Project Implementation and Controlling

Monitoring

Project monitoring is the continuous collection, recording and reporting of information on the actual progress of a project (physical work, time, cost, quality, resource use) during implementation, and its comparison with the plan, so that deviations are known.

Evaluation

Project evaluation is the periodic, systematic assessment of a project (during, at the end, or after completion) to judge its relevance, efficiency, effectiveness, impact and sustainability against the objectives, and to draw lessons for decisions and for future projects.

Controlling

Project control is the process of comparing actual performance with the plan, analysing the variances and taking corrective action (or revising the plan) so that the project is completed within the planned time, cost and quality.

Project control cycle

The control cycle is a closed loop that is repeated at every review period.

+--------------+     +------------------+
| 1 Plan:      |     | 2 Implement and  |
| baseline of  |---->| measure actual   |
| time, cost,  |     | progress         |
| quality      |     +--------+---------+
+------^-------+              |
       |                      v
+------+-------+     +------------------+
| 5 Take       |     | 3 Compare actual |
| corrective   |<----| with plan and    |
| action /     |     | find variance    |
| re-plan      |     +--------+---------+
+------^-------+              |
       |                      v
       |             +------------------+
       +-------------| 4 Analyse causes |
                     | and decide       |
                     +------------------+

1. Set the baseline plan: approved scope, schedule, budget and quality standards.
2. Measure progress: record actual work done, cost spent and quality results through site reports, measurement books and inspections.
3. Compare actual with planned values and find the variance (schedule, cost, quality).
4. Analyse the variance: find causes (late material, low productivity, design change, weather) and forecast the effect on completion date and final cost.
5. Take corrective action: add resources, work overtime, re-sequence activities, change method, or revise the plan with approval.
6. Report and update: inform management, update the plan, and repeat the cycle at the next review period (feedback).

Example (road project): 10 km of road is to be built in 100 days (0.1 km per day). At day 50 the progress report shows only 4 km finished (planned 5 km). Variance = 1 km behind (20 %). Analysis finds that the roller was idle for 6 days and rain stopped work for 4 days. Corrective action: hire one more roller, add a second shift and use the float of side-drain work to release labour. At the next review (day 60) the progress is compared again.

Project Management Information System (PMIS) is an organised system (manual or computer-based) of people, procedures, data and tools that collects, stores, processes and reports information needed by project managers to plan, monitor and control a project. It gives the right information, to the right person, at the right time, in the right form.

Components

• Data input: site reports, measurement books, labour and equipment logs, material receipts, bills, test results, drawings.
• Database: schedules, budget, cost records, resource and contract data, risk register.
• Processing tools: spreadsheets, scheduling software (MS Project, Primavera), cost and EVA software.
• Output reports: progress, variance, cost, resource, quality and exception reports, dashboards.
• People and procedures: reporting formats, frequency, responsibilities.

Functions

• Planning and scheduling support; progress and cost tracking.
• Variance and trend analysis; forecasting of final cost and date.
• Early warning of problems (exception reporting).
• Document control and communication among client, consultant and contractor.
• Support for decisions, claims, and audit.

Site data -> Collect -> Store (database) -> Process
                                              |
Decision <- Reports/Dashboard <- Analyse <----+
   |
   +--> Corrective action --> Site

Benefits

• Faster and better decisions with accurate, current data.
• Better coordination and communication.
• Early detection of delay and overrun.
• Less paperwork; reliable records for evaluation and claims.

Example

On a highway project the site engineer enters daily quantities of earthwork and bitumen, the store keeper enters material stock, and the accountant enters bills. The PMIS prints a weekly report showing physical progress (% complete), cost to date, and variance against the baseline, so that the manager can see which section is behind and act the same week.

Project control

Project control is the process of comparing actual performance with the plan, analysing the variances and taking corrective action (or revising the plan) so that the project is completed within the planned time, cost and quality. Control keeps the project on the planned path of time, cost and quality.

Steps of the project control cycle

+--------------+     +------------------+
| 1 Plan:      |     | 2 Implement and  |
| baseline of  |---->| measure actual   |
| time, cost,  |     | progress         |
| quality      |     +--------+---------+
+------^-------+              |
       |                      v
+------+-------+     +------------------+
| 5 Take       |     | 3 Compare actual |
| corrective   |<----| with plan and    |
| action /     |     | find variance    |
| re-plan      |     +--------+---------+
+------^-------+              |
       |                      v
       |             +------------------+
       +-------------| 4 Analyse causes |
                     | and decide       |
                     +------------------+

1. Set the baseline plan: approved scope, schedule, budget and quality standards.
2. Measure progress: record actual work done, cost spent and quality results through site reports, measurement books and inspections.
3. Compare actual with planned values and find the variance (schedule, cost, quality).
4. Analyse the variance: find causes (late material, low productivity, design change, weather) and forecast the effect on completion date and final cost.
5. Take corrective action: add resources, work overtime, re-sequence activities, change method, or revise the plan with approval.
6. Report and update: inform management, update the plan, and repeat the cycle at the next review period (feedback).

Controlling the project in the implementation phase

As project manager I would apply the cycle as follows.

1. Baseline: fix the approved schedule, budget and quality plan; communicate targets to site engineers and contractors.
2. Measure: collect daily and weekly reports of work done, labour, machines and materials; check the quality by tests and inspections; record the bills.
3. Compare: hold weekly progress meetings; compare actual with planned physical progress and cost (S-curve, bar chart, earned value).
4. Analyse: find the cause of each delay or overrun and its effect on the critical path and the final cost.
5. Act: add resources to critical activities, re-sequence work, give incentives, change method, resolve design and payment problems, or get approved changes (variation orders).
6. Update and report: revise the schedule, inform the client, and repeat the cycle every week or month.

Close control of critical activities, quick decisions and good records keep the project within time and budget.

Monitoring and control

Project monitoring is the continuous collection, recording and reporting of information on the actual progress of a project (physical work, time, cost, quality, resource use) during implementation, and its comparison with the plan, so that deviations are known.

Project control is the process of comparing actual performance with the plan, analysing the variances and taking corrective action (or revising the plan) so that the project is completed within the planned time, cost and quality.

Why monitoring and control are difficult in Nepal

1. Weak planning and unrealistic estimates, so the baseline itself is poor.
2. Poor data and record keeping; no reliable PMIS, and reports are late or inaccurate.
3. Delay in budget release and payment, and the fiscal year system (work rush in the last months).
4. Political instability and frequent change of ministers and project staff; weak ownership.
5. Difficult geography and weather: remote hilly sites, landslides and monsoon, blockages of roads, so site visits and supply are hard.
6. Land acquisition, compensation, tree cutting and forest clearance problems.
7. Weak contractor capacity (small firms, shortage of skilled labour and equipment) and delay in procurement and approvals.
8. Lack of trained managers and monitoring tools; insufficient budget for monitoring.
9. Local strikes, bandhs, and law and order problems; weak enforcement of contract provisions.
10. Frequent design changes and variation orders, and corruption or pressure that weaken control.

Why continuous monitoring and control are required

• To know actual progress and detect delay or cost overrun early, while correction is cheap.
• To ensure the work meets the quality and safety standards.
• To use resources properly and prevent waste and leakage.
• To get information for timely decisions and for payment and claims.
• To make the staff and contractors accountable.
• Conditions (price, weather, funds) change constantly, so the plan must be updated.

Project control cycle

The project control cycle is the repeated process of planning, measuring, comparing, analysing and correcting that keeps the project on its time, cost and quality targets.

+--------------+     +------------------+
| 1 Plan:      |     | 2 Implement and  |
| baseline of  |---->| measure actual   |
| time, cost,  |     | progress         |
| quality      |     +--------+---------+
+------^-------+              |
       |                      v
+------+-------+     +------------------+
| 5 Take       |     | 3 Compare actual |
| corrective   |<----| with plan and    |
| action /     |     | find variance    |
| re-plan      |     +--------+---------+
+------^-------+              |
       |                      v
       |             +------------------+
       +-------------| 4 Analyse causes |
                     | and decide       |
                     +------------------+

1. Set the baseline plan: approved scope, schedule, budget and quality standards.
2. Measure progress: record actual work done, cost spent and quality results through site reports, measurement books and inspections.
3. Compare actual with planned values and find the variance (schedule, cost, quality).
4. Analyse the variance: find causes (late material, low productivity, design change, weather) and forecast the effect on completion date and final cost.
5. Take corrective action: add resources, work overtime, re-sequence activities, change method, or revise the plan with approval.
6. Report and update: inform management, update the plan, and repeat the cycle at the next review period (feedback).

