wInsight Formulas - Deltek · PDF filethe WBS/Functional tree. ... are lowest level elements....

wInsight Formulas

Contents

Assumptions 1 Management Reserve.................................................................................................................1 MR and UB Forecasts................................................................................................................1 Recalculate Setting: Sum Forecasts Yes vs. No ........................................................................2

Analysis Formulas 5 Current Period............................................................................................................................5 Cumulative To Date...................................................................................................................6 At Completion ...........................................................................................................................6 Other Formulas ..........................................................................................................................8 Comments Generated by Validity Report..................................................................................9

EAC Forecasting Formulas 11 Overview .................................................................................................................................11 3 Period (Month) Average .......................................................................................................11 6 Period (Month) Average .......................................................................................................12 Cumulative CPI .......................................................................................................................12 Current CPI..............................................................................................................................12 Cost & Schedule ......................................................................................................................12 Linear Regression ....................................................................................................................13 Performance Factor..................................................................................................................14 CPI*SPI ...................................................................................................................................14 MICOM EAC ..........................................................................................................................15

EAC Formula Substitutions 17 Overview .................................................................................................................................17 Substitutions ............................................................................................................................17

Lack of Data ..............................................................................................................17 Division By Zero .......................................................................................................17 Linear Regression......................................................................................................18 MR & UB Calculations .............................................................................................18

wInsight Formulas Contents • i

ii • Contents wInsight Formulas

Assumptions

Management Reserve In wInsight 5.0, all forecasting formulas exclude management reserve (MR) when calculated for the PMB element. All forecasting formulas include MR when calculated for the top level element (i.e., at the CBB). In prior versions of wInsight, the inclusion or exclusion of MR at the top level is controlled by the selecting “Include MR in Level 1 forecast” Recalculate option.

In pre-wInsight 5.0 versions, users have the option of specifying (during Recalculation in wInsight Administrator or wInsight Utility Pack) whether EACs and calculations such as % complete, % spent, % schedule, and to-complete performance indices are generated at the total contract level (e.g., PMB + MR, the Include MR option is selected) or at the PMB (without MR, the Include MR option is not selected). For forecasts generated at the total contract level it is assumed that MR will be consumed in accordance with prior performance (that is, at the same efficiency as the cumulative contract performance). For forecasts generated at the PMB it is assumed that MR will not be automatically consumed. If you wish to identify utilization of MR you may input the MR usage in the EAC/Funding/MR Inputs screen, which is accessed in wInsight by choosing the EAC/Funding option from the Input pull-down menu.

MR and UB Forecasts Since MR and UB have no performance measurement data, such data would be pulled from the total contract level (i.e., SPI, CPI, etc.) to calculate statistical forecasts. For example, assume the following:

MR BAC = 100

CUM CPI Total Contract = .9

CUM CPI Forecast for MR would be:

MR = 100/.9 = 111

wInsight Formulas Assumptions • 1

Recalculate Setting: Sum Forecasts Yes vs. No wInsight (wInsight Administrator or wInsight Utility Pack) will generate forecasts for each element (all levels) independently or generate forecasts at the lowest level and summarize the lowest levels up the WBS/Functional tree. The Sum Forecasts from Lowest Levels check box determines whether forecasts are computed at the lowest level of the contract and then rolled up (Sum Forecasts = Yes/selected) or whether they are calculated at each level (Sum Forecasts = No/not selected). When the Sum Forecast from Lowest Levels option is select (Yes), and you recalculate your data, you will not be able to calculate the forecasts for summary level elements (because the values for the summary elements will be a sum of forecasts from the lower level elements).

The following example is provided to illustrate that different values can be generated based on whether the Sum Forecasts option is selected or not selected, and the differences can be significant. The example assumes that element 5100 and 5200 are children of element 5000. Elements 5100 and 5200 are lowest level elements.

5000

5100 5200

The formulas used to calculate the EACs in this example are:

• CPI = BCWP (CUM)/ACWP (CUM)

• CUM CPI EAC = BAC/CPI

The data used in the calculations is shown in the following table:

DATA 5000 5100 5200 BCWS (CUM) 99 19 80

BCWP (CUM) 92 12 80

ACWP (CUM) 110 17 93

BAC 127 32 95

LRE 143 32 111

2 • Assumptions wInsight Formulas

If Sum Forecasts is No (the option is not selected), then each element will use its own BCWS, BCWP, ACWP and BAC values for this calculation. The results will be:

EAC 5000 5100 5200

CUM CPI 151.85 ≠ 45.33 + 110.44 If Sum Forecasts is Yes (the option is selected), then no EAC calculation is done for element 5000 - it's Cum CPI EAC is the sum of its children. The results will be:

