VIETNAM NATIONAL UNIVERSITY, HANOI
SCHOOL OF BUSINESS

Le Thi Thu Trang

IMPROVING PROJECT MONITORING AND CONTROLLING:
CASE OF RURAL FINANCE PROJECT FUNDED BY WORLD BANK

Major: Business Administration
Code: 60 34 05

Master of business administration thesis

Supervisor: Dr. Ta Ngoc Cau

Hanoi – 2011


TABLE OF CONTENT

ACKNOWLEDGEMENT .........................................................................................i
ABSTRACT .............................................................................................................. ii
TÓM TẮT ..................................................................................................................v
TABLE OF CONTENT ........................................................................................ viii
LIST OF TABLES ....................................................................................................x
LIST OF FIGURES .................................................................................................xi
LIST OF ABBREVIATIONS................................................................................ xii
INTRODUCTION .....................................................................................................1
1.

The thesis necessity ............................................................................................1

2.

Objectives of the thesis: .....................................................................................3

3.

Scopes of the thesis: ...........................................................................................4

4.

Research methodology and approaches: .........................................................4

5.

Data sources: ......................................................................................................5

6.

Significance: .......................................................................................................6

7.

Expected results: ................................................................................................6

8.

The thesis structure ...........................................................................................6

CHAPTER 1: LITERATURE REVIEW AND THEORETICAL

FRAMEWORK .........................................................................................................8
1.1 Literature review .................................................................................................8
1.2 Theoretical framework .....................................................................................13
1.2.1 The concept of project monitoring and controlling ....................................14
1.2.2 Key parts and tasks of M&C system during the project cycle .....................20

viii


1.2.3 Process M&C system: ..................................................................................21
1.2.4 Necessary conditions and capacities for M&C successs ..............................28
CHAPTER 2: CASE STUDY AND FINDINGS ..................................................33
2.1 Case study ..........................................................................................................33
2.1.1 Overview of "Rural Finance Project" funded by WB and its performance .33
2.1.2 M&C system of RFPII: Real situation and Problems ..................................47
2.1.3 M&C system of RFPII: Causes of M&C problems .....................................67
2.2 Limitations .........................................................................................................79
CHAPTER 3: CONCLUSIONS AND RECOMMENDATIONS .......................80
FOR M&C SYSTEM OF RURAL FINANCE PROJECT .................................80
3.1 Conclusions ........................................................................................................80
3.2 Recommendations for developing necessary conditions and capacities M&C
improvement of RFPIII ..........................................................................................81
3.2.1 Building human capacity for M&C: .............................................................82
3.2.2 Introducing incentives for implementation of M&C ....................................84
3.2.3 Revising a clear organizational structure ...................................................85
3.2.4 Adopting an integrated Project Management Information System ..............86
3.2.5 Allocating adequate budget for M&C ..........................................................89
REFERENCES ........................................................................................................90
APPENDIX ..............................................................................................................93


ix


LIST OF TABLES

Tab. 1.1 Monitoring and Controlling comparison ....................................................16
Tab. 2.2 Credit lines to PFIs (As of 31st Dec., 2008) ................................................40
Tab. 2.3 Compliance of PFIs with accreditation criteria at Project Completion ......41
Tab. 2.4 Key Performance Indicators and Results of RDFI .....................................43
Tab. 2.5 Disbursement of RDF through PFIs ...........................................................45
Tab. 2.6: Key Performance Indicators and Baselines of RFPII ................................52
Tab. 2.7: Main causes of M&C system's problems under RFPII..............................78

x


LIST OF FIGURES

Fig. 1.1 Key M&C tasks ....................................................................................22
Fig. 1. 2: Process of M&C system .....................................................................25
Fig. 2.1: Participating partners under Rural Finance Project ............................37
Fig. 2.2 for the implementation structure and stakeholders of RFPII ...............39
Fig. 2.3 Cumulative Planned and actual disbursement progress .......................47
Fig. 2.4: Cumulative disbursement lags in Vietnam, regional and global scale47
Fig. 2.5 M&C organization under RFPII (2003-Sep2009) ................................55
Fig. 2.6: Fishbone diagram of possible causes leading to problems of project
performance under RFPII ..................................................................................69

