Control Accounts in Different Performance Periods - Assignment Example

Performance Measurements Exercise 13 If Invalid, Reason: It is invalid because it does not represent a performance measurement period. Instead it spans two periods. In Invalid, Reason: If Invalid, Reason: It is invalid because the two earning points are in the same period. If Invalid, Reason: If Invalid, Reason: It is invalid because it was not completed within two (2) consecutive measurement periods. If Invalid, Reason: It is invalid because the first earning point represents more than 50% of the work package. If Invalid, Reason: It is invalid because no milestone was established in measurement period 1 and the final milestone is not close to the end of the measurement period. If Invalid, Reason: It is invalid because the start of work is not an acceptable milestone. If Invalid, Reason: If Invalid, Reason: It is invalid because there is no milestone in period 3 and work was left to be completed. If Invalid, Reason: It is invalid because there is no milestone in the second measurement period. If Invalid, Reason: If Invalid, Reason: If Invalid, Reason: It is invalid because no more than 80% of the value of the next period’s milestone can be planned in the current period. If Invalid, Reason: It is invalid because it extends to more than two consecutive measurement periods and more than two earning points have been established. If Invalid, Reason: It is invalid because it spans more than two measurement periods and t has more than two earning points. If Invalid, Reason: It is invalid because the total work package should be 100% and there s no indication that the work will continue into the next period. If Invalid, Reason: If Invalid, Reason: If Invalid, Reason: It is invalid because the totals of the percentage ratios do not add up to 100% of the total work package and there is no indication that the work is ongoing to the next period. Activity 13.2 Comments: This earning method should only be used for work packages which are scheduled to begin and completed in a single measurement period. This work package was scheduled to finish in period 2. However, it was not completed until period 3. Comments: The planned and completed earning point is the same. The work package was completed n one measurement period. Comments: The project was scheduled to start in period 1 and completed in period 2. The first completed earning point was in period 2 and the project was completed in period 2. Comments: The 50% is earned when the project actually starts in period 1. However, the project was not completed until period 3 even though it was scheduled to be completed in period 2. Therefore, the planned earning point (period 2) is earlier than the completed earning point (perod 3). Comments: The work package was scheduled to start in period 2 and end in period 3; however, it was started earlier in period 1 and completed in period 2. Therefore, the earnings came much earlier than anticipated. Comments: The planned milestones are earlier than the completed milestones and so the planned values are earned in subsequent periods. The work continues into the next period when milestone 3 will be completed and the final budgeted amount of ?20,000 will be earned. Comments: The planned milestones were for periods 1, 2 and 3. However, the completed milestones occurred in periods 2 and 3. Therefore, half of the budgeted amount was earned n period 2 and the other half in period 3. Comments: The planned milestones were for periods 1 and 2. However, the milestones were completed in periods 1 and 2. The first milestone was completed before the scheduled start of the work package. Comments: The plan was for the work to start early in period 1 and to be completed in period 2. However, the work started late in period 2 and was still ongoing at the end of period 3. The milestones were planned for period 1 and 2 but the first milestone was not accomplished until period 3 due to the late start. Only 60 workdays were completed at the end of period 3. Comments: The work started a little late and so the milestones were not accomplished as planned. The schedule for the first milestone was the end of period 1. However, this was not accomplished until early period 2. The plan was that 66% of the second milestone would have been completed by the end of period 2 but only 50% was completed then. The work was not completed at the end of period 3 and so it continues to the next period when t is hoped that the final milestone will be accomplished and the balance of the budgeted amount (1,000dm) will be earned. Comments: Comments: The work started in period 1 and was budgeted for completion in period 3. The first scheduled milestone was for the end of period 1. However, it was not accomplished until period 2. The final milestone which was scheduled for period 3 was also not accomplished as work was ongoing at the end of period 3. At the end of period 2 only 25% of milestone 2 was accomplished compared to the planned 60%. At the end of period 3 only 50% of milestone 2 was accomplished. Comments: The work was planned for completion in period 3 was only 85% complete at the end of the period and so work was