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ADynamicModelforProjectReviewintheConstructionIndustry

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ITcon Vol. 16 (2011), Elyan, pg. 578

1. INTRODUCTION

Project review is a process, which may take place at anytime throughout the project life. It is an evaluation and prediction process undertaken at any time during the project life cycle.(Eleyan, 2006). Evaluation aims to evaluate the current situation of a project against the main objectives of time, budget and quality through consideration of the project work as a leading parameter. Prediction aims to forecast the project’s future against project time, budget and quality then compares predicted values with those forecasted. To understand the current behavior of a project, the main factors; cost, schedule, resources and quality should be reviewed. From the current behavior, it is possible to predict the future of the project, e.g., prediction of a project completion time, its budget at completion, types and amount of resources needed to undertake the future work. An early detection of variance in predicted outcomes is a concern to all Project Managers (Moselhi 2006). Project review should be an essential part of any project. To be effective, it must be in-depth and directed at full understanding of proposed solutions. The sooner the Project Manager Implements project reviews with an understanding that integrity during discussions is primary, the better chance for success to achieve. Project review plays a major role in determining project success. A project’s success can be predicted by reviewing the past performance of the participants. Project success demands timely evaluation of all activities and performance (Gaynor 1996). A wealth of research in project management has identified variant of measures which described the outcomes of a project and the input characteristics that impact these outcomes. The most commonly cited project outcomes include cost, schedule, performance and client satisfaction. Although a general definition of project success still elusive (Farris 2006). However, traditionally project success, effectiveness and performance were related to the three principal criteria of attaining target dates, achieving financial plans and controlling the completion of a project to a specified quality (Barber and Miley 2002). The foundation of this tradition corresponds to the management concept that project success means the level of satisfaction with the achievement of the three criteria of: on time, on budget and completion of work to a specified quality. Effectiveness is related to the achievement of goals. In this way, a project’s success corresponds to the effectiveness and efficiency of the project. Effectiveness is the achievement of project goals while efficiency in economic term refers to the maximization of output for a given level of input or a resource (Freeman and Beale 1992). According to Wit (Wit 1988), there is a difference between project success and project management success. Project success is measured against the objectives of a project, while project management success measured against the traditional measures of performance against time, cost, and quality. Another distinction, which is also important to address, is the success criteria and success factors. Success criteria enable the project to be judged and measured against predefined criteria as set out of the project objectives. Success factors are those factors which, if followed, are likely leading to a successful conclusion, whilst the absence of these factors is likely leading to a failure (Cooke 2002). This paper presents a system dynamics model to facilitate the performance of project review. This model uses a set of parameters to predict future cost and duration not only at completion but also at anytime throughout the project life. Potential cost overruns and schedule slippage are determined using the predicted results and the planned values of costs and durations. The outcome of the model simulations is useful in evaluating the project status at anytime of the project life. This model is intended to be used by members of project team when performing a project review.

2. SYSTEM DYNAMICS AND PROJECT MANAGEMENT

System dynamics is looking at the project as a whole - neither as a sum of parts nor as a composition of different elements or tasks, e.g. activities as reconstructing the project from its elements and calculating the duration, cost and resource requirements of the whole project from those of its elements. This concern means that system dynamics looks at the interrelationship between these different elements and the influences between each others (Sterman 1992). This approach facilitates and encourages managers to examine the feedback loops, which rule the project dynamics. The two feedback loops both balancing and reinforcing describe the major non-linear aspects in the project. System Dynamics also offers and facilitates an experimental model with management options. Nowadays project management is treated as one of the most important fields but it is mostly a poorly understood area of management. Project management still encounters the problems of delay and cost overruns. The over schedule and over budget are considered chronic problems in different project management fields as constructions, defense, aerospace, etc. These projects often appear to be going smoothly until near the end when

ITcon Vol. 1

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ITcon Vol. 16 (2011), Elyan, pg. 580

3.2. Project Review meta- Model

The Meta-model of a Project Review in FIG. 2 below confines the important variables, which construct a general project and affect its behavior. These elements are usually considered when conducting a project review. In each milestone, Project Managers need to evaluate these elements to gain a clear picture about the actual situation of a project. This evaluation will give them a good indication about the status of a project whether the project is on track or there are some deviations or impediments. The following sections clarify each variable, discuss it in detail, and discover how can be measured and used to correctly predict the future performance of the project.

