Earned Value Management Flashcards
Earned value management is a tool that project managers can use to monitor project progress using the?
Schedule (time) or budget (cost)
It will allow the project manager and their team to track project progress against the baseline, but goes a bit further with what it does and allows the project team to make predictions based on the progress they are seeing
This will enable the project manager and their team to make informed decisions about how to take corrective action based on progress and predictions made from it
Cost variance compared the earned value with the ?
Actual cost
Earned value - actual cost
Cost variance will tell us whether we are overspending , underspending or exactly on budget.
If we are progressing exactly as planned , then we should have a cost of 0. If the cost variance is greater than 0 it means we are doing better than expected (underspending) if the cost variance is less than 0 we are doing worse than expected (overspending)
Schedule variance works the same as cost :
If the schedule variance is 0 then we are performing exactly as planned if it greater than 0 we are ahead of schedule if the value is less than 0 we are behind.
Performance index can be used to ?
Predict how this will affect the budget at completion and planned duration of the project.
Cost performance index : division is used to work it out
Earned value divided by actual cost
If we have a cost performance of index 1 this would indicate our spending is exactly as planned , any number greater than 1 tells us that we are doing better than expected any number less than 1 is going worse than expected
Schedule performance index : works the same way as cost performance index
If the number is greater than 1 we are on track and ahead of schedule anything less than 1 is behind schedule
A key advantage of EVM is that it allows us to predict what might happen should we take no corrective action through ?
Graphs of performance indexes
Estimation at completion :
In order to calculate our estimate at completion we will use our budget at completion and divide it by our cost performance index
Estimate our new planned duration :
To help us estimate our new planned duration, we take our original duration and divide it by our schedule performance index so to get our schedule performance index it will be earned value divided by planned cost
Advantages of using EVM:
- It helps us make informed decision , we can be proactive and use predictions made in EVM to steer and adjust the project rather than reacting to things that happen to us.
- because it uses graphs which are very visual and numerical data which allows for quick comparisons and measurements to be made , EVM is a very effective tool to communicate progress to stakeholders as well as inform them on any predictions being made based of data
- because we are comparing actuals to our plans it can help us identify estimating
Problems. If our CPI is less or greater than 1, then it may not indicate poor project management , it may simply be that our initial estimate was incorrect. Therefore it can encourage us to re-estimate more regularly throughout the project - because it is focusing on more than on simply whether our actual cost align with our planned cost , it can identify areas of underperformance that might have been missed had we just focused on delivering the budget to plan.
- trend can also be monitored using the graphs and data we have gathered allowing us to predict future costs and schedule based on what has happened so far, whilst keeping an eye on project progress against the plan
Considerations of EVM:
- it requires resources to work effectively. People will need to spend time gathering and analysing the data.
- it does not monitor quality at all , so we need to ensure we have a quality management plan and assurance and control monitored separately.
- EVM assumes performance is a straight line, so any predictions we make using data will not necessarily consider that project progress is more realistically going to be following an s-curve.
- despite using graphs and raw data can be difficult for stakeholders to understand
Earned value management is a project control process based on a structured approach to ?
Planning , cost collection and performance measurement.
It facilitates the integration of project scope , time and cost objectives and the establishment of a baseline plan of performance measurement
Why a project manager would use earned value management
- achievement of planned scope to the required quality
- motivation and satisfaction of team members
- performance of contractors and the health of the relationship in the supply chain
- committed cosy and cash-flow
- changes to the risk profile and impact on time buffers and contingency
- effectiveness of communication with stakeholders
