Performance of the project will be measured using Earned Value Management.
The following four
Earned Value metrics will be used to measure to projects cost performance:
Schedule Variance (SV):
Measure the schedule performance of the project.
Cost Variance (CV): Measure the budget performance of the project.
Schedule Performance Index (SPI): Measures the progress achieved against that which was
Cost Performance Index (CPI): Measures the value of the work completed compared to the
actual cost of the work completed.
Level of precision and accuracy
SPI is calculated as EV/PV.
If EV is equal to PV, the value of the SPI is 1.
If EV is less than the PV then
the value is less than 1, which means the project is behind schedule.
If EV is greater than the PV the
value of the SPI is greater than one, which means the project is ahead of schedule.
A well performing
project should have its SPI as close to 1 as possible, or maybe even a little under 1.
CPI is calculated as EV/AC.
If CPI is equal to 1 the project is perfectly on budget.
If the CPI is greater
than 1 the project is under budget, if it’s less than 1 the project is over budget.
If the SPI or CPI has a variance of between 0.1 and 0.2 the Project Manager must report the reason
for the exception.
If the SPI or CPI has a variance of greater than 0.2 the Project Manager must
report the reason for the exception and provide management a detailed corrective plan to bring the
projects performance back to acceptable levels.
Organization cost management procedures
There a procedure for control the changes in the budget that is based on the follow steps:
Identify and assess the change from the EVA report.
Fill out a change request form and send to the project manager.
The project manager will review and request modifications if necessary.
The project manager and project director will jointly evaluate the change.
The change can be approved/ approved pending additional supporting documentation/
The project manager will document the change outcome necessary in the change request