Factors to be considered in quality control

1. Specifications and standards: clear drawings, specifications and codes (Nepal Building Code, IS, NS) with acceptance limits.
2. Quality of materials: testing of cement, steel, aggregate, bricks, bitumen before use; approved sources.
3. Workmanship and skill: trained labour and supervisors; method statements.
4. Equipment and tools: proper, calibrated and well-maintained machines and testing instruments.
5. Inspection and testing: a plan of tests (cube test, density test, slump), frequency and sampling.
6. Supervision and organisation: clear responsibility; qualified quality engineer.
7. Documentation: records of tests, approvals, non-conformance reports.
8. Environment and site conditions: weather, curing, storage of material.
9. Time and cost pressure: a rush or low rates reduce quality; quality must be planned in the budget and schedule.
10. Corrective and preventive action: rework or rejection procedure and feedback to avoid repeat defects.

A feedback control system is a closed-loop system in which the output (actual performance) is measured and fed back to be compared with the desired standard (plan). If a difference (error) exists, a corrective action is taken to bring the output back to the standard. The aim is self-regulation.

Elements

1. Standard / plan (set point): target for time, cost, quality.
2. Process: the project work.
3. Sensor / measurement: records actual progress, cost and quality.
4. Comparator: compares actual with standard and finds the variance.
5. Decision and corrective action (effector): the manager adjusts input (resources, method) to remove the variance.

            Plan / Standard (set point)
                    |
                    v
Input --> [ Process: project work ] --> Output
               ^                          |
               |                          v
        [ Corrective        <---- [ Sensor: measure
          action ]                    actual ]
               ^                          |
               |                          v
               +------ [ Comparator: ] <--+
                         actual vs plan

Example: budgeted cost of a building at 50 % progress is Rs 40 lakh but actual cost is Rs 46 lakh. The report (feedback) shows an overrun of Rs 6 lakh. The manager reduces wastage, renegotiates rates and re-plans the remaining work to bring the cost back to the budget.

Features: continuous, automatic or semi-automatic, corrects after the deviation has occurred (so there is some lag), and works best with timely information.

Earned Value Analysis (EVA)

Earned Value Analysis is a method of measuring project performance by comparing three quantities: the work planned (PV), the value of the work actually done (EV) and the actual cost (AC). It gives schedule and cost variances and indices in one common unit (money), and forecasts the final cost and time.

$$\begin{aligned} SV &= EV - PV, \qquad CV = EV - AC \\ SPI &= \frac{EV}{PV}, \qquad CPI = \frac{EV}{AC} \\ EAC &= \frac{BAC}{CPI}, \qquad ETC = EAC - AC, \qquad VAC = BAC - EAC \end{aligned}$$

Given data

• Budget: 50 labour days x Rs 1,000 = Rs 50,000 for 10 days (assumed uniform, 5 labour days per day).
• At the end of day 3: work done = 25 %; labour used = 18 days at Rs 800 per day.

Calculation

$$\begin{aligned} PV &= \frac{3}{10} \times 50{,}000 = 15{,}000 \\ EV &= 0.25 \times 50{,}000 = 12{,}500 \\ AC &= 18 \times 800 = 14{,}400 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 12{,}500 - 15{,}000 = -2{,}500 \\ CV &= EV - AC = 12{,}500 - 14{,}400 = -1{,}900 \\ SPI &= \frac{EV}{PV} = \frac{12{,}500}{15{,}000} = 0.83 \\ CPI &= \frac{EV}{AC} = \frac{12{,}500}{14{,}400} = 0.87 \\ EAC &= \frac{BAC}{CPI} = \frac{50{,}000}{0.8681} = 57{,}600 \\ ETC &= EAC - AC = 57{,}600 - 14{,}400 = 43{,}200 \\ VAC &= BAC - EAC = 50{,}000 - 57{,}600 = -7{,}600 \\ \text{Forecast duration} &= \frac{10}{SPI} = \frac{10}{0.8333} = 12.0\ \text{days} \end{aligned}$$

Comment on performance

• SV is negative and SPI = 0.83 < 1: the work is behind schedule; only 83 % of the planned work is done. At this rate the job takes 12 days instead of 10.
• CV is negative and CPI = 0.87 < 1: the job is over budget. Although the rate per labour day is lower (Rs 800 against Rs 1,000), more labour days (18 against 15) were used for less work, so productivity is poor.
• The expected final cost is Rs 57,600, an overrun of Rs 7,600.
• Corrective action: improve productivity (better supervision, tools, work method), plan materials, and rearrange crews to catch up the delay.

Answer: SV = Rs -2,500, CV = Rs -1,900, SPI = 0.83, CPI = 0.87; the work is behind schedule and over budget.

Quality assurance and quality control

Costs associated with quality (cost of quality)

The total cost of quality has two groups: the cost of conformance (money spent to achieve good quality) and the cost of non-conformance (money lost due to poor quality).

1. Prevention cost (conformance): spent to avoid defects - quality planning, training, better design, procedures, supplier selection.
2. Appraisal cost (conformance): spent to find defects - inspection, testing, laboratory, calibration, audits.
3. Internal failure cost (non-conformance): defects found before delivery - rework, scrap, re-testing, delay.
4. External failure cost (non-conformance): defects found after delivery - repair under warranty, claims, litigation, loss of reputation, compensation.

Total cost of quality
|-- Cost of conformance
|     |-- Prevention
|     `-- Appraisal
`-- Cost of non-conformance
      |-- Internal failure
      `-- External failure

Spending more on prevention and appraisal reduces failure costs; the best level is where the total is lowest.

Quality

Quality is the degree to which the project deliverable satisfies the specified requirements and the needs of the client; in simple words "fitness for use" or "conformance to requirements".

Quality costs more, but lack of quality costs even more

Good quality needs money for planning, training, better materials, inspection and testing. But poor quality is far more expensive: rework, rejection, delay, repair, claims, loss of goodwill, and, in construction, failure and loss of life. The total cost of quality is:

$$\text{Total quality cost} = \text{Prevention} + \text{Appraisal} + \text{Internal failure} + \text{External failure}$$

Illustration (Rs thousand, for one slab-casting package):

As the money spent on prevention and appraisal increases, failure cost falls much faster, so the total cost falls up to an optimum point. For example, spending Rs 20,000 on testing and supervision of a slab can avoid demolition and recasting costing lakhs. Hence the statement is justified: the cost of lack of quality (failure costs) is greater than the cost of achieving quality.

Project quality control

Quality control (QC) is the set of operational activities used during the project to check that the work and materials meet the specified standards, to find defects early and to correct their causes. It includes inspection, testing, measurement, and taking action on non-conformance, so that the product is acceptable to the client.

Main steps: set standards and acceptance limits, take samples and test, compare with standards, correct or reject, and record.

Techniques of quality control

1. Inspection and testing: visual checks, measurement and laboratory/field tests (cube strength, slump, field density, bitumen content).
2. Statistical sampling: a small sample is tested to judge the whole lot, with acceptance limits.
3. Control charts: plot test results with upper and lower control limits over time to show whether the process is under control.
4. Pareto chart: bar chart arranging the causes of defects in order; shows the vital few causes (80/20 rule).
5. Cause-and-effect (fishbone) diagram: finds root causes of a defect under headings such as man, machine, material, method.
6. Histogram: shows the distribution of measured values.
7. Scatter diagram: shows the relation between two variables (water-cement ratio and strength).
8. Check sheet and flow chart: record defects and show process steps.
9. Checklists and quality audits of work stages.

Earned value analysis (EVA) compares planned value, earned value and actual cost to measure schedule and cost performance. Planned progress is taken as uniform over the 3 weeks.

Data

• Total work = 50 units, rate = Rs 2,500/unit, duration = 3 weeks
• Budget at completion, BAC = 50 x 2,500 = Rs 125,000
• Monitoring at end of week 1: completed = 20 units, actual cost = 20 x 2,500 = Rs 50,000

$$\begin{aligned} PV &= \frac{1}{3} \times 125{,}000 = 41,666.67\ \text{(planned work = 16.67 units)}\\ EV &= 20 \times 2{,}500 = 50,000\\ AC &= 20 \times 2{,}500 = 50,000 \end{aligned}$$

Calculation

$$\begin{aligned} PV &= Rs\ 41,666.67\\ EV &= Rs\ 50,000.00\\ AC &= Rs\ 50,000.00\\ SV &= EV - PV = 50,000.00 - 41,666.67 = 8,333.33\\ CV &= EV - AC = 50,000.00 - 50,000.00 = 0.00\\ SPI &= EV/PV = 1.200\\ CPI &= EV/AC = 1.000\\ EAC &= BAC/CPI = 125,000.00/1.000 = 125,000.00\\ ETC &= EAC - AC = 75,000.00\\ VAC &= BAC - EAC = 0.00 \end{aligned}$$

Comment

• Schedule: SV is positive and SPI = 1.200, so the project is ahead of schedule. The work done is 120.0% of the planned work. At this rate the duration becomes about 2.50 against the planned 3 (a change of -0.50).
• Cost: CV is zero and CPI = 1.000, so the project is on budget. Each Rs 1 spent gives Rs 1.00 of work.
• Forecast: if the present cost trend continues, the final cost will be Rs 125,000.00 against the budget of Rs 125,000.00 (variance at completion 0.00).

