Chapter 4 : Project Implementation and Controlling

4.1 Introduction to Monitoring, Evaluation and Controlling

A project manager needs to ensure that the activities in the project are being
carried out in accordance with the approved plan, policy, schedule, budget,
quality standard, procedure, and utmost safety.
Hence, it is absolutely necessary to monitor the project at regular intervals and
adopt suitable controlling measures in order to keep the project on track.
Monitoring and controlling is essentially required in any project because things
don’t always go according to plan no matter how much we prepare and to detect
and react appropriately to deviations and changes to the plan.
Even Projects that are well designed, comprehensively planned, fully resourced,
and accurately executed will face challenges.
These challenges can take place at any point in the life of the project.

1
 Project Monitoring
Monitoring is concerned with the gathering of information and
connecting them with the project plans and objectives.
Project team must regularly monitor the design, planning, and
implementation of the project to confirm they are valid and to
determine whether corrective actions need to be taken when the
project’s performance differs significantly from its design and plan.
Project Monitoring refers to the method of keeping track of all
project-related metrics including team performance and task
duration, identifying possible problems, and taking remedial actions
necessary to ensure that the project is within scope, on budget, and
meets the stipulated deadlines.

2
 Project Monitoring

Project Monitoring answers the questions like:

 Have input and resources been provided as planned?
 Have activities been completed as planned?
 Have output been produced as anticipated?
 Is the work of the project progressing as planned?
It indicates to the project manager where the project performance is
in terms of time, quantity, quality, risk, money, and other areas of
project progress.

3
 Project Monitoring

What to Monitor?
At the most fundamental level, we need to track the difference
between what was planned and what is actually happening.
Project monitoring includes:
 whether start and finish date for activities are being met,
 how cost estimates are working out in reality and
 weather planned resource requirements are being created
Hence during this phase, we are to monitor all the parameters and
assumption we had considered while planning and scheduling the
project, such as: Scope, Schedule, Cost, Quality, Safety, Risk,
Contract Performance.

4
 Project Evaluation
Evaluation is interpretation & estimating the collected information.
Evaluation is a systematic and objective assessment of an on-going or
completed activity, project program, strategy, policy, and its design,
implementation, and result.
As an essential part of the policy development process, evaluation
provides a timely assessment of the relevance, efficiency, effectiveness,
impact, and sustainability of interventions.

5
 Project Control
Control is the corrective action that is undertaken if the desired result is not
achieved. They are three separate actions but go hand in hand as tools for
assessing the status and success of a project.
Control uses the monitored data and information to bring actual performance
into an agreement with the plan.
It Involves comparing actual performance with planned performance and taking
appropriate corrective action that will yield the desired outcome in the project
when a significant difference exists.
Changes to the original project execution plan are inevitable. Changes will always
occur in the project. But we must be able to manage the changes as they occur.
It is an important job of the project manager to identify all changes from the
original project scope & Plan and manage them. Managing changes is one of the
most challenging areas of construction management and if left unchecked can
result in the project run off the track.

6
 Project Control
Project Control is about understanding and monitoring a project to
subsequently base decision-making thereon. It is applied in all stages of
the project lifecycle – from the initiation phase through to completion.
Although Project Control can be applied to many elements of project
management, the following are the main areas of Project Control:
 Planning
 Risk management
 Cost management
 Scope and change management
 Earned Value Management
 Performance management
 Stakeholder management
 Reporting control

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 Project Control in Planning Phase

The initial stage of a project is mainly about project planning / project

scope.
Here, the basic project management principles of a project are outlined,
what problems need to be solved, the people (team members) who need
to be involved in the project, and what tasks will actually be performed.
The management of all stakeholders and their interests is also part of this
stakeholder management.
 Most important part of this phase is defining project objectives and the
scope of the project.
Part of the success of this phase depends on the realistic preparation of
cost and time estimates.