EAC 5000 5100 5200

CUM CPI 155.77 = 45.33 + 110.44

As you can see the difference between the Sum "No" and Sum "Yes" is 3.92 (155.77 – 151.85) or 2.5% higher if Sum = Yes, in this example. Depending on the data in your contract and the EAC formulae being used, the difference could be even greater!

wInsight Formulas Assumptions • 3

4 • Assumptions wInsight Formulas

Analysis Formulas

Current Period 1. Current Period Schedule Variance $ = BCWP (CUR) - BCWS (CUR)

2. Current Period Schedule Variance % = Schedule Variance (CUR) x 100

BCWS (CUR)

3. Current Period SPI = BCWP (CUR)

BCWS (CUR)

4. Current Period Cost Variance $ = BCWP (CUR) - ACWP (CUR)

5. Current Period Cost Variance % = Cost Variance (CUR) x 100

BCWP (CUR)

6. Current Period CPI = BCWP (CUR)

ACWP (CUR)

wInsight Formulas Analysis Formulas • 5

Cumulative To Date 1. Cumulative Schedule Variance $ = BCWP (CUM) - BCWS (CUM)

2. Cumulative Schedule Variance % = Schedule Variance (CUM) x 100

BCWS (CUM)

3. Cumulative SPI = BCWP (CUM)

BCWS (CUM)

4. Cumulative Cost Variance $ = BCWP (CUM) - ACWP (CUM)

5. Cumulative Cost Variance % = Cost Variance (CUM) x 100

BCWP (CUM)

6. Cumulative CPI = BCWP (CUM)

ACWP (CUM)

At Completion 1. To Complete Performance Index (BAC)

At the PMB = BAC - Management Reserve BAC - BCWP (CUM)

BAC - Management Reserve BAC - ACWP (CUM)

At Other Levels = BAC - BCWP (CUM)

BAC - ACWP (CUM)

2. To Complete Performance Index (LRE)

At the PMB = BAC - Management Reserve BAC - BCWP (CUM)

LRE - Management Reserve LRE - ACWP (CUM)

At Other Levels = BAC - BCWP (CUM)

LRE - ACWP (CUM)

3. Contractor Variance-At-Completion (VAC) $ = BAC – LRE

Note: Includes MR.

6 • Analysis Formulas wInsight Formulas

4. Contractor Variance-At-Completion (VAC) % = BAC - LRE x 100

BAC

5. % Scheduled (BAC) at the PMB = BCWS (CUM) x 100

BAC

6. % Complete (BAC)

At the PMB = BCWP (CUM) x 100

BAC - MR

At Other Levels = BCWP (CUM) x 100

BAC

7. % Spent (BAC)

At the PMB = ACWP (CUM) x 100

BAC - MR

At Other Levels = ACWP (CUM) x 100

BAC

8. Schedule Slip in Weeks = $SV (CUM) x 4.3

3 Period Average of (CUR) BCWS $

Note: Data must be loaded monthly for the slip in weeks to be valid. If data is loaded quarterly instead of monthly, the schedule slip in weeks will be understated. If data is loaded weekly instead of monthly, the schedule slip in weeks will be overstated.


Other Formulas 1. % Spent (LRE)

At the PMB = ACWP (CUM) x 10

LRE - MR

At Other Levels = ACWP (CUM) x 100

LRE

2. MR as % Budgeted Cost of Work Remaining (BCWR) = MR .

BAC - BCWP

3. Tolerance Band High = BAC .

(BCWP) - (BAC/BCWP)2

(ACWP) 100

4. Tolerance Band Low = BAC .

(BCWP) + (BAC/BCWP)2

(ACWP) 100


Comments Generated by Validity Report

Comments Conditions 1 Task complete BCWP (CUM) = BAC

2 ACWP exceeds BAC ACWP (CUM) > BAC

3 ACWP equals BAC ACWP (CUM) = BAC

4 Cost charged to completed tasked BCWP (CUM) = BAC, in any prior period; and ACWP (CUM) increases

5 ACWP charged to unopened task BCWS = 0, ACWP (CUM) > 0

6 Schedule slip exceeds two weeks 2 > SV (CUM) * 4.3 . 3 Period Average BCWS (CUR)

7 *BCWP increase without ACWP increase

BCWP (CUM) cp > BCWP (CUM) 1p and ACWP cp = ACWP 1p

8 ACWP increase without BCWP increase

ACWP cp > ACWP 1p and BCWP cp = BCWP 1p

9 No BAC BAC = 0

10 No LRE LRE = 0

11 Estimate to complete is 0, Yet task is not complete

LRE – ACWP (CUM) = 0 and BAC > BCWP (CUM)