Answer: SV = 8,333.33, CV = 0.00, SPI = 1.200, CPI = 1.000; the project is ahead of schedule and on budget.

Both schedule and cost are favourable. Controlling statements: continue the present method, maintain productivity, keep records, and watch for later risks.

Planned work in week 1 was 16.67 units, but 20 units were finished, so the project is faster than planned and the unit cost is exactly as budgeted.

Data

• Work = 50 units at Rs 200/unit in 4 weeks, so BAC = 50 x 200 = Rs 10,000
• Monitoring after 3 weeks: progress = 60% (30 units); actual rate = Rs 300/unit
• Planned progress after 3 weeks = 3/4 = 75% (uniform progress assumed)

$$\begin{aligned} PV &= 0.75 \times 10{,}000 = 7,500\\ EV &= 0.60 \times 10{,}000 = 6,000\\ AC &= 30 \times 300 = 9,000 \end{aligned}$$

Calculation

$$\begin{aligned} PV &= Rs\ 7,500.00\\ EV &= Rs\ 6,000.00\\ AC &= Rs\ 9,000.00\\ SV &= EV - PV = 6,000.00 - 7,500.00 = -1,500.00\\ CV &= EV - AC = 6,000.00 - 9,000.00 = -3,000.00\\ SPI &= EV/PV = 0.800\\ CPI &= EV/AC = 0.667\\ EAC &= BAC/CPI = 10,000.00/0.667 = 15,000.00\\ ETC &= EAC - AC = 6,000.00\\ VAC &= BAC - EAC = -5,000.00 \end{aligned}$$

Comment

• Schedule: SV is negative and SPI = 0.800, so the project is behind schedule. Only 80.0% of the planned work is done. At this rate the duration becomes about 5.00 against the planned 4 (a change of +1.00).
• Cost: CV is negative and CPI = 0.667, so the project is over budget. Each Rs 1 spent gives Rs 0.67 of work.
• Forecast: if the present cost trend continues, the final cost will be Rs 15,000.00 against the budget of Rs 10,000.00 (variance at completion -5,000.00).

Answer: SV = -1,500.00, CV = -3,000.00, SPI = 0.800, CPI = 0.667; the project is behind schedule and over budget.

Both schedule and cost are unfavourable. Controlling statements: increase productive resources (labour, equipment, extra shifts), improve supervision and productivity, review rates and wastage, re-sequence activities and revise the plan or budget with the client's approval.

The project is late and also costly, because only 60% is done against 75% planned and the unit cost is 50% above the estimate (Rs 300 against Rs 200).

Difference between evaluation and controlling

Elements of project control

1. Plan / standard (baseline): approved scope, schedule, budget and quality standards against which performance is judged.
2. Measurement of performance: collecting actual data of progress, cost, quality and resource use (monitoring).
3. Comparison and variance analysis: finding the difference between actual and planned and its cause and effect on the project.
4. Corrective action: decisions to bring the project back to plan (more resources, re-sequencing, change of method) or to revise the plan.
5. Information and reporting (feedback): timely reports to the manager and the client; the result of the action is fed back to the next cycle.
6. Organisation and authority: clear responsibility, authority and people for control at each level.

Plan -> Measure -> Compare -> Act -> Feedback
  ^                                    |
  +------------------------------------+

Why monitoring, evaluation and control are a must

A project is a one-time, costly and uncertain job with limited time and money. Plans are made on assumptions, but conditions change during implementation. Without monitoring and control the project drifts.

• Monitoring shows the actual progress, cost and quality continuously, so that delay or overspend is seen early.
• Control compares the actual with the plan and takes corrective action so that time, cost and quality targets are achieved.
• Evaluation judges whether the objectives are being achieved and whether the project is still relevant and efficient, and gives lessons for decisions and future projects.
• Together they give accountability, avoid waste and loss, reduce risk, satisfy the client and donor, and improve the chance of success.

+--------------+     +------------------+
| 1 Plan:      |     | 2 Implement and  |
| baseline of  |---->| measure actual   |
| time, cost,  |     | progress         |
| quality      |     +--------+---------+
+------^-------+              |
       |                      v
+------+-------+     +------------------+
| 5 Take       |     | 3 Compare actual |
| corrective   |<----| with plan and    |
| action /     |     | find variance    |
| re-plan      |     +--------+---------+
+------^-------+              |
       |                      v
       |             +------------------+
       +-------------| 4 Analyse causes |
                     | and decide       |
                     +------------------+

Project Management Information System (PMIS)

Project Management Information System (PMIS) is an organised system (manual or computer-based) of people, procedures, data and tools that collects, stores, processes and reports information needed by project managers to plan, monitor and control a project. It gives the right information, to the right person, at the right time, in the right form.

Components

• Data input: site reports, measurement books, labour and equipment logs, material receipts, bills, test results, drawings.
• Database: schedules, budget, cost records, resource and contract data, risk register.
• Processing tools: spreadsheets, scheduling software (MS Project, Primavera), cost and EVA software.
• Output reports: progress, variance, cost, resource, quality and exception reports, dashboards.
• People and procedures: reporting formats, frequency, responsibilities.

Functions

• Planning and scheduling support; progress and cost tracking.
• Variance and trend analysis; forecasting of final cost and date.
• Early warning of problems (exception reporting).
• Document control and communication among client, consultant and contractor.
• Support for decisions, claims, and audit.

Site data -> Collect -> Store (database) -> Process
                                              |
Decision <- Reports/Dashboard <- Analyse <----+
   |
   +--> Corrective action --> Site

Benefits

• Faster and better decisions with accurate, current data.
• Better coordination and communication.
• Early detection of delay and overrun.
• Less paperwork; reliable records for evaluation and claims.

"The right information at the right time reduces the risk of wrong decisions"

A decision is as good as the information behind it. If the manager learns of a delay or overspend only after the project is finished, it is too late to correct. Timely and accurate information from the PMIS means that:

• a 2-week delay is seen in the weekly report, and extra resources are applied to a critical activity while the delay is still small;
• cost variance is known at 30 % progress, not at 90 %, so scope or method can still be changed;
• the choice between alternatives (overtime or new equipment) is made on facts, not guesses;
• risk is lowered because uncertain assumptions are replaced by measured data. Late, wrong or excessive information, on the other hand, causes wrong decisions, delay and loss.

Difference between monitoring and evaluation

Tools of project quality control

1. Inspection and testing of materials and work (cube test, slump, field density, bitumen test).
2. Check sheet: a form to record the number and type of defects.
3. Histogram: shows the frequency distribution of measured values.
4. Pareto chart: ranks causes of defects, showing the vital few (80/20 rule).
5. Cause-and-effect (fishbone) diagram: traces the root cause of a defect under man, machine, material and method.
6. Scatter diagram: shows the relation between two variables, e.g. water-cement ratio and strength.
7. Control chart: plots results against upper and lower control limits to show whether the process is stable.
8. Flow chart of the process and statistical sampling plans.

Monitoring and controlling

Project control cycle

+--------------+     +------------------+
| 1 Plan:      |     | 2 Implement and  |
| baseline of  |---->| measure actual   |
| time, cost,  |     | progress         |
| quality      |     +--------+---------+
+------^-------+              |
       |                      v
+------+-------+     +------------------+
| 5 Take       |     | 3 Compare actual |
| corrective   |<----| with plan and    |
| action /     |     | find variance    |
| re-plan      |     +--------+---------+
+------^-------+              |
       |                      v
       |             +------------------+
       +-------------| 4 Analyse causes |
                     | and decide       |
                     +------------------+

Monitoring covers steps 2 and 3 (measure and compare); controlling covers steps 4 and 5 (analyse and act), and the cycle is repeated at every review.

Earned Value Analysis (EVA) for cost control

EVA compares the planned value (PV), the earned value (EV) and the actual cost (AC) at a status date, so that cost and schedule performance are seen in one common unit (money).

$$\begin{aligned} SV &= EV - PV, \qquad CV = EV - AC \\ SPI &= \frac{EV}{PV}, \qquad CPI = \frac{EV}{AC} \\ EAC &= \frac{BAC}{CPI}, \qquad ETC = EAC - AC, \qquad VAC = BAC - EAC \end{aligned}$$

Example: BAC = Rs 10 lakh; at the status date PV = Rs 5 lakh, EV = Rs 4 lakh, AC = Rs 6 lakh. $SV = -1$ lakh, $CV = -2$ lakh, $SPI = 0.80$, $CPI = 0.67$, $EAC = 10/0.67 = 15$ lakh. The project is behind schedule and over budget, so corrective action is needed at once.

Definitions

Project monitoring is the continuous collection, recording and reporting of information on the actual progress of a project (physical work, time, cost, quality, resource use) during implementation, and its comparison with the plan, so that deviations are known.

Project evaluation is the periodic, systematic assessment of a project (during, at the end, or after completion) to judge its relevance, efficiency, effectiveness, impact and sustainability against the objectives, and to draw lessons for decisions and for future projects.