8
 Project Control in Planning Phase

Many projects fail because they are not properly planned, or the
costs are not realistically budgeted in advance. So, these variables
are predicted as accurately as possible.
The best way to do this is to analyze performance data from similar,
previous projects. For this, we have to consider the different tasks
associated with a project as below:
 The duration of each project phase
 The budgets for all individual tasks
 How the activities are distributed among the team members

9
 Project Control in the Development Phase
The development phase of project management is mainly about
getting the ball rolling.
During this phase, the project team meets for the first time,
together with stakeholders, and the assignments and activities are
planned.
In this phase, project control is key to success. Cost estimates and
timetables are converted into realistic planning, and the most
important project controls are established here.

10
 Project Control in the Implementation Phase
In this phase of the project, the first real results are delivered. Even though this is
a rewarding phase, a lot can go wrong.
This also creates frustrations that can negatively affect the productivity of the
project team members.
It is therefore important that the project team remains focused. To ensure this,
the progress of the project must be closely monitored.
Many projects use a team management tool to quickly identify time drains,
quality issues, and other problems. In any case, we have to make sure that the
following matters are analyzed:
 Individual and total employee capacity
 Distribution of activities per employee / project stakeholders
 How much time employees spend on each task
 Number of hours worked per employee / project stakeholders
 Expenses per employee / project stakeholders
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 Project Control in Closing Phase
In closing phase of a project, the project is formally concluded, and the sponsor
is informed of the overall level of success. In this phase, the products or services
to be supplied are transferred to the customer.
The fact that the project is complete does not mean that no more project checks
have to be performed.
To execute projects more effectively in the future, the final performance of the
project team must be evaluated as below:
Which trends and processes have led to success?
What should have been different?
What could have been more efficient?
Has the team achieved the goals?
Have they kept the expected pace?
Is the end result within the limits of quality and costs?
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 Advantages of Project Control
The total costs of a project can be kept low by effective decision-making, for
example, on Key Performance Indicators (KPIs).
It provides increased predictability for costs and deadlines.
It provides more and better insights into the financial health of a project in all of
its phases.
It allows one to more easily prevent deferral of results.
It ensures higher margins for quality, cost and schedule.
It ensures an improved reputation when it comes to project management and
result guarantees.
It provides an increased sense of employee satisfaction.
It provides a competitive advantage over project teams with less mature project
management capabilities.

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Feedback Process of the Project

Fig: Feedback Process

14
 4.3 Project Control Cycle

The project control cycle

involves the following steps:
 Producing a plan
 Monitoring progress
 Identifying variations
 Applying corrective
action if necessary

Fig: Project Control Cycle

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 Project Monitoring and Control Cycle
.
Plan (Setting Progress Identification and
Standard) Monitoring evaluation
of deviations

Controlling Reporting deviation

(Taking action) to the authority

Fig: Project Monitoring and Control Cycle.

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 4.7 Project Quality Control
Definition of Quality
 Degree of goodness.
 Conformance to requirements or specification.
 Zero defects.
 Fitness for use.
 Consistent conformance to expectation.
 Doing things right first time.
 Doing the right things.
 Quality is the totality of all attributes and characteristics of a product or service as
specified, required and expected.

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 Definition of Quality
• Quality may be defined as “The totality of features and characteristics
of a product or services which bear on its ability to satisfy stated or
implied need” (ANSL/ASQC Standard A3-1987).
• Definition of quality as “consisting of conformance to some standard”
e.g. conformance to specifications, procedures, or requirements can be
helpful in clarifying quality responsibilities of workers and supervisors.
• However, for company, definition should be stated in terms of meeting
customer needs, and freedom from deficiencies.

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 Quality Misconception
Quality is not grade
 Plastic tap and brass tap both may be of excellent quality if they don’t leak.

 Golden tap may be of poor quality if that leaks and doesn’t meet the
requirement.

Quality is expensive.

Quality is luxury.

Quality is in short supply.