xi



LIST OF ABBREVIATIONS
ACB

Asia Joint Stock Commercial Bank

AGRIBANK
/VBARD

Vietnam Bank for Agriculture and Rural Development

BIDV

Bank for Investment and Development of Vietnam

EAB

East Asia Joint Stock Commercial Bank

GD

General Director

IAS

International Accounting System

IDA

International Development Association


IDP

Institutional Development Plan

IT/IS

Information Technology/Information System

JSCB

Joint Stock Commercial Bank

LAN

Local Area Network

M&C

Monitoring and Controlling

MFIS

Micro-finance Institutions

MIS

Management Information System

MLF


Micro Lending Fund

MOF

Ministry of Finance

MOU

Memorandum of Understanding

MPI

Ministry of Planning and Investment

NAB

North Asia Joint Stock Commercial Bank

OECD

Organization for Economic Cooperation and Development

PFIs

Participating Financial Institutions

PMIS

Project Management Information System


PMU

Project Management Unit

PhNB

Southern Joint Stock Commercial Bank

RDF

Rural Development Fund

RFP

Rural Finance Project

SAR

Staff Appraisal Report

SBV

State Bank of Vienam

SDR

Special Drawing Right

xii



SIDA

Swedish International Development Cooperation Agency

SMEs

Small and Medium Enterprises

SRV

The Socialist Republic of Vietnam

TA

Technical Assistance

TCIII

Transaction Center III (BIDV)

UNDP

United Nations Development Program

VAS

Vietnam Accounting System


VIB

Vietnam International Bank

WB

World Bank

WBO

Wholesale Banking Operation

xiii


INTRODUCTION
1. The thesis necessity
In 2010, Vietnamese economy has continued to grow at an average rate of 6.7%
although the global economy has been recovering more slowly. The macroeconomic
situation has improved especially public debt which, at about 56.7% of GDP, is at
the safety level. Facing with the demand of making use of different resources to
boost socio-ecomomic development in whole country, Vietnam have broadened
international relationship, focusing on attracting, receiving and managing well
Official Development Assistance (ODA) projects funded by international financial
organizations such as World Bank (WB), Asia Development Bank (ADB), Agence
Franỗaise de Dộveloppement (AFD), International Fund for Agricultural
Development (IFAD), European Investment Bank (EIB), Kreditanstalt für
Wiederaufbau (KFW), etc.,. Actually, WB is the earliest donor; the World Bank‟s
funded projects are by far the largest capital projects with high degree of influence
and thus are most extensive in typical field of management of ODA projects in

Vietnam.
Thanks to many open and incentive policies by the Government recent time, this
growing economy with steadily increasing GDP is acquiring a great amount of
investment capital. In response to this demand, besides capital accumulated
internally, an increasing flow of official development assistance capital (from US$
1,810 million and US$ 410 million of committed and disbursed amount respectively
in 1993 to more than US$ 8,0 million and US$ 3,5 million in 2010) [19] (see the
ODA capital in Vietnam in Appendix No.5) has been pumped into various aspects of
Vietnamese economy by international donors and non-governmental organizations
through Development Agreements with the Government of Vietnam. The Rural
Finance Projects under Development Credit Agreements in 2003 and 2009 for
Credit No. 3648-VN (US$ mil. 200 equivalent) and 3884-VN (US$ mil. 200
equivalent) respectively entered into the Government of Socialist Republic of
Vietnam (SRV) and International Development Association (IDA) with objective of

