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Measuring Work Progress

There are Six method by which a work progress
can be measured.

Chapters Ch14, Ch15, Ch 16

Progress Measurement and Earned

Value

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Units Completed

Incremental Milestone

Start/Finish

Supervisor Opinion

Cost Ratio

Weighted Or Equivalent Units
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Units Completed

Units Completed

When each task requires approximately the same level of
effort units completed technique can be used.

This method is applicable to task which are usually repeated

Placing and finishing concrete slabs is another example.

Even though this task involves many more steps, the
progress can be reported in number of square meters
completed

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Example: Light Fixtures is a task where

accomplishment is easily measured in terms of
number of lights fixed in each flats. Let say you
have to fix 450 similar light fixture and so far
you have done 230.

The earned value percentage is (230 / 450 x
100) 51% and you should have spent 51% of
the budgeted amount for the 450 light fixture.
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Incremental Milestone

Incremental Milestone

Method is applicable for the subtask that must be handled in
sequence

Particular activities can be sub-divided into a series of task.
Completion of each task is given certain percentage which is
used to indicate the percentage of work completed

Completing of any subtask or mile stone is considered as
achievement of a milestone

Dividing each task into subtask and allotting each subtask an
increment of progress for the entire task is called developing
rules of credit

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Example: The work effort involved with installation of standard piping

might be divided into four milestones

Spool in place: 20% of work and 20% of cumulative work.

Ends welded: 40% of work and 60% of cumulative work.

Hangars and Trim Complete: 30% of work and 90% of
cumulative work.

Hydro tested and Complete: 10% of work and 100% of
cumulative work.

Thus, a pipe section for which the ends have been welded would be
reported as 60% complete.

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Start/Finish percentage

Start/Finish percentage

In this technique, a percentage complete is arbitrarily
assigned to start of the task, and 100% is record once the
task is completed.

No credit given in between the task.

For example, if a work is very short term, we can set
0%/100% credit, which means, only if the work is
completed it will get the credit not in the start or in the
middle.

Depends on the nature of the work, we can 20%/100%,
50%/50% etc.,

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Example: Alignment of Machinery shaft, Like

Ships propeller shaft and Main engine crank
shaft, or huge Motor Fan assembly.

This type of work may be completed in hours
or it can take months to complete.

So this type of activities initial start may be
given 50%, which will remain constant till the
task is completed and will achieve 100%
completion.
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Supervisor Opinion

Cost Ratio

Subjective judgments of the percentage complete

can be prepared by inspectors, supervisors or
project managers themselves.

The cost incurred to date can also be used to estimate

the work progress.

Clearly, this estimated technique can be biased by

optimism, pessimism or inaccurate observations.

This method provides no independent information on

the actual percentage complete or any possible errors
in the activity budget: the cost forecast will always be
the budgeted amount.

Knowledgeable estimators and adequate field

observations are required to obtain sufficient
accuracy with this method.

Consequently, managers must use the estimated costs

to complete an activity derived from the cost ratio
method with extreme caution.

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Weighted or Equivalent Units

Cost Ratio

Example: if an activity

was budgeted to cost

$20,000 and the cost incurred at a particular
date was $10,000, then the estimated
percentage complete under the cost ratio
method would be 10,000/20,000 = 0.5 or fifty
percent.

This method is applicable when the task being controlled

involves a long period of time and is composed of two or
more overlapping subtasks, each with a different unit of
work measurement.
Structural steel erection provides a good example of where
this method may be applied. Structural steel is normally
estimated and controlled by using tons as the unit of
measures.
How ever the subtasks included in steel erection can have
different unit of measures.

