Project Management
Quản lý Dự án
Dr. TRAN QUYNH LE
Dr. NGUYEN DUC DUY
Industrial Systems Engineering Department
Mechanical Engineering Faculty
Ho Chi Minh City University of Technology (HCMUT)–
VNUHCM
Chapter 13
Progress and Performance Measurement and
Evaluation
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LEARNING OUTCOME
• Identify the four steps for controlling a project.
• Utilize a tracking Gantt to monitor time performance.
• Understand and appreciate the significance of earned value
management.
• Calculate and interpret cost and schedule variance.
• Calculate and interpret performance and percent indexes.
• Forecast final project cost.
• Identify and manage scope creep
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Project Monitoring System for Control
▪ Information System Structure
• What data are collected?
➢ Current status of project (schedule and cost)
➢ Remaining cost to compete project
➢ 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… (cont’d)
▪ Information System Structure (cont’d)
• Collecting data and analysis
➢ Who will collect project data?
➢ How will data be collected?
➢ When will the data be collected?
➢ Who will compile and analyze the data?
• Reports and reporting
➢ Who will receive the reports?
➢ How will the reports be transmitted?
➢ When will the reports be distributed?
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Project Progress Report Format
▪ Progress since last report
▪ Current status of project
• Schedule
• Cost
• Scope
▪ Cumulative trends
▪ Problems and issues since last report
• Actions and resolution of earlier problems
• New variances and problems identified
▪ Corrective action planned
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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 actions
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Monitoring Time Performance
▪ Tools used to catch negative variances from plan and communicate project
schedule status:
• Tracking and baseline Gantt charts
➢ Show expected, actual, and trend data for event duration performance.
• Control charts
➢ Plot the difference in scheduled time on the critical path with the actual point on the
critical path.
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Baseline and Tracking Gantt Charts
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Project Schedule Control Chart
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Disparity Among Monitoring Systems
▪ Time-Phase Baseline Plan
• Corrects the failure of most monitoring systems to connect a project’s actual
performance to its schedule and forecast budget.
➢ Systems that measure only cost variances do not identify resource and project
cost problems associated with falling behind or progressing ahead of
schedule.
▪ Earned Value Cost/Schedule System
• An integrated project management system based on the earned value concept
that uses a time-phased budget baseline to compare actual and planned
schedule and costs.
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Glossary of Terms
▪ EV
• The percent complete times its original budget. The percent of the original budget
that has been earned by actual work completed. The older acronym for this value was
BCWP—budgeted cost of the work performed.
▪ PV (Planned Value)
• The 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
• The actual cost of the work completed. The sum of the costs incurred in
accomplishing work. (ACWP—actual cost of the work performed).
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Glossary of Terms
▪ 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 (SV) is the difference between the earned value and the baseline
line to date where SV=EV-PV.
▪ BAC
• Budgeted cost at completion. The total budgeted cost of the baseline or project cost
accounts.
▪ EAC
• Estimated costs at completion. Includes costs to-date plus revised estimated costs
for the work remaining.
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Glossary of Terms
▪ ETC
• Estimate to complete.
▪ VAC
• Cost variance at completion (BAC-EACe), where EACe is derived by estimators in
the field.
• Or, alternatively, cost variance at completion (BAC-EACf), where EACf is derived from
a formula using actual and earned value costs.
• VAC indicates expected actual over-or underrun cost at completion.
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Developing 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 and resource schedules.
a. Schedule resource to activities
b. Time-phase work packages into a network
3. Develop a time-phased budget using work packages included in an activity.
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Developing an Integrated Cost/Schedule System
3. Develop a time-phased budget using work packages included in an activity.
Accumulate budgets (PV).
4. At the work package level, collect the actual costs for the work performed (AC).
5. Multiply percent complete times original budget (EV).`
6. Compute the schedule variance (EV-PV) and the cost variance (EV-AC).
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Project Management System Overview
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Development of Project Baselines
▪ Purposes of a Baseline (PV)
• An anchor point for measuring performance
➢ A planned cost and expected schedule against which actual cost and schedule are
measured.
➢ A basis for cash flows and awarding progress payments.
➢ A summation of time-phased budgets (cost accounts as summed work packages)
along a project timeline.
▪ What Costs Are Included in Baselines?
• Labor
• Equipment
• Materials
• Project direct overhead costs (DOC)
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Baseline Data Relationships
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Development of Project Baselines (cont’d)
▪ Rules for Placing Costs in Baselines
• Costs 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 work are completed over
the duration of a work package.
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Methods of Variance Analysis
▪ Comparing Earned Value
• With 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 or changes that have taken place.
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Methods of Variance Analysis
▪ Cost Variance (CV)
• Indicates if the work accomplished using labor and materials costs more or less
than was planned 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 project scheduled to date.
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Cost/Schedule Graph
FIGURE 13.5
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Earned Value Review Exercise
FIGURE 13.6
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Developing A Status Report:
A Hypothetical Example
▪ Assumptions
• Each cost account has only one work package, and each cost account will be
represented as an activity on the network.
• The project network early start times will serve as the basis for assigning the baseline
values.
• Baseline value will be assigned linearly, unless stated differently.
• From the moment work on an activity begins, some actual costs will be incurred each
period until the activity is completed.
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Work Breakdown Structure and Cost Accounts
FIGURE 13.7
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Digital Camera Prototype Project Baseline Gantt Chart
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Digital Camera Prototype Project Baseline
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Digital Camera Prototype Status Reports: Periods 1–3
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Digital Camera Prototype Status Reports: Periods 4–6
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Digital Camera Prototype Status Reports: Period 7
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Digital Camera Prototype Summary Graph
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Digital Camera Project Tracking Gantt Chart Showing Status—Through Period
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Digital Camera
Project Rollup
at End Period 7
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Indexes to Monitor Progress
▪ Performance Indexes
• Cost 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 of the total budgeted
(BAC) and actual (AC) dollars to date.
➢ PCIB = EV/BAC
➢ PCIC = AC/EAC
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Interpretation of Indexes
TABLE 13.3
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Indexes Periods 1–7
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Project Cost/Schedule Systems Software
▪ Typical Computer-Generated Status Report
• Schedule variance (EV-PV) by cost account and WBS and OBS
• Cost variance (EV-AC) by cost account and WBS and OBS
• Indexes—cost, schedule, total percent complete, and the to complete
performance index
• Cumulative actual total to date (AC)
• Expected costs at completion
• Paid and unpaid commitments
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Additional Earned Value Rules
▪ Rules applied to short-duration activities and/or small-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 to be earned when it is
started and 50% to be earned when the package is completed.
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Forecasting Final Project Cost
▪ Methods used to revise estimates of future project costs:
• EACe
➢ Allows experts in the field to change original baseline durations and costs because
new information tells them the original estimates are not accurate.
• EACf
➢ Uses actual costs-to-date plus an efficiency index to project final costs in large
projects where the original budget is unreliable.
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Forecasting Model: EACf
The equation for this forecasting model:
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Other Control Issues
Issues In Maintaining Control Of Projects
Baseline Changes
Contingency Reserve
Costs and Problems of Data Acquisition
Scope Creep
Managing the Portfolio of Projects
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Scope Changes to a Baseline
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Key Terms
▪ Baseline budget
▪ Cost performance index (CPI)
▪ Cost variance (CV)
▪ Earned value
▪ Schedule variance (SV)
▪ Time phasing
▪ Variance at completion (VAC)
▪ Estimate at completion (EAC)
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