T ECHNICAL A RTICLE

Cost-Time-Risk Diagram:
Project Planning and Management
Dr. Peerapong Aramvareekul, PSP EVP and Daniel J. Seider, PE
ABSTRACT: This article presents the integration of cost and time performance measurement with
project risk analysis into one diagram, called the Cost-Time-Risk diagram (CTR). The author
believes the presented CTR diagram is a revolution in earned value analysis. It plots the total
brainstorming of project cost-time planning versus actual production. It also integrates evaluation of internal risks, external risks, and project specific risks. The steps to prepare and to operate the CTR diagram are explained. The article also illustrates, with graphical movement, decision-making information that many project managers struggle in developing.
KEY WORDS: Costs, earned value, planning, and project risk analysis

he idea of good project management

is to ensure that projects will be
completed on time, on budget, and
to meet clients satisfaction. Standard
project management processes and
techniques, such as project task list and
Delphi technique, are the tools for project
managers.
The Cost-Time-Risk diagram (CTR) is
presented in this article as a revolutionary
project planning and management
technique. The authors believe that CTR
will help project managers consider project
risk issues while monitoring and controlling
their project schedule and cost performance
in one diagram.
Managing projects involves planning,
scheduling, risk analysis and identification,
performance monitoring, quality control,
and solution making [14].
Planning and managing projects is
challenging. Projects are unique and
temporary [16]. Unique means that the
product or service and the clients
expectations are different from project to
project [16]. Temporary means that a start
date and a finish date are always required for
every project [16].
Projects bring together many groups of
people within and outside of an
organization. Each of these groups have
different responsibilities and expectations.
Managing a project is like managing
expectations and responsibilities of various
groups. Examples can include project
managers, project team members,
executives, subcontractors, suppliers, and
clients [5]. Although each party has different
goals and responsibilities, the ultimate

12

both project cost performance and project

time performance on the same time
diagram, which is important for cost-time
tradeoff decision-making. Besides the
tradeoff between cost and time, the CTR
diagram also provides risky and healthy
boundaries at each period of time during the
project life cycle. The risky and healthy
boundaries are evaluated and used in the
CTR diagram to ensure that projects will be
delivered on time and within the budget.
Earned Value Analysis : Fundamental
Method of Cost-Time-Risk Diagram
Earned value analysis (EVA), a process
of earned value management (EVM), is a
fundamental
method
for
project
management and for the cost-time-risk
diagram (CTR). The CTR diagram is an
integration of earned value analysis with risk
management. Risk management is an
aspect of quality assurance, using basic
analysis techniques and performance
measurement to ensure that risks are
properly identified, evaluated, and managed
[15]. Prior to discussing the use of the costtime-risk diagram, it is first necessary to
understand some of the basic concepts of the
earned value analysis method. The key to
the practice of earned value analysis and
cost-time-risk diagram is the concept of the
work breakdown structure (WBS).
Earned value analysis is an industry
standard method to measure a projects
progress, to forecast its completion date and
final cost, and to provide project schedule
and cost variances along the way [3]. With
the integration of three measurements, it
provides consistent numeric indicators,
which can be evaluated, for project
performance.
The three measurements that are
calculated from the time period summation
of planned and actual costs associated with
each work package include the following.

project goals are on time, on budget, right

product or service, and good quality.
This article presents the integration of
cost and time performance measurement
with project risk analysis in one diagram,
called the Cost-Time-Risk diagram (CTR).
The authors consider the CTR diagram to
be a revolution in earned value analysis.
They believe, it plots the total
brainstorming of project cost-time planning
versus actual production. It also integrates
evaluation of internal risks, external risks,
and project specific risks.
This CTR diagram is a project
management tool that supports the
successful control of project cost and
schedule. The CTR diagram also supports
proactive management for better productive
outcome.
The steps to prepare and operate a CTR
diagram are explained.
The article
illustrates, with graphical movement,
decision-making information that many
project managers struggle to develop. For
example: what is going on in your project, is
there anything unexpected happening, what
should the project manager do to recover the

performance?

budgeted cost of work scheduled

(BCWS) or planned value;
budgeted cost of work performed
(BCWP) or earned value; and
actual cost of work performed (ACWP)
or actual cost of accomplished work, as
illustrated in figure 1.

What is Cost-Time-Risk Diagram?

