2. Control of Construction Projects in Sudanese Contracting
companies :university thesis
majority of construction
companies
DO NOT have any system in
place for
COST control
http://www.sustech.edu/sudannewar/thesis.php?serial=611130&collno=9
3. Project Management Process Group
and Knowledge Area Mapping
Knowledge Area Initiating Planning Executing M& C Closing
4. Project Integration Management
4Develop
Project Charter
4.2 Develop Project
Management Plan
4.3 Direct & Manage Project Work
4.4 Monitor & Control Project Work
4.5 Perform Integrated Change Control
4.6 Close Project
or Phase
5. Project Scope Management
5Plan Scope Management
5.2 Collect Requirements
5.3 Define Scope
5.4 Create WBS
5.5 Validate Scope
5.6 Control Scope
6. Project Time Management
6Plan Schedule Management
6.2 Define Activities
6.3 Sequence Activities
6.4 Estimate Activity Resources
6.5 Estimate Activity Durations
6.6 Develop Schedule
6.7 Control Schedule
7. Project Cost Management
7Plan Cost Management
7.2 Estimate Costs
7.3 Determine Budget
7.4 Control Costs
8. Project Quality Management 8Plan Quality Management 8.2 Perform Quality Assurance 8.3 Control Quality
9. Project Human Resource Management
9.1 Plan Human Resource
Management
9.2 Acquire Project Team
9.3 Develop Project Team
9.4 Manage Project Team
10. Project Communications Management 10Plan Communications Management 10.2 Manage Communications 10.3 Control Communications
11. Project Risk Management
11Plan Risk Management
11.2 Identify Risks
11.3 Perform Qualitative Risk Analysis
11.4 Perform Quantitative Risk Analysis
11.5 Plan Risk Responses
11.6 Control Risks
12. Project Procurement Management 12Plan Procurement Management 12.2 Conduct Procurements 12.3 Control Procurements 12.4 Close Procurements
13. Project Stakeholder Management
13Identify
Stakeholders
13.2 Plan Stakeholder
Management
13.3 Manage Stakeholder
Engagement
13.4 Control Stakeholder
Engagement
OSO OCT 2013
Planning M& C
4. Cost aspectsacquisition
decision
committed
order
placed
Using Maintaining
supporting the
product
limiting the number of
design reviews >>
reduce the cost of
the project >>
could increase the
resulting product’s
operating costs
Numerous Financial Techniques
ROI, discounted cash flow,
investment payback analysis
additional processes
IF FINANCIAL
predictions and analyses included
order
placed
Item
delivered
actualcost
incurred
Acquired Item
primarily cost of the resources
+ subsequent recurring cost of :
5. Project Cost Processes
7.1 Plan Cost
Management
policies,
procedures, and
documentation
for planning,
managing,
expending,
controlling
project costs.
7.2 Estimate
Costs
developing an
APPROXIMATION
of the monetary
resources needed
to complete
project activities.
7.3 Determine
Budget
AGGREGATING
the estimated
costs of individual
activities or WP to
establish cost
baseline.
7.4 Control
Costs
MONITORING the
status to update
costs and
managing
changes to the
cost baseline.
6. 7.1 Plan Cost Management
Inputs
Project management
plan
Project charter
Enterprise
environmental factors
Organizational
process assets
2. Tools & Techniques
Expert judgment
Analytical techniques
Meetings
.3 Outputs
Cost management
plan
establishes the policies, procedures, &documentation for PLANNING, MANAGING,
EXPENDING, and CONTROLLING project costs.
7. 7.1 Plan Cost Management
Data Flow Diagram
Project
charter
4.1
develop
Project
charter
7.1 Plan Cost
Management
Project
M. plan
4.2
develop
Project
M.P.
OPA
EEF
4 Integration 5 Scope 6 Time 7 Cost 8 Quality 9 H. Resource 10 Commn. 11 Risk 12 Procurement 13 S/holders
Enterprise/
Organization
6.2
Define Activities
6.3
Sequence Activities
11.2
Identify Risks
11.4
Perform Quantitative
Risk Analysis
Cost management plan
8. 7.1.1 Plan Cost Management: Inputs
7.1.1.1 Project
Management Plan
• Scope baseline.
scope statement and
WBS detail.
