1. INTRODUCTION
Monitoring is collecting, recording, and reporting information concerning any and all aspects of project performance that the project manager or others in the organization wish to know while controlling uses the data supplied by monitoring to bring actual performance into approximate congruence with planned performance. The Control system helps the project manager to take measures to rectify the deviation of the actual performance and the planned performance. The Control system monitor three parameters i.e. time, cost, and quality. A control system should be designed properly so that it can give deviation from the plan on a timely basis and corrective measures can be taken at the right time.
2. PROJECT CONTROLLING TOOLS
Following are the tools used for project controlling:
(a) Bar chart/ Milestone chart
(b) Work Breakdown structures
(c) Network Analysis
(d) Line of Balance method
(e) Graphical evaluation and review techniques
(f) Earned value analysis
(g) Critical Ratio method
2.1. Earned Value Analysis
Earned value management is a project management technique for measuring project performance and progress. It has the ability to combine measurements of the project management triangle: scope, time, and costs.
2.1.1. Basic Terminology
There are mainly three terms that identify Earned Value Technique:
(i) Budgeted Cost of Work Scheduled (BCWS) or Planned Value (PV)
(ii) Budgeted Cost of Work Performed (BCWP) or Earned Value (EV)
(iii) Actual Cost of Work Performed (ACWP) or Actual Cost (AC)
(i) Planned Value (PV): The planned value is that portion of the approved total
a cost estimate which is planned to be spent on an activity during a given period.
PV = Physical Work + Approved Budget
(ii) Actual Cost (AC): Actual cost (AC), also called actual cost of work performed (ACWP), is the total of direct and indirect costs incurred in accomplishing work on an activity during a given period.
(iii) Earned Value (EV): The earned value (EV), also called the budgeted cost
of work performed (BCWP), is an approximation of the value of the physical work actually completed. It relates the original planned costs for the project or activity and the rate at which the team is completing work on the project or activity to date.
(iv) Estimate at Completion: The Estimate at Completion (EAC) is the sum of
the actual cost in current till date and the estimated cost for the remaining work.
EAC = Actual Cost (AC) + Estimate to Complete (ETC)
(v) Schedule Performance Index: The schedule Performance Index (SPI) can be used to estimate the projected time to complete the project based on the performance to date. It is given by:
SPI = EV / PV
If SPI <1, it means the project is behind schedule.
(vi) Cost Performance Index: Cost Performance Index (CPI) can be used to
estimate the projected cost to complete the project based on performance to date. It is given by:
CPI = EV / AC
If CPI <1, it means the project is under budget.
(vii) Schedule Variance: Schedule Variance (SV) is the comparison of
the amount of work performed during a given period of time to what was scheduled to be performed. It is calculated as follows
SV = EV – PV
A negative schedule variance indicates that the project is behind schedule which means it took a longer time than planned to perform the work.
(viii) Cost Variance: Cost Variance (CV) is the comparison of the budgeted cost of work performed with the actual cost. It is calculated as follows
CV = EV – AC
A negative cost variance means the project is over budget that is performing the work cost more than planned.
(ix) Budget at Completion: Budget at Completion (BAC) is the baseline cost
that shows the planned cost for a task, a resource for all assigned tasks, or for work to be performed by a resource on a task.
The graphical representation of the costs with respect to time is shown in the figure below. It shows the expected budget and how there is a variation of actual cost from this expected budget or the planned value. The estimate of work that was actually performed is also shown as Earned value.
3. PROJECT RISK ANALYSIS AND MANAGEMENT
Project risk is defined as, "an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives”. Project risk analysis and management is a process that enables the analysis and management of risk associated with the project. It will increase the likelihood of successful completion of the project to cost, time and performance objectives.
Types of Project Risks:
(i) Completion Risk: This includes completing the project within time and cost constraints.
(ii) Resource Risk: Less availability of resources or underutilization of resources leads to these types of risks.
(iii) Price Risk: High fluctuation in prices of both raw material and finished product influences the project.
(iv) Technology Risk: Use of faulty and obsolete technology induces risk in the project.
4. Risk Management
Risk management uses the information collected during the risk analysis phase to make decisions on how to improve the probability of achieving its cost, time and performance objectives. There are five ways the risk can be reduced in a project:
- Remove: This includes the elimination of risk from the project so that it may no longer a threat to the project.
- Reduce: risk can be reduced by taking certain actions such as changing the proportion of fixed and variable costs.
- Avoid: Risk can be mitigated by taking the contingencies actions.
- Transfer: Risk can be transferred to the other parties.
Acceptance: The benefits that can be gained by taking the risk should be balanced against the penalties.
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