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 Facts about Quality
 Quality costs more but lack of quality costs even more
 ‘Mahanga roya yek bar, sastha roya bar bar’ and Sasto Besaai pet lagi mar’ phrases
indicate idea laying behind it.

 Cheaper construction without taking care of quality may reduce initial investment but
tends to have higher operating and maintenance cost.

 Quality cost
 High quality should be achieved at low cost and not high quality at high cost or low quality
at low cost.
 Process quality is more than product quality
 Product quality may contain many defects that are latent and would surface at extreme
adverse conditions, whereas process quality eliminates those.
 Quality standards does not demand best quality they establish minimum requirements to
be achieved.

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 Characteristics of Quality
 Functionality
 Reliability
 Durability
 Aesthetic characteristics
 Safety

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 Factors Affecting Quality in Construction

Design
Drawings
Specifications
Bid document
Selection of a contractor
Socioeconomic factors
Environmental factors

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 Why Quality becomes Inferior?
Lack of commitment from top
Prevailing corruption practices
Lack of quality system and enforcement of standard
Lack of training on quality, better workmanship
Degraded norms and values
Less recognition on quality performers
Changes in project, mistakes in design stage
Lack of understanding about cost of rectification/failures
Lack of proper planning for quality

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 Project Quality Control
Quality is managed by use of three managerial processes of quality
planning, quality control, and quality improvement.

1. Quality planning: is the activity for developing products and processes

required to meet customers’ needs.

2. Quality control: evaluates actual quality performance, compares actual

performance to quality goals, and acts on the difference.

3. Quality improvement: aims to raise quality performance to

unprecedented (breakthroughs) levels, which are significantly better than
any past level performance.

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 Definitions of Quality Control

“Quality control is regulatory process through which we measure actual

quality performance, compare with standards, and act on the difference”
(Juran, 1988).

“Quality control is operational techniques and activities which sustain a

quality of product or service that will satisfy given needs; also the use of
such techniques and activities” (ANSL/ASQC Standard A3, 1987).

“Quality control is the part of quality management, focused on fulfilling

quality requirements” (ISO 9000-2000).

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 Quality Control (QC)
QC refers to the process employed in order to meet the quality standard.

QC deals with detection of error and verification of conformity.

Cornerstone of QC is specification.

Control consists of observing actual performance, comparing actual

performance with some standard, and then taking corrective action if
actual performance significantly differs from standard.

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Quality Determinants

27
 Stages of Quality Control
QC of incoming goods
 Receiving inspection and testing is required for its verification.
QC in-process (In-process inspection or testing)
 Inspect, test and identify as per quality plan/procedures.
 Establish conformance to specified requirements.
 Hold until test results have been verified.
 Identify non-conforming product.
QC for end product (Final inspection and testing)
 Quality plan require specified inspections and tests.
 Final inspection and testing to ensure specified requirements.

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4.6 Project Cost Control: Methods and Procedure (Earned value Analysis)

Project cost control is exercised through setting standards, comparing

actual performance with standards, and taking corrective actions to
ensure that future performance conforms to set standards.

Steps in Cost Control

Establish norms or standards

Select a yardstick for measuring the standard
Ascertain actual performance
Compare actual performance with standards and compute variations

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 Cost Control Techniques
 Material control
 Labor control
 Overhead control
 Budgetary control
 Material control includes effective and economic purchase of material,
devotion to economic order quantity, keeping less investment in
stock, effective check on receiving materials, and control over
material storage and issues.

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 Essentials for Success of Cost Control
Effective system of cost control require definite plan of organization.

Involvement of project team is important in preparing and setting up standards

in achieving desired result.

Authority and responsibility of each executive should be clearly defined.

Costs should be collected by each area and reporting should be prompt.

Report should draw management’s attention to exceptionally good or bad

performance.

Aim of management should be to increase in cost rather than to punish

people to improve performance in future.

