Framework: An Integrated Approach to Portfolio, Program and Project
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III. PROJECT CONTROL PROCESS - CHAPTER 9 - PROJECT CONTROL MEASUREMENT
9.2 Progress and Performance Measurement
Progress and performance measurement is the process of measuring the expenditure or status of non-monetary resources on a project (e.g., tracking the receipt of materials or consumption of labor hours) and the degree of completion or status of project work packages or deliverables (e.g., the extent that materials have been installed, deliverables completed, or milestones achieved), as well as observations of how work is being performed (e.g., work sampling). Together with project cost accounting measures of the commitment and expenditure of money (Section 9.1), progress and performance measures are the basis for project performance assessment. Performance assessment methods such as earned value analysis, forecasting, work sampling productivity analysis, and so on are covered in Sections 10.1 and 10.2.
9.2.2 Process Map for Progress and Performance Measurement
The progress and performance measurement process illustrated in Figure 9.2-1 includes a variety of work, resource, and process performance measurement steps. The process is integrated with project cost accounting measurement (see Section 9.1). The measurements are inputs to the project performance assessment process (Section 10.1)
Figure 9.2-1 Process Map for Performance Measurement
The following sections briefly describe the steps in the progress and performance measurement process.
.1 Plan for Progress and Performance Measurement
The process for progress and performance measurement starts with planning for the measurements. Initial planning starts with planning for the project scope and execution strategy development process (Section 7.1) and continues through development of control accounts during project control plan implementation (Section 8.1). A requirement of work package and control account development is that the resources, activities, and deliverables for each work package and control account be measurable. Because the measurements are done to support the assessment methods that will be used, planning for measurement and assessment (Section 10.1) must be done together.
One aspect of planning includes assigning specific roles and responsibilities for measuring the progress and performance of each work package. That planning is done in consultation with those responsible for each work package (as determined during scope development). Another aspect to plan is the interface (i.e., data transfer) between measurement systems (e.g., payroll systems, material management systems, etc.) and systems used for project control (e.g., scheduling software). Finally, the use of enhanced performance measurement and assessment methods such as work sampling must also be planned.
Planning ensures that the measures captured in and reported by various systems are either consistent with the control and cost accounts, or that processes and procedures are in place to obtain measures and/or translate them to the account basis. This may involve manual measurement, translation, and entry of data. For example, if the enterprises material management system does not report procurement milestones for each line item in a purchase order (i.e., item shipment date, item receipt date, etc.), but your control account activity measures require milestone dates for individual line items within the purchase order, then the line item milestone dates may have to be obtained by some other means (e.g., calling the procurement department) and manually entering the data into the project control system. In addition, the interaction/interface of owner, supplier, and contractor reporting systems, if any, must be considered and addressed in progress and performance measurement plans.
After progress and performance measurement has been planned, measurement processes or systems are initiated for each resource type for which consumption or status is to be measured and each work package activity or deliverable type for which the degree of completion will be measured. The progress measurement plan will establish who may enter, change, delete, view, or otherwise use data and information in or from each system. Project control is responsible for interfacing with the design management, material management, and other processes to ensure that measurement is initiated in an appropriate and timely manner. Methods such as work sampling may require consultation and/or negotiation with those whose work will be observed to ensure that the method is understood.
.2 Measure Physical Progress (to Support Earned Value Performance Assessment)
Each control account manifests at a work package level the overall project plan for activities to produce project deliverables (i.e., the schedule), the use of resources (i.e., the resource and procurement plans), and the commitment and expenditure of funds (i.e., the cost budget). Progress against each of these plan elements is measured to support earned value analysis and forecasting.
The earned value assessment method (as covered in more detail in Section 10.1) starts with the premise that control accounts have resource values (typically cost or labor hours) that can be summed to the total value for the project. The percent progress of any sub-component of the WBS, at any point in time, is then the sum of the value of each control account in that WBS component that has been "earned" at that point, divided by the total value of that component of the WBS. The earned value for each control account is the value of the control account multiplied by the percent "physical progress" of the scope included in that control account. For example, if the work package was construction of a building concrete foundation, with a budgeted cost of $10,000, and the construction physical progress at a certain time was measured as 40 percent complete, the earned value for that foundation control account at that point of time would be $4,000 (i.e., 0.4 x $10,000).
