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Unformatted text preview: n the project that this chart depicts. It gives the experienced project manager a summary of how the project is being managed and the information needed to begin the process of isolating problems and finding solutions. On this chart there are three "curves" (graphs). They are labeled baseline man-hours , actual man- hours earned man-hours . The baseline man-hour curve expresses how much labor project management intends to expend and how this labor will be expended over time. The actual man-hour curve expresses how labor is actually being expended on the project. The actual man- hour curve is an accumulation of labor expended to date, plotted against time. These two curves together tell a lot about a project overall. If the two curves are very close together, then we know that the project is expending labor-hours at about the same rate as called for in the plan. If these two curves diverge significantly Page 5 at any point in time, then we know that during that period, labor was not being expended as planned. But these two curves do not tell the whole story. It is possible that labor is being expended as planned but little is being accomplished. The third curve, the earned man-hours curve, completes the picture. The earned man-hour curve on the chart in Figure 1-1 is a special case of a more general concept called earned value, which is discussed in Chapter 4. Earned value is a measure of what has been achieved (earned). Earned value is an expression of worth and as such can be expressed in various ways. It can be expressed in dollars or in the amount of labor needed to create this worth. It is frequently the case that the client is more interested in the dollar value of the achievement, whereas the project manager is more interested in the labor-hour value of what has been accomplished, because labor-hours are what the project manager directly controls (primarily). And, on most projects, labor -hours account for more than half the cost of a project. Earned value is calculated by a simple formula. It is the percent complete multiplied by the budgeted (planned) value of the project. Earned value is a measure of accomplishment that can be applied equally well to a single task within a project, a group of tasks, or the total project. For example, if the budgeted value of the project is 100,000 labor-hours or $8 million, and the project is 50% completed, then the earned labor - hours are 50,000 and the earned value is $4 million. In the chart in Figure 1-1, the baseline (budgeted) labor -hours curve and the actual labor-hours curve are close together. This means that the rate of expenditure of labor-hours is very close to the estimated rate of expenditure envisioned in the budget. If the actual labor-hours curve is below the baseline labor-hour curve, then we know the labor-hour expenditure is less than what was planned. On the other hand, if the actual labor-hour curve is above the baseline curve, we know that the rate of expenditure is greater than what was anticipated in the budget. In Figure 1-1 we also notice that the earned labor -hours Page 6 curve is trailing somewhat below the baseline la...
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This note was uploaded on 01/11/2011 for the course ACC 9 taught by Professor Yeetan during the Spring '10 term at Sunway University College.
- Spring '10