If midcourse changes in the project specifications are not controlled, the following are typical results: a newspaper front-page headline reading “Stadium costs soaring;” an ar- ticle on a inner page stating that “Change orders . . . are one of the most common sources of waste and fraud during projects, experts say;” and a quote from a County Commissioner, “The project is in trouble, but it’s absolutely recoverable. . . . We can work out responsibility for those payments at a later time. Now is not the time to start pointing fingers.” An auditor appointed to look into the matter “found that there is not sufficient oversight to properly monitor the change orders, check if they were necessary and determine who is responsible” (see Cincinnati Enquirer, February 15, 2000, pages A-1 and A-4).
As we noted in Chapter 6, input from over 500 project managers regarding things that “bugged” PMs the most indicated that coping with changes is at the top of their list. The most common source of changes is the natural tendency of the client, as well as the project team members, to try to improve the project’s output as the project progresses—a phenomenon so frequently encountered a name for it has been coined,
“scope creep.” The most common result of scope creep is an upset client who was not (or claims not to have been) told how long the change would delay the project and how much it would raise the project’s cost. The general subject of scope management is described in more detail in Chapter 5 of PMBOK.
New technologies and materials become available, new requirements and needs be- come apparent, and these lead to changed projects. The later these changes are made in the project, the more difficult and costly they become. The one absolutely certain thing about a project—even though virtually nothing in a project is ever certain—is that there will be concerted attempts to change it. PMs must expect these attempts and be prepared to deal with them. Fighting change is not appropriate. The best approach is for the PM to set up a well-controlled, formal process whereby such changes can be intro- duced and accomplished with as little distress as possible.
This process is known as the change control system. The purpose of this system is to:
• review all requested changes (either content or procedural changes)
• identify all impacts the change may have on other project tasks
• translate these impacts into alterations of project performance, schedule, and cost
• evaluate the benefits and disadvantages of the requested changes
• identify and evaluate alternative changes that might accomplish the same ends with greater benefits and/or fewer disadvantages
• install a process so that individuals with appropriate authority may accept or reject the proposed changes
• communicate accepted changes to all concerned parties
• ensure that the changes are implemented properly
• prepare reports that summarize all changes to date and their impacts
Avoiding scope creep is not possible. Controlling it, and thereby reducing some of the pain, is possible—if the PM follows a few rules.
1. Every project contract must include a change control systemby which requests for changes in the project’s plan, processes, budget, schedule, or deliverables are evaluated.
2. Every project change must be introduced by a change order that includes a descrip- tion of the agreed-upon change together with any resulting changes in the plan, processes, budget, schedule, or deliverables.
3. Changes must be approved in writing by the client’s agent as well as by a representa- tive of senior management of the firm conducting the project.
4. The project manager must be consulted on all proposed changes prior to the prepa- ration and approval of the change order. (The PM’s approval is not required.) 5. Once the change order has been approved, the project master plan must be
amended to reflect the change and the change order becomes a part of that plan.
The process of controlling change is not complicated. For large projects, a change control board consisting of all interested parties is recommended for handling change requests. For smaller projects, a smaller group may be designated. The main source of trouble with requested changes is typically that the PM, in an attempt to avoid bureau- cracy, adopts an informal process of handling requests for change. Such a process leads to misunderstanding on the part of the party requesting the change and before the PM can undo the damage, the organization is committed to extending the scope of the pro- ject but without the additional resources and time to do it.
In March 2003, the United Kingdom’s Child Support Agency (CSA) started using their new $860 million software system for receiving and disbursing child support pay- ments (PMI, January 2005). By the end of 2004, however, only about 12 percent of all applications had received payments, and even those took about three times longer to process than expected. CSA is now threatening to scrap the entire system and is with- holding $2 million/month in service payments to the software vendor. The problem seems to be due to control both scope management problems and the lack of a risk man- agement strategy. The vendor claims that the project was disrupted constantly by CSA’s 2500 change requests, while CSA maintains that there were only 50 requests, but the contract did not include a scope management plan to help define what consti- tuted a scope change request. The lack of a risk management strategy resulted in no contingency or fallback plan in case of trouble, so when project delays surfaced and in- adequate training became apparent, there was no way to recover.