Cost-Time-Risk diagram (CTR) is a
diagram that illustrates current project cost
and time performance status associated with
evaluated risks. The CTR diagram is an
advanced graphical analysis of earned value
Definitions
of
these
three
management (EVM). The CTR diagram is
measurements
can
be
listed
as
follows.
like a project health-monitoring map. It
helps project managers make better
Budgeted cost of work scheduled
decisions in problem solving during the
(BCWS)Planned cost of the total
project life cycle. Project managers will see

Cost Engineering Vol. 48/No. 11 NOVEMBER 2006

Figure 1 Earned Management Terms

amount of work scheduled to be

performed within given time period or
by the milestone date.
Budgeted cost of work performed
(BCWP)The planned (not actual)
cost to complete the work that has been
done at that time period.
Actual cost of work performed
(ACWP)The actual costs incurred in
accomplishing the work performed
within a given time period.

Work Breakdown Structure (WBS)

Work breakdown structure (WBS) was
initially developed by the US Defense
Establishment. As described in the Military
Standard (MIL-STD) 881B (25 Mar 93),
work breakdown structure (WBS) is a
product-oriented tree diagram that contains
all work of a project in an organized format
[18]. It is often portrayed graphically as a
hierarchical tree, as shown in figure 2;
however, it can also be a tabular list of
element categories and tasks, or the
indented task list that appears in a Gantt
chart schedule, as shown in figure 3.

Work breakdown structure (WBS) is

considered the foundation of project plans.
It is not a to do list of every possible thing
that needs to be done in the project. Rather
it is the assignments that hold project team
members accountable for delivering. As a
result, developing an effective work
breakdown structure requires a great amount
of thinking and organizing effort, not just
writing down every single thing that needs to
be done in the project.

Figure 2 WBS Hierarchical Tree

Cost Engineering Vol. 48/No. 11 NOVEMBER 2006

13

Figure 3 WBS Gantt Chart

Monitoring And controlling A Project

With The CTR Diagram
The CTR diagram is a project
management tool and technique for project
managers to use for monitoring their
projects. In the CTR diagram, a revolution
in earned value analysis, graphs present
current project schedule and cost
performance against integrated evaluation of
risk at each period of time. Risk evaluation
is an important means of planning and
controlling projects, improving project
decision-making, and reducing uncertainty.
If risk is not proactively managed, projects
may be seriously threatened by unplanned

events, which could result in cost overruns,

schedule delays, quality issues, and/or failing
to meet project objectives [12]. The CTR
diagram
also
supports
proactive
management for better decision-making
especially for the time-cost tradeoff.
Setting Up And Plotting CTR Diagram
The CTR diagram is plotted from the
cumulative data of percentage of work
completed and percentage of cost over-run
or under-run at each time period of the
monitoring point. Both the percentage of
work completed and the percentage of cost

Figure 4 Budgeted Cost of Work Scheduled (BCWS)

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Cost Engineering Vol. 48/No. 11 NOVEMBER 2006

over-run or under-run are products from the

earned value analysis (EVA) calculation.
Setting up the CTR diagram starts from
preparing three measurements of earned
value analysis: BCWS, BCWP, and ACWP.
The first thing is to develop the work
breakdown structure (WBS). Then, a
performance measurement baseline (PMB)
is prepared by cumulatively summing value
of all work packages from the start to each
monitoring time period, as shown in figure
4, as BCWS at each time period.
Budgeted cost of work performed
(BCWP) is obtained from updating how
much work has been completed up to that

monitoring time period, and actual cost of

work performed (ACWP) is obtained from
updating how much money has been spent
on the project up to that monitoring time
period, as shown in figure 5.

When
preparing
performance
measurement baseline (PMB), risk analysis
should also be integrated into it. For
instance, project risks in general are
categorized into three groups: external risks,

internal risks, and project specific risks. Risk

analysis is an ongoing activity throughout the
project, and will involve all members of the
project organization [12]. External risks are
risk factors that come from outside the

Figure 5 Budgeted Cost of Work Scheduled (BCWS), Budgeted Cost of Work Performed (BCWP), Actual Cost of Worth Performed (ACWP)

Figure 6 Cost Time Risk Diagram (CTR)

Cost Engineering Vol. 48/No. 11 NOVEMBER 2006

15

company such as suppliers, weather, clients,

etc. Internal risks are risk factors that come
from the team within the company such as
worker levels, material, communication
process, etc. Last but not least, project
specific risks are risk factors that occur only
for that type of project such as technical
process, quality control process, evaluation
process, etc. All of these risks must be
evaluated and integrated into the projects
PMB, starting from project planning phase
and continuing until the project is finished
The next step after setting up PMB and
updating BCWP and ACWP is to run
calculations for variance, performance
index, revised time-cost estimate and so on.
Two numbers from the calculation, which
will be used to plot the CTR diagram, are
percentage of work completed and
percentage of cost over-run or under-run, as
shown in figure 6.
Evaluating and Determining Risky and
Healthy Area
To determine healthy area, it depends
on project managers and/or project
management officers to evaluate safety
boundaries for both schedule performance
and cost performance. The healthy area is
like a safety net for project schedule and cost
performances.
When CTR - schedule performance
line (CTR-S) and CTR - cost performance

