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8/2/2019 Time and Cost Integration and Control
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281BE Project Management
Project Control
Time and Cost Integration
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Outline
The need for project control
Traditional project control need to
integrate expenses and progressEarned value analysis
EVA application to project scenarios
Earned value reporting
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Project Control System
Project Objectives, Corporation Management Decisions,Operating Policies Influences
PlanningSchedule
CostResource
Authorisation forImplementation
Update the
Plan
Measurement
EvaluationDecision
Implementation/
Execution
External Factor Influences
Planning
Control
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Why do we need project control?
Collecting information, making decisions and
taking (corrective) actions based on this
information
while there is still enough time!!
Controlling project to discover:
What has happened?
What is happening? What should have happened?
What should be happening?
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How can we exercise project control?
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S-Curve
Draw S-curve based on:
Early start for all activities
Late start for all activities
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S-Curve
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S-Curve
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Consider.
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Traditional Project Control
Often based on a single measure
Rely on variance analysis (e.g. cost or
time variance)
The difference between planand actual
at a particular point of time
No information about how much workcompleted/progress
Insufficient measure of control
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Why integrate expenses and progress?
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Earned Value Analysis
Planned Value (PV)baseline
Budgeted Cost of Work Scheduled (BCWS) to be completed on
an activity
What I plan to do
Earned Value (EV)
Budgeted Cost of Work Performed (BCWP) on the schedule
activity
What I did
Actual Cost (AC)
Actual Cost of Work Performed (ACWP) on the schedule activity
What I paid for
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Earned Value Graph
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Variance
Cost Variance (CV)
CV = EV AC
Cost Performance Index (CPI) = EV/AC
Schedule Variance (SV) SV = EV PV
Schedule Performance Index (SPI) = EV/PV
Threshold Variance To flag problem areas
Set as a percentage (e.g. +/- 5%)
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Other Terminology
Budget at Completion (BAC)
Original estimate/ budget/ quotation
Not including profit
Estimate at Completion (EAC)
Revised budget based on current productivity
Estimate-to-Complete (ETC)
ETC = EAC ACWP
Compare with Cost-to-Complete
Percentage Complete (PC)
Measure of progress up to timenow
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Forecasting EAC
PC
ACWPEAC
BAC
BACPC
ACWPEAC
therefore
BACPCBCWPas
BACBCWP
ACWPEAC
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Forecasting Estimated Time toCompletion
Assuming unchanged productivity
Actual Time Expended (ATE)
Time from project start until timenow Original Duration (OD)
SPISPI)(ATE-ODATECTimeE
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Percentage Complete
50 50 estimate
50% assumed when the task starts, and remaining 50% when
completed
0 100 percent rule
No credit until the task is completed
Critical input use
E.g. skilled labour, equipment/machine
Proportionality rule Actual task time divided by total scheduled task time, or
Actual cost divided by total budgeted task cost
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Earned Value Table
Act BAC BCWS PC BCWP ACWP SV CV EAC
100 2000 1000 40 800 1200 -200 -400 3000
200
300
Total
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Example
Activity BAC BCWS PC BCWP Status
100 2000 1000 60% 1200 Ahead
200 1000 900 80% 800 Behind
300 1500 1000 67% 1000 On time
Total 2900 3000
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Extrapolation
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Scenario: the project is running late and thecosts are over budget
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Scenario: the progress is ahead of plannedand the costs are under budget
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Scenario: the project is ahead, but the costsare over budget
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Earned Value Reporting
EV graph provides overview of status; tables providedetailed information
Management response:
SV(+), ahead of schedule
SV(-), behind schedule
CV(+), costs less than budget
CV(-), costs greater than budget
EVA should not be used in isolation, e.g. with float
EV is only useful if the different between planned and
actual is 10 to 15%
EVA is also influenced by (overoptimistic) estimate!!
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References
Burke R., (2003) Project management
planning and control techniques,4th ed. John Wiley & Sons, Chichester.
Burke, R. (2007) Introduction to project management: one small step for the
project manager. Burke Publishing.
Hamilton, A. (2001) Managing projects for success: a trilogy. Thomas
Telford Publishing, London. Lockyer, K. and Gordon, J. (2005) Project management and project network
techniques, 7th ed. Pearson Education Ltd., Harlow, England.
Meredith, J.R. and Mantel, S.J. (2006) Project management: a managerial
approach, 6th ed. John Wiley & Sons, Inc., Hoboken, New Jersey.
PMI (2004) A guide to the Project Management Body of Knowledge, 3rd ed.Project Management Institute, Pennsylvania.
Popescu, C. and Charoenngam, C. (1995) Project planning, scheduling,
and control in construction: an encyclopedia of terms and applications. John
Wiley & Sons, Inc, New York.