[MUSIC] This is a module on monitoring and control. The project and progress should be monitored at pre-specified intervals to find out if the progress is according to plan or not. A summary of the monitoring and control process is given in the diagram. As we have seen earlier, the planning process gives the scope of the project, the deliverables, the activities and their estimated durations, and resources required, schedule for the task and resources, time phased budget, project completion time, etc. The initial estimates and the plan, including the schedule, are referred to as baseline estimates. At review time, necessary data is collected, and the status of the project is analyzed with reference of the earlier plan. A progress report is then prepared, and if the project is behind schedule and are over the budget, appropriate, corrective action needs to be identified and implemented. The initial plan may then be revised, and the revised plan would form the basis for the next review. At review time, the data to be collected would include the status of the project, the potential problems to be addressed, identification of activities that may require intervention etc. The data collected is then analyzed for identifying the cost of variances. Notion for activities in progress estimates must be made for additional cost of the remaining work and the required duration to complete the remaining work. For activities yet to be started, revise estimate of course on time should be made because as the project progressesm some of the uncertainties would have been resolved and better estimates maybe possible. From the revised estimates and proposed corrective actions if any to be taken, we arrived at a revised plan which forms the basis for subsequent review. In the analysis of the current status of the project, two methods are used. One is the use of tracking Gantt chart for estimating the revised completion date for the project. Another is the earned value analysis, which is used for estimating the total cost of completing the project if no changes are made in the current plan at review time. We'll start to use hypothesis method using the same simple software but at example that we have been considering throughout this course. As shown in the table, the project has eight activities. The president's relationships, the duration of activities and the resource requirements are also shown in the same table. Recall that it' is only one senior software engineer available, applying the minimum slack rule, the start and finish time of each activity was calculated, and the project completion time was 14 weeks. Now, for this schedule, we need to find a time phased budget, which is the period by period, or week by week, in this example, budget. Using the total direct cost for the normal duration for an activity and the period by period break up of the same total direct cost, the time phase budget is arrived at. In this example, the real cost of an activity is assumed to be the same for each week of the duration of the activity as given in the table. But it may not always be the case. The calculated time phase budget is given in the next table. Note that the period, K, is from K minus one to K, and the total direct cost of this project is $4.70. The total budget for each activity is called the planned value, referred to as PV. In the past, the same value was referred to as budgeted cost of the work schedule and the abbreviated BCWS. Supposed if you have a project design that taken at the end of period and the status of the project is as given in the table. At the end of week ten status of the project is as follows, activity is started at the beginning of week one and finish at the end of week two. So it is 100% complete. The actual cost incurred as given by the accounting department is 80. Similarly, Activity B started at the beginning of week three and ended at the end of week five. In other words, Activity B took only three weeks to complete as compared to the inital estimate of four weeks. So activity B is also a 100% complete. The cost incurred for activity b is 100 as given by the accounting department. Activity c started at the beginning of week six and was completed at the end of week nine. The actual cost for activity c is 80 as shown in the table. At the end of week ten, activities D and E are in progress. It is estimated that 30% of activity D has been completed while the estimate for activity E is 40% complete. The actual cost incurred so far for activities D and E, are 20 and 30 respectively. Activities F, G, and H have not started as yet. In addition, suppose that activity D is expected to take an additional two weeks to complete, while the total direct cost for activity D remains the same as estimated earlier. Activity E is expected to take an additional two weeks to complete, while the total direct cost for activity E remains the same 60 as before. The revised times and costs for activities F, G, and H are the same as estimated earlier. We are now in a position to draw the Tracking Gantt Chart that gives the status of the project at the end of week ten. Note the devised system at a project completion time is 15. That is, the project is expected to be delayed by one week if no corrective action is taken. We will next look at the earned value analysis in some detail and do the calculations for the example above. For each activity at review time, earned value is defined as the amount of the current budget that has been earned by the work completed on that activity till the review time. The abbreviation EV for earned value is now invoked but the abbreviation in the past for the same concept was BCWP, for budgeted cost of the work performed. At review time, each of the activities is in one of three mutually exclusive plausible