FIGURE 15-14. Cost account variance analysis report.

the project will finish over or under the budget. As an example, on June 1, the budget showed that 800 hours should have been expended for a given task. However, only 600 hours appeared on the labor report. Therefore, the performance is (800/600) X 100, or 133 percent, and the task is underrunning in performance. If the actual hours were 1,000, the performance would be 80 percent, and an overrun would be occurring.

The major difficulty encountered in the determination of BCWP is the evaluation of in-process work (work packages that have been started but have not been completed at the time of cutoff for the report). The use of short-span work packages or establishment of discrete value milestones within work packages will significantly reduce the work-in-process evaluation problem, and procedures used will vary depending on work package length. For example, some contractors prefer to take no BCWP credit for a short-term work package until it is completed, while others take credit for 50 percent of the work package budget when it starts and the remaining 50 percent at completion. Some contractors use formulas that approximate the time-phasing of the effort, others use earned standards, while still others prefer to make physical assessments of the work completed to determine the applicable budget earned. For longer work packages, many contractors use discrete milestones with preestablished budget or progress values to measure work performed.

The difficulty in performing variance analysis is the calculation of BCWP because one must predict the percent complete. To eliminate this problem, many companies use standard


Budgeted cost for work

Scheduled (BCWS) Performed (BCWP)

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