Project Execution and Control: Lunar International College July, 2021

P r o g r e s s Tr a c k i n g a n d M o n i t o r i n g
E a r n e d Val u e Anal ys i s
S c h e d u l e a n d C o s t Va r i an c e F o r e c a s t i n g
Resource M an a g e m e n t a n d Co st Control
PPEC
4. Project Execution and Control
Solomon K.(PhD)
Lunar International College
July, 2021
Solomon K. P roject Planning....

Table of Contents
1
Progress Tracking and Monitoring
2
Earned Value Analysis
o Efficiency Indices
3
Schedule and Cost Variance Forecasting
4
Resource Management and Cost Control
o Identify Potential Resources
o Determine Resource Availability
o Decide Timing Issues when Resourcing Projects


• Project tracking and monitoring are one way of controlling and
reporting the project progress.
• Project tracking allow project manager to track the project

progress and its current performance.
• Monitoring is collecting, recording and reporting information

concerning project performance.
• The project progress can be tracked based on the progress-

related quantities such as remaining duration, actual and
remaining units, and cost.
Project Tracking and Monitoring Process

It is possible to choose from many percentages to report progress, such as:
o Physical percent complete,
o Labor unit percent complete
o Material cost percent
complete or cost percent of
budget.
Avantages
• Project tracking and monitoring will enable the project
team and manager to
o Monitor the project to ensure that everything is proceeding
according to plan.
o Identify and eliminate root causes of problems, if it arises.
o Provide recommendations for corrective and preventive actions.
• To track the progress, we can also used earned value
analysis and/or CPI and SPI.P r o j e c t P l a n n i n g . . . .
Solomon K.
Progress Control Charts Trend Analysis

Control charts/ Trend Analysis
• Tools used to monitor project progress includes histogram, control charts,
trend analysis, etc.
• The project team wants to see how one specific aspect of the work process
may change over time.
• Control charts are graphs that display periodic results along with established
control limits, to determine whether the project performance is improving or
getting worse.
• They help to distinguish between normal variations and unusual variations

produced by special causes that need to be identified and corrected.
• They are used to determine if a process is in control or in need of adjustment (see

Fig. 4.1).
Project Control Charts
• If they collect data for two weeks on a daily basis and show them
on a control chart (Figure 4.1), they could determine trends in
how the process is changing over time.
• Figure 4.1: Project control chart

• Control limits identify the natural variation (normal variation

or unusual variation) that occurs in the process.
o Example: If the project team has established an upper control

limit of 70% and a lower control limit of 20% for the material cost
as a percentage of budget, all the points in this two-week period
would be within the normal variation except the rejection rate of
10% on the First Day.
• Points outside the control limits generally signal that

something has occurred that requires attention, such as a
problem with equipment, defective materials, or an employee.

E f f c i e n c y I ndi c es
Earned Value Analysis (EVA)
• Under progress tracking and monitoring, we have

shown that monitoring of the project progress is
crucial.
• One way of measuring overall performance is by using an

aggregate performance measure called earned value
analysis.
• EVA is used to determine exactly how actual cost

and schedule progress are compared with planned
progress.
Solom on K. P roject Planning....
E f f i c i e n c y Indi c es
Earned Value Analysis

• It is a way to measure and evaluate project performance.
• It compares the amount of work planned with what is
actually accomplished to see whether the project is on
track.
• It uses various calculations and ratios to measure and report
on the status and effectiveness of project work.
• Earned value is unique because it calculates cost, schedule,
and scope measurements together to determine various
indexes, performance measures, and variances.
• The first step in EVA is to determine the following three
key values (refer Figure 4.2 for graphical representation):

Eff i ci e nc y Indi ce s
Three key values

1. Planned Value (PV): is the planned cost of work scheduled to be done
in each time period. PMBOK Guide, “Planned Value (PV) is the authorized
budget 1assigned to work to be accomplished for an activity or WBS
component.”
 How much work should be done?