• Schedule baseline.
when the project
costs will be
incurred.
• Other information.
scheduling, risk, and
communications
decisions.
7.1.1.2 Project Charter
• provides the
summary budget
• approval
requirements that
will influence the
management of the
project costs.
7.1.1.3 Enterprise
Environmental Factors
• Organizational
culture and structure
• Market conditions
• Currency exchange
rates
• Published
commercial
information
(resource cost)
• Project management
information system.
7.1.1.4 Organizational
Process Assets
• Financial controls
procedures
• Historical
information and
lessons learned
• Financial databases
• Existing cost policies,
procedures, and
guidelines.
9. 7.1.2 Plan Cost Management:
Tools and Techniques
7.1.2.1 Expert
Judgment
• provides valuable insight about the environment and
information from prior similar projects.
• suggest whether to combine methods and how to reconcile
differences between them.
7.1.2.2 Analytical
Techniques
• CMP may involve choosing strategic options to fund (self-
funding, funding with equity, or funding with debt).
• may also detail ways to finance resources (making, purchasing,
renting, or leasing).
• Techniques :payback period, ROI, IRR, discounted cash flow,
&NPV
7.1.2.3 Meetings
• project manager, sponsor, selected project team members,
selected stakeholders, anyone with responsibility for costs,
others.
10. 7.1.3 Plan Cost Management: Outputs:
7.1.3.1 Cost Management Plan
how the project costs will be planned, structured, and controlled.
Units of measure.
•staff hours/days ,meters, liters,
tons, kilometers, or lump sum in
Level of precision.
•The degree to which activity cost
estimates will be rounded up or
down
Level of accuracy.
•e.g., ±10% ,may include an
amount for contingencies;
Organizational
procedures links.
•WBS, consistency with the
estimates, budgets, and control.
•organization’s accounting
system.
Control thresholds.
•variation to be allowed before
some action needs to be taken.
Rules of performance
measurement.
•EVM rules of performance
measurement are set.
Define
CA points;
Establish
EV measurement
techniques :
fixed-formula, %
Specify
tracking
methodologies
EAC
forecasts
equation?
11. 7.2 Estimate Costs
Inputs
Cost management plan
Human resource management plan
Scope baseline
Project schedule
Risk register
Enterprise environmental factors
Organizational process assets
2. Tools & Techniques
Expert judgment
Analogous estimating
Parametric estimating
Bottom-up estimating
Three-point estimating
Reserve analysis
Cost of quality
Project management software
Vendor bid analysis
Group decision-making techniques
.3 Outputs
Activity cost estimates
Basis of estimates
Project documents updates
developing an APPROXIMATION of the monetary resources needed to complete
project activities.
it determines
the amount
of cost
required to
complete
project work
12. 7.2 Estimate Costs
Data Flow Diagram
Scope
baseline
5.4
Create
WBS
7.2 Estimate Costs
Project
schedule
6.6
Develop
Schedule
OPA
EEF
4 Integration 5 Scope 6 Time 7 Cost 8 Quality 9 H. Resource 10 Commn. 11 Risk 12 Procurement 13 S/holders
Enterprise/
Organization
11.2
Identify Risks
12.1
Plan Procurement
Management
A. cost estimates
9.1
Plan HR
Mt
HRM
Plan
11.2
Identify
Risks
Risk
register
7.1 Plan Cost
Management
Cost management plan
Basis of estimates
Project documents u
7.3 Determine
Budget
6.4
Estimate Activity
Resources
Project documents
risk register
13. 7.2 Estimate Costs
Cost estimates
a prediction
• based on the
information
known at a given
point in time.
alternatives -
• Cost tradeoffs
and risks should
be considered
(make or buy,
buy or lease.
expressed
• in units of
currency or man-
hours
reviewed and
refined
• to reflect
additional detail,
assumptions
changes.
accuracy
• will increase as
the project
progresses.
initiation phase >>rough order of magnitude
(ROM) estimate in the range of −25% to +75%.
Later, definitive estimates range to -5% to +10%.
