Chapter 13 - Progress and Performance Measurement and Evaluation

Data collection and analysis; Project control process; Monitoring progress; Terminology; Baselines; Variances; Reporting
SJSU Bus. 286 - David Bentley (Gray)

11/26/06

Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

1

Course Structure

11/26/06

SJSU Bus. 286 - David Bentley (Gray)

2

Project Monitoring System for Control

11/26/06

SJSU Bus. 286 - David Bentley (Gray)

Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

3

Information System Structure    What data are collected? Collection and analysis questions Reports and reporting (see following slides) 11/26/06 SJSU Bus.David Bentley (Gray) 4 . 286 .

286 .What data are collected?        Current status of project (schedule & 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 11/26/06 SJSU Bus.David Bentley (Gray) 5 .

286 .Collecting data and analysis     Who will collect project data? How will data be collected? When will the data be collected? Who will compile and analyze the data? 11/26/06 SJSU Bus.David Bentley (Gray) 6 .

Reports and Reporting    Who will receive the reports? How will the reports be transmitted? When will the reports be distributed? 11/26/06 SJSU Bus.David Bentley (Gray) 7 . 286 .

Project Progress Report Format   Progress Since Last Report Current Status of Project    Schedule Cost Scope   Cumulative Trends Problems and Issues Since Last Report   Actions and resolution of earlier problems New variances and problems identified 11/26/06 SJSU Bus. 286 .David Bentley (Gray) 8  Corrective Action Planned .

Inc. 9 . All Rights Reserved.The Project Control Process 11/26/06 SJSU Bus.David Bentley (Gray) Copyright © 2008 by The McGraw-Hill Companies. 286 .

Definition of Control  The process of comparing actual performance against plan to identify deviations. 286 . and take appropriate corrective action 11/26/06 SJSU Bus. evaluate courses of action.David Bentley (Gray) 10 .

2. Setting a baseline plan Measuring progress and performance Comparing plan against actual Taking actions 11/26/06 SJSU Bus.David Bentley (Gray) 11 .Project Control Steps  Project Control Steps 1. 286 . 3. 4.

David Bentley (Gray) Copyright © 2008 by The McGraw-Hill Companies.Monitoring Time Performance 11/26/06 SJSU Bus. 286 . Inc. All Rights Reserved. 12 .

and trend data for event duration performance Plot the difference in scheduled time on the critical path with the actual point on the critical path SJSU Bus.Tools for Variances and Status Used to Catch Negative Variances from Plan and Communicate Project Schedule Status:  Tracking and baseline Gantt charts  Show expected.David Bentley (Gray) 13  Control charts  11/26/06 . 286 . actual.

David Bentley (Gray) 14 . 286 .Baseline and Tracking Gantt Charts 11/26/06 SJSU Bus.

286 .David Bentley (Gray) 15 .Project Schedule Control Chart 11/26/06 SJSU Bus.

Inc. 16 .Disparity Among Monitoring Systems 11/26/06 SJSU Bus. All Rights Reserved. 286 .David Bentley (Gray) Copyright © 2008 by The McGraw-Hill Companies.

David Bentley (Gray) 17 . 286 .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. 11/26/06 SJSU Bus.

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 11/26/06 SJSU Bus.David Bentley (Gray) 18 . 286 .

EAC. PV. VAC 11/26/06 SJSU Bus.Glossary of Terms EV. ETC. . 286 .David Bentley (Gray) 19 Copyright © 2008 by The McGraw-Hill Companies. AC. BAC. Inc. All Rights Reserved. SV. CV.

David Bentley (Gray) 20 . 11/26/06 SJSU Bus. The older acronym for this value was BCWP budgeted cost of the work performed.Earned Value (EV)  The percent complete times its original budget. The percent of the original budget that has been earned by actual work completed. 286 .

286 .Planned Value (PV)  The time-phased baseline of the value of the work scheduled.David Bentley (Gray) 21 . An approved cost estimate of the resources scheduled in a time-phased cumulative baseline (older acronym: BCWS budgeted cost of the work scheduled). 11/26/06 SJSU Bus.

286 . 11/26/06 SJSU Bus.Actual Cost (AC)  The actual cost of the work completed. The sum of the costs incurred in accomplishing work. (older acronym: ACWP actual cost of the work performed).David Bentley (Gray) 22 .

Cost Variance (CV) 

Cost variance is the difference between the earned value and the actual costs for the work completed to date where CV=EV-AC.

11/26/06

SJSU Bus. 286 - David Bentley (Gray)

23

Schedule Variance (SV) 

Schedule variance (SV) is the difference between the earned value and the baseline line to date where SV=EV-PV.

11/26/06

SJSU Bus. 286 - David Bentley (Gray)

24

Budgeted Cost at Completion (BAC) 

Budgeted cost at completion. The total budgeted cost of the baseline or project cost accounts.

