Explain how the earned value chart captures all three objectives of a project

performance, cost and schedule

An earned value chart (EVC) is a powerful tool in project management because it visually
captures all three crucial aspects of project performance: **schedule, cost, and progress**.
Here's how it works:

**1. Planned schedule:** The X-axis of the chart represents the project timeline, typically in
days, weeks, or months. This reflects the **planned schedule** for completing tasks and
milestones.

**2. Planned and actual cost:**

- **Planned Value (PV):** This is a line plotted based on the budgeted cost of work scheduled
(BCWS) at each point in time. It reflects the **planned cost** as per the schedule.
- **Actual Cost (AC):** This line represents the actual amount of money spent on the project at
each point. It shows the **actual cost** incurred.

**3. Earned Value (EV):** This is the key metric that ties cost and schedule together. It shows
the value of the work **completed** based on the planned schedule and budget. It's calculated
as:

```
EV = % work completed x planned budget for that work
```

The EVC plots these three lines together:

- **PV and AC** show how much was planned to be spent vs. how much was actually spent.
The **gap** between them represents cost overrun or underrun.
- **PV and EV** show how much work was planned to be completed vs. how much has been
completed. The **gap** between them represents schedule slippage or progress ahead of
schedule.

**Interpreting the chart:**

By analyzing the relative positions of these lines, project managers can assess:

- **Schedule performance:** If EV is above PV, you're ahead of schedule. If it's below PV,
you're behind.
- **Cost performance:** If AC is above EV, you're overspending. If it's below EV, you're
underspending.
- **Overall project health:** A widening gap between PV and AC indicates potential cost
overrun, while a widening gap between PV and EV signifies schedule delays.
**Benefits:**

- EVC provides a **holistic view** of project performance, integrating schedule and cost
information.
- It helps identify **potential problems** early, allowing for timely corrective actions.
- It facilitates **communication** with stakeholders by presenting complex data in a clear visual
format.

**Note:** While EVC is a valuable tool, it's important to consider external factors and limitations
when interpreting the chart.

Logically when using earned value data in the critical ratio formula should the budgeted
cost be the planned value or the earned value?

When using earned value data in the critical ratio formula, the **budgeted cost should be the
planned value (PV)**, not the earned value (EV). Here's why:

* **Planned value (PV):** This represents the **authorized budget allocated** for work
scheduled at a specific point in time. It reflects the **intended cost** as per the project plan.
* **Earned value (EV):** This captures the **value of work actually completed** based on the
planned schedule and budget. It considers both **progress made** and the **associated cost**.

The critical ratio formula, **CR = CPI x SPI**, aims to assess both **cost performance** and
**schedule performance**.

* **Cost Performance Index (CPI):** This compares the **earned value (EV)** to the **actual
cost (AC)**. It essentially tells you how efficiently you're using resources compared to the plan.
* **Schedule Performance Index (SPI):** This compares the **earned value (EV)** to the
**planned value (PV)**. It shows you how much work you've completed compared to what was
planned for the schedule.

Therefore, to accurately assess **overall project health** through the critical ratio, you need to:

1. **Compare planned cost (PV)** with **actual cost (AC)** to understand cost efficiency (CPI).
2. **Compare completed work (EV)** with **planned work (PV)** to understand schedule
adherence (SPI).

Using earned value (EV) instead of planned value (PV) in the critical ratio formula would
essentially **double-count** the progress already made. This can lead to misleading
interpretations about cost and schedule performance, potentially masking underlying issues.

Remember, the **critical ratio** provides a snapshot of both cost and schedule performance. By
using the planned value (PV) as the budgeted cost, you ensure a clear and accurate evaluation
of your project's progress against its intended path.

When making an estimate for the time and cost to execute a project, should the time and
cost required to develop the planning, monitoring, and controlling systems be included
as well? Should the actions required to monitor and control a project be included in the
project's action plan or WBS?