Figure 7 CTR Schedule and Cost Matrix

line (CTR-C) are progressing within the

healthy area, the project manager and/or
project management officer have a certain
amount of time and budget to solve
problems when they occur during the
project duration.
The closer the project finished date
comes, if the CTR-S and CTR-C are still
progressing within the healthy area, it is a
sign of possibly earning extra profit at the end
of the project. For example, as shown in this
article, 10 percent ahead of schedule for
time performance and 10 percent under
budget for cost performance at each period
of time are set up to be the healthy area, as
shown in figure 6 (green color/healthy area).
Some factors can be used to evaluate
and determine what the risky areas are,
including the following: the type of project,

Figure 8 Sample of CTR Diagram Implementation

16

Cost Engineering Vol. 48/No. 11 NOVEMBER 2006

milestones, holidays, schedule and work to

be finished, resources capacity, project
teams work-load and milestones from other
projects, etc.
As shown in figure 6, a risk level of
CTR-S is set at 85 percent at the start of the
project. This means that, the project team
has up to 15 percent for performing below
the performance measurement baseline
(PMB) of 100 percent, at the project start.
But this is not recommended,
This under-PMB allowable area
becomes smaller as the time gets closer to
the project finished date, This is shown in
the risk area (all colors except green color) of
figure 6.
To determine the risk level of CTR-C,
as used in this article, a sample is set up of
five percent allowable for over budget

performing at the period of project start and CT-4: CTR-S is increasing while CTR-C is
continuing until almost the last period of the stable. This indicates that project time
performance is increasing while effort is
project duration, as shown in figure 6.
stable. This can happen when a project
Reading and Analyzing Information From team is highly productive and/or successfully
uses value engineering.
A CTR Diagram
The goal of the project manager is to
keep the schedule performance line (CTR- CT-5: CTR-S is stable and CTR-C is also
S) and the CTR - cost performance line stable. This indicates that project time
(CTR-C) moving forward. To accomplish performance and cost performance are
this, areas of risk need to be avoided or stable. However, this can be positive or
mitigated. Both CTR-S and CTR-C,at the negative, depending upon where or at what
time of project start, can be experiencing risk percentage levels the two lines run
issues. If not, risk issues can develop during horizontally.
the project. To avoid these becoming a
problem, the team can use fast-tracking, CT-6: CTR-S is decreasing while CTR-C is
crashing, etc., to bring the CTR-S and the stable. This indicates that project time
CTR-C out of risk problems. The best performance is decreasing while effort is
solution is to have both lines of the CTR stable. This generally happens when a
project team performs at a low level of
diagram running within the healthy area.
productivity.
Normally, CTR-S and CTR-C should
be progressing in the same direction; for
example, if CTR-S is increasing, CTR-C
will be also increasing, which means that the
team puts out more effort to get more work
done. For the ideal case, if a project is
progressing exactly as planned, CTR-S and
CTR-C will be parallel, running at the at the
100 percent and 0 percent levels
respectively. In this article, there are nine
moving directions of the CTR diagram, as
presented in a matrix table in figure 7.
CT-1: CTR-S is increasing and CTR-C is
also increasing. This indicates that project
time performance is increasing by means of
increased effort. An example of this is
overtime, such as when a project manager
has the project team spend more time to
catch up a project time performance
baseline.
CT-2: CTR-S is stable while CTR-C is
increasing. This is an indication that project
time performance is stable while effort is
increasing. This can happen when a project
team performs low productivity and/or works
on tasks that are out of scope. It most likely
shows a low productivity performance.
CT-3: CTR-S is decreasing while CTR-C is
increasing. This indicates that project time
performance is decreasing despite the fact
that effort is increasing. This can happen
when a project team performs at a seriously
low level of productivity and/or works on
tasks that are out of scope. Generally it is
caused by working on tasks that are not listed
in the project scope of work.

CT-7: CTR-S is increasing while CTR-C is

decreasing. This indicates that project time
performance is increasing but with less
effort. This can happen when a project team
performs at an extremely high level of
productivity and/or can be a result of
excellent value engineering. However,
when this happens, the project manager
must pay high attention to quality control to
ensure that there will not be a need for
redoing work later on.
CT-8: CTR-S is stable while CTR-C is
decreasing. This indicates that project time
performance is stable while effort is
decreasing. This can happen when a project
team performs at a high productivity level
and/or has success with value engineering.
CT-9: CTR-S is decreasing and CTR-C is
also decreasing. This indicates that project
time performance is decreasing with
decreasing effort. This can happen when a
project manager decides to have the project
team spend less time catching up on project
cost performance baseline items. Another
possibility is that the project manager
decides to let some of project team work on
other projects during this duration period
because his/her project is not ahead of
schedule.
An Example of Implementing CTR
Diagram to Decision-Making
The following example is from a project
that used EVM concepts and implemented
a CTR diagram to manage the project and to
help decision-making.

