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Topics for Today

Cycle of planning-monitoring-control Report process The concept of earned value (EV)


EV, PV, AC CPI, SPI

Purposes and types of control Practice of project control

The basic feedback loop of control


PLAN ACTUAL

no

VARIANCE?

yes

New Plan

Find cause

Forecast to

Corrective action

complete

Control System Example


1. 2. 3. Periodic status checking will be performed monthly Labor costs will be collected manually and estimated where necessary from discussion with Group engineering management. Out-of-pocket costs will be collected through commitments and/or invoice payment records. Monthly status reports will be issued by the PM&C Program project manager including: a. Cost to date summaries b. Cost variances. c. Schedule performance relative to schedule in Gantt format. d. Changes in scope or other modifications to plan. Informal control will be exercised through milestone anticipation in the PM&C Program project manager

4.

5.

Gantt Schedule Chart Example


Job Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8
Start of an activity End of an activity Scheduled activity time allowed
Maintenance

Actual work progress Nonproduction time

Point in time when chart is reviewed


Now

Figure 15.4

Earned Value (EV or BCWP) is the budgeted value of work performed. Planned Value (PV) is also called BCWS budgeted cost of work scheduled.

Actual Cost (AC) is also called ACWP actual cost of work performed.

SV (schedule variance) = EV PV a negative value is bad (behind schedule) SPI (schedule performance index) = EV/PV a value less than 1 is bad CV (cost variance) = EV-AC a negative value is bad (over cost)

CPI (cost performance index) = EV/AC a value less than 1 is bad; equal to 1 suggests being on target; over 1 says under budget.

The Earned Value Calculations


50-50 rule 0-100 percent rule Critical input use rule The proportionality rule

Management Information System

Designing the Monitoring System


1. Identify key factors to be controlled
Performance Cost Time

2. Information to be collected must be identified

Test your knowledge


1. What does a cost performance index (CPI) of 1.0 suggest?

That the project is on budget

2. What does a schedule Performance Index (SPI) of 0.80 mean?

We are only progressing at 80% of the schedule.

How do you interpret the CPI (cost performance index) = 0.7?

CPI = EV/AC = 0.7 It means that for each $1 actually spent, only $0.7 worth of work has been completed cost inefficient.

Group Discussion Assignments


G1&2: Discuss the benefits of timely, appropriate, detailed information. How can a value be assigned to these characteristics? G3&4: What are the advantages for a PM of having a computerized system over a manual one? The disadvantages? G5&6: A project is usually a one-time activity with a well-defined purpose. What is the justification of setting up a PMIS for such a project? G7&8: The earned value chart is an attempt to put the three-dimensional concept of Figure 1.1 (see Chap 1) into a two-dimensional format. Is it successful?What is missing?

G9&10: How might a variance be traced back to its source?

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