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Project Management C53PM

Session 8 Russell Taylor Lecturer in Computing & Business Studies E-mail: rtayl@borderscollege.ac.uk. Project Management C53PM. Session 8. Project Monitoring & Control Chapter 8 Earned Value Analysis Exam question. Summary - Session 8. Difference between monitoring and control

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Project Management C53PM

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  1. Session 8 Russell Taylor Lecturer in Computing & Business Studies E-mail: rtayl@borderscollege.ac.uk Project Management C53PM

  2. Session 8 • Project Monitoring & Control • Chapter 8 • Earned Value Analysis • Exam question

  3. Summary - Session 8 • Difference between monitoring and control • Discussed processes for change management • Considered appropriate project control systems • Discussed two different methods of project control • Milestone & EVA • Identified three most important variables to measure in project control • ACWP, BCWP & BCWS • Explained EVA spreadsheet

  4. Major Budgeting Processes • Resource Planning • People, Equipment, Materials, Overheads • Cost Estimating • Developing approximate cost for each resource • Cost Budgeting • Relating cost estimates to schedule • Producing time-phased cost & cash-flow predictions • Cost Control • Controlling cost in relation to project schedule

  5. Project Monitoring & Control • Monitoring • Comparison of actual costs & schedule with planned cost & schedule. • Control • Setting control limits • Deviation outside limits • Corrective action • Effectiveness of project control systems • Response time • Traceability

  6. Project Monitoring & Control Systems • What control measures to select • What data to collect to estimate the current value of each control measure • How to collect the data • What analysis to perform on data collected to detect deviations • Who needs it, in what format and how often

  7. Project monitoring & control Areas • Critical tasks not started or finished on time • Schedule • Non-critical tasks becoming critical • Schedule • Milestones / key dates missed • Schedule • Price changes, cost over-runs, cash flows • Costs

  8. Project monitoring & control Areas • Long supply lead times • Resources, Schedule • Resource availability problems • Resources, Schedule, Costs, • Insufficient technical information • Resources, Schedule, Costs, • Changes in project scope • Performance, Resources, Schedule, Costs,

  9. Typical types of change • Scope creep • Increase level of effort • Quality creep • New technologies or tools • Personnel changes • Schedule improvement • Client discretion

  10. Change Management • Identify the change • Analyse the effects of change • Develop a response strategy • Communicate the strategy and gain endorsement for the change • Revise the work plan and monitor the effects of change

  11. Cost Control • Two methods • Milestone Monitoring • Earned Value Analysis • Exam Question

  12. Milestone Monitoring • A milestone is a key event in a project • Clear and well defined (Concrete) • Related to deliverables in the Gantt chart • Milestones mark progress • Either achieved or not achieved • Have a target completion date • Have a budgeted cost • Milestone monitoring • Simple & effective method • Plotted Deliverables on graph

  13. Milestone Monitoring

  14. Figure 8.1: Milestone monitoring 250 Example 1.70 200 1.65 1.60 Planned budget 1.55 150 1.45 Actual cost 1.50 Cost/£ 1.40 100 50 1.35 1.30 1.25 1.10 1.15 1.20 0 0 10 20 30 40 50 60 Week No.

  15. Earned Value Analysis (EVA) • Earned Value Analysis (EVA) • also called Cost/Schedule Control System (C/SCS) • or Baseline Performance Measurement (BPM) • or Integrated Baseline Review (IBR) • Comparison of the value actual work completed (earned value) against planned progress & actual expenditure of each activity • Time-phased plan

  16. Earned Value Analysis (EVA) • Actual cost of work performed (ACWP) • Actual costs incurred & recorded • Progress reports • Budget costs of work scheduled (BCWS) • The value of the work scheduled to be accomplished at a given period in time. • Budget cost of work performed (BCWP) • Earned Value (EV) • Budgeted value of work completed to date

  17. BCWS & BCWP Total Activity Budget = £1000,000 Actual progress 70% Scheduled progress 60% 6 0 10 weeks • Budget costs of work scheduled: • BCWS = £1000,000 x 60% = £600,000 • Budget costs of work Performed: • BCWP = £1000,000 x 70% = £700,000

  18. Scheduled Variance • Schedule variance (SV) • Indicates the difference between work content performed and work content scheduled • Monitory units • Difference between BCWP and BCWS • SV = BCWP – BCWS • = £700,000 - £600,000 • = +£100,000 • Project ahead of schedule by £100,000 (1week)

  19. ACWP Total Activity Budget = £1000,000 Actual progress 70% ACWP = £750,000 Scheduled progress 60% 6 0 10 weeks • Budget costs of work scheduled: • BCWS = £1000,000 x 60% = £600,000 • Budget costs of work Performed: • BCWP = £1000,000 x 70% = £700,000

  20. Cost Variance • Cost variance (CV) • Identifies deviations in costs on work content actually performed • Difference between BCWP and ACWP • CV = BCWP – ACWP • = £700,000 - £750,000 • = -£50,000 • Project has a cost overrun of £50,000

  21. CV & SV Total Activity Budget = £1000,000 Actual progress 70% ACWP = £750,000 Scheduled progress 60% 6 0 10 weeks • SV = + £100,000 • CV = - £50,000

  22. Performance Indices • Schedule Variance (SV) & Cost Variance (CV) • Absolute measures in monitory units • Schedule Performance Index (SPI) • Cost Performance Index (CPI)

  23. BCWP SPI = BCWS £700,000 SPI = = +1.16 £600,000 Schedule Performance Index (SPI) • SPI defined as the ratio between BCWP & BCWS • SPI value = 1 indicates activity is on schedule • SPI value >1 indicates activity ahead of schedule • SPI value <1 indicates schedule overrun

  24. BCWP CPI = ACWP £700,000 CPI = = 0.93 £750,000 Cost Performance Index (CPI) • CPI defined as the ratio between BCWP & ACWP • CPI value = 1 indicates activity is on budget • CPI value > 1 indicates better than planned cost performance • CPI value <1 indicates cost overrun

  25. Earned Value Analysis Total Activity Budget = £1000,000 Actual progress 70% ACWP = £750,000 Scheduled progress 60% 6 0 10 weeks • SV = + £100,000 • CV = - £50,000 • SPI = 1.16 • CPI = 0.93

  26. £1000,000 BAC = £1075,268 = EAC = 0.93 CPI Cost Estimate at Completion (EAC) • Budget at Completion (BAC) • BAC = BCWS at completion = £1000,000 • Estimate at Completion (EAC) EAC = ACWP + (BAC – BCWP) EAC = £750,000 + (£1000,000 - £700,000) = £1050,000

  27. Variance at Completion (EAC) • Variance at Completion (VAC) • VAC = BAC - EAC • VAC = £1000,000 - £1075,286 • = -(£75,286) • VAC = £1000,000 - £1050,000 • = -(£50,000)

  28. Original estimated duration SAC = SPI 10 weeks = 8.62 weeks = 1.16 Schedule at completion • Schedule at Completion (SAC) • Project will have a cost overrun of £75,286, but will finish 1.4 weeks ahead of scheduled

  29. Summary - Session 8 • Difference between monitoring and control • Discussed processes for change management • Considered appropriate project control systems • Discussed two different methods of project control • Milestone & EVA • Identified three most important variables to measure in project control • ACWP, BCWP & BCWS • Explained EVA spreadsheet

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