14. 7.2.1 Estimate Costs: Inputs
1 Cost Management Plan
• how project costs will be managed
and controlled
2 Human Resource
Management Plan
• project staffing attributes, personnel
rates, rewards/recognition
3 Scope Baseline
• Project scope statement - WBS –
WBS dictionary
4 Project Schedule
• type and quantity of resources ,
durations
15. 7.2.1 Estimate Costs: Inputs
5 Risk Register
• typically have an impact on both activity and overall
project costs.
• negative risk >> COST increase,
• potential opportunities >> reducing activity costs or
by accelerating the schedule.
6 Enterprise Environmental
Factors
• Market conditions -Published commercial
information
7 Organizational Process Assets
• Cost estimating policies, Cost estimating templates,
Historical information, and Lessons learned.
16. 7.2.2 Estimate Costs: Tools and Techniques
7.2.2.1 Expert Judgment
Guided by historical information,
provides valuable insight about the
environment and INFORMATION from
prior similar projects.
Determine whether to combine
methods of estimating and how to
reconcile differences between them.
17. 7.2.2 Estimate Costs: Tools and Techniques
7.2.2.2 Analogous Estimating
• Cost, budget or measures (size, weight), and complexityuses the values:
• the actual cost of previous, similar projectsrelies on
• known differences in project complexity.adjusted for
• there is a limited amount of detailed informationused when
• and expert judgment.Uses historical information
• and less time consuming, but less accurate.less costly
• a total project or to segments of a projectcan be applied to
18. 7.2.2 Estimate Costs: Tools and Techniques
7.2.2.3 Parametric Estimating
• between relevant historical data and other variables (building m2) .
statistical relationship
• the sophistication
• underlying data built into the model.
produce higher levels of accuracy depending upon:
• a total project or to segments of a project, in conjunction with other estimating methods
can be applied to:
19. Analogous vs. Parametric
SIMILARITIES
Can be used for both duration and cost
estimating
Essentially a combination of historical
information (leveraging past
projects/activities) and expert judgment
DIFFERENCES
•Analogous :
• top-down and
• less accurate
• comparing a past similar project to your current
project.
•Parametric
• more accurate,
• uses a relationship between variables (a unit
cost/duration and the number of units) to
develop the estimate.
20. Analogous vs. Parametric
Example
oYou are the project manager for the annual Earth Day
5k road race, with three primary components:
marketing, registration, and race-day coordination.
oFor marketing, there will be 500 flyers printed up at a
cost $0.20 each.
It took two weeks for the flyers to be printed for last
year event, so you estimate two weeks for the printing
of the brochures for this event.
oLast year it took one week to design the on-line
registration form and the cost to host the registration
website was $850.00 You estimate the same this year.
oThere will be four people used to coordinate the race.
Each resource will be paid $25 per hour and they will
be working an estimated seven hours, based on the
race last year.
Marketing:
• 500 flyers
• cost $0.20 each
• 2 weeks printing
Registration
• website
• $850.00
• one week
Coordination
• 4 people
• $25 per hour
• seven hours
21. Analogous vs. Parametric
Example
Coordination
Cost: $700
parametric estimating - 4 x
$25 x 7
Duration: 7 hours analogous
Registration
Cost: $850 analogous Duration: one week analogous
Marketing
Cost: $100 for brochures
parametric estimating 500 x
$0.20
Duration: two weeks analogous
22. 7.2.2.4/.5 Estimate Costs:
Tools and Techniques
4 BOTTOM-UP ESTIMATING
WP/activities is estimated (to the greatest
level of specified detail).
then summarized or “rolled up” to higher
levels .
accuracy influenced by the size and complexity
of the individual activity /WP
5 THREE-POINT ESTIMATING
accuracy improved by considering estimation
uncertainty and risk using three estimates to define an
approximate range for an activity’s cost:
Most likely (cM).
◦ based on realistic effort assessment for the required work
and any predicted expenses.
Optimistic (cO).
◦ based on analysis of the best-case scenario.
Pessimistic (cP).
◦ based on analysis of the worst-case scenario.
cE = (cO + cM + cP) / 3 cE = (cO + 4cM + cP) / 6
Beta DistributionTriangular Distribution
23. 7.2.2 Estimate Costs:
7.2.2.6 Reserve Analysis
CONTINGENCY RESERVES
(CONTINGENCY ALLOWANCES)
• budget within the cost baseline that is allocated for
identified & accepted risks
• often viewed to address the “known-unknowns”.
