SlideShare a Scribd company logo
1 of 23
Download to read offline
Project Performance Management
Dr. Huy Nguyen
• What is a Project Monitoring System?
• Examples of Progress Report;
• What is the Project Control Process and why is it useful?
• How do we monitor Time Performance?
• Shortcomings of Monitoring Systems;
• Earned Value Management;
• Integrated Cost / Schedule System;
• Project Baselines.
Project Performance Management
2
• It involves determining what data to collect, how, when and who will collect
the data, analysis of the data, and reporting progress.
• You need to know what information is needed to satisfy you and your
stakeholders.
• Think about the Information System Structure.
What is a Project Monitoring System?
Monitoring System
Gather Analyse Report
3
• What data are collected?
– Current status of project (schedule and cost);
– Remaining cost to complete project;
– Date that project will be complete;
– Potential problems to be addressed currently;
– Out-of-control activities requiring intervention;
– Cost and/or schedule overruns & their reasons;
– Forecasting overruns at time of completion.
What is a Project Monitoring System? (cont.)
4
• Collecting data and analysis:
– Who will collect project data?
– How will data be collected?
– When will the data be collected?
– Who will compile and analyze the data?
– Who will receive the reports?
– How will the reports be transmitted?
– When will the reports be distributed?
What is a Project Monitoring System? (cont.)
5
• Progress Report Format:
– Progress since last report;
– Current status of project:
• Schedule;
• Cost;
• Scope.
– Problems and issues since last report:
• Actions and resolution of earlier problems;
• New variances and problems identified.
– Corrective action planned.
• How long should a project status report be?
– From 5 - 10 pages.
Examples of Progress Report
6
• Project Control Process:
– The process of comparing actual performance against plan to identify
deviations, evaluate courses of action, and take appropriate corrective
action.
• Project Control Step:
WhatistheProjectControlProcessandwhyisituseful?
Set and baseline
a plan
Measuring
progress and
performance
Comparing the
plan to the facts
Taking action
7
• Monitoring Time Performance:
– Tools used to catch negative variances from plan and communicate
project schedule status;
– Tracking and baseline Gantt charts:
• Show expected, actual, and trend data for event duration performance;
– Control charts:
• Plot the difference in scheduled time on the critical path with the actual point
on the critical path.
How do we monitor Time Performance?
8
Tracking Gantt chart showing status through periods
Baseline Gantt chart
How do we monitor Time Performance? (cont.)
• Gantt chart:
9
How do we monitor Time Performance? (cont.)
• Control chart:
10
• Monitoring Systems Disparities:
– Time-Phase Baseline Plan:
– Correct the failure of most monitoring systems to connect a project’s
actual performance to its schedule and forecast budget;
– Systems that measure only cost variances do not identify resource and
project cost problems associated with falling behind or progressing
ahead of schedule;
• Earned Value Cost / Schedule System:
– An integrated project management system based on the earned value
concept that uses a time-phased budget baseline to compare actual and
planned schedule and costs.
Shortcomings of Monitoring Systems?
11
• What is Earned Value Management
(EVM)?
– A project performance
measurement technique that
integrates scope, time, and cost
data;
– Give a baseline (original plan plus
approved changes) to determine
how well the project is meeting its
goals;
– Must enter actual information
periodically to use EVM.
• Terms to learn:
– PV: Planned Value;
– AC: Actual Cost;
– EV: Earned Value;
– CV: Cost Variance;
– SV: Schedule Variance;
– CPI: Cost Performance Indicator;
– SPI: Schedule Performance
Indicator.
Earned Value Management
12
• BAC - Budget at Completion:
– Planned budget of the project.
• PV - Planned Value (Budget):
– This is that portion of the approved total cost estimate planned to be spent
on an activity during a given period.
• AC - Actual Cost:
– The total of direct and indirect costs incurred in finishing work on an activity
during a given period.
• EV - Earned Value:
– An estimate of the value of the physical work actually completed.
• CV - Cost Variance:
– Earned value minus the actual cost. Shows the difference between the
