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Project ControlsTraining Manual

Applied

Your Ultimate Guide to Successin Project Control and Management

Table of Contents

Module 5-‐ Execution of Project Controls

Record Schedule Status ............................................................................................................................................. 6

Record Cost Status ................................................................................................................................................... 14

Measure Earned Value Key Components .................................................................................................. 16

Exercise # 1-‐ Calculating the key components of Earned Value ................................................................. 34

Performance Measurement Methods ....................................................................................................... 41

Fixed Formula .................................................................................................................................. 45

Percent Complete ............................................................................................................................ 48

Weighted Milestone ........................................................................................................................ 50

Apportioned Effort .......................................................................................................................... 53

Level of Effort (LOE) ......................................................................................................................... 57

Review of Module 5 ................................................................................................................................................. 60

Page: 1 2014 © Project Control Academy, All rights reserved

By the end of this module, you will learn:   The elements of schedule and cost status recording.   The steps involved in schedule upda;ng process.   Three key components ( PV, AC, EV) of cost status recording in applying the Earned Value Management technique.   The difference between the Tradi;onal Management and Earned Value Management.   Various techniques available to calculate Earned Value.


  In previous modules, three major elements of planning; Scope Planning, Time Planning, and Cost planning were discussed.   Through the integrated scope, ;me, and cost planning, the project “baseline” is established.   ANer establishing the project’s Baseline and freezing the Baseline, we are ready to execute the work.   The execu;on stage is covered in this module.


Execu&on of Project Controls Record Schedule Status

Record / Measure Cost Status

Do

  The role of Project Controls in the execu;on stage of the project is to accurately and regularly record and measure the project progress against the frozen baseline.

  The role of planner/scheduler during the execu;on stage is to record the schedule progress.

  The role of a cost controller during execu;on stage is to capture actual costs, physical progress, and changes to the BL.

  The above figures will be used for monitoring and controlling performance against the frozen project’s baseline.


Measure EV Key Components

(PV, AC, EV)

Select EV Measurement

Method

Record Cost Status

  In execu;ng a project, to determine the status of projects, three key components are examined:

  Cost and Schedule Baseline (What is Planned)   Actual expenditures (What is done)   Recorded accomplishment or “Earned Value” (What is earned)

  To measure progress (“physical” accomplishments), we will review various Earned Value methods.


WBS Schedule Budget

Scope Planning

Time Planning

Cost Planning

Planning

PMB PV

EV Methods

AC

Physical% Complete

EV

Financial Accounting

Sys.

Cost Control System

Execution

Schedule Updates Schedule

Software


Record Schedule Status Record Cost Status


  Change is inevitable and every project will experience it.   Change can occur simply by:

  Work progressing more quickly or slowly than planned,   Changes in other elements of the project occur (e.g. scope changes),

  The project team decides to modify its approach to the project work.

  The purpose of schedule status recording/ upda;ng is to ;mely track the changes to the schedule baseline.


  The steps involved in schedule upda;ng process during the repor;ng cycle are:   Collect and record the actual status of the work. The informa;on collected should include:   The actual start dates for all ac;vi;es that have been commenced.   The actual finish dates for all ac;vi;es that have been completed.   Where an ac;vity is in progress, the amount of work accomplished and the ;me needed to complete the remaining work should be determined.

- PMI Practice Standard for Scheduling


  The steps involved in schedule upda;ng process during the repor;ng cycle are:   Enter status informa;on into the schedule model and re-‐analyze the remaining work to determine the project status.   The new project status is determined aNer changing the data date and re-‐calcula;ng the cri;cal path.   The data is collected as of a nominated date/;me. This date/;me is called the data date and is analogous to “;me now” in EVM.

- PMI Practice Standard for Scheduling


Ac&vity Dura&on Preceding Ac&vity

Start O

A 3 Start

B 4 Start

C 2 Start

D 2 B

E 5 A, C

F 1 B

G 6 D, F

H 11 E

I 8 D, F

Finish 0 G, H, I

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

A

B

C

D

E

F

G

H

I



Start O

A 3 Start

B 4 Start

C 2 Start

D 2 B

E 5 A, C

F 1 B

G 6 D, F

H 11 E

I 8 D, F

Finish 0 G, H, I

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

A

B

C

D

E

F

G

H

I

Schedule Status at the end of Week 2:

•  Activity A started on time and is completed. •  Activity B has not started yet. It is forecasted to start on week 4. •  Activity C is completed as per the plan.