## Including Planning, Monitoring, and Controlling in Project Estimates:

**Time and Cost:**

- **Yes, the time and cost required to develop planning, monitoring, and controlling systems
should be included in project estimates.** These activities are essential for successful project
execution.
- Excluding them can lead to underestimating the overall project cost and duration, impacting
budget allocation and scheduling.

**How to Account for Them:**

- **Estimate the effort and resources needed for each planning, monitoring, and controlling
activity.** Consider factors like:
- Complexity of the project.
- Required tools and systems.
- Frequency of reporting and data analysis.
- Team size and expertise.
- **Allocate these costs and durations to relevant phases of the project plan.** For example,
include planning activities in the project initiation phase, and monitoring tasks in each execution
phase.

**Actions for Monitoring and Control:**

- **Yes, the actions required to monitor and control a project should be included in the project's
action plan or Work Breakdown Structure (WBS).** These actions ensure progress aligns with
the plan and adjustments are made when needed.
- **Include monitoring and control tasks as sub-tasks within relevant activities.** For example,
monitoring progress on a specific deliverable would be a sub-task under the task for completing
that deliverable.
- **Clearly define the triggers and escalation procedures for taking corrective actions.**

**Benefits of Including These Elements:**

- **Realistic estimates:** More accurate project planning and budgeting.

- **Improved project control:** Proactive identification and mitigation of risks.
- **Enhanced communication:** Stakeholders understand the importance and cost of project
management activities.

**Remember:**

- The level of detail in your estimates and plans will depend on the project's size, complexity,
and risk profile.
- Regularly review and update your estimates and plans as the project progresses.

By factoring in these elements, you can ensure your project estimates are realistic and your
plan effectively guides its execution and control.

Using earned value analysis, explain how the total cost of a partially completed project
can be estimated.

Earned Value Analysis (EVA) provides crucial insights into project performance, allowing you to
estimate the total cost of a partially completed project through two key metrics: **Estimate at
Completion (EAC)** and **To Complete Performance Index (TCPI)**.

**Understanding the Metrics:**

* **Earned Value (EV):** Represents the value of the work completed according to the project
plan and budget.
* **Actual Cost (AC):** Represents the actual amount spent on the project so far.
* **Planned Value (PV):** Represents the budgeted cost of work scheduled to be completed by
a specific date.

**Estimate at Completion (EAC):**

There are two primary methods for calculating EAC:

1. **Cost Performance Index (CPI) Method:**

- **CPI = EV / AC**
- If CPI < 1, cost overruns are occurring.
- **EAC = AC / CPI + (BAC - EV)**
- **BAC:** Budget at Completion (total project budget)

2. **To Complete Performance Index (TCPI) Method:**

- **TCPI = (BAC - EV) / (BAC - AC)**

- It compares the remaining work (BAC - EV) to the remaining budget (BAC - AC).
- **EAC = AC + (BAC - EV) / TCPI**
**Interpreting the EAC:**

The EAC indicates the expected total cost of the project based on its current performance. By
comparing it to the original budget (BAC), you can assess potential cost overruns or underruns
and take corrective actions if needed.

**To Complete Performance Index (TCPI):**

TCPI signifies how efficiently you're likely to utilize the remaining budget to complete the project.

- **TCPI > 1:** You're likely to finish within budget.

- **TCPI < 1:** You're likely to exceed the budget.

**Limitations of EAC and TCPI:**

- Both methods rely on past performance, assuming it continues in the future.

- Project changes, risks, and external factors can impact their accuracy.

**Additional Considerations:**

- Regularly update EV, AC, and PV as the project progresses.

- Analyze trends in cost and schedule performance to identify potential issues.
- Use EAC and TCPI in conjunction with other project management tools for a comprehensive
evaluation.

**Remember:**

EAC and TCPI provide estimates, not guarantees. Continuously monitor project performance
and update these estimates as needed for informed decision-making.