Week 6_ SeeGod Meregini_ Correctly assessing project performance with contractors

While supervising project controls work for different contractors, I found out some problems in the way project performance was analyzed and controlled, I would highlight some alternative solutions used by some of these contractors. I would also provide a possible solution based on recommended practices in any of these alternatives.

The problem is how to correctly implement project performance assessment.

Some alternative solutions carried out by different projects to the problem were:

·         1. Use the progress assessing methodology by contractors.

·         2. Modify the contractor’s methodology with the clients.

·         3. Impose the clients’ methodology on the contractor.

·         4. Use a standard best practice methodology.

I discovered that the outcomes of these alternatives were:

·         1. The Contractors‘s in-house progress performance assessment process does not fit all    types of projects. Also, in trying to customise the process, inconsistencies in creating performance baseline were done.

·         2. While modifying the contractors’ progress methodology to suit the clients’ own, establishing consistent control limits was a gap.

·         3. A major issue here was wrong assessment of labour productivity.

·         4. While it takes more time and effort in establishing best practices in project performance assessment, this method makes the project easy to trace and control variances.

A further breakdown of these best practices is:

Ø  Create a chart of WBS work packages having estimated cost, accountable person and a way to measure completion.

Ø  Create performance measurement baseline – develop a chart showing each deliverable across a time line, along with the cost of the deliverable ( i.e. PV)

Ø  Establish control limits – establishing some measurement criteria to indicate when project performance is too far from baseline.

Ø  Measuring project progress at any point in time by comparing PV (derived from performance measurement baseline) with EV (derived from performance reports) and AC (derived from cost accounting system).

Ø  Reviewing performance variances using EVM (SV, CV and so on). Also, bearing in mind that Labour productivity factor = Expended Hours/Earned Hours, where the earned hours = percent physical progress * control budget hours.[1]

Ø  Reviewing performance indices – SPI and CPI (most helpful in comparing performance across projects, deliverables and various levels of WBS)

Ø  Developing a forecast – EAC, EDAC (only for critical path), ETC and so on.

Ø  Taking preventive and corrective actions – correcting negative schedule and cost variances. Also, correcting deliverables that do not meet Acceptance criteria.

Ø  Establishing new baselines for the project – in response to scope change or if the original estimates are so incorrect that performance measuring does not provide reliable information.

My selection criterion for this problem is that the alternative to be chosen must objectively meet best and recommended practices.

Analyses of all alternatives bearing in mind my selection criteria showed the following results:

·         Alternative 1 showed lack of consistency and created room for rejected contractor reports – invoices etc. hence should not be used.

·         Alternative 2 also lacked clarity and control of all project variances. This alternative should not also be used.

·         Alternative 3 had a huge problem of acceptance by contractors. When this method manages to become implemented, a lot of claims by contractor occur. This method should not be chosen.

·         Alternative 4 involves a lot of collaborating effort on the part of contractor and client .It is also very consistent in its method with almost any project. This most definitely would easily create a win-win position for both contractor and client.

I recommend Alternative 4 based on the reasons above and its capability to exceed the selection criteria.

For performance monitoring, I would use quality submission and acceptance of deliverables based on Acceptance Criteria with a labour productivity of less than 1. Another key performance guide is a positive variance and an index greater than 1.

For post evaluation of results, the metric would be how much claims would need to be paid for. If too many claims are received, a through and rigorous review of the project performance process to adhere to these best practices would be done.

References

Giammalvo, P. D. (2010). AACE Certification Prep Course [PowerPoint slides], Day 5. Lagos: Nigeria.

Sullivan, W. G., Wicks, E.M., & Koelling, C.P. (2009). Engineering economy and design process. In M.J. Horton (Ed.), Engineering economy (14^th ed.) (chapter 1.3) (pp. 27). New Jersey, NJ: Pearson Education, Inc.

AACE International Education Board. (2010).Progress Measurement and Earned Value. In S.J.Amos (Ed), Skills & knowledge of cost engineering (5^th ed) (chapter 14) (pp.14.1-14.6). Morgantown, West Virginia: AACE International.

Humphreys, G.C (2002) Performance Measurement Calculations. Project management using earned value (chapter 34). (pp.675-701). California, CA: Humphreys & Associates, Inc.

AACE International Education Board. (2006). Project Performance Assessment. In J.K.Hollmann (Ed), Total cost management framework – A process for applying the Skills & knowledge of cost engineering (1^st ed) (chapter 10.1) (pp.199-208). Morgantown, West Virginia: AACE International.

Tate,T, & Stackpole,C. (2006) Controlling Project Progress.The advanced project management memory jogger(1^st ed) (chapter 7) (pp.91-110). Salem,NH: GOAL/QPC

---

[1] AACE International Education Board. (2006). Process Map for Project Performance Assessment. In J.K.Hollmann (Ed), Total cost management framework – A process for applying the Skills & knowledge of cost engineering (1^st ed) (chapter 10.1.2.6) (pp.205). Morgantown, West Virginia: AACE International.