Start O

A 3 Start

B 4 Start

C 2 Start

D 2 B

E 5 A, C

F 1 B

G 6 D, F

H 11 E

I 8 D, F

Finish 0 G, H, I

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

A

B

C

D

E

F

G

H

I


  The newly updated schedule should be compared with the baseline and schedule variances should be managed.   The status/ update process occurs on a regular basis determined during project planning process, which is documented on the Basis of Schedule document.


Record Schedule Status Record Cost Status

Record/ Measure EV Key Components

(PV, AC, EV)


Method


  You must record cost informa;on periodically to use Earned Value Management (EVM).   More and more organiza;ons around the world are using EVM to help control project costs.   EVM is a project performance measurement technique that integrates scope, ;me, and cost data.   “Earned Value Management” is an industry standard way to:

  measure a project’s progress,   forecast its comple;on date and final cost, and   provide schedule and budget variances along the way


Record Cost Status


(PV, AC, EV)

Select EV Measurement Method


Painting 4 Bedrooms

$1000 Budget

5 Weeks


$0

$200

$400

$600

$800

$1,000

$1,200

Week 1 Week 2 Week 3 Week 4 Week 5$0

$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200

Week 1 Week 2 Week 3 Week 4 Week 5


$0

$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


Plan

Actual

Can you make your friend happy?!


• What is your physical progress?!

•  Only Painted 1 BDR out of 4 BDRs (25% Progress)

Earned = 25% x $1000 = $250


$0

$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


Plan

Actual

Earned


•  PV = Budgeted Cost of Work Planned


$0

$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


Plan

Actual

Earned

PV = $600

What is the PV on Week 3?


•  PV = Budgeted Cost of Work Planned •  AC = Actual Cost of Work Performed


$0

$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


Plan

Actual

Earned

PV = $600 AC = $500

What is the AC on Week 3?


•  PV = Budgeted Cost of Work Planned •  AC = Actual Cost of Work Performed •  EV = Budgeted Cost of Work Performed


$0

$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


Plan

Actual

Earned

PV = $600 AC = $500

EV = $250

What is the EV on Week 3?


Budget = $1000 PV = $600 AC = $500 EV = $250

$1000

$600

PV AC

$500

EV $250


$0

$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


Plan

Actual


$0

$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


$200

$400

$600

$800

$1,000

$1,200


Plan

Actual

Earned

PV = $600 AC = $500

EV = $250


  Tradi&onal Management provides you with…   How much money and ;me a par;cular job is likely to require prior to star;ng and once started, how much money was spent at any given ;me.

  Earned Value Management provides you with…   How much money and ;me a par;cular job is likely to require prior to star;ng and once started, how much money was spent at any given ;me.

PLUS   Once started, what work has been accomplished to date for the funds expended (what you got for what you spent)

  Once started, what the total job will cost at comple;on, and how long it will take to complete.

Source: DOE Introduction to Earned Value Management by Booz Allen Hamilton


Planned Value (PV)

  PV = Budgeted Cost of Work Planned   PV is a numeric reflection of the budgeted work that is scheduled to be performed, and it is the established baseline (PMB) against which the actual progress of the project is measured.   PV is the result of Cost & Schedule Baseline.   Cumulative PV is the sum of the approved budget for activities scheduled to be performed to date.   Period PV is the approved budget for activities scheduled to be performed during a given period.


Planned Value (PV)

Keep some important points in mind regarding PV:   Project Total PV must always equal to the Project Budget at Completion (BAC) BAC= Sum of all budgets allocated to a project scope. BAC= PMB= Project Total PV   If Project Total PV # BAC, your EV calculations and analysis will be inaccurate.


Calcula;ng Key Components of EVM ( PV, EV, AC)


Planned Value (PV)

You are working on a computer programming project, and part of the scope is for software design. The time frame for software design is 6 months and the budget for this scope is $12,000, resulting in a budget of $2000 per month.

