1 day ago
Brigitte Moffah
RE: Week 9 Discussion
Good day Dr. Kimble and classmates,
I will not blame my project sponsor if she admits she has no idea what EVM and its concepts mean. These factors of project management could be quite challenging to comprehend but are very important. While educating my project sponsor on what EVM and its concepts are, I will do a step-by-step description, so she does not get overwhelmed or confused. The steps below contain information I will use in educating her.
Earned Value Management (EVM) is a key concept used to assess current performance and to predict final costs and completion dates (Larson and Gray, 1). EVM combines scope, schedule, and resource measurements to assess project performance and progress. It predicts the future and enables project managers to act accordingly. The basic principle of EVM is that the value of the piece of work is equal to the amount of funds budgeted to complete it.
EVM has several benefits, which include the following:
– It provides more information than normal project tracking.
-It gives a more accurate description of the project’s progress and helps with the calculation of its successful completion.
-It provides a clear communication of the activities involved and improves project visibility and accountability (APMG,2).
EVM also has its disadvantage, which is the fact that it does not have any tool which shows customer satisfaction and the quality of the project. If the quality of the product or service is poor and customers are not satisfied, then there is a serious problem.
EVM has three metrics, which include the following:
i)Planned Value (PV): This is the value of the budget which has been assigned to accomplish a work schedule. Planned value can be cumulative or current. Cumulative PV is the budget which has been authorized for certain tasks performed within the estimated date. It is also known as Performance Measurement Baseline (PMB). Current PV is the budget that has been authorized for the completion of certain tasks within scheduled dates, weeks, or months. Another name for Planned Value is Budget Cost of Work Schedule (BCWS) (Thakur, 3).
ii)Earned Value (EV): This refers to the value of tasks that have been performed in terms of the approved budget. It is also known as the Budgeted Cost of Work Performed or BCWP.
iii)Actual Cost (AC): Actual cost refers to the value of actual cost which has been acquired for executing certain tasks of a project, during a specific period. Actual Cost is also known as the Actual Cost of Work Performed (ACWP). When Planned Value and Earned Value are compared, the project manager can determine whether the project is moving according to schedule.
The following indicators are required for the description of project performance and cost schedule with EVM:
Schedule Variance (SV): This is the difference between work that has been accomplished and, the work which was scheduled. It is calculated by subtracting the Project Planned Value from the Project Earned Value (SP=EV-PV).
Cost Variance (CV): This shows whether the project is within budget or not and measures the difference between the budget amount that was approved, and the actual cost used to perform the task. CV is calculated by subtracting Actual cost from Earned value (CV = EV-AC).
Schedule Performance Index (SPI): This is the ratio of earned value to planned value, which is calculated by dividing Earned Value by Planned Value (SPI=EV/PV).
Cost Performance Index (CPI): It provides an early warning signal to cost overruns so that adjustments can be made to the budget or scope of a project (Larson and Gray, 3). It is calculated by dividing Earned Value by Actual Cost (CPI=EV/AC).
I chose the topics above because they are the key concepts of EVM and, describing each of them will help my project manager understand the roles they play in project performance and progress.
Sources
1)Erik Larson, Clifford Gray. 2021. Project Management (The Managerial Process)
2)APMG International (No Author). 2021. What is EVM and Why is it Important?
https://apmg-international.com/article/what-earned-value-management-and-why-it-important
3)Madhuri Thakur. 2022. EVM System
https://www.educba.com/earned-value-management-system/
