Sharif MBA Project Management Session 9

Transcription

1 Sharif MBA Project Management Session 9 Resource Planning Project Accounts Earned Value Burke Ch. 13, 14, 16 1

2 Resource Table Example/ Exercise 2

3 Bar-chart & Resource Histogram 3

4 Cumulative Resource S Curve 4

5 Bar-chart & Smoothed Histogram 5

6 Resource Smoothed Bar-chart 6

7 Resource Constraints Working Overtime Working Shifts Increase Productivity Job and Knock Learning Curve Sub-contractors Scope of Work Duration Deadline 7

8 Cost Distribution 8

9 Schedule of Work 9

10 Cash-Flow Imposed on Bar-chart 10

11 Expenses Bar-chart (showing expenses per day) 11

12 S-Curve (accumulated expenses per day) 12

13 Cost Management Cost Management: processes required to ensure that the project is completed within the approved budget (PMBOK) Financial Accounting Management Accounting Project Accounting Due to limited class time, Cost Management will be discussed D at the end, as time permits. Only some concepts and Earned value are explained here. 13

14 Cash-Flow Statement 14

15 Cost Estimating Techniques & Tools Analogous estimates / top-down estimates Bottom-up estimating Parametric modeling Computerized tools, spread sheets, MS Project Useful tips for creating more precise estimates Have the person doing the work create the estimate. Use task information from another project. Use the PERT technique Be sure to estimate all tasks for all resources: people, equipment, and materials. 15

16 Influence / Cost Change of Curve 16

17 Project Control If anything seems to be going well, you obviously do not know what s going on! Murphy Law If the project is off course, then control in the form of corrective action must be applied. It is essential for effective project control that performance is measured while there is still time to take corrective action. 17

18 Project Progress Against Time Planned Progress => Project Behind schedule & Over-spent 18

19 Earned Value False assumption: Input == Output Example: Projects 99% complete for a year Expenses & Progress reported separately The Earned Value technique measures the performance of project as it is completed. It also allows to forecast future performance based on the past performance (PMBOK) 19

20 Input vs. Output vs. Plan 20

21 Project Man-hours Planned Man-hours: Estimates of how you intend to perform the work Actual Man-hours: Recorded on the clock cards Earned Man-hours: Measure of work done 21

22 Over Optimistic Reporting 22

23 Project Values 1. The planned value (PV), also the budgeted cost of work schedule (BCWS), or the budget, is portion of the approved total cost estimate planned to be spent on an activity during a given period. 2. The actual cost (AC), also the actual cost of work performed (ACWP), is the total direct and indirect costs incurred in accomplishing work on an activity during a given period. 3. The earned value (EV), also the budgeted cost of work performed (BCWP), is the percentage of work actually completed multiplied by the planned value. 23

24 Earned Value Curve BAC: Budget At Completion BCWS (budget): Budgeted Cost of Work Scheduled ACWP (actual): Actual Cost of Work Performed BCWP (earned): Budgeted Cost of Work Performed EAC: Estimate at Completion 24

25 Earned Value EV = PV * (% Complete) Expert Opinion % of Production Using WBS (Data Capture Proforma) 25

26 Data Capture Proforma Pipe Erection Activity 26

27 Cost Control Earned Value Management 27

28 Cost Control Calculations - Earned Value Management 28

29 Cost Variance Calculation CV = BCWP - ACWP A negative variance indicates a cost overrun 29

30 Schedule Variance Calculation SV = BCWP - BCWS A negative variance indicates a behind schedule condition 30

31 Variance percents SCHEDULE VARIANCE % = (SVP) SV BCWS X 100 COST VARIANCE % = (CVP) CV BCWP X

32 Estimate at completion (EAC) EAC = ACWP BCWP X Budget at completion (BAC) The estimate at completion is the best estimate of the total cost at the completion of the project. The EAC is a periodic evaluation of the status of the project - usually on a monthly basis or until a significant change has been identified. 32