• provide for a specific activity/ whole project, or both.
• percentage of the estimated cost, a fixed number, or may
be developed by using quantitative analysis methods.
• As more precise information about the project becomes
available, the contingency reserve may be used,
reduced, or eliminated.
• Contingency should be clearly identified in cost
documentation.
• Contingency reserves are part of the cost baseline and
the overall funding requirements for the project.
MANAGEMENT RESERVES
• amount of the project budget withheld for
management control purposes and are reserved
for unforeseen work that is within scope of the
project.
• to address the “unknown unknowns” that can
affect a project.
• not included in the cost baseline but is part of the
overall project budget and funding requirements.
• When an amount of management reserves is
used to fund unforeseen work, the amount of
management reserve used is added to the cost
baseline, thus requiring an approved change to
the cost baseline.
25. 7.2.2:7-10 Estimate Costs: T&T
7.2.2.7 Cost of Quality
(COQ)
• Assumptions about costs of quality
7.2.2.8 Project
Management Software
• applications, computerized spreadsheets, simulation, and statistical
tools (assist ,simplify ,facilitate rapid consideration of alternatives.
7.2.2.9 Vendor Bid
Analysis
• analysis of what the project should cost, based on the responsive bids
from qualified vendors.
• additional cost estimating work to:
• examine the price of individual deliverables
• supports the final total project cost.
7.2.2.10 Group
Decision-Making
Techniques
• brainstorming, the Delphi or nominal group techniques improve
estimate accuracy and commitment to the emerging estimates.
26. 7.2.3 Estimate Costs: Outputs
7.2.3.1 Activity Cost Estimates
• quantitative assessments of the probable costs
required to complete project work.
• presented in summary form or in detail.
• Including all resources
• direct labor, materials, equipment, services,
facilities, information technology,
• special categories :cost of financing (including
interest charges),
• inflation allowance, exchange rates,
• cost contingency reserve.
• Indirect costs, (if they) can be included at the activity
level or at higher levels.
27. 7.2.3 Estimate Costs: Outputs
7.2.3.2 Basis of Estimates
the supporting documentation should provide a clear and complete understanding of how the
cost estimate was derived.
Supporting detail for activity cost estimates may include:
Documentation of :
the basis of
the estimate
all
assumptions
made,
any known
constraints,
Indication of :
the range of
possible estimates
(e.g., €10,000
(±10%)
confidence level of
the final estimate
28. 7.3 Determine Budget
Inputs
Cost management plan
Scope baseline
Activity cost estimates
Basis of estimates
Project schedule
Resource calendars
Risk register
Agreements
Organizational process assets
Tools & Techniques
Cost aggregation
Reserve analysis
Expert judgment
Historical relationships
Funding limit reconciliation
Outputs
Cost baseline
Project funding requirements
Project documents updates
aggregating the estimated costs of individual activities or work packages to establish an
authorized cost baseline.
determines
the cost
baseline
against which
project
performance
can be
monitored
and
controlled
30. 7.2.1 Estimate Costs: Inputs
1 Cost Management Plan
• how project costs will be
managed and controlled
2 Scope Baseline
• Project scope statement - WBS
–WBS dictionary
Activity cost estimates
• Cost estimates for each activity
within a work package are
aggregated
Basis of estimates
• any basic assumptions dealing with
the inclusion or exclusion of indirect
or other costs in the project budget
31. 7.3.1 Determine Budget: Inputs
Project schedule
•information can be used to aggregate
costs to the calendar periods in which
the costs are planned to be incurred.
Resource calendars
•provide information on which
resources are assigned to the project
and when they are assigned
Risk register
•to consider how to aggregate the risk
response costs
Agreements
•Applicable agreement information
and costs relating to products
purchase
Organizational process assets
•Existing policies, procedures, and
guidelines; Cost budgeting tools,
Reporting methods.
32. 7.3.2 Determine Budget: Tools and Techniques
7.3.2.1 Cost
Aggregation
• Cost estimates are
aggregated by
work packages
>>higher
component levels
(control accounts)
>> entire project.
