project control -...

1.040/1.401/ESD.0181.040/1.401/ESD.018Project Management, Spring 2007Project Management, Spring 2007

Project ControlProject Control

Samuel Labi and Fred MoavenzadehDepartment of Civil and Environmental EngineeringDepartment of Civil and Environmental EngineeringMassachusetts Institute of TechnologyMassachusetts Institute of Technology

CLOSEOUTDEVELOPMENTDEVELOPMENT OPERATIONS DESIGN,PLANNING

FEASIBILITY

Actual Start of Project

OrganizationEstimationPlanning

FinanceEvaluation

Monitoring & ControlChanges & ClaimsQuality & Reviews

CLOSEOUT

Recall: The 5 Phases of Project ManagementRecall: The 5 Phases of Project Management

Project Control

Monitoring & Control: A Feedback Process

Correct Deviations

Monitoring1. Measurement2. Performance Analysis)

Detect deviations

Control1. Actions2. Revised Plans, Cash Flows, Schedules, etc.

Project Control

Project Control: The Big Picture …

Given

Project is Off-track

Project Control


Given


Monitoring indicates that:

- Project is behind time-schedule, and/or

- Project has exceeded budget, and/or

- Quality of materials or finished work is below standard, and/or

- Productivity is lower than as planned, etc.

Project Control


GivenResources for PC (the 4-M’s)


Project Control


GivenResources for PC (the 4-M’s)


Resources available to the Project Manager for Project Control:- Money- Manpower (labor)- Materials- Machinery (Equipment)

Project Control


GivenMechanism and Elements of PC

Resources for PC (the 4-M’s)

Adjust the resources

Adjust the projectcharacteristics: size, scope, etc


Project Control







More labor? Better labor?Better supervision?More materials? Better materials?More equipment? Better equipment?More money?

Reduce project size? Reduce project scope?Terminate project?

resources

project

Project Control



output





Project brought back on-track

Was the Project Control successful? How can we tell?

Project Control


GivenElements and Mechanism of PC

output





Project brought back on-track

Project Control

Outline of this Lecture:

1.1. How can we tell when PC is needed?How can we tell when PC is needed?

2.2. What resources are available for PC?What resources are available for PC?

3.3. What are the elements of PC? What are the elements of PC?

4.4. What is the mechanism of PC?What is the mechanism of PC?

5.5. Some important issues in Project ControlSome important issues in Project Control

Project Control

Part 1Part 1

How can we tell How can we tell when Project Control is when Project Control is

needed?needed?

Specific CluesSpecific CluesGeneral CluesGeneral Clues

Is Project Control is needed now?Is Project Control is needed now?How can we tell?How can we tell?

““PrimitivePrimitive””IndicatorsIndicators

OtherOtherIndicatorsIndicators

Performance Performance and Qualityand Quality

CostCost TimeTime

How can we tell when Project Control is needed? How can we tell when Project Control is needed?

PerformancePerformance-- Unexpected technical problems ariseUnexpected technical problems arise-- Insufficient resources are unavailable when neededInsufficient resources are unavailable when needed-- Quality or reliability problems occurQuality or reliability problems occur-- Owner/Client requires changes in technical specificationsOwner/Client requires changes in technical specifications-- InterInter--functional complications and conflicts arisefunctional complications and conflicts arise-- Market changes that increase/decrease the projectMarket changes that increase/decrease the project’’s values value

GENERAL CLUES (Meredith and Mantel, 2006)GENERAL CLUES (Meredith and Mantel, 2006)


CostCost-- Technical difficulties that require more resourcesTechnical difficulties that require more resources-- Scope of work increasesScope of work increases-- Bid amount (accepted for the contract award) is too low Bid amount (accepted for the contract award) is too low -- Reporting of the monitoring results are poor/lateReporting of the monitoring results are poor/late-- Project budgeting for contractor cash flows not done rightProject budgeting for contractor cash flows not done right-- Changes in market prices of the inputsChanges in market prices of the inputs



TimeTime-- Technical difficulties require more time to solveTechnical difficulties require more time to solve-- Scope of work increasesScope of work increases-- Unexpected utilities needing relocation Unexpected utilities needing relocation -- Task sequencing not done rightTask sequencing not done right-- Required material, labor/equipment unavailable when Required material, labor/equipment unavailable when neededneeded-- Key preceding tasks were not completed on time.Key preceding tasks were not completed on time.