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Example Weighted or Equivalent Units

Example Weighted or Equivalent Units

Allowed
Credit

Subtask

0.02

Run foundation bolts

Each

0.02

Shim

0.05

Shakeout

0.06

Columns

Each

0.11

Beams

Each

0.10

Cross braces

Each

0.20

Girts and sag rods

Bay

0.09

Plumb and align

0.30

Connection

Each

0.05

Punch list

100

1.00

Steel Totals

Ton

520

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Total
(U/M)

Total
Qty

To-Date
Qty

Allowed
Credit

Subtask

200

200

0.02

Run foundation bolts

Each

200

200

10.4

100

100

0.02

Shim

100

100

10.4

100

100

0.05

Shakeout

100

100

26.0

87

74

0.06

Columns

Each

87

74

26.5

859

45

0.11

Beams

Each

859

45

837

0.10

Cross braces

Each

837

38

0.20

Girts and sag rods

Bay

38

100

0.09

Plumb and align

100

2.3

2977

74

0.30

Connection

Each

2977

74

3.9

0.05

Punch list

100

1.00

Steel Totals

Ton

520

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Total
(U/M)

Total
Qty

To-Date
Qty

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Earned
Tons

82.5
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Cost Performance Baseline

Weighted or Equivalent Units

Earned quantity = (allowed credit) x (summary qty)
x [(qty to date) / (total qty)]

Earned Ton Beams = (0.11) x (520 tons) x (45 each /859each)
= 3.0 tons

For our earlier example:

Percentage Complete = 82.5/520 tons = 16%

Represented by S CURVE

It is developed as a summation of the approved budgets by time period

Known as performance measurement baseline (PMB)

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Project Cost Budgeting

Earned Value Management (EVM)

EVM in its various forms is commonly used method of
performance measurement.

EVM integrates project scope, cost and schedule
measures to help the project management team assess
and measure project performance and progress

COSTING

EVM develops and monitors key dimensions for each work

package and control account
1. Budget at completion (BAC)
2. Budget cost for work Scheduled (BCWS) or Planned
Value (PV)
3. Budget cost for Work Performed (BCWP) or Earned Value
(EV)
4. Actual Cost of work performed (ACWP) or Actual cost (AC)
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BAC is prepared at planning stage before the

execution takes place.

BAC is calculated by aggregation method.
Bottom-up estimating is the most accurate.

Estimating should be based on WBS to
improve accuracy.

Contingency reserve is included and
Management reserve is excluded in BAC.

Your BAC becomes your cost baseline.
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Budgeted Cost for the work Scheduled (BCWS) / PV

Budget At Completion (BAC)

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Budgeted Cost for the work Scheduled (BCWS) is the authorized budget assigned
to the work to be accomplished for an activity or Work Package

The total planned value for the project is known as Budget at completion (BAC)
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Earned Value (EV) or BCWP

Actual Cost of Work Performed (ACWP) / AC

Earned value is the value of work performed expressed in

terms of the approved budget assigned for activity or WBS

Earned Value (EV) is also known as Budgeted Cost for
Work Performed (BCWP)

EV can be calculated as follows

EV = ( Percent work Competed) x Budget

Budget can be in terms of Hours or Cost for a Work
package or Full project

The total cost actually incurred and recorded in
accomplishing work performed for an activity or WBS.

It is the total cost incurred in accomplishing that the EV
measured.
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Project Managers monitor EV both incrementally ( Work

package) and cumulatively (Project) to determine long term
performance trends
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BAC, ACWP, BCWS, BCWP

BCWS = $69,000
Earned Value = ( % work Completed) X BCWS
If work Completed is 85.5%
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Example:

EV

= 0.855 x 69000
=$59,000
ACWP = $65,000
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Work
Package
1
2
3
4
5
6
7
8
9
10
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ACWP Progress BCWS

10
100%
10
15
100%
10
15
100%
10
10
50%
10
10
50%
10
10
30%
10
0%
10
0%
10
0%
10
0%
10
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Find for project

1. BCWS
2. ACWP
3. BAC
4. EV or BCWP

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Performance Measurement

Solution:
Work Package
1
2
3
4
5
6
7
8
9
10
Total
ACWP
BCWS
EV
BAC
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AC
10
15
15
10
10
10
70M
70M
60M
43M
100M

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Progress
100%
100%
100%
50%
50%
30%
0%
0%
0%
0%

PV
10
10
10
10
10
10
10
10
10
10

43%

100M

EV
10
10
10
5
5
3
-

Schedule Variance (SV):

SV = EV - BCWS
Indicates project falling behind Schedule
On project completion SV is equal to zero
Cost Variance(CV)
CV = EV ACWP

Measure of cost performance on a project

The cost variance at the end of the project will be BAC
and actual amount spent

Any ve CV is often non recoverable to the project

43M

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Performance Measurement

Performance Measurement

Efficiency indicators: Used for performance comparison of project against

other projects.

