12 - Project Monitoring, Evaluation and Control 2-Evaluation, Forecasting, Control

Lecture 15: Project Monitoring, Evaluation and
Control 2 - Evaluation, Forecasting, Control
I.
Project Monitoring and Control System
II.
Project Performance Baselines
III. Project Performance Accounting

IV. Project Performance Evaluation and Forecasting
I. Work Performance Analysis
II. Project Periodic Performance Analysis
III. Integrated Cost-Schedule-Work Analysis
IV. Earned Value Analysis
EM-504: Project Management Framework And Tools
Farhan Saleem
Farhan Saleem
Prepared by: Farhan Saleem

1. Work Performance Analysis
Farhan Saleem
WORK PERFORMANCE ANALYSIS (1)

VARIANCE
Difference between Planned Performance & Actual Performance
Variance 0
Favorable
Variance < 0
Unfavorable
Duration Variance = Planned Duration Actual Duration

Resource Work Variance = Planned Resource Work Actual Resource Work
Resource Prod Variance = Actual Resource Prod Planned Resource Prod
Cost Variance = Budgeted Cost Actual Cost
Physical Work Done Variance = Actual Work Done Planned Work Done
Farhan Saleem

WORK PERFORMANCE ANALYSIS (2)

Consider the following scenario of activity EXCAVATION
Quantity of Work = 10000 cft
Total Duration = 10 days
Resources Required = 200 excavator hours
Budgeted Cost= $ 3,000
After completion, the actual condition is:
Physical Work Done = 10000 cft Actual Cost Incurred = $ 3,500
Actual Resource = 250 excavator hours
Actual Duration = 12 days
Duration Variance = -2 days
Resource Work Variance = -50 hrs
Resource Productivity Variance = -10 cft/hr
Cost Variance = - $500
Physical Work Variance = 0
Farhan Saleem
2. Project Periodic Performance Analysis (PPPA)
Farhan Saleem

PROJECT PERIODIC PERFORMANCE ANALYSIS
A. CONVENTIONAL TECHNIQUE
Farhan Saleem
UPDATING PERCENT COMPLETE (1)

Percent Complete can be calculated in four ways:
Physical Work Done
Duration
Resource Work
Cost Incurred
Farhan Saleem

UPDATING PERCENT COMPLETE (2)

Consider the following scenario of activity EXCAVATION
Quantity of Work = 1000 cft
Total Duration = 20 days
Resources Required = 20 excavator days + 40 Man days
BOQ Amount = $ 4,000
Budgeted Cost by Contractor= $ 3,000
Today is Day No. 10. The actual condition is:
Physical Work Done = 300 cft Actual Cost Incurred = $ 1,200
Actual Resource = 10 excavator days + 20 Man Days
Physical Work = 30%
Duration
= 50 %
Resource Work = 50 %
Cost Incurred = 40 %
Farhan Saleem
PPPA CONVENTIONAL TECHNIQUE (2)
EXAMPLE
ID
Activity Name
Baseline
Duration
Predecessor
Budgeted
Quantity
Baseline
Cost
Weightage
to Project
Site Layout
10 days
L/sum
$ 10,000
2.62 %
Cut and Fill
40 days
A (FS)
10,000 cft
$ 50,000
13.12 %
Grading
30 days
B (SS + 20)
15,000 cft
$ 60,000
15.75 %
Sub Base
60 days
C (SS + 10)
15,000 cft
$ 75,000
19.69 %
Compaction
40 days
D (FF+ 20)
1800 sft
$ 36,000
9.45 %
Carpeting
80 days
E (SS+20)
1500 sft
$ 150,000
39.37 %
Farhan Saleem