Scope creep arises quite naturally from both the client as well as the project team as new capabilities and needs surface during the course of the project. Rather than trying to ignore or handle change requests on an informal basis, the PM must an- ticipate that they will inevitably arise and institute a formal change control system to handle them. The purpose of the system is to evaluate each change formally to determine its benefits as well as its costs and other impacts on the project, and to make arrangements for obtaining the resources and altering the project specifica- tions as needed to implement the change, if it is eventually approved.
REVIEW QUESTIONS
1. Why can’t the PM use the organization’s current infor- mation system for project monitoring and reporting?
2. What does it mean to say that project monitoring and control are on the opposite sides of project selec- tion and planning?
3. The monitoring system is the direct connection be- tween project planning and control. Why is this true?
4. Why is it probably a good idea to avoid periodic re- ports, except in specific cases such as reports tied to the organization’s accounting system?
PROBLEMS • 265
DISCUSSION QUESTIONS
8. When making an estimate for the time and cost to execute a project, should the time and cost required to develop the planning, monitoring, and controlling systems be included as well? Should the actions re- quired to monitor and control a project be included in the project’s action plan or WBS?
9. The chapter included an example of a firm where the PM dispensed with all the planning formality because no one ever looked at it anyway. What did the PM think the purpose of such planning was in this firm? What should the firm do in the future to correct this problem?
10. In fields such as psychology and sociology, verbal characterizations are frequently used to show the amount of some factor. How might one set up such a measure for a project management characteristic such as the “energy” of the project team?
11. How might one measure team morale?
12. How can the PM circumvent the problem that the monitoring system can only report on activities that have passed, thus telling the PM what has already gone wrong but not what will go wrong in the future?
13. How might using electronic media to report project information lead to problems with control?
14. Explain how the earned value chart captures all three objectives of a project: performance, cost, and schedule.
15. Why isn’t there an earned value reporting conven- tion that allows progress on a task to be credited when the task is half completed? Wouldn’t this be more accurate than giving credit only when the task is finally completed?
16. When would spending and schedule variances be more informative than ratios? When would ratios be better?
17. How should a PM reconcile the dual purposes of con- trol: conserving resources and regulating results through the use of resources?
18. Identify situations where each of the following control tools might be useful: earned value charts, benchmark- ing, critical ratios, control charts, variance analysis, trend projections.
19. How might the existence of a change control system affect the behavior of a client, or a project team mem- ber, who desires to make a change in the project?
20. “In order to manage for overall project success, control must be exercised at the detailed work level for each aspect of project performance or no significant change will occur.” Does this mean that the PM should micro- manage the project? If not, what does it mean?
21. Select a hypothetical project (e.g., designing and building a Web site, installing a new machine in an assembly line, or conducting a major inspection and repair of a passenger aircraft), and briefly describe an example of how each of the following types of con- trol data might be used for project control:
(a) Frequency counts (b) Raw numbers
(c) Subjective numeric ratings (d) Indicator and surrogate measures
22. Of all the rules for conducting meetings, the most diffi- cult to enforce is the injunction against the weekly (or daily) standard project progress report (the “show and tell” meeting). Why is this, and under what circum- stances do you think that such meetings are justified?
23. If your project management software calculates earned value, or any other standard item to be re- ported, differently than the Project Management In- stitute suggests, should you deal with this matter in management reports? If so, how?
24. Logically, when using earned value data in the criti- cal ratio formula, should the “budgeted cost” be the planned value or the earned value? What problems occur with each choice?
PROBLEMS
25. A project in its 26th week has an actual cost of
$270,000. It was scheduled to have spent $261,000.
For the work performed to date, the budgeted
value is $272,000. What are the cost and sched- ule variances for the project? What are the SPI and CPI?
5. Aside from the obvious benefits for project control, what other benefits might result from a good project reporting system?
