Lesson 38: Control Costs
Generally, I'm pretty good at controlling Ragnar costs. But if you made me go through a formula to prove to you that we're behind/on target/ahead of cost/schedule/scope, I'd probably kick you off the team.
That being said, the EVA process (or earned value management) tells you where you are with respect to cost/schedule/scope. Basically - are you on track with how much something should cost, have you done enough things on the check list, and is it all where it should be with this many weeks til the race?
The Planned Value (PV) or Budgeted Cost of Work Schedule (BCWS) - baseline of money planned for spending to date at any particular time. Essentially: if 30 days out, I should have gotten all the decorations for 200. My PV is 200.
Earned Value (EV) or Budgeted Cost of Work Performed (BCWP) - baseline of money planned for spending on actual work performed to date. Example: if we're 30 days out, the cost of what I've actually accomplished (it may be that I've only spent 10 dollars on glow sticks). My EV is 10.
Actual Cost (AV) or Actual Cost of Work Performed (ACWP) - the amount of money spent on the actual work performed to date. Example: at 30 days out, I got our decorations, but because of a coupon, I got them for $150. My AC is 150.
Budget At Completion (BAC) - this is the amount of money planned for spending on the entire project. Generally, for Ragnar, if we're not traveling, and including registration fee, you're looking between $250-$350 a person.
Schedule Variance (SV) - take your Earned Value and subtract your Planned Value (EV- PV). If your SV is greater than 0, you are ahead of schedule. If your SV is less than 0, you're behind schedule. Example: If I have done 300 dollars of work (shirts and decorations!) when I was only having to get 200 dollars of work done (decorations), my SV is -100 and I am ahead of schedule.
Cost Variance (CV) - Earned Value minus Actual Cost. I got $10 of glowsticks, but they actually cost me $15 with shipping. CV > 0 = under budget, CV < 0 = over budget. Here, I'm over budget.
Variance at Completion (VAC) - BAC (budget at completion) - EAC (cost estimate at completion).
Schedule Performance Index (SPI) - SPI = Earned Value/Planned Value SPI > 1 = ahead SPI < 1 = behind; I did $300 dollars of work (shirts and decorations) when I said I'd have $200 done (decorations). Ahead of schedule!
Cost Performance Index (CPI) = EV/AC How much the cost of work should have been over how much I actually spent. Again, 10/15 (glowstick example) would equal less than 1. Over budget.
To Complete Performance Index (TCPI) = (BAC-EV)/(EAC-AC) thus - Team Budget of 1000-200(decorations)/1200-1100 = 8
Let's have a quick chat about EAC. There are three kinds and I hate them all.
Time EAC = Planned Duration/SPI (EV/PV)
Cost EAC = BAC/CPI (EV/AC)
Estimate to Complete ETC = EAC-AC
Here are my fun ways to memorize this stuff:
SV = EV - PV (rain seeps into the van and can make a schedule variance)
CV = EV - AC (if there's a problem with a vendor, say "see ya" to extra cash because of cost variance)
VAC = BAC - EAC (Very Big Expectations for having 0 variances of cost or schedule)
SPI = EV/PV (spies are EVer Present to see if we're on schedule)
CPI = EV/AC I got nothin, once I remember SPI, I remember that it's just CEA with division instead of subtraction