Unformatted text preview: ment must recognize this reality and accept it.
Otherwise, people will go crazy trying to achieve 3 percent tolerances. It’s like trying to push a noodle in a
straight line or nail jelly to a wall. MEASURING PROJECT PERFORMANCE/QUALITY
If you think measuring progress is hard, try measuring quality. Were the bolts holding the steel beams
together put in properly? Are all the welds sound? How do you tell?
Quality is the hardest variable to track, and the one that often suffers as a consequence. In addition, so much
attention tends to be focused on cost and schedule performance that work quality is often sacrificed. This can
be a disaster, in some cases resulting in customer lawsuits for damages resulting from poor-quality products.
Project managers must pay special attention to the quality variable, in spite of the difficulty of tracking it. EARNED VALUE ANALYSIS
It is one thing to meet a project deadline at any cost. It is another to do it for a reasonable cost. Project cost
control is concerned with ensuring that projects stay within their budgets, while getting the work done on time
and with the correct degree of quality. One system for measuring these factors is called earned value analysis
(also known as variance analysis), which was developed in the 1960s to allow the government to decide if a
contractor should receive a progress payment for work done. The method is finally coming into its own
outside of government projects, and it is considered the correct way to monitor and control almost any project.
Variance analysis allows the project manager to determine “trouble spots” in the project and to take corrective
Terms Used in Earned Value Analysis
• Cost Variance: Measures the gap between the budgeted cost and the actual cost of performed work.
• Schedule Variance: Compares planned versus actual work completed.
• Budgeted Cost of Work Scheduled (BCWS): The budgeted cost of work scheduled to be done in a
given time period, or the level of effort supposed to be expended during that period.
• Budgeted Cost of Work Performed (BCWP): The budgeted cost of work actually performed in a
given period, or the budgeted level of effort actually expended. BCWP, also called earned value, is a
measure of the dollar value of the work actually accomplished in the period being monitored.
• Actual Cost of Work Performed (ACWP): The amount of money (or effort) actually spent in
completing work in a given period. Variance thresholds can be established to define the level at which reports must be sent to various levels of
management within an organization.
By combining cost and schedule variances, an integrated cost/schedule reporting system can be developed.
Two formulas are of use in performing earned value analysis using these concepts:
Cost variance = BCWP - ACWP
Schedule variance = BCWP - BCWS Previous Table of Contents Next Products | Contact Us | About Us | Privacy | Ad Info | Home
Use of this site is subject to certain T...
View Full Document
- Fall '13