estimated cost of an activity and the actual cost of that activity.
• SV - Schedule Variance:
– Earned value minus the planned value. Shows the difference between the
schedule completion of an activity and the actual completion of that activity.
Earned Value Management (cont.)
13
• CPI - Cost Performance Indicator:
– The ratio of earned value to actual cost and can be used to estimate the
projected cost of completing the project;
– If the CPI is equal to 1 or 100% then the planned and actual costs are
equal, or the costs are as budgeted;
– If the CPI is less than 1 or less than 100%, the project is over budget;
– If the CPI is greater than 1 or more than 100%, the project is under
budget.
• SPI - Schedule Performance Indicator:
– The ratio of earned value to planned value and can be used to estimate
the projected time to complete the project;
– Similar to the CPI, an SPI of 1 or 100% means the project is on schedule;
– If the SPI is greater than 1 or 100% then the project is ahead of schedule;
– If the SPI is less than 1 or 100%, the project is behind schedule.
Earned Value Management (cont.)
14
Earned Value Management (cont.)
• Term:
– Earned Value
– Cost Variance
– Schedule Variance
– Cost Performance Indicator
– Schedule Performance Indicator
– Estimate at Completion (EAC)
– Estimated time to Complete (ETC)
– Estimated cost to Complete (ETC)
– Variance at Completion (VAC)
• Formula:
– EV = PV to date X percent complete
– CV = EV – AC
– SV = EV – PV
– CPI = EV / AC
– SPI = EV / PV
– EAC = BAC / CPI
– ETC = Original time estimate / SPI
– ETC = EAC – AC
– VAC = BAC – EAC
15
Earned Value Management (cont.)
• Rules for Earned Value Numbers:
– Negative numbers for cost and schedule variance indicate problems in
those areas;
– The project is costing more than planned or taking longer than planned if
CPI and SPI less than 100%.
• There are methods used to revise estimates of future project costs:
– EVM allows experts in the field to change original baseline durations and
costs because new information tells them the original estimates are not
accurate;
– EVM uses actual costs-to-date plus an efficiency index to project final costs
in large projects where the original budget is unreliable.
Index Cost (CPI) Schedule (SPI)
> 1.0 Under cost Ahead of schedule
= 1.0 On cost On schedule
< 1.0 Over cost Behind schedule
16
Integrated Cost / Schedule System
• Developing an Integrated Cost / Schedule System:
Report &
Action
Calculate &
Compute
Collect
Schedule
Resource
plan
WBS
Budget
Plan
Monitor
17
Integrated Cost / Schedule System (cont.)
• Define the work using a WBS:
– Scope;
– Work packages;
– Deliverables;
– Organization units;
– Resources;
– Budgets.
• Develop work and resource schedules:
– Schedule resource to activities;
– Time-phased work packages into a network.
• Develop a time-phased budget using work packages included in an activity -
Accumulate budgets (PV);
• At the work package level, collect the actual costs for the work performed
(AC);
• Multiply percent complete time by original budget (EV);
• Compute the schedule variance (EV – PV) and the cost variance (EV – AC).
18
Integrated Cost / Schedule System (cont.)
• Sample of an Integrated Cost / Schedule System:
19
Project Baseline
• Measure change against the project baseline;
• Baseline is:
– An anchor point for measuring performance;
– A planned cost and expected schedule against which actual cost and
schedule are measured;
– A basis for cash flows and awarding progress payments;
– A summation of time-phased budgets (cost accounts as summed work
packages) along a project timeline.
• What costs are included in baselines?
– Labor;
– Equipment;
– Materials;
– Project direct overhead costs (DOC).
20
Project Baseline (cont.)
• Scope changes to a baseline:
21
• Project monitoring system includes data collection, analysis and reporting.
• Project control steps include baseline plan, progress measurement,
comparing actual against projected plan, and actions.
• Performance can be monitored using tools such as: tracking Gantts, control
charts, baseline plans and earned value management.
• Earned value management (EVM) is a technique which incorporated scope,
time and cost data to determine the health of the project.
• Integrated Cost / Schedule systems are developed by creating WBS, work /
resource schedules, budget, and EVM.
• Project baselines are an anchor point for measuring performance.
Review
22
Thank You
Next topic:
Project Schedule Management
23

