W2_NasserAl-Julandani_Earned_Value_Analysis_Essay

 

 

 

1) Problem Definition

 

Reporting the project status using Earned Value (EV) measurements;

• Budgeted cost of work performed (BCWP);
• Budgeted cost of work scheduled (BCWS);
• Actual cost of work performed (ACWP);

 

2)  Identify the Feasible Alternative.

 

This essay aims to use EV calculations to identify the project current status in terms of;

1. Cost Variance (CV);
2. Schedule Variance (SV);
3. Cost Performance Index (CPI);
4. Schedule Performance Index (SPI)

The EV calculations are based on the report received from field on day 180 shown in figure.1 below.

Figure.1: Field Report 

3) Development of the Outcome for Alternative

 In order to use EV measurements, project Scope, Schedule and Budget are needed. The following figure and tables are examples. Figure.2 is an example of phasing the project budget over the schedule so cumulative S-Curve can be generated. I have used “0/100” formula when calculating the completion % for the work element. I.e. an activity credit value is 0% when its start and 100% credit value when it’s completed only; therefore, an activity with 75% physical completion has 0% credit value.

Figure.2: Project Schedule

Activity	Predecessor	Duration (Days)	Cost/Day US ($)	Total Cost US ($)
A.    Design		30	200	6,000
B.    Engineering	A	60	400	24,000
C.    Construction	B	90	600	54,000
D.    Tasting	C	10	100	1,000
E.    Commissioning	D	20	300	6,000

Table.1: Project Budget

Figure.3: Budget Over Time (Time Phase)

 

Figure.3: Project S-Curve

4)  Selection of Criteria.

Earn value method was adopted for the indication of the status of the project are shown in the following table.

Activity	ACWP ($)	BCWP ($)	BCWS ($)	CV ($)	SV	CPI	SPI
A.   Design	6,000	6,000	6,000	–	–	1	1
B.   Engineering	24,000	24,000	24,000	–	–	1	1
C.   Construction	–	51,300	54,000	51,300	-2,700	–	1
D.   Tasting	–	–	–	–	–	–	–
E.   Commissioning	–	–		–	–	–	–
Total	30,000	81,300	84,000	51,300	-2,700	2.7	0.968

Table.2: Earned Value Calculation

5)  Data Analysis.

The project CPI is great (2.7); while the SPI is (0.968) which is a bad sign meaning that the project is behind schedule. Maybe some recovery actions are required to keep the project back on truck on a later stage.

6)  Selection of the Preferred Alternative.

From the analysis, at the current stage no corrective actions are required as SPI is every close to 1. A major observation, we may thank of revised our payment formual “completion % for the work element” so we can pay our contractors based on the physical completed % reported of the activity rather than 0\100% method. The “Doggy Biscuit” method can be taken onto consideration to support resources availability and contractors performances.

7) Performance Monitoring and the Post Evaluation of Result.

It can be concluded, the Earned Value analysis is one of the best methods of measuring projects as it’s evaluate the status of the project for both Schedule and Budget. It’s a tool helps managers to identify and control the current and potential issues on the project; so the project can be managed better on terms of time and cost.

8)  References

• Source: Guild of Project Controls, 9.0 – MANAGING PROJECT PROGRESS. http://www.planningplanet.com/guild/GPCCAR-modules
• Duncan Haughty (2010). What is Earned Value? [ONLINE] Available at: http://cdn.projectsmart.co.uk/pdf/what-is-earned-value.pdf. [Last Accessed 10 June 2014].

• Booz Allen Hamilton (2010). Earned Value Management Tutorial. [ONLINE] Available at: http://energy.gov/sites/prod/files/maprod/documents/EVMModule6.pd. [Last Accessed 10 June 2014].
• Suketu Nagrecha (2002). An introduction to Earned Value Analysis. [ONLINE] Available at: http://www.pmiglc.org/COMM/Articles/0410_