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Scope increases lead to increased costs.

J-CONTROL ELEMENTS
BACKGROUND
Control is the act of reducing the difference between plan and reality. Control focuses on the balance between cost, time and performance. These three parameters raises a number of issues that need to be addressed when determining the required level and methods of control. Performance Issues The performance issues that can influence the project include: Unexpected technical problems that arise during execution. Lack of resources and incorrect mix of resources when needed. Insurmountable technical problems. Quality and reliability problems from suppliers and areas within the project team's direct control. Inter-functional complications, relating to standards and requirements. Client changes to system specifications, also changes to the basic assumptions used to plan the project. Opportunities created from technological breakthroughs during project execution. Cost Issues Cost issues that can influence the project include: Technical difficulties require more resources than planned.

Poor estimating techniques both in rate and quantities. Inefficient reporting systems that do not adequately reflect the correct cost exposures on the project or provide untimely information. Corrective action was not exercised in time to correct the deviation. Cost of resources changes over execution cycle. Time issues The time issues that can influence the project include: Increased time to solve technical difficulties on the project. Initial time estimates inaccurate. Sequencing of tasks either not feasible or not followed. Lack of resources when required. Difficulty completing preceding activities to allow subsequent activities to progress. Rework due to change orders. Government and union regulations changes.

CONTROL SYSTEMS DESIGN

Control systems are often required to take into account many of the cultural and political elements encountered in the project environment. One major problem is the camaraderie of the project team. To overcome these problems, the purposes of the control system must be understood and used to design the systems.

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Control systems must: regulate the results through alterations of activities related to the project. guard the organisations assets, physical assets that require usage control and maintenance control. Inventory and warehousing control also needs to be undertaken on projects. human resources need to be maintained and developed. financial resource control. Techniques include current asset controls, project budgets and capital investment controls.

First order systems use goal seeking to set the standards. These systems are fixed until changed by recourse to factors external to the control system. Second order system make use of contextual information to modify the response of the control system. The responses depend on conditions other than the output. These systems react according to preset patterns. Third order system can change the goals. They are particularly suitable for unforseen and unexpected conditions. Information Requirements The project manager/controller must be aware of the system's full capabilities to apply this type of control. Few elements in a project are subject to automatic control. Systems must operate over sufficient time to justify the expense of this type of control. The steps are: decide what output characteristics are to be controlled. set standards for outputs. build sensors to measure with the required precision. translate signals to allow comparison. transmit signal and standard to decision maker. undertake action. The most efficient method of undertaking this type of control is by exception. Go/No go controls This system tests against a specific precondition. A wide range of possible systems are possible. These controls can be turned on and off at the discretion of the controller.

TYPES OF CONTROL PROCESSES

Before deciding what type of control process to implement, it is necessary to consider: at what points in the project should control be exercised. what will and can be controlled. how will measurements regarding performance be taken. how great can the actual results deviate from the plan before intervention is necessary. what type of intervention is required. Cybernetic Controls These processes are automatically applied to projects. Output sensors measure deviations and these are compared to standards. Control is then applied to the input to the process to correct the output. This process of reducing the deviations is termed a negative feedback loop.

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These tests are usually undertaken at periodic intervals. The interval is a function of the project. These periods may be regular or dictated by the events of the project. Information requirements: Much of the information generated in the earlier stages of the project can be used for these control systems. This includes: project proposals. plans. specifications. budgets and schedules. This control system is typified by the periodic monthly reporting systems. Post controls This control system is designed to extract information from the project. The format for this type of report covers four major areas: Project objectives : This section is often taken from the proposal and key initial assumptions are evaluated. Budgets and Milestones: The actual performance is recorded. Deviations from the plan should be fully evaluated. This requires a consistency in reporting systems. Final report on Project results This section contains other relevant project information. Items covered could include organisational information, methods of planning and direction, communications and monitoring systems, control methods and interactions.

CONTROL SYSTEM DESIGN.

A number of key questions control the design of these systems: who sets the standards? are these realistic and clear? will the attainment of these standards ensure goal attainment? what should be monitored? what type and accuracy of sensors? when should action be taken? how should rewards and penalties be distributed? who should take action? A good control system requires the following characteristics: flexible cost effective useful timely operation sensors accuracy consistent with limits set simplicity easy to maintain able to be extended fully documented and understood. The use of earned values and standard ratios can increase the value of control systems.

