Module 3: Project Management Processes

Tutorial
1. Project Time Management
 Project Time Management
Start Completion
Project duration = 24 days

Activity A Activity B Activity C

7 days 13 days 4 days
CASE 1: All activities are critical: total float and free floats for all activities = 0

Start Activity D Total Float = 5 Completion

8 days Free Float = 5

Activity A Activity B Activity C

7 days 13 days 4 days
CASE 2: Activity sequence in which one activity has total and free float

Total Float of D = 5 Total Float of E = 5

Free Float of D = 0 Free Float = 5
Start Activity D Activity E Completion
5 days 3 days
Activity A Activity B Activity C
7 days 13 days 4 days

CASE 3: Activity sequence illustrating total and free float

 Activity-on-Node (AoN)
Draw the Node Diagram

Sequence Steps

A D H

St B E Fn

C F G I
Step

1 2 3 4 5 6
 Activity-on-Node (AoN)

Scheduling Computations (Forward Pass Rules)

◼ Four rules of completing a Forward Pass:

Rule 1: The initial project event is assumed to occur at time zero.

Rule 2: All activities are assumed to start as soon as possible, that

is, as soon as all the predecessor activities are completed.

Rule 3: The early finish time of an activity is merely the sum of its
early start date and the estimated activity duration.

EF= ES + DI
 Activity-on-Node (AoN)

Scheduling Computations (Forward Pass Rules)

◼ Four rules of completing a Forward Pass:

Rule 4: At merge points, the early start is the largest value of the
preceding early finish time.
EFD=6

2 ESD=9

EFD=9
6

Forward
 Activity-on-Node (AoN)

Scheduling Computations (Backward Pass Rules)

◼ Three rules of completing a Backward Pass:

Rule 1: The late finish date of the last activity is equal to its early
finish date.

Rule 2: The late start date for any activity is found by subtracting the
activity duration from its late finish date.

LSDI= LFDI - DI
 Activity-on-Node (AoN)

Scheduling Computations (Backward Pass Rules)

◼ Three rules of completing a Backward Pass:

Rule 3: In the backward pass, the late finish date of an activity

is the smallest late start value of the following activities.

12
10 LSD=37

LFD=37
14
LSD=42

Backward
 Activity-on-Node (AoN)

Task/Duration/Predecessor

ID – Task ID
D- Duration
ES – Early Start
EF – Early Finish
LS – Late Start
ES EF
LF – Late Finish
F ID D
F - Float/Slack
LS LF
 Activity-on-Node (AoN)

B 2 F 3

Activity

A 2 C 1 G 2

Duration

D 3 E 1 ES EF

F ID DR

LS LF
 Activity-on-Node (AoN)

Forward Pass 2 4 4 7
B 2 F 3

Early Early Duration=

Start Finish 9days
7 9
0 2 2 3
G 2
A 2 C 1

2 5 5 6
D 3 E 1
1st task starts at 0
ES EF
EF = ES + DR
F ID DR
ESj = EFi of predecessor
When more than one predecessor, pick the larger # LS LF
 Activity-on-Node (AoN)
Backward Pass 2 4 4 7
B 2 F 3
2 4 4 7
1st task should
end with LS = 0.
2 3 7 9
0 2
C 1 G 2
A 2
5 6 7 9
0 2

Late Late
Start Finish

2 5 5 6
D 3 E 1
3 6 6 7 ES EF
LS = LF - DR F ID DR
LF = LS of successor
LS LF

When more than one successor, pick the smallest #

 Activity-on-Node (AoN)

Calculating float

▪ If an activity can be delayed it is said to have float (or slack).

▪ To calculate float you subtract the Early Start from the Late Start (or
the Early Finish from the Late Finish).

▪ The amount of float is indicated as a number in/above the box.

