Stage III: Execution
Stave IV: Monitoring and
Control
Earned Value Analysis
Burns: Chapter 8: pages 10-13
Burns: Chapter 12: the entire chapter
Recitation
 What
does RAM stand for in the context of HR
Management?
 What was the name of the guy who categorized all
job satisfaction factors into two categories?
 What were those two categories?
The Project Control Process
 Control

The process of comparing actual performance against plan to identify
deviations, evaluate courses of action, and take appropriate corrective action.
 Project
1.
2.
3.
4.
Control Steps
Setting a baseline plan.
Measuring progress and performance.
Comparing plan against actual.
Taking action.
 Tools


Tracking and baseline Gantt charts
Control charts
13–3
What is a baseline?
 It
makes the plan difficult to change
 Its an anchor point for measuring performance
against plan
 Planned
cost
 Planned schedule
 Planned scope
Baseline and Tracking Gantt Charts
13–5
FIGURE 13.1
Project Schedule Control Chart
13–6
FIGURE 13.2
Disparity Among Monitoring Systems
 Time-Phase
Baseline Plan
 Corrects
the failure of most monitoring systems to
connect a project’s actual performance to its schedule
and forecast budget.
 Systems
that measure only cost variances do not identify
resource and project cost problems associated with falling
behind or progressing ahead of schedule.
 Earned

Value Cost/Schedule System
An integrated project management system based on the earned
value concept that uses a time-phased budget baseline to compare
13–7
actual and planned schedule and costs.
Glossary of Terms
EV
Earned value for a task is simply the percent complete times its original budget. Stated differently,
EV is the percent of the original budget that has been earned by actual work completed.
PV
The planned time-phased baseline of the value of the work scheduled. An approved cost estimate
of the resources scheduled in a time-phased cumulative baseline [BCWS—budgeted cost of the
work scheduled].
AC
Actual cost of the work completed. The sum of the costs incurred in accomplishing work.
[ACWP—actual cost of the work performed].
CV
Cost variance is the difference between the earned value and the actual costs for the work
completed to date where CV = EV – AC.
SV
Schedule variance is the difference between the earned value and the baseline line to date where
SV = EV – PV.
BAC
Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts.
EAC
Estimated cost at completion.
ETC
Estimated cost to complete remaining work.
VAC
Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion.
13–8
TABLE 13.1
Developing an Integrated Cost/Schedule System
1.
2.
Define the work using a WBS.
a.
Scope
b.
Work packages
c.
Deliverables
d.
Organization units
e.
Resources
f.
Budgets
Develop work and
resource schedules.
a.
Schedule resources
to activities
b.13–9
Time-phase
network
work packages into a
3.
Develop a time-phased budget using
work packages included in an
activity. Accumulate budgets (PV).
4.
At the work package level, collect
the actual costs for the work
performed (AC). Multiply percent
complete times original budget
(EV).`
5.
Compute the schedule variance
(EV-PV) and the cost variance (EVAC).
Freeze Requirements???
 What
are the PROS?
 What
are the CONS?
Freeze those requirements!!
 Late-project
creeping requirements are the most
common source of cost and schedule overruns
 Late-project creeping requirements are a major factor in
project cancellations
Rather than freezing, use some kind of
change control system
 Allows
for some changes to happen, depending
upon contractual considerations
 Allows for the system to reject some proposed
changes
 Use of a CCB (Change Control Board) is
considered a modern BEST PRACTICE
Forces pushing for late-project
requirements change
Competition intros new version of competitive product
with unanticipated KILLER features
 New work is undiscovered late in the project
 A “Wouldn’t It be Great if…” scenario happens
 End-users want changes because they now know more
about their requirements than they did 18 months ago
 Developers want changes because they have a great
emotional and intellectual investment in all of the
system’s details

Processes utilized in Phase III—the
Execution Process Group
Integration management:
 Monitor and Control Project Work
 Perform Integrated Change Control
 Scope management:
 Control Scope
 Time management:
 Control Schedule
 Cost management:
 Control cost
 Quality management:
 Perform Quality Control

Processes utilized in Phase III, the
Execution Process Group
Communication management:
 Distribute Information
 Report Performance
 Risk management:
 Monitor and Control Risks


