Lecture 7- Cost and Schedule Control(2)

7/25/2019 Lecture 7- Cost and Schedule Control(2)

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Control Cost and ScheduleControl Cost and Schedule

Dr Anisur Rahman

G09 1.19

[email protected]
mailto:[email protected]:[email protected]


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IntroductionIntroduction

70%of projects are:

Over budget

Behind schedule

52%of all projects finish at18%of their initial budget

!nd so"e# after hugeinvest"ents of ti"e and"one$# are si"pl$ neverco"pleted

ource: &he tandish 'rou


3/43

Why this Situation?Why this Situation?

Poor control

(u"erous co"ple) *and interrelated+projects

,rojects -ith "an$ .B activities

/iverse technolog$ platfor"s

,roject can not be controlled unless so"e

valuationare done ti"e to ti"e(eed accurate and consistent infor"ation

to "onitor and control ti"e and costperfor"ance


4/43

ontrontrolling uantitative ele"ents ofolling uantitative ele"ents of

project: controlling &i"e and costproject: controlling &i"e and cost

3arned3arned4alue4alue!nal$sis 6ost -idel$ usedtechniue to "onitor and control a project

t co"pares the ,!((3/ a"ount of -or9 -ith-hat has actuall$ been O6,3&3/# todeter"ine -hether COST# SCHEDULE, andWORK ACCOMPLISHEDare progressing asplanned

34! allo-s the ,6 to identif$ the trouble spotand helps in ta9ing corrective actions

34! is usuall$ applied to "easure uantitativeele"ents to trac9 cost and schedule ele"entsnot good for the ualitative perfor"ance target


5/43

,roject: ueensland health a-arded the design projectof a ne- 200 bed "odern hospital in oolongatta to !B/esign and !rchitecture o &he design project involves

&hree "ajor tas9s: &as9 !: ite preparation and la$out design: duration ;

-9s# ;0hr100


6/43

How EVA WorksHow EVA Works

et us consider the bar chart the project thatconsists of the tas9s !# B# and

&he budgeted cost of -or9 schedule *B.+ curve baseline plan

for the project planned e)penditure of efforts on the project;5

Weeks

1 2 3 4 5 6 7

TaskA 3000 3000 3000

TaskB 360003600

0 36000 36000 36000

TaskC 4000 4000 4000 4000 4000 4000

Wkly

Value 3000 39000

4300

0 40000 40000 40000 4000 4000

CummVal 8000 47000

90000

130000

170000

210000

214000

214000


7/43

In Real Life (Actual Situation)In Real Life (Actual Situation)

&he B. curve "a$ shift up and do-ndue to

/eviation of abour


8/43

Whats More I!ortant?Whats More I!ortant?

"nowin# where you"nowin# where you

are on sche$uleare on sche$ule

"nowin# where"nowin# where

you are on %u$#etyou are on %u$#et"nowin# where you are on"nowin# where you are on

work acco!lishe$work acco!lishe$


9/43

So What Is to %e Monitore$So What Is to %e Monitore$

!s for cost and schedule objectives# 6onitor:

Sche$ule &arianceSche$ule &ariance' ifference%etween the tiin# of worksche$ule$ to %e $one an$ work

actually $one

*ost &ariance*ost &ariance' ifference

%etween the %u$#ete$ cost of

work $one an$ the actual cost ofwork $one


10/43

6easuring ost and chedule 4ariances6easuring ost and chedule 4ariances

&hree variable to be used in "easuringcost and schedule variances

Budgeted ost of .or9 cheduled *B.+

Budgeted ost of .or9 ,erfor"ed *B.,+

!ctual ost of .or9 ,erfor"ed *!.,+

Sche$ule Variance + ,*W- . ,*WSSche$ule Variance + ,*W- . ,*WS

*ost Variance + ,*W- / A*W-*ost Variance + ,*W- / A*W-


11/43

Budgeted ost of .or9 cheduled *Budgeted ost of .or9 cheduled *B.B.++

@ses the -or9 planned to have been done and

the budget for each tas9# to calculate theportion of the budgetplanned to have beenued


12/43

Budgeted ost of .or9 ,erfor"ed *B.,+:Budgeted ost of .or9 ,erfor"ed *B.,+:

@ses the a"ount of -or9 done and thebudget for each tas9# to indicate -hatportion of the bud!et hould have beenpentin doing the -or9