The earned value method is typically applied at the cost account level. For example, a work package may include installation of a piece of equipment for which there are cost accounts for the equipment purchase (i.e., material cost account) and installation of the piece of equipment (i.e., labor cost account). The labor and material progress will be measured separately, and then, using earned value methods, the weighted progress for any work package, component of the WBS, or cost type can be determined.
If the work package is the responsibility of suppliers or contractors, they will not only use measurements to control their own work, but may also use them as a basis for billing for their work depending on the billing method specified in their contract type.
The following describes the traditional physical progress methods for measuring the extent of completion of the scope of a work package.
This measurement method can be used when work package scope can be further decomposed into fairly homogenous units of work (e.g., units of material, drawings, lines of code, function points, etc.) that each require approximately the same level of effort to produce, and for which work is usually completed, and can be measured, for some units while work continues on others.
For example, if a work packages labor cost account scope was to pull 10,000 meters of wire through conduit, and the wire was made up of many short lengths of wire pulled at different times, then a meter of wire pulled could be considered a valid "unit" of measurement. Therefore, if 4,000 meters had been pulled as of a given point in time, then the labor cost account would be considered 40 percent complete (i.e., 4,000/10,000). For the work packages material cost account, if 8,000 meters of the wire had been received at the site at the same point in time, then the material cost account would be considered 80 percent complete (i.e., 8,000/10,000).
This measurement method can be used when work package scope is one deliverable (i.e., not many units as described above) or a set of deliverables done together, for which multiple activities must be performed in sequence and for which the completion of incremental tasks can be observed. In this case, based on estimates or past experience, a percent completion value can be credited for completion of key incremental tasks or "milestones." For example, if a work packages labor cost account scope was to install a piece of equipment that had a sequence of 5 activities to perform (i.e., receive, set, align, test, and accept), then the percent cost account completion at completion of each activity can be estimated (i.e., 15, 60, 75, 90, and 100 percent, respectively). The estimated percents would be called the rules of credit. Therefore, when the equipment piece was set, the work package would be considered 60 percent complete. The work packages material cost account would be considered 100 percent complete when the equipment arrived at the site.
In some cases (usually hard to measure minor work packages), the incremental milestones may simply be the start and finish (e.g., earn 30 percent when you start, and 100 percent at completion), or just the finish (i.e., earn 100 percent at completion and nothing until then).
Weighted or Equivalent Units Completed
This measurement method is a hybrid of units completed and incremental milestones. It is used when the work package scope includes non-homogenous units of work and/or work tasks that overlap such that the other methods dont work well. In this case, based on estimates or past experience, a percent completion value can be credited for completion (and possibly intermediate milestones) of specific scope components or units. For example, if a work packages scope was to landscape a site, the scope may include many different components (i.e., trees, turf, shrubs, etc.) for which the installation sequence is non-sequential and flexible depending on vagaries of the weather. Units completed or incremental milestones alone do not readily apply. In this case, the estimated weighting or rules of credit are 60 percent when all trees are planted, 20 percent when the turf is laid, and 20 percent when the shrubs are planted. If at a point in time the turf is laid and trees planted, the percent complete would be 60 percent (i.e., 40 plus 20).
Resource Expenditure (Level of Effort)
This measurement method is generally used when the work package scope does not include discrete deliverables or milestones and for which the activities are of long duration and of a relatively constant level of effort. These most often include management and support labor cost accounts (e.g., project management, project control, quality assurance, etc.). For these, the percent complete may be estimated based on the percent of the total planned or forecast duration, hours, or cost spent for the control account. For example, if a work packages scope is project control during construction, the project control staff is relatively fixed throughout construction, and the forecasted execution duration is 16 months, the percent complete at the end of the 4th month can be estimated as 25 percent (i.e., 4/16).