33 Exercise Template 33

34 Solution to Number 4 34

35 Solution to Number 7 35

36 Solution to Number 13 36

37 Project Variance Analysis VARIANCE UPPER BOUNDARY PROJECTED COST $ ACTUAL COST VARIANCE VARIANCE LOWER BOUNDARY R&D QUALIFICATION DEVELOPMENT PHASE I PHASE II PHASE III TIME 37

38 Management Reserve CONTRACTED COST ACTUAL COST MANAGEMENT RESERVE $ RELEASED BUDGET TIME 38

39 Variance Analysis Questions What is the problem causing the variance? What is the impact on time, cost, and performance? What is the impact on other efforts, if any? What corrective action is planned or under way? What are the expected results of the corrective action? 39

40 Variance Reporting Variance reporting is accomplished at each reporting interval. However, the variance threshold reports are exception reports and occur only when the variances exceed the upper and lower boundaries of the project variances envelope. Reporting Intervals Depends on the type of organization and characteristics of the projects. Project-driven organization - weekly. Non-project-driven organization - monthly 40

41 Cost Account Variance Analysis Report Cost account no/cam WBS/Description Cost performance data Month to date ($) Contract to date ($k) Problem cause and impact Variance BCWS BCWP ACWP SCHED COST Reporting level As of At completion Budget EAC Var. Corrective action (including expected recovery date) Cost account Date Cost center Date WBS element Date Mgr. Mgr. Mgr. Date 41

42 The 50/50 rule Half of the budget for each element is recorded at the time that the work is scheduled to begin and the other half at the time the work is scheduled to be completed. For a project with a large number of elements the amount of distortion from such a procedure is minimal. 42

43 Analysis Budgeted cost for work Scheduled (BCWS) Performed (BCWP) Budget Cost account budget = 100 (thousands) Work packages BCWS = 38 BCWP = 49 SCHED. VARIANCE = rule used for work in process 8 43 J F M A M J J A S O N D

44 Using The Rule 4,000 10,000 TIME LINE 12,000 4,000 LEGEND COMPLETED NOT COMPLETED BCWS = 34,000 BCWP = 33,000 BAC = 52,000 TIME 6,000 6,000 10,000 44

45 Earned Value Status Reporting TIME LINE CUMMULATIVE COST, $ ACWP BCWS CV BCWP SV TIME 45

46 Monthly Project Report 1. VARIANCE ANALYSIS (Cost in Thousands) 1 June 1997 Budgeted Budgeted Cost Milestone Cost Work Work Actual Variance, % Subtask Status Scheduled Performed Cost Schedule Cost 1 Completed Completed Completed Not Started Completed Not started Started Not started Total ESTIMATE AT COMPLETION (EAC) EAC = (360/340) X 579,000 = $613,059 Overrun = 613, ,000 = $34,059 46

47 3. COST SUMMARY Costs are running approximately 5.9% over budget due to higher salaried labor. 4. SCHEDULE SUMMARY The 24.4% behind schedule condition is due to subtasks 4 and 6 which have not yet begun due to lack of raw materials and the 50/50 method for booking costs. Overtime will get us back on schedule but at an additional cost of 2.5% of direct labor costs. 5. MILESTONE REPORT Milestone/ Scheduled Projected Actual Subtask Completion Completion Completion 1 4/1/97 4/1/97 2 5/1/97 5/1/97 3 5/1/97 4/23/97 4 7/1/97 7/1/97 5 6/1/97 6/1/97 6 8/1/97 8/1/97 7 9/1/97 9/1/ /1/97 10/1/97 47

48 6. ACTIVITY REPORT Current Potential Corrective Problem Impact Action (a) Lack of raw Cost overruns and Overtime is scheduled. materials. behind schedule We will try to use lower condition. salaried staff. Raw materials are expected to be on dock next week. (b) Customer un- May need add- Customer will provide happy with test itional planning. us with revised statement results. of work on 6/15/97. 48