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Cert iv cost part 2

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  • 1. Diploma Project Management Captain Cook College Sharon Boyle
  • 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 overview2. Basic Elements3. Cost Variances4. 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.
  • 6.  http://www.youtube.com/watch?v=7WsfuvHe gxE&feature=related
  • 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.  1. Assist with the development of the project budget 2. Monitor project costs 3. Contribute to cost finalisation process
  • 15.  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
  • 16.  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
  • 17.  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
  • 18.  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
  • 19.  Assessment Item 1 Cost Estimating Use template for Fred’s shed budget Completed cost estimates Assessment Item 2 Finalisation & handover report Documents Completed templates