2.3. EARNED VALUE MANAGEMENT:
EVM control the projects, yet dependent on a project’s effective plans. About EVM we know collectively from these research works. Firstly EVM contributes to project planning then secondly EVM contributes to project control and EVM contribution to project management processes, all these processes are believed to positively influence project performance. This is a EVM contribution to project success.
The concept of earned value has been around for over a hundred years. Depending on the time period, it changed various names, including industrial factory standards, earned value management, performance measurement, the Planned Value of Work Accomplished (PVWA), the Budgeted Costs of Work Performed (BCWP), the Cost/
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It analyzed the experience, the main problems, prospect and main driving factors of EVM in the development process [32]. Improved EV method for schedule and cost integration management [33]. Based on plan and cost difference of EV, established a simple but more comprehensive measure and a principal-agent model [34]. Uses time units to measure the performance progress of the project, proposes a time-based EV technique, and gives formula estimating completion time of different states …show more content…
“Good judgment is the result of experience,” he said. “The way to become a good project manager is by having bad experiences and learning from them.”
A review of literature uncovered three categories of knowledge regarding the contribution of earned value management success. Ample literature offers rational support for EVM’s positive contribution [48], [50]. Works of this type suggest the benefit of EVM across major project management processes including planning, executing, monitoring, and controlling (PMBOK, 2004).
Another source of knowledge is from the experiential accounts of project practitioners [49]. These works are important in that, unlike theory, they offer empirical evidence based on personal experience and observations.
A third source of knowledge about EVM’s contribution to project success blends both theory and experience [48]. These works offer the highest level of precision in both their methodology and findings and can be said to offer scientific knowledge. Works in this category are research-oriented, and to date rely on qualitative method to make relevant
Spokane Industries has contracted Franklin Electronics for an 18 month product development contract. Franklin Electronics is new to using project management methodologies and have not been exposed to earned value management methodologies. Even though Franklin and Spokane have worked together in the past, they have mainly used fixed price contracts with little to no stipulations. For this project Spokane Industries is requiring Franklin Electronics to use formalized project management methodologies, earned value cost schedules, and schedules for reports and meetings. Since Franklin Electronics had had no experience with earned value management, the cost accounting group was trained in the methodology in order to bid for the project. Franklin Electronics won the contract because they had the lowest price. They developed a work breakdown structure that consisted of 45 work packages with 4 of the work packages being delivered in the first 4 months. They also developed a simple status report consisting of the work packages due, budgeted cost for work scheduled, budgeted cost for work performed, actual cost for work performed, cost variance and price variance. When they deliver the first status report, the Franklin Electronics project manager is called into an emergency meeting because Spokane Industries vice president is unhappy with the progress. In this paper, we will discuss Six Sigma process improvement for tracking time and cost, recommendations on how Franklin Electronics can use project management principles to meet their goal of improving efficiency and empowering management to make better and informed decisions through the use of Earned Value Management, how an effective Earned Value Management System contributes ...
Project managers, as mentioned earlier, are becoming a highly sought after commodity. There are many fields which project management professionals may enter into, such as constructions, engineering, logistics, and information technology. For those project managers who are interested in expanding their careers with new skills, this is phenomenal news. In order to validate project management on the corporate level, researchers view that ownership is required from the top (Chandler & Thomas, 2015). Corporate executives need to understand the importance of PM and embrace its functionality within the organization. This will ensure that project management continues to stay linked with areas like personnel, finance, and production. The nature of project management is crucial to business success, and enables proper development and implementation of solid practices. This further highlights that hiring project professional’s remains essential as businesses become “supported from top to bottom and from edge to edge” (Project Management is Vital for Business Success,
Regardless of industry, earned value management (EVM) has become the preferred method of metrics monitoring. Considering that EVM can be tailored to fit the needs of any project, and is easily done through electronic methods with technology today, it is the most user friendly tool for obtaining real-time status and progress reports for project managers and clients alike. This technique is recognized and put in motion at the initiation of a project, integrating costs, schedules, technical performance management, and risk management to more accurately relate cost to performance (Kerzner, 2013). “EVM is a method that uses scope, cost, and schedule to measure and communicate real physical process of a project” (Chen, 2014, p. 135). Moreover, the
Project Management is a concept of making the project successful through knowledge, processes, methods and experience. Every project is unique since it needs the same mythology of the methods but the circumstances are always different. The success rate of a project can be derived from the output it produces, outcomes or benefits, according to a criteria within agreed budget and timescale.
