After we sign the project contract, we start doing the job. While project is in progress, we need to forecast final cost of the project.
DEVELOPMENT OF FEASIBLE ALTERNATIVES
In order to be able to forecast the final cost, there are some factors to be considered, i.e. Plan value, Earn Value, actual cost, Cost performance Index, and Schedule Performance Index. We will develop final forecast cost by considering above variable.
DEVELOPMENT OF OUTCOMES FOR EACH ALTERNATIVE
As plan value directly related to progress, the breakdown of the plan value, earn value, an actual cost, CPI, and SPI is referring to progress breakdown structure, i.e. Product Breakdown Structure (PBS) of Norzok Z-014.
Level 1- Budget Value of Project
Overall Budget Value will be on Top Level (Level 1, PBS View) and will be broken down in to following value:
Figure 1. Level 1 Project Budget of Project (PBS view)
Level 2- Activities weighting factor
Level 2 budget will be broken down in to phase level (SAB –point of view) with it’s value :
Figure 2. Level 2 Weight Factor (point PBS point of view)
SELECTION OF CRITERIA
There are some criterion to be an acceptable progress measurement. Some of them are:
Earn Value calculation is generated to sufficient detail.
ü CPI & SPI cover all the progress element
ü CPI&SPI calculation is based on account that progress > 25 %.
ü The equation used to estimate final cost is following:
IAC = AC + ((BAC-EV)/((80%xCPI)+(20%xSPI)))
IAC = AC + ((BAC-EV)/(CPIxSPI)))
IAC = Independent Estimate at Completion
AC = Actual Cumulative Cost
BAC = Budgeted at Completion
EV = Earned Value
SPI = Schedule Performance Index
CPI = Schedule Performance Index
ANALYSIS FOR THE ALTERNATIVES
Below is the Estimate final value by considering CPI and SPI using equation 1 and equation 2 above as of October 5, 2013 on level 0 (Product Breakdown Structure).
Figure 3. Project Level Estimate Final Cost (PBS view)
For the monitoring and forecasting purpose, below is the project status as per October 5, 2013.
Figure 4. Project Status as per October 5, 2013
SELECTION ON THE PREFERRED ALTERNATIVES
Below are selected alternative for Onshore Gas Production & Pipeline Projects forecasting cost result:
Figure 5, Cost Forecast using Earn value considering SPI
PERFORMANCE MONITORING AND POST EVALUATION RESULT
Based on the status above that project SPI 0,84 < 1,0, the project is delay and CPI 0,79<1 means the project is tend to overrun. Based equation 2, forecast final cost will be overrun 44.8% and based on equation 1, forecast final cost will be overrun 27,87%.
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