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1、PMP Preparation Training,Cost Management,Chapter7,Project Cost Management,Resource PlanningCost EstimatingCost BudgetingCost Control,Processes required to ensure the project is completed within the approved budget,Cost Management,7.1ResourcePlanning,Planning,7.3Cost Budgeting,7.4CostControl,Controll
2、ing,7.2Cost Estimating,Resource Planning,Determining physical resources needed(i.e.,material,equipment,and people)and number of resources required to perform the project activities,Resource Planning,Inputs Scope statementWBSResource pool descriptionOrganizational policiesHistorical information,Tools
3、&TechniquesExpert judgmentAlternatives identification,OutputsResource requirements,Inputs,Work breakdown structure(WBS)Identifies the project elements that require resources Historical information Used to identify the types of resources that were required for similar work on previous projects Scope
4、statement Contains project justification and the project objectives,which need to be consideredResource pool description Description of resources available,if necessary,to work on a projectOrganizational policies Of the performing organization,regarding staffing and the rental and purchase of suppli
5、es and equipment,Resource Planning,Tools&Techniques,Expert judgment Expertise,provided by any group or individual,used to assess the inputs to this processOther units within organizationConsultantsProfessional and technical associationsIndustry groupsAlternatives identification,Resource Planning,Out
6、puts,Resource requirements Description of the types(e.g.,skill levels)and numbers of resources required by each element of the WBS,Resource Planning,Cost Estimating,Difference between cost estimating and pricing:Cost estimating:Assessing how much it will cost the organization to provide the product
7、or servicePricing:Assessing how much the organization will charge for the product or serviceCost estimating also includes identifying and considering cost alternatives,Process of developing an approximation(or estimate)for the cost of the resources necessary to complete the project activities,Cost E
8、stimating,Inputs WBSResource requirementsResource ratesActivity duration estimatesHistorical informationChart of accounts,Tools&TechniquesAnalogous estimatingParametric modelingBottom-up estimatingComputerized tools,OutputsCost estimatesSupporting detailCost management plan,Inputs,WBS Used to organi
9、ze the cost estimates and to ensure that the cost of all identified work has been estimatedResource requirements Resource rates Unit rates for each resource Activity duration estimates Affects cost estimates if project budget includes an allowance for the cost of financing(i.e.,interest)Chart of acc
10、ounts Coding structure used by the organization to report financial information.Cost estimates must be assigned to the correct accounting category.,Cost Estimating,Inputs(cont.),Historical information Information on the cost of resourcesProject files Records of previous project results that are deta
11、iled enough to aid in developing cost estimatesCommercial cost-estimating databases Historical information available commerciallyProject team knowledge,Cost Estimating,Tools&Techniques,Analogous estimating(Expert judgment)Used to estimate total project costs if there is a limited amount of detailed
12、information Parametric modeling Using project characteristics(or parameters)in a mathematical model to predict costs(e.g.,price per square foot)Bottom-up estimating Estimating the cost of individual work items and then rolling up the costs to arrive at a project totalComputerized tools PM software a
