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Cost Management
Earned value analysis
Schedule Variance = EV- PV
SPI = EV/PV
Cost Variance = EV- AC
CPI = EV/AC
Negative variance is slippage. Positive is we are doing better than planned.
Performance Index <1 is slippage. More than 1 means we are doing better than planned.
EAC: Estimate At Completion
ETC: Estimate To complete. Expenditure from this point onwards to complete project.
EAC = BAC/CPI = AC + (BAC-EV)/CPI
Typical problems. Likely to continue. Assume the
project execution is same after the present point with respect to the till date execution
EAC = AC + (BAC-EV) Atypical problems. Now onward things will be as planned earlier
EAC = AC + ETC
Basis of estimation was not correct. Fresh re-estimation of remaining work.
Duration to complete Project = Planned Duration/SPI
Depreciation:
Cost of machine 1200. Life 4 Years, Scrap Value 200.
Risk Management
Simple Probability
Probability: Chance of selecting one card of pack 1/52
Chance of alternative outcome = 1- outcome.
e.g probability of Diamond card is 1/4 probability on non diamond card is 1-1/4 = 3/4
Chance of two event occurring P1 and P2 is P1*P2.
Chance of occurring either P1 or P2is P1 + P2
Statistics
Mean: Sum(values)/N
Mode: Most likely event, Max( Values)
Median (50% vales are higher 50% values are Lower). If values are arranged in ascending order the center
value is median.
Variance and Standard deviation is spread around central value.
variance = (Standard Deviation)2 = (Sigma)2 for Gaussian distribution
For three point estimate
mean value = (Optimistic + 4 X Most likely + Pessimistic)/4
Std Dev = (Pessimistic - Optimistic)/6
Variance = (Standard Deviation)2
To find project mean and deviation
Add mean value of critical path. Add Variances. Find square root of this variance as deviation of critical
path. You cannot add deviations directly.
e.g. if A,B,C for critical path
Task
Opti.
Most like.
A
O
M
B
C
Pess.
P
Pert (Mean)
(O + 4M + P)/4
Std Dev
(P - O)/6
Variance
((P - O)/6)2
Completion duration = (A-Mean + B-Mean + C-Mean) +- (Square Root(A- Var + B- Var + C- Var))
Standard/Normal/Gaussian distribution
+_(1 Sigma) = 68.26==68.3
+_(2 Sigma) = 95.46==95.5
+_(3 Sigma) = 99.73==99.7
+_(6 Sigma) = ???