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Earned Value Management (EVM)
Section I: MS Project exercise
Task Objective Deliverables Duration Staff
Water To find water sources Tank 10th November to 14th November 2014 Water Manager
Food To find sources of food Stock 14th November to 16th November 2014 Food Manager
Farm Identify location of Farm Land 16th November to 17th November 2014 Owner
Iron Sheets Obtain enough iron sheets Iron-20 Irons 17th November to 18th November 2014 Worker
Wire Mesh Get equal length wire mesh Length- 20m 18th November to 19th November 2014 Worker
Chicken Obtain source of chicken Number 19th November to 20th November 2014 Owner
Card Boxes Find required numbers 5 Card boxes 20th November to 22ndNovember 2014 Worker
Locks Determine the number 5 Locks 22nd November to 24th November 2014 Owner/Manager
Engineer To design project 1 24st November to 25th November 2014 Hired
Building Stones Find how to obtain them 500 stones 25th November to 26th November 2014 Bought
Medicine for chicks Find where they are sold 4 per day 26th November to 26th November 2014 Buy
Chicken Doctor/Advisor Know where specialists are found 1 26th November to 27th November 2014 Supplier
Tape Measure Find the length required Unlimited Length 27th November to 28th November 2014 Buy
Cement Determine source of cement 5 bags 28th November to30th November 2014 Buy
Shovel Find the number 1 or 2 30th November to 1stDecember 2014 Buy
Chipboards Find location 5 1st December to 3rd December 2014 Buy
Tress Find the number 50 3rd December to 4th December 2014 Buy/Own
Light Energy How to install it Reliable 4th December to 5th December 2014 Reliable and available
Showers Know how many 3 5th December to 6th December 2014 Worker
Wood Determine how to use it 30 6th December to 7th December 2014 Worker
Scooper
Number to use 2 7th December to 8th December 2014 Worker
Cutting Machine How many are required 2 8th December to 9th December 2014 Worker
Wheelbarrow The number of them 2 9th December to 10th December 2014 Owner
Nails The number and where to find long lasting nails 2 Kilograms 10th December to 11th December 2014 None
Driller To know the number required 1 11th December to 12thDecember 2014 None
Table 1: Updated project schedule
Name Formula Value ($) Remarks
Cost variance (CV) EV – AC (15000-7500) 7,500 Under budget
Schedule Variance (SV) EV – PV (15000-5000) 10000 Ahead of schedule
Cost Performance Index (CPI) EV/AC (15000/7500) 2 The project gets 2 cents out of every $1.
Scheduled Performance Index (SPI) EV/PV (15000/5000) 3 The project progressed at 3% of the original rate planned
Estimate at Completion (EAC) AC + (BAC-EV0/CPI
{7500 + (10000-15000)/2 1250
–
Estimate to Complete (ETC) EAC – AC
(1250-7500) -6,250 –
Variance at Completion (VAC) BAC – EAC
(10000-1250) 8,750 –
Table 2: EVM report
Section II: EVM paper
Summary of changes
The project aimed at establishing a poultry farm. The following changes have been made in the original schedule. Firstly, the current project schedule contains five work packages as opposed to the original schedule that had seven work packages. The reduction in the number of packages resulted into a significant change in time schedule. The task durations have been reduced to meet the new schedule. Moreover, the new schedule does not recognize work package for non-staff resources. Additionally, a single work package of duration was developed by merging the start and finish work packages. The new schedule consists of updated start and finish period contained in the same column.
On the other hand, the new project schedule will utilize an outline view in order to deliver the project that aligns with Work Breakdown Structure (WBS). WBS assists in establishing different project deliverables and obtaining detailed information about different schedules and activities by breaking them down into small and manageable activities. The main idea of using EVM is estimates, implementing WBS allows easier cost estimation of small activities ensuring the project operates within the planned budget (Schwalbe 296).
Performance results of the project
The objective of this project is to build a poultry farm. The performance of the project will be evaluated through developing a checklist approach that assessed the productivity of the project. Additionally, the project team will conduct an assessment through randomly selecting different work packages and evaluating them based on the expected results. Finally, project evaluation will involve determining the total budget spent in the whole implementation process and relating it to the scheduled cost to estimate the amount used in excess of the estimated, or the amount left. The following areas establish the performance results for the project:
Operational-The project operational objectives are achieved, and the client gets what he or she had requested. All the expected changes and schedules are communicated on time to allow the client prepare for any cost associated with change in schedule. The performance results of the project are evaluated on the basis of accomplishment of all tasks including those changed during the implementation process.
Risk identification: At the end of the project the project manager should define all risks that interfered with the effectiveness of implementing the project and show how they were mitigated. Risks increase the cost of the project, but the nature of risk determines the impact it causes in a project.
