COST LOADED SCHEDULE.
While the cost loaded schedule reflects the cost of each work
component, it is also essential that it has to be time phased. So it
must show you not only how much project activities will cost, but
when these costs will be incurred.
Cost Baseline is a time-phased budget which can be used to monitor
and measure cost performance throughout project life cycle. It is the
product of the approved schedule and the project budget (BAC).
Using the schedule, you need to identify when, and for how long, each
activity is planned. You then align the aggregated costs you've
calculated with the time durations in which they fall.
The BAC includes the allocated project budget and the budget
contingency to accommodate the risk of incurring unidentifiable but
normally occurring costs. The key elements that should be present in
any cost baseline are work package costs, subproject costs, a total
project cost, as well as their due dates and contingency reserves.
COST LOADED SCHEDULE – ADVANTAGES.
Some advantages to the cost loading of schedules include:
Make sure the owner pays on time for work accomplished.
Make sure contractor is not charging too much for the work
accomplished.
Insure that all parties expect the same level of effort on similar
work.
Allows the evaluation of possible changes to the project scope.
Updating earned value is little additional effort if time-based
progress is tracked monthly.
Allows analysis of Time-Cost Tradeoff.
Allows analysis of Cash Flow and Financing Requirements.
PROJECT PERFORMANCE.
The traditional approach to progress monitoring was merely the
comparison of budget versus actual cost which would indicate
what was planned to be spent versus what was actually is spent at
any given time. This method fails to compare or detect the physical
amount of work performed.
EVM – BASIS.
The Earned Value Analysis provides a third reference which is the
earned value of the physical work completed which gives an
objective view of the status of the project, i.e. the value of the work
completed to date.
This can be compared with both planned and actual cost to
determine the performance to date which will give an early
indication of problems.
Earned Value Analysis (EVA) is an industry standard method of
measuring a project’s progress at any given point in time,
forecasting the project completion date and final cost and also
analyzing variances in the schedule and budget as the project
proceeds.
EVM – BENEFIT.
The outcome of the EVM analysis will answer the following two
important questions:
At the end of the project, is it likely that the cost will be
less than or equal to or greater than the original
estimate or the budget?
Whether the project is likely to be completed on time?
THREE KEY PROGRESS PARAMETERS.
Budgeted Cost of Work Scheduled (BCWS):- It represents the budgets
of the activities that were planned or scheduled to have been
completed, otherwise known as Planed Value (PV). BCWS is derived
from the Work Breakdown Structure (WBS), the project budget and the
project master schedule.
Actual Cost of Work Performed (ACWP):- It represents the actual cost
charged against the activities that were completed, other wise known
as Actual Cost (AC). This can be established from the actual
measurements of the work completed. Actual costs recorded from
invoices and workmen’s time sheets.
Budgeted Cost of Work Performed (BCWP):- It represents the planned
or scheduled cost of the activities that are completed at any given
time, other wise known as Earned Value (EV). This is calculated from
the measured work completed and the budgeted costs for that work
(i.e Percentage project completed x Project Budget).
THE PROJECT STATUS INDICATORS.
Cost Performance Index (CPI):- It is the ratio between the work
accomplished versus the actual cost incurred for a specified time
period. It can be stated as an efficiency rating for the work
accomplished for the resources expended.
Cost Variance (CV):- It is the difference between the Earned Value and
the actual cost incurred for a specified time period. It can be stated as
a measure of the spending variance.
Schedule Performance Index (SPI):- It is the ratio between the work
accomplished versus the value of the planned work for a specified time
period. It can be stated as an efficiency rating for the work
accomplished against the original plan.
Schedule Variance (SV):- It is the difference between the Earned value
of the work accomplished and the planned versus the value of the
planned work. It can be stated as an efficiency of the project
performance.
Cost Performance Index (CPI):
It is the ratio of earned value and the actual cost of completed
works.
CPI = BCWP / ACWP or
CPI = EV / AC
CPI represents the amount of work produced by the project for
every unit of cost spent.
No. Description Remarks
1 Cost Performance Index (CPI) = 1 On Budget
2 Cost Performance Index (CPI) < 1 Over Budget
3 Cost Performance Index (CPI) > 1 Under Budget
Cost Variance (CV):
It is the difference between the Earned Value and the Actual
Cost of the works.
CV = BCWP – ACWP
CV = EV - AC
No. Description Remarks
1 Cost Variance (CV) = 0 On Budget
2 Cost Variance (CV) < 0 Over Budget
3 Cost Variance (CV) > 0 Under Budget
Schedule Performance Index (SPI):
SPI is the ratio of earned value and the planned value of
completed works.
SPI = BCWP / BCWS
SPI = EV / PV
SPI represents the amount of time being utilized on a project
for every unit hour spent
No. Description Remarks
1 Schedule Performance Index (SPI) = 1 On Schedule
2 Schedule Performance Index (SPI) < 1 Behind Schedule
3 Schedule Performance Index (SPI) > 1 Ahead of Schedule
Scheduled Variance (SV):
It is the difference between the Earned Value and the planed value.
SV = BCWP – BCWS
SV = EV - PV
No. Description Remarks
1 Schedule Variance (SV) = 0 On Schedule
2 Schedule Variance (SV) < 0 Behind Schedule
3 Schedule Variance (SV) > 0 Ahead of Schedule
THE PROJECT FORECASTING.
Estimate At Completion (EAC): It is the estimate or the amount of
money will be spend on the project and it depend on judgment.
Independent Estimate At Completion (IEAC): is the projected final cost
of the project, based on the performance so far. It takes into account
the original budget (BAC).
IEAC = BAC / CPI
BAC is the Budget at completion
Independent Schedule At Completion (ISAC): is the projected duration
of the project based on the performance so far.
ISAC = SAC / SPI
SAC is the schedule at completion
Variance AT Completion(VAC): is the forecast of final cost variance.
VAC = BAC – IEAC or BAC - EAC
The above analysis and the forecasted values will give an indication,
whether the project is in crises or not and also the type of crises if
there is.
To Complete Performance Index (TCPI):
TCPI is the required productivity to complete the scope
within the available budget.
TCPI = (Budget – BCWP) / (Budget – ACWP)
TCPI is an indication of how one has to perform for the
project duration in order to meet the desired cost goal.
Inference of the results:
If TCPI is greater than 1, one must perform better than planed
to meet the goal.
If TCPI is less than 1, one can get by with performing under
the plan.
To Complete Schedule Performance Index (TCSPI):
TCSPI is the required work rate to complete the scope within
the available schedule. It gives the idea how to utilize the
remaining time period of the project.
TCSPI = (Budget – BCWP) / (Budget – BCWS)
TCSPI is an indication of how we have to perform for the
project duration in order to meet the desired schedule goal.
Inference of result:
If TCSPI is grater than 1, one must perform better than
planned in order to meet the goal.
If TCSPI is less than 1, one can get by with performing under
the plan.
WHY PLANNING, SCHEDULING & CONTROLLING
Planning : You could know what you will do.
Scheduling : You know when you will do it.
Controlling : Because things never work out
exactly the way you had planned.
THANK YOU