Week 8: Earned Value Analysis Flashcards
Earned Value Analysis (EVA) allows the PM to answer the following 3 questions:
- Where have we been? (How much work done, how much $ spent)
- Where are we now? (Under/overbudget? Behind/ahead of schedule?)
- Where are we going? (Anticipated total cost, money required to complete project)
What is the Weighted Attributes procurement method?
why is it not that good?
Assess attributes and price with varying weightings to determine preffered bidder for cost and quality optimisation. Lacks transparency because of tradeoffs between price & non-price components leading to unexpected outcomes.
What is the Target Price (Purchaser Nominated Price) procurement method?
- Client sets budget in Request for Proposal. Specifies desired outcomes.
- Suppliers describe proposed solutions based on weighted evaluation criteria.
- Bids are scored. Winner is determined using weighted attributes method.
Useful when issuing request for proposal where client defines desired outcome but relies on suppliers to prepare best approach. Ensures optimal value within set budget.
What is the Price Quality procurement method?
Transparent version of Weighted Attributes method. Clients can see weightings. Increased transparency and sensitivity. Ideal for complex/high risk procurements where attribute weightings impact value for money.
‘reality check’ for clients
What is the Quality-based selection (Brook’s Law) procurement method?
Once the best supplier is chosen, client and suppliers collaborate to establish a ‘Target Outturn Cost’ (TOC).
Pain-share/gain-share mechanism to incentivise exceptional performance during project execution.
Ideal for uncertain project scope, challenging estimate price/ alliance
What is the Schedule of Values?
what is total SOV?
Detailed allocation of the contract sum into individual components of work.
-Basis for determining earned value for progress payments. What has been accomplished or earned.
- Total of SOV = contract price + contractor’s profit
What are Baseline Values?
Planned values:
- time
- dollars earned.
What is the Budgeted Cost of Work Scheduled (BCWS) or Planned Value (PV)?
The value of work planned or scheduled to be accomplished within a specific time period as illustrated in the schedule.
What is the Budgeted Cost for Work Performed (BCWP) or Earned Value (EV)?
The value of work completed measured in terms of planned value of work.
What is the Actual Cost of Work Performed (ACWP) or Actual Cost (AC)?
The actual cost incurred in the performance of the work for a given time period.
What is the Schedule Variance (SV)?
SV = EV - PV = BCWP - BCWS
What is Schedule Performance Index (SPI)?
SPI = EV/PV = BCWP/BCWS
What is Cost Variance (CV)?
CV = EV - AC = BCWP - ACWP
What is Cost Performance Index (CPI)?
CPI = EV/AC = BCWP/ACWP
What are the steps to drawing an Expense S-Curve (Planned Value)?
- Draw an ES Gantt chart for the project.
- Assign values linearly per day.
- Add cost values vertically to get daily totals.
- Accumulate daily values from left to right to get total.
- Plot accumulated figures on graph of cost against time. (S-Curve)
demonstrates progress for a variety of tasks as a whole
What is a SPI chart?
Plot Reporting Period (X) against SPI values (Y).
Graphically express estimated schedule performance.
What is a CPI chart?
Plot Reporting Period (X) against CPI values (Y).
Graphically express estimated cost performance.
What are the four main forecasts?
Estimate at Completion (EAC)
Estimate to Completion (ETC)
Variance at Completion (VAC)
To-Complete Performance Index (TCPI)
What is EAC?
Estimate at completion. The total anticipated cost of the project when it is complete.
EAC = BAC / CPI
or
EAC_com = AC + [(BAC - EV) / (CPI_a * SPI_a)]
What is ETC?
Estimate to completion. The amount of money required to complete the task or project if conditions remain as is.
ETC = EAC - AC
What is VAC?
The expected cost variance at the end of the project.
VAC = BAC - EAC
+ve VAC –> under budget
-ve VAC –> over (have exceeded) budget
What is TCPI?
The CPI required to complete the project on budget.
Cost efficiency required to achieve target EAC.
TCPI = [(BAC - EV) / (BAC - AC)]
TCPI > 1 means more work remaining than there is budget to pay for it.
What are some limitations of EVA?
