Ariba Implementation at MED-X:

Managing Earned Value

Project Management
MGT 8803
March 2, 2011

Why is the Project Underperforming?

The Ariba implementation at MED-X had gotten off track early in the project timeline. As illustrated in the
earned value analysis, the project was over budget and behind schedule by the end of June; only two short
months after the project had kicked off. Isolating the earned value analysis to investigate the software
customization and technical infrastructure portions of the project individually, it can easily be seen that the
technical infrastructure portion of the project had caused the delay.

The schedule performance indicator (SPI) for the technical infrastructure segment of the project was 0.929
at the end of June and 0.919 at the end of July, indicating a schedule delay. However, the SPI maintained
an upward trend through August and September, suggesting that the project was making up some of the
ground it lost during the earlier months. Therefore, the primary cause of the delay must have occurred in
late June (after the CRP) and/or July during the early part of the Build phase.

This delay could have been caused by an array of events. First, it is stated that early in the project a MEDX staffer had been repeatedly pulled from the project to tend to other duties. This may have created a delay
providing information to the implementation team early in the build phase. This could have also created
delays in providing the team with the required network access and permissions to effectively do their job.
Further, some of the server equipment was received late. This delay of equipment would certainly affect
the overall project schedule, but it would most likely impact the technical infrastructure segment the most.
Lastly, it is mentioned that testing was scheduled late in July and that uncovered more issues than were
anticipated.

Why did Terry Baker think the project was going according to plan the entire time?
Terry Baker did a poor job of following the project. She did not have proper controls in place that would
keep her informed. Also, it seems that Martin realized that there were issues early on in the project, but he
did not communicate these issues to Terry. In the future, Terry needs to have the consultants give her
regular reports, with detailed analysis and projections of where they are, and when they will finish.

How much longer will the project take and how much will it cost when completed if no adjustments are
made?
Due to the delays in the development of the Technical Infrastructure, the project will run 11 days over if no
adjustments are made. This can be calculated by dividing the number of planned days, 184, by the
schedule performance index, which is .944 at the end of September.
Combining the Software Customization and Technical Infrastructure projected costs shows that the project
will actually come in under budget by $64,770.05, at a total projected cost of $1,831,229.95. This is due to
Software Customization being under budget by a great deal. This projection was found by dividing the
original cost by the cost performance index, which is 1.188 for the Software Customization and is 0.917 for
Technical Infrastructure. These numbers can be seen in the attached spreadsheet.

Is there anything Martin can do at this point to help the project finish according to plan? If so, please
elaborate and show your analysis.

The project is currently running 10 days late but is over budget by over $60,000. The ETC is 10 days over
for the Technical portion but about 15 under for software customization. Martin can allocate some of the
staff from the software customization side of the project to help with the Technical side which is running
behind schedule. If there is not enough people that could help, since he is still under budget, he can use
some of the remaining budget to hire on some part time staff to also speed up the project. He can also align
incentives of finishing the project faster by creating an extrinsic motivation of finishing the allocating some
of the budget to give bonuses for finishing the Technical infrastructure ahead of schedule.

What should Martin do in future projects to prevent similar problems from happening?

Martin should pay closer attention to the Earned Value Analysis and have it as a constantly updated
document so he can spot problems like this ahead of time. He should also have higher visibility and
transparency so that this delay is not a surprise to Terry when it happens. If he spots a problem like this
early he can reallocate resources to put the project back on time. Martin should make sure to order the
hardware required for the project ahead of when it is required, to make sure a delay in shipping will not

delay the project. Martin should also use more testing and milestones for the tasks so that there are not
large sections of work that come back with errors.

Exhibit 1. Earned Value Analysis.