1. How can we tell when PC is needed?1. How can we tell when PC is needed?

““PrimitivePrimitive”” indicators:indicators:–– More resources or less More resources or less

resources haven been used resources haven been used than planned than planned

–– Activities are taking long Activities are taking long than plannedthan planned

–– Cost of activity (or of Cost of activity (or of project to date) is higher project to date) is higher than expectedthan expected

actual

actual

actual

planned

planned

planned

0 500 1000 1500 2000

Amt of concrete used (tons)

Total Man-hours

Equipment-hours

Amount input to date

SPECIFIC CLUESSPECIFIC CLUES


““PrimitivePrimitive”” indicators:indicators:–– More resources or less resources More resources or less resources

haven been used than planned haven been used than planned

–– Activities are taking long than Activities are taking long than plannedplanned

–– Cost of activity (or of project to Cost of activity (or of project to date) is higher than expecteddate) is higher than expected

actual

actual

actual

planned

planned

planned

0 500 1000 1500 2000

Amt of concrete used (tons)

Total Man-hours

Equipment-hours

Amount input to date




haven been used than plannedhaven been used than planned



JAN FEB MAR APR MAY JUN

Activity 1

Activity 2

Activity 3

planned

actual

NOW

Legend

plannedactual



Program (schedule)

Progress (actual)

Program (schedule)

Progress (actual)

now time

50%

70%


haven been used than planned haven been used than planned



$



Why are they Why are they ““primitiveprimitive””??-- May be biased.May be biased.-- Do not consider that progress may be Do not consider that progress may be

overestimated or underestimated due to:overestimated or underestimated due to:-- execution of unscheduled work done, or execution of unscheduled work done, or -- execution of more work of low value and less work of high execution of more work of low value and less work of high

valuevalue



Work Schedule

(WS)

Work Performed

(WP)

Budgeted Cost (BC)

Actual Cost (AC)

BCWS BCWP

ACWS ACWP

Used for plotting the Program S-curve

Used for plotting theProgress S-curve

Used for plotting the EVA S-curve



$max

t

BCWS

ACWP

BCWP

Time

SCHEDULE VARIANCECOST VARIANCE

RESOURCE FLOW VARIANCE

TIME VARIANCE

tmax

ACWPt

BCWSt

BCWPt

t-p

now



So we know Project Control is needed (at time So we know Project Control is needed (at time tt) ) particularly when:particularly when:

-- RVRVtt is is ––veve, , -- RIRItt < 1< 1-- CVCVtt is is ––veve-- CICItt <1<1-- SVSVtt is is ––veve-- SISItt is < 1is < 1-- TVTVtt is is ––veve-- TITItt is < 1is < 1

Part 2Part 2

Resources Resources for for


2. Resources for Project Control2. Resources for Project Control

MoneyMoney

Machinery (Equipment)Machinery (Equipment)

Materials and SuppliesMaterials and Supplies

Manpower (Labor and Supervision)Manpower (Labor and Supervision)

Money as a PC ResourceMoney as a PC Resource

Not a direct resource Not a direct resource Rather, used to influence the amounts Rather, used to influence the amounts or quality of the other resourcesor quality of the other resources

Using Equipment for PCUsing Equipment for PC

Often used to augment labor in order to Often used to augment labor in order to speed up projectspeed up project

Can be expensiveCan be expensive

May involve renting or purchasingMay involve renting or purchasing

Materials and Supplies as a PC ResourceMaterials and Supplies as a PC Resource

Increase in quality or quantity may be Increase in quality or quantity may be necessary to enhance project controlnecessary to enhance project control

Improved inventory systems for Improved inventory systems for materialsmaterials

Manpower as a PC ResourceManpower as a PC Resource

Project problems (time delays, excess costs, Project problems (time delays, excess costs, poor performance, etc.) are partly due to the poor performance, etc.) are partly due to the human element (action or inaction)human element (action or inaction)

In using Manpower as a tool for project In using Manpower as a tool for project control, PM encounters human emotions control, PM encounters human emotions (anger, fear, frustration, etc.)(anger, fear, frustration, etc.)

