This document provides an overview of project cost management processes including developing cost baselines, earned value management, and variance analysis. It defines key terms like planned value, earned value, actual costs, cost variance, and schedule variance. Cost baselines include time-phased budgets for planned costs. Earned value management compares earned value to planned value and actual costs to calculate cost and schedule performance using indices like CPI, SPI, and variance. Variance analysis is used to track project performance and forecast final costs.
Earned value management (EVM) is a methodology that combines scope, schedule, and resource measurements to assess project performance and progress.
It is a commonly used method of performance measurement for projects.
It integrates the scope baseline with the cost baseline, along with the schedule baseline, to form the performance baseline, which helps the project management team assess and measure project performance and progress
By Er.Nikhil Raj, Senior Planning Enginner, Navig Solution Pvt Ltd
Abstract— Execution of engineering projects are tracked against critical metrics such as safety, quality,
delivery cost and inventory. Earned value is a key parameter that helps in assessing delivery (schedule) and cost.
Static shows that 70% of projects are over budget behind schedule, 52% of all projects finish at 189% of their
initial budget and some, after huge investments of time and money, are simply never completed. The rest of this
paper gives a perspective on monitoring project health by Earned value analysis.
Earned Value Management - Quantifiable project metrics for learning the current state of a project.
Examples and Value Definitions for EVM in relation to project management.
https://agile-mercurial.com
https://twentyfirstcenturyworkforce.com/
Earned value management (EVM) is a methodology that combines scope, schedule, and resource measurements to assess project performance and progress.
It is a commonly used method of performance measurement for projects.
It integrates the scope baseline with the cost baseline, along with the schedule baseline, to form the performance baseline, which helps the project management team assess and measure project performance and progress
By Er.Nikhil Raj, Senior Planning Enginner, Navig Solution Pvt Ltd
Abstract— Execution of engineering projects are tracked against critical metrics such as safety, quality,
delivery cost and inventory. Earned value is a key parameter that helps in assessing delivery (schedule) and cost.
Static shows that 70% of projects are over budget behind schedule, 52% of all projects finish at 189% of their
initial budget and some, after huge investments of time and money, are simply never completed. The rest of this
paper gives a perspective on monitoring project health by Earned value analysis.
Earned Value Management - Quantifiable project metrics for learning the current state of a project.
Examples and Value Definitions for EVM in relation to project management.
https://agile-mercurial.com
https://twentyfirstcenturyworkforce.com/
Introduction
Overview of Key Performance Indicators ( KPI )
What Is The Earned Value Management ?
Why Project Managers Use EVM ?
Earned Value Management Terms and Formulas
Planned value (PV)
Earned value (EV)
Actual cost (AC)
Variance
Schedule Variance ( SV )
Cost Variance ( CV )
Performance Index
Schedule Performance Index (SPI)
Cost Performance Index (CPI)
Example ( Case Study )
Project Forecasting
Budget at Completion (BAC)
Estimate at Completion (EAC)
Estimate to Complete (ETC).
Variance at Completion (VAC)
To Complete Performance Index (TCPI)
This lecture provides a short but comprehensive review of earned value analysis and how this technique helps us to determined the project financial and schedule situation.
Earned value management is a project management technique for measuring project performance and progress. It has the ability to combine measurements of the project management triangle:
Scope
Schedule, and
Costs
In a single integrated system, Earned Value Management is able to provide accurate forecasts of project performance problems, which is an important contribution for project management.
Early EVM research showed that the areas of planning and control are significantly impacted by its use; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance. More recent research studies have shown that the principles of EVM are positive predictors of project success.[1] Popularity of EVM has grown in recent years beyond government contracting, in which sector its importance continues to rise[2] (e.g., recent new DFARS rules[3]), in part because EVM can also surface in and help substantiate contract disputes.[4]
Essential features of any EVM implementation include
a project plan that identifies work to be accomplished,
a valuation of planned work, called Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS), and
pre-defined “earning rules” (also called metrics) to quantify the accomplishment of work, called Earned Value (EV) or Budgeted Cost of Work Performed (BCWP).
EVM implementations for large or complex projects include many more features, such as indicators and forecasts of cost performance (over budget or under budget) and schedule performance (behind schedule or ahead of schedule). However, the most basic requirement of an EVM system is that it quantifies progress using PV and EV
Earned Value Management is an important topic for PMP and PMI ACP Exam. Since the questions related with Earned Value Management are based on formulas so with practice, these concepts can be mastered and these questions can be answered confidently in the exam.