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PROJECT CONTROL
Project control uses a baseline plan as an outline of the required condition. The baseline plan is a system that is initiated to indicate the path that the project should follow. The aim of the control system is to eliminate surprises in relation to the performance of a project. The project' s baseline plan is the course to steer. If the project is off course, control in the form of corrective action must be applied. Project controls cost real money for the project is expensive. As with most project expenditures, a cost benefit analysis is required to determine the extent of control. This will vary over the life cycle of the project as shown on the following curve
10 9 8 7 6 5 4 3 2 1 0 Concept

Control Cycle The control cycle outlines a series of steps from issuing instructions, tracking progress through to applying control on deviations.

Baseline Plan

Revision and Correction

Work Authorization

Decision Making

Tracking and Monitoring Progress

Possible Cost Reductions

Forecasting and Evaluation

Cost of Change
Define Execute Finish

Change Control

This model not only shows that changes at the beginning of a project are easier and cheaper, but also implies that the feedback on the project's status must be timely and accurate. Reporting The unsuspecting project manager should beware of the over reporting trap. This situation gives rise to the 90/10 rule. The consequences considerably reduce the project manager's ability to have a real impact on the program.

The frequency of the reporting cycle should reflect the needs of the project. Short reporting periods, when there is a high level of change and uncertainty in the project, long periods when there is little change. As a rule of thumb the reporting cycle should leave sufficient time to implement corrective action to bring any project deviation back on course. The Baseline Plan: The baseline plan may be considered as a portfolio of documents which indicate how the project's objectives will be achieved. These documents should be produced before the execution phase of the project starts.

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Work authorisation: This function communicates and disseminates information and instructions to the responsible parties. Tracking and Monitoring Progress: This data capture function records the current status of the project. Change Control: The change control function ensures that all changes to the scope of work are approved by the designated people before being incorporated in the baseline plan. Evaluation and Forecasting: The evaluation and forecasting function is to quantify the project's present position within the CPM model and extrapolate current trends. It may also develop what-if analysis to simulate areas of uncertainty. Decision-Making: The decision-making function collates all the information and decides on an appropriate course of action. Revision and Correction: Based on the project manager's decision the baseline plan is revised and corrective action outlined.

Site communications Impact statements Variations and Modifications Change requests Concessions Scope Control Systems The aim of a scope control system is to capture the potential change of scope, relay the impact of that change where possible to the project organisation and the client. The impact should be assessed to determine if a formal scope change is required. Scope changes should then be tracked through both the client and executing organisation as the change will have a major impact on the time and cost budgets. Some changes could provide formal changes to these budgets, others may be carried as a variance.

SCOPE CONTROL
Scope control is directly linked to cost, time and quality. The control systems for scope therefore have a kick on effect into the other control systems. Baseline Information Planning documents used in scope control are:: Work Breakdown Structure Activity list Drawing register Specification register Parts list Control documents used to control scope include:

COST & RESOURCE CONTROL

Cost control is effected by the control of all elements of the project that have an impact on the financial management of the works. Estimating Baseline Documents: Planning documents to control resources include: Project selection model The quotation and tender Control documents to control resources include:: Closeout report on performance Revised estimating data base

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Cost Management baseline Documents: . Planning documents: Activity budgets Department budgets Cash flow statements Cost and commitment reports Control documents: Expenditure reports (planned vs actual) Revised budgets Earned value Resource Management Planning documents: Resource forecast Resource availability Resource levelled manpower histogram Control documents: Time sheets Revised manpower histogram Cashflow Management The cash flow statement will be developed, which is one of the most powerful tools available for cost management. If effectively used the cash flow statement has all the advantages of an explicitly designed financial planning and control system.

