Cost Management

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Project
Cost Management

Planning
Cost Management
Plan Cost Magmt Plan
Planning

Estimate Activity Activity Cost Estimates

Cost
Planning

Determine Budget Cost Baseline

Monitoring & Control

Control Cost
Performance
Forecast
Measurements

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Cost Management Process:

The Cost Management Process Done During

Plan Cost Management Planning Process Group

Estimate Activity Cost Planning Process Group

Determine Budget Planning Process Group

Control Cost Monitoring & Controlling Process Group

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Value Analysis :

The Concept is sometimes also called value Engineering.

It focuses to find the less costly way to do the same thing. In Other words, this
technique asks How can we decrease the cost on the project while
maintaining the same scope.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Techniques to estimate Activity Cost:
Estimate Cost

- Analogous Estimation.
- Parametric Estimation.
- Bottom up Estimation.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Reserve Analysis:
Estimate Cost

There Are two Types Of Reserves

- Contingency Reserves

- Management Reserves

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

Basic Parameters

- PV=Planned Value ( Budgeted Cost for Work Scheduled)

- EV=Earned Value (Budgeted Cost for Work Performed)
- AC=Actual Cost (Actual Cost for Work Performed)

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

CV = EV - AC
SV = EV - PV
CPI= EV/AC
SPI= EV/PV
CV = +ve (Under Budget) CPI >1 ( Under Budget)
CV = -ve (Over Budget) CPI < 1(Over Budget)
CV = 0 (On Budget) CV = 1 (On Budget)

SV= +ve (Ahead Of Schedule) SPI >1(Ahead Of Schedule)

SV= -ve (Behind Schedule) SPI < 1(Behind Schedule)
SV= 0 (On Schedule) SPI = 1(On Schedule)

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

The Budget at completion for your project is 100,000$. After 05 Months

Planned Value is 56000$ & Earned value is 50,000$.

Actual cost for Project is 57,000$. What is Schedule Performance Index &
Cost Performance index of the Project?

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

If CPI=1.22 & Actual cost of Project is 210,000. Calculate Earned Value of

the Project.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Analysis

IF CV = 10,000 $ and SV= -1,500$. What is status of your project?

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Sample Questions:

If EV = 350 , AC= 400 & PV= 325. What is cost variance?

A. 350
B. -75
C. 400
D. -50

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Sample Questions:

BAC= 150,000 USD.06 months after the Project Start, you find our that PV =
40,000 & you have spent an actual cost of 38,000 USD. If CPI = 1.22, then what
will be your earned value cost.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Sample Questions:

A Schedule Performance index 0.76 Means

A. You are over budget

B. You are Ahead of Schedule
C. You are Progressing at 76% of originally Planned
Rate
D. You are Progressing at 24% of originally Planned
Rate

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Project:

Construct 05 Rooms
Budget for Project = 5,000$
Project Duration = 05 Months

Construction & Management Solutions

(CMS)
 Project Plan: Well Construct 05 Rooms in 05 Months

Start $ $ $ $ $ END
1000 1000 1000 1000 1000

M1 M2 M3 M4 M5

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month-1

Budget = $ 5,000

$
1000
Start END

$
1000

M1 M2 M3 M4 M5
PV = 1,000$ (1 Room)
EV= 1,000$ (1 Room done)
AC= 950$ (What spent)

CV=50, SV=0, CPI=1.05, SPI=1 By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month-2

Budget = $ 5,000

$ $
1000 1000
Start END

$ $
1000 1000

M1 M2 M3 M4 M5
PV = 2,000$ (2 Room)
EV= 2,000$ (2 Room done)
AC= 2,000$ (What spent)
CV=0, SV=0, CPI=1, SPI=1 By: Engr.Faiz Rasul
E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month- 3

Budget = $ 5,000

$ $ $
1000 1000 1000
Start $ 500 END

$ $
1000 1000

M1 M2 M3 M4 M5
PV = 3,000$ (3 Room)
EV= 2,500$ (2.5 Room done)
AC= 2,800$ (What spent)

CV= -300, SV= -500, CPI= 0.89, SPI= 0.83

 Now Lets Move on to Further
Concepts of Earned Value Analysis:

Estimate To Complete.

There can be 02 Scenarios.

1- Remaining work will be done on initially planned rate?

ETC = BAC EV
Hint*(Remaining work = Total work What U have Done)

2- Remaining work will be done at current rate?

ETC = (BAC-EV) / CPI
Hint*(Divide with current rate)
By: Engr.Faiz Rasul
E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month- 3

Budget = $ 5,000

$ $
$
1000 1000
1000
Start END
$ $
$ 500 $ $
$ 500

1000 1000
$

1000 1000

M1 M2 M3 M4 M5
ETC = BAC EV
Hint* = ( Total Value of work Work Done = Remaining Work)
By: Engr.Faiz Rasul
E: pmp@cmsofficial.com, Ph.: 00966599454518
Now When You have Actual Cost Till Date & You know
Estimate to Complete also, Can you Predict How much
will be the Estimate At compltion of Project?:
Estimate at Completion= EAC = How Much we have spent+ How much more we need to Spend

EAC = AC + (BAC EV) [Initially planned rate]

Or EAC = BAC / CPI (Current Rate)
Just Use ETC based on Situation (Typical or Atypical)

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 After Month- 3

Budget = $ 5,000

$ $
$
1000 1000
1000
Start END
$ $
$ 500 $ $
$ 500

1000 1000
$

1000 1000

M1 M2 M3 M4 M5
If at initially planned rate then?
EAC = AC + ETC If at Current rate then?
or AC + (BAC-EV) = 2,800 + (5000-2500) = 5,300$ EAC = BAC / CPI= 5000 / 0.89 = 5,617 $
 Sample Questions:

Project Budget is 200,000. After 06 Months You have

Earned value of 40,000. CPI for your Project is 0.95. If
you will Proceed at the current rate. What will be your
estimate to complete the project.

ETC = (BAC EV ) / CPI

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Sample Questions:

On Your Project EV = 3500 , AC= 4000 & PV= 3850. Project Budget at completion
is 20,000 USD. If Cost performance index is expected to be same as it is, then
what is Estimate at completion.

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518
 Earned Value Formulas:

CV = EV- AC
SV= EV-PV
CPI= EV/AC
SPI = EV/PV
ETC= BAC-EV
EAC= AC+ETC , EAC= AC + (BAC-EV), EAC = BAC/CPI
VAC = BAC EAC

By: Engr.Faiz Rasul

E: pmp@cmsofficial.com, Ph.: 00966599454518