3.2.1. Project Work The project work is the core of the model. It determines a project cost, schedule and resources necessary to perform the project. The project work is normally defined in detail using the Work Breakdown Structure (WBS) and shows the total work scheduled. The work scheduled is measured in working hours, which means how many working hours a project requires to perform a specified product. On each milestone, the work performed is measured and compared with the work scheduled (Kauffmann, Keating et al. 2002). The project work in FIG. 2 is a structure of different types of work attributed to different staff, e.g. the work of a project general manager, site manager and site engineer, etc., also the work of sub-contractors who are usually contracted to do a specific job as electrical, drainage, plumbing, heating and so on. Each type of resource performs its own work; the work is determined by work rate, which is the product of number of staff and their productivity. Knowing how much work is scheduled and how much has been performed, the project’s current situation will be obvious and the future can be predicted depending on the project’s current performance. In FIG. 2, project work has two values: planned and actual depending on the resources (which may be planned or actual). The planned resources, the planned work to be done and the planned work rate are already determined in the project plan throughout the project planning stage. The planned staff and their planned productivity determine the planned work rate as show in equation (a):

oductivityPlannedffPlannedStakRatePlannedWor Pr [a]

ITcon Vol. 1

FIG. 2: P

The plannThe planmonth is performethe work rework frthe work will be us

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16 (2011), Elyan,

Project Review

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, pg. 581

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ITcon Vol. 16 (2011), Elyan, pg. 582

3.2.3. Project Cost Project cost as shown in FIG. 3 is another important element in the conceptual model. The project cost means the amount of money needed to perform the project. In the project planning stage, the project budget is estimated and the cost is determined. When the project starts, there is a planned budget for each task to be performed; this means the planned amount of money to be spent to accomplish the project work. The planned value is determined as shown in equation (b). The planned budget is the sum of the planned values of the project which is incurred each month (Vargas 2003) as in equation (c). The cumulative planned value is the budget at completion. Each time, the planned value is calculated from the planned work performed.

ourRatePlannedLabkPerformedPlannedWoruePlannedVal [b]

mpletionBudgetatCouePlannedValn

i 1

[c]

Equation (c) shows the accumulated planned value where n is the number of time intervals in which the planned value is calculated. It is accumulated on a monthly, weekly or pre-agreed basis. It is generated as an accumulative planned value. The accumulative planned value is equal to the planned budget at the end of the project or budget at completion (Fleming and Koppelman 2000). Equation (d) shows that the earned value is generated from the actual staff and their actual productivity but using the planned labor rate as follows:

ourRatePlannedLabPerformedActualWorkeEarnedValu [d] The planned labor rate is used here instead of actual labor rate because the definition of the earned value is the budgeted cost of work performed (BCWP) (Fleming and Kopelman 1999). The third important value is the actual cost value. Equation (e) shows that the actual cost value is generated from the actual staff, their actual productivity and actual labor rate.

LabourRateActoductivityActStaffActtCostValueAc .Pr... [e] After generating the planned value, earned value and actual cost value of the project work already done, the project review will perform the evaluation process to evaluate the current situation of the project to generate a clear picture about the project’s actual behavior, and then run the prediction process to predict its future. Earned value and planned value are used to calculate schedule variance to find if the project is performing on schedule or whether there is a schedule slippage (Energy 2004). The schedule variance is the difference between the earned value and the planned value (Barr 1996). If the difference is positive then the project is ahead of schedule, however, if it is negative then the project is behind schedule; therefore the Project Manager should take a corrective action to overcome this problem and return the project back to plan. Another important attribute, which can be an indicator of the project’s schedule, is the schedule performance index, which is the division of the earned value over the planned value (Barr 1996). If the result is one then the project is on schedule, but if the result is below one then the project is facing a schedule slippage. The project review also calculates the cost variance and cost performance index using the earned value and the actual cost value to explore if the project is performing within budget or having a budget overrun. The cost variance is generated from the difference between earned value and actual cost value (Barr 1996). If the difference is positive then the project is under budget, but if the difference is negative then the project is facing budget overrun. In addition, the cost performance index is useful to explore the budget situation. The cost performance index is the division of earned value over Actual Cost value (Anbari 2003). If the result is one, then the project is within budget, but if it is less than one, then the project is going over budget. From the cost performance index, budget at completion and earned value, it is easy to find out how much money is needed to complete the project (ETC), and how much the project will cost at the end, in other words, estimate at completion (EAC) (Vargas 2003).

ITcon Vol. 1

FIG. 3: P

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, pg. 583

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ITcon Vol. 1

FIG. 4: P

The projeto complshould betechnical measuremIn the procompletioactual stathe financbe availab 3.2.5. Project reproject. Tstaff avainumber oto accomearned an

16 (2011), Elyan,

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, pg. 584

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ITcon Vol. 1

FIG 5: Pr

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16 (2011), Elyan,

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ITcon Vol. 1

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3.4.

