Earned Value
Develop a comprehensive earned value analysis report.
Introduction
This portfolio work project, an earned value management analysis, is based on your selected business or IT project. You may choose to base your assessment on the Revive LLC case study for the development of a new online employee orientation module, or you may continue to use a company of your choice. Both human resource (HR) and information technology (IT) employees, as well as contractors, will be utilized in this project.
Earned value (EV) is defined "the measure of work performed expressed in terms of the budget authorized for that work" (Project Management Institute, 2021, p. 275).
Project managers examine cost control, tools, and techniques that define the procedures by which the cost baseline may be changed. They engage in performance measurement to assess the magnitude of variations that occur during project execution. EVM is used to measure project performance by comparing certain predefined variables. Microsoft Project is a tool used to track planned cost versus actual cost, calculate the earned value, and forecast the effects of some cost changes.
Sample Solution
Earned value analysis (EVM) is a project management technique that is used to measure project performance. EVM compares planned values to actual values to identify variances and to assess the overall health of the project. Earned value (EV) is the value of the work that has been completed to date. It is calculated by multiplying the planned cost of the work by the percentage of work that has been completed. Actual cost (AC) is the actual cost of the work that has been completed to date. It includes the cost of materials, labor, and any other expenses that have been incurred.Full Answer Section
Planned value (PV) is the budget for the work that has been scheduled to be completed to date. Schedule variance (SV) is the difference between EV and PV. A positive SV indicates that the project is ahead of schedule, while a negative SV indicates that the project is behind schedule. Cost variance (CV) is the difference between EV and AC. A positive CV indicates that the project is under budget, while a negative CV indicates that the project is over budget. Performance index (PI) is a measure of how well the project is performing. It is calculated by dividing EV by PV. A PI of 1 indicates that the project is on track, while a PI of less than 1 indicates that the project is behind schedule or over budget. To-complete performance index (TCPI) is a measure of how much work needs to be done to complete the project on time and on budget. It is calculated by dividing the remaining EV by the remaining AC. A TCPI of 1 indicates that the project can be completed on time and on budget, while a TCPI of less than 1 indicates that the project is likely to be over budget or behind schedule. Earned value analysis can be used to track project performance and to identify potential problems early on. It can also be used to forecast the likely outcome of the project and to make adjustments as needed. In this portfolio work project, I will be using earned value analysis to assess the performance of the Revive LLC project to develop a new online employee orientation module. The project has a budget of $100,000 and is scheduled to be completed in six months. The project is currently 50% complete and has an EV of $50,000. The AC is $60,000, which results in a CV of -$10,000 and a SV of -$10,000. The PI is 0.50, which indicates that the project is behind schedule and over budget. The TCPI is 0.83, which indicates that the project is likely to be over budget but can still be completed on time. The results of the earned value analysis indicate that the Revive LLC project is not on track to be completed on time or on budget. The project is behind schedule and over budget, and it is likely to remain so. The project manager needs to take corrective action to get the project back on track. Some possible corrective actions include:- Reducing the scope of the project.
- Increasing the budget for the project.
- Accelerating the schedule for the project.
- Improving the efficiency of the project team.