Graham, R. J. & Randall, L., Creating an Environment for Successful Projects: The Quests to Manage Project Management, second ed. San Francisco: Jossey-Bass, 65-113, 2003.
Jugdev, K. (2012). Learning from Lessons Learned: Project Management Research Program. American Journal of Economics and Business Administration , 4(1), 13-22.
“Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind” a famous quote about our goal by Seneca. It is a metaphor about the achievement goal and objectives by good planning skills. One has to plan for what one wants to achieve and where one wants to go. One of the most important things is to have good planning, before taking any project the first think you should do is to create project plan. Planning can be defined as preparing a sequence of action to achieve specific goals and objectives. According to Kerzner (2009), “project planning is desirable that the project manager is involved from project conception through execution. It must be systematic, flexible to handle, closely disciplined through reviews and control and capable of accepting multi functional inputs (pg. 412)”. The importance of planning a project is to describe the work so that it will be easily identifiable to the project team member.
Project management is said to be completed within time when it completed within the “triple constraints”: cost, time and quality. And in a lot of causes, one them is sacrificed so as to meet the other two. Project managers prioritize which ones are the most important.
Project manager concentration from inception to completion is within the project initiation, planning ,execution, close down & conflict that arises at these project phases are reasonably resolved to achieve the set objectives of the project. According to (Hoffer, J. A., Valacich, J. S., & George, J. (2002) the Project manager uses the required skills in leadership, management, stakeholders’ relationship and conflict management style to achieve project objectives by motivating the team to ameliorate conflict during project life cycle.
In the globalized economy, Successful project managers are in much demand across many industries. Organizations strongly need experienced project managers to lead their staff to accomplish their business goals and deliver successful projects. In an increasingly complex environment, project managers need to turn into many roles and have all kinds of responsibilities at each level of management within an organization. Good project managers are not born. They need to be trained. They develop their skills through study, practise and experience. They become better project managers after they finish a successful project each time. They learn new techniques and apply them on their projects. They learn their lessons from failed projects and then improve to be better project managers in the future.
Many organizations do not achieve the profits they anticipate by using incorrect methods or models to determine the true costs of products and services. This failure to correctly assess the costs associated with business not only affects the profit margin, but the organizations competitive advantage as well. In order to asses whether the organization is failing to realize optimum resource allocation, the organization should look at the methodology first popularized by Michael Porter titled the Value Chain Analysis (VCA). "VCA seeks to define the entire chain through which goods are supplied to a customer" (Booth, 1997, 2). The VCA can be a powerful tool in increasing an organization's competitive advantage; by correctly pricing products and assessing the true costs of materials and labor, organizations can align the improvements in efficiency, quality, and profits with its strategic objectives.
Vargo, S.L., Maglio, P.P. and Akaka, M.A. (2008b) ‘On Value and Value Co-creation: A Service
Within the steps of project management, control is very crucial. Project managers spend their time controlling all aspects of a project, but are mostly focused on time, scope and cost. This is due to how easy it is to lose sight of the project objectives, particularly, on large projects that can quickly spin out of control. Having mechanisms to control the project is of the utmost importance.
Over the course of my professional life, I have become increasingly involved in project management roles. Doing so has made me aware of the many varied challenges that can face projects and the project managers who are charged with bringing them through to completion. The success or failure of projects, in whatever economic, political or social field, rests not just on the quality of the project’s goals, but also on the abilities of those involved in the project – and above all those who are managing it – to bring it to successful completion. To do this, project managers need to be equipped with a very wide range of skills, many of which are unrelated to the type of project itself. So, for example, a project manager of an engineering project must not only have engineering
When planning a new project, how the project will be managed is one of the most important factors. The importance of a managers will determine the success of the project. The success of the project will be determined by how well it is managed. Project management is referred to as the discipline that entails the processes of carefully planning, organizing, controlling, and motivating the organization resources so as to foster and facilitate the achievement of specific established and desired goals and meet the specific criteria of success required in the organization (Larson, 2014). Over the course of this paper I will be discussing and analyzing the importance of project management.