TIME BASELINE (BAR CHART)
EXAMPLE
Assume Project Planned Start is 01/01/09

Site Layout
Cut and Fill
10
11
50
31
Grading
60
41
Sub Base
100
81
Compaction
120
101
Carpeting
180
Farhan Saleem
EXAMPLE
COST BASELINE (COST PROFILE)
January 05
February 05
March 05
April 05
May05
June 05
Site Layout
10/10 x 10,000
10,000
10/10 x 10,000
10,000
10/10 x 10,000
10,000
10/10 x 10,000
10,000
10/10 x 10,000
10,000
10/10 x 10,000
10,000
Cut and Fill
21/40 x 50,000
26,250
40/40 x 50,000
50,000
40/40 x 50,000
50,000
40/40 x 50,000
50,000
40/40 x 50,000
50,000
40/40 x 50,000
50,000
Grading
1/30 x 60000
2000
29/30 x 60000
58,000
30/30 x 60000
60,000
30/30 x 60000
60,000
30/30 x 60000
60,000
30/30 x 60000
60,000
Sub Base
0/60 x 75000
0
19/60 x 75000
23,750
50/60 x 75000
62,500
60/60 x 75000
75,000
60/60 x 75000
75,000
60/60 x 75000
75,000
Compaction
0/40 x 36000
0
0/40 x 36000
0
10/40 x 36000
9,000
40/40 x 36000
36,000
40/40 x 36000
36,000
40/40 x 36000
36,000
Carpeting
0/80 x 150000
0
0/80 x 150000
0
0/80 x 150000
0
20/80x 150000
37,500
51/80 x 150000
95,625
80/80 x 150000
150000
38,250
10.04%
141,750
37.20%
191,500
50.26%
268,500
70.47%
326,625
85.73%
381,000
100%
TOTAL
Farhan Saleem

COST BASELINE (COST PROFILE)
EXAMPLE
Planned COST Curve

100.00
% Baseline Cost
100
85.73
80
70.47
60
50.26
40
37.20
20
10.04
-
0
0
30
60
90
120
150
180
Day No.
Farhan Saleem

EXAMPLE
WORK DONE BASELINE (WORK DONE PROFILE)
January 05
February 05
March 05
April 05
May05
June 05
Site Layout
10/10 x 2.62%
2.62%
10/10 x 2.62%
2.62%
10/10 x 2.62%
2.62%
10/10 x 2.62%
2.62%
10/10 x 2.62%
2.62%
10/10 x 2.62%
2.62%
Cut and Fill
21/40 x 13.12%
6.89%
40/40 x 13.12%
13.12%
40/40 x 13.12%
13.12%
40/40 x 13.12%
13.12%
40/40 x 13.12%
13.12%
40/40 x 13.12%
13.12%
Grading
1/30 x 15.75%
0.53
29/30 x 15.75%
15.23%
30/30 x 15.75%
15.75%
30/30 x 15.75%
15.75%
30/30 x 15.75%
15.75%
30/30 x 15.75%
15.75%
Sub Base
0/60 x 19.69%
0
19/60 x 19.69%
6.24%
50/60 x 19.69%
16.41%
60/60 x 19.69%
19.69%
60/60 x 19.69%
19.69%
60/60 x 19.69%
19.69%
Compaction
0/40 x 9.45%
0
0/40 x 9.45%
0
10/40 x 9.45%
2.36%
40/40 x 9.45%
9.45%
40/40 x 9.45%
9.45%
40/40 x 9.45%
9.45%
Carpeting
0/80 x 39.37%
0
0/80 x 39.37%
0
0/80 x 39.37%
0
20/80x 39.37%
9.84%
51/80 x 39.37%
25.10%
80/80 x 39.37%
39.37%
10.04%
37.20%
50.26%
70.47%
85.73%
100%
TOTAL
Farhan Saleem


WORK DONE BASELINE (WORK DONE PROFILE)
EXAMPLE
Planned Work Done Curve

100.00
% Baseline Work
100
85.73
80
70.47
60
50.26
40
37.20
20
10.04
-
0
0
30
60
90
120
150
180
Day No.
Farhan Saleem
3. INTEGRATED COST-SCHEDULE-WORK ANALYSIS

TECHNIQUE
Farhan Saleem

Farhan Saleem
Farhan Saleem

Farhan Saleem
Farhan Saleem
10

Farhan Saleem
4. Earned Value Cost and Schedule Performance System:

A Means for Integrating Costs and Schedule
Farhan Saleem
11

The Earned Value Concept (1)

The earned value (EV) refers to the determination of
how much work has been performed on the basis of
what was scheduled to be performed and what was
budgeted for the work that has actually been
completed.
The earned value (EV) concept integrates cost,
schedule, and work performed by ascribing
monetary values to each.
Farhan Saleem
The Earned Value Concept (2)

