W3.1_Austin_Earned Value Analysis Management Best Practices

1.  Problem recognition, definition and evaluation

Projects like Building and Managing Housing Estates of Identical Flats, requires a more flexible approach to development and management without compromise on design or amenity, guarantee of adequate supply of housing that is affordable for very low, low and moderate-income earners, provides  financial viability for developers and managers. It's said that every project is unique; however the underlying causes of project failure are usually the same. When we know what these causes are, we can minimize the chances of problems and increase our likelihood of success. Earned Value analysis is an effective way to do so.

There are two major objectives of an earned value management system:

1.   To encourage contractors to use effective internal cost and schedule management control systems.

2.   To permit the customer to be able to rely on timely data produced by those systems for determining product oriented contract status.

2.  Development of the feasible alternatives

a.   Earned Value Management Analysis

Earned Value (EV) is a management tool for tracking and communicating a project's status. It provides an objective measurement of how much work has been accomplished on a project. Using the EVM process, the management team can readily compare how much work has actually been completed against the amount of work planned to be accomplished. All work is planned, budgeted, and scheduled in time-phased “planned value” increments constituting a performance measurement baseline, real time project monitoring and controlling to achieve project completion target.

b.  Practical Project Management & Tracking Using MS Project: MS Project starts with what to do as soon as you have created the new project and ends with tracking progress against that plan. Some Tasks, such as laying bricks, are easy to measure by counting the bricks. These Tasks, the ones that are easy to measure, can have longer Durations. Other Tasks, which are harder to measure, must have shorter Durations, or shorter stages, or they will not be track-able or controllable.

c.   Track Project Progress with Physical % Complete: 

Far too often people arbitrarily track project performance through the “Percent (%) Complete” method with subjective estimates for “how finished” the project is. However, repetitive activities project doesn’t work well with this technique due to manual entering of values into the % complete field.

3.  Development of the outcomes and cash flows for each Alternative

Earned Value Calculation Table:

From the table above we know that the budget for 1 Flat is $28,829 with total target 12 Flats Eqv to be completed in a month, the simple calculation using the EVM Technique is as follows:

BAC per month          = 12 Flats Eqv x $28,829 = $345,948
BCWP per month         = Actual Flats Eqv Completed x $28,829
BCWS per month       = Planned Flats Eqv x $28,829
ACWP per month         = Monthly actual cost is retrieved from ERP every month
SPI per month                = BCWP /BCWS
CPI per month                = BCWP / ACWP
Example :

Assumption :
1 month               = 30 days
1 day                    = 3 shifts (day, swing, night)
1 month              = 90 shifts

Target Plan:
1 month               = 12 Flats Eqv
1 shift                   = 12 Flats Eqv  / 90 shifts = 0.133 Flats Eqv

Performance:
Report Period             = Shift 50^th

Actual achievement      = 5.81 Flats Eqv
BCWP                        = 5.81 Flats Eqv x $28,829               =  $167,496
BCWS                        = (50^th x 0.133) x $28,829                = $191,713
ACWP                        = Caclulated at end of the month      =  N/A
SPI                            = $167,496 / $191,713                    =  0.87CPI                           = Calculated after finance month closing =   N/A

4.  Selection of the acceptable criteria

Earned Value (EV) is a management tool for tracking and communicating a project's status with an SPI of 0.87 as shown above. The earned value management criteria selection is driven by the requirement of accurate and real-time performance measurement, monitoring and controlling tools that would be easily updated by the field project team with minimum wording but presenting the valuable project information accurately and timely.

5.  Analysis and Comparison of the alternatives

The foregoing analysis demonstrates the use of Earned Value method as the most effective project tracking tool to generate a real-time progress measurement, monitoring, controlling and reporting for efficient management and mitigation against anticipated constraints to achieving project completion target.

6.  Selection of the preferred alternative

Timeliness, accuracy and consistency are the yardstick for measuring this project performance. Hence, the user friendly EVM measurement, monitoring controlling and reporting system is implemented, with an SPI of 0.87 as shown above.

7.  Performance Monitoring and Post Evaluation of Results

The shift crews’ performance is measured by using the shift crews SPI, because of the shift crews’ most likely works in the same location. The field project team assigned to each shift crew has to complete the shift progress performance measurement at the end of the shift to enable the project management team to monitor and control the progress every single shift which eventually constitutes the project dashboard.

8.  References/Bibliography

1.   Humphreys, G.C. (2012) The Humphreys & Associates team ... field of earned value project management consulting and training. Retrieved from: http://cad.digitalmedianet.com/articles/viewarticle.jsp?id=2258411 

2.   Jerald, J. K. (2012). The NASA EVM Implementation Handbook. Retrieved from: http://evm.nasa.gov/reports.html

3.    Humphreys, G. C. (2011). Project Management Using Earned Value (2nd ed. P-16). Humphreys & Associates, Inc. Retrieved from: http://www.humphreys-assoc.com/evms/project-management

4.   Humphreys, K. K. (2005). Project And Cost Engineers' Handbook Fourth Edition. North Carolina: Marcel Dekker. Retrieved from: http://ebookee.org/Project-and-Cost-Engineers-Handbook-Fourth-Edition-Cost-Engineering-_195466.html