Project control is the process of comparing actual performance with the plan, analysing the variances and taking corrective action (or revising the plan) so that the project is completed within the planned time, cost and quality.

Quality control

Checking that materials and work meet the specifications and standards, through inspection, sampling and testing (cube test, density test), use of control charts and Pareto/fishbone analysis, and correcting or rejecting defective work. It is done by a quality engineer with a test plan and records.

Cost control

Keeping the actual cost within the approved budget. The budget is set by WBS/cost codes, the actual cost is recorded, the variance is found (actual against budget, or by earned value: CV and CPI), the final cost is forecast (EAC) and corrective actions are taken (reduce wastage, improve productivity, control variations and procurement).

Schedule control

Keeping the work on the planned time table. Actual progress is compared with the baseline (bar chart, S-curve, SV and SPI); the cause of delay and its effect on the critical path are found; the corrective action is taken (more resources, overtime, re-sequencing, fast-tracking, crashing) and the schedule is updated.

Project schedule control

Schedule control is the process of monitoring the actual progress of the project, comparing it with the baseline schedule, finding the causes of any delay and taking corrective action (or approved changes) so that the project is completed on the planned date.

Schedule control cycle

+-----------------+   +------------------+
| Baseline        |-->| Record actual    |
| schedule        |   | progress         |
+--------^--------+   +---------+--------+
         |                      v
+--------+--------+   +------------------+
| Update schedule |   | Compare with plan|
| and report      |   | (SV, SPI, float) |
+--------^--------+   +---------+--------+
         |                      v
+--------+--------+   +------------------+
| Corrective      |<--| Analyse delay,   |
| action          |   | critical path    |
+-----------------+   +------------------+

1. Baseline schedule: approved bar chart or network with milestones.
2. Record actual progress: percent complete and actual start/finish of each activity.
3. Compare with plan: bar chart, S-curve, schedule variance $SV = EV - PV$, $SPI = EV/PV$, float used.
4. Analyse: which activities are delayed, whether they are critical, and the effect on completion; forecast the new date.
5. Corrective action: see below.
6. Update and report the schedule; repeat at the next review.

How to keep the project on schedule

• Make a realistic plan, with the critical path and float known.
• Arrange materials, equipment, drawings, land and payments in advance.
• Give priority in resources to critical activities; monitor them daily.
• Hold regular progress meetings and take quick decisions.
• If delayed: add labour or equipment, work overtime or extra shifts (crashing), do activities in parallel (fast tracking), change the method or logic, or use float of non-critical work.
• Control changes and variation orders; manage risks (weather, strikes) with contingency.
• Use incentives for early completion and penalty for delay in the contract.

Cost control

Cost control is the process of keeping the actual cost of the project within the approved budget by recording costs, comparing them with the budget, finding the variances and taking corrective action.

Cost control cycle

Budget baseline -> Record actual cost -> Compare with budget
       ^                                      |
       |                                      v
Update budget <- Corrective action <- Analyse variance
                                      and forecast cost

1. Prepare the budget baseline from the WBS and cost codes.
2. Record the actual costs (labour, material, equipment) from bills and site records.
3. Compare actual with budgeted (earned) cost and find the variance.
4. Analyse the causes and forecast the final cost (EAC).
5. Take corrective action; revise the budget through approved changes; repeat.

Methods of cost control

• Cost budgeting and cost codes by WBS, with a responsible person for each item.
• Variance analysis and exception reports (actual against budget).
• Earned value analysis: CV, CPI and EAC.
• S-curve and cash flow control of planned against actual expenditure.
• Control of changes and variation orders; claims management.
• Procurement and material control: bulk buying, store control, reducing wastage.
• Productivity improvement, better equipment use, and work study.
• Time-cost trade-off (crashing only when the benefit is greater) and value engineering.

Elements of cost control

1. Cost estimate and budget baseline prepared from the WBS, with cost codes.
2. Cost accounting: recording the actual costs of each work item.
3. Cost reporting: regular reports of budget, actual cost, commitments and forecast.
4. Variance analysis: comparing actual with budget (or earned value) and finding the causes.
5. Forecasting: estimate at completion (EAC) and cash needs.
6. Corrective action and change control: actions to reduce cost or approved change in the budget.
7. Responsibility and authority: each cost centre has an accountable person.

System of control

A control system can be:

• Open system: no feedback; the output is not compared with the target, so errors are not corrected automatically (e.g. a fixed monthly allocation, without checking progress).
• Closed system: the output is measured and fed back, compared with the target and corrected (e.g. monthly comparison of actual cost with the budget). Project cost control is a closed system.

Feedback control system

            Plan / Standard (set point)
                    |
                    v
Input --> [ Process: project work ] --> Output
               ^                          |
               |                          v
        [ Corrective        <---- [ Sensor: measure
          action ]                    actual ]
               ^                          |
               |                          v
               +------ [ Comparator: ] <--+
                         actual vs plan

The sensor measures the actual cost, the comparator finds the variance against the budget, and the manager (effector) takes corrective action. The result of the action is again measured, so the loop keeps the cost close to the budget. Feedback should be quick and accurate; a long delay in the report weakens control.

Closed and open system of control

OPEN LOOP                  CLOSED LOOP
Input -> [Process] -> Out  Input -> [Process] -> Out
                              ^                   |
                              +-- [Compare]<------+
                                  (feedback)

Project control should be a closed system because the environment changes and errors must be corrected.

"Quality costs more, but lack of quality costs even more"

Good quality needs money for prevention (planning, training, procedures) and appraisal (inspection and tests). Poor quality costs far more through failure: rework and rejection (internal failure) and repair, claims and loss of reputation (external failure). For example, testing concrete cubes costs a few hundred rupees, but a defective slab may cost lakhs to demolish and recast.

$$\text{Total quality cost} = \text{Prevention} + \text{Appraisal} + \text{Internal failure} + \text{External failure}$$

As spending on prevention and appraisal increases, the failure cost falls faster, so the total cost goes down to an optimum. Hence lack of quality is more costly than quality.

Project control is the process of keeping the project on its planned time, cost and quality by comparing actual performance with the plan and taking corrective action. Its elements are:

1. Plan / standard (baseline): approved scope, schedule, budget and quality standards against which performance is judged.
2. Measurement of performance: collecting actual data of progress, cost, quality and resource use (monitoring).
3. Comparison and variance analysis: finding the difference between actual and planned and its cause and effect on the project.
4. Corrective action: decisions to bring the project back to plan (more resources, re-sequencing, change of method) or to revise the plan.
5. Information and reporting (feedback): timely reports to the manager and the client; the result of the action is fed back to the next cycle.
6. Organisation and authority: clear responsibility, authority and people for control at each level.

The elements work as a loop: after action is taken, performance is measured again and the result is fed back, so control is continuous until the project is complete.

• Project monitoring is the continuous collection, recording and reporting of information on the actual progress of a project (physical work, time, cost, quality, resource use) during implementation, and its comparison with the plan, so that deviations are known.
• Project evaluation is the periodic, systematic assessment of a project (during, at the end, or after completion) to judge its relevance, efficiency, effectiveness, impact and sustainability against the objectives, and to draw lessons for decisions and for future projects.
• Project control is the process of comparing actual performance with the plan, analysing the variances and taking corrective action (or revising the plan) so that the project is completed within the planned time, cost and quality.

Monitoring gives the information, evaluation judges the results, and control uses both to correct the project. The three together form the basis of good project management.

Why cost control is necessary

• The budget is limited, and overspending can make the project unviable.
• Costs change with price rise, wastage, variations and delay; they must be watched.
• It gives early warning of overrun, while correction is still possible.
• It helps funding and cash-flow planning, and satisfies the client and the lender.
• It improves efficiency and profit of the contractor.

Earned value

Earned value (EV) is the budgeted cost of the work actually completed at the status date: $EV = \%\ \text{complete} \times BAC$. It tells what the completed work was worth according to the budget.

EVA approach of cost control

At each review the following three quantities are found:

$$\begin{aligned} SV &= EV - PV, \qquad CV = EV - AC \\ SPI &= \frac{EV}{PV}, \qquad CPI = \frac{EV}{AC} \\ EAC &= \frac{BAC}{CPI}, \qquad ETC = EAC - AC, \qquad VAC = BAC - EAC \end{aligned}$$

CV and CPI show cost performance; SV and SPI show schedule performance. EAC forecasts the final cost. If CPI < 1 the manager looks for the cause (low productivity, wastage, high rates) and acts to bring the cost back to the budget; the forecast is updated every month.

Earned Value Analysis

EVA is a project control technique that measures project progress by comparing the budgeted value of the work done (earned value) with the planned value and with the actual cost. It integrates scope, time and cost, giving variances and indices and forecasts of final cost and time.