SPI is the measure of Progress Achieved (EV) to Progress

Planned (BCWS)

An SPI less than 1 indicates less work completed than
planned

Similarly more than 1 indicates more work is completed
than planned

The performance on critical path must also be measured to
analyze if the project will be complete ahead or behind the
schedule
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Cost Performance Index (CPI)

CPI = EV/ACWP

Schedule Performance Index (SPI)

SPI = EV/BCWS

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Measure of Value of completed work compared the amount

spent on it.

Most important EVM metric and measures the cost
efficiency for the work completed

A CPI value less than 1 indicates cost over run

A CPI greater than 1 indicates a cost under run

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Practice Problem:

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EVM Measures Project Performance

For previous Problem Find SV, CV, SPI, CPI

BCWS

60M

ACWP

70M

BCWP/EV

43M

SV

= EV BCWS
= 43 60 = -$17M

SPI = EV/BCWS
= 43/60
= 0.71
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CV = EV ACWP
= 43 70
= -$27M
CPI = EV/ACWP
= 43/70
= 0.61

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FORECASTING

FORECASTING

Estimate at completion (EAC) may differ from the
budget at completion(BAC) based on the project
performance

EAC are typically based on the costs incurred for
work completed plus an Estimate to Complete
(ETC)

Using bottom up approach ETC can be recalculated
for the remaining work.
EAC = ACWP + (Bottom-up ETC)

Bottom up ETC is time consuming and requires
additional resources
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EAC forecast when ETC is calculated at Budgeted

Rate ( Atypical)

FORECASTING

Using EVM data many different type of
statistical EAC can be prepared
1. EAC forecast when ETC is calculated at
budgeted rate ( Atypical)
2. EAC forecast when ETC is calculated at the
current CPI (Typical)
3. EAC forecast when ETC is calculated based on
both CPI & SPI
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Predicts that all Future ETC work will be accomplished at

budgeted rate ( CPI = 1)
ETC

= BAC EV
EAC = ACWP + BAC EV
ETC
= 100 43
= 57M
EAC = 70M + 100M 43M
= 127M
Therefore

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EAC forecast when ETC is calculated at the

current CPI (Typical)

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EAC forecast when ETC is calculated based

on both CPI & SPI

In this forecast, the ETC work will be performed at an
efficiency rate that considers both the cost and schedule
performance indices

This method assumes what the project has experienced to date can
be expected to continue in the future
ETC = (BAC EV)/CPI
EAC = BAC/CPI

EAC = BAC / (CPI x SPI)

ETC = BAC EAC
Variance at completion VAC = BAC EAC
EAC

ETC = ( 100 43) / 0.61

= 93M

ETC (VAC)

EAC = 100/ 0.61

= 164M
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= 100/ ( 0.61 x 0.71)

= 230M
= 100 230
= 130M
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To Complete Performance Index (TCPI)

The to- complete performance index (TCPI) is
calculated projection of cost performance that must
be achieved on the remaining work to meet a
specified management goal, such as BAC or EAC.
TCPI = Work Remaining
Funds remaining
= BAC - EV
BAC - ACWP
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Project Cost Control Tools & Techniques

Acronym

Term

Interpretation

PV

Planned Value

What is the estimated value of the work planned to be

done ?

EV

Earned Value

What is the estimated value of the work actually

accomplished?

AC

Actual Cost

What is the actual cost incurred for the work

accomplished?

BAC

Budget At Completion

How much did we BUDGET for the TOTAL project effort?

EAC

Estimate At
Completion

What do we currently expect the TOTAL project to cost?

ETC

Estimate to Complete

From this point on, how much MORE do we expect it to

cost to finish the project?

VAC

Variation to Complete

How much over or under budget do we expect to be at

the end of the project?

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CHAPTER ENDS

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10