Thf

Update Date

Time

Figure 10.8 Baseline versus actual cost curve illustrating cost variance.

Projects rarely run significantly under budget. A more common reason for the actual curve to be below the baseline is that the activities that should have been done have not been, and thus the dollars or person hours/day that were planned to be expended have not been. The possible schedule variance is highlighted in Figure 10.9.

Progress

Progress

Cost Variance

^ Schedule Variance

Update *- Date

Time

Figure 10.9 Baseline versus actual cost illustrating schedule variance.

To determine whether there has really been a progress schedule variance, you need some additional information. Cost schedule control (CSC) comprises three basic measurements: budgeted cost of work scheduled, budgeted cost of work performed, and actual cost of work performed. These measurements result in two variance values: schedule variance and cost variance. Figure 10.10 is a graphical representation of the three measurements.

The figure shows a single activity that has a five-day duration and a budget of $500. The budget is prorated over the five days at an average daily value of $100. The left panel of Figure 10.10 shows an initial (baseline) schedule with the activity starting on the first day of the week (Monday) and finishing at the end of the week (Friday). The budgeted $500 value of the work is planned to be accomplished all within that week. This is the planned value (PV). The center panel shows the actual work that was done. Note that the schedule slipped and work did not begin until the third day of the week. Using an average daily budget of $100, we see that we were able to complete only $300 of the scheduled work. This is the earned value (EV). The rightmost panel shows the actual schedule as in the center panel, but now we see the actual dollars that were spent to accomplish the three days' work. This $400 is the actual cost (AC).

The PV, EV, and AC are used to compute and track two variances. The first is schedule variance (SV). SV is the difference between the EV and PV, which is -$200 (EV - PV) for this example. That is, the SV is the schedule difference between what was done and what was planned to be done, expressed in dollar or person hours/day equivalents. The second is cost variance (CV). CV is the difference between the EV and the AC, which is $100 in this example. That is, we overspent by $100 (AC - EV) the cost of the work completed.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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