This measurement method is the most subjective and is used when more objective methods are not reasonable. In this method, the person responsible for the work package estimates the percent complete based on his or her informed judgment. For example, if a work packages scope was to landscape a site, the scope may include many different components of many sizes (i.e., trees, turf, shrubs, etc.) for which the installation sequence is flexible depending on vagaries of the weather. Units completed or incremental milestones do not readily apply. If landscaping is a minor component of the project scope, then the landscaping supervisor may simply be asked to provide an estimate of percent completion.
.3 Track Resources
In addition to the physical progress measures that support earned value performance assessment, the status of resource procurements and resource usage need to be tracked to support productivity analysis (Section 10.2), to support forecasting and change management (Sections 10.3), and to track resource risk factors identified in the risk management process (Section 7.6).
For labor cost accounts, hours are often used as a basis for earned value performance assessments rather than costs. By controlling the hours, you can effectively control the cost. Part of the reason is that hours data are typically captured at more frequent intervals (i.e., daily or weekly) than accounting and payroll systems book costs or make payments (often monthly). Cost accounting requires adjustments and allocations (e.g., for overhead) and this creates a lag in reporting. A monthly assessment cycle is too long for many projects. If hours are used for earned value methods, then the hours spent on a control account will need to be captured for comparison to the budgeted hours. Hours data will also be used in the assessment of labor productivity, either through earned value or work sampling. Project payroll systems are often closely linked or part of project cost accounting systems.
Material Management and Fabrication
For material cost accounts, earned value measurements are most often done on the basis of units completed or interim milestones (i.e., material cost account completion is credited in proportion to the percent of units received by the project, or in accordance with rules of crediting). However, the current status of each material procurement or fabrication is of greater interest to project controls than just for progress measurement.
For example, project control is at risk if material is not received in time and/or in the sequence planned; therefore, interim material status data are needed to assess the likelihood of this risk. Also, the change management process requires that the status of material procurements be known so that the effect of a change or trend on material costs or schedule can be estimated. Furthermore, shipments that come too early may look good on a progress report, but may lead to increased inventory and material handling costs, and so on.
Therefore, the status of order placement, fabrication, shipments, inventories, and so on is measured. Increasingly, material or enterprise resource planning (MRP/ERP) systems capture material management information that can be used effectively for project control.
.4 Status the Schedule
As with tracking labor and material resources, the resource of time must be tracked. As activities in the project schedule are started and completed, or when milestones are achieved, the actual start, finish, or milestone date will be captured in the project schedule database (often called the project management information system [PMIS]). During the assessment process (Section 10.1), the effect of project progress on the scheduled work remaining will be evaluated.
.5 Measure Work Process Performance (i.e., "how" work is being done)
Physical progress measurement and earned value assessment do not provide much information about why performance is better or worse than planned. Project control also requires information about the specific causes of performance problems. For material cost accounts, the material management expediting and quality management inspection functions provide such information about supply chain performance. Work sampling is a method that can be used to assess project labor performance (and in some respects material). The safety inspection process may also provide useful performance information for project control. Finally, quality management processes (i.e., work process improvements by functions working on or supporting the project) may contribute to project performance improvement.
Expediting is a process in which a representative of the buyer assists the material supplier in achieving its contractual obligations. The representative expedites the flow of information, obtaining approvals, and so on. Inspection is a process in which a representative of the buyer helps ensure that the supplier conforms with contract specifications and that any required processes and procedures are followed. The work and products of both suppliers and contractors are subject to inspection. Both the expediting and inspection functions provide project control with information about potential and actual control problems and their causes.
Work sampling measurement involves observing and recording what people are doing during the hours they are charging to the project. In projects, it is most typically applied to the construction and maintenance processes. In manufacturing processes, the equivalent method may be referred to as time and motion studies. In work sampling, a statistically planned sample of project activities is chosen for observation. During the assessment process, the measurements are compared to standard expectations or metrics for how long particular tasks should take and how they should be done. Observations also help identify productivity improvement ideas. For example, work sampling may identify that materials are stored too far from the work site and that workers are taking too much time to acquire supplies or materials. Because individuals will often try to make their own work more efficient, it may also be observed that some crews are creating local hoards of materials to avoid the long walk, resulting in damage to or loss of materials. These are examples of the type of information work sampling provides to help assess and improve project performance.