A simple example of Earned Value Management (EVM) in actionPlanisware
A simple example of Earned Value Management (EVM) calculations to illustrate the EVM article on Planisware's online Project Portfolio Management glossary.
Introduction
Overview of Key Performance Indicators ( KPI )
What Is The Earned Value Management ?
Why Project Managers Use EVM ?
Earned Value Management Terms and Formulas
Planned value (PV)
Earned value (EV)
Actual cost (AC)
Variance
Schedule Variance ( SV )
Cost Variance ( CV )
Performance Index
Schedule Performance Index (SPI)
Cost Performance Index (CPI)
Example ( Case Study )
Project Forecasting
Budget at Completion (BAC)
Estimate at Completion (EAC)
Estimate to Complete (ETC).
Variance at Completion (VAC)
To Complete Performance Index (TCPI)
This lecture provides a short but comprehensive review of earned value analysis and how this technique helps us to determined the project financial and schedule situation.
Earned value management is a project management technique for measuring project performance and progress. It has the ability to combine measurements of the project management triangle:
Scope
Schedule, and
Costs
In a single integrated system, Earned Value Management is able to provide accurate forecasts of project performance problems, which is an important contribution for project management.
Early EVM research showed that the areas of planning and control are significantly impacted by its use; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance. More recent research studies have shown that the principles of EVM are positive predictors of project success.[1] Popularity of EVM has grown in recent years beyond government contracting, in which sector its importance continues to rise[2] (e.g., recent new DFARS rules[3]), in part because EVM can also surface in and help substantiate contract disputes.[4]
Essential features of any EVM implementation include
a project plan that identifies work to be accomplished,
a valuation of planned work, called Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS), and
pre-defined “earning rules” (also called metrics) to quantify the accomplishment of work, called Earned Value (EV) or Budgeted Cost of Work Performed (BCWP).
EVM implementations for large or complex projects include many more features, such as indicators and forecasts of cost performance (over budget or under budget) and schedule performance (behind schedule or ahead of schedule). However, the most basic requirement of an EVM system is that it quantifies progress using PV and EV
Earned Value Management is an important topic for PMP and PMI ACP Exam. Since the questions related with Earned Value Management are based on formulas so with practice, these concepts can be mastered and these questions can be answered confidently in the exam.
A simple example of Earned Value Management (EVM) in actionPlanisware
A simple example of Earned Value Management (EVM) calculations to illustrate the EVM article on Planisware's online Project Portfolio Management glossary.
Earned Value AnalysisTracking Project ProgressWh.docxsagarlesley
Earned Value Analysis
Tracking Project Progress
What Is Earned Value?The dollar amount you planned to spend for the work actually completed
Earned Value is the budgeted cost of the work that has actually been performed/completed
Earned Value = Budgeted Cost of the Work Performed (BCWP)
What Is Earned Value Analysis (EVA)?
EVA enables the project progress to be tracked in terms of:
The work that has actually been completed
--- Compared To ---
The work that was scheduled to be completed
Why Is Earned Value Analysis Important?EVA enables the project team to know:If the project is ahead of, or behind schedule
How far the project is ahead of, or behind schedule
If the project is over or under budget
How much the project is over or under budget
Why Is Earned Value Analysis Important?EVA enables the team to address the project’s triple constraints earlier rather than later Scope – re-prioritize/reduce requirements
--- and/or ---
Schedule – adjust the timeline
--- and/or ---
Cost – request additional funding
The Components of Earned Value Analysis WBS – Work Breakdown StructureIdentifies products to be delivered by the project Products or sub-products should be broken down to what can be completed in 80 hours (“80-hour rule”), when applicable
Provides the basis for Distinct products or sub-products – which help to provideValid estimates – which enableTracking earned value / project progress
The Components of Earned Value Analysis Earned Value (EV) ---- or BCWPThe budgeted cost of the work actually performed How much work was actually completed
Planned Value (PV) ---- or BCWSThe budgeted cost of the work scheduled to be performed How much work should have been completed
Actual Cost (AC) ------- or ACWPThe actual cost of the work performedHow much money has been actually spent
The Components of Earned Value AnalysisBudget at Completion (BAC)Dollar amount originally budgeted to complete the project
Estimate at Completion (EAC)Estimate of dollar amount needed to complete the project
Variance at Completion (VAC)Estimate of the dollar amount projected above or below budget
Schedule at Completion (SAC)Projection of the time needed to complete the project
The Components of Earned Value Analysis
Schedule Variance (SV)The work completed vs. the work planned to be completed
SV = (Earned Value – Planned Value)
Tells us if the project is ahead of, or behind schedule
Negative value means the project is behind schedule
The Components of Earned ValueSchedule Performance Index (SPI)Utilized to forecast how long it will take to complete the project
SPI = (Earned Value / Planned Value)
Tells us if the project is ahead of, or behind schedule
Less than 1.00 means the project is behind schedule
The Components of Earned Value
Cost Variance (CV)What we planned to spend on the work completed vs. what was actually spent on the work completed
CV = (Earned Value – Actual Cost)
Tells us if the project is over or under budget ...