The impact of changed schedule: The project underwent a change on the initial schedule, and this interferes with the initial cost and implementation time as demonstrated on the project timeline. The end results should indicate what extra values were added after changing the project schedule, and how the project would have failed if it maintained its original schedule. Additionally, any change in the project plan results into a significant change in cost. The performance results will establish how effective was the proposed change and how it helped conserve resources, hence reducing the budget.
Performance measurement baseline
The main performance measurement baselines utilized in MS projects currently are Technical, cost, and schedule (Taylor 55). Performance measurement baseline represents a collection of work packages defining the deliverables of an MS project in order to fulfill project goals and objectives. Additionally, performance measurement baseline assists in making the estimation of the exact duration and work effort for each package. Moreover, the baseline makes estimate of the resources needed in terms of budget to produce deliverables and within the specified period. Finally, it defines any internal or external factors that the project team needs to start a work package. The following is a poultry farming project, and the project team has reduced the number of work packages from seven to five. The team has come up with cost estimates for all tasks required to complete the project. The project’s main performance baseline is cost.
Cost forms the most critical aspect of any budget and will act as the most important performance measurement baseline for the poultry farm project. Any approach by the project team to implement any technical activity or reschedule an activity must be associated with cost. Costs in MS project occur under two categories: Distributed budget and undistributed budget (Taylor 55). Distributed budget cost caters for accounts that control active activities being performed for the project. The project team actively involves in minimizing work packages from seven packages to five packages through making several changes on the main schedule. All these activities require budget allocation made possible through distributed budget category. Using the distributed budget as an aspect of performance measure on cost, the project manager can easily measure the cost of implementing the whole project by easily tracking all expenditures.
On the other hand, undistributed budget caters for the scheduled plans that have not yet started. The completion technique used by project managers in executing work packages indicates the percentage of work complete. Those tasks that record less than 5% are termed “not done” and fall under the undistributed budget. The project team revised project work packages to fit five tasks. These tasks fall under the undistributed budget because they were proposed, but have not been accomplished. In addition, the project is at its initial stages of implementation meaning the budget has not been fully utilized. The undistributed budget prevents the project team from making unexpected use of funds set aside for major tasks that were rescheduled. The project also must provide a summary of all tasks performed and the tasks not performed in order to account for the cost of material and services purchased. The cost baseline performs all these tasks.
Cost also represents the performance measurement baseline for this project because the project team works underestimates. The estimated budget for the project is $5,000. The high cost of implementation and the limited amount of finances forced the project team to reduce the number of work packages to five. The project also incurs a lot of risks during implementation, which are a function of cost. In order to effectively carry out the project and make it successful, the team must employ effective cost management and systems. Cost management helps in proper allocation of finances to all tasks and making a workable prediction on any future changes in the economy. On the other hand, cost is associated with many risks that the project team cannot afford taking. The project has taken care of all costs associated with planning, execution, and completion of the project by applying best practices. The best practices employed by the project team involved establishing a team to deal with cost management before embarking on other major activities of the project.
Earned Value Analysis (EVA)
The concept of EVM forms the fundamental approach to MS project management commonly used by many project managers. It forms a sound management approach that assists in the effective implementation of all projects in different fields by offering all levels of management through project schedule and cost. All projects undergo a performance analysis process to determine whether they are worth of execution. Earned Value Analysis (EVA) is a performance measurement tool used by project managers to compare planned and actual project results. The following tool would be of great use on the poultry farm project to forecast future costs issues brought about by rescheduling project tasks. Defining project quantities forms the first step in analyzing the project using EVA. The main qualities of importance as Budgeted Cost of Work Scheduled (BCWS), Budgeted Cost of Work Performed (BCWP) and the Actual Cost of Work Performed (ACWP). These are represented by Planned Value (PV), Earned Value (EV), and Actual Cost (AC) respectively (Nagrecha 5).
The total cost of purchasing project materials was $3370. Adding the cost of labor and buying chickens adds up to &5000. The sum of all budgets allocated to the program was $10,000. The actual cost of work performed is $7500 and the Earned value of $15000. Table 2 provides the estimated future cost issues.
Given; PV = 5,000, EV = 15,000, and AC = 7,500
The values shown in table 2 indicate that the project will be $8,750 more at the time of completion. The calculations indicated that the project is under budgeted, but ahead of schedule.
Works Cited
Nagrecha, S. An introduction to Earned Value Analysis. 2002. Web November 28, 2014
http://www.pmiglc.org/COMM/Articles/0410_nagrecha_eva-3.pdf
Schwalbe, Kathy. Information Technology Project Management. 7th ed. Cambridge, Ma:
Course Technology, 2014. Print.
Taylor, James. Project Scheduling and Cost Control: Planning, Monitoring and Controlling the
Baseline. Ft. Lauderdale, Fla: J. Ross Pub, 2008. Print.