More Related Content

Similar to Topic 10 - Project Performance Management.pdf

Project Cost Management
Project Cost ManagementProject Cost Management
Project Cost Management
Serdar Temiz
 
07.cost management updated
07.cost management updated07.cost management updated
07.cost management updated
Shraddha PMP
 
Software Project Management lecture 9
Software Project Management lecture 9Software Project Management lecture 9
Software Project Management lecture 9
Syed Muhammad Hammad
 

Similar to Topic 10 - Project Performance Management.pdf (20)

PMP Exam Preparation Course: 06 Project Cost Management
PMP Exam Preparation Course: 06 Project Cost ManagementPMP Exam Preparation Course: 06 Project Cost Management
PMP Exam Preparation Course: 06 Project Cost Management
 
Project Cost Management
Project Cost ManagementProject Cost Management
Project Cost Management
 
Earned value 01
Earned value 01Earned value 01
Earned value 01
 
Chap05_Project Monitoring and Control.pdf
Chap05_Project Monitoring and Control.pdfChap05_Project Monitoring and Control.pdf
Chap05_Project Monitoring and Control.pdf
 
Monitoring and information systems
Monitoring and information systemsMonitoring and information systems
Monitoring and information systems
 
ATCO Engineering - Process Evaluation
ATCO Engineering - Process EvaluationATCO Engineering - Process Evaluation
ATCO Engineering - Process Evaluation
 
4- Project Cost Management.ppt
4- Project Cost Management.ppt4- Project Cost Management.ppt
4- Project Cost Management.ppt
 
07.cost management updated
07.cost management updated07.cost management updated
07.cost management updated
 
The Project Management Process - Week 9 Performance Management
The Project Management Process - Week 9   Performance ManagementThe Project Management Process - Week 9   Performance Management
The Project Management Process - Week 9 Performance Management
 
Mitigation And Performance Recovery Using Earned Value
Mitigation And Performance Recovery Using Earned ValueMitigation And Performance Recovery Using Earned Value
Mitigation And Performance Recovery Using Earned Value
 
Schedule Recovery Using Earned Value
Schedule Recovery Using Earned ValueSchedule Recovery Using Earned Value
Schedule Recovery Using Earned Value
 
MandC.pdf
MandC.pdfMandC.pdf
MandC.pdf
 
Project monitoring & Earned Value Analysis
Project monitoring & Earned Value AnalysisProject monitoring & Earned Value Analysis
Project monitoring & Earned Value Analysis
 
Topic 12 - Project Cost Management.pdf
Topic 12 - Project Cost Management.pdfTopic 12 - Project Cost Management.pdf
Topic 12 - Project Cost Management.pdf
 
Software Project Management lecture 9
Software Project Management lecture 9Software Project Management lecture 9
Software Project Management lecture 9
 
Monitor and control process group part two
Monitor and control process group part twoMonitor and control process group part two
Monitor and control process group part two
 
(Presentation) Cis utilization of earned value management for monitoring prod...
(Presentation) Cis utilization of earned value management for monitoring prod...(Presentation) Cis utilization of earned value management for monitoring prod...
(Presentation) Cis utilization of earned value management for monitoring prod...
 
Earned Value Management
Earned Value ManagementEarned Value Management
Earned Value Management
 
Delivering nothing efficiently
Delivering nothing efficientlyDelivering nothing efficiently
Delivering nothing efficiently
 
6- PMP Training - Cost Management
6- PMP Training - Cost Management6- PMP Training - Cost Management
6- PMP Training - Cost Management
 

More from HuyNguyen657394

Topic 2 - Project Life Cycle and Project Management Organization.pdf
Topic 2 - Project Life Cycle and Project Management Organization.pdfTopic 2 - Project Life Cycle and Project Management Organization.pdf
Topic 2 - Project Life Cycle and Project Management Organization.pdf
HuyNguyen657394
 

More from HuyNguyen657394 (17)

Topic 15 - Leadership in Project Management.pdf
Topic 15 - Leadership in Project Management.pdfTopic 15 - Leadership in Project Management.pdf
Topic 15 - Leadership in Project Management.pdf
 
Topic 14 - Project Team Management.pdf
Topic 14 - Project Team Management.pdfTopic 14 - Project Team Management.pdf
Topic 14 - Project Team Management.pdf
 
Tips - IT Project Management.pdf
Tips - IT Project Management.pdfTips - IT Project Management.pdf
Tips - IT Project Management.pdf
 
Topic 13 - Project Resource Management.pdf
Topic 13 - Project Resource Management.pdfTopic 13 - Project Resource Management.pdf
Topic 13 - Project Resource Management.pdf
 
Topic 11 - Project Schedule Management.pdf
Topic 11 - Project Schedule Management.pdfTopic 11 - Project Schedule Management.pdf
Topic 11 - Project Schedule Management.pdf
 
