Cost Unit part 2. BSBPMG504A Manage project cost

Diploma Project Management Captain Cook College

Sharon Boyle

Presentation – Cost management techniques – some detail as requested

Changes or variations Check everyone has completed

◦ Activity 1 – discuss this afternoon◦ Activity 3 – discuss this afternoon◦ Written/Oral – tomorrow?◦ SB CMP started last week & finish tomorrow

Everyone continues with Cost ◦ Today & Friday – completing cost Friday 23 August

Today

As per last week’s email Case studies – we can take through most of

the course ◦ Building/construction◦ Community/event based◦ Personal – seems Ok with me

Assessment: the bit you do

1. EVM an overview2. Basic Elements3. Cost Variances4. Schedule Variances

The details of EVM

tracking tools upon which to base forecasts Integrates scope, schedule & cost Answers many questions stakeholders need Performance can be shown as

◦ Past◦ Current ◦ Predictive

Promises to reduce over-runs

Earned Value Management both Time & Cost

financial analysis specialty from United States Government programs in the 1960s,

Now significant branch of project management.

In the late 1980s and early 1990s, EVM emerged as a project management methodology

EVM has become an essential part of every project tracking.

Context

Planned Value ◦ (PV) = PV or Budgeted cost of work scheduled

BCWS = Hourly Rate * Total Hours Planned or Scheduled

Actual Cost ◦ (AC) = hourly rate x total hours spent

Earned Value ◦ (EV)= Baselined costs x % complete

% Completed Planned◦ % Completed planning =PV/BAC

Basic Elements

Cost Variance (CV) indicates how much over or under budget the project is.

Why is under cost a problem? (CV) = Earned Value (EV) – Actual Cost (AC)

Also CV = BCWP – ACWP

◦ Positive Cost Variance Indicates the project is under budget

◦ Negative Cost Variance Indicates the project is over budget

Cost Variances

Cost Variance % - how much over or under budget the project is in terms of percentage

CV% = CV/EV◦ Or

CV% = CV/Budgeted Cost of Work

Cost Variances %

CPI = EV/AC

Shows how efficient we are Above 1 good efficiency Below 1 project not using resources

efficiently

Cost Performance Indicator CPI

TCPI = Total Budget – EV/Total Budget – AC

Another measure of efficiency –◦ The correct people do the correct things within a

clear process◦ Above 1 utilization must be stringent◦ Below 1 lenient.

To complete Cost performance indicator (TCCPI)

 Schedule Variance (SV) = Earned Value (EV) - Planned Value (PV)

How much is yet to be completed as per schedule

+ve Schedule variances = we are ahead of time

-ve Schedule variance = we are behind schedule

Then same % as for Costs

Schedule Variance

Budget at Completion = total budget

BAC = Baselined effort hours x hourly rate

Estimate to complete – just what it says. Estimate hours required x hourly rate

A few more

http://www.youtube.com/watch?v=7WsfuvHegxE&feature=related

Why important? What can go wrong? Relationship to other aspects of project

management?

Changes or Variations

The establishes an orderly and effective procedure for ◦ tracking the submission, ◦ coordination, review, evaluation, ◦ categorization, and ◦ approval for release of all changes to the project’s

baselines.

Change Management process

Element Description

Date The date the CR was created

CR# Assigned by the Change Manager

Title A brief description of the change request

Description Description of the desired change, the impact, or benefits of a change should also be described

Submitter Name of the person completing the CR Form and who can answer questions regarding the suggested change

Phone Phone number of the submitter

E-Mail Email of the submitter

Product The product that the suggested change is for

Version The product version that the suggested change is for

Priority A code that provides a recommended categorization of the urgency of the requested change (High, Medium, Low)

Start the process

Priority Description

High <Insert the definition the project assigns to a high priority CR>

Medium <Insert the definition the project assigns to a medium priority CR>

Low <Insert the definition the project assigns to a low priority CR>

<priority> <Insert the definition the project assigns to this level of priority CR>

Assign the priority

Type Description

Scope Change affecting scope

Time Change affecting time

Duration Change affecting duration

Cost Change affecting cost

Resources Change affecting resources

Deliverables Change affecting deliverables

Product Change affecting product

Processes Change affecting process

Quality Change affecting quality

Change requests are evaluated and assigned one or more of the following change types:

Some more to search for Any more examples to choose from the

internet.

Today’s lesson plan

Presentation – Cost management techniques – some detail as requestedChanges or variationsCheck everyone has completed

Activity 1 – discuss this afternoonActivity 3 – discuss this afternoonWritten/Oral – tomorrow?SB CMP started last week & finish tomorrow

Everyone continues with Cost Today & Friday – completing cost Friday 24 August

Master of Ceremonies suddenly taken ill two weeks before event and will not be available for the event. A strong suggestion from Councillors to get a professional.

The Council access officer wants to know how the event is to cater meet council’s Universal access policy.

Changes to Doggy Day out..