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Unformatted text preview: nverse of actual productivity. It is natural to think of comparing the actual unit rates to the budgeted unit rates to see if the budgeted unit rates are actually being achieved. Since the planned unit rate is the inverse of the planned productivity, we should interpret the actual unit rate as the inverse of the actual productivity. Consequently, comparing the actual unit rate with the budgeted unit rate is the inverse of comparing the actual productivity to the budgeted productivity. Therefore, if we compare the budgeted unit rate to the actual unit rate instead, we are then comparing the actual productivity to the planned productivity. Page 129 For this reason, the author defined the productivity ratio PRt for a task t as follows: It will be seen in the next section that working with the productivity ratio has more favorable properties than working with unit rates, and that the productivity ratio can also be calculated in such a way that we can generalize the concept so that it applies to control packages as well. To conclude this section on unit rates, there are still a couple of points that need to be mentioned. First, the budgeted unit rates are always calculated from the control budget for the same reasons that the earned values are always calculated from the control budget. Moreover, if the budget we used to compute the unit rates included productivity variances, then the man-hour budgets would contain man-hours generated from performing the work at a different productivity rate than was planned. This would make the budgeted unit rates tend toward the actual unit rates, giving the impression that the planned unit rates were being achieved, when in fact they were not. This is another reason why it is important to segregate quantity variances from productivity variances and have separate budgets that incorporate these different variance components. This leads us to the next point about unit rates. In addition to the budgeted unit rate and the actual unit rate, it is possible to introduce the concept of the forecast unit rate. This concept was introduced in my 1984 IEEE paper. The forecast unit rate FURt for a task t is defined as follows: where FMBt denotes the forecast man-hour budget for the task t and FQBt denotes the forecast quantity budget. The forecast unit rate for a task t represents a projection of what the actual rate will be at completion of the task. Consequently, one would Page 13 methodologies for producing designs. These subjects are beyond the scope of this book. In comparison, there have been far fewer attempts at explaining the theory, methods, and tools of project management. We therefore concentrate on where we feel that we can make a contribution. Page 130 expect to see the actual unit rates less than or equal to the forecast unit rates. If, for a particular task this is not the case, there must either exist some explanation why project management believes the actual unit rate at completion will not exceed the forecast u...
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- Spring '10