2. Presentation –
Revision of last week’s terms
Cost management techniques – some detail as
requested
Time to catch up and finalise LMS
Morning Tea
Balance of cost unit
◦ SB Cost Unit started last week & finish tomorrow
Everyone continues with Cost
◦ Today & Friday – completing cost Friday 23 August
3. 1. EVM an overview
2. Basic Elements
3. Cost Variances
4. Schedule Variances
4. 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
5. 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.
7. 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
8. 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
9. 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
10. CPI = EV/AC
Shows how efficient we are
Above 1 good efficiency
Below 1 project not using resources
efficiently
11. 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.
12. 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
13. 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
14.
15. 1. Assist with the
development of the project
budget
2. Monitor project costs
3. Contribute to cost
finalisation process
16. Determine
◦ estimated costs for tasks & activities and
◦ communicate these costs to others for inclusion in
project budget
Map costs against
◦ duration /effort &
◦ resources allocated, and
◦ communicate to project manager for inclusion
project plan,
budget
expenditure flow
Contribute to
◦ development of cost management strategies &
processes,
◦ financial authorisation within delegated authority
17. Monitor income and expenditure against
◦ agreed project plan
◦ budgets to facilitate cost management throughout
the project life cycle
Use established cost management methods,
techniques & tools
Implement & monitor
◦ agreed actions
◦ report progress
18. Project records
◦ cost management lessons learned
◦ cost verification and validation documentation
◦ input to cost management plans
◦ invoice and payment records
◦ lists of potential costs
◦ project and/or organisation files and records
◦ reports to relevant stakeholders
19. Provide assistance in the finalisation and transfer
of financial assets, liabilities and records to the
client or relevant operational support agency
Provide assistance in the review of project
outcomes by use of project records, to determine
the effectiveness of initial and subsequent cost
management strategies and processes
Report cost management issues and responses to
project/program manager for application in
future projects
