COST CONTROL

Cahyono Bintang Nurcahyo, ST, MT

Cost Management : an
overview

Constraints

PMBOK Guide, 2008

Project Managements Mapping

Project Cost Management

Estimate Costs

Control Costs
MONITORING &
CONTROLLING PROCESSES

Determine
Budget

PLANNING
PROCESSES

INITIATING
PROCESSES

CLOSING
PROCESSES

EXECUTING
PROCESSES

Project Cost Management

Project Cost Management

Estimate Costs

The process of developing an

approximation of the monetery resources
needed to complete project activities.

Determine Budgets

The process of aggregating the estimates

costs of individual activities or work
packages to establish an authorized cost
baseline.

Project Cost Management

Cost Control

The process of monitoring the

status of the project to update the
project budget and managing
changes to the baseline.

Cost Control

CC. Concept
Strategic

FORECAST

PLANNING

Strategic

FORECAST

IMPLEMENTATION

Monitoring

Monitoring

Monitoring

COST & SCHEDULE

CC. Tools & Techniques

#1

Earned Value

Earned Value

Earned Value represent the amount of budget

absorbed that you can claim representing the
complete work (cost, time, scope)
Earned Value Analysis / technique is a
method of measuring project performance, by
comparing the amount of work planned with
what was actually accomplished to determine
if cost and schedule performance is as
planned
Enable the project manager to detect
deviations from plan as soon as they occur
and to take appropriate corrective action.

EV. The key values

Planned Value (PV): Estimated value
of the work to be done
Budget at Completion (BAC): Budget
for total work
Earned value (EV): Estimated value
of the work actually accomplished
Actual Cost (AC): Actual cost incurred

EV. The key values

Cumulative Value

Planned Value
Budget at
Completio
n (BAC)

Actual
Cost

Earned Value

Data Date

Time

EV. The measurenment

Cost Variance CV = EV - AC
(+) = under budget
(-) = over budget

Schedule Variance SV = EV - PV
(+) = ahead schedule
(-) = behind schedule

Cost Performance Index CPI = EV/AC

>1 performance of cost OK
<1 performance of cost not OK
Getting Rp.xx out of every Rp.1

Schedule Performance Index SPI = EV/PV

>1 performance of schedule OK
<1 performance of schedule not OK
Progressing at x% of the rate originally plan

EV. CV and SV

Cumulative Value

Planned Value
Actual
Cost
Cost Variance =
EV - AC

Budget at
Completio
n (BAC)

Schedule Variance =
EV - PV
Earned Value

Data Date

Time

EV. CPI and SPI

Cost Performance Index
CPI =
CPI =

EV

Performance
Above Plan

AC
BCWP
ACWP

Schedule Performance Index

EV
SPI =
PV
BCWP
SPI =
BCWS

Performance
Below Plan

EV. CPI and SPI

2.5

2.5

1.5

1.5

0.5
1

0.5
1

1.5

2.5

1.5

0.5

0.5
1

: Schedule Performance Index (SPI)

: Cost Performance Index (CPI)

EV. Example #1
Selamat!
Saya
memberi
Anda
kontrak
Pembangun
an Jalan Rel
baru

hmm... Sepanjang
5km, dalam 5
bulan, maka akan
selesai dengan
total biaya $5,000

Planned Value (PV)

Bulan 1
Bulan 2
Bulan 3
PV = $1,000 PV = $1,000 PV = $1,000

Bulan 4
Bulan 5
PV = $1,000 PV = $1,000

Month
Cost ($)
% complete

1,000
20%

2
1,000
40%

3
1,000
60%

4
1,000
80%

5
1,000
100%

PV

Earned Value (EV)

CONTROL POINT : Akhir bulan ke-2

Bulan 1
Bulan 2
PV = $1,000PV = $1,000

Sekarang kita berada pada

akhir bulan kedua,
tapi hanya 1 section
track yang selesai.
Maka, nilai dari Earned
Value (EV) adalah =
$1,000

Akhir bulan ke-2

PV = $2,000 Rencana
EV = $1,000 Yang didapatkan

Actual Cost (AC)

CONTROL POINT : Akhir bulan ke-2

Tenaga kerja $1,300,

Biaya material $1,100.
Jadi biaya pada akhir bulan ke- 2 =
$2,400

Akhir bulan ke-2

AC = $2,400 Pengeluaran Aktua

Illustration Summary
1

Month
Cost ($)

1,000

% complete

2
1,000

20%

40%

3
1,000
60%

4
1,000
80%

5
1,000

PV

100%

CONTROL POINT

at Control Point :
PV = $2,000

Planning Progress = 40%

EV = $1,000

Actual Progress

AC = $2,400

= 20%

Progress
Status

Cost
Actual Cost Spent = $2,400 Status

The Measurenment

Cost Variance CV = EV - AC

CV = $1,000 - $2,400 = - $1,400

(-) = over budget

Schedule Variance SV = EV - PV
SV = $1,000 - $2,000 = - $1,000
(-) = behind schedule

Cost Performance Index CPI = EV/AC

CPI = $1,000/$2,400 = 0.42
<1 performance of cost not OK
Getting Rp.xx out of every Rp.1

Schedule Performance Index SPI = EV/PV

SPI = $1,000/$2,000 = 0.5
<1 performance of schedule not OK
Progressing at 50% of the rate originally plan

#2

Forecasting

Forecasting

Forecasting includes making estimates

or predictions of conditions in the
projectss future, based on information
and knowledge available at the time of
the forecast

Forecasting:

Estimate at Completion (EAC)

Estimate to Complete (ETC)

Parameter used to forecast : BAC, AC, &

CPI

F. Estimate to Complete

ETC is the estimate for completing the

remaining work for a schedule
activity.

New estimates:

Work performed at the budgeted rate:

ETC = ETCbottom-up
ETC = BAC - EV

Considering both SPI and CPI factors:

ETC = [ BAC - EV ] / [ CPIcumulative x SPIcumulative ]

Ratio CPI/SPI = 80/20, 50/50, others

F. Estimate at Completion

EAC is a forecast of the most likely total

value based on project performance

New estimates:

Work performed at the budgeted rate:

EAC = AC + ( BAC - EV)

Considering both SPI and CPI factors:

EAC = AC + ETCbottom-up

EAC = AC + ( [ BAC - EV ] / [ CPI cumulative x

SPIcumulative ] )
Ratio CPI/SPI = 80/20, 50/50, others

Work performed at the present CPI:

EAC = BAC / CPIcumulative

#3

To-Complete Performance
Index

To-Complete Performance
Index
TCPI is the calculated projection of
cost performance that must be
achieved on the remaining work to
meet a specified management goal,
such as the BAC or the EAC.
TCPI
as the work remaining (BAC
minus EV) devided by the funds
remaining (BAC minus AC, or EAC
minus AC)
Formula TCPI = [ BAC - EV ] / [ BAC AC ]
Or TCPI = [ BAC - EV ] / [ EAC - AC ]

To-Complete Performance
Index

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