Topic 9 - Project Stakeholder Management.pdf
Topic 9 - Project Stakeholder Management.pdfTopic 9 - Project Stakeholder Management.pdf
Topic 9 - Project Stakeholder Management.pdf
 
Topic 8 - Project Quality Management.pdf
Topic 8 - Project Quality Management.pdfTopic 8 - Project Quality Management.pdf
Topic 8 - Project Quality Management.pdf
 
Topic 7 - Project Scope Management.pdf
Topic 7 - Project Scope Management.pdfTopic 7 - Project Scope Management.pdf
Topic 7 - Project Scope Management.pdf
 
Topic 6 - Project Integration Management.pdf
Topic 6 - Project Integration Management.pdfTopic 6 - Project Integration Management.pdf
Topic 6 - Project Integration Management.pdf
 
Topic 5 - Project Planning.pdf
Topic 5 - Project Planning.pdfTopic 5 - Project Planning.pdf
Topic 5 - Project Planning.pdf
 
Topic 4 - Project Management Process.pdf
Topic 4 - Project Management Process.pdfTopic 4 - Project Management Process.pdf
Topic 4 - Project Management Process.pdf
 
Topic 3 - Project Selection & Portfolio Management.pdf
Topic 3 - Project Selection & Portfolio Management.pdfTopic 3 - Project Selection & Portfolio Management.pdf
Topic 3 - Project Selection & Portfolio Management.pdf
 
Topic 2 - Project Life Cycle and Project Management Organization.pdf
Topic 2 - Project Life Cycle and Project Management Organization.pdfTopic 2 - Project Life Cycle and Project Management Organization.pdf
Topic 2 - Project Life Cycle and Project Management Organization.pdf
 
Topic 1 - Introduction of Project Management.pdf
Topic 1 - Introduction of Project Management.pdfTopic 1 - Introduction of Project Management.pdf
Topic 1 - Introduction of Project Management.pdf
 
Topic 0 - General Information.pdf
Topic 0 - General Information.pdfTopic 0 - General Information.pdf
Topic 0 - General Information.pdf
 
Topic 0 - General Information New.pdf
Topic 0 - General Information New.pdfTopic 0 - General Information New.pdf
Topic 0 - General Information New.pdf
 
Nhan thuc ve chuyen doi so.pdf
Nhan thuc ve chuyen doi so.pdfNhan thuc ve chuyen doi so.pdf
Nhan thuc ve chuyen doi so.pdf
 

Recently uploaded

electrical installation and maintenance.
electrical installation and maintenance.electrical installation and maintenance.
electrical installation and maintenance.
benjamincojr
 
ALCOHOL PRODUCTION- Beer Brewing Process.pdf
ALCOHOL PRODUCTION- Beer Brewing Process.pdfALCOHOL PRODUCTION- Beer Brewing Process.pdf
ALCOHOL PRODUCTION- Beer Brewing Process.pdf
Madan Karki
 
Maher Othman Interior Design Portfolio..
Maher Othman Interior Design Portfolio..Maher Othman Interior Design Portfolio..
Maher Othman Interior Design Portfolio..
MaherOthman7
 
Final DBMS Manual (2).pdf final lab manual
Final DBMS Manual (2).pdf final lab manualFinal DBMS Manual (2).pdf final lab manual
Final DBMS Manual (2).pdf final lab manual
BalamuruganV28
 
Tembisa Central Terminating Pills +27838792658 PHOMOLONG Top Abortion Pills F...
Tembisa Central Terminating Pills +27838792658 PHOMOLONG Top Abortion Pills F...Tembisa Central Terminating Pills +27838792658 PHOMOLONG Top Abortion Pills F...
Tembisa Central Terminating Pills +27838792658 PHOMOLONG Top Abortion Pills F...
drjose256
 
Activity Planning: Objectives, Project Schedule, Network Planning Model. Time...
Activity Planning: Objectives, Project Schedule, Network Planning Model. Time...Activity Planning: Objectives, Project Schedule, Network Planning Model. Time...
Activity Planning: Objectives, Project Schedule, Network Planning Model. Time...
Lovely Professional University
 
Microkernel in Operating System | Operating System
Microkernel in Operating System | Operating SystemMicrokernel in Operating System | Operating System
Microkernel in Operating System | Operating System
Sampad Kar
 

Recently uploaded (20)

electrical installation and maintenance.
electrical installation and maintenance.electrical installation and maintenance.
electrical installation and maintenance.
 
