"S" Curve

The cost curve is called the "S" curve, named for the characteristic shape of the curve that plots the distribution of project costs as a function of time. To illustrate the main issues that can be resolved by charting such a curve, we return our previous example of the pouring of concrete foundations. In Figure 6.2 the project-days in which 10 subtasks associated with pouring the concrete founda­tions were carried out are "Gantt-charted," indicating the days in which this work was completed. The number in the rightmost col­umn, headed "$K", is the amount spent on each subtask for the project-days shown in the chart’s main body. (For simplicity’s sake, we assume here that every activity cost is rated at $1000 a day.) One of the subtasks was carried out from Day 24 through Day 28, i. e., past the 25-day period (25 workdays at 8 hours per day = 200 hours) originally assigned for completing the pouring of the concrete foundations. This subtask, and another that was under­taken later than planned, have been placed in a second section of the chart, below the main data chart illustrating the completion and budget expenditure on the other subtasks that finished within the originally envisioned 25-day work timeframe.

The (S)-curve is obtained as information from the Gantt chart of Figure 6.2 is graphically represented so as to display project bud­get expenditure of this set of subtasks as a function of time. In the case of the subtasks completed early, the first curve Figure (6.3) is obtained. In the case of subtasks implemented in the later phases and even past the originally-envisioned 25-day period around which the budget was originally designed, the second curve Figure (6.4) is obtained.

If these data are now taken and placed on the same graph, an envelope appears, bounded above by the curve displaying the data on outlays for the subtasks that finished early and from below by the data on outlays for the subtasks that finished late.

Another example will serve to illustrate cost-control approaches to managing what might happen at the overall level of a project. The following table gives the values of the cost of planning in an engineering project for a period of 12 months. At a point six months into the project, we calculate the position and display the crisis presented in Table (6.6)

From the previous table calculate the cost control parameters after 6 months from start of the project.

Days

Figure 6.3 Cash flow in case of early dates.

Days

Figure 6.4 Cash flow in case of late date.

From these parameters we have tools to evaluate the project every month as follows:

January

The cost of execution is 300 less than the ACWP in this month, so the work is slow but the cost is acceptable.

The reason for this may be due to late hiring of new laborers.

February

The work is progressing as planned, but work is still slow. Deal with this situation by letting them work on weekends to achieve the required time schedule.

Figure 6.5 Cash flow envelope

Table 6.6 Cost per month

Plan

Jan.

Feb.

March

April

May

June

Work in month

60

140

200

200

200

200

Cumulative

60

200

400

600

800

1000

Cost/month

6000

14000

20000

20000

20000

20000

BCWS

6000

20000

40000

60000

80000

100000

Plan

July

Aug.

Sep.

Oct.

Nov.

Dec.

Work in month

200

200

200

200

100

100

Cumulative

1200

1400

1600

1800

1900

2000

Cost/month

100000

10000

20000

20000

20000

100000

BCWS

120000

14000

16000

18000

19000

200000

March

During this month, the work is close to reaching the plan. Now the time schedule is not the only problem but also the cost increase.

April

This month the work was done more than it was planned. Now the work is going according to schedule and will be back to a normal mode of work, avoiding work on weekends.

Table 6.7 Parameters calculation

Jan.

Feb.

March

April

May

June

Cost per month

6000

14000

20000

20000

20000

20000

BCWS

6000

20000

40000

60000

80000

100000

BCWP (EV)

4000

14000

20000

20000

20000

20000

ACWP

4000

14000

22000

23000

21000

20000

EV cumulative

4000

18000

38000

88000

78000

98000

ACWP

cumulative

4000

18000

40000

63000

84000

104000

CV

0

0

-1000

-1000

-2000

-2000

sv

200

200

-100

0

0

0

Cost index

1

1

0.95

0.921

0.929

0.942

Schedule index

0.66

0.9

0.95

1

1

1

ВАС

15000

15000

15000

15000

15000

15000

EAC

15000

15000

16034

16333

16250

16000

May

The activity increased slightly more than planned, so we are going with the time schedule.

June

The work is progressing according to plan after 6 months of proj­ect. Work is proceeding according to schedule, but there has been an increase in cost. It is expected that the budget at the end of the project will be about $16,000.