This paper applies earned value management (EVM) principles to a real-world logistics and package delivery app project. It identifies three primary project challenges — managing technological scope, establishing accurate measurement criteria amid level-of-effort tasks, and training stakeholders in EVM fundamentals — and proposes concrete solutions for each. The paper then outlines how project performance will be monitored using five core EVM metrics: planned value, actual cost, earned value, the schedule performance index, and the cost performance index. It concludes with a plan for formal project closeout, including a final review of specifications and lessons learned to inform future projects.
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 a project. This is a critical element, as it helps determine the overall financial performance of a department or business segment within an organization. Strong financial performance ultimately allows a company to continue innovating as it reinvests profits into new and better projects.
The process of controlling costs and time on specific projects is known as earned value management (EVM) 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.
The current project described in this paper is related to logistics and delivery of packages to customers within a direct metropolitan statistical area. This project involves a number of challenges related to creating a profitable delivery network that can provide timely package delivery while also generating sufficient income to support continued network expansion. Investments were also required across a relatively large number of assets related to property, plant, equipment, and technology. The primary project was to create an app that would direct drivers using the most efficient path and route within the area. The budget for the project was 2,000 hours, determined by estimating the time each individual task in the project chain would require. Overall, the app was expected to be completed in six months.
The first challenge was related to technological innovation and the overall functionality of the app. Due to the sheer amount of white space within the industry, an app can be customized to do almost anything. The issue, therefore, was to first narrow the focus of the app so that earned value management principles could be most beneficial to the project. The project required a basic navigation app with links to package delivery providers as a foundation for use. All other auxiliary features were not undertaken, as they would significantly add to the overall scope and cost of the project — which would ultimately impact the earned value analysis as scope increased. The solution was straightforward: the scope of the application design was narrowed specifically to the direct navigation processes of the app, and all other side functions were either relinquished or avoided to ensure that the scope was maintained.
The next challenge involved identifying the correct measurement and evaluation criteria. This is critical, as it enables proper evaluation of project success. As it relates to earned value management, non-discrete effort is called "level of effort," otherwise known as LOE. If the application design project contains a significant portion of LOE, and that LOE is combined with discrete effort, EVM results will not be accurate. Some programs do not 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. The problem is further compounded by the fact that app development is particularly challenging due to the volume of innovation and project changes that occur throughout the process. As these changes continue, measurement techniques must be employed to ensure that progress is being accurately captured during earned value management.
The third challenge for the project is related to proper training and education of EVM principles among all stakeholders involved. Properly training project managers, staff, and other stakeholders on the key foundations of EVM is critical. This will allow for proper oversight along with a strong basis by which to evaluate project success. Some programs have an EVM requirement but either do not know how to use the information or do not use it once it has been collected and reported. For this challenge, it is critical to have project managers actively support EVM implementation (Altshuller, 2005). Ensuring that all participants understand the purpose and mechanics of EVM reduces the risk of misinterpretation and improves the overall reliability of performance reporting.
"Weekly and monthly monitoring approach"
By combining quantitative EVM metrics with qualitative assessments of deliverable quality, the project monitoring approach accounts for dimensions of performance that EVM alone cannot capture. This balanced evaluation approach is particularly important for software development projects, where user experience and functional reliability are difficult to express purely in cost or schedule terms.
Project performance will be measured by evaluating three foundational figures: planned value (PV), actual cost (AC), and earned value (EV). These metrics will then be used to calculate the schedule performance index (SPI), the cost performance index (CPI), and the estimate at completion (EAC). Each of these figures will be evaluated on a monthly basis to ensure adequate progress toward project completion.
In particular, the schedule performance index will be a critical metric to monitor, as any score above 1.0 indicates that more work was completed than was planned. Throughout the duration of the project, managers will be tasked with keeping this figure above 1.0 on a monthly basis. It is equally important to keep the cost performance index above 1.0, as a figure higher than 1.0 indicates that costs were less than budgeted — which helps ensure project success. By keeping all five metrics under constant observation, management can ensure that the project is completed effectively and within budget.
"Final review and lessons-learned process"
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