Project Management PM CHECK Project Management Day 3

Project Management (PM) CHECK Project Management Day 3 in the am

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Earned Value Analysis Ø EVA is a performance measurement technique that integrates scope, time, and cost data Ø Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals Ø You must enter actual information periodically to use EVA Project Management Cook Day 3 in the am # 5 / 24

EVA Terminology Ø Budgeted cost of work scheduled (BCWS) is the portion of the approved cost estimate planned to be spent on an activity during a given period Ø Actual cost of work performed (ACWP) is the total of the direct and indirect costs incurred in doing the work on an activity during a given period Ø Budgeted cost of work performed (BCWP), also called earned value, is the percentage of work actually completed multiplied by the cost (BCWS) Project Management Cook Day 3 in the am # 6 / 24

Earned Value Analysis (EVA) Project Management Cook Day 3 in the am # 7 / 24

Deriving EVA Metrics Ø Weeks Elapsed = WE = ((actual task beginning) – (report date)) / 7 Ø Weeks Performed = WP = WE * (SD)/(ED) (note: “D” is for duration) Where: SD = ((scheduled project beginning) - (scheduled completion)) / 7 ED = ((actual project beginning) - (expected completion)) / 7 Ø Budgeted Cost of Work Scheduled = BCWS = BCF(1) + … BCF (WE) Where: BCF = Budgeted Cash Flow and ACF = Actual Cash Flow Ø Budgeted Cost of Work Performed = BCWP = BCF(1) + … BCF (WP) Ø Schedule Variance = BCWP - BCWS (measured in $, not time) Ø Actual Cost of Work Performed = ACWP = ACF(1) + … ACF(WE) Ø Spend Comparison = BCWS – ACWP ( commonly reported) Ø Cost Performance Index = BCWP / ACWP (>1 is good) Ø Budgeted Performance Index = BCWP / BCWS ( >1 is good) Project Management Cook Day 3 in the am # 8 / 24

Weekly Task Report (by WBS) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Expected Completion 200__. ____ (95% confidence) Δ Actual Cost (in-house) ____ , _____ RMB (+ => expense) Δ Actual Cost (contracted) ____ , _____ RMB (+ => overrun) Δ Actual Cost (purchases) ____ , _____ RMB (- => refund) Δ Quality Issues? ___ (if “N”, then quality is presumed excellent) Δ Subcontracting Issues? ___ (if “Y”, attach explanation) Δ Resource Issues? (Staff, Material, Equipment) ___ , ___ Δ Integration/Dependency Issues? ___ Δ Catastrophe Possibility? ___ Δ Other Issues? ___ (Scope, surprise, opportunity, infrastructure, …) Δ Notices (vacations, emergencies, changes, conntact, …): __________________________ Project Management Cook Day 3 in the am # 9 / 24

EVA Trend Analysis Project Management Cook Day 3 in the am # 10 / 24

Weekly Task Report (by WBS) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Expected Completion 20__. ____ (95% confidence) Δ Actual Cost (in-house) ____ , _____ RMB (+ => expense) Δ Actual Cost (contracted) ____ , _____ RMB (+ => acceptance) Δ Actual Cost (purchases) ____ , _____ RMB (- => refund) Δ Quality Issues? ___ (if “N”, then quality is presumed excellent) Δ Contracting Issues? ___ (if “Y”, attach explanation) Δ Resource Issues? (Staff, Material, Equipment) ___ , ___ Δ Integration/Dependency Issues? ___ Δ Catastrophe Possibility? ___ Δ Other Issues? ___ (Scope, surprise, opportunity, infrastructure, …) Δ Notices (vacations, emergencies, changes, contact, …): ___________________________ Project Management Cook Day 3 in the am # 11 / 24

Weekly Project Summary In-House Contracted Purchases ( : ) ( : %$) Schedule: % on-time (budget wtd. ) % completed (budget weighted) Schedule variance (budget wtd. ) Estimated completion date Estimation trend (10 week) Schedule Performance Index Serious issues open (# : trend) Cost: % within budget Estimated completion date Estimation trend (10 week) Schedule Performance Index Serious issues open (# : trend) Spent to date ($ : %) Situation: (need mgmt. help? ) Project Management Cook Day 3 in the am # 12 / 24

Weekly Status Report Project Management Cook Day 3 in the am # 13 / 24

MS Reporting Capability Project Management Cook Day 3 in the am # 14 / 24

Basic Financial Terms Ø Life cycle costing is estimating the cost of a project over its entire life Ø Cash flow analysis is used for determining the estimated annual costs and benefits for a project Ø Benefits and costs can be tangible or intangible, direct or indirect, but will have to be quantified Ø Sunk cost is money spent in the past and should not be a criteria in project selection Ø Learning curve theory – when many items are produced repetitively, unit cost decreases Ø Reserves – money included in cost estimate Ø Contingency reserves – allowances for future situations Project Management Cook Day 3 in the am # 15 / 24

Net Present Value Example Project Management Cook Day 3 in the am # 16 / 24

Return on Investment Ø Return On Investment (ROI) : ROI = ((Discounted Benefits) – (Discounted Costs)) / (Discounted Costs) Ø Breakeven Analysis: BE = (Time when DB-DC =0) – (Time when DC began) Where: DB is Discounted Benefits and DC is Discounted Costs Project Management Cook Day 3 in the am # 17 / 24

NPV, ROI, and Payback I Project Management Cook Day 3 in the am # 18 / 24

NPV, ROI, and Payback II Project Management Cook Day 3 in the am # 19 / 24

Expected Monetary Value Project Management Cook Day 3 in the am # 20 / 24

Controlling ØControlling is the process of Ø measuring progress towards project objectives Ø monitoring deviation from the plan Ø taking corrective action to match progress with the plan ØControlling cuts across all of the other phases of the project life cycle and involves seven knowledge areas Project Management Cook Day 3 in the am # 21 / 24

Control Processes Project Management Cook Day 3 in the am # 22 / 24

Cost Control Ø Project cost control includes Ømonitoring cost performance Øensuring that only appropriate project changes are included in a revised cost baseline Øinforming project stakeholders of authorized changes to the project that will affect costs Ø Earned value analysis is an important tool for cost control Project Management Cook Day 3 in the am # 23 / 24

Concluding Remarks Ø Questions and Answers Ø Thank you, again. You can find a copy of this lecture (350 KB) on the Internet at: http: //cha 4 mot. com/PM Project Management Cook Day 3 in the am # 24 / 24