Chapter 13 g3 2005 Student 5 12

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Chapter 13Progress and Performance

Measurement and Evaluation

Earned Value Glossary of TermsAC The actual cost of the work completed. The sum of the costs incurred

in accomplishing work. (Also called ACWP — actual cost of the work performed).

BAC Budgeted cost at completion. The total budgeted cost of the baseline or project cost accounts.

BCWP Older acronym for EV: Budgeted cost of the work performed. The earned valueor original budgeted cost for work actually completed.

BCWS Budgeted cost of the work scheduled. A cost estimate of theresources scheduled in a time-phased cumulative baseline.

CV Cost variance - the difference between the earned value and the actual costsfor the work completed to date where CV=EV-AC. (or BCWP - ACWP).

EAC Estimated costs at completion. Includes cost to-date plus

revised estimated costs for the work remaining.

ETC Estimate to complete

EV Percent complete times its original budget. The percent of the original budget that has been earned by actual work completed.

The older acronym for this value was BCWP — budgeted cost of the work

performed.

Glossary of Terms (Continued)

FAC Computed forecasted costs at completion

PV Planned Value - the time-phased baseline of the value of the work scheduled. Anapproved cost estimate of the resources scheduled in a time-phasedcumulative baseline (or old: BCWS).

SV Schedule variance - the difference between the earned value and the baseline line to date where SV=EV-PV.

(or old: BCWP - BCWS).

VAC Cost variance at completion (BAC-EACe), where EACe is derived by estimatorsin the field.

Or, alternatively, cost variance at completion (BAC-EACf ), where EACf isderived from a formula using actual and earned value costs.

(or BAC - FAC).Indicates expected actual over or underun at completion

Project Management System

Overview

FIGURE 13.3

Earned Value Process

Project Monitoring and Control

Project Control Monitoring System

Data Needed• Current status of project

• Cost to compete project

• Date of Completion

• Potential problems

• Out-of-control activities

Project Monitoring System… (cont’d)

Data Collection

• Who

• How

• When

Data Analysis

– Reports and reporting

• Receiver

Project Progress Report

• Progress since last report

• Current status of project –

• Cumulative trends

• Problems and issues since last report

• Corrective action planned

Project Control Process

• Control Definition

– Process of comparing actual

performance against the original plan toidentify:

Project Control Process (Cont’d)

• Project Control Steps

1.Set a baseline plan

2.Measure progress and performance

3.Compare plan against actual

• 4.

Time Performance

• Tools to catch negative variances from plan

and communicate project schedule status:

– Tracking and baseline Gantt charts

• Show expected, actual, and trend data for event

duration performance.

– Control charts

• Plot the difference in scheduled time on the critical

path with the actual point on the critical path.

Baseline and Tracking Gantt Charts

FIGURE 13.1

Project Schedule Control Chart

FIGURE 13.2

Earned Value (EV) System

Project Monitoring System

(Earned Value - EV)• Current status of project (Schedule and

• Cost to complete

• Project Completion

• Potential problems addressed now

• Causes for cost / schedule overruns

• Value for dollars spent

Earned Value (EV)

• Earned Value Cost/Schedule System

– An integrated project management system

based on the earned value concept that uses atime-phased budget baseline to compare actual

and planned schedule and costs.

Earned Value (EV)

• Depends on data from

– WBS

• Time phased budget ofr each task

• New estimates of percent complete (realistic)

Earned Value (EV)

• % of original budget that has been earned

by actual work completed

– Old - BCWP – Budgeted cost of work performed

– The anchor for comparing to baseline

• EV Usage

Steps in an EV Control Process

• Step 1: Set a baseline

• Step 2: Measure progress and performance

• Step 3: Comparing actual against a baseline plan

• Step 4: Taking action

Project Baselines

• Purposes of a Baseline (EV) (also BCWP) – A point for measuring performance

• A planned cost and expected schedule against which

actual cost and schedule are measured.• A basis for cash flows and awarding progress payments.

• A summation of time-phased budgets (cost accounts as

summed work packages) along a project timeline.

Baseline Costs

• Labor

• Equipment

• Materials

• Project direct overhead costs (DOC)

Baseline Data Relationships

FIGURE 13.4

Rules for Costs in Baseline

• Percent Complete

– Most common on larger projects

• Will use for this course

• 0-100 Percent Rule

– Credit earned after work is complete

• Ie: 100% of budget earned at completion

– Used on projects with very short duration

• 50/50 Rule

– 50% of money up front

– 50% of money at completion

• Used on projects with short duration and small total costs

Variance Analysis Control

Variance Analysis• Earned Value Comparison

• With the expected schedule value.

• With the actual costs.

• Assessment Status of a Project

• Required data elements – Data Budgeted cost of the work scheduled (PV)

– Budgeted cost of the work completed (EV)

– Actual cost of the work completed (AC)

• Schedule and cost variance calculation – Positive variance - a desirable condition,

– Negative variance - problems

Methods of Variance Analysis

• Cost Variance (CV)

– Indicates if:

• Work accomplished using labor and materials costsmore or less than planned at any point in the project

• Schedule Variance (SV)

– Presents:• Overall assessment in $ of the progress of all WP’s in

the project scheduled to date.