states. The activity may have been completed sometime on or before the review time or the activity is in progress and not yet completed, or the activity has not yet started. For activities that have been completed, the earned value equals the planned value. For activities not yet started, the earned value is zero. For activities that are in progress, we need to calculate the earned value. A popular approach is to estimate the percentage completion of the activity, and multiply that by the total plan value for that activity to arrived at its earned value. This rule is referred to as the Percent Complete Rule. A variant of the Percent Complete Rule for long duration activities is to first break up the activity duration into two or more phases, and the percent complete depends upon the status of activity in terms of which phase it is in and the percent complete within that phase. For instance, suppose an activity duration is divided into three phases. With the end of Phase one representing 30% complete of activity while the end of Phase two represent 70% complete of the activity, and the end of Phase three represents 100% complete of the activity. Suppose the status on the activity is that it is in Phase two and is in progress, and 20% of Phase two has been completed. Then the percent complete for that activity equals 30 plus 0.2 into 70- 30, and this is equal to 38%. There are other possible ad-hoc rules that may be used for calculating the earned value for an activity and progress attribute time. The 0/100 rule is that earned value is 0 until the activity is completed at which time the earned value is 100% of the budget for that activity. The 50/50 rule states that the earned value for an activity in progress is 50% of the budget until it is completed at which point the earned value is 100% of the budget for that activity. These Ad-Hoc rules may be reasonable for activities of short duration. The only real advantage of this Ad-Hoc rules is we need not the percent complete of an activity at review time. Often, the percent completion of an activity simply estimated by someone who's familiar with such activities. It should be more in mind that as in the case of estimation of activity durations, more elaborate procedures for estimating the percent complete of an activity may not be worth the additional time, effort, and cost in allowing it more accurate estimates. Before we can calculate the different variances, we need one other data for each activity that has been completed or in progress of your time. This is the actual cost incurred for activities completed and the actual cost incurred so far for activities in progress. This data is to be obtained from the accounting department. This implies that the accounts, at least in terms of costing card, are up to date. The actual cost is abbreviated as AC value in the past. This was refered to as Actual Cost of Work Performed and abbreviated as ACWP. Now with activity level, the definition of different variances are as follows. The Cost Variance, CV, for an activity is the difference between Earned Value and Actual Cost for that activity. That is CV = Earned value- Actual cost. This variance is an assessment in monetary terms of the progress of each activity at review time. The Schedule Variance is the difference between EV and PV. That is Schedule Variance equal to Earned Value minus Planned Value. In the example about the two variances for each activity at the end of week, ten are shown in the next table. For complete activities, the Earned Values equals Planned Value and the Schedule Variance, SV, equals 0. Thus, activities A, B, and C have SV equal to 0. Activity D is in progress, and it has been estimated that activity D is 30% complete. So, its Earned Value equals 0.3 times 40 equals 12. Similarly for activity E, the earned value equals 0.4 into 60 equal to 24. So, CV and SV for activities D and E are -8 and -6, respectively. The totals are given in the last row of the table. These values will be used to calculate some variances, in the project level, as we will see later in this module. There are two other variances that have been defined. The Resource Variance, RV, for an activity is the difference between the cost that should have been incurred as per the budget and the actual cost incurred as on the review date. That is RV = Plan Value- Actual Cost. Time Variance, TV, is the difference between the time scheduled for work that has been performed. The actual time used for, to perform the work, AT. That is, TV = ST- AT. This variance have provides some useful information, although they are not as popular as CV and SV. Next, we'll extend our analysis to a project level. The baseline budget for the project is referred to as Budget at Completion, or abbreviated as BAC. At review time, we need to calculate the revised estimate of the total cost at completion of the project. In order to do this, we need to estimate the cost of completing the remaining work. There are two approaches to this estimation. One approach is to find out from experts and other persons associated with the project, what their estimate is for the expected cost of completing the remaining work. Suppose this estimate is denoted as ECR1, then the revised estimate of the expected total cost of completion of the project is ETC1 = ECR1 + TAC, where TAC is the Total Actual Cost as on Review Date. Then the cost variance of completion of the project, which is denoted as VAC1, is BAC- ETC1. The second approach is to calculate a revised estimate of the total cost of completion of the project, is to use the cumulative cost performance index, or the efficiency index to estimate the cost of completing the remaining work. The cumulative cost performance index denoted as CPI, is equal to TEV/TAC, where TEV and TAC are