OPM0035

Varunsoftech Project Services: Project Control to Manage Changes in Project Plan

Project planning and control are the two important and interrelated phases in project management. The information flow between the two phases is described in Exhibit I. The planning process defines the project parameters like performance, quality, cost and time, whereas project control process steers the project towards achieving the predefined parameters. In the planning process, resources (time, cost, manpower, etc.) are allocated phase-wise for each activity, whereas the control process monitors periodic utilisation of these resources. During the development of the project plan, all possible problems and changes are taken into consideration and during control process, problems and changes are monitored periodically and corrective actions initiated wherever necessary.

Exhibit I Information Flow between Project Planning and Control

Information for planning new projects Controlling Mechanism

Project Planning

Project Initiation

Project Completion

Corrections if Required
Prepared by the author

The significance of planning and control processes is increasing, with rapid changes in global business competition and strategies. All the major projects especially multinational, should implement the global business changes in their business strategies. However, all these global projects particularly in Information Technology (IT) (executed in different nations), can be monitored and controlled from

This case study was written by Dr. V Srinivas, IBSCDC. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was prepared from generalised experiences. 2010, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

Varunsoftech Project Services: Project Control to...

one location without any difficulty or delay. IT companies mostly focus on the motto work locally and think globally. Hence, the concept of outsourcing is apt to IT-related projects to minimise the time and overall project costs. India is one of the leading countries in providing IT solutions to the global technological and business problems. The Indian IT industry has played a key role in putting India on the global map. Thanks to the success of the industry, India is now a power to reckon with. According to the National Association of Software and Service Companies (NASSCOM), the apex body for software services in India, the revenue from the IT sector has risen from 1.2% of the Gross Domestic Product (GDP) in FY19971998 to an estimated 5.8% in FY 20082009.1 India continues to be the most preferred destination for companies looking for setting up their IT and back-office functions offshore. According to global management consultancy, A.T. Kearney, India also retains its low-cost advantage and is among the most financially attractive locations in terms of its business environment and the availability of skilled people. To succeed in the global market, particularly in knowledge-based industry like IT, all the companies should modify their strategies to address globalisation, encourage innovation and development and improving growth and revenues. Varunsoftech Project Services (VPS) is one of the leading IT giants, which understands the concept of global competition very well and responds rapidly to changing global market demands as well as local conditions. VPS was established in 2003 in Hyderabad by a small group of software engineers with a mission IT for better future. VPS provides one-stop integrated solutions to IT-related problems and caters its services across five continents. It helps the customers in achieving their business goals by providing them with remarkable, user-friendly services. However, the lions share of the companys revenue of about 80% comes from outsourced projects. The balance revenue is tapped from the domestic market in India. Presently, the company has diversified its services to more than 12 areas and is providing employment opportunity to about 1,000 people in Hyderabad. It has 72 active clients with more than 50% of them counted among the Fortune 2000. Remarkably, about 70% of their business revenue comes from repeat clients. The company strongly believes and works on the principle that software services should be effectively utilised in industrial and service sectors, which will result in the overall growth of a country. Recently, VPS has been facing severe problems due to the global recession in IT sector. The effect has been so pronounced that the total worth of the outsourced projects has come down to 50% of the previous year. The company has been hit hard, since it mostly depends on the outsourced projects. In order to face the challenges arising out of recession, the global clients have changed their project schedules and costs bringing the number of outsourced projects down to 50% compared to the previous year. The company is in receipt of huge number of requests for changes from the clients but has to accept these changes and cater their services accoring to compete in the global market. In the management review, the management noticed delay in project completion for an outsourced banking project and agreed the project team to submit its report on existing project performance. The delay in project completion reduces the project benefits or even results in
1

http://www.ibef.org/industry/informationtechnology.aspx

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Varunsoftech Project Services: Project Control to...