Cost Engineering Vol. 48/No. 11 NOVEMBER 2006

This project was a water system design

project. The first phase of the project was
the environmental study, survey, and basemapping phase.
The duration of this phase was
approximately four months.
Time
management was very important for this
phase to be finished on time in order to start
the next phase, as planned in a project
master schedule. This first phase is a
schedule-driven phase.
This first phase was planned on an
aggressive schedule from the start. The
project team had a good start with ahead of
schedule and under-budget performances,
until approximately the 20 percent
milestone point of the phase, as shown in
Figure 8. at MP-1.
At the MP-1, the project schedule
performance dropped down below an 80
percent work-completed level. This
indicated an area of risk. The project
manager evaluated information. It showed
that the project team was doing very well on
project cost performance at that monitoring
period. The project was approximately 50
percent under-budget.
The project manager decided to have
the project team work overtime for the next
three weeks. This was to bring the project
schedule performance or CTR-S line above
the area of risk.
As seen in figure 8, at MP-2, executive
management was satisfied with the project
managers decision to use overtime,
although it seemed to be too early to spend
overtime funds. As the result of the overtime
decision, the team was able to increase the
project schedule performance to almost the
100 percent work complete level at the 50
percent milestone point. The project cost
performance was at approximately 35
percent under-budget, as shown in figure 8,
at MP-2.
A short time period later, a CT-3
situation was found, as shown in figure 8, at
MP-3. The project manager evaluated the
information and found that the project team
was working on tasks that were not listed in
the original scope of this phase.
The project schedule performance was
dropped to a level of below 90 percent work
completed level. Project cost performance
was approximately 20 percent under-budget.
The project manager decided to implement
a value-engineering method to stop the
problem. After solving the CT-3, the project
manager evaluated the project cost
performance, and then decided to add one

17

Management Journal, XXXI (1), 2000,

The CTR diagram provides important
pp. 32-43.
information for projects, so it helps project
managers for better decision-making with 12. Kerzner, H., Project Management: A
Systems Approach to Planning,
faster reaction. The CTR diagram, a
Scheduling, and Controlling, John
revolution of earned value analysis, is a
Wiley & Sons, New York, New York,
project management tool that supports the
Seventh Edition, 2001.
successful control of project cost and
schedule. The CTR diagram also supports 13. Kim, E.H., A Study on the Effective
Implementation of Earned Value
proactive management for better productive
Management
Methodology,
outcome.

Opinions and Feedback from End Users:

Unpublished
Doctoral
Dissertation,
Project Manager
The
George
Washington
University,
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6. Department of the Navy, Cost and ABOUT THE AUTHORS
day to day basis.
Schedule Control Systems Criteria
Dr. Peerapong Aramvareekul, PSP
Joint Implementation Guide, EVP, is the manager of development schedn order to run business profitably,
Assistant Secretary of the Navy (S&L) uling with Land Capital Group of Park City,
executives need the latest and most
Pamphlet NAVSO P3627, Washington, UT. He is a member of AACE International
accurate facts on project health and
DC, Oct. 1, 1987.
and he can be contacted by sending e-mail
performance.
7.
Farid,
F.
and
Karshenas,
S.,
Cost
and
to: apeerapong@yahoo.com.
As project teams become more
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Control
Systems
Criteria
Daniel J. Seider, PE, is employed by
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Inflation,
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Duchscherer A&E of Amherst, NY.
communicate effectively, to share
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be contacted by sending e-mail to:
information, and capture feedback with
8.
Fleming,
Cost
Schedule
Control
dseider@wd-ae.com
accurate project performance analysis in a
Systems Criteria, The Management
timely manner. Project delivery is critical to
Guide to C/SCSC, Probus Publishing Technical Articles - Each month, Cost
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Company, 1992.
Engineering journal publishes one or more peerincreasing in complexity and constraints are
9.
Heize,
K., Cost Management of reviewed technical articles. Unless noted
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the right information and the means to
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Inc., New York, New York, 1996.
model that information to maximize
the subject area judge the technical accuracy of the
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performance and minimize risk.
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A CTR diagram and EVM concepts
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more worker to increase the project teams
productivity, until this phase was finished.
Finally, this project phase was completed
about on schedule and approximately six
percent under budget. Everyone on the
project team was satisfied with the final
result and the client was happy with the
timing and quality of work.

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Cost Engineering Vol. 48/No. 11 NOVEMBER 2006