7.3.2.2 Reserve
Analysis
• contingency
reserves and the
management
reserves
7.3.2.3 Expert
Judgment
• guided by
experience in an
application area,
Knowledge Area,
discipline,
industry, or similar
project
33. 7.3.2 Determine Budget: Tools and Techniques
4 HISTORICAL RELATIONSHIPS
◦ Any historical relationships that result in
parametric estimates or analogous estimates
involve the use of project characteristics
(parameters) to develop mathematical
models to predict total project costs.
◦ home construction >>cost per square meter
◦ one model of software development >>multiple
separate adjustment factors, each of which has
numerous points within it
5 FUNDING LIMIT RECONCILIATION
◦ The expenditure of funds should be reconciled
with any funding limits on the commitment of
funds for the project.
◦ A variance between the funding limits and the
planned expenditures will sometimes
necessitate the rescheduling of work to level out
the rate of expenditures.
◦ This is accomplished by placing imposed date
constraints for work into the project schedule.
34. 7.3.3 Determine Budget: Outputs
7.3.3.1 Cost Baseline
approved version of the time-phased project budget, excluding any management reserves, used
as a basis for comparison to actual results.
Activity Estimates + Activity
Contingency Reserve
WP Estimates + Contingency Reserve
Control Accounts
COST BASELINE + Management
reserves
COST BUDGET 400
300 100
300
50 100
80 20
150
25 125
35. 7.3.3 Determine Budget: Outputs
7.3.3.2 Project Funding Requirements
Total funding requirements & periodic funding requirements
• are derived from the cost baseline.
The cost baseline will include
• projected expenditures + anticipated liabilities.
Funding often occurs in incremental amounts
• that are not continuous, and may not be evenly distributed,
The total funds required are
• cost baseline + management reserves, if any.
• may include the source(s) of the funding.
7.3.3.3 Project Documents Updates
Risk register,
Activity cost estimates
Project schedule.
37. 7.4 Control Costs
Inputs
Cost management plan
Project funding requirements
Work performance data
Organizational process
assets
Tools & Techniques
Earned value management
Forecasting
To-complete performance
index (TCPI)
Performance reviews
Project management
software
Reserve analysis
Outputs
Work performance information
Cost forecasts
Change requests
Project management plan
updates
Project documents updates
Organizational process assets
updates
of monitoring the status of the project to update the project costs and managing
changes to the cost baseline.
provides the
means to
recognize
variance
from the plan
in order to
take
corrective
action and
minimize risk
39. 7.4 Control Costs
Project cost control includes:
Influencing
•the factors that create
changes to baseline;
Ensuring
•all change requests are
acted on in a timely
manner;
Managing
• the actual changes when
and as they occur;
Ensuring
•that cost expenditures do
not exceed the authorized
funding by period, WBS
,activity, in total
Monitoring
•cost performance to isolate
and understand variances
Monitoring
•work performance against
funds expended;
Preventing
•unapproved changes
reported or resource
usage;
Informing
•appropriate stakeholders of
all approved changes and
associated cost;
Bringing
•expected cost overruns
within acceptable limits
40. 7.4.1 Control Costs: Inputs
• Cost baseline & Cost
management plan.
7.4.1.1 Project
Management
Plan
• include projected
expenditures plus
anticipated liabilities.
7.4.1.2 Project
Funding
Requirements
• includes progress
information (started/
finished activities,
their progress) ,costs
authorized and
incurred.
7.4.1.3 Work
Performance
Data
• Existing policies,
procedures, and
guidelines;
• Cost control tools;
• Monitoring and
reporting methods
7.4.1.4
Organizational
Process Assets
41. 7.4.2 Control Costs: Tools and Techniques
7.4.2.1 Earned Value Management
methodology that combines SCOPE, SCHEDULE, & RESOURCE measurements to assess project performance and
progress.
It integrates the scope ,cost & schedule baselines, to form the performance baseline
• authorized budget planned for the work to be accomplished for an activity or WP/CA.
• The total of the PV (performance measurement baseline PMB ,also known as budget at
completion BAC).
Planned value.
• a measure of work performed expressed in terms of the budget authorized for that work.
Earned value.
• realized cost incurred for the work performed on an activity during a specific time period.
Actual cost.
