Control Cost
Process
Essam Lotfi, PMP, CCP
ELV Projects Manager, Abu Dhabi, UAE
CONTROL COST
• Control Costs is the process of monitoring the status of the project to update the project
costs and managing changes to the cost baseline.
• The key benefit of this process is that it provides the means to recognize variance from
the plan in order to take corrective action and minimize risk.
Project cost control includes:
– Influencing the factors that create changes to the authorized cost baseline
– Ensuring that all change requests are acted on in a timely manner;
– Managing the actual changes when and as they occur
– Ensuring that cost expenditures do not exceed the authorized funding by period, by
WBS component, by activity, and in total for the project
– Monitoring cost performance to isolate and understand variances from the
approved cost baseline
– Monitoring work performance against funds expended
– Preventing unapproved changes from being included in the reported cost or
resource usage
– Informing appropriate stakeholders of all approved changes and associated cost
– Bringing expected cost overruns within acceptable limits
Inputs
Control Cost Process
Outputs
Tools & Techniques
Project Management Plan Expert Judgment
Work Performance Information
Cost Management Plan Data Analysis
Cost Forecast
Cost Baseline Earned Value Analysis
Change Request
Performance Measurement Baseline Variance Analysis
Project Management Plan
Project Documents Trend Analysis Updates
Lessons Learned Reserve Analysis Cost Management Plan
To – Complete Performance Index Cost Baseline
Project Funding Requirements
PMIS Performance Measurement
Work Performance Data Baseline
OPA
Project Document Updates
Assumption Log
Basis of Estimates
Cost Estimates
Lessons Learned Register
Risk Register
CONTROL COST
EARNED VALUE MANAGEMENT
• Earned Value Management Is a project management methodology used to track project
performance as well as forecast future performance.
• EVM integrates the scope baseline, schedule baseline and cost to provide performance
measurements (PMB).
• Results can be expressed in dollars and/or percentage.
• EVM can be used to report current/past project performance, and predict future project
performance based on current/past performance.
• EVM can be used Variance Analysis Forecasting Current/Past Performance Future Performance
EARNED VALUE BASIC FORMULAS
CV SV CPI SPI
Cost Performance Index Schedule Performance
Cost Variance Schedule Variance
Index
EV – AC EV – PV EV / AC EV / PV
Where: Where: Where: Where:
EV = Earned Value EV = Earned Value EV = Earned Value EV = Earned Value
AC = Actual Cost PV = Planned Value AC = Actual Cost PV = Planned Value
Earned Value Management Representation
EARNED VALUE BASIC FORMULAS
CV - Cost Variance • EV – AC
EV – AC • The difference between Earned Value and Actual Cost
Negative • Cost Overrun or over budget
Positive • Under Budget
Zero • On Budget
CPI - Cost Performance Index • EV /AC
EV/AC • The ratio of Earned Value to Actual Cost
Value < 1 • Project performance Over Budget
Value > 1 • Project performance Under Budget
Value= 1 • Project Performance On Budget
EARNED VALUE BASIC FORMULAS
SV - Schedule Variance • EV – PV
EV – PV • The difference between Earned Value and Planned Value
Negative • Project performance behind schedule
Positive • Project performance ahead schedule
Zero • Project Performance on schedule
SPI - Cost Performance Index • EV /PV
EV/PV • The ratio of Earned Value to Planned Value
Value < 1 • Project performance behind schedule
Value > 1 • Project performance ahead schedule
Value= 1 • Project Performance on schedule
Earned Value Management calculations
TO COMPLETE PERFORMANCE INDEX (TCPI):
Is an indicator of how performance needs to improve to close the deviation between planned values
and actual performance, (efficiency level needed from the remaining resources to meet the cost
goals of the project)
To Complete Performance The Work Remaining BAC EV
TCPI Indicator (Index) The fund remaining BAC AC
To Complete Performance The Work Remaining BAC EV
TCPI Indicator (Index) The fund remaining EAC AC
Earned Value Management calculations
As Forecasting Tool
ESTIMATE AT COMPLETION (EAC) :
Is a periodic evaluation of the project status, used to estimate what is will cost to complete the
project based on the performance today (CPI) – usually performed monthly or if significant
changes have been identified.
Forecast for ETC Work Performance
EAC = AC + (BAC – EV)
at the Budget Rate
ETC
Forecast for ETC Work Performance
EAC = BAC / Cumulative CPI
at the Present CPI
AC
Forecast for ETC Work Considering
EAC = AC + [(BAC – EV)/ (SPI*CPI)]
Both SPI & CPI
Earned Value Management calculations
Estimate to Complete (ETC)
ESTIMATE TO COMPLETE (ETC) :
The estimate to complete (ETC represents the amount needed to finish the project based on the
current spending efficiency of the project.)
EV AC BAC EAC
PV VAC
ETC
Earned Value Management Representation
THANK YOU
• Contact me : [email protected]
• Mob.: +971556683732
• LinkedIn Profile: linkedin.com/in/essamlotffy
• PMWorld Journal: https://pmworldlibrary.net/authors/essam-lotffy/
