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PROJECT COST MANAGEMENT

“Project Cost Management includes the processes involved in estimating,


budgeting, & controlling costs so that the project can be completed within the
approved budget”
PROJECT COST MANAGEMENT

This Knowledge Area is primarily concerned with:

• The cost of resources needed to complete the schedule activities.

• Considering the information requirements of stakeholders.

With proper planning, you can:

→ Adjust the project plan to conform to the budget

→ Track and manage cost once the project execution begins

→ Compare actual cost to the original planned cost and analyze any
variances between the two
PROJECT COST MANAGEMENT

• Project Cost Management should consider the effect of project decisions on the

cost of using, maintaining, and supporting the project's product, service, or result;
this broader view is often called Life Cycle Costing.
→ Life Cycle Costing together with value engineering can improve decision-
making and is used to reduce cost and execution time and to improve the quality
and performance of the project deliverable
→ Value Engineering (VE) - Creative approach used to optimize project life
cycle costs, save time, increase profits, improve quality, expand market share,
solve problems, and/or use resources more effectively. Value engineering is a
systematic and organized approach to provide the necessary functions in a project
at the lowest cost. Value engineering promotes the substitution of materials and
methods with less expensive alternatives, without sacrificing functionality.
PROJECT COST MANAGEMENT PROCESSES

Project Cost Management Processes include:

PLAN COST MANAGEMENT

ESTIMATE COSTS

DETERMINE BUDGET

CONTROL COSTS

These processes interact with each other as well as with the processes of other
knowledge areas.
PROJECT COST MANAGEMENT PROCESSES

• On some projects, cost estimating & cost budgeting processes are so tightly

linked that they are viewed as a single process & can be performed by a person

over a relatively short period of time.


PROJECT COST MANAGEMENT PROCESSES

• All the selected cost management processes & their associated tools &

techniques are documented in the Cost Management Plan

• Influence to cost is greatest at the beginning of the project; impact of changes

to Cost becomes higher as the project progresses.


PROJECT COST MANAGEMENT PROCESSES
• Project Cost Management should consider the stakeholder requirements for
capturing costs.

• Different stakeholder will measure project costs in different ways & at different
times.

• Project Cost Management is primarily concerned with the resources needed to


complete project activities.

• It should also consider the effect of project decisions on the subsequent


recurring cost of using, maintaining, & supporting the product, service, or result of
the project.
PROJECT COST MANAGEMENT
PROCESSES

PLAN COST MANAGEMENT

Plan Cost Management is the process that establishes the policies, procedures,

and documentation for planning, managing, expending, and controlling project

costs. The key benefit of this process is that it provides guidance and direction

on how the project costs will be managed throughout the project.


PLAN COST MANAGEMENT

INPUTS OUTPUTS
TOOLS & TECHNIQUES
1. Project
management plan 1. Expert judgment
1. Cost management
plan
2. Project charter 2. Analytical techniques

3. Enterprise 3. Meetings
environmental
factors

4. Organizational
process assets
PLAN COST MANAGEMENT

INPUTS

1. Project Management Plan

The project management plan contains information used to develop the cost
management plan, which contains, but is not limited to:

• Scope baseline. The scope baseline includes the project scope statement and
WBS detail for cost estimation and management.

• Schedule baseline. The schedule baseline defines when the project costs will be
incurred.

• other information. Other cost-related scheduling, risk, and communications


decisions from the project management plan.
PLAN COST MANAGEMENT

INPUTS (cont.)

2. Project charter

The project charter provides the summary budget from which the detailed project
costs are developed. The project charter also defines the project approval
requirements that will influence the management of the project costs.

3. Enterprise Environmental Factors


The enterprise environmental factors that influence the Plan Cost Management
process include, but are not limited to:

• Organizational culture and structure can all influence cost management


• Market conditions describe what products, services, and results are available in the
regional and global market
• Project management information system, which provides alternative possibilities
for managing cost.
PLAN COST MANAGEMENT

INPUTS (cont.)

4. Organizational Process Assets

The organizational process assets that influence the Plan Cost Management process
include, but are not limited to:

• Financial controls procedures (e.g., time reporting, required expenditure and


disbursement reviews, accounting codes, and standard contract provisions);
• Historical information and lessons learned knowledge bases;
• Financial databases; and
• Existing formal and informal cost estimating and budgeting-related policies,
procedures, and guidelines.
PLAN COST MANAGEMENT

TOOLS & TECHNIQUES

1. Expert Judgment

• Provides valuable insight about the environment and information from prior
similar projects.