ongoing. Therefore, at the end of period 3 only 85% was earned and not the total amount budgeted. Comments: Work was planned to start in period 1 but did not get started until period. The plan was for 40% to be completed by the end of period 1 and 60% by the end of period 2. However, only 50% was completed in period 2 and 50% in period 3. Comments: The budgeted work hours were apportioned proportionately to the planned work package and the earned work package Comments: 30% of the budgeted workdays will be attained in period 1, 40% in period 2 and 30% in period 3. The planned workdays are equivalent to the actual workdays and so the earnngs wll be as planned. Comments: The planned units were not the same as the earned units for period 1 and 2. However by the end of period 2 the planned units were equal to the actual units completed and therefore both planned and actual was similar for period 3. Exercise 13-3 Basic Performance Measurements Control Account/Work Package Budget Earnings Method Performance Measure Measurement Periods 1 2 3 4 5 6 Totals 2.1.3 Customer Service Solution Design 2.1.3.1 Management Structure Design 10 0%/100% Planned (BCWS) 10 10 Earned (BCWP) 10 10 2.1.3.2 Customer Service Rep Role Description 20 40%/60% Planned (BCWS) 8 12 20 Earned (BCWP) 8 12 20 2.1.3.3 New Customer Business Process Design 30 Milestone Planned (BCWS) 3 12 12 3 30 Earned (BCWP) 3 12 12 3 30 2.1.3.4 Service Order Business Process Design 30 % Complete Planned (BCWS) 12 9 9 30 Earned (BCWP) 9 15 6 30 2.1.3.5 Supervision & Review Apportioned Effort – Ratio 1/3 (20/60) 20 Apportioned (Based on Work Packages 2.1.3.3 & 2.1.3.4 Planned (BCWS) 1 4 4 5 3 3 20 Earned (BCWP) 1 4 7 6 2 20 2.1.4 Project Management 12 Level of Effort Planned (BCWS) 1 3 3 2 2 1 12 Earned (BCWP) 1 3 3 2 2 1 12 Totals 122 Planned (BCWS) Cur Cum Cur Cum Cur Cum Cur Cum Cur Cum Cur Cum 15 15 27 42 31 73 22 95 14 109 13 122 Earned (BCWP) 15 15 11 26 19 45 42 87 26 113 9 122 Actuals (ACWP) 14 14 24 38 26 64 26 90 20 110 18 128 Cost Var (CV) 1 1 -13 -12 -7 -19 16 -3 6 3 -9 -6 Sched Var (SV) 0.0 0.0 -16 -16 -12 -28 20 -8 12 4 -4 0 Analysis of the Performance of Each Control Account An assessment of each of the five control accounts revealed that there were cost over-runs in all control accounts in one or more performance periods. Control account 2.1.3 encountered poor efficiency levels and therefore cost over-runs in period 1 and 2. However, efficiency levels improved in the following periods leading to under-runs in all three remaining performance periods. There were cost over-runs resulting from poor levels of efficiency in relation to control account 2.1.4 in all four periods in which the project was ongoing. Control account 2.1.5 shared a similar fate to 2.1.4 in three periods in which the project was ongoing. Control account 2.1.6 had low efficiency level and therefore experienced cost over-run in the first performance period (period 3). However, things improved significantly in period 4 when the project experienced efficiency levels of 130% and continued into period 5 where 150% efficiency levels were attained. Control account 2.1.7 were efficient in periods 1, 2 and 3 where 100% efficiency was attained with budgeted cost being equal to actual cost in each of the three performance periods. However, in periods 4 and 5 efficiency levels fell to 0.9 and 0.6 resulting in continuously increasing cost over-runs. Analysis of Analytical EAC Proved for Each Account EAC is defined as the actual cost of the work that was contracted to date plus the estimated cost of the work that remains to be completed (Christensen 1994). The table above shows the results of several formulas for computing EAC. The EAC for Control account 2.1.3 ranged from 109.2 to 113.3 which is within the range of the budgeted cost and the actual cost which is an indication that the work package was completed without any cost over run. This also indicates that on average the work was carried out efficiently. In relation to control account 2.1.4 the management of the work package was highly inefficient and so while the budget at completion was 567 the EAC’s ranged from 698 to 941. Control account 2.1.5 had a BAC of 189 and the EAC’s ranged from 116 to 313.7 and indicates that the levels of inefficiency were high as confirmed by CPI’s of 0.4, 0.7 and 0.6 respectively. The BAC for Control account 2.1.6 was 1,345 and the EAC’s ranged from 925.3 to 1322. In terms of Control account 2.1.7 the BAC was 220 and the EAC’s ranged from 230 to 310. The differences indicate the effects of different variables used in calculating the EAC. Regardless of the index used the EAC formula assumes that future performance is a reflection of the past (Christensen 1994). The EAC for the controls accounts should be EAC4 for all control accounts since it provides a better reflection of the efficiency levels than the others. The efficiency level provides information on the cost over-run or under-run and therefore gives a better estimate of the estimated cost at completion. Work cited Christensen, David S. “Using performance indices to evaluate the estimate at completion.” Journal of Cost Analysis and Management, Spring, (1994): 17-24. Web Read More