42. 7.4.2 Control Costs: Tools and Techniques
7.4.2.1 Earned Value Management
•SV = EV – PVSchedule
variance
•CV= EV − ACCost variance
•SPI = EV/PV
Schedule
performance
index
•CPI = EV/AC
Cost
performance
index
PV EV AC
Jan-13 0 0 0
Feb-13 1000 800 1200
Mar-13 1500 1200 1800
Apr-13 2500
May-13 3000
Jun-13 3600
44. 7.4.2 Control Costs: Tools and Techniques
7.4.2.2 Forecasting
As the project progresses, forecast for the estimate at completion (EAC) may develop based on the
project performance.
If BAC is no longer viable, forecasted EAC should be considered.
Forecasting the EAC involves making projections of conditions and events in the project’s future
based on current performance information and other knowledge available.
Forecasts are generated, updated, and reissued based on work performance data.
EVM method works well in conjunction with manual forecasts of the required EAC costs.
EAC = AC + Bottom-up ETC.
work performed
@budgeted rate
• EAC = AC + (BAC – EV)
@ the present CPI. • EAC = BAC / CPI
considering both SPI &CPI • EAC = AC + [(BAC – EV) / (CPI × SPI)]
45. 7.4.2 Control Costs: Tools and Techniques
7.4.2.3 To-Complete Performance Index (TCPI)
• measure of the cost performance that is required to be
achieved in order to meet a specified management goal (cost
to finish / remaining budget).
• If BAC is no longer viable, forecasted EAC should be
approved, use in the TCPI calculation.
• TCPI (based on the BAC): (BAC – EV) / (BAC – AC).
• If the cumulative CPI falls below the baseline, all future work
of the project will need to be performed immediately in the
range of the TCPI (BAC) to stay within the authorized BAC.
• Whether this level of performance is achievable is a judgment
call based on a number of considerations, including risk,
schedule, and technical performance.
• This level of performance is displayed as the TCPI (EAC)
line.
• TCPI (based on the EAC): (BAC – EV) / (EAC – AC)
based on the BAC
TCPI = (BAC –
EV) / (BAC – AC)
based on the EAC
TCPI = (BAC –
EV) / (EAC – AC)
46. • 7.4.2 Control Costs: Tools and Techniques
7.4.2.4 Performance Reviews
compare cost performance over time, schedule activities or work packages overrunning and underrunning the budget, and
estimated funds needed to complete work in progress.
• Variance analysis.
• explanation (cause, impact, and corrective actions)
• for cost (CV = EV – AC),
• schedule (SV = EV – PV),
• variance at completion (VAC = BAC – EAC)
• An important aspect of project cost control includes determining the cause and degree of variance relative to the
cost baseline and deciding whether corrective or preventive action is required.
• Trend analysis.
• examines performance over time improving or deteriorating.
• Graphical analysis techniques are valuable for understanding performance to date and for comparison to future
performance goals in the form of BAC versus EAC and completion dates.
• Earned value performance.
• compares the performance measurement baseline to actual schedule and cost performance.
• If not being used, then the analysis of the cost baseline against actual costs for the work performed is used .
48. • 7.4.2 Control Costs: Tools and Techniques
7.4.2.5 Project Management Software
7.4.2.6 Reserve Analysis
7.4.2.5 PROJECT MANAGEMENT SOFTWARE
used to monitor the three EVM dimensions
(PV, EV, and AC), to display graphical trends,
and to forecast a range of possible final project
results.
7.4.2.6 RESERVE ANALYSIS
used to monitor the status of contingency and
management reserves to determine if these reserves
are still needed or if additional reserves need to be
requested.
As work progresses, reserves may be used as planned
to cover the cost of risk mitigation or other
contingencies.
Or, if the probable risk events do not occur, the unused
contingency reserves may be removed from the
project budget to free up resources for other projects
or operations.
Additional risk analysis during the project may reveal a
need to request that additional reserves be added to
the project budget.
49. 7.4.3 Control Costs: Outputs
7.4.3.1 Work Performance Information
• The calculated CV, SV, CPI, SPI, TCPI, and VAC values for WBS components (WP, CA) are documented and communicated to stakeholders.
