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John Chapman
Programme Director
Touchstone Energy
www.TouchstoneEnergy.co.uk
John.chapman@touchstone.co.uk
Agenda
Accountancy
Project accounting & Financial Accounting
The five key values
Creating a budget by deliverable
Profiling the budget
Gathering actual data
Estimates to complete & the importance of CPI
Implementing Earned Value Management
Questions
Financial Accounting
Based on periods in a
financial year
A comparative example
A budget hierarchy
BAC
5k
Stage 01
Stage 02
40k
35k
Stage 03
Closure
Totals
Risk
Contingency / MR
15k
5k
100k
5k
3k
BAC
ACWP
ETC
EAC
VAC
Project
Initiation
5k
5k
0k
5k
0k
Stage 01
40k
38k
0k
38k
2k
Stage 02
35k
15k
5k
100k
35k
5k
40k
-5k
Stage 03
Closure
Totals
CPI is an important
metric
For example
You have agreed to run a series
of design workshops to
complete system design
The cost is 16,000 to complete
and that is the agreed budget
BCWS (PV)
5k
6k
3k
2k
16k
BCWS (PV)
BCWP(EV)
Actual Cost
5k
6k
5k
6k
5k
7k
3k
2k
3k
2k
3k
3k
16k
16k
18k
Estimate at complete
4500 / 0.89 = 5056 hours
When to use : at the 15% project completion point
Thoughts on
Earned Value
Management
What is EVM?
Earned Value Management is a project
control process based on a structured
approach to planning, cost collection and
performance measurement. It facilitates the
integration of project scope, time and cost
objectives, and the establishment of a
baseline plan for performance
measurement.
APM Body of Knowledge, 5th Edition
Earned Value Project Management, Quentin W. Fleming and Joel M Koppelman, ISBN 1930699891
Earned Value Project Management, Quentin W. Fleming and Joel M Koppelman, ISBN 1930699891
A way of approaching
Instead of trying to achieve all these at once a proposal is to split this
into three levels representing levels of maturity
Level 01: Focus on the financial values and project scope.
Estimate at Complete
Calculation of Actual Cost + Estimate to Complete
Estimate to Complete
Bottom up / town down estimating (or CPI)
Management reserve
Money set aside
Cost Variance
CV = BCWP ACWP
So you must have the BCWP
Undistributed Budget
An assessment of how to earn the value
How to evidence that the work is completed the physical
completeness with a link to the QMS
Training the project team to think in these terms.
A method of getting this feedback during delivery
Book References
The Earned Value Management Maturity Model, Ray W Stratton, ISBN 1-56726180-9
Earned Value Project Management, 3rd Edition, Quentin W Fleming and Joel M Koppelman,
ISBN 193069989-1
EVA in the UK, Steve Wake
APM Body of Knowledge, 5th Edition, Association for Project Management, ISBN 1-90349413-3
Interfacing Risk and Earned Value Management, Association for Project Management,
ISBN 1-903494-24-9
The Mythical Man Month and Other Essays on Software Engineering, Frederick Brooks,
ISBN 0201835959
Project and Programme Accounting, a practical guide for Professional Service
Organisations and IT, John Chapman, Project Manager Today Publications, ISBN: 1900391-14
Earned Value Management using Microsoft Office Project, Sham Dayal, J.Ross Publishing,
ISBN 978-1-932159-98-1
Work Breakdown Structures, The Foundation for Project Management Excellence, Eric S
Norman, Shelly A Brotherton, Robert T Fried, Wiley, ISBN 978-0470-17712-9
Performance Based Earned Value, Paul J Solomon, Ralph R Young, Wiley Interscience,
ISBN 978-0-471-721888
Earned Schedule, Walter H Lipke, ISBN 0557177383
YouTube References
Touchstone Energy YouTube site
http://www.youtube.com/user/TouchstoneEnergyPro