INF337 Assignment Project Cost and Value Management

Project Management—Cost and Value Management
Kimberly V. Adams
INF337: Integrated Cost & Schedule Control
InstructorRodney Greer
January 16, 2017
Project Management--Cost and Value Management
Introduction
Feedback remains a vital aspect to the success of a project. Targeted and timely feedback enables project managers to determine the problems within a project in a bid to make early adjustments that ensure a project is completed on time and in accordance with the budget. Earned Value Management (EVM) has therefore proven to be an effective performance measurement and feedback tool in the management of projects. EVM enables managers to close the loop of a plan management cycle. According to Fleming& Koppelman (2011),EVM is referred to as a management approach with lights on since it can objectively help in illuminating where a project is and where it is headed through the use of fundamental principles that trends and patterns project prospects as good predictors for the future. Given this, it is imperative to consider that this paper seeks to establish mythologies that are required in a bid to integrate cost and schedule performance measurement baseline into the prospects of a project.
Determining a Cost and Schedule Performance Measurement Baseline
EVM as established by Kemps (2014),provides organizations with procedures required in integrating the management of a project's scope, costs, and schedules. EVM plays a critical role in answering several management questions that are essential in establishing the success of a project. The application of EVM in a project reveals the state of the projects, an aspect that determines if the project is behind schedule or over budget (Venkataraman & Pinto, 2008). This, therefore, enables a project manager to identify some of the challenges that a project encounters, whether these difficulties are critical or not, and what it would take to ensure that the project gets back on the right track. Visitacion (2007), clearly points out that EVM scales towards project success, this is evident in this tools capacity to enable managers to pinpoint challenges exhibited in a project such as costs and schedules early in a bid to make adjustments.
EVM and the Project Management Process
An efficient use of EVM in the project management process requires its inclusion of projects that adhere to the procedures of good project management. During the project planning process, EVM, managers have an obligation to establish a performance management baseline (PMB) inclusively. This, therefore, amplifies the essence of project planning principles, especially those that are related to scope, cost, and schedule. EVM, in this case, elevates the need for project work to be manageable and executable, hence making it possible to have the managers and employees held responsible and accountable for the performance of the project(Visitacion, 2007). The inclusion of EVM in project management process requires the breaking down of project work, with this necessitating the use of a work breakdown structure (WBS) that allows the execution of tasks into manageable elements often referred to as control accounts. These “work packages are the elemental tasks at the lowest level in the WBS and represent basic project activities for which duration and budget figures can be assigned” (Venkataraman & Pinto, 2008, pg. 33).
Teams or individuals within the organization are therefore tasked with the responsibility of managing each of the work segments through the use of the WBS. Project work also needs to be logically scheduled and resourced within an action plan an aspect that takes into consideration the plans, project work scope, and the costs required in integrating and recording a time-phased budget know as a performance measurement baseline (PMB).
Project Control Charts to Show Project Status and Present Value
Project managers may make use of control charts that display process data over time against process control limits in a bid to determine the projects status and present value. Control limits, in this case, determine the area of three standard deviations on either side of the centerline of the mean on the data plotted on a control chart where the expected variations are observed (Venkataraman & Pinto, 2008, pg. 35). In this case as established in Table 1.1, PM may consider three essential components of the control charts that include:
1 A centerline that represents the mean value of the data points.
2 A horizontal border line that determines the upper control limit (UCL) and the lower control limit (LCL). These, therefore, define the limits of common causes of variations in projects.
3 Data points that are plotted over time
Table 1.1: Project Control Chart
In this case, the project control chart determines whether a project's process is stable (Contains frequent causes of variations) of if the project is subject to special variation causes that determine the project's status and present value. The common variations of a project are in this case predictable, and the special causes of differences take into consideration randomized events or external factors within the process.
Schedule Analysis and Forecasting
During the project planning process, the element of schedule analysis (SV) establishes whether a project is on schedule or ahead of the established schedule. In arriving at the scheduled analysis, managers need to subtract the Planned Value (PV) from the Earned Value (EV)(Visitacion, 2007). A positive value, in this case, gives an indication of a favorable condition while on the other hand; a negative value provides a sign of the unfavorable condition. An instance of this can be depicted in a project TZ (sample name used to illustrate the processes):
In this case: SV=EV-PV = 30-40= -10 (Unfavorable)
In this case, the Schedule Variance can, therefore, be expressed in a percentage by dividing the Schedule Variance (SV) with the Planned Value (PV):
In this case: SV% = SV/PV = -10/40 = -25
Given this, it is essential to assume that the project is 25% behind the scheduled durations, an aspect that apparently means that the time of computation had not achieved 25% of the ...