Earned Value Management

A performance measurement baseline for the project MS Project

A performance measurement baseline is one of the most valued time-phased tools used in project management. Its set standard application enables the evaluation of project performance to determine whether variances exist based on the original plan of the project (Taylor, 2008). The baseline is to incorporate different significant elements categorized into schedule, scope, and cost baselines. The baseline also incorporates operational and financial activities in the project. For the project, the PMB will be the time-phased schedule involving all the tasks to be accomplished, the task budgeted cost and the organizational elements to produce the assigned deliverables (Taylor, 2008).

The performance measurement baseline to be used in the project will be a schedule and cost baseline with a core element. As a collection of the project packages, the baseline will define the deliverables set to fulfill the required business capabilities. This will also include an estimated duration and project effort for every task package and the resources necessary for producing the deliverables. The deliverables will contain the business value of the project. Connection of the deliverables with the necessary capabilities forms the basis of the project execution procedure credibility. Establishing a baseline for the project involves six steps with each performed as priority (Taylor, 2008). They include:

Building a time-phased schedule network of activities to describe the project tasks to be executed. This also involves a budget for the project cost. The schedule covers organizational elements meant to produce the deliverables and the performance measures to indicate whether the project progress correlate to the plan layout.

Decomposing the scope of the project into a product based structure, then further into task package breakdown to describe the deliverable production which is traceable to the project requirements.

Assigning responsibility to the task packages for the project manager accountable for resource allocation and management, technical delivery and cost baseline.

Arranging the task packages in a well designed network through defined deliverables, inner and outer dependencies, milestones, cost margin and the appropriate schedules

Developing a timeline budget cost for the project task scheduled, including the material cost in every package and the entire project. Assurance in the proper allocation of resources is met, and the budget profile should match the project sponsor expectations.

Assigning object performance measures and measures of effectiveness for the project work package and making an overall summary of the entire project. This will also involve establishing of a baseline to be used in forecasting task package and the progress of the project including schedule metrics and the completion cost.

Application of earned value analysis to forecast future cost issues

The program management technique uses the progress of the project to determine future results through examining actual accomplishments. This is to help in examining the project potential risk areas. The application involves calculations through a basic arithmetic operation (Harrison & Lock, 2004). This involves data collection on the progress and cost of the project through a disciplined approach. The findings are processed instantaneously to enable the detection of any cases of deviation. It creates enough time to assess whether the deviation pose danger to the project and the corrective actions necessary to counter the effects (Harrison & Lock, 2004). The analysis involves the following inputs:

Budgeted cost of the works scheduled, this forms the analysis baseline through cumulated costs as planned in relation to incurrence time.

Budgeted cost of the work completed, the input involves works expressed physical progress measurement through cumulated planned costs of the project tasks covered related to the timeframe.

The actual cost of the work completed, the input refers to the amount payable cumulated for the project tasks done on the relation to time.

Budget at project completion, the entire project planned cost which equals the BCWS at the project end.

The planned project duration abbreviated as “T”

The following graph indicates the curves of earning value for the project.

The earned value analysis for the project integrates scheduler, scope and the cost to forecast the future performance and the completion date of the project. It creates a platform for efficiency in managing the project based on time and budget. Earned value analysis also involves cost variance as one of the significant inputs. It is applied as a measure approach in the project work deviation between actual and planned cost (Harrison & Lock, 2004). Cases of a negative progress in cost units indicates of an over budget of the project.

CV = ACWP – BCWP

In capturing the deviation scale, the arithmetic expression is based on the fraction of a budgeted task cost as performed:

CV% = CV/BCWP× 100%

Earned value analysis uses schedule variance in forecasting the future cost issues of the project. This enables deviation measurement between the planned progress and actual project progress. In cases of negative results, a delay is indicated:

SV = BCWP – BCWS.

In addressing cases of distortion that results from activities relative value, the variance is expressed as a BCWS fraction:

SV% = SV/BCWS

References

Harrison, F. L., & Lock, D. (2004). Advanced project management: A structured approach. Aldershot, England: Gower.

Taylor, J. (2008). Project scheduling and cost control: Planning, monitoring and controlling the baseline. Ft. Lauderdale, Fla: J. Ross Pub.