1.040/1.401/ESD.

018 Project Management, Spring 2007

Lecture 15

Project Control
Samuel Labi and Fred Moavenzadeh Department of Civil and Environmental Engineering Massachusetts Institute of Technology

Project Control

Recall: The 5 Phases of Project Management

FEASIBILITY

DESIGN, PLANNING

CLOSEOUT DEVELOPMENT CLOSEOUT

OPERATIONS

Finance Evaluation

Organization Estimation Planning

Monitoring & Control Changes & Claims Quality & Reviews

Actual Start of Project

Project Control

Monitoring & Control: A Feedback Process

Detect deviations

Monitoring
1. Measurement 2. Performance Analysis)

Control
1. Actions 2. Revised Plans, Cash Flows, Schedules, etc.

Correct Deviations

Project Control

Project Control: The Big Picture

Given Project is Off-track

Project Control

Project Control: The Big Picture

Given Project is Off-track

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

Project Control: The Big Picture

Given Project is Off-track

Resources for PC (the 4-Ms)

Project Control

Project Control: The Big Picture

Given Project is Off-track

Resources for PC (the 4-Ms)

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

Project Control

Project Control: The Big Picture

Given Project is Off-track

Resources for PC (the 4-Ms)

Mechanism and Elements of PC

Adjust the resources Adjust the project characteristics: size, scope, etc

Project Control

Project Control: The Big Picture

Given Project is Off-track

Resources for PC (the 4-Ms)

Mechanism and Elements of PC

Adjust the resources Adjust the project characteristics: size, scope, etc

resource s

More labor? Better labor? Better supervision? More materials? Better materials? More equipment? Better equipment? More money? Reduce project size? Reduce project scope? Terminate project?

project

Project Control

Project Control: The Big Picture

Given Project is Off-track

Resources for PC (the 4-Ms)

Mechanism and Elements of PC

Adjust the resources Adjust the project characteristics: size, scope, etc

output

Was the Project Control successful? How can we tell?

Project brought back ontrack

Project Control

Project Control: The Big Picture

Given Project is Off-track

Resources for PC (the 4-Ms)

Elements and Mechanism of PC

Adjust the resources Adjust the project characteristics: size, scope, etc

output

Project brought back ontrack

Project Control

Outline of this Lecture:

1.
2.

How can we tell when PC is needed?

What resources are available for PC?

3.
4. 5.

What are the elements of PC?

What is the mechanism of PC? Some important issues in Project Control

Part 1

How can we tell when Project Control is needed?

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

General Clues

Specific Clues

Performance and Quality

Cost

Time

Primitive Indicators

Other Indicators

How can we tell when Project Control is needed?

GENERAL CLUES (Meredith and Mantel, 2006)

Performance
- Unexpected technical problems arise - Insufficient resources are unavailable when needed - Quality or reliability problems occur - Owner/Client requires changes in technical specifications - Inter-functional complications and conflicts arise - Market changes that increase/decrease the projects value

How can we tell when Project Control is needed?

GENERAL CLUES (Meredith and Mantel, 2006)

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

How can we tell when Project Control is needed?

GENERAL CLUES (Meredith and Mantel, 2006)

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

1. How can we tell when PC is needed?

SPECIFIC CLUES

Primitive indicators:
More resources or less resources haven been used than planned Activities are taking long than planned Cost of activity (or of project to date) is higher than expected

Equipment-hours

planned actual planned

Total Man-hours

actual

Amt of concrete used (tons) 0 500

planned actual 1000 1500 2000

Amount input to date

1. How can we tell when PC is needed?

SPECIFIC CLUES

Primitive indicators:
More resources or less resources haven been used than planned

Activities are taking long than planned

Cost of activity (or of project to date) is higher than expected
Equipment-hours planned actual planned actual planned actual 0 500 1000 1500 2000

Total Man-hours

Amt of concrete used (tons)

Amount input to date

1. How can we tell when PC is needed?

SPECIFIC CLUES

Primitive indicators:
More resources or less resources haven been used than planned
Activity 1 Activity 2

JAN

FEB

MAR

APR

MAY

JUN

planned

actual

Activities are taking long than planned

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

Activity 3

NOW

Legend

planned actual

1. How can we tell when PC is needed?

SPECIFIC CLUES

Primitive indicators:
More resources or less resources haven been used than planned
Program (schedule) Progress (actual)

Activities are taking long than planned

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

$
70%

Program (schedule) Progress (actual)

