Chat with us, powered by LiveChat With the communication issues stabilized, the focus turns to project performance measurement and closure. Chapter 13 presents a discussion on metrics used to assess project performa - Wridemy Bestessaypapers

With the communication issues stabilized, the focus turns to project performance measurement and closure. Chapter 13 presents a discussion on metrics used to assess project performa

With the communication issues stabilized, the focus turns to project performance measurement and closure. Chapter 13 presents a discussion on metrics used to assess project performance. Three commonly used metrics are schedule variance (SV), cost variance (CV), and cost performance index (CPI). The sponsor is not familiar with how these metrics work and has asked for a demonstration of how they are used. The sponsor has presented a scenario and is requesting you to conduct a demonstration using fictitious data to access the results given the following situation.

Instructions

On day 51, a project has an earned value of $600, an actual cost of $650, and a planned cost of $540. Compute the SV, CV, and CPI for the project. Present your results and explain them.

Next, the project sponsor wants to be assured that the project will be closed in accordance with best practices. Research what the Project Management Body of Knowledge (PMBOK) says about closing projects and briefly discuss.

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

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Chapter Thirteen

Progress and Performance Measurement and Evaluation

© 2021 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom.

No reproduction or further distribution permitted without the prior written consent of McGraw Hill.

Because learning changes everything.®

Where We Are Now

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Learning Objectives

13-1 Identify the four steps for controlling a project.

13-2 Utilize a tracking Gantt to monitor time performance.

13-3 Understand and appreciate the significance of earned value management.

13-4 Calculate and interpret cost and schedule variance.

13-5 Calculate and interpret performance and percent indexes.

13-6 Forecast final project cost.

13-7 Identify and manage scope creep.

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Chapter Outline

13.1 Structure of a Project Monitoring Information System

13.2 The Project Control Process

13.3 Monitoring Time Performance

13.4 Earned Value Management (EVM)

13.5 Developing a Status Report: A Hypothetical Example

13.6 Indexes to Monitor Progress

13.7 Forecasting Final Project Cost

13.8 Other Control Issues

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13.1 Structure of a Project Monitoring Information System

A project monitoring system involves

Determining what data to collect

Determining how, when, and who will collect the data

Analysis of the data

Reporting current progress

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What Data Are Collected?

The data need to answer questions such as

What is the current status of the project in terms of schedule and cost?

How much will it cost to complete the project?

When will the project be completed?

Are there potential problems that need to be addressed now?

What, who, and where are the causes for cost or schedule overruns?

If there is a cost overrun midway in the project, can we forecast the overrun at completion?

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Collecting Data and Analysis

Will the data be collected by the project team, contractor, independent cost engineers, project manager?

Will the data be derived electronically from some form of surrogate data?

Should the reporting period be one hour, one day, one week, or what?

Is there a central repository for the data collected and is someone responsible for its dissemination?

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Reports and Reporting

Who gets the progress reports?

How will the reports be transmitted?

When will the reports be distributed?

A common topic format for progress reports

Progress since last report

Current status of project: 1) schedule, 2) cost, 3) scope

Cumulative trends

Problems and issues since last report:

Actions and resolutions of earlier problems

New variances and problems identified

Corrective action planned

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13.2 The Project Control Process

Control

Is the process of comparing actual performance against plan to identify deviations, evaluate possible alternative courses of actions, and take appropriate corrective action.

Project control steps for measuring and evaluating project performance

Setting a baseline plan

Measuring progress and performance

Comparing plan against actual

Taking action

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13.3 Monitoring Time Performance

Typical tools used for communicating project schedule status

Gantt chart (bar chart) is the most favored, used, and understandable. It is commonly referred to as a tracking Gantt chart.

Control chart is used to plot the difference between the scheduled and actual times on the critical path at a given point on the project.

Milestone schedules are often used to keep more distal stakeholders informed on the progress of a project.

Milestones are significant project events that mark major accomplishments.

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Baseline and Tracking Gantt Charts

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Project Schedule Control Chart

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13.4 Earned Value Management (EVM)

Earned Value Management

Is a methodology that combines scope, schedule, and resource measurement to assess project performance and progress.

Was pioneered by the U.S. Department of Defense (DoD) in the 1960s.

Uses several acronyms and equations for analysis.

Uses data developed from the work breakdown structure, project network, and schedule.

Starts with the time-phased costs that provide the project budget baseline, which is called the planned budgeted value of the work scheduled (PV). Then comparisons can be made with actual and planned schedule and costs.

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Glossary of Terms

EV Earned value for a task is the budgeted value of the work accomplished. Work accomplished is often measured in terms of percentages (for example, 25% complete) in which case, EV is simply percent complete times its original budget. [The older acronym for this value was BCWP— budgeted cost of the work performed.]
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. The 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 underrun cost at completion.

TABLE 13.1

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Developing an Integrated Cost/Schedule System

Define the work using a WBS.