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 Essentials for Success of Cost Control
Good performance should be rewarded to motivate workers towards
better performance.
Effective system of cost control should include effective budgetary
control with proper setting of standards.
Budgets and standards should be fixed with practicability.
Planning sets standards to achieve expected performance, and standards
are starting point of control.
Control measures actual performance and compares it with standards to
identify deviation.
Deviations are analyzed to take corrective actions.

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 Project Cost Control
Project elements
 Time performance
 Cost performance
 Quality performance

Project control aspects

 Time (schedule)
 Cost (budget), and
 Quality (specification)

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 Earned Value Analysis (EVA)
Budgeted cost of work performed is known as the ‘earned value’.

It is a commonly used method to assess and measure project performance and
progress.

It compares the performance (value of work done) with the set standard (value
of work that should have been done).
 EVA is often presented in the form of progress, productivity, or S-curve diagrams.

 Actual progress can be measured and compared with the forecasted progress that
being the S-curve.

 Earned value always differs from the planned value, which is known as variance.

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 Earned Value Analysis (EVA)
Variance always exists, unless there is a perfect execution of project plan.

Any deviation from the activity S-curve is reported immediately and acted upon.

EVA is important for cost controlling.

One manager can take decisions of many projects by the use of EVA.

Terms used in EVA

 Budgeted cost of work performed, BCWP = Earned Value (EV).

 Budgeted cost of work scheduled, BCWS = Planned Value (PV).

 Actual cost of work performed, ACWP = Actual Cost (AC).

35
 Earned Value Analysis (EVA)
Planned Value (PV): The approved budget for the work scheduled to be completed
by a specified date; also referred to as the budgeted cost of work scheduled (BCWS).
The total PV of a task is equal to the task’s budget at completion (BAC) — the total
amount budgeted for the task.
Earned Value (EV): The approved budget for the work actually completed by the
specified date; also referred to as the budgeted cost of work performed (BCWP).
Actual Cost (AC): The costs actually incurred for the work completed by the
specified date; also referred to as the actual cost of work performed (ACWP).
Monitoring your project’s performance involves determining whether you’re on,
ahead of, or behind schedule and on, under, or over budget.
But just comparing actual expenditures with budget can’t tell whether we are on,
under, or over budget — which is where EVM comes in.
Monitoring planned value, earned value, and actual cost. To describe your project’s
schedule and cost performance with EVM, we use the following indicators:

36
 Earned Value Analysis (EVA)
Schedule Variance (SV): The difference between the amounts budgeted for the
work we actually did and for the work you planned to do. The SV shows whether
and by how much our work is ahead of or behind our approved schedule.
Cost Variance (CV): The difference between the amount budgeted and the
amount actually spent for the work performed. The CV shows whether and by
how much we are under or over our approved budget.
Schedule Performance Index (SPI): The ratio of the approved budget for the
work performed to the approved budget for the work planned. The SPI reflects
the relative amount the project is ahead of or behind schedule, sometimes
referred to as the project’s schedule efficiency. We can use the SPI to date to
project the schedule performance for the remainder of the task.
Cost Performance Index (CPI): The ratio of the approved budget for work
performed to what we actually spent for the work. The CPI reflects the relative
value of work done compared to the amount paid for it, sometimes referred to as
the project’s cost efficiency. We can use the CPI to date to project the cost
performance for the remainder of the task.

37
Earned Value Analysis (EVA)

38
Earned Value Analysis (EVA)

39
 Earned Value Analysis (EVA)
.

40
 Earned Value Management
.

Time
41
 Earned Value Analysis (EVA)
We can approximate the amount of time our behind or ahead of the approved schedule by drawing
a line from the intersection of the EV and assessment date lines parallel to the x-axis to the PV line.
Doing so suggests that the project being described by the graph is about one month behind
schedule.