13、nd spreadsheets,Cost Estimating,Outputs,Cost estimates Quantitative assessments of the cost of resources(e.g.,units of currency or staff hours)Types of estimatesOrder of magnitude(-25%/+75%)Budget estimate(-10%/+25%)Definitive estimate(-5%/+10%)Supporting detailDescription of estimated scope of work
14、Documentation of the basis for the estimateDocumentation of any assumptions madeRange of possible results,Cost Estimating,Outputs(cont.),Cost management planDescribes how cost variances will be managedPart of the overall project plan,Cost Estimating,Cost Budgeting,Allocating the value of the overall
15、 cost estimate to individual work items,in order to establish a cost baseline to use in measuring project performance,Cost Budgeting,Inputs Cost estimatesWBSProject schedule,Tools&TechniquesCost-estimatingtools and techniques,OutputsCost baseline,Inputs,Cost estimates WBS Identifies the project elem
16、ents to which the costs will be allocatedProject schedule Used to assign costs to project elements for the time period when costs will be incurred,Cost Budgeting,Tools&Techniques,Cost estimating tools and techniquesAnalogous estimatingParametric modelingBottom-up estimatingComputerized tools,Cost Bu
17、dgeting,Outputs,Cost baseline Time phased budget that will be used to measure and monitor the cost performance of the project,Cost Budgeting,Cost Control,Controlling changes to the project budgetMonitoring cost performance to detect variances from the planEnsuring that all appropriate changes are re
18、cordedPreventing incorrect,inappropriate,or unauthorized changesInforming the appropriate stakeholders of authorized changesAnalyzing positive and negative variances and how they affect the other control processes,Cost Control,Inputs Cost baselinePerformance reportsChange requestsCost management pla
19、n,Tools&TechniquesCost change control systemPerformance measurementAdditional planningComputerized tools,OutputsRevised cost estimatesBudget updatesCorrective actionEstimate at completionLessons learned,Inputs,Cost baselinePerformance reports Information on cost performanceChange requests Oral or wr
20、itten requests to change the budgetCost management plan,Cost Control,Tools&Techniques,Cost change control system Procedures used for making changes to the cost baselinePaperworkTracking systemApproval levelsPerformance measurement Assessment of the magnitude of any variation,the cause of the varianc
21、e,and the corrective action needed,Cost Control,Tools&Techniques(cont.),Additional planning Changes may require new or revised cost estimates or an analysis of alternative approachesComputerized tools Used for tracking the value of planned costs compared to actual costs and for predicting the effect
22、s of cost changes,Cost Control,Outputs,Revised cost estimatesBudget updatesCorrective actionEstimate at completionLessons learned,Cost Control,Earned Value(EV),A method of measuring project performance by comparing the amount of work planned with that actually accomplished,in order to determine if c
23、ost and schedule performance are as planned,Cost Control,Cost Control,EV Terms,Control account Level of the WBS at which a budget is assigned and a control account manager(CAM)is given responsibility for delivering the itemCreate control accounts at the level that senior management wants to track co
24、st and scheduleUse the responsibility assignment matrix(RAM)as a tool,Establishing Control Accounts,Cost Control,RAM The integration of the WBS and the OBS of a projectProper creation of the RAM results from locating the intersection of the OBS unit that is assigned responsibility for the work and t
25、he specific WBS element that defines the work to be performed,Responsibility Assignment Matrix,Cost Control,CA#1WBS Element:OBS Element:CAM:Budget:Schedule:,Control Account Example,1.1 FrameFrame ShopMr.I.M.Smart$125,000Jan-Jun 00,Cost Control,Control Account Managers,Receive work authorizationDevel
