3. INPUTS AND OUTPUTS
• The key benefit of this process is that it provides the
means to recognize variance from the plan in order to
take corrective action and minimize risk.
• E.g. The project funding requirements are also an
input. The outputs will deal directly with work
performance information
4. INPUTS
• To determine project performance, one of the common
practise is by measuring the percentage of the project
progress.
• 2 problems with this approach: -
• it’s subjective and can be abused;
• for short-term activities, it’s time consuming.
• One way to reduce the time associated with recording
progress is to set up a fixed formula for short-term
activities, short-term being defined as spanning one to
two reporting periods.
5. INPUTS
• One way to reduce the time associated with recording
progress is to set up a fixed formula for short-term
activities, short-term being defined as spanning one to
two reporting periods.
• E.g. with the selection ratio with total of 100%, E.g. 50/50,
25/75, or 20/80. When an activity starts, the first
percentage is credited. When the activity is done, the
remainder is credited.
• Using a 50/50 measure is the most aggressive, and 20/80
is the most conservative.
7. TYPES OF INPUTS
• Project management plan: There are two
components you will use in this process.
• Cost baseline: planned expenditures vs actual costs.
• Cost management plan: Identify the acceptable variances for
cost performance based on:-
• Budget Constraint
• Progress Variance
• Reverse Engineering with Backwards and Forwards
Scheduling
• Cost Performance Measurement in Progress Report.
8. TYPES OF INPUTS
• Work performance data: This includes which
activities have started and finished, which costs have
been authorized, and which have been incurred.
• Project funding requirements: The periodic required
funds for expenditures and reserves.
• Organizational process assets
(OPAs): Organizational policies, templates, and
procedures you need to manage and report project
costs.
9. OUPUTS
• The outcome of this process is the actual work
performance information, E.g.:-
• Cumulative Cost & Schedule Variances
• Cumulative Cost & Schedule Performance Indexes.
• Forecasts is required and the associated data to justify
the assumptions made.
• From time to time, the project may required change
requests and update various project management plan
components, project documents, and organizational
process assets.
11. TYPES OF OUTPUTS
• Cost management plan: If there are significant cost
variances, you may need to revisit estimating
techniques as well as levels of accuracy needed for
estimating and reporting.
• Cost baseline: If changes have occurred or risk events
have materialized, the baseline may be updated (but
only after going through the formal change control
process).
• Cost estimates: Cost estimates may be updated to
reflect the most current information.
12. TYPES OF OUTPUTS
• Basis of estimates: As cost estimates are adjusted, the
underlying basis of the estimates are also updated.
• Causes of variances: Make sure to also catalog the
corrective actions taken to address the variances.
• Lessons learned: Record information that can be used
later in the project and by other projects.
15. TYPES OF OUTPUTS
• Basis of estimates: As cost estimates are adjusted, the
underlying basis of the estimates are also updated.
• Causes of variances: Make sure to also catalog the
corrective actions taken to address the variances.
• Lessons learned: Record information that can be used
later in the project and by other projects.
16. TOOLS AND TECHNIQUES OF COST
CONTROL
• Earned Value Management
• Forecasting
• Rate of performance (RP)
• Performance Reviews
• Project Management Software
• Reserve Analysis
17. EARNED VALUE MANAGEMENT
(EVM)
• EVM is a project performance measurement technique
that integrates scope, time, and cost data.
• Given a baseline (original plan plus approved
changes), you can determine how well the project is
meeting its goals.
• You must enter actual information periodically to use
EVM.
• More and more organizations around the world are
using EVM to help control project costs.
18. EARNED VALUE MANAGEMENT
(EVM)
• The planned value (PV), formerly called the budgeted cost of
work scheduled (BCWS), also called the budget, is that portion
of the approved total cost estimate planned to be spent on an
activity during a given period
• Actual cost (AC), formerly called actual cost of work performed
(ACWP), is the total of direct and indirect costs incurred in
accomplishing work on an activity during a given period
• RM20,000 AC to accomplish task over two weeks - RM15K AC week
1and RM5K week 2
• The earned value (EV), formerly called the budgeted cost of
work performed (BCWP), is an estimate of the value of the
physical work actually completed
• EV is based on the original planned costs for the project or activity
and the rate at which the team is completing work on the project
or activity to date
19. FORECASTING
• EAC (Estimate At Completion) is determined based on
a calculated value or a bottom-up estimation based on
the remaining work
20. RATE OF PERFORMANCE (RP)
• Rate of performance (RP) is the ratio of actual
work completed to the percentage of work
planned to have been completed at any given
time during the life of the project or activity
• Brenda Taylor, Senior Project Manager in South
Africa, suggests this term and approach for
estimating earned value
• For example, suppose the server installation was
halfway completed by the end of week 1; the rate of
performance would be 50% because by the end of
week 1, the planned schedule reflects that the task
should be 100% complete and only 50% of that work
has been completed
• The EV would thus be $5,000 after week 1
($10,000*50%)
21. PERFORMANCE REVIEW
• Performance reviews in projects are required to check
the health of a project. This usually involves Cost and
Schedule as the main parameters to assess. However,
other parameters, such as Scope, Quality, and Team
Morale may be used. Reviews may include the
client, Owner, or other Project Managers
22. PROJECT MANAGEMENT
SOFTWARE
• Spreadsheets are a common tool for resource planning,
cost estimating, cost budgeting, and cost control
• Many companies use more sophisticated and centralized
financial applications software for cost information
• Project management software has many cost-related
features, especially enterprise PM software
• Several companies have developed methods to link data between
their project management software and their main accounting
systems
23. RESERVE ANALYSIS
• Reserve Analysis is one of the techniques used to
determine a project budget.
• During Reserve Analysis, a project is analyzed from a
cost overruns point of view and buffers are placed in
appropriate place.
• These buffers are called Contingency and
Management Reserves.