42
 Phase Earned Value Analysis Concept
.

43
 Earned Value Analysis (EVA)
Forecasting
 Budget at completion, BAC = Original project estimate.
Budget at completion− Earned value BAC−BCWP
 Estimate to complete, ETC = = ;
Cost performance index CPI

𝐵𝐴𝐶−𝐸𝑉
 ETC =
𝐶𝑃𝐼

 Estimate at completion, EAC = Actual cost + Estimate to complete; EAC =

AC + ETC
Estimated manhours
 Productivity factor =
Actual manhours

44
 Earned Value Analysis (EVA)
Use of EVA
 The effort required at project level to undertake EVA is such that it is not
recommended for small projects.
 Below certain size the effort required to gather and process data may
offset its benefit.
 EVA needs a basic requirement that is the collection and processing of
data related to existing and past projects.
 EVA is primarily a system of approximation, the accuracy of which
depends on the time and costs allotted in the estimate compared with the
actual time and costs as work progress.

45
 Use of EVA
 The importance of developing standard curves cannot be
overemphasized.
 If there are no standard curves, then it is difficult for the project manager to
set realistic targets.

46
 Earned Value Analysis (EVA)
Note
• If % of SPI ˃ 100 the project is ahead schedule.
• If % of SPI = 100 the project is on schedule.
• If % of SPI ˂ 100 the project is behind schedule (or delayed).
• If % of CPI ˃ 100 the project is completed in less cost.
• If % of CPI = 100 the project is completed on cost.
• If % of CPI ˂ 100 the project is cost overrun or over budget.
• At the end of each month ACWP should be computed.
• Manager gets idea from the ‘S - curve’ where to intervene and where to improve.
• SPI is beneficial to the contractor. Contractor can gain maximum benefit from cost
control.

47
48
 Interpretation of Ahead Schedule-Under Cost
 SV = EV – PV = 60 - 40 = 20 (ahead schedule).
 CV = EV – AC = 60 - 50 = 10 (completed in less cost).
 SPI = (EV÷ PV) x 100 = (60 ÷ 40) x 100 = 150.00% (ahead schedule)
 CPI = (EV ÷ AC) x 100 = (60 ÷ 50) x 100 = 120.00% (completed in less
cost).
 S - curve diagram depicts that project is ahead schedule and completed in
less cost.

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 Time now
Cost

26 ACWP CV
24
SV

20
BCWP

BCWS

0 Time
This project is behind schedule and cost overrun.

50
 Interpretation of Behind Schedule - Over Cost
 SV = EV – PV = 20 - 24 = - 04 (project is behind schedule).

 CV = EV – AC = 20 - 26 = - 06 (cost overrun).

 SPI = (EV÷ PV) x 100 = (20 ÷ 24) x 100 = 83.33 % (project is behind
schedule).

 CPI = (EV ÷ AC) x 100 = (20 ÷ 26) x 100 = 76.92 % (cost overrun).

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 Time now
Cost

16
ACWP CV

SV
13
12
BCWS

BCWP

0 Time

This project is ahead schedule and cost overrun.

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 Interpretation of Ahead Schedule - Over Cost
 SV = EV – PV = 13 - 12 = 01 (ahead schedule).

 CV = EV – AC = 13 - 16 = - 03 (Cost overrun).

 SPI = (EV÷ PV) x 100 = (13 ÷ 12) x 100 = 108.33 % (ahead schedule).

 CPI = (EV ÷ AC) x 100 = (13 ÷ 16) x 100 = 81.25 % (Cost overrun).

 This project indicates “fast work but with more cost”.

53
 Time now
Cost

28 BCWS SV

26 CV

24
ACWP

BCWP

0 Time
This project is behind schedule and completed in less cost
54
 Interpretation of Behind Schedule - Under Cost
 SV= EV – PV = 26 - 28 = - 02 (behind schedule).

 CV = EV – AC = 26 - 24 = + 02 (less cost).

 SPI = (EV÷ PV) x 100 = (26 ÷ 28) x 100=92.86 % (behind schedule).

 CPI=(EV ÷ AC) x 100=(26 ÷ 24) x 100=108.33 % (less cost).

 This project indicates “project is behind schedule but with less cost”.

