Topic 12_Dipan

8/7/2019 Topic 12_Dipan

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Progress and

PerformanceMeasurementand Evaluation

CHAPTER THIRTEEN

Copyright 2011 by The McGraw-Hill Companies, Inc. All

rights reserved.

McGraw-Hill/Irwin


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WhereWe Are NowWhereWe Are Now

Monitoring progress & performance is the most neglected function in projects Control is basically measuring actual situation against plansWhen not monitored, projects may get delayed and over the budget


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Structure of a Project MonitoringStructure of a Project MonitoringInformation SystemInformation System

Creating a project monitoring systeminvolves determining:

What data to collect Time, Cost, Resource.

How, when, and who will collect the data

How to analyze the data

How to report current progress to management

Actual Time Planned Time

Actual Costs Budget Costs

Resource Usage Planned Resource


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Project Monitoring Information SystemProject Monitoring Information System

Information System StructureWhat data are collected?

Current status of project (schedule and cost)

Remaining cost to compete project. Budget remaining

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


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Project Monitoring System (contd)Project Monitoring System (contd)

Information System Structure (contd)

Collecting data and analysis

Who will collect project data? PM, Member, Contractor?

How will data be collected? Normally thru MIS

When will the data be collected? Weekly, Milestones

Who will compile and analyze the data? Normally PM

Reports and reporting

Who will receive the reports? Eg. Snr Management How will the reports be transmitted? Email, Memo

When will the reports be distributed? Management first, thencustomer


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Project Progress Report FormatProject Progress Report Format

Progress since last report Current status of project

1. Schedule

2. Cost

3. Scope

Cumulative trends

Problems and issues since last report

1. Actions and resolution of earlier problems2. New variances and problems identified

Corrective action planned


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The Project Control ProcessThe Project Control Process

Control The process of comparing actual performance against plan to

identify deviations, evaluate courses of action, and takeappropriate corrective action.

Project Control Steps1. Setting a baseline plan. Cost from WBS, Time from Network Diag.

2. Measuring progress and performance. Costs & works completed now

3. Comparing plan against actual. Extent of the deviation

4. Taking action. Bringing costs & time back to track according to planned

Tools Tracking and baseline Gantt charts

Control charts


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Baseline and Tracking Gantt ChartsBaseline and Tracking Gantt Charts

FIGURE 13.1


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Project Schedule Control ChartProject Schedule Control Chart

FIGURE 13.2


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Disparity Among Monitoring SystemsDisparity Among Monitoring Systems

Time-Phase Baseline PlanCorrects the failure of most monitoring systems to

connect a projects actual performance to its scheduleand forecast budget.

Systems that measure only cost variances do not identifyresource and project cost problems associated with fallingbehind or progressing ahead of schedule.

Earned Value Cost/Schedule System

An integrated project management system based onthe earned value concept that uses a time-phasedbudget baseline to compare actual and plannedschedule and costs.


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Glossary of TermsGlossary of Terms

TABLE 13.1

EV Earned value for a task is simply the percent complete times its original budget. Stated differently,EV is the percent of the original budget that has been earned by actual work completed.

PV The planned time-phased baseline of the value of the work scheduled. An approved cost estimateof the resources scheduled in a time-phased cumulative baseline [BCWSbudgeted cost of the

work scheduled].

AC Actual cost of the work completed. The sum of the costs incurred in accomplishing work.[ACWPactual cost of the work performed].

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

SV Schedule variance is the difference between the earned value and the baseline line to date whereSV = EV PV.

BAC Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts.

EAC Estimated cost at completion.

ETC Estimated cost to complete remaining work.

VAC Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion.


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Developing an Integrated Cost/Schedule SystemDeveloping an Integrated Cost/Schedule System

1. Define the work using a WBS.a. Scope

b. Work packages

c. Deliverables

d. Organization units

e. Resources

f. Budgets

2. Develop work andresource schedules.

a. Schedule resourcesto activities

b. Time-phase work packagesinto a network

3. Develop a time-phasedbudget using work packagesincluded in an activity.

Accumulate budgets (PV).

4. At the work package level,

collect the actual costs forthe work performed (AC).Multiply percent completetimes original budget (EV).`

5. Compute the schedule

variance (EV-PV) and thecost variance (EV-AC).