Part 3Part 3

ElementsElementsof of


ProjectProject--relatedrelatedResourcesResources--relatedrelated

Elements of Project ControlElements of Project Control

3. Elements of Project Control3. Elements of Project Control

ManpowerManpower--related controlrelated control

MachineryMachinery--related controlrelated control

MoneyMoney--related controlrelated control

MaterialMaterial--related controlrelated control

3A. Resource3A. Resource--relatedrelated

ReRe--allocate resourcesallocate resources



ManpowerManpower

MachineryMachinery

MoneyMoney

MaterialsMaterials


Also referred to as ”Human Resource Control”

- Lay-off/fire any under-performing staff

- Hire staff with needed skills

- Assign staff with specific skills to specific activities

Issues:

-PM may be seen as a “stern disciplinarian”

- PM must avoid heavy handed actions,

- Fix problems without blaming people

Elements of Project ControlElements of Project Control3A. Resource3A. Resource--relatedrelated

ManpowerManpower

MachineryMachinery

MoneyMoney

MaterialsMaterials


Also referred to as ”Physical Asset Control”- Decommission any under-performing equipment- Bring in equipment with appropriate capabilities- Re-assign specific equipment to specific activities


ManpowerManpower

MachineryMachinery

MoneyMoney

MaterialsMaterials


Also referred to as ”Physical Asset Control”- Decommission any under-performing equipment- Bring in equipment with appropriate capabilities- Re-assign specific equipment to specific activities

Issues:- Equipment decisions may involve some economic

analysis- Equipment-based control easier than manpower-

based control - Some trade-off may exist between manpower and

equipment utilization.


ManpowerManpower

MachineryMachinery

MoneyMoney

MaterialsMaterials



Also referred to as ”Financial Resource Control”

- How much money should be spent?

- How should it be spent?

- PM assisted by:

- Project accountant

- Project Finance Manager


ManpowerManpower

MachineryMachinery

MoneyMoney

MaterialsMaterials


- Discontinue use of sub-standard material

- Seek new sources of superior material

Elements of Project ControlElements of Project Control3B. Project3B. Project--relatedrelated

Options:Options:

-- Reduce project size? Reduce project size?

-- Reduce project scope?Reduce project scope?

-- Terminate project?Terminate project?

Part 4Part 4

MechanismsMechanismsof of


Mechanisms of Project ControlMechanisms of Project Control

Types of Mechanisms:Types of Mechanisms:

-- CyberneticCybernetic

-- Go/NoGo/No--gogo

-- PostPost--controlcontrol

Types of Control MechanismsTypes of Control Mechanisms

CyberneticCybernetic

-- ““CyberCyber”” means means ““SteerSteer”” or helmsman or helmsman (Greek language)(Greek language)

-- May be FirstMay be First--, Second, Second--, or Third, or Third--orderorder

Cybernetic control mechanismsCybernetic control mechanisms

Process

Comparator

Standards

Effectorand Decision-maker

OutputsInputs Mechanism:

- System output monitored by sensor

- Sensor measurements transmitted to Comparator

- Measurements compared with predetermined standards

-- Deviation from standard sent to decision-maker

-If deviation from standard is too large, signal sent to Effector

Monitoring mechanism (e.g. sensor)


Process

Comparator

Standards



- System output monitored by sensor

- Sensor measurements transmitted to Comparator

- Measurements compared with predetermined standards

-- Deviation from standard sent to decision-maker

-If deviation from standard is too large, signal sent to Effector


This is a First-order cybernetic control system. (Standards are fixed)

Example: Thermostat that keeps room temperature to 70F all year round.


Process

Comparator

Standards



- Same as described for First-order Cybernetic systems, but:

- Standards are not fixed, but the manner they change is fixed.


This is a Second-order cybernetic control system (standards vary according to a fixed set of rules)

Examples: Thermostat that keeps room temperature to 70F in winter and 65F in summer,Robot installations, Automated inventory systems, Automated record keeping systems

Memory Pre-programmed Responses


Process

Comparator

Standards



- Same as described for First-order Cybernetic systems, but:

- Standards are not fixed but are variable. Also, the manner they change is variable because there is a consciousness (human element) involved.


This is a Third-order cybernetic control system (standards vary according to a variable set of rules)

Examples: Most Project management systems.

