Earned Value Management Essay Example

C/SCSC cost system primarily due to issues created when their contractors exceeded their budgets, fell behind on timelines, and were unable to accurately predict the interrelation of cost, schedule, and scope on multiple concurrent projects. Therefore, the government demanded that contractors should stop estimating future costs by deducting actual project costs from the initial budget. Instead, they implemented the Earned Value Management System (EVMS), which organizes elements of the project such as schedule, budget estimate and scope of work. This brings about more precise projections for the project costs at completion (Warhoe, 2004).

Despite the Earned Value Management (EVM) system being in existence for almost four decades, it still has not fully realized its anticipated potential. It's relevant to note that EVM methodology is deployed in less than 1% of numerous projects. There are research indications that this infrequent application of EVM and procurement may be due to a bias towards cost-reimbursable contracts (CR). Literature review on EVM and procurement shows varied viewpoints regarding the choice of contract types (Marshall, 2005). The traditional use of EVM with CR contracts primarily occurs within major U.S government agencies such as the National Aeronautics and Space Administration (NASA).

Currently, NASA utilizes EVM aligning with President Bush's Management Agenda, particularly to improve competitive sourcing through superior historic performance data, enhance financial accomplishment by facilitating performance comparison with budget, and promote NASA's budget and performance integration by merging the management of technical requirements, schedule, and budget risks. On the other hand, a lot of project practitioners, specialists and scholarly reviews advocate for the use of fixed price (FP) contracts.

Kelvin Yu outlined the profound use of EVM

in partnership with an FP contract during a renovation of a wind tunnel run by NASA. For instance, he harnessed EVM to establish the project's scope, craft negotiation instruments like "should cost estimate", and manage and unify the work of several contractors involved in the project. Both Quentin Fleming and Joel Koppleman concur as they have observed the productivity and efficacy of EVM paired with FP contracts. The authors recommend the application of EVM in conjunction with FP contracts, substantiating their assertions and reasons.

Marshall (2005) suggested compelling arguments advocating for constant utilization of FP. However, personalities such as Karen Evans, an e-Government and Information Technology Administrator at the Office of Management and Budget (OMB), had a different opinion. She expressed her objection during a hearing before the House Government Reform Committee last spring, stating that EVM was not helpful to her. Her issue was that her project's EVM reports showed no differences and she believed that a flawless report is an indication of potential issues within the system. Primavera Systems Incorporation, an EVM software-selling firm based in Bala Cynwyd, Pennsylvania, conducted a recent survey involving senior agency managers.

About 50% of the participants in a survey revealed that their institutions lacked sufficient comprehension and trained personnel regarding Earned Value Management (EVM). In response to this input, the Office of Management and Budget (OMB) required these institutions to devise plans for improving employee competence in four key sectors, including project management. Evans notes that measures are being put into place within these bodies to facilitate the adoption and utilization of EVM. However, the study underscored that most project managers do not have a

good grasp on how to effectively use EVM (Perera, 2006). Delving deeper into discussions indicates that there is a correlation between the principle of Earned Value Management and the concept of an essential path.

Frequently, earned value management fails to differentiate between the restrictions on a project's advancement (including the critical chain) and progress towards non-limiting factors. As a result, there could be times when the project manager may favour non-essential tasks, in doing so neglecting vital work, with an aim to enhance earned value indicators. This situation could eventually cause delays in completing the project. Such a phenomenon is often referred to as local optimization and is caused due to lack of both local and global measurements. Accurate implementation of earned value across an entire project necessitates initial data collection by the project manager.

The given data set includes components like a ranked task breakdown, a comprehensive project timeline illustrating task assignment, a budget outlining the scope and timing for planned tasks, a financial plan demonstrating progress on completed tasks, the total cost of finished work, projected completion date and final expense of the project. It also consists of available resources in total, jointly approved deadline with client to conclude the project, expected performance timeline, rate of cost buildup as well as an estimation of remaining tasks. Here is an example.

The Transportation Security Administration (TSA)'s situation exemplifies the use of earned value management. Faced with the task of replacing departing federal inspectors, the TSA sought advice from the Defense Contract Management Agency (DCMA) on a project pertaining to human resources screening contracts. As a result, CPS and Accenture won contracts

from the TSA. Presently, DCMA is significantly engaged in supervising this project's earned value, which involves managing cost, schedule, and technical performance aspects to track project advancement.

The ultimate objective is to enable the TSA to maintain a small team and only call on DCMA for support when necessary. This demonstrates how Earned Value Management can be delegated to different firms and how these businesses can collaborate in this area to attain optimal results. TSA's aim is to recruit experts who can help simplify their operations. Various viewpoints exist when it comes to earned value management. The initial viewpoint portrays earned value management in a positive light overall. In a comment by Jennifer Jones: "Earned value management (EVM) techniques provide project managers with a potent early alert mechanism for projects that are significantly going astray." (Jones, 2004)

Jones's view underlines the encouraging perception of earned value management, asserting her strong conviction that this strategy can indeed control and oversee business projects. Moreover, she considers earned value management as a preventative measure that allows enterprises to identify errors before they occur, thus aiding the projects and the companies in avoiding mishaps. In a broader perspective of project management, Jones maintains that earned value management is an effective and advantageous method to both administer a project and prevent blunders. Yet, is it plausible to apply earned value management universally?

Is the idea of applying it to all projects considered successful? This is where an additional assessment becomes necessary, based on a paper titled “Earned Value Management.” The article illustrates that using Earned Value Management (EVM) on undefined tasks such as effort-based, time

and materials, and service tasks should be individually assessed. The nature of work associated with the contracted task ought to direct the decision-making about EVM's worthiness, and if deemed valuable, which EVM method is best suited for usage. (Asks, 2005) Consequently, EVM shouldn't be perceived as the ultimate answer for project management. It can prove helpful but isn't universally applicable.

Therefore, it's not certain that all errors in project management can be avoided by using earned value management as its suitability varies from project to project initiated by a business. The effectiveness of earned value management isn't universal and dependable. Though helpful, it is essential to utilize it for the right goals. Nonetheless, determining these goals is up to the organization and may become unclear due to divergent views - while some might see value in applying earned value management, others could disagree. As a result, employees and project managers are tasked with assessing its relevance which might lead to contrasting opinions. Hence, there aren't any clear-cut correct or incorrect decisions when it comes down to employing earned value management.

Earned Value Management (EVM) in the context of project management, is a tool that enables an educated prediction of a project's current status concerning its timeline and budget. It merges finished tasks with starting forecasts, serving as an indicator of how far along the project has advanced towards its conclusion. By assessing the volume of work already completed, the project manager can precisely predict the total resources required to finish the project. In short, EVM when effectively employed can accurately assess and convey a project's progression by taking into account completed activities, time

passed and costs incurred.

The Earned Value Management System (EVMS) is constructed to evaluate and control by defining the work scope, creating a Work Breakdown Structure (WBS), setting up a Project Master Schedule (PMS) that outlines the timeline for every Work Package (W/P), assigning budget costs to all W/Ps, identifying an efficient way of measuring completed tasks, and establishing the Performance Measurement Baseline (PMB). The advancement of project management integration continues with the growing adoption of earned value's (EV) in both government and industrial sectors. Entities such as Project Management Institute play significant parts in precisely pinpointing EV's role within the global project management framework through their knowledge and benchmark-establishing abilities(Abba, 1997).