Create New Baseline In the middle of Project (Re-Baseline)Scope changing study case


Problem Definition

You are managing a project with a budget of 500 to be completed in 6 months.

Due to various causes there have been substantial delays and cost overruns on the project and at the end of 3 months you find that you have already spent 400 and only 200 – worth of deliverables have been completed.

After discussions with your team you find that based on the past experiences and lessons learnt you can now commit to a CPI of 1.5 for the remaining duration of the project.

What should be the budgetary enhancement that you would ask for based on this data?

 

Answer (Author Analysis)

1

2

Figure 1- Month 3rd Preliminary Analysis

Educated Guess for BCWS record ( 1/6, 2/6, 3/6, 4/6, 5/6, 6/6 from 500)

Educated Guess for BCWP & ACWP Record in Month 1 until Month 2

Preliminary Analysis Month 3rd

ACWP = 400; BCWP = 200; BCWS = 500*(3month/6month) = 250;

BAC = 500; BAC is scope of the project value. BAC = BCWS at month 6th =  final value of BCWP.
CPI = BCWP/ACWP = 0.5; SPI = BCWP / BCWS = 0.8

SV = BCWP – BCWS = 200 – 250 = -50 ;Behind schedule by 50 worth value

CV = BCWP – ACWP = 200 – 400 = -200 Cost Overrun by 200 worth value

Note for commit to a CPI of 1.5 for the remaining duration of the project

Current CPI is abnormal ==>Recalculating EAC

EAC is ACWP at the end of project, ACWP in month 6th  is = EAC

ETC = BAC – BCWP = 500 – 200 = 300

EAC = ACWP + ETC

EAC = ACWP + (BAC – BCWP)

EAC = 400 + (500 – 200) = 700

 

Creating new Baseline (Re-Baseline)

3

4

Figure 2 – New Baseline (Re-Baseline month 3rd)

New Baseline (Re-Baseline) in Month 3rd

–          Adjusting BAC, old BAC = 500, new BAC = EAC = 700, Because BAC changing which means scope is changing BCWS affected to change. Remember that if scope remain still, BAC not change then BCWS and BCWP will be remain as it is. See Humprey references1

–          ACWP remain same = 400

–          BCWS = ACWP = 400 ; Because cost overrun worth value 200 distributed to remaining month 4th until month 6th

–          BCWP = ACWP = 400; Because cost overrun worth value 200 distributed to remaining month 4th until month 6th

–          In other word New Baseline is old project scope worth value 500 added by cost overrun  worth value 200 become Project with worth value 700

 

Disputation for Note “for commit to a CPI of 1.5 for the remaining duration of the project”

When we commit to get CPI 1.5 at the end of project month 6th the analysis is (Consider only New Baseline month 4th until month 6th)

CPI= ETC /ACWP cumulative month4 to month 6

1.5 = ETC / ACWP cumulative month4 to month 6

3/2 = 300/ ACWP cumulative month4 to month 6

ACWP cumulative month4 to month 6 = 200 or ETC for CPI 1.5 = 200 to complete work deliverable worth of 300 values

From Old BAC = 500, already expense ACWP = 400,

Remaining Budget = Old BAC – ACWP = 500 – 400 = 100

To commit CP 1.5 at we need to ask budgetary enhancement for = ACWP cumulative month4 to month 6 – Remaining Budget = 300 – 200 = 100

Dissention

Usually in normal practices CPI is calculated on all the lifetime period of project. So for this study case CPI should be normally counted from month 1st until month 6th. Calculation CPI from month 4 to month 6 is not normal practice.

Bottom line

Eventhough there are dissention in this study case about how CPI calculated but this study case is a good practice how to create new baseline (re-baseline) concept when BAC or scope changes

This study case was taken from PMBOK 5th edition. In I want to be a PMP® linkedin group discussion 17 September 2013 Questions from PMBok Fifth edition – Cost Alakananda Rao, PMP

References:

  1. Humphreys, Gary C. (2011). What is Scheduling? Schedule Types. Project Management Using Earned Value 2nd Edition,(pp. 137-146). Orange, United States Of America : Humphreys & Associates Inc
  2. TestEagle. (2013). how-to-calculate-estimate-at-completion-eac-for-the-pmp-exam. Retrieved September 17, 2013 from http://testeagle.com/blog/2012/03/how-to-calculate-estimate-at-completion-eac-for-the-pmp-exam/
  3. Rao, Alakananda (2013). I want to be a PMP® linkedin group . Questions from PMBok Fifth edition – Cost. Retrieved September 17, 2013 from http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=274036493&gid=2356441&commentID=164825079&goback=%2Enpv_94027909_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_*1_nav*4responsive*4tab*4profile_*1&trk=NUS_DISC_Q-subject#commentID_164825079
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3 Responses to Create New Baseline In the middle of Project (Re-Baseline)Scope changing study case

  1. drpdg says:

    Hi Pak Delano, you NEVER go back and change history. The history (sunk costs) and what work that sunk cost bought you, remains unchanged. When you rebaseline, you start with the ACWP (which, assuming the accounting records are current, is the only real “truth” you have. Then you perform an estimate to complete based on the actual productivity to date and that becomes your new ETC. ACWP (sunk costs) + Revised ETC = Revised BAC.

    And don’t hesitate to challenge Ms. Akananda!!! She is a smart lady, but based on my exchanges with her, she really only has a superficial understanding of applied EVM.

    But good to see you standing up and challenging people. In the end, Humphrey’s will trump what PMI has produced!!!

    Keep up the good work!!!

    BR,
    Dr. PDG, Jakarta

  2. Seona Cruz says:

    From my perspective – as consultant and practitioner who works a lot with project managers in large and partly international companies – the PMP courses (http://www.pmstudy.com/) form a good and substantial program. It combines theoretical information with practical, job-related and hands-on approaches. It provides excellent opportunities to draw from one’s own professional experiences, learn from each other, and gain new perspectives which help improve projects.It a highly recommendable investment in one’s own professional development.

  3. Lydia Perry says:

    I agree with pretty much everything you say here. To deliver the greatest amount of value in the shortest amount of time, Scrum promotes prioritization and Time-boxing over fixing the scope, cost and schedule of a project. An important feature of Scrum is self-organization, which allows the individuals who are actually doing the work to estimate and take ownership of tasks.You can learn the agile way of managing project through http://www.scrumstudy.com/.

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