Electrical shop management system project report.pdf
Electrical shop management system project report.pdfElectrical shop management system project report.pdf
Electrical shop management system project report.pdf
 
Augmented Reality (AR) with Augin Software.pptx
Augmented Reality (AR) with Augin Software.pptxAugmented Reality (AR) with Augin Software.pptx
Augmented Reality (AR) with Augin Software.pptx
 
ALCOHOL PRODUCTION- Beer Brewing Process.pdf
ALCOHOL PRODUCTION- Beer Brewing Process.pdfALCOHOL PRODUCTION- Beer Brewing Process.pdf
ALCOHOL PRODUCTION- Beer Brewing Process.pdf
 
Maher Othman Interior Design Portfolio..
Maher Othman Interior Design Portfolio..Maher Othman Interior Design Portfolio..
Maher Othman Interior Design Portfolio..
 
Final DBMS Manual (2).pdf final lab manual
Final DBMS Manual (2).pdf final lab manualFinal DBMS Manual (2).pdf final lab manual
Final DBMS Manual (2).pdf final lab manual
 
Diploma Engineering Drawing Qp-2024 Ece .pdf
Diploma Engineering Drawing Qp-2024 Ece .pdfDiploma Engineering Drawing Qp-2024 Ece .pdf
Diploma Engineering Drawing Qp-2024 Ece .pdf
 
Worksharing and 3D Modeling with Revit.pptx
Worksharing and 3D Modeling with Revit.pptxWorksharing and 3D Modeling with Revit.pptx
Worksharing and 3D Modeling with Revit.pptx
 
Tembisa Central Terminating Pills +27838792658 PHOMOLONG Top Abortion Pills F...
Tembisa Central Terminating Pills +27838792658 PHOMOLONG Top Abortion Pills F...Tembisa Central Terminating Pills +27838792658 PHOMOLONG Top Abortion Pills F...
Tembisa Central Terminating Pills +27838792658 PHOMOLONG Top Abortion Pills F...
 
Activity Planning: Objectives, Project Schedule, Network Planning Model. Time...
Activity Planning: Objectives, Project Schedule, Network Planning Model. Time...Activity Planning: Objectives, Project Schedule, Network Planning Model. Time...
Activity Planning: Objectives, Project Schedule, Network Planning Model. Time...
 
Lab Manual Arduino UNO Microcontrollar.docx
Lab Manual Arduino UNO Microcontrollar.docxLab Manual Arduino UNO Microcontrollar.docx
Lab Manual Arduino UNO Microcontrollar.docx
 
Instruct Nirmaana 24-Smart and Lean Construction Through Technology.pdf
Instruct Nirmaana 24-Smart and Lean Construction Through Technology.pdfInstruct Nirmaana 24-Smart and Lean Construction Through Technology.pdf
Instruct Nirmaana 24-Smart and Lean Construction Through Technology.pdf
 
SLIDESHARE PPT-DECISION MAKING METHODS.pptx
SLIDESHARE PPT-DECISION MAKING METHODS.pptxSLIDESHARE PPT-DECISION MAKING METHODS.pptx
SLIDESHARE PPT-DECISION MAKING METHODS.pptx
 
Microkernel in Operating System | Operating System
Microkernel in Operating System | Operating SystemMicrokernel in Operating System | Operating System
Microkernel in Operating System | Operating System
 
Filters for Electromagnetic Compatibility Applications
Filters for Electromagnetic Compatibility ApplicationsFilters for Electromagnetic Compatibility Applications
Filters for Electromagnetic Compatibility Applications
 
Vip ℂall Girls Karkardooma Phone No 9999965857 High Profile ℂall Girl Delhi N...
Vip ℂall Girls Karkardooma Phone No 9999965857 High Profile ℂall Girl Delhi N...Vip ℂall Girls Karkardooma Phone No 9999965857 High Profile ℂall Girl Delhi N...
Vip ℂall Girls Karkardooma Phone No 9999965857 High Profile ℂall Girl Delhi N...
 
