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(Part 2 of 3)
In the first part of this series, we introduced the idea of the earned value management system (EVMS), and started to show how it was being used by federal and local government agencies as well as contractors to manage some large contract tasks. We also discussed how this EVMS tool allows project leaders to look into the future and obtain insights into where their project is heading, and if it is not proceeding down a path of success, they may take corrective action.
Key to managing a successful project is taking corrective action early, and we will discuss this here. And while this article is not intended to be a paper on project management, we will cover some of the preliminary tasks of project managers as they are essential to creating accurate baselines for the EVMS.
With project management, cost, schedule and scope are three important business elements that are key to understanding a project and its myriad needs.
Every project must have a clearly defined scope of work (SOW) at the outset of a project which details the desired end product of the project. It is from this scope of work that the project flows, and cost and schedule are created. For example, when examining the scope of work for a road, some things that are important to note for budgeting include; how wide is the road, how long is the road, what type of load will it support, is there a particular surface required, when must the road be completed, throughwhichseasons will construction take place. These critical elements will directly impact the cost, and the schedule associated with building the road.
Before the start of a project, a project team normally develops a project plan by breaking down the scope of work into tasks that include a detailed analysis of the work to be accomplished, including the time and personnel needed by skill and experience that it will take to achieve the desired end result. These tasks will be logically grouped into what are commonly called work packages. Through this detailed analysis a good project plan accurately helps predict the cost.
For scheduling, the project planning team will place these work packages in their logical sequence to ensure that they are accomplished in an appropriate manner. Once they have been placed in a logical order, the team will determine the schedule in which these packages could be completed, keeping in mind some work packages must be completed before others can start, while some can be accomplished in parallel. For example, road markings cannot be painted on a road until the asphalt has received the final grading. However, road markings and new signage installation may be able to proceed at the same time.
If we change any one of these three elements (scope of work, cost, schedule) the outcome of the project will be impacted. If the scope of work is changed to make the road longer, the schedule will change as it will take longer to build the road, and that in turn will impact the cost and the scheduled completion date.
By correlating the estimated cost associated with each work package, and the week that it will be accomplished, we now have the makings of a project baseline, the planned value (PV) of the project.
The size of a project will help determine how often we track the performance data. Normally it is on a weekly or monthly basis, whichever, provides management with the best insight into its project's outcome.
Assuming the project team hired the personnel with the requisite skills, are paying the prevailing rates for those skills, and support the project team with other material and equipment as required and planed for, we should be able to progress on schedule and within cost.
As our example in Figure 1, of part 1 showed, we are a third of the way into our project and the cost (AC), schedule (PV), and Earned Value (EV) are on track. One can hardly see any difference in these three critical performance objectives. This is good. However, in most cases, we find some tasks missed their deadlines, or there was a miscalculation made on some of our labor rates, and these will negatively impact the project.
The earned value management system (EVMS) will detect problem(s) early and bring it to the attention of management. The project manager needs to be skilled enough to recognize the problem and be able to take the necessary actions to correct the problem before it ruins the outcome of the project. To do this they will normally analyze why the problem occurred, and evaluate what corrective action they should take. For example, if clearing scrub for our road is behind schedule due to unforeseen vegetation issues, our project manager may increase the clearing workforce to make up for lost time and keep the rest of the project on schedule which would ultimately be more cost effective than letting the entire project fall behind. Once management decides to make changes, they can analyze the next report to see if they have successfully corrected the problem, or over corrected to the point in which they will miss the scheduled due date.
In parts one and two of this series we introduced EVMS and how project managers create baselines for the system. In part three we will discuss some of the EVMS projection tools and how to use them. Tools that are based on the current performance and making predictions based on the current performance.
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