Unformatted text preview: he current baseline. Earned value is a key measure of performance (discussed in Chapter 4), and it is always calculated from the current baseline (control budget), not the original budget. As we will see shortly, the control budget is formed from the original budget by taking all change orders and quantity deviations into consideration (but not productivity deviations). If the baseline is not kept current, the earned value computation will not be correct. The capability to maintain multiple budgets in a formal (controlled) manner is an essential project management capability. The support that the Modern Project tool-set provides for this capability is one of the features that distinguishes it from other desktop tools such as Microsoft Project. This capability is explained in what follows. The term variance is used in this book to denote the documentation of a deviation from the plan or baseline. Note that this is not the conventional English usage of the word. It is a subtle but important distinction to use the word deviation, rather than variance, to denote a departure from the plan and to reserve the word variance to denote the documentation of the deviation. This terminology arose more than thirty years ago among those who first realized that a distinction in terms was necessary to differentiate between the concepts of variations that occur in the work plan and the documentation and tracking of these variations. At some point it was decided that the term deviation would be used to denote variations in the actual work, while the term variance would be used to denote the documentation of these variations. We use this terminology here because it is historically well established. This terminology is extended to the phrase variance tracking, which means the formal process of documenting and reestimating the impact of deviations from the plan and, in some cases, obtaining project management or client approval for a change in the scope of the work. Three types of variances (doc - Page 89 umentation) correspond to the three types of deviations from the plan discussed earlier. They are: • Change orders • Quantification variances • Productivity variances Project managers often corrupt this terminology by referring to both deviations and the documentation of the deviations as variances. This leads to all kinds of confusion on projects, so in this book we are careful to distinguish between deviations and variances (the documentation of the deviations). Also, this usage of the term variance is not to be confused with the terms cost variance and schedule variance , which are used when dealing with the subject of Variance Analysis, presented in Chapter 4. It is unfortunate that these seeming contradictions in terminology exist. It has a lot to do with the independent evolution in commercial and government project management styles and terminology, as is explained in Chapter 8. It also has to do with the fact that only a segment of the project management profession has recognized the significance of distinguishing among the causes of deviations from the plan and carefully documenting them in order to im...
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