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3.4.1. This modresourcesthe projecAfter thefollowing

16 (2011), Elyan,

Project Review

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schedule. Froble, therefore,pes were dete

del

at there is a retual performato spot the d

rrun problems

roject review, ion and gaininhavior of the m

ck and Flow

in simulating h the real resuview tool. Thsal loops, plannoted into a ned.

and Flow Moables needed om model sim, to predict theermined, the

elation betweeance and projedeviations in s by compari

there is a neng results. Stomajor variable

w Model

the model, teults using a cahe stock and

anning, actual new symbol -

odel to conduct a

mulation, it is e project’s fustock and flo

en project planect actual cosschedule, i.e

ing the actua

eed to construock and flow des in the system

est it with diffse study. Thisflow model performance

stock, flow o

a project revpossible to de

uture as it willow model wa

nning and projst from the ot. exploring sc

al performanc

ct a stock anddiagram is usem.

ferent scenarios validation wis composed and actual c

or converter.

view. It encomepict the planl be shown in as constructed

oject actual perther side. Thechedule prob

ce with the a

d flow diagraed to simulate

os to see howwill judge the md of three seccost causal loThe followin

mpasses projn and actual sin the simulatiod and appear

rformance e first one lems. The

actual cost

am to help e different

w it works, model and ctors. It is ops. Each g sections

ject work, ituation of on section. red in the

ITcon Vol. 1

FIG. 7: G

Figure 7 working done willwork rateand workaccumulawork to bplanned vPlanned-mwork. Asconsumedconductedwas actuacalled mamaterial d

It is the swhich is conveyoraccumulaplanned vequipmen

3.4.2. Project aproject. FIt is assumthe projecwork to btheir actuwork up tto find d

16 (2011), Elyan,

Generic Projec

is a reflectionhours outstanl decrease in e. These workk in the conated in anothebe done and revalue is depenmaterial-resous the project d are accumud. As the projally consumedaterial consumdefects are acc

same methododecreased by

r to be inspectated in anothevalue. The fant planned val

Project Actactual performFigure 8 belowmed that the wct launches, thbe done is decual productivito a month un

defects. These

, pg. 587

ct Planning Se

n of the projending to comprelation to the

king hours are nveyor is inser stock calleeworked. The

ndent on the plurces are alsoprogresses, m

ulated in a cject review is d and how mumed. From thecumulated int

ology for plany the plannedted at the ender stock calledailed work is lue are then ac

tual Performamance sector iw shows all thwork to be dohe work to becreased in relaty determinesntil the projece defects are

ector

ct plan. The mplete the projee planned woaccumulated

spected againd work-perfowork perform

lanned amounrepresented a

materials usedconveyer unti

conducted, thuch was rejecte amount of mto a stock calle

nned equipmed equipment-wd of the monthd planned equreturned for rccumulated to

ance Stock anis another stoche variables coone stock is th done is the sation to the acs the work ratt review is coreturned bac

model containect. As the pr

ork rate. The pin a conveyor

nst quality stormed. The wmed is used tont of work peras a stock, i.ed will relate il the end of he materials cted. The real mmaterial consed planned ma

ent work. Theworking rate. h, when the pruipment workrework. The w

o generate accu

nd Flow Modck and flow momprising the he same as theame as plannectual work ratte. The work onducted. Theck to work to

ns the plannedroject progresplanned staff r. After each mtandards. The

work, which fao determine thrformed. e. contains all to the materi

f the month wconsumed are materials consumed, materiaterial defects

planned equiThe equipm

roject review k performed, wwork plannedumulative plan

del model. This rproject actua

e planned wored work to bete. The numberate flows in

e project revieo be done st

d work to be sses, the plannand their prodmonth, a projee work passiails, will be rhe planned val

the materialsial consumptiwhen the proinspected to

sumed will be al planned va

s.

ipment work ient work donconducted. Twhich will ded value, maternned value fo

represents thel performancerk-to-be-donee done. As theer of staff wor

a conveyor, ew inspects thtock for rewo

done, which mned project wductivity deteect review is ing inspectionreturned to thlue. This mean

s needed for tion rate. The oject review see how muc accumulated

alue is determ

is representedne is accumu

The work passetermine the erial planned v

or the whole pr

e actual situate stock and floe. This means e project progrrking in the pwhich accum

he work in theork. The wor

means the work to be ermine the conducted n will be

he planned ns that the

the project materials

is usually h material in a stock

mined. The

d as stock, ulated in a ed will be equipment value, and roject.

tion of the ow model. that when resses, the

project and mulates the e conveyor rk passing

ITcon Vol. 1

inspectionplanned l

FIG. 8: G

Besides tproject wThese maproject reaccumulastock callmaterial eThe actuaThis amothe actualof the moequipmenthe equipcumulativ 3.4.3. The thirdas the plamodel is equipmenproduct omonthly called tot

16 (2011), Elyan,

n is accumulaabor rate to de

Generic Proje

the project wowork done. Thaterials are acceview, the mated in anotheled actual maearned value ial equipment

ount of work il equipment wonth to see if nt work perforpment earned ve earned valu

Project Actd sector of theanning and actconstructed asnt cost valuesof actual stafwork. When

tal work. The t

, pg. 588

ated in a stocketermine the w

ect Actual Perf

ork, there arehe actual matecumulated in

materials, whier stock calledaterials consumis calculated. work to be ds represented

work rate. Theit conforms tormed. This amvalue. The w

ue for the who

tual Cost Stoce project revietual performans appeared in . The work co

ff and their athe project retotal work and

k called actuawork earned v

rformance Sec

material anderial consumpta conveyor. Ach are accumd actual matermed. From the

done is the woas stock calle

e equipment wo quality stan

mount of workwork, equipmeole project.

