Project ManagementDay 3 in the am Project Management (PM) CHECK.

Project Management Day 3 in the am

Project Management (PM)

CHECK

Day 3 in the am # 2 / 24Project Management Cook


Earned Value Analysis

EVA is a performance measurement technique that integrates scope, time, and cost data

Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals

You must enter actual information periodically to use EVA


EVA Terminology

Budgeted cost of work scheduled (BCWS) is the portion of the approved cost estimate planned to be spent on an activity during a given period

Actual cost of work performed (ACWP) is the total of the direct and indirect costs incurred in doing the work on an activity during a given period

Budgeted cost of work performed (BCWP), also called earned value, is the percentage of work actually completed multiplied by the cost (BCWS)


Earned Value Analysis (EVA)


Deriving EVA Metrics

Weeks Elapsed = WE = ((actual task beginning) – (report date)) / 7

Weeks Performed = WP = WE * (SD)/(ED) (note: “D” is for duration) Where: SD = ((scheduled project beginning) - (scheduled completion)) / 7 ED = ((actual project beginning) - (expected completion)) / 7

Budgeted Cost of Work Scheduled = BCWS = BCF(1) + … BCF (WE) Where: BCF = Budgeted Cash Flow and ACF = Actual Cash Flow

Budgeted Cost of Work Performed = BCWP = BCF(1) + … BCF (WP)

Schedule Variance = BCWP - BCWS (measured in $, not time)

Actual Cost of Work Performed = ACWP = ACF(1) + … ACF(WE)

Spend Comparison = BCWS – ACWP (commonly reported)

Cost Performance Index = BCWP / ACWP (>1 is good)

Budgeted Performance Index = BCWP / BCWS (>1 is good)


1. Expected Completion 200__.____.____ (95% confidence)

2. Δ Actual Cost (in-house) ____ , _____ RMB (+ => expense)3. Δ Actual Cost (contracted) ____ , _____ RMB (+ => overrun)4. Δ Actual Cost (purchases) ____ , _____ RMB (- => refund)5. Δ Quality Issues? ___ (if “N”, then quality is presumed excellent)6. Δ Subcontracting Issues? ___ (if “Y”, attach explanation)7. Δ Resource Issues? (Staff, Material, Equipment) ___ , ___ , ___8. Δ Integration/Dependency Issues? ___ 9. Δ Catastrophe Possibility? ___10. Δ Other Issues? ___ (Scope, surprise, opportunity, infrastructure, …)11. Δ Notices (vacations, emergencies, changes, conntact, …): _______ _____________________________________________

Weekly Task Report (by WBS)


EVA Trend Analysis

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

1 2 3 4 5 6 7 8 9 10 11 12

Month

$

BCWS or Cumulative Plan ACWP or Cumulative Actual BCWP or Cumulative EV

BCWS

ACWP

BWCP

BAC


1. Expected Completion 20__.____.____ (95% confidence)

2. Δ Actual Cost (in-house) ____ , _____ RMB (+ => expense)3. Δ Actual Cost (contracted) ____ , _____ RMB (+ => acceptance)4. Δ Actual Cost (purchases) ____ , _____ RMB (- => refund)5. Δ Quality Issues? ___ (if “N”, then quality is presumed excellent)6. Δ Contracting Issues? ___ (if “Y”, attach explanation)7. Δ Resource Issues? (Staff, Material, Equipment) ___ , ___ , ___8. Δ Integration/Dependency Issues? ___ 9. Δ Catastrophe Possibility? ___10. Δ Other Issues? ___ (Scope, surprise, opportunity, infrastructure, …)11. Δ Notices (vacations, emergencies, changes, contact, …): ________ _____________________________________________

Weekly Task Report (by WBS)


Weekly Project Summary<NAME>

(<Budget> : <Scheduled completion>)

In-House(<Budget> : %$)

Contracted(<Budget> : %$)

Purchases(<Budget> : %$)

Schedule: % on-time (budget wtd.)

% completed (budget weighted)

Schedule variance (budget wtd.)

Estimated completion date

Estimation trend (10 week)

Schedule Performance Index

Serious issues open (# : trend)

Cost: % within budget

Estimated completion date

Estimation trend (10 week)

Schedule Performance Index

Serious issues open (# : trend)

Spent to date ($ : <budget> %)

Situation: (need mgmt. help?)


Weekly Status Report


MS Reporting Capability

Reports Views and Table Views Filters Overview reports: critical

tasks and milestones Current activities reports:

unstarted tasks, tasks startingsoon, tasks in progress,completed tasks, should havestarted tasks, and slippingtasks

Assignment reports: whodoes what when

Gantt chart, PERTchart, Tracking Gantt,schedule, tracking,variance, constraintdates, and delay

All tasks,completed tasks,critical tasks,incomplete tasks,and milestonetasks


Basic Financial Terms

Life cycle costing is estimating the cost of a project over its entire life

Cash flow analysis is used for determining the estimated annual costs and benefits for a project

Benefits and costs can be tangible or intangible, direct or indirect, but will have to be quantified

Sunk cost is money spent in the past and should not be a criteria in project selection

Learning curve theory – when many items are produced repetitively, unit cost decreases

Reserves – money included in cost estimate Contingency reserves – allowances for future situations


Net Present Value Example


Return on Investment

Return On Investment (ROI) : ROI = ((Discounted Benefits) – (Discounted Costs)) / (Discounted Costs)

Breakeven Analysis:

BE = (Time when DB-DC =0) – (Time when DC began)

Where: DB is Discounted Benefits and DC is Discounted Costs


NPV, ROI, and Payback I


NPV, ROI, and Payback II


Expected Monetary Value


Controlling

Controlling is the process ofmeasuring progress towards project objectivesmonitoring deviation from the plan taking corrective action to match progress with the plan

Controlling cuts across all of the other phases of the project life cycle and involves seven knowledge areas


Control ProcessesKnowledge Area Process Outputs

Integration Overall Change Control Project Plan Updates Corrective Actions Lessons Learned Scope Scope Change Control Scope Changes Corrective Actions Lessons Learned Time Schedule Control Schedule Updates Corrective Actions Lessons Learned Cost Cost Control Revised Cost Estimates Budget Updates Corrective Actions Estimate at Completion Lessons Learned Quality Quality Control Quality Improvement Acceptance Decisions Rework Completed Checklists Process Adjustments Communications Performance Reporting Performance Reports Change Requests Risk Risk Response Control Corrective Actions Updates to Risk Management Plan


Cost Control

Project cost control includesmonitoring cost performanceensuring that only appropriate project changes

are included in a revised cost baselineinforming project stakeholders of authorized

changes to the project that will affect costs

Earned value analysis is an important tool for cost control


Concluding Remarks

Questions and Answers

Thank you, again.

You can find a copy of this lecture (350 KB) on the Internet at:

http://cha4mot.com/PM

Project ManagementDay 3 in the am Project Management (PM) CHECK.

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