 Activity-on-Node (AoN)
Calculating float 0 0
2 4 4 7
0 B 2 0 F 3
2 4 4 7

0 2
7 9
0 2 2 3
0 G 2
0 A 2 3 C 1
7 9
0 2 5 6
Total Float = LS –
ES 0 1
2 5 5 6
1 D 3 FF
1 E 1
ES EF
3 6 6 7
TF ID DR

LS LF
Total Float = Late Start (LS) – Early Start (ES)
Free Float = Early start (j) – early Finish (i)
 Activity-on-Node (AoN)
critical path 0 0
2 4 4 7
The path with 0 Float 0 F 3
0 B 2
is the critical path.
2 4 4 7

0 A-B-F-G is the critical path.

2
7 9
0 2 2 3
0 A 2 3 C 1 0 G 2
0 2 5 6 7 9

0 1 FF
2 5 5 6 ES EF

1 D 3 1 E 1 F ID DR

LS = LF - DR 3 6 6 7 LS LF

LF = LS of successor
 Activity-on-Node (AoN)
0/0 2/0 4/4
3 6 6 10 10 16
B E H
3 4 6
3 6 8 12 14 20

0/0 0/0 0/0 0/0

0 3 3 8 6 12 12 20 20 20
A C F J Fn
3 5 6 8 0
0 3 3 8 6 12 12 20 20 20
0/0 TF/FF
1/0 8 12 ES EF
3 10 G
D 4 Act
7 8 12 Dur
4 11 1/1
10 19 LS LF
ES: Early Start (ES=latest EF of all IPAs) I TF/FF
EF: Early Finish (EF=ES + Dur) 9 TFi = LFi - EFi
LS: Late Start (LF - Dur)
LF: Late Finish (LF = earliest LS of all succeeding Activities) 11 20
2. Project Cost Management
 Project Control

One of the projects managers in a construction company working in new

hospital project has the following data:

▪ The estimated value of the work completed by the project so far

is $405,000.

▪ The total cost of the project is expected to be $650,000.

▪ So far, the project has cost $325,000.

What is the Cost Performance Index?

What does this tell us about the project?

 Project Control

Cost Performance Index = Earned Value / Actual Cost.

▪ The Earned Value is $405,000.
▪ The Actual Cost is $325,000.
Cost Performance Index= $405,000 / $325,000 = 1.25

This means that for every $1 spent on the project $1.25 of

value is being produced.(money is being spent efficiently on the project)
 Project Control

A project to be completed in 12 months, and the total cost of the project is

$100,000 USD. Six months have passed, and $60,000 USD has been spent,
but on closer review, only 40% of the work is completed so far.
Find the Estimate at Completion (EAC) for this project, assume the same
performance will continue until the project end.

Budget at Completion (BAC) = $100,000

Actual Cost (AC) = $60,000
Planned Value (PV) = 50% of $100,000 = $50,000
Earned Value (EV) = 40% of $100,000 = $40,000
Cost Performance Index (CPI) = EV / AC = $40,000 / $60,000 = 0.67
Estimate at Completion (EAC) = BAC/CPI = $100,000/0.67 = $149,253.73 $
It means if the project continues to progress with CPI = 0.67 until the end, you will spend $149,253.73 USD to
complete the project.
 Project Control

A project to build governmental building with a worth of $500,000. To date

the project spent $200,000 and the value of the completed work is
$175,000. However, during the project execution it is noticed that the cost
estimation was flawed and the budget need to be calculated again for the
remaining parts.
The new estimate says that it will take $400,000 USD to complete the
remaining part of the project. Calculate the Estimate at Completion
(EAC).

Budget at Completion (BAC) = $500,000

Actual Cost (AC) = $200,000 Earned Value (EV) = $175,000
Bottom Up Estimate to Complete = $400,000
EAC = AC + Bottom up Estimate to Complete = 200,000 + 400,000 =
$600,000
 Project Control

Project with a budget of $500,000 USD. During execution phase, an

incident happens which costs a lot of money. To date $200,000 USD have
been spent, and the value of the completed work is $175,000 USD.
Calculate the Estimate at Completion (EAC).

Actual Cost (AC) = $200,000

Budget at Completion (BAC) = $500,000
Earned Value (EV) = $175,000
EAC = AC+BAC-EV
EAC = 200,000 + (500,000 – 175,000)= 200,000 + 325,000 = 525,000 USD
 Project Control

A fixed deadline project with a budgeted cost of $500,000 USD. So far $200,000
USD have been spent and the value of the completed work is $175,000 USD.
However, as per the schedule the project should have earned $225,000 USD to
date. Calculate the Estimate at Completion (EAC).

