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Chapter 7
Project execution, monitoring and control: Understanding earned value management

Learning outcomes
At the end of this session, you should be able to:

Reflect on the importance of project performance management, control and monitoring. Understand the basics of project costing. Define earned value management as a method to measure project progress. Describe the various terms used in earned value management. Illustrate how earned value management works. Describe how to monitor time performance. Describe the relationship between monitoring and controlling project performance and project risk. Describe configuration management and change control. Explain ethical considerations in project monitoring, control and evaluation.

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Project execution

The project execution phase follows the planning phase in the project management life cycle. It is the longest, most resource intensive phase of the project. It is during this phase that the work that has been planned is actually carried out. Here the project manager is responsible for initiating, managing and controlling all tasks, and directing the efforts of the project team. Includes stakeholder management, risk management as well as configuration management and change control.

Project monitoring and control

Most important part of project execution. Involves measurement of project

progress and any deviations from planned progress in particular.

Earned value management is one of the

more useful tools to monitor progress.

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Cost estimation

Critical part of measurement of

progress.

Begins at proposal stage where a sense

of the total project cost is provided.

Top down approach involves providing

a rough estimate:

Cost/square metre Apportionment method.

Cost estimation

Bottom up approach involves more accurate estimates

Roll up technique.
Iterative approach involves using the top down approach to derive a rough estimate and the bottom up approach to refine the estimate. Bottom up and top down estimates form budgets. Important to include contingencies in budgets.

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The roll-up technique

Cost estimation

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EVM

First implemented by the USA Department of Defence in the 1960s as part of its cost/schedule control systems criteria (C/SCSC). Introduced into industry in 1990s. EVM is a technique used to compare actual costs with planned costs as well as cost of work performed to date with planned costs. Generally suited to larger projects.

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Earned value management (EVM) graphically

How EVM works

Step 1: Define the project scope. Step 2: Complete the work breakdown structure and establish the budgets for your work packages and cost accounts. Step 3: Complete the organisational breakdown structure (OBS) and allocate organisational responsibility accordingly. Step 4: Develop the network diagram by time-phasing the work packages. Step 5: Develop the baseline budget by time-phasing the rand value of your workpackages. This baseline will constitute the Planned Values. Step 6: Capture actual costs for work completed (AC). Step 7: Compute the EVs by determining percentage of work completed to date and multiplying this with total value of work planned for each activity. Step 8: Generate the final report in which you reflect:

Variances in cost and schedule performance Cost and scheduling performance indices to determine cost and scheduling efficiency Forecasted final cost at completion Future time performance.

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EVM Step 1

Project Objective: To develop a low cost surveillance drone within 9 weeks at a cost not exceeding R750 000. Milestones. Technical Requirements.

Limits and exclusions. Review. See Table 7.2

EVM Steps 2 and 3

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EVM Step 4

EVM Step 5

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EVM Step 6

EVM Step 7

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EVM Step 7

EVM Step 8

Developing the status report, Milestone report, and Issue report.

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EVM Step 8

EVM Step 8

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EVM Step 8

Extending EVM: the notion of earned schedule

ES uses EVM data to determine

schedule performance, and, as such, provides a more reliable source of schedule predictors for projects that finish late or early.

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Earned schedule

Earned schedule

SVt = ES-AT = 2 4 = -2 (2 weeks behind schedule). SPIt= ES/AT = 2/4 = 0.5 (< 1 therefore behind schedule). ETCt= (PD-ES)/SPIt= (9-2)/0.5 = 14 weeks to completion at this point. EACt = AT + ETCt= 4 + 14 = 18 weeks . TSPI = (PD ES)/(PD AT) = (9 2)/(9 4) = 1.4 is indicative of the fact that the current schedule isnt feasible. The work rate has to be higher than it currently is.

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EVM and risk

During the execution phase, potential sources of risk in South Africa might include:

Economic issues Labour unrest Technological failure Conflict, infighting and politicking Perceptions of political uncertainty by the international community Infrastructural issues.

EVM and risk

Ways to deal with risk:

Transfer Avoid Share Contingency plans.

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Configuration management and change control

Baseline central to configuration management (CM):

Functional Baseline: all initial information Allocated Baseline: performance specifications Product Baseline: relates to actual deliverable

CM consists of 4 stages: Configuration identification: risk identification, degree of interrelatedness etc Change control: project specific documentation of project changes to the baseline Status accounting: updating of change requests etc Verification: assurances that processes have been undertaken

The ethics of execution, monitoring and control

Ethical issues might include: Altering of status reports Compromising quality Exploitative labour practises Many organisations provide ethical codes
and professional project managers would subscribe to PMIs ethical code too.

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Activity (30 mins)

To be handed out in class

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