13/43

A*W-A*W-

!ctual ost of .or9 ,erfor"ed

*!.,+: &he actual cost of -or9done

Cot in"u##ed to a""o$plih the %o#&

that ha been done to date'


14/43

Earne$ ValueEarne$ ValueAnalysisAnalysis

(EVA)(EVA)

Actual cost of wok!efome" #ACW$%

Bu"&ete" cost of wok!efome" #BCW$%

Bu"&ete" cost of woksc'e"ule" #BCW(%

T'e W'ole (toyT'e W'ole (toy


15/43

Re0uireents of Earne$ Value AnalysisRe0uireents of Earne$ Value Analysis

,roper .B /esign

Baseline Budget ontrol !ccounts

Baseline chedule

.or9 "easure"ent b$ ontrol !ccount

-or9hours# dollars# units# etc

'ood ,roject 6anage"ent ,ractices


16/43

*ase Stu$y

!ctual ost of .or9 ,erfor"ed *!.,+ u"ulative pending *000As+

,ac9ages .ee9 (u"ber

0 1 2 ; 5 ? 7 8

! 0 1 ; ; 0

B 0 2 5 5 1 50

0 2 5 5 1? 50

/ 0 ; 12 12 20 ?0

Budgeted ost of .or9 cheduled *B.+ u"ulative pending *000As+


0 1 2 ; 5 ? 7 8 ! 0 ; 7 1; 28 50 7; 8 1

B 0 ; 7 1; 28 50 7; 8 1

0 ; 7 1; 28 50 7; 8 1

/ 0 ; 7 1; 28 50 7; 8 1

Budgeted ost of .or9 ,erfor"ed *B.,+ u"ulative pending *000As+


0 1 2 ; 5 ? 7 8

! 0 1 ; 20 0B 0 2 5 5 2; 0

0 2 22 ?0

/ 0 ; 10 10 ; ?0


17/43

1 raw cost cur&es for all the -ro2ects? Inclu$e ,*WS3,*W- an$ A*W- $etails an$ fully la%el the cur&es?

4 What are the Sche$ule Variance (SV) an$ *ost

Variance (*V) for the four !ro2ects at week 5? escri%e

the status of each of the four !ro2ects A3 ,3 *3 an$ $etaile$ a%o&e?

6 In $etail3 $escri%e what ay ha&e cause$ each of these

situations in the four work !acka#es? E7!lore

a$&anta#es an$ $isa$&anta#es of each situation an$

outline soe $ee!er ana#eent consi$erations that

ay ha&e contri%ute$


18/43

-acka#eA' 8he Situation HereA' 8he Situation Here.ee9s

0 1 2 ; 5 ? 7 8

B. 0 ; 7 1; 28 50 7; 8 1

B., 0 1 ; 20 0

!., 0 1 ; ; 0

SVSV+

,*W- / ,*WS

+ 9: / 5:

+ /1:k

*V +

,*W- / A*W-

+9:/9:

+:

,ehin$ the Sche$ule an$,ehin$ the Sche$ule an$S!en$in# *orrectlyS!en$in# *orrectly


19/43

,ehin$ Sche$ule3 S!en$in# *orrectly,ehin$ Sche$ule3 S!en$in# *orrectly

Both B., and !., are 09

Behind schedule and correctl$ spent

.hat does this "ean for the ,6CDesourcesC ongter" proble"sC

,erhaps a lac9 of labour resources to sta$

on schedule

(eed to catch up lost schedule perhapsusing labour at a pre"iu" rate


20/43

-acka#e ,' EVA A!!lication' EVA A!!lication.ee9s

0 1 2 ; 5 ? 7 8

B. 0 ; 7 1; 28 50 7; 8 1

B., 0 2 5 5 2; 0

!., 0 2 5 5 1 50

SVSV+

,*W- / ,*WS

+ 9: / 5:

+ /1:k

*V +

,*W- / A*W-

+9:/5:

+ /1:

,ehin$ the Sche$ule an$,ehin$ the Sche$ule an$;&er S!ent;&er S!ent


21/43

,ehin$ Sche$ule3 ;&ers!ent,ehin$ Sche$ule3 ;&ers!ent

!t certain date *.9 5+: should be 509*B.+

B., E 09

!., E 509F

,lan called for 509 of -or9 to be co"pleted,lan called for 509 of -or9 to be co"pletedbut onl$ 09 done behind schedulebut onl$ 09 done behind schedule

,roject has spent 509 to acco"plish 09,roject has spent 509 to acco"plish 09

-orth of -or9 109 overspent-orth of -or9 109 overspent


22/43

What 0uestions nee$ to %e aske$?What 0uestions nee$ to %e aske$?