ck and Flow Mw model is thnce sectors. AFigure 9. Theost value is g

actual producteview is condd actual work

al work perforvalue.

ctor

d equipment rtion rate repre

At the end of emulated in thrial defects. Te actual mate

orking hours ed actual equipwork done is andards. The wk and the planent and materi

Model he actual cost After all variabe accumulativegenerated fromtivity. This w

ducted, the actlabor rate are

rmed. The act

resources. Theesents the ameach month, thhe conveyor, The actual pasrial consumed

the equipmenpment work toccumulated inork passed is

nned equipmenial earned val

sector. This mbles are determe actual cost i

m the total wowork is accumtual monthly

e used to calcu

ual work perf

ese resources ount of mater

he project reviwill be inspe

ssing materiald and the mat

nt will work too be done. Thin a conveyor aaccumulated nt cost per holues are accum

model is constmined, the acts generated fr

ork done. The mulated in a work is trans

ulate the work

formed is use

are required rial consumediew is conducected. The dls are accumuterial planned

to complete thhis stock is decand inspected in a stock cal

our are used tomulated to ge

tructed in the tual cost stockrom work, ma actual work conveyor cal

sferred to anok cost value.

d with the

to get the d monthly. cted. In the defects are ulated in a

price, the

he project. creased by at the end

lled actual o calculate enerate the

same way k and flow aterial, and rate is the led actual

other stock

ITcon Vol. 1

FIG. 9: G

The mateaccumulamaterials and the acThe last vmonthly work andmaterial a

3.5. C

The caseoperates projects. the projec

The proje

16 (2011), Elyan,

Generic Projec

erial actual cating in a conv in the conveyctual materialvalue is the eequipment wo

d actual equipactual cost and

Case Study

e study is a cthroughout thThe project stct was a full 1

ect is briefly d

Design, bu

Refurbish

Construct

Structural

Each unit t

Demolition

Lay foul a

General la

Hot asphal

, pg. 589

ct Actual Cost

cost is calculveyor called myor are transfel costs per unitequipment actuork. This wor

pment cost perd equipment a

y

onstruction phe North of Etarted on 1st O2 months.

described as fo

uild & commi

and remodel

five new unit

steel frame w

to contain off

n of two store

and surface wa

andscaping and

lt and white li

t Sector

lated in the smonthly matererred to a stoct are used to cual cost. The

rk is transferrer hour are useactual cost are

project commeEngland. InduOctober 2003

ollows:-

ssion nine ind

an existing wa

s built on a re

with fire protec

fice, toilet and

ey building an

ater drainage a

d stone bound

ining to yard a

same way asrial consumedck called totalcalculate the m

equipment wed to a stock ed to calculatee accumulated

enced by theustrial warehoand finished o

dustrial units.

arehouse into

einforced conc

ction to bound

d kitchen with

nd provision of

and connect to

dary walls.

and car parkin

s work actual until the monl material conmaterial actualwork is accum

called total eqe the equipme

d to show the a

ABLE Consouse office don 30th Septem

five starter un

crete raft foun

dary condition

a potential to

f electrical wo

o utilities main

ng areas.

l cost. All mnthly project resumed. The tol cost.

mulated monthlquipment worent actual costactual cost for

truction Northevelopment ismber 2004, th

nits.

dation.

ns, and roller s

add a mezzan

orks, plumbing

ns.

materials consreview is condotal material c

hly in a converk. The total et. The work cr the whole pr

h West. Thiss one of its

herefore, the d

shutters to eac

nine floor.

g and heating

sumed are ducted. All consumed,

yor called equipment cost value; oject.

company successful

duration of

ch unit.

works.

ITcon Vol. 1

3.6.

A simulatmodelingcontains w

Work simManagemwork. Plavalue. Usschedule shows thebehind scis within site engin

Resourceaims to cbetween pbetween p

Equipmenequipmenthe accur

3.6.1. The modproject wbe finisheresourcesperform mwith the planned m

FIG. 10:

16 (2011), Elyan,

Model Sim

tion could be g process, onework, resourc

mulation meament work simanned and actusing these valuand cost varie accomplishm

chedule. The cthe planned b

neering, survey

e simulation iscompare plannplanned and aplanned, earne

nt simulationnts used. This acy of the pla

Work Simudel offers the work is helpfuled as per the ps. For examplemanagement tamount of womanagement w

Graph shows

, pg. 590

mulation

described as ae tries to find tce and earned v

ans the simulamulation for eual managemeues make it eiances and thement of manacost performanbudget, over orying, block w

s the simulatined material actual. This hed and actual.

n aims to comgives a clear

anning process

ulation ability to siml in the planniplanned schede, in the projetasks in the prork planned awork simulatio

s planned man

a simplified rethe behavioravalue simulati

ation of diffeexample, showent works are asy to depict e schedule anagement worknce index shor under budge

work and so on

ion of both mto be consumelps to find th

mpare the plapicture, show

s.