financial losses to the company. Therefore, to prevent the financial losses to the company, the management of VPS conducted a brain storming session and finally evolved a methodology Project Control Process. This control process is used to manage the changes occurring in the project plan and also steers the project towards its pre-established project specifications. VPS initiated the project control process in three steps, to manage the changes in project schedules. In the first step, project performance standards were defined. These performance standards were in terms of work done, resources utilised, costs involved, quality, etc. These established standards were used as baseline parameters to see the changes in the project. In the next step, project progress was monitored periodically or phase-wise. It was planned to assess whether the progress of the project was alinged with the planned parameters. Then the performance of the project was evaluated, based on the comparison of each project parameter. In the final step, corrective actions were evolved and initiated wherever and whenever necessary. To reduce the number of changes, the project progress had to be assessed periodically to take control actions wherever necessary. Further, to survive in the global market, VPS needed to modify its existing strategies and procedures, to reduce its financial losses. Therefore, VPS decided to focus on local market rather than the offshore market and shorten the ongoing project schedules to save the financial resources. It is also decided that all the ongoing projects have to be executed with cost-efficient techniques to improve the companys financial health. Based on the plans, VPS restructured its project team and responsibilities were assigned to each team member with stringent deadlines. Based on the comparison of project status with the baseline data, performance reports were to be prepared, which would in turn help the project team to know project progress regularly. Appropriate corrective actions, wherever necessary, were to be initiated to push the project towards its predefined project performance. In due course of time, these corrective actions resulted in improving the project performance and reducing the adverse impacts on the projects. Eventually, the project team in VPS was successful in controlling the project and assessing the project performance, without project control process and with project control process (Annexure I and II).

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Varunsoftech Project Services: Project Control to...

Annexure I Project Performance without Control Process

Activity Identification (A.Id) A Activity Description Planned Activity Actual Activity Duration (Days) Duration (Days) Man-Days Composition (Days) Category SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL Planned 8 2 0 8 2 0 15 5 0 5 15 0 5 5 0 0 10 50 0 10 0 0 10 50 0 10 0 10 20 0 0 20 0 10 0 0 Actual 8 2 0 8 2 0 15 5 0 5 20 0 5 10 0 0 15 75 0 15 0 0 15 75 0 15 0 10 30 0 0 30 0 10 0 0 Change 0 0 0 0 0 0 0 0 0 0 -5 0 0 -5 0 0 -5 -25 0 -5 0 0 -5 -25 0 -5 0 0 -10 0 0 -10 0 0 0 0

Proposal Submission

10

10

Project Finalisation

10

10

Project Plan

20

20

Pre Design

20

25

Final Design

10

15

Coding&Development (Phase-I) Component-level Testing (Phase-I) Coding&Development (Phase-II) Component-level Testing (Phase-II)

60

90

10

15

60

90

10

15

Comprehensive Testing

30

40

Product Installation

20

30

Project Evaluation

10

10

Total duration of all the activities

270

370

A.Id: Activity Identification, SL: Senior level; ML: Middle level; JL: Junior Level. Note: Negative values in Change indicates excessive man days (or) deviation in negative side from project plan. Prepared by the author

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Varunsoftech Project Services: Project Control to...

Annexure II Project Performance with Control Process

A ct ivity Identification (A .Id) A Activity Description Planned A ctivity Actual A ctivity Du ration (Days) Duration (D ays) M an Days Composition (Days) Categ ory SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL SL ML JL P lanned 8 2 0 8 2 0 15 5 0 5 15 0 5 5 0 0 10 0 0 10 50 0 10 0 0 10 0 0 10 50 0 10 0 10 20 0 0 20 0 10 0 0 Actual 8 2 0 8 2 0 15 5 0 5 20 0 5 10 0 0 10 0 0 10 55 0 10 0 0 10 0 0 10 55 0 10 0 10 20 0 0 20 0 10 0 0 Chang e 0 0 0 0 0 0 0 0 0 0 -5 0 0 -5 0 0 0 0 0 0 -5 0 0 0 0 0 0 0 0 -5 0 0 0 0 0 0 0 0 0 0 0 0

P roposal Sub mission

10

10

P roject Finalisation

10

10

P ro ject P lan

20

20

P re D esign

20

25

Fin al D esign

10

15

Control (P hase-I)

10

10

Coding & Developm en t (Ph ase-I) Comp onen t-level T esting (Phase-I)

60

65

10

10

Control (Phase-II)

10

10

Coding& Develo pm ent (P hase-II) Comp onen t-level Testing (P hase-II)

60

65

10

10

Compreh ensive T esting

30

30

P roduct Installation

20

20

P roject Ev aluat ion

10 2 70

10 310

T otal duration of all the activities

A.Id: Activity Identification, SL: Senior Level Person; ML: Middle Level Person; JL: Junior Level Person. Note: Negative values in Change indicates excessive man-days (or) deviation in negative side from project plan. Prepared by the author

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