Project_Accounting_Presentation_Final.pptx

Accountancy
• Project Accounting & Financial Accounting
• The Five Key Values
• Creating a Budget by Deliverable
• Profiling the Budget
• Gathering Actual Data
• Estimates to Complete & the Importance of CPI

1. An Introduction to Project Accounting John Chapman, Programme Director, Touchstone Energy www.TouchstoneEnergy.co.uk [email protected]

2. Agenda • Accountancy • Project Accounting & Financial Accounting • The Five Key Values • Creating a Budget by Deliverable • Profiling the Budget • Gathering Actual Data • Estimates to Complete & the Importance of CPI • Implementing Earned Value Management • Questions

3. Project Accounting vs Financial Accounting Financial Accounting: • Based on periods in a financial year • Department & Cost Centre Hierarchies Project Accounting: • Start and end dates, no relation to accounting periods • Focus on Deliverables, Activity, Project

4. The Five Key Numbers 1. BAC: Budget at Complete 2. ACWP: Actual Cost of Work Performed 3. ETC: Estimate To Complete 4. EAC: Estimate At Complete 5. VAC: Variance At Complete

5. Bottom Up and Top Down Estimating Steps: • Prepare work breakdown structure (WBS) • Identify components for each deliverable • Estimate time and convert to financial value if needed

6. Estimate to Complete & the Importance of CPI CPI Formula: CPI = BCWP (Earned Value) / ACWP (Actual Cost) • CPI helps measure cost efficiency

7. Reporting Example Example: Initiation: BAC = £5k, ACWP = £5k, VAC = £0 Stage 1: BAC = £40k, ACWP = £38k, VAC = £2k

8. Thank You – Questions? John Chapman Touchstone Energy [email protected]