 It is also called the Budgeted Cost of Work Scheduled (BCWS)
 Total Planned Value for the project is known as Budget at
Completion (BAC).
Planned Value = (Planned % Complete) X (BAC)
Example: You have a project to be completed in 12 months. The
budget of the project is 100,000 USD. Six months have passed, and
the schedule says that 50% of the work should be completed. What
is the project’s Planned Value (PV)?

Three key values
Given:
Project duration:
1 12 months
Project cost (BAC): 100,000 USD
Percent complete: 50% (as per the schedule)
Solution: Planned Value is the value of the work that should have been completed
so far (as per the schedule). In this case, we should have completed 50% of the
total work.
Planned Value = 50% of the value of the total work
3
= 50% of BAC
= 50% of 100,000
= (50/100) X 100,000
= 50,000 USD
Therefore, the project’s Planned Value (PV) is 50,000 USD.

Three key values

2. Actual Cost (AC): is the total cost incurred to complete the work
that was actually performed in a given time period. PMBOK Guide,
“Actual Cost (AC) is the total cost actually incurred in
accomplishing work performed for an activity or WBS
component.”
 How much did the “is done” work cost?
2  It is also called the Actual Cost of Work Performed (ACWP).
Actual Cost is the amount of money that you have spent so far.
Example: You have a project to be completed in 12 months. The budget of the
project is 100,000 USD. Six months have passed, and 60,000 USD has been
spent, but on closer review, you find that only 40% of the work has been
completed so far. What is the project’s Actual Cost (AC)?
Solution: You have spent 60,000 USD on the project so far.
Hence, The project’s Actual Cost is 60,000 USD.

Three key values

3. Earned Value (EV): is the planned cost of work actually
performed in a given time period.
PMBOK Guide, “Earned Value (EV) is the value of work
performed expressed in terms of the approved budget assigned to
that work for an activity or WBS component.”
How much work is done?
It is also called the Budgeted Cost of Work Performed (BCWP).
Earned Value = % of completed work X BAC (Budget at
Completion).
Example: You have a project to be completed in 12 months. The
budget of the project is 100,000 USD. Six months have passed,
and 60,000 USD has been spent. On closer review, you find that
only 40% of the work has been completed so far.
What is the project’s Earned Value (EV)?
Three key values
Given: In the above question, you can clearly see that

only 40% of the work is actually completed, and the
3
definition of Earned Value states that it is the value of

the project that has been earned.
Solution:
Earned Value = 40% of the value of total work
= 40% of BAC
= 40% of 100,000
= 0.4 X 100,000
= 40,000 USD
Therefore, the project’s Earned Value (EV) is 40,000
USD.
E a r n e d Val u e Anal ys i s E ffi ci ency Ind ic es
Terms in Value Analysis

Figure 4.2: Earned value chart
Variable measure in the vertical axis is monetary value (say in Birr) and
time is measured along the horizontal axis (in months).


• Schedule Variance (SV): is a schedule performance
measurement that used to assess the magnitude of variation to the original
schedule baseline. How much is the project schedule ahead or behind?
• SV is determined by subtracting the earned value from the planned
value. A positive result means the project is ahead of schedule; a
negative result means the project is behind schedule.
• SV = EV -- PV ( SV; Behind is negative). -
• Cost Variance (CV): is the amount of budget deficit or

surplus at a given point in time, is determined by subtracting the
earned value from the actual cost. How much is the project over or
under budget?
• A positive result means the project is under budget; a negative result
means the project is over budget.
• CV = EV -- AC (CV; Overrun is negative). =


• Time variance (TV): is the difference in the time scheduled for
the work that has been performed (ST) and the actual time used
to perform it (AT).
TV = ST-AT (TV; Delay is negative)
• The two variances help us understand in birr terms how poorly or
well we are performing on cost and schedule.
• However, some people prefer to use efficiency measures, called
indices, to understand in percentage terms how well or poorly the
project is performing.
• The two most used indices are:
o Schedule Performance Index (SPI)
o Cost Performance Index (CPI).

