Introduction
Indexes that monitor the projects allow easy tracking and evaluation of the project progress by the project manager and the customer as well. Two performance indexes are involved in the measurement of the progress of a project. The first index, the cost performance index (CPI), evaluates the efficiency of the cost of the work completed to date with the value of one indicating that the project is in line with cost projections. The other index is the scheduling performance index (SPI) which evaluates whether the project is on schedule as planned or not.
The percent complete index PCIC
The determination of project completion progress involves the use of two project performance complete indexes. The percent complete index PCIB evaluates project completion about the original budget without the inclusion of the actual costs incurred in its implementation. The percent complete index PCIC, on the other hand, includes the actual costs incurred to date and the expected costs until the project is complete.
Project management also involves the evaluation of the technical performance of a system, facility, or product. To achieve this, review of documents found in the scope statement or the work package documentation is necessary. Project performance measurement also involves frequent quality efficiency tests on the products or a system. The technical performance evaluation allows quality assessment and evaluation of the project schedule to occur.
A variety of soft wares that report cost and schedule progress, performance measurements, and cash flow management allow easy assessment of project progress. These soft wares provide output regarding the schedule and cost of original projections. They also provide total percent complete and performance indexes, the cumulative actual total cost to date, expected cost at completion, and paid and unpaid commitments.
The rules employed to determine how much of a project is complete include the 0/100 rule, under which contractors receive payment once the work is completed. Under the 50/50 rule, 50% of the budget is given at the start of the project and the remainder is then paid once the project is completed. These two rules require short-duration projects that are not expensive. The other rule involves tracking and control of payment over the project duration. It includes monitoring of the project broken into short discrete packages to remove subjective judgment.
Conclusion
There are two methods used to revise the estimates of project costs. If new information indicates that the original budget estimates are not accurate, the original baseline and costs are changed. This is the revised estimated cost at completion (EAC). It involves the summation of the cumulative actual cost of work completed to date (AC) and the revised estimated cost to complete the remaining work (ETCre). The other method involves the prediction of the cost at completion and involves the summation of the actual costs to date and the efficiency index. The first method works in smaller projects while the second method is useful for larger methods.
The forecasting cost at completion can also be calculated using the ‘To Complete Performance Index (TCPI)’ which determines how much work must be done to stay within the budget limits. A ratio of more than one indicates that the reduction of the remaining work to meet the budget while a TCPI ratio of less than one indicates that the project will be completed without exhausting the entire budget. This gives room for other activities like quality improvement of the product. The TCPI ratio is also useful in cost accounting to make an objective forecast of the remaining and total costs.
Reference
Gray, C & Larson, E 2002, Project Management, McGraw-Hill, New York.