What is Earned Value or Performance Measurement?
Earned Value is an objective measurement of how much work has been accomplished on a project.
Earned Value, Performance Measurement, Management by Objectives, and Cost Schedule Control Systems are synonymous terms. The use of either manufacturing standards or a Line-of-Balance methodology for measuring accomplishment on the factory floor is an earned value process.
Earned Value improves on the "normally used" spend plan concept (budget versus actual incurred cost) by requiring the work in process to be quantified.
Using the earned value process, members of management can readily compare how much work has actually been completed against the amount of work planned to be accomplished. Earned Value requires the project manager to plan, budget and schedule the authorized work scope in a time-phased plan. The time phased plan is the incremental "planned value" culminating into a performance measurement baseline. As work is accomplished, it is "earned" using the same selected budget term. Earned Value compared with planned value provides a work accomplished against plan. A variance to the plan is noted as a schedule or cost deviation.
Normally the established accounting system provides accumulation of actual cost for the project. The actual cost is compared with the earned value to indicated a over or under run condition.
Planned Value, Earned Value, and Actual Cost data provides an objective measurement of performance, enabling trend analysis and evaluation of cost estimate at completion within multiple levels of the project.
Project management should
be applied to every project where the owners of the final
product wish to ensure that the expended resources were
used efficiently. On major projects the application of
good project management tools will aid in the selection
of the right course when managers need to make financial
and time allocation decisions.
What is the purpose of project management?
To provide management with valid, auditable status on which to base management decisions.
Why should the project be planned?
The main reason for planning a project is for cost expediency. Proper project planning will insure that the amount of work to be accomplished, the time allotted to satisfactory complete the work scope, and the resources required to complete the work scope are equally balanced. Every project undergoes some amount of change while in progress. Proper planning allows for the assessment of the impact of change prior to implementing the change.
What is the most important safeguard provided by project planning?
Proper planning includes the documentation of the work scope in language that is understandable by the individuals who shall accomplish the work scope. This single step when properly accomplished will save many false starts as well as preventing the waste of resources working on efforts which are not required to obtain the desired goals of the project.
Why should the company have a project management system?
The customer may wish to know how the company manages a project. The customer wants some assurance that the company can deliver the project on time and within budget. Senior management wants a valid insight on how the project is progressing. History is required of past performance so that new proposals can be created based on fact. The company desires to be a superior performer when compared to the competition.
Does each project have to create its own management system?
The style of the individual project manager will normally vary for each project. It is the responsibility of senior management to put in place a policy and procedure, supported by a selection of project management tools and formats, which will assure that the status reporting is readable, auditable, and valid.
What are the basic tools needed for a project management system?
A work definition policy and format, a scheduling procedure, a resource budgeting methodology and format, a real time data collection/reporting system, a material control and accountability subsystem, a change control subsystem, and a monthly formal status review format to be used by senior management.
What should the project manager look for in a scheduling system?
The three basic elements that the project scheduling systems should provide are; a common basis for communication at all operational levels of the project, a basis for regular status reporting, the use of the management by exception technique.
What is a Work Breakdown Structure (WBS)?
The work breakdown structure defines the total project. A work breakdown structure is a product oriented, family tree composed of hardware elements, software elements, and service elements. The work breakdown structure relates project elements or work scope definitions to each other and to the end product. The work breakdown structure is not an organization chart of a company personnel.
What is the different between a project plan and a project schedule?
The project plan, using an iterative process, integrates the work scope, the schedule and the resource requirements. The project schedule is one of the three main ingredients to a valid program plan.
Is there a difference between a project budget and project cost?
The budget is a plan of resource expenditures. The cost resulting from the expenditure of a resource is cost incurred. As an example; The project plan has a task requiring the use of a master plumber for 100 hours in July at a cost of $65.00 an hour. The resultant of $6,500.00 is a budget. The master plumber while completing the work used 87 hours at a cost of $63.84 an hour. The resultant of $5554.00 is cost incurred, sometimes referred to as actual cost for this task.
Should a project which is six months long and worth $78,000 be planned?
Only if it is the desire of the project manager to remain employed.
How much detail does the project planning require?
The key to a properly implemented project management system, is to have enough detail that the owner of the work scope can convince a stranger that the effort is properly documented, planned and under control.
What is a task on a project?
A task can be defined as a single work scope which can be managed by a single individual. It contains effort which can be formally defined, scheduled, and consumes resources. A task is a measurable element of the total project plan.
What is a nominal size for a task? What is a nominal duration of a task?
The size and duration of a single task is dependent on the work scope definition. On a major project, a project which will take three to five years to complete and involve multiple resource disciplines, a group of five to ten integrated, interrelated tasks will most likely span eleven to fourteen months, and and have ten to twenty full time personnel assigned.