In creating the weekly report for Team Emerald, the group noticed that other groups had calculated their BCWS figures differently using the planned completion percentages x BAC figures instead of creating a cost loaded schedule and S-Curve.
This blog will consider what are the differences between each approach and can 1 method be considered more correct than the other.
Method 1: Calculate BCWS using S-Curve or cost loaded programme bas
Method 2: Using the BAC figures calculated at end of method 1 above, calculate the weekly BCWS base on planned progress multiplied by BAC.
Development of the Alternatives
The BCWS is also known as the “Planned value” (PV) as well as the Performance Management Baseline (PMB)
Ultimately, the BCWS defined as the BCWS is the sum of the budget items for all work packages, planning packages, and overhead which was scheduled for the period. It can be compared to the Cost budget or what is planned to be spent.
Under Method 1, this is calculated by developing a cost or resource loaded programme from which an S-Curve is produced. refer to Figure Below which represents the early and late curves for Team Emerald’s entire programme. Each Team member (Resource) has made a weekly estimate of their hours required to complete the required deliverables.
In developing their schedules and progamme, the following factors have been considered;
- Total Weekly contribution
- Sequence in which hours are allocated to projects
- Anticipated Variances in weekly hours/costs due to availability, etc
- Non Working Times due to holidays, etc
Hours are then converted to costs on a week by week basis and summed over the full period of the progamme to determine the BAC (Budget at Completion).
Under Method 2, the BCWS is determined using the formula of Total Budget cost or BAC x Planned Schedule %
The Planned schedule progress is determined by reference to the project deliverables and each deliverable carries its own weight with respect to the overall programme as well as method of calculating progress.
- ACWP figures can be compared against BCWS accurately on a week by week basis
- BCWS reflects any fluctuations in resource usage or allocation
Comparison of the Alternatives
Refer to Figure 2 below for a comparison of each BCWS calculated using Method 1 and Metho 2.
Note that there is a large differencebetween the 2 methods at week 1. Under Method 2, the BCWS value is approximately $12k less than method.
This variance is due to a misalignment between the first project milestone and the planned costs for Week 0.
The project includes a milestone after week 0 which has been valued by the programme Owner as equivalent to 8% of the total project – 115 from 1500.
However after completing an estimate of the hours and cost, the total cost for Week 0 is equivalent to 18% of the BAC!!
Method 2 therefore reports a BCWS based upon the programme’s weightage allocation and this percentages has no relationship to the estimated hours or costs spent during the Week 0 period and as such are misleading.
Similarly, the use of Incremental Milestone Techniques to determine planned percentage for deliverables i.e. Paper Topic instead of units in place for deliverables such as blog postings, problem solving, etc also contributes to difference in BCWS figures between the 2 methods.
Similarly, non work periods predicted around week 22 to 23 are not reflected under method 2.
Selection of the Alternative
As can be seen the determination of BCWS figures using the planned progress % and BAC figure does allow for an accurate comparison with ACPW figures due to the fact that Planned progress % and planned Expenditure are not always aligned due to factors such as
- Resource usage may vary from time to time
- Resource Usage is not aligned with Deliverable weightage
- Method of calculating Progress percentage
Calculation of BCWS using a Cost loaded Schedule is the most accurate method when comparing on a week by week basis
The Use of Method 2 could be considered if resource usage was aligned with planned progress percentage. This would likely require the milestones weightage closely reflects planned cost or effort
1. Chapter 9.1 – Introduction to Managing Progress – Guild of project controls compendium and reference (CaR) | Project Controls – planning, scheduling, cost management and forensic analysis (Planning Planet). Retrieved from http://www.planningplanet.com
2. Humphreys, G.C 2011 Project Management Using Earned Value Humphreys associates, Management Consultants. Second Edition, pp 512-515
3.Earned Value Management – Budgeted Cost of Work Scheduled (BCWS) (2017) retrieved from http://acqnotes.com/acqnote/tasks/budgeted-cost-of-work-scheduled