- SV and SPI are often inaccurate when projects are running late (think about when a project approaches deadline; SPI will approach 1. Seems more on time than it is late.)
- Numbers alone lack context.
- EV does not consider its performance measurement methodology.
What are delay claims?
Request from one contract party to another for additional compensation, extension of time, or both.
Define Privy.
A person or entity who is in privity with another.
Privity: a relation between two parties that is recognized by law, such as that of blood, lease, or service.
What is ‘Cost-creep’ syndrome?
A.K.A ‘Budget creep’.
A project’s costs increase beyond original budget.
Caused by Unexpected changes organisational mismanagement, or unrealistic estimates.
What is an Excusable Delay?
what are the 2 types?
An excusable delay entitles the contractor to additional time for completing the contract work. Excusable delays stem from reasons beyond the contractor’s control.
They are classified into
- Non-compensable delay: beyond control of owner. Unusual weather, natural disaster, national crises, labour crises, etc.
- Compensable delay: owner/designer at fault.
What is a non-excusable delay?
A non-excusable delay is any delay that is caused by the contractor or should have been anticipated by the contractor under normal conditions.
- Contractor is not entitled to time extension or monetary compensation.
What are liquidated damages (LD)?
Predetermined measure of damage agreed between parties to a construction contract before the contract is finalised.
Usually relate to contractor failing to achieve practical completion by the completion date. Pre-determined damages set based on calculation of actual loss the client is likely to incur if contractor fails to meet completion date.
What is concurrent delay?
what are the 2 types?
A combination of two or more independent causes of delay during the same general time period.
Two types:
- True concurrency: A client risk event and contractor risk event happen at the same time.
- Concurrent effect of sequential delay events: Delay events occur at different times but effects overlap.
What does acceleration a project mean?
Shortening the normal duration of the project schedule without reducing the original scope of work. A.K.A. schedule compression.
What is Normal Duration?
Amount of time required to finish the project under ordinary circumstances without any deliberate acceleration or deceleration.
What are the 3 ways a project duration can be shortened?
- Revisit or study the schedule thoroughly to find any errors or unnecessary logic or constraints.
- Fast-track the project.
- Conduct constructability studies.
What is crashing?
Technique used to shorten the schedule duration for the least incremental cost by adding resources.
Involves:
- Work overtime
- Acquire more workers
- Acquire special materials and equipment that help speed up the work process
What are mandatory dependencies?
Dependencies which are legally or contractually required or inherent in the nature of the work. Often physical limitations.
Also referred to as:
- hard logic
- hard dependencies
What are discretionary dependencies?
Preferred logic, preferential logic, soft logic.
Based on knowledge of best practices within a particular application area.
For example: electrical work should start after finishing plumbing work. Not mandatory, but reduces overall risk.
Define constructability.
The optimum use of construction knowledge and experience in planning, design, procurement, field operations to achieve overall project objectives.
What is Normal Cost?
Normal cost is the cost of a project that is performed within the normal duration.
What is a direct cost?
Cost that can be directly tied to the production.
- labour
- materials
- equipment
- subcontractors
What are some examples of indirect cost?
- Project overhead
- General overhead
- Contingency fees
longer duration = increase indirect costs
What is the Time-Cost Ratio (TCR)?
TCR = (Crash cost - Normal cost) / (Normal duration - Crash duration)
Total project costs = …
Indirect costs + Direct costs
Who owns float? There are three propositions:
Proposition 1: Client owns float.
- NZS3910 Engineer can force it
- Client variation is considered an offer. Contractor accepts, continues working as in Gantt Chart.
Proposition 2: Contractor owns float.
Proposition 3: The project owns float.
- Float belongs to whichever party uses it first.
- First come first served basis.
What is Lowest Price Conforming (LPC)?
The lowest price is chosen provided it meets the requirements.
However, we should pay for experience as it means more cost certainty
What are some key interpretation of the S-curve?
- AC < EV for profit
- If PV rises abruptly = unrealistic scheduling
- EV > PV = work faster than predicted
- AC rises abruptly = negative trend/ a problem
What is a contingency fee?
Additional sum of money allocated for unknown events.