mulate plannedng phase to as

dule using the ct-planning ph

roject. The moand assess whon.

nagement work

epresentation al rules underlions.

erent types ofws the planneused in calcuthe real situa

nd cost perfork according toows the monetet. The model n (Fleming and

material and eqmed with whahe accuracy o

anned equipmws the differen

d project workssess accuracy available reshase, the projeodel is useful hen it will fini

k simulation

of a system (Dlying the syste

f work planneed managemenulating planneation of managrmance indexeo schedule i.etary situation ooffers a simu

d Koppelman

quipment resoat is actually f the planning

ment needed tnce between pl

k and actual py and to discoources, or whect team deterin verifying thish. The follow

Drappa, Deiniem to be mod

ed and work nt work and td value, earnegement work es. The sched

e. if it is perfoof managemenlation for all t1994).

ources. Materconsumed to g process by d

to perform prlanned, earned

project work. over whether thether it will ermines the amhe accuracy owing figure sh

inger et al. 199deled. Model s

already accothe actual maed value and aby calculating

dule performaforming on, ahnt work, i.e. itypes of proje

rial resource sindicate the

depicting the

roject work ad and actual, a

Simulation othe work is onexceed it and n

mount of work of planning byshow an exam

96). In the simulation

omplished. anagement actual cost g both the

ance index head of or f the work ct work as

simulation difference difference

and actual and shows

of planned n course to need more needed to feeding it

mple of the

ITcon Vol. 1

It is clearmonth 12the defecmonth 12

Simulatiocompare planned, to adjust simulatio

FIG. 11:

Figure 1111 to comthe projecbring it b

The otherthis modeproject w 3.6.2. Material actual costhe differbudgeted value is tMaterial Figure 12

16 (2011), Elyan,

r from Figure2 as planned. cts are about 2 or the forthc

on of actual pwhat was plabehind or ahethe project du

on of actual pr

Graph shows

1 shows that thmpare the planct work and asack on schedu

r type of simuel are material

work simulatio

Material Reresources simst. In additionrence between

amount of mthe budgeted actual cost is

2 below shows

, pg. 591

e 10 that plan A few hours10 hours; theoming month

project work hanned againstead of plan. Thuring the earlyroject managem

s actual manag

he project’s anned work anscertain if theule.

ulation the ml and equipmen

esources Simmulation is usn to these valun the budgetedmoney planne

amount of mthe amount o

s materials pla

nned managem represent the

erefore, the Prs by increasin

helps to ascert what has achis gives the Py stages beforement work.

gement work s

ctual work wad actual work work can be

model offers isent resources.

mulation ed to show thues, the modeld use of materd to purchase

money for theof money incuanned, earned

ment work to e defects, whiroject Manag

ng the work to

rtain the true ctually been cProject Manage problems oc

simulation

as finished at k will enable tcompleted as

s the Project R The other re

he materials pl facilitates thrials and theire materials nee actual amouurred from us

d and actual co

be done is gich resulted frger could cons be done in th

progress of tcompleted, toger the opportccurs. The foll

month 12 as pthe Project Mplanned or w

Resources Simesource is hum

planned valuehe calculation r actual usage.eeded to carry

unt of materiasing the actuaost values.

going to be corom the projecsider perform

hat month.

the project. T see if the prtunity to impllowing figure

planned. Usinanager to undhether it requi

mulation. The man resources,

, material earof material u Material plany out project

als already col amount of m

ompleted by tct review proc

ming this rewo

This enables throject is perfolement correct shows an exa

ng Figure 10 aderstand the siuires corrective

e two main re, which was u

rned value anusage variancenned value rework. Mater

onsumed in thmaterials in th

the end of cess. Here ork during

he user to forming as tive action ample of a

and Figure ituation of e action to

sources in used in the

d material e, which is fers to the

rial earned he project. he project.

ITcon Vol. 1

FIG. 12:

Material action to alternativmaterial t

Materia

This willamount otable belowas muchalternativ

FIG. 13:

Another ivalue is c

16 (2011), Elyan,

Material Plan

simulation hereduce the ac

ves to do the to be consume

ageVaralUs

l be used as aof material plaow shows thath more than m

ve materials.

Material usag

important comcompared with

, pg. 592

nned Value Ea

elps in understctual cost throsame work.

ed and the actu

Merianc

an indicator. Ifanned is what t at the end ofmaterial plann

ge variance

mparison is to h the materials

arned Value a

tanding the maough either reThe material ual materials a

anMaterialPl

f the variancethe project re

f the project thned. To reduc

find out hows planned valu

and Actual Co

aterial usage aeducing the us usage varianas shown in e

nedValue

e is zero then equired with nhe difference

ce the differen

w accurate the ue as shown in

ost Value

and enables thsage rate or snce refers to quation (f).

