50 Section 3
Figure 3-7. Project Schedule Presentation—Example
Calendar
Units
Days
1st
Quarter
1st
Quarter
4th
Quarter
3rd
Quarter
2nd
Quarter
Control
Account
Activity Description
CA-001
WP--01
WP-02
WP-03
CA-002
WP-04
WP-05
WP-06
CA-003
PP-02
PP-01
CA-004
PP-03
PP-04
PP-05
CA-005
PP-06
332
332
67
248
20
50
25
25
25
175
175
120
75
30
30
5
20
20
SAMPLE PROJECT
Project Management
Conception
Manage Product Realization
Close Project
Smart Building Planning Phase (Definition)
Architecture/Engineering and IT Planning
Architectural and Engineering Designs
Information System Requirements
Building Construction
Building Construction Work
Building Contingency Reserve
Smart Building Information System
Release 1
Release 2
Software Installation
Handover
Handover
Project Schedule Timeframe
3.3.4.4 SCHEDULE EVOLUTION
Project budgeting and scheduling are iterative processes involving the negotiation of project constraints until
consensus estimates are achieved among the stakeholders. Therefore, the schedule continues to evolve until the
project manager establishes the PMB.
A properly structured schedule model depicts the project team’s plan for work accomplishment by CA with WPs.
The planning package should be planned in detail and broken down into WPs before the work is executed. The CA
work package provides the underlying logic for the PMB, against which accomplishments are measured and expected
future outcomes are forecasted.
51
Enhancements to the schedule model may include:
Logic-driven schedule, networked at the work package or activity level,
Resource-loaded WP and/or activities,
Risk trigger milestones and potential risk responses incorporated as alternative paths, and
Schedule risk analysis data incorporated into the schedule model.
Inclusion of probabilistic considerations based on complexity awareness and risk analysis (striking a balance
between various risks and objectives) enhances the usefulness of the schedule model as a management tool.
3.3.5 COST BASELINE
The cost baseline for EVM is the approved budget for each control account with work and planning packages and the
appropriate contingency reserve (when required, depending on EEFs/OPAs). For EVM, the cost for each work package
or planning package (i.e., the approved budget) needs to be time-phased and aligned with the schedule baseline.
The cost baseline is developed as a summation of the approved budgets for the different CAs that have scheduled
work or planning packages. The basis for cost data within each CA is outlined during planning for each CA. The
cost should be based on cost estimates. The cost estimates are often broken out between direct and indirect costs.
Whether indirect costs are in the project estimate and, therefore, in the project budget depends on EEFs and OPAs.
EVM does not require any specific handling of indirect costs; however, indirect cost variances could impact variance
analysis. When the project and the enterprise want to include indirect costs, these should be incorporated in the cost
estimating process and included at the activity level or at higher levels (see Section 7.2.3.1 of the PMBOK
®
Guide).
Within EVM, when allocated at high levels, indirect costs can be apportioned to control accounts, work packages,
activities, or resources, as appropriate. It is important for users of EVM to understand which costs are included within
the PMB and which are not; this is dependent on organizational rules. EVM requires the cost estimate to be aligned
with the CAs at a minimum, but the cost estimate can be aligned down to the activity level.
The cost estimate provides the basis for establishing the budget. Typically, estimates should be developed for
each work package or planning package. The estimates for each work package should be robust enough to assist
the project team in planning the needed resources, while budget estimates for planning packages may have a lower
level of detail until enough information is available to support the conversion to work packages. All cost estimates
within the CAs should be developed within the timeframes established for that work in the schedule baseline. Further
guidance for developing a cost estimate can be found in the Practice Standard for Project Estimating [9].
52 Section 3
Once the cost estimates for work packages and planning packages within a control account are completed, the
project manager and the control account manager review them. The project manager may decide to authorize budget
for an amount more, less, or equal to the cost estimate as follows:
More budget may be authorized if the project manager is aware of likely future events, such as changes in
rates, processes, or customers. This extra budget is often put into contingency reserves at the work/planning
package level or within the CA.
Less budget may be authorized if the project manager is giving the control account manager a stretch goal or
holding back reserve. Less budget may also be authorized if some of the assumptions in initial estimates are
proven wrong or more information on scope is available before execution than when it was estimated. Often
the budget below the cost estimate is placed in reserves outside the CA.
Budget equal to the cost estimate may be authorized, particularly when risk analysis and reserves are handled
outside of the control account.
The most universal and broad measurement unit used to value both budget and actual resource consumption is
the monetary unit or appropriate currency, which is also the most widely used and original measure within the EVM
method. On multicurrency projects, the management of exchange rates should be addressed, which can be done
similarly to labor rate or other indirect and direct cost changes that have impacts on projects. This is not surprising since
cost data answer the basic question of any project sponsor: How much is the project really costing the organization?
However, it is possible to use other units for budget and cost, such as labor hours (i.e., human effort). These
alternatives often focus on a specific resource or cost element of the overall organizational effort, which is considered
more relevant for management purposes. All other cost elements are either converted to this unit or simply not
considered in EVM. The measure used depends on the nature and scope of the EVM being implemented and should
be documented within the project management plan.
Alternative measures should be consistent with the boundaries of the cost elements being controlled by the project.
For example, in some environments (e.g., in small software projects), the project manager is not responsible for
measuring the full project cost but only the direct human effort. In these scenarios, labor hours are used as the measure
of value—a more defined and less granular substitute for monetary units. In this example, nonhuman effort costs, such
as travel costs, are outside of the PMB. As a result, the different costs of the hourly efforts are not captured within the
PMB. In some cases, this may simplify the EVMS significantly while having little impact on the management value.
When alternative substitutes for monetary value are used, it is essential to ensure that the cost data used are the
chosen measure of organizational effort (in the form of resource consumption) incurred to execute the project; such a
measure, even if similar, should not be mistaken with the measures of scope accomplishment (e.g., scope data) like
physical measures (e.g. drawings complete).
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