Parameters and interpretation

Applicability of EVA for monitoring

EVA is suitable for monitoring a construction project because it measures performance with one common unit, money. At every review the planned value (PV), earned value (EV) and actual cost (AC) are found. From them the schedule variance, cost variance and the SPI and CPI show whether the project is ahead or behind and over or under budget, and the EAC forecasts the final cost. Since the physical progress is converted to a value, the cost and time performance of different activities can be added and compared with the baseline at any date.

Given data

BAC = Rs 10,00,000; planned duration = 50 days; at day 35: progress = 60 %, cost spent = Rs 8,00,000. Planned work is assumed uniform with time.

Calculation

$$\begin{aligned} PV &= \frac{35}{50} \times 10{,}00{,}000 = 7{,}00{,}000 \\ EV &= 0.60 \times 10{,}00{,}000 = 6{,}00{,}000 \\ AC &= 8{,}00{,}000 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 6{,}00{,}000 - 7{,}00{,}000 = -1{,}00{,}000 \\ CV &= EV - AC = 6{,}00{,}000 - 8{,}00{,}000 = -2{,}00{,}000 \\ SPI &= \frac{EV}{PV} = \frac{6{,}00{,}000}{7{,}00{,}000} = 0.86 \\ CPI &= \frac{EV}{AC} = \frac{6{,}00{,}000}{8{,}00{,}000} = 0.75 \\ EAC &= \frac{BAC}{CPI} = \frac{10{,}00{,}000}{0.7500} = 13{,}33{,}333 \\ ETC &= EAC - AC = 13{,}33{,}333 - 8{,}00{,}000 = 5{,}33{,}333 \\ VAC &= BAC - EAC = 10{,}00{,}000 - 13{,}33{,}333 = -3{,}33{,}333 \\ \text{Forecast duration} &= \frac{50}{SPI} = \frac{50}{0.8571} = 58.3\ \text{days} \end{aligned}$$

Comment

• Schedule: SV = -1,00,000 and SPI = 0.86, so the project is behind schedule; only 86 % of the planned work is done. If the same rate continues, the duration becomes 58.3 days against 50 days planned.
• Cost: CV = -2,00,000 and CPI = 0.75, so the project is over budget; each rupee spent has earned Rs 0.75 of work.
• Forecast: EAC = Rs 13,33,333 against BAC = Rs 10,00,000, i.e. a final overrun of Rs 3,33,333.
• Action: find the causes (low productivity, idle equipment, material delay, wastage), add resources or shifts on critical activities, tighten supervision and cost control, and revise the plan with the client.

Answer: SV = Rs -1,00,000, CV = Rs -2,00,000, SPI = 0.86, CPI = 0.75; behind schedule and over budget; EAC = Rs 13,33,333.

Given data

BAC = Rs 20,00,000; planned duration = 60 days; at the end of the first month (30 days) 25 % of the work is complete and the cost is Rs 12,00,000. Planned work is assumed uniform, so half of the work is planned in the first month.

Calculation

$$\begin{aligned} PV &= \frac{30}{60} \times 20{,}00{,}000 = 10{,}00{,}000 \\ EV &= 0.25 \times 20{,}00{,}000 = 5{,}00{,}000 \\ AC &= 12{,}00{,}000 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 5{,}00{,}000 - 10{,}00{,}000 = -5{,}00{,}000 \\ CV &= EV - AC = 5{,}00{,}000 - 12{,}00{,}000 = -7{,}00{,}000 \\ SPI &= \frac{EV}{PV} = \frac{5{,}00{,}000}{10{,}00{,}000} = 0.50 \\ CPI &= \frac{EV}{AC} = \frac{5{,}00{,}000}{12{,}00{,}000} = 0.42 \\ EAC &= \frac{BAC}{CPI} = \frac{20{,}00{,}000}{0.4167} = 48{,}00{,}000 \\ ETC &= EAC - AC = 48{,}00{,}000 - 12{,}00{,}000 = 36{,}00{,}000 \\ VAC &= BAC - EAC = 20{,}00{,}000 - 48{,}00{,}000 = -28{,}00{,}000 \\ \text{Forecast duration} &= \frac{60}{SPI} = \frac{60}{0.5000} = 120.0\ \text{days} \end{aligned}$$

Comment

• Schedule: SV = -5,00,000 and SPI = 0.50, so the project is behind schedule; only 50 % of the planned work is done. If the same rate continues, the duration becomes 120.0 days against 60 days planned.
• Cost: CV = -7,00,000 and CPI = 0.42, so the project is over budget; each rupee spent has earned Rs 0.42 of work.
• Forecast: EAC = Rs 48,00,000 against BAC = Rs 20,00,000, i.e. a final overrun of Rs 28,00,000.
• Action: find the causes (low productivity, idle equipment, material delay, wastage), add resources or shifts on critical activities, tighten supervision and cost control, and revise the plan with the client.

Answer: SV = Rs -5,00,000, CV = Rs -7,00,000, SPI = 0.50, CPI = 0.42; the project is badly behind schedule and over budget, EAC = Rs 48,00,000.

Given data

BAC = Rs 20,000; duration = 60 days (2 months); cost breakdown Rs 10,000 per month; half of the work is scheduled in each month. At the end of month 1: work done = 25 %; spent = 50 % of the budget.

Calculation

$$\begin{aligned} PV &= 50\%\ \text{of}\ 20{,}000 = 10{,}000 \\ EV &= 25\%\ \text{of}\ 20{,}000 = 5{,}000 \\ AC &= 50\%\ \text{of}\ 20{,}000 = 10{,}000 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 5{,}000 - 10{,}000 = -5{,}000 \\ CV &= EV - AC = 5{,}000 - 10{,}000 = -5{,}000 \\ SPI &= \frac{EV}{PV} = \frac{5{,}000}{10{,}000} = 0.50 \\ CPI &= \frac{EV}{AC} = \frac{5{,}000}{10{,}000} = 0.50 \\ EAC &= \frac{BAC}{CPI} = \frac{20{,}000}{0.5000} = 40{,}000 \\ ETC &= EAC - AC = 40{,}000 - 10{,}000 = 30{,}000 \\ VAC &= BAC - EAC = 20{,}000 - 40{,}000 = -20{,}000 \\ \text{Forecast duration} &= \frac{60}{SPI} = \frac{60}{0.5000} = 120.0\ \text{days} \end{aligned}$$

Comment

• Schedule: SV = -5,000 and SPI = 0.50, so the project is behind schedule; only 50 % of the planned work is done. If the same rate continues, the duration becomes 120.0 days against 60 days planned.
• Cost: CV = -5,000 and CPI = 0.50, so the project is over budget; each rupee spent has earned Rs 0.50 of work.
• Forecast: EAC = Rs 40,000 against BAC = Rs 20,000, i.e. a final overrun of Rs 20,000.
• Action: find the causes (low productivity, idle equipment, material delay, wastage), add resources or shifts on critical activities, tighten supervision and cost control, and revise the plan with the client.

Answer: SV = Rs -5,000, CV = Rs -5,000, SPI = 0.50, CPI = 0.50; behind schedule and over budget; EAC = Rs 40,000, double the budget.

Given data

BAC = Rs 1,00,000 (100,000); duration = 10 days; at day 6: work done = 70 %, cost spent = Rs 55,000. Planned work is assumed uniform with time.

Calculation

$$\begin{aligned} PV &= \frac{6}{10} \times 100{,}000 = 60{,}000 \\ EV &= 0.70 \times 100{,}000 = 70{,}000 \\ AC &= 55{,}000 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 70{,}000 - 60{,}000 = 10{,}000 \\ CV &= EV - AC = 70{,}000 - 55{,}000 = 15{,}000 \\ SPI &= \frac{EV}{PV} = \frac{70{,}000}{60{,}000} = 1.17 \\ CPI &= \frac{EV}{AC} = \frac{70{,}000}{55{,}000} = 1.27 \\ EAC &= \frac{BAC}{CPI} = \frac{1{,}00{,}000}{1.2727} = 78{,}571 \\ ETC &= EAC - AC = 78{,}571 - 55{,}000 = 23{,}571 \\ VAC &= BAC - EAC = 1{,}00{,}000 - 78{,}571 = 21{,}429 \\ \text{Forecast duration} &= \frac{10}{SPI} = \frac{10}{1.1667} = 8.6\ \text{days} \end{aligned}$$

Answers

(i) $SV = +10{,}000$ and $SPI = 1.17 > 1$: the project is ahead of schedule (70 % done against 60 % planned). At this rate it can finish in about 8.6 days.

(ii) $CV = +15{,}000$ and $CPI = 1.27 > 1$: the project is expected to complete under budget; EAC = Rs 78,571 against Rs 1,00,000, a saving of Rs 21,429.

(iii) SPI = 1.17 and CPI = 1.27 at day 6.

• Action: continue the same management, keep the quality standard (do not save cost by poor work), and use the saved time/money as contingency or to release resources for other tasks.

Given data

BAC = Rs 1,00,000; duration = 10 days; at day 6: work done = 70 %, expenditure = Rs 65,000. Planned work is assumed uniform with time.

