CPM -100: Principles of Project Management
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1 CPM -100: Principles of Project Management Lesson B: Time and Cost Management Presented by Bruce R. Shaw, P.E., PMP Ph: Presented at the PMI-CPM 2002 Fall Conference Prepared by the Washington, D.C. Chapter of PMI Page 1
2 Project Time Management Activity definition Activity sequencing Activity duration estimating Schedule development Schedule control Presenter: Bruce R. Shaw, P.E., PMP Page 2
3 Activity Definition Inputs Work breakdown structure (WBS) Scope statement Historical information Constraints Assumptions Expert judgment Presenter: Bruce R. Shaw, P.E., PMP Page 3
4 Activity Definition Outputs Activity list Supporting detail WBS updates Presenter: Bruce R. Shaw, P.E., PMP Page 4
5 Activity Sequencing Inputs Activity list Product description Mandatory dependencies Discretionary dependencies External dependencies Milestones Presenter: Bruce R. Shaw, P.E., PMP Page 5
6 Outputs Activity Sequencing Project network diagram Activity list updates Presenter: Bruce R. Shaw, P.E., PMP Page 6
7 Activity Sequencing Definitions Activity: A defined work effort that consumes resources Event: The beginning or end of an activity Milestone: A significant event Node: The intersection of events or activities Critical Path: The shortest duration (longest path) to completion Slack: Delay which will not impact the total schedule Presenter: Bruce R. Shaw, P.E., PMP Page 7
8 Bar/Gantt Chart Activity Task A Task B Milestone Task C Task D June July Aug Sept Oct Nov Dec Time Presenter: Bruce R. Shaw, P.E., PMP Page 8
9 Network Diagramming Critical Path Method Precedence Diagramming Method PERT Presenter: Bruce R. Shaw, P.E., PMP Page 9
10 Critical Path Method (CPM) Network format Activities or events at nodes Easily shows dependencies, critical path Extensive software available Presenter: Bruce R. Shaw, P.E., PMP Page 10
11 Precedence Diagram Method (PDM) Network format Activities on nodes (AON) Arrows show dependencies Most common computer software Presenter: Bruce R. Shaw, P.E., PMP Page 11
12 Program Evaluation and Review Technique (PERT) Network format Activities on arrows (AOA) Events at nodes Statistical time analysis Accounts for time uncertainties Not in common use Presenter: Bruce R. Shaw, P.E., PMP Page 12
13 Network Diagrams AOA Start A B C D E F Finish AON A B C Start Finish D E F Presenter: Bruce R. Shaw, P.E., PMP Page 13
14 Activity Duration Estimating Inputs Activity list Constraints Assumptions Resource requirements Resource capabilities Historical information Identified risks Presenter: Bruce R. Shaw, P.E., PMP Page 14
15 Activity Duration Estimating Outputs Activity duration estimates Basis of estimates Activity list updates Presenter: Bruce R. Shaw, P.E., PMP Page 15
16 Schedule Development Inputs Project network diagrams Activity duration estimates Resource pool description Calendars Constraints Assumptions Leads and lags Risk management plan Activity attributes Presenter: Bruce R. Shaw, P.E., PMP Page 16
17 Schedule Development Outputs Project schedule Supporting detail Schedule management plan Resource requirement updates Presenter: Bruce R. Shaw, P.E., PMP Page 17
18 Schedule Control Inputs Project schedule Performance reports Change requests Schedule management plan Presenter: Bruce R. Shaw, P.E., PMP Page 18
19 Schedule Control Tools & Techniques Schedule change control system Progress measurement Additional planning Project management software Variance analysis Presenter: Bruce R. Shaw, P.E., PMP Page 19
20 Outputs Schedule Control Schedule updates Corrective action Lessons learned Presenter: Bruce R. Shaw, P.E., PMP Page 20
21 Project Cost Management Resource planning Cost estimating Cost budgeting Cost control Presenter: Bruce R. Shaw, P.E., PMP Page 21
22 Resource Planning Inputs Work breakdown structure Historical information Scope statement Resource pool description Organizational policies Activity duration estimates Presenter: Bruce R. Shaw, P.E., PMP Page 22
23 Resource Planning Output Resource requirements Presenter: Bruce R. Shaw, P.E., PMP Page 23
24 Cost Estimating Inputs Work breakdown structure Resource requirements Resource rates Activity duration estimates Estimating publications Historical information Chart of accounts Risks Presenter: Bruce R. Shaw, P.E., PMP Page 24
25 Cost Estimating Outputs Cost estimates Supporting detail Cost management plan Presenter: Bruce R. Shaw, P.E., PMP Page 25
26 Estimating Accuracy Order of magnitude Budget estimate Definitive estimate (-25%, +75%) (-10%, +25%) (-5%, +10%) Presenter: Bruce R. Shaw, P.E., PMP Page 26
27 Cost Budgeting Inputs Cost estimates Work breakdown structure Project schedule Risk management plan Presenter: Bruce R. Shaw, P.E., PMP Page 27
28 Output Cost baseline Cost Budgeting Presenter: Bruce R. Shaw, P.E., PMP Page 28
29 Cost Control Inputs Cost baseline Progress reports Change requests Cost management plan Presenter: Bruce R. Shaw, P.E., PMP Page 29
30 Cost Control Tools & Techniques Cost change control system Progress measurement Earned value management (EVM) Additional planning Computerized tools Presenter: Bruce R. Shaw, P.E., PMP Page 30
31 Outputs Revised cost estimates Budget updates Corrective action Estimate at completion Project closeout Lessons learned Cost Control Presenter: Bruce R. Shaw, P.E., PMP Page 31
32 Cost Control Budgeting Reporting Analysis Deviations Feedback Control Presenter: Bruce R. Shaw, P.E., PMP Page 32
33 Earned Value Management BCWP Budgeted cost of work performed EV Earned Value BCWS Budgeted cost of work scheduled PV Planned Value ACWP Actual cost of work performed AC Actual Cost Presenter: Bruce R. Shaw, P.E., PMP Page 33
34 Project Performance Chart Target Cost Management Reserve Effort BCWS ACWP Budget at Completion (BAC) BCWP Start Time Now Finish Presenter: Bruce R. Shaw, P.E., PMP Page 34
35 Variance Analysis Schedule Variance = BCWP - BCWS Cost Variance = BCWP - ACWP Cost Performance Index (CPI) = BCWP/ACWP Schedule Performance Index (SPI) = BCWP/BCWS Presenter: Bruce R. Shaw, P.E., PMP Page 35
36 Sample Problem If, at Time Now: BAC = $40k BCWP = $20k BCWS = $28k ACWP = $26k Calculate: % of Work Scheduled % of Budgeted Spent % of Work Accomplished Cost Variance Schedule Variance Presenter: Bruce R. Shaw, P.E., PMP Page 36
37 Sample Solution % of Work Scheduled % of Budget Spent % of Work Accomplished Cost Variance Schedule Variance BCWS/BAC = $28k/$40k = 70% ACWP/BAC = $26k/$40k = 65% BCWP/BAC = $20k/$40k = 50% BCWP-ACWP =$20k-$26k=($6k) BCWP-BCWS=$20k-$28k= ($8k) Presenter: Bruce R. Shaw, P.E., PMP Page 37
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