The safety management and inspection process will provide information on how to perform work tasks more safely. Any safety changes to or observations concerning work tasks (e.g., re-sequence work to avoid overcrowding in an area) are in effect measures that must be assessed in the project control process. Likewise, any quality (i.e., process improvement) changes to or observations concerning work tasks must be addressed.
.6 Review Progress and Performance Measures
The project control function regularly checks that the basis of project progress and performance measurements is appropriate and in alignment with the project control plan and control and with cost accounts. Measures are also reviewed to ensure timeliness and accuracy.
A risk to be aware of with progress measurements and schedules of payment based on progress is that contractors responsible for work packages can benefit financially by over-reporting progress and/or assigning too much money for payment for work that is performed early in the project. This is called front-end loading of the payment schedule. Front-end loading improves a contractors cash flow at the expense of the owner. Its also contributes to poor project control. Therefore, it is important to use objective measures of progress whenever possible, and carefully review progress measurements (especially if the judgment method is used) and payment schedules.
Most measurements are not made directly by those responsible for the project control process. Physical progress (e.g., quantities installed, drawings completed, lines coded, etc.) is generally measured and reported by whoever is responsible for the work package. Labor hour status is reported from accounting payroll systems, and material status is reported from material management systems. Work sampling may be performed by a specialist in industrial engineering. However, those with project control responsibility should spot check the work progress and performance measurements to some extent (i.e., informal work sampling, questioning responsible leaders, etc.) to ensure that the data being received and reviewed are reliable, appropriate, and understood.
.7 Report Progress and Performance Measures
After review, measurement information is reported to the performance assessment process (Section 10.1). Information includes physical progress measures for earned value performance assessment, work sampling measures for work productivity and process improvement evaluations, current status data for the forecasting of work yet to be completed, and so on.
Schedule status data (e.g., completion dates for activities and milestones, etc.) are entered into the scheduling system (i.e., PMIS). If an integrated cost/schedule control system is used, the physical progress measures are entered there as well. If not, the progress data are entered into the cost control system.
Measures of work package progress and milestone achievements are reported to the project cost accounting process (Section 9.1) to support the initiation and closing of cost accounts. Also, the measures or progress and tracking of resources identifies costs that the project has become obligated to pay (i.e., incurred costs).
In addition, measurement data are used in the evaluation of changes and trends in the change management process (Section 10.3). These data may also be used in the enterprise resource planning system (Section 5.2).
Finally, historical project information is captured. The information is used to help improve measurement tools such as software, forms, checklist, procedures, and so on. Measurement data, including experiences and lessons learned about past measurement practices, are used for planning project progress and performance measurement practices on future projects.
9.2.3 Inputs to Progress and Performance Measurement
.1 Project Implementation Basis. The implementation basis includes progress and performance measurement requirements (Section 4.1).
.2 Project Control Plan and Control Accounts. The project control plan (Section 8.1) describes specific systems and approaches to be used in project control, including interface with measurement and assessment (cost/schedule control) systems. The control accounts (Section 8.1) are work packages from the WBS for which responsibility has been assigned in accordance with the OBS and the procurement plan, and for which cost budgets and resources have been assigned, and activities scheduled. Measurement plans must address how planned measures align with the planned control accounts (i.e., the measurement basis). During reviews, this alignment is assessed and corrected as needed.
.3 Project Cost Accounting Plans. Plans for measuring cost commitments and expenditures (Section 9.1) should be aligned with progress and performance measurement plans as appropriate. Alignment may consider the frequency of measurements, alignment with control accounts, etc.
.4 Work, Resource, and Process Performance. As project work packages are executed, information about the progress and performance of their activities and resources is captured by those responsible as determined in the project control plan and control accounts. Also, measures, observations, and other information about "how" work activities and work processes are being done or improvement ideas are captured (e.g., work sampling, safety observations, quality improvement ideas, etc.).
