W2_ASIBELI UGBOMA_EARNED VALUE ANALYSIS IN MY PROJECT TEAM

W2_ASIBELI UGBOMA_EARNED VALUE ANALYSIS IN MY PROJECT TEAM

 Problem recognition, definition and evaluation

My company has Earned Value Management included in our Project Controls but we are not fully utiliizing the implementation because our Cost and schedule are not aligned. Due to that even though the report is generated monthly it is not accurate.  

Earned Value Management (EVM) is a Project Management technique used for measuring Project Progress in an Objective Manner. EVM has the ability to combine measurements of:

·         Scope  (Achieved / accomplishment of Planned work

·         Schedule (behind / ahead of schedule

·         Cost (under / over budget)

 When properly applied EVM provides an early warning of performance problems. Additionally EVM promises to improve the definition of Project scope, communicate objective progress to stakeholders and keep the Project team focused on achieving Progress

Development of the feasible alternative

Early EVM research showed that the areas of planning and Control are significantly impacted by its use and using the methodology improves both scope definition as well as the analysis of overall Project Performance. It effectively integrates the work scope of a program with the schedule and cost elements for optimum program planning and control.

We in Projects will have to realize that EVM system is owned by the organization and is governed by the organization’s policies and procedures. We have to make sure that our schedule and the cost breakdown are aligned.

Development of the outcome

The essential elements of the technique are as follows:

·         Establish the baseline plan: In the planning phases of a Project a target value is assigned to each scheduled element of work (usually some physical deliverable). This is called the ‘Planned Value (PV)’

·         Allocate earned value: As the elements of work are completed their original Planned Values are classed as ‘earned’, hence the term ‘’Earned Value (EV)’’. The cumulative Earned Value across all completed work elements provides an accurate measurement of the Value of work (VOWD) performed at any point in time.

·         Measure Variances from plan: Project performance can now be measured by comparing Earned Value with what has been spent to perform the work (Actual Cost – AC) and what was scheduled to be accomplished (PV)

·         Determine the criticality of variances: Earned Value indices provides further insights into the relative magnitude and (criticality) of cost and schedule variances.

·         Forecast Project outcomes: Earned Value metrices can also be used to forecast the outcome of a project

Fig 1

Criteria of Selection

Earned Value Management metrics assumes a project with a fixed set of deliverables conducted over a defined period in time. EVM is therefore not useful in managing continuous business operations. Since we deal in specific Projects it is ideal for our needs

Analysis

Earned Value Management (EVM) is a project performance measurement technique that provides an accurate comparison of the actual work performed against that planned. It achieves this by placing a baseline value on each deliverable at project commencement and crediting the project with that value when the deliverable is completed. This facilitates early identification of variances from plan allowing management to take corrective action before problems escalate.

Selection of alternative

Earned Value Technique is still the way to go for us and we have to make sure that the Planners and Cost engineers align closely for a successful implementation

Performance monitoring and post-evaluation of results

EV uses three key pieces of information, which are the planned value, actual cost and earned value as shown in Fig 1. These items are not new so we have almost everything in place to make sure it is implemented properly.

References:

1.       Earned Value Management Retrieved from: http://en.wikipedia.org/wiki/Earned_value_management     

2.       Earned Value Management Retrieved from: http://www.chambers.com.au/glossary/earned_value_management.php   

3.       GEIA Standard Earned Value Management System ANSI/EIA-748-B-2007