How to effectively use earned value management for a project

Due in part to globalization, businesses around the world now require a large degree of project management and innovation. Project management enables companies to maintain their competitive position relative to peers in the industry. To maintain this position management must ensure that time and costs are controlled throughout the duration of the project. This is a critical element as it helps to determine the overall financial performance of a department or business segment within an organization. Strong financial performance ultimately allows the company to continue to innovate as it plows profits into new and better projects. The process of controlling costs and time on specific projects is know as earned value management and is critical to overall organizational success. Through this process management can better detect early warning signs related to projects and proceed to enact mitigation efforts in order to alleviate concerns.

Identify and discuss your project’s greatest challenges (at least three) and provide a recommendation for addressing each of the challenges.

My current projects are related to logistics and delivery of packages to customers in my direct metropolitan statistics area. This project has a number of challenges related to creating a profitable network for delivery that would first provide timely delivery of packages while also providing an income to continue expansion of the network. In addition, investments were required in a relatively large number of investments related to property, plant, equipment, and technology. The primary project was to create an app that would help direct drivers using the most efficient path and route within the area. The budget for the project was 2000 hours which was determined by estimating the amount of time each individual task within the chain would take. Overall, the app was expected to be completed in 6 months.

The first challenge was related to technological innovation and the overall functionality within the app. Due to sheer amount of white space within the industry, an app can be customized to due almost anything. The issue therefore was to first narrow the focus of the app so that earned value management principles can be much beneficial to the project. Here, the project required a basic navigation app and links to package delivery providers as a basis for utilization. All other auxiliary items we not undertaken as they would significantly add to the overall scope and cost of the project. This would ultimately impact the earned value analysis as the scope would increase. The solution was therefore very simple and straightforward. First, the scope of the application design was narrowed specifically for the direct navigation processes of the app. All other side jobs were either relinquished or avoided to ensure that the scope was maintained.

The next challenge related to the project identifying the correct measuring and evaluation criteria. This is critical as it enables proper evaluation of success of the project. As it relates to earned value management, non-discrete effort is called “level of effort” otherwise known as LOE. As it relates to the application design project, if it contains a significant portion of LOE, and the LOE is combined with discrete effort, EVM results will not be accurate. Some programs either don’t have enough reporting information within their overall tasks to be effective in reporting proper performance, and are therefore labeled LOE (Altshuller, 1996). This creates measurement difficulty as specific evaluations are not present. This is further compounding by the fact that app development is very difficult due to excessive amounts of innovation and project changes that occur throughout the process. As these changes continue to be incurred, measure techniques must be employed to make sure progress is being effective during earned value management principles.

The next challenge for the project is related to proper training and education of EVM principles by all stakeholders involved. Properly training project managers, staff, and other stakeholders on the key underpinnings of EVM is critical. This will allow for proper oversight along with a strong foundation by which to evaluate project success. Some programs have an EVM requirement but either don’t know how to or don’t use the information once it has been collected and reported. For this challenge, it is critical to have project managers support EVEM (Altshuller, 2005).

Examine how you manage your project performance via earned value management (EVM).

I will manage the project by checking weekly on the project schedule and the overall project budget. Although schedule and budget are the main focal points for EVM, quality must also be evaluated on the app. This is one of the weaknesses of EVM as it doesn’t adequately measure overall quality specifications very well. As such project performance will be evaluated on a qualitative and quantitative basis. This evaluation will occur monthly in conjunction with project managers using the specific metrics discussed below.

Identify at least three key EVM metrics you will use for your project.

Project performance will be measured by evaluating planned value, actual costs, and earned value. I will then use these metrics to calculate the schedule performance index, the cost performance index, and the estimated at completion values. Each of these figures will be evaluated on a monthly basis to ensure adequate completion of the projective. In particularly the scheduled performance index will be a critical metric to evaluate as any score over 1 indicates that more work was completed than was planned. Throughout the duration of the project, managers will be tasked with keeping this figure above 1 on a monthly basis. In addition, it is critical to keep the cost performance index above 1 as well. A figure higher than 1 indicates that costs were less than budgeted which again helps to ensure project success. By keep all 5 metrics above in constant observation, it helps to ensure that the project is completed effectively and under budget.