.5 Changes. During project execution, changes to the baseline scope definition and plans are identified in the change management process (see Sections 10.3). Change may result in changes to project cost accounting.
.6 Historical Project Information. Successful past project progress and performance measurement approaches are commonly used as future planning references. Historical cost and schedule data are also captured at project closeout.
9.2.4 Outputs from Progress and Performance Measurement
.1 Project Control Plan and Control Accounts. Measurement planning may identify improvements to aspects of project control plan implementation (Section 8.1).
.2 Project Cost Accounting Plans. Project progress and performance measurement planning may identify improvements in plans for cost accounting (Section 9.1)
.3 Corrections to Measurement Basis. Project control review of project measurement may identify corrections that need to be made in the measurement process (e.g., timeliness, quality of measures, etc.).
.4 Information for Enterprise Resource Planning. Resource tracking measurement data may be used directly by the enterprise resource planning system (Section 5.2).
.5 Measurement Information for Project Cost Accounting. Measures of work package progress and milestone achievements are reported to the project cost accounting process (Section 9.1) to support the initiation and closing of cost accounts. Also, the measures of progress and tracking of resources identifies costs that the project has become obligated to pay (i.e., committed costs).
.6 Measurement Information for Performance Assessment. Measurement information includes physical progress measures for earned value performance assessment, work sampling measures for work productivity and process improvement evaluations, current status data for the forecasting of work yet to be completed, and other assessments included in Section 10.1.
.7 Status Information for Change Management. Measurement data are used in the evaluation of changes and trends (Section 10.3). In order to evaluate the effect of a change, it is necessary to know if the work has already been performed, if the material has already been shipped, etc.
.8 Historical Project Information. The projects performance measurement approaches are captured in a database (Section 10.4) for use as future planning references. Final measures are captured as part of the projects cost and schedule performance data.
9.2.5 Key Concepts for Progress and Performance Measurement
The following concepts and terminology described in this and other chapters are particularly important to understanding the project cost accounting process of TCM:
.1 Earned Value. (See Section 10.1).
.2 Productivity. (See Section 10.1 and 11.2).
.3 Progress. Development to a more advanced stage. In network scheduling, progress indicates activities have started or completed, or are in progress.
.4 Physical Progress. (See Section 220.127.116.11).
.5 Expediting. A procurement process in which a representative of the buyer assists the supplier in achieving its contractual obligations, particularly as regards schedule. The representative, or expeditor, facilitates or expedites the flow of information, the obtaining of approvals, and so on.
.6 Inspection. A process for examining or measuring to verify whether an activity, component, product, or service conforms to specified requirements. The inspection may be focused on quality or safety; both provide useful information for project control.
.7 Work Sampling. A productivity improvement method that involves observing a sample of the work tasks that people are doing on a project, and the time they spend doing them, and comparing the observations and measurements to standard expectations or metrics.
Further Readings and Sources
The project performance measurement and assessment process is covered in a variety of sources. Most project management and control texts address basic earned value and earned value management systems and resource tracking to some degree. Direct measurement and assessment of supplier performance, work processes, and productivity are more thoroughly covered by procurement and material management, quality management, and industrial engineering texts. The following references provide basic information and will lead to more detailed treatments.
Amos, Scott J., Editor. Skills and Knowledge of Cost Engineering, 5th ed. Morgantown, WV: AACE International, 2004.
Fleming, Quentin W., and Joel M. Koppleman. Earned Value Project Management, 2nd ed. Upper Darby, PA: Project Management Institute, 2000.
Humphreys, Kenneth K., and English, Lloyd, Editors. Project and Cost Engineers Handbook, 3rd ed. New York: Marcel Dekker, Inc., 2005.
Maynard, Harold B., and Kjell B. Zandin. Maynards Industrial Engineering Handbook, 5th ed. New York: McGraw-Hill, 2001.
Stumpf, George R., Editor. Professional Practice Guide No. 5: Earned Value. CD ROM. Morgantown, WV: AACE International, 1999.
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