Project Monitoring, Control and Earned Value Analysis

 

Project Monitoring and Control

Projects get delayed for many reasons, including unforeseen risks, optimistic estimates, and evolving requirements. The reality is that projects rarely go as planned. Project Monitoring and Controlling is the set of activities that enable a project to get back on track. Monitoring is the project management activities that determines

®    If the project is under control and

®    Identifies if the project is out of control

If the project is under control We arrive at the milestones:

–        On-time.

–        With the expected resources.

–        With the quality expected.

–        It’s economically acceptable.

If the project is out of control, we observe some deviations and we must:

–        Revise the plan.

–        Negotiate the new plan with the client.

 

Control is the process of making things happen in an ordered manner or according to plan.

–        It measures performance against goals and plans,

–        reveals when and were deviations exists, and

–        performs actions to correct deviations,

Monitoring and Control Activities

®    Develop standards of performance: Set conditions or measurements that will exists when tasks are correctly done.

®    Establish monitoring and reporting systems: Determine necessary data, who will receive it, and when they will receive it.

®    Measure results: Determine the accomplishment of, or extent of deviation from, goals and standards.

®    Initiate corrective actions: Reinforce standards, adjust goals or re-plan.

®    Reward and discipline: Praise, remunerate, and discipline applicable personnel.

®    Document controlling methods: Document the standards, methods of reporting and control, bonus plans et al., decisions points, and so on.

Earned Value Analysis

Earned Value Analysis (EVA) is a commonly used method of performance measurements. It integrates project scope, cost, and schedule measures to help the project management team assess and measure the project performance and progress. Earned Value Analysis has three basic elements:

1. Planned Value (PV)
2. Earned Value (EV)
3. Actual Cost (AC)

Planned Value: Planned Value is the scheduled cost of work planned in a given time. Planned Value is also known as Budgeted Cost of Work Scheduled (BCWS).

Earned Value: Earned Value is the amount of money earned from completed work in a given time. Earned Value is also known as Budgeted Cost of Work Performed (BCWP).

Actual Cost: Actual Cost is the actual amount of money spent to date. Actual Cost is also known as the Actual Cost of Work Performed (ACWP).

With the help of these three elements, you can calculate the following variances and performance index:

• Schedule Variance
• Cost Variance
• Schedule Performance Index
• Cost Performance Index

Schedule Variance: Schedule Variance is the difference between Earned Value (EV) and Planned Value (PV).

Schedule Variance = Earned Value – Planned Value

Cost Variance: Cost Variance is the difference between Earned Value (EV) and Actual Cost (AC).

Cost Variance = Earned Value – Actual Cost

Schedule Performance Index: Schedule Performance Index is the ratio between Earned Value (EV) and Planned Value (PV).

Schedule Performance Index = (Earned Value) / (Planned Value)

Cost Performance Index: Cost Performance Index is the ratio between Earned Value (EV) and Actual Cost (AC).

Cost Performance Index = (Earned Value) / (Actual Cost)