1


assisting Vietnam in its efforts to improve living conditions in the rural areas are
three of the most biggest projects of the same kind in Vietnam.
The two projects have been implemented in the form of wholesale banking
operation (WBO). They have introduced the concept of WBO for the first time in
Vietnam. Because of this new nature, the project monitoring and controlling (M&C)
have become a very essential factor to a successful project performance together
with others factors ranging from objective to subjective ones. It is project
management unit (PMU) nominated by Bank for Investment and Development of
Vietnam (BIDV) called Transaction Center III (TCIII) responsible for managing
both Rural Finance Project II (RFPII) and Rural Finance Project III (RFPIII).
In general, M&C is a task, which is so crucial but “is not performed well in most
organizations” and “is one of the most neglected areas of project management” [10,

p359]. M&C is necessary because it possesses method to analyze how well a
completed task has been performed. This can also be used to evaluate progress on
unfinished work if one examines data for a specific period and makes estimates of
work completed to date. More over, M&C provides managers and other
stakeholders with continuous feedback on implementation and identifies actual or
potential successes and problems as early as possible to facilitate timely adjustment
to project operation. Despite the essential role of M&C, there still are some
mistakes commonly made such as: having some prejudice before monitoring and
controlling, lack of updated and necessary information for M&C, evaluating
unreasonably, unclear objectives, unreasonable criteria, unreasonable monitoring
and controlling organizing.
In addition, because RFPIII has been already become effective, one of the major
tasks that implementing agency has had to undertake in performing its WBO as an
apex bank is to implement this project successfully within agreed schedule.
According to annual Consultative Group Meeting 18th for Vietnam (Dec., 2010), the
project M&E as well as project controlling in Vietnam in general have been

2


concerned as one of the problem which needs to be improved in the coming time,
especially for projects/program in agricultural and rural fields.
In addition, there are many essays or rearches about ODA project management or
project monitoring and evaluating in Vietnam recently,
specific research mentions to

however there are no

monitoring and controlling WB‟s loan projects


particular those have been carried out through commercial banks aiming at
supporting for agriculture and rural development.
For the above existing reasons, a research on M&C is very important to a successful
performance of not only Rural Finance projects funded by World Bank but also for
the alike, which have been getting increased in numbers recently.
2. Objectives of the thesis:
This study aims at reviewing, analyzing M&C system of RFPII to find out its
problems that have affected adversely to project performance and drawing lessons
for improvement of the system contributing to better performance of RFPIII.
These objectives will be achieved by performing the following tasks:
 Making clear the concept and fundamentals of M&C.
 Analyzing M&C system of RFPII to find out its obstacles and problems in
project implementation.
 Proposing suggestions for improving M&C system in RFPIII.
To achieve objectives of the study, those tasks need to be done to answer the
following questions:
 What are the main tasks of project M&C?
 How can M&C contribute to project performance?
 How can a project be monitored and controlled?
 What does the M&C system of the RFPII undertake as planned and what are
its main obstacles and problems?

3


 What should be done to improve M&C system to enhance project
performance?
3. Scopes of the thesis:
This study focuses on examining M&C system of RFPII funded by WB mainly at
project management unit (PMU) in terms of its component, process and function in

project implementation stage to identify its problems.
4. Research methodology and approaches:
Theoretical framework of M&C is discussed and then applied to analyze current
status of M&C system and problems occurred during implementation of the Rural
Financial Projects and after that, recommendations will be made upon findings.
Secondary data and primary data are used to conduct this study.
Secondary data is gathered from external sources like libraries, textbooks,
government documents and internal sources like progress reports, project
documents helping researcher obtain an overview of theoretical framework of M&C
as well as status of M&C system of RFPII.
Primary data is collected by conduct qualitative research. The qualitative research
objective is to obtain information on the obstacles of M&C system of RFPII and
requirements for M&C of RFPIII from interviewing PMU‟s staff and managers as
well as project officers of other PFIs. The research method used is in-depth
personnel interview by unstructured questionnaires. Managers of PMU have been
interviewed on how they used information from M&C system of RFPII for making
decision in project implementation, how these information could respond to their
needs; what obstacles that make the M&C system ineffective and inefficient were;
what they can do to improve M&C system for better project performance of RFPIII.
Staff of PMU and PFIs have been asked how they got data, analyzed and reported;
what problem they had with M&C system; how they are motivated to undertake
M&C system and same questions on obstacles and improvement of the system.