The cash flow statement is a document which models the flow of money in the project. The time frame is usually monthly so as to coincide with the normal business accounting cycle. Flows Flows that control cashflow on a project are: incomes (cash in-flows) from the monthly progress payments, expenditures (cash out-flows) are wages, materials, overheads, interest and bought-in services. Timing of Cashflows In evaluation of cashflow, timing is critical. Typical timing of flows for projects is; Part payment with placement of order. Stage payments to cover the manufacture's costs. Payment on purchase; this is normal practice with retailers. Monthly payments; labour, rent, telephone and other office expenses. 30 or 60 days credit; normal terms for bought-in items. 90 days credit; used where the payee has considerable power over the supplier. The payment for typical project goods and services are; Labour costs are usually paid in the month they are used. Material costs c an vary from an up-front payment, cash on delivery (COD), to I to 3 months credit.

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Bought-in services and plant hire costs can be paid within I to 3 months after delivery. Income from client; up-front payment, stage payments or progress payment one month after invoice. Use of CPM for cash flows CPM networks are often used to calculate cashflows. For ease of calculation the activity's cost is usually assumed to be linear over the duration of the activity. Labour costs are generally uniform over the duration of the activity. Whereas the cost of materials and other bought-in items may need to be qualified, as they can vary from up-front payments to 1, 2 or 3 months later depending on the supplier. When considering the project as a whole, if there are more than a hundred activities any distortions caused by non-linear cash flow would tend to be smoothed out, however each project should be evaluated for timing deviations. Preparing a Cashflow Curve Preparation of a Cashflow curve follows the following steps Draw an Early Start barchart for the project. Assign values linearly per period, Add the cost values vertically to get period totals. Plot the period total costs on a graph of costs against time to obtain the period rate of expenditure curve. Accumulate the period values from left to right. To give the total to timenow. Plot accumulated figures on a graph of cost against time. This will produce the distinctive S curve.

If the S curve for the Early Start and Late Start are drawn on the same graph they produce a distinctive banana type curve. Managing Commitments The management of commitments is vital to allow project management to make informed decisions in relation to the control of the cost of a project. Commitment management requires early information that is often more aligned to the engineering function rather than the procurement function. The difference between the value committed and the budget gives the project manager an indication of the extent to which he can change the cost performance of the project.

TIME CONTROL
Time control consists of two major elements, progress and criticality. Schedule Control Planning documents: Method statement Activity list Network diagram Scheduled barchart Keydate schedule Rolling horizon Control documents: Progress report (planned vs actual)

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Gantt chart Revised barchart Earned value Trend documents

calculation. There are a number of methods of calculating percentage complete. The most robust relate to quantity or milestone measurement. This calculation can be undertaken by examining the work undertaken or the work required to complete an activity. Remaining Duration (RDU): The remaining duration is the estimated time required to complete the activity from timenow. The production feedback overrides the network logic if the activity has already started, but for work that has not started the original network logic must be assumed to hold. Budgeted Cost for Work Scheduled (BCWS):

PROGRESS MEASUREMENT
Determining the progress of a project is an essential element of control. A number of methods exist and the results of measurement are analysed using a variety of techniques. One of the most common methods examines earned value. EARNED VALUE Earned value is an integrated planning and control tool which integrates cost and time. The time for assessment is determined by the time to take corrective action. Although the earned value technique was set up initially to track the progress of cost and time, in practice it is often more appropriate to track progress measured as earned manhours and time. Terminology

The BCWS may be considered to be the same as the accumulated expenditure S curve. This curve forms the basis of the baseline plan by providing a measure of planned work output with respect to time. The BCWS is calculated and plotted from the following equation: BCWS = Planned PC x BAC Budgeted Cost for Work Performed (BCWP):

Timenow or Status Date or Data Date or Progress Date represents the cutoff date for which the earned value is calculated Budget at Completion (BAC):

The BCWP which is also called earned value, is a measure of achievement or value of the work done. The BCWP is calculated and plotted from the equation: BCWP = PC (actual) x BAC

This is the original cost estimate, budget or quotation, indicating the funds required to complete the work. The units could be in $ or manhours or any other measure that is appropriate. Percentage Complete (PC): The PC is a measure of the activities performance and progress to timenow and is required for the earned value

Actual Cost for Work Performed (ACWP): The cost to achieve the reported progress. Cuttoff dates for progress and actual cycles should coincide to avoid over rosy results.