Efficiency Indices
• Schedule Performance Index. is a measure of schedule
efficiency expressed as a ratio of earned value to the planned
value.
SPI = EV
PV
o It is a measure of schedule efficiency.
o How efficient is the project so far with its schedule
• SPI < 1 means the project has accomplished less work than planned and is
behind schedule; SPI > 1 means the project is ahead of schedule (more work is
completed than the plan).
• Cost Performance Index:- is a measure of cost efficiency of budgeted
resources expressed a ratio of the earned value to the actual cost.
CPI = EV/AC
• This ratio is a measure of cost efficiency (how efficiently birr is being
spent). How efficient is the project so far with its budget?
 CPI < 1 means the work is costing more than planned;
 CPI > 1 means the work is costing less than planned.
E f fi c i ency I ndi c es
Example 1
The ABC Project was scheduled to cost ETB 1,500 and was
originally scheduled to be completed today. As of today,
however, the project has spent ETB 1,350 and it is estimated
that only two-thirds of the work has been completed.
1 Calculate and interpret the Schedule and Cost Variances.
2 Find and interpret the Schedule and Cost Performance Indices.
3 Calculate and Estimate to Complete First method and Second
method provided that Budget at Completion is Birr 6500.
4 Compute and interpret Estimate at Completion.
5 Find and interpret To-complete Performance Index.

Solution: SV and CV
Given
PV = 1500 EV = 2
3
∗ 1500 = 1000 AC = 1350 BAC = 6500
1. Calculate and interpret the Schedule and Cost Variances.

SV = EV- PV = 1000 - 1500 = -500
= =
(project is significantly behind schedule).
CV = EV - AV =1000-1350= -350
=
(project is over budgeted).

Solution: SPI and CPI
2. Find and interpret the Schedule and Cost Performance Indices.

EV
SPI = PV = 1500 = 1000
Interpretation: Since the value is significantly less than1, it
0.67
indicates that the project has accomplished less than planned
(only 67 percent) and is significantly behind schedule (less
efficient than planned).
CPI = EVAV = 1 3 5 0 =
1000
Interpretation: Since the value is less than 1, it indicates that

0.74
the project is costing more than planned. Each ETB 1 spent on
the project has produced only ETB 0.74 worth of value. We
know our project is over budget because we have only received
ETB 0.74 worth of results for every birr we have spent.

• Looking at above example, so far, we have performed fairly

poorly.
• These variances and indices are not merely enough to talk about
the full progress of the project, as they only tell about the status
of the project at a given point in time.
• Now it is time to forecast how we will perform for the
remainder of the project.
• The simplest way to estimate future performance is to predict
that past performance will continue.
• There are projects, however, that may have unusual circumstances
in the early stages that are not likely to be repeated later.

• In those instances, the project manager and sponsor need to

use judgment to determine if the original estimates for the
remaining work are better predictors.
• In each case, an estimate is made for the remaining work and
added to the actual cost of work completed to provide the
overall estimate.
• We will use the most used methods to forecast how we will
perform for the remainder of the project.
• These include:
o Estimate-to-Complete (ETC)
o Estimate-at-Completion (EAC)
o To-complete Performance Index
(TCPI)
Budget at Completion and Estimate to Complete
• Budget at Completion (BAC)

• It is the estimated total cost of the project when completed.
• It is calculated by totaling the cost of all activities outlined on the
WBS.
 How much was the total project supposed to cost?
• Estimate to Complete (ETC).
• This is the expected additional cost needed to complete all the
remaining project work.
 How much more do we expect to spend to finish the
project?
There are two methods of calculating ETC:
 ETC First Method
 ETC Second Method
Estimate to Complete
• ETC First Method
• It is calculated by subtracting the earned value from the BAC,
then dividing the result by the CPI.
ETC =BAC−EV CPI (ETC − First
Method
• It shows the expected )
additional cost needed to finish the
project based on project performance to date.
• It is based on the assumption that our future performance will
have the same efficiency as our past performance.
• ETC Second Method
• It is calculated by subtracting the earned value from BAC.
ETC = BAC − EV (ETC − Second Method )
• This method is based on the assumption that the original plan is a
better predictor than the work to date (maybe because of unusual
circumstances that are unlikely to continue).
Example: ETC