Calculation

$$\begin{aligned} PV &= \frac{6}{10} \times 100{,}000 = 60{,}000 \\ EV &= 0.70 \times 100{,}000 = 70{,}000 \\ AC &= 65{,}000 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 70{,}000 - 60{,}000 = 10{,}000 \\ CV &= EV - AC = 70{,}000 - 65{,}000 = 5{,}000 \\ SPI &= \frac{EV}{PV} = \frac{70{,}000}{60{,}000} = 1.17 \\ CPI &= \frac{EV}{AC} = \frac{70{,}000}{65{,}000} = 1.08 \\ EAC &= \frac{BAC}{CPI} = \frac{1{,}00{,}000}{1.0769} = 92{,}857 \\ ETC &= EAC - AC = 92{,}857 - 65{,}000 = 27{,}857 \\ VAC &= BAC - EAC = 1{,}00{,}000 - 92{,}857 = 7{,}143 \\ \text{Forecast duration} &= \frac{10}{SPI} = \frac{10}{1.1667} = 8.6\ \text{days} \end{aligned}$$

Comment on performance

• Schedule: SV = 10,000 and SPI = 1.17, so the project is ahead of schedule; 117 % of the planned work is done. At this rate the work could finish in about 8.6 days against 10 days planned.
• Cost: CV = 5,000 and CPI = 1.08, so the project is under budget; each rupee spent has earned Rs 1.08 of work.
• Forecast: EAC = Rs 92,857 against BAC = Rs 1,00,000, i.e. a final saving of Rs 7,143.

Yes, the work performance is on track and better than planned: it is ahead of schedule and under budget. The margin on cost is smaller than the margin on time (CPI = 1.08 against SPI = 1.17), so the manager should keep a watch on spending and keep the quality standard while the work goes ahead.

Answer: SV = Rs 10,000, CV = Rs 5,000, SPI = 1.17, CPI = 1.08; EAC = Rs 92,857.

Given data

• Quantity = 450 cum; rate = Rs 16,000 per cum, so $BAC = 450 \times 16{,}000 = 72{,}00{,}000$.
• Duration = 40 days; status date = day 20; work completed = 30 % of 450 = 135 cum.
• Actual rate = Rs 16,500 per cum. Planned work is assumed uniform with time.

Calculation

$$\begin{aligned} PV &= \frac{20}{40} \times 72{,}00{,}000 = 36{,}00{,}000 \quad (225\ \text{cum planned}) \\ EV &= 0.30 \times 72{,}00{,}000 = 21{,}60{,}000 \quad (135\ \text{cum}) \\ AC &= 135 \times 16{,}500 = 22{,}27{,}500 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 21{,}60{,}000 - 36{,}00{,}000 = -14{,}40{,}000 \\ CV &= EV - AC = 21{,}60{,}000 - 22{,}27{,}500 = -67{,}500 \\ SPI &= \frac{EV}{PV} = \frac{21{,}60{,}000}{36{,}00{,}000} = 0.60 \\ CPI &= \frac{EV}{AC} = \frac{21{,}60{,}000}{22{,}27{,}500} = 0.97 \\ EAC &= \frac{BAC}{CPI} = \frac{72{,}00{,}000}{0.9697} = 74{,}25{,}000 \\ ETC &= EAC - AC = 74{,}25{,}000 - 22{,}27{,}500 = 51{,}97{,}500 \\ VAC &= BAC - EAC = 72{,}00{,}000 - 74{,}25{,}000 = -2{,}25{,}000 \\ \text{Forecast duration} &= \frac{40}{SPI} = \frac{40}{0.6000} = 66.7\ \text{days} \end{aligned}$$

Analysis of the situation

• Schedule: SV = -14,40,000 and SPI = 0.60, so the project is behind schedule; only 60 % of the planned work is done. If the same rate continues, the duration becomes 66.7 days against 40 days planned.
• Cost: CV = -67,500 and CPI = 0.97, so the project is over budget; each rupee spent has earned Rs 0.97 of work.
• Forecast: EAC = Rs 74,25,000 against BAC = Rs 72,00,000, i.e. a final overrun of Rs 2,25,000.

The cost overrun is small (CPI close to 1), but the schedule delay is serious: only 135 cum is done against 225 cum planned (SPI = 0.60). The job needs about 67 days at the present rate. Er. Jack should add masons and curing/material arrangements and work extra shifts to recover the 90 cum backlog, while controlling rate of Rs 16,500 against Rs 16,000.

Answer: CV = Rs -67,500, SV = Rs -14,40,000, CPI = 0.97, SPI = 0.60; the project is behind schedule and slightly over budget.

Given data

• Fixed contract: 1000 meters at Rs 20,00,000, i.e. Rs 2,000 per meter, so $BAC = 20{,}00{,}000$.
• Planned rate = 25 meters/day, so the planned duration = 1000 / 25 = 40 days.
• Review at day 18: meters installed = 400; $AC = 10{,}00{,}000$.

Calculation

$$\begin{aligned} PV &= (25 \times 18) \times 2{,}000 = 450 \times 2{,}000 = 9{,}00{,}000 \\ EV &= 400 \times 2{,}000 = 8{,}00{,}000 \\ AC &= 10{,}00{,}000 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 8{,}00{,}000 - 9{,}00{,}000 = -1{,}00{,}000 \\ CV &= EV - AC = 8{,}00{,}000 - 10{,}00{,}000 = -2{,}00{,}000 \\ SPI &= \frac{EV}{PV} = \frac{8{,}00{,}000}{9{,}00{,}000} = 0.89 \\ CPI &= \frac{EV}{AC} = \frac{8{,}00{,}000}{10{,}00{,}000} = 0.80 \\ EAC &= \frac{BAC}{CPI} = \frac{20{,}00{,}000}{0.8000} = 25{,}00{,}000 \\ ETC &= EAC - AC = 25{,}00{,}000 - 10{,}00{,}000 = 15{,}00{,}000 \\ VAC &= BAC - EAC = 20{,}00{,}000 - 25{,}00{,}000 = -5{,}00{,}000 \\ \text{Forecast duration} &= \frac{40}{SPI} = \frac{40}{0.8889} = 45.0\ \text{days} \end{aligned}$$

Comment

• Schedule: SV = -1,00,000 and SPI = 0.89, so the project is behind schedule; only 89 % of the planned work is done. If the same rate continues, the duration becomes 45.0 days against 40 days planned.
• Cost: CV = -2,00,000 and CPI = 0.80, so the project is over budget; each rupee spent has earned Rs 0.80 of work.
• Forecast: EAC = Rs 25,00,000 against BAC = Rs 20,00,000, i.e. a final overrun of Rs 5,00,000.

Only 400 meters are installed against 450 planned (50 meters behind), and the actual cost per meter installed is 10,00,000 / 400 = Rs 2,500 against the budgeted Rs 2,000 (25 % higher). At the present rate the installation needs about 45 days instead of 40 days. Action: add installation crews, check why the cost per meter is high (rework, transport, idle labour) and control it, since the contract is fixed-cost and the overrun is borne by the company.

Answer: PV = Rs 9,00,000; EV = Rs 8,00,000; AC = Rs 10,00,000; SV = Rs -1,00,000; CV = Rs -2,00,000; SPI = 0.89; CPI = 0.80; EAC = Rs 25,00,000; behind schedule and over budget.

Given data

BAC = Rs 30,00,000; planned duration = 24 months. The planned progress is assumed uniform, so $PV = \frac{\text{month}}{24} \times 30{,}00{,}000$. $EV = \%\ \text{work} \times BAC$; AC is given.

Calculation (Rs)

Sample (month 20): $PV = \frac{20}{24} \times 30{,}00{,}000 = 25{,}00{,}000$; $EV = 0.70 \times 30{,}00{,}000 = 21{,}00{,}000$; $AC = 24{,}00{,}000$.

Forecast at the latest review (month 20):

$$\begin{aligned} SV &= EV - PV = 21{,}00{,}000 - 25{,}00{,}000 = -4{,}00{,}000 \\ CV &= EV - AC = 21{,}00{,}000 - 24{,}00{,}000 = -3{,}00{,}000 \\ SPI &= \frac{EV}{PV} = \frac{21{,}00{,}000}{25{,}00{,}000} = 0.84 \\ CPI &= \frac{EV}{AC} = \frac{21{,}00{,}000}{24{,}00{,}000} = 0.88 \\ EAC &= \frac{BAC}{CPI} = \frac{30{,}00{,}000}{0.8750} = 34{,}28{,}571 \\ ETC &= EAC - AC = 34{,}28{,}571 - 24{,}00{,}000 = 10{,}28{,}571 \\ VAC &= BAC - EAC = 30{,}00{,}000 - 34{,}28{,}571 = -4{,}28{,}571 \\ \text{Forecast duration} &= \frac{24}{SPI} = \frac{24}{0.8400} = 28.6\ \text{months} \end{aligned}$$

Comment on performance

• Month 5: slightly behind schedule (SPI 0.96) and over budget (CPI 0.86).