Calculate the Cumulative and Period PV at the end

of 3rd month. What is the Project Total PV for the complete software design scope of the project?


Actual Cost (AC)

  AC = Actual Cost of Work Performed   AC = Actual Expenditure, the cost incurred for executing the work.   Cumulative AC is the sum of the actual cost for activities performed to date.   Period AC is the actual costs of activities performed during a given period.


Actual Cost (AC) Computer Programming Project- WBS 1.1.1 Software Design Calculate the Cumulative and Period ACs on Month 3rd.

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

$2000 $2000

$2000

$2000

$2000

$2000

$1200 $800 $1500

Time Now


Earned Value (EV)

EV = Budgeted Cost of Work Performed EV = Quantification of the “worth” of the work done to date. EV = Physical accomplishment of the project to date EV= Physical % Complete x Current Budget   Cumulative EV is the sum of the budget for the activities accomplished to date.   Period EV is the sum of the budget for the activities accomplished in a given period.


Earned Value (EV) Computer Programming Project- WBS 1.1.1 Software Design Calculate the Cumulative and Period EV on Month 3 by assuming that the

physical % complete to date ( 3rd month) is 40% and the cum. actual progress in the previous month was 30%.

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

$2000 $2000

$2000

$2000

$2000

$2000

$1200 $800 $1500

Time Now

PV

AC


Earned Value Key Components (PV, AC,EV)

At this point, you should have a good understanding of the three key Earned Value components:   Planned Value (PV) is the result of PMB ( cost & schedule baseline, discussed in previous modules)   Actual Cost (AC) is determined by the actual cost incurred on the project.   Earned Value (EV) tells you, in physical terms, what the project is accomplished.   Question: How do you determine the physical accomplishment in a project?


Record Cost Status


(PV, AC, EV)

Select EV Measurement Method


  Earned Value (EV) = Objective measuring the physical accomplishment of an activity.

( EV = Physical % x Budget )


(PV, AC, EV)


Method

Physical %?

100%


  Earned Value techniques should be selected based on the key attributes of the work:

- The Duration of the Effort - The tangibility of its products/ services


(PV, AC, EV)


Method


Product / Service

of Work

Dura&on of Work Effort

1-‐2 Measurement Periods

>2 Measurement Periods

Tangible Fixed Formula Weighted Milestone Percent Complete

Intangible Appor;oned Effort Level of Effort

Earned Value Measurement Techniques

Source: PMI Practice Standard for Earned Value Management


Product /

Service of Work


1-‐2 Measurement

Periods

>2 Measurement

Periods



Fixed Formula X% 100-X%

  X% of the work is credited as complete for the measurement period in which the work begins, regardless of how much work has actually been accomplished.

  The remaining (100-X%) is credited when the work is completed.

  Requires very detailed and short span work packages.

  Example: 25%/75% method for purchased material.


Product /

Service of Work


1-‐2 Measurement

Periods

>2 Measurement

Periods



Fixed Formula X% 100-X%

Important rule in using this method: •  Defined tasks not exceed one or

two maximum reporting periods, measured either weekly or monthly.


Fixed Formula- Exercise Calculate Earned Value for following tasks: ( EV= Budget x Physical%)

  Task 1 Budget: 12




50% 50%

25% 75%

0% 100%

Cut-Off date

25% 75%


Product /

Service of Work


1-‐2 Measurement

Periods

>2 Measurement

Periods



Percent Complete X% 100%

  Estimate of the % of work completed during the reporting period.   Such estimates are made by individuals in charge of the a

given work package.   The Simplest and easiest method, but can be the most

subjective of the EV measurement techniques if there are no objective indicator to back it up.

  This method requires a sort of informal “check and balance” on the accuracy of the periodic estimates.


Percent Complete- Exercise X% 100%

  What is the physical % completion of this “Applied Project Controls Course” at this moment?!


Product /

Service of Work


1-‐2 Measurement

Periods

>2 Measurement

Periods



Weighted Milestone

  Divides the work to be completed

into segments, each ending with an observable milestone; it then assigns a value to the

achievement of each milestone.   More suitable for longer duration tasks having tangible

outcomes.   Once the work is underway, values should not be changed.   A preferred method used in performance measurement, but

also a most difficult method to initially plan.