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 Time now
Cost

20 ACWP
CV
19
SV

17

BCWP
BCWS

0 Time
This figure depicts that this project have ups and down, project is not smooth.

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 Interpretation of Project not Being Smooth.
 SV = EV – PV = 17 - 19 = - 2 (Time overrun).

 CV = EV – AC = 17 - 20 = - 3 (Cost overrun).

 SPI = (EV÷ PV) x 100 = (17 ÷ 19) x 100 = 89.47% (Behind schedule).

 CPI = (EV ÷ AC) x 100 = (17 ÷ 20) x 100 = 85.00% (Cost overrun).

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 Example Of EVA
Example 1: 50 units of plantation have to be done in two weeks period. Per
unit cost of plantation is estimated as Rs.200 of which progress monitoring
was done one week after the work was started. Only 40% work was found
completed and the account record showed that the actual expenditure
(cost) for plantation per unit was Rs.250. What would be the status of the
project in terms of cost and schedule?

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 Solution of Example 1

EV (BCWP) = 20 x 200 = 4,000.

PV (BCWS) = 25 x 200 = 5,000.
AC (ACWP) = 20 x 250 = 5,000.
CV = EV – AC = 4,000 – 5,000 = - 1,000 (cost overrun)
SV = EV – PV = 4,000 – 5,000 = - 1,000 (time overrun)
CPI = (EV ÷ AC) x 100 = (4,000 ÷ 5,000) x 100 = 80% (cost overrun)
SPI = (EV÷ PV) x 100 = (4,000 ÷ 5,000) x 100 = 80% (schedule overrun).
Since CPI is 80%, final cost would be: (50 units x Rs.200) ÷ 0.80 = Rs.12,500.
(instead of estimated cost Rs.10, 000).
Since SPI is 80%, completion time would be: 2 weeks ÷ 0.80 = 2.5 weeks (instead of
estimated time 2 weeks)

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 Example Of EVA
Example 2: Provide an earned-value analysis to evaluate the progress of
sewer and water lines project. The original budget is $147,500 and the project
is scheduled to be completed in 94 working days. A status report after 10
working days into the project includes the following information: BCWP =
7,600; ACWP = 7,700; BCWS = 7,600; BAC = 147,500.

Solution: CV = EV – AC = 7,600 - 7,700 = -100 (cost overrun).

SV = EV – PV = 7,600 - 7,600 = 0, project is progressing as planned, neither
ahead nor behind the schedule.
EV 7,600
CPI = = = 0.987 ˂ 1.0, poor cost performance (over cost)
AC 7,700

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 Solution of Example 2

BCWP 7,600
SPI = = = 1.0 project is progressing as planned
BCWS 7,700
BAC−EV 147,500−7,600
ETC = = = 141,743
CPI 0.987
Remaining cost to complete the project is 141,743.
EAC = AC + ETC = 7,700 + 141,743 = 149,443
Estimated cost of the project at completion is 147,500.

61
 Example of EVA
Example 3: Provide an earned-value analysis to evaluate the progress of
sewer and water lines project. The original budget is $147,500 and the
project is scheduled to be completed in 94 working days. A status report
after 20 working days into the project includes the following information:
Previous period analysis: BCWP = 7,600; ACWP = 7,700; BCWS = 7,600;
BAC = 147,500. Current status report: BCWP = 22,720; ACWP = 25,200;
BCWS = 22,400; BAC = 147,500

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 Solution of Example 3
CV=EV – AC =22,720 - 25,200= - 2,480 (cost overrun).
SV = EV – PV = 22,720 - 22,400 = 320 (ahead of schedule).
EV 22,720
CPI = = = 0.90. CPI ˂ 1.0, poor cost performance (over cost)
AC 25,200

EV 22,720
SPI = = = 1.01 . SPI ˃ 1.0, better progress than planned (ahead
PV 22,400
schedule)
BAC−BCWP 147,500−22,720
ETC = = = 138,644
CPI 0.90

Remaining cost to complete the project is 138,644 .

