W8_Hilal_Estimating Cost At Completion (Part 1)
Problem Recognition
As we are approximately in the middle of PMP course duration, it is important to forecast the cost and time for the coming weeks. With this, we can give the client some comfort on how the project is going to go. Moreover, another objective of this and coming blogs is to be able to use different tools and techniques that can be used to present different scenarios to the management.
Feasible alternative
The Guild of Project Controls Compendium and Reference suggest using three main furcating/ estimation techniques:
- Independent estimate at completion (IEACs)
- Monte Carlo Simulation
- Best Fit
Outcomes of IEAC Alternative
· IEAC5 = ACWP + (BAC – BCWP)
· IEAC1 = ACWP + ((BAC – BCWP) / CPI)
· IEAC2 = ACWP + ((BAC – BCWP) / SPI)
· IEAC3 = ACWP + ((BAC – BCWP) / CPI * SPI)
· IEAC4 = ACWP + ((BAC – BCWP) / ((0.2 * SPI) + (0.8 * CPI))
Method
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Assumption
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Comment
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IEAC1
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Both CPI and SPI values are equal to 1. This is basically the optimistic approach.
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IEAC2
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Future cost performance will be the same as all past cost performance
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“Best Case” when CPI is below 1.00 / “Worst Case” when CPI above 1.00
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IEAC3
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Future cost performance will be influenced by past schedule performance.
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Use with caution as SPI is diluted by LOE and loses accuracy over last third of the project
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IEAC4
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Future cost performance will be influenced by past schedule and cost performance.
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In contrast to IEAC2, this calculation typically yields the “Worst Case” (pessimistic) when the CPI and SPI are below 1.00.
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IEAC5
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Similar to IEAC4, except increased weight, is placed on CPI.
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More reliable than IEAC4 late in a project since less weight is given to SPI
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Table 1: Outcomes and Assumptions for Each IEAC.
Analysis of Alternative
The table below shows the current progress of the PMP course project:
Table 2: Up to W6 PMP Course Progress
Now we calculate the independent estimate at completion (IEACs):
Table 3: Calculations of IEACs for Each Project
Using PERT formula to calculate select the best value of estimate at completion:
Table 4: PERT Formula Calculations
Figure1: Distribution curve of the results.
Selection of Preferred Alternative:
Since we are discussing which method to select, the preferred alternative will be selected once all the methods have been discussed in the future blogs.
Tracking/ reporting plan
The next step is to do the same analysis using different estimation methods (i.e. Monet Carlo, Best Fit). This method can then be applied to our forecasts of project completion and present this to the management based on the confidence level they choose.
Reference
Stephen, J. (2017).W10_SJP_Forecasts Part 2. Retrieved from https://js-pag-cert-2017.com/w10_sjp_forecasts-part-2/
PP Admin. (2015). PERT Formula. Guild of Project Controls Compendium and References. Retrieved from http://www.planningplanet.com/guild/gpccar/assess-prioritize-and-quantify-risks-opportunities
National Defense Industrial Association. (2014). A Guide to managing programs using predictive measures. Retrieved from http://www.earnedschedule.com/Docs/NDIA%20Predictive%20Measures%20Guide.pdf
????? HOW MANY REFERENCES ARE REQUIRED? Sorry but I have to REJECT your posting on the grounds that you did not meet the TECHNICAL SPECIFICATIONS.
ReplyDelete??? How could you possibly miss the PMBOK Guide or better yet, the Guild of Project Controls Module 9? http://pmworldjournal.net/wp-content/uploads/2014/07/pmwj25-aug2014-Al-Barrami-assessing-contractors-schedules-Featured-Paper.pdf
Take 10 minutes to fix this and get the 3 stars you deserve for this excellet posting...
BR,
Dr. PDG, Bali, Indonesia
I have used three references as I mentioned in the references section. Please, check again.
DeleteThe middle one is not cited properly using APA format...... Sorry....... Try again....
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