11/26/06

SJSU Bus. 286 - David Bentley (Gray)

25

Estimated Cost at Completion (EAC)  Estimated costs at completion.David Bentley (Gray) 26 . 286 . Includes costs to-date plus revised estimated costs for the work remaining. 11/26/06 SJSU Bus.

Estimate to Complete (ETC)  Estimate to complete remaining work. 286 . 11/26/06 SJSU Bus.David Bentley (Gray) 27 .

where EAC is derived by estimators in the field.Cost Variance at Completion (VAC)    Cost variance at completion (BAC-EAC). Or.David Bentley completion. where EACf is derived from a formula using actual and earned value costs. cost variance at completion (BAC-EACf). 11/26/06 (Gray) 28 . 286 . alternatively. VAC indicates expected actual over-or underrun cost atSJSU Bus.

29 . 2.David Bentley (Gray) Copyright © 2008 by The McGraw-Hill Companies.Developing an Integrated Cost/Schedule System 1. 3. Work Breakdown Structure (WBS) Work & Resource Schedules Time Phased Budget 11/26/06 SJSU Bus. All Rights Reserved. 286 . Inc.

d. f. Scope Work packages Deliverables Organization units Resources Budgets SJSU Bus. e.Define the Work Using a WBS  WBS content a. c. b. 286 .David Bentley (Gray) 11/26/06 30 .

b. Schedule resource to activities Time-phase work packages into a network 11/26/06 SJSU Bus. 286 .Develop Work and Resource Schedules  Work and resource schedules a.David Bentley (Gray) 31 .

Develop a Time-phased Budget   Develop a time-phased budget using work packages included in an activity. Accumulate budgets for all activities (PV) 11/26/06 SJSU Bus.David Bentley (Gray) 32 . 286 .

11/26/06 SJSU Bus. collect the actual costs for the work performed (AC).David Bentley (Gray) 33 . 286 .Collect Actual Costs  At the work package level.

David Bentley (Gray) 34 . 286 . 11/26/06 SJSU Bus.Determine Earned Value  Multiply percent complete times original budget (EV).

286 .Compute Variances   Schedule variance (SV = EV PV) Cost variance (CV = EV AV) 11/26/06 SJSU Bus.David Bentley (Gray) 35 .

Schedule resources to activities Time-phase work packages into a network 11/26/06 6. collect the actual costs for the work performed (AC). Multiply percent complete times original budget (EV).Summary of Integrated Cost/Schedule System 1. Develop work and resource schedules. c. 4. Accumulate budgets (PV). Define the work using a WBS. b. f. At the work package level. Scope Work packages Deliverables Organization units Resources Budgets 5. 3. 286 . a. d. b. Compute the schedule variance (EV-PV) and the cost variance (EV-AC). e. SJSU Bus. 36 2.David Bentley (Gray) . Develop a time-phased budget using work packages included in an activity. a.

286 .David Bentley (Gray) 37 .Project Management System Overview 11/26/06 SJSU Bus.

Inc. 38 . All Rights Reserved. 286 .Developing Project Baselines 11/26/06 SJSU Bus.David Bentley (Gray) Copyright © 2008 by The McGraw-Hill Companies.

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 11/26/06 SJSU Bus. 286 .David Bentley (Gray) 39 .

Costs Included in Baselines     Labor Equipment Materials Project direct overhead costs (DOC) 11/26/06 SJSU Bus. 286 .David Bentley (Gray) 40 .

David Bentley (Gray) 41 . 286 .Baseline Data Relationships 11/26/06 SJSU Bus.

11/26/06 SJSU Bus. 286 . Percent Complete Rule  Costs are periodically assigned to a baseline as units of work are completed over the duration of a work package.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.David Bentley (Gray) 42 .

43 . 286 . Inc. All Rights Reserved.David Bentley (Gray) Copyright © 2008 by The McGraw-Hill Companies.Methods of Variance Analysis Comparing earned value Assessing project status 11/26/06 SJSU Bus.

286 .David Bentley (Gray) 44 .Comparing Earned Value   With the expected schedule value With the actual costs 11/26/06 SJSU Bus.

Assessing Status of a Project  Required data elements    Data Budgeted cost of the work scheduled (PV) Budgeted cost of the work completed (EV) Actual cost of the work completed (AC) A positive variance indicates a desirable condition. while a negative variance suggests problems or changes that have taken place. 286 . SJSU Bus.David Bentley (Gray)  Calculate schedule and cost variances  11/26/06 45 .

David Bentley (Gray) 46  Schedule Variance (SV)  .Variances  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 Presents an overall assessment in dollar terms of the progress of all work packages in the project scheduled to date 11/26/06 SJSU Bus. 286 .

David Bentley (Gray) 47 . 286 .Cost/Schedule Graph 11/26/06 SJSU Bus.