Weighted Milestone- Example

P&IDs Gated Milestones   1- CAD Set-up 5%   2- Engineering related to P&IDs 25%   3- Initial Drafting 20%   4- Issue for In-House Review 10%   5- Issue for Customer Review 10%   6- Issue for Design Review/ HAZOP 15%   7- Issue for Design 15%

1

5% 25% 20% 10% 10% 15% 15%

2 3 4 5 6 7

100%


Weighted Milestone- Exercise

P&IDs Gated Milestones

  1- CAD Set-up 5%   2- Engineering related to P&IDs 25%   3- Initial Drafting 20%   4- Issue for In-House Review 10%   5- Issue for Customer Review 10%   6- Issue for Design Review/ HAZOP 15%   7- Issue for Design 15%

P&ID Issued for Customer Review. P&ID issued for HAZOP @ 50%. Calculate the Physical % Complete.

1

5% 25% 20% 10% 10% 15% 15%

2 3 4 5 6 7


Product /

Service of Work


1-‐2 Measurement

Periods

>2 Measurement

Periods


Intangible Appor&oned Effort Level of Effort

Apportioned Effort   If a task has a direct, supportive

relationship to another task that has its own EV, the value for the support task may be determined based on ( or apportioned to) the EV of the reference base activity.   When work is performed in the base task, it is assumed that

work will be performed in the apportioned task.   Examples of apportioned tasks include QA and inspection

activities.


Apportioned Effort   An apportioned effort PV is directly proportional to the

associated base effort’s budget and time phasing.   An apportioned effort EV is directly proportional to actual

amount of base work that is completed during the reporting period.

  An advantage of this technique is that it simplifies the earned value management of recurring support activities by defining standardized percentages for these tasks.


Apportioned Effort- Example QA Control Account appor;oned @ 10% of produc;on control account

Mar Apr May Total

Produc;on Control Account PV 100 500 200 800

QA Control Account PV 10 50 20 80

Produc;on Control Account EV 250 400 150 800

QA Control Account EV 25 40 15 80


Apportioned Effort- Example

Actual


Product /

Service of Work


1-‐2 Measurement

Periods

>2 Measurement

Periods



Level of Effort (LOE)   The project activities that do not

produce tangible outcomes and cannot be measured objectively, but are necessary to support a project uses the LOE method.   LOEs are more “time” sensitive than “performance” sensitive.   Examples of the LOE tasks are the tasks related to Project

Management Team, project controls, procurement, contract admin, security guards, cooks, helpdesks,…

  Whenever these functions are charged to the project, they normally start at the beginning of project and continue for the full term of the project.


Level of Effort (LOE)   LOE tasks have no schedule variance ( EV= PV) and can bias

the project data towards an on-schedule condition.   Although LOE tasks resemble indirect work on projects, the

performance measurement on LOE tasks has an impact on the overall project performance.

  LOE efforts generally have no measurable or deliverable outputs. So, LOE method should be used only when the task does not lend itself to a technique that actually measures physical work progress.


Level of Effort (LOE)-Example Planned Value for Project Coordination & Support: What is the Cum. EV in March?

Month Jan Feb Mar Apr May Jun Jul Aug

PV 1000 1200 1000 900 1100 1500 1000 500

Time Now


Execution of Project Controls


  The role of Project Controls in the execution stage of the project is to accurately and regularly record and measure the project progress against the frozen baseline.   Record Schedule Status   Record Cost Status (EV, AC)

  The purpose of schedule status recording/ updating is to timely track the changes to the schedule baseline.


  There are three key components to Cost Recording: Planned Value, Earned Value, and Actual Cost.   PV is the work scheduled or “what you plan to do”.   EV is the quantification of the “worth” of the work done to date or “what you physically achieved”.   AC is the cost incurred for executing work on a project or “what you have spent”.


Acronym Variable Defini&on Meaning

PV Budgeted Cost of Work Scheduled

Time phased es;mated value of planned work.

