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PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - 1 Project Management Professionals Hot.

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Presentation on theme: "PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - 1 Project Management Professionals Hot."— Presentation transcript:

1 PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - 1 Project Management Professionals Hot Topics & Challenges - Cost Management Presenter: Sohel Akhter, PMP, CCNA,ISMS PMP and Six Sigma instructor, Netcom Learning Adjunct Professor, MBA program, CUNY

2 PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - Project Management Professionals Hot Topics & Challenges - Cost Management 1. PV 2. EV 3. AC Variance Formulas: 4. SV = EV – PV 5. CV = EV - AC Index Formulas: 6. SPI =EV/PV 7. CPI = EV/AC Forecasting Formulas: 8. BAC 9. EAC = BAC/CPI 10. ETC = EAC - AC 11. VAC = BAC - EAC 12. TCPI = (BAC – EV) / (BAC – AC) or (BAC – EV)/ (EAC – AC) 2

3 PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - 3 Project Management Professionals Hot Topics & Challenges - Cost Management P lanned V alue E arned V alue A ctual C ost B udgeted C ost of W ork S cheduled B udgeted C ost of W ork P erformed A ctual C ost of W ork P erformed New Name Old Name

4 PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - 4 Project Cost Management – Formula AcronymTermFormulaInterpretation PV or BCWS Planned Value or Budgeted Cost of Work Scheduled BAC x (Time Passed /Total Scheduled Time) or BAC x Planned % Complete What is the estimated value of the work planned to be done? EV or BCWP Earned Value or Budgeted Cost of Work Performed BAC x (Work Completed /Total Work Required) or BAC x Actual % Complete What is the estimated value of the work actually accomplished? AC or ACWP Actual Cost or Actual Cost of Work Performed What is the actual cost incurred for the work accomplished? SVSchedule VarianceSV = EV- PV A comparison of amount of work performed during a given period of time to what was scheduled to be performed. Negative = behind schedule Neutral = on schedule Positive = ahead of schedule CVCost VarianceCV = EV – AC A comparison of the budgeted cost of work performed with actual cost. Negative= over budget Neutral = on budget Positive= under budget CPICost Performance IndexCPI= EV/AC It measures the value of the work completed against actual cost. CPI<1=over budget CPI >1= under budget CPI= 1= on budget Cumulative CPI It represents the cumulative CPI of the project at the point the measurement is taken. SPISchedule Performance IndexSPI= EV/PV It measures the progress to date against the planned progress. SPI<1 = behind schedule SPI > 1= ahead of schedule SPI = 1 = on schedule Cumulative SPI It represents the cumulative SPI of the project at the point the measurement is taken. BACBudget at CompletionHow much did we BUDGET for the TOTAL project effort? EACEstimate at Completion If CPI is expected to be the same EAC= BAC/CPI If current variances are thought to be atypical of the future EAC = AC+ (BAC-EV) If both CPI and SPI influence the remaining work EAC = AC+[ (BAC-EV)/ (CPI x SPI)] What do we currently expect the TOTAL project to cost? ETCEstimate to CompleteETC= EAC - AC From this point on, how much MORE do we expect it to cost to finish the project? VACVariance at CompletionVAC= BAC - EAC How much over or under budget do we expect to be at the end of the project? TCPITo Complete Performance IndexIf targeting the current plan TCPI= (BAC- EV)/ BAC – AC If targeting the current EAC TCPI= (BAC- EV)/ EAC – AC Performance that must be achieved in order to meet financial or schedule goals. TCPI >1 = harder to complete TCPI<1 = easier to complete

5 PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - Project Management Professionals Hot Topics & Challenges - Cost Management ProjectPlanned End Date Planned Budget Actual Amount Spent by week Three Planned Completion by week three Actual Completion Corporate Training ProjectEnd of 4 th week $10,500 for total project $2625 for each module $90003 out of 4 modules2 out of 4 modules 5 PV Planned ValueBAC x ( Time Passed /Total Scheduled Time)= $10,500 x (3/4) = $10,500 x.75 = $7875 EV Earned ValueBAC x (Work Completed /Total Work Required)= $10,500 x (2/4) = $10,500 x.5 = $5250

6 PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - Project Management Professionals Hot Topics & Challenges - Cost Management ActivityStatus End of day 3 Side 1Complete, Spent $1000 Side 2Complete, Spent $1200 Side 350% done, Spent $600 Side 4Net yet started 6 You have a project to build a new fence. The fence is four sided as shown. Each side is to take one day to build and is budgeted for #1000 per side. The sides are planned to be completed one after another. Today is the end of day three. Using the project status chart below calculate the formulas. PV EV AC BAC CV CPI SV SPI EAC ETC VAC TCPI

7 PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - Project Management Professionals Hot Topics & Challenges- Cost Management ActivityStatus End of day 3 Side 1Complete, Spent $1000 Side 2Complete, Spent $900 Side 350% done, Spent $1000 Side 475% done, Spent $300 7 You have a project to build a new fence. The fence is four sided as shown. Each side is to take one day to build and is budgeted for $1000 per side. The sides are planned to be completed one after another. Today is the end of day three. In this case, assume that the sides have a finish-to-finish relationship instead of a finish-to-start relationship. Using the project status chart below calculate the formulas. What isAnswer PV EV AC BAC CV CPI SV SPI EAC ETC VAC TCPI Key S= Actual Start, F = Actual Finish, PS = Planned Start, PF = Planned Finish

8 PMP Bootcamp, Sohel Akhter (PMP, ISMS, CCNA) - Project Management Professionals Hot Topics & Challenges - Cost Management 8 Your project is running well. In the latest earned value report, you see the CPI=1.2, the SPI= 0.8, the PV= $600,000 and the SV = -$120,000. You cant find the CV in the report, so you calculate it based on the info given. What is the CV? Key S= Actual Start, F = Actual Finish, PS = Planned Start, PF = Planned Finish


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