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Development of Project BaselinesDevelopment of Project Baselines

Purposes of a Baseline (PV)An anchor point for measuring performance

A planned cost and expected schedule againstwhich actual cost and schedule are measured.

A basis for cash flows and awarding progress payments.

A summation of time-phased budgets (cost accounts assummed work packages) along a project timeline.

What Costs Are Included in Baselines?

Labor, equipment, materials, project direct overheadcosts (DOC)


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Development of Project Baselines (contd)Development of Project Baselines (contd)

Rules for Placing Costs in BaselinesCosts are placed exactly as they are expected to be

earned in order to track them to their point of origin.

Percent Complete Rule

Costs are periodically assigned to a baseline as units of workare completed over the duration of a work package.


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Methods of Variance AnalysisMethods of Variance Analysis

Comparing Earned ValueWith the expected schedule value.

With the actual costs.

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)

Calculate schedule and cost variances A positive variance indicates a desirable condition,

while a negative variance suggests problems orchanges that have taken place.


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Methods of Variance AnalysisMethods of Variance Analysis

Cost Variance (CV)Indicates if the work accomplished using labor

and materials costs more or less than wasplanned at any point in the project.

Schedule Variance (SV)Presents an overall assessment in dollar terms

of the progress of all work packages in the projectscheduled to date.


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Cost/ScheduleCost/Schedule Graph ExampleGraph Example

FIGURE 13.4

Mon Tue Wed Thu Fri

A $50

B $100

C $200

D $100

PV = $50+$100+$100 = $250

100%

80%

20%

EV = $50+$80+$40= $170

$60

$110

$30

AC = $60+$110+$30= $200

CV = EV AC = $170-$200 = -$30

SV = EV PV = $170-$250 = -$80


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Cost/Schedule GraphCost/Schedule Graph

FIGURE 13.4


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EarnedEarned--Value Review ExerciseValue Review Exercise

FIGURE 13.5


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Developing A Status Report:Developing A Status Report:A Hypothetical ExampleA Hypothetical Example

Assumptions

Each cost account has only one work package, and

each

cost account will be represented as an activityon the network.

The project network early start times will serve asthe basis for assigning the baseline values.

From the moment work an activity begins, someactual costs will be incurred each period until the

activity is completed.


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Indexes to Monitor ProgressIndexes to Monitor Progress

Performance IndexesCost Performance Index (CPI)

Measures the cost efficiency of work accomplished to date.

CPI = EV/AC

Scheduling Performance Index (SPI) Measures scheduling efficiency

SPI = EV/PV

Percent Complete Indexes

Indicates how much of the work accomplished represents ofthe total budgeted (BAC) and actual (AC) dollars to date.

PCIB = EV/BAC

PCIC = AC/EAC

CPI = EV / AC = $170/$200 = 0.85

SPI = EV / PV = $170/$250 = 0.68


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Interpretation of IndexesInterpretation of Indexes

TABLE 13.3

Index Cost (CPI) Schedule (SPI)

>1.00 Under cost Ahead of schedule

=1.00 On cost On schedule


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Additional Earned Value RulesAdditional Earned Value Rules

Rules applied to short-duration activities and/orsmall-cost activities

0/100 percent rule

Assumes 100 % of budget credit is earned at once and only

when the work is completed.

50/50 rule

Allows for 50% of the value of the work package budget tobe earned when it is started and 50% to be earned when thepackage is completed.

Percent complete with weighted monitoring gates

Uses subjective estimated percent complete in combinationwith hard, tangible monitoring points.


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Other Control IssuesOther Control Issues

Issues In Maintaining Control Of Projects

Scope Creep

Baseline Changes

Data AcquisitionCosts and Problems


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Scope Changes to a BaselineScope Changes to a Baseline

FIGURE 13.13


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Key TermsKey Terms

Baseline budget

Control chart

Cost performance index (CPI)

Cost variance (CV)

Earned value (EV)

Estimated Cost at CompletionForecasted (EACf)Estimated Cost at CompletionRevised Estimates (EACre)

Percent complete indexbudget costs (PCIB)

Percent complete indexactual costs (PCIC)

Schedule performance index (SPI)

Schedule variance (SV)Scope creep

To complete performance index (TCPI)

Tracking Gantt chart

Variance at completion (VAC)

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