26、op work and planning packagesAssign a budget and schedule for each work and planning packageBuild a baseline by summing the budgeted cost of work scheduled(BCWS)for each reporting period,Cost Control,Planning PackagesFuture work that has not been planned in detail as work packages;Always scheduled t
27、o occur in the future,Work PackagesDetailed,short-span tasks or material items;Required to accomplish the CA objectives;Typically for the near term,Control Account Elements,Cost Control,Performance Measurement Baseline(PMB),The plan against which actual performance can be comparedBased on budgets as
28、signed to scheduled segments of workBuild PMB by summing the BCWS for all control accounts,by reporting periodBudget at completion(BAC)Equal to the cumulative BCWS for the total project,Cost Control,Time-Phased Budget,Performance Measurement Baseline(PMB),BAC,Cost Control,Work schedule to be accompl
29、ished,Budgeted Cost of Work Scheduled(BCWS),Cost Control,Budgeted value of completed or in-process work,Budgeted Cost of Work Performed(BCWP),Cost Control,Actual Cost of Work Performed(ACWP),Actual value of completed or in-process work,Cost Control,Schedule Variance,Comparing the BCWP,the amount ori
30、ginally budgeted for the work that has been completed or is in-process,to the BCWS,the amount budgeted for the work that was planned to have been accomplishedSV=BCWP BCWSA negative result means less work has been performed than was planned,Cost Control,SV Example,BCWS=$42,000BCWP=$38,000ACWP=$48,000
31、SV=BCWP BCWS=$38,000$42,000=-$4,000 SV%=SV/BCWS=-$4000/$42,000=-0.095=-9.5%,Cost Control,Cost Variance,Comparing the amount originally budgeted for the work completed or in-process,the BCWP,to the actual costs of that work,the ACWPCV=BCWP ACWPA negative CV means more dollars were spent to accomplish
32、 the work than was planned,Cost Control,Cost Variance Example,BCWS=$42,000BCWP=$38,000ACWP=$48,000CV=BCWP-ACWP=$38,000$48,000=-$10,000 CV%=CV/BCWP=-$10,000/$38,000=-26%,Cost Control,Performance Indices,Dfn:Cost-and schedule-performance efficiency calculations;expressed in$Cost Performance Index(CPI)
33、CPI=BCWP/ACWPSchedule Performance Index(SPI)SPI=BCWP/BCWS,Cost Control,CPI Example,BCWS=$42,000BCWP=$38,000ACWP=$48,000CPI=BCWP/ACWP=$38,000/$48,000=0.79$0.79 worth of work was actually done for each$1.00 spent,Cost Control,SPI Example,BCWS=$42,000BCWP=$38,000ACWP=$48,000SPI=BCWP/BCWS=$38,000/$42,00
34、0=0.90$0.90 worth of work has been done for each$1.00 worth of work that was planned to be done,Cost Control,Estimate at Completion(EAC),Dfn:The managements assessment of the cost of the project at completion After variance analysis,the estimated cost at completion is determined,Cost Control,EAC Exa
35、mple,One methodology:EAC=BAC/CPIBAC=$80,000CPI=0.79EAC=$80,000/0.79=$101,265,Cost Control,Variance at Completion,BAC=$80,000 EAC=$101,265VAC=BAC EAC=$80,000$101,265=$21,265Based on past performance,project will exceed planned budget by$21,265,Cost Control,To Complete Performance Index(TCPI),Work Rem
36、aining/Cost RemainingTCPI=(BAC BCWP)/(EAC ACWP)=($80,000$38,000)/($101,265$48,000)=$42,000/$53,265=1.4,Cost Control,Earned Value Examples,BCWSBCWPACWP$1$1$1On scheduleOn cost$2$2$1On scheduleUnder cost$1$1$2On scheduleOver cost$1$2$2Ahead of scheduleOn cost$1$2$3Ahead of scheduleOver cost$1$2$1Ahead
37、 of scheduleUnder cost$3$2$1Behind scheduleUnder cost$2$1$3Behind scheduleOver cost$2$1$1Behind scheduleOn cost,Cost Control,Example,BCWSBCWP ACWPEAC BAC 100125 75600 560125100 100850 800 75 75 75700560100 75 100570 600,Cost Control,Sample Cost Problem,BAC=$40kBCWP=$20kBCWS=$28kACWP=$26k,Calculate%o