• Used to determine whether to combine methods of estimating & how to


reconcile differences between them.
2. Analytical techniques
Developing the cost management plan may involve choosing strategic options to
fund the project such as:
self-funding, funding with equity, or funding with debt. The cost management
plan may also detail ways to finance project resources such as making,
purchasing, renting, or leasing. These decisions, like other financial decisions
affecting the project, may affect project schedule and/or risks.
PLAN COST MANAGEMENT

TOOLS & TECHNIQUES (cont.)

3. Meetings

Project teams may hold planning meetings to develop the cost management plan.

Attendees at these meetings may include the project manager, the project
sponsor, selected project team members, selected stakeholders, anyone with
responsibility for project costs, and others as needed.
PLAN COST MANAGEMENT

OUTPUT

1. Cost Management Plan

The cost management plan is a component of the project management plan


and describes how the project costs will be planned, structured, and controlled.

The cost management processes and their associated tools and techniques are
documented in the cost management plan.

For example, the cost management plan can establish the following:
• Units of measure. Each unit used in measurements (such as staff hours, staff
days, weeks for time measures; or meters, liters, tons, kilometers, or cubic
yards for quantity measures; or lump sum in currency form) is defined for
each of the resources.

• Level of precision. The degree to which activity cost estimates will be


rounded up or down (e.g.,US$100.49 to US$100, or US$995.59 to
US$1,000), based on the scope of the activities and magnitude of the project
PLAN COST MANAGEMENT

OUTPUT

• Level of accuracy. The acceptable range (e.g., +-10%) used in determining realistic
activity cost estimates is specified, and may include an amount for contingencies

• Organizational procedures links. The work breakdown structure (WBS) provides the
framework for the cost management plan, allowing for consistency with the estimates,
budgets, and control of costs. The WBS component used for the project cost
accounting is called the control account. Each control account is assigned a unique
code or account number(s) that links directly to the performing organization’s
accounting system.

• Control thresholds. Variance thresholds for monitoring cost performance may be


specified to indicate an agreed-upon amount of variation to be allowed before some
action needs to be taken. Thresholds are typically expressed as percentage deviations
from the baseline plan.
PLAN COST MANAGEMENT

OUTPUT

• Rules of performance measurement. Earned value management (EVM) rules of


performance measurement are set. For example, the cost management plan may:

• Define the points in the WBS at which measurement of control accounts will be
performed
• Establish the earned value measurement techniques to be employed
• Specify tracking methodologies and the earned value management computation
equations for calculating projected estimate at completion (EAC) forecasts to
provide a validity check on the bottom-up EAC.
PROJECT COST MANAGEMENT
PROCESSES

ESTIMATE COSTS

“Estimate Costs is the process of developing an approximation of the monetary

resources needed to complete project activities”


ESTIMATE COSTS
Cost Estimating process includes:

• Identifying & considering alternative ways of reducing cost, this is called Value
analysis/engineering

• Estimator must consider the possible causes of variation of cost estimates,


including risks.

• Should consider Life cycle costing, which considers the overall cost of the product
not just the project cost.

• Costs for schedule activities are estimated for all resources that will be charged to
the project.

• Estimates are further refined as the project progresses. This is for improved
accuracy. A cost baseline is created & changed only through the Integrated Change
Control process.
ESTIMATE COSTS
Types of Costs:

→ Direct Costs – which are costs directly to the work of the project.

→ Fixed Costs – which are the costs that remain the same throughout the project
such as rentals.

→ Variable Costs – which are the costs that change as the work changes such as
the cost of material.

→ Indirect Costs – are those costs that are incurred by the company as a result of
the work e.g. taxes, overhead costs & etc.

→ Sunk Costs – which is money already spent.

→ Opportunity Costs – which refers to a project selection & the money that was
lost when selecting one project for another.

→ Crashing Costs – which is the cost of crashing the schedule.


ESTIMATE COSTS

INPUTS TOOLS & TECHNIQUES OUTPUTS


1. Cost management .1 Expert judgment .1 Activity cost
plan
.2 Analogous estimating estimates
2. Human resource .3 Parametric estimating .2 Basis of estimates
management plan
.4 Bottom-up estimating
3. Scope baseline .3 Project documents
.5 Three-point estimating updates
4. Project schedule
.6 Reserve analysis
5. Risk register
.7 Cost of quality
6. Enterprise
environmental .8 Project management
factors software

7. Organizational .9 Vendor bid analysis


process .10 Group decision-making
assets techniques
ESTIMATE COSTS

INPUTS

1. Cost Management Plan

The cost management plan defines how project costs will be managed and
controlled. It includes the method used and the level of accuracy required to estimate
activity cost.

