1. Project ManagementDay 3 in the am Project Management (PM) CHECK

2. Day 3 in the am # 2 / 24 Project ManagementCook

3. Day 3 in the am # 3 / 24 Project ManagementCook

4. Day 3 in the am # 4 / 24 Project ManagementCook

5. Day 3 in the am # 5 / 24 Project ManagementCook Earned Value Analysis  EVA is a 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  You must enter actual information periodically to use EVA

6. Day 3 in the am # 6 / 24 Project ManagementCook EVA Terminology  Budgeted cost of work scheduled (BCWS) is the portion of the approved cost estimate planned to be spent on an activity during a given period  Actual cost of work performed (ACWP) is the total of the direct and indirect costs incurred in doing the work on an activity during a given period  Budgeted cost of work performed (BCWP), also called earned value, is the percentage of work actually completed multiplied by the cost (BCWS)

7. Day 3 in the am # 7 / 24 Project ManagementCook Earned Value Analysis (EVA)

8. Day 3 in the am # 8 / 24 Project ManagementCook Deriving EVA Metrics  Weeks Elapsed = WE = ((actual task beginning) – (report date)) / 7  Weeks Performed = WP = WE * (SD)/(ED) ( note: “D” is for duration ) Where: SD = ((scheduled project beginning) - (scheduled completion)) / 7 ED = ((actual project beginning) - (expected completion)) / 7  Budgeted Cost of Work Scheduled = BCWS = BCF(1) + … BCF (WE) Where: BCF = Budgeted Cash Flow and ACF = Actual Cash Flow  Budgeted Cost of Work Performed = BCWP = BCF(1) + … BCF (WP)  Schedule Variance = BCWP - BCWS (measured in $, not time)  Actual Cost of Work Performed = ACWP = ACF(1) + … ACF(WE)  Spend Comparison = BCWS – ACWP ( commonly reported )  Cost Performance Index = BCWP / ACWP ( >1 is good )  Budgeted Performance Index = BCWP / BCWS ( >1 is good )

9. Day 3 in the am # 9 / 24 Project ManagementCook 1.Expected Completion 200__.____.____ ( 95% confidence ) 2.Δ Actual Cost ( in-house ) ____, _____ RMB ( + => expense ) 3.Δ Actual Cost ( contracted ) ____, _____ RMB ( + => overrun ) 4.Δ Actual Cost ( purchases ) ____, _____ RMB ( - => refund ) 5.Δ Quality Issues? ___ ( if “N”, then quality is presumed excellent ) 6.Δ Subcontracting Issues? ___ ( if “Y”, attach explanation ) 7.Δ Resource Issues? ( Staff, Material, Equipment ) ___, ___, ___ 8.Δ Integration/Dependency Issues? ___ 9.Δ Catastrophe Possibility? ___ 10.Δ Other Issues? ___ ( Scope, surprise, opportunity, infrastructure, … ) 11.Δ Notices ( vacations, emergencies, changes, conntact, … ): _______ _____________________________________________ Weekly Task Report (by WBS)

10. Day 3 in the am # 10 / 24 Project ManagementCook EVA Trend Analysis

11. Day 3 in the am # 11 / 24 Project ManagementCook 1.Expected Completion 20__.____.____ ( 95% confidence ) 2.Δ Actual Cost ( in-house ) ____, _____ RMB ( + => expense ) 3.Δ Actual Cost ( contracted ) ____, _____ RMB ( + => acceptance ) 4.Δ Actual Cost ( purchases ) ____, _____ RMB ( - => refund ) 5.Δ Quality Issues? ___ ( if “N”, then quality is presumed excellent ) 6.Δ Contracting Issues? ___ ( if “Y”, attach explanation ) 7.Δ Resource Issues? ( Staff, Material, Equipment ) ___, ___, ___ 8.Δ Integration/Dependency Issues? ___ 9.Δ Catastrophe Possibility? ___ 10.Δ Other Issues? ___ ( Scope, surprise, opportunity, infrastructure, … ) 11.Δ Notices ( vacations, emergencies, changes, contact, … ): ________ _____________________________________________ Weekly Task Report (by WBS)

12. Day 3 in the am # 12 / 24 Project ManagementCook Weekly Project Summary ( : ) In-House ( : %$) Contracted ( : %$) Purchases ( : %$) Schedule: % on-time (budget wtd.) % completed (budget weighted) Schedule variance (budget wtd.) Estimated completion date Estimation trend (10 week) Schedule Performance Index Serious issues open (# : trend) Cost: % within budget Estimated completion date Estimation trend (10 week) Schedule Performance Index Serious issues open (# : trend) Spent to date ($ : %) Situation: (need mgmt. help?)

13. Day 3 in the am # 13 / 24 Project ManagementCook Weekly Status Report

14. Day 3 in the am # 14 / 24 Project ManagementCook MS Reporting Capability

15. Day 3 in the am # 15 / 24 Project ManagementCook Basic Financial Terms  Life cycle costing is estimating the cost of a project over its entire life  Cash flow analysis is used for determining the estimated annual costs and benefits for a project  Benefits and costs can be tangible or intangible, direct or indirect, but will have to be quantified  Sunk cost is money spent in the past and should not be a criteria in project selection  Learning curve theory – when many items are produced repetitively, unit cost decreases  Reserves – money included in cost estimate  Contingency reserves – allowances for future situations

16. Day 3 in the am # 16 / 24 Project ManagementCook Net Present Value Example

17. Day 3 in the am # 17 / 24 Project ManagementCook Return on Investment  Return On Investment (ROI) : ROI = ((Discounted Benefits) – (Discounted Costs)) / (Discounted Costs)  Breakeven Analysis: BE = ( Time when DB-DC =0) – (Time when DC began) Where: DB is Discounted Benefits and DC is Discounted Costs

18. Day 3 in the am # 18 / 24 Project ManagementCook NPV, ROI, and Payback I

19. Day 3 in the am # 19 / 24 Project ManagementCook NPV, ROI, and Payback II

20. Day 3 in the am # 20 / 24 Project ManagementCook Expected Monetary Value

21. Day 3 in the am # 21 / 24 Project ManagementCook Controlling  Controlling is the process of  measuring progress towards project objectives  monitoring deviation from the plan  taking corrective action to match progress with the plan  Controlling cuts across all of the other phases of the project life cycle and involves seven knowledge areas

22. Day 3 in the am # 22 / 24 Project ManagementCook Control Processes

23. Day 3 in the am # 23 / 24 Project ManagementCook 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

24. Day 3 in the am # 24 / 24 Project ManagementCook Concluding Remarks  Questions and Answers  Thank you, again. You can find a copy of this lecture (350 KB) on the Internet at: http://cha4mot.com/PM