; Earned value is keyed to the project budget. Earned value
techniques can be applied in both fixed price (or budget) and
cost reimbursable (floating or variable budget) projects.
; Under earned value, a direct relationship is established
between percent complete of an account and the budget for
that account.
; Earned value = (percent complete) x (budget for that account)
; Percent complete = (actual units completed)/(Budgeted
number of units at completion)
Farhan Saleem
12

Main primary data (1)

In EV -based control systems only three variables are used as the basic
building blocks:
1. BCWS: Budgeted Cost of Work Scheduled
The value (in monetary units) of the work scheduled to be accomplished in
a given period of time (a single control period, or an ordered sequence
beginning with the first).
This measure, also called the project plan, is developed at the outset of the
project as it involves assigning to activities the amount budgeted
(estimated) for each activity.
Thus the work content scheduled to
be accomplished during the first 4
weeks of the project is budgeted at
$7,456.
Rizwan Farooqui
Farhan Saleem

2. BCWP: Budgeted Cost of Work Performed
The budgeted monetary value of the work actually accomplished
within the control period.
It is also known as the earned value.
Farhan Saleem
13


3. ACWP: Actual Cost of Work Performed
The cost actually incurred and recorded in accomplishing the
work performed within the control period.
Farhan Saleem
Earned Value Approach
The three measures BCWS, ACWP, and BCWP are the basis of
the control analysis by which variations/ deviations in time and
schedule are detected
Farhan Saleem
14

Variances (1)
SV: schedule variance; BCWP-BCWS
The difference between the budgeted cost of work performed (BCWP)
and the budgeted cost of work scheduled (BCWS) indicates (in
monetary units) the deviation between the work content performed
and the work content scheduled for the control period.
A positive difference indicates that the project is ahead of schedule,
and a negative difference implies that the project is late. If the
absolute value of the difference is very small, then in terms of work content,
the project is on schedule.
SV>0: ahead of schedule, SV<0: behind schedule
% SV:% Schedule Variance: 100SV/BCWS

Percentage deviation of the budgeted cost of performed works from the
budgeted cost of scheduled works
Farhan Saleem
Variances (2)
Example Schedule Variance
Activity A, the work performed is worth $300 more than what was planned
for the control period; in activity B, the work performed is exactly equal to
what was planned; and in activity E, the work performed is worth $1,628 less
than what was planned for the period.
The cumulative variance is an indication in terms of work content performed.
Farhan Saleem
15

Variances (3)
CV: cost variance; BCWP-ACWP
Deviations in cost are calculated based on the work content actually
performed during the control period.
The cost variance (CV) is defined as the difference between the budgeted
cost of work performed (BCWP) and the actual cost of work performed
(ACWP).
A positive CV indicates a lower actual cost than budgeted for the control
period, while a negative CV indicates a cost overrun.
CV>0: under budget, CV<0: over budget
% CV:% Cost Variance: 100CV/BCWP

Percentage deviation of the actual costs from what was budgeted for the work
performed to date
Farhan Saleem
Variances (4)
Example Cost Variance
Activities A and B are exactly on budget.

Activity E, however, shows a cost overrun of $1,272, since the work
performed on this activity was budgeted at $1,628 whereas the actual
cost turned out to be $2,900.
Farhan Saleem
16

General Concept of EV Analysis
Farhan Saleem
Project that is ahead of schedule
Farhan Saleem
17

Project that is over budget
Farhan Saleem
Cost and schedule indicators (1)

SPI: schedule performance index: BCWP/BCWS
Direct relationship between work performed and work
scheduled based on budgeted costs (SPI>1: ahead of
schedule, SPI<1: behind schedule)
CPI: cost performance index: BCWP/ACWP
This ratio directly compares budgeted costs to actual
costs based on work performed. (CPI>1: under budget,
CPI<1: over budget)
Farhan Saleem
18


Following are CPI and SPI values for the project after 4 weeks:
These values indicate that
during the control period,
25%
more
work
was
performed for activity A than
planned (SPI = 1.25) but at
the exact cost budgeted for
that work content (CPI = 1).
For activity B, the planned work content was performed at the
planned cost, and for activity E only half of the planned work
content was performed (SPI = 0.5). The planned cost of performing
that work content was only 56% (CPI = 0.56) of the actual cost.
Farhan Saleem

