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# Pm 8 cost_management

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Cost Management

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### Pm 8 cost_management

1. 1. Cost ManagementHow are you using the Budget ?
2. 2. Cost Management Process Cost Estimation  How much each activity is going to cost me and how long it is going to take Budgeting Process  Estimates are added-up and base lined  Control Process  How you are doing compared to how you thought you would dohttp://www.radiantminds.co.in
3. 3. Planned Value  Budget At Completion (BAC)  This is the total budget you have for your project How much you planned to spend on your project To tell the sponsor the total amount of value needed for the projecthttp://www.radiantminds.co.in
4. 4. Planned Value  Planned % Complete  Your team should have done 300 Hrs of work so far out of 1000 Hrs, so planned % complete is 30%http://www.radiantminds.co.in
5. 5. Planned Value (PV)  Planned Value (PV)  How much of budget you planned on using so far BAC is \$200,000 Planned % complete is 30% PV = \$60,000http://www.radiantminds.co.in
6. 6. Earned Value (EV)  How much work you have been able to accomplish with the money you have been given  You can determine how far off-track your project actually ishttp://www.radiantminds.co.in
7. 7. Earned Value (EV)  Write down your BAC  EV = BAC X Actual % completion  BAC = \$ 200,000 Actual % completed is 35%  EV = \$200,000 X .35 = \$ 70,000http://www.radiantminds.co.in
8. 8. How Is your project doing?  Schedule Performance Index (SPI)  SPI = EV / PV  Schedule Variance (SV)  SV = EV - PVhttp://www.radiantminds.co.in
9. 9. Are you over budget  Actual Cost (AC) – Amount of money you spent so far on the project  Cost Performance Index (CPI)  CPI = EV / AC  Cost Variance (CV)  CV = EV - AChttp://www.radiantminds.co.in
10. 10. Diff. between EV and AC  EV – measures the work that has been done  AC – Tells how much you have spent so far  When CPI is less than 1 and CV is negative that means your sponsor is not getting his money’s worth of value from the projecthttp://www.radiantminds.co.in
11. 11. SummaryBAC How much money you will spent on your projectPV What your schedule says you should have spentEV How much of the project value you really earnedAC How much you have actually spent so farSPI Whether you are behind or ahead of scheduleSV How much behind or ahead of schedule you areCPI Whether you are within your budget or notCV How much above or below your budget you arehttp://www.radiantminds.co.in
12. 12. Forecasting  Estimate at Completion (EAC)  EAC = BAC / CPI  Estimate to Complete (ETC)  ETC = EAC - AChttp://www.radiantminds.co.in
13. 13. Forecasting  Variance at Completion  VAC = BAC - EAChttp://www.radiantminds.co.in