV.
This client is probably upset because the CSI suggests that this project is likely to be delayed and to cost more than originally planned.