The schedule index and the cost index can be calculated for a single
activity, for a group of activities, or for the whole project.
This is done by accumulating the values of BCWS, BCWP , and
ACWP for the appropriate activities and calculating the values of SPI
and CPI based on these totals.
For our example, the SPI and CPI after 4 weeks are:
Farhan Saleem
19

Earned Value Forecasting (1)

BAC: Budgeted Cost at Completion
Original cost estimate of the total cost of construction
EAC: Estimated Cost at Completion
Forecast of the total actual costs required to complete a
project based on performance to date and estimates of future
conditions
Farhan Saleem
Earned Value Forecasting (2)

PC: percentage complete : BCWP/BAC
Earned Value (BCWP) = (PC) (BAC)
Planned Percent Complete (PPC)= BCWS/BAC
Estimate To Complete (ETC)= (BAC-BCWP)/CPI; unearned hours
Estimate At Completion (EAC)=ACWP+ETC
Variance At Completion (VAC) = BAC-EAC (VAC>0, the project is
expected to be completed under budget; VAC<0, the project is expected to
overrun or exceed the budget.
To Complete Performance Index (TCPI) = (BAC - BCWP) / (BAC ACWP)
Farhan Saleem
20

EV Cost and Schedule Performance System (1)

Summary of the Earned Value Analysis
; Earned value
9
BCWS = Budgeted cost of work scheduled (Planned)
9
ACWP = Actual cost of work performed (Actual)
9
BCWP = Budgeted cost of work performed (Earned)
; Variances
9 CV = BCWP ACWP (Cost variance = Earned Actual)
9 SV = BCWP BCWS (Schedule variance = Earned Planned)
; Indices
9 CPI = BCWP/ACWP (Cost performance index = Earned/Actual)
9 SPI = BCWP/BCWS (Schedule performance index = Earned/Planned)
; Forecasting
9 BAC = Budget at completion (Original project estimate)
9 ETC = (BAC BCWP)/CPI (Estimate to complete)
9 EAC = (ACWP + ETC) (Estimate at completion)
9 VAC = BAC EAC
9 TCPI = (BAC BCWP) / (BAC ACWP)
Farhan Saleem

Example 1
Provide an earned-value analysis to evaluate the progress of a
project with a total budgeted cost of $147,500 and an estimated
completion time of 94 working days. A status report after 10
working days into the project is as follows:
BCWP = $7,600
ACWP = $7,700
BCWS = $7,600
BAC = $147,500
The BCWS and BCWP shown above were the same since all
activities that were scheduled for completion were completed
according to the original planned schedule.
Farhan Saleem
21


Example 1 (cont.)
Cost and schedule deviations
Cost variance, CV
= BCWP ACWP
=$7,600 - $7,700
=-$100
A negative value of CV represents a cost overrun. Based on
the status report the actual cost is greater than that earned by
$100.
Schedule variance, SV = BCWP BCWS
=$7,600 - $7,600
=0
Since the SV is zero, the project is progressing as planned.
The project is not ahead of or behind the planned schedule.
Farhan Saleem

Example 1 (cont.)
Cost and schedule performance
Cost performance index, CPI = BCWP/ACWP
= $7,600/$7,700
= 0. 987
The CPI is less than 1.0, which indicates a poor cost
performance. The earned value is less than the actual costs.
Schedule performance index, SPI = BCWP/BCWS
= $7,600/$7,600
= 1.0
The SPI is equal to 1.0, which indicates the schedule
performance is progressing precisely as planned.
Farhan Saleem
22


Example 1 (cont.)
Forecasting cost at completion
Estimate to complete, ETC = (BAC BCWP)/CPI
=($147,500-$7,600)/0.987
= $141,743
Based on the analysis of the status report, the remaining
cost to complete the project is $141,743.
Estimate at completion, EAC = ACWP + ETC
= $7,700 + $141,743
= $149,443
Based on the analysis of the status report, the estimated
cost of the project at completion is $149,443, which is
$1,943 over the original budget of $147,500.
Farhan Saleem

