You are on page 1of 4


0 PROJECT PERFORMANCE Having a successful company dedicate time, other resources &cost to projects automatically expects positive return for venture. It is therefore the responsibility of the PM to ensure projects achieved within forecasted schedule and budget. Project performance measurement enables & gives PM visibility to ensure he is operating within approved time and cost constraint and project is performing according to plan and if otherwise cost overrun, stakeholders and management should be notified for necessary measures to be taken. 1.1 COST CONTROL PERFORMANCE AND MEASUREMENT TECHNIQUES Sanghera, (2010, p 356) explains cost control embraces factors that creates changes to cost baseline; and changes can be detected by understanding variance from cost baseline by monitoring cost performance. With cost estimation process completely done for each project task, combination of this cost is used to determine project budget following projects stakeholders budget approval before project commencement. (UoL, n.d.). Cost performance is observed using Earned Value Technique (EVT) involving cost &Schedule performance analysis. 1. Budget at completion (BAC) Planned budget approved at project commencement 2. Earned Value (EV) Projects work completion value expressed in terms of project budget (UoL, n.d.). 3. Actual Cost (AC): summed expenses spent on completed. PMBOK,( 2008 p.182) defines it as summed expenses incured in realizing work achieved for an activity or WBS componenet 4. Cost Variance (CV) =EV-AC: If CV=0, depicts project is flawless budget wise, if CV >0, project is earning more value than forecasted thus cost overrun. If <0, project is earning less value and lacking time/schedule 5. CPI=EV/AC - if CPI=1, depicts project is flawless, if CPI <1, depicts cost overrun, if >1 depicts under budget. PMBOK, (2008 p.183) CPI: measurement of the value of work done compared to actual money spent on the project. 6. Planned Value (PV): approved cost for the planned project task or activity up to a given point on the timescale. PV also called budgeted cost for the work scheduled (BCWS). Sanghera, (2010, p 358) where PV=BAC *(time passed/total time schedule) (UoL, n.d.). 7. Schedule Variance (SV) = EV-PV (UoL, n.d.).Deviation amongst actual& planned schedule stated in terms of cost. A positive value depicts project is ahead of schedule and vice versa with its expected value to be 0. 8. Schedule Performance Index (SPI)- SPI=EV/PV. This is for calculating projects schedule effectiveness. If SPI is 1, project is flawless and on schedule. If >1, ahead schedule and efficient with completed work planned. If <1, behind schedule and not efficient. A well performance project ought to have its SPI close to 1 Based on the DQ project scenario, it is imperative to ensure that project performance is measured in respect to cost for comparison with planned cost. Below is the breakdown of developed budget and allocated cost based on the WBS provided with task and resources assigned to individual personnel responsible.

PART 1&2 Diagram 1&2 Budget estimate and timeline graph. Please note currency is in USD ($)

Estimated budget for the project is $128,000 with estimated duration of 64 days.





$5,000.00 $80,000.00 $4,000.00 $60,000.00 Total Cost Cumulative $40,000.00 $2,000.00 $20,000.00





Following the analysis of data in the excel sheet and plotted timeline graph, measuring time spent on the project is required by Schedule Performance Index (SPI) & Cost Performance Index (CPI). Based on the definitions and explanations above and relating it to the DQ project scenario; which is @ the 25th day, organization would have spent $48,000 with project delievered over 5% @ the end of the day. 1.2 ASSUMPTIONS 1. Equilibral distributing of budget of $128,000daily means $2,000 is required daily and PV to day 25 will be Pv=25*2,000=50,000; EV will be calculated based on % per day 1.6% inorder to figure out how much 5% of work value equals 3 days EV= $50,000+$6,000=$56,000 & AC= $48,000. SPI = EV/PV=56,000/50000=1.12 depcitng > task carried out as scheduled CPI=EV/AC=56000/48000=1.17 depicting > earnings than amount spent Study, if data is >1, project is on schedule. For this to remain constant till project completion, critical path is advised to be monitored so as to have successful project delievery as estimated with time and budget.

2. The Estimate to complete (ETC) at planned rate forecasts expected cost to complete remaining project task. Sanghera, (2010, p, 360)

Given by; ETC = BAC EV =$128,000 - $56,000 = $72,000 The estimate to complete (ETC) at the present CPI is the anticipated cost estimated to complete the remaining present project task CPI. (Sanghera, 2010, P 361) ETC = BAC EV/CPI =$128,000 - $56,000/1.17 = $61,538 Estimate at completion (EAC) at the budgeted rate: EAC = AC + ETC = $48, 000 + $61,538 = $ 109,538
Reference Mark Piscopo. 2013. Project Management Docs. Free Project Management Templates. [ONLINE] Available from: (Accessed 22 May 13) PMBOK English 4th Edition published by PMI 2008. Sanghera, P. (2010), PMP in depth: project management professional study guide for the PMP exam. 2nd ed. Boston: Course Technology/Cengage Learning. University of Liverpool/Laureate Online Education (2013) Week 3 Lecture notes from Planning and budgeting with risk Module 2 [Online]. Available from: (Accessed: May 20, 2013)

Related Interests