4


In addition, general observation has been also conducted to examine aptitude of
staff and officers involving in M&C system for their tasks and accompanying
significance.
Sample has been selected from central, senior, middle and operating level of M&C

system of RFPII or in other words from WB and PMU, PFIs‟s project management
and PIFs‟ braches respectively.
 At senior level, a manager from WB and an operation officer in charged of
RFPII from WB were selected.
 At senior level, 05 staffs were selected from respective departments of PMU.
 At middle level, 02 relevant managers from Agribank and VIB that had
biggest credit line proportion of 68.6% and 22% respectively [23] were
selected out of 25 PFIs and
 At operating level, 03 staff from 03 branches out of 39 participating branches
of Agribank and 02 staff from 02 branches out of 24 participating branches
of other PFIs were selected. Totally, 16 people were selected (Appendix
No.9)
Qualitative data of interviewers‟ ideas and opinions are processed by using
qualitative analysis method.
5. Data sources:
The literature review and collection of secondary data has been performed by
research of books, reports, newspapers and internet sources; by exchange
information with WB staff and key employees from WBO, PMU in project PFIs.
And an extremely significant part of the research is my personal experience in PMU
(BIDV) and now in Agribank, allowed a careful understanding of particular issues
in the areas.

5


6. Significance:
By reviewing the issues on project M&C and understanding, findings the common
problems through case study analysis, the thesis benefits implementing agency and
PFIs in providing appropriate recommendations to improve project M&C system of
RFPIII as well as applies in other cases in Vietnam.

In addition, the special meaning of the study is the given case studies (RFPII) turned
out to be the projects that the author involved as a project codinator; directly
participated on project implementation and so on. Thus, author spends much effort
and enthusiasm for this research with the hope and belief that the study is not only
meaningful in terms of literature, but also has great significane in reality. The fact
that, thank to the weakness found from RFPII‟s performance, author will propose
practical solutions and recommendations to help improve the M&C system of the
RFPIII which is currently in the first stage of implementation.
7. Expected results
The result of this thesis is to improve project monitoring and controlling for further
development of BIDV and PFIs who involving in WB projects; to be expected
effectively applied in the case study of other projects funded by different donors.
8. The thesis structure
The thesis started with the introduction part, following by three chapters and the
conclusion part:
Chapter 1 will introduce general theoretical framework for M&C. In this chapter,
definition, M&C comparison, significance of M&C system and key parts and tasks
of M&C were addressed to build the Concept of M&C within this study context.
Some principles of control, process of M&C as well as necessary conditions and
capacities to make M&C system workable have been important parts of this chapter.
Chapter 2 will examine M&C and its problems in case of Rural Finance Project II
(RFPII) funded by WB. The overview of RFPII will provide information on ideas
and objectives of RFPII, some key dates and elements, the way it operated and

6


finally, some general results and evaluations of project performance. Basing on this
overview, the theoretical framework of M&C will be applied to analyze M&C
system under RFPII together with its respective necessary conditions and capacities

to find out M&C problems that adversely affect to the presented project
performance.
Chapter 3 will address some recommendations for M&C improvement aiming at
better project performance of RFPIII in particular and for other similar financial
projects.

7


CHAPTER 1: LITERATURE REVIEW AND THEORETICAL
FRAMEWORK
1.1 Literature review
So far, project monitoring and controlling has been examined in several studies.
However, the issue is not addressed deeply and thoroughly in such studies because
those have discussed not only monitoring and controlling but also other issues of
project management either covering all stages of project life cycle or focusing only
on implementation stage. Some of the most relevant studies from the company and
organization as wel1 as development agencies' point of views by Vietnamese and
foreign authors were reviewed. Incidentally, almost all these studies were on
development and ODA projects. The literature review leads to a conclusion that
M&C issue has been really interesting and being discussed more and more since it
is one of the main issues that directly affect to project performance and a study
focusing on M&C in particular should be needed to fill the loop of existing studies.
In terms of theory, Trần Thiện Dũng (2000) discussed project management issue in
the whole project life cycle that is defined therein consisting of three periods
namely formulating, implementing and closing. Theoretical framework, findings,
and recommendations are studied and developed in turns for each of these periods.
Project monitoring and controlling theory as well as obstacles in project
implementation phase of Denmark particular case, therefore, was introduced and
discussed. However, due to the thesis' broad coverage to the whole project life with