• Month 10: ahead of schedule (SPI 1.08) and slightly under budget (CPI 1.04); the best position.

• Months 15 and 20: the performance has dropped; SPI falls to 0.84 and CPI to 0.88. The project is behind schedule and over budget, and the trend is getting worse.

• Schedule: SV = -4,00,000 and SPI = 0.84, so the project is behind schedule; only 84 % of the planned work is done. If the same rate continues, the duration becomes 28.6 months against 24 months planned.

• Cost: CV = -3,00,000 and CPI = 0.88, so the project is over budget; each rupee spent has earned Rs 0.88 of work.

• Forecast: EAC = Rs 34,28,571 against BAC = Rs 30,00,000, i.e. a final overrun of Rs 4,28,571.

S-curve (cumulative values, Rs lakh)

P = planned value, E = earned value, A = actual cost, F = forecast (completion time, EAC), * = overlapping points.

  36 |                               
     |                             F 
  33 |                               
     |                               
  30 |                        P      
     |                               
  27 |                               
     |                    P          
  24 |                    A          
     |                               
  21 |                    E          
     |               A               
  18 |               *               
     |                               
  15 |                               
     |          *                    
  12 |          P                    
     |                               
   9 |                               
     |     A                         
   6 |     *                         
     |                               
   3 |                               
     |                               
   0 |*                              
     +-------------------------------
      0    5    10   15   20   25   30  months

The planned S-curve ends at Rs 30 lakh in month 24. The earned value curve lies below it (except around month 10) and the actual cost curve lies above the earned value curve. Extending the trend, the project will be completed in about 28.6 months (instead of 24) at a cost of about Rs 34,28,571 (instead of Rs 30,00,000), an overrun of Rs 4,28,571. The manager must speed up the critical work and control cost to reduce this.

Answer: at month 20, SV = Rs -4,00,000, CV = Rs -3,00,000, SPI = 0.84, CPI = 0.88; forecast cost Rs 34,28,571 and forecast duration 28.6 months.

Use of EVA in controlling cost

During implementation, at every review date the manager finds PV, EV and AC and calculates the variances and indices:

$$\begin{aligned} SV &= EV - PV, \qquad CV = EV - AC \\ SPI &= \frac{EV}{PV}, \qquad CPI = \frac{EV}{AC} \\ EAC &= \frac{BAC}{CPI}, \qquad ETC = EAC - AC, \qquad VAC = BAC - EAC \end{aligned}$$

CV and CPI show the cost performance; SV and SPI show the schedule performance; EAC forecasts the final cost. The result decides the control action; the same figures are plotted every month, so the trend is visible. A project with BAC = Rs 10,00,000, 10 months, and status at month 5 (PV = Rs 5,00,000) is used for the three examples.

Example 1: behind schedule and over budget

PV = Rs 5,00,000, EV = Rs 4,00,000, AC = Rs 6,00,000. $SV = -1,00,000$, $CV = -2,00,000$, $SPI = 0.80$, $CPI = 0.67$, $EAC = 10{,}00{,}000 / 0.67 = 15,00,000$.

Status: behind schedule, over budget. Control approach: Both schedule and cost are in trouble, so the control must be strong: find the causes, add resources only to the critical activities, tighten cost control (wastage, rates), and revise the plan or scope with the client. If CPI is very low, consider stopping low-value work.

Example 2: ahead of schedule and under budget

PV = Rs 5,00,000, EV = Rs 5,50,000, AC = Rs 4,80,000. $SV = 50,000$, $CV = 70,000$, $SPI = 1.10$, $CPI = 1.15$, $EAC = 10{,}00{,}000 / 1.15 = 8,72,727$.

Status: ahead of schedule, under budget. Control approach: The project is doing better than planned. Control means keeping the good performance: check that quality is not being sacrificed, keep the contingency, and release the extra resources or crew to other work. No corrective action is required.

Example 3: on schedule but over budget

PV = Rs 5,00,000, EV = Rs 5,00,000, AC = Rs 6,00,000. $SV = 0$, $CV = -1,00,000$, $SPI = 1.00$, $CPI = 0.83$, $EAC = 10{,}00{,}000 / 0.83 = 12,00,000$.

Status: on schedule, over budget. Control approach: Time is satisfactory but money is being lost. The control is on cost only: reduce wastage, improve productivity, renegotiate rates or procurement, and control variations. Adding resources to speed up the work is not needed and would increase the cost.

Another case is behind schedule but under budget (EV = 4,50,000, AC = 4,00,000, SPI = 0.90, CPI = 1.13): here the saving can be used to add resources and recover time.

EVA is carried out in Rs million. Planned progress is taken as uniform over 30 months.

Data

• BAC = 753 x 9.3 = Rs 7,002.90 million
• Planned progress after 6 months = 6/30 = 20%
• Completed = 179 units; actual average cost = Rs 7.8 million/unit

$$\begin{aligned} PV &= 0.20 \times 7,002.90 = 1,400.58\\ EV &= 179 \times 9.3 = 1,664.70\\ AC &= 179 \times 7.8 = 1,396.20 \end{aligned}$$

(all values in Rs million; planned units after 6 months = 150.6, completed = 179)

Calculation

$$\begin{aligned} PV &= Rs\ 1,400.58\\ EV &= Rs\ 1,664.70\\ AC &= Rs\ 1,396.20\\ SV &= EV - PV = 1,664.70 - 1,400.58 = 264.12\\ CV &= EV - AC = 1,664.70 - 1,396.20 = 268.50\\ SPI &= EV/PV = 1.189\\ CPI &= EV/AC = 1.192\\ EAC &= BAC/CPI = 7,002.90/1.192 = 5,873.40\\ ETC &= EAC - AC = 4,477.20\\ VAC &= BAC - EAC = 1,129.50 \end{aligned}$$

Comment

• Schedule: SV is positive and SPI = 1.189, so the project is ahead of schedule. The work done is 118.9% of the planned work. At this rate the duration becomes about 25.24 against the planned 30 (a change of -4.76).
• Cost: CV is positive and CPI = 1.192, so the project is under budget. Each Rs 1 spent gives Rs 1.19 of work.
• Forecast: if the present cost trend continues, the final cost will be Rs 5,873.40 against the budget of Rs 7,002.90 (variance at completion 1,129.50).

Answer: SV = 264.12, CV = 268.50, SPI = 1.189, CPI = 1.192; the project is ahead of schedule and under budget.

Both schedule and cost are favourable. Controlling statements: continue the present method, maintain productivity, keep records, and watch for later risks.

Controlling statements

• The project is ahead of schedule by about 18.9% and below cost by about 19.2%, so the present work method is good and should be continued.
• Check that quality and structural safety have not been reduced to save time and cost.
• Keep the same crew and material supply, and update the forecast regularly because the later reconstruction in remote hill areas may be harder.
• Use the saving as contingency for price rise and the monsoon.

Data

BCWS = PV = Rs 9,50,000; BCWP = EV = Rs 8,00,000; ACWP = AC = Rs 10,00,000; BAC = Rs 50,00,000; reporting date = week 20 of 45 weeks.

Calculation

$$\begin{aligned} PV &= Rs\ 950,000\\ EV &= Rs\ 800,000\\ AC &= Rs\ 1,000,000\\ SV &= EV - PV = 800,000 - 950,000 = -150,000\\ CV &= EV - AC = 800,000 - 1,000,000 = -200,000\\ SPI &= EV/PV = 0.842\\ CPI &= EV/AC = 0.800\\ EAC &= BAC/CPI = 5,000,000/0.800 = 6,250,000\\ ETC &= EAC - AC = 5,250,000\\ VAC &= BAC - EAC = -1,250,000 \end{aligned}$$

Comment

• Schedule: SV is negative and SPI = 0.842, so the project is behind schedule. Only 84.2% of the planned work is done. At this rate the duration becomes about 53.44 against the planned 45 (a change of +8.44).
• Cost: CV is negative and CPI = 0.800, so the project is over budget. Each Rs 1 spent gives Rs 0.80 of work.
• Forecast: if the present cost trend continues, the final cost will be Rs 6,250,000 against the budget of Rs 5,000,000 (variance at completion -1,250,000).

Answer: SV = -150,000, CV = -200,000, SPI = 0.842, CPI = 0.800; the project is behind schedule and over budget.

Both schedule and cost are unfavourable. Controlling statements: increase productive resources (labour, equipment, extra shifts), improve supervision and productivity, review rates and wastage, re-sequence activities and revise the plan or budget with the client's approval.

Features of the project

 Cost (Rs lakh)
 50|                          .-- BAC
   |                      .-'
 10|        ACWP o   .-'
 9.5|      PV  o  .-'
  8 |      EV  o-'
   |  .-'
   +----------|---------------- weeks
   0         20              45

• Planned progress = 9.5/50 = 19%; earned progress = 8/50 = 16%; money spent = 20% of the budget.
• Since AC > PV > EV, the project is behind schedule and over budget (the worst situation).