6. If the calendar should not dictate reporting fre- quency, what should?
7. Using earned value analysis, explain how the total cost of a partially completed project can be estimated.
INCIDENTS FOR DISCUSSION
St. Margaret’s Hospital
Mary Lynn DeCold is the Quality Improvement Director at St. Margaret’s Hospital, a large acute care facility. She is responsible for monitoring all of the performance im- provement projects that take place in the hospital. At any given time numerous projects can be underway, some departmental and some enterprise-wide efforts.
The Joint Commission on Accreditation of Health- care Organizations is scheduled to conduct a survey of St. Margaret’s in 9 months. It is a requirement of the accrediting agency that three performance improvement projects be spotlighted during the survey. Mary Lynn wants to be sure that she picks three projects that will be finished within the next month or two so that they have at least 6 months’ worth of data to show that the project improved performance.
Mary Lynn is having trouble getting information on the status of the three projects she chose. Communication be- tween the project managers and the Quality Improvement Department is not always timely. She wants to be sure that all three are completed in plenty of time before the survey is scheduled. Mary Lynn also wants to be able to tell where the projects are in relation to each other, as they all need to be completed by a certain date. She wonders how she can tell if they are behind or ahead of schedule.
Question: What would you recommend Mary Lynn do?
Stoneworth Paving Company
Stoneworth Paving Company specializes in highway paving jobs for the State of Virginia. When the state first awarded Stoneworth the contract, they stipulated a 1 percent penalty for each week Stoneworth was late on a completion date.
Preston Flintrock, the project coordinator for Stoneworth, began to notice that the last two jobs were three weeks late, and the paving job that was due to be completed in the next two weeks was behind schedule. When Preston went in the field to investigate, he found the job to be understaffed,
supplier delays, and a high work rejection rate/repaving needed. As a result, Preston decided to establish a better sys- tem of project control and present it to his boss.
Question: If you were Preston, what characteristics would you be looking for in a new control system? Will a new control system be adequate for the problem? Explain.
Happy Customers
J. Z. Smith is a small consulting firm specializing in imple- menting new information systems installation projects for service agencies. J. Z. Smith has a standard project action plan for the implementation projects they work on. They feel very confident in the project plan they use; all steps are included and the costs are estimated well.
The project teams are very entrepreneurial and have great relationships with their small client base. The com- pany works with their clients informally following the standard action plan. They provide weekly progress re- ports for the client and for Jeremy Smith, the president of J. Z. Smith. Jeremy has noticed that they have problems with meeting budgets and due dates. He thinks his teams allow their clients to add steps to the projects. A current client, the local welfare department has asked J. Z. Smith, to help them implement a newly purchased Dead-Beat- Parent tracking system. Jeremy is nervous and wants to be sure that they meet the specifications of this new project.
He is not sure if the standard action plan needs changing or if there is something else he should do.
Question: What do you suggest Jeremy Smith do?
Cable Tech, Inc.
Cable Tech is a contract cable wiring company. It pro- vides support to local cable companies in seven states in the midwest. Cable Tech has one operation in each state, and they vary in size from 60 to 250 employees. A disturb- ing trend has been developing for the last couple of years that Cable Tech management wishes to stop. Incidences 26. A project has just completed the 87th item in its ac-
tion plan. It was scheduled to have spent $168,000 at this point in the plan, but has actually spent only
$156,000. The foreman estimates that the value of the work actually finished is about $162,000. What are the spending and schedule variances for the proj- ect? What are the SPI and CPI?
27. The following project is at the end of its sixth week.
Find the cost and schedule variances. Also find the CPI and SPI. Then find the critical ratio of the project using earned value calculations. Finally, calculate the ETC and EAC for the project.