Cost Variance

• Difference between earned value and actual

– ACWP – Actual cost of work performed

• CV = EV – AC

Anchor

Schedule Variance

• Difference between earned value to date

and the baseline schedule (BCWS)

– BCWS – Budgeted cost of work scheduled

• SV = EV - PV

Anchor

Cost/Schedule Graph

FIGURE 13.5

Old13 7

OldCost/Schedule Graph

Old vs New Cost Schedule Graph

New Old

NewEarned Value Review

FIGURE 13.6Make Sure to Understand

OldEarned-Value Review

Status Report:A Hypothetical Example

• Assumptions to the hypothetical example

– Each cost account has only one work package, and

each cost account will be represented as an activity on

the network. – The project network early start times will serve as the

basis for assigning the baseline values.

– Baseline value will be assigned linearly, unless stated

differently.

– From the moment work on an activity begins, some

actual costs will be incurred each period until the

activity is completed.

5 steps - A Must For:

Integration of Cost/Schedule SystemStep 1: Define work with WBS

• Scope

• Work packages

• Deliverables

• Budgets for each work package

Integration of Cost/Schedule SystemStep 2: Develop work and resource schedules

– Time phased work packages into network

– Schedule resources to activities

Integration of Cost/Schedule SystemStep 3: Develop a time phased budget

– Use Work Packages

– Accumulation of these values becomes a baseline PV (or BCWS)

– Collect budgeted cost for work accomplished

• E V (or BCWP)

Integration of Cost/Schedule System• Step 4: Collect actual costs at WP level

– Costs that are actually experienced

• Actual cost of work performed AC (or ACWP)

– Collect earned value or budgeted cost of work

performed

• (EV)

Integration of Cost/Schedule SystemStep 5: Compute SC and CV

– SV = EV – PV

– CV = EV – AC

– Prepare Reports for management

• Project roll-ups

– Organization – Deliverable

– Actual time performance of project checked against the

network schedule

Baseline

• Anchor

• Set in concrete

• Building blocks

– Placement of work packages into network

• Establishes start times of work packages

• Time phases budgets from work package estimates

Baseline Budget

• Budgeted cost of work performed

– EV or BCWP

– Sum of all cost accounts• Sum of all work packages for the cost account

• Three typical costs

– Materials

– Labor and Equipment

– Level of Effort (LOE)

Level of Effort

• LOE

– Administrative support

– Computer support

– Legal support

– Public Relations

• Often 10 to 20% of a project

Digital Camera Prototype Project Baseline

FIGURE 13.9

Di it l C P t t St t

Digital Camera Prototype Status

Reports: Periods 1 – 3

TABLE 13.2

Digital Camera Prototype StatusReports: Periods 4 – 6

TABLE 13.2 (cont’d)

Reports: Period 7

TABLE 13.2 (cont’d)

Digital Camera Prototype Summary

Graph (in $000)

FIGURE 13.10

Digital Camera Project Tracking Gantt

Showing Status — Through Period 7

FIGURE 13.11

Digital Camera

Project Rollup at End

Period 7 (000)

FIGURE 13.12

Indexes to Monitor Progress

• Performance Indexes

– Cost Performance Index (CPI)

• Measures the cost efficiency of work accomplished todate.

• CPI = EV/AC

– Scheduling Performance Index (SPI)

• Measures scheduling efficiency

• SPI = EV/PV

– Percent Complete Indexes

• Indicates how much of the work accomplished

Interpretation of Indexes

TABLE 13.3

Indexes

Periods 1 – 7

FIGURE 13.13

Hypothetical Work Organizational Structure

Example

Example Project Network Plan13-10

Example Project Network Plan

Total Cost = 6

Total Cost = 20

Total Cost = 30

Total Cost = 24

Total Cost = 16

Total Cost = 9

Total Cost = 16Total Cost = 18

E l P j t B li B d t

Example Project Baseline Budget

Estimated

Cost at

Completion

Example Project

Example Project Now work has begun, are at the end of

time period 4

Example ProjectStatus Report at The End of Time Period 4

Status Report at The End of Time Period 4

EV (CV= EV – AC)

Scope Changes to a Baseline13-17

Forecasting Final Project Cost

• Methods used to revise estimates of future

project costs:

– EACe• Allows experts in the field to change original baseline

durations and costs because new information tells

them the original estimates are not accurate.

– EACf • Uses actual costs-to-date plus an efficiency index to

project final costs in large projects where the original

budget is unreliable.

Performance Equations

• CPI – Cost performance index

– CPI = EV / AC – Worth of work planned to date for each dollar actually

spent» Greater than one - good

• SPI – Scheduling performance index

– SPI = EV / PV – Worth of work accomplished for each dollar worth of

scheduled work to date

» Greater than one - good

Percent Complete Index

• PCI-C –

– Percent complete in terms of actual dollarsspent to accomplish the work to date and theactual expected dollars for the completed

project (EAC).

– PCI-C = AC/EAC

• Indicates percent of project completed, when viewedfrom the actual dollars spent to complete the work todate and the revised actual expected costs tocomplete the project.

Scope Creep

• Minor Refinements

1 + 1 + 1 becomes 4 or greater

Build to big problems

Chapter 13 g3 2005 Student 5 12

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