the Total Earned Value and the Total Actual Cost respectively as on the review date. Note that if TEV is less than TAC, CPI is less than 1 indicating that the performance or date is below expectation. If CPI is greater than 1, the performance or date is better than expectation. Assuming that the remaining work will be preformed at the same efficiency as on review date, the estimated cost of completing the remaining work is ECR2 = (work remaining) / CPI = (BAC- TEV) / (TEV / AC). Now the revised estimate of Expected Total Cost of Completion is ETC2, which is equal to ECR2 + TAC. And the cost variance VAC2 = BAC- ETC2. In certain defining variances as about inordinate approaches to define performance indices for monitoring the progress. Now, the activity level the cost performance index CPI for an activity is EV/AC, where EV and AC are the Earned value and the Actual cost respectively for that activity. Similarly, at the activity level Schedule Performance Index are SPI for an activity is EV/PV, where EV and PV are the Earned value and Planned value respectively. At the project level, we look at the total size on review date for Earned value, Planned value and Actual cost, which are denoted as TEV, TPV, and TAC respectively. CPI at the project level is equal to TEV/TAC and SPI = TEV/TPV. At the project level, if CPI<1, it implies that there's a cost overrun while CPI>1 implies that the cost incurred is less than the budget. Similarly, SPI<1 implies the project is behind schedule while SPI>1 implies the project is ahead of schedule. The Cost Schedule Index in order as CSI is a product of CPI and SPI. That is CSI = CPI * SPI which in turn equals (TEV / TAC) * (TEV / TPV), that is equal to (TEV)2 / (TAC * TPV). The rationale for CSI is that if both CPI and SPI are greater than 1, then the project CSI is greater than one and the progress in the project is good. If both CPI and SPI are less than one and the product CSI is less than one and the progress on the project is not adequate. If one of them is greater than 1 another is less 1, then the product CSI maybe less than 1 or greater than 1. In this case, if CSI is greater than 1, then progress on one dimension is good enough to view the overall progress as adequate, although the progress on the other dimension is not really adequate. On the other hand, if CSI is less than 1 then the overall progress is not considered as adequate. And the example that we considered taking the values in the last row of the table, we have TPV equals 340, TEV equals 326 and TAC equals 310 and CPI = TEV/TAC = 326/310=1.052 And SPI = TEV / TPV = 326 / 340 = 0.959. CSI then is TEV squared over (TAC * TPV) = 326 squared / (310 * 340) which is equal to 1.008 So the oral progress of the project is adequate although the project is slightly behind schedule as indicated by SPI. At the activity level, to find the EV for an activity in progress at review time, we have to estimate the percent complete of that activity. At the project level we have three measures of percentage completion. One measure is based on the budgeted cost of the project but ignoring the actual cost incurred until review time. This person completes index in other to as PCIB is simply equal TEV/BAC. The other two measures denoted as PCIC1 and PCIC2 are based on the actual cost incurred until review time and the expected cost and completion of the project. Recall that we had two ways of estimating the total cost at completion of the project. These two estimates were denoted as ETC1 and ETC2. So we have the percent complete index, PCIC1 as equal to TAC over ETC1. And PCIC2, you equate it to TAC, ETC2. In the example we've been considering PCIB equals 326 over 470, which is equal to 0.694. Suppose the exports estimated the cost of completing the remaining work is 200 that is easy, R1 is 200. Then the expected total cost at completion of the project, ETC1 = TAC + ECR1 = 310 + Plus 200 is equal to 510. So the cost variance at completion of the project, VAC1, equals BAC- ETC1 = 470- 510, which is equal to -40. And PCIC1 is 310 over 510 Equals 0.608. If you use the cumulative performance index attribute type CPI = TEV/TAC which is equal to 326/310 equal to 1.052. And the estimated cost of the remaining work ECR2 =(work remaining)/CPI Which is equal to (BAC- TEV) / TEV over actual cost AC. This is equal to (470- 326) / (326 / 310), which is equal to 144 divided by 326 over 310, which gives us a value of 136.933. ETC2 equals TAC plus ECR2, that is equal to 310 plus 136.933 equal to 446.933. And the cost variance at completion of the project is VAC2 equals BAC minus ETC2 equal to 470 minus 446.933 equals 23.067 which is positive while VAC1 was negative equal to minus 40, now PCIC2 = 310/446.933 which is equal to 0.694. Finally we have the two complete performance index. TCPI which is the amount of value each unit of currency in the remaining budget should earn to stay within the total budget at the completion of the project the remaining budget is given by BAC-TAC while the value still to be earned is BAC minus earned value, EV. And TCPI = (BAC-TEV)/ (BAC-AC). If TCPI is greater than 1, then there's more work to be done that the available budget. This would imply that the productivity has to be increased if there is to be no cost overrun. If TCPI is less than 1, then there is less work to be done than the available budget. This implies that the project may be completed without using all the budget. And when may considering increasing the scope of the project while staying within the budget. For the example we have been looking at TCPI = (470- 326) / (470- 310) = 144 / 160 = 0.9 Since TCPI is less than 1, it is estimated that the project may be completed without using all the budget. This completes our module on monitoring and control. [MUSIC]