What will you $o to correct this?What will you $o to correct this?< s the actual scope of -or9 co"pleted represented

b$ the B.,C

< .hat is the ualit$ of the -or9 perfor"edC6ust ensure that scope and ualit$ are -here the$

are "eant to bebefore performing EVA

< .h$ overspent and behind ti"eC Opti"istic

esti"atesC ,eople -or9ing hard but not solving theproble"C .or9 is "ore difficult than e)pectedC

< .hat can $ou do as a project "anager tooverco"e thisC


23/43

-acka#e*' Situation Here?*' Situation Here?.ee9s

0 1 2 ; 5 ? 7 8

B. 0 ; 7 1; 28 50 7; 8 1

B., 0 2 22 ?0

!., 0 2 5 5 1? 50

SVSV+

,*W- / ,*WS

+ =: / 5:

+ 1:k

CVCV+

,*W- / A*W-

+=:/5:

+ 1:

Ahea$ of Sche$ule an$Ahea$ of Sche$ule an$>n$ers!ent>n$ers!ent


24/43

Ahea$ of Sche$ule3 >n$ers!entAhea$ of Sche$ule3 >n$ers!ent

!head of schedule# underspent

!cco"plished -or9 E ?09 but actual cost of -or9 is 09

4er$ rare case &hree possibilities to e)plain:

1 !ctual labour rates -ere considerabl$ lo-er than e)pected andbetter efficienc$ "ost unli9el$F

2 ! tas9 -as easier than e)pected the project tea" had a Gluc9$brea9H happens occasionall$F

; &he ,6 padded ever$thing in the esti"ate# pla$ing it safe "ostli9el$ e)planation


25/43

-acka#es ' 8he Situation Here' 8he Situation Here.ee9s

0 1 2 ; 5 ? 7 8

B. 0 ; 7 1; 28 50 7; 8 1B., 0 ; 10 10 ; ?0

!., 0 ; 12 12 20 ?0

SVSV+

,*W- / ,*WS

+ =: / 5:

+ 1:k

CVCV+

,*W- / A*W-

+=:/=:

+ :

Ahea$ of Sche$ule an$Ahea$ of Sche$ule an$S!en$in# *orrectlyS!en$in# *orrectly


26/43

Ahea$ of Sche$ule3 S!en$in# *orrectlyAhea$ of Sche$ule3 S!en$in# *orrectly

B., and !., both at ?09

pent ?09 but acco"plished ?09 of -or9

,lan called for 509 of -or9: status is aheadof schedule

!head of schedule but spending correctl$for a"ount of -or9 done

.hat is the situation hereC


27/43

8he Situation Here?8he Situation Here?

s there a proble" -ith this situationC

6ore resources applied than planned but

resources are not overspent

.here did the ,6 get e)tra resources for freeC@sing shared resourcesC

,erhaps ahead of schedule at others e)pense

ontingencies "a$ not have happened

.hat could be a disadvantage of being aheadC


28/43

What is Reasona%le?What is Reasona%le?.e can not e)pect Iero variance

Jard to sa$onstruction projects can be held to

s"all tolerances K ;%

Desearch and develop"ent projectsare li9el$ to run higher tolerances K20%


29/43

Refinin# the AnalysisRefinin# the Analysis

,roble"sC

t is an aggregate figure and -ould not per"it

deter"ination of -hat area of the project aproble" e)ists in and "a$ even hide aproble" co"pletel$

(eeds tas9 b$ tas9 variance anal$sis

&his is usuall$ done at the -or9 pac9age levelbut can be at an$ level of the .B at -hich one-ishes to trac9 the project


30/43

Refinin# the AnalysisRefinin# the AnalysisB$ su""ing the individual .or9 pac9age figures# the

aggregate figure can be developed to gauge the projecthealth# -hile line b$ line accounting can be used to spot

specific proble" areasDeal life situation:

