Analyzing Variances and Ratios Project Management Help

The three fundamental values (BCWP, BCWS, and ACWP) aren’t used directly in analysis.

The two variances-schedule variance and cost variance, which can be either positive or negative numbers-are the more important values. The larger the number, the greater the variance between performance and the schedule, or the actual cost and the baseline.
When SV or CV are positive, things are looking good. Positive schedule variance means that tasks are ahead of schedule. When cost variance L positive, the project is under budget.

Negative variances are bad news. When schedule variance is negative, the project is behind schedule. If the cost variance is positive, you have some room to add resources to solve the schedule problems. If cost variance is negative, the project is currently over budget.

The earned value indices are small numbers. If there is no schedule variance, then SPI is 1.0. If there’s no cost variance, then CPI is 1.0. As with the variances, negative” numbers (in the case of an index, a number less than 1.0) mean that the project is behind schedule or over budget. Numbers greater than 1 are good. If CPI is greater than 1, the project is ahead of budget. If SPI is greater than 1, the project is ahead of schedule.

Analyzing the Cost Estimate s

The Estimate at Completion and Baseline at Completion estimates are less important than the Variance at Completion (see Figure 12.12). VAC indicates whether the project will finish over or under budget. If VAC is positive, the project will finish under budget. Negative VAC means that the project will finish over budget. If the budget is constrained, a negative VAC is a call to action if the project is to be completed at all.

Bear in mind that the Variance at Completion estimate is not the result of a trend analysis. If your project is running over budget at the halfway point; VAC reflects the estimate if all remaining tasks are completed within the baseline budget. If you feel the over budget performance will continue for the duration of the project, multiply the VAC by the inverse of the percent of the project completed for an estimate of the true variance at completion. In this example, we’d multiply the VAC by 2 because the project is 50% completed (1 divided by 50% is the inverse of 50%). If the project is 75% completed, and you expect the current budget trends to continue, multiply VAC by the inverse of 75%, 1.33 (1 divided by 0.75 = 1.33) .

Applying Earned Value Analysis to Resources and

Assignments Earned value analysis isn’t limited to tasks. You can use earned value analysis to analyze resources and assignments to see who or what is over budget and behind schedule.

If you’re looking for a scapegoat, earned value analysis will help you find at least one. You, of course, would be the other scapegoat because you assigned the resources to the tasks in the first place. But we digress.

To see the earned value analysis fields for resources or assignments, switch to an appropriate view, display the Earned Value table by choosing View >- More Views, and select Earned Value from the More Tables dialog box. A Resource Usage sheet with the earned value columns is

Use earned value to analyze resource and assignment performance

Keeping the Project on Track

After you have analyzed the source of problems w!th your projects, you can make the necessary adjustments to the project plan to get the project back on track. Although our assumption is, of course, that projects tend to run over budget and behind schedule, believe it or not, some projects may run under budget and ahead of schedule. In both circumstances, you have to decide what to do to correct the variances and bring the , project back in line.  “Project 2000 Basics,” we introduced you to the concept of the project triangle: time, money, and scope, Every decision you make about how to adjust the project affects one or more sides of the project triangle and ultimately impacts quality.

What’s Next

In’ Chapter 13, “Assessing and managing Risks,” you’ll be introduced to another project management analysis tool, called PERT,and learn how to use PERT and other Project tools to assess and manage risks.

Related Project Management Assignments

Posted on November 27, 2015 in TRACKING PROJECT PROGRESS