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Estimate at Completion (EAC): The EAC is a revised estimate of the cost to complete by extrapolation of the current trend to the end of the project. This assumes productivity is constant. EAC = ACWP x BAC BCWP Schedule Variance (SV): The Schedule variance calculation is a measure of the time deviation between the actual progress and the planned progress expressed algebraically. SV = BCWP - BCWS

Threshold Variance: Extent of variance that will trigger action. The threshold limits may be set as a percentage (say +/- 5%) to give an early indication of an undesirable trend. Why Use Earned Value ? Enables integration and aggregation of costing and schedule information. Links to planning cycles and enables clear exposure of potential problem areas. Earned Value Steps The following steps have been developed as a guideline for the project planner to follow, in order to produce: The Earned Value table. The integrated cost / schedule graph. Step l: Set up an earned value table Calculate BCWS for the project, draw the curve BCWS against time. Track project to timenow. Record the following data for each activity: percentage complete and ACWP. Calculate BCWP = BAC x PC, draw BCWP to timenow, then extrapolate Draw ACWP to timenow, and extrapolate the line to the new completion date. This will forecast the EAC. Calculate the variancess Plot variances. Apply Control .

Schedule Variance Percentage (SV % ): Converting the schedule variance to a percentage will address any distortion caused by the size of the activity. SV% = SV / BCWS

Step 2: Cost Variance (CV): The cost variance is a measure of the deviation between the earned value and the actual cost of doing the work. CV = BCWP - ACWP Step 3: Step 4: Step 5: Converting the CV to a CV% will reduce the distortion caused by the size of the activity. CV% = CV / BCWP Step 6: Step 7: Step 8:

Cost Variance Percentage (CV % ):

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Information Requirements Project Accounts: The project manager will need to ensure that the project accounting system will generate costs to timenow. Extended site: If costs are being incurred off site, such as stage payments then the progress (PC) must be reported along with the associated cost (ACWP). Cash flow:

CONTROL BY PROJECT PHASE

Engineering Control The control of engineering largely centres on the control of the deliverables from the engineering process. Engineering controls will be discussed later in more detail. Procurement Management: Planning documents:

Parts list

Procurement schedule

The earned value technique is not the same as cash flow. The Client's Perspective

Material requirement planning (MRP) Procurement budget

The client can effectively use earned value to track the progress on his project in terms of manhours or costs. Analysing the C/SCS Graph

Control documents:

Expediting status report

Forecasting: When trying to forecast the trends in the project by extrapolating the earned value curves, the following considerations should be made: Will the same performance be maintained. Will the performance improve because of a learning curve effect. Will the performance reduce because of unforeseen problems and rework.

Revised procurement schedule and budget

OTHER CONTROL ISSUES

Communication Management: Planning documents: Lines of communication

List of controlled documents

Schedule of meetings and agendas

Control documents: Minutes of meetings Transmittals

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Quality Management Planning documents: Project quality plan (ISO 9000) Quality control plan Parts lists and specifications Control documents: Inspection reports Non conformance reports (NCR's) Concessions Change requests As-built drawings Data books and operation manuals Commissioning Technical Support: Planning documents: Client's brief Statuary regulations Specifications Design calculations Control documents: Configuration Control Commissioning

As-built drawings Human Resource Management: Planning documents: Project organisation structure Responsibility matrix Job descriptions Work procedures Control documents: Team building reports Performance evaluations Environmental Management Planning documents: Laws and regulations Environmental issues Control documents: Environmental report

PROJECT EVALUATION AND AUDIT

Post control methods attempt to capture the essence of project successes and failures for the benefit of future projects. Project evaluation performs a similar function but can be instigated at any stage in the project life cycle. It has the ability to benefit the current project. A project audit will examine a wide range of matters relating to the performance of the project that are of concern to senior management.