Dura- Actual %
Prede- tion Budget Cost Com- Activity cessors (wks) ($) ($) plete
a — 2 300 400 100
b — 3 200 180 100
c a 2 250 300 100
d a 5 600 400 20
e b, c 4 400 200 20
28. Repeat Problem 26 using MSP (omit calculation of CPI and SPI).
CASE • 267 of tardiness and absenteeism are on the increase. Both are
extremely disruptive in a contract wiring operation. Cable Tech is nonunion in all seven locations, and since man- agement wants to keep this situation, it wants a careful, low-key approach to the problem. Assistant Personnel Manager Jean Alister has been appointed project manager to recommend a solution. All seven operations managers have been assigned to work with her on this problem.
Jean has had no problem interfacing with the opera- tions managers. They quickly agreed that three steps must be taken to solve the problem:
1. Institute a uniform daily attendance report that is summarized weekly and forwarded to the main office.
(Current practice varies from location to location, but comments on attendance are normally included in monthly operations reports.)
2. Institute a uniform disciplinary policy, enforced in a uniform manner.
3. Initiate an intensive employee education program to emphasize the importance of good attendance.
In addition, the team decided that the three-point pro- gram should be tested before a final recommendation is presented. They thought it would be best to test the pro- gram at one location for two months. Jean wants to con- trol and evaluate the test by having a daily attendance report transmitted to her directly at headquarters, from which she will make the final decision on whether or not to present the program in its current format.
Questions: Does this monitoring and control method seem adequate? What are the potential problems?
C A S E
St. Dismas Assisted Living Facility Case—5 It is now just 4 months until the Assisted Living Facility project is scheduled to be completed. The project team is ex- cited because they can watch the construction of the facility and feel they are moving toward the end of this project.
Every week since construction began, the construction project manager, Kyle Nanno, has been holding a meeting of his project team. At the meetings he invites representa- tives of the construction company, the facilities manager from St. Dismas, the Director of Security, and other key peo- ple as he deems necessary. The meetings are scheduled every Friday at 1:00 PMand last not more than one hour. No mat- ter who is or is not there, Kyle starts the meetings exactly at 1:00 PM. Kyle developed the following standing agenda:
1. Review schedule and budget as of today’s date 2. Review schedule and budget for next two weeks 3. Issues impacting schedule or budget
4. Next steps and action items to be completed
The construction project update presented at the April 11, 2001 meeting is shown below.
After each meeting the construction project manager emails the minutes of the meeting and the action item list generated to each member of the Construction Project team. He also sends the information to Fred Splient, the president of St. Dismas, as well as to each member of the ALF Project Steering Team.
Following the update is the most recent copy of the action items generated at the 4/11/01 construction project meeting.
Upon reading the minutes and action items from the week’s meeting, Fred got quite angry. Fred read the
minutes every week and would immediately phone Kyle to ask why certain decisions still had not been made. This week he wanted to know why the location of the security panel had not been picked out yet, and what the hair salon issue was about. Kyle decided that these matters would be better discussed face to face. He went to Fred’s office.
Kyle proceeded to explain to Fred that the Director of Security, Frank Geagy had not attended the construction project update meeting in weeks. Kyle said that Frank in- formed him that in light of the cost cutting going on in the hospital, he is short staffed and cannot hire a new security guard. Frank states that he personally has to cover shifts dur- ing the time when the update meetings take place. Kyle told Fred that he was not comfortable making the security panel decision without the head of security’s input, and that Frank has not returned his phone calls or answered his emails. Fred Splient proceeded to tell Kyle in a very loud and angry voice, “That guy is not short staffed and is not busy covering anyone’s shift. Who does he think he is?” Fred instructed Kyle to tell Frank to answer the contractor’s questions im- mediately or the decisions would be made for him.
Kyle said he would do so and then changed the sub- ject. He told Fred that they were still waiting for the city officials to approve the parking lot construction permit.
St. Dismas’s legal officer estimated that it would take 8–10 weeks to hear back on approval. Kyle allocated that amount of time in the schedule.
Kyle received notice from Fred to proceed with the parking lot project on January 11, 2001. On February 9, he submitted the application for a permit, complete with appropriate plans and descriptions of the proposed lot, and allocated 10 weeks to wait for the county to notify him. He expected approval on or before April 19 and