Comment on each parameter

• SV = -1,50,000: work worth Rs 1.5 lakh planned is not yet done; the project is behind schedule.
• SPI = 0.842: only 84.2% of the planned work is done.
• CV = -2,00,000: the work done cost Rs 2 lakh more than its budget.
• CPI = 0.80: each Rs 1 spent gives Rs 0.80 of work.
• EAC = Rs 6,250,000: the project will cost Rs 12.5 lakh more than BAC if the trend continues. ETC = EAC - AC = Rs 52,50,000.
• Forecast duration = 45/0.842 = 53.4 weeks, about 8.4 weeks late.

Corrective action is needed: increase resources and productivity, control waste and unit rates, and revise the schedule.

Earned value analysis graphically

EVA plots three cumulative cost curves against time: BCWS (planned value), BCWP (earned value) and ACWP (actual cost). The gaps between them are the variances.

• Schedule variance: SV = BCWP - BCWS
• Cost variance: CV = BCWP - ACWP

 FAVOURABLE            UNFAVOURABLE
 Cost                  Cost
  |      EV  .--        |      AC  .--
  |   PV .-'-'          |   PV .-'-'
  |   .-'   AC          |   .-'  EV
  | .'                  | .'
  +--------- time       +--------- time
 EV above PV: ahead     EV below PV: behind
 EV above AC: saving    EV below AC: overrun

Numerical (schedule performance)

Data: PV = Rs 9,50,000, EV = Rs 8,00,000 at week 20; planned duration = 45 weeks. The total budget and the actual cost are not given, so only schedule performance can be found.

$$\begin{aligned} SV &= EV - PV = 8{,}00{,}000 - 9{,}50{,}000 = -1{,}50{,}000\\ SPI &= EV/PV = 8.00/9.50 = 0.842 \end{aligned}$$

Features and comment

 Cost
 9.5 |        PV o
 8.0 |        EV o   (below PV)
     +----------|----------- weeks
                20         45

• The earned value curve lies below the planned curve, so the project is behind schedule.
• Only 84.2% of the planned work is complete; work worth Rs 1,50,000 is delayed.
• If the same performance continues, the expected duration = 45/0.842 = 53.4 weeks, i.e. about 8.4 weeks of delay.
• Remedies: add labour and equipment, work overtime, fast-track activities that are not on the critical path and re-plan the remaining schedule.

Answer: SV = -Rs 1,50,000; SPI = 0.842; the project is behind schedule.

Why cost control is important

Cost control means monitoring actual expenditure against the budget and taking action on variances. It is important because it:

• keeps the project within the approved budget and prevents cost overrun;
• gives early warning of problems so that corrective action is taken in time;
• improves profit for the contractor and value for the client;
• helps to forecast the final cost and cash flow;
• supports good decisions and accountability on resources and prices.

Status of the project by EVA

• BAC = 50 x $1,000 = $50,000; time elapsed = 20 of 90 days (planned progress = 22.22%)
• Completed = 10 doghouses (20%); actual cost AC = $8,500

$$\begin{aligned} PV &= \frac{20}{90} \times 50{,}000 = 11,111.11\\ EV &= 10 \times 1{,}000 = 10,000\\ AC &= 8{,}500 \end{aligned}$$

Calculation

$$\begin{aligned} PV &= \$\ 11,111.11\\ EV &= \$\ 10,000.00\\ AC &= \$\ 8,500.00\\ SV &= EV - PV = 10,000.00 - 11,111.11 = -1,111.11\\ CV &= EV - AC = 10,000.00 - 8,500.00 = 1,500.00\\ SPI &= EV/PV = 0.900\\ CPI &= EV/AC = 1.176\\ EAC &= BAC/CPI = 50,000.00/1.176 = 42,500.00\\ ETC &= EAC - AC = 34,000.00\\ VAC &= BAC - EAC = 7,500.00 \end{aligned}$$

Comment

• Schedule: SV is negative and SPI = 0.900, so the project is behind schedule. Only 90.0% of the planned work is done. At this rate the duration becomes about 100.00 against the planned 90 (a change of +10.00).
• Cost: CV is positive and CPI = 1.176, so the project is under budget. Each $ 1 spent gives $ 1.18 of work.
• Forecast: if the present cost trend continues, the final cost will be $ 42,500.00 against the budget of $ 50,000.00 (variance at completion 7,500.00).

Answer: SV = -1,111.11, CV = 1,500.00, SPI = 0.900, CPI = 1.176; the project is behind schedule and under budget.

Cost is favourable but progress is slow. Controlling statements: add resources or work extra shifts to recover the delay, remove bottlenecks (material, equipment, approvals), and keep the present cost discipline.

Status

The contractor is slightly behind schedule (SPI = 0.90; about 100 days needed instead of 90) but under budget (CPI = 1.18, forecast final cost $42,500 against $50,000). The cost saving is good, but resources should be increased to recover the delay.

All money values are in Rs lakh.

Data

• BAC = Rs 25 lakh for 100 windows in 20 days, so budget = Rs 0.25 lakh/window
• At day 10: planned = 50% of work; fixed = 40 windows (40%); expenses = Rs 9 lakh

$$\begin{aligned} PV &= 0.50 \times 25 = 12.50\\ EV &= 40 \times 0.25 = 10.00\\ AC &= 9.00 \end{aligned}$$

Calculation

$$\begin{aligned} PV &= Rs\ 12.50\\ EV &= Rs\ 10.00\\ AC &= Rs\ 9.00\\ SV &= EV - PV = 10.00 - 12.50 = -2.50\\ CV &= EV - AC = 10.00 - 9.00 = 1.00\\ SPI &= EV/PV = 0.800\\ CPI &= EV/AC = 1.111\\ EAC &= BAC/CPI = 25.00/1.111 = 22.50\\ ETC &= EAC - AC = 13.50\\ VAC &= BAC - EAC = 2.50 \end{aligned}$$

Comment

• Schedule: SV is negative and SPI = 0.800, so the project is behind schedule. Only 80.0% of the planned work is done. At this rate the duration becomes about 25.00 against the planned 20 (a change of +5.00).
• Cost: CV is positive and CPI = 1.111, so the project is under budget. Each Rs 1 spent gives Rs 1.11 of work.
• Forecast: if the present cost trend continues, the final cost will be Rs 22.50 against the budget of Rs 25.00 (variance at completion 2.50).

Answer: SV = -2.50, CV = 1.00, SPI = 0.800, CPI = 1.111; the project is behind schedule and under budget.

Cost is favourable but progress is slow. Controlling statements: add resources or work extra shifts to recover the delay, remove bottlenecks (material, equipment, approvals), and keep the present cost discipline.

The company is late (40 windows fixed against 50 planned) but each unit costs less than budgeted (Rs 0.225 lakh against Rs 0.25 lakh).

Importance of cost control

• It keeps actual cost within the budget and avoids overrun.
• It shows variances early so that corrective action can be taken.
• It helps to forecast the final cost and the cash needed.
• It increases profit, efficiency and the client's confidence.

Earned value analysis

Money is in Rs lakh (Rs 25,00,000 = 25 lakh per house).

• BAC = 15 x 25 = Rs 375 lakh (3.75 crore)
• After 1 month: planned = 1/3 of the work; completed = 4 houses; actual cost = Rs 96 lakh

$$\begin{aligned} PV &= \frac{1}{3} \times 375 = 125.00\\ EV &= 4 \times 25 = 100.00\\ AC &= 96.00 \end{aligned}$$

Calculation

$$\begin{aligned} PV &= Rs\ 125.00\\ EV &= Rs\ 100.00\\ AC &= Rs\ 96.00\\ SV &= EV - PV = 100.00 - 125.00 = -25.00\\ CV &= EV - AC = 100.00 - 96.00 = 4.00\\ SPI &= EV/PV = 0.800\\ CPI &= EV/AC = 1.042\\ EAC &= BAC/CPI = 375.00/1.042 = 360.00\\ ETC &= EAC - AC = 264.00\\ VAC &= BAC - EAC = 15.00 \end{aligned}$$

Comment

• Schedule: SV is negative and SPI = 0.800, so the project is behind schedule. Only 80.0% of the planned work is done. At this rate the duration becomes about 3.75 against the planned 3 (a change of +0.75).
• Cost: CV is positive and CPI = 1.042, so the project is under budget. Each Rs 1 spent gives Rs 1.04 of work.
• Forecast: if the present cost trend continues, the final cost will be Rs 360.00 against the budget of Rs 375.00 (variance at completion 15.00).

Answer: SV = -25.00, CV = 4.00, SPI = 0.800, CPI = 1.042; the project is behind schedule and under budget.

Cost is favourable but progress is slow. Controlling statements: add resources or work extra shifts to recover the delay, remove bottlenecks (material, equipment, approvals), and keep the present cost discipline.

Planned completion in one month = 5 houses, but only 4 were finished. The project is behind schedule (needs about 3.75 months instead of 3) but the cost is slightly under control.