Describe how a project’s earned value (EV) is calculated. What is the benefit of measuring EV? Would you recommend this method? Explain.
Earned value is a technique, mostly used by experts in the Project Management field to estimate the status of a project in terms of budget and schedule. It is also used to determine the resources needed to finalize the project.
In order to calculate how much of the budget has been already used, the EV is combined with the Budgeted Cost of Work Scheduled (BCWS). Based on this combination, it is possible determine whether a project is over or under the budget at the moment.
BCWS is totally allocated for labor and resources needed for the project. In order to get a clear result of the EV, the exact amount of the project completion must be known and has to be multiplied with the BCWS.
To determine the performance ratio, one must divide the Actual Cost of Work Scheduled (ACWS), which is the total amount of labor and resources, which has been spent so far, by the EV.
So, the EV=BCWS X percentage of the project that is completed.
Example: If the BCWS is $20,000 and the Percentage of the project that is completed is 50%, then EV= 20,000 X 0.5= $10,000.
To determine if the project is over, on or under budget, we should use the method, which is based on the following example: if the AWS was for example, $5,000 , then one divide this by the EV and multiply it by 100 to get the result in percentage.
AWS / EV X 100= 5000/10000 X 100 = 0.5 X 100 = 50%. So, the project is under budget, so far.
Thanks to EV, the managers can get a much clearer image of the project, and can evaluate it easier and more accurately. Therefore, a realistic assessment is possible now. It enables to eliminate a series of errors and unclear data. Managers can track performance and can observe the flow of the project while the development itself.
Even though, the EV cannot solve all problems. It is still a big improvement in the fields of Project Management, thanks to its potential to help identify problems and solve them before causing real danger. Nowadays, due to this technique combined with the necessary tools, the Project Manager can be informed in a clear way about the status of the program, during its entire lifecycle.
I would certainly recommend this technique to any Project Manager, because it really helps a lot in monitoring, supervising and determining the real progress of a project. Besides that, it is also a good tool to get accurate information and avoid hazards.
What is resource leveling with a project plan? Discuss two reasons why it is important.
Resource leveling is the technique of resolving project resource over-allocation. Over-allocation it is a process when a resource has been allocated more work than he can actually do in the time imposed. Usually, over-allocation is fixed by extending the periods for certain tasks, or by moving them to another source.
Managers are competing to obtain the best resources for the most important tasks, which can become a burden in the healthy evolution of a project, due to the possibility to do not meet the requirements as scheduled.
The general causes of over-allocation are the high amount of work on a particular task and overlapping it with the upcoming one. It can happen sometimes because certain tasks will begin or end in the same time. This will mean that the labor force and the resources, must be divided in both direction, so the effectiveness will decrease. A forecasted finish, which causes a task to slip, also is delaying a successor dependency to start late.. It can be considered as a major force issue.
In several occasions, due to certain reasons such as poor management, or just simple rush, employees can be assigned a big amount of tasks in the same time. Mostly, they cannot keep up with them, and solve them in an effective way. When this happens, inevitably the project itself will be affected in a negative way. A delay will come up, the project flow will be stuck, and thanks to this, certain additional costs will happen. There comes the technique of resource leveling, which can avoid this situation. If the Project Manager will apply this technique, probably, he will be able to redress or avoid this situation, by re-organizing and re-distributing the tasks, in an effective way to more employees, so none of them will get overwhelmed. So, splitting the tasks, will win time to keep up with the rhythm of work.
Major force issues are mostly managed with this technique. These kinds of events can and will happen during the life cycle of any project. By solving major force issues, it will always be able to redress the situation and to set the project back on the right path. Let’s say, when the progress of two tasks, is overlapping and the managers try to concentrate the resources, each on his own task, then the competition between them will harm the general development, because all the resources will end up being focused on only one task. By using the resource leveling technique, they will agree on splitting the resources in equal manner, in order to assure the normal and planned development within a time.