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The evaluation is often undertaken through an audit. In order to be successful this process requires careful control. All relevant data must be considered and the evaluation team must have credibility for both the management and project personnel. The process can pose major threats to project personnel and therefore objective assessments are required. PURPOSE OF EVALUATION The purpose of the evaluation is to aid in achieving the project's goals in the context of the parent organisations goals. To ensure that this occurs, both the strengths and weaknesses of the project must be studied. Goal directed purposes are relatively easy to define and measure against. These goal directed purposes of this process will ensure that: problems are identified in sufficient time to take action. the cost, time, performance relationships are clarified. project performance is improved. opportunities are identified. the project management system is evaluated to improve quality. cost and time improvements. information is made available to the project stakeholders. The goal free objectives are not as explicit and difficult to measure against. These objectives also are related to the perceptions and priorities of the stakeholders to the project. The indirect nature of the goals is often open to interpretation and can lead to mistrust with the subsequent problem of withholding information. The purposes include: examination of the value of projects to the parent organisation.

examination of project processes. determination of organisational abilities to undertake projects. evaluate risk in the use of projects. PROJECT AUDIT ASPECTS TO COVER In order to fully evaluate the project, the audit may cover: management of projects. methodology and procedures. records. properties of the project. budgets and expenditures. schedule status. It may be desirable to evaluate the total project or select some critical elements for evaluation. This extent of coverage is dictated by management concerns and project conditions. The report of the audit must address the following: Current status of the project by comparison of the actual achievements against the plan in terms of cost, time and performance. Future status or any major changes that will affect the plan. Critical success factors that will dictate the success or failure of the project. Risk assessment of the potential for project failure.

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General principles that can be applied to other projects. Assumptions made to undertake the audit and any limitations. DEPTH OF COVERAGE The depth of coverage is constrained by the realities of the cost and time taken to complete the audit. The costs relate to two elements, firstly the direct cost of undertaking the work and secondly the cost to the project in the creation of anxiety and possible loss of morale. The depth of investigation is contingent on project circumstances. A general audit may be performed to gauge if the project is tracking correctly. A detailed audit may then be required if all or part of the project is mal-performing or unacceptable risks are evident. The consequences of these problems will then dictate to what depth the audit is undertaken. A technical audit may be warranted to examine highly specific areas of the project. The use of external experts is often required for this stage. TIMING The timing of the audit is also dictated by project conditions. As the audit can provide benefits for the project under consideration, audits undertaken early in the life cycle have a higher benefit than latter audits. Audits undertaken early in the life cycle tend to concentrate on technical issues. Cost and schedule items become more dominant later in the lifecycle with asset disposal issues becoming important at the end of the project. Audits are often undertaken for other purposes and the timing of these audits relate to these purposes. This timing may be

dictated by the company's reporting, profit sharing or statutory timetables. USE OF THE AUDIT REPORT Audit reports are often prepared in a general format. This has the major advantages of facilitating communications of the data across projects and allowing project personnel to be aware of the process before hand. The use of standard reporting methods also prevents much of the political interference that can occur. It will remove doubt that the auditor is examining areas that may reflect badly on a particular individual or section of the project. The report format should be simple and unambiguous. This facilitates both preparation and comparisons. AUDIT LIFECYCLE As with the project, the audit has a lifecycle. In simple terms the lifecycle covers: what the audit will do and how it will be done. what standards will be used to evaluate performance. collect the relevant data. data analysis and communication of findings to management. report preparation. follow-up and implementation. AUDIT/EVALUATION ESSENTIALS TEAM SELECTION The selection of the team is critical to the success of the audit. The size of the team is a function of the size and complexity of the project. Team members may be selected from:

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the project functional departments within the parent organisation. . technical specialty areas. . the customer. . senior management. . consultants. The team has clear responsibility to: . determine which items should be brought to management's attention. . maximise the utility of the audit. . remain aloof from internal rivalries. . understand and adopt the discipline of the audit process. DATA AVAILABILITY The audit team must have access to all relevant data. This data may come from project records, documentation predating the project or generation of specific data. The quantity and usefulness of the data is dictated by the methods used to categorise, sort and filter the data. Again care must be exercised to ensure that the analysis is not flawed by this process. MEASUREMENT Project measurement of some aspects may be obvious, in other cases, measurement problems may occur. Items that have a simple yes/no relationship can be measured accurately. Items that require transfer of obligations to and from the organisation or between projects are more difficult to assess. In these cases, political rather than technical solutions may be required. Program evaluation poses special problems for audits and specialised techniques are available to evaluate multiple

. .

