Projects Performance Analysis & Forecasting

PROJECTSPERFORMANCE ANALYSIS & FORECASTING

®

Prepared By:

WALEED ELBASYOUNISr. Architect, PMP , SFC™, 6Sigma™

Using Earned Value Management

Session Content :-

• Introduction • Overview of Key Performance Indicators ( KPI )• What Is The Earned Value Management ?• Why Project Managers Use EVM ?

• Earned Value Management Terms and Formulas• Planned value (PV)• Earned value (EV)• Actual cost (AC)

• Variance• Schedule Variance ( SV )

• Cost Variance ( CV )

• Performance Index • Schedule Performance Index (SPI)• Cost Performance Index (CPI)

• Example ( Case Study )

• Project Forecasting• Budget at Completion (BAC)• Estimate at Completion (EAC)• Estimate to Complete (ETC).• Variance at Completion (VAC)• To Complete Performance Index (TCPI)

1.1 Introduction

1.1 Introduction

Overview of Key Performance Indicators ( KPI )

• Key Performance Indicators ( KPI ) are a Set Of Quantifiable Measures That a Company Uses To Gauge Its Performance Over Time.

• These Metrics Are Used To Determine a Company's Progress In Achieving Its Strategic and Operational Goals, And Also To Compare A Company's Performance Against Other Businesses Within Its Industry.

What Is The Earned Value Management ?• Earned Value Management Is a Project Management Technique For Measuring Project Performance And

Progress.

• Earned Value Is An Approach Where You Monitor The Project Plan, Actual Work, And Work-completed Value To See If a Project Is On Track.

• Earned Value Shows How Much Of The Budget And Time Should Have Been Spent, With Regard To The Amount Of Work Done So Far.

Why Project Managers Use EVM ?• Project Managers Use EVM To Assess The Schedule and Cost Performance Of a Project To Know Exactly

Whether The Project Is:

(Ahead Of / On / Behind Schedule) - ( Under / On / Over Budget )

1.1 Introduction

1.2 Earned Value Management Terms and Formulas

Planned value

Earned value

Actual Cost

PV

EV

AC


Any Project Manager Use Earned Value Management To Assess The Schedule and Cost Performance Of a Project He Should Based On Three Terms.

EVMEVM

PVPV

EVEVACAC

Budgeted Cost For Work Scheduled (BCWS)Planned valuePV

• The Approved Budget For The Work Scheduled To

Be Completed By a Specified Date.

• Also Referred To As The Budgeted Cost Of Work

Scheduled (BCWS).


Budgeted Cost For Work Performed (BCWP)Earned valueEV

• The Approved Budget For The Work Actually

Completed By The Specified Date.

• Also Referred To As The Budgeted Cost Of

Work Performed (BCWP).


• The Costs Actually Incurred For The Work

Completed By The Specified Date.

• Also Referred To As The Actual Cost Of Work

Performed (ACWP).

Actual cost for work performed (ACWP)Actual CostAC


1.3 Project Variance & Performance Index

Project Variance

Schedule Variance

Cost Variance

SV CVEV – PV

EV – AC

Project Variance According To Earned Value Management Three Terms We Can Define The Project Variance :-

• Planned Value (PV)

• Earned Value (EV)

• Actual Cost (AC)


SV < 0Behind Schedule SV = 0

On Schedule

SV > 0Ahead of Schedule

Planned Value (PV) - Earned value (EV) - Actual Cost (AC)

Schedule Variance (SV) = EV – PV


CV < 0Over Budget CV = 0

On Budget

CV > 0Under Budget


Cost Variance (CV) = EV – AC


Project Performance

Index

Schedule Performance

Index

Cost Performance

Index

SPI CPIEV / PV

EV / AC

Performance Index According To Earned Value Management Three Terms We Can Define The Project Performance Index :-

• Planned Value (PV)

• Earned Value (EV)

• Actual Cost (AC)


SPI < 1Behind Schedule

SPI = 1On Schedule

SPI > 1Ahead of Schedule

Schedule Performance Index (SPI) = EV / PV



Cost Performance Index (CPI) = EV / AC


CPI < 1Over Budget

CPI = 1On Budget

CPI > 1Under Budget


Planned Value (PV) Earned value (EV) Actual Cost (AC) Schedule Variance (SV) Cost Variance (CV) Schedule Performance Index (SPI) Cost Performance Index (CPI)


Quantity Cost | Unit

Budget 100 500 S.R

Actual 120 600 S.R

Example ( Case Study )• This Schedule Shows Some Information About Budgeted

And Actual Cost To (XYZ) Construction Project , According To EVM Techniques Calculate The Following Terms Then Define The Project Status (Schedule & Budget) ?

• PV = 500 x 100 = 50.000 S.R

• EV = 500 x 120 = 60.000 S.R

• AC = 600 x 120 = 72.000 S.R

• SV = EV – PV = 60.000 – 50.000 = 10.000 S.R

• CV = EV – AC = 60.000 – 72.000 = -12.000 S.R

• SPI = EV / PV = 60.000 / 50.000 = 1.2

• CPI = EV / AC = 60.000 / 72.000 = 0.83

The Project (XYZ ) Status at this Time • According SV & SPI The Project Ahead Of Schedule.

• According CV & CPI The Project Over Budget.

1.4 Project Forecasting


Project Forecasting

• Consists Of Taking The Project Status

Information And Extrapolating The Current

Project Performance To The End Of The

Project and How The Future Will Turn Out

Based On Evidence Or Assumptions.

• The Purpose Of Forecasting Is To Give

Managers Insight Into How Profitable

Projects Are Likely To Be In The Future.


Forecasting Terms :-

• Budget at Completion (BAC)

• Estimate at Completion (EAC)

• Estimate to Complete (ETC)

Considering The Same Budgeted Rate

Considering CPI

Considering CPI and SPI

• Variance At Completion (VAC)

• To Complete Performance Index (TCPI)


• Estimate To Complete (ETC)Is The Estimated Cost Required To Complete The Remainder Of The Project There Are Various Methods To Calculate The (ETC):-

Considering The Same Budgeted RateEAC = AC + (BAC – EV) Considering CPIEAC = BAC / CPI Considering CPI and SPIEAC = AC + [ (BAC – EV) / (CPI x SPI) ]

• Budget At Completion (BAC) Is The Total Budget Allocated To The Project

• Estimate At Completion (EAC)Is The Expected Total Cost Of A Schedule Activity Component, EAC Is Equal To The Actual Cost Of Work Performed (ACWP) + The Estimate To Complete (ETC) For All Of The Remaining Work.


• Variance At Completion (VAC)Is The Difference Between The Budget At Completion(BAC) And The Estimate At Completion (EAC)

VAC = BAC – EAC• To Complete Performance Index (TCPI)

It’s The Cost Performance That Must Be Achieved On The Remaining Work To Meet A Specified Goal Like BAC Or EAC, It Represents The Ratio Between Remaining Works And Remaining Funds.

TCPI = (BAC- EV) / (BAC – AC) Or TCPI = (BAC-EV) / (EAC – AC)

From the Previous Example• PV = 500 x 100 = 50.000 S.R

• EV = 500 x 120 = 60.000 S.R

• AC = 600 x 120 = 72.000 S.R

• Assumed BAC = 500.000 S.R

TCPI = (BAC-EV)

---------------------(BAC – AC)

TCPI = 500.000 - 60.000-----------------------500.000 – 72.000

TCPI =1.028

TCPI = 440.000

--------------428.000

Leadership & Management

Projects Performance Analysis & Forecasting