![Glossary of Terms
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 estimate of the
resources scheduled in a time-phased cumulative baseline [BCWS—budgeted cost of the work scheduled].
AC Actual cost of the work completed. The sum of the costs incurred in accomplishing work. [ACWP—actual cost
of the work performed].
CV Cost variance is the difference between the earned value and the actual costs for the work completed to date
where CV = EV – AC.
SV Schedule variance is the difference between the earned value and the baseline line to date where SV = EV –
PV.
BAC Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts.
TAC The duration of the critical path
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.](https://image.slidesharecdn.com/5-220714125825-85a07eb2/85/5-PAE-AcFn621-Ch-5-Execution-and-Monitoring-ppt-17-320.jpg)
5. PAE AcFn621 Ch-5 Execution and Monitoring.ppt
- 1. M.SC.,ACCOUNTING AND FINANCE PROJECT ANALYSIS AND EVALUATION CODE AcFn621-CREDIT HOURS-3 CHAPTER-FIVE EXECUTION AND MONITORING PROF. DR. CHINNIAH ANBALAGAN PROFESSOR OF M.SC., ACCOUNTING & FINANCE COLLEGE OF BUSINESS AND ECONOMICS SAMARA UNIVERSITY, ETHIOPIA, EAST AFRICA EMAIL ID: dr.chinlakshanbu@gmail.com
- 2. Monitoring and Control The duration of the project and covers the development process. Monitors all key parameters like cost, schedule, risks, etc. Takes corrective actions when needed. Needs information on the development process.
- 3. The Project Control Process Control The process of comparing actual performance against plan to identify deviations, evaluate courses of action, and take appropriate corrective action. Project Control Steps 1. Setting a baseline plan. 2. Measuring progress and performance. 3. Comparing plan against actual. 4. Taking action. Tools Tracking and baseline Gantt charts Control charts
- 4. What is a baseline? It makes the plan difficult to change It is rather like writing the plan (schedule and cost) on the backside of Moses’ tablets Its an anchor point for measuring performance against plan Planned cost Planned schedule Planned scope
- 5. Baseline and Tracking Gantt Charts
- 6. Project Schedule Control Chart
- 7. Qualities of PM 1. Inspires a Shared Vision 2. Good Communicator 3. Integrity 4. Enthusiasm 5. Empathy 6. Competence 7. Ability to Delegate Tasks 8. Cool Under Pressure 9. Team-Building Skills 10. Problem Solving Skills
- 8. Important Concepts during Execution Leadership Communication Focus Tracking
- 9. Processes Utilized of the Lifecycle Integration management: Monitor and Control Project Work Perform Integrated Change Control Scope management: Control Scope Time management: Control Schedule Cost management: Control cost Quality management: Perform Quality Control
- 10. Processes Utilized Communication Management Distribute Information Report Performance Risk Management Monitor and Control Risks Procurement Management Administer Procurements
- 11. Controlling Changes to the Project Schedule Perform reality checks on schedules Allow for contingencies?? Don’t plan for everyone to work at 100% capacity all the time Hold progress meetings with stakeholders and be clear and honest in communicating schedule issues
- 12. Execution Focus and leadership are keys to success in execution Poor execution leads to losses in the business world just as it does in sports
- 13. Factors Leading to Poor Execution Multitasking-doing several things at once Procrastination (student syndrome)-putting things off until the last minute
- 14. Multi Tasking A finishes A finishes B finishes
- 15. Cost Control Project cost control includes monitoring cost performance ensuring that only appropriate project changes are included in a revised cost baseline informing project stakeholders of authorized changes to the project that will affect costs Earned value analysis is an important tool for cost control
- 16. Earned Value Analysis (EVA) EVA is a project performance measurement technique that integrates scope, time, and cost data Given a baseline (original plan plus approved changes), you can determine how well the project is meeting its goals with EVA You must enter actual information periodically to use EVA. Figure 6-1 shows a sample form for collecting information
- 17. Glossary of Terms 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 estimate of the resources scheduled in a time-phased cumulative baseline [BCWS—budgeted cost of the work scheduled]. AC Actual cost of the work completed. The sum of the costs incurred in accomplishing work. [ACWP—actual cost of the work performed]. CV Cost variance is the difference between the earned value and the actual costs for the work completed to date where CV = EV – AC. SV Schedule variance is the difference between the earned value and the baseline line to date where SV = EV – PV. BAC Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts. TAC The duration of the critical path 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.