2. Human resource Management Plan

The human resource management plan provides project staffing attributes, personnel
rates, and related rewards/recognition, which are necessary components for
developing the project cost estimates.
ESTIMATE COSTS

INPUTS (cont.)

3. Scope Baseline

The scope baseline is comprised of the following:

• Project scope statement. The project scope statement provides the product
description, acceptance criteria, key deliverables, project boundaries,
assumptions, and constraints about the project.

• Work breakdown structure. The WBS provides the relationships among all the
components of the project and the project deliverables.

• WBS dictionary . The WBS dictionary provides detailed information about the
deliverables and a description of the work for each component in the WBS
required to produce each deliverable.
ESTIMATE COSTS

INPUTS (cont.)

4. Project Schedule

The type and quantity of resources and the amount of time which those
resources are applied to complete the work of the project are major factors in
determining the project cost. Schedule activity resources and their respective
durations are used as key inputs to this process.

5. Risk register

The risk register should be reviewed to consider risk response costs. Risks,
which can be either threats or opportunities, typically have an impact on
both activity and overall project costs. As a general rule, when the project
experiences a negative risk event, the near-term cost of the project will
usually increase, and there will sometimes be a delay in the project schedule.
ESTIMATE COSTS

INPUTS (cont.)

Enterprise Environmental Factors

The enterprise environmental factors that influence the Estimate Costs process
include, but are not limited to:

• Market conditions. These conditions describe what products, services, and


results are available in the market, from whom, and under what terms and
conditions. Regional and/or global supply and demand conditions greatly
influence resource costs.

• Published commercial information. Resource cost rate information is often


available from commercial databases that track skills and human resource
costs, and provide standard costs for material and equipment. Published
seller price lists are another source of information.
ESTIMATE COSTS

INPUTS (cont.)

7. Organizational Process Assets

The organizational process assets that influence the Estimate Costs process include,
but are not limited to:

• Cost estimating policies,


• Cost estimating templates,
• Historical information, and
• Lessons learned.
ESTIMATE COSTS

TOOLS & TECHNIQUES

1. Expert Judgment

• Provides valuable insight about the environment and information from prior
similar projects.

• Used to determine whether to combine methods of estimating & how to


reconcile differences between them.

2. Analogous Estimating
• Technique used when little information is available to perform estimating
activities.
• Relies on the actual costs from previous, similar projects.
• Also uses Expert Judgment.
• Less costly method but less accurate.
ESTIMATE COSTS

TOOLS & TECHNIQUES


TOOLS & TECHNIQUES (cont.)

Parametric Estimating

• Technique that uses a statistical relationship between historical data


and other variables to calculate an estimate for a activity parameters,
such as cost, budget, & duration.

Bottom-Up Estimating
• A method of estimating a component of work.
• More precise due to individual work package estimation.
• The detailed cost is rolled up to higher levels for reporting & tracking
purposes.
• Helpful when schedule activity of work is large & complex.
ESTIMATE COSTS

TOOLS & TECHNIQUES (cont.)


ESTIMATE COSTS

TOOLS & TECHNIQUES (cont.)

Three-Point Estimating

The accuracy of single-point activity cost estimates may be improved by considering


estimation uncertainty and risk and using three estimates to define an approximate range
for an activity’s cost:

• Most likely (cM). The cost of the activity, based on realistic effort assessment for
the required work and any predicted expenses.

• optimistic (cO). The activity cost based on analysis of the best-case scenario for the
activity.

• Pesimistic (cP). The activity cost based on analysis of the worst-case scenario for
the activity.
ESTIMATE COSTS

TOOLS & TECHNIQUES (cont.)

Depending on the assumed distribution of values within the range of the three estimates
the expected cost, cE, can be calculated using a formula. Two commonly used formulas
are triangular and beta distributions. The formulas are:

• triangular distribution. cE = (cO + cM + cP) / 3

• Beta distribution (from a traditional PERT analysis). cE = (cO + 4cM + cP) / 6

Cost estimates based on three points with an assumed distribution provide an expected
cost and clarify the range of uncertainty around the expected cost.
ESTIMATE COSTS

TOOLS & TECHNIQUES (cont.)