Passive Air Cooling System and Solar Water Heater.ppt
Passive Air Cooling System and Solar Water Heater.pptPassive Air Cooling System and Solar Water Heater.ppt
Passive Air Cooling System and Solar Water Heater.ppt
 
Seismic Hazard Assessment Software in Python by Prof. Dr. Costas Sachpazis
Seismic Hazard Assessment Software in Python by Prof. Dr. Costas SachpazisSeismic Hazard Assessment Software in Python by Prof. Dr. Costas Sachpazis
Seismic Hazard Assessment Software in Python by Prof. Dr. Costas Sachpazis
 
The Entity-Relationship Model(ER Diagram).pptx
The Entity-Relationship Model(ER Diagram).pptxThe Entity-Relationship Model(ER Diagram).pptx
The Entity-Relationship Model(ER Diagram).pptx
 
Multivibrator and its types defination and usges.pptx
Multivibrator and its types defination and usges.pptxMultivibrator and its types defination and usges.pptx
Multivibrator and its types defination and usges.pptx
 

Topic 10 - Project Performance Management.pdf

  • 2. • What is a Project Monitoring System? • Examples of Progress Report; • What is the Project Control Process and why is it useful? • How do we monitor Time Performance? • Shortcomings of Monitoring Systems; • Earned Value Management; • Integrated Cost / Schedule System; • Project Baselines. Project Performance Management 2
  • 3. • It involves determining what data to collect, how, when and who will collect the data, analysis of the data, and reporting progress. • You need to know what information is needed to satisfy you and your stakeholders. • Think about the Information System Structure. What is a Project Monitoring System? Monitoring System Gather Analyse Report 3
  • 4. • What data are collected? – Current status of project (schedule and cost); – Remaining cost to complete project; – Date that project will be complete; – Potential problems to be addressed currently; – Out-of-control activities requiring intervention; – Cost and/or schedule overruns & their reasons; – Forecasting overruns at time of completion. What is a Project Monitoring System? (cont.) 4
  • 5. • Collecting data and analysis: – Who will collect project data? – How will data be collected? – When will the data be collected? – Who will compile and analyze the data? – Who will receive the reports? – How will the reports be transmitted? – When will the reports be distributed? What is a Project Monitoring System? (cont.) 5
  • 6. • Progress Report Format: – Progress since last report; – Current status of project: • Schedule; • Cost; • Scope. – Problems and issues since last report: • Actions and resolution of earlier problems; • New variances and problems identified. – Corrective action planned. • How long should a project status report be? – From 5 - 10 pages. Examples of Progress Report 6
  • 7. • Project Control Process: – The process of comparing actual performance against plan to identify deviations, evaluate courses of action, and take appropriate corrective action. • Project Control Step: WhatistheProjectControlProcessandwhyisituseful? Set and baseline a plan Measuring progress and performance Comparing the plan to the facts Taking action 7
  • 8. • Monitoring Time Performance: – Tools used to catch negative variances from plan and communicate project schedule status; – Tracking and baseline Gantt charts: • Show expected, actual, and trend data for event duration performance; – Control charts: • Plot the difference in scheduled time on the critical path with the actual point on the critical path. How do we monitor Time Performance? 8
  • 9. Tracking Gantt chart showing status through periods Baseline Gantt chart How do we monitor Time Performance? (cont.) • Gantt chart: 9
  • 10. How do we monitor Time Performance? (cont.) • Control chart: 10
  • 11. • Monitoring Systems Disparities: – Time-Phase Baseline Plan: – Correct the failure of most monitoring systems to connect a project’s actual performance to its schedule and forecast budget; – Systems that measure only cost variances do not identify resource and project cost problems associated with falling behind or progressing ahead of schedule; • Earned Value Cost / Schedule System: – An integrated project management system based on the earned value concept that uses a time-phased budget baseline to compare actual and planned schedule and costs. Shortcomings of Monitoring Systems? 11
  • 12. • What is Earned Value Management (EVM)? – A project performance measurement technique that integrates scope, time, and cost data; – Give a baseline (original plan plus approved changes) to determine how well the project is meeting its goals; – Must enter actual information periodically to use EVM. • Terms to learn: – PV: Planned Value; – AC: Actual Cost; – EV: Earned Value; – CV: Cost Variance; – SV: Schedule Variance; – CPI: Cost Performance Indicator; – SPI: Schedule Performance Indicator. Earned Value Management 12
