Class Activity Earned Value Analysis During project execution, the project manager should periodically conduct some type of variance or camned value analysis to determine if the project is on its time and cost baselines Time or schedule variance analysis measures the difference in the amount of work effort and duration) planned and the actual work completed. Cost variance measures the difference between the planned and actual cost of human resources, equipment, services, and so on. This is shown in tables Famed value analysis is a better way to measure performance. It sets a standard using the time and cost baselines and then measures actual performance against this standard, not just the variance. This is best illustrated by working on the following exercise Formulas: Famed value (EV) percent complete X total budget Cost variance (CV) - Earned value (EV) Actual Cost (AC) Schedule variance (SV) - EV - (Planned Value) PV Estimate at Completion (EAC) - AC/EV x total budget Case Study: A company is looking to contract out the production of harmonicas. A request for bid for this project resulted in contractors coming forward to compete for the contact. The company has asked each contractor to produce 100 harmonicas over a 5-week period under a budget of 5700 (covering all labor and material costs). Each contractor will be controlled for the same resources and project start time. However, as consistency and reliability are important in the production of harmonicas, the company wants to monitor each contractor's performance after 3-weeks of production. Simply using the 5-week (200 hours) time baseline, and 5700 cost baseline, it is estimated that to stay on track. each contractor must produce 20 harmonicas each week at a total cost of $140. The winning contractor will be given a 5-year contract to produce 5.000 harmonicas each year. At the end of 3-weeks of production, each contractor had made different progress, as shown in below 1. Contractor A produced 70 harmonicas and spent $400 on labor and materials 2. Contractor B produced so harmonicas and spent $500 on labor and materials 3. Contractor C produced 65 harmonicas and spent $520 on labor and materials The company decides to conduct an earned value analysis of this information to see how the companies are performing and then to determine from these data which company is most likely to come closest to producing 100 harmonicas in 5-weeks with a budget of $700. If there are no changes in performance Actual Cost Aamned value after 3 weeks FEV) wher Your small group is asked to complete the following table Total Time Cost Planned Value Budget for (PV) aller Project wooks Contractor A Hours worked Dollars spent Contractor B Hours worked Dollars spent Contractor Hours worked Dollars spent HINT: You will need to figure out each company's percent of project completion and also the total budget to determine EV. For example, how many harmonicas did they complete in three weeks divided by how many they should have completed at the end of three weeks, or by how many harmonicas they should have completed in five weeks. You will get two different percent figures, but when you multiple one by the PVs (3-weeks total budget) and the other by the total hudget (5-weeks), you should get the same answer Next, you are asked to estimate from these data the Estimate at Completion (EAC) for both time and dollars. Using the formula for EAC, complete the following table: Contractor A Contractor B Contractor Total Time/Cost Budget for Project 200 hours Projection for hours worked Projection for weeks worked Projection for 5 weeks 5800 $700 dollars spent Now answer the following questions: 1. How might you present the three-week results to your company? 2. If each contractor did the same analysis, what could each do to improve their performance over the next two weeks of the competition? 3. Should your company provide comparison information to the three contractors at the end of the 3-week monitoring period? 4. What might you think of each contractor if they upped their game over the next two weeks and met the 5-week expectations for the harmonica competition? Class Activity Earned Value Analysis During project execution, the project manager should periodically conduct some type of variance or camned value analysis to determine if the project is on its time and cost baselines Time or schedule variance analysis measures the difference in the amount of work effort and duration) planned and the actual work completed. Cost variance measures the difference between the planned and actual cost of human resources, equipment, services, and so on. This is shown in tables Famed value analysis is a better way to measure performance. It sets a standard using the time and cost baselines and then measures actual performance against this standard, not just the variance. This is best illustrated by working on the following exercise Formulas: Famed value (EV) percent complete X total budget Cost variance (CV) - Earned value (EV) Actual Cost (AC) Schedule variance (SV) - EV - (Planned Value) PV Estimate at Completion (EAC) - AC/EV x total budget Case Study: A company is looking to contract out the production of harmonicas. A request for bid for this project resulted in contractors coming forward to compete for the contact. The company has asked each contractor to produce 100 harmonicas over a 5-week period under a budget of 5700 (covering all labor and material costs). Each contractor will be controlled for the same resources and project start time. However, as consistency and reliability are important in the production of harmonicas, the company wants to monitor each contractor's performance after 3-weeks of production. Simply using the 5-week (200 hours) time baseline, and 5700 cost baseline, it is estimated that to stay on track. each contractor must produce 20 harmonicas each week at a total cost of $140. The winning contractor will be given a 5-year contract to produce 5.000 harmonicas each year. At the end of 3-weeks of production, each contractor had made different progress, as shown in below 1. Contractor A produced 70 harmonicas and spent $400 on labor and materials 2. Contractor B produced so harmonicas and spent $500 on labor and materials 3. Contractor C produced 65 harmonicas and spent $520 on labor and materials The company decides to conduct an earned value analysis of this information to see how the companies are performing and then to determine from these data which company is most likely to come closest to producing 100 harmonicas in 5-weeks with a budget of $700. If there are no changes in performance Actual Cost Aamned value after 3 weeks FEV) wher Your small group is asked to complete the following table Total Time Cost Planned Value Budget for (PV) aller Project wooks Contractor A Hours worked Dollars spent Contractor B Hours worked Dollars spent Contractor Hours worked Dollars spent HINT: You will need to figure out each company's percent of project completion and also the total budget to determine EV. For example, how many harmonicas did they complete in three weeks divided by how many they should have completed at the end of three weeks, or by how many harmonicas they should have completed in five weeks. You will get two different percent figures, but when you multiple one by the PVs (3-weeks total budget) and the other by the total hudget (5-weeks), you should get the same answer Next, you are asked to estimate from these data the Estimate at Completion (EAC) for both time and dollars. Using the formula for EAC, complete the following table: Contractor A Contractor B Contractor Total Time/Cost Budget for Project 200 hours Projection for hours worked Projection for weeks worked Projection for 5 weeks 5800 $700 dollars spent Now answer the following questions: 1. How might you present the three-week results to your company? 2. If each contractor did the same analysis, what could each do to improve their performance over the next two weeks of the competition? 3. Should your company provide comparison information to the three contractors at the end of the 3-week monitoring period? 4. What might you think of each contractor if they upped their game over the next two weeks and met the 5-week expectations for the harmonica competition