WIX2002 – PROJECT MANAGEMENT
Week 9 – Measurement and Evaluation
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LEARNING OBJECTIVES
At the end of this topic, students will be able to:
03 Perform a project to track project schedule, expenses and
resources with the use of suitable project management tools.
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CONTENT
Monitoring Information System
01
Glossary Terms
02
Monitor Progress
03
Status report
04
Other control mechanism
05
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WIX2002 - PROJECT MANAGEMENT
Week 9 – Measurement and Evaluation
Where we are now??
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Week 9 – Measurement and Evaluation
Structure of a Project
Monitoring Information
System
Creating a project monitoring system involves determining:
◦ What data to collect – which metrics used for project control
◦ How, when, and who will collect the data
◦ How to analyze the data
◦ How to report current progress to management
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Project Monitoring Information
Week 9 – Measurement and Evaluation
System
Information System Structure
◦ What data are collected?
◦ Current status of project (schedule and cost)
◦ Remaining cost to compete project
◦ Date that project will be complete
◦ Potential problems to be addressed now
◦ Out-of-control activities requiring intervention
◦ Cost and/or schedule overruns and the reasons for them
◦ Forecast of overruns at time of project completion
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Project Monitoring System…
Week 9 – Measurement and Evaluation
(cont’d)
Information System Structure (cont’d)
◦ Collecting data and analysis
◦ Who will collect project data? (project team/contractor/ independent cost engineer/project manager)?
◦ How will data be collected?(electronically)
◦ When will the data be collected? (reporting period- one hour/one week)
◦ Who will compile and analyze the data?(who in charge of the data?)
◦ Reports and reporting
◦ Who will receive the reports?
◦ How will the reports be transmitted?
◦ When will the reports be distributed?
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Week 9 – Measurement and Evaluation
Project Progress Report Format
Progress since last report
Current status of project
1. Schedule
2. Cost
3. Scope
Cumulative trends
Problems and issues since last report
1. Actions and resolution of earlier problems
2. New variances and problems identified
Corrective action planned
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Week 9 – Measurement and Evaluation
The Project Control Process
Control
◦ The process of comparing actual performance against plan to identify deviations, evaluate
courses of action, and take appropriate corrective action.
Project Control Steps
1. Setting a baseline plan.
2. Measuring progress and performance.
3. Comparing plan against actual.
4. Taking action.
Tools
◦ Tracking and baseline Gantt charts
◦ Control charts
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Baseline and Tracking Gantt
Charts
FIGURE 13.1
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Week 9 – Measurement and Evaluation
Project Schedule Control
This chart is another tool used to monitor past project schedule performance
Chart and current performance and to estimate future schedule trends
FIGURE 13.2
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Week 9 – Measurement and Evaluation
Development of an Earned Value
Cost/Schedule System
Time-Phase Baseline Plan
◦ Corrects the failure of most monitoring systems to connect a project’s actual performance to its
schedule and forecast budget.
◦ Systems that measure only cost variances do not identify resource and project cost problems associated with falling behind or
progressing ahead of schedule.
Earned Value Cost/Schedule System
◦ An integrated project management system based on the earned value concept that uses a time-phased
budget baseline to compare actual and planned schedule and costs.
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Glossary of Terms
Week 9 – Measurement and Evaluation
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 cost at completion.
ETC Estimated cost to complete remaining work.
VAC Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion.
TABLE 13.1
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Week 9 – Measurement and Evaluation
Developing an Integrated
Cost/Schedule System
1. Define the work using a WBS. 3. Develop a time-phased budget using work
a. Scope packages included in an activity.
b. Work packages Accumulate budgets (PV).
c. Deliverables 4. At the work package level, collect the
d. Organization units
actual costs for the work performed (AC).
Multiply percent complete times original
e. Resources budget (EV).`
f. Budgets
5. Compute the schedule variance (EV-PV)
2. Develop work and and the cost variance (EV-AC).
resource schedules.
a. Schedule resources
to activities
b. Time-phase work packages into a network
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Project Management Information
System Overview
FIGURE 13.3
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Development of Project Baselines
(cont’d)
Rules for Placing Costs in Baselines
◦ Costs are placed exactly as they are expected to be “earned” in order to track them to their point of
origin.
◦ Percent Complete Rule
◦ Costs are periodically assigned to a baseline as units of work are completed over the duration of a work package.
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Development of Project Baselines
Purposes of a Baseline (PV)
◦ An anchor point for measuring performance
◦ A planned cost and expected schedule against
which actual cost and schedule are measured.
◦ A basis for cash flows and awarding progress payments.