Example 2
A project is consisted of 12 activities (each requires one month to complete)
for which the estimated costs and durations have been defined in the figure.
Farhan Saleem
23


Example 2 (contd.)
The project costs are estimated to be $257,000
(BAC= sum of the costs of all activities). The project
is scheduled to be completed in six months. After three
and a half months, the site work, excavation,
foundation, fencing, and rough electrical work are
completed. The framing is one-half complete, the rough
plumbing is three-fourths complete, and the paving is
half complete. The incurred costs to date are $152,000.
What is the status of this project in terms of the
schedule and the budget?
Farhan Saleem

Example 2 (contd.)
Solution:
ACWP=$152,000 (given)
BCWS=$22,000+$30,000+$50,000+$10,000+$18,000+(1/2)
($40,000+$6,000+$16,000)=$161,000
BCWP=$22,000+$30,000+$50,000+$10,000+$6,000+(1/2)
($40,000)+ (3/4)($16,000)+(1/2)($18,000)=$159,000
Project status:
Schedule Variance=BCWP-BCWS=$159,000-$161,000=
-$2,000
Farhan Saleem
24


Example 2 (contd.)
SPI=BCWP/BCWS=$159,000/$161,000=0.99
%SV: 100SV/BCWS=100(-$2,000/$16,000)= -1.2%
Slightly behind schedule
Cost Variance=BCWP-ACWP=$159,000$152,000=$7,000
CPI= BCWP/ACWP=1.05
%CV: 100CV/BCWP=+4.4%
Under budget
Farhan Saleem

Example 2 (contd.)
Percent
Complete=
BCWP/BAC
$159,000/$257,000100% = 62% complete
100%
ETC= (BAC-BCWP)/CPI = ($257,000-$159,000)/1.05 =

$93,333
EAC= ACWP+ETC=$152,000+$93,333= $245,333
Summary: Although the project is slightly behind schedule,
it is performing under budget. The project is currently at
the 62% completion stage and is estimated to be completed
for a revised estimated cost of $245,333; a decrease from
the original estimate.
Farhan Saleem
25

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Lecture 15: Project Monitoring, Evaluation and

Control 2 - Evaluation, Forecasting, Control

Project Monitoring and Control System

Project Performance Baselines

III. Project Performance Accounting

EM-504: Project Management Framework And Tools

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and

1. Work Performance Analysis

EM-504: Project Management Framework And Tools

WORK PERFORMANCE ANALYSIS (1)

Duration Variance = Planned Duration Actual Duration

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and

WORK PERFORMANCE ANALYSIS (2)

2. Project Periodic Performance Analysis (PPPA)

EM-504: Project Management Framework And Tools

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and

PROJECT PERIODIC PERFORMANCE ANALYSIS

EM-504: Project Management Framework And Tools

UPDATING PERCENT COMPLETE (1)

EM-504: Project Management Framework And Tools

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and

UPDATING PERCENT COMPLETE (2)

PPPA CONVENTIONAL TECHNIQUE (2)

Cut and Fill

EM-504: Project Management Framework And Tools

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and

PPPA CONVENTIONAL TECHNIQUE (3)

TIME BASELINE (BAR CHART)

Assume Project Planned Start is 01/01/09

EM-504: Project Management Framework And Tools

PPPA CONVENTIONAL TECHNIQUE (4)

COST BASELINE (COST PROFILE)

Cut and Fill

EM-504: Project Management Framework And Tools

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and

PPPA CONVENTIONAL TECHNIQUE (5)

COST BASELINE (COST PROFILE)

Planned COST Curve

EM-504: Project Management Framework And Tools

PPPA CONVENTIONAL TECHNIQUE (6)

WORK DONE BASELINE (WORK DONE PROFILE)

Cut and Fill

EM-504: Project Management Framework And Tools

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and

PPPA CONVENTIONAL TECHNIQUE (7)

Planned Work Done Curve

EM-504: Project Management Framework And Tools

3. INTEGRATED COST-SCHEDULE-WORK ANALYSIS

EM-504: Project Management Framework And Tools

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and

EM-504: Project Management Framework And Tools

EM-504: Project Management Framework And Tools

Prepared by: Farhan Saleem

Lecture 15: Project Monitoring, Evaluation and