COST CONTROL
Background For small companies, cost control is of vital importance. Larger organisations can spread cost overruns and therefore have flexibility in regard to cost. The discipline associated with cost control is often termed cost engineering. This function provides methods and procedures for monitoring, forecasting, analysing and controlling costs on a project. The function is not the same as project financial accounting for the following reasons:

a solid technical basis is required to interpret project documentation,

forecasting and trending are major components of the work,

information used by the cost engineer is often tenuous.

Cost control elements The cost control process is covered by the following components:

Cost estimation

Cost accounting

Project Cashflow

Company Cashflow

Direct Labour costing

Overhead Labour costing

Other elements The cost control system must have the following attributes:

Give a picture of true work progress,

Relate cost to schedule performance,

Identify potential problems with respect to their sources,

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Provides sufficient summarisation of costs,

Identification and control of risks/opportunities, Identification of scope changes,

Demonstrate that milestones are valid, timely and auditable. To provide these attributes the cost control system must be designed to provide and integrated, responsive and accurate platform for the entrapment of data and subsequent analysis of data. These requirements may change over the duration of the project and often requirements change in relation to the perceived cost exposures. The perception of exposure is often related to the experience of the project management team. In order to implement a cost control system the following need to be established:

Measurement and control of progress,

Forcing planning control ties.

Ability to affect project costs The ability to exert control on costs varies throughout the project life cycle as shown on the following figures. Cost control tools Code Of Accounts Cost codes provide the basic framework for building the control system. Cost codes generally fall into two major categories:

Plan and schedule of work,

Identify measurement indicators,

Establish direct labour budgets,

Identify overhead budgets,

Standard Cost codes

Identify management reserve.

Cost control system cost/benefit Before a system is implemented, the costs and benefits relating to the use of the system should be evaluated. In the interrelationship between contractor and client, this tradeoff between cost and benefit is often the source of conflict. The costs of a control system include:

Development of systems, often tailor designed to the clients specifications,

Implementation of procedures and systems to trap data,

Equipment for cost analysis

Diversion of personnel from project execution tasks,

Project Cost codes Standard cost codes These codes relate to the type of work being performed. These codes are often have similarities within the sector of industry, for example building, oil and gas, infrastructure. These lists provide a good checklist for estimating, budgeting and time planning. Project Cost Codes These codes are developed for each project and have a similar structure to the work break down structure. The project cost coding system is a day-to-day tool and must be kept practical. A good rule of thumb is if in doubt delete it. Project costs codes can be used to reference and document the following: Expenditures and commitments for:

Training of staff. Benefits of a control system include,

Labour Materials

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Equipment

Subcontracts

Work Type - eg. A - Input, B - Data Comparison, CUser interface Distribution Code - eg. 1 Labour, 2 Materials, 3 Subcontract.

Indirect costs Procurement documents such as:

Requisitions

Purchase orders,

Receival slips

Invoices.

Deriving Project Cost Codes The project cost coding system provides a means of communication and interface management between the following project participants

Control Budgets The structure for the control budget is taken from the project cost coding system. These provide the standard reference for monitoring and controlling the cost status on a project. Control budgets require the conversion of estimate information as category and detail differences occur. Estimates are based on averages, while budgets provide a realistic but testing target. Allocation of budgets and responsibility for budgets is often devolved through the project organisation. Sources of Data for Cost Control Systems The data for the cost control system can be obtained from a multitude of sources. These include:

Client

Corporate management

Labour time sheets, Equipment time sheets,

Accounting

Procurement

Field surveys of quantities of work placed, Warehousing goods received reports,

Field and Design engineers

Forepersons and supervisors,

QA/QC information and test report, Consumable usage and many others.

Scheduling engineers

Many others.

Coding Structure The common elements of a coding system are:

Project Number- eg P92001 - Power project, 1992 Job 1.

Cashflow Forecasting and Control In addition to control of actual costs, prediction of Cashflow requirements are required. This prediction is complicated by the variable cost behaviour of the various cost exposures incurred in the execution of the project The starting point for Cashflow projections is the control budgets and the project schedule. The complications arise from non-linear commitments.

Area-Facility Code - eg A -mainframe, B - workstations, C - Communications

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Progress Measurement
INTRODUCTION
Determining the progress of a project is an essential element of control. A number of methods exist and the results of measurement are analysed using a variety of techniques. One of the most common methods examines earned value.