Budget at Completion (BAC) = $500,000

Actual Cost (AC) = $200,000
Earned Value (EV) = $175,000
Planned Value (PV) = $225,000
CPI = EV/AC= 175,000/200,000= 0.88
EAC = AC + (BAC – EV)/(CPI*SPI) = 200,000 + (500,000 – 175,000)/(0.88)
= 200,000 + 325,000/0.88 = 569,318.18 USD
 Project Control

A project manager for a construction company managing a

project to create a new sports hall. So far, the project has
spent $430,000. The predicted total cost of the project is
$650,000. What is the Estimate To Complete?

The Estimate At Completion is $650,000.

The Actual Cost is $430,000. (the project has spent” is another way of saying
Actual Cost)

Estimate To Complete = $650,000 – $430,000 = $220,000

 Project Control

Three months into the five-month kitchen remodeling project passed. The
original budget was $1,500 and approximately 40% of the work was
completed. Currently the project running over-budget, as indicated by a
cost performance index (CPI) of 0.67. Actual costs to-date is $900. The
contractor found some mold in the sheetrock and needed to be replaced,
causing a one-time variance, forecast the EAC and the ETC:

EAC = AC + BAC – EV = $900 + $1,500 - $600 = $1,800 (how much we will spend at
the end of the project)
ETC = EAC – AC = $1,800 - $900 = $900 (how much we will spend from this point forward)

If, however, the performance of the future activities will continue with same
pattern of the current activates.
EAC = BAC ÷ CPI = $1,500 / 0.67 = $2,239
ETC = EAC – AC = $2,239 - $900 = $1,339
 Project Control

▪ Assume Time-now is End of Week 2.

From the Table:
BAC = $2,500
PV = $700
PC (Planned) = 28%
EV = $625
PC (Actual) = 25%
Given AC = $750
▪ SV = EV – PV = $625 - $700 = - $75
▪ CV = EV – AC = $625 - $750 = - $125
 Project Control

▪ SPI = EV/PV = $625/$700 = 0.89

How to draw the
S-curves?

▪ CPI = EV/AC = $625/$750 = 0.83

▪ EAC (Schedule) = Total Scheduled Period/SPI

= 6 weeks/0.89 = 6.74 weeks
= 5 days delay

▪ EAC (Cost) = BAC/CPI

= $2,500/0.83 = $3,012 ($512 over)
▪ ETC = BAC – AC
= $3,012 - $750 = $2,262
 Project S CURVE An Earned Value Exampl
Control
Project Control
Individual months cost:

Cumulative months cost:

 Project Control

Evaluate how the project is progressing at the end of the month 7, using an Earned
Value Analysis in terms of cost and time.

At the end of MONTH 7, BCWS= $ 56,600, BCWP= $ 61,000, ACWP= $ 50,000

Cost Variance (CV) = BCWP – ACWP

= 61,000 - 50,000 = $ + 11,000
➢ Positive Cost Variance Indicates the project is under budget.

CPI = BCWP / ACWP

=61,000 /50,000 = 1.22
➢ A value of more than one means that money is being spent efficiently on the
project. Therefore, as CPI is 1.22, this means that for every $1 spent on the
project you are getting $1.22 of value.

Schedule Variance (SV) = BCWP – BCWS

= 61,000 -56,600 = $ 4,4000
➢ Positive Schedule Variance indicates we are ahead of schedule.
 Project Control
Evaluate how the project is progressing at the end of the month 7, using an Earned Value
Analysis in terms of cost and time.

SPI = BCWP / BCWS

= 61,000 /56,600 = 1.077
➢ SPI value above 1 indicates project team is very efficient in utilizing the time
allocated to the project.

Estimate the at completion cost and to completion cost, knowing that project faced difficult
underground conditions, which was not in the plan.

Estimate at Completion = AC + (BAC – BCWP) Estimate To Complete = EAC – ACWP

= 50,000 + (150,000-61,000) = $ 139,000 = 139,000 - 50,000 = $ 89,000

Project Management Processes
32