Diploma Project Management Captain Cook College Sharon Boyle
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
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
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.
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
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
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
CPI = EV/AC Shows how efficient we are Above 1 good efficiency Below 1 project not using resources efficiently
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.
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
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
1. Assist with the development of the project budget 2. Monitor project costs 3. Contribute to cost finalisation process
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
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
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
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