Chapter 11

Project Control

ANDRADE | DE LEON | DE VERA | MARASIGAN | MEJIA | VILLAMAR

PROJECT CONTROL
Control is the last element in the
implementation cycle of planning-
monitoring-controlling
Control is focused on three elements of a
project
Performance
Cost
Time
CONTROLLING
PERFORMANCE
There are several things that can cayse a project's
performance to require control:
Unexpected technical problems arise
Insufficient resources are available when
needed
Insurmountable technuval difficulties are
present
Quality or realibility problems occur
Client requires changes in specifications
Interfunctional complications arise
Technological breakthroughs affect the project
CONTROLLING COST
There are several things that can cause a
project's cost to require control:
Technical difficulties require more
resources
The scope of the work increase
Initial bids were too low
Reporting was poor or untimely
Budgeting was inadequate
Corrective control was not exercised in
time
Input price changes occurred
 CONTROLLING TIME
There are several things that can cause a project's
schedule to require control:
Technical difficulties took longer than planned
to resolve
Initial time estimates were optimistic
Task sequencing was incorrect
Required inputs of material, personnel, or
equipment were unavailable when needed
Necessary preceding tasks were incomplete
Customer generated change orders required
rework
Governmental regulations were altered
PURPOSES OF CONTROL
There are two fundamental objectives of control:
1. The regulation of results through the
alteration of activities
2. The stewardship of organizational assets

The project manager needs to be equally

attentive to both regulation and conservation
The project manager must guard the physical
assets of the organization, its human
resources, and its financial resources

HUMAN RESOURCE
CONTROL
Stewardship of human resources requires
controlling and maintaining the growth and
development of people
Projects provide fertile ground for cultivating people
Because projects are unique, it is possible for
people working on projects to gain a wide range of
experience in a reasonably short period of time
FINANCIAL RESOURCE
CONTROL
The techniques of financial control, both
conservation and regulation, are well known:
Current asset controls
Project budgets
Capital investment control
FINANCIAL RESOURCE
CONTROL
Representation of the accounting/controlling
function on the project team is mandatory
The parent organization is responsible for the
conservation and proper use of resources owned by
the client or charged to the client
Due diligence requires that the organization
proposing a project conduct a reasonable
investigation, verification, and disclosure of all
material facts relevant to the firm’s ability to
conduct the project
THREE TYPES OF CONTROL
PROCESSES
Decisions must be made concerning:
oAt what points in the project will control be
exerted
What is to be controlled
How it will be measured
How much deviation will be tolerated
How to spot and correct potential deviations
before they occur
THREE TYPES OF CONTROL
PROCESSES
No matter what the purpose in controlling a project
there are two basic types of control mechanisms that
can be used:
Go/no-go control
Post control

Cybernetic control is a third, but less common control

mechanism that is rarely directly applicable to
projects
GO/NO-GO CONTROLS
Take the form of testing to see if some
specific precondition has been met.
Most of the control in project management
falls into this category.
This type of control can be used on almost
every aspect of a project.
Must exercise judgment in the use of go/no-
go controls.
Go/no-go controls operate only when and if
the controller uses them
INFORMATION
REQUIREMENTS FOR
GO/NO-GO CONTROLS
The project proposal, plans specifications,
schedules and budgets contain all the information
needed to apply go/no-go controls to the project.
Milestones are the key events that serve as a focus
for ongoing control activity.
These milestones are the project’s deliverables in
the form of in-process output or final output
POSTCONTROL
Postcontrols are applied after the fact
Directed toward improving the chances for
future projects to meet their goals
It is applied through a relatively formal
document that contains four distinct sections:
1. The project objectives
2. Milestones, checkpoints, and budgets
3. The final report on project
4. Recommendations for performance and
process improvement
CHARACTERISTICS OF A
CONTROL SYSTEM
Should be flexible
Should be cost effective
Must be truly useful
Must satisfy the real needs of the project
Must operate in a timely manner
Sensors and monitors should be sufficiently
accurate and precise to control the project within
the limits that are functional for the client and
parent organization
CHARACTERISTICS OF A
CONTROL SYSTEM
Should be as simple as possible
Should be easy to maintain
Should be capable of being extended or
otherwise altered
Should be fully documented when installed
the documentation should include a
complete training program in system
operation
CONTROL SYSTEMS
All control systems use feedback as a control process
The control of performance, cost, and time usually
require different input data:
Performance - engineering change notices, test
results, quality checks, rework tickets, scrap rates
Cost - budgets to actual cash flows, purchase
orders, absenteeism, income reports, labor hour
charges, accounting variance reports
Schedule - benchmark reports, status reports,
PERT/CPM networks, earned value graphs, Gantt
charts, WBS, and action plans
CONTROL TOOLS
Some of the most important tools available
for the project manager to use in controlling
the project are variance analysis and trend
projection
A budget plan or expected growth curve of
time or cost for a certain task is plotted
Actual values are plotted as a dashed line as
the work is actually finished
At each point in time a new projection from
the actual data is used to forecast what will
occur in the future
Trend Projection
WHAT IS A CRITICAL RATIO?

