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COST MANAGEMENT 642 - Paper 13
COST MANAGEMENT 642 - Paper 13
• Example:
• CV = $ 8,000 - 8,500 = -$500. i.e., cost overrun,
• CPI = $ 8,000 / 8,500 = 0.94. i.e., cost overrun
• Can be calculated cumulatively or for a specific period
EV - Example
• 4. What does BCWP - BCWS tell you ?
Schedule Variance
• SV = difference between budget for accomplished work & budget
for planned work I.e. schedule performance
• SV = = BCWP - BCWS
• Schedule Performance Index (SPI) = BCWP / BCWS
Current overrun
END OF PROJECT
• BCWP = BCWS
•CV = final overrun
EAC - Forecasting Methods
Original Budget + Cost Variance to date
• Work from particular point will progress at planned rates, whether or not
rates have prevailed to this point
• EAC = BAC + CV
• [BAC: Original Budget at Completion; CV: Cost Variance to date]
• Example:
• EAC = 8,500 + (10,000 - 8,000) = 10,500
• Common method because
– some cost overspends are unlikely to be repeated
those likely to be repeated may be reduced using experience to date
some cost savings will be made to balance further overspend
EAC - Forecasting Methods
• Cost variance to date will continue to prevail
• Example:
• EAC = 10,000 / 0.94 = 10,638.
• “provides what some consider to be the ‘best case’ possible for a project”
EAC - Forecasting Methods
• Cost and Schedule variance to date will continue to prevail