"Cost control is the process of monitoring project status, updating project costs and managing cost baseline changes. The main function of this process is to maintain the cost baseline during the entire project period. This process needs to be carried out throughout the project period."
7.4.2 Controlling costs: tools and techniques
7.4.2.1 Expert judgment
7.4.2.2 Data analysis
Data analysis techniques applicable to the cost control process include (but are not limited to):
Earned Value Analysis (EVA) . Earned value analysis compares actual schedule and cost performance with performance measurement benchmarks. Earned value management (EVM) integrates scope benchmarks, cost benchmarks and schedule benchmarks to form a performance measurement benchmark. It calculates and monitors the following three key indicators for each work package and control account :
- Plan value . The planned value (PV) is the approved budget allocated for the planned work. It is an approved budget prepared for the completion of an activity or work breakdown structure (WBS) component, excluding management reserves.
- Earned value . Earned value (EV) is the measured value of the completed work, expressed by the approved budget of the work, which is the approved budget of the completed work.
- Actual cost . The actual cost (AC) is the cost actually incurred during the execution of an activity in a given period of time, and it is the total cost incurred to complete the work corresponding to the EV.
Deviation analysis . In EVM, deviation analysis is used to explain the causes, effects and corrective measures of cost deviations (CV = EV – AC), schedule deviations (SV = EV – PV), and completion deviations (VAC = BAC – EAC).
Deviation analysis includes (but is not limited to):
- Progress deviation . Schedule deviation (SV) is a measure of schedule performance, expressed as the difference between earned value (EV) and planned value (PV). Formula: SV = EV-PV.
- Cost deviation . Cost deviation (CV) is the budget deficit or surplus at a given point in time, expressed as the difference between earned value (EV) and actual cost (AC). Formula: CV = EV-AC.
- Progress performance index . The Schedule Performance Index (SPI) is a measure of schedule efficiency, expressed as the ratio of earned value to planned value, reflecting the efficiency of the project team in completing work. Formula: SPI = EV / PV.
- Cost performance index . Cost Performance Index (CPI) is an indicator of the cost efficiency of budgeted resources, expressed as the ratio of earned value (EV) to actual cost (AC). It is the most critical EVA indicator, used to measure the cost efficiency of completed work. Formula: CPI = EV / AC.
Trend analysis .
- Chart .
- Forecast .
Reserve analysis .
7.4.2.3 Performance index for completion
"The Performance to Completion Index (TCPI) is a cost performance index that must be achieved in order to achieve specific management goals and the use of remaining resources. It is the ratio of the cost required to complete the remaining work to the remaining budget."
TCPI formula based on BAC : TCPI = (BAC – EV)/(BAC – AC).
The concept of TCPI can be shown in Figure 7-13. The calculation formula is in the lower left corner of the figure, and the remaining work (BAC minus EV) is divided by the remaining funds (it can be BAC minus AC, or EAC minus AC).