Reserve Analysis

• Includes contingency reserves (sometimes called contingency allowance) to


account for cost uncertainty.

• The contingency reserve may be a percentage of the estimated cost, a fixed


number, or may be developed by quantitative analysis method.

• Reserves analysis should include making sure individual activity estimates are
not padded.

Cost of Quality

• The cost of work added to the project to accommodate quality efforts should
be included in project estimate.
TOOLS & TECHNIQUES (cont.)

Project Management Estimating Software

• Assist & simplify the estimation

• Facilitate rapid consideration of various cost estimate alternatives.


Vendor Bid Analysis

• To examine the price of individual deliverables, and derive a cost that supports
the final total project cost.

• Vendor Bid Analysis. Vendor analysis can be used to estimate what the
project should cost by comparing the bids submitted by multiple vendors.
Using some of these tools and techniques when you're planning your project
can help with your project budgeting.
ESTIMATE COSTS

TOOLS & TECHNIQUES (cont.)

Group decision-Making techniques

Team-based approaches, such as brainstorming, the Delphi or nominal group


techniques, are useful for engaging team members to improve estimate
accuracy and commitment to the emerging estimates.

By involving a structured group of people who are close to the technical


execution of work in the estimation process, additional information is gained
and more accurate estimates are obtained.

Additionally, when people are involved in the estimation process, their


commitment towards meeting the resulting estimates increases.
OUTPUTS

Activity Cost Estimates

• A quantitative assessment of the likely resource cost necessary to complete


the schedule activity.

• Costs are estimated for all resources that are applied to the activity cost
estimate. This includes: labor, materials, equipment, services, facilities,
information technology, and special categories such as an inflation allowance
or cost contingency reserve.
OUTPUTS (cont.)

Basis of Estimates

• The amount and type of additional details supporting the cost estimate
vary by application area.
• Provide a clear, professional, and complete picture by which the cost
estimate was derived.
• Include:
- Documentation supporting how the estimate was developed.
- Any assumptions made,
- Any known constraints,
- Estimate range
- Final estimate confidence level.
OUTPUTS (cont.)

Project Document Updates

• Updates include the risk register.


• Also to the cost management plan if there would be any requested changes.
ACCURACY OF ESTIMATE

 Think about someone walking into your office now and asking you to
estimate the total cost of a new project. The first question you would probably
ask is, “How accurate do you want me to be?”

 Estimates made in the early part of the project will be less accurate than those
made later, when more is known about the project.

 Estimates should be in a range, as it is very unlikely that an activity will be


completed for exactly any particular amount of money.

 In the early part of the project, you typically provide wide-ranging estimates.
Over time, as you determine more information about the project during
planning, you can narrow the estimate range.
ACCURACY OF ESTIMATE

 Organizations often have different standards for different ranges, from


preliminary to conceptual to feasibility to order of magnitude to definitive
estimates.

 Rough Order of Magnitude (ROM) Estimate This type of estimate is


usually made during project initiating. A typical range for ROM estimates is
-25 to +75 percent from actual, but this range can vary depending on how
much is known about the project when creating the estimates.

 Budget Estimate This type of estimate is usually made during project


planning and is in the range of -10 to +25 percent from actual.

 Definitive Estimate As the project progresses, the estimate will become


more refined. Some project managers use the range of + / -1 0 percent from
actual, while others use -5 to + 10 percent from actual.
DETERMINE BUDGET

“Determine Budget is the process of aggregating the estimated costs of


individual activities or work packages to establish an authorized cost
baseline (for measuring project performance)”

 Budgeting involves:
→ Allocating of the cost estimate over the time period required to do the work.
The estimate provides the "should cost" for each task or activity.
→ Determining the specific time period needed to perform each project task or
activity.
→ Developing a time-phased cost baseline that becomes the plan-of-record
based on how the "should cost" have been spread out over time.
→ Using the estimate to determine how much time and money is allocated to
each work package.
DETERMINE BUDGET

INPUTS
.1 Cost management
TOOLS & TECHNIQUES OUTPUTS
plan
.2 Scope baseline .1 Cost baseline
1. Cost aggregation
.3 Activity cost .2 Project funding
estimates 2. Reserve analysis
requirements
.4 Basis of estimates 3. Expert Judgment
.3 Project documents
4. Historical relationships
.5 Project schedule updates
5. Funding limit reconciliation
.6 Resource calendars
.7 Risk register
.8 Agreements
.9 Organizational
process
assets
DETERMINE BUDGET

Tools & Techniques

 Cost Aggregation

 Cost estimates are aggregated by work packages in accordance with the


WBS.

