Earned value is an integrating concept because it allows review of project progress based on: (1) separate analyses of schedule and cost variance, and (2) a combined analysis of both schedule and cost, based on work performed. The reviewer is able to see the project from two different perspectives and then from a single earned value standpoint. Earned value is the value that a project has earned, based on work performed; in effect, earned value is the dollar value of work progress, the amount that a customer would pay for the work.
1. Identifying earned value. Earned value is identified by project team members' estimates of work performed, either in terms of %complete or hours worked.
Tools. Earned value can be documented and calculated by Microsoft Project; tools include %complete reporting formats, calculated schedule and cost variance, and capacity to enter actual costs from accounting records to assure that cost variance is based on real project costs during the Gateway period.
Process. The process is triggered by project and Gateway reviews. Data on schedule and cost variance are reported and review meetings focus on interpretation of root causes and corrective actions.
Planning. Work is planned in increments that allow earned value assessment. Tasks are broken down into task milestones that correspond with %complete determinations.
Execution. Execution is accomplished by program and project managers who must "walk the talk" on earned value by scheduling and holding project and gateway reviews to assess earned value.
Control. Control of schedule and cost is accomplished by interpretation of earned value and taking corrective action. A key concept in control is forward corrective action—the process of looking at where you are in the project (not where you plan to be) and determining remaining work. Control does not point backward to the original plan; it directs attention and action forward to completion and customer satisfaction.
Reporting. Reporting is conducted through electronic reporting of %com-plete on key tasks at the lowest level of the WBS where actual costs can be collected. Team members must determine %complete based on the structure of the planned work and must report progress accurately, even when progress is disappointing. This requires the establishment of a collaborative and open project team.
Management data. Management data are collected and documented in a Microsoft Project or a tailored project management information system, and posted in a company intranet and Web-based customer reporting system. Scope. The scope is embodied in the project plan and serves as the basis for controlling work. Scope "creep" is avoided by the establishment of a WBS and baseline schedule bounded by work in the scope.
Content. The quality of the content of management data is assured by documentation and verification of earned value information through frequent audits.
Frequency. The timing of major Gateway reviews determine major review frequencies; bi-weekly project reviews are made within the gateway period to assess progress, based on the 80-hour rule (project manager reviews at the earned value level and can plan to look ahead about 80 hours in most projects).
Quality. The quality of the process is determined by the extent of trust and reliability in the reporting system. If a team member determines that a task is 100% complete, it must mean that the customer would accept the deliverable of this task in a user approval transaction.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.