business management view approach, project monitoring and supervising and
evaluating (not controlling) is addressed generally and limited to definition,
purpose, steps, organization, some common accompanied problems and general
description of existing system only [8]. Details on tools and techniques, monitoring
and controlling system in particular have not been discussed yet.
Trần Quang Tiến (2000) defined controlling consisting of four steps: setting
baseline, measuring progress and performance, comparing planned-actual, taking

8


action [7]. Derek P. (1997) addressed performance monitoring, performance
measurement and performance management as a need for result oriented
management [11]. This concept is very close to project monitoring and controlling
when stated that if there are performance measures that monitored systematically,
then management can respond to the information that is obtained and in this way,
the notion of performance management arises-management geared to setting targets
reviewing achievements against those targets and taking any corrective action.
Thus, M&C was discussed, theoretically, on definition, purpose, steps, organization,
and some common accompanied problems. Tools and their uses have not been
applied in these studies.
In terms of practice, Nguyễn Minh Phương (2000) shown that M&C of financial
foreign invested projects which is given priorities during project implementation
were undertaken by both donors and receivers. Credit finance in the form of project
requires of receivers separate account keeping, document filling and archiving for
donors‟ monitoring and controlling purposes. At the same time, donors also require
receiver's financial status and project regulation implementation process to be
audited by independent auditor. For economical and more effective use of
borrowing funds, receivers need to enhance monitoring and controlling activity and
give prominence to the role of internal auditing and controlling system at branches

where projects are implemented. More specifically, this study pointed out that
reporting and information system in branches for project implementation progress is
inadequate while there are too many report forms with prolix, repeated and overlap
norms. Furthermore, report generating is late with ambiguous and unclear defining
of responsibility [6].
Among studies reviewed, this study is most related to financial project case. It
reflected the current situation of project monitoring and controlling of financial
foreign invested projects at operating level that is useful for more detailed study on
project monitoring and controlling issue.

9


Trần Quang Tiến (2000) stated that monitoring and controlling in specific case of
study was undertaken at low extent and limited scope and was not strictly
conformed to plan. This study also pointed out some causes of such a situation as
lack of resources and achievement-favored reporting tendency [7].
World Bank's document named Implementation Completion Report No. 24926 and
Findings and Recommendations on IDA Credit Portfolio, problems relating to
M&C system are causes leading to project start up delay and implementation
difficulties among other such as:
-

Lack of readiness for implementation before credit approval.

-

Inadequate and untimely provision of counterpart funds.

-


Centralization of decision making authority.

-

Incompetent and inefficient M&C (and/or M&E) system [20] and [29].

Therefore, it is necessary to have a study on problems and shortcoming relating
M&C system to improve project performance.
Derek P. (1997) depicted the whole picture of performance measurement at the
Member States of the Organization for Economic Cooperation and Development
(OECD) and reported some good lessons applied at donors and aid agencies level
[11]:
-

Managing for Results: Performance measurement is a common-sense

management activity practiced on a routine basis by many people in the private
sector. Meanwhile, in public sector, it is not introduced in OECD until early 1980s
when there was much pressure by stakeholders and taxpayers on governments to
demonstrate value for money in the provision of public services due to the weakness
in

organization

and

procedures:

poorly


specified

objectives,

ill-defined

responsibilities and too much emphasis on spending money rather than getting
results. However, experience of OECD countries in performance management and
measurement has been widely documented, such has not been the case for that of

10


development assistance organization and aid agencies, which have been
experimenting with techniques for gauging performance since the 1970s.
-