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project control using earned value analysis - Part 01 waleed hamdy
Project control using earned value analysis - Part 01
Mission of the projects control division
Why the earned value management?
Establishment of the Performance Measurement Baseline
EVM Analysis & Forecasting
Project Mangement - overview of the Cost Management knowledge area within project management. Describes the 4 processes within Project Cost Management and the process groups impacted.
Blog: https://agile-mercurial.com
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Cheryl Hung, ochery.com
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Neuro-symbolic is not enough, we need neuro-*semantic*Frank van Harmelen
Neuro-symbolic (NeSy) AI is on the rise. However, simply machine learning on just any symbolic structure is not sufficient to really harvest the gains of NeSy. These will only be gained when the symbolic structures have an actual semantics. I give an operational definition of semantics as “predictable inference”.
All of this illustrated with link prediction over knowledge graphs, but the argument is general.
2. Introduction:
o Project Cost Management is the knowledge use for managing
costs. It helps to ensure a project is completed within the
approved budget
o It includes the processes involving in estimating, budgeting and
controlling costs
o These processes interact with each other and with processes in
the other nine knowledge areas as well
3. Developing a Cost/Schedule System:
Define
work
using a
WBS
Create
work and
resource
schedules
Develop
a time-
phased
budget
Collect
Cost
Data (at
the work
package
level)
Compute
variances
o Scope
o Work packages
o Deliverables
o Organization units
o Resources
o Budgets
o Schedule
resources
to activities
o Time-phase
work
packages into
a network
o Use work
packages
included in
an activity.
Accumulate
budgets (PV).
o Use work
packages
included in
an activity.
Accumulate
budgets
(PV)
o Compute the
schedule variance
(EV-PV) and the
cost variance (EV-
AC)
5. Development of Project Baselines:
Purposes of a Baseline
o It is an anchor point for measuring performance
o A planned cost and expected schedule against which actual cost and schedule are measured
o A summation of time-phased budgets (cost accounts as summed work packages) along a
project timeline
What Costs Are Included in Baselines?
o Labor, equipment, materials, project direct overhead costs (DOC)
Rules for Placing Costs in Baselines
o Costs are placed exactly as they are expected to be “earned” in order to track
them to their point of origin
o Percent Complete Rule
o Costs are periodically assigned to a baseline as units of work are completed over the duration
of a work package
6. o Project Manager can use the information about the
project progress to help control the schedule and
cost to assess whether the project is on track
through earned value management (EVM)
o EVM uses Variance Analysis methodology
o Other alternative methods are:
o Ask team members for a % of the work completed in each
work package or activity
o Team member provides a simple “guess” of work
performed
Earned Value Management (EVM):
7. Methods of Variance Analysis in EVM:
Comparing Earned Value
oWith the expected schedule value
oWith the actual costs
Assessing Status of a Project
oRequired data elements
o Budgeted cost of the work scheduled (PV)
o Budgeted cost of the work completed (EV)
o Actual cost of the work completed (AC)
oCalculate cost and schedule variances
o A positive variance indicates a desirable condition,
while a negative variance suggests problems or
changes that have taken place
8. oCost Variance (CV)
oIndicates if the work accomplished using labor
and materials costs more or less than was
planned at any point in the project
oSchedule Variance (SV)
oPresents an overall assessment in dollar terms
of the progress of all work packages in the
project scheduled to date
Methods of Variance Analysis in EVM:
9. Project Cost Management:
ESTIMATE
COST
DETERMIN
E
COST
CONTROL
COST
The process involved in planning, estimating, budgeting, and controlling costs so that the
budget can be completed within the approved budget
Developing an
estimate of costs of
the resources
needed to
complete a project
Allocating overall
cost estimate to
individual work
items “cost
baseline”
Controlling change
to project budget
PLANNING MONITOR & CONTROL
10. Monitor & Control Costs : CONTROL
COST
Cost Baseline
Project Funding Requirements
Performance Reports
Work Performance
Information
Approved Change Requests
Project Management Plan
Cost Change Control System
Performance Measurement
Analysis
Forecasting
Project Performance
Reviews
Project Performance
Software
Variance Management
Inputs Tools & Techniques Outputs
Cost Estimate Updates
Cost Baseline Updates
Performance
Measurements
Forecasted Completion
Recommended Corrective
Action
Organizational Process
Assets Updates
Project Management Plan
Updates
o Monitor Cost Performance
o Ensure that changes are included in cost baseline
o Inform stakeholders of authorized changes which impact
cost
11. Cost Budget Breakdown:
Project
ReservesNot Used in Earned Value
Calculations
Used in Earned Value Calculations
Cost Budget
Management
Reserve
Cost Baseline
Contingency
Reserve
Project
Control Account
Work Package
Activity
Tasks
Project
WBS
Schedule
Work Breakdown Structure Schedule Information
Budget Breakdown
13. Terms:
EV Earned value for a task is simply the percent complete times its original budget. Stated differently, EV is the percent of the original
budget that has been earned by actual work completed.