 The work package cost estimates are then aggregated for the higher
component levels of the WBS, such as control accounts, and ultimately
for the entire project
DETERMINE BUDGET

Tools & Techniques

Cost Aggregation
DETERMINE BUDGET

Tools & Techniques

Reserves Analysis
 Reserve analysis establishes contingency reserves and the management
contingency reserve for the project.

 Contingency reserves are allowances for unplanned, but potentially required,


changes that can result from risks identified in the risk register.

 Included in the Cost Baseline

 Management reserves are budgets reserved for unplanned, but potentially


required, changes to project scope and cost.

 These reserves are not part of the Cost Baseline but instead part of the
Overall Budget.
DETERMINE BUDGET

Tools & Techniques

Reserves Analysis
DETERMINE BUDGET

Tools & Techniques


Expert Judgment
Sources includes:
 Other units within the performing organization,
 Consultants,
 Stakeholders, including customers,
 Professional and technical associations, and
 Industry groups.

Historical Relationships

 Any historical relationships that result in parametric estimates or


analogous estimates involve the use of project characteristics (parameter)
to develop mathematical models to predict the total project costs.
DETERMINE BUDGET

Tools & Techniques


Funding Limit Reconciliation
 The process of comparing the planned expenditure of project funds against
any limits on the commitment of funds for the project to identify any variances
between the funding limits and the planned expenditures.

 A technique that looks at existing expenditure of the funds and reconciles


them to occur within the set limits, determined by customer or performing
organization.

 Reconciliation of funding limits necessitates the scheduling of work to be


adjusted to smooth or regulate these expenditures, which is accomplished by
placing imposed date constraints for some work packages, schedule
milestones, or WBS components into the project schedule
DETERMINE BUDGET

Tools & Techniques


Funding Limit Reconciliation
 Purpose: To avoid large & inconsistent use of funds, and to even out or
smoothen out the spending throughout the execution of the project work as is
possible.

 It is like looking at the funding constraints of the project. Our cash flow may
not be consistent throughout out the duration of the project and hence the
spend needs to planned accordingly.
 For eg: in the first month the cash flow is only $x and project cannot spend
more than that but in the next we can spend $x+3. Once these limits are
know we need to adjust the schedule, resourcing etc in line with this.

 The final product of these planning iterations is a cost baseline.


DETERMINE BUDGET

Output
Cost Performance Baseline
 A time-phased budget at completion (BAC) used to measure, monitor, and

control overall project cost performance developed by summing estimated cost


by period.

 Developed as a summation of the approved budgets by time period & is

typically displayed in the form of an S-curve.

 In EVM techniques the cost performance baseline is referred to as the

performance measurement baseline (PMB).


DETERMINE BUDGET

Output

Project Funding Requirements


 Total and periodic funding requirements are derived from the cost
baseline and can be established to exceed in order to allow for either
early progress or cost overruns
 Funding often occurs in incremental amounts that are not continuous,
which appear as step in the S-curve.
→ Total funds required are those in the cost baseline plus the
management contingency reserve amount (funds held outside the PM's
domain and used at senior management discretion)
Project Documents Updates
CONTROL COST

“Control Costs is the process of monitoring the status of the

project to update the project budget & managing changes to the

cost baseline”

This process influence the factors that create cost variance within
the project, and control changes to the project budget.
CONTROL COST
Project Cost Control process is concerned with:
• Influencing the factors that create changes to the authorized cost baseline,
• Ensuring that all change requests are acted on in a timely manner,
• Managing the actual changes as and when they occur,
• Ensuring that cost expenditures do not exceed the authorized funding
periodically and in total for the project,
• Monitoring cost performance to isolate and understand variances from the
approved cost baseline,
• Monitoring work performance against funds expended,
• Preventing unapproved changes from being included in the reported cost or
resource usage,
• Informing appropriate stakeholders of approved changes & associated cost,
Acting to bring expected cost overruns within acceptable limits.
CONTROL COST

INPUTS

Project Management Plan


Contains the following to control cost:

• Cost Performance Baseline: It is compared with actual results to determine


if a change, corrective or preventive action is necessary.

• Cost Management Plan: Describes how the project costs will be managed
and controlled.
CONTROL COST

INPUTS

Project Funding Requirements

Work Performance Information


Includes information about:

• Project progress such as deliverables status information,

• Costs that have been authorized and incurred,

• Estimates for completing the project work.