Development workers have long carried out monitoring and evaluation using

key indicators, reports and impact studies but those system have rarely lived up to
expectation. There is likely a gap between how a system is supposed to work and
how it operates in practice. Despite a long-standing use of the log frame, internal
reports often describe poorly structured project objectives and difficulties
experienced by staff members in selecting and applying indicators. With the advent
of public sector reforms, aid agencies have begun to revisit their monitoring and
evaluation arrangement, looking for ways to develop effective learning systems and
support their client countries.
-


One basis dilemma is that aid agencies are dependent on results from client

countries. Systemic performance management would need to be introduced by the
client administrations.
-

OECD Country Experience: Setting objectives, choosing indicators and

reporting are core elements consistently applied among OECD Member States but
the extent to which authority is devolved, managers are made accountable, or the
process is made transparent differs among countries to a much greater extent. A
comparative material comes from Public Management Service notes that the content
of performance measurement systems differs from country to country depending on
the philosophy of change and reflecting in part the State's culture. New Zealand
places emphasis on measure of out put, Australia and the US on outcomes,
Denmark on client surveys for customer satisfaction, and others such as the UK on
financial results.
-

Aid agency Experience: An examination of WB documents reveals three

interesting features: First, the focus of advice and procedures was supply-driven.
Monitoring and evaluation handbooks emphasize-technical aspects of defining
indicators and collecting data and say little about using data or borrower capacity.
Second, until the most recent work, no formal methods were used to match

11


indicators to objectives. That changed with the introduction of logical framework.

Third, the focus was primarily on the needs of the Bank for supervision and
portfolio management rather than on the management interests of the borrower.
Some striking similarities and interesting differences in the approaches taken by
donors are also found out:
Similarities: First, commitment to an agency mission or goal as an over-arching
objective; second, adoption of the analytical structure of the log frame to help to
structure programmers toward the goals; and third, the importance attached to the
role of indicators and the need to establish regular reporting.
Differences: relate to the ways in which agencies manage reporting, evaluation,
performance assessment and publication. E.g. the United Kingdom Overseas
Development Administration (ODA) tries to assess project and program
performance against goals derived from the agency's aims in its mission statement.
WB looks at internally derived assessment of "quality at entry" (the soundness of
analysis and design of a new project judged by rating systems during
implementation and after project completion).
Eight techniques as good lessons have been selected from aid agency examples:
-

The logical framework in order to structure objectives;

-

Analysis of risks, especially between outputs and outcomes, help to manage

accountability;
-

Work on the specification of indicators by the USAID and the WB;

-


Perfoffi1ance analysis through (a) structured supervision-monitoring by the WB

and (b) assessment against policy aim, undertaken by ODA;
-

Introduction by ODA of output-to purpose reviews;

-

Departmental portfolio evaluation plans, adopted by the Australian Public

Service; surveys of customer satisfaction, exemplified by the United Kingdom's
Citizen's Charter; and

12


-

Linking performance to resource allocation, as in the USAID Results Report and

Resource Request.
It has been 7 years since the completion of this research and the situation may have
changed dramatically so far. However, this research has brought insights on
performance measurement and management and its techniques use status and
situation in selected OECD Member and development agencies and especially the
agency in question of this project, say WB. It also highlights the fact that the use of
indicators by WB focus primarily on its need for supervision and portfolio
management rather than on the management interests of the borrower and that aid

agencies are dependent on results from client countries. Systemic performance
management would need to be introduced by the client administrations.
This knowledge is very helpful for a study, which is beyond scope of this research,
on the issue at micro level in client countries/borrowers .
Nguyễn Hữu Bình (2002) and Nguyễn Văn Phú (2002) are also reviewed but not
much relevant information are drawn from [3] and [4].
From these studies mentioned above, some useful secondary data have been drawn
on the issue of project monitoring and controlling. However, all studies have
approached the issue from result approach not process one. In addition, there have
not been many studies particularly focusing on project monitoring and controlling in
financial field. Thus a study on this particular issue is needed to improve project
performance and narrow the gap between activities control level and milestone
control level which is donors in general and the World Bank in this case.
1.2 Theoretical framework
Let's move to an important part of Chapter 1 which is used as framework for
Chapter 2 and Chapter 3. Firstly M&C concept is addressed and then process of
M&C system is also discussed. All these two parts of framework are applied to
assess reports and M&C system of RFPII. In order to make the M&C system