38、f Work Scheduled%of Budget Spent%of Work AccomplishedCost VarianceSchedule Variance,Cost Control,Sample Solution,Calculate%of Work ScheduledBCWS/BAC=$28K/$40K=70%of Budget SpentACWP/BAC=$26K/$40K=65%of Work Accomplished BCWP/BAC=$20K/$40K=50%Cost VarianceBCWP ACWP=$20K$26K=-$6KSchedule Variance BCWP
39、 BCWS=$20K$28K=-$8K,Cost Control,Summary,Review Questions,Case 1,BCWS=$1,860BCWP=$1,860ACWP=$1,860,This is the ideal situation,where everything goes according to plan.,Case 2,BCWS=$1,900ACWP=$1,700,In this Case,without Earned Value measurements,it appears were in good shape.Expenditures are less tha
40、n planned.,Spending Variance=-$200,Case 2,BCWS=$1,900BCWP=$1,500ACWP=$1,700,But with EV measurements,we see.$400 worth of work is behind schedule in being completed;i.e.,we are 21 percent behind where we planned to be.,SV=BCWP BCWS=-$400SV%=SV/BCWS x 100=-21%,Case 2,BCWS=$1,900BCWP=$1,500ACWP=$1,700
41、,In addition,we can see.“Actuals”exceed“Value Earned”(BCWP),i.e.,$1,500 worth of work was accomplished but it cost$1,700 to do so.We have a$200 cost overrun(i.e.,13%over budget).,CV=BCWP ACWP=-$200CV%=CV/BCWP x 100=-13%,Case 2,BCWS=$1,900BCWP=$1,500ACWP=$1,700,This means only 79 cents worth of work
42、was done for each$1.00 worth of work planned to be done.And,only 88 cents worth of work was actually done for each$1.00 spent,SPI=BCWP/BCWS=$0.79CPI=BCWP/ACWP=$0.88,Case 2,BCWS=$1,900BCWP=$1,500ACWP=$1,700,This is the worst kind of scenario,where all performance indicators are negative.,SV=-$400;SPI
43、=0.79CV=-$200;CPI=0.88,BCWS=$2,600BCWP=$2,400 ACWP=$2,200,In this case there is bad news and good news.,Case 3,BCWS=$2,600BCWP=$2,400 ACWP=$2,200,The bad news is that our work efficiency is a bit low;were getting only 92 cents of work done on the dollar.As a result,we are behind schedule.,SPI=0.92 S
44、V=-$200;SV%=-8%,Case 3,BCWS=$2,600BCWP=$2,400 ACWP=$2,200,The good news is that were under-running our budget.Were getting$1.09 worth of work done for each$1.00 were spending.,CV=+$200;CV%=+8%CPI=1.09,Case 3,Case 4,BCWS=$1,700BCWP=$1,500ACWP=$1,500,In this case,the work is not being accomplished on
45、schedule.,SV=-$200;SV%=-12%SPI=0.88,Case 4,BCWS=$1,700BCWP=$1,500ACWP=$1,500,.but the cost of the work accomplished is just as we budgeted.,CV=$0.00CPI=1.00,Case 5,BCWS=$1,400BCWP=$1,600ACWP=$1,400,A positive scenario;right?But is it because we are out-performing our learning-curve standards or beca
46、use we planned too pessimistically?,Case 5,BCWS=$1,400BCWP=$1,600ACWP=$1,400,Here in this case,we are getting work done at 114 percent efficiency.,SPI=1.14CPI=1.14,Case 5,BCWS=$1,400BCWP=$1,600ACWP=$1,400,.work is ahead of schedule by 14 percent and under-running cost by 12.5%.,SV=+$200;SV%=+14%CV=+
47、$200;CV%=+12.5%,Case 6,BCWS=$2,000BCWP=$2,200ACWP=$2,400,In Case 6,work is being done efficiently,but a cost overrun is occurring.,SPI=1.10CV=-$200;CV%=-9%,Case 7,BCWS=$2,200BCWP=$2,400ACWP=$2,400,In Case 7,work is being done efficiently,and costs are right on target.,SPI=1.09CV=$0.00,Case 8,BCWS=$2
48、,000BCWP=$2,000ACWP=$2,200,See if you can analyze this one!,Case 8,BCWS=$2,000BCWP=$2,000ACWP=$2,200,Were on schedule.But in order to be on schedule,its costing us$1.00 to do each 91-cents worth of work.Theres a$200 overrun as a result.,SV=$0.00CV=-$200;CPI=0.91,Case 9,BCWS=$1,700BCWP=$1,500ACWP=$1,
49、900,OK,see how you do with this one!,Case 9,BCWS=$1,700BCWP=$1,500ACWP=$1,900,Negative scenario:12%behind schedule and over-running cost by 27%,SV=-$200;SV%=-12%CV=-$400;CV%=-27%,Case 10,BCWS=$1,000BCWP=$0.00ACWP=$800,Lets try one more!,Case 10,BCWS=$1,000BCWP=$0.00ACWP=$800,A tough one!Of$1,000 wor
50、th of scheduled work,no measurable milestone has yet been accomplished.However,$800 has been spent just getting started.,SV=-$1,000;SV%=-100%CV=-$800;CV%=N/A,Case 11,BCWS=$0.00BCWP=$700ACWP=$900,See how you do on this final one!,Case 11,BCWS=$0.00BCWP=$700ACWP=$900,Work was begun before it was sched