  • 13. • BAC - Budget at Completion: – Planned budget of the project. • PV - Planned Value (Budget): – This is that portion of the approved total cost estimate planned to be spent on an activity during a given period. • AC - Actual Cost: – The total of direct and indirect costs incurred in finishing work on an activity during a given period. • EV - Earned Value: – An estimate of the value of the physical work actually completed. • CV - Cost Variance: – Earned value minus the actual cost. Shows the difference between the estimated cost of an activity and the actual cost of that activity. • SV - Schedule Variance: – Earned value minus the planned value. Shows the difference between the schedule completion of an activity and the actual completion of that activity. Earned Value Management (cont.) 13
  • 14. • CPI - Cost Performance Indicator: – The ratio of earned value to actual cost and can be used to estimate the projected cost of completing the project; – If the CPI is equal to 1 or 100% then the planned and actual costs are equal, or the costs are as budgeted; – If the CPI is less than 1 or less than 100%, the project is over budget; – If the CPI is greater than 1 or more than 100%, the project is under budget. • SPI - Schedule Performance Indicator: – The ratio of earned value to planned value and can be used to estimate the projected time to complete the project; – Similar to the CPI, an SPI of 1 or 100% means the project is on schedule; – If the SPI is greater than 1 or 100% then the project is ahead of schedule; – If the SPI is less than 1 or 100%, the project is behind schedule. Earned Value Management (cont.) 14
  • 15. Earned Value Management (cont.) • Term: – Earned Value – Cost Variance – Schedule Variance – Cost Performance Indicator – Schedule Performance Indicator – Estimate at Completion (EAC) – Estimated time to Complete (ETC) – Estimated cost to Complete (ETC) – Variance at Completion (VAC) • Formula: – EV = PV to date X percent complete – CV = EV – AC – SV = EV – PV – CPI = EV / AC – SPI = EV / PV – EAC = BAC / CPI – ETC = Original time estimate / SPI – ETC = EAC – AC – VAC = BAC – EAC 15
  • 16. Earned Value Management (cont.) • Rules for Earned Value Numbers: – Negative numbers for cost and schedule variance indicate problems in those areas; – The project is costing more than planned or taking longer than planned if CPI and SPI less than 100%. • There are methods used to revise estimates of future project costs: – EVM allows experts in the field to change original baseline durations and costs because new information tells them the original estimates are not accurate; – EVM uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable. Index Cost (CPI) Schedule (SPI) > 1.0 Under cost Ahead of schedule = 1.0 On cost On schedule < 1.0 Over cost Behind schedule 16
  • 17. Integrated Cost / Schedule System • Developing an Integrated Cost / Schedule System: Report & Action Calculate & Compute Collect Schedule Resource plan WBS Budget Plan Monitor 17
  • 18. Integrated Cost / Schedule System (cont.) • Define the work using a WBS: – Scope; – Work packages; – Deliverables; – Organization units; – Resources; – Budgets. • Develop work and resource schedules: – Schedule resource to activities; – Time-phased work packages into a network. • Develop a time-phased budget using work packages included in an activity - Accumulate budgets (PV); • At the work package level, collect the actual costs for the work performed (AC); • Multiply percent complete time by original budget (EV); • Compute the schedule variance (EV – PV) and the cost variance (EV – AC). 18
  • 19. Integrated Cost / Schedule System (cont.) • Sample of an Integrated Cost / Schedule System: 19
  • 20. Project Baseline • Measure change against the project baseline; • Baseline is: – An anchor point for measuring performance; – A planned cost and expected schedule against which actual cost and schedule are measured; – A basis for cash flows and awarding progress payments; – A summation of time-phased budgets (cost accounts as summed work packages) along a project timeline. • What costs are included in baselines? – Labor; – Equipment; – Materials; – Project direct overhead costs (DOC). 20
  • 21. Project Baseline (cont.) • Scope changes to a baseline: 21
  • 22. • Project monitoring system includes data collection, analysis and reporting. • Project control steps include baseline plan, progress measurement, comparing actual against projected plan, and actions. • Performance can be monitored using tools such as: tracking Gantts, control charts, baseline plans and earned value management. • Earned value management (EVM) is a technique which incorporated scope, time and cost data to determine the health of the project. • Integrated Cost / Schedule systems are developed by creating WBS, work / resource schedules, budget, and EVM. • Project baselines are an anchor point for measuring performance. Review 22
  • 23. Thank You Next topic: Project Schedule Management 23