PV The planned time-phased baseline of the value of the work scheduled. An approved cost estimate of the resources scheduled in a
time-phased cumulative baseline [BCWS—budgeted cost of the work scheduled].
AC Actual cost of the work completed. The sum of the costs incurred in accomplishing work. [ACWP—actual cost of the work
performed].
CV Cost variance is the difference between the earned value and the actual costs for the work completed to date where CV = EV – AC
SV Schedule variance is the difference between the earned value and the baseline line to date where SV = EV – PV
BAC Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts.
EAC Estimated costs at completion.
ETC Estimated costs to complete remaining work.
VAC Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion.
14. Terms:
Performance Indexes:
• Cost Performance Index (CPI)
• Measures the cost efficiency of work accomplished to
date.
• CPI = EV/AC
• Scheduling Performance Index (SPI)
• Measures scheduling efficiency
• SPI = EV/PV
• Percent Complete Indexes
• Indicates how much of the work accomplished represents
of the total budgeted (BAC) and actual (AC) dollars to
date.
• PCIB = EV/BAC
• PCIC = AC/EAC
15. Terms:
Index Cost (CPI) Schedule (SPI)
>1.00 Under cost Ahead of schedule
=1.00 On cost On schedule
<1.00 Over cost Behind schedule
18. EV
Earned Value = EV
The value of the work
accomplished until this point
in time. Cost is as per the
original budget.
“ As of today, what is the
estimated value of the work
actually accomplished? “
19. PV
Planned Value = PV
Planned cost or value of the
work to be done until this
point in time.
“ As of today, what is the
estimated value of the work
planned to be done? “
20. AC
Actual Costs = AC
The costs actually incurred to
complete the work until this
point in time.
“ As of today, what is the
actual costs incurred for the
work accomplished? “
21. BAC
Budget At Completion =
BAC
The total planned value or
budget for completing the
entire project.
“ How much did we budget
for the total project? “
22. CV
Cost Variance = CV
CV = EV - AC
o Positive is Under Budget
o Negative is Over budget
23. SV
Schedule Variance = SV
SV = EV - PV
o Positive is ahead of
schedule
o Negative is behind
schedule
24. CPI
Cost Performance Index =
CPI
CPI =
o We are getting $___
worth out of every $1
spent.
o Greater than 1 is good;
less than 1 is bad
EV
AC
25. SPI
Schedule Performance
Index = SPI
SPI =
o We are progressing at
___% of the rate
originally planned.
o Greater than 1 is good;
less than 1 is bad
EV
PV
26. EAC
Estimate At Completion = EAC
Prediction of what project will
cost when completed..
“ What do we currently expect the
total project to cost (a forecast)?
“
There are 4 types:EAC = AC + Bottom up
ETC
BAC
CPI
EAC = AC + (BAC – EV)
EAC =
EAC =
(BAC – EV)
(CPI x SPI)
Used when the
original estimate
was flawed
Used when there are no variances
from BAC. Most common one for
exam
Used when the current
variances are “atypical” of
the future
Used when the current
variances are “typical” of the
future
27. ETC
Estimate To Complete = ETC
From this point on, How much
More do we expect it to cost to
finish the project ? (a Forecast)
How much more will the project
cost?
ETC = EAC - AC
28. VAC
Variance At Completion = VAC
As of today, how much over or
under budget will we be at the
end of the project ?
VAC = BAC -
EAC
29. TCPI
To Complete Performance
Index = TCPI
In order to stay within budget,
what rate must we meet for the
remaining work?
TCPI
=
(BAC – EV)
(BAC - AC)
o It divides the work remaining to be done
by the money remaining to do it
o Greater than 1 is bad; less than 1 is good