1. M.SC.,ACCOUNTING AND FINANCE
PROJECT ANALYSIS AND
EVALUATION
CODE AcFn621-CREDIT HOURS-3
CHAPTER-FIVE
EXECUTION AND MONITORING
PROF. DR. CHINNIAH ANBALAGAN
PROFESSOR OF M.SC., ACCOUNTING & FINANCE
COLLEGE OF BUSINESS AND ECONOMICS
SAMARA UNIVERSITY, ETHIOPIA, EAST AFRICA
EMAIL ID: dr.chinlakshanbu@gmail.com
2. Monitoring and Control
The duration of the project and covers the
development process.
Monitors all key parameters like cost,
schedule, risks, etc.
Takes corrective actions when needed.
Needs information on the development
process.
3. 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 Control Steps
1. Setting a baseline plan.
2. Measuring progress and performance.
3. Comparing plan against actual.
4. Taking action.
Tools
Tracking and baseline Gantt charts
Control charts
4. What is a baseline?
It makes the plan difficult to change
It is rather like writing the plan (schedule and cost)
on the backside of Moses’ tablets
Its an anchor point for measuring performance
against plan
Planned cost
Planned schedule
Planned scope
9. Processes Utilized of the Lifecycle
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
11. 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
12. 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
13. Factors Leading to Poor Execution
Multitasking-doing several things at once
Procrastination (student syndrome)-putting
things off until the last minute
15. 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 value analysis is an important tool for cost
control
16. 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
17. 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.
TAC The duration of the critical path
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.
18. Earned Value Analysis Terms
Budgeted cost of work performed (BCWP), also called
earned value, is the percentage of work actually
completed multiplied by the budget for the activity
Budgeted cost of work scheduled (BCWS), also called
planned value, 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, are the total direct and indirect costs incurred
in accomplishing work on an activity during a given
period
19. Earned Value Analysis-EVA
Earned value = Budgeted Cost of Work Performed
(BCWP)
Planned value = Budgeted Cost of Work
Scheduled (BCWS), and
Actual Cost = Actual Cost of Work Performed
(ACWP)
When you complete an activity, you earn the
budgeted value of that activity
20. Schedule Variance (SV)-Ahead or Behind
Defined as the difference between the budgeted
cost of work performed and the budgeted cost of
work scheduled
= BCWP – BCWS = EV - PV
Is also equal to Earned Value (EV) minus Planned
Value (PV)
Indicates the deviation between the work content
performed and the work content scheduled to be
performed for the control period
21. Cost Variance (CV)—over or under
Defined as the difference between the budgeted
cost of work performed and the actual cost of work
performed
= BCWP – ACWP = EV - AC
Is also equal to Earned Value (EV) minus Planned
Value (PV)
A positive CV indicates a lower actual cost than
budgeted for the control period, while a negative
CV indicates a cost overrun
22. 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
23. 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
24. 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% or 1 indicate
problems with cost or schedule
The project is over-budget if CPI < 1
The project is behind schedule if SPI < 1
26. 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.
27. 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?
28. 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
29. 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
30. Cont’d
WR = Work Remaining = budgeted cost of the
work not yet accomplished by the end of the
reporting period
WR = BAC – BCWP = BAC - EV
EAC = updated estimate of the Total Project Cost
= BAC/CPI = BAC/CI
ETAC = Updated Estimate Of The Total Project
Duration = TAC/SPI = TAC/SI
31. Earned Value Chart for Project
After Five Months
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1 2 3 4 5 6 7 8 9 10 11 12
Month
$
BCWS or Cumulative Plan ACWPor Cumulative Actual BCWPor Cumulative EV
BCWS
ACWP
BWCP
BAC
EAC
34. 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
cost-related features
35. 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
36. Tracking: MS Project will track
Task start dates
Task finish dates
Task duration
Task cost work
Percentage of task that is complete
37. 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
38. 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
39. 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
40. Close Out of Project
Project closeout is the last phase of
the project management lifecycle.
During the project
closeout phase, project deliverables are
transitioned to the business owners.
Before the project is officially closed,
the project team must hold a stakeholder's
meeting.
41. Important of Project Close Out
Project Management Processes (Initiation,
Planning, Execution, Monitoring and
Controlling), Project Closing serves
an important purpose for the organization
and helps it avoid unfavorable and adverse
scenarios
42. The Key Activities Of Close Project
Project Management Consists of five
process groups, namely initiating, planning,
execution, monitoring and control,
and closing.
The project closure phase consists of the
processes that are performed to officially
finish and close all the assignments in
a project or phase.
Why is project closeout important?
Why Is Project Closing Important? Just as any of the other project management processes (Initiation, Planning, Execution, Monitoring
43. Close Out Document
The purpose of the close out document is to
assess the project's performance, identify the
lessons learned, and confirm that essential
contractual and other project closure
activities have been completed.
The close out document is intended to
summarize the project record.
What is a close out document?
The purpose of the close out document is to assess the project's performance, identify the lessons learned, and confirm that essential