Budgeted Cost for Work Scheduled (BCWS): The BCWS may be considered to be the same as the accumulated expenditure S curve. This curve forms the basis of the baseline plan by providing a measure of planned work output with respect to time. The BCWS is calculated and plotted from the following equation: BCWS = Planned PC x BAC Budgeted Cost for Work Performed (BCWP): The BCWP which is also called earned value, is a measure of achievement or value of the work done. The BCWP is calculated and plotted from the equation: BCWP = PC (actual) x BAC Actual Cost for Work Performed (ACWP): The cost to achieve the reported progress. Cuttoff dates for progress and actual cycles should coincide to avoid over rosy results. Estimate at Completion (EAC): The EAC is a revised estimate of the cost to complete by extrapolation of the current trend to the end of the project. This assumes productivity is constant. EAC = ACWP x BAC BCWP Schedule Variance (SV): The Schedule variance calculation is a measure of the time deviation between the actual progress and the planned progress expressed algebraically. SV = BCWP - BCWS Schedule Variance Percentage (SV % ): Converting the schedule variance to a percentage will address any distortion caused by the size of the activity. SV% = SV / BCWS Cost Variance (CV): The cost variance is a measure of the deviation between the earned value and the actual cost of doing the work. CV = BCWP - ACWP Cost Variance Percentage (CV % ): Converting the CV to a CV% will reduce the distortion caused by the size of the activity. CV% = CV / BCWP

EARNED VALUE
Earned value is an integrated planning and control tool which integrates cost and time. The time for assessment is determined by the time to take corrective action. Although the earned value technique was set up initially to track the progress of cost and time, in practice it is often more appropriate to track progress measured as earned manhours and time. Terminology Timenow or Status Date or Data Date or Progress Date represents the cutoff date for which the earned value is calculated Budget at Completion (BAC): This is the original cost estimate, budget or quotation, indicating the funds required to complete the work. The units could be in $ or manhours or any other measure that is appropriate. Percentage Complete (PC): The PC is a measure of the activities performance and progress to timenow and is required for the earned value calculation. There are a number of methods of calculating percentage complete. The most robust relate to quantity or milestone measurement. This calculation can be undertaken by examining the work undertaken or the work required to complete an activity. Remaining Duration (RDU): The remaining duration is the estimated time required to complete the activity from timenow. The production feedback overrides the network logic if the activity has already started, but for work that has not started the original network logic must be assumed to hold.

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Threshold Variance: Extent of variance that will trigger action. The threshold limits may be set as a percentage (say +/- 5%) to give an early indication of an undesirable trend.

WHY USE EARNED VALUE ?

Enables integration and aggregation of costing and schedule information. Links to planning cycles and enables clear exposure of potential problem areas.

Extended site: If costs are being incurred off site, such as stage payments then the progress (PC) must be reported along with the associated cost (ACWP). Cash flow: The earned value technique is not the same as cash flow. The Client's Perspective The client can effectively use earned value to track the progress on his project in terms of manhours or costs.

ANALYSING THE C/SCS GRAPH EARNED VALUE STEPS

The following steps have been developed as a guideline for the project planner to follow, in order to produce: * The Earned Value table. * The integrated cost / schedule graph. Step l: Step 2: Step 3: Step 4: Step 5: Step 6: Set up an earned value table Calculate BCWS for the project, draw the curve BCWS against time. Track project to timenow. Record the following data for each activity: percentage complete and ACWP. Calculate BCWP = BAC x PC, draw BCWP to timenow, then extrapolate Draw ACWP to timenow, and extrapolate the line to the new completion date. This will forecast the EAC. Calculate the variancess Forecasting: When trying to forecast the trends in the project by extrapolating the earned value curves, the following considerations should be made: a) Will the same performance be maintained. b) Will the performance improve because of a learning curve effect. c) Will the performance reduce because of unforeseen problems and rework.

Step 7: Plot variances. Step 8: Apply Control .

INFORMATION REQUIREMENTS
Project Accounts: The project manager will need to ensure that the project accounting system will generate costs to timenow.

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