7.4.3.2 Cost Forecasts
• Either a calculated EAC value or a bottom-up EAC value is documented and communicated to stakeholders.
7.4.3.3 Change Requests
• Analysis of project performance may result in a change request to the cost baseline or other components of the project management plan
7.4.3.4 Project Management Plan Updates
• Cost baseline. :in response to approved changes in scope, activity resources, or cost estimates.
• Cost management plan. changes to control thresholds or specified levels of accuracy required
7.4.3.5 Project Documents Updates
• Cost estimates, and Basis of estimates.
7.4.3.6 Organizational Process Assets Updates
• Causes of variances, Corrective action chosen and the reasons, Financial databases, and Other types of lessons learned from project cost control.
50. Earned Value Management (EVM)
Reference Card
EVM Terminology
AC Actual Cost of Work Performed (Actual cost incurred for work accomplished during a given period)
AUW Authorized Un-priced Work (Work contractually approved, but not yet negotiated)
BAC Budget At Completion (Total planned value for the project)
PV Budgeted Cost for Work Scheduled (Planned Value - budget assigned to the planned scheduled
work to be accomplished)
EV Budgeted Cost for Work Performed (Earned Value - budget value for the physical work
accomplished)
CA Control Account (Management control point to plan and control scope, schedule, and budget)
CBB Contract Budget Baseline (Total negotiated cost plus AUW)
EAC Estimate At Completion (Expected total cost of the project when the scope of work will be
completed)
ETC Estimate To Complete (Expected cost needed to complete all remaining work)
MR Management Reserve (Budget withheld for unknowns / risk management)
NCC Negotiated Contract Cost (Contract price minus profit or fees or project value for in-house work)
OTB Over Target Baseline (Sum of CBB and recognized overrun)
PBB Project Budget Baseline (Same as CBB for in-house projects)
PMB Performance Measurement Baseline (Time-phased budget plan)
PP Planning Package (Far term effort within a CA not yet defined into WPs)
TAB Total Allocated Budget (Sum of all budgets for work on contract = NCC, CBB/PBB, or OTB)
TCPI To Complete Performance Index (Efficiency needed from ‘status date’ to achieve an EAC or BAC)
UB Undistributed Budget (Broadly defined effort not distributed into CAs)
WP Work Package (Near term effort detailed planned within a CA)
Revised May 2012 EDITTED BY OMER ALSAYED
For NASA in-house programs/projects and contract policies and requirements for the
application of EVM, please refer to the NASA EVM Website: http://evm.nasa.gov.
Performance Indices: (Favorable is > 1.0, Unfavorable is < 1.0)
Cost Performance Index (Efficiency): CPI = EV / AC
Schedule Performance Index (Efficiency): SPI = EV / PV
To Complete Performance Index (TCPI)
TCPIEAC = Work Remaining / Cost Remaining = (BAC – EVCum) / (EAC – ACCum)
TCPIBAC = Work Remaining / Budget Remaining = (BAC – EVCum) / (BAC – ACCum)
Status Percentage
% Complete = EVCum / BAC x 100
% Spent = ACCum / BAC x 100
% Schedule = PVCum / BAC x 100
CV
SV
Actual Costs
(AC)
Earned Value
(EV)
Planned Value
(PV)
$
EAC
Time Now
Performance Measurement Baseline
(PMB)
BAC
Time
Management Reserve (MR)
TAB
(CBB or PBB)
Projected
Slippage
VAC
ETC
Variances: (Favorable is Positive, Unfavorable is Negative)
Cost Variance (CV): CV = EV – AC CV% = CV / EV x 100
Schedule Variance (SV): SV = EV – PV SV% = SV / PV x 100
Variance at Completion (VAC): VAC = BAC – EAC VAC% = VAC / BAC x 100
UB
WPs PPs
CAs
PMB MR
CBB
Fee/Profit
(no Project analogy)
Contract Price (Project Price)
AUW
OTB
TAB
PBB
NASA Contract / Project Hierarchy
NCC Plus
Overrun
Estimate at Completion (EAC) = AC + ETC
EAC = Actuals to Date + Work Remaining / Performance Factor
EACComposite = ACCum + (BAC – EVCum) / (CPICum x SPICum)
EACCPI = BAC / CPICum
Common EAC Calculations