Estimate at completion, EAC = AC + ETC = 25,200 + 138,644 = 163,844.

63
 Example of EVA
Example 4: Provide an earned-value analysis to evaluate the progress of
sewer and water lines project. The original budget is $147,500 and the
project is scheduled to be completed in 94 working days. A status report
after 25 working days into the project includes the following information:
Previous period analysis: BCWP = 22,720; ACWP = 25,200; BCWS =
22,400; BAC = 147,500. Current status report: BCWP = 33,000; ACWP =
36,600; BCWS = 31,740; BAC = 147,500.

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 Solution of Example 4
CV = EV – AC = 33,000 - 36,600= - 3,600 (cost overrun).
SV = EV – PV = 33,000 - 31,740 = 1,260 (ahead of schedule).
EV 33,000
CPI = = = 0.90˂ 1.0, poor cost performance.
AC 36,600
EV 33,000
SPI = = = 1.04 ˃ 1.0, (ahead of schedule).
PV 31,740
BAC−EV 147,500 − 33,000
ETC = = = 127,222
CPI 0.90

The remaining cost to complete the project is 127,222 .

EAC = AC + ETC = 36,600 + 127,222 = 163,822.
Estimated cost of project at completion = 163,822, cost overrun by 16,322.
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 Example of EVA
Example 5: Provide an earned-value analysis to evaluate the progress of
the sewer and water lines project. The original budget is $147,500 and the
project is scheduled to be completed in 94 working days. A status report
after 70 working days into the project includes the following information.
Previous period analysis: BCWP = 33,000; ACWP = 36,600; BCWS =
31,740; BAC = 147,500. Current status report: BCWP = 56,830; ACWP =
65,080; BCWS = 102,800; BAC = 147,500.

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 Solution of Example 5

CV = EV – AC = 56,830 - 65,080 = - 8,250 (cost overrun).

SV = EV – PV = 56,830 - 102,800 = - 45,970 (behind schedule).
EV 56,830
CPI = = = 0.87˂ 1.0 (poor cost performance).
AC 65,080
EV 56,830
SPI = = = 0.55 ˂ 1.0 (behind schedule).
PV 102,800
BAC−EV 147,500 −56,830
ETC = = = 104,218
CPI 0.87

The remaining cost to complete the project is 104,218.

EAC = AC + ETC = 65,080 + 104,218 = 169,298
Estimated cost of the project at completion is 169,298.

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 Example of EVA
Example 6: A project has to be completed in 2 months in Rs.20,000. Cost
breakdown is Rs10,000 for each month. The work scheduled in each month
is half of the total work to be completed. By the end of the first month, the
project has completed only 25% of the total work to be completed, but the
cost utilized is that of 50% of the total work. Also given that, for completion
of 25% work, the actual cost (AC) incurred =50% of total budgeted cost.
Perform the earn value analysis to evaluate the project.

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 Solution of Example 6

By the end of first month, PV = 50% of total = 50% of 20,000 =10,000.

Rate of performance, RP = Percentage of ratio of work actually completed to
the work scheduled to be completed = (25/50) x 100 = 50%.
EV = RP x PV = 50% x 10,000 = 5,000; AC = Rs.10,000.
CV = EV - AC = 5,000 -10,000 = -5,000
SV = EV- PV = 5,000 -10,000 = - 5,000
CPI = EV/AC = 5,000/10,000 = 0.50

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 Solution of Example 6
SPI = EV/PV = 5,000/10,000 = 0.50
EAC = PV of whole project/CPI = 20,000/0.50 = 40,000
Project had to be completed in a budget of Rs.20,000 will be completed in
Rs.40,000 (if the rate of performance is the same).
Estimated time to complete = Original time/SPI = 2 months/0.50 = 4 months
Project which had to be completed in 2 months will be completed in 4
months, if the work goes on in the same way.

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