- 18. Earned Value Analysis Terms Budgeted cost of work performed (BCWP), also called earned value, is the percentage of work actually completed multiplied by the budget for the activity Budgeted cost of work scheduled (BCWS), also called planned value, is that portion of the approved total cost estimate planned to be spent on an activity during a given period Actual cost of work performed (ACWP), also called actual cost, are the total direct and indirect costs incurred in accomplishing work on an activity during a given period
- 19. Earned Value Analysis-EVA Earned value = Budgeted Cost of Work Performed (BCWP) Planned value = Budgeted Cost of Work Scheduled (BCWS), and Actual Cost = Actual Cost of Work Performed (ACWP) When you complete an activity, you earn the budgeted value of that activity
- 20. Schedule Variance (SV)-Ahead or Behind Defined as the difference between the budgeted cost of work performed and the budgeted cost of work scheduled = BCWP – BCWS = EV - PV Is also equal to Earned Value (EV) minus Planned Value (PV) Indicates the deviation between the work content performed and the work content scheduled to be performed for the control period
- 21. Cost Variance (CV)—over or under Defined as the difference between the budgeted cost of work performed and the actual cost of work performed = BCWP – ACWP = EV - AC Is also equal to Earned Value (EV) minus Planned Value (PV) A positive CV indicates a lower actual cost than budgeted for the control period, while a negative CV indicates a cost overrun
- 22. Schedule Performance Index (SPI) Defined as the ratio BCWP/BCWS = EV/PV A value close to 1 indicates an activity that is on schedule Values greater than 1 suggest the activity is ahead of schedule Values less than 1 indicate a schedule overrun
- 23. Cost Performance Index (CPI) Defined as the ratio BCWP/ACWP = EV/AC A value close to 1 indicates an activity that is on budget Values greater than 1 suggest the activity is below budget Values less than 1 indicate a budget overrun
- 24. Rules of Thumb for EVA Numbers Negative numbers for cost and schedule variance indicate problems in those areas. The project is costing more than planned or taking longer than planned CPI and SPI less than 100% or 1 indicate problems with cost or schedule The project is over-budget if CPI < 1 The project is behind schedule if SPI < 1
- 25. Earned Value Calculations for a One-Year Project After Five Months
- 26. In the Figure above Budget At Completion = BAC = Original Budget At The Planned Completion Date Time At Completion = TAC = Original Completion Time In the figure above, $100,000 in month 12 Estimate At Completion = EAC = BAC/CPI Estimate At Completion = $100,000/.83 = $120,455 Estimated Time To Complete = ETAC = TAC/SPI Estimated Time To Complete = 12/.96 = 12.55 mos.
- 27. Why Earned Value Analysis?? You can’t tell what your true cost variance is because you don’t know where you are relative to schedule Suppose you are behind schedule but also you have spent less than what the schedule has called for. Are you really under budget?
- 28. Updating Cost Estimates BAC = Budget at completion = total budget of the project activities based on the original project plan Assuming the original budget (the BAC) was $200,000 and the CPI is 1.12, what is EAC? EAC = BAC / CPI = $200,000 / 1.12 $178,571
- 29. Updating Schedule Estimates TAC = Time At Completion = total time required to complete the schedule, as determined by the CP ETAC = Estimated (revised) time to complete Assuming the TAC was 12 months and the SPI = .77, what is the ETAC? ETAC = TAC / SPI = 12 / .77 15.6 months
- 30. Cont’d WR = Work Remaining = budgeted cost of the work not yet accomplished by the end of the reporting period WR = BAC – BCWP = BAC - EV EAC = updated estimate of the Total Project Cost = BAC/CPI = BAC/CI ETAC = Updated Estimate Of The Total Project Duration = TAC/SPI = TAC/SI
- 31. Earned Value Chart for Project After Five Months - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 1 2 3 4 5 6 7 8 9 10 11 12 Month $ BCWS or Cumulative Plan ACWPor Cumulative Actual BCWPor Cumulative EV BCWS ACWP BWCP BAC EAC
- 34. Software to Assist in Cost Management Spreadsheets are a common tool for resource planning, cost estimating, cost budgeting, and cost control Many companies use more sophisticated and centralized financial applications software for cost information Project management software has many cost-related features
- 35. MS Project for Execution & Control First, make certain your project plan is complete and final Second, save it as a baseline Begin entering actual information Actual costs Percentage complete
- 36. Tracking: MS Project will track Task start dates Task finish dates Task duration Task cost work Percentage of task that is complete
- 37. Entering Actual Start & Finish Dates for a Task On the view bar, click Gantt chart In the task name field select the task to update On the Tools menu, point to tracking and click Update Tasks Under Actual, type the dates in the Start and Finish boxes
- 38. Indicating Progress On A Task As A Percentage In the task name field of the Gantt Chart Double click—this brings up the task information sheet Select the general tab In the percentage complete box type a whole number between 0 and 100
- 39. Entering Actual Costs for a Resource Assignment On the Tools menu, click options, then click the calculation tab Clear the Actual costs are always calculated by MS Project check box Click OK On the view bar, click Task usage On the view menu, point to the Table, and click Tracking Drag the divider bar to the right to view the Activity Cost field In the activity cost field, type the actual cost for the assignment for which you want to update costs
- 40. Close Out of Project Project closeout is the last phase of the project management lifecycle. During the project closeout phase, project deliverables are transitioned to the business owners. Before the project is officially closed, the project team must hold a stakeholder's meeting.
- 41. Important of Project Close Out Project Management Processes (Initiation, Planning, Execution, Monitoring and Controlling), Project Closing serves an important purpose for the organization and helps it avoid unfavorable and adverse scenarios
- 42. The Key Activities Of Close Project Project Management Consists of five process groups, namely initiating, planning, execution, monitoring and control, and closing. The project closure phase consists of the processes that are performed to officially finish and close all the assignments in a project or phase. Why is project closeout important? Why Is Project Closing Important? Just as any of the other project management processes (Initiation, Planning, Execution, Monitoring
- 43. Close Out Document The purpose of the close out document is to assess the project's performance, identify the lessons learned, and confirm that essential contractual and other project closure activities have been completed. The close out document is intended to summarize the project record. What is a close out document? The purpose of the close out document is to assess the project's performance, identify the lessons learned, and confirm that essential