MaterialAc

what was plano need to puwas £70,421.

nce, it is possi

materials wern the followin

he Project Manourcing morethe difference

tualCostVa

anned is consurchase more m37 meaning thible to substit

re planned whg table.

anager to take e cost effective between th

luea

umed, meaninmaterial. Howhat materials tute more cos

hen the materi

corrective ve material he planned

[f]

ng that the wever, the consumed t effective

als earned

ITcon Vol. 1

TABLE 1

Table 1 earned vastated thaearned vaor materishows tha 3.6.3. Equipmevalue, equamount oearned vavalue is th

FIG. 14:

16 (2011), Elyan,

: Comparison

shows there walue is more tat the final eaalue, which stial consumedat the planning

Equipmentnt Resources uipment earne

of money assialue is the budhe actual amo

Equipment P

, pg. 593

n between mat

was a differethan the plannarned value sates that the e. Therefore, tg process of m

Resources SSimulation i

ed value and eigned to buy odgeted amounount of money

lanned Earne

terial planned

nce between ned value, thi

should not excearned value ithe gap betwematerial resour

imulation is the same aequipment actor hire equipm

nt of money foy already incur

d and Actual

d value and ma

material planis is against tceed the finas the budgetedeen the materrces was not a

as material retual cost valuement that wasor equipment rred to buy or

Cost Values

aterial earned

nned value anthe principlesl planned oned amount of mrial planned vaccurate and r

esources simue. Equipment s needed to palready used hire equipme

d value

nd material eaof the earned

e. This is frommoney for the value and theequired revisi

ulation. It shoplanned valueerform the prin the project.nt.

arned value. d value. The m the definit

e actual work pe material earion.

ows equipmene explains theroject work. E. Equipment a

When the principles ion of the performed rned value

nt-planned e budgeted Equipment actual cost

ITcon Vol. 16 (2011), Elyan, pg. 594

Figure 14 above shows the monthly equipment planned, earned and actual cost values. The Project Manager compares these values to get clear view of the equipment resource situation. The equipment planned and earned values are approximately close to each other but the equipment actual cost shows that it is more than the planned and earned meaning that the project hired more than it planned or the actual cost per hour exceeded the planned cost per hour and incurred more cost.

3.6.4. Earned Value Simulations Earned Value Simulations consider cumulative planned, earned and actual cost values and uses them to calculate some important indicators to help understanding the overall situation of the project. The correlation among these values allows for the verification of results for the project and continues the evaluations and future projections of final cost and duration. In order to relate between these three values there are the following indices and variances.

3.6.5. Cost Performance Index and Cost Variance

Cost Performance Index (CPI) is the ratio between the Earned Value (EV) and the Actual Cost (AC) (Vargas 2003). The CPI in equation (g) indicates the conversion between AC used by the project and the EV in the same period, and provide information to show how much is earned of what was already spent.

CPI= ACEV / [g]

When CPI equals one, the value spent by the project is integrally earned to the project and it is within budget. When the CPI is less than one, the project is spending more than planned when the calculation was made. If the CPI is more than one, the project costs are less than forecasted when the calculation was made.

Cost variance (CV) is the comparison between the values of the work performed with the actual cost of work performed. CV in equation (h) is an objective indicator. It is the money value of what is accomplished for the resources expended. Mathematically it is expressed as-

CV= ACEV [h]

A positive cost variance indicates that the work is accomplished for less resource expenditure than earned. A negative cost variance indicates that the work accomplished costs more than earned resource value (Vargas 2003). From the equation above, CV is determined by the EV and AC. If the project is over budget according to the value of CV, it would be possible to bring the project back to the budget line by manipulating the actual cost value to reduce the actual cost which will reduce the CV. This will happen by seeking alternatives to the resources used in order to lessen the costs incurred e.g., for human resources it may be possible to hire less skilled staff (Barr 1996).

ITcon Vol. 1

TABLE 2

Table 2 sthe projecas the wreaching project. T15% and an early opportuni

3.6.6.

ScheduleValue (PV

SPI= EV

When SPperforminperiod deexpected

Schedulebetween tnot reveabehind sc

SV= EV

A positivvariance and PV, iby manipwould hathe numb

16 (2011), Elyan,

2: Cost Varian

shows the valuct, the cost pe

work performe94% at month

This simulatiothe 85% of cowarning that ity for the Pro

Schedule Perf

PerformanceV) (Energy 20

PVV /

PI equals one,ng at a lower efined could nand it is ahea

Variance (Sthe values of

al the critical chedule. Math

PV

ve schedule vindicates thatif the project

pulating the eaappen by adopber of staff hir

, pg. 595

nce and Cost P

ues of both therformance aned would be hs 2 and 3 andon demonstratontract perforthe project is

oject Manager

rformance Ind

e Index (SPI) 004). The SPI

, the planned conversion r

not be obtainedad of plan.

V) is anotherwork performpath (Vargas

hematically, it

ariance is an t in-process wis behind sch

arned value, thpting an overted.