&he co"pan$ had been using aggregate anal$sis

/iscovered >100#000 overspend in one area and >100#000underspend in another area

oo9s good but huge variances indicate lac9 of control andshould be addressed


31/43

Inte#ratin# *ostSche$ule Re!ortin# SysteInte#ratin# *ostSche$ule Re!ortin# Syste

15 May/1=


32/43

8he *ritical Ratios8he *ritical Ratios

&-o ratios that indicate ho- -ell a project is going on *6eredith and6antel# 15+:

ost perfor"ance inde) *,+

,L1 "eans project is over budget

chedule perfor"ance inde) *,+

,L1 "eans project is behind schedule

ritical Datio *D+ or ost chedule nde) *+

ACWP

BCWPCPI =

BCWS

BCWPSPI =

ACWP

BCWP

BCWS

BCWPCR =


33/43

$efoma)ce *et+cs

,st+mate t'e C+t+calat+o

55000

000

5?000

0

20000

0000

?0000

80000

100000

120000

Man50;

Neb50;

6ar50;

!pr50;

6a$50;

Mun50;

Mul50;

!ug50;

%ep50;

Oct50;

(ov50;

/ec50;

B.%

B.,

!.,


34/43

E iE i


35/43

E7erciseE7ercise

! si"ple construction project consists of tas9s as

follo-s,lanned:

&as9 ! >0 per hour# 0 hrs0 per hour# ?0 hrs0 per hour# 0 hrs0 per hour# 0 hrs2 per hour# 0 hrs0 per hour# 80 hrs?0 per hour# ?0 hrs0 per hour# ;0 hrs


36/43

-se ,VA

to *o)+toVa+a.les

1;


37/43

$efoma)ce *et+cs

($/ BCW$BCW(

4900055000 0891

C$/ BCW$ACW$

4900056000 0875

C #C(/% ($/ C$/

891 875 0780

&he further D is fro" 10#

55000

000

5?000

0

20000

0000

?0000

80000

100000

120000

Man50;

Neb50;

6ar50;

!pr50;

6a$50;

Mun50;

Mul50;

!ug50;

%ep50;

Oct50;

(ov50;

/ec50;

B.%

B.,

!.,


38/43

Weeks

Act++ty 1 2 3 4 5 6 7 8 9 10

A 1600 1600 1600

1371429

1371429

1371429

6857143

1680 1680 1680 840

B 2400 2400 2400

1200 2400 2400 1200

1600 3200 3200 1600

C 1600 1600 1600 1600 1600

1000 2000 2000 2000 1000

1800 3600 3600 3600 1800

1600 1600640 1280 1280

600 1200 1200

BCW( 1600 1600 1600 4000 4000 4000 1600 1600 1600 1600

1600 3200 4800 8800 12800 16800 18400 20000 21600 23200

BCW$ 13714 13714 13714288571

4 4400 4400 3200 1640 1280 1280

13714 27428 41142 6999914 1139991 1579991 1899991 2063991 2191991 2319991


39/43


40/43

Weeks

1 2 3 4 5 6 7

TaskA 4500 4500 4500

TaskB3600

03600

03600

03600

03600

0

TaskC 4000 4000 4000 4000 4000 4000

WklyValue 4500

40500

44500

40000

40000

40000 4000 4000

CummVal 4500

45000

89500

129500

169500

209500

213500

217500

Weeks


41/43

1 2 3 4 5 6 7

TaskA 4500 4500 4500

TaskB 360003600

0 36000 36000

TaskC 4000 4000 4000 4000 4000 4000

WklyValue 4500 40500

44500 40000 40000 4000 4000

CummVal 8000 48500

93000

133000

173000

177000

181000

181000


42/43

Weeks

1 2 3 4 5 6 7 8

TaskA 4500 4500 4500

TaskB 360003600

0 36000 36000 36000

TaskC 4000 4000 4000 4000 4000 4000

Task 6000 6000

WklyValue 4500 40500

50500 46000 40000 40000 4000 4000

CummVal 4500 45000

95500

141500

181500

221500

225500

229500


43/43

@our -hases of a *onstruction@our -hases of a *onstruction

-ro2ect-ro2ect

nitialisation

/esignand

,lanning

onstruction&er"ination

-ro2ect control

Documents

Lecture 7- Cost and Schedule Control(2)