12 Possible inconsistency in LRE, does not reflect cum cost overrun

CUM CV > LRE

13 BAC or BCWS inconsistency BCWS (CUM) > BAC

14 BAC or BCWP inconsistency BCWP (CUM) > BAC

15 ACWP greater than LRE ACWP (CUM) > LRE

16 BAC change BAC 1p ≠ BAC cp

17 BAC change without corresponding LRE change BAC 1p ≠ BAC cp and LRE 1p = LRE cp

18 LRE change LRE 1p ≠ LRE cp

19 TCPI - LRE is greater than CPI by more than 0.05 TCPI - CPI > .05

20 Negative current period ACWP 0 > ACWP (CUR)

21 Negative current period BCWP 0 > BCWP (CUR)

22 Negative current period BCWS 0 > BCWS (CUR)

23 BCWP present with no ACWP BCWP (CUM) ≠ 0 and ACWP (CUM) = 0

24 SPI less than 80% SPI < 0.80

25 **LRE not within tolerance X = BAC . (BCWP) + or - (BAC/BCWP)2 (ACWP) 100

*: (1p) denotes one period prior to the current period (cp). **: Check when contract is ≥ 40% complete.


The following validity checks are performed at the total contract level to reconcile formats, ensure target cost values are consistent, and ensure that Format 3 totals correctly:

a. Format 3 PMB EOP does not equal Format 1 BAC subtotal (PMB).

b. Format 3 BOP PM Baseline plus changes does not equal EOP PM Baseline.

c. Format 3 BOP PM Baseline does not equal last period's EOP PM Baseline.

d. Format 3 BCWS for report period does not equal Format 1 current period BCWS.

e. Format 3 BOP Cumulative BCWS does not equal last period's Format 3 EOP cumulative BCWS.

f. Format 3 EOP Cumulative BCWS does not equal Format 1 cumulative BCWS.

g. Format 3 Original Negotiated Cost plus Negotiated Changes does not equal current Negotiated Cost.

h. Format 3 Contract Budget Base plus Format 1 Reprogramming Adjustment for Budget does not equal the Format 3 Total Allocated Budget.

i. Format 1 Negotiated Cost plus Estimated Authorized Unpriced Work does not equal the Contract Budget Base.

j. Format 1 Current X does not equal Format 2 Current X.

X can = BCWS, BCWP, or ACWP.

k. Format 1 Cumulative X does not equal Format 2 Cumulative X.

X can = BCWS, BCWP, or ACWP.

l. Format 1 X does not equal Format 2 X.

X can = BAC or LRE.


EAC Forecasting Formulas

Overview In wInsight 5.0, all forecasting formulas exclude management reserve (MR) when calculated for the PMB element. All forecasting formulas include MR when calculated for the top level element (i.e., at the CBB). In prior versions of wInsight, the inclusion or exclusion of MR at the top level is controlled by selecting the “Include MR in Level 1 forecast” Recalculate option.

3 Period (Month) Average This method is calculated using a performance factor based on a three-period average of current period cost performance. Step by step, it is calculated as follows. The example assumes that the current period is March 1990.

1. Compute the Performance Factor (PF):

PF = (March 90) BCWP (CUM) - (Dec 89) BCWP (CUM)

(March 90) ACWP (CUM) - (Dec 89) ACWP (CUM)

2. Compute the quantity of Work Remaining (BCWR):

At the PMB BCWR = BAC - MR- BCWP (CUM)

At Other Levels BCWR = BAC - BCWP (CUM)

3. Compute the Estimate to Complete (ETC):

ETC = BCWR

PF

4. Compute the Cost at Completion (CAC):

CAC = ETC + ACWP (CUM)

wInsight Formulas EAC Forecasting Formulas • 11

6 Period (Month) Average Same as the 3 Period (Month) Average except compute the CPI's and performance factor using six periods.

Cumulative CPI This method is calculated using a performance factor based on cumulative cost performance. Step by step, it is calculated as follows. The example assumes that the current period is 30 June 1990.

1. Compute the Performance Factor (PF):

PF = (30June90) BCWP (CUM)

(30June90) ACWP (CUM)

2. Compute the quantity of work remaining (BCWR):

BCWR = BAC - BCWP (CUM)


ETC = BCWR

PF

4. Compute the Cost at Completion (CAC):


Current CPI Same as Cumulative CPI except current period data in used in step 1.

Cost & Schedule This method is calculated using a performance factor based on a combination of cost and schedule performance, and user chosen performance weightings. It is calculated as follows:

CAC = BAC - BCWP (CUM) + ACWP (CUM)

((A) x CPI (CUM)) + ((B) x SPI (CUM))

where A = the cost weighting (e.g., 0.80)

B = the schedule weighting (e.g., 0.20)

The sum of A and B must equal 1, and the BAC excludes MR. This formula is further explained in the AFSC Guide to Analysis of Contractor Cost Data, I September 1989, page 20.

