Project Monitoring and Controlling Processes

Progress Review

EV

PV

AC

SV

CV

ΔT

Cu

mu

lati

ve V

alu

es

Time

CV -ve indicates over-budget

+ve indicates under-budget

SV -ve indicates behind schedule

+ve indicates ahead of schedule

CPI Indicates INR_ worth of work has been

done for each Rupee spent.

SPI Indicates that the project is progressing

at _% of the rate originally planned.

Cost Variance (CV) Formula: CV= EV –AC

Schedule Variance (SV)

Formula: SV = EV – PV

Cost Performance Index (CPI)

Formula: CPI = EV/AC

Schedule Performance Index (SPI)

Formula: SPI = EV/PV

Item Formula Remark

Cost Variance (CV) EV –AC Negative value indicates over budget and positive

value indicates under budget

Schedule Variance (SV) EV – PV Negative value indicates behind schedule and positive

value indicates ahead of schedule

Cost Performance Index (CPI) EV / AC Lesser than one indicates over budget and greater

than one indicates under budget

Schedule Performance Index (SPI) EV / PV Lesser than one indicates behind schedule and greater

than one indicates ahead of schedule

Estimate at Completion (EAC) BAC / CPI Considering that the rate of spending remains the

same

AC + ETC Considering that the current estimate is fundamentally

flawed

AC + (BAC – EV) Considering atypical variances

AC + [(BAC – EV) / CPI] Considering typical variances

Estimate to Complete (ETC) EAC –AC Considering that the current estimate is fundamentally

flawed

BAC – EV Considering atypical variances

(BAC – EV) / CPI Considering typical variances

Variance at Completion (VAC) BAC – EAC Considering the status of the budget expected at the

end of the project

Financial Term Definition

Benefit Cost Ratio

(BCR)

Compares the benefits (revenues) to the costs of different options

Chart of Accounts Any numbering system used to monitor project costs by category (for example, labor, supplies, and materials)

Depreciation Reduced price of an asset over time attributable to deterioration, obsolescence, and impending retirement

Applies particularly to physical assets such as equipment and structures

Straight Line depreciation: Standard amount depreciating every year

Accelerated depreciation: Value depreciating at a faster rate, for example, Double Declining method and Sum of the

Years Digits

Internal Rate of Return

(IRR)

Rate at which the project inflows and project outflows are equal

Project with greatest IRR is generally selected

Net Present Value

(NPV)

Present value of the total benefits minus costs over many time periods

Investment is profitable for positive NPV

Project with greatest NPV is selected

Opportunity Cost Opportunity given up by selecting one project over another

Payback Period Time period it takes to recover the investment made in the project before the profits start accumulating

Present Value The current value of future cash flows.

Sunk Cost Expended costs, to be avoided when deciding whether to continue with a troubled project

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