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Shakthidhar Dhananjaya

October 14 Project Cost Management

The Benefits of Earned Value Management from a Project Managers


Perspective

Overview
One of the most critical problems project managers encounter is the management of the
performance on their project. Most common complaints are about cost and schedule overruns.
Earned value management (EVM) is a project performance measurement technique that
integrates scope, time, and cost data. It requires discipline in all aspects of the project. It
requires that the organization performing the tasks to plan the work and then to work to that
plan. The article explains how the use of EVM helps the project managers in determining the
current project status by answering questions such as: Are we on schedule? Are we on cost?
Do the costs reflect the true accomplishments? What are our variances?
In this article the authors have taken a scenario where the Habitat Holding Rack (HHR)
manager at Marshall Space Flight Centre (MSFC) was introduced to the overall concept of
Earned Value Management (EVM).

Analysis

The research paper talks about the Habitat Holding Rack (HRR) manager at Marshall Space
Flight Centre (MSFC) who was facing increasing costs (which eventually resulted in
decreased scope of the project), continued schedule slides, and several technical anomalies,
the project manager was looking for a way to gain a better handle on the project performance.

Shakthidhar Dhananjaya
October 14 Project Cost Management

As the principle centre for EVM, MSFC was fortunate to have a group of experts whose
knowledge of EVM was substantial and who were willing to work with the HHR
Project Manager to apply the principles of EVM to the project.

The first step in using EVM within the HHR Project was to identify exactly where the project
stood at the current time. Without an understanding of current project status, there is no
baseline from which to measure in future evaluations. At the early stages of design
development, Integrated Baseline Review (IBR) is a review - used to understand the projects
performance measurement baseline (PMB) and project objectives. Based on this review, the
project identifies and documents the risks associated with elements of the project so that
mitigation plans can be developed for each. This review was scheduled such that it would not
interfere with the contractors regularly scheduled tasks. Once the review was completed, the
entire team had a much better vision of the remaining tasks and individuals came away with a
clearer picture of their piece in the overall project flow. The review resulted in a betterinformed project team, and a group of people that learned to work together as a team rather
than a government versus contractor environment.

In reviewing the PMB, schedule experts performed a review of the HHR schedules to ensure
that good network logic was in place and that all task dependencies in the schedule were
linked appropriately. It was in the area of scheduling that the HHR team first realized the
importance, and impact, of EVM. Once a good schedule was developed for the overall
project linking all major pieces of the project together HHR personnel could better predict
the end date for completion of the work as well as to develop a true critical path for the
project.

Shakthidhar Dhananjaya
October 14 Project Cost Management

Conclusion

After reading the above research paper on how EVM can improve the project we can clearly
say that it is a management process that has been embraced by project managers around the
globe with good success. EVM allows the manager to define a PMB for the project that was
more realistic than the previous baseline. In doing so, EVM provides managers the necessary
data to track performance and to ably discuss project impacts with higher-level management.
With good tools, solid upfront planning, and effective implementation of these tools, project
managers can be better informed to make management decisions during the entire life cycle
of their project.

References

1. The Benefits of Earned Value Management from a Project Managers


Perspective - Jerald G. Kerby and Stacy M. Counts, NASA - Link

2. Information Technology Project Management, Seventh Edition by Kathy Schwalbe