Optimal control in homogeneous projects: analytically solvable deterministic cases

We develop a model for determining the economically optimal amount of control effort required to manage a homogeneous project (one consisting of a large number of similar activities). The model is formulated in terms of the losses generated by deviations from the plan and of the costs associated with carrying out control activities. It accounts for changing levels of project activities and includes parameters that represent control effectiveness and project management effectiveness. The model is studied by applying optimal control theory, which yields the optimal control effort described by a number of control functions and switching points at which they change over. We identify three analytically solvable cases for the most commonly used forms of control cost and deviation loss functions. Our analysis of the model leads to several specific conclusions regarding the extent and timing of managerial attention that should be devoted to keep projects on track. We also point out how the optimal off-line policy can be adapted for on-line control and real-time decision making throughout the project life cycle.