Project Management

C19PT
Lecture 11
Project Evaluation and Control

Session 11
Why do changes occur in projects?
What are the sources of changes?
What is Milestone monitoring
How do we perform Earned Value
Management on a project?

Session 11: Learning Objectives

After completing this session, students will be able
to:
Recognise the source of changes within a project.
Understand the nature of the control cycle and four key
steps in a general project control model.
Understand the benefits of milestone monitoring.
Understand how to use Earned Value Management to
track and evaluate a project.

Project Changes
Projects incur numerous changes
Re-designing; Re-planning; Re-working
Impact on time and costs

Greatest impact at execution stage

Commitment to contractors and suppliers

Must have an efficient change management

process
Authorised and controlled changes

Sources of Change
Scope Changes:
Scope Creep
Additional project elements
Improvements / quality changes
Baseline Changes
Client requests for improvement in schedule or reduction in costs
Risks
Implementation of contingency plans
Failure
Risks that were not identified
Contractor or Supplier failure
Improvements
Project team changes

Change Management Process

1. Identify the proposed change
2. Analyse the effects of changes to the master
schedule and budget
3. Review, evaluate and approve or disapprove
changes formally
4. Negotiate and resolve conflicts of change.
5. Communicate changes to affected parties
6. Assign responsibility for implementing the
change
7. Adjust the master schedule and budget
8. Track all changes that are to be implemented

Project Monitoring & Control

Need to maintain accurate monitoring and
control systems
Monitoring
Comparison of actual costs & schedule with
planned cost & schedule.

Control

Setting control limits

Monitor for deviation outside limits
Take corrective action

Effectiveness of project control systems

Response time
Traceability

The Project Control Cycle

1. Setting a goal
Baseline of Schedule & Cost

4. Taking Action

2. Measuring
Progress
and
performance

3. Comparing Actual
with Planned

Project S-Curve
Tracking schedule & time

Project Base-line

Project S-Curve
Negative variance

Milestone Analysis
Milestones are events or stages of the project that
represent a significant accomplishment
Clear and well defined (Concrete)

Milestones mark progress

Either achieved or not achieved
Have a target completion date
Could have a budgeted cost

Milestone tracking
Simple & effective method

Milestones

Milestone tracking example

Milestone Analysis
Milestone Tracking Chart

35

Cost/1000

30
E

25
20
15

10

10
Week No.

15

20

Earned Value Management (EVM)

Earned Value Management (EVM)
Also called Earned Value Analysis (EVA)
or Earned Value Technique (EVT)

Comparison of the value actual work

completed (earned value) against planned
progress & actual expenditure of each
activity
Enables calculation of estimated project
time and cost

Earned Value Management (EVM)

Cost

Performance

Schedule

Earned Value Variables

Earned Value (EV)
Percentage of the original budget that has been
earned by actual work completed
Budgeted value of work completed to date

Planned Value (PV)

The planned time-phased baseline of the value
of the work schedule
The point of performance measurement

Actual Cost (AC)

Actual costs incurred & recorded
Progress reports

Planned Value (PV)

Activity

Planned
Week

Cum Cost ()
PV

1000

2000

3000

4000

5000

6000

Project Baseline (PV)

Planned Value (PV) and Earned

Value (EV)
Activity

Planned

Percentage
Complete

Week

Cum Cost ()
PV

1000

100

2000

75

3000

66

4000

62

5000

6000

Planned Value (PV) and Earned

Value (EV)
Activity

Planned

Percentage
Complete

Earned Value
()
EV

Week

Cum Cost ()
PV

1000

100

1000

2000

75

1500

3000

66

2000

4000

62

2500

5000

6000

Scheduled Variance (SV)

Schedule variance (SV)

The difference between the work content actually

performed (EV) and the work content scheduled to be
performed (PV).
Monitory units
Difference between EV and PV

SV = EV PV
= 2500 - 4000
= - 1500
At week 4, the project is behind schedule by
1500

Earned Value

SV

Actual Cost (AC)

Activity

Planned
Week

Earned Value
()
Cum Cost ()
EV
PV

Actual Cum
Cost
()
AC

1000

1000

1000

2000

1500

2500

3000

2000

3500

4000

2500

5000

5000

6000

Cost Variance (CV)

Cost variance (CV)
The difference in cost between the work content
actually performed (EV) and the actual cost of the work
scheduled (AC).
Difference between EV & AC

CV = EV AC
= 2500 - 5000
= -2500
Project has a cost overrun of 2500

Cost Variance

A
C
SV

CV

Schedule Performance Index (SPI)

SPI defined as the ratio between EV & PV

SPI =

EV
PV

2500
= 0.625
SPI =
4000

SPI value = 1 indicates activity is on schedule

SPI value >1 indicates activity ahead of schedule
SPI value <1 indicates schedule overrun

Estimate Time to Completion (ETC)

When will the project be complete

Original estimated duration

ETC =
SPI
6 weeks
=
0.625

= 9.6 weeks

Project will be complete 3.6 week behind

schedule

Cost Performance Index (CPI)

CPI defined as the ratio between EV & AC

CPI =

EV
AC

2500
CPI =
= 0.50
5000

CPI value = 1 indicates activity is on budget

CPI value > 1 indicates better than planned
cost performance
CPI value <1 indicates cost overrun

Estimate at Completion (EAC)

Budget at Completion (BAC)
BAC = baseline budget at completion = 6000

Estimate at Completion (EAC)

BAC
6000
EAC =
=
CPI
0.5

= 12000

Variance at Completion (VAC)

Variance at Completion (VAC)
VAC = BAC - EAC
VAC = 6000 - 12000
= -(6000)

Summary
Recognise the source of changes within a
project
Understand the nature of the control cycle and
four key steps in a general project control model.
Understand the benefits of milestone monitoring
Understand how to use Earned Value
Management to track and evaluate a project