Earned value analysis and cost reporting Flashcards
What is milestone analysis?
Simple method of comparing the actual costs and progress experienced with the costs and
progress planned.
Milestone analysis is done by choosing and naming the achievements that can most effectively be used as project milestones. Ideally, milestones should coincide with the completion of packages from the WBS or events marking other significant stages in progress.
What are two fundamental things in creating a time scale budget curve?
Work break down
Budget
What questions should be asked by a project manager with regards to cost report?
How much have we spent to date?
What should we have spent to date?
What have we achieved so far?
What should we have achieved by this time?
What are the final cost and delivery prospects for the project if our performance continues at the current level?
What is required for a milestone analysis?
The date on which the milestone is scheduled to be achieved and
The estimated cost or budget for the associated work package (or, alternatively, the
expected cost of all the work needed to achieve the milestone).
versus
The date on which each milestone was actually achieved;
the project costs actually incurred (including committed costs of relevant purchased
items) at the end of each cost monitoring period
What are some disadvantages of the milestone analysis model?
- Info is extracted after damage has been done and much later then other methods
- Curves need to be redrawn with changes
- Not a good tool for predictions
- Only shows trends
What are some advantages of milestone analysis model?
- Takes little effort
- Better for busy project managers
What is required for a earned value analysis?
Detailed WBS;
Detailed cost coding system;
Timely and accurate collection and reporting of cost data;
Method for monitoring and quantifying the amount of work done, including work in progress.
What does an earned value analysis attempt to do?
Aims to compare the costs incurred for an accurately identified amount of work WITH the costs budgeted for that same work
What does an earned value analysis result in?
A numerical value for cost performance index
1.0 is everything is going according to plan
Less than 1.0 indicates value earned for the money being spent is less than that expected
What is CPI?
Cost performance index.
Indicates the measure of success in achieving results against budget. Anything less than 1.0 indicates that the value earned from money spent is less than that intended.
What is the CPI formula?
CPI = BCWP / ACWP
budget cost of work performed / actual cost of work performed
What is SPI?
Schedule performance index.
This can be used as a measure of progress performance against plan, but is less commonly used than the CPI. Anything less than 1.0 shows progress slower than that planned.
What is the formula for SPI?
SPI = BCWP / BCWS
budget cost of work performed / budget cost of work scheduled
Why is the earned value analysis valuable?
It can give advanced warning of project going over budget
What can be done if earned value analysis is bad?
- Be more strict about budgeting and unnecessary spending
- Better communication between parties, why ask if there is problems, letting them know they are going over budget etc