13


workable, necessary conditions and capacities for M&C should be made available
as presented in 1.2.3.
1.2.1 The concept of project monitoring and controlling
1.2.1.1 Definition:
This part will discuss the concept of project monitoring and controlling in turn
through several definitions as well as their comparison in order to draw the most
appropriate and relevant definition for the purpose of this study. Specifically, there
have been many definitions of project monitoring and controlling. Those definitions

of each concept are similar to each other in content but different in wording. In
some books, there is no definition of monitoring but project control, in others,
monitoring is always accompanied by evaluation. However, there are still some
books that address monitoring, control and evaluation separately. Here are some of
those:
Firstly, monitoring concept has been addressed. Jack R. M. and Samuel J.M., JR in
their work have defined "Monitoring is collecting, recording, and reporting
information concerning any and all aspects of project performance that the project
manager or others in the organization wish to know" and "...monitoring, as an
activity, should be kept distinct from controlling (which uses the data supplied by
monitoring to bring actual performance into approximate congruence with planned
performance), as well as from evaluation (through which judgments are made about
the quality and effectiveness of project performance)" [17, p 441]. This definition
states specific tasks of monitoring very clearly but fails to mention input for
monitoring which is agreed schedule or plan quoted in another definition:
"Monitoring is the continuous assessment of project implementation in relation to
agreed schedules, and of the use of inputs, infrastructure, and services by project
beneficiaries. Monitoring provides managers and other stakeholders with
continuous feedback on implementation and identifies actual or potential successes
and problems as early as possible to facilitate timely adjustment to project
operations" [5].

14


Secondly, Jack R. M. and Samuel J.M., JR have written "Reporting performance,
comparing the differences between desired and actual performance levels, and
accounting for why such difference exist are all parts of the control process. In
essence, control is the act of reducing the difference between plan and reality" [17,
p 508]. It seems that there is an overlapping of reporting performance both stated in

those authors' conceptions of controlling and monitoring addressed above.
They also have given generalized comment that "... control of projects is such a
mixture of feeling and fact, of human and mechanism, of causation and random
chance..." [17, p 510]. There has been another interesting definition of "Controlling
is the process whereby the project manager determines the degree to which the
project plan - baseline is being met, and takes necessary action to ensure its
successful completion" [14, p 76] while less profound and clear one has been also
existed: "Project control is the product of Monitoring and Evaluation. Project
control is developed by continually reviewing and evaluating ongoing project
results" [5].
Thus, in the context of this study, we can agree with Wil1iam R.D. "Monitoring is
the capture, analysis, and reporting of project performance, usually as
compared to plan" [18, p165] and "Control is the process of comparing actual
performance with planned performance, analyzing variances, evaluating
possible alternatives, and taking appropriate corrective action as needed." [18,
p161].
Table 1.1 will help distinguishing the two concepts and understanding the interreaction between monitoring and controlling.
Although we come to the concept of project monitoring and controlling with
separate definition of monitoring and controlling, they are actually interactive and
should be seen as an integrated system of reflection and communication supporting
project implementation and can be planned for and managed over the entire life of
project [16]. Despite the only focus on project monitoring and controlling in
implementation phase of this study, it is useful to understand that monitoring and

15


controlling is necessary for the whole project life-cycle from conceptualization,
planning, implementation to termination with respectively different purposes and is
integral component of planning-monitoring-controlling cycle. The monitoring

system "is a direct connection between planning and control" and usually, as shown
in Tab.1.1, planning and monitoring provide input for controlling. It is also
beneficial to perceive controlling process "as closed loop system with revised plans
and schedules following corrective actions" [17, pp 445-446].
Tab. 1.1 Monitoring and Controlling comparison
Monitoring
Similarities
Focus of attention
Periodicity
Level of Aggregation
Point of view
Differences
Purpose