ETC = BAC −EV = 6500−1000
= 7432.4
CPI 0 .7 4
 Interpretation: Unless we improve upon our efficiency,

we can expect to pay more for the remaining project
work than we originally expected to pay for the entire
project!
E T C = B A C − E V = 6500 − 1000 = 5500
 Interpretation: Original plan is good estimate of future
because we are expected to pay less for the remaining
project work than we originally expected to pay for the
entire project!
Estimate at Completion
• It is the expected total cost of completing all work expressed as
the sum of actual cost to date and the estimate to complete.
EAC = AC + ETC
• In our example, if we believe our efficiency to date is a good
predictor of the future, EAC is :
EAC = AC + ETC 1 s t = 1350 + 7432.4 = 8782.4
• But, if we believe what happened so far will not be repeated and
our original plan is good for the remaining work, EAC is: EAC
= AC + ETC 2 n d = 1350 + 5500 = 6850
• Interpretation: Because our cost efficiency is only 74% (see
CPI), which is less than our plan , unless we become more
efficient, we can expect to pay extra 35 percent of our original
estimate! Even if we match our original plan for the rest of the
project, we will still be way over budget in the end.
To-Complete Performance Index (TCPI)
• It is a measure of the cost performance that is required to be

achieved to finish the outstanding work to the remaining
budget.
• It is the ratio of the remaining work to the remaining budget:
TCPI = (BAC−EV
(BAC−AC ))
• In our example is calculated as
TCPI = (BAC−EV
(BAC−AC) )= ( 6 5 0 0 − 1 0 0 0 ) (= 0−1350)
6 5 01.068
• That means so far, our cost efficiency as measured by our CPI is

74% and we need to suddenly raise it to 106.80% for the
remainder of the project to complete on budget!

I dent i fy P o t e n t i a l R e s o u r c e s
D e t e r m i n e R e s o u r c e Availability
D e c i d e Ti m i n g Is s ue s w h e n R e s o u r c i n g P r o j e c t s
• Project human resource management is often overlooked in projects.

• It involves identifying the people needed to do the job, required skills,
defining their roles and responsibilities, reporting relationships, and
then managing them as the project is executed.
• Roles and responsibilities for project participants can be documented in
role descriptions, usually including title, assigned duties, and limits of
authority as shown in Table 4.1.
Figure 4.1: Project control chart


• Resource management can also be looked at in other ways,
depending on the nature of the business and on management
attitudes.
o In those industries with a high proportion of casual labour, or
which subcontract large elements of their work, detailed in-
house resource scheduling can usually be confined to the
relatively few permanent headquarters staff.
• A staffing management is a component of the human resource
management
o It describes when and how project team members will be
acquired and how long they will be needed.
o It addresses how to identify potential internal and/or external
human resources for the project, determine the availability of
each and decide how to handle timing issues regarding
building up, developing, rewarding, and releasing the project
team.
D e c i d e Ti m i n g Is s ue s w h e n R e s o u r c i n
g Projects
Identify Potential Resources
• Identifying people who might work on a project

differs significantly from one organization to
another.
• In a small organization, one particular person may often be
the logical choice for certain types of work on a project.
• In larger organizations and in situations where outside

resources may be hired, identifying potential people
becomes a bigger issue.
• Whatever the situation, a project manager needs to
understand who is potentially available to work on
his/her project.

Identify Potential Resources

• A project manager uses the following information when
identifying people who could potentially work on the project.
o Work functions (job titles and range of responsibilities)
o Professional discipline (degrees and professional certifications)
o Skill level (experience and performance ratings)
o Physical location (willingness to relocate and travel)
• Given the above information, a project manager can compare
the available people to the estimated resource needs to identify
both gaps in specific skills that are needed and gaps in the
number of people available versus those needed.
• If it is clear that more and/or different people are needed, then
the project manager needs to look elsewhere.