Preformance I

e cost variancnd cost varianc

minimal. As d decreasing toted that the CPmance. In fac

s going to be r to implement

dex and Schedu

as in equatioI shows the co

value is perfrate than forecd. When SPI i

r schedule inmed with the v

2004). SV inis expressed a

indication thwork is behindedule accordinhereby increastime program

Index

ce and cost pece were low. Tthe project p

o 93% from mPI did not sig

ct, it declines tover budget t corrective ac

ule Variance

on (i) is the ronversion rate

forming to sccasted and theis higher than

ndicator (Vargvalues of workn equation (j)as follows:

hat in-process d schedule. Frng to the valusing the earne

m either by inc

erformance indThis is expectprogresses, th

months 4-10, agnificantly imptowards the enas the CPI wction to remed

ratio of the Ee of PV and in

chedule. Whene forecasted f

n one, then the

gas 2004); ank scheduled. S) is an aggreg

work is ahearom the equaue of SV it is ed value, whiccreasing the p

dex. It shows ted as the earnhe performancand reducing tprove during nd of the projeas less than o

dy the variance

arned Value EV.

n SPI is less financial amoue project is ear

nd is obtainedSV is a subjecgate money va

ad of scheduletion above SVpossible to re

ch causes a reroductivity of

that at the begned value wouce improves to 92% at the the period beect. This can bone. This woe.

(EV) over th

than one the unt to be earnrning results f

d from the coctive indicatoralue of events

le. A negativeV is determineturn the projeeduction in thef the staff or

ginning of uld be low gradually, end of the

etween the be used as ould be an

he Planned

[i]

project is ned in the faster than

omparison r and does s ahead or

[j]

e schedule ned by EV ect to plan e SV. This increasing

ITcon Vol. 1

TABLE 3

Table 3 sproject pPerformaManager increasedthe schedaction.

3.6.7. P

One of thcomplete

Percent C

Percent C

BAC= Pr

Project Mand the Mportray amanagemthe percen

Percent S

Percent S

16 (2011), Elyan,

: Schedule Va

shows a graperformance b

ance reduced decided to in

d to one and adule was slipp

Percentage C

he advantages of a project in

Complete=Wo

Complete = E

roject Measur

Management BManagement accurately the ment reserve, a

nt spent of a p

Spent=TotalE

M

Spent=EACAC

, pg. 596

ariance and Sc

ph and table obegan at zero

to 91% in mncrease produ

above. The schping behind p

Complete and

of an EV repn a budget sen

TotalworktWorkComple

BACeEarnedValu

ement Baselin

Baseline (PMBReserve whicproject perce

and summary project in a fun

tedExExpecTMoneySpent

chedule Perfo

of schedule vbefore work

months 5, 6, auctivity in ordhedule performplan, giving t

Spent

orting systemnse and in wor

te

100e

ne+ Managem

B) is the two vch is equal toent complete, level budgetsnding sense as

turesxpendiToDate

ormance Index

variance and pbegan and it

and improvedder to complemance and schthe Project M

m is the ability rk complete a

ment Reserve

values of the po £62,195; the

the BAC as s. Most organis shown in eq

x

performance. t improved tod to 97% in mete the projechedule varian

Manager the o

to determine as shown in eq

project planneerefore the Bin equation (

izations like toquations (n) an

From the gra96% at the e

month 9. Aftect on time andnce were usefuopportunity to

precisely andquation (k) and

d value whichAC equals £1m) should inco correlate thend (o). The def

aph, it is cleaend of the firer month 9 thd in month 1ul as they indio implement

d objectively thd (l). The defi

h is equal to £1,534,956. Include any cone percent comfinition is:

ar that the rst month. he Project 0 the rate icated that corrective

he percent inition is-

[k]

[l]

[m]

£1,472,761 n order to ntingency,

mplete with

[n]

[o]

ITcon Vol. 1

The denopercentagFrom TabEAC, so t

Table 4: P

3.6.8. ECD meanumber oover SPI.

ECD=Pr

Where prcumulativ

TABLE 5

16 (2011), Elyan,

ominator reflege spent reveable 4 below, itthe EAC is als

Percent comp

Estimated C

ans the date thof months requ The ECD as

CumSPIojectDurar

roject durationve schedule pe

5: Estimated C

, pg. 597

ects the best pals how fast mt is clear that tso realistic.

pleted and per

Completion D

hat the projecuired to compin equation (p

iont

n=12 months,erformance in

Completion Da

projection of money is beinthe project wa

rcent spent

Date (ECD)

ct is forecastedlete the work

p) is calculated

which is the ndex. Figure 1

ate

final cost. Thng spent compas progressing

d to finish. Thremaining. Thd using the fo

planned time8 shows the e

he comparisopared with hog at the same p

here are severhe ECD is detllowing equat

e needed to coestimated com

n between pew fast the wo

percentage rat

ral methods avtermined by dition:-

omplete the prpletion date.

ercentage comork is being cte of spending

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ITcon Vol. 16 (2011), Elyan, pg. 598

Table 5 shows that the project started with a large ECD as the SPI was nearly zero. As the project progressed, the ECD became more realistic, showing an approximation date for the project to be completed. The ECD on month 10 and after shows a near value as the project was accelerated to overcome the schedule slippage, which appears here in the estimate at completion-simulated values.

