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Unformatted text preview: nit rate, or else this task is a candidate for having a new productivity variance issued against it. 5.2— The Productivity Ratio An important fact about the productivity ratio PR t for a task t is that it can be defined equivalently as: where EMt denotes the earned man-hours for the task t and AMt denotes the actual man-hours expended for t. This can be seen from the following calculation: This calculation is based on factoring out the quantity budget QBt for the task t in both the numerator and denominator of the term PR t. Factoring out the quantity budget QB t is an important reformulation of the productivity ratio because it makes it independent of the task's quantification and defines it strictly in terms of man-hours. This is the needed generalization to apply the concept to the work packages and control packages of the WBS. Moreover, it allows us to compute the productivity ratio for a work package or control package from the information contained in the lower level components that comprise the package. Therefore, we define the productivity ratio PR P for any package P in the WBS as: Page 131 where EMP denotes the earned man-hours for the package P and AMP denotes the actual man-hours expenditure for P. We have already encountered the ratio EMP/AMP for a package P in Chapter 4 in the case where the package was the top-level package for the project. In that case it was called the cost performance ratio for the project. So the productivity ratio for a total project is simply the cost performance ratio for the project. Now, however, we have a way to measure productivity for each package in the WBS. 5.3— The Productivity Report A copy of the Productivity Report for the example project is shown in Figure 5-1. The Productivity Report plays the same role for the Cost Performance Trend Chart as the Cost and Schedule Variance Report does for the Earned Value Chart. If the Earned Value Chart reveals an unfavorable trend, project management needs a way of isolating the work packages that are causing this unfavorable trend. For this purpose, project management uses the Cost and Schedule Variance Report to locate the work packages with unfavorable cost or schedule variances. Similarly, if the Cost Performance Trend Chart reveals an unfavorable trend, project management needs a way to isolate the offending work packages. For this purpose project management can use the Productivity Report. It should be apparent from the definition of the productivity ratio (earned man-hours divided by actual man-hours expended) that the productivity ratio for any package in the WBS can be calculated from the earned and actual man-hours from the packages or tasks that it contains. Consequently, the Productivity Report lends itself to the management-by-exception philosophy, since, if the productivity ratio is favorable for any control package in the WBS, the package manager can choose to ignore all productivity infor- Page 132 Figure 5-1. Example Productivity Report for example project. mation at lower levels. The argument for this is b...
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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