Planning Baseline-‐ PMB

EV Budgeted Cost of Work Performed

Time phased es;mated value of completed work

Work Accomplishment Earned Value

AC Actual Cost of Work Performed

Time phased costs incurred for completed work

Expenditures Actuals are Actuals


  Techniques for measuring work performed ( Physical % Progress) are the basis for performance measurement during project execution and control.   Earned Value techniques should be selected based on the key attributes of the work; duration & tangibility of end deliverables.

Product / Service of

Work


1-‐2 Measurement Periods

>2 Measurement Periods




EV Method Meaning Advantage Disadvantage

Fixed Formula

X% of the work is credited as complete for the measurement period in which the work begins, regardless of how much work has actually been accomplished. The remaining (100-X%) is credited when the work is completed.

For short term work packages Requires minimal effort to status

Defined tasks not exceed one or two maximum reporting periods. Not effective for longer term work packages

% Complete Estimate of the % of work completed during the reporting period.

The Simplest and easiest method. Based on the CAM's assessment of the work packages progress

The most subjective of the EV measurement techniques if there are no objective indicator to back it up. Requires a sort of informal “check and balance” on the accuracy of the periodic estimates

Weighted Milestone

Divides the work to be completed into segments, each ending with an observable milestone; it then assigns a value to the achievement of each milestone.

A preferred method used in performance measurement. Suitable for longer duration tasks having tangible outcomes.

One of the most difficult methods to initially plan.

Apportioned Effort

If a task has a direct, supportive relationship to another task that has its own EV, the value for the support task may be determined based on ( or apportioned to) the EV of the reference base activity.

Simplifies the earned value management of recurring support activities

Used only for tasks that have a direct, supportive relationship to another task.

Level of Effort (LOE)

The project activities that do not produce tangible outcomes and cannot be measured objectively, but are necessary to support a project uses the LOE method

Does not require statusing, and is appropriate for sustaining tasks such as Program Management.

LOE tasks have no schedule variance ( EV= PV) and can bias the project data towards an on-schedule condition. LOE method should be kept to a minimal number of work packages. LOE method should be used only when the task does not lend itself to a technique that actually measures physical work progress.


Record / Measure Cost Status

Record Schedule Status

Project Controls Scope

Planning Time

Planning Cost

Planning

Plan

Do

Checking & Measuring Variances

Measuring Performance Indices

Check

Future Analysis Trend Analysis

Baseline Analysis

Change Control

Act


Project Controls

Execution of Project Control (Recording/ Measuring Cost and Schedule Status)

Planning & Development of Scope, Time, and Cost (Fundamental steps to Form Project Baseline)

Checking the Performance (Measuring & Monitoring Cost and Schedule Performance against Baseline) Cost & Schedule

Analysis & Taking Action (Analyzing Performance Results and Forecasting Project behaviour)


Are you Ready to Move on to Module 6,

Checking the Performance?

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Applied Project Controls TrainingMaintain Control, Boost Performance, and

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The A pplied Project Controls training s eries equ ips you w ith fu ndam ental and practical tools to enhance you r com petency and perform ance in controlling and m anag ing you r projects . This cou rs e provides you a s tep-by-s tep proces s from planning to execu tion and control of project’s s chedu le and cos t in a s im ple yet effective m anner. Clos ely alig ned w ith the Project M anag em ent Ins titu te’s s tandards and g u idelines ,A pplied Project Controls training offers bas ic and advanced m ethods for k eeping you r projects in control. It provides you a clear u nders tanding of the Project Controls ’ concepts , tools , and techniqu es that can be applied to any project w ithin any indu s try.

TheThe A pplied Project Controls video training is com pos ed of 7 m odu les that are delivered as 12 online videos or DVDs :

- M odu le 1- Introdu ction to Project Controls - M odu le 2- Scope Planning - M odu le 3- Tim e Planning (Parts 1-3) - M odu le 4- Cos t Planning - M odu le 5- Execu tion of Project Controls (Parts 1-2) - M odu le 6- Check ing the Perform ance - M odu le 7- Cos t and Schedu le A nalys is (Parts 1-3)

J u s t w atch the videos , learn from the exam ples , do the exercis es , and follow the s ys tem . You can becom e the next expert in you r field. You can do this . The project m anag em ent w orld needs you .

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