David Bentley (Gray) 48 . 286 .Earned Value Review Exercise 11/26/06 SJSU Bus.

49 . Inc. All Rights Reserved.David Bentley (Gray) Copyright © 2008 by The McGraw-Hill Companies. 286 .Developing A Status Report: A Hypothetical Example 11/26/06 SJSU Bus.

unless stated differently. 11/26/06 SJSU Bus.David Bentley (Gray) 50 . From the moment work on an activity begins. and each cost account will be represented as an activity on the network.Assumptions     Each cost account has only one work package. Baseline value will be assigned linearly. some actual costs will be incurred each period until the activity is completed. The project network early start times will serve as the basis for assigning the baseline values. 286 .

Work Breakdown Structure and Cost Accounts 11/26/06 SJSU Bus. 286 .David Bentley (Gray) 51 .

Digital Camera Prototype Project Baseline Gantt Chart 11/26/06 SJSU Bus.David Bentley (Gray) 52 . 286 .

David Bentley (Gray) 53 .Digital Camera Prototype Project Baseline 11/26/06 SJSU Bus. 286 .

David Bentley (Gray) 54 . 286 .Digital Camera Prototype Status Reports: Periods 1 3 11/26/06 SJSU Bus.

286 .Digital Camera Prototype Status Reports: Periods 4 6 11/26/06 SJSU Bus.David Bentley (Gray) 55 .

286 .David Bentley (Gray) 56 .Digital Camera Prototype Status Reports: Period 7 11/26/06 SJSU Bus.

Digital Camera Prototype Summary Graph (000) 11/26/06 SJSU Bus.David Bentley (Gray) 57 . 286 .

David Bentley (Gray) 58 . 286 .Digital Camera Project Tracking Gantt Chart Showing Status Through Period 7 11/26/06 SJSU Bus.

286 .Digital Camera Project Rollup at End Period 7 (000) 11/26/06 SJSU Bus.David Bentley (Gray) 59 .

286 .David Bentley (Gray) Copyright © 2008 by The McGraw-Hill Companies. 60 . All Rights Reserved.Indexes to Monitor Progress 11/26/06 SJSU Bus. Inc.

Performance Indexes  Cost Performance Index (CPI)   Measures the cost efficiency of work accomplished to date CPI = EV/AC Measures scheduling efficiency SPI = EV/PV SJSU Bus. 286 .David Bentley (Gray)  Scheduling Performance Index (SPI)   11/26/06 61 .

Percent Complete Indexes  Indicates how much of the work accomplished represents of the total budgeted (BAC) and actual (AC) dollars to date   PCIB = EV/BAC (budget) PCIC = AC/EAC (actual) 11/26/06 SJSU Bus.David Bentley (Gray) 62 . 286 .

Interpretation of Indexes TABLE 13.3 11/26/06 SJSU Bus. 286 .David Bentley (Gray) 63 .

286 .13 64 .David Bentley (Gray) FIGURE 13.Indexes Periods 1 7 11/26/06 SJSU Bus.

schedule.David Bentley (Gray) 65 . and the to complete performance index Cumulative actual total to date (AC) Expected costs at completion Paid and unpaid commitments 11/26/06 SJSU Bus. total percent complete.Typical Computer-Generated Status Reports       Schedule variance (EV-PV) by cost account and WBS and OBS Cost variance (EV-AC) by cost account and WBS and OBS Indexes cost. 286 .

286 .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 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 SJSU Bus.David Bentley (Gray)  50/50 rule  11/26/06 66 .

David (Gray) 67  EACf  11/26/06 .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 Uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable Bentley SJSU Bus. 286 .

David Bentley (Gray) 68 .Forecasting Model: EACf The equation for this forecasting model: 11/26/06 SJSU Bus. 286 .

EV BAC AC TCPI= TCPI = the amount of value each remaining dollar in the budget must earn to stay within budget 11/26/06 SJSU Bus. 286 .David Bentley (Gray) 69 .To Complete Performance Index (TCPI) BAC .

David Bentley (Gray) 70 .Other Control Issues Issues In Maintaining Control Of Projects Baseline Changes Contingency Reserve Costs and Problems of Data Acquisition Scope Creep Managing the Portfolio of Projects 11/26/06 SJSU Bus. 286 .

286 .David Bentley (Gray) FIGURE 13.14 71 .Scope Changes to a Baseline 11/26/06 SJSU Bus.

286 .Key Terms Base line budget Control Chart Cost performance index (CPI) Cost variance (CV) Earned Value (EV) Estimated cost at completion (EACre) Percent complete index Schedule performance index (SPI) Schedule variance (SV) Scope creep To complete performance index (TCPI) Tracking Gantt chart Variance at completion (VAC) 11/26/06 SJSU Bus.David Bentley (Gray) 72 .

Sign up to vote on this title
UsefulNot useful