Procurement management:
 Administer Procurements
Controlling Changes to the Project
Schedule
 Perform
reality checks on schedules
 Allow for contingencies??
 Don’t plan for everyone to work at 100%
capacity all the time
 Hold progress meetings with stakeholders and
be clear and honest in communicating
schedule issues
A Change Control Process
Execution
 Focus
and leadership are keys to success in
execution
 Poor execution leads to losses in the business
world just as it does in sports
Factors leading to poor Execution
 Multitasking—doing
several things at once
 Procrastination
(student syndrome)—putting things
off until the last minute
 Others
we will discuss later
Multitasking
A finishes
A finishes
B finishes
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
control
value analysis is an important tool for cost
Earned Value Analysis (EVA)
 EVA
is a project 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 with EVA
 You must enter actual information periodically
to use EVA. Figure 6-1 shows a sample form
for collecting information
Figure 6-1. Cost Control Input Form for
Business Systems Replacement Project
Design Interface Process Customer Information
Description:
WBS#: 6.8.1.2
Assignments
SMC
Role:
PA
Availability:
Involved:
Role:
Availability:
Involved:
Role:
Availability:
Involved:
Role:
Availability:
6
Optimistic:
Effort (in hours)
Most Likely:
20
30
Pessimistic:
40
Develop an operational process design for the Customer Information
interface from the Invoicing System to Oracle Receivables. This task will
accept as input the business/functional requirements developed during the
tactical analysis phase and produce as output a physical operational design,
which provides the specifications, required for code development.
Process Design Document - Technical
- Operation/Physical DFD
- Process Specifications
- Interface Data Map
Calculated
Plan
Effort:
Plan
Duration
:
30
5
Hrs
Days
Delay (Days):
Description
Results / Deliverables
Revision Date:
Forecast
Hours per day
Responsible:
Revision:
Assumptions
- All business rules and issues will be resolved prior to this task.
- The ERD & data model for Oracle Receivables & any Oracle
extension required will be completed and available prior to this task.
- The ERD for the Invoicing System will be completed and available
prior to this task.
- Few iterations of the review/modify cycle will be required.
- Primarily a documentation task.
Dependencies
Predecessors (WBS#):
4.7
Successors (WBS#):
Earned Value analysis--EVA
 Earned
Value = EV = Budgeted Cost of Work
Performed (BCWP)
 Planned Value = PV = Budgeted Cost of Work
Scheduled (BCWS), and
 Actual Cost = AC = Actual Cost of Work
Performed (ACWP)
 When you complete an activity, you earn the
budgeted value of that activity
Earned Value Analysis Terms
Budgeted cost of work performed (BCWP), also
called Earned Value, EV, is the percentage of work
actually completed multiplied by the budget for the
activity
 Budgeted cost of work scheduled (BCWS), also called
Planned Value, PV, is that portion of the approved
total cost estimate planned to be spent on an activity
during a given period
 Actual cost of work performed (ACWP), also called
Actual Cost, AC, are the total direct and indirect
costs incurred in accomplishing work on an activity
during a given period

Schedule Variance (SV)
 Defined
as the difference between the budgeted
cost of work performed and the budgeted cost of
work scheduled
 = BCWP – BCWS = EV - PV
 Indicates the deviation between the work content
performed and the work content scheduled for the
control period
Cost Variance (CV)
 Defined
as the difference between the budgeted
cost of work performed and the actual cost of work
performed
 = BCWP – ACWP = EV - AC
 A positive CV indicates a lower actual cost than
budgeted for the control period, while a negative
CV indicates a cost overrun
Schedule Performance Index (SPI)
 Defined
as the ratio BCWP/BCWS = EV/PV
 A value close to 1 indicates an activity that is on
schedule
 Values greater than 1 suggest the activity is
ahead of schedule
 Values less than 1 indicate a schedule overrun
Cost Performance Index (CPI)
 Defined
as the ratio BCWP/ACWP = EV/AC
 A value close to 1 indicates an activity that is on
budget
 Values greater than 1 suggest the activity is
below budget
 Values less than 1 indicate a budget overrun
Table 6-7. Earned Value Formulas
Term
Earned Value
Cost Variance
Schedule Variance
Cost Performance Index
Schedule Performance Index
Formula
Budgeted Cost of Work Performed (BCWP) =
budgeted cost of task X % complete
CV=BCWP-ACWP = EV - AC (actual cost of work
performed)
SV=BCWP-BCWS = EV - PV(budgeted cost of
work scheduled)
CPI=BCWP/ACWP = EV/AC
SPI = BCWP/BCWS = EV/PV
Rules of Thumb for EVA Numbers
 Negative
numbers for cost and schedule
variance indicate problems in those areas. The
project is costing more than planned or taking
longer than planned
 CPI and SPI less than 100% indicate problems
Figure 6-2. Earned Value Calculations for a
One-Year Project After Five Months
In the Figure above
Budget at Completion = BAC = original budget at the
planned completion date
 Time at Completion = TAC = original completion time
 In the figure above, $100,000 in month 12
 Estimate at completion = EAC = BAC/CPI
 Estimate at completion = $100,000/.83 = $120,455
 Estimated time to complete = ETAC = TAC/SPI
 Estimated time to complete = 12/.96 = 12.55 mos.

