Cost Change Control System
A cost change control system, documented in the cost
management plan, defines the procedures by which the cost baseline can be
changed. It includes the forms documentation, tracking systems, and approval
levels necessary for authorizing changes. The cost change control system is
integrated with the integrated change control process.
Performance Measurement Analysis
Performance measurement techniques help to assess the
magnitude of any variance that will I invariably occur. The earned value
technique (EVT) compares the cumulative value of the budgets cost of work
scheduled (planned) to the actual cost control, resource management, and
An important part of cost control is to determine the
variance, the magnitude of the variance, and to decide if the variance requires
The earned value technique uses the cost control contained
in the project management plan to assess project progress and the magnitude of
any variations that occur. The earned value technique involves developing these
key values for each schedule activity, work package, or control account.
Planned value (PV)
PV is the budgeted cost for the work scheduled to be
completed on an activity or WBS component up to a given point in time.
Earned value (EV)
EV is the budgeted amount for the work actually completed on
the schedule activity or WBS component during a given time period.
Actual cost (AC)
AC is the actual cost incurred in accomplishing work on the
schedule activity or WBS component during a given time period. This AC must
correspond in definition and coverage to whatever was budgeted for the PV and
the EV (e.g. direct hours only, direct cost only, or all costs including
Estimate to complete (ETC) and estimate at completion
The PV, EV, and AC values are used in combination to provide
performance measures of whether or not work is being accomplished as planned at
any given point in time. The most commonly used measures are cost variance (CV)
and schedule variance (SV). The amount of variance of the CV and SV values tend
to decrease as the project reaches completion due to compensating effect of
more work being accomplished. Predetermined acceptable completion can be
established in the cost management plan.
Cost Variance (CV)
CV equals earned value (EV) minus actual cost (AC). The cost
variance at the end of the project will be the difference between the budget at
the completion (BAC) and the actual amount spent.
Schedule Variance (SV):
SV equals earned value (EV) minus planned value (PV). Schedule
variance will ultimately equal zero when the project is completed because all
of the planned values will ultimately equal zero when the project is completed
because all of the planned values will have been earned.
These two values, the CV and SV, can be converted to
efficiency indicators to reflect the cost and schedule performance of any
Cost performance index (CPI)
A CPI value less than 1.0 indicate accost overrun of the
estimates. A CPI value greater than 1 indicates a cost under-run of the
estimates. CPI equals the ratio of the EV to the AC. The CPI is the most
commonly used cost-efficiency indicator.
Cumulative CPI (CPI^c):
The cumulative CPI is widely used to forecast project costs
at completion. CPIC equals the sum of the periodic earned values (EV^c) divided
by the sum of the individual actual costs (AC^c).
The earned vale technique in its various forms is a commonly
used method of performance measurement. It integrates project scope, cost (or
resource) and schedule measures to help the project team assess project