Cost Management

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Project
Cost Management

Planning
Cost Management
Plan Cost Magmt Plan
Planning

Estimate Activity Activity Cost Estimates

Cost
Planning

Determine Budget Cost Baseline

Monitoring & Control

Performance
Control Cost Forecast
Measurements

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Cost Management Process:

The Cost Management Process Done During

Plan Cost Management Planning Process Group

Estimate Activity Cost Planning Process Group

Determine Budget Planning Process Group

Control Cost Monitoring & Controlling Process Group

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Value Analysis :

The Concept is sometimes also called value Engineering.

It focuses to find the less costly way to do the same thing. In Other words, this
technique asks “ How can we decrease the cost on the project while
maintaining the same scope.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Techniques to estimate Activity Cost:
Estimate Cost

- Analogous Estimation.
- Parametric Estimation.
- Bottom up Estimation.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Types of costs :

- Direct Cost.
- Indirect Cost.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Reserve Analysis:
Estimate Cost

There Are two Types Of Reserves

- Contingency Reserves

- Management Reserves

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

Basic Parameters

- PV=Planned Value ( Budgeted Cost for Work Scheduled)

- EV=Earned Value (Budgeted Cost for Work Performed)
- AC=Actual Cost (Actual Cost for Work Performed)

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

CV = EV - AC
SV = EV - PV
CPI= EV/AC
SPI= EV/PV
CV = +ve (Under Budget) CPI >1 ( Under Budget)
CV = -ve (Over Budget) CPI < 1(Over Budget)
CV = 0 (On Budget) CV = 1 (On Budget)

SV= +ve (Ahead Of Schedule) SPI >1(Ahead Of Schedule)

SV= -ve (Behind Schedule) SPI < 1(Behind Schedule)
SV= 0 (On Schedule) SPI = 1(On Schedule)

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

The Budget at completion for your project is 100,000$. After 05 Months

Planned Value is 56000$ & Earned value is 50,000$.

Actual cost for Project is 57,000$. What is Schedule Performance Index &
Cost Performance index of the Project?

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

If CPI=1.22 & Actual cost of Project is 210,000. Calculate Earned Value of

the Project.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

IF CV = 10,000 $ and SV= -1,500$. What is status of your project?

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Sample Questions:

If EV = 350 , AC= 400 & PV= 325. What is cost variance?

A. 350
B. -75
C. 400
D. -50

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Sample Questions:

BAC= 150,000 USD.06 months after the Project Start, you find our that PV =
40,000 & you have spent an actual cost of 38,000 USD. If CPI = 1.22, then what
will be your earned value cost.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Sample Questions:

A Schedule Performance index 0.76 Means

A. You are over budget

B. You are Ahead of Schedule
C. You are Progressing at 76% of originally Planned
Rate
D. You are Progressing at 24% of originally Planned
Rate

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Project:

• Construct 05 Rooms
• Budget for Project = 5,000$
• Project Duration = 05 Months

Construction & Management Solutions

(CMS)
 Project Plan: We’ll Construct 05 Rooms in 05 Months

Start $ $ $ $ $ END
1000 1000 1000 1000 1000

M1 M2 M3 M4 M5

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month-1

Budget = $ 5,000

$
1000
Start END

$
1000

M1 M2 M3 M4 M5
PV = 1,000$ (1 Room)
EV= 1,000$ (1 Room done)
AC= 950$ (What spent)
CV=50, SV=0, CPI=1.05, SPI=1 By: Engr.Faiz Rasul
E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month-2

Budget = $ 5,000

$ $
1000 1000
Start END

$ $
1000 1000

M1 M2 M3 M4 M5
PV = 2,000$ (2 Room)
EV= 2,000$ (2 Room done)
AC= 2,000$ (What spent)
CV=0, SV=0, CPI=1, SPI=1 By: Engr.Faiz Rasul
E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month- 3

Budget = $ 5,000

$ $ $
1000 1000 1000
Start $ 500 END

$ $
1000 1000

M1 M2 M3 M4 M5
PV = 3,000$ (3 Room)
EV= 2,500$ (2.5 Room done)
AC= 2,800$ (What spent)
CV= -300, SV= -500, CPI= 0.89, SPI= 0.83
 Now Lets Move on to Next Concepts
of Earned Value Analysis:

Estimate To Complete.

There can be 02 Scenarios.

1- Remaining work will be done on initially planned rate?

ETC = BAC –EV
Hint*(Remaining work = Total work – What U have Done)

2- Remaining work will be done at current rate?

ETC = (BAC-EV) / CPI
Hint*(Divide with current rate)
By: Engr.Faiz Rasul
E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month- 3

Budget = $ 5,000

$ $
$
1000 1000
1000
Start END
$ $
$ 500 $ $
$ 500

1000 1000 1000 1000

$

M1 M2 M3 M4 M5
ETC = BAC – EV
Hint* = ( Total Value of work – Work Done = Remaining Work)
By: Engr.Faiz Rasul
E: pmp@cmsofficial.com, Ph.: 00966599454518
Now When You have Actual Cost Till Date & You know
Estimate to Complete also, Can you Predict How much
will be the Estimate At complétion of Project?:
Estimate at Completion= EAC = How Much we have spent+ How much more we need to Spend

EAC = AC + (BAC –EV) [Initially planned rate]

Or EAC = BAC / CPI (Current Rate)
Just Use ETC based on Situation (Typical or Atypical)

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month- 3

Budget = $ 5,000

$ $
$
1000 1000
1000
Start END
$ $
$ 500 $ $
$ 500

1000 1000 1000 1000

$

M1 M2 M3 M4 M5
If at initially planned rate then?
EAC = AC + ETC If at Current rate then?
or AC + (BAC-EV) = 2,800 + (5000-2500) = 5,300$ EAC = BAC / CPI= 5000 / 0.89 = 5,617 $
 Sample Questions:

On Your Project EV = 3500 , AC= 4000 & PV= 3850. Project Budget at completion
is 20,000 USD. If Cost performance index is expected to be same as it is, then
what is Estimate at completion.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Formulas:

CV = EV- AC
99.99% possibility
SV= EV-PV
CPI= EV/AC
SPI = EV/PV
ETC= BAC-EV
EAC= AC+ETC , EAC= AC + (BAC-EV), EAC = BAC/CPI
VAC = BAC – EAC

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518