12 • EAC Forecasting Formulas wInsight Formulas

Linear Regression The linear regression formula is calculated by finding the formula for the straight line that best fits the plot of cumulative ACWP vs. cumulative BCWP (Figure 1), then entering the BAC into that formula to calculate the EAC (Figure 2).

• •• •

• • •• • • • •

• • ••ACWP

BCWP at Different Periods

FIGURE 1

Figure one shows a plot of cumulative ACWP vs. cumulative BCWP for a number of periods, along with a “best-fit” straight line passing through the points. The straight line can be used to estimate the ACWP for any given BCWP.

• •• •

• • •• • • • •

• • ••ACWP

BCWP at Different Periods BAC

EAC (Forecast)

FIGURE 2

Figure 2 illustrates how the best-fit straight line is used to calculate the EAC. The EAC is the value given by the straight line formula for the point at which the BCWP equals the BAC.


The best-fit straight line (like any straight line) can be expressed by an equation of the form:

Y = (slope) * X + (y-intercept)

In this case, the slope and y-intercept are calculated using a standard technique called “linear regression”, as follows:

Sx = Sum of BCWP (CUM)

Sy = Sum of ACWP (CUM)

Sxx = Sum of (BCWP (CUM) * BCWP (CUM))

Sxy = Sum of (BCWP (CUM) * ACWP (CUM ))

N = Number of data points (periods)

slope = (Sxy – (Sx * Sy) / N) / (Sxx – (Sx * Sx) / N)

y-intercept = (Sy – (slope * Sx)) / N

The resulting formula is used to calculate EAC, as shown:

EAC = (slope) * BAC + (y-intercept)

Performance Factor Same as the 3 Period (Month) Average calculation, except, in Step 2, the performance factor is user specified instead of calculated. In addition, in Step 3 the work remaining (BCWR) is multiplied by the performance factor instead of dividing by it. Therefore, to project a 10% overrun in work remaining, the performance factor would be 1.10.

CPI*SPI This method is calculated using a performance factor based on a combination of cost and schedule performance. It is calculated as follows:

CAC = BAC - BCWP (CUM) . + ACWP (CUM)

CPI (CUM) x SPI (CUM)


MICOM EAC The example assumes that the current period is 30 June 1990.

1. Compute the six period average cumulative CPI:

6pCPI = (30June90) BCWP (CUM) - (31Dec89) BCWP (CUM)

(30June90) ACWP (CUM) - (31Dec89) ACWP (CUM)

2. Compute the Cumulative SPI:

SPI = BCWP (CUM)

BCWS (CUM)

3. Compute Performance Factor:

PF = 6pCPI x SPI

4. Compute the Budgeted Cost of Work Remaining (BCWR):

BCWR = BAC - BCWP (CUM)


ETC = BCWR

PF

6. Compute the Cost at Complete (CAC):



EAC Formula Substitutions

Overview EACs cannot be calculated using the specified formulas under certain conditions. Such a condition occurs, for example, when wInsight attempts to calculated the six period average EAC for a contact with only one period of data. In other instances, data exists but is considered invalid. For example, when BCWP, BCWS, or ACWP values cause a formula to attempt division by zero. When these conditions arise, other values are substituted for the EAC calculations.

Substitutions

Lack of Data Some formulas require multiple periods of data for their calculations. For instance, the Three Period (Month) Average requires four periods of data (the example in the previous chapter used Dec 89 to Mar 90, which equals four months). wInsight will perform the calculation using the required number of periods, or as many periods as are available. For example, if only Dec 89, Jan 90, and Feb 90 data exists, wInsight will still perform the Three Period (Month) Average calculation, but using only three months of data (i.e., a two month average).

Division By Zero In general, EACs follow the form:

EAC = [BAC – BCWP (CUM)] / Performance Factor

If the Performance factor is zero for any reason, the EAC cannot be calculated, since division by zero is never permissible. For example, the CUM CPI forecast uses a performance factor given by (BCWP (CUM)) / ACWP (CUM)). If ACWP (CUM) is zero for the given period, the Performance Factor, and hence the EAC, cannot be calculated.

Whenever a division by zero prevents a formula from being calculated, the following substitutions are made for the EAC:

• If BCWP ≥ BAC, then the larger of ACWP or LRE is used

• If BCWP < BAC, then the larger of BAC or LRE is used

• For MR or UB calculations, the larger of BAC or LRE is used.

wInsight Formulas EAC Formula Substitutions • 17

Linear Regression The Linear Regression formula can fail due to a division-by-zero error when calculating the slope of the best-fit line (see the discussion of Linear Regression above). In this case, substitutions follow the Division by Zero rules.

MR & UB Calculations All calculations involving MR and UB use a level-1 performance factor.

18 • EAC Formula Substitutions wInsight Formulas

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