CONTROL COST

INPUTS

Organizational Process Assets

• Existing formal & informal cost budgeting-related policies, procedures,


& guidelines,

• Cost control tools, and

• Monitoring and reporting methods to be used.


CONTROL COST

TOOLS
TOOLS &&TECHNIQUES
TECHNIQUES

Earned Value Management

• It is a performance measurement technique.

• Integrates project scope, cost, and schedule measures to help the project
management team assess & measure project performance & progress.

• Performance is measured against an integrated baseline for the duration of


the project.

• It compares Budgeted Cost of Work Performed (Earned) to:

- The Budgeted Cost of Work Scheduled (Planned), and

- The Actual Cost of Work Performed.


CONTROL COST
ROLE OF EARN VALUE MANAGEMENT (EVM)
EVM has proven itself to be one of the most effective performance measurement
and feedback tools for managing projects
→ It enables managers to close the loop in the “Plan, Do, Check, Act”
cycle.
→ EVM provides organizations with the methodology needed to integrate
the management of project scope, schedule, and cost.
→ EVM has been called “management with the lights on” because it can
help clearly and objectively illuminate where a project is and where it is
going—compared to where it was supposed to be and where it was supposed
to be going.
→ EVM uses the fundamental principle that patterns and trends in the past
can be good predictors of the future.
CONTROL COST
EARNED VALUE MANAGEMENT (EVM) ANALYSIS
Uses performance management techniques to help assess the magnitude of any
variances that will invariably occur.
→ One technique used is called earned value technique (EVT) which
compares the cumulative value of the budgeted cost of work performed (earned
at the original allocated budget amount) to both the budgeted cost of work
scheduled (planned) and to the actual cost or work performed (actual).

→ An important part of cost control is to determine the cause of a variance,


the magnitude of the variance, and to decide if the variance requires corrective
action
→ EVT uses the cost baseline contained in the project management plan to
assess project progress and the magnitude of any variations that occur.
CONTROL COST

EARNED VALUE MANAGEMENT (EVM) ANALYSIS

→ EVT involves developing these key values for each schedule activity, work
package, or control account.

o Planned Value (PV)


o Earned Value (EV)
o Actual Cost (AC)
o Estimate to Complete (ETC)
o Estimate at Completion (EAC)
CONTROL COST

Earned Value Management


CONTROL COST

Earned Value Management


CONTROL COST

Earned Value Management


CONTROL COST

Earned Value Management


Earned Value Management
CONTROL BUDGET

Earned Value Management


CONTROL COST

Earned Value Management


Earned Value Management
CONTROL COST

TOOLS & TECHNIQUES

Reserve Analysis
During cost control, reserve analysis is used to monitor the status of
contingency and management reserves for the project to determine if
these reserves are still needed or if additional reserves need to be
requested.

Project Management Software

PM Software is often used to monitor the three EVM dimensions (PV,


EV & AC) to display graphical trends, and to forecast a range of possible
final project results.
CONTROL COSTS

OUTPUTS
OUTPUTS (cont.)

Work Performance Information

• The calculated CV, SV, CPI, and SPI values for WBS components,
in particular the work packages and control accounts, are documented
and communicated to stakeholders.

Cost Forecasts
• Either a calculated EAC value or a bottom-up EAC value is
documented and communicated to stakeholders.
OUTPUTS (cont.)
OUTPUTS (cont.)

Organizational Processes Assets Updates

Updates include:
• Cause of variances,
• Corrective action chosen and the reasons, and
• Other types of lessons learned from project cost control.

Change Requests
• Analysis of project performance can result in a change request to
cost performance baseline or other components of project
management plan.
• Include: Preventive or corrective actions.
OUTPUTS (cont.)

Project Management Plan Updates

Updates include:
• Cost Performance Baseline – updated due to the approved changes
in scope, activity resources, or cost estimates.
• Cost Management Plan.

Project Document Updates


• Cost estimates, and
• Basis of estimates.
Exercises

Question: What is the EV, if your CPI is 1.1 and SPI is 0.92, and your AC is
$10,000?

Question: What is your SPI if your CV is $10,000, your SV is -$3,000, and


your PV is $100,000?

Question: Using the information from the previous question, determine AC.

Question: In the latest Earn Value Report for your project, you see the CPI is
1.2, the SPI is 0.8, the PV is $600,000, and SV is -$120,000. You cant find CV
in the report. So you need to calculate it based on the information given. What
is the CV?