Earned Value Analysis
Software Customization

Monthly Plan

Software

May

Jun

Jul

Aug

Sep

Oct

Monthly Status

Plan
Actual Burn
Actual Performance

BCWS
ACWP
BCWP

$120,000
$119,000
$133,250

$192,000
$187,000
$197,000

$192,000
$165,000
$220,000

$192,000
$189,000
$215,000

$192,000
$186,000
$240,000

$60,000

Rolling Status

Plan
Actual Burn
Actual Performance

BCWS
ACWP
BCWP

$120,000
$119,000
$133,250

$312,000
$306,000
$330,250

$504,000
$471,000
$550,250

$696,000
$660,000
$765,250

$888,000
$846,000
$1,005,250

$948,000

Rolling Ratios

Schedule Impact

SV = BCWP - BCWS
SPI = BCWP/BCWS

$13,250
1.110

$18,250
1.058

$46,250
1.092

$69,250
1.099

$117,250
1.132

Cost Impact

CV = BCWP - ACWP
CPI = BCWP/ACWP

$14,250
1.120

$24,250
1.079

$79,250
1.168

$105,250
1.159

$159,250
1.188

Control Ratio

CR = SPI x CPI

1.243

1.142

1.275

1.275

1.345

BTC:
ETC:
Technical Infastructure

154
136.037802

BAC:
EAC:

$948,000
$797,819.45 -$150,180.55

Monthly Plan

Technical

May

Jun

Jul

Aug

Sep

Oct

Monthly Status

Plan
Actual Burn
Actual Performance

BCWS
ACWP
BCWP

$120,000
$120,000
$120,000

$192,000
$215,000
$170,000

$192,000
$192,000
$173,000

$192,000
$216,500
$190,000

$192,000
$170,000
$185,000

$60,000

Rolling Status

Plan
Actual Burn
Actual Performance

BCWS
ACWP
BCWP

$120,000
$120,000
$120,000

$312,000
$335,000
$290,000

$504,000
$527,000
$463,000

$696,000
$743,500
$653,000

$888,000
$913,500
$838,000

$948,000

Rolling Ratios

Schedule Impact

SV = BCWP - BCWS
SPI = BCWP/BCWS

$0
1.000

-$22,000
0.929

-$41,000
0.919

-$43,000
0.938

-$50,000
0.944

Cost Impact

CV = BCWP - ACWP
CPI = BCWP/ACWP

$0
1.000

-$45,000
0.866

-$64,000
0.879

-$90,500
0.878

-$75,500
0.917

Control Ratio

CR = SPI x CPI

1.000

0.805

0.807

0.824

0.866

$948,000
$1,033,410.50

$85,410.50

BTC:
ETC:
Combined Projects

154
163.188544

Monthly Plan

BAC:
EAC:

May

Jun

Jul

Aug

Sep

Oct

Monthly Status

Plan
Actual Burn
Actual Performance

BCWS
ACWP
BCWP

$240,000
$239,000
$253,250

$384,000
$402,000
$367,000

$384,000
$357,000
$393,000

$384,000
$405,500
$405,000

$384,000
$356,000
$425,000

$120,000

Rolling Status

Plan
Actual Burn
Actual Performance

BCWS
ACWP
BCWP

$240,000
$239,000
$253,250

$624,000
$641,000
$620,250

$1,008,000
$998,000
$1,013,250

$1,392,000
$1,403,500
$1,418,250

$1,776,000
$1,759,500
$1,843,250

$1,896,000

Rolling Ratios

Schedule Impact

SV = BCWP - BCWS
SPI = BCWP/BCWS

$13,250
1.055

-$3,750
0.994

$5,250
1.005

$26,250
1.019

$67,250
1.038

Cost Impact

CV = BCWP - ACWP
CPI = BCWP/ACWP

$14,250
1.060

-$20,750
0.968

$15,250
1.015

$14,750
1.011

$83,750
1.048

Control Ratio

CR = SPI x CPI

1.118

0.962

1.021

1.030

1.087
Total Projected Cost:
$1,831,229.95
Difference: -$64,770.05