Consciousness Memory, Selection

Cybernetic control in Project ManagementCybernetic control in Project Management

1.1. PM must clearly define PM must clearly define ““outputsoutputs”” in terms of relevant in terms of relevant project characteristicsproject characteristics

2.2. PM must establish standards for each characteristicPM must establish standards for each characteristic

3.3. Monitoring mechanisms (sensors) must be established to Monitoring mechanisms (sensors) must be established to measure the characteristics at regular intervalsmeasure the characteristics at regular intervals

4.4. For each characteristic, the trigger point or maximum For each characteristic, the trigger point or maximum deviation (difference between deviation (difference between ““attained levelattained level”” and and ““standard levelstandard level””) should be established.) should be established.

5.5. If triggered, appropriate action should be taken to minimize If triggered, appropriate action should be taken to minimize the deviation between Attained Level and Standard Level the deviation between Attained Level and Standard Level of performance.of performance.

““Go/NoGo/No--gogo”” Mechanisms of Project ControlMechanisms of Project Control

Testing to see if some specific precondition has been Testing to see if some specific precondition has been achievedachieved

Yes/No (discrete)Yes/No (discrete)

Control in most PM fall into this category (Cooper, Control in most PM fall into this category (Cooper, 1994; Meredith and Mantel, 2006) 1994; Meredith and Mantel, 2006)

Example: Was Activity X completed within 6 months?Example: Was Activity X completed within 6 months?

Did Activity Y cost exceed its budget of $1.5 million?Did Activity Y cost exceed its budget of $1.5 million?

Some engineering judgment is necessary in exercising Some engineering judgment is necessary in exercising these types of controls. these types of controls.

PostPost--Control Types of Project ControlControl Types of Project Control

Also called: PostAlso called: Post--performance control, Postperformance control, Post--performance performance reviewreview

Is done after the activity or project is over Is done after the activity or project is over

Like a postLike a post--mortem or report cardmortem or report card

Is it Is it ““Locking the barn door after the horse has Locking the barn door after the horse has escapedescaped””??

Or is it Or is it ““We need to learn from the past to avoid future We need to learn from the past to avoid future mistakesmistakes””??

Generates lessons from current projects so that future Generates lessons from current projects so that future projects can be controlled better.projects can be controlled better.

Desired characteristics of a project control mechanismDesired characteristics of a project control mechanism

FlexibleFlexible –– PC should be able to react to changes in system PC should be able to react to changes in system performanceperformance

CostCost--effectiveeffective –– Value of PC should exceed cost of PCValue of PC should exceed cost of PC

Useful Useful –– Must really satisfy the needs of project, not the Must really satisfy the needs of project, not the whims of the PMwhims of the PM

TimelyTimely –– Be able to react quickly before the problem Be able to react quickly before the problem overwhelms the projectoverwhelms the project

SimpleSimple ––Easy to understand and operateEasy to understand and operate

AdjustableAdjustable –– Capable of being adjusted to reflect changing Capable of being adjusted to reflect changing prioritiespriorities

DocumentedDocumented –– so that training is possibleso that training is possible

Some Interesting Issues in Project ControlSome Interesting Issues in Project Control

FlexibilityFlexibilityTradeTrade--offsoffsSome things to watch out forSome things to watch out forImpediments to Project accelerationImpediments to Project accelerationCostCost--only and timeonly and time--only actions to control only actions to control projectsprojects

Value of Flexibility in Project PlanningValue of Flexibility in Project Planning

Flexibility is primary defense against riskFlexibility is primary defense against risk

Planning too tightly may highly complicate control Planning too tightly may highly complicate control

Flexibility in Flexibility in constructionconstruction is key during control is key during control

Want adequate float and contingency to change plans if Want adequate float and contingency to change plans if neededneededBe careful on Be careful on value engineeringvalue engineering that limits flexibility!that limits flexibility!


TradeTrade--offs between Performance Measures offs between Performance Measures during Project Controlduring Project Control

Can sometimes only correct for Can sometimes only correct for oneoneperformance measure at a time performance measure at a time –– TimeTime–– CostCost–– QualityQuality

Need to understand Need to understand tradeoffstradeoffs and and triagetriage–– Pick where to make tradeoffs (e.g. nonPick where to make tradeoffs (e.g. non--critical critical

activities)activities)


TradeoffsTradeoffs

Time Quality

$Acceleration ⇒ $

(Overtime, shift work,Rework, higher-end equipment, better crews etc.)

