This course introduces the types of cost estimation from the conceptual design phase through the more detailed design phase of a construction project. In addition, the course highlights the importance of controlling costs and how to monitor project cash flow. Students will work on a break-even analysis of construction tasks in a project.
Calculating EVM
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En provenance du cours de Columbia University
Construction Cost Estimating and Cost Control
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Earned Value Method (EVM)
In this module, Professor Odeh goes deeper into the Earned Value Method of Cost Control.
Rencontrer les enseignants
Ibrahim Odeh, Ph.D., MBAInstructor, Department of Civil Engineering and Engineering Mechanics, Columbia University
Director of Research and Founder, Global Leaders in Construction Management
Let us start with the word package A.
The word package A we have all the parameters we need here from
the actual cost for perform, the budgeted cost for
perform, and the budgeted cost of work scheduled.
And of course the budget costs at completion.
The four parameters.
I just here put the variance and the index for
the costs and the variance and the index for the schedule.
So the budgeted cost of work performed is 46 minus the actual
cost of work performed is 40, so it's giving you here six.
The cost index is the 46 divided by the 40,
so, is going to be greater than 1.
So we have a favorable situation or scenario from a cost perspective.
So it is under budget.
From a schedule point of view, the earned value or the BCWP is 46 also.
You are subtracting it minus the 55.
The budgeted cost of work scheduled.
So that will give you a negative number minus nine.
And at the same time, if you divide 46 over 55, that will give you less than 1.
In this situation, the schedule is delayed.
So this is the status from the cost and the schedule point of view.
What about if I ask you to let's draw it, draw both?
The earned curve, the actual curve, and the budgeted curve,
or the S-curve, or the baseline for this specific work package.
Let's do that.
So let's say we have
Here, the cost or the dollar amount and here's the time.
And approximately, we have, let's say an S curve like that.
Then this where is the end of that whole package A.
And the number here when it reaches here is going to be 115.
From that budgeted cost of work, budgeted cost at completion.
And let's say it started at, let's say the T here
Then The number
with intersection on the curve would be the budgeted cost of work scheduled, 55.
And we have the budgeted cost of work performed or
the earned value, 46.
And you have the actual course for
performed is 40.
So this is BCWS,
46 is the BCWP, and
the 40 is the ACWP.
It is the curve.
This is the earned curve and this is the actual curve,
is above the earned curve above the actual, So
that cost variants here is positive, as we can see here.
And greater than one for the index.
And the budget cost of work performed or
the earned curve is less than the budgeted curve.
So that scheduled variance is a negative,
minus nine, or less than one in this perspective.
So this is if we want to draw the curves comparing
to the budgeted curve and find that status and present it.
Let's go then to the next activity or work package which is B.
The cost variants and the cost index list.
Look at here, the BCWP or
the earned value is 39 minus the actual cost of work performed is also 39.
So in this case you're a getting a variance of 0.
And an index, a cost performance index of 1.
For the schedule variance, the BCWP 39 or
the end value minus the BCWS is also 39.
The budgeted cost of work scheduled.
So you're getting also a variance of 0.
And an index of 1.
This is something every engineer,
every PMCM looking for work, to get something like that.
What's that mean?
That we are, from a cost status, on budget.
From a schedule status, we are on schedule.
So, what does it mean if I ask you then to draw that?
So we have Here's the time,
again, and here's the cost.
And we have, let's say the following S curve.
So the budget costs at completion for work package B is 60.
Let's say we have here somewhere the study date.
Then it says in this point is 39.
And this 39 is actually what we refer to as first
the budgeted cost of work scheduled,
as well as the actual cost of work performed, and
the earned value BCWP budgeted cost of work performed.
So all the lines of the earned value, or the earned curve,
the actual curve, and the budgeted curve.
Goes all the way to here and intersect, so
we have on budget and on schedule work package of B.
For the last work package, we have work package C.
Let's do the calculations and find the cost and the schedule status.
That cost status we have the earned value,
the budgeted cost of work performed, 56,
minus the actual cost of work performed, 48.
That will give us 56 minus 48, plus 8, a positive variance,
as well as a greater than one in the cost index
56 over 48 give you a number greater than 1.
And the schedule variance, or the schedule status in this case,
you have the earned value 56, minus their budget cost of work scheduled, 42.
So it gives you also plus number and
the index also if it's over 42 it's greater than 1.
This is also a very good case scenario where we have an under budget and
ahead of schedule.
So if I ask you, also let's draw this curves.
It will give us, let's say here the time.
And here's the cost.
Assume here's the S-curve.
The budgeted cost at completion.
It's here, 70.
And at the study date.
Let's assume it's here.
We have the budgeted cost of work scheduled is 42.
Budgeted cost of work scheduled.
And the actual cost of work performed is 48.
Actual cost of work performed And
the budgeted cost of work performed, Is 56.
The earned value, BCWP.
So in this case, if I ask you to draw the actual
curve it could be, look like that.
And the earned curve it could be like this.
Which will be the budgeted cost of work performed
is greater than the actual cost of work performed,
So this is the cost, variance plus.
And the earned value, 56 is greater than the budget cost of work scheduled.
Let's take them here.
Is also positive.
So we have an account, work package C, is ahead of schedule and under budget.
With that we conclude our module for the earned value method.
And going through the definition, the objectives, and going through
the examples, if you get what are the scenarios you have for each work package.
Or if you're starting an entire project and
that will help you to give you if you are doing well from
schedule perspective or even from the cost or a budget perspective.
Later in the course we have a presentation about technology
implementation and technology use.
About how you do cost control in the field from some softwares we have out there.
And in real life case scenario, to highlight and share it with you to link
between, or what I call it, bridge between the theory and the practice in the field.
Thank you.
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