This preview shows page 1. Sign up to view the full content.
Unformatted text preview: oals, because on large projects, there is not enough time to analyze every deviation from the plan. Managers of large projects normally adopt a management-by-exception philosophy. They look at performance measures (such as cost and schedule variances) at summary levels, and, if they are acceptable at the summary level, they often do not attempt to analyze the problem further. It is only in the case where performance at the summary level is not acceptable that further analysis is necessary, and this is one of the advantages of the cost variance: it can be examined at any level of the WBS hierarchy. Normally, the cost variance at the top level is observed by comparing the earned man-hours and actual man-hour expenditure on an earned value plot, as shown in Figure 4- 2. Project management relies heavily on these plots because they show a good deal more about per - Page 116 formance of the project than just the cost variance. Then, if it is determined that there is an unacceptable total cost variance at the top level of the project WBS, more information is needed to isolate the problem(s). What is needed at this point is a listing of all the cost variances of all the control packages. Such is the Cost and Schedule Variance Report , discussed in Section 4.3.3. But, before we discuss this report, a discussion of the schedule variance is in order. 4.3.2— Schedule Variances The schedule variance is defined, for each control package in the WBS, as the earned man-hours minus the budgeted man-hours to-date. For the total project this is E(t) –B(t), as shown in Figure 41. In Figure 4-1, the project schedule variance at time t is negative. This negative amount indicates how many man-hours it will take (at the planned productivity rate) to earn enough man-hours to catch up to where the project should be at the current time. Figure 4-1 also shows a schedule deviation ∆S expressed in time, rather than in man-hours. We can translate between the man-hours version of the schedule variance and the time version of the schedule deviation by means of the slope of the earned man-hours curve for any control package. The slope of the earned man-hours curve for any control package is simply the schedule variance of the control package divided by its schedule deviation. The geometrical meaning of the slope is as follows. In Figure 4-1 the slope of this earned man-hours curve E at time t (for the total project control package) is simply the tangent of the angle φ that a straight line tangent to the curve E at the point E(t) makes with the x-axis (time axis). Whether or not you understand what the angle φ or the tangent of φ (tan φ) means, it suffices to understand the following formulas: (SV means schedule variance of control package) TE
Team-Fly® AM FL Y Page 117 So, if we know any two of these three terms (SV, ∆S, tan φ), we can compute the third term. For instance, in Figure 4-1 we know SV and ∆S for the total project, so we can calculate the tangent to the E curve at the time t by dividing SV by ∆S. The schedule variance is somewhat more complex than the cost variance. All that was said about the cos...
View Full Document
- Spring '10