Less $ ⇒ Low progressResource reductionSelection of poor quality workersDefault of contractor/subs

Quality problems result from overtime, shift work, new hires

Quality level impacts speed of work,Level of rework

Need for rework imposes high expenses

High quality needs can leadto costly miscalculationson labor time

Trying to save $Can lead to substitution,

lower qualityworkmanship

Slow progress ⇒ $Delayed occupation,Higher interest on

const. loanLoss of tenantsOpportunity cost


TradeTrade--offs: The Timeoffs: The Time--QualityQuality--Money Triage Money Triage

In many cases, the best we can do is to pick In many cases, the best we can do is to pick the areas where tradeoffs do the least harm the areas where tradeoffs do the least harm e.g.e.g.–– Move resources from nonMove resources from non--critical activitiescritical activities–– Accelerate only critical activitiesAccelerate only critical activities–– Sacrifice quality on nonSacrifice quality on non--critical items that can critical items that can

be remedied after substantial completionbe remedied after substantial completion


Some things to watch out for: Some things to watch out for: Overreacting/Improvisation, etc.)Overreacting/Improvisation, etc.)

When trying to correct, often bump up against other limiting When trying to correct, often bump up against other limiting factorsfactors–– Space constraints/Hiring time/Morale/Coordination Space constraints/Hiring time/Morale/Coordination

difficultiesdifficultiesImprovisation dangerous (working w/o planning)Improvisation dangerous (working w/o planning)–– Often can lead to Often can lead to ““SnowballingSnowballing”” ((increasedincreased problems at a problems at a

rapidly accelerating rapidly accelerating rate)rate)–– Confusion, discoordination, cascading unanticipated Confusion, discoordination, cascading unanticipated

effects, suboptimal work efficiency, lack of moraleeffects, suboptimal work efficiency, lack of morale–– Breaking Breaking ““Job rhythmJob rhythm”” and learning curves can really and learning curves can really

inhibit productivity!inhibit productivity!


Controlling the Time Schedule Controlling the Time Schedule –– Project CrashingProject Crashing

–– Adding new project resourcesAdding new project resources–– Changing the Changing the ““production functionproduction function”” (Change the (Change the

technology)technology)–– Change operation conditions by altering the Change operation conditions by altering the

precedence, sequence, or timing of workprecedence, sequence, or timing of workFastFast--track, activity overlappingtrack, activity overlappingOvertimeOvertimeShift workShift work

–– Changes in the tools, methods, operating conditionsChanges in the tools, methods, operating conditions–– Work in more sheltered locationWork in more sheltered location


Impediments to Project AccelerationImpediments to Project AccelerationHuman resourcesHuman resources–– MultipleMultiple--shift workshift work

Environmental/safety issues, High cost, Neighborhood objectionsEnvironmental/safety issues, High cost, Neighborhood objections–– Overtime/extended workdaysOvertime/extended workdays

Fatigue, Lower morale, ReworkFatigue, Lower morale, Rework–– Increasing # of workersIncreasing # of workers

Training (takes time of most experienced!), Space constraints, HTraining (takes time of most experienced!), Space constraints, Hiring timeiring timeTechnologyTechnology–– Using more, larger or more efficient equipmentUsing more, larger or more efficient equipment

Training/learning curve, Procurement time, Space constraintsTraining/learning curve, Procurement time, Space constraints–– Using fasterUsing faster--installing materialsinstalling materials

Procurement, Submittals for owner approvalProcurement, Submittals for owner approval–– Alternate construction methodsAlternate construction methods

Skill set, Learning curve, Unknown sideSkill set, Learning curve, Unknown side--effectseffects


TimeTime--only or Costonly or Cost--Only Control ActionsOnly Control Actions

Sometimes, reduce time without increasing costSometimes, reduce time without increasing cost–– Change operating methods and process to increase Change operating methods and process to increase

work efficiency and product qualitywork efficiency and product quality–– OutsourcingOutsourcing

Sometimes, reduce cost without increasing timeSometimes, reduce cost without increasing time–– OutsourcingOutsourcing–– Substitute with less expensive but acceptable Substitute with less expensive but acceptable

materials or equipmentmaterials or equipment


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