Scope

Work package

Deliverables

Organization units

Resources

Budgets for each work package

Develop work and resource schedule.

Schedule resources to activities

Time-phase work packages into a network

Develop a time-phased budget using work packages included in an activity called the planned budgeted cost of the work scheduled (PV).

At the work package level, collect the actual costs for the work performed called the actual cost of the work completed (AC). Multiple percent complete with the original budget amount to be earned value (EV).

Compute the schedule variance (SV = EV − PV) and cost variance (CV = EV − AC).

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Project Management Information System Overview

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Development of Project Baseline

Purposes of a Baseline (PV)

To measure and report progress

To estimate cash flow

Rules in Assigning Costs to the Baseline

Costs are placed (time-phased) in the baseline exactly as managers expected them to be “earned.”

Percent complete is the workhorse most commonly used. Someone familiar with each task estimates what percent of the task has been completed or how much of the task remains.

What Costs Are Included in Baselines?

Baseline is the sum of the cost accounts and each cost account is the sum of the work packages in the cost account.

Three direct costs are typically included in baselines—labor, equipment, and materials.

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Methods of Variance Analysis

Comparing earned value with

The expected schedule value

The actual costs

Assessing current status of a project requires three data elements

Planned cost of the work scheduled (PV)

Budgeted cost of the work completed (EV)

Actual cost of the work completed (AC)

Computing schedule variance (SV) and cost variance (CV)

A positive variance indicates a desirable condition, while a negative variance suggests problems or changes that have taken place.

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Variances

Cost variance (CV) = EV − AC

Tells us if the work accomplished costs more or less than was planned at any point over the life of the project.

Schedule variance (SV) = EV − PV

Presents an overall assessment of all work packages in the project scheduled to date.

Contains no critical path information.

Measures progress in dollars rather than time units.

Variance at completion (VAC) = BAC − EAC

Suggests whether the costs at completion of the project will differ from what was planned.

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Cost/Schedule Graph

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Earned Value Review Exercise

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13.5 Developing a Status Report: A Hypothetical Example

Assumptions

Each cost account has only one work package, and each cost account will be represented as an activity on the network.

The project network early start times will serve as the basis for assigning the baseline values.

From the moment work on an activity task begins, some actual costs will be incurred each period until the activity is completed.

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Work Breakdown Structure with Cost Accounts

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Digital Camera Prototype Project Baseline Gantt Chart

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Digital Camera Prototype Project Baseline Budget ($000)

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Digital Camera Prototype Status Reports: Periods 1–3

Cost Variance CV = EV − AC
Schedule Variance SV = EV − PV
Status Report: Ending Period 1
Task %Complete EV AC PV CV SV
A 50% 10 10 10 0 0
Cumulative Totals 10 10 10 0 0
Status Report: Ending Period 2
Task %Complete EV AC PV CV SV
A Finished 20 30 20 −10 0
Cumulative Totals 20 30 20 −10 0
Status Report: Ending Period 3
Task %Complete EV AC PV CV SV
A Finished 20 30 20 −10 0
B 33% 5 10 5 −5 0
C 20% 20 30 20 −10 0
D 60% 21 20 15 +1 +6
Cumulative Totals 66 90 60 −24 +6

TABLE 13.2

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Digital Camera Prototype Status Reports: Periods 4–5

Status Report: Ending Period 4
Task %Complete EV AC PV CV SV
A Finished 20 30 20 −10 0
B Finished 15 20 15 −5 0
C 50% 50 70 50 −20 0
D 80% 28 30 25 −2 +3
Cumulative Totals 113 150 110 −37 +3
Status Report: Ending Period 5
Task %Complete EV AC PV CV SV
A Finished 20 30 20 −10 0
B Finished 15 20 15 −5 0
C 60% 60 100 80 −40 −20
D 80% 28 50 35 −22 −7
Cumulative Totals 123 200 150 −77 −27

TABLE 13.2 (Continued)

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Digital Camera Prototype Status Reports: Periods 6–7

Status Report: Ending Period 6
Task %Complete EV AC PV CV SV
A Finished 20 30 20 −10 0
B Finished 15 20 15 −5 0
C 80% 80 110 100 −30 −20
D Finished 35 60 35 −25 0
Cumulative Totals 150 220 170 −70 −20
Status Report: Ending Period 7
Task %Complete EV AC PV CV SV
A Finished 20 30 20 −10 0
B Finished 15 20 15 −5 0
C 90% 90 120 100 −30 −10
D Finished 35 60 35 −25 0
E 0% 0 0 30 0 −30
F 0% 0 0 0 0 0
Cumulative Totals 160 230 200 −70 −40

TABLE 13.2 (Continued)

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Digital Camera Prototype Summary Graph ($000)

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Digital Camera Project-Tracking Gantt Chart Showing Status—through Period 7

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Project Rollup End Period 7 ($000)

FIGURE 13.11

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