D e c i d e Ti m i n g Is s ue s w h e n R e s o u r c i n g P r o j e c t
s
Determine Resource Availability
• Once the potential resources have been identified, it is necessary to
discover if the identified people are available and committed.
• In terms of resource availability, full- and part-time resources as well

as internal and external resources may be available.
• If the new project is of higher priority than an existing project,

resources that were already committed may be freed up.
• Regarding ability to commit at a very detailed level, some people have

individual calendars with specific vacation or other unavailable
times.

Decide Timing Issues when Resourcing Projects
• Projects, because of their temporary nature and unique

outputs, have timing issues unlike those of ongoing
operations.
• Early in the project, one timing issue is when to bring people on
board.
 Bringing them on before they are needed can be costly. However,
if the project manager takes a chance with an important resource
and that person is not available, the schedule will probably be
delayed.
• The general solution is to assign key players as quickly as
possible.
• This helps establish good project planning, effective project
culture, and early project progress.
Decide Timing Issues when Resourcing Projects
• Of course, a project manager may need to negotiate not just for who
will be assigned to his project, but when they will be assigned.
• As members are brought on board, timing issues involve getting the
team functioning effectively and keeping them motivated and on
schedule.
• Near the end of a project, timing issues include rewarding,
recognizing, and releasing project team members.
• The staffing management deals with these three issues:
o how the project planners identify potential people for
the project,
o how they determine which people are available and secure
their services, and
o how to deal with timing issues of building up and then
releasing the workforce.

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P r o g r e s s Tr a c k i n g a n d M o n i t o r i n g

Lunar International College

Solomon K. P roject Planning....

Solomon K. P roject Planning....

Progress Tracking and Monitoring

• Project tracking allow project manager to track the project

• Monitoring is collecting, recording and reporting information

• The project progress can be tracked based on the progress-

Progress Tracking and Monitoring

Project Tracking and Monitoring Process

Progress Control Charts Trend Analysis

• They help to distinguish between normal variations and unusual variations

• They are used to determine if a process is in control or in need of adjustment (see

Project Control Charts

Solomon K. P roject Planning....

Project Control Charts

• Control limits identify the natural variation (normal variation

o Example: If the project team has established an upper control

• Points outside the control limits generally signal that

Solomon K. P roject Planning....

Earned Value Analysis (EVA)

• Under progress tracking and monitoring, we have

• One way of measuring overall performance is by using an

• EVA is used to determine exactly how actual cost

Earned Value Analysis

Solomon K. P roject Planning....

Three key values

 How much work should be done?

Solomon K. P roject Planning....

Three key values

Solomon K. P roject Planning....

Three key values

Solomon K. P roject Planning....

Three key values

Three key values

Given: In the above question, you can clearly see that

definition of Earned Value states that it is the value of

Terms in Value Analysis

Solomon K. P roject Planning....

Terms in Value Analysis

• Cost Variance (CV): is the amount of budget deficit or

Solomon K. P roject Planning....

Terms in Value Analysis

Solomon K. P roject Planning....

Solomon K. P roject Planning....

1. Calculate and interpret the Schedule and Cost Variances.

(project is significantly behind schedule).

(project is over budgeted).

Solomon K. P roject Planning....

Solution: SPI and CPI

2. Find and interpret the Schedule and Cost Performance Indices.

Interpretation: Since the value is less than 1, it indicates that

Solomon K. P roject Planning....

Schedule and Cost Variance Forecasting

• Looking at above example, so far, we have performed fairly

Solomon K. P roject Planning....

Schedule and Cost Variance Forecasting

• In those instances, the project manager and sponsor need to

Budget at Completion and Estimate to Complete

• Budget at Completion (BAC)

• ETC First Method

 Interpretation: Unless we improve upon our efficiency,

To-Complete Performance Index (TCPI)