1. Diploma Project Management
Captain Cook College
Sharon Boyle

2.  Presentation –
 Revision of last week’s terms
 Cost management techniques – some detail as
requested
 Time to catch up and finalise LMS
 Morning Tea
 Balance of cost unit
◦ SB Cost Unit started last week & finish tomorrow
 Everyone continues with Cost
◦ Today & Friday – completing cost Friday 23 August

3. 1. EVM an overview
2. Basic Elements
3. Cost Variances
4. Schedule Variances

4.  tracking tools upon which to base forecasts
 Integrates scope, schedule & cost
 Answers many questions stakeholders need
 Performance can be shown as
◦ Past
◦ Current
◦ Predictive
 Promises to reduce over-runs

5.  financial analysis specialty from United States
Government programs in the 1960s,
 Now significant branch of project
management.
 In the late 1980s and early 1990s, EVM
emerged as a project management
methodology
 EVM has become an essential part of every
project tracking.

6.  http://www.youtube.com/watch?v=7WsfuvHe
gxE&feature=related

7.  Planned Value
◦ (PV) = PV or Budgeted cost of work scheduled BCWS
= Hourly Rate * Total Hours Planned or Scheduled
 Actual Cost
◦ (AC) = hourly rate x total hours spent
 Earned Value
◦ (EV)= Baselined costs x % complete
 % Completed Planned
◦ % Completed planning =PV/BAC

8.  Cost Variance (CV) indicates how much over
or under budget the project is.
 Why is under cost a problem?
 (CV) = Earned Value (EV) – Actual Cost (AC)
 Also
 CV = BCWP – ACWP
◦ Positive Cost Variance Indicates the project is under
budget
◦ Negative Cost Variance Indicates the project is over
budget

9.  Cost Variance % - how much over or under
budget the project is in terms of percentage
 CV% = CV/EV
◦ Or
 CV% = CV/Budgeted Cost of Work

10.  CPI = EV/AC
 Shows how efficient we are
 Above 1 good efficiency
 Below 1 project not using resources
efficiently

11.  TCPI = Total Budget – EV/Total Budget – AC
 Another measure of efficiency –
◦ The correct people do the correct things within a
clear process
◦ Above 1 utilization must be stringent
◦ Below 1 lenient.

12.  Schedule Variance (SV) = Earned Value (EV) -
Planned Value (PV)
 How much is yet to be completed as per
schedule
 +ve Schedule variances = we are ahead of
time
 -ve Schedule variance = we are behind
schedule
 Then same % as for Costs

13.  Budget at Completion = total budget
 BAC = Baselined effort hours x hourly rate
 Estimate to complete – just what it says.
 Estimate hours required x hourly rate

15.  1. Assist with the
development of the project
budget
 2. Monitor project costs
 3. Contribute to cost
finalisation process

16.  Determine
◦ estimated costs for tasks & activities and
◦ communicate these costs to others for inclusion in
project budget
 Map costs against
◦ duration /effort &
◦ resources allocated, and
◦ communicate to project manager for inclusion
 project plan,
 budget
 expenditure flow
 Contribute to
◦ development of cost management strategies &
processes,
◦ financial authorisation within delegated authority

17.  Monitor income and expenditure against
◦ agreed project plan
◦ budgets to facilitate cost management throughout
the project life cycle
 Use established cost management methods,
techniques & tools
 Implement & monitor
◦ agreed actions
◦ report progress

18.  Project records
◦ cost management lessons learned
◦ cost verification and validation documentation
◦ input to cost management plans
◦ invoice and payment records
◦ lists of potential costs
◦ project and/or organisation files and records
◦ reports to relevant stakeholders

19.  Provide assistance in the finalisation and transfer
of financial assets, liabilities and records to the
client or relevant operational support agency
 Provide assistance in the review of project
outcomes by use of project records, to determine
the effectiveness of initial and subsequent cost
management strategies and processes

 Report cost management issues and responses to
project/program manager for application in
future projects

20.  Assessment Item 1
 Cost Estimating
 Use template for Fred’s shed budget
Completed cost estimates
 Assessment Item 2
 Finalisation & handover report Documents
Completed templates