Why Earned Value Analysis??
 You
can’t tell what your true cost variance is
because you don’t know where you are relative to
schedule
 Suppose
you are behind schedule but also you have
spent less than what the schedule has called for. Are
you really under budget?
Updating cost estimates
 BAC
= Budget at completion = total budget of the
project activities based on the original project plan
 Assuming the original budget (the BAC) was
$200,000 and the CPI is 1.12, what is EAC?
 EAC = BAC / CPI = $200,000 / 1.12
 $178,571
Updating schedule estimates
 TAC
= Time at completion = total time required to
complete the schedule, as determined by the CP
 ETAC = Estimated (revised) time to complete
 Assuming the TAC was 12 months and the SPI =
.77, what is the ETAC?
 ETAC = TAC / SPI = 12 / .77
 15.6 months
 Project will be delayed almost 4 months
Updating, Cont’d
 WR
= Work Remaining = budgeted cost of the
work not yet accomplished by the end of the
reporting period
 WR = BAC - BCWP
 EAC = updated estimate of the total project cost =
BAC/CPI = BAC/CI
 ETAC = updated estimate of the total project
duration = TAC/SPI = TAC/SI
Figure 6-3. Earned Value Chart for
Project After Five Months
BAC
100,000
90,000
80,000
70,000
BCWS
60,000
$
EAC
50,000
ACWP
40,000
30,000
BWCP
20,000
10,000
1
2
3
4
5
6
7
8
9
10
Month
BCWS or Cumulative Plan
ACWP or Cumulative Actual
BCWP or Cumulative EV
11
12
Cost/Schedule Graph
13–40
FIGURE 13.4
Earned-Value Review Exercise
13–41
FIGURE 13.5
Using Software to Assist in Cost
Management
 Spreadsheets
are a common tool for resource
planning, cost estimating, cost budgeting, and cost
control
 Many companies use more sophisticated and
centralized financial applications software for cost
information
 Project management software has many costrelated features
Using MS Project for Execution &
Control
 First,
make certain your project plan is complete
and final
 Second, save it as a baseline
 Begin entering actual information
 Actual
costs
 Percentage complete
Tracking: MS Project will track—
 Task
start dates
 Task finish dates
 Task duration
 Task cost work
 Percentage of task that is complete
Getting Earned Value Data Visible
 You
can go to view and replace the entry table
with the Earned Value table
 Or, you can enter the earned value columns into
your existing table through the Insert Column
facility.
 The
columns are BCWP, BCWS, ACWP, CV, SC, SPI,
CPI, etc.
You can also request the Tracking Gantt Chart off the
LHS side of MS Project
Entering actual start & Finish dates for
a task
 On
the view bar, click Gantt chart
 In the task name field select the task to update
 On the Tools menu, point to tracking and click
Update Tasks
 Under Actual, type the dates in the Start and
Finish boxes
Indicating progress on a task as a
percentage
 In
the task name field of the Gantt Chart
 Double click—this brings up the task information
sheet
 Select the general tab
 In the percentage complete box type a whole
number between 0 and 100
Entering actual costs for a resource
assignment
On the Tools menu, click options, then click the
calculation tab
 Clear the Actual costs are always calculated by MS
Project check box
 Click OK
 On the view bar, click Task usage
 On the view menu, point to the Table, and click Tracking
 Drag the divider bar to the right to view the Activity Cost
field
 In the activity cost field, type the actual cost for the
assignment for which you want to update costs

The End…..
Earned Value analysis--EV
Budgeted Cost of Work
Performed (BCWP)
 Also uses Budgeted Cost of Work
Scheduled (BCWS), and
 Actual Cost of Work Performed
(ACWP)
 When you complete a milestone,
you earn the budgeted value of that
milestone
An Example
=
Budget
Overrun???
Actual
Budget
TIME
James R. Burns, Texas Tech Univeresity
James R. Burns, Texas Tech Univeresity
Budgeted Cost of Work
Performed (BCWP)
Cost Variance (CV)
 Defined
 Defined
as the monetary value of
the work actually accomplished
within the control period.
ACTIVITY
1
2
3
CUMULATIVE
James R. Burns, Texas Tech Univeresity
BCWP
$12,000
$30,000
$16,000
$58,.000
as the difference between
the budgeted cost of work
performed and the actual cost of
work performed
 = BCWP - ACWP
 A positive CV indicates a lower
actual cost than budgeted for the
control period, while a negative CV
indicates a cost overrun
James R. Burns, Texas Tech Univeresity
Recitation
 What
are two of the four Myers/Briggs
dimensions?
 What are the other two?
 To what Myers/Briggs category do most IT
professionals belong?
 Who is the motivation guru?
 What are his five levels?
 Who gave us Theory X and Theory Y??