The critical ratio is a good measure of the

general health of the project.
Indicates whether the project performance is
stable or not over the project duration.
Ratios less than 1.0 are behind, ratios greater
than 1.0 are ahead and a ratio of 1.0 is on
schedule.
CRITICAL RATIO CONTROL
CHARTS
Critical ratio is made up of two major parts:
1. The ratio of actual progress to scheduled
progress also known as the SCHEDULE
PERFORMANCE INDEX (SPI).
2. The ratio of budgeted cost to actual cost also
known as the COST PERFORMANCE INDEX (CPI).
By combining two ratios it weighs them
equally allowing “bad ratio” to be offset by a
“good ratio”.
Critical Ratio
Critical Ratio Control
Chart
FORMULA:
CPI = Budgeted Cost (BC)/ Actual Cost
(AC)
SPI = Actual Progress (AP)/ Scheduled
Progress (SP)
CR = CPI x SPI
Cost Performance Index Schedule Performance Critical Ratio
Index
If its < 1.0 the actual If its < 1.0 the If its < 1.0 its either
cost is higher than project is behind behind schedule,
the budgeted cost schedule over budget or both
If its = 1.0 the project If its = 1.0 the If its = 1.0 it meets
is on budget project is on the scheduling and
If its > 1.0 the project schedule budget
is under budget If its > 1.0 the If its > 1.0 its either
project is ahead of under budget, ahead
schedule of schedule or both
IMPORTANCE OF CRITICAL
RATIO
Help managers what would be the next
step if there’s a problem within the
process.
Oversee what is the overall
performance
 BENCHMARKING

Benchmarking makes comparisons “best in

class” practices across the organizations
Process of measuring key business metrics and
practices and comparing them within business
areas, competitors or other companies
 BEST PRACTICES AND KEYS
TO SUCCESS
There are four major areas found to help projects in
functional management:
1. Promoting the benefits of project management
2. Personnel pay for project management skills and
high-risk projects through bonuses, stock, options,
and other incentives
3. Methodology
4. Results of project management
CONTROL AS A FUNCTION
OF MANAGEMENT
Helps to check errors in order to take corrective
actions
Includes setting standards, measuring actual
performances and decision making
The job of project managers is to set controls that
will encourage those behaviors that are deemed
desirable and discourage that are not
CYBERNETIC CONTROLS
Human response to steering controls tends to be
positive
Steering controls are usually viewed as helpful
rather than a source of unwelcome pressure
Response to steering controls also depends on the
acceptance that the goals of the control system
are appropriate
GO / NO-GO CONTROLS
Response to go/no-go controls tends to be
neutral or negative
“Barely good enough” results are just as
acceptable as “perfect” results
The fact that this kind of control emphasizes
“good enough” performance is no excuse for the
nonchalant application of careless standards
POSTCONTROLS
They may serve as the basis for reward or
punishment, but they are received too late to
change current performance
May be applied to such areas as: communication,
cooperation, quality of project management, and
the nature of interaction with the client
BALANCE IN A CONTROL
SYSTEM
Though precise definition is impossible, we can
describe some general features of a balanced control
system, and also indicate some of the things a
controller can do to achieve a good balance in a
system.
a. Built with cognizance of the fact that investment
in control is subject to sharply diminishing returns
b. Recognizes that as control increases past some
point, innovative activity is more and more
damped, and then finally shut off completely
BALANCE IN A CONTROL
SYSTEM
c. Directed toward the correction of error rather than
toward punishment
d. Exerts control only to the degree required to
achieve its objectives
e. Utilizes the lowest degree of hassle consistent
with accomplishing its goals
CONTROL OF CREATIVE
ACTIVITIES
The more creativity involved, the greater the
degree of uncertainty surrounding outcomes
Too much control tends to inhibit creativity
There are three general approaches to control
creative projects:
Progress review
Personnel reassignment
Control of input resources
PROGRESS REVIEW
The progress review focuses on the process of
reaching outcomes rather than on the outcomes
per se
The process is controllable even if the precise
results are not
Control should be instituted at each project
milestone
The object of control is to ensure that the research
design is sound and is being carried out as
planned or amended
PERSONNEL
REASSIGNMENT
This type of control is straightforward
Individuals who are productive are kept
Non-productive are moved to other jobs or to
other organizations usually
Quite hard to make clear distinctions between the
people in the middle quartiles
CONTROL OF INPUT
RESOURCES
The focus is on efficiency
The ability to manipulate input resources carries
with it considerable control over output
The milestones for application of resource control
must be chosen with great care
CONTROL OF CHANGE AND
SCOPE CREEP
Coping with changes and changing priorities is
perceived
Most common changes are due to the natural
tendency of the client and project team members
Continuing accumulation of little changes can have
a major negative impact on the project’s schedule
and cost
CONTROL OF CHANGE AND
SCOPE CREEP
The project manager’s best hope is to control the process by
which change is introduced and accomplished
This can be done with a formal change control system that is
able to

1. Review all requested changes 3. Evaluate the benefits and costs of the
and identify all task impacts requested changes
2. Translate those impacts into 4. Accept or reject the changes and
project performance, cost, communicate to all concerned parties
and schedule 5. Ensure that changes are implemented
properly
EFFECTIVE CHANGE CONTROL PROCEDURE
The guidelines, applied with reasonable rigor, can be used to effectively control
changes:

1. All project contracts or agreements must include a description of how requests

for a change in the project’s plan, budget, schedule, and/or deliverables, will be
introduced and processed
2. Any change in a project will be in the form of a change order that will include a
description of the agreed-upon change together with any changes inthe plan,
budget, schedule, and/or deliverables that result from the change
EFFECTIVE CHANGE CONTROL PROCEDURE
3. Changes must be approved, in writing, by the client’s agent as well as by an
appropriate representative of senior management of the firm responsible for
carrying out the project

4. The project manager must be consulted on all desired changes prior to the
preparation and approval of the change order. The project manager’s
approval, however, is not required

5. Once the change order has been completed and approved, the project
master plan should be amended to reflect the change, and the change order
becomes part of the master plan
 END OF
PRESENTATION
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