4. CONCLUSION AND FUTURE RESEARCH

The aim of the paper is to develop a generic system dynamics model to assist a Project Manager to carry out an effective project review. This model is used to track and control the project in terms of schedule, budget and quality. To achieve this aim the first step was conceptualizing a generic conceptual model. The model includes the essential factors to conduct a successful project review. These factors are project work, resources, cost, schedule and quality. This model captured the essential variables for each factor. These variables in the conceptual model are classified into three sectors according to their tasks. The variables attributed to planning are confined into the planning sector. The variables attributed to the project actual performance are confined into the project actual performance sector and the variables attributed to the project actual cost are confined into the actual cost sector. The variables in each sector are connected together according to the relation between them showing the cause and effect by constructing a causal loop for each sector. These sectors are important to gain a whole picture about the current state of the project in terms of schedule, budget and quality. Constructing a stock and flow model is essential to run the simulation process in order to depict the actual picture of the whole project. This model is constructed from three sectors; planning, actual performance and actual cost sectors. Each sector fulfils a job in the project review. For example, the planning sector reflects the project plan, which means how the project work is planned. The actual performance reflects the situation of the project and shows the actual staff working on it and their productivity and how much work is passed and how much is rejected when the inspection is carried out in the project review. The actual cost sector reflects the actual cost and expenditure situation. It shows the actual cost spent so far to perform the project work. Depicting these three situations will help the Project Manager to understand the current situation of the project and enables him/her to accurately predict the project future performance.

The model is evaluated using a case study from a construction industry. It has been selected from a construction industry because the construction projects are well defined and the project baseline plan consists of: 1) a detailed schedule containing all the authorized work, 2) schedules containing the authorized resources to conduct the work, and 3) payments by the cost manager to contractors based on their physical accomplished work, together with the original authorized budget for the work.

The model can be used as an approach to scrutinize the plan. The model provides a good facility to test the planning values in order to see if they are effectively planned. For example, the model can be fed with the values of the number of staff planned to conduct the project work, their productivity and the amount of work needed to be done, in order to foresee if the staff and the productivity are adequate to perform the required amount of work. The previous implementation of the model shows how it is beneficial. The model is used to verify the project plan, actual performance and cost when the model compares the earned value and the actual cost for each type of work and resources. In addition, it examines the earned value to calculate if it is greater than the plan –the planning values must be revised in order to ensure that the planning process was accurate

From the implementation of the system dynamics model on the case study, it is quite apparent that the model encompasses the essential factors needed to conduct a successful project review as shown in the meta-model. The model considered different types of human factor according to the type of work they performed, and considered different types of material and equipment resources and how to measure their consumptions and defects.

However, the model shows that there is a need for expansion and future works requiring more effort and further research are the following:

ITcon Vol. 16 (2011), Elyan, pg. 599

4.1. Level of Experience and Staff Required To enhance the project review system dynamics model, human resources should be extended and included their level of experience. Including the level of experience will facilitate how to determine and measure the review fraction for the future. If the level of experience is increased then the review fraction would decrease and rework needed would decrease. This is important when thinking about the level of experience required to reduce project costs or rescue the project from budget overrun. The review fraction also affects the project’s duration. Further research is also needed to compromise between the level of experience on one side against cost and duration on the other.

Also, during the project review, there is a need to know the staff required to finish the project work to plan and their level of experience against the type of work outstanding. When the project review is conducted, two processes take place, one is the evaluation and the other is prediction as discussed in the state of the art. In order to get the project completed on schedule, it is important to know how many staff needed depending on the evaluation process. The required staff is estimated based upon the volume of work to be done, the time horizon to completion, productivity, and quality.

4.2. The impact of adding more resources Using the model to measure the influence of adding more resources during the project life to complete the project on schedule, more attention should be paid to Brooks’ law, which says that adding more resource to a late project will cause it to be later. It is important, therefore, to enhance the model to a level which shows the threshold where adding more resources will cause more delays and how this impacts the project finish date and budget at completion. Moreover, the model should determine the level of experience of the staff required and the length of time needed to make them produce quality work, including the training needs to assimilate them in the project.

4.3. Overtime duration What are the factors that affect the duration of overtime or increasing the staff productivity? The overtime policy is one of the prominent alternatives the project manager thinks of when the project is suffering from schedule slippage. Increasing productivity will help to recover the schedule overrun. This needs further research. For example, when overtime adopted to increase the productivity may have a negative impact on project duration and causes a reduction in staff productivity due to staff fatigue. It is imperative to cease this practice before this occurs.

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