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One time cost and Total cost - help

2 replies [Last post]
Mon, 2005-12-19 15:14
manulal inasu
User offline. Last seen 18 years 32 weeks ago. Offline
Joined: 15 Oct 2005
Posts: 52
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Dear PP members,

Please help me to solve this problem.

Presently we are doing a project of
1.Total duration = 6 months.
2. Total budgeted cost = 8 million.
3. Elapsed time = 3.5 months.
4. Work progress = 44%
5. Cost to date = 4 million
6. One time cost for the entire project incurred at the beginning = 1 million.
Now to calculate the CPI, I had to calculate the actual cost incurred so far.

In my finance manager’s view it should be the total cost so far, which is 4 million.
But I think it should be (Total cost – One time cost) + ( One time cost * Progress)
That is (4 – 1) + (1*44%) = 3.44 million. I think the CPI will be more realistic done this way. Our SPI is nearly one.
Please help,
Manu.
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Replies

Tue, 2005-12-20 04:50
#1
manulal inasu
User offline. Last seen 18 years 32 weeks ago. Offline
Joined: 15 Oct 2005
Posts: 52
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Thanks steven,

If our purpose was simply to calculate the actual cost incurred so far then it is surely sum total of all the costs incurred whether it is one time, fixed,committed etc.

But to use EV and CPI as project analyzing tools, which should the correct method to calculate Actual cost of work performed?

My logical thinking tells me it is the second method.

Manu.
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Tue, 2005-12-20 04:17
#2
Steven Oliver
User offline. Last seen 11 years 39 weeks ago. Offline
Joined: 8 Nov 2002
Posts: 313
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Your Actual Cost, is your Actual Cost. i.e what it has cost you to accomplish the work you have done so far. Your one off cost should be taken into account in both this and your BCWS.

(IMHO) Leave the bean counting to the bean counters, concentrate on what Planners should be good at. Influencing the future.
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