50%

now

time

1. How can we tell when PC is needed?

SPECIFIC CLUES

Why are they primitive? - May be biased. - Do not consider that progress may be overestimated or underestimated due to:
-

execution of unscheduled work done, or execution of more work of low value and less work of high value

1. How can we tell when PC is needed?

SPECIFIC CLUES

Used for plotting the Program S-curve

Work Schedule (WS) BCWS ACWS

Work Performed (WP) BCWP ACWP

Used for plotting the EVA S-curve

Budgeted Cost (BC) Actual Cost (AC)

Used for plotting the Progress S-curve

1. How can we tell when PC is needed?

SPECIFIC CLUES
$max

TIME VARIANCE

BCWS

ACWPt BCWSt BCWPt

RESOURCE FLOW VARIANCE SCHEDULE VARIANCE ACWP BCWP COST VARIANCE

t-p

tmax

Time

now

1. How can we tell when PC is needed?

So we know Project Control is needed (at time t) particularly when: - RVt is ve, - RIt < 1 - CVt is ve
- CIt <1 - SVt is ve - SIt is < 1 - TVt is ve - TIt is < 1

Part 2
Resources for Project Control

2. Resources for Project Control

Money Machinery (Equipment)

Materials and Supplies

Manpower (Labor and Supervision)

Money as a PC Resource

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

Using Equipment for PC

Often used to augment labor in order to speed up project

Can be expensive

May involve renting or purchasing

Materials and Supplies as a PC Resource

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

Improved inventory systems for materials

Manpower as a PC Resource

Project problems (time delays, excess costs, poor performance, etc.) are partly due to the human element (action or inaction) In using Manpower as a tool for project control, PM encounters human emotions (anger, fear, frustration, etc.)

Part 3

Elements of Project Control

Elements of Project Control

Resources-related

Project-related

3. Elements of Project Control

3A. Resource-related

Re-allocate resources

Manpower-related control Machinery-related control Money-related control

Material-related control

Elements of Project Control

3A. Resource-related

Re-allocate resources

Manpower Machinery Money

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:

Materials

-PM may be seen as a stern disciplinarian - PM must avoid heavy handed actions, - Fix problems without blaming people

Elements of Project Control

3A. Resource-related

Re-allocate resources

Manpower

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

Machinery Money

Materials

Elements of Project Control

3A. Resource-related

Re-allocate resources

Manpower

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 manpowerbased control - Some trade-off may exist between manpower and equipment utilization.

Machinery Money

Materials

Elements of Project Control

3A. Resource-related

Re-allocate resources

Manpower Machinery

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

Money

Materials

Elements of Project Control

3A. Resource-related

Re-allocate resources

Manpower Machinery Money

Materials

- Discontinue use of sub-standard material - Seek new sources of superior material

Elements of Project Control

3B. Project-related

Options: - Reduce project size? - Reduce project scope?

- Terminate project?

Part 4

Mechanisms of Project Control

Mechanisms of Project Control

Types of Mechanisms:
- Cybernetic

- Go/No-go
- Post-control

Types of Control Mechanisms

Cybernetic
- Cyber means Steer or helmsman (Greek language) - May be First-, Second-, or Third-order

Cybernetic control mechanisms

Monitoring mechanism (e.g. sensor) Mechanism: Process Outputs - System output monitored by sensor Effector and Decisionmaker Comparator - 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

Inputs

Standards

Cybernetic control mechanisms

Monitoring mechanism (e.g. sensor) Mechanism: Process Outputs - System output monitored by sensor Effector and Decisionmaker Comparator - 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

Inputs

Standards

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

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

Cybernetic control mechanisms

Monitoring mechanism (e.g. sensor) Mechanism: Process Outputs - Same as described for Firstorder Cybernetic systems, but:

Inputs

Effector and Decisionmaker

Comparator
Standards
Memory Pre-programmed Responses

- 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

Cybernetic control mechanisms

Monitoring mechanism (e.g. sensor) Mechanism: Process Outputs - Same as described for Firstorder Cybernetic systems, but:

Inputs

Effector and Decisionmaker

Comparator
Standards
Consciousness Memory, Selection

- 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.

Cybernetic control in Project Management

1.

PM must clearly define outputs in terms of relevant project characteristics

PM must establish standards for each characteristic Monitoring mechanisms (sensors) must be established to measure the characteristics at regular intervals For each characteristic, the trigger point or maximum deviation (difference between attained level and standard level) should be established. If triggered, appropriate action should be taken to minimize the deviation between Attained Level and Standard Level of performance.