Input

Tools & Technique

Output

-

Controlling

Individual tasks; resources
Daily, weekly, monthly, yearly
Task; Individual Resource
Work Breakdown Structure

-


To gather and report data.
To describe what has
occurred and what the
situation is
- Paperwork
- Project plan
- Work results of on-going
activities
- Other project records
- Performance review
- Variance analysis
- Trend analysis
- Earned value analysis
- Information distribution
tools
and techniques
(Communication skills,
Information retrieval systems,
Information distribution
systems)
- Performance report
- Change requests

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-

-


-

To act on the data.
To analyze the situation,
decide what to do and do
it
Management
Project plan
Performance reports
Change requests
Change control system
Configuration
management
Performance measurement
Additional planning
Project management
nforn1ation system

Schedule update
Corrective action
Lessons learned


Inter-reaction

All reporting is in vain unless project management have the
ability to make decision based
on the reports they receive

Control presupposes that a

certain amount of
paperwork (reporting) be
done

Source: Generated from Erling, S. A., Kirstoffer V. G. and Tor H.(2004). Goal
Directed Project Management. Second Edition. Coopers & Lybrand, p 151 and
William, R. D. (1996). A guide to project management body of knowledge. Project
Management Institute, pp 43-46; pp 104-110
1.2.1.2 Significance and Objectives of M&C
Planning is a fundamental component of project management. A detailed plan
covering the technological, budgetary, scheduling, organizational, and risk-related
aspects is essential to facilitate coordination among the participants. Unfortunately,
even the best of plans can not guarantee success. Uncertainty and changing
environmental conditions are bound to intervene in unforeseen ways, sometime
positively, sometimes negatively. Plans are based on availability, labor efficiency,
and cost, each of which may be subject to a high degree of variability. In addition,
needs and goals are dynamic, changing over time. The original plans will be
obsolete due to newly developed technology, corporate strategy rethinking, the
replacement of key personnel and new market or legal circumstances. Therefore
monitoring actual progress and to update the original plans continually is evident
and fundamentally needed. M&C is aiming at the following objectives [5]:
-

To find out what was going on and project implementation process to have more

insight on project. Frequently used method in this case is descriptive one. Normally,
general description of project implementation process is undertaken and detail
description is given only to important issues with significant meaning or differences
between plan and reality. In order to depict real project implementation status, some
diagram, graph and chart systems are use reflecting each project aspect separately or

representing coordinately some interrelated aspects and factors.
-

To disclose deviation between implementation and initial plan for corrective or

necessarily actuated actions. Basing on the above comparison and description,

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deviations and their causes should be determined and their impact assessment to
project in general (project successful possibility, risk level etc.) as well as project
impact to stakeholders should be determined. It is noticeable that even if the project
is implemented "exceeds plan", it is necessary to analyze, evaluate how it affects to
project implementation process.
-

To determine and highlight strengths and weaknesses exposed during project

implementation. Those should be depicted and identified clear enough for corrective
actions afterward. [15] So, at the same time sources of strengths and weaknesses
should be clarified so as to evaluate performance of individuals who participate in
project implementation.
-

To re-judge evaluations in project development stage. These judgments help

project development agency be capable discovering project development
opportunities later or changing project plan in compliance with emerging
environmental condition and context. This is a dispensable activity since projects

are always developed basing on assumptions that can only be forecasted at project
formulation phase.
-

To work out recommendations on changes in comparison with project plan so as

to implement project effectively. Those recommendations are always emanated
when deviations with initial plan are disclosed and they have simultaneous
characteristic. Those play role of availably initial information and source for later
creative ideas.
-

To collect information and document project files. This is usually final project

activity that is likely neglected or undertook improperly. It is normally considered
as administrative and documented activity but indispensable one of controlling and
monitoring. Furthermore, it also set some certain requirements for designing,
planning schedule and content of controlling and evaluating.
1.2.1.3 Principles of control

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