◦ A summation of time-phased budgets (cost accounts as summed work packages) along a project
timeline.
What Costs Are Included in Baselines?
◦ Labor, equipment, materials, project direct overhead costs (DOC)
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Methods of Variance Analysis
Comparing Earned Value
◦ With the expected schedule value.
◦ With the actual costs.
Assessing Status of a Project
◦ Required data elements
◦ Data Budgeted cost of the work scheduled (PV)
PV =the planned time-phased baseline of the value of the work schedule
◦ Budgeted cost of the work completed (EV)- Earned value
EV = The percent complete times its original budge
◦ Actual cost of the work completed (AC)
◦ Calculate schedule and cost variances
◦ A positive variance indicates a desirable condition,
while a negative variance suggests problems or
changes that have taken place.
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Methods of Variance Analysis
Cost Variance (CV)
◦ Indicates if the work accomplished using labor
and materials costs more or less than was
planned at any point in the project.
◦ CV= EV – AC
Schedule Variance (SV)
◦ Presents an overall assessment in dollar terms
of the progress of all work packages in the project scheduled to date.
◦ SV = EV - PV
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Cost/Schedule Graph
FIGURE 13.4
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Earned-Value Review Exercise
FIGURE 13.5
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Developing A Status Report:
A Hypothetical Example
Assumptions
◦ Each cost account has only one work package, and each cost account will be
represented as an activity on the network.
◦ The project network early start times will serve as the basis for assigning the
baseline values.
◦ From the moment work an activity begins, some actual costs will be incurred
each period until the activity is completed.
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Work Breakdown Structure
with Cost Accounts
FIGURE 13.6
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Digital Camera Prototype
Project Baseline Gantt Chart
FIGURE 13.7
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Digital Camera Prototype
Project Baseline Budget ($000)
FIGURE 13.8
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Digital Camera Prototype
Status Reports: Periods 1–3
TABLE 13.2
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Digital Camera Prototype
Status Reports: Periods 4 & 5
TABLE 13.2 (cont’d)
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Digital Camera Prototype
Status Reports: Periods 6 & 7
TABLE 13.2 (cont’d)
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Digital Camera Prototype
Summary Graph ($000)
FIGURE 13.9
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Digital Camera Project-Tracking Gantt Chart
Showing Status—Through Period 7
FIGURE 13.10
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Project Rollup
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End Period 7
($000)
FIGURE 13.11
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Indexes to Monitor Progress
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
◦ Indicate how much of the work accomplished represents of the total budgeted (BAC) and actual (AC) dollars to
date.
◦ PCIB = EV/BAC
◦ PCIC = AC/EAC
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Interpretation of Indexes
Index Cost (CPI) Schedule (SPI)
>1.00 Under cost Ahead of schedule
=1.00 On cost On schedule
<1.00 Over cost Behind schedule
TABLE 13.3
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Indexes
Periods
1–7
FIGURE 13.12
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Additional Earned Value Rules
Rules applied to short-duration activities and/or small-cost activities
◦ 0/100 percent rule
◦ Assumes 100 % of budget credit is earned at once and only when the work is completed.
◦ 50/50 rule
◦ Allows for 50% of the value of the work package budget to be earned when it is started and 50% to be earned when the package is
completed.
◦ Percent complete with weighted monitoring gates
◦ Uses subjective estimated percent complete in combination with hard, tangible monitoring points.
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Forecasting Final Project Cost
Methods used to revise estimates of future project costs:
◦ EACre
◦ Allows experts in the field to change original baseline durations and costs because new information tells them
the original estimates are not accurate.
◦ EACf
◦ Uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable.
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Forecasting Model: EACf
The equation for this forecasting model:
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Monthly
Status
Report
EXHIBIT 13.1
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Trojan Nuclear Plant Decommissioning Earned
Value Status Report
EXHIBIT 13.2
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Other Control Issues
Issues In Maintaining Control Of Projects
Scope Creep
Baseline Changes
Data Acquisition
Costs and Problems
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Scope Changes to a Baseline
FIGURE 13.13
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Conference Center WiFi Project
Communication Plan
FIGURE 13.14
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Key Terms
Baseline budget Estimated Cost at Completion—Revised
Estimates (EACre)
Budget at completion (BAC) Percent complete index—budget costs (PCIB)
Control chart Percent complete index—actual costs (PCIC)
Cost performance index (CPI) Schedule performance index (SPI)
Cost variance (CV) Schedule variance (SV)
Earned value (EV) Scope creep
Estimated Cost at Completion—Forecasted To complete performance index (TCPI)
(EACf) Tracking Gantt chart
Variance at completion (VAC)
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