2. 3.

4.

5.

Go/No-go Mechanisms of Project Control

Testing to see if some specific precondition has been achieved

Yes/No (discrete)

Control in most PM fall into this category (Cooper, 1994; Meredith and Mantel, 2006)
Example: Was Activity X completed within 6 months?

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

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

Post-Control Types of Project Control

Also called: Post-performance control, Post-performance review

Is done after the activity or project is over Like a post-mortem or report card Is it Locking the barn door after the horse has escaped? Or is it We need to learn from the past to avoid future mistakes? Generates lessons from current projects so that future projects can be controlled better.

Desired characteristics of a project control mechanism

Flexible PC should be able to react to changes in system performance

Cost-effective Value of PC should exceed cost of PC Useful Must really satisfy the needs of project, not the whims of the PM Timely Be able to react quickly before the problem overwhelms the project

Simple Easy to understand and operate

Adjustable Capable of being adjusted to reflect changing priorities Documented so that training is possible

Some Interesting Issues in Project Control

Flexibility Trade-offs Some things to watch out for Impediments to Project acceleration Cost-only and time-only actions to control projects

Some Interesting Issues in Project Control

Value of Flexibility in Project Planning

Flexibility is primary defense against risk Planning too tightly may highly complicate control

Flexibility in construction is key during control

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

Some Interesting Issues in Project Control

Trade-offs between Performance Measures during Project Control

Can sometimes only correct for one performance measure at a time

Time Cost Quality

Need to understand tradeoffs and triage

Pick where to make tradeoffs (e.g. non-critical activities)

Some Interesting Issues in Project Control

Tradeoffs
Acceleration $ Need for rework imposes (Overtime, shift work, high expenses Rework, higher-end High quality needs can lead equipment, better crews etc.) to costly miscalculations Slow progress $ on labor time Delayed occupation, Higher interest on Less $ Low progress Trying to save $ const. loan Resource reduction Can lead to substitution, Loss of tenants Selection of poor quality workers lower quality Opportunity cost Default of contractor/subs workmanship

Time

Quality level impacts speed of work, Level of rework Quality problems result from overtime, shift work, new hires

Quality

Some Interesting Issues in Project Control

Trade-offs: The Time-Quality-Money Triage

In many cases, the best we can do is to pick the areas where tradeoffs do the least harm e.g.
Move resources from non-critical activities Accelerate only critical activities Sacrifice quality on non-critical items that can be remedied after substantial completion

Some Interesting Issues in Project Control

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

When trying to correct, often bump up against other limiting factors Space constraints/Hiring time/Morale/Coordination difficulties Improvisation dangerous (working w/o planning) Often can lead to Snowballing (increased problems at a

rapidly accelerating rate)

Confusion, discoordination, cascading unanticipated effects, suboptimal work efficiency, lack of morale Breaking Job rhythm and learning curves can really inhibit productivity!

Some Interesting Issues in Project Control

Controlling the Time Schedule Project Crashing

Adding new project resources Changing the production function (Change the technology) Change operation conditions by altering the precedence, sequence, or timing of work

Fast-track, activity overlapping Overtime Shift work

Work in more sheltered location

Changes in the tools, methods, operating conditions

Some Interesting Issues in Project Control

Impediments to Project Acceleration

Human resources Multiple-shift work

Environmental/safety issues, High cost, Neighborhood objections

Overtime/extended workdays
Fatigue, Lower morale, Rework

Increasing # of workers
Training (takes time of most experienced!), Space constraints, Hiring time

Technology Using more, larger or more efficient equipment

Training/learning curve, Procurement time, Space constraints

Using faster-installing materials

Procurement, Submittals for owner approval

Alternate construction methods

Skill set, Learning curve, Unknown side-effects

Some Interesting Issues in Project Control

Impediments to Project Acceleration

Human resources Multiple-shift work

Environmental/safety issues, High cost, Neighborhood objections

Overtime/extended workdays
Fatigue, Lower morale, Rework

Increasing # of workers
Training (takes time of most experienced!), Space constraints, Hiring time

Technology Using more, larger or more efficient equipment

Training/learning curve, Procurement time, Space constraints

Using faster-installing materials

Procurement, Submittals for owner approval

Alternate construction methods

Skill set, Learning curve, Unknown side-effects